As Filed with the Securities and Exchange Commission on July 2, 2001
Registration No. 333-62044
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
Amendment No. 1 to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------------
NEW YORK FLOWSERVE CORPORATION 31-0267900
(State or other (Exact name of Registrant (I.R.S. Employer
jurisdiction of as specified in its charter) Identification No.)
incorporation of
organization)
-----------------------------
DELAWARE FLOWSERVE US INC. 75-2778918
DELAWARE FLOWSERVE INTERNATIONAL, INC. 95-3887956
DELAWARE FLOWSERVE HOLDINGS, INC. 75-2737169
DELAWARE BW/IP-NEW MEXICO, INC. 85-0429772
DELAWARE INGERSOLL-DRESSER PUMP COMPANY 22-3191012
DELAWARE FLOWSERVE INTERNATIONAL L.L.C. NONE
DELAWARE FLOWSERVE MANAGEMENT COMPANY 75-2737324
DELAWARE CFM-V.R. TESCO INC. 75-2802692
UNITED KINGDOM FLOWSERVE INTERNATIONAL LIMITED NONE
THE NETHERLANDS FLOWSERVE FINANCE B.V. NONE
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation of
organization)
---------------------------
222 WEST LAS COLINAS BOULEVARD, SUITE 1500
IRVING, TEXAS 75039
972-443-6500
(Address, including zip code, and telephone number,
including area code, of Flowserve Corporation's
principal executive offices)
-----------------------------
RONALD F. SHUFF, ESQ.
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
FLOWSERVE CORPORATION
222 WEST LAS COLINAS BOULEVARD
SUITE 1500
IRVING, TEXAS 75039
972-443-6500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
STEPHEN L. BURNS
CRAVATH, SWAINE & MOORE
WORLDWIDE PLAZA
825 EIGHTH AVENUE
NEW YORK, NEW YORK 10019
-----------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this Registration Statement, as
determined by the Registrants.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of this prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
====================================================================================================================
AMOUNT PROPOSED
TO BE PROPOSED MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF REGISTERED (1) OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED (2) PER OFFERING PRICE REGISTRATION FEE
Unit (1) (2) (1) (3) (4)*
- --------------------------------------------------------------------------------------------------------------------
Common Stock, par value $1.25 per share(5)
- --------------------------------------------------------------------------------------------------------------------
Preferred Stock, par value $1.00 per
share (6)
- --------------------------------------------------------------------------------------------------------------------
Debt Securities
- --------------------------------------------------------------------------------------------------------------------
Guarantees of Debt Securities, of the
Guarantors
(as defined below) (7)
====================================================================================================================
TOTAL $500,000,000 $125,000
====================================================================================================================
* Previously paid on May 31, 2001.
(1) There are being registered under this Registration Statement such
indeterminate number of shares of common stock and preferred stock of
Flowserve Corporation, and such indeterminate principal amount of debt
securities and guarantees of debt securities of the Registrants, as shall
have an aggregate initial offering price not to exceed $500,000,000. If
any debt securities are issued at an original issue discount, then the
securities registered shall include such additional debt securities as
may be necessary such that the aggregate public offering price of all
securities issued pursuant to this Registration Statement will equal
$500,000,000. Any securities registered under this Registration Statement
may be sold separately or as units with other securities registered under
this Registration Statement. The proposed maximum offering prices per
unit will be determined, from time to time, by the Registrants in
connection with the issuance by the Registrants of the securities
registered under this Registration Statement.
(2) Not specified with respect to each class of securities to be registered
pursuant to General Instruction II.D of Form S-3 under the Securities
Act.
(3) The proposed maximum offering price has been estimated solely for
purposes of calculating the registration fee pursuant to Rule 457. Any
offering of debt securities denominated in any foreign currency or
currency unit will be treated as the equivalent in U.S. dollars based on
the exchange rate applicable to the purchase of such debt securities from
the Registrant. No separate consideration will be received for common
stock, preferred stock, or debt securities that are issued upon
conversion or exchange of debt securities or preferred stock registered
hereunder.
(4) Calculated pursuant to Rule 457 of the rules and regulations under the
Securities Act.
(5) Including such indeterminate number of shares of common stock as may from
time to time be issued (i) at indeterminate prices or (ii) upon
conversion or exchange of debt securities or preferred stock registered
hereunder, to the extent any of such debt securities or shares of
preferred stock are, by their terms, convertible into common stock.
(6) Including such indeterminate number of shares of preferred stock as may
from time to time be issued (i) at indeterminate prices or (ii) upon
conversion or exchange of debt securities registered hereunder, to the
extent any such debt securities are, by their terms, convertible into
preferred stock.
(7) Subject to Note (1) above, there is being registered hereunder an
indeterminate principal amount of guarantees of debt securities to be
issued by one or more of Flowserve US Inc., Flowserve International,
Inc., Flowserve Holdings, Inc., BW/IP-New Mexico, Inc., Ingersoll-Dresser
Pump Company, Flowserve International L.L.C., Flowserve Management
Company, CFM-V.R. Tesco Inc., Flowserve International Limited and
Flowserve Finance B.V. Pursuant to Rule 457(n), no separate fee is
required to be paid in respect of guarantees of debt securities which are
being registered concurrently.
- --------------------------------------------------------------------------------
The Registrants hereby amend this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrants shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a),
may determine.
===============================================================================
SUBJECT TO COMPLETION, DATED JULY 2, 2001
PROSPECTUS
$500,000,000
FLOWSERVE CORPORATION
We may sell, from time to time, any of the following securities:
--Common stock
--Preferred stock
--Debt securities
Our common stock is listed on the New York Stock Exchange under the
symbol "FLS."
The debt securities of Flowserve Corporation may be fully,
unconditionally and irrevocably guaranteed by one or more of Flowserve US
Inc., Flowserve International, Inc., Flowserve Holdings, Inc., BW/IP-New
Mexico, Inc., Ingersoll-Dresser Pump Company, Flowserve International L.L.C.,
Flowserve Management Company, CFM-V.R. Tesco Inc., Flowserve International
Limited and Flowserve Finance B.V.
We will provide the specific terms of these securities in one or more
prospectus supplements to this prospectus. You should read this prospectus and
any applicable prospectus supplement carefully before you invest.
The securities offered by this prospectus may be issued in one or more
series or issuances and will be limited to $500,000,000 in aggregate public
offering price (or its equivalent, based on the applicable exchange rate, to
the extent debt securities are issued for one or more foreign currencies or
currency units). The securities may be sold for U.S. dollars, or any foreign
currency or currencies or currency units, and the principal of, any premium
on, and any interest on, the debt securities may be payable in U.S. dollars,
or any foreign currency or currencies or currency units.
SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF CERTAIN
MATTERS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
We may offer these securities to or through underwriters, through dealers
or agents, directly to you or through a combination of these methods. You can
find additional information about our plan of distribution for the securities
under the heading "Plan of Distribution" in this prospectus. We also may
describe the plan of distribution for any particular offering of these
securities in any applicable prospectus supplement. This prospectus may not be
used to sell our securities unless it is accompanied by a prospectus
supplement.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION ("SEC") NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 2001.
Red Herring Text
The information in this prospectus is not complete and may be changed.
These securities may not be sold until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not an
offer to sell nor does it seek an offer to buy these securities in any
jurisdiction where the offer or sale is not permitted.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS.................................................. 1
WHERE YOU CAN FIND MORE INFORMATION .................................. 2
INCORPORATION OF INFORMATION WE FILE WITH THE SEC...................... 2
FORWARD-LOOKING STATEMENTS............................................. 3
ABOUT FLOWSERVE CORPORATION............................................ 4
RISK FACTORS........................................................... 5
USE OF PROCEEDS........................................................ 9
RATIO OF EARNINGS TO FIXED CHARGES..................................... 10
DESCRIPTION OF DEBT SECURITIES AND GUARANTEES.......................... 10
DESCRIPTION OF CAPITAL STOCK........................................... 21
PLAN OF DISTRIBUTION................................................... 24
VALIDITY OF SECURITIES................................................. 26
EXPERTS................................................................ 26
---------------------
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with
the SEC utilizing a "shelf" registration process, which allows us to offer and
sell any combination of the securities described in this prospectus in one or
more offerings. Using this prospectus, we may offer up to a total dollar
amount of $500,000,000 of securities.
This prospectus provides you with a general description of the securities
we may offer. Each time we sell securities, we will provide a prospectus
supplement that will describe the specific terms of the securities we are
offering. Each supplement will also contain specific information about the
terms of the offering it describes. The prospectus supplement may also add to,
update or change the information contained in this prospectus. In addition, as
we describe in the section entitled "Where You Can Find More Information,"
Flowserve Corporation has filed and plans to continue to file other documents
with the SEC that contain information about it and the business conducted by
it and its subsidiaries. Before you decide whether to invest in any of the
securities offered by this prospectus, you should read this prospectus, the
prospectus supplement that further describes the offering of those securities
and the information Flowserve Corporation otherwise files with SEC.
---------------------
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized any other person to
provide you with different information. We will not make an offer to sell
these securities in any jurisdiction where the offer or sale is not permitted.
You should assume that the information appearing in this prospectus is
accurate only as of the date on the cover page.
In this prospectus, references to "Company," "we," "us" and "our," refer
to Flowserve Corporation and its subsidiaries, unless the context otherwise
requires. References to "Flowserve" refer to Flowserve Corporation. The phrase
"this prospectus" refers to this prospectus and any applicable prospectus
supplement, unless the context otherwise requires. References to "securities"
refer collectively to the common stock, preferred stock, debt securities and
guarantees of debt securities offered by this prospectus.
1
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with SEC under the Securities Exchange Act of 1934. You may read
and copy any document we file at the following SEC public reference rooms:
450 Fifth Street, N.W. Seven World Trade Center Citicorp Center
Judiciary Plaza Suite 1300 500 West Madison Street
Room 1024 New York, NY 10048 Suite 1400
Washington, D.C. 20549 Chicago, IL 60661
You may also inspect and copy our SEC filings, the complete registration
statement and other information at the offices of the New York Stock Exchange
located at 20 Broad Street, 16th Floor, New York, New York 10005.
You may obtain information on the operation of the public reference room
in Washington, D.C. by calling the SEC at 1-800-SEC-0330.
We file information electronically with the SEC. Our SEC filings also are
available from the SEC's Internet site at http://www.sec.gov, which contains
reports, proxy and information statements, and other information regarding
issuers that file electronically.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we may disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file after the
date of this prospectus will automatically update and supersede this
information. We incorporate by reference the documents listed below and any
future filings made with the SEC under Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 until all of the securities described in
this prospectus are sold:
o The audited financial statements of Ingersoll-Dresser Pump Company,
contained on pages F-70 through F-99 in our Registration Statement
on Form S-4, as amended (File No. 333-46760), filed on September 27,
2000;
o Our Annual Report on Form 10-K for the year ended December 31, 2000;
o Our Quarterly Report on Form 10-Q for the quarter ended March 31,
2001; and
o Our Current Report on Form 8-K, filed May 31, 2001.
You may request a copy of these filings (other than an exhibit to a
filing unless that exhibit is specifically incorporated by reference into that
filing) at no cost, by writing or telephoning us at the following address:
Flowserve Corporation
222 West Las Colinas Boulevard, Suite 1500
Irving, Texas 75039
Attention: Corporate Secretary
972-443-6543
2
This prospectus is part of a registration statement we filed with the
SEC. This prospectus does not contain all of the information contained in the
registration statement and all of the exhibits and schedules thereto. For
further information about Flowserve, please see the complete registration
statement. Any statement made in this prospectus concerning the contents of
any agreement or other document is only a summary of the actual document. If
we have filed any agreement or other document as an exhibit to the
registration statement, you should read the exhibit for a more complete
understanding of the document or the matter involved. Each statement regarding
an agreement or other document is qualified in its entirety by reference to
the actual document.
FORWARD-LOOKING STATEMENTS
This prospectus contains various forward-looking statements and includes
assumptions about future market conditions, operations and results. Any
statement that is not historical fact is a forward-looking statement. These
statements are based on current expectations and are subject to significant
risks and uncertainties. They are made pursuant to safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Among the many factors
that could cause actual results to differ materially from the forward-looking
statements are:
o changes in the already competitive environment for our products or
competitors' responses to our strategies;
o the health of the petroleum, chemical, water treatment and power
generation industries and general industrial markets;
o economic conditions and the extent of economic growth in areas outside
and inside the United States;
o political risks or trade embargoes affecting important country
markets;
o our ability to successfully complete the integration of the
acquisition of Ingersoll-Dresser Pump Company ("IDP") into our
management and operations and fully realize anticipated synergies
and cost savings;
o the recognition of remaining expenses associated with adjustments to
realign our combined Flowserve and IDP facilities and other
capabilities with our strategic objectives and business conditions
including, without limitation, expenses incurred in restructuring and
integrating our operations to incorporate IDP's facilities;
o our ability to meet the financial covenants and other requirements
of our financing agreements;
o technological developments in our products as compared to those of
our competitors;
o changes in prevailing interest rates and the effective interest cost
which we bear; and
o adverse changes in the regulatory climate and other legal
obligations imposed on Flowserve.
Accordingly, you should not rely on the accuracy of predictions contained
in forward-looking statements. Further, we undertake no obligation to publicly
update or revise any forward-looking statement as a result of new information,
future events or otherwise.
3
ABOUT FLOWSERVE CORPORATION
We are among the largest manufacturers and aftermarket service providers
of comprehensive flow control systems in the world. We have been in the flow
control industry for over 125 years. We develop and manufacture
precision-engineered flow control equipment for critical service applications
where high reliability is required. The flow control system components we
produce include pumps, valves and mechanical seals. Our products and services
are used in several industries, including petroleum, chemical, power
generation and water treatment.
We conduct our operations through three divisions that encompass our
primary product types: (1) Pump Division, (2) Flow Solutions Division and
(3) Flow Control Division. Our Pump Division supplies engineered and industrial
pumps. Through our Flow Solutions Division, we provide mechanical seals and
aftermarket services. Our Flow Control Division supplies valves and related
products. Through each of our segments, we provide aftermarket replacement
parts.
Through our Pump Division ("Pump"), we design, manufacture and distribute
engineered and industrial pumps and pump systems, replacement parts and related
equipment principally to industrial markets. Pump's products and services are
primarily used by companies that operate in the petroleum, chemical processing,
power generating, water treatment and general industrial markets. Following the
completion of the facilities rationalization in connection with the acquisition
of IDP, we will manufacture our pump systems and components at eight plants in
the United States, one in Canada, three in Latin America, ten in Europe and the
Middle East and one in Asia. We also manufacture a small portion of our pumps
through several foreign joint ventures. We market our pump products, which are
primarily sold to end users and engineering and construction companies, through
our worldwide sales force, regional service and repair centers, independent
distributors and sales representatives.
Through our Flow Solutions Division ("FSD"), we design, manufacture and
distribute mechanical seals and sealing systems and provide parts, repair and
services for flow control equipment used in process industries. Flow control
products require mechanical seals to be replaced throughout the products'
useful lives as the function of a seal is to prevent leakage of a fluid. The
replacement of mechanical seals is an integral part of aftermarket services.
Our mechanical seals are used on a variety of pumps, mixers, compressors,
steam turbines and specialty equipment, primarily in the petroleum, chemical
processing, power generation, water treatment industries and general
industrial end-markets. We manufacture mechanical seals through two plants in
the United States, three in Europe and the Middle East, two in Latin America
and three in Asia. Through FSD's global network of service and quick response
centers, we provide service, repair and diagnostic services for maintaining
flow control systems components.
Through our Flow Control Division ("FCD"), we design, manufacture and
distribute valves, actuators and related equipment. FCD's valve products are
an integral part of a flow control system and are used to control the flow of
liquids and gases. Substantially all of FCD's valves are specialized and
engineered to perform specific functions within a flow control system. FCD's
products are primarily used by companies that operate in the petroleum,
chemical and power generation industries. We manufacture valves and actuators
through four plants in the United States, six in Europe and three in other
regions. We also manufacture a small portion of our valves through a foreign
joint venture. Manual valve products and valve actuators are distributed
through our sales force personnel and a network of distributors. Automatic
control valves are marketed through sales engineers and service and repair
centers or, on a commission basis, through sales representatives in our
principal markets.
Our executive offices are located at 222 West Las Colinas Boulevard,
Suite 1500, Irving, Texas 75039 and our telephone number is (972) 443-6500.
4
RISK FACTORS
You should carefully consider the risks described below in addition to
the other information set forth or incorporated by reference in this
prospectus before making an investment in the securities.
ECONOMIC, POLITICAL AND OTHER RISKS ASSOCIATED WITH INTERNATIONAL SALES AND
OPERATIONS COULD ADVERSELY AFFECT OUR BUSINESS.
Since we sell our products worldwide, our business is subject to risks
associated with doing business internationally. Our sales originating outside
the United States, as a percentage of our total sales, was 42% in 1999 and 38%
in 2000. On a pro forma basis, (which includes IDP for the full year) our sales
originating outside the United States, as a percentage of total sales, were 40%
in 2000. Accordingly, our future results could be harmed by a variety of
factors, including:
o changes in foreign currency exchange rates;
o changes in a specific country's or region's political or economic
conditions, particularly in emerging markets;
o trade protection measures and import or export licensing
requirements;
o potentially negative consequences from changes in tax laws;
o difficulty in staffing and managing widespread operations;
o differing labor regulations;
o differing protection of intellectual property; and
o unexpected changes in regulatory requirements.
OUR OPERATING RESULTS COULD BE HARMED DURING ECONOMIC DOWNTURNS.
The businesses of most of our industrial customers, particularly
refineries, chemical companies and power plants, are, to varying degrees,
cyclical and have historically experienced periodic downturns. Margins in
those industries are highly sensitive to demand cycles, and our customers in
those industries historically have tended to delay large capital projects,
including expensive maintenance and upgrades, during economic downturns. For
example, due to the simultaneous decline in oil and chemical prices in 1998
and 1999, many of our key customers significantly reduced their capital
spending, which resulted in declines in our revenues and net earnings during
those years. These industry downturns have been characterized by diminished
product demand, excess manufacturing capacity and subsequent accelerated
erosion of average selling prices in the flow control industry. Therefore, any
significant downturn in our customers' markets or in general economic
conditions could result in a reduction in demand for our products and services
and could harm our business.
WE FACE INTENSE COMPETITION.
We encounter intense competition in all areas of our business.
Additionally, customers for our products are attempting to reduce the number
of vendors from which they purchase in order to reduce the size and diversity
of their inventory. To remain competitive, we will need to invest continuously
in manufacturing, marketing, customer service and support and our distribution
networks. We anticipate that we may have to adjust the prices of some of our
products to stay competitive. We cannot assure you that
5
we will have sufficient resources to continue to make such investments or that
we will maintain our competitive position.
ENVIRONMENTAL COMPLIANCE COSTS AND LIABILITIES COULD ADVERSELY AFFECT OUR
FINANCIAL CONDITION.
Our operations and properties are subject to increasingly stringent laws
and regulations relating to environmental protection, including laws and
regulations governing air emissions, water discharges, waste management and
workplace safety. Such laws and regulations can impose substantial fines and
sanctions for violations and require the installation of costly pollution
control equipment or operational changes to limit pollution emissions and/or
decrease the likelihood of accidental hazardous substance releases. We must
conform our operations and properties to these laws, and adapt to regulatory
requirements in all countries as these requirements change. In connection with
the IDP acquisition, we believe that we may be required to incur costs to
bring the former IDP properties into compliance with applicable requirements.
We use and generate hazardous substances and wastes in our manufacturing
and foundry operations. In addition, many of our current and former properties
are or have been used for industrial purposes. Accordingly, we are conducting
investigation and remediation activities at several on-site and off-site
locations. We also may be subject to potentially material liabilities relating
to the investigation and clean-up of contaminated properties and to claims
alleging personal injury.
We have experienced, and expect to continue to experience, operating
costs to comply with environmental laws and regulations. In addition, new laws
and regulations, stricter enforcement of existing laws and regulations, the
discovery of previously unknown contamination or the imposition of new
clean-up requirements could require us to incur costs or become the basis for
new or increased liabilities that could have a material adverse effect on our
business, financial condition or results of operations.
OUR BUSINESS COULD SUFFER IF WE ARE UNSUCCESSFUL IN NEGOTIATING NEW COLLECTIVE
BARGAINING AGREEMENTS.
As of December 31, 2000, we had approximately 10,000 employees. Our
operations in the following countries are unionized: Argentina, Austria,
Belgium, Brazil, Canada, France, Germany, Italy, Mexico, The Netherlands,
Spain and the United Kingdom. We also have five unionized plants in the U.S.
Approximately 8% of our 6,000 U.S. employees are represented by unions.
Although we believe that our relations with our employees are good and we have
not experienced any recent strikes or work stoppages, we cannot assure you
that we will be successful in negotiating new collective bargaining
agreements, that such negotiations will not result in significant increases in
the cost of labor or that a breakdown in such negotiations will not result in
the disruption of our operations. In addition, our closures of certain
facilities may create the risk of strikes or work stoppages at those and other
facilities.
THIRD PARTIES MAY INFRINGE OUR INTELLECTUAL PROPERTY, AND WE MAY EXPEND
SIGNIFICANT RESOURCES ENFORCING OUR RIGHTS OR SUFFER COMPETITIVE INJURY.
Our success depends in part on our proprietary technology. We rely on a
combination of patents, copyrights, trademarks, trade secrets, confidentiality
provisions and licensing arrangements to establish and protect our proprietary
rights. If we fail to successfully enforce our intellectual property rights,
our competitive position could suffer, which could harm our operating results.
We may be required to spend significant resources to monitor and police our
intellectual property rights.
6
OUR SUCCESS WILL CONTINUE TO DEPEND TO A SIGNIFICANT EXTENT ON OUR EXECUTIVES
AND OTHER KEY PERSONNEL.
Our future success depends to a significant degree on the skills,
experience and efforts of our senior management and other key personnel. The
loss of the services of any of these individuals could adversely affect our
results of operations and our ability to implement our business strategy.
WE ARE DEPENDENT ON THE AVAILABILITY OF RAW MATERIALS AND ELECTRIC POWER.
We require substantial amounts of raw materials and electric power.
Substantially all raw materials and all electric power we require are purchased
from outside sources. The availability and prices of raw materials and electric
power may be subject to curtailment or change due to, among other things, new
laws or regulations, suppliers' allocations to other purchasers, interruptions
in production by suppliers, changes in exchange rates and prevailing price
levels. Any change in the supply of, or price for, these raw materials or
electric power could materially affect our operating results.
WE ARE SUBJECT TO THE EFFECTS OF FLUCTUATIONS IN FOREIGN EXCHANGE RATES.
We are exposed to fluctuations in foreign currencies as a significant
portion of our revenue, and certain of our costs, assets and liabilities, are
denominated in currencies other than U.S. dollars. Our ability to pay interest
and principal on dollar-denominated indebtedness when due is dependent on the
then current exchange rates between U.S. dollars, on the one hand, and the euro
and other European as well as Asian currencies, on the other hand, which rates
are and will be subject to fluctuation. During 2000, approximately 38% of our
actual revenue and 40% of our pro forma revenue (which includes IDP for the full
year) were from sales originating outside the United States. Our share of
revenue in non-dollar denominated currencies may continue to increase in future
periods. We can offer no assurance, however, that exchange rate fluctuations
will not have a material adverse effect on our results of operations and
financial condition and therefore on our ability to make principal and interest
payments on our indebtedness, including any dollar-denominated debt securities
we may issue, when due.
OUR LEVERAGE COULD ADVERSELY AFFECT OUR FINANCIAL HEALTH, MAKE US VULNERABLE
TO ADVERSE ECONOMIC AND INDUSTRY CONDITIONS AND PREVENT US FROM FULFILLING OUR
OBLIGATIONS UNDER DEBT SECURITIES CURRENTLY OUTSTANDING OR ISSUED PURSUANT TO
THIS PROSPECTUS.
We have incurred significant indebtedness that is substantial in relation
to shareholder's equity. As of March 31, 2001, we had approximately $1,168.1
million outstanding consolidated debt. Total net debt (total debt less
cash and equivalents) was 81.9% of our capital structure as of March 31, 2001.
Our substantial indebtedness could have important consequences to you. For
example, it could:
o make it more difficult for us to satisfy our obligations with
respect to any additional debt securities;
o increase our vulnerability to general adverse economic and industry
conditions;
o require us to dedicate a substantial portion of our cash flow from
operations to payments on our indebtedness, thereby reducing the
availability of our cash flow to fund working capital, capital
expenditures, research and development efforts and other general
corporate purposes;
o limit our flexibility in planning for, or reacting to, changes in
our business and the industry in which we operate;
7
o place us at a competitive disadvantage relative to our competitors
that have less debt; and
o limit, along with the financial and other restrictive covenants in
our indebtedness, our ability to borrow additional funds, among
other things.
Subject to the restrictions in our debt agreements, we may also borrow more
money from time to time, which could further exacerbate the effect of any of the
consequences described above. Furthermore, failing to comply with those
covenants could result in an event of default which, if not cured or waived,
could have a material adverse effect on our business, financial condition and
results of operations.
THE SENIOR CREDIT FACILITIES AND THE INDENTURES GOVERNING OUR OUTSTANDING DEBT
SECURITIES CONTAIN VARIOUS COVENANTS WHICH LIMIT MANAGEMENT'S DISCRETION IN
THE OPERATION OF OUR BUSINESS.
The senior credit facilities and the indentures governing our current
outstanding debt contain various provisions that limit management's discretion
in operating our businesses by restricting their ability, among other things,
to:
o incur additional debt;
o pay dividends and make other distributions;
o prepay subordinated debt, make investments and other restricted
payments;
o enter into sale and leaseback transactions;
o create liens;
o sell assets; and
o enter into transactions with affiliates.
WE MAY NOT BE ABLE TO FULLY INTEGRATE THE BUSINESS OF IDP TO ACHIEVE ALL
EXPECTED SYNERGIES.
Our future success will depend in part on our ability to successfully
complete the integration of the businesses of IDP into Flowserve's operations.
The combination of Flowserve and IDP involves the integration of companies that
had previously operated independently. The remaining integration process may be
disruptive to the businesses and may cause an interruption of, or a loss of
momentum in, the businesses as a result of a number of obstacles such as:
o loss of key employees or customers;
o failure to maintain the quality of customer service that such
companies have historically provided;
o the need to coordinate geographically diverse organizations;
o retooling and reprogramming of equipment; and
o the resulting diversion of management's attention from our
day-to-day business and the need to hire additional management
personnel to address integration obstacles.
8
If we are not able to successfully complete this combination, if the
combination takes longer than anticipated, or if our integrated product and
service offering fails to achieve market acceptance, our business could be
adversely affected.
WE MAY NOT BE ABLE TO FULLY REALIZE THE ANTICIPATED COST SAVINGS, SYNERGIES OR
REVENUE ENHANCEMENTS FROM COMBINING FLOWSERVE AND IDP, ALTHOUGH WE HAVE INCURRED
SIGNIFICANT CASH INTEGRATION COSTS TO ACHIEVE THESE COST SAVINGS AND WE
ANTICIPATE INCURRING ADDITIONAL COSTS.
Even if we are able to complete the integration of the operations of IDP
into Flowserve successfully, we cannot assure you that we will fully realize the
cost savings, synergies or revenue enhancements that we anticipate from such
integration or that we will fully realize such benefits within the time frame
that we currently expect.
o Whether we can effectively eliminate all redundant administrative
overhead and overlapping sales personnel, rationalize manufacturing
capacity and shift production to more economic facilities is
difficult to predict. Accordingly, the amount and timing of the
remaining available cost savings are inherently difficult to
estimate.
o Any remaining cost savings and other synergies from the transactions
may be offset by remaining costs incurred in integrating the
companies.
o The remaining cost savings, or any cost savings achieved to date,
and other synergies may also be offset by increases in other
expenses, by operating losses or by problems unrelated to the IDP
integration.
o Labor cost savings depend on the ability of the personnel at our
remaining plants to handle their increased workloads at planned
efficiency levels.
o We will still incur significant cash integration costs to fully
achieve these cost savings, in addition to our reported integration
costs to date.
In addition, the Company's existing senior credit facilities require us to
maintain certain financial performance ratios, which will become more
restrictive over time.
If we fail to comply with the restrictions contained in these senior credit
facilities or our existing indentures, the indentures governing any debt
securities issued under this prospectus or any other subsequent financing
agreements, a default may occur. This default may allow some creditors, if their
respective agreements so provide, to accelerate payments owed on such debt as
well as any other indebtedness as to which a cross-acceleration or cross-default
provision applies. In addition, our lenders may be able to terminate any
commitments they had made to supply us with further funds. See "Description of
the Debt Securities and Guarantees."
USE OF PROCEEDS
We intend to use the net proceeds from the sale of the securities offered
by this prospectus for general corporate purposes, which may include repaying
indebtedness, funding future acquisitions or for any other purposes as may be
described in an accompanying prospectus supplement.
9
RATIO OF EARNINGS TO FIXED CHARGES
The Company was in compliance with all specified financial covenants as
defined in its Credit Agreements at March 31, 2001 and December 31, 2000. These
financial covenants include a fixed charge coverage ratio, an interest coverage
ratio and a leverage ratio.
The following table shows our ratio of earnings to fixed charges for the
periods indicated:
Three Months
Ended
Years Ended December 31, March 31,
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- -----
Ratio of Earnings to Fixed Charges... 7.3 5.9 5.2 1.8 1.3 -
We computed these ratios by dividing fixed charges into the sum of earnings
from continuing operations before income taxes and fixed charges. Fixed charges
consist of interest expense on all indebtedness, amortization of deferred
financing fees and the estimated interest portion of rental expense.
The Company's debt increased in 2000 primarily as the result of financing
the acquisitions of IDP and Innovative Valve Technologies, Inc. and related
integration costs. The ratio of earnings to fixed charges for the year ended
December 31, 2000, was 2.0 excluding integration and restructuring expenses
related to the acquisition of IDP.
The ratio of earnings to fixed charges was adversely impacted in the first
quarter of 2001 by the normal seasonal softness in the engineered pump business
and integration costs associated with the acquisition of IDP. For the three
months ended March 31, 2001, additional earnings of $13.3 million would have
been required to provide a one-to-one coverage ratio during the period. The
ratio of earnings to fixed charges was 1.2, excluding IDP integration expenses,
for the three months ended March 31, 2001.
Because we do not have any preferred stock outstanding, our ratio of
earnings to fixed charges and preferred stock dividends was the same as our
ratio of earnings to fixed charges.
DESCRIPTION OF DEBT SECURITIES AND GUARANTEES
The following is a summary of certain general terms and provisions of the
indenture and is not complete. The particular terms of any series of debt
securities we may offer, including the extent to which the general terms and
provisions may apply to that series of debt securities, will be described in a
prospectus supplement relating to those debt securities.
We may issue debt securities from time to time in one or more series. Any
series of debt securities offered by us may be offered together with the
unconditional guarantee of one or more of Flowserve US Inc., Flowserve
International, Inc., Flowserve Holdings, Inc., BW/IP-New Mexico, Inc.,
Ingersoll-Dresser Pump Company, Flowserve International L.L.C., Flowserve
Management Company, CFM-V.R. Tesco Inc., Flowserve International Limited and
Flowserve Finance B.V. (collectively, the "guarantors").
Debt securities may be issued under one or more indentures between
Flowserve, the guarantors and one or more trustees named in the prospectus
supplement (collectively, the "Trustee"). A copy of the form of the indenture is
filed as an exhibit to the registration statement. You should read all of the
provisions of the indenture, including the definitions contained in the
indenture which are not otherwise defined in this prospectus, and the applicable
prospectus supplement. Wherever we refer to particular
10
provisions or defined terms of the indenture, these provisions or defined terms
are incorporated in this prospectus by reference.
General
The debt securities will be our general obligations and may be subordinated
to "senior indebtedness" we have or may incur. The prospectus supplement will
define senior indebtedness and describe the terms of any subordination. Any, or
all of, the guarantors may unconditionally guarantee the payment of the
principal, premium, if any, and interest on the debt securities when due and
payable, whether by acceleration, required repurchase, call for redemption or
otherwise. See "--Guarantees." The prospectus supplement will define the
relative priority of any guarantees. The indenture does not limit the aggregate
principal amount of debt securities which may be issued under it. Debt
securities may be issued under the indenture from time to time in one or more
series.
The applicable prospectus supplement will describe, among other things, the
following terms, to the extent they are applicable to that series of debt
securities:
o the title of the debt securities of the series;
o any limit upon the aggregate principal amount of the debt securities
of the series that may be authenticated and delivered under the
indenture;
o the date or dates on which the principal and premium of the debt
securities of the series are payable;
o the rate or rates (which may be fixed or variable) at which the debt
securities of the series shall bear interest, if any, or the method
of determining such rate or rates, the date or dates from which such
interest, if any, shall accrue, the interest payment dates on which
such interest, if any, shall be payable or the method by which such
dates will be determined, the record dates for the determination of
holders thereof to whom such interest is payable (in the case of
debt securities in registered form), and the basis upon which such
interest will be calculated if other than that of a 360-day year of
twelve 30-day months;
o the currency or currencies, including composite currencies in which
debt securities of the series shall be denominated, if other than
U.S. dollars, the place or places, if any, in addition to or instead
of the corporate trust office of the trustee (in the case of debt
securities in registered form) or the principal New York office of
the trustee (in the case of debt securities in bearer form), where
the principal, premium and interest with respect to debt securities
of such series shall be payable or the method of such payment, if by
wire transfer, mail or other means;
o the price or prices at which, the period or periods within which,
and the terms and conditions upon which, debt securities of the
series may be redeemed, in whole or in part at our option or
otherwise;
o whether debt securities of the series are to be issued in registered
form or bearer form or both and, if debt securities are to be issued
in bearer form, whether coupons will be attached to them, whether
debt securities of the series in bearer form may be exchanged for
debt securities of the series issued in registered form, and the
circumstances under which and the places at which any such
exchanges, if permitted, may be made;
11
o if any debt securities of the series are to be issued in bearer form
or as one or more global securities representing individual debt
securities of the series in bearer form, whether certain provisions
for the payment of additional interest or tax redemptions shall
apply; whether interest with respect to any portion of a temporary
debt security of the series in bearer form payable with respect to
any interest payment date prior to the exchange of such temporary
debt security in bearer form for definitive debt securities of the
series in bearer form shall be paid to any clearing organization
with respect to the portion of such temporary debt security in
bearer form held for its account and, in such event, the terms and
conditions (including any certification requirements) upon which any
such interest payment received by a clearing organization will be
credited to the persons entitled to interest payable on such
interest payment date; and the terms upon which a temporary debt
security in bearer form may be exchanged for one or more definitive
debt securities of the series in bearer form;
o our obligation, if any, to redeem, purchase or repay the debt
securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a holder of such debt securities and
the price or prices at which, the period or periods within which,
and the terms and conditions upon which, debt securities of the
series shall be redeemed, purchased or repaid, in whole or in part,
pursuant to such obligations;
o the terms, if any, upon which the debt securities of the series may
be convertible into or exchanged for any of our common stock,
preferred stock, other debt securities or warrants for common stock,
preferred stock or other securities of any kind and the terms and
conditions upon which such conversion or exchange shall be effected,
including the initial conversion or exchange price or rate, the
conversion or exchange period and any other additional provisions;
o if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which the debt securities of the
series shall be issuable;
o if the amount of principal, premium or interest with respect to the
debt securities of the series may be determined with reference to an
index or pursuant to a formula, the manner in which such amounts
will be determined;
o if the principal amount payable at the stated maturity of debt
securities of the series will not be determinable as of any one or
more dates prior to such stated maturity, the amount that will be
deemed to be such principal amount as of any such date for any
purpose, including the principal amount thereof which will be due
and payable upon any maturity other than the stated maturity and
which will be deemed to be outstanding as of any such date (or, in
any such case, the manner in which such deemed principal amount is
to be determined), and if necessary, the manner of determining the
equivalent thereof in U.S. currency;
o any changes or additions to the indenture dealing with defeasance;
o if other than the principal amount thereof, the portion of the
principal amount of the debt securities of the series that shall be
payable upon declaration of acceleration of the maturity thereof or
provable in bankruptcy;
o the terms, if any, of the transfer, mortgage, pledge or assignment
as security for the debt securities of the series of any properties,
assets, moneys, proceeds, securities or other collateral, including
whether certain provisions of the Trust Indenture Act of 1939, as
12
o amended, are applicable and any corresponding changes to provisions
of the indenture as then in effect;
o any addition to or change in the events of default with respect to
the debt securities of the series and any change in the right of the
trustee or the holders to declare the principal amount of, premium,
if any, and interest, with respect to such debt securities due and
payable;
o if the debt securities of the series shall be issued in whole or in
part in the form of a global security, the terms and conditions, if
any, upon which such global security may be exchanged in whole or in
part for other individual debt securities in definitive registered
form, the depositary (as defined in the applicable prospectus
supplement) for such global security and the form of any legend or
legends to be borne by any such global security in addition to or in
lieu of the legend referred to in the indenture;
o any trustee, authenticating agent, paying agent, transfer agent,
service agent or registrar;
o the applicability of, and any addition to or change in, the
covenants (and the related definitions) set forth in the indenture
or in the terms then set forth in the indenture relating to
permitted consolidations, mergers, or sales of assets;
o the names, if any, of the subsidiary guarantors and the terms of the
subsidiary guarantees, including any provisions related to their
subordination;
o the subordination, if any, of the debt securities of the series
pursuant to the indenture and any corresponding changes to the
provisions of the indenture as then in effect;
o with regard to debt securities of the series that do not bear
interest, the dates for certain required reports to the trustee;
o any U.S. Federal income tax consequences applicable to the debt
securities of the series;
o the terms applicable to original issue discount securities,
including the rate or rates at which original issue discount will
accrue; and
o any other terms of debt securities of the series (which terms shall
not be prohibited by the provisions of the indenture).
Debt securities of a series may be issued in registered form or bearer
form or both as specified in the terms of the series, may be issued in whole
or in part in the form of one or more global securities and may be issued as
book-entry securities that will be deposited with, or on behalf of a
depositary named by us and identified in a prospectus supplement with respect
to such series. The prospectus supplement will specify whether the offered
debt securities will be registered, bearer, global or book-entry form.
GUARANTEES
In connection with an offering of a particular series of debt securities,
the prospectus supplement relating to such debt securities will specify
whether any guarantors are providing guarantees with respect
to such series of debt securities. In such event, each of the guarantors that
are providing guarantees, as primary obligors and not merely as sureties, will
fully, irrevocably and unconditionally guarantee to each holder of debt
securities of such series, and to the trustee on behalf of the holders, (i) the
due and punctual payment of principal of, premium, if any, on and interest on
the debt securities when due and payable,
13
whether by acceleration, required repurchase, redemption or otherwise, the due
and punctual payment of interest on the overdue principal of and interest, if
any, on the debt securities, to the extent lawful, and the due and punctual
performance of all other obligations of Flowserve to the holders and the
trustee, in accordance with the terms of the debt securities of such series
and the indenture and (ii) in the case of any extension of time of payment or
renewal of any debt security of such series or any of such other obligations,
that the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, by acceleration,
required repurchase, redemption or otherwise.
The obligations of any guarantor under its guarantee may be limited as
necessary to prevent that guarantee from constituting a fraudulent conveyance
under applicable law.
Unless otherwise specified in the applicable prospectus supplement, the
guarantee of a guarantor will be released:
(1) upon the sale or other disposition (including by way of
consolidation or merger) of a guarantor; or
(2) upon the sale or disposition of all or substantially all the assets
of a guarantor;
other than to Flowserve or a subsidiary of Flowserve and as permitted by the
indenture.
GLOBAL SECURITIES
The debt securities of a series may be issued in whole or in part in the
form of one or more global debt securities. A global security is a security,
typically held by a depositary, that represents and is denominated in an amount
equal to the aggregate principal amount of all outstanding debt securities of a
series or any portion thereof, in either case having the same original issue
date, date or dates on which principal and interest are due, and interest rate
or method of determining interest. Any global debt securities will be deposited
with, or on behalf of, a depositary or its nominee, which will be identified in
the applicable prospectus supplement. Global securities may be issued in either
registered or bearer form and in either temporary or definitive form.
Unless and until a global security is exchanged in whole or in part for the
individual debt securities represented thereby, a global security may not be
transferred except as a whole:
o by the depositary for the global security to a nominee for the
depository;
o by a nominee of the depositary to the depositary or to another
nominee of the depositary; or
o by the depositary or its nominee to a successor depositary or a
nominee of a successor depositary.
The prospectus supplement relating to a particular series of debt
securities which may be so issued hereunder, will describe the specific terms of
the depositary arrangement with respect to a series of debt securities. We
anticipate that the following provisions will generally apply to all depositary
arrangements for debt securities:
o ownership of beneficial interests in a global security will be
limited to persons that have accounts with the depositary for the
global security (each a "participant" and, collectively, the
"participants") or persons holding interests through the
participants;
14
o after the issuer of a series of debt securities issues the
registered global security for the series, the depositary will
credit, on its book-entry registration and transfer system, the
participants' accounts in an amount equal to the respective
principal amounts of the debt securities of that series represented
by the global security beneficially owned by the participants;
o the underwriters, agents or dealers participating in the
distribution of the debt securities will designate the accounts to
be credited unless such debt securities are offered by us or through
our agents, in which case we will designate the accounts to be
credited;
o only a participant or a person that may hold an interest through a
participant may be the beneficial owner of a global security; and
o ownership of beneficial interests in the global security will be
shown on, and the transfer of that ownership interest will be
effected only through, records maintained by the depositary for the
global security for interests of the participants, and on the
records of the participants for interests of persons holding through
the participants.
The laws of some states may require that specified purchasers of securities
take physical delivery of the securities in definitive form. These laws may
limit the ability of those persons to own, transfer or pledge beneficial
interests in global securities.
So long as the depositary for a global security, or its nominee, is the
registered owner of the global security, the depositary or its nominee, as the
case may be, will be considered the sole owner or holder of the debt securities
represented by the global security for all purposes under the indenture. Except
as stated below, owners of beneficial interests in a global security:
o will not be entitled to have the debt securities represented by a
registered global security registered in their names;
o will not receive or be entitled to receive physical delivery of the
debt securities in definitive form; and
o will not be considered the owners or holders of the debt securities
under the indenture.
Accordingly, each person owning a beneficial interest in a registered
global security must rely on the procedures of the depositary for the
registered global security and, if the person is not a participant, on the
procedures of the participant through which the person owns its interests, to
exercise any rights of a holder under the indenture applicable to the
registered global security.
We understand that, under existing industry practices, if we request any
action of holders, or if an owner of a beneficial interest in a registered
global security desires to give or take any action which a holder is entitled
to give or take under the indenture, the depositary for the registered global
security would authorize the participants holding the relevant beneficial
interests to give or take the action, and the participants would authorize
beneficial owners owning through the participants to give or take the action
or would otherwise act upon the instructions of beneficial owners holding
through them.
Subject to the restrictions applicable to bearer securities described in
the applicable prospectus supplement (See "--Limitations on Issuance of Bearer
Securities"), principal, premium, if any, and interest payments on individual
debt securities represented by a global security will be made to the
depositary or its nominee, as the case may be, as the registered owner or
holder of such global security. Neither we, the trustee, or any registrar or
paying agent nor any other agent of any of us will be responsible or liable
for any aspect of the records relating to, or payments made on account of,
beneficial
15
ownership interests in the global security for the series or for maintaining,
supervising or reviewing any records relating to the beneficial ownership
interests.
We expect that the depositary for any such debt securities represented by
a global security, upon receipt of any payment of principal, premium, if any,
or interest in respect of the global security, will immediately credit
participants accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the global security
as shown on the depositary's records. We also expect that payments by
participants to owners of beneficial interests in a global security held
through the participants will be governed by standing customer instructions
and customary practices, as is now the case with the securities held for the
accounts of customers and registered in "street name." Such payments will be
the responsibility of the participants. Receipt by owners of beneficial
interests in a temporary global security of payments of principal, premium or
interest with respect thereto will be subject to the restrictions described in
an applicable prospectus supplement (see "--Limitations on Issuance of Bearer
Securities" below).
If the depositary for any debt securities represented by a global
security is at any time unwilling or unable to continue as depositary or
ceases to be a clearing agency registered under the Securities Exchange Act of
1934, we will appoint an eligible successor depositary. If we fail to appoint
an eligible successor depositary within 90 days, individual debt securities of
such series will be issued in exchange for the global security. In addition,
we may at any time and in our sole discretion determine not to have any debt
securities of a series represented by one or more global securities. In that
event, individual debt securities of such series will be issued in exchange
for the global security representing such series debt securities. Furthermore,
if we so specify with respect to the debt securities of a series, an owner of
a beneficial interest in a global security representing debt securities of
such series may, on terms acceptable to us, the trustee, and the depositary
for such global security, receive individual debt securities of such series in
exchange for such beneficial interests, subject to any limitations described
in the prospectus supplement relating to such debt securities. In any such
instance, an owner of a beneficial interest in a global security will be
entitled to physical delivery of individual debt securities of the series
represented by such global security equal in principal amount to such
beneficial interest and to have such debt securities registered in its name
(if the debt securities are issuable as registered securities). Individual
debt securities of such series so issued will be issued (a) as registered
securities in denominations, unless otherwise specified by us, of $1,000 and
integral multiples thereof if the debt securities are issuable as registered
securities, (b) as bearer securities in the denomination or denominations
specified by us if the debt securities are issuable as bearer securities or
(c) as either registered securities or bearer securities as described above if
the debt securities are issuable in either form.
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
The debt securities of a series may be issued as registered securities
(which will be registered as to principal and interest in the register
maintained by the registrar for such debt securities) or bearer securities
(which will be transferable only by delivery). If such debt securities are
issuable as bearer securities, the applicable prospectus supplement will
describe certain special limitations and considerations that will apply to
such debt securities.
COVENANTS
If debt securities are issued, the indenture, as supplemented for a
particular series of debt securities, will contain certain covenants for the
benefit of the holders of such series of debt securities, which will be
applicable (unless waived or amended) so long as any of the debt securities of
such series are outstanding, unless stated otherwise in the prospectus
supplement. The specific terms of the covenants, and summaries thereof, will
be set forth in the prospectus supplement relating to such series of debt
securities.
16
MERGERS AND SALES OF ASSETS
The indenture provides that Flowserve may not consolidate with or merge
into any other person or convey, transfer or lease all or substantially all of
its properties and assets to another person, unless among other items: (i) the
resulting, surviving or transferee person (if other than the relevant issuer)
is organized and existing under the laws of the United States, any state
thereof or the District of Columbia and such person expressly assumes, by
supplemental indenture, all obligations of the relevant issuer under the
indenture and either the debt securities or the guarantees, as the case may
be; (ii) Flowserve or such successor person shall not immediately thereafter
be in default under the indenture and either the debt securities or the
guarantees, as the case may be; and (iii) Flowserve shall have provided the
trustee with an opinion of counsel and officer's certificate confirming
compliance with the indenture. Upon the assumption of the obligations of
Flowserve by such a person in such circumstances, subject to certain
exceptions, Flowserve shall be discharged from all obligations under all debt
securities and the indenture (except in the case of a lease).
SUBORDINATION
Debt securities of a series, and any guarantees, may be subordinated
("subordinated debt securities") to senior indebtedness (as defined in the
applicable prospectus supplement) to the extent set forth in the prospectus
supplement relating thereto. We conduct substantially all of our operations
through subsidiaries, and the holders of debt securities (whether or not
subordinated debt securities) will be structurally subordinated to the
creditors of our subsidiaries except to the extent such subsidiary is a
guarantor of such series of debt securities.
EVENTS OF DEFAULT
Each of the following constitutes an event of default under the form of
indenture with respect to any series of debt securities which may be issued,
except as may be specified in the prospectus supplement:
1. default for 30 days in the payment of interest when due on the debt
securities;
2. default in the payment of principal or premium, if any, when due on
the debt securities;
3. our failure to comply with the obligations described under
"--Mergers and Sales of Assets" above;
4. our failure to comply for 30 days after notice with any of the
obligations in the covenants set forth in the prospectus supplement;
5. our failure or failure of any guarantor to comply for 60 days after
notice with other agreements contained in the indenture or any
supplemental indenture relating to that series of debt securities;
6. indebtedness (as defined) of us, a guarantor or any significant
subsidiary (as defined), is not paid within the applicable grace
period after final maturity or is accelerated by the holders of such
indebtedness because of a default and the total amount of such
indebtedness unpaid or accelerated exceeds $10.0 million;
7. certain events of bankruptcy, insolvency or reorganization affecting
us;
8. any judgment for the payment of money the uninsured amount of which
is in excess of $10.0 million is entered against us, a guarantor or
a significant subsidiary (as defined) and remains outstanding for a
period of 60 days;
17
9. a guarantee ceases to be in full force and effect in any material
respect (other than in accordance with the terms of the applicable
indenture) or a guarantor denies or disaffirms its obligations under
its guarantee; and
10. any other event of default provided with respect to that series of
debt securities.
A prospectus supplement may omit, modify or add to the foregoing events of
default.
However, a default under clauses (4), (5) and (8) will not constitute an
event of default until the trustee or the holders of 25% in principal amount of
the outstanding debt securities notify us of the default and we do not cure such
default within the time specified after receipt of such notice.
If an event of default (other than certain events of bankruptcy, insolvency
or reorganization) occurs and is continuing, the trustee or the holders of at
least 25% in aggregate principal amount of the outstanding applicable series of
debt securities may declare the principal of and accrued but unpaid interest on
all the applicable debt securities to be due and payable. Upon such a
declaration, such principal of (or, in the case of original issue discount debt
securities, the portion thereby specified in the terms thereof), premium, if
any, and accrued interest shall be due and payable immediately. In the case that
certain events of bankruptcy, insolvency or reorganization occur and are
continuing, the principal of (or, in the case of original issue discount debt
securities, the portion thereby specified in the terms thereof), premium, if
any, and accrued interest on all the applicable debt securities will
automatically become and be immediately due and payable without any declaration
or other act on the part of the trustee or any holders of such debt securities.
Subject to the provisions of the indenture relating to the duties of the
trustee, in case an event of default occurs and be continuing, the trustee is
under no obligation to exercise any of the rights or powers under the
indenture at the request or direction of any of the holders of the applicable
debt securities unless such holders have offered to the trustee indemnity or
security satisfactory to it against any loss, liability or expense. Except to
enforce the right to receive payment of principal, premium, if any, or
interest when due, no holder of a debt security may pursue any remedy with
respect to the indenture or debt securities unless:
1. such holder has previously given the trustee written notice that an
event of default is continuing with respect to such series of debt
securities;
2. holders of at least 25% in aggregate principal amount of the
outstanding debt securities of the applicable series have made a
written request to the trustee to pursue the remedy;
3. such holders have offered the trustee security or indemnity
satisfactory to it against any loss, liability or expense;
4. the trustee has not complied with such request within 60 days after
the receipt thereof and the offer of security or indemnity; and
5. holders of a majority in aggregate principal amount of the
outstanding debt securities of such series have not given the
trustee a direction inconsistent with such request within such
60-day period.
Subject to certain restrictions, the holders of a majority in principal
amount of the outstanding debt securities of such series are given the right
under the indenture to direct the time, method and place of conducting any
proceeding for any remedy available to the trustee or of exercising any trust or
power conferred on the trustee. The trustee, however, may refuse to follow any
direction that conflicts with law
18
or the indenture or that the trustee determines is unduly prejudicial to the
rights of any other holder of such series of debt securities or that would
involve the trustee in personal liability.
If a default with respect to a series of debt securities occurs, is
continuing and is known to the trustee, such trustee must mail to each holder
of such debt securities notice of the default within 90 days after it occurs.
Except in the case of a default in the payment of principal, premium, if any,
or interest on any debt security, the trustee may withhold notice if and so
long as a committee of its trust officers in good faith determines that
withholding notice is in the interests of the holders of the debt securities.
In addition, we are required to deliver to each trustee, within 120 days after
the end of each fiscal year, a certificate indicating whether the signers
thereof know of any default under the related indenture that occurred during
the previous year.
Modification of the Indenture
We and the trustee may enter into supplemental indentures without the
consent of the holders of debt securities for one or more of the following
purposes:
(a) to evidence the succession of another person to us pursuant to the
provisions of the indenture relating to consolidations, mergers and
sales of assets and the assumption by such successor of our
covenants, agreements and obligations in the indenture and in the
debt securities;
(b) to surrender any right or power conferred upon us by the indenture,
to add to our covenants such further covenants, restrictions,
conditions or provisions for the protection of the holders of all or
any series of debt securities as our board of directors shall
consider to be for the protection of the holders of such debt
securities, and to make the occurrence, or the occurrence and
continuance, of a default in any of such additional covenants,
restrictions, conditions or provisions a default or an event of
default under the indenture (provided, however, that with respect to
any such additional covenant, restriction, condition or provision,
such supplemental indenture may provide for a period of grace after
default, which may be shorter or longer than that allowed in the
case of other defaults, may provide for an immediate enforcement
upon such default, may limit the remedies available to the trustee
upon such default or may limit the right of holders of a majority in
aggregate principal amount of any or all series of debt securities
to waive such default);
(c) to cure any ambiguity or correct or supplement any provision
contained in the indenture, in any supplemental indenture or in any
debt securities that may be effective or inconsistent with any other
provision contained therein, to convey, transfer, assign, mortgage
or pledge any property to or with the trustee, or to make such other
provisions in regard to matters or questions arising under the
indenture as shall not adversely affect the interests of any holders
of debt securities of any series;
(d) to modify or amend the indenture in such a manner as to permit the
qualification of the indenture or any supplemental indenture under
the Trust Indenture Act as then in effect;
(e) to add or change any of the provisions of the indenture to provide
that bearer securities may be registerable as to principal, to
change or eliminate any restrictions on the payment of principal or
premium with respect to registered securities or of principal,
premium or interest with respect to bearer securities, or to permit
registered securities to be exchanged for bearer securities, so as
to not adversely affect the interests of the holders of debt
securities or any coupons of any series in any material respect or
permit or facilitate the issuance of debt securities of any series
in uncertificated form;
(f) to comply with the provisions of the indenture relating to
consolidations, mergers and sales of assets;
19
(g) in the case of subordinated debt securities, to make any change in
the provisions of the indenture relating to subordination that would
limit or terminate the benefits available to any holder of senior
indebtedness under such provision (but only if each such holder of
senior indebtedness consents to such change);
(h) to add guarantees with respect to the debt securities or to secure
the debt securities;
(i) to make any change that does not adversely affect the rights of any
holder;
(j) to add to, change, or eliminate any of the provisions of the
indenture with respect to one or more series of debt securities, so
long as any such addition, change or elimination not otherwise
permitted under the indenture shall (1) neither apply to any debt
security of any series created prior to the execution of such
supplemental indenture and entitled to the benefit of such provision
nor modify the rights of the holders of any such debt security with
respect to such provision or (2) become effective only when there is
no such debt security outstanding;
(k) to evidence and provide for the acceptance of appointment by a
successor or separate trustee with respect to the debt securities of
one or more series and to add to or change any of the provisions of
the indenture as shall be necessary to provide for or facilitate the
administration of the indenture by more than one trustee; and
(l) to establish the form or terms of debt securities and coupons of any
series, as described under "--General" above.
With the consent of the holders of a majority in aggregate principal
amount of the outstanding debt securities of each series affected thereby, we
and the trustee may from time to time and at any time enter into a
supplemental indenture for the purpose of adding any provisions to, changing
in any manner or eliminating any of the provisions of the indenture or of any
supplemental indenture or modifying in any manner the rights of the holder of
the debt securities of such series; provided, however, that without the
consent of the holders of each debt security so affected, no such supplemental
indenture shall (a) reduce the percentage in principal amount of debt
securities of any series whose holders must consent to an amendment, (b)
reduce the rate of or extend the time for payment of interest on any debt
security or coupon or reduce the amount of any payment to be made with respect
to any coupon, (c) reduce the principal of or extend the stated maturity of
any debt security, (d) reduce the premium payable upon the redemption of any
debt security or change the time at which any debt security may or shall be
redeemed, (e) make any debt security payable in a currency other than that
stated in the debt security, (f) in the case of any subordinated debt security
or coupons appertaining thereto, make any change in the provisions of the
indenture relating to subordination that adversely affects the rights of any
holder under such provision, (g) release any security that may have been
granted with respect to the debt securities, (h) make any change in the
provisions of the indenture relating to waivers of defaults or amendments that
require unanimous consent, (i) change any obligation of ours provided for in
the indenture to pay additional interest with respect to bearer securities or
(j) limit our obligation to maintain a paying agency outside the United States
for payment on bearer securities or limit our obligation to redeem certain
bearer securities.
SATISFACTION AND DISCHARGE OF THE INDENTURE; DEFEASANCE
Unless otherwise provided in the prospectus supplement, the indenture
shall cease to be of any further effect with respect to a series of debt
securities if (a) we have delivered to the trustee for cancellation all debt
securities of such series (with certain limited exceptions) or (b) all debt
securities of such series not theretofore delivered to the trustee for
cancellation shall have become due and payable, or are by their terms to
become due and payable within one year or are to be called for redemption
within one year, and we shall have deposited with the trustee as trust funds
the entire amount sufficient to pay at maturity or
20
upon redemption all such debt securities and coupons (and if, in either case,
we shall also pay or cause to be paid all other sums payable under the
indenture by us).
In addition, we shall have a "legal defeasance option" (pursuant to which
we may terminate, with respect to the debt securities of a particular series,
all of our obligations under such debt securities, the indenture and the
applicable indenture supplement with respect to such debt securities) and a
"covenant defeasance option" (pursuant to which we may terminate, with respect
to the debt securities of a particular series, our obligations with respect to
such debt securities under certain specified covenants contained in the
indenture). If we exercise our legal defeasance option with respect to a
series of debt securities, payment of such debt securities may not be
accelerated because of an event of default. If we exercise our covenant
defeasance option with respect to a series of debt securities, payment of such
debt securities may not be accelerated because of an event of default related
to the specified covenants.
The applicable prospectus supplement will describe the procedures we must
follow in order to exercise our defeasance options.
REGARDING THE TRUSTEE
The indenture provides that, except during the continuance of an event of
default, the trustee will perform only such duties as are specifically set forth
in the indenture. During the existence of an event of default, the trustee will
exercise such rights and powers vested in it under the indenture the use the
same degree of care and skill in its exercise as a prudent person would exercise
under the circumstances in the conduct of such person's own affairs.
The indenture and provisions of the Trust Indenture Act that are
incorporated by reference therein contain limitations on the rights of the
trustee, should it become one of our creditors, to obtain payment of claims in
certain cases or to realize on certain property received by it in respect of any
such claim as security or otherwise. The trustee is permitted to engage in other
transactions with us or any of our affiliates; provided, however, that if it
acquires any conflicting interest (as defined in the indenture or in the Trust
Indenture Act), it must eliminate such conflict or resign.
GOVERNING LAW
The indenture, the debt securities and the guarantees will be governed by
the laws of the State of New York without reference to principles of conflicts
of law thereunder.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 120,000,000 shares of common
stock, par value $1.25 per share, and 1,000,000 shares of preferred stock, par
value $1.00 per share. As of May 1, 2001, we had outstanding 37,967,468 shares
of common stock and no shares of preferred stock. Our common stock is listed on
the New York Stock Exchange under the symbol "FLS."
COMMON STOCK
Subject to any special voting rights of any preferred stock that we may
issue in the future, each share of common stock has one vote on all matters
voted on by our stockholders, including election of our directors. No share of
common stock affords any cumulative voting or preemptive rights. Holders of
common stock will be entitled to dividends in the amounts and at the times
declared by our board of directors, after payment of any dividends on any
outstanding preferred stock and subject to limitations for dividends contained
in certain of Flowserve's outstanding debt instruments. No dividends are
currently paid to holders of the common stock.
21
Holders of common stock will share equally in our assets on liquidation
after payment or provision for all liabilities and any preferential liquidation
rights of any preferred stock then outstanding. All issued and outstanding
shares of common stock are fully paid and non-assessable and are not subject to
redemption or conversion and have no conversion rights.
The transfer agent for our common stock is National City Bank, in
Cleveland, Ohio.
PREFERRED STOCK
At the direction of our board of directors, we may issue shares of
preferred stock from time to time. Our board of directors may, without any
action by holders of the common stock, adopt resolutions to issue preferred
stock in one or more series and establish or change the rights of the holders of
any series of preferred stock.
The rights of any series of preferred stock may include:
o voting rights;
o liquidation preferences;
o dividend rights;
o redemption rights;
o conversion or exchange rights; and
o sinking funds.
The issuance of such preferred stock could, among other things:
o adversely affect the voting, dividend, and liquidation rights with
respect to the common stock;
o discourage an unsolicited proposal to acquire us; or
o facilitate a particular business combination involving us.
Any of these actions, plus those which follow in the remainder of this
"Description of Capital Stock" section, could discourage a transaction that
some or a majority of our stockholders might believe to be in their best
interests or in which our stockholders might receive a premium for their stock
over its then market price.
FLOWSERVE RIGHTS PLAN; SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
In August 1986, Flowserve's board of directors adopted a rights
agreement. Under this agreement, one preferred stock purchase right was
distributed in August 1986 with respect to each outstanding share of Flowserve
common stock. The rights agreement provides that, unless the rights have been
redeemed, one right will be granted for each additional share of Flowserve
common stock issued after August 1986 and prior to the earlier of the time the
rights become exercisable or August 13, 2006, the termination date of the
rights agreement.
The rights are not currently exercisable and trade in tandem with the
common stock. The rights become exercisable and trade separately from the
common stock ten days after a person or group acquires 20% or more of the
outstanding shares of common stock or commences a tender offer which would
result in the ownership of 30% or more of the outstanding shares of common
stock. Upon their becoming exercisable, each right entitles the registered
holder to purchase a fraction of a share of Series A Junior Participating
Preferred Stock. Generally, each share of Series A Junior Participating
Preferred Stock carries voting, dividend and liquidation rights equal to 100
shares of common stock. The rights provide that if Flowserve were to be
acquired in a merger or business combination after the rights become
exercisable, each right may be exercised to purchase common stock of the
acquiring company at a 50% discount. In addition, if a 20% shareholder
(determined as provided in the rights agreement) either
22
acquires by means of a reverse merger in which Flowserve survives or engages
in certain other transactions with Flowserve, each right (other than rights
held by the 20% shareholder) may be exercised to purchase shares of Series A
Junior Participating Preferred Stock at a price equal to 50% of the market
value of the shares. The rights are redeemable by Flowserve at any time prior
to becoming exercisable and will expire on August 13, 2006.
The summary description of the rights set forth above does not purport to
be complete and is qualified in its entirety by reference to the rights
agreement.
CERTAIN ANTI-TAKEOVER PROVISIONS
Under the Certificate of Incorporation of Flowserve, as amended, the
board of directors is divided into three classes of directors serving
staggered terms of three years each. Each class is to be as nearly equal in
number as possible, with one class being elected each year. The Certificate of
Incorporation, as amended, also provides that:
o directors may be removed from office only for cause and only with the
affirmative vote of two-thirds of the voting power of the voting
stock;
o any vacancy on the board of directors or any newly created
directorship will be filled by the remaining directors then in office,
though less than a quorum; and
o advance notice of not less than fifty days of shareholder nominations
for the elections of directors must be given in the manner provided by
the By-Laws of Flowserve.
Under the New York Business Corporation Law (NYBCL), the "merger
moratorium" statute would prohibit any business combination with an "interested
shareholder" (as defined in the statute) for a five year period, unless the
combination is approved by the Flowserve board of directors. In addition,
amendments which make changes relating to the capital stock by increasing or
decreasing the par value or the aggregate number of authorized shares of a
class, or otherwise adversely affecting the rights of such class, must be
approved by the majority vote of each class or series of stock affected, even if
such stock would not otherwise have such voting rights. The Flowserve
Certificate of Incorporation additionally requires (i) a four-fifths vote of the
outstanding stock of Flowserve entitled to vote thereon to amend certain
provisions in the Flowserve Certificate restricting transactions with a Related
Corporation (as defined therein) and (ii) a two-thirds vote to amend certain
provisions in the Flowserve Certificate and Flowserve Corporation By-laws
relating to the Flowserve Corporation board of directors.
The noted merger moratorium statute and the noted required supermajority
shareholder vote necessary to alter, amend or repeal these provisions of the
Flowserve Certificate of Incorporation, as amended, the related amendments to
the By-laws and all other provisions of the By-laws, or to adopt any provisions
relating to the classification of the board of directors and the other matters
described above may make it more difficult to change the composition of the
board of directors of Flowserve and may discourage or make difficult any attempt
by a person or group to obtain control of Flowserve.
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PLAN OF DISTRIBUTION
The securities may be distributed under this prospectus from time to time
in one or more transactions:
o at a fixed price or prices, which may be changed;
o at market prices prevailing at the time of sale;
o at prices related to prevailing market prices; or
o at negotiated prices.
Each time we sell securities, we will describe the method of distribution
of the securities in the prospectus supplement relating to the transaction.
We may offer and sell securities to which this prospectus relates in any
one or more of the following ways:
o through underwriters or dealers;
o through agents;
o directly to purchasers; or
o through a combination of such methods of sale.
Each time we sell securities, we will provide a prospectus supplement that
will name any underwriter, dealer or agent involved in the offer and sale of the
securities. The prospectus supplement will also set forth the terms of the
offering, including the purchase price of the securities and the proceeds we
will receive from the sale of the securities, any underwriting discounts and
other items constituting underwriters' compensation, public offering or purchase
price and any discounts or commissions allowed or paid to dealers, any
commissions allowed or paid to agents and any securities exchanges on which the
securities may be listed. The maximum underwriting commission or discount to
be received by any member of the National Association of Securities Dealers
Inc. ("NASD") or independent broker-dealer will not be greater than 8% for any
sale of securities offered under this prospectus.
If underwriters or dealers are used in the sale, the securities will be
acquired by the underwriters or dealers for their own account and may be resold
from time to time in one or more transactions, at a fixed price or prices, which
may be changed, or at market prices prevailing at the time of sale, or at prices
related to such prevailing market prices, or at negotiated prices. The
securities may be offered to the public either through underwriting syndicates
represented by one or more managing underwriters or directly by one or more of
such firms. Unless otherwise set forth in the prospectus supplement, the
obligations of underwriters or dealers to purchase the securities offered will
be subject to certain conditions precedent and the underwriters or dealers will
be obligated to purchase all the offered securities if any are purchased. Any
public offering price and any discounts or concessions allowed or reallowed or
paid by underwriters or dealers to other dealers may be changed from time to
time.
The securities may be sold directly by us or through agents designated by
us from time to time. Any agent involved in the offer or sale of the securities
in respect of which this prospectus is delivered will be named, and any
commissions payable by us to such agent will be set forth in the prospectus
supplement. Unless otherwise indicated in the prospectus supplement, any such
agent will be acting on a best efforts basis for the period of its appointment.
24
Offers to purchase the securities offered by this prospectus may be
solicited, and sales of the securities may be made, by us of those securities
directly to institutional investors or others, who may be deemed to be
underwriters within the meaning of the Securities Act of 1933 with respect to
any resales of the securities. The terms of any offer made in this manner will
be included in the prospectus supplement relating to the offer.
If indicated in the applicable prospectus supplement, we will authorize
underwriters, dealers or agents to solicit offers by certain institutional
investors to purchase securities from us pursuant to contracts providing for
payment and delivery at a future date. Institutional investors with which these
contracts may be made include, among others:
o commercial and savings banks;
o insurance companies;
o pension funds;
o investment companies; and
o educational and charitable institutions.
In all cases, these purchasers must be approved by us. Unless otherwise set
forth in the applicable prospectus supplement, the obligations of any
purchaser under any of these contracts will not be subject to any conditions
except that (a) the purchase of the securities must not at the time of
delivery be prohibited under the laws of any jurisdiction to which that
purchaser is subject and (b) if the securities are also being sold to
underwriters, we must have sold to these underwriters the securities not
subject to delayed delivery. Underwriters and other agents will not have any
responsibility in respect of the validity or performance of these contracts.
Some of the underwriters, dealers or agents used by us in any offering of
securities under this prospectus may be customers of, engage in transactions
with, and perform services for us in the ordinary course of business.
Underwriters, dealers, agents and other persons may be entitled under
agreements which may be entered into with us to indemnification against and
contribution toward certain civil liabilities, including liabilities under the
Securities Act of 1933 and to be reimbursed by us for certain expenses.
Subject to any restrictions relating to debt securities in bearer form,
any securities initially sold outside the United States may be resold in the
United States through underwriters, dealers or otherwise.
Each series of securities other than common stock will be new issue of
securities with no established trading market. Any underwriters to whom
offered securities are sold by us for public offering and sale may make a
market in such securities, but such underwriters will not be obligated to do
so and may discontinue any market making at any time.
The anticipated date of delivery of the securities offered by this
prospectus will be described in the applicable prospectus supplement relating
to the offering. The securities offered by this prospectus may or may not be
listed on a national securities exchange or a foreign securities exchange. No
assurance can be given as to the liquidity or activity of any trading in the
offered securities.
If more than 10% of the net proceeds of any offering of securities made
under this prospectus will be received by NASD members participating in the
offering or affiliates or associated persons of such NASD members, the
offering will be conducted in accordance with NASD Conduct Rule 2710(c)(8).
25
VALIDITY OF SECURITIES
The validity of the common stock and the preferred stock offered by this
prospectus will be passed upon by Ronald F. Shuff, Vice President, Secretary
and General Counsel of Flowserve Corporation. The validity of the debt
securities offered by this prospectus will be passed upon by Cravath, Swaine &
Moore, New York, New York. Mr. Shuff owns beneficially approximately 63,991
shares of Flowserve's common stock. He holds options to purchase 69,740
additional shares of Flowserve's common stock that were granted to him
pursuant to Flowserve's 1989, 1997 and 1999 stock option plans.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K for the year ended December 31,
2000, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants given on the authority of
said firm as experts in auditing and accounting.
The financial statements of Ingersoll-Dresser Pump Company as of December
31, 1999 and for each of the two years in the period ended December 31, 1999,
incorporated in this Prospectus by reference to the Registration Statement on
Form S-4 (File No. 333-46760) have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The consolidated balance sheet of Flowserve Corporation and subsidiaries
as of December 31, 1999 and the related consolidated statements of income,
comprehensive (loss) income, shareholders' equity and cash flows for each of
the two years in the period then ended, incorporated by reference in Flowserve
Corporation's Annual Report (Form 10-K) for the year ended December 31, 2000,
and the related financial statement schedule included in the Annual Report
(Form 10-K) for the year ended December 31, 2000, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their reports thereon
included or incorporated by reference therein and incorporated herein by
reference. Such consolidated financial statements and schedule are
incorporated herein by reference in reliance upon such reports given on the
authority of such firm as experts in accounting and auditing.
26
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses in connection with the sale and
distribution of the securities being registered (all of which are to be paid by
the registrant). All amounts shown are estimates except for the SEC registration
fee:
Securities and Exchange Commission registration fee .......... $125,000
Legal fees and expenses ..................................... 125,000
Accounting fees and expenses ................................ 30,000
Printing expenses ........................................... 7,500
Transfer Agent and registrant fees .......................... 3,000
Miscellaneous ............................................... 10,000
--------
TOTAL ............................................ $300,500
============
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 722 through 726 of the New York Business Corporation Law (the
"BCL") grant New York corporations broad powers to indemnify their present and
former directors and officers and those of affiliated corporations against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with threatened,
pending or completed actions, suits or proceedings to which they are parties or
are threatened to be made parties by reason of being or having been such
directors or officers, subject to specified conditions and exclusions; give a
director or officer who successfully defends an action the right to be so
indemnified; and permit a corporation to buy directors' and officers' liability
insurance. Such indemnification is not exclusive of any other rights to which
those indemnified may be entitled under any by-laws, agreement, vote of
shareholders or otherwise.
Section 402(b) of the BCL permits a New York corporation to include in its
certificate of incorporation a provision eliminating the potential monetary
liability of a director to the corporation or its stockholders for breach of
fiduciary duty as a director, provided that such provision shall not eliminate
the liability of a director (i) for any breach of the director's duty of loyalty
to the corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) for improper payment of dividends, improper purchase of the shares of the
corporation, improper distribution of assets to shareholders after dissolution
of the corporation and improper making of any loan, or (iv) for any transaction
from which the director receives an improper personal benefit or other
advantage.
Flowserve's Restated Certificate of Incorporation includes the provision
permitted by Section 402(b) of the BCL.
Flowserve's By-laws provide that Flowserve shall indemnify its present or
future directors and officers from and against any and all liabilities and
expenses to the maximum extent permitted by the BCL as the same presently exists
or to the greater extent permitted by any amendment hereafter adopted.
II-1
ITEM 16. EXHIBITS
Exhibit No. Description
- ----------- -----------
1.1 Form of underwriting agreement.
4.1 Specimen common stock certificate.
4.2 Form of indenture.
4.3 Rights Agreement dated as of August 1, 1986 between the Company
and BankOne, N.A., as Rights Agent, which includes as Exhibit B
thereto the Form of Rights Certificate (incorporated herein by
reference to Exhibit 1 to Flowserve Corporation's Registration
Statement on Form 8-A on August 13, 1986).
4.4 Amendment dated August 1, 1996, to Rights Agreement (incorporated
herein by reference to Exhibit 4.5 to Flowserve Corporation's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1996)
4.5 Amendment No. 2 dated as of June 1, 1998, to the Rights Agreement
dated as of August 13, 1986, and amended as of August 1, 1996
(incorporated by reference to Exhibit 1 to Flowserve
Corporation's Registration Statement on Form 8-A/A dated June 1,
1998)
5.1 Opinion of Ronald F. Shuff, Esq.
5.2 Opinion of Cravath, Swaine & Moore.
12.1* Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Ernst & Young LLP.
23.3 Consent of PricewaterhouseCoopers LLP.
23.4 Consent of Ronald F. Shuff, Esq., included in Exhibit 5.1.
23.5 Consent of Cravath, Swaine & Moore, included in Exhibit 5.2.
24.1* Power of Attorney (included in signature page).
25.1 Form T-I Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939.
- ------------
* Previously filed.
II-2
ITEM 17. UNDERTAKINGS
(A) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in this registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of a prospectus filed
with the Securities and Exchange Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration
statement or any material change to such information in this
registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(B) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(C) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission
II-3
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
(D) The undersigned registrant hereby undertakes that:
(1) For the purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was
declared effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
undersigned registrants certify that they have reasonable grounds to believe
that they meet all of the requirements for filing on Form S-3 and have duly
caused this amendment to the registration statement to be signed on their
behalf by the undersigned respectively, thereunto duly authorized, in the City
of Irving, State of Texas on the 2nd day of July, 2001.
FLOWSERVE CORPORATION, as Registrant
By: *
-------------------------------------
Name: C. Scott Greer
Title: Chairman, President and
Chief Executive Officer
FLOWSERVE US INC., as Registrant
By: /s/ JOHN M. NANOS
-------------------------------------
Name: John M. Nanos
Title: Vice President
FLOWSERVE INTERNATIONAL, INC., as Registrant
By: /s/ JOHN M. NANOS
-------------------------------------
Name: John M. Nanos
Title: Vice President
FLOWSERVE HOLDINGS, INC., as Registrant
By: /s/ JOHN M. NANOS
-------------------------------------
Name: John M. Nanos
Title: Vice President
BW/IP-NEW MEXICO, INC., as Registrant
By: /s/ JOHN M. NANOS
-------------------------------------
Name: John M. Nanos
Title: Vice President
INGERSOLL-DRESSER PUMP COMPANY, as Registrant
By: /s/ JOHN M. NANOS
-------------------------------------
Name: John M. Nanos
Title: Member, Management Committee
II-5
FLOWSERVE INTERNATIONAL L.L.C., as Registrant
By: /s/ JOHN M. NANOS
-------------------------------------
Name: John M. Nanos
Title: Vice President
FLOWSERVE MANAGEMENT COMPANY, as Registrant
By: /s/ JOHN M. NANOS
------------------------------------
Name: John M. Nanos
Title: Vice President
CFM-V.R. TESCO INC., as Registrant
By: /s/ JOHN M. NANOS
-------------------------------------
Name: John M. Nanos
Title: Vice President
FLOWSERVE INTERNATIONAL LIMITED, as Registrant
By: /s/ JOHN M. NANOS
-------------------------------------
Name: John M. Nanos
Title: Managing Director
FLOWSERVE FINANCE B.V., as Registrant
By: /s/ JOHN M. NANOS
-------------------------------------
Name: John M. Nanos
Title: Managing Director
II-6
Pursuant to the requirements of the Securities Act of 1933, as amended,
this amendment to the registration statement has been signed below by the
following persons in the capacities indicated on the 2nd day of July, 2001.
Signatures Title
* Chairman, President and Chief Executive
- ------------------------- Officer of Flowserve Corporation (Principal
C. Scott Greer Executive Officer)
* Vice President and Chief Financial Officer
- ------------------------- of Flowserve Corporation (Principal
Renee J. Hornbaker Financial Officer)
* Corporate Controller of Flowserve Corporation
- ------------------------- (Principal Accounting Officer)
Kathleen A. Giddings
* Director, Chairman of Audit/Finance
- ------------------------- Committee of Flowserve Corporation
Diane C. Harris
* Director, Member of Audit/Finance Committee
- ------------------------- of Flowserve Corporation
Charles M. Rampacek
* Director, Member of Audit/Finance Committee
- ------------------------- of Flowserve Corporation
James O. Rollans
* Director, Member of Audit/Finance Committee
- ------------------------- of Flowserve Corporation
William C. Rusnack
*By: /s/ Ronald F. Shuff
---------------------
Ronald F. Shuff
Vice President, Secretary and General Counsel
as Attorney-in-Fact
II-7
Exhibit 1.1
Flowserve Corporation
Debt Securities, Preferred Stock and Common Stock
Underwriting Agreement
Ladies and Gentlemen:
1. Introductory. Flowserve Corporation, a New York corporation (the
"Company") proposes, subject to the terms and conditions stated herein, to
issue and sell to the Underwriters named in a schedule to the Terms Agreement
(as defined in Article 3 below) (the "Underwriters") from time to time certain
of its preferred stock or common stock (the "Offered Equity Securities"). The
Company [if there are Guarantors-- and Flowserve US Inc., Flowserve
International, Inc., Flowserve Holdings, Inc., BW/IP-New Mexico, Inc.,
Ingersoll-Dresser Pump Company, Flowserve International L.L.C., Flowserve
Management Company, CFM-V.R. Tesco Inc., Flowserve International Limited and
Flowserve Finance B.V. (collectively, the "Guarantors")], propose[s], subject
to the terms and conditions stated herein, to issue and sell to the
Underwriters from time to time certain of its debt securities (the "Offered
Debt Securities" and, together with the Offered Equity Securities, the
"Offered Securities"). The representatives of the Underwriters, if any,
specified in a Terms Agreement are hereinafter referred to as the
"Representatives"; provided, however, that if the Terms Agreement does not
specify any representative of the Underwriters, the term "Representatives", as
used in this Agreement, shall mean the Underwriters. If the Offered Securities
are Debt Securities: The Offered Securities will be issued under an indenture,
dated as of ____, ____ (the "Indenture"), between the Company[, the
Guarantors] and a trustee as Trustee, in one or more series, which series may
vary as to interest rates, maturities, redemption provisions, selling prices
and other terms. If the Offered Securities are Preferred Stock: The Offered
Securities may be issued in one or more series, which series may vary as to
dividend rates, redemption provisions, selling prices and other terms.
Particular series or offerings of Offered Securities will be sold pursuant to
a Terms Agreement, for resale in accordance with terms of offering determined
at the time of sale.
2. Representations and Warranties of the Company [and the Guarantors].
The Company [and the Guarantors, jointly and severally,] as of the date of
each Terms Agreement, represent[s] and warrant[s] to, and agree[s] with, each
Underwriter that:
(a) A registration statement (No. 333- ) on Form S-3 relating to the
Offered Securities has been filed with the Securities and Exchange
Commission (the "Commission") and has become effective; and no stop order
suspending the effectiveness of the initial registration statement, any
post-effective amendment thereto or Rule 462(b) registration statement,
if any, has been issued and no
2
proceeding for that purpose has been initiated or threatened by the
Commission. Such registration statement, as amended at the time of any
Terms Agreement, is hereinafter referred to as the "Registration
Statement", and the prospectus included in such Registration Statement,
as supplemented and as contemplated by Section 3 to reflect the terms of
the Offered Securities (if they are debt securities or preferred stock)
and the terms of the offering of the Offered Securities, as first filed
with the Commission pursuant to and in accordance with Rule 424(b) ("Rule
424(b)") under the Securities Act of 1993 (the "Act"), including all
material incorporated by reference therein, is hereinafter referred to as
the "Prospectus";
(b) No order preventing or suspending the use of any preliminary
Prospectus has been issued by the Commission, and each preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations of
the Commission thereunder ("Rules and Regulations"), and did not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and
in conformity with information furnished in writing to the Company by an
Underwriter expressly for use therein;
(c) The Registration Statement conforms and on the date of each
Terms Agreement will conform, and the Prospectus and any further
amendments or supplements to the Registration Statement or the Prospectus
will conform, in all material respects to the requirements of the Act and
the Rules and Regulations and do not and will not, as of the applicable
effective date as to the Registration Statement and any amendment thereto
and as of the applicable date as to the Prospectus and any amendment or
supplement thereto and as of the date of each Terms Agreement, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and
in conformity with information furnished in writing to the Company by an
Underwriter expressly for use therein;
(d) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of New York,
with power and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus; and the Company is
duly qualified to do business as a foreign corporation in good standing
in all other jurisdictions in which its ownership or lease of property or
the conduct of its business requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would
not individually or in the aggregate have a material adverse effect on
the condition (financial or other),
3
business, properties or results of operations of the Company and its
subsidiaries taken as a whole after giving effect to the Acquisition
("Material Adverse Effect");
(e) Each subsidiary of the Company [, including each of the
Guarantors] has been duly organized or incorporated and is an existing
partnership, limited liability company or corporation in good standing
under the laws of the jurisdiction of its organization or incorporation
and has the requisite corporate or similar power and authority to own its
assets and to carry on its business as described in the Prospectus,
except to the extent that the failure to be so qualified or be in good
standing would not individually or in the aggregate have a Material
Adverse Effect; and each subsidiary of the Company is duly qualified to
do business as a foreign partnership, limited liability company or
corporation in good standing in all other jurisdictions in which its
ownership or lease of property or the conduct of its business requires
such qualification, except to the extent that the failure to be so
qualified or be in good standing would not individually or in the
aggregate have a Material Adverse Effect; all of the issued and
outstanding capital stock of each subsidiary of the Company has been duly
authorized and validly issued and is fully paid and nonassessable; and,
except as disclosed in the Prospectus, the capital stock of each
subsidiary owned by the Company, directly or through subsidiaries, is
owned free from liens, encumbrances and defects;
(f) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
nonassessable and conform to the description of the capital stock
contained in the Prospectus;
(g) Except as disclosed in the Prospectus, the Company and its
subsidiaries have good and marketable title to all real properties and
all other properties and assets owned by them, in each case free from
liens, encumbrances and defects that would materially affect the value
thereof or materially interfere with the use made or to be made thereof
by them; and except as disclosed in the Prospectus, the Company and its
subsidiaries hold any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere
with the use made or to be made thereof by them;
(h) None of the subsidiaries of the Company (other than the
subsidiaries designated as "Significant Subsidiaries" under the Terms
Agreement) (collectively, the "Significant Subsidiaries")) is a
"significant subsidiary," as such term is defined in Rule 405 of the
rules and regulations under the Act;
(i) If the Offered Securities are debt securities: The Indenture has
been duly authorized by the Company [and the Guarantors] and on the date
provided by the Terms Agreement will have been duly executed and
delivered by the Company[, the
4
Guarantors] and the Trustee, as applicable, and will constitute a valid
and binding agreement of the Company [and the Guarantors], enforceable
against the Company [and the Guarantors] in accordance with its terms,
except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law);
(j) If the Offered Securities are debt securities: The Offered
Securities have been duly and validly authorized and, when issued and
delivered against payment therefor as provided pursuant to the Terms
Agreement, will be duly and validly executed, authenticated, issued and
delivered and will constitute valid and legally binding obligations of
the Company [and the Guarantors] and will be entitled to the benefits
provided by the Indenture under which they are to be issued, which is
substantially in the form filed as an exhibit to the Registration
Statement. The Indenture has been duly qualified under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act");
(k) If the Offered Securities are common stock: The Offered
Securities to be issued and sold by the Company to the Underwriters
pursuant to the Terms Agreement have been duly and validly authorized
and, when issued and delivered against payment therefor as provided
herein, will be duly and validly issued and fully paid and nonassessable;
and, except as described in the Prospectus, the stockholders of the
Company have no preemptive rights with respect to the Offered Securities;
(l) If the Offered Securities are preferred stock: The Offered
Securities have been duly authorized and, when the Offered Securities
have been delivered and paid for in accordance with the Terms Agreement
on the Closing Date (as defined in Article 3 below), such Offered
Securities will have been validly issued, fully paid and nonassessable;
and, except as described in the Prospectus, the stockholders of the
Company have no preemptive rights with respect to the Offered Securities;
(m) If the Offered Securities are convertible into common stock:
When the Offered Securities are delivered and paid for pursuant to the
Terms Agreement at the Time of Delivery (as defined in Article 3 below),
such Offered Securities will be convertible into common stock of the
Company in accordance with their terms (if the Offered Securities are
preferred stock) or the Indenture (if the Offered Securities are debt
securities); the shares of common stock initially issuable upon
conversion of such Offered Securities have been duly authorized and
reserved for issuance upon such conversion and, when issued upon such
conversion, will be validly issued, fully paid and nonassessable; the
outstanding shares of common stock have been duly authorized and validly
issued, are fully paid and nonassessable; and, except as
5
described in the Prospectus, the stockholders of the Company have no
preemptive rights with respect to the common stock;
(n) The execution, delivery and performance of [If the Offered
Securities are debt securities: the Indenture] [If the Offered Securities
are preferred stock: the certificate of designations (the "Certificate of
Designations")] and the Terms Agreement and the issuance and sale of the
Offered Securities and compliance by the Company [and the Guarantors]
with all of the provisions thereof will not conflict with or result in a
breach or violation of any of the terms or provisions of, or (with the
giving of notice or the lapse of time or both) constitute a default
under, any statute, any rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having jurisdiction
over the Company[, any Guarantor] or any subsidiary of the Company or any
of their properties, or any material agreement or instrument to which the
Company[, any Guarantor] or any such subsidiary is a party or by which
the Company[, any Guarantor] or any such subsidiary is bound or to which
any of the properties of the Company[, any Guarantor] or any such
subsidiary is subject, or the charter or by-laws of the Company[, any
Guarantor] or any such subsidiary, and each of the Company [and the
Guarantors] has full power and authority to consummate the Transactions
and to authorize, issue and sell the Offered Securities as contemplated
by the Terms Agreement (including the provisions of this Agreement);
(o) No consent, approval, authorization, or order of, or filing
with, any governmental agency or body or any court is required for the
consummation of the transactions contemplated by the Terms Agreement
(including the provisions of this Agreement) in connection with the
issuance and sale of the Offered Securities by the Company [and the
Guarantors], except (A) the registration under the Act of the Offered
Securities and (B) such consents, approvals, authorizations,
registrations or qualifications (1) as may be required under the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), the
Trust Indenture Act and applicable state or foreign securities laws in
connection with the purchase and distribution of the Offered Securities
by the Underwriters, (2) as may have already been obtained or made and
(3) which the failure to obtain or make would not, individually or in the
aggregate, have a Material Adverse Effect;
(p) Neither the Company nor any of its subsidiaries (A) is in
violation of its charter, by-laws or other constitutive documents, (B) is
in default in any material respect, and no event has occurred which, with
notice or lapse of time or both, would constitute such a default, in the
due performance or observance of any term, covenant or condition
contained in any material indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or by
which it is bound or to which any of its properties or assets is subject
or (C) is in violation in any material respect of any law, ordinance,
governmental rule, regulation or court decree
6
to which it or its property or assets may be subject or has failed to
obtain any material license, permit, certificate, franchise or other
governmental authorization or permit necessary to the ownership of its
property or to the conduct of its business, except for, in the cases of
clause (B) or (C), such defaults, violations or failures to obtain that
in the aggregate would not have a Material Adverse Effect;
(q) The statements set forth in the Prospectus under the caption
"Description of the [Debt Securities and Guarantees/Capital Stock]",
insofar as they purport to constitute a summary of the terms of the
Offered Securities, under the caption "Certain United States Federal
Income Tax Considerations" and under the caption "Plan of Distribution",
insofar as they purport to describe the provisions of the laws and
documents referred to therein, are accurate, complete and fair;
(r) Except as disclosed in the Prospectus, there are no pending
actions, suits or proceedings against or affecting the Company, [any
Guarantors] any of [its/their respective] subsidiaries or any of their
respective properties that, if determined adversely to the Company [any
Guarantors] or any of [its/their respective] subsidiaries would
individually or in the aggregate have a Material Adverse Effect, or would
materially and adversely affect the ability of the Company[, any
Guarantor] or any subsidiary of the Company that is a party thereto to
perform its obligations under the [Indenture,] Terms Agreement or this
Agreement or which are otherwise material in the context of the sale of
the Offered Securities; and no such actions, suits or proceedings are
threatened or, to the Company's knowledge, contemplated;
(s) The Company is not an open-end investment company, unit
investment trust or face-amount certificate company that is or is
required to be registered under Section 8 of the United States Investment
Company Act of 1940 (the "Investment Company Act") ; and the Company is
not and, after giving effect to the offering and sale of the Offered
Securities and the application of the proceeds thereof as described in
the Prospectus, will not be an "investment company" as defined in the
Investment Company Act;
(t) Ernst & Young LLP and PricewaterhouseCoopers LLP, who have each
certified certain financial statements of the Company and its
subsidiaries in the Registration Statement are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder;
(u) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company or any of its
subsidiaries and any person (other than as described in the Terms
Agreement) granting such person the right to require the Company or any
of its subsidiaries to file a registration statement under the Act with
respect to any securities of the Company and its subsidiaries owned or to
be owned by such person or to require the Company or any of its
subsidiaries to
7
include such securities in the securities registered pursuant to the
Registration Statement or the Prospectus in any securities being
registered pursuant to any other registration statement filed by the
Company or any of its subsidiaries under the Act;
(v) This Agreement and the Terms Agreement have been duly
authorized, executed and delivered by the Company [and each Guarantor
that is a party thereto] and, assuming due authorization, execution and
delivery by the Underwriters, constitute the valid and binding agreement
of the Company [and each Guarantor that is a party thereto], enforceable
against the Company [and each Guarantor that is a party thereto] in
accordance with their terms except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers) reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law);
(w) If the Offered Securities are common stock or are convertible
into common stock: Except as described in the Prospectus, the Company has
not sold or issued any shares of common stock during the six-month period
preceding the date of the Terms Agreement, including any sales pursuant
to Rule 144A under, or Regulation D or Regulation S of, the Act other
than shares issued pursuant to employee benefit plans or other employee
compensation plans or pursuant to outstanding options, rights or
warrants;
(x) The financial statements, together with the related notes
thereto filed as part of the Registration Statement or included in the
Prospectus comply as to form in all material respects with the
requirements of Regulation S-X under the Act applicable to registration
statements on Form S-3 under the Act. Such financial statements fairly
present the financial position of the Company and its consolidated
subsidiaries as of the dates shown and their results of operations and
cash flows for the periods shown, in each case in accordance with
generally accepted accounting principles ("GAAP") consistently applied
throughout such periods. The assumptions used in preparing the pro forma
financial statements included in the Registration Statement provide a
reasonable basis for presenting the significant effects directly
attributable to the transactions or events described therein, the related
pro forma adjustments give appropriate effect to those assumptions, and
the pro forma columns therein reflect the proper application of those
adjustments to the corresponding historical financial statement amounts.
The other financial and statistical information and data filed as part of
the Registration Statement or included in the Prospectus, historical and
pro forma, are, in all material respects, fairly presented and prepared
on a basis consistent with such financial statements and the books and
records of the Company;
8
(y) The Company and its subsidiaries possess adequate certificates,
authorities or permits issued by appropriate governmental agencies or
bodies necessary to conduct the business now operated by them and have
not received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit that, if
determined adversely to the Company or any of their respective
subsidiaries, would individually or in the aggregate have a Material
Adverse Effect;
(z) The Company and its subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and
other intellectual property (collectively, "intellectual property
rights") necessary to conduct the business now operated by them, or
presently employed by them, and have not received any notice of
infringement of or conflict with asserted rights of others with respect
to any intellectual property rights that, if determined adversely to the
Company or any of its subsidiaries, would individually or in the
aggregate have a Material Adverse Effect;
(aa) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that
might have a Material Adverse Effect;
(bb) Except as disclosed in the Prospectus, since the date of the
latest audited financial statements included in the Registration
Statement there has been no material adverse change, nor any development
or event involving a prospective material adverse change, in the
condition (financial or other), business, properties or results of
operations of the Company, and its subsidiaries taken as a whole and,
except as disclosed in or contemplated by the Prospectus, there has been
no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock; and
(cc) Except as disclosed in the Prospectus, none of the Company or
any of its subsidiaries is in violation of any statute, any rule,
regulation, decision or order of any governmental agency or body or any
court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or
restoration of the environment or human exposure to hazardous or toxic
substances (collectively, "environmental laws"), owns or operates any
real property contaminated with any substance that is subject to any
environmental laws, is liable for any off-site disposal or contamination
pursuant to any environmental laws, or is subject to any claim relating
to any environmental laws, which violation, contamination, liability or
claim would individually or in the aggregate have a Material Adverse
Effect; and the Company is not aware of any pending investigation which
might lead to such a claim.
9
3. Purchase, Sale and Delivery of Offered Securities. The obligation of
the Underwriters to purchase the Offered Securities will be evidenced by an
agreement or exchange of other written communications ("Terms Agreement") at
the time the Company determines to sell the Offered Securities. The Terms
Agreement may also amend, modify or supplement this Agreement as provided
therein. The Terms Agreement will incorporate by reference the provisions of
this Agreement, except as otherwise provided therein, and will specify the
firm or firms which will be Underwriters, the names of any Representatives,
the principal amount or number of shares to be purchased by each Underwriter,
the purchase price to be paid by the Underwriters and (if the Offered
Securities are debt securities or preferred stock) the terms of the Offered
Securities not already specified (in the Indenture, in the case of Offered
Securities that are debt securities), including, but not limited to, interest
rate (if debt securities), dividend rate (if preferred stock), maturity (if
debt securities), any redemption provisions (if debt securities or preferred
stock) and any sinking fund requirements (if debt securities or preferred
stock). The Terms Agreement will also specify the time and date of delivery
and payment (such time and date, or such other time not later than seven full
business days thereafter as the Underwriter first named in the Terms Agreement
(the "Lead Underwriter") and the Company agree as the time for payment and
delivery, being herein and in the Terms Agreement referred to as the "Time of
Delivery"), the place of delivery and payment and any details of the terms of
offering that should be reflected in the prospectus supplement relating to the
offering of the Offered Securities. For purposes of Rule 15c6-1 under the
Exchange Act, the Time of Delivery (if later than the otherwise applicable
settlement date) shall be the date for payment of funds and delivery of
securities for all the Offered Securities sold pursuant to the offering. The
obligations of the Underwriters to purchase the Offered Securities will be
several and not joint. It is understood that the Underwriters propose to offer
the Offered Securities for sale as set forth in the Prospectus.
If the Offered Securities are debt securities and the Terms Agreement
specifies "Book-Entry Only" settlement or otherwise states that the provisions
of this paragraph shall apply, the Company will deliver against payment of the
purchase price the Offered Securities in the form of one or more permanent
global securities in definitive form (the "Global Securities") deposited with
the Trustee as custodian for The Depository Trust Company ("DTC") and
registered in the name of Cede & Co., as nominee for DTC. Interests in any
permanent global securities will be held only in book-entry form through DTC,
except in the limited circumstances described in the Prospectus. Payment for
the Offered Securities shall be made by the Underwriters (if the Terms
Agreement specifies that the Offered Securities will not trade in DTC's Same
Day Funds Settlement System) by certified or official bank check or checks in
New York Clearing House (next day) funds or (if the Terms Agreement specifies
that the Offered Securities will trade in DTC's Same Day Funds Settlement
System) in Federal (same day) funds by official check or checks or wire
transfer to an account in New York previously designated to the Lead
Underwriter by the Company at a bank acceptable to the Lead Underwriter, in
each case
10
drawn to the order of the Company at the place of payment specified in the
Terms Agreement on the date specified in the Terms Agreement as the closing
date (the "Closing Date"), against delivery to the Trustee as custodian for
DTC of the Global Securities representing all of the Offered Securities.
4. Certain Agreements of the Company [and the Guarantors]. The Company
[and the Guarantors jointly and severally] agree[s] with each of the
Underwriters:
(a) To prepare the Prospectus in a form approved by the Representatives
and to file such Prospectus pursuant to Rule 424(b) under the Act not later
than the Commission's close of business on the second business day following
the execution and delivery of the Terms Agreement, or, if applicable, such
earlier time as may be required by Rule 430A(a)(3) under the Act; to make no
further amendment or any supplement to the Registration Statement or
Prospectus which shall be disapproved by the Representatives promptly after
reasonable notice thereof; to advise the Representatives promptly after it
receives notice thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed and to furnish the
Representatives with copies thereof; to advise the Representatives promptly
after it receives notice thereof, of the issuance by the Commission of any
stop order or of any order preventing or suspending use of the Prospectus, of
the suspension of the qualification of the Offered Securities for offering or
sale in any jurisdiction, of the initiation or threatening of any proceeding
for any such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for
additional information; and, in the event of the issuance of any stop order or
of any order preventing or suspending the use of the Prospectus or suspending
any such qualification, to promptly use its best efforts to obtain the
withdrawal of such order;
(b) Promptly from time to time to take such action as the Representatives
may reasonably request to qualify the Offered Securities for offering and sale
under the securities laws of such jurisdictions as the Representatives may
request and to comply with such laws so as to permit the continuance of sales
and dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Offered Securities, provided that in
connection therewith the Company [and the Guarantors] shall not be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction;
(c) Prior to Noon, New York City time, on the New York Business Day next
succeeding the date of the Terms Agreement and from time to time, to furnish
the Underwriters with copies of the Prospectus in New York City in such
quantities as the Representatives may reasonably request, and, if the delivery
of the Prospectus is required at any time prior to the expiration of nine
months after the time of issue of the Prospectus in connection with the
offering or sale of the Offered Securities and if at such time any
11
events shall have occurred as a result of which the Prospectus as then amended
or supplemented would include an untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made when such Prospectus
is delivered, not misleading, or, if for any other reason it shall be
necessary during such same period to amend or supplement the Prospectus in
order to comply with the Act [For debt securities: or the Trust Indenture Act,
or] to notify the Representatives and upon the request of the Representatives
to prepare and furnish without charge to each Underwriter and to any dealer in
securities as many copies as the Underwriters may from time to time reasonably
request of an amended Prospectus or a supplement to the Prospectus which will
correct such statement or omission or effect such compliance; and in case any
Underwriter is required to deliver the Prospectus in connection with sales of
any of the Offered Securities at any time nine months or more after the time
of issue of the Prospectus, upon request of the Representatives but at the
expense of such Underwriter, to prepare and deliver to such Underwriter as
many copies as the Representatives may request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the date of
the Terms Agreement, an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Act and the
rules and regulations of the Commission thereunder (including, at the option
of the Company, Rule 158);
(e) During the period beginning at the time of the execution of the Terms
Agreement and ending the number of days after the Time of Delivery specified
under "Blackout" in the Terms Agreement, not to offer, sell, contract to sell
or otherwise dispose of, except as provided hereunder and under the Terms
Agreement any securities of the Company that are substantially similar to the
Offered Securities including but not limited to any securities that are
convertible into or exchangeable for, or that represent the right to receive,
common stock or any such substantially similar securities (other than pursuant
to employee stock option plans existing on, or upon the conversion or exchange
of convertible or exchangeable securities outstanding as of, the date of this
Agreement), without the prior written consent of the Underwriters;
(f) To cause each of the persons listed on a schedule to the Term
Agreement to enter into a lock-up agreement with the Underwriters, in form and
substance satisfactory to the Underwriters, providing that, during the period
beginning at the time of execution of the Terms Agreement and ending the
number of days after the Time of Delivery specified under "Blackout" in the
Terms Agreement, such person will not offer, sell, contract to sell or
otherwise dispose of, except as provided hereunder or under the Terms
Agreement, any securities of the Company that are substantially similar to the
Offered Securities, including but not limited to any securities that are
convertible into or exchangeable for, or that represent the right to receive,
the Offered Securities or any such substantially similar
12
securities (other than pursuant to employee stock option plans existing on, or
upon the conversion or exchange of convertible or exchangeable securities
outstanding as of, the date of the Term Agreement), without the prior written
consent of the Underwriters;
(g) During a period of three years from the effective date of the
Registration Statement, to furnish to the Representatives, upon request,
copies of all reports or other communications (financial or other) furnished
to stockholders, and to deliver to the Representatives, as soon as practicable
after they are available, [(A)] copies of any reports and financial statements
furnished to or filed with the Commission or any national securities exchange
on which the Offered Securities or any class of securities of the Company is
listed [For debt securities: and (B) the documents specified in the Indenture
as in effect at the Time of Delivery];
(h) To use the net proceeds received by it from the sale of the Offered
Securities pursuant to this Agreement in the manner specified in the
Prospectus under the caption "Use of Proceeds";
(i) If Offered Securities are common stock: To use its best efforts to
list for quotation the Offered Securities on the New York Stock Exchange
("NYSE");
(j) If the Company [and the Guarantors] elect[s] to rely upon Rule
462(b), the Company [and the Guarantors] shall file a Rule 462(b) Registration
Statement with the Commission in compliance with Rule 462(b) by 10:00 P.M.,
Washington, D.C. time, on the date of this Agreement, and the Company [and the
Guarantors] shall at the time of filing either pay to the Commission the
filing fee for the Rule 462(b) Registration Statement or give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under the
Act; and
(k) The Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Offered Securities under the Act and
all other expenses in connection with the preparation, printing and filing of
the Registration Statement, the Prospectus and amendments and supplements
thereto and the mailing and delivering of copies thereof to the Underwriters
and dealers; (ii) the cost of printing or producing any Agreement among
Underwriters, this Agreement, the Terms Agreement, [If the Offered Securities
are debt securities: the Indenture,] closing documents (including any
compilations thereof) and any other documents in connection with the offering,
purchase, sale and delivery of the Offered Securities; (iii) all expenses in
connection with the qualification of the Offered Securities for offering and
sale under state securities laws as provided in this Section 4, including the
fees and disbursements of counsel for the Underwriters (not in excess, in the
aggregate, an amount specified in the Terms Agreement) in connection with such
qualification; (iv) any fees charged by securities rating services for rating
the Offered Securities; [If the Offered Securities are common
13
stock: (v) all fees and expenses in connection with listing the Offered
Securities on the NYSE]; (vi) the filing fees incident to securing any
required review by the National Association of Securities Dealers, Inc. of the
terms of the sale of the Offered Securities; (vii) the cost of preparing
certificates evidencing the Offered Securities; (viii) the fees and expenses
[If the Offered Securities are debt securities: of the Trustee and any agent
of the Trustee and the fees and disbursements of counsel for the Trustee in
connection with the Indenture and the Offered Securities] [If the Offered
Securities are common stock: any transfer agent or registrar]; and (ix) all
other costs and expenses incident to the performance of its obligations
hereunder and under the Terms Agreement which are not otherwise specifically
provided for above. It is understood, however, except as provided in this
Subsection 4(k), and Sections 6 and 9 hereof, the Underwriters will pay all of
their own costs and expenses, including the fees of their counsel, transfer
taxes on resale of any of the Offered Securities by them, and any advertising
expenses connected with any offers they may make.
5. Conditions of the Obligations of the Underwriters. The respective
obligations of the Underwriters hereunder and under the Terms Agreement as to
the Offered Securities to be delivered at each Time of Delivery, shall be
subject, in the sole discretion of the Representatives, to the condition that
all representations and warranties of the Company [and the Guarantors] herein
are, at and as of the Time of Delivery, true and correct, the condition that
the Company [and the Guarantors] shall have performed all of its and their
obligations hereunder and under the Terms Agreement theretofore to be
performed and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant to
Rule 424(b) within the applicable time period prescribed for such filing by
the rules and regulations under the Act and in accordance with Section 4(a)
hereof; if the Company has elected to rely upon Rule 462(b), the Rule 462(b)
Registration Statement shall have become effective by 10:00 P.M., Washington,
D.C. time, on the date of this Agreement; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on
the part of the Commission shall have been complied with to the reasonable
satisfaction of the Representatives, as the case may be;
(b) _____________, counsel for the Underwriters, shall have furnished to
the Representatives, such written opinion or opinions, dated the Time of
Delivery, as the Representatives may reasonably require, and such counsel
shall have received such papers and information as they may reasonably request
to enable them to pass upon such matters;
14
(c) Cravath, Swaine & Moore, special counsel for the Company, shall have
furnished to the Representatives their written opinion, dated the Time of
Delivery, in form and substance satisfactory to the Representatives, to the
effect that:
(i) The Company is a corporation validly existing and in good
standing under the laws of the state of its incorporation or formation
(which opinion may be based solely on a certificate of the Secretary of
State of such state).
(ii) To the knowledge of such counsel, there are no agreements,
contracts, indentures, leases or other instruments to which the Company
or any of the Significant Subsidiaries is a party or to which any of
their respective properties or assets is subject that are required to be
described in, or filed as exhibits to, the Registration Statement and the
Prospectus that have not been so described or filed;
(iii) The Registration Statement was declared effective under the
Act as of the date and time specified in such opinion, the Prospectus was
filed with the Commission pursuant to the subparagraph of Rule 424(b) of
the Rules and Regulations specified in such opinion on the date specified
therein and to their knowledge no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated under the
Act;
(iv) If the Offered Securities are debt securities: Assuming that
the Indenture under which the Offered Securities will be issued has been
duly and validly authorized, executed and delivered by the Company [and
the Guarantors] and, assuming due authorization, execution and delivery
by the Trustee, such Indenture will constitute the legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms (subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws
affecting creditors' rights generally from time to time in effect and to
general principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing, regardless of
whether in a proceeding in equity or at law); and such Indenture has been
duly qualified under the Trust Indenture Act;
(v) If the Offered Securities are debt securities: Assuming that the
Offered Securities have been duly and validly authorized by the Company
[and the Guarantors] and when duly executed by the Company [and the
Guarantors] in accordance with the terms of the Indenture under which the
Offered Securities will be issued and, assuming due authentication of the
Offered Securities by the Trustee, upon delivery to the Underwriters
against payment therefor in accordance with the terms of the Terms
Agreement, will have been validly issued and delivered, and will
constitute valid and binding obligations of the Company [and the
Guarantors] entitled
15
to the benefits of such Indenture, enforceable against the Company in
accordance with their terms (subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and other
similar laws affecting creditors' rights generally from time to time in
effect and to general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether in a proceeding in equity or at law);
(vi) No authorization, approval or other action by, and no notice
to, consent of, order of, or filing with, any United States Federal, New
York or, to the extent required under the General Corporation Law of the
State of Delaware, Delaware governmental authority or regulatory body is
required for the consummation of the transactions contemplated by this
Agreement or the Terms Agreement, except such as have been obtained under
the Act or the Trust Indenture Act and such as may be required under the
blue sky laws of any jurisdiction in connection with the purchase and
distribution of the Offered Securities by the Underwriters;
(vii) The statements made in the Prospectus under the caption
"Description of Debt Securities and Guarantees", insofar as they purport
to constitute summaries of the terms of the debt securities [and the
guarantees] and under the caption "Certain United States Federal Income
Tax Considerations," insofar as they purport to describe the material tax
consequences of an investment in the Offered Securities, fairly summarize
the matters therein described;
(viii) If the Offered Securities are debt securities convertible
into common stock: The Offered Securities are convertible into common
stock in accordance with the terms of the Indenture.
(ix) None of the issue and sale of the Offered Securities, the
consummation of any other of the transactions contemplated by this
Agreement or the Terms Agreement or the performance of the terms of this
Agreement or the Terms Agreement (i) will conflict with, result in a
breach of, or constitute a default under, the terms of any indenture or
other agreement or instrument to which the Company or any of its
subsidiaries is a party or bound and listed as an exhibit to the
Company's most recent Annual Report on Form 10-K or any subsequent
Commission filings, except as would not have a Material Adverse Effect or
(ii) will contravene in any material respect any law, rule or regulation
of the United States or the State of New York or the General Corporation
Law of the State of Delaware, or, to such counsel's knowledge, any order
or decree of any court or government agency or instrumentality. In
connection with the foregoing, such counsel may point out that certain of
the agreements referred to in clause (i) above are or may be governed by
laws other than the laws of the State of New York. For purposes of the
opinion expressed in this paragraph, however, such counsel may assume
that all such agreements are governed by and would be interpreted in
accordance with the laws of the State of New York;
16
(x) The Registration Statement and the Prospectus and any further
amendments and supplements thereto made by the Company prior to such Time
of Delivery (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion) comply as to
form in all material respects with the requirements of the Act and the
rules and regulations thereunder;
(xi) The Company is not and, upon sale of the Offered Securities to
be issued and sold thereby in accordance herewith and the application of
the net proceeds to the Company of such sale as described in the
Prospectus under the caption "Use of Proceeds," will not be an
"investment company" within the meaning of the Investment Company Act of
1940, as amended.
In addition, such counsel shall also state that such counsel has
participated in conferences with certain officers of, and with the accountants
and counsel, for the Company, and with certain representatives of, and counsel
for, the underwriters, concerning the preparation of the Registration
Statement and the Prospectus and that although such counsel has made certain
inquiries and investigations in connection with the preparation of the
Registration Statement and Prospectus, the limitations inherent in the role of
outside counsel are such that such counsel cannot and does not assume
responsibility for the accuracy or completeness of the statements made in the
Registration Statement and Prospectus, except insofar as such statements
relate to such counsel and except to the extent set forth in clause (vii)
above. Subject to the foregoing, such counsel shall advise you that its work
in connection with this matter did not disclose any information that gave such
counsel reason to believe that the Registration Statement at the time the
Registration Statement was last amended or deemed to be amended or the
Prospectus, as of its date or as of the Time of Delivery (in each case except
for the financial statements and other information of a statistical,
accounting or financial nature included or incorporated by reference therein,
[If the Offered Securities are debt securities: and the Statement of
Eligibility (Form T-1) included as an exhibit to the Registration Statement,]
as to which such counsel need not express any view), was not appropriately
responsive in all material respects to the requirements of the Act [If the
Offered Securities are debt securities: and the Trust Indenture Act] and the
Rules and Regulations or the Registration Statement, at the time it became
effective was last amended or deemed to be amended, contained an untrue
statement of a material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
or that the Prospectus, at the Time of Delivery, includes an untrue statement
of a material fact or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading (in each case except for the financial
statements and other information of a statistical, accounting or financial
nature included therein, as to which such counsel need not express any view).
17
The opinion of such counsel may be limited to the laws of the State of
New York, the General Corporation Law of the State of Delaware and the Federal
laws of the United States;
(d) John Nanos, Associate General Counsel to the Company, shall have
furnished to the Representatives, his written opinion, dated such Time of
Delivery, in form and substance reasonably satisfactory to the
Representatives, to the effect that:
(i) Each of the Company, and [the Guarantors] is (other than [list
non- corporate entities]) a corporation validly existing and in good
standing under the laws of the state of its incorporation or formation
(which opinion may be based solely on a certificate of the Secretary of
State of such state), and has all requisite corporate power and authority
to own its assets and carry on its business as described in the
Prospectus. Each of the Company, and [the Guarantors] is duly qualified
to do business as a foreign corporation in good standing (which opinion
may be based solely on a certificate of the Secretary of State of such
state), in each jurisdiction in which its ownership or lease of property
or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify or to
be in good standing would not have a Material Adverse Effect;
(ii) All of the issued and outstanding capital stock of the Company
and each subsidiary of the Company (other than as set forth in the Terms
Agreement) have been duly and validly authorized and issued and are fully
paid, non-assessable and (except for directors' qualifying shares) all
such shares of the subsidiaries of the Company are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances and
defects, except as set forth in the Registration Statement and the
Prospectus (including the exhibits thereto);
(iii) The Company has an authorized capitalization as set forth in
the Prospectus; and all of the issued shares of capital stock of the
Company (including the Offered Shares being delivered at such Time of
Delivery) have been duly and validly authorized and issued, are fully
paid and nonassessable; and the shares conform to the description of the
capital stock contained in the Prospectus;
(iv) To the knowledge of such counsel, except as disclosed in the
Prospectus, the Company and its subsidiaries have good and marketable
title to all real properties and all other properties and assets owned by
them, in each case free from liens, encumbrances and defects that would
materially affect the value thereof or materially interfere with the use
made or to be made thereof by them; and except as disclosed in the
Prospectus, the Company and its subsidiaries hold any leased real or
personal property under valid and enforceable leases with no exceptions
that would materially interfere with the use made or to be made thereof
by them;
18
(v) To the knowledge of such counsel, except as disclosed in the
Prospectus, there are no pending actions, suits or proceedings against or
affecting the Company, [any Guarantors] any of [its/their respective]
subsidiaries or any of their respective properties that, if determined
adversely to the Company [any Guarantors] or any of [its/their
respective] subsidiaries would individually or in the aggregate have a
Material Adverse Effect, or would materially and adversely affect the
ability of the Company[, any Guarantor] or any subsidiary of the Company
that is a party thereto to perform its obligations under the [Indenture,]
Terms Agreement or this Agreement or which are otherwise material in the
context of the sale of the Offered Securities; and no such actions, suits
or proceedings are threatened or, to the Company's knowledge,
contemplated;
(vi) To the knowledge of such counsel, except as described in the
Prospectus there are no contracts, agreements or understandings between
the Company or any of its subsidiaries (other than as set forth in the
Terms Agreement) and any person granting such person the right to require
the Company or any of such subsidiaries to file a registration statement
under the Act with respect to any securities of the Company owned or to
be owned by such person or to require the Company or any of such
Subsidiaries to include such securities in the securities registered
pursuant to the Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the
Company or any of such Subsidiaries under the Act;
(vii) The execution, delivery and performance of [If the Offered
Securities are debt securities: the Indenture] [If the Offered Securities
are preferred stock: the certificate of designations] and the Terms
Agreement and the issuance and sale of the Offered Securities and
compliance by the Company [and the Guarantors] with all of the provisions
thereof will not conflict with or result in a breach or violation of any
of the terms or provisions of, or (with the giving of notice or the lapse
of time or both) constitute a default under, any statute, any rule,
regulation or order of any governmental agency or body or any court,
domestic or foreign, having jurisdiction over the Company[, any
Guarantor] or any subsidiary of the Company or any of their properties,
or any material agreement or instrument to which the Company[, any
Guarantor] or any such subsidiary is a party or by which the Company[,
any Guarantor] or any such subsidiary is bound or to which any of the
properties of the Company[, any Guarantor] or any such subsidiary is
subject, or the charter or by-laws of the Company[, any Guarantor] or any
such subsidiary, and each of the Company [and the Guarantors] has full
power and authority to consummate the Transactions and to authorize,
issue and sell the Offered Securities as contemplated by the Terms
Agreement (including the provisions of this Agreement);
(viii) No consent, approval, authorization, or order of, or filing
with, any governmental agency or body or any court is required for the
consummation of the transactions contemplated by the Terms Agreement
(including the provisions of this
19
Agreement) in connection with the issuance and sale of the Offered
Securities by the Company [and the Guarantors], except (A) the
registration under the Act of the Offered Securities and (B) such
consents, approvals, authorizations, registrations or qualifications as
(1) may be required under the Securities and Exchange Act of 1934, as
amended, the Trust Indenture Act and applicable state or foreign
securities laws in connection with the purchase and distribution of the
Offered Securities by the Underwriters, (2) as may have already been
obtained or made and (3) the failure to obtain or make would not,
individually or in the aggregate, have a Material Adverse Effect;
(ix) If the Offered Securities are common stock: Except as described
in the Prospectus, there are no preemptive or other rights to subscribe
for or to purchase, nor any restriction upon the voting or transfer of,
any Offered Securities pursuant to the Company's charter or by-laws or
any agreement or other instrument known to such counsel;
(x) If the Offered Securities are debt securities: The Indenture has
been duly and validly authorized, executed and delivered by the Company
[and the Guarantors].
(xi) If the Offered Securities are debt securities: The Offered
Securities have been duly and validly authorized by the Company [and the
Guarantors].
(xii) If the Offered Securities are common stock: The Offered
Securities have been duly and validly authorized and, when issued and
delivered against payment therefor as provided in the Terms Agreement,
will be duly and validly issued and fully paid and nonassessable.
(xiii) If the Offered Securities are preferred stock: The Offered
Securities have been duly authorized and, when the Offered Securities
have been delivered and paid for in accordance with the Terms Agreement
on the Closing Date, such Offered Securities will have been validly
issued, fully paid and nonassessable; and, except as described in the
Prospectus, the stockholders of the Company have no preemptive rights
with respect to the Offered Securities;
(xiv) If the Offered Securities are convertible into common stock:
The Offered Securities will be convertible into common stock of the
Company in accordance with their terms (if the Offered Securities are
preferred stock) or the Indenture (if the Offered Securities are debt
securities); the shares of common stock initially issuable upon
conversion of such Offered Securities have been duly authorized and
reserved for issuance upon such conversion and, when issued upon such
conversion, will be validly issued, fully paid and nonassessable; the
outstanding shares of common stock have been duly authorized and validly
issued, are fully paid
20
and nonassessable; and, except as described in the Prospectus, the
stockholders of the Company have no preemptive rights with respect to the
common stock;
(xv) The Terms Agreement has been duly and validly authorized,
executed and delivered by the Company; and
(xvi) This Agreement has been duly and validly authorized, executed
and delivered by the Company.
(xvii) Such counsel has no reason to believe that the Registration
Statement at the time the Registration Statement was last amended or
deemed to be amended or the Prospectus, as of its date or as of the Time
of Delivery, contained any untrue statement of material fact or omitted
to state any material fact necessary to make the statements therein not
misleading; the descriptions in the Registration Statement and the
Prospectus of statutes, legal and governmental proceedings and contracts
and other documents are accurate and fairly present the information
required to be shown; it being understood that such counsel need express
no opinion as to the financial statements or other financial related
statistical data contained in the Registration Statement or the
Prospectus.
The opinion of such counsel may be limited to the laws of the State of
Texas, the General Corporation Law of the State of Delaware and the Federal
laws of the United States;
(e) On the date of the Prospectus at a time prior to the execution of
this Agreement, at 9:30 a.m., New York City time, on the effective date of any
post-effective amendment to the Registration Statement filed subsequent to the
date of the Terms Agreement and also at the Time of Delivery, Ernst & Young
LLP and PricewaterhouseCoopers LLP shall have furnished to the Representatives
a letter or letters, dated the respective dates of delivery thereof, in form
and substance satisfactory to the Representatives;
(f) Neither the Company nor any of its subsidiaries shall have sustained
since the date of the latest audited financial statements included in the
Prospectus any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree, otherwise than
as set forth or contemplated in the Prospectus, and (ii) since the respective
dates as of which information is given in the Prospectus there shall not have
been any change in the capital stock or long-term debt of the Company or any
of its subsidiaries or any change, or any development involving a prospective
change, in or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Prospectus,
the effect of which, in any such case described in clause (i) or (ii), is in
the judgment of the Representatives so material and adverse as to
21
make it impracticable or inadvisable to proceed with the public offering or
the delivery of the Offered Securities on the terms and in the manner
contemplated in the Prospectus;
(g) On or after the date of the Terms Agreement (i) no downgrading shall
have occurred in the rating accorded the Company's debt securities or
preferred stock by any nationally recognized statistical rating organization,
as that term is defined by the Commission for purposes of Rule 436(g)(2) under
the Act, and (ii) no such organization shall have publicly announced that it
has under surveillance or review, with possible negative implications, its
rating of any of the Company's debt securities or preferred stock;
(h) On or after the date of the Terms Agreement there shall not have
occurred any of the following: (i) a material suspension or material
limitation in trading in securities generally on the NYSE or on NASDAQ; (ii) a
suspension or material limitation in trading in the Company's securities on
the NYSE; (iii) a general moratorium on commercial banking activities declared
by either Federal or New York State authorities; or (iv) the outbreak or
escalation of hostilities involving the United States or the declaration by
the United States of a national emergency or war, if the effect of any such
event specified in this clause (iv) in the judgment of the Representatives
makes it impracticable or inadvisable to proceed with the public offering or
the delivery of the Offered Securities on the terms and in the manner
contemplated in the Prospectus; [If the Offered Securities are debt
securities: or (v) the occurrence of any material adverse change in the
existing financial, political or economic conditions in the United States or
elsewhere which, in the judgment of the Representatives, would materially and
adversely affect the financial markets or the market for the Offered
Securities and other debt securities;]
(i) If the Offered Securities are common stock: At such Time of Delivery
the NYSE shall have approved the Offered Securities to be sold by the Company
for inclusion, subject only to official notice of issuance and evidence of
satisfactory distribution;
(j) If the Offered Securities are common stock: The Company has obtained
and delivered to the Underwriters executed copies of an agreement from the
persons identified a schedule to the Terms Agreement to the effect set forth
in Subsection 4(e) hereof in form and substance satisfactory to the
Representatives;
(k) The Company shall have complied with the provisions of Section 4(c)
hereof with respect to the furnishing of Prospectuses on the New York Business
Day next succeeding the date of this Agreement; and
(l) The Company shall have furnished or caused to be furnished to the
Representatives at the Time of Delivery certificates of officers of the
Company satisfactory to the Representatives as to (i) the accuracy of the
representations and
22
warranties of the Company herein at and as of such Time of Delivery, (ii) the
performance by the Company of all of its obligations hereunder and under the
Terms Agreement to be performed at or prior to such Time of Delivery, (iii)
the absence of untrue statements of material facts or omissions of material
facts required to be stated or necessary to make statements not misleading in
the Registration Statement and the Prospectus, (iv) absence of events since
the effective date of the Registration Statement which should be set forth in
a supplement or amendment to the Registration Statement and the Prospectus,
and (v) such other matters as the Underwriter may reasonably request and the
Company shall have furnished or caused to be furnished certificates as to the
matters set forth in subsections (a) and (f) of this Section and as to such
other matters as the Representatives may reasonably request.
6. Indemnification and Contribution. (a) The Company [and the Guarantors,
jointly and severally] will indemnify and hold harmless each Underwriter,
their respective officers and employees and each person, if any, who controls
any Underwriter within the meaning of the Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of Offered Securities), to which that
Underwriter, officer, employee or controlling person may become subject, under
the Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or the
Prospectus or in any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, and
shall reimburse each Underwriter, and each such officer, employee or
controlling person promptly upon demand for any legal or other expenses
reasonably incurred by that Underwriter, officer, employee or controlling
person in connection with investigating or defending or preparing to defend
against any such loss, claim damage, liability or action as such expenses are
incurred; provided, however, that the Company [and the Guarantors] shall not
be liable in any such case to the extent that any such loss, claim, damage,
liability, or action arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement or the Prospectus or any such amendment or supplement
in reliance upon and in conformity with written information concerning such
Underwriter furnished to the Company by any Representatives by or on behalf of
any underwriter specifically for inclusion therein; provided further that
[neither] the Company [nor any Guarantor] shall be liable to any Underwriter
under the indemnity agreement in this paragraph 6(a) with respect to the
Prospectus to the extent that any such loss, claim, damage or liability of
such Underwriters results from the fact that such Underwriter sold Offered
Securities to a person as to whom there was not sent or given, at or prior to
written confirmation of such sale, a copy of the Prospectus as then amended or
supplemented if the Company had previously furnished copies thereof in the
quantity requested and in a timely manner in
23
accordance with Section 4(c) hereof to such Underwriter and the loss, claim,
damage or liability of such Underwriter results from an untrue statement or
omission of a material fact contained in the Registration Statement and
corrected in the Prospectus as amended or supplemented.
(b) Each Underwriter, severally and not jointly, shall indemnify and hold
harmless the Company, [the Guarantors] [their respective /its] officers who
sign the Registration Statement, each of [their respective/its] directors
(including any person who, with his or her consent, is named in the
Registration Statement or the Prospectus as about to become a director of the
Company), and each person, if any, who controls the Company or a Guarantor
within the meaning of the Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Company [the Guarantors] or any such director, officer or controlling person
may become subject, under the Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus or in any amendment or supplement
thereto or (ii) the omission or alleged omission to state in the Registration
Statement or the Prospectus, or in any amendment or supplement thereto, any
material fact required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
concerning such Underwriter furnished to the Company through the
Representatives by or on behalf of that Underwriter specifically for inclusion
therein, and shall reimburse the Company and any such director, officer or
controlling person for any legal or other expenses reasonably incurred by the
Company or any such director, officer or controlling person in connection with
investigating or defending or preparing to defend against any such loss,
claim, damage, liability or action as such expenses are incurred. The
foregoing indemnity agreement is in addition to any liability which any
Underwriter may otherwise have to the Company [the Guarantors], or any such
director, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify the indemnifying party in
writing of the claim or the commencement thereof; provided, however, that the
failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this section except to the extent it has
been materially prejudiced by such failure, and provided further, that the
failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under such
subsection. In case any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other similarly notified indemnifying party,
to
24
assume the defense thereof, with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under such
subsection for any legal or other expenses, subsequently incurred by the
indemnified party, in connection with the defense thereof; provided, however,
that if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have in good faith
reasonably concluded that there may be defenses available to it which are
different from or additional to those available to the indemnifying party or
if the interests of the indemnified party may be deemed to conflict with the
interests of the indemnifying party, the indemnified party shall have the
right to select a separate counsel in the defense of such action, with the
expenses and fees of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as incurred, provided
further that in no event shall the foregoing proviso require the indemnifying
party to bear the fees and expenses of more than one separate counsel, in
addition to local counsel, for each of the following classes of parties
hereto: (i) the Representatives and those other Underwriters and their
respective officers, employees and controlling persons who may be subject to
liability arising out of any claim in respect of which indemnity may be sought
under this Section 6, (ii) the Company and its Subsidiaries [and (iii) the
Guarantors]. No indemnifying party shall (i) without the prior written consent
of the indemnified parties (which consent shall not be unreasonably withheld),
settle or compromise or consent to the entry of any judgment with respect to
any pending or threatened claim, action, suit or proceeding in respect of
which indemnification or contribution may be sought hereunder (whether or not
the indemnified parties are actual or potential parties to such claim or
action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising out
of such claim, action, suit or proceeding, or (ii) be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with the consent
of the indemnifying party or if there be a final judgment of the plaintiff in
any such action, the indemnifying party agrees to indemnify and hold harmless
any indemnified party from and against any loss or liability by reason of such
settlement or judgment to the extent provided in this Section 6.
(d) If the indemnification provided for in this Section 6 shall for any
reason be unavailable to or insufficient (other than by reason of the
exceptions provided therein) to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by each party to the Terms Agreement from the offering of the Offered
Securities or (ii) if the allocation provided by the clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to
25
reflect not only such relative benefits but also the relative fault of each
party to the Terms Agreement with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in respect
thereof, as well as any other relevant equitable considerations. The relative
benefits received by the Company, the Underwriters, [and the Guarantors] with
respect to such offering shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Offered Securities purchased under
this Agreement (before deducting expenses) received by the Company, [the
Guarantors], and the total underwriting discounts and commissions received by
the Underwriters with respect to the Offered Securities purchased under the
Terms Agreement as set forth in the table on the cover page of the Prospectus,
bear to the sum of the total proceeds from the sale of the Offered Securities
(before deducting expenses) in the offering. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company, or the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, [the Guarantors], and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this subsection (e) were
determined by pro rata allocation or by any other method of allocation which
does not take into account of the equitable considerations referred to herein.
The amount paid or payable by an indemnified party as a result of the loss,
claim, damage or liability or action in respect thereof, referred to above in
this subsection (e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (e), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Offered Securities
underwritten by it and distributed to the public was offered to the public,
exceeds the amount of any damages which such Underwriter, as the case may be,
has otherwise been required paid or become liable to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Underwriters' obligations in this
subsection (e) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) As used herein, the phrase "actual knowledge" means, with respect to
any natural person, the actual knowledge of such person and, with respect to
any other person, the actual knowledge of any natural person exercising
control (whether by ownership or management) over such person, and shall not
imply any duty to investigate or be deemed to include any knowledge that might
have become actually known following investigation. The phrase "actually
known" shall have a correlative meaning.
26
(f) The obligations of the Company [and the Guarantors] under this
Section 6 shall be in addition to any liability which the Company [and the
Guarantors] may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; the obligations of the Underwriters under this Section 6
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company [or any Guarantor] (including any person
who, with his or her consent, is named in the Registration Statement or the
Prospectus as about to become a director of the Company [or any Guarantor])
and to each person, if any, who controls the Company [or any Guarantor] within
the meaning of the Act.
7. Default of Underwriters. (a) If any Underwriter shall default in its
obligation to purchase the Offered Securities which it has agreed to purchase
under the Terms Agreement, at a Time of Delivery, the Representatives may in
their discretion arrange for the Representatives or another party or other
parties to purchase such Offered Securities on the terms contained herein. If
within thirty-six hours after such default by any Underwriter, the
Representatives do not arrange for the purchase of such Offered Securities,
then the Company shall be entitled to a further period of thirty-six hours
within which to procure another party or other parties satisfactory to the
Representatives to purchase such Offered Securities on such terms. In the
event that, within the respective prescribed periods, the Representatives
notify the Company that they have so arranged for the purchase of such Offered
Securities, or the Company notifies the Representatives that it has so
arranged for the purchase of such Offered Securities, the Representatives or
the Company shall have the right to postpone the Time of Delivery for a period
of not more than seven days, in order to effect whatever changes may thereby
be made necessary in the Registration Statement or the Prospectus, or in any
other documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in the
opinion of the Representatives may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to this Agreement with respect to such Offered Securities.
(b) If, after giving effect to any arrangements for the purchase of the
Offered Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate number of such Offered Securities which remains unpurchased does not
exceed one-eleventh of the aggregate principal number of all the Offered
Securities to be purchased at such Time of Delivery, then the Company shall
have the right to require each non-defaulting Underwriter to purchase the
number of Offered Securities which such Underwriter agreed to purchase under
the Terms Agreement at such Time of Delivery and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the number
of Offered Securities which such Underwriter agreed to purchase under the
Terms Agreement) of the Offered Securities of such defaulting Underwriter or
Underwriters for which such
27
arrangements have not been made; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Offered Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate number of Offered Securities which remains unpurchased exceeds
one-eleventh of the aggregate principal amount of all the Offered Securities,
or if the Company shall not exercise the right described in subsection (b)
above to require non-defaulting Underwriters to purchase Offered Securities of
a defaulting Underwriter or Underwriters, then this Agreement shall thereupon
terminate, without liability on the part of any non-defaulting Underwriter or
the Company, except for the expenses to be borne by the Company [and the
Guarantors] and the Underwriters as provided in Subsection 4(k) hereof and the
indemnity and contribution agreements in Section 6 hereof; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
8. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of
the Company, [the Guarantors] and the several Underwriters, as set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement and the Terms Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, the Company [, or any Guarantor], or any officer or director or
controlling person of the Company [or any Guarantor,] and shall survive
delivery of and payment for the Offered Securities.
9. Reimbursement for Underwriting Expenses. If this Agreement shall be
terminated pursuant to Section 7 hereof, neither the Company [nor the
Guarantors] shall then be under any liability to any Underwriter except as
provided in Sections 4(k) and 6 hereof; but, if for any other reason, the
Offered Securities are not delivered by or on behalf of the Company [and the
Guarantors] as provided herein, the Company will reimburse the Underwriters
through the Representatives for all out-of-pocket expenses approved in writing
by the Representatives, including fees and disbursements of counsel,
reasonably incurred by the Underwriters in making preparations for the
purchase, sale and delivery of the Offered Securities not so delivered, but
the Company [and the Guarantors] shall then be under no further liability to
any Underwriter except as provided in and Sections 4(k) and 6 hereof.
10. Notices, etc. In all dealings hereunder and under the Terms
Agreement, the Representatives shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon
any statement, request, notice or agreement on behalf of any Underwriter made
or given by the Representatives jointly or by the Lead Underwriter on behalf
of the Representatives.
28
All statements, requests, notices, and agreements hereunder and under the
Terms Agreement shall be in writing, and if to the Underwriters shall be
delivered or sent by mail, telex or facsimile transmission to the
Representatives at the address specified in the Terms Agreement; and if to the
Company [or any Guarantor] shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Renee Hornbaker; provided, however, that
any notice to an Underwriter pursuant to Section 6(c) hereof shall be
delivered or sent by mail, telex or facsimile transmission to such Underwriter
at its address set forth in its Underwriters' Questionnaire, or telex
constituting such Questionnaire, which address will be supplied to the Company
by the Representatives upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof. The Company shall be
entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Underwriters by any of the Representatives.
11. Persons Entitled to Benefit of Agreement. This Agreement and the
Terms Agreement shall be binding upon, and inure solely to the benefit of, the
Underwriters, the Company and [the Guarantors and,] to the extent provided in
Sections 6 and 8 hereof, the officers and directors of the Company and each
person who controls the Company, [any Guarantor,] any Underwriter, and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Offered Securities from any Underwriter
shall be deemed a successor or assign by reason merely of such purchase.
12. Time of the Essence. Time shall be of the essence of this Agreement
and the Terms Agreement. As used herein, the term "Business Day" shall mean
any day on which the New York Stock Exchange, Inc. is open for trading.
13. Governing Law. This Agreement and the Terms Agreement shall be
governed by and construed in accordance with the laws of the State of New York
without giving effect to any provisions relating to conflicts of law.
14. Counterparts. This Agreement and the Terms Agreement may be executed
by any one or more of the parties hereto in any number of counterparts, each
of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument.
15. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
29
Very truly yours,
Flowserve Corporation
By:
---------------------------------
Name:
Title:
Flowserve US Inc.
Flowserve International, Inc.
Flowserve Holdings, Inc.
BW/IP-New Mexico, Inc.
Ingersoll-Dresser Pump Company
Flowserve International L.L.C.
Flowserve Management Company
CFM-V.R. Tesco Inc.
Flowserve International Limited
Flowserve Finance B.V.
By:
---------------------------------
Name:
Title:
[GRAPHICS OMITTED]
COMMON STOCK
Incorporated under This certificate SEE REVERSE FOR CERTAIN SHARES
the laws of the is transferable in DEFINITIONS
State of New York Cleveland, Ohio and
and New York, New York
CUSIP 34354P 10 5
- --------------------------------------------------------------------------------
[LOGO]
FLOWSERVE FLOWSERVE CORPORATION
THIS CERTIFIES THAT
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
Flowserve Corporation (hereinafter called the "Corporation"), transferable on
the books of the Corporation by the holder hereof in person or by duly
authorized attorney, upon surrender of this Certificate properly endorsed. This
Certificate and the shares represented hereby are issued and shall be held
subject to all the provisions of the Certificate of Incorporation of the
Corporation, as amended (a copy of which certificate is on file with the
Transfer Agent), to all of which the holder, by acceptance hereof, assents. This
Certificate is not valid until countersigned by the Transfer Agent and
registered by the Registrar.
Witness the seal of the Corporation and the facsimile
signatures of its duly authorized officers.
- --------------------------------------------------------------------------------
Dated:
/s/ Ronald F. Shuff /s/ C. Scott Greer
[CORPORATE SEAL] Secretary Chairman, President and
Chief Executive Officer
Countersigned and Registered:
NATIONAL CITY BANK
(Cleveland, OH) Transfer Agent
and Registrar
BY
S P E C I M E N
Authorized Signature
FLOWSERVE CORPORATION
ARTICLE "EIGHTH" OF THE CERTIFICATE OF INCORPORATION CONTAINS A PROVISION
SPECIFYING A PROPORTION (TWO-THIRDS) OF THE VOTE OF SHAREHOLDERS GREATER THAN
THE PROPORTION PRESCRIBED BY STATUTE IN THE ABSENCE OF SUCH PROVISION TO (a)
ADOPT, AMEND OR REPEAL ANY BY-LAW OR ANY PROVISION OF THE CERTIFICATE OF
INCORPORATION, RELATING TO (i) THE NUMBER, CLASSIFICATION AND TERMS OF OFFICE
OF DIRECTORS, (ii) THE FILLING OF NEWLY CREATED DIRECTORSHIPS AND VACANCIES
OCCURRING IN THE BOARD OF DIRECTORS, (iii) THE REMOVAL OF DIRECTORS, OR (iv)
THE POWER OF THE BOARD OF DIRECTORS TO ADOPT, AMEND OR REPEAL BY-LAWS OF THE
CORPORATION OR THE VOTE OF THE BOARD OF DIRECTORS REQUIRED FOR ANY SUCH
ADOPTION, AMENDMENT OR REPEAL; OR (b) AMEND OR REPEAL SAID ARTICLE "EIGHTH."
ARTICLE "NINTH" OF THE CERTIFICATE OF INCORPORATION OF THE CORPORATION
CONTAINS A PROVISION SPECIFYING A PROPORTION (80%) OF THE COTE OF SHAREHOLDERS
GREATER THAN THE PROPORTION PRESCRIBED BY STATUE IN THE ABSENCE OF SUCH
PROVISION TO (a) AUTHORIZE A MERGER OR CONSOLIDATION OF THE CORPORATION WITH
OR INTO, OR A SALE OR OTHER DISPOSITION OF SUBSTANTIALLY ALL THE ASSETS OF A
"RELATED CORPORATION OR ANY AFFILIATE OF A RELATED CORPORATION" AS THEREIN
DEFINED OR (b) AMEND OR DELETE SAID ARTICLE "NINTH."
THE CORPORATION WILL FURNISH TO ANY SHAREHOLDER UPON REQUEST AND WITHOUT
CHARGE, A FULL STATEMENT OF THE DESIGNATION, POWERS, RELATIVE RIGHTS, AND
PREFERENCES AND LIMITATION OF THE SHARES OF EACH CLASS OF SHARES, IF MORE THAN
ONE, AUTHORIZED TO BE ISSUED AND THE DESIGNATION, POWERS, RELATIVE RIGHTS,
PREFERENCES AND LIMITATIONS OF EACH SERIES OF ANY CLASS OF PREFERRED SHARES
AUTHORIZED TO BE ISSUED SO FAR AS THE SAME HAVE BEEN FIXED AND THE AUTHORITY
OF THE BOARD OF DIRECTORS TO DESIGNATE AND FIX THE POWERS, RELATIVE RIGHTS,
PREFERENCES AND LIMITATIONS OF OTHER SERIES.
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER TO CERTAIN RIGHTS
AS SET FORTH IN A RIGHTS AGREEMENT BETWEEN THE FLOWSERVE CORPORATION AND
NATIONAL CITY BANK, DATED AS OF AUGUST 1, 1996 ("RIGHTS AGREEMENT"), THE TERMS
OF WHICH ARE INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH IS ON FILE
AT THE PRINCIPAL EXECUTIVE OFFICE OF FLOWSERVE CORPORATION UNDER CERTAIN
CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS WILL BE
EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO LONGER BE EVIDENCED BY THIS
CERTIFICATE. FLOWSERVE CORPORATION WILL MAIL TO THE HOLDER OF THIS CERTIFICATE
A COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE WITHIN FIVE DAYS AFTER RECEIPT
BY IT OF A WRITTEN REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES AS PROVIDED
IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING
PERSONS OR THEIR ASSOCIATES OR AFFILIATES (AS DEFINED IN THE RIGHTS AGREEMENT)
OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BE LIMITED AS PROVIDED IN SECTION
11(A)(II) OF THE RIGHTS AGREEMENT.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws and regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - _______________ Custodian _______________
(Cust) (Minor)
TEN ENT - as tenants by the entireties
under Uniform Gifts to Minors Act
JT TEN - as joint tenants with right of
survivorship and not as tenants ---------------------------------------
in common (State)
Additional abbreviations may also be used though not in the above list.
NOTICE: The signature(s) to this assignment must correspond with the name(s) as written upon the face of the Certificate in every
particular, without alteration or enlargement, or any change whatever.
SIGNATURE(S) MUST BE GUARANTEED by a participant in either the Securities Transfer Agents Medallion Program ("STAMP"), the Stock
Exchanges Medallion Program ("SEMP") or the New York Stock Exchange Medallion Signature Program ("MSP").
FOR VALUE RECEIVED _____________ hereby sell, assign and transfer unto_________________
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------- Shares
or capital Stock represented by the within Certificate, and do hereby irrevocably constitute and appoint
- ---------------------------------------------------------------------------------------------------------Attorney
to transfer the said stocks on the Books of the within-named Company with full power of substitution in the premises.
Dated ________________________________ __________________________________________________________
(SIGNATURE/S OF SHAREHOLDER/S)
__________________________________________________________
(SIGNATURE/S GUARANTEED BY)
Exhibit 4.2
================================================================================
FLOWSERVE CORPORATION
Issuer
and
--------------------
Trustee
--------------------
INDENTURE
Dated as of __________, ____
$-----------
--------------------
================================================================================
CROSS-REFERENCE TABLE*
Trust Indenture Indenture
Act Section Section
----------- -------
310 (a)(1)................................................ 7.10
(a)(2)................................................ 7.10
(a)(3)................................................ N.A.
(a)(4)................................................ N.A.
(a)(5)................................................ 7.10
(b)................................................... 7.10
(c)................................................... N.A.
311 (a)................................................... 7.11
(b)................................................... 7.11
(c)................................................... N.A.
312 (a)................................................... 2.06
(b)................................................... 11.03
(c)................................................... 11.03
313 (a)................................................... 7.06
(b)(1)................................................ N.A.
(b)(2)................................................ 7.06
(c)................................................... 7.06;11.02
(d)................................................... 7.06
314 (a)................................................... 4.02;4.03;11.02
(b)................................................... N.A.
(c)(1)................................................ 11.04
(c)(2)................................................ 11.04
(c)(3)................................................ N.A.
(d)................................................... N.A.
(e)................................................... 11.05
(f)................................................... N.A.
315 (a)................................................... 7.01
(b)................................................... 7.05;11.02
(c)................................................... 7.01
(d)................................................... 7.01
(e)................................................... 6.11
316 (a) (last sentence)................................... 2.10
(a)(1)(A)............................................. 6.05
(a)(1)(B)............................................. 6.04
(a)(2)................................................ N.A.
(b)................................................... 6.07
(c)................................................... 2.13
317 (a)(1)........................................... 6.08
(a)(2)................................................ 6.09
(b)................................................... 2.05
318 (a).............................................. 11.01
(b)................................................... N.A.
(c)................................................... 11.01
N.A. means not applicable.
* This Cross Reference Table is not part of the Indenture.
TABLE OF CONTENTS
Page
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions...............................................1
SECTION 1.02. Other Definitions.........................................5
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.........5
SECTION 1.04. Rules of Construction.....................................6
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Issuable in Series........................................6
SECTION 2.02. Establishment of Terms of Series of Securities............7
SECTION 2.03. Execution and Authentication..............................9
SECTION 2.04. Registrar and Paying Agent...............................10
SECTION 2.05. Paying Agent to Hold Money in Trust......................11
SECTION 2.06. Holder Lists.............................................11
SECTION 2.07. Transfer and Exchange....................................11
SECTION 2.08. Mutilated, Destroyed, Lost and Stolen Securities.........12
SECTION 2.09. Outstanding Securities...................................13
SECTION 2.10. Treasury Securities......................................13
SECTION 2.11. Temporary Securities.....................................13
SECTION 2.12. Cancellation.............................................13
SECTION 2.13. Defaulted Interest.......................................14
SECTION 2.14. Global Securities........................................14
SECTION 2.15. CUSIP Numbers............................................16
ARTICLE THREE
REDEMPTION AND PREPAYMENT
SECTION 3.01. Notices to Trustee.......................................17
SECTION 3.02. Selection of Securities to Be Redeemed...................17
SECTION 3.03. Notice of Redemption.....................................17
SECTION 3.04. Effect of Notice of Redemption...........................18
SECTION 3.05. Deposit of Redemption Price..............................18
SECTION 3.06. Securities Redeemed in Part..............................19
i
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities....................................19
SECTION 4.02. SEC Reports..............................................19
SECTION 4.03. Compliance Certificate...................................20
SECTION 4.04. Further Instruments and Acts.............................20
SECTION 4.05. Corporate Existence......................................20
SECTION 4.06. Calculation of Original Issue Discount...................20
ARTICLE FIVE
SUCCESSOR COMPANIES
SECTION 5.01. Merger, Consolidation or Sale of Assets..................20
ARTICLE SIX
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default........................................22
SECTION 6.02. Acceleration.............................................23
SECTION 6.03. Other Remedies...........................................24
SECTION 6.04. Waiver of Past Defaults..................................24
SECTION 6.05. Control by Majority......................................24
SECTION 6.06. Limitation on Suits......................................25
SECTION 6.07. Rights of Holders to Receive Payment.....................25
SECTION 6.08. Collection Suit by Trustee...............................25
SECTION 6.09. Trustee May File Proofs of Claim.........................26
SECTION 6.10. Priorities...............................................26
SECTION 6.11. Undertaking for Costs....................................26
SECTION 6.12. Waiver of Stay or Extension Laws.........................26
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee........................................27
SECTION 7.02. Rights of Trustee........................................28
SECTION 7.03. Individual Rights of Trustee.............................29
SECTION 7.04. Trustee's Disclaimer.....................................29
SECTION 7.05. Notice of Defaults.......................................29
SECTION 7.06. Reports by Trustee to Holder.............................29
SECTION 7.07. Compensation and Indemnity...............................30
SECTION 7.08. Replacement of Trustee...................................30
SECTION 7.09. Successor Trustee by Merger..............................31
ii
SECTION 7.10. Eligibility; Disqualification............................31
SECTION 7.11. Preferential Collection of Claims Against Company........31
ARTICLE EIGHT
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.32
SECTION 8.02. Legal Defeasance and Discharge...........................32
SECTION 8.03. Covenant Defeasance......................................32
SECTION 8.04. Conditions to Legal or Covenant Defeasance...............33
SECTION 8.05. Deposited Money and Government Securities to be Held
in Trust; Other Miscellaneous Provisions...............34
SECTION 8.06. Repayment to Company.....................................35
SECTION 8.07. Reinstatement............................................35
ARTICLE NINE
AMENDMENTS
SECTION 9.01. Without Consent of Holders...............................35
SECTION 9.02. With Consent of Holders..................................37
SECTION 9.03. Compliance with Trust Indenture Act......................38
SECTION 9.04. Revocation and Effect of Consents and Waivers............38
SECTION 9.05. Notation on or Exchange of Securities....................38
SECTION 9.06. Trustee To Sign Amendments...............................39
SECTION 9.07. Payment for Consent......................................39
ARTICLE TEN
SUBSIDIARY GUARANTEES
SECTION 10.01. Subsidiary Guarantees...................................39
SECTION 10.02. Limitation on Liability.................................41
SECTION 10.03. Successors and Assigns..................................42
SECTION 10.04. No Waiver...............................................42
SECTION 10.05. Modification............................................42
SECTION 10.06. Release of Subsidiary Guarantor.........................42
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. Trust Indenture Act Controls............................43
SECTION 11.02. Notices.................................................43
SECTION 11.03. Communication by Holders with Other Holders.............43
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SECTION 11.04. Certificate and Opinion as to Conditions Precedent......44
SECTION 11.05. Statements Required in Certificate or Opinion...........44
SECTION 11.06. When Securities Disregarded.............................44
SECTION 11.07. Rules by Trustee, Paying Agent and Registrar............44
SECTION 11.08. Legal Holidays..........................................44
SECTION 11.09. Governing Law...........................................45
SECTION 11.10. No Recourse Against Others..............................45
SECTION 11.11. Successors..............................................45
SECTION 11.12. Multiple Originals......................................45
SECTION 11.13. Table of Contents; Headings.............................45
SECTION 11.14. Severability............................................45
iv
INDENTURE dated as of ____________, ____, between FLOWSERVE
CORPORATION, a New York corporation (the "Company"), and _________________, as
trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the Securities
issued under this Indenture (the "Securities"):
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
------------------------------------------
SECTION 1.01. Definitions.
Certain terms used herein and not defined herein shall have the
meanings assigned to them in a Board Resolution, an Officer's Certificate or a
supplemental indenture. The following terms shall have the following meanings:
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), when used with respect to any Person, shall
mean the power to direct or cause the direction of the management or policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by agreement or otherwise.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been adopted by the
Board of Directors or pursuant to authorization by the Board of Directors and to
be in full force and effect on the date of the certificate and delivered to the
Trustee.
"Business Day" means any day other than a Legal Holiday.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any preferred
stock, but excluding any debt securities convertible into such equity.
"Clearstream" means Clearstream Banking, societe anonyme.
1
"Company" means Flowserve Corporation, and any and all successors
thereto.
"Company Order" means a written order signed in the name of the
Company by two Officers, one of whom must be the Company's principal executive
officer, principal financial officer or principal accounting officer.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 11.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Custodian" means the Trustee, as Custodian with respect to the
Securities in global form, or any successor entity thereto.
"Default" means any event that is, or after notice or passage of time
or both would be, an Event of Default.
"Definitive Security" means a certificated Security registered in the
name of the Holder thereof and issued in accordance with Section 2.07 hereof.
"Depositary" means, with respect to the Securities issuable or issued
in whole or in part in global form, the Person specified in Section 2.14 hereof
as the Depositary with respect to the Securities, and any and all successors
thereto appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Dollar" means a dollar or other equivalent unit in such coin or
currency of the United States as at the time shall be legal tender for the
payment of public and private debt.
"Euroclear" means the Euroclear System.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Foreign Currency" means any currency or currency unit issued by a
government other than the government of The United States of America.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, including those principles set
forth in (i) the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants, (ii) statements and
pronouncements of the Financial Accounting Standards Board, (iii) such other
statements by such other entity as approved by a significant segment of the
accounting profession and (iv) the rules and regulations of the SEC governing
the inclusion of financial statements (including pro forma financial statements)
in periodic reports required to be filed pursuant to Section 13 of the Exchange
Act, including opinions and pronouncements in staff accounting bulletins and
similar written statements from the accounting staff of the SEC which are in
effect on the date hereof.
2
"Global Security" when used with respect to any Series of Securities
issued hereunder, means a Security which is executed by the Company and
authenticated and delivered by the Trustee to the Depositary or pursuant to the
Depositary's instruction, all in accordance with this Indenture and an indenture
supplemental hereto, if any, or Board Resolution and pursuant to a Company
Order, which shall be registered in the name of the Depositary or its nominee
and which shall represent, and shall be denominated in an amount equal to the
aggregate principal amount of, all the outstanding Securities of such Series or
any portion thereof, in either case having the same terms, including, without
limitation, the same original issue date, date or dates on which principal is
due, and interest rate or method of determining interest and which shall bear
the legend as prescribed by Section 2.14(c).
"Global Security Legend" means the legend set forth in Section
2.14(c), which is required to be placed on all Global Securities issued under
this Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof), of all or any part of any Indebtedness. The term "Guarantor" shall
mean any Person Guaranteeing any obligation.
"Holder" means a Person in whose name a Security is registered on the
Registrar's books.
"Indebtedness" has the meaning specified in the applicable Board
Resolution, supplemental indenture or Officers' Certificate relating to a
particular Series of Securities.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Interest Payment Date" when used with respect to any Series of
Securities, means the date specified in such Securities for the payment of any
installment of interest on those Securities.
"Maturity," when used with respect to any Security or installment of
principal thereof, means the date on which the principal of such Security or
such installment of principal becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption, notice of option to elect repayment or otherwise.
"Offering" means the offering of the Securities by the Company.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief
3
Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 11.04 hereof.
"Opinion of Counsel" means an opinion from legal counsel, that meets
the requirements of Section 11.04 hereof. The counsel may be an employee of or
counsel to the Company, any Subsidiary of the Company or the Trustee.
"Original Issue Discount Security" means any Security that provides
for an amount less than the stated principal amount thereof to be due and
payable upon declaration of acceleration of the maturity thereof pursuant to
Section 6.02.
"Participant" means, with respect to the Depositary, Euroclear or
Clearstream, a Person who has an account with the Depositary, Euroclear or
Clearstream, respectively (and, with respect to the Depository Trust Company,
shall include Euroclear and Clearstream).
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, rust,
unincorporated organization or government or any agency or political subdivision
thereof or any other entity.
"Responsible Officer" with respect to the Trustee, means any Vice
President, Assistant Vice President, Assistant Treasurer or any other officer of
the Trustee assigned by the Trustee to administer its corporate trust matters
and who customarily performs functions similar to those performed by such
Persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of such Person's knowledge of and
familiarity with the particular subject and who shall have direct responsibility
for administration of this Indenture.
"SEC" means the Securities and Exchange Commission.
"Securities" has the meaning assigned to it in the preamble to this
Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Series" or "Series of Securities" means each series of debentures,
notes or other debt instruments of the Company created pursuant to Sections 2.01
and 2.02 hereof.
"Significant Subsidiary" has the meaning specified in the applicable
Board Resolution, supplemental indenture or Officers' Certificate relating to a
particular Series of Securities.
4
"Stated Maturity," when used with respect to any Security, means the
date specified in such Security as the fixed date on which an amount equal to
the principal amount of such Security is due and payable.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (i) such Person, (ii) such
Person and one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person.
"Subsidiary Guarantee" means a Guarantee by a Subsidiary Guarantor of
the Company's obligations with respect to a particular Series of Securities.
"Subsidiary Guarantors" means Flowserve US Inc., Flowserve
International, Inc., Flowserve Holdings, Inc., BW/IP-New Mexico, Inc.,
Ingersoll-Dresser Pump Company, CFM-V.R. Tesco Inc., Flowserve Management
Company, Flowserve International L.L.C., Flowserve International Limited,
Flowserve Finance B.V., or any one or combination of such Subsidiaries as is
designated in a Board Resolution, supplemental indenture or an Officers'
Certificate as a "Subsidiary Guarantor" for a particular Series of Securities.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-
77bbbb) and the rules and regulations thereunder as in effect on the date on
which this Indenture is qualified under the TIA.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"U.S. Person" means a U.S. person as defined in Rule 902(k) under the
Securities Act.
SECTION 1.02. Other Definitions.
Term Defined in Section
"Covenant Defeasance" 8.03
"Event of Default" 6.01
"Legal Defeasance" 8.02
"Legal Holiday" 11.08
"Paying Agent" 2.04
"Payment Default" 6.01
"Registrar" 2.04
"Service Agent" 2.04
"Subsidiary Guarantor Obligations" 10.01
SECTION 1.03. Incorporation by Reference of Trust Indenture Act. This
Indenture is subject to the mandatory provisions of the TIA, which are
incorporated by
5
reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"indenture securities" means the Securities;
"indenture security Holder" means a Holder of a Security;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Securities means the Company and any successor
obligor upon the Securities.
All other terms used in this Indenture that are defined by the TIA,
defined by the TIA's reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them.
SECTION 1.04. Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement or successor sections or rules
adopted by the SEC from time to time.
ARTICLE TWO
THE SECURITIES
--------------
SECTION 2.01. Issuable in Series. The aggregate principal amount of
Securities that may be authenticated and delivered under this Indenture is
unlimited. The Securities may be issued in one or more Series. All Securities of
a Series shall be identical except as may be set forth in a Board Resolution, a
supplemental indenture or an Officers' Certificate detailing the adoption of the
terms thereof pursuant to the authority granted under a Board Resolution. In the
case of Securities of a Series to be issued from time to time, the Board
Resolution, Officers' Certificate or supplemental indenture may provide for the
method by which specified terms (such as interest rate, maturity date,
6
record date or date from which interest shall accrue) are to be determined.
Securities may differ between Series in respect of any matters.
SECTION 2.02. Establishment of Terms of Series of Securities. At or
prior to the issuance of any Securities within a Series, the following shall be
established (as to the Series generally, in the case of Subsection 2.02(a) and
either as to such Securities within the Series or as to the Series generally in
the case of Subsections 2.02(b) through 2.02(x)) by a Board Resolution, a
supplemental indenture or an Officers' Certificate pursuant to authority granted
under a Board Resolution:
(a) the title of the Securities of the Series (which shall distinguish
the Securities of that particular Series from the Securities of any other
Series);
(b) any limit upon the aggregate principal amount of the Securities of
the Series which may be authenticated and delivered under this Indenture (except
for Securities authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other Securities of the Series);
(c) the date or dates on which the principal and premium of the
Securities of the Series are payable;
(d) the rate or rates (which may be fixed or variable) at which the
Securities of the Series shall bear interest, if any, or the method of
determining such rate or rates, the date or dates from which such interest, if
any, shall accrue, the Interest Payment Dates on which such interest, if any,
shall be payable or the method by which such dates will be determined, the
record dates, for the determination of Holders thereof to whom such interest is
payable (in the case of Securities in registered form), and the basis upon which
such interest will be calculated if other than that of a 360-day year of twelve
30-day months;
(e) the currency or currencies, including composite currencies in
which Securities of the Series shall be denominated, if other than Dollars, the
place or places, if any, in addition to or instead of the Corporate Trust Office
of the Trustee (in the case of Securities in registered form) or the principal
New York office of the Trustee (in the case of Securities in bearer form), where
the principal, premium and interest with respect to Securities of such Series
shall be payable or the method of such payment, if by wire transfer, mail or
other means;
(f) the price or prices at which, the period or periods within which,
and the terms and conditions upon which, Securities of the Series may be
redeemed, in whole or in part at the option of the Company or otherwise;
(g) whether Securities of the Series are to be issued in registered
form or bearer form or both and, if Securities are to be issued in bearer form,
whether coupons will be attached to them, whether Securities of the Series in
bearer form may be exchanged for Securities of the Series issued in registered
form, and the circumstances under which and the places at which any such
exchanges, if permitted, may be made;
(h) if any Securities of the Series are to be issued in bearer form or
as one or more Global Securities representing individual Securities of the
Series in bearer form,
7
whether certain provisions for the payment of additional interest or tax
redemptions shall apply; whether interest with respect to any portion of a
temporary Security of the Series in bearer form payable with respect to any
Interest Payment Date prior to the exchange of such temporary Security in
bearer form for definitive Securities of the Series in bearer form shall be
paid to any clearing organization with respect to the portion of such
temporary Security in bearer form held for its account and, in such event, the
terms and conditions (including any certification requirements) upon which any
such interest payment received by a clearing organization will be credited to
the Persons entitled to interest payable on such Interest Payment Date; and
the terms upon which a temporary Security in bearer form may be exchanged for
one or more definitive Securities of the Series in bearer form;
(i) the obligation, if any, of the Company to redeem, purchase or
repay the Securities of the Series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof and the price or prices at
which, the period or periods within which, and the terms and conditions upon
which, Securities of the Series shall be redeemed, purchased or repaid, in whole
or in part, pursuant to such obligations;
(j) the terms, if any, upon which the Securities of the Series may be
convertible into or exchanged for any of the Company's common stock, preferred
stock, other debt securities or warrants for common stock, preferred stock or
other securities of any kind and the terms and conditions upon which such
conversion or exchange shall be effected, including the initial conversion or
exchange price or rate, the conversion or exchange period and any other
additional provisions;
(k) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which the Securities of the Series shall be
issuable;
(l) if the amount of principal, premium or interest with respect to
the Securities of the Series may be determined with reference to an index or
pursuant to a formula, the manner in which such amounts will be determined;
(m) if the principal amount payable at the Stated Maturity of
Securities of the Series will not be determinable as of any one or more dates
prior to such Stated Maturity, the amount that will be deemed to be such
principal amount as of any such date for any purpose, including the principal
amount thereof which will be due and payable upon any Maturity other than the
Stated Maturity and which will be deemed to be outstanding as of any such date
(or, in any such case, the manner in which such deemed principal amount is to be
determined), and if necessary, the manner of determining the equivalent thereof
in Dollars;
(n) any changes or additions to Article Eight;
(o) if other than the principal amount thereof, the portion of the
principal amount of the Securities of the Series that shall be payable upon
declaration of acceleration of the maturity thereof pursuant to Section 6.02;
(p) the terms, if any, of the transfer, mortgage, pledge or assignment
as security for the Securities of the Series of any properties, assets, moneys,
proceeds, securities or other collateral, including whether certain provisions
of the TIA are
8
applicable and any corresponding changes to provisions of this Indenture as then
in effect;
(q) any addition to or change in the Events of Default which applies
to any Securities of the Series and any change in the right of the Trustee or
the requisite Holders of such Series of Securities to declare the principal
amount of, premium, if any, and interest on such Series of Securities due and
payable pursuant to Section 6.02;
(r) if the Securities of the Series shall be issued in whole or in
part in the form of a Global Security, the terms and conditions, if any, upon
which such Global Security may be exchanged in whole or in part for other
individual Definitive Securities of such Series, the Depositary for such Global
Security and the form of any legend or legends to be borne by any such Global
Security in addition to or in lieu of the Global Securities Legend;
(s) any Trustee, authenticating agent, Paying Agent, transfer agent,
Service Agent or Registrar;
(t) the applicability of, and any addition to or change in, the
covenants (and the related definitions) set forth in Articles Four or Five which
applies to Securities of the Series;
(u) the names, if any, of the Subsidiary Guarantors and the terms of
the Subsidiary Guarantees, including any provisions related to their
subordination;
(v) the subordination, if any, of the Securities of the Series
pursuant to this Indenture;
(w) with regard to Securities of the Series that do not bear interest,
the dates for certain required reports to the Trustee;
(x) any United States Federal income tax consequences applicable to
the Securities;
(y) the terms applicable to Original Issue Discount Securities,
including the rate or rates at which original issue discount will accrue;
(z) any other terms of Securities of the Series (which terms shall not
be prohibited by the provisions of this Indenture).
All Securities of any one Series need not be issued at the same time
and may be issued from time to time, consistent with the terms of this
Indenture, if so provided by or pursuant to the Board Resolution, supplemental
indenture or Officers' Certificate referred to above, and the authorized
principal amount of any Series may not be increased to provide for issuances of
additional Securities of such Series, unless otherwise provided in such Board
Resolution, supplemental indenture or Officers' Certificate.
SECTION 2.03. Execution and Authentication. One or more Officers shall
sign the Securities for the Company by manual or facsimile signature. If an
Officer
9
whose signature is on a Security no longer holds that office at the time the
Security is authenticated, the Security shall nevertheless be valid. A
Security shall not be valid until authenticated by the manual signature of the
Trustee or an authenticating agent. The signature shall be conclusive evidence
that the Security has been authenticated under this Indenture.
The Trustee shall at any time, and from time to time, authenticate
Securities for original issue in the principal amount provided in the Board
Resolution, supplemental indenture hereto or Officers' Certificate, upon receipt
by the Trustee of a Company Order. Such Company Order may authorize
authentication and delivery pursuant to oral or electronic instructions from the
Company or its duly authorized agent or agents, which oral instructions shall be
promptly confirmed in writing. Each Security shall be dated the date of its
authentication unless otherwise provided by a Board Resolution, a supplemental
indenture hereto or an Officers' Certificate.
The aggregate principal amount of Securities of any Series outstanding
at any time may not exceed any limit upon the maximum principal amount for such
Series set forth in the Board Resolution, supplemental indenture hereto or
Officers' Certificate delivered pursuant to Section 2.02, except as provided in
Section 2.08.
Prior to the issuance of Securities of any Series, the Trustee shall
have received and (subject to Section 7.02) shall be fully protected in relying
on: (a) the Board Resolution, supplemental indenture hereto or Officers'
Certificate establishing the form of the Securities of that Series or of
Securities within that Series and the terms of the Securities of that Series or
of Securities within that Series, (b) an Officers' Certificate complying with
Section 11.04, and (c) an Opinion of Counsel complying with Section 11.04.
The Trustee shall have the right to decline to authenticate and
deliver any Securities of such Series: (a) if the Trustee, being advised by
counsel, determines that such action may not lawfully be taken; or (b) if the
Trustee in good faith by its board of directors or trustees, executive committee
or a trust committee of directors and/or vice- presidents shall determine that
such action would expose the Trustee to personal liability to Holders of any
then outstanding Series of Securities.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. An authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate.
SECTION 2.04. Registrar and Paying Agent. The Company shall maintain,
with respect to each Series of Securities, at the place or places specified with
respect to such Series pursuant to Section 2.02, an office or agency where
Securities of such Series may be presented or surrendered for payment ("Paying
Agent"), where Securities of such Series may be presented for registration of
transfer or exchange ("Registrar") and where notices and demands to or upon the
Company in respect of the Securities of such Series and this Indenture may be
served ("Service Agent"). The Registrar shall keep a register with respect to
each Series of Securities and to their transfer and exchange. The Company will
give prompt written notice to the Trustee of
10
the name and address, and any change in the name or address, of each
Registrar, Paying Agent or Service Agent. If at any time the Company shall
fail to maintain any such required Registrar, Paying Agent or Service Agent or
shall fail to furnish the Trustee with the name and address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices
and demands.
The Company may also from time to time designate one or more
co-registrars, additional paying agents or additional service agents and may
from time to time rescind such designations; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligations to maintain a Registrar, Paying Agent and Service Agent in each
place so specified pursuant to Section 2.02 for Securities of any Series for
such purposes. The Company will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the name or address of any
such co-registrar, additional paying agent or additional service agent. The term
"Registrar" includes any co-registrar; the term "Paying Agent" includes any
additional paying agent; and the term "Service Agent" includes any additional
service agent.
The Company hereby appoints the Trustee as the initial Registrar,
Paying Agent and Service Agent for each Series unless another Registrar, Paying
Agent or Service Agent, as the case may be, is appointed prior to the time
Securities of that Series are first issued.
SECTION 2.05. Paying Agent to Hold Money in Trust. The Company shall
require each Paying Agent, other than the Trustee, to agree in writing that the
Paying Agent will hold in trust, for the benefit of Holders of any Series of
Securities, or the Trustee, all money held by the Paying Agent for the payment
of principal of or interest on the Series of Securities, and will notify the
Trustee of any default by the Company in making any such payment. While any such
default continues, the Trustee may require a Paying Agent to pay all money held
by it to the Trustee. The Company at any time may require a Paying Agent to pay
all money held by it to the Trustee. Upon payment over to the Trustee, the
Paying Agent (if other than the Company or a Subsidiary) shall have no further
liability for the money. If the Company or a Subsidiary acts as Paying Agent, it
shall segregate and hold in a separate trust fund for the benefit of Holders of
any Series of Securities all money held by it as Paying Agent.
SECTION 2.06. Holder Lists. The Trustee shall preserve in as current a
form as is reasonably practicable the most recent list available to it of the
names and addresses of Holders of each Series of Securities and shall otherwise
comply with TIA ss. 312(a). If the Trustee is not the Registrar, the Company
shall furnish to the Trustee at least ten days before each Interest Payment Date
and at such other times as the Trustee may request in writing a list, in such
form and as of such date as the Trustee may reasonably require, of the names and
addresses of Holders of each Series of Securities.
SECTION 2.07. Transfer and Exchange. When Securities of a Series are
presented to the Registrar or a co-registrar with a request to register a
transfer or to exchange them for an equal principal amount of Securities of the
same Series, the Registrar shall register the transfer or make the exchange if
its requirements for such
11
transactions are met. To permit registrations of transfers and exchanges, the
Trustee shall authenticate Securities at the Registrar's request. No service
charge shall be made for any registration of transfer or exchange (except as
otherwise expressly permitted herein), but the Company may require payment of
a sum sufficient to cover any transfer tax or similar governmental charge
payable in connection therewith (other than any such transfer tax or similar
governmental charge payable upon exchanges pursuant to Sections 2.11, 3.06 or
9.05).
Neither the Company nor the Registrar shall be required (a) to issue,
register the transfer of, or exchange Securities of any Series for the period
beginning at the opening of business fifteen days immediately preceding the
mailing of a notice of redemption of Securities of that Series selected for
redemption and ending at the close of business on the day of such mailing, or
(b) to register the transfer or exchange of Securities of any Series selected,
called or being called for redemption as a whole or the portion being redeemed
of any such Securities selected, called or being called for redemption in part.
SECTION 2.08. Mutilated, Destroyed, Lost and Stolen Securities. If any
mutilated Security is surrendered to the Trustee, the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor a new Security
of the same Series and of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Security
and (ii) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice to
the Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and make available for delivery, in lieu of any such destroyed,
lost or stolen Security, a new Security of the same Series and of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any Series issued pursuant to this Section in
lieu of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that Series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
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SECTION 2.09. Outstanding Securities. The Securities outstanding at
any time are all the Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation, those reductions in the
interest on a Global Security effected by the Trustee in accordance with the
provisions hereof and those described in this Section as not outstanding.
If a Security is replaced pursuant to Section 2.08, it ceases to be
outstanding until the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds on the Maturity of Securities of a Series money
sufficient to pay such Securities payable on that date, then on and after that
date such Securities of the Series cease to be outstanding and interest on them
ceases to accrue.
A Security does not cease to be outstanding because the Company or an
Affiliate holds the Security.
In determining whether the Holders of the requisite principal amount
of outstanding Securities have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, the principal amount of an
Original Issue Discount Security that shall be deemed to be outstanding for such
purposes shall be the amount of the principal thereof that would be due and
payable as of the date of such determination upon a declaration of acceleration
of the Maturity thereof pursuant to Section 6.02.
SECTION 2.10. Treasury Securities. In determining whether the Holders
of the required principal amount of Securities of a Series have concurred in any
request, demand, authorization, direction, notice, consent or waiver, Securities
of a Series owned by the Company or an Affiliate shall be disregarded, except
that for the purposes of determining whether the Trustee shall be protected in
relying on any such request, demand, authorization, direction, notice, consent
or waiver only Securities of a Series that a Responsible Officer of the Trustee
actually knows are so owned shall be so disregarded.
SECTION 2.11. Temporary Securities. Until Definitive Securities are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities upon a Company Order. Temporary Securities shall be
substantially in the form of Definitive Securities but may have variations that
the Company considers appropriate for temporary Securities. Without unreasonable
delay, the Company shall prepare and the Trustee upon request shall authenticate
Definitive Securities of the same Series and date of maturity in exchange for
temporary Securities. Until so exchanged, temporary Securities shall have the
same rights under this Indenture as the Definitive Securities.
SECTION 2.12. Cancellation. The Company at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee shall cancel all Securities
surrendered for transfer, exchange, payment, replacement or cancellation and
shall dispose of such canceled Securities according to its normal operating
procedures (subject to the record retention requirement of the Exchange Act) and
deliver a certificate of such destruction to the
13
Company, unless the Company otherwise directs. The Company may not issue new
Securities to replace Securities that it has paid or delivered to the Trustee
for cancellation.
SECTION 2.13. Defaulted Interest. If the Company defaults in a payment
of interest on a Series of Securities, it shall pay the defaulted interest,
plus, to the extent permitted by law, any interest payable on the defaulted
interest, to the persons who are Holders of the Series on a subsequent special
record date. The Company shall fix the record date and payment date. At least 30
days before the record date, the Company shall mail to the Trustee and to each
Holder of the Series a notice that states the record date, the payment date and
the amount of interest to be paid. The Company may pay defaulted interest in any
other lawful manner.
SECTION 2.14. Global Securities.
(a) Terms of Securities. A Board Resolution, a supplemental indenture
hereto or an Officers' Certificate shall establish whether the Securities of a
Series shall be issued in whole or in part in the form of one or more Global
Securities and the Depositary for such Global Security or Securities.
(b) Transfer and Exchange. Notwithstanding any provisions to the
contrary contained in Section 2.07 of the Indenture and in addition thereto, any
Global Security shall be exchangeable pursuant to Section 2.07 of the Indenture
for Securities registered in the names of Holders other than the Depositary for
such Security or its nominee only if (i) such Depositary notifies the Company
that it is unwilling or unable to continue as Depositary for such Global
Security or if at any time such Depositary ceases to be a clearing agency
registered under the Exchange Act, and, in either case, the Company fails to
appoint a successor Depositary within 90 days of such event, (ii) the Company
executes and delivers to the Trustee an Officers' Certificate to the effect that
such Global Security shall be so exchangeable or (iii) an Event of Default with
respect to the Securities represented by such Global Security shall have
happened and be continuing. Any Global Security that is exchangeable pursuant to
the preceding sentence shall be exchangeable for Securities registered in such
names as the Depositary shall direct in writing in an aggregate principal amount
equal to the principal amount of the Global Security with like tenor and terms.
Except as provided in this Section 2.14(b) a Global Security may not
be transferred except as a whole by the Depositary with respect to such Global
Security to a nominee of such Depositary, by a nominee of such Depositary to
such Depositary or another nominee of such Depositary or by the Depositary or
any such nominee to a successor Depositary or a nominee of such a successor
Depositary.
(c) Legend. Any Global Security issued hereunder shall bear a legend
in substantially the following form:
"THIS GLOBAL SECURITY IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS SECURITY) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF
THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (II) THIS GLOBAL SECURITY
MAY BE EXCHANGED IN WHOLE BUT NOT IN PART
14
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (III) THIS GLOBAL SECURITY MAY BE
DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.12 OF THE
INDENTURE AND (IV) THIS GLOBAL SECURITY MAY BE TRANSFERRED TO A SUCCESSOR
DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF FLOWSERVE CORPORATION"
(d) Acts of Holders. (i) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by an agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and conclusive in favor of the Trustee and the
Company, if made in the manner provided in this Section.
(ii) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to such officer the execution thereof.
Where such execution is by a signer acting in a capacity other than such
signer's individual capacity, such certificate or affidavit shall also
constitute sufficient proof of such signer's authority. The fact and date of the
execution of any such instrument or writing, or the authority of the Person
executing the same, may also be proved in any other manner which the Trustee
deems sufficient.
(iii) The ownership of bearer securities may be proved by the
production of such bearer securities or by a certificate executed by any trust
company, bank, banker or other depositary, wherever situated, if such
certificate shall be deemed by the Trustee to be satisfactory, showing that at
the date therein mentioned such Person had on deposit with such depositary, or
exhibited to it, the bearer securities therein described; or such facts may be
proved by the certificate or affidavit of the Person holding such bearer
securities, if such certificate or affidavit is deemed by the Trustee to be
satisfactory. The Trustee and the Company may assume that such ownership of any
bearer security continues until (i) another such certificate or affidavit
bearing a later date issued in respect of the same bearer security is produced,
(ii) such bearer security is produced to the Trustee by some other Person, (iii)
such bearer security is surrendered in exchange for a registered security or
(iv) such bearer security is no longer outstanding. The ownership of bearer
securities may also be proved in any other manner which the Trustee deems
sufficient.
(iv) The ownership of registered securities shall be proved by the
register maintained by the Registrar.
(v) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be
15
done by the Trustee or the Company in reliance thereon, whether or not
notation of such action is made upon such Security.
(vi) If the Company shall solicit from the Holders any request,
demand, authorization, direction, notice, consent, waiver or other Act, the
Company may, at its option, by or pursuant to a Board Resolution, fix in advance
a record date for the determination of Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but the
Company shall have no obligation to do so. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent, waiver or other Act
may be given before or after such record date, but only the Holders of record at
the close of business on such record date shall be deemed to be Holders for the
purposes of determining whether Holders of the requisite proportion of
outstanding Securities have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act, and for
that purpose the outstanding Securities shall be computed as of such record
date; provided that no such authorization, agreement or consent by the Holders
on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than six months after the
record date.
The Depositary, as a Holder, may appoint agents and otherwise
authorize Participants to give or take any request, demand, authorization,
direction, notice, consent, waiver or other action which a Holder is entitled to
give or take under the Indenture.
(e) Payments. Notwithstanding the other provisions of this Indenture,
unless otherwise specified as contemplated by Section 2.02, payment of the
principal of and interest, if any, on any Global Security shall be made to the
Holder thereof.
(f) Consents, Declaration and Directions. Except as provided in
Section 2.14(e), the Company, the Trustee and any Agent shall treat a person as
the Holder of such principal amount of outstanding Securities of such Series
represented by a Global Security as shall be specified in a written statement of
the Depositary with respect to such Global Security, for purposes of obtaining
any consents, declarations, waivers or directions required to be given by the
Holders pursuant to this Indenture.
SECTION 2.15. CUSIP Numbers. The Company in issuing the Securities may
use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
elements of identification printed on the Securities, and any such redemption
shall not be affected by any defect in or omission of such numbers. The Company
shall promptly notify the Trustee of any change in CUSIP Numbers.
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ARTICLE THREE
REDEMPTION AND PREPAYMENT
-------------------------
SECTION 3.01. Notices to Trustee. The Company may, with respect to any
Series of Securities, reserve the right to redeem and pay the Series of
Securities or may covenant to redeem and pay the Series of Securities or any
part thereof prior to the Stated Maturity thereof at such time and on such terms
as provided for in such Series of Securities. If a Series of Securities is
redeemable and the Company wants or is obligated to redeem prior to the Stated
Maturity thereof all or part of the Series of Securities pursuant to the terms
of such Securities, it shall notify the Trustee of the redemption date and the
principal amount of Securities of the Series to be redeemed and the redemption
price. The Company shall give such notice to the Trustee at least 30 but no more
that 60 days before the redemption date (or such shorter notice as may be
acceptable to the Trustee).
SECTION 3.02. Selection of Securities to Be Redeemed. Unless otherwise
indicated for a particular Series by a Board Resolution, a supplemental
indenture or an Officer's Certificate, if less than all of the Securities are to
be redeemed or purchased in an offer to purchase at any time, the Trustee shall
select the Securities to be redeemed or purchased as follows:
(1) if the Securities are listed on any national securities exchange,
in compliance with the requirements of the principal national securities
exchange, if any, on which the Securities are listed; or
(2) if the Securities are not listed on any national securities
exchange, on a pro rata basis, by lot or by such other method as the
Trustee shall deem fair and appropriate.
No Securities of $1,000 of principal amount or less will be redeemed
in part. Except as provided in the preceding sentence, provisions of this
Indenture that apply to Securities called for redemption also apply to portions
of Securities called for redemption. The Trustee shall make the selection at
least 25 days but not more than 60 days before the redemption date from
outstanding Securities of a Series not previously called for redemption.
If any Security is to be redeemed in part only, the notice of
redemption that relates to such Security shall state the portion of the
principal amount of that Security to be redeemed. A new Security in principal
amount equal to the unredeemed portion of the original Security presented for
redemption will be issued in the name of the Holder thereof upon cancellation of
the original Security. Securities called for redemption become due on the date
fixed for redemption. On and after the redemption date, interest ceases to
accrue or accrete on Securities or portions of them called for redemption.
SECTION 3.03. Notice of Redemption. Unless otherwise provided for a
particular Series of Securities by a Board Resolution, a supplemental indenture
or an Officers' Certificate, at least 30 days but not more than 60 days before a
redemption date, the Company shall mail or cause to be mailed, by first class
mail, a notice of redemption to each Holder whose Securities are to be redeemed
at its registered address.
17
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the
redemption date upon surrender of such Security, a new Security or
Securities in principal amount equal to the unredeemed portion shall be
issued upon cancellation of the original Security;
(4) the name and address of the Paying Agent;
(5) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(6) that, unless the Company defaults in making such redemption
payment or the Paying Agent is prohibited from making such payment pursuant
to the terms of this Indenture, interest on Securities (or portion thereof)
called for redemption ceases to accrue on and after the redemption date;
(7) the paragraph of the Securities and/or provision of this Indenture
or any supplemental indenture pursuant to which the Securities called for
redemption are being redeemed; and
(8) the CUSIP or ISIN number, if any, printed on the Securities being
redeemed;
(9) that no representation is made as to the correctness or accuracy
of the CUSIP or ISIN number, if any, listed in such notice or printed on
the Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as required
by this Section.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed in accordance with Section 3.03 hereof, Securities called
for redemption become irrevocably due and payable on the redemption date at the
redemption price. A notice of redemption may not be conditional.
Failure to give notice or any defect in the notice to any Holder shall
not affect the validity of the notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price. Prior to 10:00 a.m. (New
York City time) on the redemption date, the Company shall deposit with the
Trustee or with the Paying Agent (or, if any Issuer or a Subsidiary of any of
the Issuers is the Paying Agent, shall segregate and hold in trust) money
sufficient to pay the redemption price of, and accrued interest on, all
Securities to be redeemed on that date, other than Securities or
18
portions of Securities called for redemption that have been delivered by the
Issuers to the Trustee for cancellation. The Trustee or the Paying Agent shall
as promptly as practicable return to the Company any money deposited with the
Trustee or the Paying Agent by the Company in excess of the amounts necessary
to pay the redemption price of, and accrued interest on, all Securities to be
redeemed. If such money is then held by the Issuers in trust and is not
required for such purpose it shall be discharged from such trust.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Securities or the portions of Securities called for redemption. If a
Security is redeemed on or after an interest record date but on or prior to the
related interest payment date, then any accrued and unpaid interest shall be
paid to the Person in whose name such Security was registered at the close of
business on such record date. If any Security called for redemption shall not be
so paid upon surrender for redemption because of the failure of the Company to
comply with the preceding paragraph, interest shall be paid on the unpaid
principal, from the redemption date until such principal is paid, and, to the
extent lawful, on any interest not paid on such unpaid principal, in each case
at the rate provided in the Securities.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and, upon the
Company's written request, the Trustee shall authenticate for the Holder (at the
Company's expense) a new Security equal in principal amount to the unredeemed
portion of the Security surrendered.
ARTICLE FOUR
COVENANTS
---------
SECTION 4.01. Payment of Securities. The Company covenants and agrees
for the benefit of the Holders of each Series of Securities that it will duly
and punctually make all payments in respect of each Series of Securities on the
dates and in the manner provided in such series of Securities and this
Indenture. Such payments shall be considered made on the date due if on such
date the Trustee or the Paying Agent holds, in accordance with this Indenture,
money sufficient to make all payments with respect to such Securities then due
and the Trustee or the Paying Agent, as the case may be, is not prohibited from
paying such money to the Holders on that date pursuant to the terms of this
Indenture.
SECTION 4.02. SEC Reports. Unless otherwise indicated in a Board
Resolution, a supplemental indenture hereto or an Officer's Certificate,
notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, so long as any
Securities are outstanding, the Company shall furnish to the Holders copies of
its annual report and the information, documents and other reports that are
specified in Sections 13 and 15(d) of the Exchange Act. Delivery of such
reports, information and documents to the Trustee is for informational purposes
only and the Trustee's receipt of such shall not constitute constructive notice
of any information contained therein or determinable from information contained
therein, including the Company's compliance with any of the covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers'
Certificates). The Company also shall comply with the other provisions of TIA
ss. 314(a).
19
In addition, whether or not required by the rules and regulations of
the SEC, the Company shall file a copy of all such information and reports with
the SEC for public availability within the time periods specified in the SEC's
rules and regulations (unless the SEC will not accept such a filing) and make
such information available to securities analysts and prospective investors upon
request. The Company shall at all times comply with TIA ss. 314(a).
SECTION 4.03. Compliance Certificate. The Company shall deliver to the
Trustee within 120 days after the end of each fiscal year of the Company an
Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Company they would normally have
knowledge of any Default and whether or not the signers know of any Default that
occurred during such period. If they do, the certificate shall describe the
Default, its status and what action the Issuers are taking or propose to take
with respect thereto. The Company also shall comply with TIA ss. 314(a)(4).
SECTION 4.04. Further Instruments and Acts. The Company shall execute
and deliver to the Trustee such further instruments and do such further acts as
may be reasonably necessary or proper to carry out more effectively the purpose
of this Indenture.
SECTION 4.05. Corporate Existence. Subject to Article 5 hereof, the
Company shall do or cause to be done all things necessary to preserve and keep
in full force and effect:
(1) its corporate existence, and the corporate, partnership or other
existence of each of its Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of
the Company or any such Subsidiary and
(2) the rights (charter and statutory), licenses and franchises of the
Company and its Subsidiaries; provided, however, that the Company shall not
be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if
the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and its
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in
any material respect to the Holders of the Securities.
SECTION 4.06 Calculation of Original Issue Discount. The Company shall
file with the Trustee promptly at the end of each calendar year (i) a written
notice specifying the amount of original issue discount (including daily rates
and accrual periods) accrued on outstanding Securities as of the end of such
year and (ii) such other specific information relating to such original issue
discount as may then be relevant under the Internal Revenue Code of 1986, as
amended from time to time.
ARTICLE FIVE
SUCCESSOR COMPANIES
-------------------
SECTION 5.01. Merger, Consolidation or Sale of Assets. Unless
otherwise provided for a particular Series of Securities by a Board Resolution,
a supplemental
20
indenture or an Officers' Certificate, the Company shall not consolidate with
or merge into or sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its properties or assets in one transaction or
series of transactions, to another Person unless:
(a) the resulting, surviving or transferee Person (the "Successor
Company") shall be a corporation organized or existing under the laws of
the United States, any state thereof or the District of Columbia;
(b) the entity or Person formed by or surviving any such consolidation
or merger (if other than the Company) or the entity or Person to which the
sale, assignment, transfer, lease, conveyance or other disposition shall
have been made assumes all the Obligations (as defined in the Board
Resolution, a supplemental indenture hereto or an Officers' Certificate for
a particular Series) of the Company under the Securities and this Indenture
pursuant to a supplemental indenture in a form reasonably satisfactory to
the Trustee;
(c) immediately after giving effect such transaction no Default shall
have occurred and be continuing;
(d) immediately after giving effect to such transaction, the Successor
Company shall have Consolidated Net Worth (as defined in the Board
Resolution, supplemental indenture hereto or an Officer's Certificate for a
particular Series) in an amount that is not less than the Consolidated Net
Worth of the Company immediately prior to such transaction; and
(e) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer comply with this Indenture.
The Successor Company shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under this Indenture (as
modified or supplemented by a Board Resolution, supplemental indenture hereto or
an Officers' Certificate), and the predecessor Company, except in the case of a
lease of all or substantially all of its assets, shall be released from the
obligation to pay the principal of and interest on the Securities.
The Company shall not permit any Subsidiary Guarantor to
consolidate with or merge with or into, or convey, transfer or lease, in one
transaction or a series of transactions, all or substantially all of its
assets to any Person unless: (1) except in the case of a Subsidiary Guarantor
that has been disposed of in its entirety to another Person (other than to the
Company or an Affiliate of the Company), whether through a merger,
consolidation or sale of Capital Stock or assets, the resulting, surviving or
transferee Person (if not such Subsidiary) shall be a Person organized and
existing under the laws of the jurisdiction under which such Subsidiary was
organized or under the laws of the United States of America, or any State
thereof or the District of Columbia, and such Person shall expressly assume,
by a guaranty agreement, in a form satisfactory to the Trustee, all the
obligations of such Subsidiary, if any, under its Subsidiary Guarantee of the
Securities; (2) immediately after giving effect to such transaction or
transactions on a pro forma basis (and treating any Indebtedness which becomes
an obligation of the resulting, surviving or transferee Person as a result of
such transaction as having been issued by such Person at the
21
time of such transaction), no Default shall have occurred and be continuing;
and (3) the Company delivers to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that such consolidation, merger or transfer
and such guaranty agreement, if any, complies with this Indenture.
ARTICLE SIX
DEFAULTS AND REMEDIES
---------------------
SECTION 6.01. Events of Default. Unless otherwise indicated for a
particular Series of Securities by a Board Resolution, a supplemental indenture
hereto, or an Officers' Certificate, each of the following constitutes an "Event
of Default" with respect to each Series of Securities:
(1) default for 30 days in the payment of interest when due on the
Securities;
(2) default in the payment of the principal of or premium, if any,
when due on the Securities;
(3) the Company fails to comply with the provisions described under
Article 5 hereof;
(4) the Company fails to comply with Section 4.02, 4.03 or 4.04 and
such failure continues for 30 days after notice (as specified below);
(5) the Company or any Subsidiary Guarantor fails to comply with any
of its agreements in the Securities or this Indenture (other than those referred
to in clause (1), (2), (3) or (4) above) and such failure continues for 60 days
after the notice specified below;
(6) Indebtedness (as defined in the applicable Board Resolution,
supplemental indenture hereto or Officers' Certificate relating to a particular
Series of Securities) of any Subsidiary Guarantor, the Company or any
Significant Subsidiary is not paid within any applicable grace period after
final maturity or is accelerated by the holders thereof because of a default and
the total amount of such Indebtedness unpaid or accelerated exceeds $10.0
million, or its foreign currency equivalent at the time;
(7) any Subsidiary Guarantor, the Company or any Significant
Subsidiary pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in an
involuntary case;
(C) consents to the appointment of a Custodian of it or for any
substantial part of its property; or
(D) makes a general assignment for the benefit of its creditors;
22
or takes any comparable action under any foreign laws relating to insolvency;
(8) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against any Subsidiary Guarantor, the Company or any
Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of any Subsidiary Guarantor, the Company or
any Significant Subsidiary or for any substantial part of its property; or
(C) orders the winding up or liquidation of any Subsidiary Guarantor,
the Company or any Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order or decree
remains unstayed and in effect for 60 days;
(9) any judgment or decree for the payment of money in excess of $10.0
million or its foreign currency equivalent at the time is entered against any
Subsidiary Guarantor, the Company or any Significant Subsidiary, remains
outstanding for a period of 60 days following the entry of such judgment or
decree and is not discharged, waived or the execution thereof stayed within 10
days after the notice specified below; or
(10) a Subsidiary Guarantee ceases to be in full force and effect
(other than in accordance with the terms of this Indenture) or a Subsidiary
Guarantor denies or disaffirms its obligations under its Subsidiary Guarantee.
The foregoing will constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
The term "Custodian" means, for the purposes of this Article Six, any
receiver, trustee, assignee, liquidator, custodian or similar official under any
Bankruptcy Law.
A Default under clauses (4), (5) or (9) is not an Event of Default
until the Trustee or the Holders of at least 25% in principal amount of the
outstanding Securities notify the Company of the Default and the Company does
not cure such Default within the time specified after receipt of such notice.
Such notice must specify the Default, demand that it be remedied and state that
such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Event of Default under clause (6) or (10) and any event which with the
giving of notice or the lapse of time would become an Event of Default under
clause (4), (5) or (9), its status and what action the Company is taking or
proposes to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default with respect to any
Series of Securities at the time outstanding (other than an Event of Default
specified in
23
Section 6.01(7) or (8) with respect to the Company) occurs and is continuing,
the Trustee or the Holders of at least 25% in principal amount of the
outstanding Securities of that Series by notice to the Company, may declare
the principal amount of (or, in the case of Original Issue Discount Securities
of that Series, the portion thereby specified in the terms of such Security),
premium, if any, and accrued and unpaid interest on all the Securities of that
Series to be due and payable. Upon such a declaration, such amounts shall be
due and payable immediately. If an Event of Default specified in Section
6.01(7) or (8) with respect to the Company occurs, the principal amount of
(or, in the case of Original Issue Discount Securities of that Series, the
portion thereby specified in the terms of such Security), premium, if any, and
accrued and unpaid interest on all the Securities of each Series of Security
shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder. The Holders
of a majority in principal amount of the Securities of any Series of
Securities by notice to the Trustee may rescind an acceleration of that Series
of Securities and its consequences if the rescission would not conflict with
any judgment or decree and if all existing Events of Default with respect to
such Series of Securities have been cured or waived except nonpayment of the
principal amount of (or, in the case of Original Issue Discount Securities of
that Series, the portion thereby specified in the terms of such Security),
premium, if any, and accrued and unpaid interest on all Securities of that
Series that has become due solely because of acceleration. No such rescission
shall affect any subsequent Default or impair any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default with respect to
any Series of Securities occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of the principal amount of (or, in the
case of Original Issue Discount Securities of that Series, the portion thereby
specified in the terms of such Security), premium, if any, and accrued and
unpaid interest on the Securities of that Series or to enforce the performance
of any provision of the Securities of that Series or this Indenture.
The Trustee may institute and maintain a suit or legal proceeding even
if it does not possess any of the Securities of a Series or does not produce any
of them in the proceeding. A delay or omission by the Trustee or any Holder in
exercising any right or remedy accruing upon an Event of Default with respect to
any Series of Securities shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. No remedy is exclusive of any
other remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in
principal amount of the Securities of any Series by notice to the Trustee may
waive an existing Default and its consequences except (i) a Default in the
payment of the principal amount of (or, in the case of Original Issue Discount
Securities of that Series, the portion thereby specified in the terms of such
Security), premium, if any, and accrued and unpaid interest on a Security of
that Series, (ii) a Default arising from the failure to redeem or purchase any
Security of that Series when required pursuant to the terms of this Indenture or
(iii) a Default in respect of a provision that under Section 9.02 cannot be
amended without the consent of each Holder of that Series affected. When a
Default is waived, it is deemed cured, but no such waiver shall extend to any
subsequent or other Default or impair any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority in
principal amount of the outstanding Securities of any Series may direct the
time, method
24
and place of conducting any proceeding for any remedy available to the Trustee
or of exercising any trust or power conferred on the Trustee with respect to
that Series. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture or, subject to Section 7.01, that the
Trustee determines is unduly prejudicial to the rights of any other Holder of
that Series or that would subject the Trustee to personal liability; provided,
however, that the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction. Prior to taking any
action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses
caused by taking or not taking such action.
SECTION 6.06. Limitation on Suits. Except to enforce the right to
receive payment of the principal amount of (or, in the case of Original Issue
Discount Securities, the portion thereby specified in the terms of such
Security), premium, if any, and accrued and unpaid interest on a Security of any
Series when due, no Holder of a Security of that Series may pursue any remedy
with respect to this Indenture or the Securities of that Series unless:
1. the Holder previously gave the Trustee written notice stating that
an Event of Default with respect to that Series is continuing;
2. the Holders of at least 25%, in principal amount of the outstanding
Securities of that Series make a written request to the Trustee to pursue the
remedy;
3. such Holder or Holders of that Series offer to the Trustee security
or indemnity satisfactory to the Trustee against any loss, liability or expense;
4. the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of security or indemnity; and
5. the Holders of a majority in aggregate principal amount of the
outstanding Securities of that Series do not give the Trustee a direction
inconsistent with the request during such 60-day period.
A Holder of Securities of any Series may not use this Indenture to
prejudice the rights of another Holder of that Series or to obtain a preference
or priority over another Holder of that Series.
SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding
any other provision of this Indenture, the right of any Holder to receive
payment of the principal amount of (or, in the case of Original Issue Discount
Securities, the portion thereby specified in the terms of such Security),
premium, if any, and accrued and unpaid interest on the Securities held by such
Holder, on or after their Maturity, or to bring suit for the enforcement of any
such payment on or after their Maturity, shall not be impaired or affected
without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default
specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount then due and owing (together with interest on any
unpaid interest to the extent lawful) and the amounts provided for in Section
7.07.
25
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Holders allowed in
any judicial proceedings relative to the Company, its creditors or its property
and, unless prohibited by law or applicable regulations, may vote on behalf of
the Holders in any election of a trustee in bankruptcy or other Person
performing similar functions, and any Custodian in any such judicial proceeding
is hereby authorized by each Holder to make payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments directly to
the Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and its counsel, and any other amounts due the Trustee under Section 7.07.
SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article 6 with respect to any Series of Securities, it
shall pay out the money or property in the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Holders for amounts due and unpaid on the Securities of
that Series for the principal amount of (or, in the case of Original Issue
Discount Securities of that Series, the portion thereby specified in the terms
of such Security), premium, if any, and accrued and unpaid interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Securities of that Series for the principal amount of (or, in the
case of Original Issue Discount Securities of that Series, the portion thereby
specified in the terms of such Security), premium, if any, and accrued and
unpaid interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section. At least 15 days before such record date, the
Trustee shall mail to each Holder and the Company a notice that states the
record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing, by any party litigant in the suit, of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees and expenses, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by
Holders of more than 10% in principal amount of the then outstanding Securities
of any Series.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company (to the
extent it may lawfully do so) shall at any time insist upon, plead, or in any
manner whatsoever claim to take the benefit or advantage of, any stay or
extension law, wherever enacted, now or at any time hereafter in force, which
may affect the covenants or the performance of this Indenture; and the Company
(to the extent that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law, and shall not hinder,
26
delay or impede the execution of any power herein granted to the Trustee, but
shall suffer and permit the execution of every such power as though no such
law had been enacted.
ARTICLE SEVEN
TRUSTEE
-------
SECTION 7.01. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing with respect to any Series of Securities, the Trustee
shall exercise the rights and powers vested in it by this Indenture and use the
same degree of care and skill in its exercise thereof as a prudent Person would
exercise or use under the circumstances in the conduct of such Person's own
affairs.
(b) Except during the continuance of an Event of Default with respect
to any Series of Securities:
(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture with respect to the Securities
of that Series, as modified or supplemented by a Board Resolution, a
supplemental indenture hereto or an Officers' Certificate and no implied
covenants or obligations shall be read into this Indenture against the Trustee;
and
(2) in the absence of bad faith on its part, the Trustee may, with
respect to Securities of that Series, conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether or not they conform to the
requirements of this Indenture (but need not confirm or investigate the accuracy
of mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own grossly
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of this
Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received by
it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company.
27
(f) Money held in trust by the Trustee need not be segregated from
funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or
powers, if it shall have reasonable grounds to believe that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may conclusively rely
on any document believed by it to be genuine and to have been signed or
presented by the proper Person. The Trustee need not investigate any fact or
matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents or attorneys and shall not be
responsible for the misconduct or negligence of any agent or attorney appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute
willful misconduct or gross negligence.
(e) The Trustee may consult with counsel of its choice, and the advice
or opinion of counsel with respect to legal matters relating to this Indenture
and the Securities, shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
(f) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(g) The Trustee shall not be deemed to have notice of any Default or
Event of Default with respect to the Securities of any Series unless a
Responsible Officer of the Trustee has actual knowledge thereof or unless
written notice of any event which is in fact such a default is received by the
Trustee at the Corporate Trust Office of the Trustee, and such notice references
such Securities and this Indenture.
(h) The rights, privileges, protections, immunities and benefits given
to the Trustee, including, without limitation, its right to be indemnified, are
extended to and shall
28
be enforceable by, the Trustee in each of its capacities hereunder, and to
each agent, custodian and other Person employed to act hereunder.
(i) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee security or indemnity reasonably satisfactory to the
Trustee against the costs, expenses and liabilities which might be incurred by
the Trustee in compliance with such request or direction.
(j) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney
at the sole cost of the Company and shall incur no liability or additional
liability of any kind by reason of such inquiry or investigation.
(k) The Trustee shall not be liable for any action taken, suffered, or
omitted to be taken by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Indenture.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar or co-paying
agent may do the same with like rights. However, the Trustee must comply with
Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in this Indenture, in the Securities, or in any
document executed in connection with the sale of the Securities, other than
those set forth in the Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default with respect to
Securities of any Series occurs and is continuing and if it is actually known to
a Trust Officer of the Trustee, the Trustee shall mail to each Holder of that
Series notice of the Default within 90 days after it occurs. The Trustee may
withhold the notice if and so long as a committee of its Responsible Officers in
good faith determines that withholding the notice is in the interests of
Holders.
SECTION 7.06. Reports by Trustee to Holder. Unless otherwise specified
in the applicable Board Resolution, supplemental indenture hereto or Officers'
Certificate, as promptly as practicable after each ________ beginning with the
_________ for so long as Securities remain outstanding, the Trustee shall mail
to each Holder a brief report dated as of such reporting date that complies with
ss. 313(a) of the TIA. The Trustee shall also comply with ss. 313(b) of the TIA.
29
A copy of each report at the time of its mailing to Holders shall be
filed with the SEC and each stock exchange (if any) on which the Securities are
listed. The Company agrees to notify promptly the Trustee whenever the
Securities become listed on any stock exchange and of any delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall pay to the
Trustee from time to time such compensation for its services as the Company and
the Trustee shall from time to time agree in writing. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection, in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of the
Trustee's agents, counsel, accountants and experts. The Company shall indemnify
the Trustee against any and all loss, liability or expense (including reasonable
attorneys' fees) incurred by or in connection with the administration of this
trust and the performance of its duties hereunder. The Trustee shall notify the
Company of any claim for which it may seek indemnity promptly upon obtaining
actual knowledge thereof; provided, however, that any failure so to notify the
Company shall not relieve the Company of its indemnity obligations hereunder.
The Company need not reimburse any expense or indemnify against any loss,
liability or expense incurred by an indemnified party through such party's own
willful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
the principal of and interest and any additional payments on particular
Securities.
The Company's payment obligations pursuant to this Section 7.07 shall
survive the satisfaction or discharge of this Indenture or the resignation or
removal of the Trustee. When the Trustee incurs expenses after the occurrence of
a Default specified in Section 6.01(7) or (8) with respect to the Company, the
expenses are intended to constitute expenses of administration under the
Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign at any
time with respect to the Securities of any Series by so notifying the Company.
The Holders of a majority in principal amount of the Securities of any Series
may remove the Trustee and may appoint a successor Trustee with respect to such
Series of Securities. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee or
its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the Holders of
a majority in principal amount of the Securities of any Series and such Holders
do not
30
reasonably promptly appoint a successor Trustee or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Issuers shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of that Series of Securities. The retiring Trustee shall
promptly transfer all property held by it as Trustee to the successor Trustee,
subject to the lien provided for in Section 7.07.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities of that Series may petition, at the
expense of the Company, any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder of that
Series of Securities may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section 7.08, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Securities shall have been authenticated but not delivered,
any such successor to the Trustee may adopt the certificate of authentication of
any predecessor trustee, and deliver such Securities so authenticated; and if at
that time any of the Securities shall not have been authenticated, any such
successor to the Trustee may authenticate such Securities either in the name of
any predecessor hereunder or in the name of the successor to the Trustee; and in
all such cases such certificates shall have the full force which it is anywhere
in the Securities or in this Indenture provided that the certificate of the
Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at all
times satisfy the requirements of TIA ss. 310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
ss. 310(b); provided, however, that there shall be excluded from the operation
of TIA ss. 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company are
outstanding if the requirements for such exclusion set forth in TIA ss.
310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Company. The
Trustee shall comply with TIAss. 311(a), excluding any creditor relationship
listed in TIA
31
ss. 311(b). A Trustee who has resigned or has been removed shall be subject
to TIA
ss. 311(a) to the extent indicated.
ARTICLE EIGHT
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
----------------------------------------
SECTION 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance. The Company may, at the option of its Board of Directors evidenced
by a resolution set forth in an Officers' Certificate, at any time, elect to
have either Section 8.02 or 8.03 hereof be applied to all outstanding Securities
of any Series upon compliance with the conditions set forth below in this
Article Eight.
SECTION 8.02. Legal Defeasance and Discharge. Upon the Company's
exercise under Section 8.01 hereof of the option applicable to this Section
8.02, the Company shall, subject to the satisfaction of the conditions set forth
in Section 8.04 hereof, be deemed to have been discharged from its obligations
with respect to all outstanding Securities of that Series on the date the
conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For
this purpose, Legal Defeasance means that the Company shall be deemed to have
paid and discharged the entire Indebtedness represented by the outstanding
Securities, which shall thereafter be deemed to be "outstanding" only for the
purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Securities and this Indenture (and the Trustee, on demand
of and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder:
(a) the rights of Holders of outstanding Securities of that Series to
receive solely from the trust fund described in Section 8.04 hereof, and as more
fully set forth in such Section, payments in respect of the principal of,
premium, if any, and interest on such Securities when such payments are due;
(b) the Company's obligations with respect to such Securities of that
Series under Article Two;
(c) the rights, powers, trusts, duties and immunities of the Trustee
hereunder and the Company's obligations in connection therewith; and
(d) this Article Eight.
Subject to compliance with this Article Eight, the Company may
exercise its option under this Section 8.02 notwithstanding the prior exercise
of its option under Section 8.03 hereof.
SECTION 8.03. Covenant Defeasance. Upon the Company's exercise under
Section 8.01 hereof of the option applicable to this Section 8.03 with respect
to any Series of Securities, the Company shall, subject to the satisfaction of
the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in a Board Resolution, a supplemental
indenture hereto or an Officers' Certificate and
32
clause (iv) of Section 5.01 hereof with respect to the outstanding Securities
of that Series on and after the date the conditions set forth in Section 8.04
are satisfied (hereinafter, "Covenant Defeasance"), and the Securities of that
Series shall thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Securities shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to
the outstanding Securities of that Series, the Company may omit to comply with
and shall have no liability in respect of any term, condition or limitation
set forth in any such covenant, whether directly or indirectly, by reason of
any reference elsewhere herein to any such covenant or by reason of any
reference in any such covenant to any other provision herein or in any other
document and such omission to comply shall not constitute a Default or an
Event of Default under Section 6.01 hereof, but, except as specified above,
the remainder of this Indenture and such Securities shall be unaffected
thereby. In addition, upon the Company's exercise under Section 8.01 hereof of
the option applicable to this Section 8.03 hereof with respect to any Series
of Securities, subject to the satisfaction of the conditions set forth in
Section 8.04 hereof, Sections 6.01(3) through 6.01(6) and 6.01(9) hereof shall
not constitute Events of Default with respect to such Securities.
SECTION 8.04. Conditions to Legal or Covenant Defeasance. The
following shall be the conditions to the application of either Section 8.02 or
8.03 hereof to the outstanding Securities:
In order to exercise either Legal Defeasance or Covenant Defeasance
with respect to any Series of Securities:
(1) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders of that Series of Securities, cash in United
States dollars, noncallable Government Securities, or a combination thereof, in
such amounts as will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants, to pay the principal of, premium, if
any, and interest on the outstanding Securities of that Series on the stated
date for payment thereof or on the applicable redemption date, as the case may
be;
(2) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling, or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Securities will not recognize income, gain or loss for federal
income tax purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such Legal Defeasance had not occurred;
(3) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Securities of that Series will not recognize income, gain or loss
for federal income tax purposes as a result of such Covenant Defeasance and will
be subject to federal income tax on the same amounts,
33
in the same manner and at the same times as would have been the case if such
Covenant Defeasance had not occurred;
(4) no Default or Event of Default with respect to that Series of
Securities shall have occurred and be continuing either:
(a) on the date of such deposit (other than a Default or Event of
Default with respect to that Series of Securities resulting from the
borrowing of funds to be applied to such deposit); or
(b) insofar as Sections 6.01(7) or 6.01(8) hereof are concerned, at
any time in the period ending on the 91st day after the date of deposit;
(5) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Company is a party or by
which the Company is bound;
(6) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that on the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
(7) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company or others; and
(8) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
SECTION 8.05. Deposited Money and Government Securities to be Held in
Trust; Other Miscellaneous Provisions. Subject to Section 8.06 hereof, all money
and noncallable Government Securities (including the proceeds thereof) deposited
with the Trustee (or other qualifying trustee, collectively for purposes of this
Section 8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Securities of the Series shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as Paying Agent) as the Trustee may determine, to
the Holders of such Securities of all sums due and to become due thereon in
respect of principal, premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or noncallable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding
Securities of that Series.
34
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or noncallable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(1) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.06. Repayment to Company. Any money deposited with the
Trustee or any Paying Agent, or then held by the Company, in trust for the
payment of the principal of, premium, if any, or interest on any Security and
remaining unclaimed for two years after such principal, and premium, if any, or
interest has become due and payable shall be paid to the Company on its request
or, if then held by the Company, shall be discharged from such trust; and the
Holder of such Security shall thereafter look only to the Company for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in the New York Times and The Wall Street
Journal (national edition), notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such notification or publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
SECTION 8.07. Reinstatement. If the Trustee or Paying Agent is unable
to apply any Dollars or noncallable Government Securities in accordance with
Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the Company's obligations under
this Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as
the Trustee or Paying Agent is permitted to apply all such money in accordance
with Section 8.02 or 8.03 hereof, as the case may be; provided, however, that,
if the Company makes any payment of principal of, premium, if any, or interest
on any Security following the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of such Securities to receive
such payment from the money held by the Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS
----------
SECTION 9.01. Without Consent of Holders. The Company, the Subsidiary
Guarantors and the Trustee may amend or supplement this Indenture or the
Securities without the consent of any Holder:
(1) to evidence the succession of another Person to the Company or any
Subsidiary Guarantor pursuant to Article Five and the assumption by such
successor of the Company's or such Subsidiary Guarantor's covenants,
agreements and obligations in this Indenture and in the Securities;
35
(2) to surrender any right or power conferred upon the Company or any
Subsidiary Guarantor by this Indenture, to add to the covenants of the
Company or any Subsidiary Guarantor such further covenants, restrictions,
conditions or provisions for the protection of the Holders of all or any
Series of Securities as the Board of Directors of the Company shall
consider to be for the protection of the Holders of such Securities, and to
make the occurrence, or the occurrence and continuance, of a default in
respect of any such additional covenants, restrictions, conditions or
provisions a Default or an Event of Default under this Indenture; provided,
however, that with respect to any such additional covenant, restriction,
condition or provision, such amendment may provide for a period of grace
after default, which may be shorter or longer than that allowed in the case
of other Defaults, may provide for an immediate enforcement upon such
Default, may limit the remedies available to the Trustee upon such Default
or may limit the right of Holders of a majority in aggregate principal
amount of the Securities of any Series to waive such default;
(3) to cure any ambiguity or correct or supplement any provision
contained in this Indenture, in any supplemental indenture or in any
Securities that may be defective or inconsistent with any other provision
contained therein;
(4) to convey, transfer, assign, mortgage or pledge any property to or
with the Trustee, or to make such other provisions in regard to matters or
questions arising under this Indenture as shall not adversely affect the
interests of any Holders of Securities of any Series;
(5) to modify or amend this Indenture in such a manner as to permit
the qualification of this Indenture or any supplemental indenture hereto
under the TIA as then in effect;
(6) to add or to change any of the provisions of this Indenture to
provide that Securities in bearer form may be registrable as to principal,
to change or eliminate any restrictions on the payment of principal or
premium with respect to Securities in registered form or of principal,
premium or interest with respect to Securities in bearer form, or to permit
Securities in registered form to be exchanged for Securities in bearer
form, so as to not adversely affect the interests of the Holders or any
coupons of any Series in any material respect or permit or facilitate the
issuance of Securities of any Series in uncertificated form;
(7) in the case of subordinated Securities, to make any change in the
provisions of this Indenture or any supplemental indenture relating to
subordination that would limit or terminate the benefits available to any
holder of Senior Indebtedness (as defined in the applicable Board
Resolution, supplemental indenture hereto or Officers' Certificate related
to such Series of Subordinated Securities) under such provisions (but only
if each such holder of Senior Indebtedness under such provisions consents
to such change);
(8) to add Subsidiary Guarantees with respect to the Securities or to
secure the Securities;
36
(9) to make any change that does not adversely affect the rights of
any Holder;
(10) to add to, change, or eliminate any of the provisions of this
Indenture with respect to one or more Series of Securities, so long as any
such addition, change or elimination not otherwise permitted under this
Indenture shall (A) neither apply to any Security of any Series created
prior to the execution of such supplemental indenture and entitled to the
benefit of such provision nor modify the rights of the Holders of any such
Security with respect to the benefit of such provision or (B) become
effective only when there is no such Security outstanding;
(11) to evidence and provide for the acceptance of appointment by a
successor or separate Trustee with respect to the Securities of one or more
Series and to add to or change any of the provisions of this Indenture as
shall be necessary to provide for or facilitate the administration of this
Indenture by more than one Trustee; or
(12) to establish the form or terms of Securities and coupons of any
Series pursuant to Article Two.
SECTION 9.02. With Consent of Holders. The Company, the Subsidiary
Guarantors and the Trustee may amend this Indenture or the Securities of any
Series without notice to any Holder but with the written consent of the Holders
of at least a majority in principal amount of the Securities of each Series then
outstanding (including consents obtained in connection with a tender offer or
exchange for the Securities) affected by such amendment. However, without the
consent of each Holder affected, an amendment may not:
(1) reduce the principal amount of Securities whose Holders must
consent to an amendment, supplement or waiver;
(2) reduce the rate of or extend the time for payment of interest,
including default interest, on any Security;
(3) reduce the principal of or change the Stated Maturity of any
Security or alter or waive any of the provisions with respect to the redemption
of the Securities;
(4) reduce the amount payable upon the redemption of any Security or
change the time at which such Security may be redeemed, if applicable;
(5) make any Security payable in money other than that stated in the
Security;
(6) in the case of any subordinated Security, make any change in the
ranking or priority of such Security that would adversely affect the rights of
the Holders;
(7) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the Securities (except a rescission of
acceleration of the Securities by the Holders of at least a majority in
aggregate principal amount of the then outstanding Securities and a waiver of
the payment default that resulted from such acceleration);
37
(8) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Securities to receive
payments of principal of, or premium, if any, or interest on the Securities;
(9) waive a redemption payment with respect to any Security;
(10) except as provided under Article Eight hereof or in accordance
with the terms of any Subsidiary Guarantee, release any Subsidiary Guarantor
from any of its obligations under its Subsidiary Guarantee or make any change in
a Subsidiary Guarantee that would adversely affect the Holders of the
Securities; or
(11) make any change in Section 6.04 or 6.07 hereof or in the
foregoing amendment and waiver provisions.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent approves the substance thereof. After an amendment
under this Section becomes effective, the Company shall mail to all affected
Holders a notice briefly describing such amendment. The failure to give such
notice to all such Holders, or any defect therein, shall not impair or affect
the validity of an amendment under this Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every amendment or
supplement to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A consent
to an amendment or a waiver by a Holder of a Security shall bind the Holder and
every subsequent Holder of that Security or portion of the Security that
evidences the same debt as the consenting Holder's Security, even if notation of
the consent or waiver is not made on the Security. However, any such Holder or
subsequent Holder may revoke the consent or waiver as to such Holder's Security
or portion of the Security if the Trustee receives the notice of revocation
before the date the amendment or waiver becomes effective. After an amendment or
waiver becomes effective, it shall bind every Holder. An amendment or waiver
becomes effective once both (i) the requisite number of consents have been
received by the Company or the Trustee and (ii) such amendment or waiver has
been executed by the Company and the Trustee.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to give their consent or take
any other action described above or required or permitted to be taken pursuant
to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an amendment
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security
38
regarding the changed terms and return it to the Holder. Alternatively, if the
Company or the Trustee so determines, the Company in exchange for the Security
shall issue and the Trustee shall authenticate a new Security that reflects
the changed terms. Failure to make the appropriate notation or to issue a new
Security shall not affect the validity of such amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article Nine if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture.
SECTION 9.07. Payment for Consent. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders, ratably, that so consent, waive or agree to
amend in the time frame set forth in solicitation documents relating to such
consent, waiver or agreement.
ARTICLE TEN
SUBSIDIARY GUARANTEES
---------------------
SECTION 10.01. Subsidiary Guarantees. If so provided in a Board
Resolution, supplemental indenture hereto or Officers' Certificate with respect
to a Series of Securities, subject to this Article Ten, each Subsidiary
Guarantor hereby unconditionally and irrevocably guarantees, jointly and
severally, to each Holder and to the Trustee and its successors and assigns (a)
the full and punctual payment of principal of and interest on such Series of
Securities when due, whether at maturity, by acceleration, by redemption or
otherwise, and all other monetary obligations of the Company under this
Indenture and such Series of Securities and (b) the full and punctual
performance within applicable grace periods of all other obligations of the
Company under this Indenture and such Series of Securities (all the foregoing
being hereinafter collectively called the "Subsidiary Guarantor Obligations").
Each Subsidiary Guarantor will further agree that the Subsidiary Guarantor
Obligations may be extended or renewed, in whole or in part, without notice or
further assent from such Subsidiary Guarantor and that such Subsidiary Guarantor
will remain bound under this Article Ten notwithstanding any extension or
renewal of any Subsidiary Guarantor Obligation.
In addition, if a Subsidiary Guarantee has been so provided by Board
Resolution, supplemental indenture hereto or Officers' Certificate with respect
to a particular Series of Securities, each of the applicable Subsidiary
Guarantors shall (1) waive presentation to, demand of, payment from and protest
to the Company of any of the Subsidiary Guarantor Obligations and also shall
waive notice of protest for nonpayment and (2) waive notice of any default under
the Securities or the Subsidiary Guarantor Obligations. The obligations of each
Subsidiary Guarantor hereunder shall not be affected
39
by (a) the failure of any Holder or the Trustee to assert any claim or demand
or to enforce any right or remedy against the Company or any other Person
under this Indenture, such Securities or any other agreement or otherwise; (b)
any extension or renewal of any thereof; (c) any rescission, waiver, amendment
or modification of any of the terms or provisions of this Indenture, such
Securities or any other agreement; (d) the release of any security held by any
Holder or the Trustee for the Subsidiary Guarantor Obligations or any of them;
(e) the failure of any Holder or the Trustee to exercise any right or remedy
against any other guarantor of the Subsidiary Guarantor Obligations; or (f)
except as set forth in Section 10.06, any change in the ownership of such
Subsidiary Guarantor.
If a Board Resolution, supplemental indenture hereto or Officers'
Certificate provides for a Subsidiary Guarantee, each Subsidiary Guarantor will
further agree that its Subsidiary Guarantee constitutes a guarantee of payment,
performance and compliance when due (and not a guarantee of collection) and will
waive any right to require that any resort be had by any Holder or the Trustee
to any security held for payment of the Subsidiary Guarantor Obligations.
If a Board Resolution, supplemental indenture hereto or Officers'
Certificate provides for a Subsidiary Guarantee with respect to a particular
Series of Securities, the Subsidiary Guarantee set forth in this Article Ten
will be subordinated to the extent and in the manner set forth in the applicable
Board Resolution, supplemental indenture or Officers' Certificate, as the case
may be.
If a Board Resolution, supplemental indenture hereto or Officers'
Certificate provides for a Subsidiary Guarantee with respect to a particular
Series of Securities, and except as expressly set forth in Sections 8.02, 8.03,
10.02 and 10.06, the obligations of each Subsidiary Guarantor so provided for
shall not be subject to any reduction, limitation, impairment or termination for
any reason, including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense of setoff, counterclaim,
recoupment or termination whatsoever or by reason of the invalidity, illegality
or unenforceability of the Subsidiary Guarantor Obligations or otherwise.
Without limiting the generality of the foregoing, the obligations of each
Subsidiary Guarantor if so provided shall not be discharged or impaired or
otherwise affected by the failure of any Holder or the Trustee to assert any
claim or demand or to enforce any remedy under this Indenture, such Series of
Securities or any other agreement, by any waiver or modification of any thereof,
by any default, failure or delay, willful or otherwise, in the performance of
the obligations, or by any other act or thing or omission or delay to do any
other act or thing which may or might in any manner or to any extent vary the
risk of such Subsidiary Guarantor or would otherwise operate as a discharge of
such Subsidiary Guarantor as a matter of law or equity.
If a Board Resolution, supplemental indenture hereto or Officers'
Certificate provides for a Subsidiary Guarantee with respect to a particular
Series of Securities, each Subsidiary Guarantor will further agree that its
Guarantee shall continue to be effective or be reinstated, as the case may be,
if at any time payment, or any part thereof, of principal of or interest on any
Subsidiary Guarantor Obligation is rescinded or must otherwise be restored by
any Holder or the Trustee upon the bankruptcy or reorganization of the Company
or otherwise.
In furtherance of the foregoing and not in limitation of any other
right which any Holder or the Trustee has at law or in equity against any
Subsidiary Guarantor by
40
virtue hereof, if a Board Resolution, supplemental indenture hereto or
Officers' Certificate provides for a Subsidiary Guarantee with respect to a
particular Series of Securities, and upon the failure of the Company to pay
the principal of or interest on any Subsidiary Guarantor Obligation when and
as the same shall become due, whether at maturity, by acceleration, by
redemption or otherwise, or to perform or comply with any other Subsidiary
Guarantor Obligation, each Subsidiary Guarantor will promise to and shall,
upon receipt of written demand by the Trustee, forthwith pay, or cause to be
paid, in cash, to the Holders or the Trustee an amount equal to the sum of (1)
the unpaid amount of such Subsidiary Guarantor Obligations, (2) accrued and
unpaid interest on such Subsidiary Guarantor Obligations (but only to the
extent not prohibited by law) and (3) all other monetary Subsidiary Guarantor
Obligations of the Company to the Holders and the Trustee.
If a Board Resolution, supplemental indenture hereto or Officers'
Certificate provides for a Subsidiary Guarantee with respect to a particular
Series of Securities, each Subsidiary Guarantor will agree that it shall not be
entitled to any right of subrogation in respect of any Subsidiary Guarantor
Obligations guaranteed hereby until payment in full of all Subsidiary Guarantor
Obligations and all obligations to which the Subsidiary Guarantor Obligations
are subordinated, as provided by the applicable Board Resolution, supplemental
indenture or Officers' Certificate. Each such Subsidiary Guarantor will further
agree that, as between it, on the one hand, and the Holders and the Trustee, on
the other hand, (x) the maturity of the Subsidiary Guarantor Obligations
guaranteed hereby may be accelerated as provided in Article Six for the purposes
of such Subsidiary Guarantor's Subsidiary Guarantee herein, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect of
the Subsidiary Guarantor Obligations guaranteed hereby, and (y) in the event of
any declaration of acceleration of such Subsidiary Guarantor Obligations as
provided in Article Six, such Subsidiary Guarantor Obligations (whether or not
due and payable) shall forthwith become due and payable by such Subsidiary
Guarantor for the purposes of this Section 10.01.
If a Board Resolution, supplemental indenture hereto or Officers'
Certificate provides for a Subsidiary Guarantee with respect to a particular
Series of Securities, each Subsidiary Guarantor will also agree to pay any and
all costs and expenses (including reasonable attorneys' fees) incurred by the
Trustee or any Holder in enforcing any rights under this Section.
In addition to the requirement of a Board Resolution, supplemental
indenture or Officers' Certificate providing for the Subsidiary Guarantee with
respect to a particular Series of Securities, the Subsidiary Guarantee set forth
in this Section 10.01 shall not be valid or become obligatory for any purpose
with respect to such Series of Securities until the certificate of
authentication on such Securities shall have been signed by or on behalf of the
Trustee.
SECTION 10.02. Limitation on Liability. Any term or provision of this
Indenture to the contrary notwithstanding, the maximum aggregate amount of the
Subsidiary Guarantor Obligations to be guaranteed by any Subsidiary Guarantor
shall not exceed the maximum amount that can be guaranteed without rendering
this Indenture, as it relates to such Subsidiary Guarantor, or the applicable
Board Resolution, supplemental indenture or Officers' Certificate, voidable
under applicable law relating to fraudulent conveyance or fraudulent transfer or
similar laws affecting the rights of creditors generally.
41
If a Board Resolution, supplemental indenture hereto or Officers'
Certificate provides for a Subsidiary Guarantee with respect to a particular
Series of Securities, each Subsidiary Guarantor that makes a payment under its
Subsidiary Guarantee will be entitled to a contribution from each other
Subsidiary Guarantor so providing a Subsidiary Guarantee with respect to such
Series of Securities in an amount equal to such other Subsidiary Guarantor's pro
rata portion of such payment based on the respective net assets of all the
Subsidiary Guarantors so providing a Subsidiary Guarantee with respect to such
Series of Securities at the time of such payment determined in accordance with
GAAP.
SECTION 10.03. Successors and Assigns. If a Board Resolution,
supplemental indenture hereto or Officers' Certificate provides for a Subsidiary
Guarantee with respect to a particular Series of Securities, this Article Ten
shall be binding upon each Subsidiary Guarantor so providing a Subsidiary
Guarantee with respect to such Series and its successors and assigns and shall
enure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges conferred upon that party in this
Indenture and in such Series of Securities shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms and conditions
of this Indenture.
SECTION 10.04. No Waiver. Neither a failure nor a delay on the part of
either the Trustee or the Holders in exercising any right, power or privilege
under this Article Ten shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The rights, remedies and benefits of the Trustee and the
Holders herein expressly specified are cumulative and not exclusive of any other
rights, remedies or benefits which either may have under this Article Ten at
law, in equity, by statute or otherwise.
SECTION 10.05. Modification. No modification, amendment or waiver of
any provision of this Article Ten, nor the consent to any departure by any
Subsidiary Guarantor therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Trustee, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on any Subsidiary Guarantor in any case shall
entitle such Subsidiary Guarantor to any other or further notice or demand in
the same, similar or other circumstances.
SECTION 10.06. Release of Subsidiary Guarantor. Unless otherwise
specified in the applicable Board Resolution, supplemental indenture or
Officers' Certificate, providing for a Subsidiary Guarantee with respect to a
particular Series of Securities, upon the sale or other disposition (including
by way of consolidation or merger) of a Subsidiary Guarantor or the sale or
disposition of all or substantially all the assets of such Subsidiary Guarantor
(in each case other than a sale or disposition to the Company or an Affiliate of
the Company) or at such other time as specified in the applicable Board
Resolution, supplemental indenture or Officers' Certificate, such Subsidiary
Guarantor shall be deemed released from all obligations under this Article Ten
without any further action required on the part of the Trustee or any Holder. At
the request of the Company, the Trustee shall execute and deliver an appropriate
instrument evidencing such release.
42
ARTICLE ELEVEN
MISCELLANEOUS
-------------
SECTION 11.01. Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 11.02. Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail addressed as
follows:
If to the Company or any Subsidiary Guarantor:
Flowserve Corporation
222 West Las Colinas Blvd.
Suite 1500
Irving, TX 75039
Attention: Renee Hornbaker
with a copy to:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Attention: Stephen L. Burns, Esq.
If to the Trustee:
[ ]
The Company, any Subsidiary Guarantor or the Trustee by notice to the
other may designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Holder shall be mailed to the
Holder at the Holder's address as it appears on the registration books of the
Registrar and shall be sufficiently given if so mailed within the time
prescribed.
Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it.
SECTION 11.03. Communication by Holders with Other Holders. Holders
may communicate pursuant to TIA ss. 312(b) with other Holders with respect to
their rights under this Indenture or the Securities. The Company, any Subsidiary
Guarantor, the Trustee, the Registrar and anyone else shall have the protection
of TIA ss. 312(c).
43
SECTION 11.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 11.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 11.06. When Securities Disregarded. In determining whether the
Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company, or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which a Responsible Officer of the Trustee actually knows are so
owned shall be so disregarded. Subject to the foregoing, only Securities
outstanding at the time shall be considered in any such determination.
SECTION 11.07. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or a meeting of Holders. The
Registrar and the Paying Agent may make reasonable rules for their functions.
SECTION 11.08. Legal Holidays. A "Legal Holiday" is a Saturday, Sunday
or other day on which banking institutions in New York State are authorized or
required by law to close. If a payment date is a Legal Holiday, payment shall be
made on the next succeeding day that is not a Legal Holiday, and no interest
shall accrue for the
44
intervening period. If a regular record date is a Legal Holiday, the record date
shall not be affected.
SECTION 11.09. Governing Law. THIS INDENTURE AND THE SECURITIES SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO
THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
SECTION 11.10. No Recourse Against Others. A director, officer,
employee or shareholder, as such, of any Company or any Subsidiary Guarantor
shall not have any liability for any obligations of the Company under the
Securities or this Indenture or such Subsidiary Guarantor under its Subsidiary
Guarantee or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Holder shall waive and release all such liability. The waiver and release shall
be part of the consideration for the issuance of the Securities.
SECTION 11.11. Successors. All agreements of each Issuer in this
Indenture and the Securities shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successors.
SECTION 11.12. Multiple Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy of the Indenture is
enough to prove this Indenture.
SECTION 11.13. Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
SECTION 11.14. Severability. If any provision in this Indenture is
deemed unenforceable, it shall not affect the validity or enforceability of any
other provision set forth herein, or of the Indenture as a whole.
[Signatures on following page]
45
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
FLOWSERVE CORPORATION
By:______________________________
Name:
Title:
FLOWSERVE US INC.
FLOWSERVE INTERNATIONAL, INC.
FLOWSERVE HOLDINGS, INC.
BW/IP-NEW MEXICO, INC.
INGERSOLL-DRESSER PUMP COMPANY
FLOWSERVE INTERNATIONAL L.L.C.
FLOWSERVE MANAGEMENT COMPANY
CFM-V.R. TESCO INC.
FLOWSERVE INTERNATIONAL LIMITED
FLOWSERVE FINANCE B.V.
By:______________________________
Name:
Title:
[ , as Trustee]
By:______________________________
Name:
Title:
[Letterhead of ]
FLOWSERVE CORPORATION
June 28, 2001
Flowserve Corporation
Registration Statement on Form S-3
Dear Ladies and Gentlemen:
I am employed as the Vice President, Secretary and General Counsel
for Flowserve Corporation, a New York corporation (the "Company"). I own
64,035 shares of stock of the Company and hold options to purchase an
additional 69,740 shares at varying prices. I am delivering this opinion in
connection with the filing by the Company and Flowserve U.S. Inc., a Delaware
corporation, Flowserve International, Inc., a Delaware corporation, Flowserve
Holdings, Inc., a Delaware corporation, BW/IP-New Mexico, Inc., a Delaware
corporation, Ingersoll-Dresser Pump Company, a Delaware corporation, Flowserve
International L.L.C., a limited liability company organized under the laws of
Delaware, Flowserve Management Company, a Delaware corporation, CFMV.R. Tesco,
Inc., a Delaware corporation, Flowserve International Limited, a corporation
organized under the laws of the United Kingdom and Flowserve Finance B.V., a
corporation organized under the laws of the Netherlands (collectively, the
"Guarantors") with the Securities and Exchange Commission (the "Commission")
of a Registration Statement on Form S-3 (the "Registration Statement")
relating to (i) debt securities of the Company, which may be senior (the
"Senior Securities") or subordinated (the "Subordinated Securities" and,
collectively with the Senior Securities, the "Debt Securities"); (ii) shares
of preferred stock, $1.00 par value per share, of the Company (the "Preferred
Stock"); (iii) shares of common stock, $1.25 par value per share, of the
Company (the "Common Stock"); and (iv) guarantees of the Debt Securities (the
"Guarantees") issued by the Guarantors. The Debt Securities, Preferred Stock,
Common
2
Stock and the Guarantees being registered under the Registration
Statement will be offered on a continued or delayed basis pursuant to the
provisions of Rule 415 under the Securities Act of 1933 (the "Securities
Act").
For purposes of this opinion, I have examined (i) the form of
Indenture (the "Indenture") to be entered into by the Company, the Guarantors
and the Trustee (the "Trustee") to be named in a Prospectus Supplement
relating to an issuance of Debt Securities; (ii) the form of Underwriting
Agreement (the "Agreement") among the Company, the Guarantors and the
Underwriters (the "Underwriters") to be named in a Prospectus Supplement
relating to the issuance of Debt Securities with or without Guarantees,
Preferred Stock, or Common Stock and (iii) originals or copies, identified to
my satisfaction, of such documents, corporate records, instruments and other
relevant materials as I have deemed advisable. In my examination, I have
assumed the genuineness of all signatures, the legal capacity of all natural
persons, the authenticity of all documents submitted to me as copies, and the
authenticity of the originals of such copies. In addition, I have relied upon
certificates of public officials, of officers and representatives of the
Company, and have made such examination of statutes and decisions and reviewed
such questions of law as I have considered necessary or appropriate.
On the basis of and subject to the foregoing, I am of the opinion
that:
(a) the Company has been duly incorporated and is validly existing
as a corporation under the laws of the State of New York.
(b) each of the Guarantors has been duly incorporated and is
validly existing as a corporation under the laws of its
jurisdiction of incorporation.
(c) the execution and delivery of the Indenture by the Company and
the Guarantors and the issuance and sale of Debt Securities by
the Company and Guarantees by the Guarantors has been validly
authorized by all necessary corporate action by the Company and
the Guarantors, respectively.
3
(d) when (i) the Registration Statement shall have become effective
under the Securities Act, (ii) the blue sky or securities laws
of certain states shall have been complied with, (iii) the
Indenture shall have been executed and delivered by the
Company, the Guarantors and the Trustee and duly qualified
under the Trust Indenture Act of 1939, as amended, (iv) the
Debt Securities shall have been duly authorized, executed,
authenticated and delivered against payment therefor as
contemplated by the Registration Statement and the Agreement,
and (v) the Guarantees shall have been duly authorized,
executed, authenticated and delivered as contemplated by the
Registration Statement and the Agreement, the Debt Securities
and the Guarantees shall have been duly authorized and issued
by the Company and the Guarantors, respectively.
(e) when (i) the Registration Statement shall have become effective
under the Securities Act, (ii) the blue sky or securities laws
of certain states shall have been complied with, and (iii) the
Preferred Stock shall have been authorized, issued and sold as
contemplated by the Registration Statement and the Agreement
and the Company shall have received consideration therefor from
the Underwriters, the Preferred Stock will be validly issued,
fully paid and non-assessable.
(f) when (i) the Registration Statement shall have become effective
under the Securities Act, (ii) the blue sky or securities laws
of certain states shall have been complied with, and (iii) the
Common Stock shall have been authorized, issued and sold by the
Company as contemplated by the Registration Statement and the
Agreement and the Company shall have received consideration
therefor from the Underwriters, the Common Stock will be
validly issued, fully paid and non-assessable.
4
I know that I am referred to under the heading "Validity of
Securities" in the Prospectus forming a part of the Registration Statement,
and I hereby consent to such use of my name in the Registration Statement and
to the use of this opinion for filing as Exhibit 5.1 to the Registration
Statement.
Very truly yours,
/s/ RONALD F. SHUFF
Ronald F. Shuff
Flowserve Corporation
222 West Las Colinas Blvd.
Suite 1500
Irving, TX 75039-5421
Exhibit 5.2
[Letterhead of ]
CRAVATH, SWAINE & MOORE
[New York Office]
July 2, 2001
Flowserve Corporation
Registration Statement on Form S-3
Dear Ladies and Gentlemen:
We have acted as special counsel for Flowserve Corporation, a New
York corporation (the "Company"), in connection with the filing by the Company
with the Securities and Exchange Commission (the "Commission") of a
Registration Statement on Form S-3 (the "Registration Statement") relating to
(i) debt securities of the Company, which may be senior (the "Senior
Securities") or subordinated (the "Subordinated Securities" and, collectively
with the Senior Securities, the "Debt Securities"); (ii) shares of preferred
stock, $1.00 par value per share, of the Company (the "Preferred Stock");
(iii) shares of common stock, $1.25 par value per share of the Company (the
"Common Stock"); and (iv) guarantees of the Debt Securities (the "Guarantees")
issued by the Guarantors (as defined in the Registration Statement). The Debt
Securities, Preferred Stock, Common Stock and the Guarantees being registered
under the Registration Statement will be offered on a continued or delayed
basis pursuant to the provisions of Rule 415 under the Securities Act of 1933,
(the "Securities Act").
In connection with the foregoing, we have examined originals, or
copies certified or otherwise identified to our satisfaction, of such
documents, corporate records and other instruments as we have deemed necessary
for the purposes of this opinion, including without limitation, the form of
Indenture (the "Indenture") to be entered into by the Company, the Guarantors
and the
Trustee (the "Trustee") to be named in a Prospectus Supplement relating to an
issuance of Debt Securities.
Based on the foregoing, we are of the opinion as follows:
1. When the Indenture shall have been duly authorized, executed and
delivered by each of the Company, the Guarantors and the Trustee,
the Indenture will constitute a legal, valid and binding
obligation of the Company and the Guarantors, enforceable against
the Company and the Guarantors in accordance with its terms
(subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws affecting
creditors' rights generally from time to time in effect and to
general principles of equity, including, without limitation,
concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether such enforceability is considered
in a proceeding in equity or at law).
2. When (i) the Registration Statement shall have become effective
under the Securities Act, (ii) the blue sky or securities laws of
certain states shall have been complied with, (iii) the Indenture
shall have been executed and delivered by each of the Company,
the Guarantors and the Trustee and duly qualified under the Trust
Indenture Act of 1939, as amended, and (iv) the Debt Securities
shall have been duly authorized, executed, authenticated and
delivered against payment therefor, the Debt Securities will
constitute legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms
and entitled to the benefits of the Indenture (subject to
applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws affecting creditors'
rights generally from time to time in effect and to general
principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing,
regardless of whether such enforceability is considered in a
proceeding in equity or at law).
3. When (i) the Registration Statement shall have become effective
under the Securities Act, (ii) the blue sky or securities laws of
certain states shall have been complied with, (iii) the Indenture
shall have been executed and delivered by each of the Company,
the Guarantors and the Trustee and duly qualified under the Trust
Indenture Act of 1939, as amended, and (iv) the Guarantees shall
have been duly authorized, executed, authenticated and delivered,
the Guarantees will constitute legal, valid and binding
obligations of each of the Guarantors, enforceable against the
Guarantors in accordance with their terms and entitled to the
benefits of the Indenture (subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or
other similar laws affecting creditors' rights generally from
time to time in effect and to general principles of equity,
including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, regardless of
whether such enforceability is considered in a proceeding in
equity or at law).
We are admitted to practice in the State of New York, and we express
no opinion as to matters governed by any laws other than the laws of the State
of New York and the Federal laws of the United States of America.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to the use of our name under the
caption "Validity of Securities" in the Prospectus contained in the
Registration Statement.
Very truly yours,
/s/Cravath, Swaine & Moore
Cravath, Swaine & Moore
Flowserve Corporation
222 West Las Colinas Blvd.
Suite 1500
Irving, TX 75039-5421
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3, Amendment No. 1, of our report dated February 5, 2001
relating to the consolidated financial statements, which appears in the 2000
Annual Report to Shareholders, which is incorporated by reference in Flowserve
Corporation's Annual Report on Form 10-K for the year ended December 31, 2000.
We also consent to the incorporation by reference of our report dated February
5, 2001 relating to the financial statement schedule, which appears in such
Annual Report on Form 10-K. We also consent to the reference to us under the
heading "Experts" in such Registration Statement.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Dallas, Texas
June 29, 2001
Exhibit 23.2
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Flowserve
Corporation for the registration of an indeterminate number of shares of its
common stock and preferred stock and indeterminate principal amount of debt
securities and guarantees of debt securities not to exceed an aggregate price of
$500,000,000, and to the incorporation by reference therein of our report dated
February 10, 2000 (except for Note 9, as to which the date is July 14, 2000),
with respect to the consolidated balance sheet of Flowserve Corporation and
subsidiaries as of December 31, 1999 and the related consolidated statements of
income, comprehensive (loss) income, shareholders' equity and cash flows for
each of the two years in the period then ended, incorporated by reference in its
Annual Report (Form 10-K) for the year ended December 31, 2000, and our report
dated February 10, 2000 with respect to the related financial statement schedule
included therein, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Dallas, Texas
June 29, 2001
Exhibit 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3, Amendment No. 1, of our report dated February 18, 2000
relating to the December 31, 1999 consolidated financial statements of
Ingersoll-Dresser Pump Company which appears in Flowserve Corporation's Form
S-4. We also consent to the reference to us under the heading "Experts" in
such Registration Statement on Form S-3.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Dallas, Texas
June 29, 2001
Exhibit 25.1
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TURSTEE PURSUANT TO
SECTION 305 (b)(2)
-----------------------------
The BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
-----------------------------
Flowserve Corporation
(Exact name of obligor as specified in its charter)
New York 31-0267900
(State or other jurisdiction of I.R.S. employer
incorporation or organization) identification no.)
222 West Las Colinas Blvd. Suite 1500
Irving Texas 75039
(Address of principal executive offices) (Zip code)
-----------------------------
DEBT SECURITIES
(Title of the indenture securities)
================================================================================
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York, N.Y.
New York 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 3 Liberty Plaza, New York, N.Y.
10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
Of the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the
Commission, are incorporated herein by reference as an exhibit
hereto, pursuant to Rule 7a-29 Under the Trust Indenture Act of 1939
(the "Act") and 17 C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibit 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to From T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a
corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by
the undersigned, thereunto duly authorized, all in the City of New York, and
State of New York, on the 25th. day of June, 2001.
THE BANK OF NEW YORK
By: /s/ LUIS PEREZ .
---------------------------------
Name: Luis Perez
Title: Assistant Vice President
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
2000 published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
in Thousands
ASSETS
Cash and balances due from depository
institutions:
Noninterest-bearing balances and
currency and coin.....................................$ 3,083,720
Interest-bearing balances................................. 4,949,333
Securities:
Held-to-maturity securities............................... 740,315
Available-for-sale securities............................. 5,328,981
Federal funds sold and Securities
purchased under agreements to resell...................... 5,695,708
Loans and lease financing receivables:
Loans and leases, net of
unearned income....................................... 35,590,456
LESS: Allowance for loan and
lease losses.......................................... 598,536
LESS: Allocated transfer risk
reserve............................................... 12,575
Loans and leases, net of unearned
income, allowance, and reserve........................ 35,979,345
Trading Assets................................................. 11,912,448
Premises and fixed assets (including
capitalized leases)....................................... 763,241
Other real estate owned........................................ 2,925
Investments in unconsolidated subsidiaries
and associated companies.................................. 183,836
Customers' liability to this bank on
acceptances outstanding................................... 424,303
Intangible assets.............................................. 1,378,477
Other assets................................................... 3,823,797
-----------
Total assets...................................................$74,266,429
===========
LIABILITIES
Deposits:
In domestic offices.......................................$28,328,548
Noninterest-bearing...........................12,637,384
Interest-bearing..............................15,691,164
In foreign offices, Edge and Agreement
subsidiaries, and IBFs...................... 27,920,690
Noninterest-bearing........................... 470,130
Interest-bearing..............................27,450,560
2
Federal funds purchased and Securities
sold under agreements to repurchase....................... 1,437,916
Demand notes issued to the U.S. Treasury....................... 100,000
Trading liabilities............................................ 2,049,818
Other borrowed money:
With remaining maturity of one year or
less.................................................. 1,279,125
With remaining maturity of more than
one year through three years.......................... 0
With remaining maturity of more than
three years........................................... 31,080
Bank's liability on acceptances executed
and outstanding........................................... 427,110
Subordinated notes and debentures.............................. 1,646,000
Other liabilities.............................................. 4,604,478
-----------
Total liabilities.............................................. 67,824,765
-----------
EQUITY CAPITAL
Common stock................................................... 1,135,285
Surplus........................................................ 1,008,775
Undivided profits and capital reserves......................... 4,308,492
Net unrealized holding gains (losses) on
available-for-sale securities............................. 27,768
Accumulated net gains (losses) on cash
flow hedges............................................... 0
Cumulative foreign currency translation
adjustments............................................... (38,656)
-----------
Total equity capital........................................... 6,441,664
-----------
Total liabilities and equity capital...........................$74,266,429
===========
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Renyi
Alan R. Griffith Directors
Gerald L. Hassell