<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
--- THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
--- THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___________________ TO ____________________
COMMISSION FILE NO. 1-9776
UNITED STATES SURGICAL CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 13-2518270
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
150 GLOVER AVENUE, NORWALK, CONNECTICUT 06856
(Address of principal executive offices) (Zip Code)
(203) 845-1000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
--- ---
Number of shares of Common Stock,
par value $.10 per share,
outstanding at June 30, 1994 56,595,765 Shares
<PAGE> 2
Form 10-Q
June 30, 1994
UNITED STATES SURGICAL CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PART I--FINANCIAL INFORMATION Page
----
<S> <C>
Financial Statements:
Consolidated Balance Sheets at June 30, 1994 (Unaudited) and December 31, 1993 . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations (Unaudited) for the Six Months and Three
Months Ended June 30, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Changes in Stockholders' Equity (Unaudited) for the
Six Months Ended June 30, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows (Unaudited) for the Six Months
Ended June 30, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to Consolidated Financial Statements (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Review by Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Independent Accountants' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Management's Discussion and Analysis of Interim Financial Condition and Results
of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
PART II--OTHER INFORMATION
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Changes in Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
-2-
<PAGE> 3
Form 10-Q
June 30, 1994
UNITED STATES SURGICAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
In thousands, except share data 1994 1993
- - ----------------------------------------------------------------------------------------------------------------------------------
ASSETS (Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 11,400 $ 900
Receivables, less allowance
($5,800 -June 30, 1994; $5,000-December 31, 1993) 199,200 197,900
Inventories:
Finished goods 112,300 113,000
Work in process 29,500 36,900
Raw materials 42,400 62,300
--------- ---------
184,200 212,200
Other current assets 46,400 53,800
--------- ---------
Total Current Assets 441,200 464,800
--------- ---------
Property, Plant, and Equipment at cost: 751,200 752,100
Less: Allowance for depreciation and amortization (182,700) (159,900)
--------- ---------
568,500 592,200
Other assets (net) 127,500 113,500
--------- ---------
Total Assets $1,137,200 $1,170,500
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 42,500 $ 50,200
Accrued expenses 126,800 137,500
Income taxes payable 35,900 28,800
--------- ---------
Total Current Liabilities 205,200 216,500
Long-Term Debt 281,100 505,300
Deferred Income Taxes 9,400 4,800
Stockholders' Equity:
Preferred Stock $5.00 par value, authorized 2,000,000 shares;
9.76% Series A cumulative convertible, 177,400 shares
issued and outstanding (liquidation value - $200 million) 900
Additional paid-in capital - preferred stock 190,900
Common stock $.10 par value, authorized 250,000,000 shares;
issued, 64,732,898 at June 30, 1994 and 64,402,144 at
December 31, 1993 6,500 6,400
Additional paid-in capital - common stock 376,300 371,700
Retained earnings 171,100 178,300
Treasury stock at cost; 8,137,133 shares at June 30, 1994
and 8,144,386 shares at December 31, 1993 (86,700) (86,700)
Other (17,500) (25,800)
--------- ---------
641,500 443,900
--------- ---------
Total Liabilities and Stockholders' Equity $1,137,200 $1,170,500
========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
-3-
<PAGE> 4
Form 10-Q
June 30, 1994
UNITED STATES SURGICAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
------------------------- --------------------------
In thousands, except per share data 1994 1993 1994 1993
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $458,000 $555,100 $232,000 $228,800
------- ------- ------- -------
Costs and expenses:
Cost of products sold 234,800 258,600 117,200 119,800
Research and development 20,000 29,000 9,200 14,100
Selling, administrative and general 186,500 240,600 90,000 120,800
Interest 10,300 7,700 3,800 4,200
------- ------- ------- -------
Total costs and expenses 451,600 535,900 220,200 258,900
------- ------- ------- -------
Income (loss) before income taxes 6,400 19,200 11,800 (30,100)
Income taxes/(benefit) 6,300 5,200 3,800 (8,100)
------- ------- ------- -------
Net income (loss) 100 14,000 8,000 (22,000)
Preferred stock dividends 5,100 4,900
------- ------- ------- -------
Net income (loss) applicable to
common stock $ (5,000) $ 14,000 $ 3,100 $(22,000)
======= ======= ======= =======
Average number of common shares
and common share equivalents
outstanding 56,400 57,500 56,500 55,900
======= ======= ======= =======
Net income (loss) per common share
and common share equivalent (primary
and fully diluted) $(.09) $.24 $.05 $(.39)
==== === === ====
Dividends declared per common share $.04 $.15 $.02 $.075
=== === === =====
</TABLE>
See Notes to Consolidated Financial Statements.
-4-
<PAGE> 5
Form 10-Q
June 30, 1994
United States Surgical Corporation and Subsidiaries
Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
For the six months ended June 30, 1994 and 1993
<TABLE>
<CAPTION>
Additional Additional
Paid-in Paid-in
Dollars in thousands, Preferred Capital - Common Capital - Retained
except share data Stock Preferred Stock Common Earnings
- - ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1993 . . . . . . . . . . . . $6,400 $345,200 $330,700
Common stock issued to
employees-net (316,694 shares) . . . . . . . . . 7,400
Income tax benefit from stock
options exercised, recognized upon
adoption of FAS 109 . . . . . . . . . . . . . . . 14,000
Payment received on installment receivables . . . .
Aggregate adjustment resulting
from the translation of foreign
financial statements . . . . . . . . . . . . . .
Common stock dividends declared ($.15 per share) . (8,300)
Net income . . . . . . . . . . . . . . . . . . . . 14,000
----- ------- -------
BALANCE AT JUNE 30, 1993 . . . . . . . . . . . . . $6,400 $366,600 $336,400
===== ======= =======
BALANCE AT JANUARY 1, 1994 . . . . . . . . . . . . $6,400 $371,700 $178,300
Issuance of preferred stock (177,400 shares) . . . $900 $190,900
Common stock issued to
employees-net (337,617 shares) . . . . . . . . . 100 4,600
Aggregate adjustment resulting
from the translation of foreign
financial statements . . . . . . . . . . . . . .
Preferred stock dividends . . . . . . . . . . . . . (5,100)
Common stock dividends declared ($.04 per share) . (2,200)
Net income . . . . . . . . . . . . . . . . . . . . 100
--- ------- ----- ------- -------
BALANCE AT JUNE 30, 1994 . . . . . . . . . . . . . $900 $190,900 $6,500 $376,300 $171,100
=== ======= ===== ======= =======
</TABLE>
<TABLE>
<CAPTION>
Installment
Accumulated Receivables
Dollars in thousands, Translation from Sale of Treasury
except share data Adjustments Common Stock Stock Total
- - ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1993 . . . . . . . . . . . . $ 400 $(6,000) $(86,700) $590,000
Common stock issued to
employees-net (316,694 shares) . . . . . . . . . 7,400
Income tax benefit from stock
options exercised, recognized upon
adoption of FAS 109 . . . . . . . . . . . . . . . 14,000
Payment received on installment receivables . . . . 600 600
Aggregate adjustment resulting
from the translation of foreign
financial statements . . . . . . . . . . . . . . (3,100) (3,100)
Common stock dividends declared ($.15 per share) . (8,300)
Net income . . . . . . . . . . . . . . . . . . . . 14,000
------- ------ ------- -------
BALANCE AT JUNE 30, 1993 . . . . . . . . . . . . . $ (2,700) $(5,400) $(86,700) $614,600
====== ====== ======= =======
BALANCE AT JANUARY 1, 1994 . . . . . . . . . . . . $(20,400) $(5,400) $(86,700) $443,900
Issuance of preferred stock (177,400 shares) . . . 191,800
Common stock issued to
employees-net (337,617 shares) . . . . . . . . . 4,700
Aggregate adjustment resulting
from the translation of foreign
financial statements . . . . . . . . . . . . . . 8,300 8,300
Preferred stock dividends . . . . . . . . . . . . . (5,100)
Common stock dividends declared ($.04 per share) . (2,200)
Net income . . . . . . . . . . . . . . . . . . . . 100
------- ------ ------- -------
BALANCE AT JUNE 30, 1994 . . . . . . . . . . . . . $(12,100) $(5,400) $(86,700) $641,500
======= ====== ======= =======
</TABLE>
See Notes to Consolidated Financial Statements.
-5-
<PAGE> 6
Form 10-Q
June 30, 1994
UNITED STATES SURGICAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
---------------------------
In thousands 1994 1993
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 463,100 $ 590,800
Cash paid to vendors, suppliers and employees (364,800) (514,000)
Interest paid (14,200) (7,600)
Income taxes paid (5,900) (8,100)
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 78,200 61,100
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant, and equipment (29,700) (129,800)
Other assets (2,600) (13,600)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (32,300) (143,400)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term debt borrowings 2,694,100 1,320,900
Long-term debt repayments (2,924,300) (1,228,700)
Issuance of preferred stock, net 191,800
Common stock issued from stock plans 4,700 8,000
Dividends paid (2,200) (8,300)
----------- -----------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (35,900) 91,900
Effect of exchange rate changes 500 (2,800)
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 10,500 6,800
Cash, beginning of period 900 2,500
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 11,400 $ 9,300
=========== ===========
RECONCILIATION OF NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
NET INCOME $ 100 $ 14,000
----------- -----------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 43,100 37,300
Adjustment to property, plant, and equipment reserves 8,500 14,400
Receivables -- decrease 5,900 36,600
Inventories -- decrease (increase) 6,800 (55,600)
Adjustment of inventory reserves 22,300 17,500
Accounts payable and accrued expenses--(decrease) increase (26,200) 700
Income taxes payable and deferred -- (decrease) (1,300) (17,400)
Income tax benefit from stock options exercised 14,000
Other adjustments -- net 19,000 (400)
----------- -----------
Total adjustments 78,100 47,100
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 78,200 $ 61,100
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
-6-
<PAGE> 7
Form 10-Q
June 30, 1994
UNITED STATES SURGICAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. GENERAL
The accompanying unaudited consolidated financial statements for the
six-month and three-month periods ended June 30, 1994 and 1993 have been
prepared in accordance with the instructions to Form 10-Q. All
adjustments which, in the opinion of management, are necessary for a fair
presentation of the consolidated financial statements for the six-month
and three-month periods ended June 30, 1994 and 1993 have been reflected.
All such adjustments are of a recurring nature. It is suggested that the
June 30, 1994 consolidated financial statements be read in conjunction
with the consolidated financial statements and notes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31,
1993.
2. INCOME TAXES
The 1994 tax provision relates primarily to foreign taxes including taxes
related to the Company's operations in Puerto Rico, and is a result of the
Company incurring net operating losses in certain tax jurisdictions for
which it is not able to recognize the corresponding tax benefits. The
1993 effective income tax rate of 27%, as well as the 1994 tax provision,
reflects the projected tax benefits from manufactu ring operations in
Puerto Rico.
3. LONG-TERM DEBT
The Company entered into a new syndicated credit agreement in June 1994
which replaced its revolving credit and term loan agreements with various
banks. The new agreement provided for the repayment of outstanding bank
indebtedness, extended the present maturities and reduced the size of the
bank credit facility from $675 million to $400 million. The new credit
agreement matures in January 1997 and provides for certain restrictions
including sales of assets, capital expenditures, dividends and subsidiary
debt and requires the maintenance of certain minimum levels of tangible
net worth and fixed charges coverage and a maximum ratio of total debt to
total capitalization, as defined. Under the most restrictive covenants,
the Company must maintain certain levels of tangible net worth and fixed
charge coverage ratios and its debt to total capitalization ratio may not
exeed a certain stipulated level. The Company is prohibited from
declaring dividends on its common stock if the Company were in default of
the covenants of the agreement. In addition, the Company is prohibited
from declaring dividends on its common stock in excess of $1,250,000 per
quarter, subject to adjustment for changes in the number of shares
outstanding, until it receives an investment grade status as defined.
The Company is in full compliance with all of the financial covenants
associated with its new credit agreement.
-7-
<PAGE> 8
Form 10-Q
June 30, 1994
UNITED STATES SURGICAL CORPORATION AND SUBSIDIARIES
REVIEW BY INDEPENDENT ACCOUNTANTS
The June 30, 1994 and 1993 consolidated financial statements included in this
Quarterly Report on Form 10-Q have been reviewed by Deloitte & Touche, in
accordance with established professional standards and procedures for such a
review. In addition, the December 31, 1993 consolidated balance sheet was
audited by Deloitte & Touche in accordance with generally accepted auditing
standards.
-8-
<PAGE> 9
Form 10-Q
June 30, 1994
INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors and Stockholders
UNITED STATES SURGICAL CORPORATION
We have reviewed the accompanying consolidated balance sheet of United States
Surgical Corporation and subsidiaries as of June 30, 1994, and the related
consolidated statements of operations for the six-month and three-month periods
ended June 30, 1994 and 1993 and the consolidated statements of changes in
stockholders' equity and cash flows for the six-month periods ended June 30,
1994 and 1993. These financial statements are the responsibility of the
Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and of making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to such consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of United States Surgical Corporation
and subsidiaries as of December 31, 1993, and the related consolidated
statements of operations, changes in stockholders' equity, and cash flows for
the year then ended (not presented herein); and in our report dated February 1,
1994 (except for Notes H, K and L, as to which the date was March 28, 1994), we
expressed an unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying consolidated
balance sheet as of December 31, 1993 is fairly stated, in all material
respects, in relation to the consolidated balance sheet from which it has been
derived.
DELOITTE & TOUCHE
STAMFORD, CONNECTICUT
JULY 22, 1994
-9-
<PAGE> 10
Form 10-Q
June 30, 1994
UNITED STATES SURGICAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF INTERIM
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
In the second quarter of 1994, the Company attained sales of $232 million
compared with sales of $229 million in the second quarter of 1993. In the
first half of 1994, the Company achieved sales of $458 million compared with
sales of $555 million in the first half of 1993. Sales increased 1% in the
second quarter and decreased 17% in the first half of 1994 in comparison to the
corresponding periods in 1993.
In the second quarter of 1994, the Company reported net income of $8 million
and $.05 per common share (after preferred dividends of $5 million) compared
with a net loss of $22 million or $.39 per share in the second quarter of 1993.
The effects of changes in foreign currency exchange rates on net income were
immaterial to the results of operations of the second quarter of 1994 in
comparison to the corresponding period in 1993.
In the first half of 1994, the Company reported net income of $.1 million and a
loss of $.09 per common share (after preferred dividends of $5 million)
compared with net income of $14 million and $.24 per share in the first half of
1993. The effects of changes in foreign currency exchange rates on net income
were immaterial to the results of operations of the first half of 1994 in
comparison to the corresponding period in 1993.
The Company's restructuring plans and other cost saving measures are expected
to reduce its operating and fixed manufacturing costs by approximately $150
million on an annualized basis. The cost cutting programs implemented in 1994
included the reduction of the Company's workforce by approximately 20% or 1,600
employees and a consolidation and divestiture of certain leased and owned real
estate. Cost savings associated with the restructuring plans started to be
realized in the first quarter of 1994 with the major effect beginning to be
realized in the second quarter of 1994. As a result of the restructuring and
cost saving measures adopted, compensation related expenses were approximately
$33 million and $21 million lower in the six months and three months ended June
30, 1994, respectively, in comparison to the same periods in 1993.
The reduction in sales in the first half of 1994 to $458 million compared to
the corresponding period in 1993 was significantly effected by initial
distributor stocking programs in 1993, which was not repeated in 1994. Company
sales were also effected by competition during this period and by uncertainties
related to health care reform. These distributor inventory purchases were made
in connection with the implementation of the Company's Just-In-Time (JIT)
domestic hospital distribution program during the first quarter of 1993. The
initial stocking of JIT distributors precipitated an inventory reduction period
during which the hospitals formerly supplied directly by the Company worked
their inventories down to minimal levels. The Company believes that
inventories at JIT distributors at the end of the 1994 first half are down
significantly, with distributor sales to hospitals during the preceding six
months significantly in excess of distributor purchases from the Company. Once
distributor inventories reach an anticipated optimum level, which should occur
in the third quarter of 1994, the Company believes that its sales to
distributors will approximate distributor sales to hospitals.
-10-
<PAGE> 11
Form 10-Q
June 30, 1994
UNITED STATES SURGICAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF INTERIM
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Sales in the 1994 second quarter were reduced by approximately $8 million
representing the initial effect of adopting a new returned goods policy with
effect from July 1, 1994. Previously, the Company's returned goods policy did
not grant credits for product returns, and the new policy grants full credit to
direct customers for certain products returned within one year of initial
shipment and a partial credit for certain products returned up to four years
after initial shipment. The establishment of a reserve, as a result of the
adoption of this new returned goods policy, for estimated product returns
relating to sales made prior to July 1, 1994 reduced second quarter sales by
approximately $8 million and increased inventories and reduced cost of products
sold by approximately $4 million. The aforementioned negative effect on net
sales and gross profit was partially offset by a $4 million adjustment of sales
reserves.
The Company continues to be affected by intense competition, and by ongoing
changes in the health care industry which impact hospital purchasing
decisions. The rate of acceptance of newer procedures utilizing the Company's
products also continues to be affected by uncertainty surrounding health care
reform and by the increased educational requirements for more complex
procedures.
The following table analyzes the increase (decrease) in sales in the second
quarter and first half of 1994 compared with the corresponding periods in 1993:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
In thousands June 30, 1994 June 30, 1994
------------ ------------------------- ---------------------
<S> <C> <C>
Composition of Sales Increase (Decrease):
Sales volume increases (decreases) $13,500 $(77,800)
Net price changes (5,200) (8,000)
Effects of changes in foreign
currency exchange rates (5,100) (11,300)
------ -------
Sales Increase (Decrease) $ 3,200 $(97,100)
====== =======
</TABLE>
The net price change component of the sales changes reflects the net effect of
selling price discounts granted to hospitals and just-in-time distributors,
partially offset by price list increases effective January 1, 1994. Sales
volume decreases in the first half of 1994 accounted for 80% of the total sales
decrease from the corresponding period in 1993. The effects of changes in
foreign currency exchange rates in the first half of 1994 compared to the
corresponding periods in 1993 contributed to 12% of the total sales decrease.
-11-
<PAGE> 12
Form 10-Q
June 30, 1994
UNITED STATES SURGICAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF INTERIM
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Gross margin from operations (sales less cost of products sold divided by
sales) was 49% in the second quarter and first half of 1994, compared with 48%
and 53% in the corresponding periods in 1993. Although the Company implemented
its restructuring plans in the first quarter of 1994, the major benefits of the
cost reduction measures adopted by the Company did not start being realized
until the second quarter of 1994, which resulted in improved gross margins in
the second quarter of 1994. Changes in foreign currency exchange rates from
those existing in 1993 did not have a material effect on the cost of products
sold in 1994.
The Company's expenditures for research and development in the second quarter
and first half of 1994 decreased by 35% and 31%, respectively, compared to the
corresponding periods in 1993, reflecting the impact of a program initiated in
the second half of 1993 to reduce the number of products being developed by
eliminating those new products which do not reduce the cost of surgery and
would not produce high incremental profits. The Company is continuing its
commitment to develop unique new products for use in new surgical procedures
and specialty areas. The Company presently plans to maintain its investment in
research and development activities at levels approximating 4% - 5% of annual
sales.
Selling, administrative and general expenses expressed as a percentage of sales
decreased to 39% in the second quarter and 41% in the first half of 1994,
compared with 53% and 43%, respectively, in the comparable 1993 periods. The
Company began to realize the major cost saving benefits from its restructuring
program in the form of reduced selling, administrative and general expenses as
a percentage of sales in the second quarter of 1994. Changes in foreign
currency exchange rates from those existing in the first half of 1993 had an
immaterial effect on reported selling, administrative and general expenses in
the 1994 first half.
The tax provision for the second quarter and first half of 1994 relates
primarily to foreign taxes including taxes in Puerto Rico, and is a result of
the Company incurring net operating losses in certain tax jurisdictions for
which it is not able to recognize the corresponding tax benefits. The
Company's effective income tax rate in the second quarter and first half of
1993 was 27% reflecting the lower effective tax rates on a subsidiary's
operations in Puerto Rico and the availability of a tax credit under Section
936 of the Internal Revenue Code.
-12-
<PAGE> 13
Form 10-Q
June 30, 1994
UNITED STATES SURGICAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF INTERIM
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
FINANCIAL CONDITION
The Company's current cash and cash equivalent balances, existing borrowing
capacity and projected operating cash flows are currently well in excess of its
foreseeable requirements. Following the successful issuance of $200 million of
convertible preferred stock in March 1994, the Company entered into a new
syndicated credit agreement in June 1994 which replaced its revolving credit
and term loan agreements with various banks. The new agreement provided for
the repayment of outstanding bank indebtedness, extended the present maturities
and reduced the size of the bank credit facility from $675 million to $400
million. The new credit agreement matures in January 1997 and provides for
certain restrictions including sales of assets, capital expenditures, dividends
and subsidiary debt and requires the maintenance of certain minimum levels of
tangible net worth and fixed charges coverage and a maximum ratio of total debt
to total capitalization, as defined. Under the most restrictive covenants, the
Company must maintain certain levels of tangible net worth and fixed charge
coverage ratios and its debt to total capitalization ratio may not exceed a
stipulated level. The Company is in full compliance with all of the financial
covenants associated with its various financing agreements.
The Company's building programs have been essentially completed, which will
enable the Company to reduce its capital spending by more than 50% in 1994
compared to 1993 levels. Additions to property, plant, and equipment on the
accrual basis totaled $36 million ($30 million on a cash basis) in the first
half of 1994, compared with $117 million on the accrual basis ($130 million on
a cash basis) in the corresponding period in 1993, and consist primarily of
additions to machinery and equipment ($18 million), molds and dies ($8 million)
and land and buildings ($9 million).
The increase in cash and cash equivalents and the reduction of long-term debt
at June 30, 1994 in comparison to the prior year-end is primarily attributable
to the receipt of the net proceeds ($192 million) from the issuance of the
Company's preferred stock (liquidation value $200 million) and the generation
of positive cash flow from operations. The reduction in total inventories ($28
million) from the prior year-end levels resulted primarily from improved
utilization and management of raw materials in the Company's production
process.
The Company routinely enters into foreign currency exchange contracts to reduce
its exposure to foreign currency exchange rate changes on the results of
operations of its foreign subsidiaries. As of June 30, 1994 the Company had
approximately $32 million of such contracts outstanding that will mature at
various dates through August 31, 1994. Realized and unrealized foreign
currency gains and losses are recognized when incurred. As a result of the
Company's economic hedging program the changes in foreign currency exchange
rates had an immaterial effect on its results of operations.
-13-
<PAGE> 14
Form 10-Q
June 30, 1994
UNITED STATES SURGICAL CORPORATION AND SUBSIDIARIES
Part II. OTHER INFORMATION
Item 1. Legal Proceedings.
A. In the pending actions brought as derivative actions (see Item 3
of Part I of the Company's Annual Report on Form 10-K for the year ended
December 31, 1993), on June 1, 1994, the Delaware Chancery Court, issued an
opinion withholding approval of a proposed settlement of the claims asserted in
the action pending further development of the record. The Court decided that it
was satisfied that the claims of excessive compensation were adequately
investigated and reasonably settled, but that it was unable to evaluate the
overall reasonableness of the proposed settlement pending further investigation
by the plaintiff in connection with insider trading charges. The defendants
have agreed to a settlement of the claims asserted in these actions, subject to
Court approval, notwithstanding defenses believed to be meritorious. The
Company believes that the ultimate outcome of these actions should not have a
materially adverse effect on the Company's consolidated financial statements.
B. In the action filed in February 1994 by Ethicon Endo-Surgery,
(see Item 1 of Part II of the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1994), alleging infringement by the Company of a single
patent for a safety lockout mechanism on a linear cutter/stapler, on June 7,
1994, the United States District Court for the Southern District of Ohio denied
Ethicon Endo-Surgery's request for a preliminary injunction. In the opinion of
management, based upon the advice of counsel, the Company has meritorious
defenses against the claims asserted in the complaint and valid counterclaims
against the plaintiffs.
C. Referring to the Company's action against Origin Medsystems, Inc.
("Origin"), based on alleged infringement of a patent for a retracting tip
trocar and alleged misappropriation of proprietary information (see Item 3 of
Part I of the Company's Annual Report on Form 10-K for the year ended December
31, 1993), the defendant Origin, on June 13, 1994, requested reexamination by
the United States Patent Office of the Company's patent. A decision as to
whether the Patent Office will reexamine the patent is expected in 1994. The
Company's preliminary injunction issued by the United States District Court for
the Northern District of California against the defendants, removing Origin's
infringing trocars from the market, remains in effect and no trial date has
been set. In the opinion of management, based upon the advice of counsel, the
Company has valid claims against the defendants.
D. The Company is engaged in other litigation, primarily as the
defendant, in cases involving product liability claims. The Company believes
it is adequately insured in all material respects against the product liability
claims. The Company is also involved in various other cases. In the opinion
of management, based on advice of counsel, the Company has meritorious defenses
and valid cross-claims in these actions.
* * *
In the opinion of management, based on the advice of counsel, the ultimate
outcome of all of the aforementioned lawsuits should not have a materially
adverse effect on the Company's consolidated financial statements.
-14-
<PAGE> 15
Form 10-Q
June 30, 1994
Item 2. Changes in Securities
Pursuant to the Company's new $400 million credit agreement, the
Company is prohibited from declaring dividends on its common stock if
the Company were in default of the covenants of the agreement. In
addition, the Company is prohibited from declaring dividends on its
common stock in excess of $1,250,000 per quarter, subject to
adjustment for changes in the number of shares outstanding, until it
achieves an investment grade status as defined.
Item 4. Submission of Matters to a Vote of Security Holders
At the annual meeting of stockholders held on May 18, 1994 the
following members were elected to the Board of Directors:
<TABLE>
<CAPTION>
Votes For Votes Withheld
--------- --------------
<S> <C> <C>
John A. Bogardus, Jr. 47,707,626 1,481,769
Thomas R. Bremer 47,695,920 1,493,475
Leon C. Hirsch 47,312,013 1,877,382
Turi Josefsen 47,420,497 1,768,898
Douglas L. King 47,747,341 1,442,054
Zanvyl Krieger 47,572,748 1,616,647
Bruce S. Lustman 47,588,429 1,600,966
William F. May 47,613,475 1,575,920
Marianne Scipione 47,659,523 1,529,872
Douglas Tansill 47,769,362 1,420,033
</TABLE>
There were no broker non-votes.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibit
(4a) $400 Million Credit Agreement
(11) Statement Regarding Computation of Per Share Earnings.
b. Reports on Form 8-K - The Company did not file any reports on
Form 8-K during the three-month period ended June 30, 1994.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED STATES SURGICAL CORPORATION
Registrant
By: /s/ Howard M. Rosenkrantz
------------------------------------
Howard M. Rosenkrantz
Senior Vice President, Finance and
Chief Financial Officer
Dated: July 26, 1994
-15-
<PAGE> 16
Form 10-Q
June 30, 1994
EXHIBIT INDEX
-------------
Exhibit No.
- - -----------
(4a) $400 Million Credit Agreement
(11) Statement Regarding Computation of Per Share Earnings.
<PAGE> 1
$400,000,000
CREDIT AGREEMENT
dated as of
June 27, 1994
among
United States Surgical Corporation
The Banks Party Hereto
Morgan Guaranty Trust Company of New York
as Documentation Agent
and
NationsBank of North Carolina, National Association
as Administrative Agent
Arranged By:
J.P. Morgan Securities, Inc.
as Lead Arranger
BA Securities, Inc.
as Co-Arranger
and
NationsBanc Capital Markets, Inc.
as Co-Arranger
<PAGE> 2
TABLE OF CONTENTS*
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Accounting Terms and Determinations . . . . . . . . . . . . . . . . 17
ARTICLE II
THE CREDITS
SECTION 2.01 Commitments to Lend . . . . . . . . . . . . . . . . . . . . . . . . 18
2.02 Method of Borrowing . . . . . . . . . . . . . . . . . . . . . . . . 18
2.03 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.04 Mandatory Termination of Commitments;
Maturity of Loans . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.05 Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.06 Method of Electing Interest Rates . . . . . . . . . . . . . . . . . 25
2.07 Commitment Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.08 Optional Termination or
Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . 27
2.09 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . 27
2.10 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.11 General Provisions as to Payments . . . . . . . . . . . . . . . . . 36
2.12 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.13 Computation of Interest, Fees and
Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.14 Termination of Existing
Bilateral Loan Agreements . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
- - ---------------------------------
* The Table of Contents is not a part of this Agreement.
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE III
CONDITIONS
SECTION 3.01 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.02 Borrowings; Issuances and
Extensions of Letters of Credit . . . . . . . . . . . . . . . . . . 39
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 Corporate Existence and Power . . . . . . . . . . . . . . . . . . . 40
4.02 Corporate and Governmental
Authorization; No Contravention . . . . . . . . . . . . . . . . . . 40
4.03 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.04 Financial Information . . . . . . . . . . . . . . . . . . . . . . . 41
4.05 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.06 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . 42
4.07 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . 42
4.08 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.09 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.10 Not an Investment Company. . . . . . . . . . . . . . . . . . . . . 43
4.11 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.12 Other Existing Debt Documents . . . . . . . . . . . . . . . . . . . 44
4.13 No Default under Other Agreements . . . . . . . . . . . . . . . . . 44
4.14 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE V
COVENANTS
SECTION 5.01 Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.02 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . 48
5.03 Maintenance of Property; Insurance . . . . . . . . . . . . . . . . 49
5.04 Conduct of Business and
Maintenance of Existence . . . . . . . . . . . . . . . . . . . . . 49
5.05 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . 50
5.06 Inspection of Property,
Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.07 Minimum Consolidated Net Worth . . . . . . . . . . . . . . . . . . 51
5.08 Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.09 Fixed Charge Coverage . . . . . . . . . . . . . . . . . . . . . . . 51
5.10 Negative Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.11 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . 53
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
5.12 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.13 Dividends and Common Stock Payments . . . . . . . . . . . . . . . . 53
5.14 Limitation on Subsidiary Debt . . . . . . . . . . . . . . . . . . . 54
5.15 Asset Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.16 Consolidations and Mergers . . . . . . . . . . . . . . . . . . . . 55
5.17 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . 56
5.18 Prepayment of Other Debt . . . . . . . . . . . . . . . . . . . . . 56
5.19 Other Existing Debt Documents . . . . . . . . . . . . . . . . . . . 57
5.20 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE VI
DEFAULTS
SECTION 6.01 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . 58
6.02 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . 61
6.03 Notice of Termination . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE VII
THE AGENTS
SECTION 7.01 Appointment and Authorization . . . . . . . . . . . . . . . . . . . 62
7.02 Agents and Affiliates. . . . . . . . . . . . . . . . . . . . . . . 62
7.03 Action by Agents . . . . . . . . . . . . . . . . . . . . . . . . . 62
7.04 Consultation with Experts;
Attorneys in Fact. . . . . . . . . . . . . . . . . . . . . . . . . 62
7.05 Liability of Agents . . . . . . . . . . . . . . . . . . . . . . . . 63
7.06 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 63
7.07 Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.08 Successor Agents . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.09 Administrative Agent's Fee . . . . . . . . . . . . . . . . . . . . 64
7.10 Arrangers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01 Basis for Determining Interest
Rate Inadequate or Unfair . . . . . . . . . . . . . . . . . . . . . 65
8.02 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.03 Increased Cost and Reduced Return . . . . . . . . . . . . . . . . . 66
8.04 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.05 Base Rate Loans Substituted for
Affected Fixed Rate Loans . . . . . . . . . . . . . . . . . . . . . 70
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.02 No Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.03 Expenses; Indemnification . . . . . . . . . . . . . . . . . . . . . 72
9.04 Sharing of Set-Offs . . . . . . . . . . . . . . . . . . . . . . . . 72
9.05 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . 73
9.06 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . 73
9.07 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . 75
9.08 Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
9.09 Governing Law; Submission to
Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
9.10 Counterparts; Integration;
Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
9.11 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . 77
9.12 COMMERCIAL TRANSACTION;
WAIVER OF RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . 77
</TABLE>
Commitment Schedule
Pricing Schedule
Exhibit A - Note
Exhibit B - Opinion of Counsel for the Borrower
Exhibit C - Opinion of Special Counsel for the
Documentation Agent
Exhibit D - Assignment and Assumption Agreement
Exhibit E - Calculation of Funding Losses
Exhibit F - List of Borrower's Active Subsidiaries
Exhibit G - List of Disclosure Documents
Exhibit H - List of Existing Liens Securing Debt
iv
<PAGE> 6
CREDIT AGREEMENT
AGREEMENT dated as of June 27, 1994 among UNITED STATES SURGICAL
CORPORATION, the BANKS party hereto, MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Documentation Agent, and NATIONSBANK OF NORTH CAROLINA, NATIONAL
ASSOCIATION, as Administrative Agent.
WHEREAS, each of the Banks listed on the signature pages hereof
(except Corestates Bank, N.A.) is party to a separate bilateral loan agreement
with the Borrower; and
WHEREAS, the Borrower wishes to replace such bilateral loan agreements
with the syndicated credit facility provided for herein and to be able to
obtain letters of credit as well as revolving credit loans hereunder;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein, have
the following meanings:
"Adjusted CD Rate" has the meaning set forth in Section 2.05(b).
"Adjusted Consolidated Net Income" means, for any period, the
consolidated net income of the Borrower and its Consolidated Subsidiaries for
such period minus dividends on the Borrower's outstanding preferred stock
accrued or paid with respect to such period.
"Adjusted London Interbank Offered Rate" has the meaning set forth
in Section 2.05(c).
"Administrative Agent" means NationsBank, in its capacity as
Administrative Agent for the Banks hereunder, and its successors in such
capacity.
"Administrative Questionnaire" means, with respect to each Bank, an
administrative questionnaire in the form
1
<PAGE> 7
prepared by the Administrative Agent, duly completed by such Bank and submitted
to the Administrative Agent (with a copy to the Borrower).
"Affiliate" means (i) any Person that directly, or indirectly through
one or more intermediaries, controls the Borrower (a "Controlling Person") or
(ii) any Person which is controlled by or is under common control with a
Controlling Person; provided that the term "Affiliate" shall not include (i)
the Borrower, (ii) any Subsidiary or (iii) any Person in which the Borrower or
a Subsidiary owns an equity interest if none of the other equity interests in
such Person are owned directly or indirectly by an Affiliate. As used herein,
the term "control" means possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"Agents" means the Administrative Agent and the Documentation Agent.
"Applicable Lending Office" means, with respect to any Bank, (i) in
the case of its Domestic Loans, its Domestic Lending Office and (ii) in the
case of its Euro-Dollar Loans, its Euro-Dollar Lending Office.
"Arrangers" means J.P. Morgan Securities, Inc., in its capacity as
Lead Arranger of the credit facility provided hereunder, and BA Securities,
Inc. and NationsBanc Capital Markets, Inc., in their respective capacities as
Co-Arrangers of the credit facility provided hereunder.
"Assessment Rate" has the meaning set forth in Section 2.05(b).
"Asset Sale" means any sale of any asset by the Borrower or any
Subsidiary, excluding sales of inventory and used, surplus or worn out
equipment in the ordinary course of business.
"Assignee" has the meaning set forth in Section 9.06(c).
"Bank" means each bank or other institution listed on the signature
pages hereof, each Assignee which becomes a Bank pursuant to Section 9.06(c),
and their respective successors.
"Bank of America" means Bank of America National Trust and Savings
Association.
2
<PAGE> 8
"Base Rate" means, for any day, a rate per annum equal to the higher
of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the
Federal Funds Rate for such day.
"Base Rate Loan" means (i) a Loan which bears interest at the Base
Rate pursuant to the applicable Notice of Borrowing or Notice of Interest Rate
Election or the provisions of Article VIII or (ii) an overdue amount which was
a Base Rate Loan immediately before it became overdue.
"Benefit Arrangement" means at any time an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"Borrower" means United States Surgical Corporation, a Delaware
corporation, and its successors.
"Borrower's 1993 Form 10-K" means the Borrower's annual report on Form
10-K for the year ended December 31, 1993, as filed with the Securities and
Exchange Commission pursuant to the Exchange Act.
"Borrower's Latest Form 10-Q" means the Borrower's quarterly report on
Form 10-Q for the quarter ended March 31, 1994, as filed with the Securities
and Exchange Commission pursuant to the Exchange Act.
"Borrowing" means a borrowing hereunder consisting of Loans which are
made to the Borrower at the same time by the Banks pursuant to Article II and
(except for Base Rate Loans) have the same initial Interest Period. A
Borrowing is a "Domestic Borrowing" if such Loans are Domestic Loans or a
"Euro-Dollar Borrowing" if such Loans are Euro-Dollar Loans. A Domestic
Borrowing is a "CD Borrowing" if such Domestic Loans are CD Loans or a "Base
Rate Borrowing" if such Domestic Loans are Base Rate Loans.
"CD Base Rate" has the meaning set forth in Section 2.05(b).
"CD Loan" means (i) a Loan which bears interest at a CD Rate pursuant
to the applicable Notice of Borrowing or Notice of Interest Rate Election or
(ii) an overdue amount which was a CD Loan immediately before it became
overdue.
"CD Margin" has the meaning set forth in Section 2.05(b).
3
<PAGE> 9
"CD Rate" means a rate of interest determined pursuant to Section
2.05(b) on the basis of an Adjusted CD Rate.
"CD Reference Banks" means Bank of America, Morgan and NationsBank.
"Closing Date" means the date on or after the Effective Date on which
the Documentation Agent shall have received all the documents and other items
specified in or pursuant to Section 3.01.
"Commitment" means, with respect to each Bank, the amount set forth
opposite the name of such Bank on the Commitment Schedule attached hereto (or,
in the case of an Assignee, the portion of the transferor Bank's Commitment
assigned to such Assignee pursuant to Section 9.06(c)), in each case as such
amount may be reduced from time to time pursuant to Section 2.08 or changed as
a result of an assignment pursuant to Section 9.06(c).
"Common Stock Dividend" means any dividend or other distribution on
any shares of the Borrower's common stock (except dividends payable solely in
shares of its common stock and dividends consisting solely of rights to acquire
shares of its common stock).
"Common Stock Payment" means any payment on account of the purchase,
redemption, retirement or acquisition of (i) any shares of the Borrower's
common stock or (ii) any option, warrant or other right to acquire shares of
the Borrower's common stock; provided that, if pursuant to the Borrower's stock
option plans, an optionee surrenders shares of the Borrower's common stock in
payment of the exercise price of options then being exercised by such optionee,
the acquisition by the Borrower of the shares so surrendered shall not
constitute a "Common Stock Payment".
"Consolidated Capital Expenditures" means, for any period, the gross
amount of all additions to property, plant and equipment of the Borrower and
its Consolidated Subsidiaries for such period; provided that, if the Borrower
acquires a going concern business, "Consolidated Capital Expenditures" shall
not include (i) the book value of the property, plant and equipment of such
business immediately before such acquisition or (ii) the amount by which such
property, plant and equipment are written up in connection with such
acquisition, except to the extent (if any) that the amounts referred to in the
foregoing clauses (i) and (ii) are attributable to expenditures made in
contemplation of such acquisition.
4
<PAGE> 10
"Consolidated Debt" means at any date the sum of all Debt of the
Borrower and its Consolidated Subsidiaries, determined on a consolidated basis
as of such date.
"Consolidated EBITDA" means, for any period, the sum of (i) the
consolidated net income of the Borrower and its Consolidated Subsidiaries for
such period (excluding any extraordinary income or extraordinary charges) plus
(ii) to the extent deducted in determining such consolidated net income, the
sum of (A) Consolidated Net Interest Expense, (B) income taxes, (C)
depreciation, amortization and write-offs of assets theretofore being
depreciated or amortized (or the creation or increase of reserves against such
assets), (D) the cost of settling any or all of the lawsuits referred to under
the caption "Legal Proceedings" in the Borrower's 1993 Form 10-K or the
Borrower's Latest Form 10-Q, provided that the aggregate amount added pursuant
to this clause (D) with respect to all Fiscal Quarters ending after March 31,
1994 shall not exceed $25,000,000 and (E) non-cash charges related to real
estate subject to the U.I.S. Financing Documents, provided that the aggregate
amount added pursuant to this clause (E) with respect to all Fiscal Quarters
ending after March 31, 1994 shall not exceed $35,000,000.
"Consolidated Net Interest Expense" means, for any period, the
interest expense (net of interest income) of the Borrower and its Consolidated
Subsidiaries for such period determined on a consolidated basis.
"Consolidated Net Rent Expense" means, for any period, the rent
expense of the Borrower and its Consolidated Subsidiaries under operating
leases for such period, net of rental income for such period, determined on a
consolidated basis.
"Consolidated Net Worth" means at any date the consolidated
stockholders' equity of the Borrower and its Consolidated Subsidiaries at such
date minus, to the extent reflected therein, all Intangible Assets (other than
patents, patent applications pending and patent licenses) acquired after
September 30, 1992.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which would be consolidated with those of the Borrower
in its consolidated financial statements if such statements were prepared as of
such date.
"Consolidated Total Capital" means at any date Consolidated Debt plus
Consolidated Net Worth at such date.
5
<PAGE> 11
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person as lessee which are (or are required to
be) capitalized in accordance with generally accepted accounting principles,
(iv) all guarantees and endorsements (other than endorsements in the ordinary
course of business of negotiable instruments for deposit or collection) by such
Person of the Debt of other Persons and all letters of credit issued on the
responsibility of such Person to support the Debt of other Persons, (v) in the
case of the Borrower, the obligations evidenced by the North Haven Notes and
(vi) with respect to obligations of such Person as lessee under any operating
lease (except the North Haven Lease) under which the aggregate rental payments
over the term of such lease exceed $15,000,000, the lesser of (x) the remaining
unpaid rental payments due during the term of such lease or (y) six times the
rental payments due under such lease during the next year. In calculating the
amount of any Person's Debt for purposes hereof, the amount of any guarantee,
endorsement or letter of credit referred to in clause (iv) of this definition
shall be deemed to be the amount of the Debt of another Person guaranteed,
endorsed or otherwise supported thereby.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice (under this Agreement or under an
agreement relating to Material Debt), lapse of time and/or the making of a
determination by the Required Banks would, unless cured or waived, become an
Event of Default.
"Derivatives Obligations" of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency
option or any other similar transaction (including any option with respect to
any of the foregoing transactions) or any combination of the foregoing
transactions.
"Documentation Agent" means Morgan, in its capacity as Documentation
Agent hereunder, and its successors in such capacity.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in
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New York City or Charlotte, North Carolina are authorized or required by law to
close.
"Domestic Lending Office" means, as to each Bank, its office located
at its address set forth in its Administrative Questionnaire (or identified in
its Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to the Borrower and the Administrative Agent; provided that any Bank may
so designate separate Domestic Lending Offices for its Base Rate Loans, on the
one hand, and its CD Loans, on the other hand, in which case all references
herein to the Domestic Lending Office of such Bank shall be deemed to refer to
either or both of such offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate Loans or both.
"Domestic Reserve Percentage" has the meaning set forth in Section
2.05(b).
"Eastern Time" means eastern standard time or eastern daylight time,
as appropriate.
"Effective Date" means the date this Agreement becomes effective in
accordance with Section 9.10.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating
to the environment, the effect of the environment on human health or to
emissions, discharges or releases of pollutants, contaminants, Hazardous
Substances or wastes into the environment including, without limitation,
ambient air, surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, Hazardous Substances or
wastes or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means the Borrower, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any
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<PAGE> 13
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its office,
branch or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Borrower and the Administrative Agent.
"Euro-Dollar Loan" means (i) a Loan which bears interest at a
Euro-Dollar Rate pursuant to the applicable Notice of Borrowing or Notice of
Interest Rate Election or (ii) an overdue amount which was a Euro-Dollar Loan
immediately before it became overdue.
"Euro-Dollar Margin" has the meaning set forth in Section 2.05(c).
"Euro-Dollar Rate" means a rate of interest determined pursuant to
Section 2.05(c) on the basis of an Adjusted London Interbank Offered Rate.
"Euro-Dollar Reference Banks" means the principal London offices of
Bank of America, Morgan and NationsBank.
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section
2.05(c).
"Event of Default" has the meaning set forth in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Existing Bilateral Loan Agreements" means the 22 separate loan
agreements signed by the Borrower and each of 22 banks as in effect on March
31, 1994.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers on
8
<PAGE> 14
such day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if such day is not a
Domestic Business Day, the Federal Funds Rate for such day shall be such rate
on such transactions on the next preceding Domestic Business Day as so
published on the next succeeding Domestic Business Day, and (ii) if no such
rate is so published on such next succeeding Domestic Business Day, the Federal
Funds Rate for such day shall be the average rate quoted to NationsBank on such
day on such transactions as determined by the Administrative Agent.
"Fiscal Quarter" means a fiscal quarter of the Borrower.
"Fiscal Year" means a fiscal year of the Borrower.
"Fixed Rate Borrowings" means CD Borrowings or Euro-Dollar Borrowings
or both.
"Fixed Rate Loans" means CD Loans or Euro-Dollar Loans or both.
"GAAP" means at any time generally accepted accounting principles as
then in effect in the United States, applied on a basis consistent (except for
changes with which the Borrower's independent public accountants have
concurred) with the most recent audited consolidated financial statements of
the Borrower and its Consolidated Subsidiaries theretofore delivered to the
Banks.
"Group of Loans" means at any time a group of Loans consisting of (i)
all Loans which are Base Rate Loans at such time or (ii) all Loans which are
Fixed Rate Loans of the same type having the same Interest Period at such time;
provided that, if a Loan of any particular Bank is converted to or made as a
Base Rate Loan pursuant to Section 8.02 or 8.05, such Loan shall be included in
the same Group or Groups of Loans from time to time as it would have been in if
it had not been so converted or made.
"Guarantee" by any Person means, for purposes of Sections 5.17 and
5.19 only, any obligation, contingent or otherwise, of such Person directly or
indirectly guaranteeing any Debt of any other Person and, without limiting the
generality of the foregoing, any obligation, direct or indirect, contingent or
otherwise, of such Person (i) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Debt (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to
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<PAGE> 15
take-or-pay, or to maintain financial statement conditions or otherwise) or
(ii) entered into for the purpose of assuring in any other manner the obligee
of such Debt of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part), provided that the term Guarantee shall
not include the North Haven Lease. The term "Guarantee" used as a verb has a
corresponding meaning.
"Hazardous Substances" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics.
"Indemnitee" has the meaning set forth in Section 9.03(b).
"Intangible Assets" means goodwill, patents, patent applications
pending, patent licenses, trade names, trademarks, copyrights, franchises,
experimental expense, organization expense, unamortized debt discount and
expense, deferred assets (other than prepaid insurance, prepaid rent in respect
of the North Haven Lease and prepaid or deferred taxes), the excess of cost of
shares acquired over book value of related assets and such other assets as are
properly classified as "intangible assets" in accordance with GAAP.
"Intercompany Debt" means (i) Debt owed by the Borrower to any
Subsidiary or (ii) Debt owed by any Subsidiary to the Borrower or to another
Subsidiary.
"Interest Period" means: (1) with respect to each Euro-Dollar Loan, a
period commencing on the date of borrowing specified in the applicable Notice
of Borrowing or on the date specified in the applicable Notice of Interest Rate
Election and ending one, two, three or six months thereafter, as the Borrower
may elect in the applicable notice; provided that:
(a) any Interest Period which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day
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<PAGE> 16
in the calendar month at the end of such Interest Period) shall, subject to
clause (c) below, end on the last Euro-Dollar Business Day of a calendar
month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(2) with respect to each CD Loan, a period commencing on the date of borrowing
specified in the applicable Notice of Borrowing or on the date specified in the
applicable Notice of Interest Rate Election and ending 30, 60, 90 or 180 days
thereafter, as the Borrower may elect in the applicable notice; provided that:
(a) any Interest Period which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, or any successor statute.
"Investment" means any investment in any Person, whether made by means
of share purchase, capital contribution, loan, time deposit, contribution of
assets, assumption of liabilities or otherwise.
"Investment Grade Status" exists at any date if the Borrower's
outstanding senior unsecured long-term debt securities (without any third-party
credit enhancement) are rated BBB- or higher by S&P and Baa3 or higher by
Moody's on such date; provided that, if the Borrower has no senior unsecured
long-term debt securities outstanding at such date, such ratings may be
established by letters from each of S&P and Moody's until either (i) the
Borrower shall have received notice from either S&P or Moody's that its letter
rating has been lowered below BBB- or Baa3, as the case may be, or withdrawn or
(ii) either S&P or Moody's shall have refused to affirm its letter rating when
asked to do so by the Administrative Agent (at the request of any Bank).
"Issuing Banks" means NationsBank, The Bank of New York and any other
Bank appointed pursuant to Section 2.10(j), each in its capacity as issuing
bank for one or
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more Letters of Credit hereunder, and their respective successors.
"Letters of Credit" means, subject to the last sentence of Section
2.10(a)(iii), each letter of credit issued by an Issuing Bank pursuant to
Section 2.10.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset. For the purposes of this Agreement, the
Borrower or any Subsidiary shall be deemed to own subject to a Lien any asset
which it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement relating to such asset.
"Loan" means a loan made by a Bank pursuant to Section 2.01; provided
that, if any such loan or loans (or portions thereof) are combined or
subdivided pursuant to a Notice of Interest Rate Election, the term "Loan"
shall refer to the combined principal amount resulting from such combination or
to each of the separate principal amounts resulting from such subdivision, as
the case may be.
"London Interbank Offered Rate" has the meaning set forth in Section
2.05(c).
"Material Debt" means (i) the North Haven Notes and (ii) any other
Debt (except the Loans and the Reimbursement Obligations) of the Borrower
and/or one or more Subsidiaries, arising in one or more related or unrelated
transactions, in an aggregate outstanding principal amount exceeding
$10,000,000.
"Material Financial Obligations" means a principal or face amount of
Debt and/or payment obligations in respect of Derivatives Obligations of the
Borrower and/or one or more Subsidiaries, arising in one or more related or
unrelated transactions, exceeding in the aggregate $10,000,000.
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $10,000,000.
"Moody's" means Moody's Investors Service, Inc.
"Morgan" means Morgan Guaranty Trust Company of New York.
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<PAGE> 18
"Multiemployer Plan" means at any time an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which any member of
the ERISA Group is then making or accruing an obligation to make contributions
or has within the preceding five plan years made contributions, including for
these purposes any Person which ceased to be a member of the ERISA Group during
such five year period.
"NationsBank" means NationsBank of North Carolina, National
Association.
"North Haven Financing Documents" means (i) the Participation
Agreement dated of January 14, 1993 among the Borrower (as lessee), Bakers
Properties Limited Partnership (as owner participant), the note purchasers
listed therein, State Street Bank and Trust Company of Connecticut, National
Association (Owner Trustee) and Norwest Bank Minnesota, National Association
(successor Indenture Trustee) and (ii) each of the "Operative Documents"
referred to therein, in each case as in effect from time to time.
"North Haven Lease" means the Lease Agreement dated as of January 14,
1993 between State Street Bank and Trust Company of Connecticut, National
Association (Owner Trustee), as lessor, and the Borrower, as lessee, as in
effect from time to time.
"North Haven Notes" means the notes outstanding from time to time
under the Trust Indenture, Assignment of Leases, Open-End Mortgage and Security
Agreement dated as of January 14, 1993 between State Street Bank and Trust
Company of Connecticut, National Association (Owner Trustee) and Norwest Bank
Minnesota, National Association (successor Indenture Trustee), as in effect
from time to time.
"Notes" means promissory notes of the Borrower, substantially in the
form of Exhibit A hereto, evidencing the obligation of the Borrower to repay
the Loans, and "Note" means any one of such promissory notes issued hereunder.
"Notice of Borrowing" has the meaning set forth in Section 2.02.
"Notice of Interest Rate Election" has the meaning set forth in
Section 2.06(a).
"Notice of LC Extension" has the meaning set forth in Section 2.10(b).
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"Notice of LC Issuance" has the meaning set forth in Section 2.10(b).
"Other Existing Debt Documents" means the North Haven Financing
Documents and the U.I.S. Financing Documents.
"Parent" means, with respect to any Bank, any Person controlling such
Bank.
"Participant" has the meaning set forth in Section 9.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Temporary Cash Investment" means any Investment in:
(i) direct obligations of the United States or any agency thereof,
or obligations guaranteed by the United States or any agency thereof,
(ii) direct obligations of the Commonwealth of Puerto Rico or any
agency thereof or any authority organized under the laws thereof, provided
in each case that such obligation is, at the time of acquisition thereof,
rated BBB+ or better by S&P or Baa1 or better by Moody's,
(iii) commercial paper rated, at the time of acquisition thereof, at
least A-1 by S&P and P-1 by Moody's,
(iv) time deposits with, including certificates of deposit issued by,
any office located in the United States of any Eligible Bank,
(v) repurchase agreements with respect to securities described in
clause (i) above entered into with an office located in the United States
of any Eligible Bank,
(vi) time deposits with, including certificates of deposit issued by,
any office located in Puerto Rico of Banco Popular de Puerto Rico, Banco
Santander Puerto Rico or any Eligible Bank, or
(vii) shares of an investment company with an aggregate net asset
value of not less than
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$500,000,000, the investments of which are limited to short-term direct
obligations of the United States or obligations backed by short-term direct
obligations of the United States,
provided that (x) each such Investment (other than an Investment permitted by
clause (ii) or (vi) above) matures within one year from the date of acquisition
thereof and (y) each Investment permitted by clause (ii) or (vi) above matures
within five years from the date of acquisition thereof. As used in this
definition, the term "Eligible Bank" means any bank or trust company which
shall have a combined capital, surplus and undivided profits of not less than
$100,000,000 and whose long-term certificates of deposit are, at the time of
acquisition thereof, rated A or better by S&P and A or better by Moody's.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan (other than
a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person
which was at such time a member of the ERISA Group for employees of any Person
which was at such time a member of the ERISA Group.
"Preferred Dividends" means, for any period, all dividends declared by
the Borrower during such period with respect to its preferred stock.
"Pricing Level" has the meaning set forth in the Pricing Schedule.
"Pricing Period" has the meaning set forth in the Pricing Schedule.
"Pricing Ratio" has the meaning set forth in the Pricing Schedule.
"Pricing Schedule" means the Pricing Schedule attached hereto.
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"Prime Rate" means the rate of interest publicly announced by
NationsBank in Charlotte, North Carolina, from time to time as its Prime Rate.
The Prime Rate is not necessarily the best or lowest rate of interest offered
by NationsBank.
"Quarterly Payment Date" means the last Euro-Dollar Business Day of
each March, June, September and December during the period from the Closing
Date to the Termination Date.
"Reference Banks" means the CD Reference Banks or the Euro-Dollar
Reference Banks, as the context may require, and "Reference Bank" means any one
of such Reference Banks.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Reimbursement Obligation" means an obligation of the Borrower to
reimburse the relevant Issuing Bank pursuant to Section 2.10 for the amount of
a drawing under a Letter of Credit.
"Required Banks" means at any time Banks having at least 60% of the
aggregate amount of the Commitments or, if the Commitments shall have been
terminated, having Total Exposures equal to at least 60% of the aggregate
amount of the Total Exposures.
"Responsible Officer" as it applies to the Borrower means the
president, the chief executive officer, the chief operating officer, the chief
financial officer, the treasurer, the general counsel or any other officer of
the Borrower whose responsibilities include the administration of the
transactions contemplated by this Agreement.
"S&P" means Standard & Poor's Corporation.
"Subsidiary" means, at any time, any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by the Borrower.
"Substantially Wholly-Owned Consolidated Subsidiary" means any
Consolidated Subsidiary at least 98% of the shares of capital stock or other
ownership interests
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of which are at the time directly or indirectly owned by the Borrower.
"Termination Date" means January 10, 1997.
"Total Exposure" means, with respect to any Bank at any time, the sum
of (i) the aggregate principal amount of its Loans then outstanding, (ii) its
share of the undrawn amount which is then, or may thereafter become, available
for drawing under each Letter of Credit then outstanding and (iii) its share of
the amount of each unpaid Reimbursement Obligation then outstanding.
"U.I.S. Financing Documents" means (i) the financing lease among Union
pour le Financement d'Immeubles de Societes (Association for the Financing of
Commercial Buildings or "U.I.S.") and Societe pour le Financement des Immeubles
d'Entreprise FINABAIL (Corporation for the Financing of Commercial Buildings or
"FINABAIL") together, as Lessor, A.S.E. PARTNERS ("ASE"), as Lessee, and the
Borrower, as Guarantor, governed by the favorable regime applicable to SICOMIs
(Societe Immobilieres pour le Commerce et l'Industrie), with respect to the DC
Building (as defined therein) dated January 4, 1994; (ii) the financing lease
among U.I.S. and FINABAIL together, as Lessor, ASE, as Lessee, and the
Borrower, as Guarantor, governed by the common-law regime, with respect to the
H.Q. Building (as defined therein) dated January 4, 1994; and (iii) the side
agreement dated January 4, 1994 between FINABAIL, U.I.S., ASE and the Borrower,
as Guarantor.
"Unfunded Liabilities" means, with respect to any Plan at any time,
the amount (if any) by which (i) the value of all benefit liabilities under
such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the
fair market value of all Plan assets allocable to such liabilities under Title
IV of ERISA (excluding any accrued but unpaid contributions), all determined as
of the then most recent valuation date for such Plan, but only to the extent
that such excess represents a potential liability of a member of the ERISA
Group to the PBGC or any other Person under Title IV of ERISA.
"United States" means the United States of America, including the
States thereof and the District of Columbia, but excluding its territories and
possessions.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
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accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared, in accordance with GAAP;
provided that, if the Borrower notifies the Documentation Agent that the
Borrower wishes to amend any provision of the Pricing Schedule and/or any
covenant in Article V to eliminate the effect of any change in GAAP on the
calculation of the Pricing Ratio and/or on the operation of such covenant (or
if the Documentation Agent notifies the Borrower that the Required Banks wish
to amend any such provision and/or any such covenant for such purpose), then
the Pricing Ratios shall be calculated and/or the Borrower's compliance with
such covenant shall be determined on the basis of GAAP as in effect immediately
before the relevant change in GAAP became effective, until either such notice
is withdrawn or such provision and/or covenant is amended in a manner
satisfactory to the Borrower and the Required Banks. Subject to the foregoing
proviso, the amounts used to determine the Borrower's compliance with the
financial covenants contained herein shall be the amounts that are (or will be)
set forth or otherwise reflected in the Borrower's consolidated financial
statements prepared in accordance with GAAP.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. Each Bank severally agrees, on
the terms and conditions set forth in this Agreement, to make loans to the
Borrower from time to time on and after the Closing Date and prior to the
Termination Date; provided that at no time shall such Bank's Total Exposure
exceed its Commitment. Each Borrowing under this Section shall be in an
aggregate principal amount of $5,000,000 or any larger multiple of $1,000,000
(except that any such Borrowing may be in the aggregate amount of the unused
Commitments) and shall be made from the several Banks ratably in proportion to
their respective Commitments. Within the foregoing limits, the Borrower may
borrow under this Section, prepay Loans to the extent permitted by Section
2.09, and reborrow under this Section at any time prior to the Termination
Date.
SECTION 2.02. Method of Borrowing. (a) The Borrower shall give the
Administrative Agent notice (a "Notice of Borrowing") not later than (x) 10:00
A.M. (Eastern Time) on the date of each Base Rate Borrowing, (y) 11:00 A.M.
(Eastern Time) on the second Domestic Business
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Day before each CD Borrowing and (z) 11:00 A.M. (Eastern Time) on the third
Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic Business
Day in the case of a Domestic Borrowing or a Euro-Dollar Business Day in
the case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing are to bear interest
initially at the Base Rate, a CD Rate or a Euro-Dollar Rate, and
(iv) in the case of a Fixed Rate Borrowing, the duration of the
initial Interest Period applicable thereto, subject to the provisions of
the definition of Interest Period.
(b) Upon receipt of a Notice of Borrowing, the Administrative Agent
shall promptly notify each Bank of the contents thereof and of such Bank's
ratable share of such Borrowing and such Notice of Borrowing shall not
thereafter be revocable by the Borrower. In the case of a Base Rate Borrowing,
the Administrative Agent shall give such notice to each Bank as promptly as
practicable and in any event not later than 1:00 P.M. (Eastern Time) on the
date of such Base Rate Borrowing.
(c) Not later than 2:00 P.M. (Eastern Time) on the date of each
Borrowing, each Bank shall make available its share of such Borrowing, in
Federal or other funds immediately available in Charlotte, North Carolina, to
the Administrative Agent at its address referred to in Section 9.01. Unless
the Administrative Agent determines that any applicable condition specified in
Section 3.02 has not been satisfied, the Administrative Agent will make the
funds so received from the Banks available to the Borrower at the
Administrative Agent's aforesaid address.
(d) Unless the Administrative Agent shall have received notice from a
Bank prior to the date of any Borrowing that such Bank will not make available
to the Administrative Agent such Bank's share of such Borrowing, the
Administrative Agent may assume that such Bank has made such share available to
the Administrative Agent on the date of such Borrowing in accordance with
subsection (c) of this Section and the Administrative Agent may, in reliance
upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank
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<PAGE> 25
shall not have so made such share available to the Administrative Agent, such
Bank and the Borrower severally agree to repay to the Administrative Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the Borrower until
the date such amount is repaid to the Administrative Agent, at (i) in the case
of the Borrower, a rate per annum equal to the higher of the Federal Funds Rate
and the interest rate applicable thereto pursuant to Section 2.05 and (ii) in
the case of such Bank, the Federal Funds Rate. If such Bank shall repay to the
Administrative Agent such corresponding amount, such amount so repaid shall
constitute such Bank's Loan included in such Borrowing for purposes of this
Agreement.
SECTION 2.03. Notes. (a) The Loans of each Bank shall be evidenced
by a single Note payable to the order of such Bank for the account of its
Applicable Lending Office in an amount equal to the aggregate unpaid principal
amount of such Bank's Loans.
(b) Upon receipt of each Bank's Note pursuant to Section 3.01(a), the
Documentation Agent shall forward such Note to such Bank. Each Bank shall
record the date, amount and type of each Loan made by it and the date and
amount of each payment of principal made by the Borrower with respect thereto,
and may, if such Bank so elects in connection with any transfer or enforcement
of its Note, endorse on the schedule forming a part thereof appropriate
notations (or attach thereto a schedule containing such notations) to evidence
the foregoing information with respect to each such Loan then outstanding;
provided that the failure of any Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or under
the Notes. Each Bank is hereby irrevocably authorized by the Borrower so to
endorse its Note and to attach to and make a part of its Note such a schedule
and a continuation of any such schedule as and when required.
SECTION 2.04. Mandatory Termination of Commitments; Maturity of
Loans. The Commitments shall terminate on the Termination Date, unless
terminated earlier in accordance with this Agreement, and any Loans then
outstanding (together with accrued interest thereon) shall be due and payable
on such date.
SECTION 2.05. Interest Rates. (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from the
date such Loan is made (or converted to a Base Rate Loan) until it becomes due
(or is converted to a CD Loan or Euro-Dollar Loan), at a rate
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per annum equal to the sum of the Base Rate Margin for such day plus the Base
Rate for such day. Such interest shall be payable quarterly in arrears on each
Quarterly Payment Date and, with respect to the principal amount of any Base
Rate Loan converted to a CD Loan or a Euro-Dollar Loan, on the date such
principal amount is so converted. Any overdue principal of or interest on any
Base Rate Loan shall bear interest, payable on demand, for each day until paid
at a rate per annum equal to the sum of 2% plus the rate otherwise applicable
to Base Rate Loans for such day.
"Base Rate Margin" means a rate per annum determined in accordance
with the Pricing Schedule.
(b) Each CD Loan shall bear interest on the outstanding principal
amount thereof, for each day during each Interest Period applicable thereto, at
a rate per annum equal to the sum of the CD Margin for such day plus the
Adjusted CD Rate applicable to such Interest Period; provided that if any CD
Loan shall, as a result of clause (2)(b) of the definition of Interest Period,
have an Interest Period of less than 30 days, such CD Loan shall bear interest
during such Interest Period at the rate applicable to Base Rate Loans during
such period. Such interest shall be payable for each Interest Period on the
last day thereof and, if such Interest Period is longer than 90 days, at
intervals of 90 days after the first day thereof. Any overdue principal of or
interest on any CD Loan shall bear interest, payable on demand, for each day
until paid at a rate per annum equal to the sum of 2% plus the higher of (i)
the rate applicable to Base Rate Loans for such day and (ii) the sum of the CD
Margin plus the Adjusted CD Rate applicable to such CD Loan immediately before
such payment was due.
"CD Margin" means a rate per annum determined in accordance with the
Pricing Schedule.
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The "Adjusted CD Rate" applicable to any Interest Period means a rate
per annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
----------
* The amount in brackets being rounded upward, if
necessary, to the next higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest Period is the rate of
interest determined by the Administrative Agent to be the average (rounded
upward, if necessary, to the next higher 1/100 of 1%) of the prevailing rates
per annum bid at 10:00 A.M. (Eastern Time) (or as soon thereafter as
practicable) on the first day of such Interest Period by two or more New York
certificate of deposit dealers of recognized standing for the purchase at face
value from each CD Reference Bank of its certificates of deposit in an amount
comparable to the principal amount of the CD Loan of such CD Reference Bank to
which such Interest Period applies and having a maturity comparable to such
Interest Period.
"Domestic Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including without limitation any
basic, supplemental or emergency reserves) for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of new non-personal time deposits in dollars in New York City having a
maturity comparable to the related Interest Period and in an amount of $100,000
or more. The Adjusted CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Domestic Reserve Percentage.
"Assessment Rate" means for any day the annual assessment rate in
effect on such day which is payable by a member of the Bank Insurance Fund
classified as adequately
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capitalized and within supervisory subgroup "A" (or a comparable successor
assessment risk classification) within the meaning of 12 C.F.R. Section
327.3(d) (or any successor provision) to the Federal Deposit Insurance
Corporation (or any successor) for such Corporation's (or such successor's)
insuring time deposits at offices of such institution in the United States.
The Adjusted CD Rate shall be adjusted automatically on and as of the effective
date of any change in the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for each day during each Interest Period applicable
thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin for
such day plus the Adjusted London Interbank Offered Rate applicable to such
Interest Period. Such interest shall be payable for each Interest Period on
the last day thereof and, if such Interest Period is longer than three months,
at intervals of three months after the first day thereof.
"Euro-Dollar Margin" means a rate per annum determined in accordance
with the Pricing Schedule.
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained (rounded
upward, if necessary, to the next higher 1/100 of 1%) by dividing (i) the
applicable London Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar
Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Interest Period
means the average (rounded upward, if necessary, to the next higher 1/16 of 1%)
of the respective rates per annum at which deposits in dollars are offered to
each of the Euro-Dollar Reference Banks in the London interbank market at
approximately 11:00 A.M. (London time) two Euro-Dollar Business Days before the
first day of such Interest Period in an amount approximately equal to the
principal amount of the Euro-Dollar Loan of such Euro-Dollar Reference Bank to
which such Interest Period is to apply and for a period of time comparable to
such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which
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the interest rate on Euro-Dollar Loans is determined or any category of
extensions of credit or other assets which includes loans by a non-United
States office of any Bank to United States residents). The Adjusted London
Interbank Offered Rate shall be adjusted automatically on and as of the
effective date of any change in the Euro-Dollar Reserve Percentage.
(d) Any overdue principal of or interest on any Euro-Dollar Loan
shall bear interest, payable on demand, for each day until paid at a rate per
annum equal to the sum of 2% plus the Euro-Dollar Margin for such day plus the
higher of (i) the quotient obtained (rounded upward, if necessary, to the next
higher 1/100 of 1%) by dividing (x) the average (rounded upward, if necessary,
to the next higher 1/16 of 1%) of the respective rates per annum at which one
day (or, if such amount due remains unpaid more than three Euro-Dollar Business
Days, then for such other period of time not longer than six months as the
Administrative Agent may select) deposits in dollars in an amount approximately
equal to such overdue payment due to each of the Euro-Dollar Reference Banks
are offered to such Euro-Dollar Reference Bank in the London interbank market
for the applicable period determined as provided above by (y) 1.00 minus the
Euro-Dollar Reserve Percentage and (ii) the Adjusted London Interbank Offered
Rate applicable to such Euro- Dollar Loan immediately before such payment was
due; provided that, if the circumstances described in clause (a) or (b) of
Section 8.01 shall exist, the rate per annum applicable to such overdue amount
for each such day shall be equal to the sum of 2% plus the rate applicable to
Base Rate Loans for such day.
(e) Within 45 days after the end of each Fiscal Quarter (commencing
with the Fiscal Quarter ending September 30, 1994), the Borrower will notify
the Administrative Agent and each Bank of the Pricing Ratio determined as of
the end of such Fiscal Quarter and the Pricing Level to be applicable during
the Pricing Period that begins 46 days after the end of such Fiscal Quarter.
The Administrative Agent will rely on such notification in determining interest
rates and fees hereunder for such Pricing Period, unless and until the
Administrative Agent determines (on the basis of financial statements of the
Borrower subsequently delivered or otherwise) that a different Pricing Level
(the "Corrected Pricing Level") is applicable during such Pricing Period, in
which event the Administrative Agent shall thereafter determine interest rates
and fees for such Pricing Period based on the Corrected Pricing Level. If any
interest or fees accrue during such Pricing Period and are paid before the
Administrative Agent determines that the Pricing Level
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should be corrected as aforesaid, the Administrative Agent shall notify the
Borrower and the Banks of the amount of any resulting underpayment or
overpayment. In the case of an underpayment, the Borrower shall, within three
Domestic Business Days after receiving such notice thereof, pay the amount
thereof to the Administrative Agent for the account of the relevant Banks. In
case of an overpayment, the amount thereof shall be credited against subsequent
payments of interest and fees payable hereunder for the account of the relevant
Banks, all as determined by the Administrative Agent.
(f) The Administrative Agent shall determine each interest rate
applicable to the Loans hereunder. The Administrative Agent shall give prompt
notice to the Borrower and the Banks of each rate of interest so determined,
and its determination thereof shall be conclusive in the absence of manifest
error.
(g) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Administrative Agent as contemplated by this Section. If any
Reference Bank does not furnish a timely quotation, the Administrative Agent
shall determine the relevant interest rate on the basis of the quotation or
quotations furnished by the remaining Reference Bank or Reference Banks or, if
none of such quotations is available on a timely basis, the provisions of
Section 8.01 shall apply.
(h) Notwithstanding anything to the contrary in the Pricing Schedule,
if at any time a Default shall have occurred and be continuing and the
Administrative Agent shall notify the Borrower that the Required Banks have
decided to invoke the provisions of this subsection (h), then the Base Rate
Margin, Euro-Dollar Margin, CD Margin, LC Commission Rate and Commitment Fee
Rate, for each day from and including the second Domestic Business Day after
the Borrower receives such notice to but excluding the first day thereafter on
which no Default shall have occurred and be continuing, shall each be increased
by 0.50% per annum.
SECTION 2.06. Method of Electing Interest Rates. (a) The Loans
included in each Borrowing shall bear interest initially at the type of rate
specified by the Borrower in the applicable Notice of Borrowing. Thereafter,
the Borrower may from time to time elect to change or continue the type of
interest rate borne by each Group of Loans (subject in each case to the
provisions of Article VIII), as follows:
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(i) if such Loans are Base Rate Loans, the Borrower may elect to
convert such Loans to CD Loans as of any Domestic Business Day or to
Euro-Dollar Loans as of any Euro-Dollar Business Day;
(ii) if such Loans are CD Loans, the Borrower may elect to convert
such Loans to Base Rate Loans or Euro-Dollar Loans or elect to continue
such Loans as CD Loans for an additional Interest Period, in each case
effective on the last day of the then current Interest Period applicable to
such Loans; or
(iii) if such Loans are Euro-Dollar Loans, the Borrower may elect to
convert such Loans to Base Rate Loans or CD Loans or elect to continue such
Loans as Euro-Dollar Loans for an additional Interest Period, in each case
effective on the last day of the then current Interest Period applicable to
such Loans.
Each such election shall be made by delivering a notice (a "Notice of Interest
Rate Election") to the Administrative Agent at least three Euro-Dollar Business
Days before the conversion or continuation selected in such notice is to be
effective (unless the relevant Loans are to be converted from Domestic Loans to
Domestic Loans of the other type or continued as Domestic Loans of the same
type for an additional Interest Period, in which case such notice shall be
delivered to the Administrative Agent at least three Domestic Business Days
before such conversion or continuation is to be effective). A Notice of
Interest Rate Election may, if it so specifies, apply to only a portion of the
aggregate principal amount of the relevant Group of Loans; provided that (i)
such portion is allocated ratably among the Loans comprising such Group and
(ii) the portion to which such Notice applies, and the remaining portion to
which it does not apply, are each $5,000,000 or any larger multiple of
$1,000,000.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such notice
applies;
(ii) the date on which the conversion or continuation selected in such
notice is to be effective, which shall comply with the applicable clause of
subsection (a) above;
(iii) if the Loans comprising such Group are to be converted, the new
type of Loans and, if such new Loans
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are Fixed Rate Loans, the duration of the initial Interest Period
applicable thereto; and
(iv) if such Loans are to be continued as CD Loans or Euro-Dollar
Loans for an additional Interest Period, the duration of such additional
Interest Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election from the
Borrower pursuant to subsection (a) above, the Administrative Agent shall
promptly notify each Bank of the contents thereof and such notice shall not
thereafter be revocable by the Borrower. If the Borrower fails to deliver a
timely Notice of Interest Rate Election to the Administrative Agent for any
Group of Fixed Rate Loans, such Loans shall be converted into Base Rate Loans
on the last day of the then current Interest Period applicable thereto.
SECTION 2.07. Commitment Fees. The Borrower shall pay to the
Administrative Agent for the account of each Bank a commitment fee at the
Commitment Fee Rate (determined daily in accordance with the Pricing Schedule)
on the unused portion of such Bank's Commitment (i.e., the amount by which its
Commitment exceeds its Total Exposure). Such commitment fees shall accrue from
and including the Closing Date to but excluding the Termination Date (or
earlier date of termination of the Commitments in their entirety) and shall be
payable quarterly in arrears, on each Quarterly Payment Date and on the
Termination Date.
SECTION 2.08. Optional Termination or Reduction of Commitments. The
Borrower may, upon at least three Domestic Business Days' notice to the
Administrative Agent, terminate at any time or ratably reduce from time to
time, by an aggregate amount of $10,000,000 or any larger multiple of
$1,000,000, the unused portions of the Commitments. Upon any such termination
or reduction of the Commitments, the Administrative Agent shall promptly notify
each Bank thereof. If the Commitments are terminated in their entirety, all
commitment fees accrued hereunder shall be payable on the effective date of
such termination.
SECTION 2.09. Optional Prepayments. (a) The Borrower may, upon at
least (i) one Domestic Business Day's notice to the Administrative Agent, in
the case of the Group of Base Rate Loans, (ii) two Domestic Business Days'
notice to the Administrative Agent in the case of any Group of CD Rate Loans,
or (iii) three Euro-Dollar Business Days' notice
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to the Administrative Agent, in the case of any Group of Euro-Dollar Loans,
prepay the Loans comprising such Group of Loans, in whole at any time, or from
time to time in part in amounts aggregating $5,000,000 or any larger multiple
of $1,000,000, by paying the principal amount to be prepaid together with
accrued interest thereon to the date of prepayment. Each such optional
prepayment shall be applied to prepay ratably the Loans of the several Banks
included in such Group of Loans. In connection with any such prepayment of
Fixed Rate Loans, the Borrower shall comply with the provisions of Section
2.12, if applicable.
(b) Upon receipt of a notice of prepayment pursuant to this Section,
the Administrative Agent shall promptly notify each Bank of the contents
thereof and of such Bank's ratable share of such prepayment and such notice
shall not thereafter be revocable by the Borrower.
SECTION 2.10. Letters of Credit.
(a) Commitments to Issue and Participate in Letters of Credit.
(i) Each Issuing Bank agrees, on the terms and conditions set forth
in this Agreement (and in accordance with its customary procedures, to the
extent such procedures are not inconsistent with the terms of this Agreement),
at the request of the Borrower to issue and extend Letters of Credit for the
account of the Borrower from time to time on and after the Closing Date and
prior to the date which is 14 Domestic Business Days before the Termination
Date.
(ii) Each Bank agrees to participate as provided in this Section,
ratably in proportion to its Commitment, in each drawing made under each Letter
of Credit.
(iii) The obligation of each Issuing Bank to issue or extend a Letter
of Credit pursuant to this Section is subject to the conditions set forth in
Section 3.02 and the following additional conditions:
(A) no such Letter of Credit shall be issued or extended if,
immediately after the issuance or extension thereof, (i) any Bank's Total
Exposure would exceed its Commitment or (ii) the sum of (x) the aggregate
undrawn amount which is, or may thereafter become, available for drawing
under all outstanding Letters of Credit and (y) the aggregate principal
amount of any outstanding Reimbursement Obligations would exceed
$10,000,000;
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(B) no such Letter of Credit shall, when issued, have an expiry date
that is more than 15 months after its date of issuance or, when extended,
have an extended expiry date that is more than 15 months after the date on
which such Issuing Bank extends such Letter of Credit;
(C) no such Letter of Credit shall have an original or extended
expiry date later than seven Domestic Business Days before the Termination
Date;
(D) without the approval of the Required Banks, no such Letter of
Credit shall be issued to support, directly or indirectly, the obligations
of any Person under any of the Other Existing Debt Documents; and
(E) the form of such Letter of Credit shall be satisfactory to the
relevant Issuing Bank.
A letter of credit issued by an Issuing Bank shall not constitute a "Letter of
Credit" for purposes of this Agreement, and the Banks shall not be obligated to
participate in drawings made thereunder, unless such letter of credit complies
with the conditions set forth in clauses (B), (C) and (D) above and,
immediately prior to the issuance of such letter of credit, such Issuing Bank
is advised by the Administrative Agent that (x) the condition set forth in
clause (A) above is satisfied and (y) the Administrative Agent has not
determined that any applicable condition specified in Section 3.02 has not been
satisfied; provided that this sentence shall not apply to any letter of credit
issued at a time when all conditions to the relevant Issuing Bank's obligation
to issue such letter of credit are in fact satisfied.
(iv) No Issuing Bank shall be obligated to issue any Letter of Credit
in connection with the financing of imports into or exports from the United
States if such Issuing Bank believes that the issuance of such Letter of Credit
would not meet the criteria (with regard to goods shipped, nationality of
beneficiary, country of origin, or other similar considerations) customarily
applied by it when considering a request to issue such letters of credit.
(b) Notice of LC Issuance or LC Extension. At least five Domestic
Business Days before any Letter of Credit is to be issued pursuant to this
Section, the Borrower shall give notice (a "Notice of LC Issuance") to the
Administrative Agent and the relevant Issuing Bank (which shall be selected by
the Borrower) specifying: (A) the date of issuance and expiry date of such
Letter of
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Credit, (B) the proposed terms of such Letter of Credit, including the face
amount thereof, and (C) the transaction that is to be supported or financed by
such Letter of Credit. At least five Domestic Business Days before any Letter
of Credit is to be extended pursuant to this Section, the Borrower shall give
notice (a "Notice of LC Extension") to the Administrative Agent and the
relevant Issuing Bank identifying such Letter of Credit and requesting the
extension of the expiry date thereof to a specified date complying with clauses
(B) and (C) of subsection (a)(iii) above. The Administrative Agent shall, upon
receipt of each such Notice of LC Issuance or Notice of LC Extension, promptly
notify each Bank of the contents thereof and of the amount of such Bank's
ratable participation in such Letter of Credit, and such Notice of LC Issuance
or Notice of LC Extension shall not thereafter be revocable by the Borrower.
(c) Drawings under Letters of Credit. Upon receipt from the
beneficiary of any Letter of Credit of demand for payment under such Letter of
Credit, the relevant Issuing Bank shall promptly notify the Borrower and the
Administrative Agent of such demand for payment and shall determine in
accordance with the terms of such Letter of Credit whether such demand for
payment should be honored. If such Issuing Bank determines that a demand for
payment by the beneficiary of a Letter of Credit should be honored, such
Issuing Bank shall make available to such beneficiary in accordance with the
terms of such Letter of Credit the amount of the drawing under such Letter of
Credit. Such Issuing Bank shall thereupon notify the Borrower, the
Administrative Agent and each Bank of the amount of such drawing paid by it.
(d) Reimbursement and Other Payments by the Borrower.
(i) If any amount is drawn under any Letter of Credit, the Borrower
shall reimburse the relevant Issuing Bank for all amounts paid by such Issuing
Bank upon such drawing, together with any and all reasonable charges and
expenses which such Issuing Bank may pay or incur relative to such drawing and
interest on the amount drawn, for each day from and including the date such
amount is drawn to but excluding the date such reimbursement payment is due and
payable, at the Federal Funds Rate for such day. Such reimbursement payment
shall be due and payable (x) on the date such Issuing Bank notifies the
Borrower of such drawing, if such notice is given at or before 12:00 Noon
(Eastern Time) on such date, or (y) if such notice is given after 12:00 Noon
(Eastern Time) on such date, then not later
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than 11:00 A.M. (Eastern Time) on the first Domestic Business Day after the
date such notice is given.
(ii) In addition, the Borrower agrees to pay to the relevant Issuing
Bank (A) interest on any amount not paid by the Borrower when due hereunder
with respect to a Letter of Credit for each day from the date when such amount
became due until such amount is paid in full, whether before or after judgment,
payable on demand, at a rate per annum equal to the sum of 2% plus the rate
applicable to Base Rate Loans for such day, and (B) upon each transfer of any
Letter of Credit in accordance with its terms, a sum equal to such amount as
shall be necessary to cover the reasonable costs and expenses of such Issuing
Bank incurred in connection with such transfer.
(iii) If the Borrower makes any payment under this subsection (d) to
any Issuing Bank for its own account after 3:00 P.M. (Eastern Time) on any
Domestic Business Day, such payment shall be deemed to have been made on the
next succeeding Domestic Business Day. If the Borrower makes any payment under
this subsection (d) to any Issuing Bank for the account of one or more other
Banks at or after 12:00 Noon (Eastern Time) on any Domestic Business Day and
such Issuing Bank fails to distribute such payment to such Banks before the end
of such Domestic Business Day, such payment shall be deemed to have been made
on the next succeeding Domestic Business Day.
(iv) Each Issuing Bank shall promptly notify the Administrative Agent
and each Bank of the amount of each reimbursement payment received by it from
the Borrower pursuant to this Section.
(e) Payments by Banks with Respect to Letters of Credit.
(i) Each Bank shall be obligated to make available to the relevant
Issuing Bank an amount equal to such Bank's ratable share of any drawing under
a Letter of Credit; provided that each Bank's obligation shall be reduced by
its pro rata share of any reimbursement by the Borrower in respect of such
drawing pursuant to subsection (d)(i) above. The relevant Issuing Bank shall
notify each Bank and the Administrative Agent of the net amount of such Bank's
obligation in respect of any drawing under a Letter of Credit as soon as
practicable after such Issuing Bank determines whether it has received timely
reimbursement for such drawing from the Borrower pursuant to subsection (d)(i)
above. Each Bank shall pay the net amount so notified to it, in Federal or
other immediately available funds, to the
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relevant Issuing Bank at such Issuing Bank's address specified in or pursuant
to Section 9.01, by 3:00 P.M. (Eastern Time) on the date such Bank receives
such notice (or, if such notice is received after 11:00 A.M. (Eastern Time) on
such day, by 2:00 P.M. (Eastern Time) on the next following Domestic Business
Day), together with interest on the net amount of such Bank's share of such
drawing, for each day from and including the date of such drawing to but
excluding the day on which such Bank's payment to the relevant Issuing Bank in
respect thereof is due, at the Federal Funds Rate for such day. If such Bank
fails to make such payment to the relevant Issuing Bank when due, such Bank
shall pay to such Issuing Bank, on demand, interest on the overdue amount (i)
for each day from and including the date such payment is due to but excluding
the first succeeding Domestic Business Day (and any intervening days), at the
Federal Funds Rate for such day and (ii) for each day thereafter until such
Bank makes such payment, at a rate per annum equal to the sum of 2% plus the
Base Rate for such day. Any payment made by any Bank after 3:00 P.M. (Eastern
Time) on any Domestic Business Day shall be deemed for purposes of this clause
(i) to have been made on the next succeeding Domestic Business Day.
(ii) When a Bank pays to the relevant Issuing Bank the full amount
required to be paid by it pursuant to the foregoing subsection (e)(i) in
connection with any drawing under a Letter of Credit, such Bank shall be
subrogated to the rights of such Issuing Bank against the Borrower to the
extent of (A) an amount equal to the portion of such drawing so paid by such
Bank and (B) the interest on such amount payable by the Borrower pursuant to
subsection (d) above.
(iii) If the Borrower shall reimburse the relevant Issuing Bank for
any drawing under a Letter of Credit after one or more Banks shall have made
funds available to such Issuing Bank with respect to such drawing in accordance
with clause (i) of this subsection, such Issuing Bank shall promptly upon
receipt of such reimbursement distribute to each such Bank its pro rata share
thereof, including interest, to the extent received by such Issuing Bank. If
any Bank has not yet made funds available to such Issuing Bank in respect of
such drawing, such Issuing Bank shall promptly notify such Bank of the amount
of such reimbursement received by such Issuing Bank from the Borrower and the
related reduction of the net amount to be paid by such Bank to such Issuing
Bank pursuant to clause (i) of this subsection.
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(iv) If any Issuing Bank receives any payment for the account of one
or more other Banks before 12:00 Noon (Eastern Time) on any Domestic Business
Day and fails to distribute such payment to such Banks before the end of such
Domestic Business Day, such Issuing Bank shall pay to each such Bank interest
on its share of such payment, for each day from and including such Domestic
Business Day to but excluding the Domestic Business Day on which such Issuing
Bank distributes such payment, at the Federal Funds Rate for such day. If any
Issuing Bank receives any payment for the benefit of one or more other Banks at
or after 12:00 Noon (Eastern Time) on any Domestic Business Day and fails to
distribute such payment to such Banks before the end of the next succeeding
Domestic Business Day, such Issuing Bank shall pay to each such Bank interest
on its share of such payment, for each day from and including such next
succeeding Domestic Business Day to but excluding the Domestic Business Day on
which such Issuing Bank distributes such payment, at the Federal Funds Rate for
such day.
(f) Letter of Credit Commissions. The Borrower shall pay to the
Administrative Agent for the account of each Bank a letter of credit commission
with respect to each Letter of Credit, computed for each day from and including
the date of issuance of such Letter of Credit to and including the last day a
drawing is available under such Letter of Credit, at the LC Commission Rate on
the undrawn amount of such Letter of Credit on such day. The Borrower also
agrees to pay to each Issuing Bank, for its own account, a commission, computed
with respect to the undrawn amount of each Letter of Credit issued by such
Issuing Bank as set forth in the preceding sentence, at a rate equal to 1/4 of
1% per annum. Such commissions shall be payable in arrears on each Quarterly
Payment Date and on the Termination Date (or on such earlier date as no Letters
of Credit are outstanding and the Commitments are terminated in their
entirety).
"LC Commission Rate" means a rate per annum determined in accordance
with the Pricing Schedule.
(g) Letter of Credit Status Report. The Administrative Agent shall
provide to the Borrower, each Bank and each Issuing Bank, within 15 days after
the close of each Fiscal Quarter ending before the Termination Date, a summary
of the Letters of Credit that are then outstanding, setting forth (to the best
of its knowledge) with respect to each such Letter of Credit (A) the name of
the Issuing Bank, (B) the date of issuance, face amount and expiry date
thereof, (C) the undrawn amount which is then, or may thereafter become,
available for drawing thereunder and (D)
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the amount of any unpaid Reimbursement Obligations outstanding as a result of
drawings thereunder.
(h) Payment upon Acceleration. If the Commitments shall be
terminated or the principal of the Notes shall become immediately due and
payable pursuant to Section 6.01, the Borrower shall immediately pay to the
Administrative Agent an amount in immediately available funds equal to the
aggregate amount which is then, or may thereafter become, available for drawing
under all outstanding Letters of Credit. The Administrative Agent shall hold
such amount in a collateral account in the name of the Administrative Agent and
shall from time to time invest and reinvest such amount, together with any
interest or other income thereon, in Permitted Temporary Cash Investments
(which shall also be held in such collateral account), but shall have no
liability for any failure to keep such amounts so invested. The Borrower
grants to the Administrative Agent a continuing security interest in all
amounts and Permitted Temporary Cash Investments held in such collateral
account from time to time to secure the Borrower's obligations under this
Section and all other amounts payable by the Borrower under this Agreement.
The Administrative Agent shall apply amounts in such collateral account in the
following order of priorities:
first to reimburse the Issuing Banks for drawings under Letters of
Credit and to pay any other amounts due under this Section 2.10;
second to pay, as promptly as practicable after all Letters of Credit
expire or are fully drawn and reimbursed, any other amounts then due and
payable by the Borrower under this Agreement; and
finally to pay any surplus then remaining to the Borrower.
(i) Limited Liability of Issuing Banks. The Borrower's obligations
under this Section shall be absolute and unconditional under any and all
circumstances and irrespective of any claim, set-off, counterclaim or defense
to payment which the Borrower may have or have had against any Issuing Bank,
any Bank, any beneficiary of a Letter of Credit or any other Person. The
Borrower assumes all risks of the acts or omissions of any beneficiary and any
transferee of any Letter of Credit with respect to its use of such Letter of
Credit. The Banks, the Issuing Banks and their respective officers and
directors shall not be liable or responsible for, and the obligations of each
Bank to make payments, and of the Borrower to reimburse the Banks or the
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Issuing Banks for payments, pursuant to this Section shall not be excused by,
any action or inaction of any Bank or Issuing Bank related to: (i) the use
which may be made of any Letter of Credit or any acts or omissions of any
beneficiary or transferee in connection therewith; (ii) the validity,
sufficiency or genuineness of documents presented under any Letter of Credit,
or of any endorsements thereon, even if such documents should in fact prove to
be in any or all respects invalid, insufficient, fraudulent or forged (and
notwithstanding any notification from the Borrower to such effect); (iii)
payment by any Issuing Bank against presentation of documents to such Issuing
Bank which do not comply with the terms of the relevant Letter of Credit,
including failure of any documents to bear any reference or adequate reference
to the relevant Letter of Credit; or (iv) under any other circumstances
whatsoever, making or failing to make any payment under any Letter of Credit or
notifying or failing to notify any Bank that it is required to participate
therein. Notwithstanding the foregoing, the Borrower shall have a claim
against an Issuing Bank, and such Issuing Bank shall be liable to the Borrower,
to the extent, but only to the extent, of any direct, as opposed to
consequential, damages suffered by the Borrower which were caused by (i) such
Issuing Bank's willful misconduct or gross negligence in determining whether
documents presented under any Letter of Credit issued by it comply with the
terms thereof or (ii) such Issuing Bank's willful failure to pay under any
Letter of Credit issued by it after the timely presentation to such Issuing
Bank by any beneficiary (or a successor beneficiary to whom such Letter of
Credit has been transferred in accordance with its terms) of documents strictly
complying with the terms and conditions of such Letter of Credit. Subject to
the preceding sentence, any Issuing Bank may accept documents that appear on
their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary unless any beneficiary
(or a successor beneficiary to whom the relevant Letter of Credit has been
transferred in accordance with its terms) and the Borrower shall have notified
such Issuing Bank that such documents do not comply with the terms and
conditions of such Letter of Credit. Each Bank shall, ratably in accordance
with its Commitment, indemnify each Issuing Bank (to the extent not reimbursed
by the Borrower, and without limiting any such reimbursement obligation)
against any cost, expense (including counsel fees and disbursements), claim,
demand, action, loss or liability (except such as result from such Issuing
Bank's gross negligence or willful misconduct) that such Issuing Bank may
suffer or incur in connection with this Agreement or any action taken or
omitted by such Issuing Bank hereunder.
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(j) Appointment of Issuing Banks. The Borrower and the Documentation
Agent may, by one or more written instruments acceptable to and executed by
each of them, appoint one or more Banks to perform all or any portion of the
functions of an Issuing Bank under this Agreement; provided that each Bank so
appointed (i) has a combined capital and surplus of at least $500,000,000 and
(ii) agrees in writing to act as an Issuing Bank under this Agreement.
SECTION 2.11. General Provisions as to Payments. (a) The Borrower
shall make each payment of principal of, and interest on, the Loans and of fees
and commissions hereunder, not later than 11:00 A.M. (Eastern Time) on the date
when due, in Federal or other funds immediately available in Charlotte, North
Carolina, to the Administrative Agent at its address referred to in Section
9.01. The Administrative Agent will promptly distribute to each Bank its
ratable share of each such payment received by the Administrative Agent for the
account of the Banks. Whenever any payment of principal of, or interest on,
the Domestic Loans or of fees or commissions shall be due on a day which is not
a Domestic Business Day, the date for payment thereof shall be extended to the
next succeeding Domestic Business Day. Whenever any payment of principal of,
or interest on, the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business Day. If the date for any
payment of principal is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
(b) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Banks
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each Bank on such due
date an amount equal to the amount then due such Bank. If and to the extent
that the Borrower shall not have so made such payment, each Bank shall repay to
the Administrative Agent forthwith on demand such amount distributed to such
Bank together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Administrative Agent, at the Federal Funds Rate for such day.
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(c) If the Administrative Agent receives any payment for the account
of the Banks before 12:00 Noon (Eastern Time) on any Domestic Business Day and
fails to distribute such payment to the Banks before the end of such Domestic
Business Day, the Administrative Agent shall pay to each Bank interest on its
share of such payment, for each day from and including such Domestic Business
Day to but excluding the Domestic Business Day on which the Administrative
Agent distributes such payment, at the Federal Funds Rate for such day. If the
Administrative Agent receives any payment for the benefit of the Banks at or
after 12:00 Noon (Eastern Time) on any Domestic Business Day and fails to
distribute such payment to the Banks before the end of the next succeeding
Domestic Business Day, the Administrative Agent shall pay to each Bank interest
on its share of such payment, for each day from and including such next
succeeding Domestic Business Day to but excluding the Domestic Business Day on
which the Administrative Agent distributes such payment, at the Federal Funds
Rate for such day.
(d) If the Borrower makes any payment to the Administrative Agent for
the account of the Banks at or after 12:00 Noon (Eastern Time) on any Domestic
Business Day and the Administrative Agent fails to distribute such payment to
the Banks before the end of such Domestic Business Day, the Borrower shall be
deemed to have made such payment on the next succeeding Domestic Business Day.
SECTION 2.12. Funding Losses. If the Borrower makes any payment of
principal with respect to any Fixed Rate Loan or any Fixed Rate Loan is
converted to a Base Rate Loan (pursuant to Article II, VI or VIII or otherwise)
on any day other than the last day of an Interest Period applicable thereto, or
the last day of an applicable period fixed pursuant to Section 2.05(d), or if
the Borrower fails to borrow or prepay any Fixed Rate Loans after notice has
been given to any Bank in accordance with Section 2.02(b) or 2.09(b), the
Borrower shall pay to each Bank within 15 days after demand an amount
calculated as provided in Exhibit E hereto to compensate such Bank for any loss
or expense incurred by it (or by an existing or prospective Participant in the
related Loan), including (without limitation) any loss incurred in obtaining,
liquidating or employing deposits from third parties, provided that such Bank
shall have delivered to the Borrower a certificate as to the amount of such
loss or expense, which certificate shall be conclusive in the absence of
manifest error.
SECTION 2.13. Computation of Interest, Fees and Commissions.
Interest based on the Prime Rate hereunder
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shall be computed on the basis of a year of 365 days (or 366 days in a leap
year) and paid for the actual number of days elapsed (including the first day
but excluding the last day). All other interest and fees shall be computed on
the basis of a year of 360 days and paid for the actual number of days elapsed
(including the first day but excluding the last day). Commissions with respect
to Letters of Credit shall be computed on the basis of a year of 360 days and
paid for the actual number of days elapsed (including the first and last days).
SECTION 2.14. Termination of Existing Bilateral Loan Agreements. On
the Closing Date the Borrower will repay in full all loans then outstanding
under the Existing Bilateral Loan Agreements between the Borrower and the
several Banks, together with all interest and fees accrued thereunder to but
excluding the Closing Date and all other amounts (if any) then due and payable
thereunder. Without notice to or any other action by the parties thereto, the
commitments of the Banks under their respective Existing Bilateral Loan
Agreements shall terminate on the Closing Date and neither the Banks nor the
Borrower shall have any further obligations thereunder after the Closing Date,
except that the Borrower shall remain liable for the payment of (i) expenses
and other amounts as provided in Sections 1.17, 1.19 and 8.11 thereof and (ii)
any amounts required to be paid on the Closing Date under this Section that are
not actually paid on the Closing Date plus interest thereon at the rate
specified in the applicable Existing Bilateral Loan Agreement for interest on
overdue amounts.
ARTICLE III
CONDITIONS
SECTION 3.01. Closing. The closing hereunder shall occur upon
receipt by the Documentation Agent of the following:
(a) a duly executed Note for the account of each Bank dated on or
before the Closing Date complying with the provisions of Section 2.03;
(b) an opinion of Donald F. Crane, Jr., Senior SEC Counsel of the
Borrower, substantially in the form of Exhibit B hereto, dated the Closing
Date and covering such additional matters relating to the transactions
contemplated hereby as the Required Banks may reasonably request;
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(c) an opinion of Davis Polk & Wardwell, special counsel for the
Documentation Agent, substantially in the form of Exhibit C hereto, dated
the Closing Date and covering such additional matters relating to the
transactions contemplated hereby as the Required Banks may reasonably
request;
(d) evidence satisfactory to the Documentation Agent that the
Borrower has paid (or made arrangements satisfactory to the Documentation
Agent for the payment of) all amounts to be paid to the Banks on the
Closing Date pursuant to Section 2.14;
(e) evidence satisfactory to the Documentation Agent that the
Borrower has paid to the Administrative Agent a participation fee for the
account of each Bank equal to .30% of such Bank's Commitment;
(f) the certificate with respect to insurance required by Section
5.03(b) to be delivered on the Closing Date (with a copy thereof for each
Bank); and
(g) all documents that the Documentation Agent may reasonably request
relating to the existence of the Borrower, the corporate authority for and
the validity of this Agreement and the Notes, and any other matters
relevant hereto, all in form and substance satisfactory to the
Documentation Agent.
The Documentation Agent shall promptly notify the Borrower and the Banks of the
Closing Date, and such notice shall be conclusive and binding on all parties
hereto.
SECTION 3.02. Borrowings; Issuances and Extensions of Letters of
Credit. The obligation of any Bank to make a Loan on the occasion of any
Borrowing or of any Issuing Bank to issue or extend any Letter of Credit is
subject to the satisfaction of the following conditions:
(a) the fact that the Closing Date shall have occurred on or prior to
July 15, 1994;
(b) receipt by the Administrative Agent of a Notice of Borrowing as
required by Section 2.02 or receipt by such Issuing Bank of a Notice of LC
Issuance or Notice of LC Extension as required by Section 2.10, as the case
may be;
(c) the fact that, immediately before and after such Borrowing or the
issuance or extension of such
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Letter of Credit, as the case may be, no Default shall have occurred and be
continuing;
(d) the fact that the representations and warranties of the Borrower
contained in Article IV shall be true on and as of the date of such
Borrowing or the issuance or extension of such Letter of Credit; and
(e) receipt by the Administrative Agent of a certificate signed by the
Borrower's president, chief executive officer, chief operating officer,
chief financial officer, treasurer or controller (which certificate may be
included in and dated the date of the related Notice of Borrowing, Notice
of LC Issuance or Notice of LC Extension delivered pursuant to clause (b)
of this Section) as to the facts specified in clauses (c) and (d) of this
Section and, in the case of an issuance or extension of a Letter of Credit,
as to compliance with the conditions specified in clauses (A) and (D) of
Section 2.10(a)(iii).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The Borrower is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of this
Agreement and the Notes are within the Borrower's corporate powers, have been
duly authorized by all necessary corporate action, require no action by or in
respect of, or filing (except filings under the Exchange Act) with, any
governmental body, agency or official and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
certificate of incorporation or by-laws of the Borrower or of any agreement,
judgment, injunction, order, decree or other instrument binding upon the
Borrower or any of its Subsidiaries or result in the creation or imposition of
any
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Lien on any asset of the Borrower or any of its Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Borrower and each Note, when executed and delivered in
accordance with this Agreement, will constitute a valid and binding obligation
of the Borrower, in each case enforceable in accordance with its terms.
SECTION 4.04. Financial Information.
(a) The consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of December 31, 1993 and the related consolidated
statements of operations, cash flows and changes in stockholders' equity for
the Fiscal Year then ended, reported on by Deloitte & Touche and set forth in
the Borrower's 1993 Form 10-K, a copy of which has been delivered to each of
the Banks, fairly present, in conformity with generally accepted accounting
principles, the consolidated financial position of the Borrower and its
Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for such Fiscal Year.
(b) The unaudited consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of March 31, 1994 and the related unaudited
consolidated statements of operations, cash flows and changes in stockholders'
equity for the three months then ended, set forth in the Borrower's Latest Form
10-Q, a copy of which has been delivered to each of the Banks, fairly present,
on a basis consistent with the financial statements referred to in subsection
(a) of this Section, the consolidated financial position of the Borrower and
its Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for such three-month period (subject to normal
year-end adjustments).
(c) Since December 31, 1993 there has been no material adverse change
in the business, financial position, operations or properties of the Borrower
and its Consolidated Subsidiaries, considered as a whole, except as disclosed
in the Borrower's 1993 Form 10-K or the Borrower's Latest Form 10-Q.
SECTION 4.05. Litigation. Except as disclosed in the Borrower's 1993
Form 10-K or the Borrower's Latest Form 10-Q, there is no action, suit or
proceeding pending against, or to the knowledge of the Borrower threatened
against or affecting, the Borrower or any of its
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Subsidiaries before any court or arbitrator or any governmental body, agency or
official which could reasonably be expected to result in an adverse decision
that would materially adversely affect the business, financial position,
operations or properties of the Borrower and its Consolidated Subsidiaries,
considered as a whole, or which in any manner draws into question the validity
or enforceability of this Agreement or the Notes.
SECTION 4.06. Compliance with ERISA. Each member of the ERISA Group
has fulfilled its obligations under the minimum funding standards of ERISA and
the Internal Revenue Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 412 of
the Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a Lien or the posting
of a bond or other security under ERISA or the Internal Revenue Code or (iii)
incurred any liability under Title IV of ERISA other than a liability to the
PBGC for premiums under Section 4007 of ERISA.
SECTION 4.07. Environmental Matters. In the ordinary course of its
business, the Borrower conducts an ongoing review of the effect of
Environmental Laws on the business, operations and properties of the Borrower
and its Subsidiaries, in the course of which it identifies and evaluates
associated liabilities and costs (including, without limitation, any capital or
operating expenditures required for clean-up or closure of properties presently
or previously owned, any capital or operating expenditures required to achieve
or maintain compliance with environmental protection standards imposed by law
or as a condition of any license, permit or contract, any related constraints
on operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat, any costs or liabilities in connection with off-site
disposal of wastes or Hazardous Substances, and any actual or potential
liabilities to third parties, including employees, and any related costs and
expenses). On the basis of this review, the Borrower has reasonably concluded
that such associated liabilities and costs, including the costs of compliance
with Environmental Laws, are unlikely to have a material adverse effect on the
business, financial
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position, operations or properties of the Borrower and its Subsidiaries,
considered as a whole.
SECTION 4.08. Taxes. The Borrower and its Subsidiaries have filed
all United States Federal income tax returns and all other material tax returns
which are required to be filed by them and have paid all taxes due pursuant to
such returns or pursuant to any assessment received by the Borrower or any
Subsidiary, except any such assessment that is being contested in good faith by
appropriate proceedings. The charges, accruals and reserves on the books of
the Borrower and its Subsidiaries in respect of taxes or other governmental
charges are, in the opinion of the Borrower, adequate.
SECTION 4.09. Subsidiaries. Each of the Borrower's corporate
Subsidiaries (except inactive Subsidiaries) is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted. All of the Borrower's active Subsidiaries are
listed on Exhibit F hereto (which may be amended from time to time by notice
from the Borrower to each of the Banks).
SECTION 4.10. Not an Investment Company. The Borrower is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.11. Full Disclosure. All information contained in the
documents listed on Exhibit G hereto is, and all information hereafter
furnished by the Borrower in writing to either of the Agents or any Bank for
purposes of or in connection with this Agreement or any transaction
contemplated hereby will be, true and accurate in all material respects on the
date as of which such information is stated or certified. The Borrower has
disclosed to the Banks in writing any and all facts (other than facts affecting
the health care business generally) which materially and adversely affect, or
are reasonably likely to materially and adversely affect (to the extent the
Borrower can now reasonably foresee), the business, financial position,
operations or properties of the Borrower and its Subsidiaries, taken as a
whole, or the ability of the Borrower to perform its obligations under this
Agreement and the Notes.
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SECTION 4.12. Other Existing Debt Documents. Each copy of an Other
Existing Debt Document heretofore delivered by the Borrower to any of the
Agents or the Banks is a complete and correct copy of such Other Existing Debt
Document as in effect on the Effective Date. Each of the Other Existing Debt
Documents is a valid and binding agreement of the parties thereto and is in
full force and effect. The Borrower is not in default under any of the
provisions of any of the Other Existing Debt Documents to which it is a party.
SECTION 4.13. No Default under Other Agreements. Neither the
Borrower nor any Subsidiary is a party to any indenture, loan agreement, credit
agreement, lease or other agreement or instrument (excluding this Agreement and
the Other Existing Debt Documents) or subject to any charter or corporate
restriction, in each case which could reasonably be expected to have a material
adverse effect on the business, financial position, operations or properties of
the Borrower and its Subsidiaries, considered as a whole, or the ability of the
Borrower to perform its obligations under this Agreement and the Notes.
Neither the Borrower nor any Subsidiary is in default under any of the
provisions of any indenture, loan agreement, credit agreement, lease or other
agreement or instrument to which it is party (excluding this Agreement and the
Other Existing Debt Documents) which default could reasonably be expected to
have a material adverse effect on the business, financial position, operations
or properties of the Borrower and its Subsidiaries, considered as a whole.
SECTION 4.14. Compliance with Laws. The Borrower and each Subsidiary
is in compliance in all material respects with all applicable laws, ordinances,
rules, regulations and requirements of governmental authorities (including,
without limitation, Environmental Laws and the rules and regulations
thereunder), except where (i) the necessity of compliance therewith is
contested in good faith by appropriate proceedings or (ii) failures to comply
therewith, in the aggregate, could not reasonably be expected to have a
material adverse effect on the business, financial position, operations or
properties of the Borrower and its Subsidiaries, considered as a whole.
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ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has any Commitment
hereunder or any Letter of Credit remains outstanding or any amount payable
under any Note remains unpaid or any Reimbursement Obligation remains unpaid:
SECTION 5.01. Information. The Borrower will deliver to each of the
Banks:
(a) as soon as available and in any event within 90 days after the
end of each Fiscal Year, a consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries as of the end of such Fiscal Year and the
related consolidated statements of operations, cash flows and changes in
stockholders' equity for such Fiscal Year, setting forth in each case in
comparative form the figures for the previous Fiscal Year, all audited by
Deloitte & Touche or other independent public accountants of nationally
recognized standing and accompanied by an opinion of such auditors (without
any qualification that would not be acceptable to the Securities and
Exchange Commission for purposes of filings under the Exchange Act);
(b) as soon as available and in any event within 45 days after the
end of each of the first three Fiscal Quarters of each Fiscal Year, a
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such Fiscal Quarter and the related
consolidated statements of operations, cash flows and changes in
stockholders' equity for such Fiscal Quarter and for the portion of the
Fiscal Year ended at the end of such Fiscal Quarter, setting forth in the
case of such consolidated statements of operations, cash flows and changes
in stockholders' equity in comparative form the figures for the
corresponding Fiscal Quarter and the corresponding portion of the previous
Fiscal Year, all certified (subject to normal year-end adjustments) as to
fairness of presentation, generally accepted accounting principles and
consistency by the chief financial officer, the treasurer or the principal
accounting officer of the Borrower;
(c) as soon as available and in any event within 45 days after the end
of each of the first two months in each Fiscal Quarter, an unaudited
summary balance sheet and income statement for such month, including a
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comparison of sales for such month with sales for the comparable month in
the previous Fiscal Year;
(d) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the
Borrower, signed by its chief financial officer, treasurer or principal
accounting officer, (i) setting forth in reasonable detail the calculations
required to establish whether the Borrower was in compliance with the
requirements of Sections 5.07 to 5.15, inclusive, on the date of such
financial statements; (ii) setting forth in reasonable detail the
calculation of the Pricing Ratio to be determined as of the date of such
financial statements and (iii) stating whether any Default exists on the
date of such certificate and, if any Default then exists, setting forth the
details thereof and the action which the Borrower is taking or proposes to
take with respect thereto;
(e) as soon as available and in any event within 45 days after the
end of each Fiscal Quarter (commencing with the Fiscal Quarter ending
September 30, 1994), the notice required by Section 2.05(e) with respect to
the Pricing Ratio determined as of the end of such Fiscal Quarter and the
Pricing Level to be applicable for the next Pricing Period;
(f) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which audited and reported on such
statements (i) whether anything has come to their attention to cause them
to believe that any Default existed under Sections 5.07 to 5.15, inclusive,
on the date of such statements and (ii) confirming the calculations set
forth in the officer's certificate delivered simultaneously therewith
pursuant to clause (d) above;
(g) within five Domestic Business Days after any Responsible Officer
of the Borrower obtains knowledge of any Default, if such Default is then
continuing, a certificate of the chief financial officer, the treasurer or
the principal accounting officer of the Borrower setting forth the details
thereof and the action which the Borrower is taking or proposes to take
with respect thereto;
(h) promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all
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financial statements, reports and proxy statements so mailed;
(i) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto (unless requested by such Bank)
and any registration statements on Form S-8 or its equivalent) and reports
on Forms 10-K, 10-Q and 8-K (or their equivalents) which the Borrower shall
have filed with the Securities and Exchange Commission;
(j) as soon as available and in any event on or before March 31 of
each Fiscal Year, a budget for such Fiscal Year, approved by the Borrower's
board of directors, setting forth anticipated income, expense and capital
expenditure items for each Fiscal Quarter during such Fiscal Year, and
concurrently with the delivery of financial statements for each such Fiscal
Quarter pursuant to clauses (a) and (b) above, a report setting forth a
detailed comparison to such budget; provided that, if such a budget has not
been prepared and approved by the Borrower's board of directors before
January 31 of such Fiscal Year, projections of such items for such Fiscal
Year shall be delivered pursuant to this clause (j) no later than January
31 of such Fiscal Year (to be replaced by the approved budget when
delivered);
(k) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined
in Section 4043 of ERISA) with respect to any Plan which might constitute
grounds for a termination of such Plan under Title IV of ERISA, or knows
that the plan administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (ii) receives
notice of complete or partial withdrawal liability under Title IV of ERISA
or notice that any Multiemployer Plan is in reorganization, is insolvent or
has been terminated, a copy of such notice; (iii) receives notice from the
PBGC under Title IV of ERISA of an intent to terminate, impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or
appoint a trustee to administer, any Plan, a copy of such notice; (iv)
applies for a waiver of the minimum funding standard under Section 412 of
the Internal Revenue Code, a copy of such application; (v) gives notice of
intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such
notice and other information filed with the PBGC; (vi) gives
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notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a
copy of such notice; or (vii) fails to make any payment or contribution to
any Plan or Multiemployer Plan or in respect of any Benefit Arrangement or
makes any amendment to any Plan or Benefit Arrangement which has resulted
or could result in the imposition of a Lien or the posting of a bond or
other security, a certificate of the chief financial officer, the treasurer
or the principal accounting officer of the Borrower setting forth details
as to such occurrence and action, if any, which the Borrower or applicable
member of the ERISA Group is required or proposes to take;
(l) as soon as reasonably practicable after any Responsible Officer
of the Borrower obtains knowledge of the commencement of, or of a threat
(with respect to which there is a reasonable likelihood of assertion) of
the commencement of, an action, suit or proceeding against the Borrower or
any Subsidiary before any court or arbitrator or any governmental body,
agency or official in which there is a reasonable possibility of an adverse
decision which could reasonably be expected to materially adversely affect
the business, financial position, operations or properties of the Borrower
and its Subsidiaries considered as a whole, or which in any manner
questions the validity or enforceability of this Agreement or the Notes,
information as to the nature of such pending or threatened action, suit or
proceeding and any material developments from time to time with respect
thereto;
(n) upon execution thereof, a copy of each amendment, waiver or other
document modifying any Other Existing Debt Document; and
(o) from time to time such additional information regarding the
financial position or business of the Borrower and its Subsidiaries as the
Administrative Agent, at the request of any Bank, may reasonably request.
SECTION 5.02. Payment of Obligations. The Borrower will pay and
discharge, and will cause each Subsidiary to pay and discharge, at or before
maturity, all their respective material obligations and liabilities, including,
without limitation, tax liabilities, except where the same are contested in
good faith by appropriate proceedings, and will maintain, and will cause each
Subsidiary to maintain, in accordance with GAAP, appropriate reserves for the
accrual of any of the same.
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SECTION 5.03. Maintenance of Property; Insurance. (a) The Borrower
will keep, and will cause each Subsidiary to keep, all of its property useful
and necessary in its business in good working order and condition, ordinary
wear and tear excepted.
(b) The Borrower will maintain, and will cause each Subsidiary to
maintain, to the extent commercially available, with financially sound and
reputable insurers, (i) physical damage insurance on all of its real and
personal property on an all risks basis (including the perils of flood and
earthquake, if such insurance is available on reasonable terms), covering the
repair and replacement cost of all such property and consequential loss
coverage for business interruption and extra expense, (ii) general public
liability insurance (including product liability coverage) in an amount not
less than $50,000,000 and (iii) such other insurance coverage in such amounts
and with respect to such risks as the Required Banks may reasonably request;
provided that the Borrower and its Subsidiaries may self-insure against, and/or
such insurance may provide for deductibles with regard to, hazards and risks
with respect to which, and in such amounts as, the Borrower in good faith
determines to be prudent, but only so long as the aggregate of all such
deductibles and self-insurance applicable with respect to any Fiscal Year under
all such insurance required under clauses (i) and (ii) above does not exceed
(x) until January 1, 1995, 4% of Consolidated Net Worth at March 31, 1994 and
(y) at any time on and after January 1, 1995, 4% of Consolidated Net Worth at
the end of the immediately preceding Fiscal Year. The Borrower will deliver,
with respect to the types of insurance required by this Section, (i) to the
Documentation Agent on the Closing Date, a certificate dated such date (with a
copy for each Bank) showing the amount of coverage as of such date, (ii) to
each Bank, upon request by any Bank through the Administrative Agent, from time
to time full information as to the insurance carried, (iii) to each Bank,
within five days of receipt of notice from any insurer, a copy of any notice of
cancellation or material change in coverage from that existing on the date of
this Agreement and (iv) to each Bank, prompt notice of any cancellation or
nonrenewal of coverage by the Borrower.
SECTION 5.04. Conduct of Business and Maintenance of Existence. The
Borrower will continue, and will cause each Subsidiary to continue, to engage
in business of the same general type as now conducted by the Borrower and its
Subsidiaries, and will preserve, renew and keep in full force and effect, and
will cause each Subsidiary to preserve, renew and keep in full force and
effect, their
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<PAGE> 55
respective existences and their respective rights, privileges and franchises
necessary or desirable in the normal conduct of business; provided that nothing
in this Section 5.04 shall prohibit (i) the merger of a Subsidiary into the
Borrower, if immediately after such merger no Default shall have occurred and
be continuing, (ii) the merger or consolidation of a Subsidiary with or into a
Person other than the Borrower, if the corporation surviving such consolidation
or merger is a Subsidiary and, immediately after giving effect thereto, no
Default shall have occurred and be continuing or (iii) the termination of the
existence of any Subsidiary or any of the rights, privileges and franchises of
the Borrower or any Subsidiary if, in each case, the Borrower in good faith
determines that such termination is in the best interest of the Borrower and is
not materially disadvantageous to the Banks.
SECTION 5.05. Compliance with Laws. The Borrower will comply, and
cause each Subsidiary to comply, in all material respects with all applicable
laws, ordinances, rules, regulations and requirements of governmental
authorities (including, without limitation, Environmental Laws and ERISA and
the rules and regulations thereunder), except where (i) the necessity of
compliance therewith is contested in good faith by appropriate proceedings or
(ii) failures to comply therewith, in the aggregate, could not reasonably be
expected to have a material adverse effect on the business, financial position,
operations or properties of the Borrower and its Subsidiaries, considered as a
whole.
SECTION 5.06. Inspection of Property, Books and Records. The
Borrower will keep, and will cause each Subsidiary to keep, proper books of
record and account in which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and activities; and,
subject to the Borrower's normal security procedures, will permit, and will
cause each Subsidiary to permit, representatives of any Bank at such Bank's
expense to visit and inspect any of their respective properties, to examine and
make abstracts from any of their respective books and records and to discuss
their respective affairs, finances and accounts with their respective officers,
employees and independent public accountants, all at such reasonable times
(after reasonable notice to the Borrower's chief financial officer) and as
often as may reasonably be desired, but only for the purpose of determining the
condition of the assets of the Borrower or such Subsidiary, as the case may be,
and the Borrower's compliance with the terms and conditions of this Agreement;
provided that, so long as no Event of Default shall have occurred and be
continuing, one or more persons designated by the Borrower's
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chief financial officer shall be entitled to attend any such visit or
discussion.
SECTION 5.07. Minimum Consolidated Net Worth. Consolidated Net Worth
will not at any time be less than the sum of (i) $461,950,000 and (ii) 50% of
the consolidated net income (if positive) of the Borrower and its Consolidated
Subsidiaries for each Fiscal Quarter ending prior to such time, commencing with
the Fiscal Quarter ending June 30, 1994.
SECTION 5.08. Leverage Ratio. Consolidated Debt will at no time be
greater than 60% of Consolidated Total Capital.
SECTION 5.09. Fixed Charge Coverage. At the end of each Fiscal
Quarter commencing with the Fiscal Quarter ending December 31, 1994, the ratio
of (i) the sum of Consolidated EBITDA plus Consolidated Net Rent Expense less
Consolidated Capital Expenditures to (ii) the sum of Consolidated Net Interest
Expense plus Consolidated Net Rent Expense plus Preferred Dividends, in each
case for the period of four consecutive Fiscal Quarters then ended, will not be
less than the ratio set forth below opposite the last day of such Fiscal
Quarter:
<TABLE>
<CAPTION>
Four Quarters Ending Ratio
-------------------- -----
<S> <C>
December 31, 1994 1.25:1
March 31, 1995 1.35:1
June 30, 1995 1.50:1
September 30, 1995 1.75:1
December 31, 1995 1.80:1
March 31, 1996 1.90:1
June 30, 1996 and thereafter 2.00:1
</TABLE>
SECTION 5.10. Negative Pledge. Neither the Borrower nor any
Subsidiary will create, assume or suffer to exist any Lien on any asset
(including, without limitation, the capital stock of any of its Subsidiaries)
now owned or hereafter acquired by it, except:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement, provided that such Liens and the
principal amounts secured thereby on the date of this Agreement are listed
on Exhibit H hereto;
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(b) any Lien existing on any asset of any corporation at the time
such corporation becomes a Subsidiary and not created in contemplation of
such event;
(c) any Lien on any asset of any corporation existing at the time
such corporation is merged or consolidated with or into the Borrower or a
Subsidiary and not created in contemplation of such event;
(d) any Lien existing on any asset prior to the acquisition thereof
by the Borrower or a Subsidiary and not created in contemplation of such
acquisition;
(e) any Lien on any asset securing Debt incurred or assumed for the
purpose of financing all or any part of the cost of acquiring such asset,
provided that such Lien attaches to such asset within 12 months after the
acquisition thereof;
(f) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
clauses of this Section, provided that such Debt is not increased and is
not secured by any additional assets;
(g) Liens arising by operation of law in the ordinary course of its
business which (i) do not secure Debt or Derivatives Obligations, (ii) do
not secure any single obligation or series of related obligations in an
amount exceeding $50,000,000 and (iii) do not in the aggregate materially
detract from the value of its assets or materially impair the use thereof
in the operation of its business;
(h) Liens on cash and cash equivalents securing Derivatives
Obligations,provided that the aggregate amount of cash and cash equivalents
subject to such Liens may at no time exceed $15,000,000; and
(i) Liens not otherwise permitted by the foregoing clauses of this
Section securing Debt in an aggregate principal amount at any time
outstanding not to exceed $10,000,000.
Nothing in clause (g) or (i) of this Section shall permit any Lien securing any
obligation arising under the Other Existing Debt Documents. Whenever this
Section permits a Lien to exist on any asset owned or leased by the Borrower or
any Subsidiary, it shall be construed to permit the same
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Lien to exist with respect to any improvements to such asset.
SECTION 5.11. Capital Expenditures. Consolidated Capital
Expenditures will not exceed (a) $100,000,000 in the Fiscal Year ending
December 31, 1994; (b) $110,000,000 in the Fiscal Year ending December 31, 1995
or (c) $125,000,000 in any subsequent Fiscal Year; provided that, without
regard to the limitation in this Section, the Borrower or any Consolidated
Subsidiary may (i) make or become legally obligated to make Consolidated
Capital Expenditures at any time when Investment Grade Status exists and (ii)
make any Consolidated Capital Expenditure that it has become legally obligated
to make at a time when Investment Grade Status existed, even if Investment
Grade Status subsequently ceases to exist. However, if Investment Grade Status
subsequently ceases to exist, all Consolidated Capital Expenditures made as
permitted by the foregoing clauses (i) and (ii) shall be taken into account in
determining whether other Consolidated Capital Expenditures are permitted by
this Section.
SECTION 5.12. Investments. Neither the Borrower nor any Subsidiary
will make or acquire any Investment in any Person, other than:
(i) Permitted Temporary Cash Investments;
(ii) any Investment in a Person which is a Consolidated Subsidiary
immediately after such Investment is made;
(iii) any Debt of a buyer received as all or part of the
consideration for an Asset Sale permitted by Section 5.15; and
(iv) any other Investment if, immediately after such Investment is
made, the aggregate original cost of all Investments made after March 31,
1994 pursuant to this clause (iv) does not exceed $20,000,000 (or its
equivalent in foreign currencies).
SECTION 5.13. Dividends and Common Stock Payments. (a) The
Borrower will not declare any Common Stock Dividend and neither the Borrower
nor any Subsidiary will make any Common Stock Payment unless, after giving
effect to such declaration or Common Stock Payment, no Default shall have
occurred and be continuing and either:
(i) the aggregate amount of all Common Stock Dividends declared and
Common Stock Payments made in the then current Fiscal Quarter will not
exceed
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$1,250,000, as such amount may be adjusted from time to time pursuant to
subsection (c) of this Section, or
(ii) the aggregate amount of all Common Stock Dividends declared and
all Common Stock Payments made in the then current Fiscal Quarter and the
three immediately preceding Fiscal Quarters will not exceed 20% of the
Adjusted Consolidated Net Income of the Borrower and its Consolidated
Subsidiaries for the immediately preceding four Fiscal Quarters;
provided that the Borrower may declare Common Stock Dividends and the Borrower
and its Subsidiaries may make Common Stock Payments at any time when Investment
Grade Status exists without regard to the limitation in clause (i) or (ii) of
this Section; but, if Investment Grade Status subsequently ceases to exist,
Common Stock Dividends declared and Common Stock Payments made when Investment
Grade Status existed shall be taken into account in determining whether other
Common Stock Dividends may be declared or other Common Stock Payments may be
made under this Section.
(b) The Borrower will not declare any Common Stock Dividend more than
50 days before such Common Stock Dividend is payable.
(c) If the number of outstanding shares of the Borrower's common
stock changes during any Fiscal Quarter ending after March 31, 1994 (by reason
of a conversion of outstanding preferred stock, a new issuance of common stock
or otherwise), the amount specified in subsection (a)(i) of this Section (as
such amount may theretofore have been adjusted pursuant to this subsection (c))
shall be adjusted for purposes of all subsequent Fiscal Quarters by multiplying
such amount by a fraction of which the numerator is the number of shares of the
Borrower's common stock outstanding at the end of such Fiscal Quarter and the
denominator is the number of shares of the Borrower's common stock outstanding
at the beginning of such Fiscal Quarter (adjusted to eliminate the effect of
any stock split, stock dividend or reverse stock split during such Fiscal
Quarter).
SECTION 5.14. Limitation on Subsidiary Debt. The aggregate principal
amount of all Debt of all Consolidated Subsidiaries (excluding (i) Debt
existing on the Closing Date under the U.I.S. Financing Documents in an
aggregate principal amount not greater than FF 484,452,000 and (ii)
Intercompany Debt owed to the Borrower or to a Substantially Wholly-Owned
Consolidated Subsidiary) will at no time exceed $50,000,000 (or its equivalent
in foreign currencies). For
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purposes of this Section any preferred stock of a Consolidated Subsidiary held
by a Person other than the Borrower or a Substantially Wholly-Owned
Consolidated Subsidiary shall be included, at the higher of its voluntary or
involuntary liquidation value, in the "Debt" of such Consolidated Subsidiary.
SECTION 5.15. Asset Sales. (a) The Borrower will not, and will not
permit any Subsidiary to, make any Asset Sale unless, after giving effect
thereto, the aggregate consideration received or to be received for all Asset
Sales during the then current Fiscal Year would not exceed:
(i) in the case of the Fiscal Year ending December 31, 1994,
$50,000,000;
(ii) in the case of the Fiscal Year ending December 31, 1995, the sum
of (A) $25,000,000 and (B) an amount (not to exceed an additional
$25,000,000) equal to the unused portion of the $50,000,000 permitted by
clause (i) above; and
(iii) in any subsequent Fiscal Year, $25,000,000;
provided that, without regard to the limitation in this subsection (a), the
Borrower or any Subsidiary may (x) make or become legally obligated to make
Asset Sales at any time when Investment Grade Status exists and (y) make any
Asset Sale that it has become legally obligated to make at a time when
Investment Grade Status existed, even if Investment Grade Status subsequently
ceases to exist; but, if Investment Grade Status subsequently ceases to exist,
all Asset Sales made as permitted by the foregoing clauses (x) and (y) shall be
taken into account in determining whether other Asset Sales are permitted by
this Section.
(b) Whether or not Investment Grade Status exists, (i) the Borrower
and its Subsidiaries will not sell, lease, transfer or otherwise dispose of all
or any substantial part of the assets of the Borrower and its Subsidiaries,
taken as a whole, to any Person other than the Borrower and its Subsidiaries
and (ii) the Borrower will not sell, lease, transfer or otherwise dispose of
all or any substantial part of its assets to any other Person; provided that
this subsection (b) shall not apply to sales of inventory and used, surplus or
worn-out equipment in the ordinary course of business.
SECTION 5.16. Consolidations and Mergers. The Borrower will not
consolidate or merge with or into any other Person; provided that the Borrower
may merge with
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another Person if (A) the Borrower is the corporation surviving such merger and
(B) immediately after giving effect to such merger, no Default shall have
occurred and be continuing.
SECTION 5.17. Transactions with Affiliates. The Borrower will not,
and will not permit any Subsidiary to, directly or indirectly, pay any funds to
or for the account of, make any Investment in, Guarantee any Debt of, lease,
sell, transfer or otherwise dispose of any assets (tangible or intangible) to,
or participate in, or effect any transaction in connection with any joint
enterprise or other joint arrangement with, any Affiliate; provided that the
foregoing provisions of this Section shall not prohibit (a) the Borrower from
declaring or paying any lawful dividend permitted by Section 5.13; (b) the
Borrower or any Subsidiary from paying compensation or providing benefits to
any of its officers or directors in the ordinary course of business; (c) the
Borrower or any Subsidiary from making sales to or purchases from any Affiliate
and, in connection therewith, extending credit or making payments, or from
making payments for services rendered by any Affiliate, if such sales or
purchases are made or such services are rendered in the ordinary course of
business and on terms and conditions comparable to the terms and conditions
which would apply in a similar transaction with a Person not an Affiliate; (d)
the Borrower or any Subsidiary from making payments of principal, interest and
premium on any Debt of the Borrower or such Subsidiary held by an Affiliate if
the terms of such Debt are substantially as favorable to the Borrower or such
Subsidiary as the terms which could have been obtained at the time of the
creation of such Debt from a lender which was not an Affiliate or (e) the
Borrower or any Subsidiary from participating in, or effecting any transaction
in connection with, any joint enterprise or other joint arrangement with any
Affiliate if the Borrower or such Subsidiary participates in the ordinary
course of its business and on a basis no less advantageous than the basis on
which such Affiliate participates.
SECTION 5.18. Prepayment of Other Debt. (a) The Borrower will
not, and will not permit any Subsidiary to, directly or indirectly, redeem,
retire, purchase, acquire or otherwise make any payment in respect of any Debt
(other than the Notes and Intercompany Debt) of the Borrower or any Subsidiary
more than 21 days before the stated due date thereof, unless such payment is
made with the net cash proceeds of (i) Debt specifically incurred for such
purpose and containing terms and conditions substantially similar to or more
favorable to the Borrower and the Banks than the Debt with respect to which
such payment is made, (ii) common
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<PAGE> 62
stock of the Borrower issued after March 31, 1994 or (iii) preferred stock of
the Borrower issued after March 31, 1994 which is not subject to redemption,
repurchase or other acquisition by the Borrower or any Subsidiary (except
redemption or repurchase at the option of the Borrower) under any circumstances
prior to March 31, 1997.
(b) The Borrower will not, and will not permit any Subsidiary to, pay
any amount under the North Haven Financing Documents more than 21 days before
such payment is due; provided that the rent payable under the North Haven Lease
on January 14, 1997 shall not be prepaid.
(c) The Borrower will not, and will not permit any Subsidiary to,
consent to or enter into any amendment, supplement, waiver or other
modification of any agreement or instrument evidencing or governing any such
Debt if the result of such modification would be, directly or indirectly, to
permit a payment that would have been prohibited pursuant to this Section prior
to such modification.
SECTION 5.19. Other Existing Debt Documents. The Borrower will
not, and will not permit any Subsidiary to, (i) consent or enter into any
amendment, supplement, waiver or other modification of any of the Other
Existing Debt Documents which would increase the amount of the payments to be
made by the Borrower or any Subsidiary in connection therewith (except for
reasonable and customary fees and expenses paid, currently or periodically, in
connection with any such amendment, supplement, waiver or other modification)
or would otherwise be materially adverse to the Borrower or any Subsidiary or
to the Banks or (ii) directly or indirectly Guarantee the obligations of any
Person under the North Haven Financing Documents.
SECTION 5.20. Use of Proceeds. The Letters of Credit and the
proceeds of the Loans will be used by the Borrower for general corporate
purposes. None of such proceeds will be used, directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of buying or carrying any
"margin stock" within the meaning of Regulation U.
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ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the following
events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay (i) any principal of any Loan or
any Reimbursement Obligation when due or (ii) any interest, fee, commission
or other amount payable hereunder within two Domestic Business Days after
the due date thereof;
(b) the Borrower shall fail to observe or perform any covenant
contained in Sections 5.07 to 5.20, inclusive, and such failure shall
continue for two Domestic Business Days after the Required Banks shall have
determined that such failure, if not cured within two Domestic Business
Days, should be an Event of Default under this clause (b) and the
Administrative Agent shall have given the Borrower written notice of such
determination;
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause
(a) or (b) above) for 30 days after written notice thereof has been given
to the Borrower by the Administrative Agent at the request of any Bank;
(d) any representation, warranty, certification or statement made by
the Borrower or by a Responsible Officer in this Agreement or in any
certificate, financial statement or other document delivered pursuant to
this Agreement shall prove to have been incorrect in any material respect
when made;
(e) the Borrower or any Subsidiary shall fail to make any payment in
respect of Material Financial Obligations when due or within any applicable
grace period;
(f) any event or condition shall occur which results in the
acceleration of the maturity of Material Debt or enables the holders of
Material Debt or any Person acting on such holders' behalf to accelerate
the maturity thereof or permits the holders of Material Debt or any Person
acting on such holders' behalf to terminate their commitments (if any) to
renew, extend,
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refund or lend additional amounts of such Material Debt;
(g) any event or condition shall occur which, with the giving of
notice or lapse of time or both, would enable the holders of Material Debt
or any Person acting on such holders' behalf to accelerate the maturity
thereof or would permit the holders of Material Debt or any Person acting
on such holders' behalf to terminate their commitments to renew, extend,
refund or lend additional amounts of such Material Debt, and the Borrower
shall fail to cure such event or condition for two Domestic Business Days
after the Required Banks shall have determined that such event or
condition, if not cured within two Domestic Business Days, should be an
Event of Default under this clause (g) and the Administrative Agent shall
have given the Borrower written notice of such determination;
(h) the Borrower or any Subsidiary shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, or shall consent to any such relief
or to the appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall fail generally to
pay its debts as they become due, or shall take any corporate action to
authorize any of the foregoing;
(i) an involuntary case or other proceeding shall be commenced
against the Borrower or any Subsidiary seeking liquidation, reorganization
or other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 60 days; or an order for relief shall be entered against
the Borrower or any Subsidiary under the federal bankruptcy laws as now or
hereafter in effect;
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(j) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $10,000,000 which it shall have
become liable to pay under Title IV of ERISA; or notice of intent to
terminate a Material Plan shall be filed under Title IV of ERISA by any
member of the ERISA Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV of ERISA
to terminate, to impose liability (other than for premiums under Section
4007 of ERISA) in respect of, or to cause a trustee to be appointed to
administer, any Material Plan; or a condition shall exist by reason of
which the PBGC would be entitled to obtain a decree adjudicating that any
Material Plan must be terminated; or there shall occur a complete or
partial withdrawal from, or a default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which
could cause one or more members of the ERISA Group to incur a current
payment obligation in excess of $10,000,000;
(k) a judgment or order for the payment of money in excess of
$10,000,000 shall be rendered against the Borrower or any Subsidiary and
such judgment or order shall continue unsatisfied and unstayed for a period
of 10 days; or
(l) any person or group of persons (within the meaning of Section 13
or 14 of the Exchange Act) shall have acquired beneficial ownership (within
the meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under the Exchange Act) of 25% or more of the outstanding shares
of common stock of the Borrower; or, during any period of twelve
consecutive calendar months, individuals who were directors of the Borrower
on the first day of such period shall cease to constitute a majority of the
board of directors of the Borrower; provided that such beneficial ownership
or change in the Borrower's directors, as the case may be, shall continue
for two Domestic Business Days after the Required Banks shall have
determined that it should be an Event of Default under this clause (l) and
the Administrative Agent shall have given the Borrower written notice of
such determination;
then, and in every such event, the Administrative Agent shall (i) if requested
by Banks having more than 60% in aggregate amount of the Commitments, by notice
to the Borrower terminate the Commitments and they shall thereupon terminate,
and (ii) if requested by Banks holding Notes evidencing more than 60% in
aggregate outstanding principal
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amount of the Loans, by notice to the Borrower declare the Notes and any
Reimbursement Obligations (together with all accrued interest thereon and all
accrued fees, commissions and other amounts payable by the Borrower hereunder)
to be, and the same shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; provided that in the case of any of the Events
of Default specified in clause (h) or (i) above with respect to the Borrower,
without any notice to the Borrower or any other act by the Administrative Agent
or the Banks, the Commitments shall thereupon terminate and the Notes and
Reimbursement Obligations (together with all accrued interest thereon and all
accrued fees, commissions and other amounts payable by the Borrower hereunder)
shall become immediately due and payable without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower.
SECTION 6.02. Notice of Default. The Administrative Agent shall give
notice to the Borrower under Section 6.01(c) promptly upon being requested to
do so by any Bank and shall thereupon notify all the Banks thereof. The
Administrative Agent shall give notice to the Borrower under clause (b), (g) or
(l) of Section 6.01 promptly upon being requested to do so by the Required
Banks and shall thereupon notify all the Banks thereof. If the Borrower fails
to pay when due any principal, interest, fee or commission payable to the
Administrative Agent for the account of the Banks and such payment default is
not cured before the end of the first Domestic Business Day after the day on
which such payment was due, the Administrative Agent shall notify each Bank of
such payment default during the second Domestic Business Day after the date on
which such payment was due.
SECTION 6.03. Notice of Termination. Promptly upon any termination
of the Commitments, the Administrative Agent will notify each Bank and Issuing
Bank thereof.
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ARTICLE VII
THE AGENTS
SECTION 7.01. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes each of the Agents to take such action as agent on its
behalf and to exercise such powers under this Agreement and the Notes as are
delegated to such Agent by the terms hereof or thereof, together with all such
powers as are reasonably incidental thereto.
SECTION 7.02. Agents and Affiliates. Each of Morgan and NationsBank
shall have the same rights and powers under this Agreement as any other Bank
and may exercise or refrain from exercising the same as though it were not an
Agent hereunder. Each of Morgan and NationsBank (and their respective
affiliates) may accept deposits from, lend money to, and generally engage in
any kind of business with the Borrower or any Subsidiary or affiliate of the
Borrower as if it were not an Agent hereunder.
SECTION 7.03. Action by Agents. Neither of the Agents shall have any
duties or responsibilities hereunder, except those expressly set forth herein,
or any fiduciary relationship with any of the Banks, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into or inferred from this Agreement or otherwise exist against either of the
Agents. Without limiting the generality of the foregoing, neither of the
Agents shall (i) be required to take any action with respect to any Default,
except in the case of the Administrative Agent as expressly provided in Article
VI, or (ii) except for notices, reports and other documents expressly required
to be furnished to the Banks hereunder, have any duty or responsibility to
provide any Bank with any credit or other information concerning the affairs,
financial condition or business of the Borrower which may come into the
possession of such Agent or any of its affiliates.
SECTION 7.04. Consultation with Experts; Attorneys in Fact. Either
of the Agents may consult with legal counsel (who may be counsel for the
Borrower), independent public accountants and other experts selected by it and
neither of the Agents shall be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts. Either of the Agents may execute any of its duties
under this Agreement by or through agents or attorneys-in-
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fact and shall be entitled to advice of counsel concerning all matters
pertaining to such duties. Neither of the Agents shall be responsible to the
Banks for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
SECTION 7.05. Liability of Agents. None of the Agents, their
respective affiliates and their respective directors, officers, agents or
employees shall be liable for any action taken or not taken in connection
herewith (i) with the consent or at the request of the Required Banks or (ii)
in the absence of its own gross negligence or willful misconduct. None of the
Agents, their respective affiliates and their respective directors, officers,
agents or employees shall be responsible for or have any duty to ascertain,
inquire into or verify (i) any statement, warranty or representation made in
connection with this Agreement or any borrowing hereunder or any issuance or
extension of a Letter of Credit hereunder; (ii) the performance or observance
of any of the covenants or agreements of the Borrower or the properties, books
or records of the Borrower or its Subsidiaries; (iii) the satisfaction of any
condition specified in Article III, except, in the case of the Documentation
Agent, receipt of items required to be delivered to it; or (iv) the validity,
effectiveness or genuineness of this Agreement, the Notes or any other
instrument or writing furnished in connection herewith. Neither of the Agents
shall incur any liability by acting in reliance upon any notice, consent,
certificate, statement or other writing (which may be a bank wire, telex,
facsimile transmission or similar writing) believed by it to be genuine or to
be signed by the proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall, ratably in
accordance with its Commitment, indemnify each of the Agents, their respective
affiliates and their respective directors, officers, agents and employees (to
the extent not reimbursed by the Borrower and without limiting any obligation
of the Borrower to do so) against any cost, expense (including counsel fees and
disbursements), claim, demand, action, loss or liability that such indemnitee
may suffer or incur in connection with this Agreement or any action taken or
omitted by such indemnitee hereunder (but, in the case of the Agents, only
actions taken or omitted in their capacities as the Agents hereunder); provided
that the Banks shall not be obligated to indemnify any Agent or affiliate (or
their respective directors, officers, agents and employees) under this Section
for (i) such Agent's or affiliate's own gross negligence or willful misconduct
or (ii) such Agent's breach of its contractual obligations to the Banks (or any
of them) under this Agreement.
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SECTION 7.07. Credit Decision. Each Bank acknowledges that none of
the Agents, the Arrangers or their respective affiliates has made any
representations or warranties to such Bank and that no act by any Agent or
Arranger hereafter taken, including any review of the affairs of the Borrower,
shall be deemed to constitute any representation or warranty by such Agent or
Arranger to such Bank. Each Bank acknowledges that it has, independently and
without reliance upon either of the Agents, any of the Arrangers or any other
Bank, and based on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement. Each
Bank also acknowledges that it will, independently and without reliance upon
either of the Agents, any of the Arrangers or any other Bank, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking any action under this
Agreement.
SECTION 7.08. Successor Agents. Either of the Agents may resign at
any time by giving notice thereof to the Banks and the Borrower. Upon any such
resignation, the Required Banks shall have the right to appoint a successor to
such Agent. If no successor Agent shall have been so appointed by the Required
Banks, and shall have accepted such appointment, within 30 days after the
retiring Agent gives notice of resignation, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent, which shall be a commercial
bank organized or licensed under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of at least
$50,000,000. Upon the acceptance of its appointment as an Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation hereunder as an Agent, the provisions of this
Article shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was an Agent hereunder.
SECTION 7.09. Administrative Agent's Fee. The Borrower shall pay to
the Administrative Agent for its own account fees and expenses in the amounts
and at the times previously agreed upon between the Borrower and the
Administrative Agent.
SECTION 7.10. Arrangers. None of the Arrangers shall have any
responsibility, obligation or liability under this Agreement.
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ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or
Unfair. If on or prior to the first day of any Interest Period for any Fixed
Rate Loan:
(a) the Administrative Agent is advised by the Reference Banks that
deposits in dollars (in the applicable amounts) are not being offered to
the Reference Banks in the relevant market for such Interest Period, or
(b) Banks having 50% or more of the aggregate principal amount of the
affected Loans advise the Administrative Agent that the Adjusted CD Rate or
the Adjusted London Interbank Offered Rate, as the case may be, as
determined by the Administrative Agent will not adequately and fairly
reflect the cost to such Banks of funding their CD Loans or Euro-Dollar
Loans, as the case may be, for such Interest Period,
the Administrative Agent shall forthwith give notice thereof to the Borrower
and the Banks, whereupon until the Administrative Agent notifies the Borrower
that the circumstances giving rise to such suspension no longer exist, (i) the
obligations of the Banks to make CD Loans or Euro-Dollar Loans, as the case may
be, or to convert outstanding Loans into CD Loans or Euro-Dollar Loans, as the
case may be, shall be suspended and (ii) each outstanding CD Loan or
Euro-Dollar Loan, as the case may be, shall be converted into a Base Rate Loan
on the last day of the then current Interest Period applicable thereto. Unless
the Borrower notifies the Administrative Agent at least two Domestic Business
Days before the date of any Fixed Rate Borrowing for which a Notice of
Borrowing has previously been given that it elects not to borrow on such date,
such Borrowing shall instead be made as a Base Rate Borrowing.
SECTION 8.02. Illegality. If, on or after the date of this
Agreement, the adoption of any applicable law, rule or regulation, or any
change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Euro-Dollar Lending Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable
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agency shall make it unlawful or impossible for any Bank (or its Euro-Dollar
Lending Office) to make, maintain or fund its Euro-Dollar Loans and such Bank
shall so notify the Administrative Agent, the Administrative Agent shall
forthwith give notice thereof to the other Banks and the Borrower, whereupon
until such Bank notifies the Borrower and the Administrative Agent that the
circumstances giving rise to such suspension no longer exist, the obligation of
such Bank to make Euro-Dollar Loans, or to convert outstanding Loans into
Euro-Dollar Loans, shall be suspended. Before giving any notice to the
Administrative Agent pursuant to this Section, such Bank shall designate a
different Euro-Dollar Lending Office if such designation will avoid the need
for giving such notice and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. If such notice is given, each Euro-Dollar Loan
of such Bank then outstanding shall be converted to a Base Rate Loan either (a)
on the last day of the then current Interest Period applicable to such
Euro-Dollar Loan if such Bank may lawfully continue to maintain and fund such
Loan to such day or (b) immediately if such Bank shall determine that it may
not lawfully continue to maintain and fund such Loan to such day.
SECTION 8.03. Increased Cost and Reduced Return. (a) If, on or
after the date hereof, the adoption of any applicable law, rule or regulation,
or any change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Applicable Lending Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall impose, modify or deem
applicable any reserve (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System, but excluding
(i) with respect to any CD Loan any such requirement included in an applicable
Domestic Reserve Percentage and (ii) with respect to any Euro-Dollar Loan any
such requirement included in an applicable Euro-Dollar Reserve Percentage),
special deposit, insurance assessment (excluding, with respect to any CD Loan,
any such requirement reflected in an applicable Assessment Rate) or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Bank (or its Applicable Lending Office) or shall impose on any
Bank (or its Applicable Lending Office) or on the United States market for
certificates of deposit or the London interbank market any other condition
affecting its Fixed Rate Loans, its Note or its obligation to make Fixed Rate
Loans and the
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result of any of the foregoing is to increase the cost to such Bank (or its
Applicable Lending Office) of making or maintaining any Fixed Rate Loan, or to
reduce the amount of any sum received or receivable by such Bank (or its
Applicable Lending Office) under this Agreement or under its Note with respect
thereto, by an amount deemed by such Bank to be material, then, within 15 days
after demand by such Bank (with a copy to the Administrative Agent), the
Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction.
(b) If, on or after the date hereof, the adoption of any applicable
law, rule or regulation, or any change in any applicable law, rule or
regulation, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Issuing Bank or
any Bank (or its Applicable Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency shall impose, modify or deem applicable any reserve
(including, without limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System), special deposit, insurance assessment
or similar requirement against or with respect to letters of credit or
participations in letters of credit or shall impose on any Issuing Bank or any
Bank (or its Applicable Lending Office) any other condition regarding any
Letter of Credit, any Issuing Bank's obligation to issue any Letter of Credit
or make any payment under any Letter of Credit, or any Bank's obligation to pay
any Issuing Bank its ratable share of any drawing under any Letter of Credit,
and the result of any of the foregoing is to increase the cost to such Issuing
Bank or such Bank (or its Applicable Lending Office) of issuing or maintaining
any Letter of Credit or participating therein or making any payment under any
Letter of Credit, or to reduce the amount of any sum received or receivable by
such Issuing Bank or such Bank (or its Applicable Lending Office) under this
Agreement by an amount deemed by such Issuing Bank or such Bank to be material,
then, within 15 days after demand by such Issuing Bank or such Bank (with a
copy to the Administrative Agent), the Borrower shall pay to such Issuing Bank
or such Bank such additional amount or amounts as will compensate such Issuing
Bank or such Bank for such increased cost or reduction.
(c) If any Bank (including for this purpose any Issuing Bank) shall
have determined that, after the date hereof, the adoption of any applicable
law, rule or regulation regarding capital adequacy, or any change in any
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such law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
any request or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on capital of such Bank
(or its Parent) as a consequence of such Bank's obligations hereunder or under
any Letter of Credit to a level below that which such Bank (or its Parent)
could have achieved but for such adoption, change, request or directive (taking
into consideration its policies with respect to capital adequacy) by an amount
deemed by such Bank to be material, then from time to time, within 15 days
after demand by such Bank (with a copy to the Administrative Agent), the
Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank (or its Parent) for such reduction.
(d) Each Bank (including for this purpose any Issuing Bank) will
promptly notify the Borrower and the Administrative Agent of any event of which
it has knowledge, occurring after the date hereof, which will entitle such Bank
to compensation pursuant to this Section and will designate a different
Applicable Lending Office if such designation will avoid the need for, or
reduce the amount of, such compensation and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive in the absence
of manifest error. In determining such amount, such Bank may use any
reasonable averaging and attribution methods.
SECTION 8.04. Taxes. (a) For purposes of this Section 8.04, the
following terms have the following meanings:
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings with respect to any payment by the
Borrower pursuant to this Agreement or under any Note, and all liabilities with
respect thereto, excluding (i) in the case of each Bank, each Issuing Bank and
each Agent, taxes imposed on its income, and franchise or similar taxes imposed
on it, by a jurisdiction under the laws of which such Bank, Issuing Bank or
Agent (as the case may be) is organized or in which its principal executive
office is located or, in the case of each Bank, in which its Applicable Lending
Office is located and (ii) in the case of each Bank and each Issuing Bank, any
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United States withholding tax imposed on such payments but only to the extent
that such Bank or such Issuing Bank is subject to United States withholding tax
at the time such Bank or such Issuing Bank first becomes a party to this
Agreement.
"Other Taxes" means any present or future stamp or documentary taxes
and any other excise or property taxes, or similar charges or levies, which
arise from any payment made pursuant to this Agreement or under any Note or
from the execution or delivery of, or otherwise with respect to, this Agreement
or any Note.
(b) Any and all payments by the Borrower to or for the account of any
Bank, Issuing Bank or Agent hereunder or under any Note shall be made without
deduction for any Taxes or Other Taxes; provided that, if the Borrower shall be
required by law to deduct any Taxes or Other Taxes from any such payments, (i)
the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 8.04) such Bank, Issuing Bank or Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law and (iv) the Borrower
shall furnish to the Administrative Agent, at its address referred to in
Section 9.01, the original or a certified copy of a receipt evidencing payment
thereof.
(c) The Borrower agrees to indemnify each Bank, Issuing Bank and Agent
for the full amount of Taxes and Other Taxes (including, without limitation,
any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts
payable under this Section 8.04) paid by such Bank, Issuing Bank or Agent (as
the case may be) and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto. This indemnification shall be paid
within 15 days after such Bank, Issuing Bank or Agent (as the case may be)
makes written demand therefor.
(d) Each Bank organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on the signature pages hereof and on
or prior to the date on which it becomes a Bank in the case of each other Bank,
and from time to time thereafter if requested in writing by the Borrower (but
only so long as such Bank remains lawfully able to do so), shall provide the
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Borrower with Internal Revenue Service form 1001 or 4224, as appropriate, or
any successor form prescribed by the Internal Revenue Service, certifying that
such Bank is entitled to benefits under an income tax treaty to which the
United States is a party which exempts such Bank from United States withholding
tax or reduces the rate of withholding tax on payments of interest for the
account of such Bank or certifying that the income receivable pursuant to this
Agreement is effectively connected with the conduct of a trade or business in
the United States.
(e) For any period with respect to which a Bank has failed to provide
the Borrower with the appropriate form as required by Section 8.04(d) (unless
such failure is due to a change in treaty, law or regulation occurring
subsequent to the date on which such form originally was required to be
provided), such Bank shall not be entitled to indemnification under Section
8.04(b) or (c) with respect to Taxes imposed by the United States; provided
that if a Bank, which is otherwise exempt from or subject to a reduced rate of
withholding tax, becomes subject to Taxes because of its failure to deliver a
form required hereunder, the Borrower shall take such steps as such Bank shall
reasonably request to assist such Bank to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for
the account of any Bank pursuant to this Section 8.04, then such Bank will
change the jurisdiction of its Applicable Lending Office if, in the judgment of
such Bank, such change (i) will eliminate or reduce any such additional payment
which may thereafter accrue and (ii) is not otherwise disadvantageous to such
Bank.
SECTION 8.05. Base Rate Loans Substituted for Affected Fixed Rate
Loans. If (i) the obligation of any Bank to make or maintain Euro-Dollar Loans
has been suspended pursuant to Section 8.02 or (ii) any Bank has demanded
compensation under Section 8.03 or 8.04 with respect to its CD Loans or
Euro-Dollar Loans and the Borrower shall, by at least five Euro-Dollar Business
Days' prior notice to such Bank through the Administrative Agent, have elected
that the provisions of this Section shall apply to such Bank, then, unless and
until such Bank notifies the Borrower that the circumstances giving rise to
such suspension or demand for compensation no longer exist:
(a) all Loans which would otherwise be made by such Bank as (or
continued as or converted into) CD Loans or Euro-Dollar Loans, as the case
may be, shall instead be Base Rate Loans (on which interest and
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principal shall be payable contemporaneously with the related Fixed Rate
Loans of the other Banks), and
(b) after each of its CD Loans or Euro-Dollar Loans, as the case may
be, has been repaid (or converted to a Base Rate Loan), all payments of
principal which would otherwise be applied to repay such Fixed Rate Loans
shall be applied to repay its Base Rate Loans instead.
If such Bank notifies the Borrower that the circumstances giving rise to such
notice no longer apply, the principal amount of each such Base Rate Loan shall
be converted into a CD Loan or Euro-Dollar Loan, as the case may be, on the
first day of the next succeeding Interest Period applicable to the related CD
Loans or Euro-Dollar Loans of the other Banks.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telex, facsimile transmission or similar writing) and shall be given to such
party: (x) in the case of the Borrower or either of the Agents, at its
address, facsimile number or telex number set forth on the signature pages
hereof, (y) in the case of any Bank, at its address, facsimile number or telex
number set forth in its Administrative Questionnaire or (z) in the case of any
party, at such other address, facsimile number or telex number as such party
may hereafter specify for the purpose by notice to the Administrative Agent and
the Borrower. Each such notice, request or other communication shall be
effective (i) if given by telex, when such telex is transmitted to the telex
number specified in this Section and the appropriate answerback is received,
(ii) if given by facsimile transmission, when transmitted to the facsimile
number specified in this Section and confirmation of receipt is received, (iii)
if given by mail, 72 hours after such communication is deposited in the mails
with first class postage prepaid, addressed as aforesaid or (iv) if given by
any other means, when delivered at the address specified in this Section;
provided that notices to the Administrative Agent under Article II or Article
VIII shall not be effective until received.
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SECTION 9.02. No Waivers. No failure or delay by either of the
Agents or any Bank in exercising any right, power or privilege hereunder or
under any Note shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 9.03. Expenses; Indemnification. (a) The Borrower shall pay
(i) the fees and disbursements of special counsel for the Documentation Agent
incurred on or prior to the Closing Date in connection with the preparation of
this Agreement, (ii) all out-of-pocket expenses incurred by the Documentation
Agent after the Closing Date, including fees and disbursements of its special
counsel, in connection with post-closing distribution of documents and any
waiver or consent hereunder or any amendment hereof or any Default or alleged
Default hereunder and (iii) if an Event of Default occurs, all out-of-pocket
expenses incurred by each Agent (including fees and disbursements of their
respective special counsel) in connection with such Event of Default and by
each Agent and each Bank, including (without duplication) the fees and
disbursements of counsel (including allocated costs of internal counsel), in
connection with collection, bankruptcy, insolvency and other enforcement
proceedings resulting therefrom.
(b) The Borrower agrees to indemnify each of the Agents, each of the
Arrangers, each Issuing Bank and each Bank, their respective affiliates and the
respective directors, officers, agents and employees of the foregoing (each an
"Indemnitee") and hold each Indemnitee harmless from and against any and all
liabilities, losses, damages, costs and expenses of any kind, including,
without limitation, the reasonable fees and disbursements of counsel, which may
be incurred by such Indemnitee in connection with any investigative,
administrative or judicial proceeding (whether or not such Indemnitee shall be
designated a party thereto) brought or threatened relating to or arising out of
this Agreement or any actual or proposed use of proceeds of Loans hereunder or
any Letter of Credit; provided that no Indemnitee shall have the right to be
indemnified hereunder for such Indemnitee's own gross negligence or willful
misconduct as determined by a court of competent jurisdiction.
SECTION 9.04. Sharing of Set-Offs. Each Bank agrees that if it
shall, by exercising any right of set-off or counterclaim or otherwise, receive
payment of a proportion of the aggregate amount of principal and interest
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due with respect to (i) any Note held by it and (ii) its participation in any
Reimbursement Obligation (collectively, its "Relevant Debt") which is greater
than the proportion received by any other Bank in respect of the Relevant Debt
of such other Bank, the Bank receiving such proportionately greater payment
shall purchase such participations in the Relevant Debt of the other Banks, and
such other adjustments shall be made, as may be required so that all such
payments of principal and interest with respect to the Relevant Debt of the
Banks shall be shared by the Banks pro rata; provided that nothing in this
Section shall impair the right of any Bank to exercise any right of set-off or
counterclaim it may have and to apply the amount subject to such exercise to
the payment of indebtedness of the Borrower other than the Relevant Debt of
such Bank.
SECTION 9.05. Amendments and Waivers. Any provision of this
Agreement or the Notes may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Borrower and the Required Banks
(and, if the rights or duties of any Agent or Issuing Bank are affected
thereby, by such Agent or Issuing Bank, as the case may be); provided that no
such amendment or waiver shall, unless signed by all the Banks, (i) increase or
decrease the Commitment of any Bank (except for a ratable decrease in the
Commitments of all the Banks) or subject any Bank to any additional obligation,
(ii) forgive all or any portion of the principal of or interest on, or reduce
the rate of interest on, any Loan or any Reimbursement Obligation or forgive or
reduce any fees hereunder, (iii) postpone the date fixed for any payment of
principal of or interest on any Loan or any Reimbursement Obligation or any
fees hereunder or for the termination of the Commitments, (iv) change any
provision of this Section 9.05 or (v) change the percentage of the Commitments,
the Total Exposures or the aggregate unpaid principal amount of the Notes, or
the number of Banks, which shall be required for the Banks or any of them to
take any action under this Section or any other provision of this Agreement;
and provided further that (x) Exhibit F hereto may be amended as provided in
Section 4.09 and (y) clause (ii) of this Section shall not apply to any
amendment pursuant to Section 1.02 for the purpose of eliminating the effect of
any change in GAAP.
SECTION 9.06. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that the Borrower may not
assign or otherwise transfer any of its rights under this Agreement without the
prior written consent of all the Banks.
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(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment,
any or all of its Loans or its participation in any or all of the Letters of
Credit or outstanding Reimbursement Obligations; provided that no Bank may
grant any such participating interest to a business competitor of the Borrower.
In the event of any such grant by a Bank of a participating interest to a
Participant, such Bank shall notify the Borrower and the Administrative Agent
thereof, but such Bank shall remain responsible for the performance of its
obligations hereunder, and the Borrower, the Issuing Banks and the Agents shall
continue to deal solely and directly with such Bank in connection with such
Bank's rights and obligations under this Agreement. Any agreement pursuant to
which any Bank may grant such a participating interest shall provide that such
Bank shall retain the sole right and responsibility to enforce the obligations
of the Borrower hereunder including, without limitation, the right to approve
any amendment, modification or waiver of any provision of this Agreement;
provided that such participation agreement may provide that such Bank will not
agree to any modification, amendment or waiver of this Agreement described in
clause (i), (ii) or (iii) of Section 9.05 without the consent of the
Participant. The Borrower agrees that each Participant shall, to the extent
provided in its participation agreement, be entitled to the benefits of Article
VIII with respect to its participating interest. An assignment or other
transfer which is not permitted by subsection (c) or (d) below shall be given
effect for purposes of this Agreement only to the extent of a participating
interest granted in accordance with this subsection (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part (equivalent to
an initial Commitment of not less than $5,000,000) of all, of its rights and
obligations under this Agreement and the Notes, and such Assignee shall assume
such rights and obligations, pursuant to an Assignment and Assumption Agreement
in substantially the form of Exhibit D hereto executed by such Assignee and
such transferor Bank, with (and subject to) the subscribed consent of the
Administrative Agent and the Issuing Banks, which shall not be unreasonably
withheld; provided that (i) if an Assignee is an affiliate of such transferor
Bank or was a Bank immediately prior to such assignment, no such consent shall
be required and (ii) no Bank shall make any such assignment to a business
competitor of the Borrower. Upon execution and delivery of such instrument and
payment
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by such Assignee to such transferor Bank of an amount equal to the purchase
price agreed between such transferor Bank and such Assignee, such Assignee
shall be a Bank party to this Agreement and shall have all the rights and
obligations of a Bank with a Commitment as set forth in such instrument of
assumption, and the transferor Bank shall be released from its obligations
hereunder to a corresponding extent, and no further consent or action by any
party shall be required. Upon the consummation of any assignment pursuant to
this subsection (c), the transferor Bank and the Borrower shall make
appropriate arrangements so that, if required, a new Note is issued to the
Assignee. In connection with any such assignment, the transferor Bank shall
pay to the Administrative Agent an administrative fee for processing such
assignment in the amount of $2,500. If the Assignee is not incorporated under
the laws of the United States or a state thereof, it shall deliver to the
Borrower and the Administrative Agent certification as to exemption from
deduction or withholding of any United States federal income taxes in
accordance with Section 8.04.
(d) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Note to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 8.03 or 8.04
than such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Borrower's prior written
consent or by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring
such Bank to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
SECTION 9.07. Confidentiality. Each Bank agrees to use its
reasonable efforts (consistent with its established procedures, if reasonable)
to (i) keep confidential all non-public information received by it from the
Borrower which has been identified (or may from time to time be identified) as
"confidential" by the Borrower in writing (herein called "Confidential
Information") and (ii) not disclose, or cause to be disclosed, such
Confidential Information to third parties or use such Confidential Information
competitively against the Borrower or in violation of federal securities laws;
provided that the provisions of this Section shall not apply to any
Confidential Information that becomes generally available to the public other
than as a result of a disclosure or other
75
<PAGE> 81
action or omission by any of the Banks or any of their respective affiliates.
Any Bank may disclose Confidential Information to any prospective permitted
transferee of any of its interests hereunder if such permitted transferee
shall, prior to such disclosure, agree in writing for the benefit of the
Borrower to hold such Confidential Information confidential subject to the
terms of this Section. Each Bank may disclose Confidential Information as
required by any applicable law, governmental rule or governmental regulation or
by court order or by any governmental authority or as such Bank may reasonably
deem necessary or desirable in its dealings with any governmental authority.
Each Bank may disclose Confidential Information (x) to its Parent, its legal
counsel or its independent auditors who agree to hold such Confidential
Information confidential subject to the terms set forth in this Section (and
each Bank agrees to use its reasonable efforts (consistent with its established
procedures, if reasonable) to ensure that each Person to whom it makes
disclosure pursuant to this sentence shall keep such Confidential Information
confidential on such terms) or (y) in the course of any litigation relating to
this Agreement if such Bank is a party to such litigation. Each Bank may also
disclose Confidential Information to its directors, trustees, employees,
agents, attorneys and accountants who would ordinarily have access to such data
and information in the normal course of the performance of their duties.
Notwithstanding anything in the foregoing to the contrary, no Bank shall be
liable to the Borrower or any other Person for damages arising from the
disclosure of Confidential Information despite compliance by such Bank with
this Section.
SECTION 9.08. Collateral. Each of the Banks represents to the Agents
and the other Banks that it in good faith is not relying upon any "margin
stock" (as defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
SECTION 9.09. Governing Law; Submission to Jurisdiction. This
Agreement, each Note and each Letter of Credit (except Letters of Credit to the
extent therein stated to be governed by the Uniform Customs and Practice for
Documentary Credits issued by the International Chamber of Commerce,
Publication No. 500 (1993 revision)) shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflicts of law rules of such State. The Borrower hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York City
for purposes of
76
<PAGE> 82
all legal proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. The Borrower irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum.
SECTION 9.10. Counterparts; Integration; Effectiveness. This
Agreement may be signed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof. This Agreement shall become effective upon receipt by the
Documentation Agent of counterparts hereof signed by each of the parties hereto
(or, in the case of any party as to which an executed counterpart shall not
have been received, receipt by the Documentation Agent in form satisfactory to
it of telegraphic, telex, facsimile or other written confirmation from such
party of execution of a counterpart hereof by such party).
SECTION 9.11. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
AGENTS, THE ISSUING BANKS AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 9.12. COMMERCIAL TRANSACTION; WAIVER OF RIGHTS. THE
BORROWER ACKNOWLEDGES THAT THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREBY CONSTITUTE COMMERCIAL TRANSACTIONS WITHIN THE MEANING OF SECTION 52-278A
OF THE CONNECTICUT GENERAL STATUTES. THE BORROWER EXPRESSLY WAIVES ANY AND ALL
RIGHTS TO PRIOR NOTICE AND A PRIOR HEARING IN CONNECTION WITH ANY PREJUDGMENT
REMEDY AVAILABLE TO THE BANKS, THE ISSUING BANKS OR THE AGENTS UNDER SECTIONS
52-278A TO 52-278G, INCLUSIVE, OF THE CONNECTICUT GENERAL STATUTES AND ANY AND
ALL CONSTITUTIONAL RIGHTS WITH RESPECT TO SUCH PRIOR NOTICE AND HEARING. THE
FOREGOING WAIVER DOES NOT AFFECT THE BORROWER'S RIGHTS TO A SUBSEQUENT NOTICE
AND HEARING.
77
<PAGE> 83
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
UNITED STATES SURGICAL CORPORATION
By: /s/ Richard A. Douville
---------------------------
Title: Vice President and Treasurer
150 Glover Avenue
Norwalk, Connecticut 06877
Attn: Treasurer
Facsimile number: (203) 845-0315
(203) 845-4085
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ Linda M. Assante
----------------------------
Title: Associate
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ Wendy L. Loring
----------------------------
Title: Vice President
NATIONSBANK OF NORTH CAROLINA,
NATIONAL ASSOCIATION
By: /s/ Steven Schneider
----------------------------
Title: Vice President
78
<PAGE> 84
CREDITANSTALT CORPORATE FINANCE, INC.
By: /s/ Gregory Mathis
----------------------------
Title: Vice President
By: /s/ Vern Christianson
----------------------------
Title: Vice President
SHAWMUT BANK CONNECTICUT, N.A.
By: /s/ Robert J. Marcinek
----------------------------
Title: Vice President
THE BANK OF NEW YORK
By: /s/ David Judge
----------------------------
Title: Vice President
BANK OF BOSTON CONNECTICUT
By: /s/ W. Lincoln Schoff Jr.
---------------------------
Title: Director
CHASE MANHATTAN BANK, N.A.
By: /s/ Gaspare Galante Jr.
-----------------------------
Title: Second Vice President
79
<PAGE> 85
CONTINENTAL BANK
By: /s/ Kathryn N. Robinson
-----------------------------
Title: Vice President
CIBC, INC.
By: /s/ Douglas J. Smith
----------------------------
Title: Vice President
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK,
B.A. "RABOBANK NEDERLAND",
NEW YORK BRANCH
By: /s/ Johannes F. Breukhoven
----------------------------
Title: Vice President
By: /s/ Ian Reece
----------------------------
Title: Vice President & Manager
CORESTATES BANK, N.A.
By: /s/ Brian M. Haley
----------------------------
Title: Assistant Vice President
BAYERISCHE VEREINSBANK AG,
NEW YORK BRANCH
By: /s/ Domenick DeGiorgio
----------------------------
Title: Assistant Vice President
By: /s/ David Fischbein
----------------------------
Title: Senior Vice President
80
<PAGE> 86
COMMERZBANK AKTIENGESELLSCHAFT
NEW YORK AND GRAND CAYMAN BRANCHES
By: /s/ Juergen Boysen
----------------------------
Title: Senior Vice President
By: /s/ Christian Jagenberg
-----------------------------
Title: Vice President
FLEET BANK, N.A.
By: /s/ William Theriault
----------------------------
Title: Vice President
THE DAI-ICHI KANGYO BANK, LTD.
By: /s/ Andres Pantelli
----------------------------
Title: Vice President
THE MITSUBISHI BANK, LIMITED
(acting through its New York Branch)
By: /s/ Monica Sheehan
----------------------------
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Nancy Goldman
----------------------------
Title: Vice President
81
<PAGE> 87
SOCIETE GENERALE,
NEW YORK BRANCH
By: /s/ Jan Wertlieb
----------------------------
Title: Vice President
WESTDEUTSCHE LANDESBANK
GIROZENTRALE
By: /s/ Cynthia M. Niesen
----------------------------
Title: Vice President
By: /s/ Karen E. Hoplock
----------------------------
Title: Associate
BANCA POPOLARE DI MILANO
By: /s/ Fulvio Montanari
----------------------------
Title: Vice President
By: /s/ Esperanza Quintero
----------------------------
Title: Vice President
CREDIT SUISSE
By: /s/ Kristina Catlin
-----------------------------
Title: Associate
By: /s/ Lynn Allegaert
-----------------------------
Title: Member of Senior Management
82
<PAGE> 88
BANQUE NATIONALE DE PARIS
By: /s/ Eric Vigne
----------------------------
Title: Senior Vice President
By: /s/ Nuala Marley
----------------------------
Title: Vice President
NATIONSBANK OF NORTH CAROLINA,
NATIONAL ASSOCIATION, as
Issuing Bank
By: /s/ Steven Schneider
----------------------------
Title: Senior Vice President
THE BANK OF NEW YORK, as
Issuing Bank
By: /s/ David Judge
----------------------------
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Documentation Agent
By: /s/ Linda M. Assante
----------------------------
Title: Associate
60 Wall Street
New York, New York 10260
Attention: Michael Leder,
Vice President
Facsimile number: (212) 648-5018
83
<PAGE> 89
NATIONSBANK OF NORTH
CAROLINA, NATIONAL ASSOCIATION
as Administrative Agent
By: /s/ Steven Schneider
----------------------------
Title: Senior Vice President
NationsBank Plaza
NC 1002-06-19
Charlotte, North Carolina 28255
Attention: Agency Services,
Mr. David Buck
Facsimile number: (704) 386-9923
84
<PAGE> 90
COMMITMENT SCHEDULE
<TABLE>
<CAPTION>
Bank or Institution Commitment
- - ------------------- ----------
<S> <C>
Morgan Guaranty Trust Company
of New York $ 39,647,210.17
Bank of America National Trust
and Savings Association $ 39,647,210.17
NationsBank of North Carolina,
National Association $ 31,717,768.14
Creditanstalt Corporate Finance, Inc. $ 26,431,473.44
Shawmut Bank Connecticut, N.A. $ 26,431,473.44
The Bank of New York $ 20,000,000.00
Bank of Boston Connecticut $ 18,502,031.41
Chase Manhattan Bank, N.A. $ 18,502,031.41
Continental Bank $ 18,502,031.41
CIBC, Inc. $ 15,858,884.07
Cooperatieve Centrale
Raiffeisen-Boerenleenbank,
B.A. "Rabobank Nederland",
New York Branch $ 15,000,000.00
Corestates Bank, N.A. $ 13,380,933.43
Bayerische Vereinsbank AG,
New York Branch $ 13,215,736.72
Commerzbank Aktiengesellschaft $ 13,215,736.72
Fleet Bank, N.A. $ 13,215,736.72
The Dai-Ichi Kangyo Bank, Ltd. $ 10,572,589.38
The Mitsubishi Bank, Limited $ 10,572,589.38
PNC Bank, National Association $ 10,572,589.38
Societe Generale, New York Branch $ 10,572,589.38
</TABLE>
<PAGE> 91
<TABLE>
<S> <C>
Westdeutsche Landesbank
Girozentrale $ 10,572,589.38
Banca Popolare di Milano $ 8,000,000.00
Credit Suisse $ 7,939,353.84
Banque Nationale de Paris $ 7,929,442.03
---------------
Total $400,000,000.00
===============
</TABLE>
2
<PAGE> 92
PRICING SCHEDULE
Subject to the provisions of Section 2.05(h), the "Base Rate Margin",
"Euro-Dollar Margin", "CD Margin", "LC Commission Rate" and "Commitment Fee
Rate" for any day are the respective rates per annum set forth below in the
applicable row under the column corresponding to the Pricing Level that is
applicable on such day:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Level Level Level Level Level Level
I II III IV V VI
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Base Rate Margin 0% 0% 0% .50% .75% 1.00%
-----------------------------------------------------------------------------------------------------
Euro-Dollar .50% .75% 1.00% 1.25% 1.50% 2.00%
Margin
-----------------------------------------------------------------------------------------------------
CD Margin .625% .875% 1.125% 1.375% 1.625% 2.125%
LC Commission Rate .50% .75% 1.00% 1.25% 1.50% 2.00%
-----------------------------------------------------------------------------------------------------
Commitment Fee Rate .175% .225% .275% .3125% .375% .50%
-----------------------------------------------------------------------------------------------------
</TABLE>
For purposes of this Pricing Schedule, the following terms have the
following meanings:
"Level I Pricing" applies on any day during any Pricing Period if the
Pricing Ratio for such Pricing Period is less than or equal to 2.0.
"Level II Pricing" applies on any day during any Pricing Period if the
Pricing Ratio for such Pricing Period is greater than 2.0 but less than or
equal to 3.0.
"Level III Pricing" applies on any day during any Pricing Period if
the Pricing Ratio for such Pricing Period is greater than 3.0 but less than or
equal to 4.0.
"Level IV Pricing" applies (i) during the period from and including
the Closing Date to but excluding November 15, 1994 and (ii) thereafter on any
day during any
<PAGE> 93
Pricing Period if the Pricing Ratio for such Pricing Period is greater than 4.0
but less than or equal to 6.0.
"Level V Pricing" applies on any day during any Pricing Period if the
Pricing Ratio for such Pricing Period is greater than 6.0 but less than or
equal to 8.5.
"Level VI Pricing" applies on any day if none of Level I Pricing,
Level II Pricing, Level III Pricing, Level IV Pricing or Level V Pricing
applies on such day.
"Pricing Level" refers to the determination of which of Level I
Pricing, Level II Pricing, Level III Pricing, Level IV Pricing, Level V Pricing
or Level VI Pricing applies on any day.
"Pricing Period" means a period from and including the 46th day after
the end of any Fiscal Quarter to and including the 45th day after the end of
the next succeeding Fiscal Quarter; provided that the first Pricing Period
shall begin on November 15, 1994.
"Pricing Ratio" for any Pricing Period means the ratio of (i)
Consolidated Debt at the end of the Prior Fiscal Quarter to (ii) Consolidated
EBITDA for the period of four consecutive Fiscal Quarters then ended; provided
that, for purposes of determining the Pricing Ratio for the Pricing Period
commencing on November 15, 1994, the amount in clause (ii) of this definition
shall be determined by multiplying Consolidated EBITDA for the period of three
consecutive Fiscal Quarters ending on September 30, 1994 by 4/3.
"Prior Fiscal Quarter" for any Pricing Period means the Fiscal Quarter
ended 46 days before such Pricing Period begins.
2
<PAGE> 94
EXHIBIT A
NOTE
New York, New York
, 19
For value received, United States Surgical Corporation, a Delaware
corporation (the "Borrower"), promises to pay to the order of
(the "Bank"), for the account of its Applicable Lending Office, the unpaid
principal amount of each Loan made by the Bank to the Borrower pursuant to the
Credit Agreement referred to below on the maturity date provided for in the
Credit Agreement. The Borrower promises to pay interest on the unpaid
principal amount of each such Loan on the dates and at the rate or rates
provided for in the Credit Agreement. All such payments of principal and
interest shall be made in lawful money of the United States in Federal or other
immediately available funds at the office of NationsBank of North Carolina,
National Association, NationsBank Corporate Center, Charlotte, North Carolina.
All Loans made by the Bank, the respective types thereof and all
repayments of the principal thereof shall be recorded by the Bank and, if the
Bank so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to
each such Loan then outstanding may be endorsed by the Bank on the schedule
attached hereto, any other schedule attached hereto or on a continuation of any
such schedule attached to and made a part hereof; provided that the failure of
the Bank to make any such recordation or endorsement shall not affect the
obligations of the Borrower hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the Credit Agreement
dated as of June 27, 1994 among the Borrower, the banks party thereto, Morgan
Guaranty Trust Company of New York, as Documentation Agent, and NationsBank of
North Carolina, National Association, as Administrative Agent (as the same may
be amended from time to time, the "Credit Agreement"). Terms defined in the
Credit Agreement are used herein with the same meanings. Reference is made to
the Credit Agreement for provisions for the mandatory and optional prepayment
hereof and the acceleration of the maturity hereof.
UNITED STATES SURGICAL CORPORATION
By
------------------------
Title:
<PAGE> 95
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------
Amount of
Amount of Type of Principal Notation
Date Loan Loan Repaid Made By
- - ------------------------------------------------------------------
<S> <C> <C> <C> <C>
- - ------------------------------------------------------------------
- - ------------------------------------------------------------------
- - ------------------------------------------------------------------
- - ------------------------------------------------------------------
- - ------------------------------------------------------------------
- - ------------------------------------------------------------------
- - ------------------------------------------------------------------
- - ------------------------------------------------------------------
- - ------------------------------------------------------------------
- - ------------------------------------------------------------------
- - ------------------------------------------------------------------
- - ------------------------------------------------------------------
- - ------------------------------------------------------------------
- - ------------------------------------------------------------------
- - ------------------------------------------------------------------
- - ------------------------------------------------------------------
</TABLE>
2
<PAGE> 96
EXHIBIT B
OPINION OF
COUNSEL FOR THE BORROWER
To the Banks and the Agents
Referred to Below
c/o Morgan Guaranty Trust Company of New York,
as Documentation Agent
60 Wall Street
New York, New York
Dear Sirs:
I have acted as counsel for United States Surgical Corporation
(the "Borrower") in connection with the Credit Agreement (the "Credit
Agreement") dated as of June 27, 1994 among the Borrower, the banks party
thereto, Morgan Guaranty Trust Company of New York, as Documentation Agent, and
NationsBank of North Carolina, National Association, as Administrative Agent.
Terms defined in the Credit Agreement are used herein as therein defined. This
opinion is being rendered to you at the request of my client pursuant to
Section 3.01(b) of the Credit Agreement.
I have examined originals or copies, certified or otherwise
identified to my satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as I have deemed necessary or advisable
for purposes of this opinion.
Upon the basis of the foregoing, I am of the opinion that:
1. The Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, and has
all corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted.
2. The execution, delivery and performance by the Borrower of the
Credit Agreement and the Notes are within
<PAGE> 97
the Borrower's corporate powers, have been duly authorized by all necessary
corporate action, require no action by or in respect of, or filing with, any
governmental body, agency or official and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
certificate of incorporation or by-laws of the Borrower or of any agreement,
judgment, injunction, order, decree or other instrument binding upon the
Borrower or any of its Subsidiaries or result in the creation or imposition of
any Lien on any asset of the Borrower or any of its Subsidiaries.
3. The Credit Agreement constitutes a valid and binding agreement
of the Borrower and each Note constitutes a valid and binding obligation of the
Borrower, in each case enforceable in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and by general principles of equity.
4. There is no action, suit or proceeding pending against, or to
the best of my knowledge threatened against or affecting, the Borrower or any
of its Subsidiaries before any court or arbitrator or any governmental body,
agency or official which could reasonably be expected to result in an adverse
decision that would materially adversely affect the business, financial
position, operations or properties of the Borrower and its Consolidated
Subsidiaries, considered as a whole, or which in any manner draws into question
the validity or enforceability of the Credit Agreement or the Notes.
5. Each of the Borrower's active corporate Subsidiaries is a
corporation validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
Very truly yours,
2
<PAGE> 98
EXHIBIT C
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE DOCUMENTATION AGENT
To the Banks and the Agents
Referred to Below
c/o Morgan Guaranty Trust Company of New York,
as Documentation Agent
60 Wall Street
New York, New York
Dear Sirs:
We have participated in the preparation of the Credit Agreement
(the "Credit Agreement") dated as of June 27, 1994 among United States Surgical
Corporation, a Delaware corporation (the "Borrower"), the banks party thereto
(the "Banks"), Morgan Guaranty Trust Company of New York, as Documentation
Agent (the "Documentation Agent"), and NationsBank of North Carolina, National
Association, as Administrative Agent, and have acted as special counsel for the
Documentation Agent for the purpose of rendering this opinion pursuant to
Section 3.01(c) of the Credit Agreement. Terms defined in the Credit Agreement
are used herein as therein defined.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that,
assuming that the execution, delivery and performance by the Borrower of the
Credit Agreement and the Notes are within the Borrower's corporate powers and
have been duly authorized by all necessary corporate action, the Credit
Agreement constitutes a valid and binding agreement of the Borrower and the
Notes constitute valid and binding obligations of the Borrower, in each case
enforceable in accordance with its terms, except as the same may be limited
<PAGE> 99
by bankruptcy, insolvency or similar laws affecting creditors' rights generally
and by general principles of equity.
We are members of the Bar of the State of New York and the
foregoing opinion is limited to the laws of the State of New York. In giving
the foregoing opinion, we express no opinion as to the effect (if any) of any
law of any jurisdiction (except the State of New York) in which any Bank is
located which limits the rate of interest that such Bank may charge or collect.
This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any other purpose
or relied upon by any other person without our prior written consent.
Very truly yours,
2
<PAGE> 100
EXHIBIT D
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among [ASSIGNOR] (the
"Assignor"), [ASSIGNEE] (the "Assignee"), the issuing banks listed on the
signature pages hereof (the "Issuing Banks") and NATIONSBANK OF NORTH CAROLINA,
NATIONAL ASSOCIATION, as Administrative Agent (the "Administrative Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the
"Agreement") relates to the Credit Agreement dated as of June 27, 1994 among
the United States Surgical Corporation, the Assignor and the other Banks party
thereto, Morgan Guaranty Trust Company of New York, as Documentation Agent, and
the Administrative Agent (as amended from time to time, the "Credit
Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has
a Commitment to make Loans to the Borrower and participate in Letters of Credit
issued for the account of the Borrower in an aggregate principal amount at any
time outstanding not to exceed $__________;
WHEREAS, Loans made to the Borrower by the Assignor under the
Credit Agreement in the aggregate principal amount of $__________ and Letters
of Credit issued for the account of the Borrower in which the Assignor has
participations in the aggregate amount of $___________ are outstanding at the
date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of
the rights of the Assignor under the Credit Agreement in respect of a portion
of its Commitment thereunder in an amount equal to $__________ (the "Assigned
Amount"), together with a corresponding portion of its outstanding Loans and
participations in Letters of Credit, and the Assignee proposes to accept
assignment of such rights and assume the corresponding obligations from the
Assignor on such terms;
<PAGE> 101
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise
defined herein have the respective meanings set forth in the Credit Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and sells to
the Assignee all of the rights of the Assignor under the Credit Agreement to
the extent of the Assigned Amount, and the Assignee hereby accepts such
assignment from the Assignor and assumes all of the obligations of the Assignor
under the Credit Agreement to the extent of the Assigned Amount, including the
purchase from the Assignor of the corresponding portion of the outstanding
principal amount of the Loans made by the Assignor and the participations in
Letters of Credit and outstanding Reimbursement Obligations (if any) held by
the Assignor at the date hereof. Upon the execution and delivery hereof by the
Assignor, the Assignee, the Issuing Banks and the Administrative Agent and the
payment of the amounts specified in Section 3 required to be paid on the date
hereof (i) the Assignee shall, as of the date hereof, succeed to the rights and
be obligated to perform the obligations of a Bank under the Credit Agreement
with a Commitment in an amount equal to the Assigned Amount, and (ii) the
Commitment of the Assignor shall, as of the date hereof, be reduced by a like
amount and the Assignor shall be released from its obligations under the Credit
Agreement to the extent such obligations have been assumed by the Assignee.
The assignment provided for herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and
sale contemplated in Section 2 hereof, the Assignee shall pay to the Assignor
on the date hereof, in Federal funds or other immediately available funds, the
amount heretofore agreed between them.* It is understood that commitment fees
and/or Letter of Credit commissions accrued to the date hereof are for the
account of the Assignor and such fees and commissions accruing from and
including the date hereof in respect of the Assigned Amount are for the account
of the Assignee. Each of the Assignor and the Assignee hereby agrees that if
it receives any
- - -----------------------------------
*Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any portion
of any upfront fee to be paid by the Assignor to the Assignee.
2
<PAGE> 102
amount under the Credit Agreement which is for the account of the other party
hereto, it shall receive the same for the account of such other party to the
extent of such other party's interest therein and shall promptly pay the same
to such other party.
SECTION 4. Consent of the Administrative Agent and the Issuing
Banks. This Agreement is conditioned upon the consent of the Administrative
Agent and the Issuing Banks pursuant to Section 9.06(c) of the Credit
Agreement. The execution of this Agreement by the Administrative Agent and the
Issuing Banks is evidence of this consent.
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition, or statements of the
Borrower, or the validity and enforceability of the obligations of the Borrower
under the Credit Agreement or any Note. The Assignee acknowledges that it has,
independently and without reliance on the Assignor, and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and will continue to be responsible for
making its own independent appraisal of the business, affairs and financial
condition of the Borrower.
SECTION 6. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[ASSIGNOR]
By
-------------------------
Title:
3
<PAGE> 103
[ASSIGNEE]
By
-------------------------
Title:
[ISSUING BANK]
By
-------------------------
Title:
[ISSUING BANK]
By
-------------------------
Title:
NATIONSBANK OF NORTH CAROLINA,
NATIONAL ASSOCIATION,
as Administrative Agent
By
-------------------------
Title:
4
<PAGE> 104
EXHIBIT E
Calculation of Funding Losses
The following formula shall be used to calculate compensation for
a funding loss (a "Funding Loss") due to a Bank under Section 2.12 in the event
of a prepayment or conversion or a failure to borrow or to prepay a Fixed Rate
Loan of such Bank:
(CR - RR) x PA x DR
FL = ------------------- + AF
360
FL = Funding Loss
CR = Contract Rate
RR = Reinvestment Rate
PA = Principal Amount
DR = Days Remaining
AF = Administrative Fee
"Administrative Fee" means the administrative fee usually charged
by such Bank, not to exceed $250.
"Contract Rate" means, with respect to any such Fixed Rate Loan,
the London Interbank Offered Rate or CD Base Rate applicable thereto, expressed
as a decimal.
"Days Remaining" means, with respect to any such Fixed Rate Loan,
(i) if prepaid or converted, the number of days in the period from and
including the date of such prepayment to but excluding the last day of the
applicable Interest Period and (ii) if not borrowed or not prepaid, the number
of days in the applicable Interest Period.
"Principal Amount" means, with respect to any such Fixed Rate
Loan, the principal amount thereof being prepaid or converted or not borrowed
or not prepaid, as applicable.
"Reinvestment Rate" means, with respect to any such Fixed Rate
Loan, a rate per annum (expressed as a decimal) reasonably determined by such
Bank to be the rate at which an amount approximately equal to the Principal
Amount thereof could be reinvested in the relevant interbank market on the date
prepaid or converted or not borrowed or not prepaid, as applicable, for a
period of time comparable to the applicable Days Remaining.
<PAGE> 105
EXHIBIT F
BORROWER'S ACTIVE SUBSIDIARIES
<TABLE>
<CAPTION>
Name Jurisdiction of Incorporation
- - ---- -----------------------------
<S> <C>
ASE Partners SNC France
Auto Suture (Austria) GmbH Austria
Auto Suture Belgium B.V. The Netherlands
Auto Suture Company, Australia Connecticut
Auto Suture Company, Canada Connecticut
Auto Suture Company, Netherlands Connecticut
Auto Suture Company, U.K. Connecticut
Auto Suture (Deutschland) GmbH Germany
Auto Suture Eastern Europe, Inc. Delaware
Auto Suture Espana, S.A. Spain
Auto Suture Europe Realty Co. Connecticut
Auto Suture Europe S.A. France
Auto Suture European Services
Center, S.A. France
Auto Suture FSC Ltd. U.S. Virgin Islands
Auto Suture Holdings Pty Limited Australia
Auto Suture Instruments (A.S.I.) Russia
Auto Suture International, Inc. Connecticut
Auto Suture Italia, S.p.A. Italy
Auto Suture Norden Co. Connecticut
Auto Suture Puerto Rico, Inc. Connecticut
Auto Suture Russia, Inc. Delaware
Auto Suture (Schweiz) AG Switzerland
Auto Suture U.K. Limited England
Elite Surgical Products Corporation Connecticut
Merlin Medical S.A. France
Surgical Service Corporation Maryland
USSC AG Switzerland
USSC (Deutschland) GmbH Germany
USSC Medical AG Switzerland
USSC Medical GmbH Germany
U.S.S.C. Puerto Rico, Inc. New York
</TABLE>
<PAGE> 106
EXHIBIT G
DISCLOSURE DOCUMENTS
1. Borrower's 1993 Form 10-K
2. Borrower's Latest Form 10-Q (for quarter ended March 31, 1994)
3. DECS Offering Memorandum dated March 21, 1994
4. Syndicated Bank Facility Invitation Letter dated May 11, 1994 (including 975
Case)
5. Revised Bank Outstandings List distributed on 5/11/94
<PAGE> 107
EXHIBIT H
EXISTING LIENS SECURING DEBT
1. A lien on improved real property in Elancourt, France, securing payment of
an aggregate principal amount, at March 31, 1994, of FF 484,452,000, owing
under the U.I.S. Financing Documents.
2. North Haven Notes in the aggregate principal amount of $300,000,000 are
secured by a Lien on the facility (including improvements thereto) leased by
the Borrower under the North Haven Lease.
3. Other Liens which may exist on miscellaneous property of the Borrower and
its Subsidiaries securing obligations which, in the aggregate, do not exceed
$5,000,000. The Responsible Officers do not, at June 27, 1994, have specific
knowledge of any such Lien.
<PAGE> 1
Form 10-Q
June 30, 1994
Exhibit 11
UNITED STATES SURGICAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME (LOSS) PER COMMON SHARE (Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
----------------------- ------------------------
In thousands, except per share data 1994 1993 1994 1993
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . $ 100 $14,000 $ 8,000 $(22,000)
Preferred stock dividend . . . . . . . . . . . . . . . . . . . (5,100) (4,900)
------- ------ ------- -------
Net income (loss) applicable to common stock . . . . . . . . . $ (5,000) $14,000 $ 3,100 $(22,000)
======= ====== ======= =======
Average number of common shares and
common share equivalents outstanding:
Average number of common shares
outstanding . . . . . . . . . . . . . . . . . . 56,400 55,800 56,500 55,900
Add common share equivalents - options
to purchase common shares - net . . . . . . . . 1,700 400
------- ------ ------- -------
Average number of common shares and
common share equivalents outstanding . . . . . . . . . . 56,400 57,500 56,900 55,900
======= ====== ======= =======
Net income (loss) per common share and
common share equivalent (primary and
fully diluted) . . . . . . . . . . . . . . . . . . . . . $(.09) $.24 $.05 $(.39)
==== === === ====
</TABLE>
The computation does not assume conversion of the Company's preferred stock
into common stock since the result would be antidilutive. For the six-month
period ended June 30, 1994 and the three-month period ended June 30, 1993, loss
per share was computed solely on the weighted average number of common shares
outstanding during the period, since the inclusion of common stock equivalents
would be antidilutive.
In accordance with Accounting Principles Board Opinion No. 15, the inclusion of
common stock equivalents in the computation of earnings per share need not be
considered if the reduction in earnings per share is less than 3%. Therefore,
net income per common share and common share equivalent as shown on the
Consolidated Statements of Operations for the three months ended June 30, 1994
does not include common share equivalents.
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