<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended June 30, 1998
Commission File Number 1-13953
W. R. GRACE & CO.
Delaware 65-0773649
(State of Incorporation) (I.R.S. Employer
Identification No.)
1750 Clint Moore Road
Boca Raton, Florida 33487
(561) 362-2000
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
----- ------
74,998,383 shares of Common Stock, $.01 par value, were outstanding on
August 1, 1998.
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<PAGE>
W. R. GRACE & CO. AND SUBSIDIARIES
Table of Contents
<TABLE>
<CAPTION>
Page No.
Part I. Financial Information
<S> <C> <C>
Item 1. Financial Statements
Consolidated Statement of Operations I - 1
Consolidated Statement of Cash Flows I - 2
Consolidated Balance Sheet I - 3
Consolidated Statement of Shareholders' Equity I - 4
Notes to Consolidated Financial Statements I - 5 to I - 15
Item 2. Management's Discussion and Analysis of Results of I - 16 to I - 24
Operations and Financial Condition
Part II. Other Information
Item 1. Legal Proceedings II - 1
Item 5. Other Information II - 1
Item 6. Exhibits and Reports on Form 8-K II - 1
</TABLE>
As used in this Report, the term "Company" refers to W. R. Grace & Co. (a
Delaware corporation formerly named "Grace Specialty Chemicals, Inc."), and the
term "Grace" refers to the Company and/or one or more of its subsidiaries and,
in certain cases, their respective predecessors.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
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W. R. GRACE & CO. AND SUBSIDIARIES Three Months Ended Six Months Ended
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) June 30, June 30,
- ---------------------------------------------------------------------------------------------------------------------------------
In millions, except per share amounts 1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales and revenues................................................... $ 369.9 $ 378.6 $ 710.7 $ 740.4
Other income......................................................... 13.4 25.9 21.2 31.7
---------- ---------- --------- ----------
383.3 404.5 731.9 772.1
---------- ---------- --------- ----------
Cost of goods sold and operating expenses............................ 224.2 235.2 433.8 458.2
Selling, general and administrative expenses......................... 78.7 98.3 159.3 184.9
Depreciation and amortization........................................ 23.6 23.5 45.4 47.0
Interest expense and related financing costs......................... 4.4 4.4 11.2 10.8
Research and development expenses.................................... 10.6 11.0 21.0 21.6
Restructuring costs.................................................. -- 4.0 -- 4.0
Gain on sale of business............................................. -- (103.1) -- (103.1)
---------- ---------- --------- ----------
341.5 273.3 670.7 623.4
---------- ---------- --------- ----------
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES........................................ 41.8 131.2 61.2 148.7
Provision for income taxes........................................... 16.3 50.6 23.9 57.0
---------- ---------- --------- ----------
INCOME FROM CONTINUING OPERATIONS........................... 25.5 80.6 37.3 91.7
Income/(loss) from discontinued operations........................... -- 36.8 (2.6) 72.1
Extraordinary item - loss from extinguishment of debt,
net of tax.................................................... -- -- (35.2) --
---------- ---------- --------- ----------
NET INCOME/(LOSS)........................................... $ 25.5 $ 117.4 $ (.5) $ 163.8
========== ========== ========= ==========
- ---------------------------------------------------------------------------------------------------------------------------------
Basic earnings per share:
Continuing operations......................................... $ .34 $ 1.11 $ .50 $ 1.24
Net income/(loss)............................................. $ .34 $ 1.61 $ (.01) $ 2.21
Diluted earnings per share:
Continuing operations......................................... $ .32 $ 1.08 $ .46 $ 1.20
Net income/(loss)............................................. $ .32 $ 1.57 $ (.01) $ 2.15
Dividends declared per common share................................ $ -- $ .145 $ -- $ .27
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Notes to Consolidated Financial Statements are integral parts of
these statements.
I - 1
<PAGE>
<TABLE>
<CAPTION>
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W. R. GRACE & CO. AND SUBSIDIARIES SIX MONTHS ENDED
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) JUNE 30,
- ---------------------------------------------------------------------------------------------------------------------------------
In millions 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Income from continuing operations before income taxes................................... $ 61.2 $ 148.7
Reconciliation to cash provided by operating activities:
Depreciation and amortization...................................................... 45.4 47.0
Provision relating to restructuring costs.......................................... -- 4.0
Gain on sale of business........................................................... -- (103.1)
Changes in assets and liabilities, excluding effect of businesses
acquired/divested and foreign currency exchange:
Increase in notes and accounts receivable, net.................................. (38.4) (72.3)
Increase in inventories......................................................... (5.9) (13.1)
Proceeds from asbestos-related insurance settlements............................ 50.8 42.5
Payments for asbestos-related litigation ....................................... (192.2) (49.9)
Decrease in accounts payable.................................................... (.9) (36.3)
Decrease in accrued liabilities................................................. (133.3) (50.8)
Other........................................................................... (22.2) 3.6
-------- ---------
NET PRETAX CASH USED FOR OPERATING ACTIVITIES
OF CONTINUING OPERATIONS......................................................... (235.5) (79.7)
Net pretax cash (used for)/provided by operating activities of
discontinued operations.......................................................... (51.3) 148.5
-------- ---------
NET PRETAX CASH (USED FOR)/PROVIDED BY OPERATING ACTIVITIES........................ (286.8) 68.8
Income taxes paid....................................................................... (27.8) (28.0)
-------- ---------
NET CASH (USED FOR)/PROVIDED BY OPERATING ACTIVITIES............................... (314.6) 40.8
-------- ---------
INVESTING ACTIVITIES
Capital expenditures.................................................................... (40.7) (113.6)
Net investing activities of discontinued operations..................................... (14.3) (70.7)
Net proceeds from divestments........................................................... 3.5 666.3
Businesses acquired in purchase transactions, net of
cash acquired and debt assumed..................................................... -- (15.9)
Other ................................................................................ .5 14.9
-------- ---------
NET CASH (USED FOR)/PROVIDED BY INVESTING ACTIVITIES............................... (51.0) 481.0
-------- ---------
FINANCING ACTIVITIES
Dividends paid.......................................................................... -- (19.8)
Repayments of borrowings having original maturities in excess of
three months....................................................................... (696.1) (75.7)
Net repayments of borrowings having original maturities of
three months or less............................................................... (195.2) (137.0)
Stock options exercised................................................................. 42.9 24.3
Net financing activities of discontinued operations..................................... 1,256.6 --
Purchase of treasury stock.............................................................. (15.5) (335.9)
-------- ---------
NET CASH PROVIDED BY/(USED FOR) FINANCING ACTIVITIES............................... 392.7 (544.1)
-------- ---------
Effect of exchange rate changes on cash and cash equivalents............................ (2.1) (2.8)
-------- ---------
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS................................... $ 25.0 $ (25.1)
======== =========
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</TABLE>
The Notes to Consolidated Financial Statements are integral parts of
these statements.
I - 2
<PAGE>
W. R. GRACE & CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
JUNE 30, December 31,
In millions, except par value and common shares 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents............................................................... $ 72.6 $ 47.6
Notes and accounts receivable, net...................................................... 364.0 353.1
Inventories............................................................................. 132.4 129.6
Net assets of discontinued operations................................................... 8.2 1,424.0
Deferred income taxes................................................................... 238.6 209.6
Other current assets.................................................................... 15.6 11.6
---------- -----------
TOTAL CURRENT ASSETS............................................................... 831.4 2,175.5
Properties and equipment, net of accumulated depreciation and
amortization of $824.1 (1997 - $789.4)............................................. 651.4 663.3
Goodwill, less accumulated amortization of $7.5 (1997 - $5.8)........................... 39.9 42.9
Asbestos-related insurance receivable................................................... 201.4 215.9
Deferred income taxes................................................................... 236.0 238.1
Other assets............................................................................ 455.0 437.3
---------- ----------
TOTAL ASSETS....................................................................... $2,415.1 $3,773.0
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt......................................................................... $ 216.6 $ 413.6
Accounts payable........................................................................ 107.2 106.5
Income taxes............................................................................ 134.9 175.6
Other current liabilities............................................................... 371.5 662.0
---------- ----------
TOTAL CURRENT LIABILITIES.......................................................... 830.2 1,357.7
Long-term debt.......................................................................... 32.8 658.7
Deferred income taxes................................................................... 32.5 20.2
Noncurrent liability for asbestos-related litigation.................................... 566.7 619.4
Other liabilities....................................................................... 644.4 649.1
---------- ----------
TOTAL LIABILITIES.................................................................. 2,106.6 3,305.1
--------- ---------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock issued, par value $.01..................................................... .8 .7
Paid in capital......................................................................... 395.3 563.4
Retained earnings....................................................................... 25.5 108.3
Deferred compensation trust............................................................. (.4) (5.7)
Accumulated other comprehensive loss.................................................... (96.1) (198.8)
Treasury stock, at cost: 929,200 common shares.......................................... (16.6) --
----------- -------------
TOTAL SHAREHOLDERS' EQUITY......................................................... 308.5 467.9
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY......................................... $2,415.1 $3,773.0
======== ========
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</TABLE>
The Notes to Consolidated Financial Statements are integral parts of
these statements.
I - 3
<PAGE>
W. R. GRACE & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Accumulated TOTAL
Deferred Other SHARE- Compre-
Common Paid in Retained Compensation Treasury Comprehensive HOLDERS' hensive
In millions Stock Capital Earnings Trust Stock Income/(loss) EQUITY Income/(loss)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996..........$ .8 $ 524.1 $ 172.6 $ -- $ (.5) $ (64.6) $ 632.4 $ --
Net income.......................... -- -- 163.8 -- -- -- 163.8 163.8
Dividends paid...................... -- -- (19.8) -- -- -- (19.8) --
Issuance/delivery of shares under
stock plans.................... -- 32.6 -- (3.9) 4.5 -- 33.2 --
Purchase of common stock............ -- -- -- -- (335.9) -- (335.9) --
Foreign currency translation
adjustment..................... -- -- -- -- -- (51.8) (51.8) (51.8)
-------- -------- -------- ------- -------- --------- -------- --------
Balance, June 30, 1997..............$ .8 $ 556.7 $ 316.6 $ (3.9) $ (331.9) $ (116.4) $ 421.9 $ 112.0
======== ======== ======== ======= ======== ========= ======== ========
Balance, December 31, 1997..........$ .7 $ 563.4 $ 108.3 $ (5.7) $ -- $ (198.8) $ 467.9 $ --
Net loss............................ -- -- (.5) -- -- -- (.5) (.5)
Separation of Packaging Business.... -- (233.8) (82.3) .5 -- 119.2 (196.4) --
Issuance/delivery of shares under
stock plans.................... .1 65.7 -- .1 -- -- 65.9 --
Reclassification of assets in
deferred compensation trust.... -- -- -- 4.7 -- -- 4.7 --
Purchase of common stock............ -- -- -- -- (16.6) -- (16.6) --
Foreign currency translation
adjustment..................... -- -- -- -- -- (21.9) (21.9) (21.9)
Unrealized gain on security......... -- -- -- -- -- 15.3 15.3 15.3
Minimum pension liability
adjustment..................... -- -- -- -- -- (9.9) (9.9) (9.9)
-------- -------- -------- ------- -------- --------- -------- --------
BALANCE, JUNE 30, 1998..............$ .8 $ 395.3 $ 25.5 $ (.4) $ (16.6) $ (96.1) $ 308.5 $ (17.0)
======== ======== ========= ======= ======== ========= ======== ========
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</TABLE>
The Notes to Consolidated Financial Statements are integral parts of
these statements.
I - 4
<PAGE>
W. R. GRACE & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Dollars in millions, except per share)
1. CHANGE IN ORGANIZATION AND BASIS OF PRESENTATION
Grace is primarily engaged in specialty chemicals businesses on a worldwide
basis. These businesses consist of catalysts and silica-based products (Grace
Davison), specialty construction chemicals and building materials (Grace
Construction Products) and container sealants and coatings (Darex Container
Products). Grace also owns businesses and investments involved in health care
services, the development of bioartificial organs and other products and
services. Grace has classified certain other businesses as discontinued
operations.
Packaging Business Transaction
On March 31, 1998, a predecessor of the Company (Old Grace) completed a
transaction in which Grace's former flexible packaging business (Packaging
Business) was combined with Sealed Air Corporation (Sealed Air). Old Grace
effected this transaction by transferring the Specialty Chemicals Businesses to
the Company, distributing the shares of the Company's common stock to Old
Grace's shareholders on a one-for-one basis (Spin-off) and merging a subsidiary
of Old Grace with Sealed Air (Merger). Immediately following the combination,
the Company changed its name to "W. R. Grace & Co." and Old Grace changed its
name to "Sealed Air Corporation" (New Sealed Air).
For further information, see Old Grace's Joint Proxy Statement/Prospectus dated
February 13, 1998, the Company's Information Statement dated February 13, 1998,
Notes 1 and 3 to the Consolidated Financial Statements in Old Grace's Annual
Report on Form 10-K for 1997 (1997 10-K), and Note 4 below.
Basis of Presentation
The interim consolidated financial statements in this Report are unaudited and
should be read in conjunction with the Consolidated Financial Statements in the
1997 10-K. Such interim consolidated financial statements reflect all
adjustments that, in the opinion of management, are necessary for a fair
presentation of the results of the interim periods presented; all such
adjustments are of a normal recurring nature. Certain amounts in the
consolidated financial statements for prior periods have been reclassified to
conform to the current period's basis of presentation and as required with
respect to discontinued operations.
The results of operations for the three- and six-month interim periods ended
June 30, 1998 are not necessarily indicative of the results of operations for
the year ending December 31, 1998.
The Consolidated Balance Sheet is only adjusted prospectively for a business
that is classified as a discontinued operation and included under the caption
"Net assets of discontinued operations." Accordingly, "Net pretax cash (used
for)/provided by operating activities of discontinued operations" excludes the
effects of changes in working capital of discontinued operations prior to their
classification as such. Similarly, the net investing and financing activities
of discontinued operations represent cash flows of discontinued operations
subsequent to the respective dates of such classification.
I - 5
<PAGE>
2. ASBESTOS AND RELATED INSURANCE LITIGATION
Grace is a defendant in property damage and personal injury lawsuits relating
to previously sold asbestos-containing products and expects that it will be
named as a defendant in additional asbestos-related lawsuits in the future.
Grace was a defendant in approximately 42,400 asbestos-related lawsuits on June
30, 1998 (16 involving claims for property damage and the remainder involving
approximately 93,000 claims for personal injury), as compared to approximately
40,600 lawsuits on December 31, 1997 (18 involving claims for property damage
and the remainder involving approximately 96,900 claims for personal injury).
Property Damage Litigation
Through June 30, 1998, 140 asbestos property damage cases were dismissed
without payment of any damages or settlement amounts; judgments were entered in
favor of Grace in nine cases (excluding cases settled following appeals of
judgments in favor of Grace); judgments were entered in favor of the plaintiffs
in seven cases for a total of $60.3; and 197 property damage cases were settled
for a total of $574.2. Property damage case activity for the six months ended
June 30, 1998 was as follows:
- -------------------------------------------------------------------------------
Cases outstanding, December 31, 1997.................................... 18
New cases filed......................................................... 1
Settlements............................................................. (2)
Dismissals.............................................................. (1)
-----
Cases outstanding, June 30, 1998................................... 16
=====
- -------------------------------------------------------------------------------
Personal Injury Litigation
Through June 30, 1998, approximately 13,300 asbestos personal injury lawsuits
involving 30,200 claims were dismissed without payment of any damages or
settlement amounts (primarily on the basis that Grace products were not
involved), and approximately 42,600 lawsuits involving 103,900 claims were
disposed of (through settlements and judgments) for a total of $335.7. Personal
injury claim activity for the six months ended June 30, 1998 was as follows:
- -------------------------------------------------------------------------------
Claims outstanding, December 31, 1997................................ 96,933
New claims........................................................... 11,699
Settlements..........................................................(14,727)
Dismissals........................................................... (877)
Judgments............................................................ (4)
-------
Claims outstanding, June 30, 1998............................... 93,024
=======
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I - 6
<PAGE>
Asbestos-Related Liability
Based upon and subject to the factors discussed in Note 2 to the Consolidated
Financial Statements in the 1997 10-K, Grace estimates that its probable
liability with respect to the defense and disposition of asbestos property
damage and personal injury cases and claims was as follows on June 30, 1998 and
December 31, 1997:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
JUNE 30, December 31,
1998 (1) 1997 (1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current liability for asbestos-related litigation (2)................................. $ 97.0 $236.5
Noncurrent liability for asbestos-related litigation.................................. 566.7 619.4
------- -------
Total asbestos-related liability................................................. $663.7 $855.9
====== ======
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</TABLE>
(1) Reflects property damage and personal injury cases and claims pending on
June 30, 1998 and December 31, 1997, as well as personal injury claims
expected to be filed through 2002. See discussion below.
(2) Included in "Other current liabilities" in the Consolidated Balance Sheet.
Asbestos-Related Insurance Receivable
Grace previously purchased insurance policies with respect to its
asbestos-related lawsuits and claims. Activity in Grace's notes receivable from
insurance carriers and asbestos-related insurance receivable during the six
months ended June 30, 1998 was as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
NOTES RECEIVABLE
<S> <C>
Notes receivable from insurance carriers on December 31, 1997, net of discount of $4.8 (1)................ $ 31.3
Proceeds received under asbestos-related insurance settlements............................................ (13.8)
Current year amortization of discount..................................................................... 1.3
--------
Notes receivable from insurance carriers on June 30, 1998, net of discount of $3.5 (2)............... $ 18.8
--------
INSURANCE RECEIVABLE
Asbestos-related insurance receivable on December 31, 1997 (3)............................................ $ 282.4
Proceeds received under asbestos-related insurance settlements............................................ (38.3)
--------
Asbestos-related insurance receivable on June 30, 1998 (4)........................................... $ 244.1
--------
Total amounts due from insurance carriers............................................................ $ 262.9
========
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</TABLE>
(1) Classified in the December 31, 1997 Consolidated Balance Sheet as $13.3 in
"Notes and accounts receivable, net" and $18.0 in "Other assets."
(2) Classified in the June 30, 1998 Consolidated Balance Sheet as $12.2 in
"Notes and accounts receivable, net" and $6.6 in "Other assets."
(3) $66.5 of the asbestos-related insurance receivable on December 31, 1997 is
classified in "Notes and accounts receivable, net" in the December 31,
1997 Consolidated Balance Sheet.
(4) $42.7 of the asbestos-related insurance receivable on June 30, 1998 is
classified in "Notes and accounts receivable, net" in the June 30, 1998
Consolidated Balance Sheet.
<PAGE>
Insurance Litigation
Grace's ultimate exposure with respect to its asbestos-related cases and claims
will depend on the extent to which its insurance will cover damages for which
it may be held liable, amounts paid in settlement and litigation costs. In
Grace's opinion, it is probable that recoveries from its insurance carriers
(including amounts reflected in the receivable discussed above), along with
other funds, will be available to satisfy the property damage and personal
injury cases and claims pending at June 30, 1998, as well as personal injury
claims expected to be filed in the foreseeable future. Consequently, Grace
believes that the resolution of its asbestos-related litigation will not have a
material adverse effect on its consolidated financial position.
For additional information, see Note 2 to the Consolidated Financial Statements
in the 1997 10-K.
I - 7
<PAGE>
3. ACQUISITIONS AND DIVESTMENTS
Acquisitions
In April 1998, Grace entered into a definitive agreement to acquire the
Crosfield business of Imperial Chemical Industries PLC for $455.0 in cash.
Crosfield is a major producer of various silica, silicate and zeolite products,
as well as hydroprocessing and specialty catalysts. Crosfield, which is to be
integrated with Grace Davison, had 1997 sales of approximately $270.0. The
completion of the acquisition is subject to various conditions, including
customary governmental approvals.
Divestments
In May 1998, Grace sold its can forming lubricants business to D. A. Stuart
Company for $3.5, subject to adjustment for changes in working capital. The
sales and revenues, financial position and results of operations of this
business were not significant to Grace. The sale resulted in a pretax gain of
$1.5, classified as "Other income" in the Consolidated Statement of Operations
in this Report.
In May 1997, Grace sold its specialty polymers business to National Starch and
Chemical Company for $148.0, subject to a purchase price adjustment. The sales
and revenues of this business for the three and six months ended June 30, 1997
were $6.8 and $24.9, respectively; its financial position and results of
operations were not significant to Grace. In October 1997, Grace paid National
Starch $1.9 in settlement of the purchase price adjustment. The sale of this
business resulted in a pretax gain of $103.1, and an after-tax gain of $63.0.
4. DISCONTINUED OPERATIONS
Packaging Business Transaction
As discussed in Note 1 above, the Spin-off and the Merger were completed on
March 31, 1998. Prior to the Spin-off and the Merger, Old Grace and a Packaging
Business subsidiary borrowed $1,258.8 (inclusive of $2.2 of bank fees) and made
a cash transfer of $1,256.6 to Grace, which used the transferred funds to repay
substantially all of Grace's debt (see Note 6). The borrowed funds are shown as
a net financing activity of discontinued operations in the Consolidated
Statement of Cash Flows. In the Merger and a related recapitalization, for each
Old Grace common share outstanding at the close of trading on March 31, 1998,
each shareholder received .536 shares of New Sealed Air common stock and .475
shares of New Sealed Air convertible preferred stock. Upon the completion of
the Spin-off and the Merger, the shareholders of Old Grace owned (a) 100% of
the Specialty Chemicals Businesses (through their ownership of 100% of the
Company's outstanding shares) and (b) approximately 63% of New Sealed Air, on a
fully diluted basis.
The Packaging Business transaction resulted in an adjustment to shareholders'
equity of $196.4, representing Grace's investment in the Packaging Business
less the $1,258.8 of borrowings discussed above. See the Consolidated Statement
of Shareholders' Equity in this Report for a reconciliation of the changes in
shareholders' equity for the six-month period ended June 30, 1998.
I - 8
<PAGE>
Financial Information for Discontinued Operations
Results of the Packaging Business for the three months and six months ended
June 30, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
- ---------------------------------------------------------------------------------------------------------------------------------
1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales and revenues.........................................................$ -- $463.3 $431.2 $886.0
----------- ------ ------ ------
Income from operations before taxes (1)....................................$ -- $ 58.5 $ 6.2 $114.7
Income tax provision....................................................... -- 21.7 8.8 42.6
----------- ------ ------ ------
Income/(loss) from discontinued packaging operations (1)..............$ -- $ 36.8 $ (2.6) $ 72.1
----------- ------ ------ ------
Basic earnings/(loss) per share from discontinued operations............... -- $ .50 $ (.04) $ .97
Diluted earnings/(loss) per share from discontinued operations............. -- $ .49 $ (.03) $ .95
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Reflects allocated interest expense of $13.3 ($8.7 after-tax) through
March 31, 1998, the date of the Spin-off and Merger, and $17.2 ($10.8
after-tax) and $31.6 ($19.9 after-tax) for the three months and six months
ended June 30, 1997, respectively, based on the ratio of the net assets of
the Packaging Business compared to Grace's total capital. Results for the
six months ended June 30, 1998 also include $32.6 ($28.3 after-tax) of
costs related to the Packaging Business transaction through March 31, 1998
and $8.4 ($5.5 after-tax) for a related pension plan curtailment loss.
- -------------------------------------------------------------------------------
The operating results of Grace's other discontinued operations have been
charged against previously established reserves and therefore are not reflected
in the above results.
The net assets of Grace's discontinued operations (excluding intercompany
assets) on June 30, 1998 were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
JUNE 30,
1998
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Current assets................................................................................... $ 6.6
Properties and equipment, net.................................................................... 3.6
Other assets..................................................................................... .5
--------
Total assets................................................................................ $ 10.7
--------
Current liabilities.............................................................................. $ 2.2
Other liabilities................................................................................ .3
--------
Total liabilities........................................................................... $ 2.5
--------
Net assets of discontinued operations....................................................... $ 8.2
--------
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
For further information, see Old Grace's Joint Proxy Statement/Prospectus dated
February 13, 1998, the Company's Information Statement dated February 13, 1998
and Notes 1 and 3 to the Consolidated Financial Statements in the 1997 10-K.
I - 9
<PAGE>
5. OTHER BALANCE SHEET ITEMS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
JUNE 30, December 31,
1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
INVENTORIES
<S> <C> <C>
Raw materials......................................................................... $ 48.2 $ 47.9
In process............................................................................ 10.5 10.3
Finished products..................................................................... 79.5 78.8
General merchandise................................................................... 21.5 20.2
Less: Adjustment of certain inventories to a
last-in/first-out (LIFO) basis................................................... (27.3) (27.6)
---------- ----------
$ 132.4 $ 129.6
======== ========
- ---------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS
Prepaid pension costs................................................................. $ 232.4 $ 245.2
Intangible asset - pension............................................................ 18.5 --
Deferred charges...................................................................... 50.6 60.4
Long-term receivables, less allowance of $23.2 (1997 - $16.1)......................... 47.7 48.4
Long-term investments................................................................. 85.8 56.4
Notes receivable from insurance carriers, net of discount of
$1.5 (1997 - $2.3)............................................................... 6.6 18.0
Other................................................................................. 13.4 8.9
---------- -----------
$ 455.0 $ 437.3
======== ========
- ---------------------------------------------------------------------------------------------------------------------------------
OTHER CURRENT LIABILITIES
Reserves for divested businesses...................................................... $ 83.8 $ 123.5
Liability for asbestos-related litigation............................................. 97.0 236.5
Accrued compensation.................................................................. 24.6 121.9
Restructuring reserves................................................................ 28.1 35.6
Environmental reserves................................................................ 29.7 38.8
Accrued interest...................................................................... 3.7 22.5
Other................................................................................. 104.6 83.2
--------- ----------
$ 371.5 $ 662.0
======== ========
- ---------------------------------------------------------------------------------------------------------------------------------
OTHER LIABILITIES
Other postretirement benefits......................................................... $ 215.0 $ 214.8
Environmental reserves................................................................ 172.3 191.4
Pension benefits...................................................................... 125.1 91.0
Deferred compensation................................................................. 32.5 58.4
Long-term self-insurance reserves..................................................... 24.9 31.6
Other................................................................................. 74.6 61.9
---------- ----------
$ 644.4 $ 649.1
======== ========
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
I - 10
<PAGE>
6. EXTRAORDINARY ITEM
As discussed in Notes 1 and 4 above, Grace received a cash transfer of $1,256.6
in connection with the Spin-off and Merger. Grace used the transferred funds to
repay substantially all of its debt. On March 31, 1998, Grace used $600 of the
cash transfer to repay bank borrowings. On April 1, 1998, Grace repaid $611.3
principal amount of 8.0% Notes Due 2004, 7.4% Notes Due 2000, and 7.75% Notes
Due 2002 (collectively, Notes), pursuant to a tender offer that expired on
March 27, 1998. On April 1, 1998, Grace also repaid $3.5 principal amount of
the Medium-Term Notes, Series A (MTNs) and $6.0 of sundry indebtedness. As a
result of this extinguishment of debt, Grace incurred a pretax charge of $56.3
($35.2 after-tax, or a basic loss per share of $.47 or a diluted loss per share
of $.43) for premiums paid in excess of the Notes' principal amounts and other
costs incurred in connection with the purchase of the Notes and MTNs (including
the costs of settling related interest rate swap agreements). These costs are
presented as an extraordinary item in the Consolidated Statement of Operations
in this Report.
On June 30, 1998 and December 31, 1997, the Company's short-term and long-term
debt was as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
JUNE 30, December 31,
1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM DEBT
<S> <C> <C>
Bank borrowings.................................................................... $ 207.0 $ 370.2
Commercial paper................................................................... 5.0 34.0
Current maturities of long-term debt............................................... -- .5
Other short-term borrowings........................................................ 4.6 8.9
-------- --------
$ 216.6 $ 413.6
======== ========
LONG-TERM DEBT
8.0% Notes Due 2004................................................................ $ 5.7 $ 276.0
7.4% Notes Due 2000................................................................ 24.7 248.7
7.75% Notes Due 2002............................................................... 2.0 119.0
Medium-Term Notes, Series A........................................................ -- 8.5
Sundry indebtedness................................................................ .4 6.5
-------- --------
$ 32.8 $ 658.7
========= ========
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
7. SHAREHOLDERS' EQUITY
The Company is authorized to issue 300,000,000 shares of common stock. Of the
common stock unissued on June 30, 1998, approximately 18,607,000 shares were
reserved for issuance pursuant to stock options and other stock incentives.
The Certificate of Incorporation also authorizes 53,000,000 shares of preferred
stock, $.01 par value, none of which has been issued. 3,000,000 of such shares
have been designated as Series A Junior Participating Preferred Stock and are
reserved for issuance in connection with the Company's Preferred Stock Purchase
Rights (Rights). A Right trades together with each outstanding share of common
stock and entitles the holder to purchase one-hundredth of a share of Series A
Junior Participating Preferred Stock under certain circumstances and subject to
certain conditions. The Rights are not and will not become exercisable unless
and until certain events occur, and at no time will the Rights have any voting
power.
I - 11
<PAGE>
In April 1998, the Company's Board of Directors approved a new program to
repurchase up to 20% of the Company's outstanding shares in the open market.
Through June 30, 1998, the Company had acquired 929,200 shares of common stock
for a total of $16.6 under the program (an average price per share of $17.89).
Cash payments for settled share repurchases were $15.5 through June 30, 1998.
This program is expected to be executed over time, depending on market
conditions and other factors.
During the first quarter of 1997, Old Grace substantially completed the share
repurchase program initiated in 1996 by acquiring 6,306,300 additional shares
of common stock for $335.9. Prior to year-end 1997, Old Grace retired all of
its treasury stock using the cost method.
In 1997, Old Grace established a trust to fund certain deferred employee
incentive compensation and nonemployee director compensation and benefits; the
trust has been continued by the Company. Prior to the Packaging Business
transaction discussed in Notes 1 and 4, the trust held only shares of Old
Grace. Subsequent to the transaction, the trust held shares of common stock of
the Company (classified as a component of Shareholders' Equity in the
Consolidated Balance Sheet) and New Sealed Air common and convertible preferred
stock (classified as a component of "Other assets" in the Consolidated Balance
Sheet). The trust held 69,652 shares of the Company's common stock, 37,159
shares of New Sealed Air common stock and 32,930 shares of New Sealed Air
convertible preferred stock on June 30, 1998 and 71,476 shares of Old Grace
common stock on December 31, 1997.
For additional information, see Note 12 to the Consolidated Financial
Statements in the 1997 10-K.
8. STOCK INCENTIVE PLANS
As described in Note 14 to the Consolidated Financial Statements in the 1997
10-K, stock options have been granted under the Company's stock incentive
plans. In connection with the Packaging Business transaction described in Notes
1 and 4 above, all outstanding options (other than those held by employees of
the Packaging Business) became options to purchase the Company's common stock,
and the number of shares covered by and purchase prices of such options were
adjusted to preserve their economic value; the options held by employees of the
Packaging Business became options to purchase common stock of New Sealed Air
and were similarly adjusted.
In April and May 1998, the Company granted a total of 76,200 shares of the
Company's common stock to certain executives, subject to various restrictions.
For more information, see the Form of Restricted Share Award Agreements filed
with the Company's Form 10-Q for the quarter ended March 31, 1998.
9. PENSION PLANS
The Packaging Business transaction described in Notes 1 and 4 above required
the Company to split certain pension plans and recognize a net curtailment loss
for other plans. In accordance with Statement of Financial Accounting Standards
(SFAS) No. 88, "Employers' Accounting for Settlements and Curtailments of
Defined Benefit Plans and for Termination Benefits," the Company recognized a
net pretax loss of $8.4 for the three months ended March 31, 1998 in connection
with these actions. The loss is comprised of the following in relation to
active employees of the Packaging Business: (a) a $9.8 curtailment loss from
the immediate recognition
I - 12
<PAGE>
of prior service costs, (b) an $11.6 loss related to a contractual termination
benefit and (c) a $13.0 curtailment gain from the decrease in the projected
benefit obligation. This net loss is included in "Income/(loss) from
discontinued operations" in the Consolidated Statement of Operations in this
Report.
10. EARNINGS PER SHARE
The following table reconciles the numerators and denominators used in
calculating basic and diluted earnings per share from continuing operations for
the three-month and six-month periods ended June 30, 1998 and 1997:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
- --------------------------------------------------------------------------------------------------------------------------------
1998 1997 1998 1997
- --------------------------------------------------------------------------------------------------------------------------------
NUMERATOR:
<S> <C> <C> <C> <C>
Income from continuing operations...................................................$ 25.5 $ 80.6 $ 37.3 $ 91.7
------ ------ ------ ------
DENOMINATOR:
Weighted average common shares - basic calculation.................................. 75.7 72.8 75.4 74.0
Effect of dilutive securities:
Employee stock options and restricted stock awards............................. 4.8 2.0 5.7 2.3
------ ------ ------ ------
Weighted average common shares - diluted calculation................................ 80.5 74.8 81.1 76.3
======= ====== ====== ======
BASIC EARNINGS PER SHARE............................................................$ .34 $ 1.11 $ .50 $ 1.24
======= ====== ====== ======
DILUTED EARNINGS PER SHARE..........................................................$ .32 $ 1.08 $ .46 $ 1.20
======= ====== ====== ======
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
11. BUSINESS SEGMENT INFORMATION
The table below presents information related to Grace's operating business
segments for the three-month and six-month periods ended June 30, 1998 and
1997. Grace has restated pretax operating results for all periods presented to
exclude previously allocated corporate expenses from the results of each
business segment.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
- ---------------------------------------------------------------------------------------------------------------------------------
1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
SALES AND REVENUES
<S> <C> <C> <C> <C>
Grace Davison.......................................................... $ 180.2 $ 175.5 $ 356.4 $ 350.1
Grace Construction Products............................................. 127.7 127.8 231.0 230.8
Darex Container Products................................................ 62.0 68.5 123.3 134.6
-------- -------- ------- -------
TOTAL...................................................................... $ 369.9 $ 371.8 $ 710.7 $ 715.5
-------- -------- ------- -------
PRETAX OPERATING INCOME
Grace Davison........................................................... $ 28.3 $ 26.4 $ 52.7 $ 48.3
Grace Construction Products............................................. 19.0 16.4 23.8 21.5
Darex Container Products................................................ 7.6 8.1 14.3 14.7
-------- -------- ------- -------
TOTAL...................................................................... $ 54.9 $ 50.9 $ 90.8 $ 84.5
-------- -------- ------- -------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
I - 13
<PAGE>
The sales and revenues and pretax operating income of Grace's business segments
for the three-month and six-month periods ended June 30, 1998 and 1997 are
reconciled below to amounts presented in the Consolidated Statement of
Operations.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
- ---------------------------------------------------------------------------------------------------------------------------------
1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales and revenues - operating segments.................................... $369.9 $371.8 $710.7 $715.5
Other (1).................................................................. -- 6.8 -- 24.9
------ ------ ------ ------
Total sales and revenues.............................................. $369.9 $378.6 $710.7 $740.4
====== ====== ====== ======
- ---------------------------------------------------------------------------------------------------------------------------------
Pretax operating income - operating segments............................... $ 54.9 $ 50.9 $ 90.8 $ 84.5
Pretax operating income - divested business (1)............................ -- 1.2 -- 3.8
Interest expense and related financing costs............................... (4.4) (4.4) (11.2) (10.8)
Interest income............................................................ 1.2 1.3 2.3 6.0
Corporate expenses......................................................... (10.8) (21.9) (20.8) (37.7)
Provision for restructuring................................................ -- (4.0) -- (4.0)
Gain on sale of business................................................... -- 103.1 -- 103.1
Other, net................................................................. .9 5.0 .1 3.8
------ ------ ------ ------
Income from continuing operations before income taxes................. $ 41.8 $131.2 $ 61.2 $148.7
====== ====== ====== ======
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Consists of Grace's specialty polymers business, divested in May 1997.
12. COMPREHENSIVE INCOME/(LOSS)
In the first quarter of 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income," which requires the reporting of changes in equity
resulting from certain transactions and economic events, other than changes
reflected in the Consolidated Statement of Operations; the measure of these
changes is referred to as "Other comprehensive income/(loss)." The tables below
present the pretax, tax and after-tax components of the Company's other
comprehensive income/(loss) for the six months ended June 30, 1998 and the
components of the accumulated other comprehensive loss at June 30, 1998:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Tax
Pretax (Expense)/ After-
Amount Benefit Tax Amount
------ --------- ----------
<S> <C> <C> <C>
Foreign currency translation adjustments................................... $ (21.9) $ -- $ (21.9)
Unrealized gain on security................................................ 23.5 (8.2) 15.3
Minimum pension liability adjustments...................................... (15.2) 5.3 (9.9)
--------- -------- ----------
Other comprehensive loss................................................... $ (13.6) $ (2.9) $ (16.5)
======== ======== ========
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Minimum Accumulated
Foreign Pension Unrealized Other
Currency Liability Gain on Comprehensive
Translation Adjustment Security Income/(Loss)
----------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
Balance, December 31, 1997.................................. $(198.8) $ -- $ -- $ (198.8)
Current period change........................................ 97.3 (9.9) 15.3 102.7
--------- ------------ ------------ ----------
Balance, June 30, 1998......................................... $(101.5) $ (9.9) $ 15.3 $ (96.1)
======= =========== =========== ==========
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
I - 14
<PAGE>
Grace holds certain restricted equity securities that are listed on a foreign
stock exchange and have limited trading activity. A portion of these
securities, which had a zero book basis, have become free of restrictions, and
the remaining portion will become free of restrictions in the 1999 second
quarter. As a result, Grace recognized an unrealized gain on security of $23.5
($15.3 after-tax) on June 30, 1998, which is included in "Accumulated other
comprehensive income/(loss)" on the Consolidated Statement of Shareholders'
Equity.
I - 15
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
REVIEW OF OPERATIONS
OVERVIEW
Sales and revenues of Grace's operating business segments (Grace Davison, Grace
Construction Products and Darex Container Products) decreased slightly for the
1998 second quarter and the six months ended June 30, 1998 versus the
comparable periods in 1997. Excluding currency translation, sales and revenues
of Grace's operating business segments increased 3.6% for the 1998 second
quarter and 4.3% for the six months ended June 30, 1998 over the comparable
periods in 1997.
Pretax income for the quarter from continuing operations was $41.8 million, a
decrease of 68.1% versus the 1997 second quarter. Year-to-date earnings were
$61.2 million, representing a 58.9% decline compared to the same period in
1997. Pretax income for the second quarter of 1997 included a gain of $103.1
million on the sale of the specialty polymers business divested in May 1997 and
a restructuring charge of $4.0 million; excluding these items, pretax income
increased 30.3% versus the 1997 second quarter.
Net income for the second quarter of 1997 included income from discontinued
operations of $36.8 million ($0.49 per share). For the six months ended June
30, 1998, the Company reported a net loss of $0.5 million (1 cent per share);
this net loss included the extraordinary loss from the early extinguishment of
debt as described in Note 6 in this Report.
The following discussion includes projections and/or other "forward-looking"
information. Grace is subject to risks and other uncertainties that could cause
its actual results to differ materially from any such projections or that could
cause other forward-looking information to prove incorrect. For a discussion of
such risks and uncertainties, see "Introduction and Overview -- Projections and
Other Forward-Looking Information" in Item 1 of the 1997 10-K.
SALES AND REVENUES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
OPERATING BUSINESS SEGMENTS THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30
-------------------------- ------------------------
(IN MILLIONS) 1998 % CHANGE 1998 % CHANGE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Grace Davison ................................ $180.2 2.7% $356.4 1.8%
Grace Construction Products........... 127.7 (.1)% 231.0 .1%
Darex Container Products................ 62.0 (9.3)% 123.3 (8.3)%
----- ------
$369.9 (.5)% $710.7 (.7)%
====== ======
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
GRACE DAVISON
Grace Davison sales increased 2.7% in the second quarter and 1.8% in the first
six months of 1998 compared to the same periods in 1997. This increase was
primarily due to volume growth estimated at 8.4% and 8.9% in the second quarter
and first six months of 1998, respectively, versus the comparable 1997 periods.
Offsetting this increase was unfavorable currency translation, estimated at
3.9% and 5.1%, and unfavorable price/mix estimated at 1.9% and 2.0%
I - 16
<PAGE>
for the second quarter and first six months of 1998, respectively. The
following discussion of Grace Davison sales excludes the effect of currency
translation.
Fluid cracking catalyst (FCC) sales improved by 11.8% in the second quarter and
12.4% in the first six months of 1998 versus the comparable 1997 periods
primarily due to volume growth in North America and Asia Pacific. Increased
North American volumes were driven by high refinery utilization rates and a
strong demand for refined products. Additive sales were also higher versus 1997
due to increased Desox (sulfur oxide reduction additives) volumes and strong
light olefins volumes. Increased volumes in Asia Pacific were a result of
market share gains in China, India and Taiwan, based on the strong technical
performance of Grace Davison FCCs. Volumes increased in Europe for additives
for light olefins. In addition, refineries on turnaround earlier in the year
came back on-stream in June. These volume increases were offset by unfavorable
price/mix variances due to price competition worldwide (prices bottomed out in
late 1997).
Silicas/adsorbents sales were lower by 2.8% in the second quarter of 1998 and
relatively flat for the first six months of 1998 compared to 1997. The second
quarter decline was due primarily to lower North American volumes of dentifrice
products and molecular sieves combined with an unfavorable price/mix variance
in the European insulated glass (IG) sieves business. These second quarter
declines were offset by first quarter volume increases in most market segments
in Europe when compared to the first six months of the prior year.
Silicas/adsorbents have been impacted in 1998 by tough market conditions in the
global IG sieves business due to new competitive capacity.
Polyolefin catalyst sales increased 17.6% in the second quarter and 21.6% in
the first six months of 1998 versus the comparable 1997 periods as a result of
volume increases in all geographic regions, especially Asia Pacific. The
improvement was due primarily to the continued strength of the plastics
industry. While the strength of the resin market has been holding, potential
signs of weakness in the Asia Pacific region could emerge with the region's
currency crisis.
Hydroprocessing sales improved 23.3% in the second quarter and 6.2% for the
first six months of 1998 compared to the 1997 periods as a result of volume
growth of approximately 24.3% and 13.0%, respectively. The volume improvements
resulted from increased shipments to both existing and new customers in North
America and Europe.
GRACE CONSTRUCTION PRODUCTS
Grace Construction Products sales and revenues were relatively flat for the
second quarter and first six months of 1998, compared to the same periods in
1997. Volume increases estimated at 2.4% and 3.8% for the second quarter and
first six months of 1998, respectively, were offset by unfavorable currency
translation fluctuations estimated at 3.2% and 3.6%, respectively. Price/mix
improved slightly (by .7%) in the second quarter compared to the prior year.
The following discussion of Grace Construction Products sales excludes the
effect of currency translation.
Sales of specialty construction chemicals increased 4.1% in the second quarter
and 7.7% in the first six months of 1998 over the 1997 comparable periods,
mainly as a result of volume increases in North America and Europe. In North
America, volumes benefited from market penetration of value-added concrete and
masonry products, masonry market growth and continued economic strength in the
region. In Europe, volumes increased in the second quarter and first six months
of
I - 17
<PAGE>
1998 as a result of greater market acceptance of value-added concrete
admixtures and milder weather compared to the first six months of 1997. In Asia
Pacific, volumes decreased in the 1998 second quarter and first six months as a
result of economic weakness in Southeast Asia. Construction projects have been
canceled or delayed, and intensified competition for active projects has left
little opportunity for price increases. To lessen the effect of the economic
disruption in the region, Grace Construction Products intends to continue its
marketing focus on the area's stronger economies.
Sales of specialty building materials increased 1.5% in the second quarter of
1998, but reflected a decrease of 1.5% for the first six months of 1998, when
compared to the same periods in 1997. In the 1998 second quarter, favorable
volume and price/mix variances were driven by strong construction activity in
North America, where sales of fireproofing products reached record levels, and
waterproofing sales benefited from a sales promotion of roof underlayments. In
Europe, waterproofing sales decreased in the second quarter and first six
months of 1998 versus the 1997 periods, mainly due to a regional strategy to
focus efforts on the introduction of new growth products and exit certain
geographic markets. For the second quarter and first six months of 1998, an
unfavorable volume variance in waterproofing products in Asia Pacific was due
to economic weakness in the region.
DAREX CONTAINER PRODUCTS
Darex Container Products sales decreased 9.3% in the second quarter and 8.3% in
the first six months of 1998 versus the 1997 comparable periods. These
decreases were primarily attributable to the negative effect of currency
translation, estimated at 6.6% in the second quarter and 7.1% in the first six
months. Excluding currency translation, sales decreased 2.7% in the second
quarter and 1.2% in the first six months of 1998. The following discussion of
Darex Container Products sales excludes the effect of currency translation.
Can sealant sales decreased 5.4% in the second quarter and 1.8% in the first
six months of 1998 as compared to the same periods in 1997, primarily due to
worldwide volume decreases, especially in the Asia Pacific region. Asia Pacific
volumes were down due to decreased beer/beverage consumption in Japan, the
continuing trend of conversion to two-piece cans which use less sealants, and
the increased use of plastic bottles in lieu of cans. This negative volume
variance was partially offset by the impact of a price increase implemented to
offset the increasing costs of imported raw materials, and a favorable product
mix variance. Latin American volumes were lower due to poor economic conditions
in Brazil and Argentina which reduced demand in the canned food and
beer/beverage markets. European volumes were also negatively impacted by the
increased use of plastic bottles and unseasonably cool weather. In North
America, inflationary price increases initiated at the beginning of 1998 and
fully implemented by the second quarter, more than offset a negative volume
variance.
Closure sealant sales increased 18.2% in the second quarter and 5.7% in the
first six months of 1998 as compared to the same periods in 1997, primarily due
to volume increases. Improved market penetration in Europe and Asia Pacific
resulted from greater demand for beer/beverage and food closure compounds.
Coatings sales increased 4.5% in the second quarter and 3.0% in the first six
months of 1998 over the 1997 comparable periods. Higher volumes in Latin
America were due to gains in market share
I - 18
<PAGE>
throughout the region, most notably in Venezuela and Colombia. Lower volumes in
Europe were due to the April 1997 divestment of a small niche segment of the
coatings business and the loss of market share as a result of price
competition.
Also contributing to Darex Container Products' sales decline in the second
quarter and first six months of 1998 was the loss of sales resulting from the
May 1998 divestment of the can forming lubricants business and the termination
of an alliance in Brazil (May 1997). The impact of these decisions on sales
growth was $1.0 million in the second quarter and $2.2 million for the first
six months of 1998.
OPERATING RESULTS
For operating business segment disclosure, Grace has charged each operating
business segment with only those expenses that are directly attributable to its
businesses.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
OPERATING BUSINESS SEGMENTS THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30
-------------------------- ------------------------
(IN MILLIONS) 1998 % CHANGE 1998 % CHANGE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Grace Davison ................................ $28.3 7.0% $52.7 8.9%
Grace Construction Products................... 19.0 16.1% 23.8 10.6%
Darex Container Products...................... 7.6 (6.0)% 14.3 (2.4)%
---- -----
$54.9 7.9% $90.8 7.3%
===== =====
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
GRACE DAVISON
Grace Davison's pretax operating income for the second quarter and first six
months of 1998 grew 7.0% and 8.9%, respectively, compared to the same periods
in 1997 (13.3% and 17.4%, respectively, excluding the effects of currency
translation). Gross margin percentage was flat in the second quarter, but
improved 0.7 percentage points in the first six months of 1998. The impacts of
strong FCC additive sales, increased volumes of higher margin polyolefin
catalysts, lower production costs for Kuantan-sourced silica products, and
benefits of various cost reduction programs in the first six months of 1998
were partially offset by increased maintenance activity (in the second quarter
of 1998), continued price declines in IG sieves, and lower hydroprocessing
prices. Selling and general and administrative expenses declined as a result of
cost controls and the elimination of the long-term incentive compensation
program.
GRACE CONSTRUCTION PRODUCTS
Grace Construction Products' pretax operating income increased 16.1% in the
second quarter and 10.6% in the first six months of 1998 compared to the same
periods in 1997. The effect of currency translation was negligible in both
periods. Improvements in manufacturing processes, production rates and material
costs, as well as market penetration of higher-margin value-added products,
have combined to improve gross margin percentages, primarily in building
materials. Factory administration expenses in North America increased 11.1% for
the second quarter and 4.6% for the first six months of 1998 due to investments
in sales growth, including a new calcium nitrite plant. General and
administrative expenses declined as a result of the decision to eliminate the
long-term incentive compensation program. Pretax operating income for the first
six months of 1998 included a $1 million charge for workforce reductions in the
European organization for
I - 19
<PAGE>
waterproofing products, the majority of which was paid during the first
quarter. The benefits of this program are expected to offset this charge by
year-end. In an effort to minimize the impact of the weakened economies in Asia
Pacific, Grace Construction Products continues to search for local raw material
sources, maintain emphasis on cost controls, and focus marketing efforts on the
region's stronger economies.
DAREX CONTAINER PRODUCTS
Darex Container Products' pretax operating income decreased 6.0% in the second
quarter and 2.4% in the first six months of 1998 versus 1997 comparable periods
(a 1.7% decrease and a 4.0% increase, respectively, excluding currency
translation). Second quarter 1998 operating income included a $1.5 million gain
from the sale of the can forming lubricants business in May 1998. Excluding
currency translation and the gain on sale of this business, operating income
decreased 20.2% and 6.2% versus the second quarter and first six months of
1997. Total gross margin experienced declines of 0.8 percentage points and 0.6
percentage points in the second quarter and first six months of 1998,
respectively, versus the 1997 comparable periods, due to lower sales of
high-margin products, lower prices and higher raw material costs. Partially
offsetting these declines were lower operating expenses resulting from cost
reduction actions implemented in late 1997, and the consolidation of R&D sites.
CORPORATE ACTIVITIES
Corporate expenses of $10.8 million for the second quarter of 1998 and $20.8
million for the first six months of 1998 decreased 50.9% and 44.8%,
respectively, compared to the same periods of 1997, primarily due to the
restructuring activities undertaken in connection with the Packaging Business
transaction (see Notes 1 and 4 to this Report), ongoing cost containment
efforts initiated in 1997, charges in 1997 for legal defense costs, and the
decision to terminate, on a prospective basis, the long-term incentive
compensation program (LTIP). In the future, stock incentives are expected to be
the primary component of long-term incentive compensation.
INTEREST EXPENSE AND RELATED FINANCING COSTS
Interest expense and related financing costs for continuing operations of $4.4
million for the three months and $11.2 million for the six months ended June
30, 1998 were flat and increased 3.8%, respectively, compared to the 1997
periods. Including amounts allocated to discontinued operations, interest
expense and related financing costs during the three months and six months
ended June 30, 1998 decreased 79.6% and 42.2%, respectively, compared to 1997
due to lower average debt levels.
See "Financial Condition: Liquidity and Capital Resources" below for further
information on borrowings.
I - 20
<PAGE>
INCOME TAXES
Grace's effective tax rate was 39.0% for the second quarter and first six
months of 1998 and 37.4% and 37.1%, respectively, for the comparable 1997
periods. The higher effective tax rate in the 1998 periods resulted primarily
from higher taxes on foreign operations.
RESTRUCTURING COSTS
In the second quarter of 1997 Grace recorded a pretax restructuring charge of
$4.0 million ($2.6 million after-tax) in continuing operations. This charge
primarily consisted of costs incurred by Darex Container Products and corporate
costs resulting from the restructuring of the Packaging Business. This charge
was primarily related to the costs of employee terminations (expected to be
completed in 1998) and asset write-downs for certain corporate research
facilities.
DIVESTMENTS
In May 1998, Grace sold its can forming lubricants business to D. A. Stuart
Company for $3.5 million, subject to adjustment for changes in working capital.
The sales and revenues, financial position and results of operations of this
business were not significant to Grace. The sale resulted in a pretax gain of
$1.5 million, classified as "Other income" in the Consolidated Statement of
Operations in this Report.
In May 1997, Grace completed the sale of its specialty polymers business to
National Starch and Chemical Company for $148.0 million, subject to a purchase
price adjustment. The sales and revenues of this business for the three and six
months ended June 30, 1997 were $6.8 million and $24.9 million, respectively;
its financial position and results of operations were not significant to Grace.
The sale of this business resulted in a pretax gain of $103.1 million, and an
after-tax gain of $63.0 million.
DISCONTINUED OPERATIONS
PACKAGING BUSINESS
As discussed in Notes 1 and 4 to this Report, the Spin-off and Merger were
completed on March 31, 1998. There was no activity for the Packaging Business
in the second quarter of 1998 and a $2.6 million loss for the first quarter of
1998 compared to income of $36.8 million in the second quarter of 1997 and
$72.1 million for the six months ended June 30, 1997. Results for the first six
months of 1998 included $32.6 million ($28.3 million after-tax) of costs
related to the Packaging Business transaction and $8.4 million ($5.5 million
after-tax) for a related pension plan curtailment loss.
I - 21
<PAGE>
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
Grace's continuing operating activities used net pretax cash of $235.5 million
in the first half of 1998, compared to $79.7 million in the first half of 1997.
After giving effect to the net pretax cash provided by operating activities of
discontinued operations and payments of income taxes, operating activities used
$314.6 million in the first half of 1998, compared to providing $40.8 million
for the same period in 1997. The increase from the first half of 1997 was
primarily due to the expenditure of $141.4 million for the defense and
disposition of asbestos-related litigation, net of amounts received from
settlements with certain insurance carriers in connection with such litigation,
as compared to the net cash outflow of $7.4 million for asbestos-related
litigation in the first half of 1997, and an increase in long-term incentive
compensation disbursements of approximately $60.0 million in 1998 compared to
the first half of 1997.
Investing activities used $51.0 million of cash in the first half of 1998 as
compared to cash provided by investing activities of $481.0 million in the
first half of 1997. The decrease in cash from investing activities was
primarily due to the receipt of net proceeds from divestments in the first half
of 1997 (most of which related to the divestment of the cocoa business),
partially offset by a reduction in net investing activities of discontinued
operations. Grace made capital expenditures of $40.7 million in the six months
ended June 30, 1998, primarily related to the Grace Davison business which is
increasing capacity for hydroprocessing and other catalysts. Grace anticipates
that total 1998 capital expenditures will not exceed $110.0 million, all of
which will be directed towards its operating business segments.
Net cash provided by financing activities in the first half of 1998 was $392.7
million, primarily reflecting the cash transfer of $1,256.6 million received in
connection with the Packaging Business transaction (as discussed in Notes 1 and
4 to this Report) and proceeds from the exercise of employee stock options,
partially offset by net repayments of borrowings.
In connection with the Packaging Business transaction, Grace received $1,256.6
million in cash, which was used to repay substantially all of its debt. On
March 31, 1998, Grace used $600 million of the cash transfer to repay bank
borrowings. On April 1, 1998, Grace repaid $611.3 million principal amount of
Notes pursuant to a tender offer that expired on March 27, 1998. On April 1,
1998, Grace also repaid $3.5 million principal amount of MTNs and $6.0 million
of sundry indebtedness. As a result of this extinguishment of debt, Grace
incurred an after-tax charge of $35.2 million for premiums paid in excess of
the Notes' principal amounts and other costs related to the purchase of the
Notes and MTNs (including the costs of settling related interest rate swap
agreements). These costs are presented as an extraordinary item in the
Consolidated Statement of Operations in this Report.
On June 30, 1998, Grace had committed borrowing facilities totaling $850.0
million, consisting of $600.0 million under a 364-day facility expiring in May
1999 (extendible for successive 364-day periods at the discretion of Grace and
the lenders) and $250.0 million under a long-term facility expiring in May
2003. These facilities also supported the issuance of commercial paper and bank
borrowings, of which $212.0 million was outstanding on June 30, 1998.
Grace has targeted a ratio of debt to EBITDA (earnings before interest, taxes
and depreciation and amortization) of less than 1.0, although Grace will
continue to have the flexibility to exceed
I - 22
<PAGE>
this target as business needs dictate. The debt to EBITDA ratio for the twelve
months ended June 30, 1998 was estimated at 1.15.
During the first quarter of 1997, Grace substantially completed the share
repurchase program initiated in 1996 by acquiring 6,306,300 additional shares
of its common stock for $335.9 million. Prior to year-end 1997, Grace retired
all of its treasury stock using the cost method.
In April 1998, the Company's Board of Directors approved a new program to
repurchase up to 20% of the Company's outstanding shares in the open market.
Through June 30, 1998, the Company had acquired 929,200 shares of common stock
for a total of $16.6 million under the program (an average price per share of
$17.89). Cash payments for settled share repurchases were $15.5 million through
June 30, 1998. This program is expected to be executed over time, depending on
market conditions and other factors.
Grace believes that cash flows generated from future operations and committed
borrowing facilities will be sufficient to meet its cash requirements for the
foreseeable future.
CROSFIELD ACQUISITION
On April 2, 1998, Grace entered into a definitive agreement to acquire the
Crosfield business of Imperial Chemical Industries PLC for $455.0 million in
cash. Crosfield is a major producer of various silica, silicate and zeolite
products, as well as hydroprocessing and specialty catalysts. Crosfield, which
is to be integrated with Grace Davison, had 1997 sales of approximately $270.0
million. The completion of the acquisition is subject to various conditions,
including customary governmental approvals. Grace expects to finance the
acquisition with borrowings.
ASBESTOS-RELATED MATTERS
In the first half of 1998, Grace paid $141.4 million for the defense and
disposition of asbestos-related property damage and personal injury litigation
(including payments made under a property damage settlement and a block
settlement of personal injury claims effected in 1997), net of amounts received
under settlements with insurance carriers. Although the total amount to be paid
in 1998 with respect to asbestos-related claims (after giving effect to
payments to be received from insurance carriers) cannot be precisely estimated,
Grace expects that it will be required to expend approximately $170 million
(pretax) in 1998 to defend against and dispose of such claims (after giving
effect to anticipated insurance recoveries). The amounts with respect to the
probable cost of defending against and disposing of asbestos-related claims and
probable recoveries from insurance carriers represent estimates and are on an
undiscounted basis; the outcomes of such claims cannot be predicted with
certainty.
In December 1997, Grace and the U.S. Department of Energy's Brookhaven National
Laboratory announced the development of a new product capable of dissolving
asbestos in installed fireproofing material previously produced by Grace
without diminishing the existing fire-resistive performance of the fireproofing
material on columns and beams. It is anticipated that the new product will
create significant cost savings in comparison to current asbestos abatement
techniques. The new product is expected to be commercially available in 1998.
Grace is not yet able to determine the effect of the new product on Grace's
exposure with respect to its property damage litigation cases.
I - 23
<PAGE>
See Note 2 to this Report for further information concerning asbestos-related
lawsuits and claims.
ENVIRONMENTAL MATTERS
In April 1998, Grace reached a settlement with the federal government relating
to a site in Wayne, New Jersey. Under the terms of the settlement, which
remains subject to court approval, Grace will pay approximately $32 million in
settlement of claims by the U.S. Army Corps of Engineers, the U.S.
Environmental Protection Agency and the U.S. Departments of Energy and the
Interior. Grace has paid $19 million of this amount into an escrow account and
will pay the remaining $13 million over the next two years. All amounts paid
and to be paid in the settlement are being charged against previously
established reserves.
There were no other significant developments relating to environmental
liabilities for the first half of 1998.
For additional information relating to environmental liabilities, see Note 11
to the Consolidated Financial Statements in the 1997 10-K.
YEAR 2000 COMPUTER SYSTEMS COMPLIANCE
There were no significant developments relating to Year 2000 computer systems
compliance in the first half of 1998.
For additional information relating to Year 2000 computer systems compliance,
see "Management's Discussion and Analysis of Results of Operations and
Financial Condition -- Year 2000 Computer Systems Compliance" and Note 17 to
the Consolidated Financial Statements in the 1997 10-K.
I - 24
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Note 2 to the interim consolidated financial statements in Part I of
this Report is incorporated herein by reference.
Item 5. Other Information.
The Company's By-laws require that shareholders give advance notice
and furnish certain information to the Company in order to bring a matter of
business before an annual meeting of shareholders or to nominate a person for
election as a director. For the 1999 annual meeting of shareholders, scheduled
to be held on May 10, 1999, the Company must receive such notice and
information by no later than March 11, 1999 (sixty days prior to the meeting)
and no earlier than February 9, 1999 (ninety days prior to the meeting). Any
such notice should be delivered to the Company's Secretary at the Company's
principal executive offices.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. The following are being filed as exhibits to this
Report:
-- Credit Agreement, dated as of May 14, 1998, among W. R.
Grace & Co.-Conn.; W. R. Grace & Co.; the several banks
parties thereto; the co-agents signatories thereto; The
Chase Manhattan Bank, as administrative agent for such
banks; and Chase Securities, Inc., as arranger
II-1
<PAGE>
-- 364-Day Credit Agreement, dated as of May 14, 1998, among W.
R. Grace & Co.-Conn.; W. R. Grace & Co.; the several banks
parties thereto; the co-agents signatories thereto; Bank of
America National Trust and Savings Association and
Nationsbank, N.A., as co-documentation agents; The Chase
Manhattan Bank, as administrative agent for such banks; and
Chase Securities Inc., as arranger
-- computation of ratio of earnings to fixed charges and
combined fixed charges and preferred stock dividends
-- financial data schedule
(b) Reports on Form 8-K. The following Reports on Form 8-K were filed
during the second quarter and to date during the third quarter of 1998:
Date of Filing Disclosure(s)
- -------------- -------------
May 11, 1998 Announcement of 1998 first quarter results
May 21, 1998 Announcements that Grace is considering purchasing supple-
mental insurance that would limit its liability for
asbestos-related litigation and that Albert J. Costello,
the Company's Chairman, President and Chief Executive
Officer, plans to retire around year-end 1998
July 14, 1998 Restatement of Financial Data Schedules
July 28, 1998 Announcement of 1998 second quarter results
II-2
<PAGE>
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.
W. R. GRACE & CO.
-------------------------
(Registrant)
Date: August 14, 1998 By /s/ Kathleen A. Browne
----------------------
Kathleen A. Browne
Vice President and Controller
(Principal Accounting Officer)
II-3
<PAGE>
W. R. Grace & Co.
Quarterly Report on Form 10-Q
for the quarter ended June 30, 1998
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
4.1 Credit Agreement, dated as of May 14, 1998, among W. R. Grace &
Co.-Conn.; W. R. Grace & Co.; the several banks parties thereto;
the co-agents signatories thereto; The Chase Manhattan Bank, as
administrative agent for such banks; and Chase Securities, Inc.,
as arranger
4.2 364-Day Credit Agreement, dated as of May 14, 1998, among W. R.
Grace & Co.-Conn.; W. R. Grace & Co.; the several banks parties
thereto; the co-agents signatories thereto; Bank of America
National Trust and Savings Association and Nationsbank, N.A., as
co-documentation agents; The Chase Manhattan Bank, as
administrative agent for such banks; and Chase Securities Inc.,
as arranger
12 Computation of ratio of earnings to fixed charges and combined
fixed charges and preferred stock dividends
27 Financial Data Schedule
<PAGE>
EXECUTION COPY
- ------------------------------------------------------------------------------
CREDIT AGREEMENT
DATED AS OF
MAY 14, 1998
AMONG
W. R. GRACE & CO.-CONN.,
W. R. GRACE & CO.
The Banks Party Hereto,
THE CHASE MANHATTAN BANK,
as Administrative Agent
and
CHASE SECURITIES INC.,
as Arranger
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
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SECTION 1. DEFINITIONS......................................................................................... 1
1.1 Defined Terms..................................................................................... 1
1.2 Other Definitional Provisions..................................................................... 13
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS..................................................................... 13
2.1 Commitments....................................................................................... 13
2.2 Obligations of Borrowers; Revolving Credit Notes.................................................. 13
2.3 Procedure for Revolving Credit Borrowing.......................................................... 15
SECTION 3. BILATERAL OPTION LOANS.............................................................................. 15
3.1 Requests for Offers............................................................................... 15
3.2 Reports to Administrative Agent; Determination of Dollar Equivalents.............................. 16
3.3 Judgment Currency................................................................................. 16
3.4 Repayments........................................................................................ 17
SECTION 4. BID LOANS........................................................................................... 17
4.1 The Bid Loans..................................................................................... 17
4.2 Procedure for Bid Loans........................................................................... 17
4.3 Repayments........................................................................................ 19
4.4 Interest on Bid Loans............................................................................. 19
4.5 Obligations of Borrowers; Bid Loan Notes.......................................................... 19
SECTION 5. LOAN FACILITY COMMON PROVISIONS..................................................................... 20
5.1 Interest Rates and Payment Dates.................................................................. 20
5.2 Facility Fee, etc................................................................................. 21
5.3 Termination or Reduction of Commitments; Change of Control Date................................... 22
5.4 Prepayments....................................................................................... 23
5.5 Conversion and Continuation Options............................................................... 23
5.6 Minimum Amounts of Eurodollar Tranches............................................................ 24
5.7 Computation of Interest and Fees.................................................................. 24
5.8 Inability to Determine Interest Rate.............................................................. 25
5.9 Pro Rata Treatment and Payments................................................................... 25
5.10 Illegality....................................................................................... 27
5.11 Requirements of Law.............................................................................. 27
5.12 Taxes............................................................................................ 28
5.13 Indemnity........................................................................................ 29
SECTION 6. REPRESENTATIONS AND WARRANTIES...................................................................... 30
6.1 Corporate Existence; Compliance with Law.......................................................... 30
6.2 Corporate Power, Authorization; Enforceable Obligations........................................... 30
6.3 No Legal Bar...................................................................................... 30
</TABLE>
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<TABLE>
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6.4 No Material Litigation............................................................................ 30
6.5 Ownership of Properties........................................................................... 31
6.6 Financial Condition............................................................................... 31
6.7 Disclosure of Contingent Liabilities.............................................................. 31
6.8 ERISA ............................................................................................ 31
6.9 Certain Federal Regulations....................................................................... 32
6.10 No Default....................................................................................... 32
6.11 Taxes............................................................................................ 32
6.12 Investment Company Act; Other Regulations........................................................ 32
6.13 Purpose of Loans................................................................................. 32
6.14 Environmental Matters............................................................................ 32
6.15 Principal Subsidiaries........................................................................... 32
6.16 Year 2000........................................................................................ 32
SECTION 7. CONDITIONS PRECEDENT................................................................................ 33
7.1 Conditions to Effectiveness....................................................................... 33
7.2 Conditions to Each Loan........................................................................... 34
SECTION 8. AFFIRMATIVE COVENANTS............................................................................... 35
8.1 Financial Statements.............................................................................. 35
8.2 Certificates; Other Information................................................................... 35
8.3 Payment of Obligations............................................................................ 36
8.4 Conduct of Business and Maintenance of Existence.................................................. 36
8.5 Insurance......................................................................................... 37
8.6 Inspection of Property, Books and Records; Discussions............................................ 37
8.7 Notices........................................................................................... 37
8.8 Environmental Laws................................................................................ 38
8.9 Year 2000 Compliance.............................................................................. 38
SECTION 9. NEGATIVE COVENANTS.................................................................................. 39
9.1 Financial Condition Covenants..................................................................... 39
9.2 Limitation on Liens............................................................................... 39
9.3 Limitation on Fundamental Changes................................................................. 41
9.4 Limitation on Asset Transfers to Foreign Subsidiaries............................................. 41
9.5 Limitation on Subordinated Debt................................................................... 41
SECTION 10. EVENTS OF DEFAULT.................................................................................. 41
SECTION 11. THE ADMINISTRATIVE AGENT........................................................................... 44
11.1 Appointment...................................................................................... 44
11.2 Delegation of Duties............................................................................. 44
11.3 Exculpatory Provisions........................................................................... 44
11.4 Reliance by Administrative Agent................................................................. 45
11.5 Notice of Default................................................................................ 45
11.6 Non-Reliance on Administrative Agent and Other Banks............................................. 45
</TABLE>
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11.7 Indemnification.................................................................................. 46
11.8 Administrative Agent in Its Individual Capacity.................................................. 46
11.9 Successor Administrative Agent................................................................... 46
11.10 Co-Agents....................................................................................... 47
SECTION 12. GUARANTEES......................................................................................... 47
12.1 Parent Guarantee................................................................................. 47
12.2 Company Guarantee................................................................................ 47
12.3 No Subrogation, Contribution, Reimbursement or Indemnity......................................... 48
12.4 Amendments, etc., with respect to the Obligations................................................ 48
12.5 Guarantee Absolute and Unconditional............................................................. 49
12.6 Reinstatement.................................................................................... 49
12.7 Payments......................................................................................... 50
SECTION 13. MISCELLANEOUS...................................................................................... 50
13.1 Amendments and Waivers; Replacement of Banks..................................................... 50
13.2 Notices.......................................................................................... 51
13.3 No Waiver; Cumulative Remedies................................................................... 52
13.4 Survival of Representations and Warranties....................................................... 52
13.5 Payment of Expenses and Taxes.................................................................... 52
13.6 Successors and Assigns; Participations; Purchasing Banks......................................... 53
13.7 Adjustments; Set-off............................................................................. 56
13.8 Counterparts..................................................................................... 57
13.9 Severability..................................................................................... 57
13.10 Integration..................................................................................... 57
13.11 GOVERNING LAW................................................................................... 57
13.12 Submission to Jurisdiction; Waivers............................................................. 57
13.13 Acknowledgments................................................................................. 58
13.14 WAIVERS OF JURY TRIAL........................................................................... 58
13.15 Additional Borrowers............................................................................ 59
</TABLE>
iii
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<TABLE>
<CAPTION>
<S> <C>
SCHEDULES
Schedule I Commitments; Lending Offices and Addresses for Notices
Schedule II Principal Subsidiaries
EXHIBITS
Exhibit A Form of Revolving Credit Note
Exhibit B Form of Bid Loan Note
Exhibit C Form of Bid Loan Confirmation
Exhibit D Form of Bid Loan Offer
Exhibit E Form of Bid Loan Request
Exhibit F-1 Form of Opinion of Counsel to the Company and the Parent
Exhibit F-2 Form of Opinion of Simpson Thacher & Bartlett
Exhibit G Form of Officer's Certificate
Exhibit H Form of Commitment Transfer Supplement
Exhibit I Form of Notice of Additional Borrower
</TABLE>
iv
<PAGE>
CREDIT AGREEMENT, dated as of May 14, 1998, among W. R. GRACE
& CO.-CONN., a Connecticut corporation (the "Company"), W. R. GRACE & CO.
(formerly named Grace Specialty Chemicals, Inc.), a Delaware corporation (the
"Parent"), the several banks from time to time parties to this Agreement (the
"Banks"), the co-agents signatories hereto (the "Co-Agents"), THE CHASE
MANHATTAN BANK, a New York banking corporation, as administrative agent for the
Banks hereunder (in such capacity, the "Administrative Agent") and CHASE
SECURITIES INC., as arranger (in such capacity, the "Arranger").
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"ABR Loans": Loans the rate of interest applicable to which
is based upon the Alternate Base Rate.
"Affiliate": as to any Person, (a) any other Person (other
than a Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person or (b) any
Person who is a director, officer, shareholder or partner (i) of such
Person, (ii) of any Subsidiary of such Person or (iii) of any Person
described in the preceding clause (a). For purposes of this
definition, "control" of a Person means the power, directly or
indirectly, either to (i) vote 10% or more of the securities having
ordinary voting power for the election of directors of such Person or
(ii) direct or cause the direction of the management and policies of
such Person whether by contract or otherwise.
"Aggregate Outstanding Bilateral Option Loans": at any time,
(i) the aggregate outstanding principal amount of all Dollar Bilateral
Loans and (ii) the aggregate Dollar Equivalents at such time with
respect to all outstanding Alternative Currency Bilateral Loans.
"Agreement": this Credit Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.
"Alternate Base Rate": for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greater of
(a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. "Prime Rate"
shall mean the rate of interest per annum publicly announced from time
to time by the Administrative Agent as its prime rate in effect at its
principal office in New York City. "Federal Funds Effective Rate"
shall mean, for any day, the weighted average of the rates on
overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business
Day, the average of the quotations for the day of such
<PAGE>
transactions received by the Administrative Agent from three federal
funds brokers of recognized standing selected by it. If for any reason
the Administrative Agent shall have determined (which determination
shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Effective Rate, for any reason, including,
the inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms hereof, the
Alternate Base Rate shall be determined without regard to clause (b)
of the first sentence of this definition until the circumstances
giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal
Funds Effective Rate shall be effective on the effective date of such
change in the Prime Rate or the Federal Funds Effective Rate,
respectively.
"Alternative Currency": any currency other than Dollars which
is freely transferable and convertible into Dollars.
"Alternative Currency Bilateral Loan": a Loan made by a Bank
to any Borrower in an Alternative Currency pursuant to Section 3.
"Applicable Margin": for any day on which the long term
senior unenhanced, unsecured debt of the Company is rated by both S&P
and Moody's, the rate per annum under the caption "Margin" (a "Margin
Rate") set forth below opposite the S&P and Moody's ratings applicable
to such debt on such day (or, if such ratings are set opposite two
different Margin Rates, then the Applicable Margin shall be the lower
of said two Margin Rates):
Margin S&P Moody's
----------------------------------------------------
.400% BB+ or lower Ba1 or lower
.250% BBB- Baa3
.215% BBB Baa2
.185% BBB+ Baa1
.175% A- or higher A3 or higher
provided that if on any day the long term senior unenhanced, unsecured
debt of the Company is rated by only one of either S&P or Moody's, the
Applicable Margin will be determined based on the rating by such
rating agency, and provided, further, that if on any day the long term
senior unenhanced, unsecured debt of the Company is rated by neither
S&P nor Moody's, the Applicable Margin will be determined based on the
rating of such debt by Duff & Phelps, Fitch or another nationally
recognized statistical rating organization agreed to by and among the
Company, the Administrative Agent and the Majority Banks (each, a
"Substitute Rating Agency") and will be the Margin Rate set forth
above opposite the S&P and Moody's ratings comparable to such
Substitute Rating
<PAGE>
Agency's rating of such debt on such date, and provided, further, that
if on any day the long term senior unenhanced, unsecured debt of the
Company is rated by none of S&P, Moody's or any Substitute Rating
Agency, the Company, the Administrative Agent and the Banks will
negotiate in good faith to determine an alternative basis for
calculating the Applicable Margin consistent with the table set forth
above and, if agreement on such alternative basis is not reached
within 30 days, the Applicable Margin will be calculated on an
alternative basis determined by the Administrative Agent and the Banks
in their reasonable discretion consistent with the table above, and
until such alternative basis is determined the Applicable Margin will
be the Applicable Margin last determined as provided in the table
above.
"Available Commitment": as to any Bank at any time, an amount
equal to the excess, if any, of (a) the amount of such Bank's
Commitment over (b) the Loan Outstandings of such Bank at such time.
"Bid Loan": each Bid Loan made pursuant to Section 4.
"Bid Loan Banks": Banks which have outstanding Bid Loans or
which are making Bid Loans.
"Bid Loan Confirmation": each confirmation by the Borrower of
its acceptance of Bid Loan Offers, which Bid Loan Confirmation shall
be substantially in the form of Exhibit C.
"Bid Loan Note": as defined in subsection 4.5(c);
collectively, the "Bid Loan Notes".
"Bid Loan Offer": each offer by a Bank to make Bid Loans
pursuant to a Bid Loan Request, which Bid Loan Offer shall contain the
information specified in Exhibit D.
"Bid Loan Request": each request by a Borrower for Banks to
submit bids to make Bid Loans at a fixed rate, which shall contain the
information in respect of such requested Bid Loans specified in
Exhibit E and shall be delivered to the Administrative Agent.
"Bilateral Option Loan": a Loan made by a Bank to a Borrower
pursuant to Section 3. Bilateral Option Loans may be either Dollar
Bilateral Loans or Alternative Currency Bilateral Loans.
"Bilateral Option Loan Report": as defined in subsection 3.2.
"Board": The Board of Governors of the Federal Reserve System
of the United States of America or any successor thereto.
<PAGE>
"Borrower": the Company and any Subsidiary of the Company
with respect to which a Notice of Additional Borrower has been given
and all conditions precedent to the effectiveness thereof have been
satisfied.
"Borrowing Date": any Business Day specified in a notice
pursuant to subsection 2.3 and 4.2, as a date on which a Borrower
requests the Banks to make Loans hereunder, or any date that a
Bilateral Option Loan is made in accordance with subsection 3.1.
"Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or
required by law to close.
"Capitalized Lease": any lease of property, real or personal,
the obligations of the lessee in respect of which are required to be
capitalized in accordance with GAAP.
"Change of Control Date": (i) the first day on which the
Company determines that any Person or group of related Persons has
direct or indirect beneficial ownership of 30% or more of the
outstanding capital stock of the Parent having ordinary voting power
(other than stock having such power only by reason of the happening of
a contingency) for the election of a majority of the board of
directors of the Parent or (ii) the first day on which any Person or
group of related Persons shall acquire all or substantially all of the
assets of the Parent.
"Chase": The Chase Manhattan Bank.
"Closing Date": the first date on which the conditions set
forth in subsection 7.1 have been satisfied or waived.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Commitment": as to any Bank, the obligation of such Bank to
make Revolving Credit Loans hereunder to the Borrowers in an aggregate
principal amount at any one time outstanding not to exceed the amount
set forth opposite such Bank's name on Schedule I under the heading
"Commitment".
"Commitment Percentage": as to any Bank at any time, the
percentage of the aggregate Commitments then constituted by such
Bank's Commitment.
"Commitment Period": the period from and including the date
hereof to but not including the Termination Date or such earlier date
on which the Commitments shall terminate as provided herein.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Company within
the meaning of Section 4001(a)(14) of ERISA or is part of a group
which includes the Company and which is treated as a single employer
under subsection (b) or (c) of Section 414 of the Code.
<PAGE>
"Consolidated Debt": at a particular date, with respect to
the Parent and its Subsidiaries, and without duplication, the sum of
the amounts set forth on a consolidated balance sheet of the Parent
and its Subsidiaries prepared as of such date in accordance with GAAP
opposite the captions (1) "Long-term debt" (or the equivalent caption)
and (2) "Short-term debt" (or the equivalent caption) but always to
include all indebtedness for borrowed money of the Parent and its
Subsidiaries in accordance with GAAP.
"Consolidated Interest Expense": for any period, with respect
to the Parent and its Subsidiaries, the sum of the amounts which, in
conformity with GAAP, would be (i) set forth opposite the caption
"Interest expense and related financing costs" (or the equivalent
caption) and (ii) calculated as interest expense and included in the
amount set forth opposite the caption "Income/(loss) from discontinued
operations" (or the equivalent caption), each on the consolidated
statement of operations of the Parent and its Subsidiaries for such
period.
"Consolidated Net Income": for any period, net income or loss
of the Parent and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, provided that there shall
be excluded from such net income or loss (a) the income of any Person
in which any other Person (other than the Parent and its Subsidiaries
or any director holding qualifying shares in compliance with
applicable law) has a joint interest, except to the extent of the
amount of dividends or other distributions actually paid to the Parent
or any of its Subsidiaries by such Person during such period and (b)
the income (or loss) of any Person accrued prior to the date it
becomes a Subsidiary or is merged into or consolidated with the Parent
or any of the Subsidiaries or the date that Person's assets are
acquired by the Parent or any of its Subsidiaries.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or
any of its property is bound.
"Default": any of the events specified in Section 10, whether
or not any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
"Dollar Bilateral Loan": a Bilateral Option Loan denominated
in Dollars.
"Dollar Equivalent": on any date of determination by the
Administrative Agent pursuant to subsection 3.2(b) or 3.2(c), as
applicable, in respect of any Alternative Currency Bilateral Loan the
amount of Dollars obtained by converting the outstanding amount of
currency of such Alterative Currency Bilateral Loan, as specified in
the then most recent Bilateral Option Loan Report, into Dollars at the
spot rate for the purchase of Dollars with such currency as quoted by
the Administrative Agent at its principal foreign exchange trading
operations office in New York City on such date.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
<PAGE>
"Domestic Indebtedness": any Indebtedness of the Parent and
any Domestic Subsidiary.
"Domestic Subsidiary": any Subsidiary of the Parent other
than a Foreign Subsidiary.
"Duff & Phelps": Duff & Phelps, Inc.
"EBIT": for any period, with respect to the Parent and its
Subsidiaries, Consolidated Net Income for such period, plus, without
duplication and to the extent deducted from revenues in determining
Consolidated Net Income for such period, the sum of (a) the aggregate
amount of Consolidated Interest Expense for such period, (b) the
aggregate amount of income tax expense for such period, (c) all
extraordinary charges during such period, and (d) all other non-cash
charges during such period, including, but not limited to, (1) asset
disposals, (2) the implementation or modified application of financial
accounting standards, and (3) other special transactions (including,
but not limited to, charges relating to Restructuring Activities,
asset impairment, discontinued operations and asbestos-related
litigation, claims and reimbursements), and minus, without duplication
and to the extent added to revenues in determining Consolidated Net
Income for such period, the sum of (i) all extraordinary gains during
such period and (ii) all other non-cash gains, including those listed
in clause (d) above, during such period, all as determined on a
consolidated basis in accordance with GAAP.
"EBITDA": for any period, EBIT plus (i) all amounts which
would be set forth opposite the caption "Depreciation and
amortization" (or the equivalent caption) and (ii) any amount
calculated as depreciation and amortization and included in the amount
set forth opposite the caption "Income/(loss) from discontinued
operations" (or the equivalent caption), each on the consolidated
statement of operations of the Parent and its Subsidiaries prepared in
accordance with GAAP for such period.
"Environmental Laws": any and all federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees or requirements of any Governmental Authority
regulating, relating to or imposing liability or standards of conduct
concerning environmental protection matters, including without
limitation, Hazardous Materials, as now or may at any time hereafter
be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied
to a Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of any reserve requirements in
effect on such day (including, without limitation, basic,
supplemental, marginal and emergency reserves under any regulations of
the Board of Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for
<PAGE>
eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) maintained by a member
bank of such System.
"Eurodollar Loans": Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
equal to the rate at which Chase is offered Dollar deposits at or
about 10:00 A.M., New York City time, two Business Days prior to the
beginning of such Interest Period in the interbank eurodollar market
where the eurodollar and foreign currency and exchange operations in
respect of its Eurodollar Loans are then being conducted for delivery
on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of its
Eurodollar Loan to be outstanding during such Interest Period.
"Eurodollar Tranche": the collective reference to Eurodollar
Loans, the Interest Periods with respect to all of which begin on the
same date and end on the same later date (whether or not such Loans
shall originally have been made on the same day).
"Event of Default": any of the events specified in Section
10, provided that any requirement for the giving of notice, the lapse
of time, or both, has been satisfied.
"Excluded Subsidiaries": GN Holdings, Inc., a Delaware
corporation; CCHP, Inc., a Delaware corporation; Assignment America,
Inc., a Delaware corporation; Cross Country Staffing, a Delaware
general partnership, and each of their respective Subsidiaries.
"Existing Credit Agreement": the Credit Agreement, dated as
of May 16, 1997, as amended, supplemented or otherwise modified as of
the date hereof, among W. R. Grace & Co.-Conn., W. R. Grace & Co.
(formerly named Grace Specialty Chemicals, Inc.), the several banks
from time to time parties thereto and The Chase Manhattan Bank, as
administrative agent.
"FASB 5": Statement of Financial Accounting Standards No. 5,
Accounting for Contingencies, of the Financial Accounting Standards
Board, as the same may be from time to time supplemented, amended or
interpreted by such Board.
"Fitch": Fitch IBCA, Inc. and its successors and assigns.
"Foreign Subsidiary": any Subsidiary of the Parent (i) that
is organized under the laws of any jurisdiction other than any state
(including the District of Columbia), territory or possession of the
United States of America (a "foreign jurisdiction"), or (ii) more than
50 percent of the book value of the assets of which (as of the end of
the most recent fiscal period for which financial statements are
required to have been provided pursuant to subsection 8.1(a) or (b))
are located in one or more foreign jurisdictions, or (iii) more than
50 percent of the Net Sales and Revenues of which (for the most recent
fiscal year
<PAGE>
for which financial statements are required to have been provided
pursuant to subsection 8.1(a)) were from sales made and/or services
provided in one or more foreign jurisdictions, or (iv) more than 50
percent of the book value of the assets of which (as of the end of the
most recent fiscal period for which financial statements are required
to have been provided pursuant to subsection 8.1(a) or (b)) consists
of equity interests in and/or Indebtedness of one or more Subsidiaries
that are "Foreign Subsidiaries" within clauses (i), (ii), (iii) or
(iv) of this definition.
"Foreign Subsidiary Indebtedness": any Indebtedness of any
Foreign Subsidiary.
"GAAP": generally accepted accounting principles in the
United States of America in effect from time to time.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Hazardous Materials": any hazardous materials, hazardous
wastes, hazardous constituents, hazardous or toxic substances,
petroleum products (including crude oil or any fraction thereof),
defined or regulated as such in or under any Environmental Law.
"Indebtedness": of any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (other than current trade
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices) or which is evidenced by a note,
bond, debenture or similar instrument, (b) all obligations of such
Person under Capitalized Leases, and (c) without duplication, all
"loss contingencies" of such Person of the types described in
paragraph 12 of FASB 5, whether or not disclosed or required to be
disclosed on the financial statements or footnotes thereto of such
Person pursuant to GAAP.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Interest Payment Date": (a) as to any ABR Loan, the
fifteenth day of each March, June, September and December to occur
while such Loan is outstanding and, if different, the Termination
Date, and (b) as to any Eurodollar Loan having an Interest Period of
three months or less, the last day of such Interest Period, and (c) as
to any Eurodollar Loan having an Interest Period longer than three
months, if any, as agreed by the Borrower of such Loan and the Banks.
"Interest Period": with respect to any Eurodollar Loan:
(i) initially, the period commencing on the
borrowing or conversion date, as the case may be, with
respect to such Eurodollar Loan and ending one or
<PAGE>
two weeks, or one, two, three or six months thereafter, or
such other period as may be requested by the Borrower and
agreed to by the Banks making such Loan, as selected by the
Borrower of such Loan in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto;
and
(ii) thereafter, each period commencing on the
last day of the next preceding Interest Period applicable to
such Eurodollar Loan and ending one or two weeks, or one,
two, three or six months thereafter, or such other period as
may be requested by the Borrower and agreed to by the Banks
making such Loan, as selected by such Borrower by irrevocable
notice to the Administrative Agent and the Banks which made
such Eurodollar Loan not less than two Business Days prior to
the last day of the then current Interest Period with respect
thereto;
provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
(1) if any Interest Period pertaining to a
Eurodollar Loan would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless the result of such
extension would be to carry such Interest Period into another
calendar month in which event such Interest Period shall end
on the immediately preceding Business Day;
(2) any Interest Period that would otherwise extend
beyond the Termination Date shall end on the Termination
Date; and
(3) any Interest Period pertaining to a Eurodollar
Loan that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month.
"Lien": any mortgage, pledge, hypothecation, assignment as
security, security deposit arrangement, encumbrance, lien (statutory
or other), conditional sale or other title retention agreement or
other similar arrangement.
"Loan": any loan made by any Bank pursuant to this Agreement.
"Loan Documents": this Agreement, the Notes and the Notices
of Additional Borrower.
"Loan Outstandings": as to any Bank at any time, the sum of
(a) the aggregate principal amount of all Revolving Credit Loans made
by such Bank then outstanding, and (b) such Bank's Commitment
Percentage multiplied by the aggregate principal amount of all Bid
Loans then outstanding.
"Loan Parties": the collective reference to the Company, the
other Borrowers and the Parent.
<PAGE>
"Majority Banks": at any time, Banks the Commitment
Percentages of which aggregate (or, if at such time all of the
Commitments shall have been terminated, Banks the Commitment
Percentages of which immediately prior to such termination aggregated)
at least 51%.
"Material Adverse Effect": a material adverse effect on (a)
the business, operations, properties, or condition (financial or
otherwise) of the Parent and its Subsidiaries taken as a whole, (b)
the ability of the Company, or any Borrower or any other Loan Party to
perform their respective obligations hereunder and under the other
Loan Documents to which such Person is a party, or (c) the validity or
enforceability of the Loan Documents or the rights or remedies of the
Administrative Agent or the Banks hereunder or thereunder.
"Moody's": Moody's Investors Services, a division of Dun &
Bradstreet Corporation, and its successors and assigns.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Sales and Revenues": with respect to any Person for any
period, all sales and operating revenues of such Person during such
period computed in accordance with GAAP after deducting therefrom
sales returns, discounts and allowances.
"Notes": the collective reference to the Revolving Credit
Notes and the Bid Loan Notes, if any.
"Notice of Additional Borrower": as defined in subsection
13.15(a).
"Obligations": the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity
of the Loans and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to any of the Loan Parties or any of the
Borrowers, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) the Loans and the Notes, if
any, and all other obligations and liabilities of any of the Loan
Parties or the Borrowers to the Administrative Agent or to the Banks,
whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, this Agreement, the Notes, any other Loan
Document and any other document made, delivered or given in connection
herewith or therewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses
(including, without limitation, all fees and disbursements of counsel
to the Administrative Agent or to the Banks that are required to be
paid by the Loan Parties and/or the Borrowers pursuant to the terms of
this Agreement) or any other obligation hereunder or thereunder.
"Parent": W. R. Grace & Co. (formerly named Grace Specialty
Chemicals, Inc.), a Delaware corporation.
<PAGE>
"Parent Guarantee": as defined in subsection 12.1.
"Participant": as defined in subsection 13.6(b).
"Payment Sharing Notice": a written notice from the Company
or any Bank informing the Administrative Agent that an Event of
Default has occurred and is continuing and directing the
Administrative Agent to allocate payments thereafter received from the
Borrower in accordance with subsection 5.9(c).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which the Company or a Commonly
Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Prepayment Date": as defined in subsection 5.3(b).
"Principal Subsidiary": (a) any Borrower and (b) any other
Subsidiary if it shall have Total Assets at the end of the most recent
fiscal year for which financial statements are required to have been
furnished pursuant to subsection 8.1(a) in excess of $75,000,000 or
have had during such year Net Sales and Revenues in excess of
$75,000,000.
"Purchasing Banks": as defined in subsection 13.6(c).
"Register": as defined in subsection 13.6(d).
"Regulation U": Regulation U of the Board.
"Regulation X": Regulation X of the Board.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the thirty day
notice requirement is waived under PBGC Reg. ss. 4043.
"Requested Bank": as defined in subsection 3.1(a).
<PAGE>
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its property or to which such Person or any of its property is
subject.
"Responsible Officer": the chief executive officer, the
president, the chief financial officer or the treasurer, assistant
treasurer or controller of, respectively, the Parent and the Company.
"Restructuring Activities": all reductions in carrying value
of assets or investments and provisions for the termination and/or
relocation of operations and employees.
"Revolving Credit Loans": as defined in subsection 2.1(a).
"Revolving Credit Notes": as defined in subsection 2.2.
"SEC": the Securities and Exchange Commission, and any
successor or analogous federal Governmental Authority.
"Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"S&P": Standard & Poor's Ratings Services, and its successors
and assigns.
"Subsidiary": as to any Person, a corporation, partnership or
other entity which is required to be consolidated with such Person in
accordance with GAAP; provided, that any such corporation, partnership
or other entity which is controlled by a receiver or trustee under any
bankruptcy, insolvency or similar law shall continue to be a
"Subsidiary" of such Person for purposes of this Agreement. Unless
otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Parent.
"Substitute Rating Agency": as defined in the definition of
"Applicable Margin".
"Termination Date": May 16, 2003.
"Total Assets": with respect to any Person at any time, the
total of all assets appearing on the asset side of the balance sheet
of such Person prepared in accordance with GAAP as of such time.
"Transferee": as defined in subsection 13.6(f).
"Type": as to any Loan, its nature as an ABR Loan or a
Eurodollar Loan.
<PAGE>
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in the Notes, if any, or any certificate or other document
made or delivered pursuant hereto.
(b) As used herein and in the Notes, if any, and any
certificate or other document made or delivered pursuant hereto, accounting
terms relating to the Parent and its Subsidiaries not defined in subsection
1.1, to the extent not defined, shall have the respective meanings given to
them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement, unless
otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Commitments. (a) Subject to the terms and conditions
hereof, each Bank severally agrees to make revolving credit loans ("Revolving
Credit Loans") to any Borrower from time to time during the Commitment Period
in an aggregate principal amount at any one time outstanding not to exceed the
amount of such Bank's Commitment, provided that no Bank shall make any
Revolving Credit Loan if, after giving effect to such Loan, the aggregate Loan
Outstandings of all of the Banks plus the Aggregate Outstanding Bilateral
Option Loans would exceed the aggregate Commitments.
(b) The Revolving Credit Loans may from time to time be (i)
Eurodollar Loans, (ii) ABR Loans or (iii) a combination thereof, as determined
by the Borrower thereof and notified to the Administrative Agent in accordance
with subsections 2.3 and 5.5, provided that no Revolving Credit Loan shall be
made as a Eurodollar Loan maturing after the Termination Date.
2.2 Obligations of Borrowers; Revolving Credit Notes. (a)
Each Borrower agrees that each Revolving Credit Loan made by each Bank to such
Borrower pursuant hereto shall constitute the promise and obligation of such
Borrower to pay to the Administrative Agent, on behalf of such Bank, at the
office of the Administrative Agent specified in subsection 13.2, in lawful
money of the United States of America and in immediately available funds the
aggregate unpaid principal amount of all Revolving Credit Loans made by such
Bank to such Borrower pursuant to subsection 2.1, which amounts shall be due
and payable (whether at maturity or by acceleration) as set forth in this
Agreement and, in any event, on the Termination Date.
(b) Each Borrower agrees that each Bank and the
Administrative Agent are authorized to record (i) the date, amount and Type of
each Revolving Credit Loan made by such Bank to such Borrower pursuant to
subsection 2.1, (ii) the date of each continuation thereof pursuant to
subsection 5.5(b), (iii) the date of each conversion of all or a portion
thereof to
<PAGE>
another Type pursuant to subsection 5.5(a), (iv) the date and amount of each
payment or prepayment of principal of each such Revolving Credit Loan and (v)
in the case of each such Revolving Credit Loan which is a Eurodollar Loan, the
length of each Interest Period and the Eurodollar Rate with respect thereto, in
the books and records of such Bank or the Administrative Agent, as the case may
be, and in such manner as is reasonable and customary for such Bank or the
Administrative Agent, as the case may be, and a certificate of an officer of
such Bank or the Administrative Agent, as the case may be, setting forth in
reasonable detail the information so recorded, shall constitute prima facie
evidence of the accuracy of the information so recorded; provided that the
failure to make any such recording shall not in any way affect the obligations
of such Borrower hereunder.
(c) Each Borrower agrees that, upon the request to the
Administrative Agent by any Bank at any time, the Revolving Credit Loans made
by such Bank to such Borrower shall be evidenced by a promissory note of such
Borrower, substantially in the form of Exhibit A with appropriate insertions as
to Borrower, payee, date and principal amount (a "Revolving Credit Note"),
payable to the order of such Bank and in a principal amount equal to the lesser
of (a) the amount of the initial Commitment of such Bank and (b) the aggregate
unpaid principal amount of all Revolving Credit Loans made by such Bank to such
Borrower. Upon the request to the Administrative Agent by any such Bank at any
time, such Borrower shall execute and deliver to such Bank a Revolving Credit
Note conforming to the requirements hereof and executed by a duly authorized
officer of such Borrower. Each Bank is hereby authorized to record the date,
Type and amount of each Revolving Credit Loan made by such Bank to such
Borrower, each continuation thereof, each conversion of all or a portion
thereof to another Type, the date and amount of each payment or prepayment of
principal thereof and, in the case of Eurodollar Loans, the length of each
Interest Period and the Eurodollar Rate with respect thereto, on the schedule
annexed to and constituting a part of its Revolving Credit Note and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded; provided that the failure to make any such recording
shall not in any way affect the obligations of such Borrower hereunder or
thereunder. Each Revolving Credit Note shall (x) be dated the Closing Date, (y)
be stated to mature on the Termination Date and (z) provide for the payment of
interest in accordance with subsection 5.1.
2.3 Procedure for Revolving Credit Borrowing. Any Borrower
may borrow under the Commitments from all Banks during the Commitment Period on
any Business Day, provided that such Borrower shall give the Administrative
Agent irrevocable notice (which notice must be received by the Administrative
Agent (a) prior to 4:00 P.M., New York City time, three Business Days prior to
the requested Borrowing Date, if all or any part of the requested Revolving
Credit Loans are to be initially Eurodollar Loans, or (b) prior to 10:00 A.M.,
New York City time, on the requested Borrowing Date, otherwise), specifying (i)
the amount to be borrowed, (ii) the requested Borrowing Date, (iii) whether the
borrowing is to be of Eurodollar Loans, ABR Loans or a combination thereof and
(iv) if the borrowing is to be entirely or partly of Eurodollar Loans, the
respective amounts of each such Type of Loan and the respective lengths of the
initial Interest Periods therefor. Each borrowing under the Commitments shall
be in an amount equal to $5,000,000 or a whole multiple of $1,000,000 in excess
thereof (or, in the case of ABR Loans, if the amount of the Available
Commitments minus the Aggregate Outstanding Bilateral Option Loans is less than
$5,000,000, such lesser amount). Upon receipt
<PAGE>
of such notice from such Borrower, the Administrative Agent shall promptly
notify each Bank thereof. Each Bank will make the amount of its pro rata share
of each such borrowing available to the Borrower at the office of the
Administrative Agent specified in subsection 13.2 prior to 12:00 noon, New York
City time, on the Borrowing Date requested by such Borrower in funds
immediately available to the Administrative Agent. Such borrowing will then be
made available to such Borrower on the books of such office with the aggregate
of the amounts made available to the Administrative Agent by the Banks and in
like funds as received by the Administrative Agent.
SECTION 3. BILATERAL OPTION LOANS
3.1 Requests for Offers. (a) From time to time during the
period from the Closing Date until the Termination Date, any Borrower may
request any or all of the Banks (each such Bank to which such a request is
made, a "Requested Bank") to make offers to make Bilateral Option Loans,
provided that immediately after making any such Bilateral Option Loan, the
aggregate Loan Outstandings of all the Banks plus the Aggregate Outstanding
Bilateral Option Loans will not exceed the aggregate Commitments. Any such
request shall specify the principal amount and maturity date of the Bilateral
Option Loans for which such Borrower is requesting offers, whether such
Bilateral Option Loans are requested to be Dollar Bilateral Loans or
Alternative Currency Bilateral Loans, the time by which offers to make such
Bilateral Option Loans must be made by such Requested Bank and by which such
offers shall be accepted or rejected by such Borrower, and if all or any part
of the requested Bilateral Option Loans are requested to be made as Alternative
Currency Bilateral Loans, the Alternative Currency to be applicable thereto.
Each Requested Bank may, but shall have no obligation to, make such offers on
such terms and conditions as are satisfactory to such Requested Bank, and such
Borrower may, but shall have no obligation to, accept any such offers. No
Bilateral Option Loan may mature after the Termination Date.
(b) Each Borrower and Requested Bank shall separately agree
as to the procedures, documentation, lending office and other matters relating
to any Bilateral Option Loan.
3.2 Reports to Administrative Agent; Determination of Dollar
Equivalents. (a) The Borrower shall deliver to the Administrative Agent a
report in respect of each Bilateral Option Loan (a "Bilateral Option Loan
Report") by 2:00 P.M. (New York City time) on the date on which the applicable
Borrower accepts any Bilateral Option Loan, on the date on which any principal
amount thereof is repaid prior to the scheduled maturity date, or on the
scheduled maturity date if payment thereof is not made on such scheduled
maturity date, specifying for such Bilateral Option Loan the date on which such
Bilateral Option Loan was or will be made, such amount of principal is or will
be repaid or such payment was not made as the case may be; in the case of
Alternative Currency Bilateral Loans, the Alternative Currency thereof; and the
principal amount of such Bilateral Option Loan or principal prepayment or
repayment or the amount paid (in the case of any Alternative Currency Bilateral
Loan, expressed in the Alternative Currency therefor).
<PAGE>
(b) Upon receipt of a Bilateral Option Loan Report with
respect to the acceptance of a Bilateral Option Loan, the Administrative Agent
shall determine the Dollar Equivalent thereof.
(c) If on any Borrowing Date on which after giving effect to
the Loans made on such date, the sum of the aggregate Loan Outstandings of all
the Banks plus the Aggregate Outstanding Bilateral Option Loans exceeds 85% of
the aggregate Commitments, then the Administrative Agent shall redetermine as
of such Borrowing Date, on the basis of the most recently delivered Bilateral
Option Loan Report for each Bilateral Option Loan, the Dollar Equivalent of
each Alternative Currency Bilateral Loan then outstanding. In addition, for so
long as the condition specified in the preceding sentence remains in effect,
the Administrative Agent shall determine, at the end of each fiscal quarter of
the Company, on the basis of the most recently delivered Bilateral Option Loan
Report for each Bilateral Option Loan, the Dollar Equivalent of each
Alternative Currency Bilateral Loan then outstanding.
(d) The Administrative Agent shall promptly notify the
Company of each Dollar Equivalent under this subsection 3.2.
3.3 Judgment Currency. If for the purpose of obtaining
judgment in any court, it is necessary to convert a sum due from any Borrower
hereunder or under any of the Notes in the currency expressed to be payable
herein or under the Notes (the "specified currency") into another currency, the
parties hereto agree, to the fullest extent that they may effectively do so,
that the rate of exchange used shall be that at which in accordance with normal
banking procedures the Administrative Agent could purchase the specified
currency with such other currency at the Administrative Agent's New York office
on the Business Day preceding that on which final judgment is given. The
obligations of each Borrower in respect of any sum due to any Bank or the
Administrative Agent hereunder or under any Note shall, notwithstanding any
judgment in a currency other than the specified currency, be discharged only to
the extent that on the Business Day following receipt by such Bank or the
Administrative Agent (as the case may be) of any sum adjudged to be so due in
such other currency such Bank or the Administrative Agent (as the case may be)
may in accordance with normal banking procedures purchase the specified
currency with such other currency; if the amount of the specified currency so
purchased is less than the sum originally due to such Bank or the
Administrative Agent, as the case may be, in the specified currency, each
Borrower agrees, to the fullest extent that it may effectively do so, as a
separate obligation and notwithstanding any such judgment, to indemnify such
Bank or the Administrative Agent, as the case may be, against such difference,
and if the amount of the specified currency so purchased exceeds:
(a) the sum originally due to any Bank or the Administrative
Agent, as the case may be, and
(b) any amounts shared with other Banks as a result of
allocations of such excess as a disproportionate payment to such Bank
under subsection 13.7,
such Bank or the Administrative Agent, as the case may be, agrees to
remit such excess to the applicable Borrower.
<PAGE>
3.4 Repayments. Each Borrower shall repay to each Bank which
has made a Bilateral Option Loan on the maturity date of each Bilateral Option
Loan (such maturity date being that specified in the documentation referred to
in subsection 3.1(a)) the then unpaid principal amount of such Bilateral Option
Loan.
SECTION 4. BID LOANS
4.1 The Bid Loans. Any Borrower may borrow Bid Loans from
time to time on any Business Day during the period from the Closing Date until
the Termination Date, in the manner set forth in this Section 4 and in amounts
such that the aggregate Loan Outstandings of all the Banks at any time plus the
Aggregate Outstanding Bilateral Option Loans at such time will not exceed the
aggregate Commitments at such time, and provided, further, that no such Bid
Loan shall be made if, after giving effect thereto, any Bid Loans would mature
after the Termination Date.
4.2 Procedure for Bid Loans. (a) A Borrower shall request Bid
Loans by delivering a Bid Loan Request to the Administrative Agent, in writing,
by facsimile transmission, or by telephone, confirmed by facsimile
transmission, not later than 1:00 P.M. (New York City time) one Business Day
prior to the proposed Borrowing Date. Each Bid Loan Request may solicit bids
for Bid Loans in an aggregate principal amount of $5,000,000 or a whole
multiple of $1,000,000 in excess thereof and for not more than three
alternative maturity dates for such Bid Loans. The Administrative Agent shall
promptly notify each Bank by facsimile transmission of the contents of each Bid
Loan Request received by it.
(b) Upon receipt of notice from the Administrative Agent of
the contents of a Bid Loan Request, any Bank that elects, in its sole
discretion, to do so, shall irrevocably offer to make one or more Bid Loans at
a rate of interest determined by such Bank in its sole discretion for each such
Bid Loan. Any such irrevocable offer shall be made by delivering a Bid Loan
Offer to the Administrative Agent, by telephone, immediately confirmed by
facsimile transmission, before 9:30 A.M. (New York City time) on the proposed
Borrowing Date, setting forth the maximum amount of Bid Loans for each maturity
date, and the aggregate maximum amount for all maturity dates, which such Bank
would be willing to make (which amounts may, subject to subsection 4.1, exceed
such Bank's Commitments) and the rate of interest at which such Bank is willing
to make each such Bid Loan; the Administrative Agent shall advise the Borrower
before 10:00 A.M. (New York City time) on the proposed Borrowing Date of the
contents of each such Bid Loan Offer received by it. If the Administrative
Agent in its capacity as a Bank shall, in its sole discretion, elect to make
any such offer, it shall advise the Borrower of the contents of its Bid Loan
Offer before 9:15 A.M. (New York City time) on the proposed Borrowing Date.
(c) The Borrower shall before 10:30 A.M. (New York City
time) on the proposed Borrowing Date, in its absolute discretion, either:
(i) cancel such Bid Loan Request by giving the
Administrative Agent telephone notice to that effect, and the
Administrative Agent shall give
<PAGE>
prompt telephone notice thereof to the Banks and the Bid
Loans requested thereby shall not be made; or
(ii) accept one or more of the offers made by any Bank
or Banks by giving telephone notice to the Administrative
Agent (confirmed as soon as practicable thereafter by
delivery to the Administrative Agent of a Bid Loan
Confirmation in writing or by facsimile transmission) of the
amount of Bid Loans for each relevant maturity date to be
made by each Bank (which amount for each such maturity date
shall be equal to or less than the maximum amount for such
maturity date specified in the Bid Loan Offer of such Bid
Loan Bank, and for all maturity dates included in such Bid
Loan Offer shall be equal to or less than the aggregate
maximum amount specified in such Bid Loan Offer for all such
maturity dates) and reject any remaining offers made by
Banks; provided, however, that (x) the Borrower may not
accept offers for Bid Loans for any maturity date in an
aggregate principal amount in excess of the maximum principal
amount requested in the related Bid Loan Request, (y) if the
Borrower accepts any of such offers, it must accept offers
strictly based upon pricing for such relevant maturity date
and no other criteria whatsoever and (z) if two or more Banks
submit offers for any maturity date at identical pricing and
the Borrower accepts any of such offers but does not wish to
(or by reason of the limitations set forth in subsection 4.1
or in clause (x) of this proviso, cannot) borrow the total
amount offered by such Banks with such identical pricing, the
Borrower shall accept offers from all of such Banks in
amounts allocated among them pro rata according to the
amounts offered by such Banks.
(d) If the Borrower accepts pursuant to clause (c) (ii)
above one or more of the offers made by any Bid Loan Bank or Bid Loan Banks,
the Administrative Agent shall notify before 11:00 A.M. (New York City time)
each Bid Loan Bank which has made such an offer, of the aggregate amount of
such Bid Loans to be made on such Borrowing Date for each maturity date and of
the acceptance or rejection of any offers to make such Bid Loans made by such
Bid Loan Bank. Each Bid Loan Bank which is to make a Bid Loan shall, before
12:00 Noon (New York City time) on the Borrowing Date specified in the Bid Loan
Request applicable thereto, make available to the Administrative Agent at its
office set forth in subsection 13.2 the amount of Bid Loans to be made by such
Bid Loan Bank, in immediately available funds. The Administrative Agent will
make such funds available to the Borrower at or before 2:00 P.M. (New York City
time) on such date at the Administrative Agent's aforesaid address. As soon as
practicable after each Borrowing Date, the Administrative Agent shall notify
each Bank of the aggregate amount of Bid Loans advanced on such Borrowing Date
and the respective maturity dates thereof.
4.3 Repayments. Each Borrower shall repay to the
Administrative Agent for the account of each Bid Loan Bank which has made a Bid
Loan on the maturity date of each Bid Loan (such maturity date being that
specified by the Borrower for repayment of such Bid Loan in the related Bid
Loan Request) the then unpaid principal amount of such Bid Loan. The
<PAGE>
Borrowers shall not have the right to prepay any principal amount of any Bid
Loan without the prior written consent of the Bid Loan Bank which made such Bid
Loan.
4.4 Interest on Bid Loans. Each Borrower which shall have
borrowed a Bid Loan shall pay interest on the unpaid principal amount of such
Bid Loan from the Borrowing Date to the stated maturity date thereof, at the
rate of interest determined pursuant to subsection 4.2 above (calculated on the
basis of a 360 day year for actual days elapsed), payable on the interest
payment date or dates specified by such Borrower for such Bid Loan in the
related Bid Loan Request. If all or a portion of the principal amount of any
Bid Loan shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue principal amount shall, without
limiting any rights of any Bank under this Agreement, bear interest from the
date on which such payment was due at a rate per annum which is 2% above the
rate which would otherwise be applicable to such Bid Loan until the scheduled
maturity date with respect thereto, and for each day thereafter at a rate per
annum which is 2% above the Alternate Base Rate until paid in full (as well
after as before judgment).
4.5 Obligations of Borrowers; Bid Loan Notes. (a) Each
Borrower agrees that each Bid Loan made by each Bid Loan Bank to such Borrower
pursuant hereto shall constitute the promise and obligation of such Borrower to
pay to the Administrative Agent, on behalf of such Bid Loan Bank, at the office
of the Administrative Agent specified in subsection 13.2, in lawful money of
the United States of America and in immediately available funds the aggregate
unpaid principal amount of each Bid Loan made by such Bid Loan Bank to such
Borrower pursuant to subsection 4.2, which amounts shall be due and payable
(whether at maturity or by acceleration) as set forth in the Bid Loan Request
related to such Bid Loan and in this Agreement.
(b) Each Borrower agrees that each Bid Loan Bank and the
Administrative Agent are authorized to record (i) the date and amount of each
Bid Loan made by such Bid Loan Bank to such Borrower pursuant to subsection
4.2, and (ii) the date and amount of each payment or prepayment of principal of
each such Bid Loan, in the books and records of such Bid Loan Bank or the
Administrative Agent, as the case may be, and in such manner as is reasonable
and customary for such Bank or the Administrative Agent, as the case may be,
and a certificate of an officer of such Bid Loan Bank or the Administrative
Agent, as the case may be, setting forth in reasonable detail the information
so recorded, shall constitute prima facie evidence of the accuracy of the
information so recorded; provided that the failure to make any such recording
shall not in any way affect the obligations of such Borrower hereunder.
(c) Each Borrower agrees that, upon the request to the
Administrative Agent by any Bid Loan Bank at any time, the Bid Loans made by
such Bid Loan Bank to any Borrower shall be evidenced by a promissory note of
such Borrower, substantially in the form of Exhibit B with appropriate
insertions (a "Bid Loan Note"), payable to the order of such Bid Loan Bank and
representing the obligation of such Borrower to pay the unpaid principal amount
of all Bid Loans made by such Bid Loan Bank, with interest on the unpaid
principal amount from time to time outstanding of each Bid Loan evidenced
thereby as prescribed in subsection 4.4. Upon the request to the Administrative
Agent by any such Bid Loan Bank at any time, such Borrower shall execute and
deliver to such Bid Loan Bank a Bid Loan Note conforming to the requirements
<PAGE>
hereof and executed by a duly authorized officer of such Borrower. Each Bid
Loan Bank is hereby authorized to record the date and amount of each Bid Loan
made by such Bank, the maturity date thereof, the date and amount of each
payment of principal thereof and the interest rate with respect thereto on the
schedule annexed to and constituting part of its Bid Loan Note, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded; provided, however, that the failure to make any such
recordation shall not affect the obligations of such Borrower hereunder or
under any Bid Loan Note. Each Bid Loan Note shall be dated the Closing Date and
each Bid Loan evidenced thereby shall bear interest for the period from and
including the Borrowing Date thereof on the unpaid principal amount thereof
from time to time outstanding at the applicable rate per annum determined as
provided in, and such interest shall be payable as specified in, subsection
4.4.
SECTION 5. LOAN FACILITY COMMON PROVISIONS
5.1 Interest Rates and Payment Dates. (a) Each Eurodollar
Loan shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such
Interest Period plus the Applicable Margin.
(b) Each ABR Loan shall bear interest at a fluctuating rate
per annum equal to the Alternate Base Rate.
(c) Except as otherwise provided in subsection 4.4, if all or
a portion of (i) the principal amount of any Loan or (ii) any interest payable
thereon shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum which is (x) in the case of overdue principal, the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
subsection plus 2% or (y) in the case of overdue interest, the rate described
in paragraph (b) of this subsection plus 2%, in each case from the date of such
non-payment until such amount is paid in full (as well after as before
judgment).
(d) Interest shall be payable in arrears on each Interest
Payment Date, provided that interest accruing pursuant to paragraph (c) of this
subsection shall be payable on demand.
(e) Subject to the limitations set forth herein, each
Borrower may use the Loans by borrowing, prepaying and reborrowing the Loans,
all in accordance with the terms and conditions hereof.
5.2 Facility Fee, etc. (a) The Company agrees to pay to the
Administrative Agent for the account of each Bank a facility fee for the period
from and including the date hereof to the Termination Date, computed at the
rate per annum determined as set forth in paragraph (b) of this subsection on
the average daily amount of the Commitment of such Bank during the period for
which payment is made, payable quarterly in arrears on the fifteenth day of
each March, June, September and December and on the Termination Date or such
earlier date as the Commitments shall terminate as provided herein, commencing
on the first of such dates to occur after the date hereof.
<PAGE>
(b) The rate per annum at which such facility fee under
paragraph (a) above shall be computed (the "Applicable Facility Fee Rate"), for
any day on which the long term senior unenhanced, unsecured debt of the Company
is rated by both S&P and Moody's, shall be the rate per annum under the caption
"Facility Fee Rate" (a "Facility Fee Rate") set forth below opposite the S&P
and Moody's ratings applicable to such debt on such day (or, if such ratings
are set opposite two different rates under said caption, then the Applicable
Facility Fee Rate shall be the lower of said two Facility Fee Rates):
FACILITY FEE
RATE S&P MOODY'S
-------------------------------------------------------
.2000% BB+ or lower Ba1 or lower
.1500% BBB- Baa3
.1100% BBB Baa2
.0900% BBB+ Baa1
.0750% A- or higher A3 or higher
provided that if on any day the long term senior unenhanced, unsecured debt of
the Company is rated by only one of S&P or Moody's, such rate will be
determined based on the rating by such rating agency, and provided, further,
that if on any day the long term senior unenhanced, unsecured debt of the
Company is rated by neither S&P nor Moody's, the Applicable Facility Fee Rate
will be determined based on the rating of such debt by a Substitute Rating
Agency and will be the Facility Fee Rate set forth above opposite the S&P and
Moody's ratings comparable to the Substitute Rating Agency's rating of such
debt on such date, and provided, further, that if on any day the long term
senior unenhanced, unsecured debt of the Company is rated by none of S&P,
Moody's or any Substitute Rating Agency, the Company, the Administrative Agent
and the Banks will negotiate in good faith to determine an alternative basis
for calculating such rate consistent with the table set forth above and, if
agreement on such alternative basis is not reached with 30 days, such rate will
be calculated on an alternative basis determined by the Administrative Agent
and the Banks in their reasonable discretion consistent with the table above,
and until such alternative basis is determined such rate will be the rate last
determined as provided in the table above.
(c) The Company agrees to pay to the Administrative Agent on
the Closing Date for the account of each Bank an upfront fee in an amount equal
to (i) the rate set forth below opposite the aggregate amount of such Bank's
initial commitment on the Closing Date (the "Initial Commitment") multiplied by
(ii) such Bank's Initial Commitment:
Initial Commitment Rate
------------------ ----
$21,000,000 or higher .125%
$14,000,000 .100%
<PAGE>
$10,000,000 .075%
$7,000,000 .050%
(d) The Company agrees to pay to the Administrative Agent and
the Arranger the fees in the amounts and on the dates previously agreed to in
writing by the Company, the Administrative Agent and the Arranger.
5.3 Termination or Reduction of Commitments; Change of
Control Date. (a) The Company shall have the right, upon not less than five
Business Days' notice to the Administrative Agent, to terminate the Commitments
or, from time to time, to reduce the amount of the Commitments, provided that
no such termination or reduction shall be permitted to the extent that, after
giving effect thereto and to any prepayments of Loans made on the effective
date thereof, the sum of the aggregate Loan Outstandings of all the Banks, plus
the Aggregate Outstanding Bilateral Option Loans would exceed the Commitments
then in effect. Any such partial reduction shall be in an amount equal to
$5,000,000 or a whole multiple of $1,000,000 in excess thereof and shall reduce
permanently the Commitments then in effect.
(b) (i) In the event that a Change of Control Date shall
occur, (A) the Company shall, within 10 days after such Change of Control Date,
give each Bank notice thereof in writing describing in reasonable detail the
facts and circumstances giving rise thereto, and (B) such Bank, by written
notice given to the Company not later than 30 days after the Change of Control
Date, may declare the Commitments of such Bank to be terminated in full or
reduced as of the date of (or as of a later date specified in) such notice to
the Company, and may require that the Borrowers prepay as provided in this
subsection 5.3 any Loans payable to such Bank and outstanding on such date to
the extent the principal amount thereof exceeds such Bank's Commitment, if any,
remaining after such termination or reduction. To the extent such Bank so
requires, the Borrowers shall prepay such Loans on the 75th day after the date
of the Company's notice or, in the event such 75th day is not a Business Day,
the Business Day next succeeding such 75th day ("Prepayment Date").
(ii) On the Prepayment Date, the Borrowers shall prepay
the unpaid principal amount of the Loans payable to such Bank, without premium
or penalty, together with accrued interest on the amount prepaid to the
Prepayment Date.
(iii) Subsections 5.9(a), (b) and (c) shall not apply to
prepayments under this subsection 5.3(b).
(iv) Paragraph (a) of this subsection 5.3 hereof shall
not apply to any Commitment reductions pursuant to this paragraph (b).
(v) In the event that a Change of Control Date shall
occur, the Company shall not thereafter, without the prior written consent of
the Majority Banks, borrow any additional Loan (other than a Bilateral Option
Loan) in order to make, directly or indirectly, any payment or prepayment on
any Indebtedness subordinated as to the payment of principal and interest or on
liquidation to the prior payment of any of the Obligations.
<PAGE>
5.4 Prepayments. (a) Any Borrower may at any time and from
time to time upon at least four Business Days' irrevocable notice to the
Administrative Agent, in the case of Eurodollar Loans, or upon at least one
Business Day's irrevocable notice to the Administrative Agent, in the case of
ABR Loans, prepay the Loans (other than Bid Loans), in whole or in part,
without premium or penalty (subject to subsection 5.13), specifying the date
and amount of prepayment and whether the prepayment is of Eurodollar Loans, ABR
Loans or a combination thereof, and, if of a combination thereof, the amount
allocable to each. Upon receipt of any such notice the Administrative Agent
shall promptly notify each Bank thereof. If any such notice is given, the
amount specified in such notice shall be due and payable on the date specified
therein. Partial prepayments shall be in an aggregate principal amount of
$5,000,000 or a whole multiple of $1,000,000 in excess thereof.
(b) If at any time, the Administrative Agent shall determine
(which determination shall be conclusive in the absence of manifest error) that
the sum of the aggregate Loan Outstandings of all the Banks plus the Aggregate
Outstanding Bilateral Option Loans exceeds the aggregate Commitments, the
Borrowers shall immediately prepay the Loans in an aggregate principal amount
equal to such excess.
5.5 Conversion and Continuation Options. (a) Any Borrower may
elect at any time and from time to time (subject to subsection 5.13) to convert
its Eurodollar Loans to ABR Loans by giving the Administrative Agent at least
two Business Days' prior irrevocable notice of such election. Any Borrower may
elect at any time and from time to time to convert its ABR Loans to Eurodollar
Loans by giving the Administrative Agent irrevocable notice of such election
(which notice must be received by the Administrative Agent prior to 4:00 P.M.,
New York City time, three Business Days prior to the requested conversion
date). Any such notice of conversion to Eurodollar Loans shall specify the
length of the initial Interest Period or Interest Periods therefor. Upon
receipt of any such notice the Administrative Agent shall promptly notify each
Bank thereof. All or any part of outstanding Eurodollar Loans and ABR Loans may
be converted as provided herein, provided that (i) no Loan may be converted
into a Eurodollar Loan when any Event of Default has occurred and is continuing
and the Administrative Agent or the Majority Banks have determined that such a
conversion is not appropriate, and (ii) any such conversion may only be made
if, after giving effect thereto, subsection 5.6 shall not have been
contravened.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower thereof giving notice to the Administrative Agent, in accordance with
the applicable provisions of the term "Interest Period" set forth in subsection
1.1, of the length of the next Interest Period to be applicable to such Loans,
provided that no Eurodollar Loan may be continued as such (i) when any Event of
Default has occurred and is continuing and the Administrative Agent or the
Majority Banks have determined that such a continuation is not appropriate, or
(ii) if, after giving effect thereto, subsection 5.6 would be contravened and
provided, further, that if any Borrower shall fail to give any required notice
as described above in this paragraph or if such continuation is not permitted
pursuant to the preceding proviso such Loans shall be automatically converted
to ABR Loans on the last day of such then expiring Interest Period.
<PAGE>
5.6 Minimum Amounts of Eurodollar Tranches. All borrowings,
conversions and continuations of Loans hereunder and all selections of Interest
Periods hereunder shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, the aggregate principal amount
of the Loans comprising each Eurodollar Tranche shall be equal to $5,000,000 or
a whole multiple of $1,000,000 in excess thereof.
5.7 Computation of Interest and Fees. (a) Interest on ABR
Loans and facility fees shall be calculated on the basis of a 365- (or 366-, as
the case may be) day year for the actual days elapsed. Interest on Eurodollar
Loans shall be calculated on the basis of a 360-day year for the actual days
elapsed. The Administrative Agent shall as soon as practicable notify the
Borrowers and the Banks of each determination of a Eurodollar Rate. Any change
in the interest rate on a Loan resulting from a change in the Prime Rate shall
become effective as of the opening of business on the day on which such change
in the Prime Rate is announced. The Administrative Agent shall as soon as
practicable notify the Borrowers and the Banks of the effective date and the
amount of each such change in interest rate.
(b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrowers and the Banks in the absence of
manifest error. The Administrative Agent shall, at the request of the Company,
deliver to the Company a statement showing in reasonable detail the quotations
and calculations used by the Administrative Agent in determining any interest
rate pursuant to subsections 5.1 and 5.7(a).
5.8 Inability to Determine Interest Rate. In the event that
prior to the first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrowers)
that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period, or
(b) the Administrative Agent shall have received notice from
the Majority Banks that the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and fairly
reflect the cost to such Banks (as conclusively certified by such
Banks) of making or maintaining their affected Loans during such
Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to
the Borrowers and the Banks as soon as practicable thereafter. If such notice
is given (x) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as ABR Loans, (y) any Loans that were to have
been converted on the first day of such Interest Period to Eurodollar Loans
shall be continued as ABR Loans and (z) any outstanding Eurodollar Loans shall
be converted, on the first day of such Interest Period, to ABR Loans. Until
such notice has been withdrawn by the Administrative Agent, no further
Eurodollar Loans shall be made or continued as such, nor shall any Borrower
have the right to convert Loans to Eurodollar Loans.
<PAGE>
5.9 Pro Rata Treatment and Payments. (a) Each borrowing by
any Borrower of Revolving Credit Loans from the Banks hereunder, each payment
by the Company on account of any facility fee hereunder, and any reduction of
the Commitments of the Banks shall be made pro rata according to the respective
Commitment Percentages of the Banks.
(b) Whenever any payment received by the Administrative Agent
or any Bank under this Agreement or any Note is insufficient to pay in full all
amounts then due and payable to the Administrative Agent and the Banks under
this Agreement and the Notes, and the Administrative Agent has not received a
Payment Sharing Notice (or if the Administrative Agent has received a Payment
Sharing Notice but the Event of Default specified in such Payment Sharing
Notice has been cured or waived), such payment shall be distributed and applied
by the Administrative Agent and the Banks in the following order: first, to the
payment of fees and expenses due and payable to the Administrative Agent in its
capacity as Administrative Agent under and in connection with this Agreement;
second, to the payment of all expenses due and payable under subsection 13.5,
ratably among the Banks in accordance with the aggregate amount of such
payments owed to each such Bank; third, to the payment of fees due and payable
under subsections 5.2(a) and (b), ratably among the Banks in accordance with
their Commitment Percentages; fourth, to the payment of interest then due and
payable on the Loans, ratably among the Banks in accordance with the aggregate
amount of interest owed to each such Bank; and fifth, to the payment of the
principal amount of the Loans which is then due and payable, ratably among the
Banks in accordance with the aggregate principal amount owed to each such Bank.
(c) After the Administrative Agent has received a Payment
Sharing Notice which remains in effect, all payments received by the
Administrative Agent under this Agreement or any Note shall be distributed and
applied by the Administrative Agent and the Banks in the following order:
first, to the payment of all amounts described in clauses first through third
of the foregoing paragraph (b), in the order set forth therein; and second, to
the payment of the interest accrued on and the principal amount of all of the
Loans, regardless of whether any such amount is then due and payable, ratably
among the Banks in accordance with the aggregate accrued interest plus the
aggregate principal amount owed to such Bank.
(d) All payments (including prepayments) to be made by any
Borrower hereunder and under the Notes, whether on account of principal,
interest, fees or otherwise, shall be made without set-off or counterclaim and
shall be made prior to 3:00 P.M., New York City time, on the due date thereof
(i) in the case of fees and Loans other than Bilateral Option Loans, to the
Administrative Agent, for the account of the Banks, at the Administrative
Agent's office specified in subsection 13.2, and (ii) in the case of Bilateral
Option Loans made by any Bank, to such Bank, at the Bank's office specified in
Schedule I (or, with respect to Alternative Currency Bilateral Loans, if
different, at such other office of the Bank that it shall designate), in each
case in Dollars (or, with respect to Alternative Currency Bilateral Loans, in
the relevant Alternative Currency) and in immediately available funds. If any
payment hereunder becomes due and payable on a day other than a Business Day,
such payment shall be extended to the next succeeding Business Day (unless,
with respect to any payment on a Eurodollar Loan, the result of such extension
would be to extend such payment into another calendar month, in which event
such payment shall be made on the immediately preceding Business Day), and,
with respect to
<PAGE>
payments of principal, interest thereon shall be payable at the then applicable
rate during such extension.
(e) Unless the Administrative Agent shall have been notified
in writing by the Bank prior to a Borrowing Date that such Bank will not make
the amount of any Loan it has committed to make on such date available to the
Administrative Agent, the Administrative Agent may assume that such Bank has
made such amount available to the Administrative Agent on such Borrowing Date,
and the Administrative Agent may, in reliance upon such assumption, make
available to the applicable Borrower a corresponding amount. If such amount is
made available to the Administrative Agent on a date after such Borrowing Date,
such Bank shall pay to the Administrative Agent on demand an amount equal to
the product of (i) the daily average Federal Funds Effective Rate during such
period, times (ii) the amount of the Loan such Bank was committed to make,
times (iii) a fraction the numerator of which is the number of days that elapse
from and including such Borrowing Date to the date on which such Bank's Loan
shall have become immediately available to the Administrative Agent and the
denominator of which is 360. A certificate of the Administrative Agent
submitted to any Bank with respect to any amounts owing under this subsection
shall be conclusive in the absence of manifest error. If such Bank's Commitment
Percentage of such borrowing is not in fact made available to the
Administrative Agent by such Bank within three Business Days of such Borrowing
Date, the Administrative Agent shall be entitled to recover such amount with
interest thereon at the rate per annum applicable to ABR Loans hereunder, on
demand, from such Borrower.
5.10 Illegality. Notwithstanding any other provision herein,
if any change after the date hereof in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Bank to
make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the
commitment of such Bank hereunder to make Eurodollar Loans, continue Eurodollar
Loans as such and convert ABR Loans to Eurodollar Loans shall forthwith be
cancelled and (b) such Bank's Loans then outstanding as Eurodollar Loans, if
any, shall be converted automatically to ABR Loans on the respective last days
of the then current Interest Periods with respect to such Loans or within such
earlier period as required by law. If any such conversion of a Eurodollar Loan
occurs on a day which is not the last day of the then current Interest Period
with respect thereto, the Borrower of such Loan shall pay to such Bank such
amounts, if any, as may be required pursuant to subsection 5.13.
5.11 Requirements of Law. (a) In the event that any change
after the date hereof in any Requirement of Law or in the interpretation or
application thereof or compliance by any Bank with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority made subsequent to the date hereof:
(i) shall subject any Bank to any tax of any kind
whatsoever with respect to this Agreement, any Note or any Eurodollar
Loan made by it, or change the basis of taxation of payments to such
Bank in respect thereof (except for taxes covered by subsection 5.12
and changes in taxes based upon or measured by income of such Bank);
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, deposits or other liabilities
<PAGE>
in or for the account of, advances, loans or other extensions of
credit by, or any other acquisition of funds by, any office of such
Bank which is not otherwise included in the determination of the
Eurodollar Rate hereunder; or
(iii) shall impose on such Bank any other condition;
and the result of any of the foregoing is to increase the cost to such Bank, by
an amount which such Bank deems in its reasonable judgment to be material, of
making, converting into, continuing or maintaining Eurodollar Loans or to
reduce any amount receivable hereunder in respect thereof then, in any such
case, the Company shall promptly pay such Bank, upon its demand, any additional
amounts necessary to compensate such Bank for such increased cost or reduced
amount receivable. If any Bank becomes entitled to claim any additional amounts
pursuant to this subsection, it shall promptly notify the Company, through the
Administrative Agent, of the event by reason of which it has become so
entitled. A certificate as to any additional amounts payable pursuant to this
subsection setting forth the calculation thereof in reasonable detail (as
determined by such Bank in its reasonable discretion) submitted by such Bank,
through the Administrative Agent, to the Company shall be conclusive in the
absence of manifest error. This covenant shall survive the termination of this
Agreement and the payment of the Notes and all other amounts payable hereunder.
(b) In the event that any Bank shall have determined that any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Bank or any
corporation controlling such Bank with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof does or shall have the effect of
reducing the rate of return on such Bank's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Bank
or such corporation could have achieved but for such change or compliance
(taking into consideration such Bank's or such corporation's policies with
respect to capital adequacy) by an amount deemed by such Bank to be material,
then from time to time, after submission by such Bank to the Company (with a
copy to the Administrative Agent) of a written request therefor, the Company
shall pay to such Bank such additional amount or amounts as will compensate
such Bank for such reduction. A certificate as to any additional amount payable
pursuant to this subsection setting forth the calculation thereof in reasonable
detail (as determined by such Bank in its reasonable discretion) through the
Administrative Agent, to the Company shall be conclusive in the absence of
manifest error.
(c) Upon request by any Bank, through the Administrative
Agent, from time to time, the Borrowers shall pay the cost of all Eurocurrency
Reserve Requirements applicable to the Eurodollar Loans made by such Bank. If a
Bank is or becomes entitled to receive payments in respect of Eurocurrency
Reserve Requirements, pursuant to this subsection 5.11(c), it shall promptly
notify the Borrowers thereof through the Administrative Agent. A certificate as
to the amount of such Eurocurrency Reserve Requirements setting forth the
calculation thereof in reasonable detail (as determined by such Bank in its
reasonable discretion) submitted by such Bank, through the Administrative
Agent, to the Borrowers shall be conclusive in the absence of manifest error.
This covenant shall survive the termination of this Agreement and the payment
of the Loans and all other amounts payable hereunder.
<PAGE>
5.12 Taxes. (a) All payments made by any Borrower under this
Agreement and any Notes shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority, excluding, in the case of the Administrative
Agent and each Bank, net income taxes and franchise taxes (imposed in lieu of
net income taxes) that would not have been imposed on the Administrative Agent
or such Bank, as the case may be, in the absence of a present or former
connection between the jurisdiction of the government or taxing authority
imposing such tax and the Administrative Agent or such Bank (other than a
connection arising solely from the Administrative Agent or such Bank having
executed, delivered or performed its obligations or received a payment under,
or enforced, this Agreement or any Notes) or any political subdivision or
taxing authority thereof or therein (all such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions and withholdings being hereinafter
called "Taxes"). If any Taxes are required to be withheld from any amounts
payable to the Administrative Agent or any Bank hereunder or under any Notes,
the amounts so payable to the Administrative Agent or such Bank shall be
increased to the extent necessary to yield to the Administrative Agent or such
Bank (after payment of all Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement and the
Notes. Whenever any Taxes are payable by any Borrower in respect of any payment
made hereunder, as promptly as possible thereafter any Borrower shall send to
the Administrative Agent for its own account or for the account of such Bank,
as the case may be, a certified copy of an original official receipt received
by such Borrower showing payment thereof. If such Borrower fails to pay any
Taxes when due to the appropriate taxing authority or fails to remit to the
Administrative Agent the required receipts or other required documentary
evidence, such Borrower shall indemnify the Administrative Agent and the Banks
for any incremental taxes, interest or penalties that may become payable by the
Administrative Agent or any Bank as a result of any such failure. The
agreements in this subsection shall survive the termination of this Agreement
and the payment of the Notes and all other amounts payable hereunder.
(b) Each Bank that is not incorporated under the laws of the
United States of America or a state thereof agrees that it will deliver to the
Company and the Administrative Agent (i) two duly completed copies of United
States Internal Revenue Service Form 1001 or 4224 or successor applicable form,
as the case may be, and (ii) an Internal Revenue Service Form W-8 or W-9 or
successor applicable form. Each such Bank also agrees to deliver to the Company
and the Administrative Agent two further copies of the said Form 1001 or 4224
and Form W-8 or W-9, or successor applicable forms or other manner of
certification, as the case may be, on or before the date that any such form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the Company, and
such extensions or renewals thereof as may reasonably be requested by the
Company or the Administrative Agent, unless in any such case an event
(including, without limitation, any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Bank from duly completing and delivering any such form with respect to it and
such Bank so advises the Company and the Administrative Agent. Such Bank shall
certify (i) in the case of a Form 1001 or 4224, that it is entitled to receive
payments under this Agreement without deduction or withholding of any United
States federal income taxes and (ii)
<PAGE>
in the case of a Form W-8 or W-9, that it is entitled to an exemption from
United States backup withholding tax.
5.13 Indemnity. Each Borrower agrees to indemnify each Bank
and to hold each Bank harmless from any loss or expense which such Bank may
sustain or incur as a consequence of (a) default by any Borrower in payment
when due of the principal amount of or interest on any Eurodollar Loan, (b)
default by any Borrower in making a borrowing of, conversion into or
continuation of Eurodollar Loans after such Borrower has given a notice
requesting the same in accordance with the provisions of this Agreement, (c)
default by any Borrower in making any prepayment after such Borrower has given
a notice thereof in accordance with the provisions of this Agreement or (d) the
making of a payment or prepayment of Eurodollar Loans on a day which is not the
last day of an Interest Period with respect thereto, including, without
limitation, in each case, any such loss or expense arising from the
reemployment of funds obtained by it or from fees payable to terminate the
deposits from which such funds were obtained. This covenant shall survive the
termination of this Agreement and the payment of the Loans or Notes, if any,
and all other amounts payable hereunder.
SECTION 6. REPRESENTATIONS AND WARRANTIES
To induce the Banks to enter into this Agreement, each of the
Company and the Parent represents and warrants to the Administrative Agent and
each Bank that:
6.1 Corporate Existence; Compliance with Law. Each Loan Party
(a) is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation, (b) is duly qualified and
in good standing in each jurisdiction wherein, in the opinion of the Company
and the Parent, the conduct of its business or the ownership of its properties
requires such qualification and (c) is in compliance with all Requirements of
Law, except to the extent that the failure to comply with paragraph (a), (b) or
(c) of this subsection would not, in the aggregate, reasonably be expected to
have a Material Adverse Effect.
6.2 Corporate Power, Authorization; Enforceable Obligations.
Each Loan Party has the corporate power and authority to make, deliver and
perform its obligations under the Loan Documents to which it is or will be a
party, and has taken all necessary corporate action to authorize (i) in the
case of the Borrowers, the borrowings under this Agreement and any Notes to
which it is or will be a party on the terms and conditions hereof and thereof
and (ii) the execution, delivery and performance of this Agreement and the Loan
Documents to which it is or will be a party. This Agreement has been, and any
Note and the other Loan Documents to which it is or will be a party will be,
duly executed and delivered on behalf of each relevant Loan Party. This
Agreement constitutes, and each of the Notes, if any, and the other Loan
Documents when executed and delivered will constitute, a legal, valid and
binding obligation of the Loan Party thereto, enforceable against such Loan
Party in accordance with its terms, such enforceability subject to limitations
under any applicable bankruptcy, insolvency, moratorium or other laws affecting
creditors' rights and by general equitable principles (whether applied in a
proceeding in equity or at law). No consent of any other party (including
stockholders of the Parent) and no
<PAGE>
consent, license, approval or authorization of, or registration or declaration
with, any Governmental Authority is required to be obtained by any Loan Party
in connection with the execution, delivery, performance, validity or
enforceability of this Agreement and any Notes.
6.3 No Legal Bar. The execution, delivery and performance of
this Agreement, the Notes and the other Loan Documents, the borrowings
hereunder and the use of the proceeds thereof, will not violate or contravene
any material provision of any Requirement of Law or material Contractual
Obligation of the Parent, the Company or any of its Subsidiaries and will not
result in, or require, the creation or imposition of any material Lien (other
than Liens permitted under subsection 9.2) on any of its or their respective
properties or revenues pursuant to any such Requirement of Law or Contractual
Obligation.
6.4 No Material Litigation. There is no legal action,
administrative proceeding or arbitration (whether or not purportedly on behalf
of the Parent or the Company or any of its Subsidiaries) presently pending, or
to the knowledge of the Parent or the Company threatened, against or affecting
the Parent or the Company or any of its Subsidiaries which would reasonably be
expected to have a Material Adverse Effect, except that the foregoing is
subject to the fact that the Parent and the Company cannot predict at this time
the results and impact, if any, of (i) those investigations and litigations
incorporated by reference in Item 3 of the Parent's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997 referred to in subsection 6.6 to
the extent that inability to make such a prediction or determine liability is
stated in Item 3 and (ii) the governmental investigation and related matters
described in Note 3 to the Consolidated Financial Statements referred to in
Item 3.
6.5 Ownership of Properties. Each of the Parent, the Company
and each of its Subsidiaries is the tenant under valid leases or has good title
to substantially all its properties and assets, real and personal (except
defects in title and other matters that would not reasonably be expected to
have a Material Adverse Effect), subject to no Lien except as permitted to
exist under subsection 9.2.
6.6 Financial Condition. The consolidated balance sheet of
the Parent (or its predecessor) and its Subsidiaries as at December 31, 1997
and the related consolidated statements of operations, shareholders' equity and
of cash flows (together with the related notes), included or incorporated in
the Parent's Annual Report on Form 10-K filed with the SEC for the fiscal year
ended December 31, 1997, present fairly in all material respects the financial
position of the Parent (or its predecessor) and its Subsidiaries as at such
dates and the results of their operations and their cash flows for the fiscal
years then ended. All of such financial statements, including the notes to such
financial statements, have been prepared in conformity with GAAP (subject, in
the case of interim statements, to normal year-end adjustments and to the fact
that such financial statements may be abbreviated and may omit footnotes or
contain incomplete footnotes) consistently applied throughout the periods
involved except as stated therein.
6.7 Disclosure of Contingent Liabilities. To the best of the
knowledge and belief of the Parent, neither the Parent nor any of its
Subsidiaries has any contingent obligation, liability for taxes, long-term
leases, unusual forward or other liabilities, which are material in amount in
relation to the consolidated financial condition of the Parent and its
Subsidiaries taken as a whole
<PAGE>
and which are not disclosed in the financial statements (including the related
notes) described in subsection 6.6 above.
6.8 ERISA. Each Plan that is intended to qualify under
Section 401(a) of the Code satisfies in all material respects the applicable
requirements for qualification under that Code Section. No Reportable Event has
occurred and is continuing with respect to any such Plan, and neither the
Parent nor any of its Subsidiaries has incurred any liability to the PBGC under
Section 4062 of ERISA with respect to any such Plan that would reasonably be
expected to have a Material Adverse Effect.
6.9 Certain Federal Regulations. Neither the Company nor any
of its Subsidiaries is engaged in or will engage in the business of extending
credit for the purposes of "purchasing" or "carrying" any "margin stock" within
the respective meanings of each of the quoted terms under Regulation U of the
Board, and no part of the proceeds of any Loan will be used for any purpose
which violates, or which would be inconsistent with, the provisions of
Regulation U or X of the Board.
6.10 No Default. Neither the Parent nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which would reasonably be expected to have a
Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.
6.11 Taxes. (a) Each of the Parent and its Subsidiaries has
filed or caused to be filed all tax returns which, to the knowledge of the
Parent, are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than any the amount or validity
of which are currently being contested in good faith by appropriate proceedings
and with respect to which adequate reserves to the extent required in
conformity with GAAP, have been provided on the books of the Parent or its
Subsidiaries, as the case may be) except insofar as the failure to make such
filings or payments would not reasonably be expected to have a Material Adverse
Effect; and (b) no tax Lien (other than a Lien permitted under subsection
9.2(a)) has been filed, and, to the knowledge of the Parent, no claim is being
asserted, with respect to any such tax, fee or other charge which would
reasonably be expected to have a Material Adverse Effect.
6.12 Investment Company Act; Other Regulations. None of the
Parent, the Company or any of its Subsidiaries is an "investment company", or a
company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended. None of the Parent, the Company or
any other Borrower is subject to regulation under any Federal or State statute
or regulation which limits its ability to incur Indebtedness.
6.13 Purpose of Loans. The proceeds of the Loans shall be
used by the Borrowers for general corporate purposes (which may include
purchases by the Parent of its capital stock).
<PAGE>
6.14 Environmental Matters. To the best of the knowledge of
the Parent, the operations of the Parent and its Subsidiaries and all parcels
of real estate owned or operated by the Parent or its Subsidiaries are in
compliance with all Environmental Laws, except where the failure to so comply
would not reasonably be expected to have a Material Adverse Effect.
6.15 Principal Subsidiaries. Set forth on Schedule II are all
of the Principal Subsidiaries as of the date hereof.
6.16 Year 2000. Any reprogramming relating to the year 2000
required to permit the proper functioning, in and following the year 2000, in
all material respects, of (i) the computer systems of the Parent and its
Subsidiaries and (ii) any material equipment of the Parent and its Subsidiaries
containing embedded microchips and the testing of all such systems and
equipment, as so reprogrammed, is expected to be completed by June 30, 1999.
The aggregate cost to the Parent and its Subsidiaries of such reprogramming and
testing and of the reasonably foreseeable consequences of year 2000 to the
Parent and its Subsidiaries (including, without limitation, reprogramming
errors and the failure of others' systems or equipment) is not expected to
result in a Default or a Material Adverse Effect.
SECTION 7. CONDITIONS PRECEDENT
7.1 Conditions to Effectiveness. The parties hereto
acknowledge that the effectiveness of this Agreement is subject to the
satisfaction of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have
received (i) this Agreement, executed and delivered by a duly
authorized officer of each of the Loan Parties, with a counterpart for
each Bank, (ii) for the account of each Bank so requesting, a
Revolving Credit Note and a Bid Loan Note conforming to the
requirements hereof and executed by a duly authorized officer of the
Borrowers and (iii) an incumbency certificate of each of the Loan
Parties which covers such officers.
(b) Corporate Proceedings. The Administrative Agent shall
have received, with a counterpart for each Bank, a copy of the
resolutions, in form and substance satisfactory to the Administrative
Agent, of the Board of Directors of each of the Loan Parties
authorizing (i) the execution, delivery and performance of the Loan
Documents to which it is or will be a party and (ii) the borrowings
contemplated hereunder (in the case of each Borrower), certified by
the Secretary or an Assistant Secretary of such Loan Party as of the
Closing Date, which certificate shall state that the resolutions
thereby certified have not been amended, modified, revoked or
rescinded and shall be in form and substance satisfactory to the
Administrative Agent.
(c) Existing Credit Agreement. All commitments of the lenders
under the Existing Credit Agreement shall have been terminated, all
outstanding loans thereunder shall have been repaid in full, all
unpaid fees thereunder shall have been paid in full and such agreement
shall have been terminated.
<PAGE>
(d) Legal Opinions. The Administrative Agent shall have
received, with a counterpart for each Bank, the following executed
legal opinions:
(i) the executed legal opinion of counsel to
the Company and the Parent who may be the General Counsel of
the Company, substantially in the form of Exhibit F-1;
(ii) to the extent required pursuant to
subsection 13.15(a)(ii), the executed legal opinion of
counsel to any other Borrower, in form and substance
reasonably satisfactory to the Administrative Agent; and
(iii) the executed legal opinion of Simpson
Thacher & Bartlett, counsel to the Administrative Agent,
substantially in the form of Exhibit F-2.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative
Agent may reasonably require.
(e) Officer's Certificate. The Administrative Agent shall
have received, with a counterpart for each Bank, a certificate
respecting accuracy of representations and warranties, the absence of
events having a Material Adverse Effect and the absence of Defaults
and Events of Default, substantially in the form of Exhibit G hereto,
signed by a Responsible Officer on behalf of each of the Company and
the Parent.
(f) Additional Matters. All corporate and other proceedings,
and all documents, instruments and other legal matters in connection
with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Administrative Agent, and
the Administrative Agent shall have received such other documents and
legal opinions in respect of any aspect or consequence of the
transactions contemplated hereby or thereby as it shall reasonably
request.
(g) Fees. The Administrative Agent shall have received, on
behalf of itself, the Banks and the Arranger, the fees to be received
on the Closing Date referred to in subsection 5.2.
7.2 Conditions to Each Loan. The agreement of each Bank to
make any Loan requested to be made by it on any date is subject to the
satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by each of the Loan Parties in or
pursuant to subsections 6.1, 6.2, 6.3, 6.5, 6.9, 6.10, 6.11, 6.12 and
6.13 of this Agreement and in or pursuant to any other Loan Document
to which it is or will be a party, shall be true and correct in all
material respects on and as of such date as if made on and as of such
date, and the representation and warranty made
<PAGE>
pursuant to subsection 6.6 shall be true and correct in all material
respects with respect to the financial statements most recently
delivered pursuant to subsection 8.1, mutatis mutandis, as if such
financial statements delivered pursuant to subsection 8.1 were the
financial statements referred to in subsection 6.6.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
Loans requested to be made on such date.
Each borrowing by the Borrowers hereunder shall constitute a representation and
warranty by the Loan Parties as of the date of such Loan that the conditions
contained in this subsection 7.2 have been satisfied.
SECTION 8. AFFIRMATIVE COVENANTS
Each of the Company and the Parent hereby agrees that, so
long as the Commitments remain in effect, any Note remains outstanding and
unpaid or any other amount is owing to any Bank or the Administrative Agent
hereunder, each of the Company and the Parent shall and the Company (except in
the case of delivery of financial information, reports and notices) shall cause
each of its Principal Subsidiaries to:
8.1 Financial Statements. Furnish to each Bank:
(a) as soon as available, but in any event within 120 days
after the end of each fiscal year of the Parent, a copy of the
consolidated balance sheet of the Parent and its Subsidiaries as at
the end of such year and the related consolidated statements of
operations, shareholders' equity and cash flows for such year (as
included or incorporated by reference in the Parent's Annual Report on
Form 10-K or successor form filed with the SEC for each such fiscal
year), setting forth in each case in comparative form the figures for
the previous year, reported on without a "going concern" or like
qualification or exception, or qualification arising out of the scope
of the audit, by Price Waterhouse LLP or other independent certified
public accountants of nationally recognized standing not unacceptable
to the Majority Banks; and
(b) as soon as available, but in any event not later than 75
days after the end of each of the first three quarterly periods of
each fiscal year of the Parent, the unaudited consolidated balance
sheet of the Parent and its Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of operations for
such quarter and the related unaudited consolidated statements of
operations and cash flows for the portion of the fiscal year through
the end of such quarter (as included in the Parent's Quarterly Report
on Form 10-Q or successor form filed with the SEC for each such
period), setting forth in each case in comparative form the figures
for the corresponding period of the previous year, certified by a
Responsible Officer as being fairly stated in all material respects
when considered in relation to the consolidated financial statements
of the Parent and its Subsidiaries.
<PAGE>
All such financial statements shall be prepared in conformity with GAAP
(subject, in the case of interim statements, to normal year-end adjustments and
to the fact that such financial statements may be abbreviated and may omit
footnotes or contain incomplete footnotes) applied consistently throughout the
periods reflected therein and with prior periods (except as disclosed therein).
8.2 Certificates; Other Information. Furnish to each Bank:
(a) concurrently with the delivery of the financial
statements referred to in subsection 8.1(a), a certificate of the
independent certified public accountants reporting on such financial
statements stating that in making the examination necessary therefor
no knowledge was obtained of any Default or Event of Default, except
as specified in such certificate;
(b) concurrently with the delivery of the financial
statements referred to in subsections 8.1(a) and 8.1(b), a certificate
of a Responsible Officer of the Parent in his capacity as such officer
stating that, (i) to the best of such Officer's knowledge, each of the
Borrowers and the Parent during such period has observed or performed
all of its covenants and other agreements, and satisfied every
condition contained in this Agreement and in the Notes and the other
Loan Documents to which it is a party to be observed, performed or
satisfied by it, (ii) to the best of such Officer's knowledge, the
representation and warranty contained in subsection 6.16 is true and
correct as of the date of delivery of such financial statements and
certificate and (iii) that such Officer has obtained no knowledge of
any Default or Event of Default except as specified in such
certificate and showing in detail the calculation of compliance with
subsections 9.1 and 9.2;
(c) concurrently with the delivery of the financial
statements referred to in subsection 8.1(a), a list of the Principal
Subsidiaries as of the corresponding fiscal year end, certified by a
Responsible Officer in his capacity as such officer;
(d) within ten Business Days after the same are sent, copies
of all financial statements and reports which the Parent sends to its
shareholders generally relating to the business of the Parent and its
Subsidiaries, and within ten Business Days after the same are filed,
copies of all reports on Forms 10-K, 10-Q, 8-K, 8 and 10, and
Schedules 13D, 13E-3, 13E-4, 13-G, 14D-1 and 14D-9, or successor forms
or schedules, and the final prospectus in each effective registration
statement (other than registration statements on Form S-8) and each
post-effective amendment to such registration statement which the
Parent may make to, or file with, the SEC; and
(e) promptly, subject to reasonable confidentiality
requirements agreed to by the Company and such Bank, such additional
financial and other information as any Bank may from time to time
reasonably request.
8.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its obligations of whatever
<PAGE>
nature, except where the amount or validity thereof is currently being
contested in good faith by appropriate proceedings and reserves, to the extent
required in conformity with GAAP with respect thereto, have been provided on
the books of the Parent or its Subsidiaries, as the case may be, and except to
the extent that the failure to so pay, discharge or otherwise satisfy such
obligations would not result in a Default or Event of Default under Section
10(e)(i).
8.4 Conduct of Business and Maintenance of Existence.
Preserve, renew and keep in full force and effect its corporate existence and
take all reasonable action to maintain all corporate rights, privileges and
franchises necessary or desirable in the normal conduct of its business, except
as otherwise permitted pursuant to subsection 9.3; comply with all Contractual
Obligations and Requirements of Law except to the extent that failure to comply
therewith would not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
8.5 Insurance. Maintain with financially sound and reputable
insurance companies (which may include, without limitation, captive insurers),
such insurance coverage as is reasonable for the business activities of the
Parent and its Subsidiaries; and furnish to the Administrative Agent, upon
written request, such information as the Administrative Agent may reasonably
request as to its insurance program.
8.6 Inspection of Property, Books and Records; Discussions.
Permit representatives of any Bank (subject to reasonable safety and
confidentiality requirements) to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired and to discuss the business,
operations, properties and financial and other condition of the Parent and its
Subsidiaries with officers and employees of the Parent and its Subsidiaries
and, provided representatives of the Parent are given an opportunity to
participate, with its independent certified public accountants.
8.7 Notices. Promptly give notice to the Administrative Agent
and each Bank of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Parent or any of its Subsidiaries or (ii)
litigation, investigation or proceeding which may exist at any time
between the Parent or any of its Subsidiaries and any Governmental
Authority, which in either case, would reasonably be expected to have
a Material Adverse Effect;
(c) any litigation or proceeding affecting the Parent or any
of its Subsidiaries in which the then reasonably anticipated exposure
of the Parent and its Subsidiaries is $10,000,000 or more and not
covered by insurance, or in which injunctive or similar relief is
sought which is then reasonably anticipated to have an adverse
economic effect on the Parent and its Subsidiaries of $10,000,000 or
more;
(d) the following events, as soon as possible and in any
event within 30 days after the Company or the Parent knows or has
reason to know thereof: (i) the occurrence or
<PAGE>
expected occurrence of any Reportable Event with respect to any Plan,
or any withdrawal from, or the termination, Reorganization or
Insolvency of any Multiemployer Plan or (ii) the institution of
proceedings or the taking of any other action by the PBGC or the
Company or the Parent or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the
terminating, Reorganization or Insolvency of, any Plan, where in
connection with any of the events described in (i) or (ii) above the
liability to the Company or a Commonly Controlled Entity would
reasonably be expected to be $10,000,000 or more;
(e) any upgrading, downgrading or cessation in the rating of
the long term senior unenhanced, unsecured debt of the Company by the
rating agency or agencies whose rating on such debt is then being used
to determine the Applicable Margin and the Facility Fee Rate; and
(f) a development or event which would reasonably be expected
to have a Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action each of the Company and the Parent proposes to
take with respect thereto.
8.8 Environmental Laws.
(a) Comply with all Environmental Laws and obtain and comply
with and maintain any and all licenses, approvals, registrations or permits
required by Environmental Laws, except to the extent that failure to do so
would not be reasonably expected to have a Material Adverse Effect; and
(b) Defend, indemnify and hold harmless the Administrative
Agent and the Banks, and their respective employees, agents, officers and
directors, from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature known or
unknown, contingent or otherwise, arising out of, or in any way relating to the
violation of or noncompliance with any Environmental Laws applicable to the
real property owned or operated by the Company, the Parent or any of the
Company's Subsidiaries, or any orders, requirements or demands of Governmental
Authorities related thereto, including, without limitation, attorney's and
consultant's fees, investigation and laboratory fees, court costs and
litigation expenses, except to the extent that any of the foregoing arise out
of the gross negligence or willful misconduct of the party seeking
indemnification therefor.
8.9 Year 2000 Compliance. Complete, by June 30, 1999, any
reprogramming relating to the year 2000 required to permit the proper
functioning, in and following the year 2000, of (i) the computer systems of the
Parent and its Subsidiaries and (ii) any material equip ment of the Parent and
its Subsidiaries containing embedded microchips and the testing of all such
systems and equipment, except to the extent that failure to do so would not be
reasonably expected to have a Material Adverse Effect.
<PAGE>
SECTION 9. NEGATIVE COVENANTS
The Parent hereby agrees that, so long as the Commitments
remain in effect, any Note remains outstanding and unpaid or any other amount
is owing to any Bank or the Administrative Agent hereunder, it shall not, and
(except with respect to subsections 9.1 and 9.5(b)) shall not permit any of its
Subsidiaries to, directly or indirectly:
9.1 Financial Condition Covenants.
(a) Consolidated Debt to EBITDA. Permit on the last day of
any fiscal quarter of the Company commencing with June 30, 1998, the ratio of
Consolidated Debt as at the end of such fiscal quarter to EBITDA for the period
of four consecutive fiscal quarters then ended to be greater than 3.5 to 1.0.
(b) Interest Coverage. Permit for any period of four
consecutive fiscal quarters ending on the last day of any fiscal quarter of the
Company commencing with June 30, 1998, the ratio of EBIT for such four fiscal
quarter period to Consolidated Interest Expense for such four fiscal quarter
period to be less than 2.0 to 1.0.
9.2 Limitation on Liens. Create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues (which property,
assets or revenues are or would be reflected from time to time on the
consolidated financial statements of the Parent and its Subsidiaries in
accordance with GAAP), whether now owned or hereafter acquired, except for:
(a) Liens for taxes or other governmental charges not yet due
or which are being contested in good faith by appropriate proceedings,
provided that adequate reserves with respect thereto are maintained on
the books of the Parent or its Subsidiaries, as the case may be, to
the extent required in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, vendors', landlords', brokers', bankers' and other like
Liens arising in the ordinary course of business relating to
obligations which are not overdue for a period of more than 60 days or
which are being contested in good faith and Liens arising out of
judgments or awards that are either discharged within 60 days after
entry or execution of which has been stayed pending the outcome of
appeal or review proceedings;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation and deposits securing liability to insurance carriers
under insurance or self-insurance arrangements;
(d) pledges, deposits and similar arrangements in connection
with or to secure performance of bids, tenders, leases and other
deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business and contractual rights of
other Persons to make set-offs and to
<PAGE>
require security in connection with letters of credit, currency,
commodity and interest rate contracts, surety bonds, leases, banking
and brokerage agreements and other transactions in the ordinary course
of business;
(e) leases, easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business which
would not reasonably be expected to have a Material Adverse Effect;
(f) Liens on the property, assets or revenues of a Person
which becomes a Subsidiary after the date hereof, to the extent that
(i) such Liens existed at the time such Person became a Subsidiary and
were not created in anticipation thereof, (ii) any such Lien is not
extended to cover any property, assets or revenues of such Person
after the time such Person becomes a Subsidiary, and (iii) the amount
of Indebtedness secured thereby is not thereafter increased;
(g) Liens arising in connection with (i) industrial
development, pollution control or other tax exempt financing
transactions, provided that such Liens do not at any time encumber any
property other than the property financed by such transaction and
other property, assets or revenues related to the property so financed
on which Liens are customarily granted in connection with such
transactions, or (ii) conveyances of any production payment or other
obligation to make a production payment (A) which is to be made solely
from production from oil, gas or other underground mineral properties
dedicated thereto or (B) as to which production payment amount the
obligee's sole recourse is to such properties;
(h) Liens (including, without limitation, Liens incurred in
connection with Capitalized Leases, operating leases and
sale-leaseback transactions) securing Indebtedness of the Parent and
its Subsidiaries incurred to finance the acquisition of fixed or
capital assets, and refinancings thereof, provided that (i) such Liens
do not at any time encumber any property other than the property
financed by such Indebtedness and other property, assets or revenues
related to the property so financed on which Liens are customarily
granted in connection with such financings or refinancings, and (ii)
the principal amount of Indebtedness secured by any such Lien shall at
no time exceed 100% of the greater of the original purchase price of
such property at the time it was acquired and the fair market value of
such property as reasonably determined by a Responsible Officer of the
Company in good faith thereafter, plus fees and other costs related to
the financing or refinancing thereof which have been agreed upon in an
arm's length manner;
(i) Liens incurred in connection with accounts receivable
sale transactions entered into by the Parent or its Subsidiaries;
(j) Liens securing Contractual Obligations of any Subsidiary
to the Parent, the Company or any Domestic Subsidiary;
(k) Liens on the property, assets or revenues of any Foreign
Subsidiary or any Excluded Subsidiary; and
<PAGE>
(l) Liens (not otherwise permitted hereunder) which secure
obligations in an aggregate amount at any time outstanding not
exceeding an amount equal to 5% of the amount recorded opposite the
caption "Properties and equipment, net" (or the equivalent caption) on
the consolidated balance sheet of the Parent and its Subsidiaries most
recently delivered to the Administrative Agent pursuant to subsection
8.1.
9.3 Limitation on Fundamental Changes. Convey, sell, lease,
assign, transfer or otherwise dispose of (including by merger, consolidation,
sale of stock, liquidation or dissolution) all or substantially all of the
property, assets or business of the Parent and its Subsidiaries taken as a
whole.
9.4 Limitation on Asset Transfers to Foreign Subsidiaries.
With respect to the Parent or any Domestic Subsidiary, convey, sell, lease,
assign, transfer or otherwise dispose of (collectively, a "transfer") any of
its property, business or assets (including, without limitation leasehold
interests), whether now owned or hereafter acquired, to any Foreign Subsidiary,
except such transfers which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
9.5 Limitation on Subordinated Debt. Permit any Subsidiary of
the Parent (other than the Company) to create, incur, assume or suffer to exist
any subordinated indebtedness other than (a) subordinated indebtedness of a
Person which becomes a Subsidiary after the date hereof to the extent such
indebtedness existed at the time such Person became a Subsidiary and was not
incurred in anticipation thereof and any refinancings of such indebtedness
after such time so long as the principal amount thereof is not increased or (b)
subordinated indebtedness of such Subsidiary held by the Parent or any other
Subsidiary of the Parent.
SECTION 10. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) Any Borrower shall fail to pay any principal of any Loan
or Note when due in accordance with the terms thereof or hereof; or
any Borrower shall fail to pay any interest on any Loan or Note, or
any other amount payable hereunder, within five Business Days after
any such interest or other amount becomes due in accordance with the
terms thereof or hereof; or
(b) Any representation or warranty made, or pursuant to
subsection 7.2, deemed made, by any Loan Party herein or in any other
Loan Document or which is contained in any certificate, document or
financial or other statement furnished at any time under or in
connection with this Agreement shall prove to have been incorrect in
any material adverse respect on or as of the date made or deemed made;
or
(c) The Parent or any Subsidiary shall default in the
observance or performance of any agreement contained in subsection
9.1, 9.3, 9.4 or 9.5; or
<PAGE>
(d) Any Loan Party shall default in the observance or
performance of any other agreement contained in this Agreement (other
than as provided in paragraphs (a) through (c) of this Section), and
such default shall continue unremedied for a period of 30 days; or
(e) The Parent or any of its Subsidiaries (other than the
Excluded Subsidiaries) shall (i) default in any payment of principal
of or interest on, or any other amount payable with respect to, any
(A) Domestic Indebtedness (other than the Notes and Loans) in an
aggregate principal amount for all such Domestic Indebtedness of
$10,000,000 or more, or (B) Foreign Subsidiary Indebtedness (other
than the Notes and Loans) in an aggregate principal amount for all
such Foreign Subsidiary Indebtedness of $20,000,000 or more, beyond
the period of grace (not to exceed 30 days), if any, provided in the
instrument or agreement under which such Indebtedness was created; or
(ii) default in the observance or performance of any other agreement
relating to any such Indebtedness in the amounts specified in clause
(i) above or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or
condition exist in any case which continues uncured or unwaived (and,
if waived, without any change in the material terms of such
Indebtedness) after the expiration of all applicable grace periods,
the effect of which default or other event or condition is to cause,
or to permit the holder or holders of such Indebtedness (or a trustee
or agent on behalf of such holder or holders) to cause, with the
giving of notice if required, such Indebtedness to become due prior to
its stated maturity; or
(f) (i) The Parent or any Principal Subsidiary (other than
the Excluded Subsidiaries) shall commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other
relief with respect to it or its debts, or (B) seeking appointment of
a receiver, trustee, custodian or other similar official for it or for
all or any substantial part of its assets, or the Parent or any such
Principal Subsidiary shall make a general assignment for the benefit
of its creditors; or (ii) there shall be commenced against the Parent
or any such Principal Subsidiary any case, proceeding or other action
of a nature referred to in clause (i) above which (A) results in the
entry of an order for relief or any such adjudication or appointment
or (B) remains undismissed, undischarged or unbonded for a period of
60 days; or (iii) there shall be commenced against the Parent or any
such Principal Subsidiary any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not
have been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (iv) the Parent or any such
Principal Subsidiary shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the
acts set forth in clause (i), (ii) or (iii) above; or (v) the Parent
or any such Principal Subsidiary shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts
as they become due; or
<PAGE>
(g) (i) Any Person shall engage in any non-exempt "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan, (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not
waived, shall exist with respect to any Plan, (iii) a Reportable Event
shall occur with respect to, or judicial proceedings shall commence to
have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any Single Employer Plan, which Reportable
Event or commencement of judicial proceedings or appointment of a
trustee is, in the reasonable opinion of the Majority Banks, likely to
result in the termination of such Plan for purposes of Title IV of
ERISA, (iv) any Single Employer Plan shall terminate for purposes of
Title IV of ERISA, (v) the Company or any Commonly Controlled Entity
shall, or in the reasonable opinion of the Majority Banks is likely
to, incur any liability in connection with a withdrawal from, or the
Insolvency or Reorganization of, a Multiemployer Plan or (vi) any
other event or condition shall occur or exist, with respect to a Plan;
and in each case in clauses (i) through (vi) above, such event or
condition, together with all other such events or conditions, if any,
could reasonably be expected to subject the Company or any of its
Subsidiaries to any tax, penalty or other liabilities which in the
aggregate would have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against
the Parent or any of its Subsidiaries in aggregate amounts (not paid
or fully covered by insurance) of $10,000,000 or more and all such
judgments or decrees shall not have been vacated, discharged, stayed
or bonded pending appeal within 60 days from the entry thereof; or
(i) The Parent shall cease to own directly or indirectly of
record and beneficially free and clear of Liens at least 75% of the
shares of the issued and outstanding capital stock of the Company;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i), (ii) or (iii) of paragraph (f) above with respect to any of the
Borrowers, automatically the Commitments to such Borrower shall immediately
terminate and the Loans made to such Borrower hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement and the Notes of such
Borrower shall immediately become due and payable, and (B) if such event is any
other Event of Default, either or both of the following actions may be taken:
(i) with the consent of the Majority Banks, the Administrative Agent may, or
upon the request of the Majority Banks, the Administrative Agent shall, by
notice to the Company declare the Commitments of any or all of the Borrowers to
be terminated forthwith, whereupon such Commitments shall immediately
terminate; and (ii) with the consent of the Majority Banks, the Administrative
Agent may, or upon the request of the Majority Banks, the Administrative Agent
shall, by notice of default to the Company and the Parent, declare the Loans
hereunder made to any or all of the Borrowers (with accrued interest thereon)
and all other amounts owing by such Borrower under this Agreement and the Notes
of such Borrower to be due and payable forthwith, whereupon the same shall
immediately become due and payable. Except as expressly provided above in this
Section, presentment, demand, protest and all other notices of any kind are
hereby expressly waived.
<PAGE>
SECTION 11. THE ADMINISTRATIVE AGENT
11.1 Appointment. Each Bank hereby irrevocably designates and
appoints Chase as the Administrative Agent of such Bank under this Agreement
and the other Loan Documents, and each such Bank irrevocably authorizes Chase,
as the Administrative Agent for such Bank, to take such action on its behalf
under the provisions of this Agreement and the other Loan Documents and to
exercise such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.
11.2 Delegation of Duties. The Administrative Agent may
execute any of its duties under this Agreement and the other Loan Documents by
or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents
or attorneys-in-fact selected by it with reasonable care.
11.3 Exculpatory Provisions. Neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except for its or such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of the Banks for
any recitals, statements, representations or warranties made by any Loan Party
or any officer thereof contained in this Agreement or any other Loan Document
or in any certificate, report, statement or other document referred to or
provided for in, or received by the Administrative Agent under or in connection
with, this Agreement or any other Loan Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
the Notes or any other Loan Document or for any failure of any Loan Party to
perform its obligations hereunder or thereunder. The Administrative Agent shall
not be under any obligation to any Bank to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of any Loan Party.
11.4 Reliance by Administrative Agent. The Administrative
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, statement, order or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Company, the
Parent or any other Borrower), independent accountants and other experts
selected by the Administrative Agent. The Administrative Agent may deem and
treat the payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
<PAGE>
filed with the Administrative Agent. The Administrative Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Majority Banks as it deems appropriate or it shall first be indemnified to
its satisfaction by the Banks against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such
action. The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement and the Notes and
the other Loan Documents in accordance with a request of the Majority Banks,
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all the Banks and all future holders of the Notes.
11.5 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Administrative Agent has received notice from a
Bank or any Loan Party referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that the Administrative Agent receives such a notice, the Administrative
Agent shall give notice thereof to the Banks. The Administrative Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Majority Banks; provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it
shall deem advisable in the best interests of the Banks.
11.6 Non-Reliance on Administrative Agent and Other Banks.
Each Bank expressly acknowledges that neither the Administrative Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact or Affiliates
has made any representations or warranties to it and that no act by the
Administrative Agent hereinafter taken, including any review of the affairs of
the Loan Parties, shall be deemed to constitute any representation or warranty
by the Administrative Agent to any Bank. Each Bank represents to the
Administrative Agent that it has, independently and without reliance upon the
Administrative Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Loan Parties and made its own decision to
make its Loans hereunder and enter into this Agreement. Each Bank also
represents that it will, independently and without reliance upon the
Administrative Agent 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 analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties. Except
for notices, reports and other documents expressly required to be furnished to
the Banks by the Administrative Agent hereunder, the Administrative Agent shall
not have any duty or responsibility to provide any Bank with any credit or
other information concerning the business, operations, property, condition
(financial or otherwise), prospects or creditworthiness of the Loan Parties
which may come into the possession of the Administrative Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.
<PAGE>
11.7 Indemnification. The Banks agree to indemnify the
Administrative Agent in its capacity as such (to the extent not reimbursed by
the Loan Parties and without limiting the obligation of the Parent, the Company
and any other Borrower to do so), ratably according to the respective amounts
of their Commitments as in effect on the date on which the claim for indemnity
by the Administrative Agent is sought, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at any
time (including, without limitation, at any time following the payment of the
Notes) be imposed on, incurred by or asserted against the Administrative Agent
in any way relating to or arising out of this Agreement, any of the other Loan
Documents or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by the Administrative Agent under or in connection with any of the foregoing;
provided that no Bank shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting solely from the
Administrative Agent's gross negligence or willful misconduct. The agreements
in this subsection shall survive the payment of the Notes and all other amounts
payable hereunder.
11.8 Administrative Agent in Its Individual Capacity. The
Administrative Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Parent, the Company or
any other Borrower as though the Administrative Agent were not the
Administrative Agent hereunder and under the other Loan Documents. With respect
to its Loans made or renewed by it and any Note issued to it, the
Administrative Agent shall have the same rights and powers under this Agreement
and the other Loan Documents as any Bank and may exercise the same as though it
were not the Administrative Agent, and the terms "Bank" and "Banks" shall
include the Administrative Agent in its individual capacity.
11.9 Successor Administrative Agent. The Administrative Agent
may resign as Administrative Agent upon 10 days' notice to the Banks. If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents, then the Majority Banks shall appoint from among
the Banks a successor agent for the Banks, which successor agent shall be
approved by the Company, whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon its
appointment, and the former Administrative Agent's rights, powers and duties as
Administrative Agent shall be terminated, without any other or further act or
deed on the part of such former Administrative Agent or any of the parties to
this Agreement or any holders of the Notes. After any retiring Administrative
Agent's resignation as Administrative Agent, the provisions of this subsection
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this Agreement and the other Loan
Documents.
11.10 Co-Agents. None of the Co-Agents shall have any rights
or obligations under this Agreement except in its capacity as a Bank hereunder.
<PAGE>
SECTION 12. GUARANTEES
12.1 Parent Guarantee. The Parent hereby unconditionally and
irrevocably guarantees to the Administrative Agent and the Banks the prompt and
complete payment and performance by each of the Borrowers when due (whether at
the stated maturity, by acceleration or otherwise) of the Obligations owing to
the Administrative Agent and the Banks by such Borrowers. This guarantee (the
"Parent Guarantee") shall remain in full force and effect until the Obligations
of each of the Borrowers are indefeasibly paid in full, notwithstanding that
from time to time prior thereto any Borrower may be free from any Obligations.
The Parent agrees that whenever, at any time, or from time to time, it shall
make any payment to the Administrative Agent or any Bank on account of its
liability under this Parent Guarantee, it will notify the Administrative Agent
and such Bank in writing that such payment is made under this Parent Guarantee
for such purpose. No payment or payments made by any Borrower or any other
Person or received or collected by the Administrative Agent or any Bank from
any Borrower or any other Person by virtue of any action or proceeding or any
offset or appropriation or application, at any time or from time to time, in
reduction of or in payment of the Obligations of such Borrower shall be deemed
to modify, reduce, release or otherwise affect the liability of the Parent
under this Parent Guarantee, which shall remain obligated under this Parent
Guarantee, notwithstanding any such payment or payments until the Obligations
are paid in full.
12.2 Company Guarantee. The Company hereby unconditionally
and irrevocably guarantees to the Administrative Agent and the Banks, the
prompt and complete payment and performance by each of the other Borrowers when
due (whether at the stated maturity, by acceleration or otherwise) of the
Obligations owing to the Administrative Agent and the Banks by such Borrowers.
This guarantee (the "Company Guarantee") shall remain in full force and effect
until the Obligations of each such Borrower are indefeasibly paid in full,
notwithstanding that from time to time prior thereto any such Borrower may be
free from any Obligations. The Company agrees that whenever, at any time, or
from time to time, it shall make any payment to the Administrative Agent or any
Bank on account of its liability under this Company Guarantee, it will notify
the Administrative Agent and such Bank in writing that such payment is made
under this Company Guarantee for such purpose. No payment or payments made by
any such Borrower or any other Person or received or collected by the
Administrative Agent or any Bank from any such Borrower or any other Person by
virtue of any action or proceeding or any offset or appropriation or
application, at any time or from time to time, in reduction of or in payment of
the Obligations of such Borrowers shall be deemed to modify, reduce, release or
otherwise affect the liability of the Company under this Company Guarantee,
which shall remain obligated under this Company Guarantee, notwithstanding any
such payment or payments until the Obligations of such Borrowers are paid in
full.
12.3 No Subrogation, Contribution, Reimbursement or
Indemnity. Notwithstanding anything to the contrary in the Parent Guarantee and
the Company Guarantee (together, the "Guarantees", each a "Guarantee"), the
Parent and the Company (together, the "Guaranteeing Parties," each a
"Guaranteeing Party") hereby irrevocably waives all rights which may have
arisen in connection with its Guarantee to be subrogated to any of the rights
(whether contractual, under the Bankruptcy Code, including Section 509 thereof,
under common law or otherwise) of the Administrative Agent or any Bank against
the Company or any other
<PAGE>
Borrowers (together, the "Guaranteed Parties", each a "Guaranteed Party") for
the payment of the Obligations. Each Guaranteeing Party hereby further
irrevocably waives all contractual, common law, statutory or other rights of
reimbursement, contribution, exoneration or indemnity (or any similar right)
from or against any Guaranteed Party or Parties or any other Person which may
have arisen in connection with its Guarantee. So long as the Obligations remain
outstanding, if any amount shall be paid by or on behalf of any Guaranteed
Party to the Guaranteeing Party on account of any of the rights waived in this
subsection, such amount shall be held by such Guaranteeing Party in trust,
segregated from other funds of such Guaranteeing Party, and shall, forthwith
upon receipt by such Guaranteeing Party, be turned over to the Administrative
Agent in the exact form received by such Guaranteeing Party (duly endorsed by
such Guaranteeing Party to the Administrative Agent, if required), to be
applied against the Obligations of such Guaranteed Party or Parties, whether
matured or unmatured, in such order as the Administrative Agent may determine.
The provisions of this subsection as they apply to each of the Guaranteeing
Parties shall survive the payment in full of the Obligations of its Guaranteed
Party or Parties.
12.4 Amendments, etc., with respect to the Obligations. Each
Guaranteeing Party shall remain obligated under its Guarantee notwithstanding
that, without any reservation of rights against such Guaranteeing Party, and
without notice to or further assent by such Guaranteeing Party, any demand for
payment of any of the Obligations made by the Administrative Agent or any Bank
may be rescinded by the Administrative Agent or such Bank, and any of the
Obligations continued, and the Obligations, or the liability of any other party
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised,
waived, surrendered or released by the Administrative Agent or any Bank, and
this Agreement, the Notes and the other Loan Documents may be amended,
modified, supplemented or terminated, in whole or in part, as the
Administrative Agent or the Banks (or the Majority Banks, as the case may be)
may deem advisable from time to time in accordance with the provisions of
subsection 13.1(a), and any collateral security, guarantee or right of set-off
at any time held by the Administrative Agent or any Bank for the payment of the
Obligations may be sold, exchanged, waived, surrendered or released. Neither
the Administrative Agent nor any Bank shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the
Obligations or for the obligations of any Guaranteeing Party under its
Guarantee or any property subject thereto.
12.5 Guarantee Absolute and Unconditional. Each Guaranteeing
Party waives any and all notice of the creation, renewal, extension or accrual
of any of the Obligations and notice of or proof of reliance by the
Administrative Agent or any Bank upon its Guarantee or acceptance of its
Guarantee; the Obligations, and any of them, shall conclusively be deemed to
have been created, contracted or incurred in reliance upon the Guarantees; and
all dealings between the Borrowers and the Parent, on the one hand, and the
Administrative Agent and the Banks, on the other, shall likewise be
conclusively presumed to have been had or consummated in reliance upon the
Guarantees. Each Guaranteeing Party waives diligence, presentment, protest,
notice of intent to accelerate, notice of acceleration, demand for payment and
notice of default or nonpayment to or upon any Guaranteed Party or such
Guaranteeing Party with respect to the Obligations. The Guarantees shall be
construed as a continuing, absolute and
<PAGE>
unconditional guarantee of payment without regard to (a) the validity or
enforceability of this Agreement, any Note, any other Loan Document, any of the
Obligations or any collateral security therefor or guarantee or right of
set-off with respect thereto at any time or from time to time held by the
Administrative Agent or any Bank, (b) any defense, offset or counterclaim
(other than a defense of payment or performance) which may at any time be
available to or be asserted by any of the Guaranteed Parties against the
Administrative Agent or any Bank or (c) any other circumstance whatsoever (with
or without notice to or knowledge of any of the Guaranteed Parties or such
Guaranteeing Party) which constitutes, or might be construed to constitute, an
equitable or legal discharge of any of the Guaranteed Parties for the
Obligations of such Guaranteed Party, or of such Guaranteeing Party under its
Guarantee, in bankruptcy or in any other instance. When the Administrative
Agent is pursuing its rights and remedies hereunder against any Guaranteeing
Party, the Administrative Agent or any Bank may, but shall be under no
obligation to, pursue such rights and remedies as it may have against its
Guaranteed Party or any other Person or against any collateral security or
guarantee for the Obligations or any right of offset with respect thereto, and
any failure by the Administrative Agent or any Bank to pursue such other rights
or remedies or to collect any payments from such Guaranteed Party or such other
Person or to realize upon any such collateral security or guarantee or to
exercise such right of offset or any release of such Guaranteed Party or such
other Person or of any such collateral security, guarantee or right of offset,
shall not relieve such Guaranteeing Party of any liability under its Guarantee,
and shall not impair or affect the rights and remedies, whether express,
implied or available as a matter of law, of the Administrative Agent and the
Banks against such Guaranteeing Party.
12.6 Reinstatement. Each Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Obligations of any Guaranteed Party thereunder is
rescinded or must otherwise be restored or returned by the Administrative Agent
or any Bank upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of such Guaranteed Party or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, such Guaranteed Party or any substantial part of any of its
property, or otherwise, all as though such payments had not been made.
12.7 Payments. Each Guaranteeing Party hereby agrees that the
Obligations will be paid to the Administrative Agent for the benefit of the
Administrative Agent and the Banks, as the case may be, without set-off or
counterclaim in Dollars or Alternative Currency, as appropriate, in immediately
available funds at the office of the Administrative Agent, c/o Loan and Agency
Services Group (Clearing Account No. 144810547) located at One Chase Manhattan
Plaza, 8th Floor, New York, New York 10081.
SECTION 13. MISCELLANEOUS
13.1 Amendments and Waivers; Replacement of Banks. (a)
Neither this Agreement, any Note, any other Loan Document, nor any terms hereof
or thereof may be amended, supplemented or modified except in accordance with
the provisions of this subsection. With the written consent of the Majority
Banks, the Administrative Agent, the Parent and the
<PAGE>
Company may, from time to time, enter into written amendments, supplements or
modifications hereto and to the Notes, if any, and the other Loan Documents for
the purpose of adding any provisions to this Agreement or the Notes, if any, or
the other Loan Documents or changing in any manner the rights of the Banks, the
Parent or of the Borrowers hereunder or thereunder or waiving, on such terms
and conditions as the Administrative Agent may specify in such instrument, any
of the requirements of this Agreement or the Notes, if any, or the other Loan
Documents or any Default or Event of Default and its consequences; provided,
however, that no such waiver and no such amendment, supplement or modification
shall (i) reduce the amount or extend the maturity of any Loan or Note or any
installment thereof, or reduce the rate or extend the time of payment of
interest thereon, or reduce any fee payable to any Bank hereunder, or change
the amount of any Bank's Commitment, in each case without the consent of the
Bank affected thereby, or (ii) amend, modify or waive any provision of this
subsection or reduce the percentage specified in the definition of Majority
Banks, or consent to the assignment or transfer by the Parent or any Borrower
of any of its rights and obligations under this Agreement and the other Loan
Documents, or amend, modify or waive any provision of Section 12, in each case
without the written consent of all the Banks, or (iii) amend, modify or waive
any provision of Section 11 without the written consent of the then
Administrative Agent. Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Banks and shall be binding upon
the Parent, the Borrowers, the Banks, the Administrative Agent, all future
holders of the Notes, if any, and all future obligees under the Loans. In the
case of any waiver, the Parent, the Borrowers, the Banks and the Administrative
Agent shall be restored to their former position and rights hereunder and under
the outstanding Loans or Notes, if any, and any other Loan Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
(b) Notwithstanding anything to the contrary contained in
subsection 13.1(a), so long as no Default or Event of Default has occurred and
is continuing the Borrowers and the Parent shall be permitted in their
discretion (but, if any Revolving Credit Loans are then outstanding, with the
consent of the Majority Banks (which consent shall not be unreasonably
withheld)) to amend this Agreement to replace one or more Banks without the
consent of any Bank to be so replaced pursuant to this subsection 13.1(b) (a
"Replaced Bank") and to provide for (w) the termination of the Commitments of
such Replaced Bank, (x) the addition to this Agreement of one or more other
banking institutions, or an increase in the Commitments of one or more of the
other Banks (with the consent of such other Banks), so that the total
Commitments after giving effect to such amendment shall be in the same amount
as the total Commitments immediately before giving effect to such amendment,
(y) if any Loans are outstanding at the time of such amendment, the making of
such additional Loans by such new financial institutions or other Bank or
Banks, as the case may be, as may be necessary to repay in full the outstanding
Loans of such Replaced Bank together with interest thereon and all accrued fees
and indemnities with respect thereto immediately before giving effect to such
amendment and (z) such other modifications to this Agreement as may be
necessary to effect the replacement of such Replaced Bank.
(c) Notwithstanding anything to the contrary contained in
paragraph (a) or (b) of this subsection 13.1, if as a result of a change in any
Requirement of Law after the date hereof
<PAGE>
any Borrower or the Parent has become obligated to, or reasonably believes that
it will become obligated to pay to any Bank any increased amount pursuant to
subsection 5.11, 5.12 or 5.13, and such Bank shall not have waived payment of
such increased amounts, then the Borrowers and the Parent may, if no Default or
Event of Default has occurred and is continuing and payment of any such
increased amounts as have become due has been made or appropriately provided
for, upon five Business Days' notice to the Administrative Agent and such Bank,
amend this Agreement, without the consent of any Bank or the Administrative
Agent, to replace any one or more of the Banks to which such increased amounts
have become payable or would become payable and to provide for the matters
referred to in clauses (w), (x), (y) and (z) of subsection 13.1(b), and such
replaced Bank or Banks shall be deemed to be Replaced Banks for purposes of
such clauses.
13.2 Notices. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made on receipt, addressed as follows in the case of
the Company, the Parent and the Administrative Agent, as set forth in paragraph
5 of the Notice of Additional Borrower relating to any Borrower other than the
Company, in the case of such other Borrower, and as set forth in Schedule I in
the case of the other parties hereto, or to such other address as may be
hereafter notified by the respective parties hereto and any future holders of
the Notes, if any, or any future obligees under the Loans:
The Company: W. R. Grace & Co.-Conn
One Town Center Road
Boca Raton, Florida 33486-1010
Attention: Treasurer
Telecopy: (561) 362-1944
Telephone: (561) 362-1949
The Parent: W. R. Grace & Co.
One Town Center Road
Boca Raton, Florida 33486-1010
Attention: Treasurer
Telecopy: (561) 362-1944
Telephone: (561) 362-1949
<PAGE>
The
Administrative
Agent: The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: Mary Elisabeth Swerz
Telecopy: (212) 270-4142
Telephone: (212) 270-7939
With a copy
to: Loan and Agency Services Group
One Chase Manhattan Plaza, 8th Floor
New York, New York 10081
Attention: Margaret Swales
Telecopy: (212) 552-5662
Telephone: (212) 552-7472
The Arranger: Chase Securities Inc.
270 Park Avenue
New York, New York 10017
Attention: Michael J. McGovern
Telecopy: (212) 270-3906
Telephone: (212) 270-1063
13.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Administrative Agent or any
Bank, any right, remedy, power or privilege hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
13.4 Survival of Representations and Warranties. All
representations and warranties made hereunder and in any document, certificate
or statement delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement and the Notes, if any.
13.5 Payment of Expenses and Taxes. The Company agrees (a) to
pay or reimburse the Administrative Agent for all its out-of-pocket costs and
expenses incurred in connection with the development, preparation and execution
of, and any amendment, supplement or modification to, this Agreement and any
Notes and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of
the transactions contemplated hereby and thereby, including, without
limitation, the fees and disbursements of counsel to the Administrative Agent,
(b) to pay or reimburse each Bank and the Administrative Agent for all its
costs and expenses incurred in connection with the enforcement or preservation
of any rights under this Agreement, any Notes,
<PAGE>
the other Loan Documents and any such other documents, including, without
limitation, fees and disbursements of counsel to the Administrative Agent and
to the several Banks, and (c) to pay, indemnify, and hold each Bank and the
Administrative Agent harmless from, any and all recording and filing fees and
any and all liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other transactional taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, any Notes, the other Loan Documents and any such
other documents, and (d) to pay, indemnify, and hold each Bank and the
Administrative Agent harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery and performance by the Loan Parties, and administration and
enforcement by the Administrative Agent and the Banks of this Agreement, any
Notes and the other Loan Documents and any such other documents (all the
foregoing, collectively, the "indemnified liabilities"), provided, that the
Company shall have no obligation hereunder to the Administrative Agent or any
Bank with respect to indemnified liabilities arising from (i) the gross
negligence or willful misconduct of the Administrative Agent or any such Bank,
(ii) legal proceedings commenced against the Administrative Agent or any such
Bank by any security holder or creditor thereof arising out of and based upon
rights afforded any such security holder or creditor solely in its capacity as
such, or (iii) legal proceedings commenced against the Administrative Agent or
any such Bank by any other Bank or by any Transferee (as defined in subsection
13.6). The agreements in this subsection shall survive repayment of the Loans
or Notes, if any, and all other amounts payable hereunder.
13.6 Successors and Assigns; Participations; Purchasing
Banks.
(a) This Agreement shall be binding upon and inure to the
benefit of the Parent, the Borrowers, the Banks, the Administrative Agent, all
future holders of the Notes, if any, all future obligees under the Loans and
their respective successors and assigns, except that neither the Parent nor any
Borrower may assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of each Bank.
(b) Any Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to one
or more banks or other entities ("Participants") participating interests in any
Loan owing to such Bank, any Note held by such Bank, any Commitments of such
Bank or any other interest of such Bank hereunder and under the other Loan
Documents. In the event of any such sale by a Bank of participating interests
to a Participant, such Bank's obligations under this Agreement to the other
parties to this Agreement shall remain unchanged, such Bank shall remain solely
responsible for the performance thereof, such Bank shall remain the holder of
any such Note, if any, and the obligee under any such Loan for all purposes
under this Agreement and the other Loan Documents, and the Parent, the
Borrowers and the Administrative Agent shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and obligations
under this Agreement and the other Loan Documents. The Parent and each of the
Borrowers agrees that if amounts outstanding under this Agreement and the Loans
or the Notes, if any, are due or unpaid, or shall have been
<PAGE>
declared or shall have become due and payable upon the occurrence of an Event
of Default, each Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this Agreement and
any Loan or Note to the same extent as if the amount of its participating
interest were owing directly to it as a Bank under this Agreement or any Loan
or Note, provided that such Participant shall only be entitled to such right of
set-off if it shall have agreed in the agreement pursuant to which it shall
have acquired its participating interest to share with the Banks the proceeds
thereof as provided in subsection 13.7. The Parent and each of the Borrowers
also agrees that each Participant shall be entitled to the benefits of
subsections 5.11, 5.12, 5.13 and 13.5 with respect to its participation in the
Commitments and the Loans outstanding from time to time; provided, that no
Participant shall be entitled to receive any greater amount pursuant to such
subsections than the transferor Bank would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Bank
to such Participant had no such transfer occurred.
(c) Any Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to any
Bank or any affiliate thereof and, with the consent of the Company and upon
notice to the Administrative Agent, to one or more additional banks or
financial institutions ("Purchasing Banks") all or any part of its rights and
obligations under this Agreement and the Loans or the Notes, if any, pursuant
to a Commitment Transfer Supplement, substantially in the form of Exhibit H,
executed by such Purchasing Bank, such transferor Bank (and, in the case of a
Purchasing Bank that is not then a Bank or an affiliate thereof, by the Company
and the Administrative Agent) and delivered to the Administrative Agent for its
acceptance and recording in the Register. Upon such execution, delivery,
acceptance and recording, from and after the Transfer Effective Date determined
pursuant to such Commitment Transfer Supplement, (x) the Purchasing Bank
thereunder shall be a party hereto and, to the extent provided in such
Commitment Transfer Supplement, have the rights and obligations of a Bank
hereunder with a Commitment as set forth therein, and (y) the transferor Bank
thereunder shall, to the extent provided in such Commitment Transfer
Supplement, be released from its obligations under this Agreement (and, in the
case of a Commitment Transfer Supplement covering all or the remaining portion
of a transferor Bank's rights and obligations under this Agreement, such
transferor Bank shall cease to be a party hereto). Such Commitment Transfer
Supplement shall be deemed to amend this Agreement to the extent, and only to
the extent, necessary to reflect the addition of such Purchasing Bank and the
resulting adjustment of Commitment Percentages arising from the purchase by
such Purchasing Bank of all or a portion of the rights and obligations of such
transferor Bank under this Agreement and the Loan or the Notes, if any. On or
prior to the Transfer Effective Date determined pursuant to such Commitment
Transfer Supplement, the relevant Borrower, at its own expense, if the
Purchasing Bank so requests, shall execute and deliver to the Administrative
Agent in exchange for any surrendered Revolving Credit Note and Bid Loan Note a
new Revolving Credit Note and Bid Loan Note to the order of such Purchasing
Bank in an amount equal to the Commitment assumed by it pursuant to such
Commitment Transfer Supplement and, if the transferor Bank has retained a
Commitment hereunder, new Notes to the order of the transferor Bank in an
amount equal to the Commitment retained by it hereunder. Such new Notes shall
be dated the Closing Date and shall otherwise be in the form of the Notes
replaced thereby. Any Notes surrendered by the transferor Bank shall be
returned by the Administrative Agent to the Company marked "cancelled".
<PAGE>
(d) The Administrative Agent shall maintain at its address
referred to in subsection 13.2 a copy of each Commitment Transfer Supplement
delivered to it and a register (the "Register") for the recordation of the
names and addresses of the Banks and the Commitment of, and principal amount of
the Loans owing to, each Bank from time to time. The entries in the Register
shall be conclusive, in the absence of manifest error, and the Parent, the
Borrowers, the Administrative Agent and the Banks may treat each Person whose
name is recorded in the Register as the owner of the Loan recorded therein for
all purposes of this Agreement. The Register shall be available for inspection
by the Parent, the Borrowers or any Bank at any reasonable time and from time
to time upon reasonable prior notice.
(e) Upon its receipt of a Commitment Transfer Supplement
executed by a transferor Bank and Purchasing Bank (and, in the case of a
Purchasing Bank that is not then a Bank or an affiliate thereof, by the Company
and the Administrative Agent) together with payment to the Administrative Agent
of a registration and processing fee of $3,500, the Administrative Agent shall
(i) promptly accept such Commitment Transfer Supplement (ii) on the Transfer
Effective Date determined pursuant thereto record the information contained
therein in the Register and give notice of such acceptance and recordation to
the Banks and the Company.
(f) The Parent and the Borrowers authorizes each Bank to
disclose to any Participant or Purchasing Bank (each, a "Transferee") and any
prospective Transferee any and all financial information in such Bank's
possession concerning such Borrower and its affiliates which has been delivered
to such Bank by or on behalf of the Parent, the Company or such Borrower
pursuant to this Agreement or which has been delivered to such Bank by or on
behalf of the Parent, the Company or such Borrower in connection with such
Bank's credit evaluation of such Borrower and its affiliates prior to becoming
a party to this Agreement.
(g) If, pursuant to this subsection, any interest in this
Agreement or any Note is transferred to any Transferee which is organized under
the laws of any jurisdiction other than the United States or any state thereof,
the transferor Bank shall cause such Transferee, concurrently with the
effectiveness of such transfer, (i) to represent to the transferor Bank (for
the benefit of the transferor Bank, the Administrative Agent, the Parent and
the Borrowers) that under applicable law and treaties no taxes will be required
to be withheld by the Administrative Agent, the Parent, the Borrowers or the
transferor Bank with respect to any payments to be made to such Transferee in
respect of the Loans, (ii) to furnish to the transferor Bank (and, in the case
of any Purchasing Bank registered in the Register, the Administrative Agent,
the Parent and the Company) either U.S. Internal Revenue Service Form 4224 or
U.S. Internal Revenue Service Form 1001 (wherein such Transferee claims
entitlement to complete exemption from U.S. federal withholding tax on all
interest payments hereunder) and (iii) to agree (for the benefit of the
transferor Bank, the Administrative Agent, the Parent and the Company) to
provide the transferor Bank (and, in the case of any Purchasing Bank registered
in the Register, the Administrative Agent, the Parent and the Company) a new
Form 4224 or Form 1001 upon the expiration or obsolescence of any previously
delivered form and comparable statements in accordance with applicable U.S.
laws and regulations and amendments duly executed and completed by such
Transferee, and to comply from time to time with all applicable U.S. laws and
regulations with regard to such withholding tax exemption.
<PAGE>
(h) Nothing herein shall prohibit any Bank from pledging or
assigning any Note to any Federal Reserve Bank in accordance with applicable
law.
13.7 Adjustments; Set-off.
(a) If any Bank (a "benefitted Bank") shall at any time
receive any payment of all or part of its Revolving Credit Loans, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 10(f), or otherwise), in a greater proportion than any
such payment to or collateral received by any other Bank, if any, in respect of
such other Bank's Revolving Credit Loans, or interest thereon, such benefitted
Bank shall purchase for cash from the other Banks such portion of each such
other Bank's Loan, or shall provide such other Banks with the benefits of any
such collateral, or the proceeds thereof, as shall be necessary to cause such
benefitted Bank to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Banks; provided, however, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
benefitted Bank, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest. Each
Borrower agrees that each Bank so purchasing a portion of another Bank's Loan
may exercise all rights of payment (including, without limitation, rights of
set-off) with respect to such portion as fully as if such Bank were the direct
holder of such portion.
(b) In addition to any rights and remedies of the Banks
provided by law, each Bank shall have the right, without prior notice to the
Parent and the Borrowers, any such notice being expressly waived by the Parent
and the Borrowers, to the extent permitted by applicable law, upon any amount
not being paid when due and payable by any Borrower hereunder or under the
Notes (whether at the stated maturity, by acceleration or otherwise) to set-off
and appropriate and apply against such amount any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct
or indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Bank or any branch or agency thereof to or for the credit or the
account of the Parent or such Borrower. Each Bank agrees promptly to notify the
Parent, the Borrowers and the Administrative Agent after any such set-off and
application made by such Bank, provided that the failure to give such notice
shall not affect the validity of such set-off and application.
13.8 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. A set of the copies of this Agreement signed by all
the parties shall be lodged with the Parent, the Company and the Administrative
Agent.
13.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
<PAGE>
13.10 Integration. This Agreement represents the agreement of
the Parent, each Borrower, the Administrative Agent and the Banks with respect
to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Administrative Agent or any Bank relative
to subject matter hereof not expressly set forth or referred to herein, in the
other Loan Documents or in any documentation entered into pursuant to
subsection 3.1(b).
13.11 GOVERNING LAW. THIS AGREEMENT (INCLUDING SECTION 12)
AND THE NOTES AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
13.12 Submission to Jurisdiction; Waivers. (a) The Parent,
each Borrower, the Administrative Agent and the Banks hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal
action or proceeding relating to this Agreement and the other Loan
Documents to which it is a party, or for recognition and enforcement
of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the Courts of the State of New York sitting in New
York County, the courts of the United States of America for the
Southern District of New York, and the appellate courts from any
thereof;
(ii) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(iii) agrees that service of process in any such action
or proceeding may be effected by mailing a copy thereof by registered
or certified mail (or any substantially similar form of mail), postage
prepaid, to the Parent or such Borrower at its address set forth in
subsection 13.2 or, with respect to Borrowers other than the Company,
the Notice of Additional Borrower relating to such Borrower or at such
other address of which the Administrative Agent shall have been
notified pursuant thereto;
(iv) agrees that nothing herein shall affect the right
to effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and
(v) waives, to the maximum extent not prohibited by
law, any right it may have to claim or recover in any legal action or
proceeding referred to in this subsection any special, exemplary,
punitive or consequential damages.
(b) Each Borrower other than the Company hereby appoints and
empowers the Parent and the Company, 1114 Avenue of the Americas, New York, New
York 10036-7794, Attention: Treasurer, as its authorized agent (the "Process
Administrative Agent") to receive on behalf of such Borrower service of any and
all process and documents in any such legal action or
<PAGE>
proceeding brought in a New York state or federal court sitting in New York
City. It is understood that a copy of such process served on the Process
Administrative Agent will be promptly hand delivered or mailed (by registered
or certified airmail if available), postage prepaid, to such Borrower at its
address set forth in paragraph 5 of such Borrower's Notice of Additional
Borrower, but the failure of such Borrower to receive such copy shall not
affect in any way the service of such process on the Process Administrative
Agent. If the Process Administrative Agent shall refuse or be prevented from
acting as agent, notice thereof shall immediately be given by such Borrowers to
the Administrative Agent by registered or certified airmail (if available),
postage prepaid, and such Borrowers agree promptly to designate another agent
in New York City, satisfactory to the Administrative Agent, to serve in place
of the Process Administrative Agent and deliver to the Administrative Agent
written evidence of such substitute agent's acceptance of such designation.
13.13 Acknowledgments. The Parent, each Borrower, the
Administrative Agent and the Banks hereby acknowledge that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the Notes and the other
Loan Documents;
(b) neither the Administrative Agent nor any Bank has any
fiduciary relationship with or duty to the Parent or such Borrower, as
the case may be, arising out of or in connection with this Agreement
or any of the other Loan Documents, and the relationship between
Administrative Agent and Banks, on one hand, and the Parent and the
Borrowers, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and
(c) as to any matter relating to any Loan Documents, no joint
venture exists among the Banks or among the Parent, the Borrowers and
the Banks.
13.14 WAIVERS OF JURY TRIAL. THE PARENT, THE BORROWERS, THE
ADMINISTRATIVE AGENT AND THE BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
THE NOTES OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
13.15 Additional Borrowers. (a) Any Subsidiary of the Company
shall have the right to become a "Borrower" hereunder, and to borrow hereunder
subject to the terms and conditions hereof applicable to a Borrower and to the
following additional conditions:
(i) the Company shall deliver a notice in
substantially the form of Exhibit I hereto (a "Notice of Additional
Borrower") signed by such Subsidiary and countersigned by the Parent
and the Company to the Administrative Agent and the Banks stating that
such Subsidiary desires to become a "Borrower" under this Agreement
and agrees to be bound by the terms hereof. From the time of receipt
of such Notice of Additional Borrower by the Administrative Agent and
the Banks and subject to the satisfaction of each condition precedent
contained in such Notice of Additional Borrower, such
<PAGE>
Subsidiary shall be a "Borrower" hereunder with all of the rights and
obligations of a Borrower hereunder; provided, however, that the
Company may revoke a Notice of Additional Borrower with respect to any
Subsidiary (other than the Company) upon five Business Days' written
notice to the Administrative Agent, so long as such Borrower has no
Obligations outstanding. No Notice of Additional Borrower relating to
a Subsidiary may be revoked as to amounts owed by such Subsidiary to
the Banks under this Agreement or any Notes or when an irrevocable
notice pursuant to subsection 2.3, or a notice of acceptance pursuant
to subsection 3.1 or 4.2, has been given by such Subsidiary as a
Borrower and is effective;
(ii) if such Subsidiary is a Foreign Subsidiary, if
reasonably requested by the Majority Banks, such Notice of Additional
Borrower shall be accompanied by an opinion of counsel for such
Subsidiary as specified in paragraph 4(a)(ii) of such Notice of
Additional Borrower;
(iii) and the other conditions set forth in such Notice
of Additional Borrower shall have been satisfied (including the
representations and warranties contained therein being true and
correct as of the date thereof).
(b) Promptly, upon receipt of any Notice of Additional
Borrower by the Administrative Agent, the Administrative Agent shall notify
each Bank thereof, and shall deliver to each Bank copies of each document
delivered to the Administrative Agent pursuant to such Notice of Additional
Borrower.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered in New York, New York by their
proper and duly authorized officers as of the day and year first above written.
W. R. GRACE & CO.-CONN.
By:
-----------------------------------
Title:
W. R. GRACE & CO.
By:
-----------------------------------
Title:
THE CHASE MANHATTAN BANK, as
Administrative Agent and as a Bank
By:
-----------------------------------
Title:
CHASE SECURITIES INC., as Arranger
By:
-----------------------------------
Title:
<PAGE>
FIRST UNION NATIONAL BANK OF
FLORIDA
By:
-----------------------------------
Title:
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By:
-----------------------------------
Title:
NATIONSBANK, N.A.
By:
-----------------------------------
Title:
ABN AMRO BANK N.V.
By:
-----------------------------------
Title:
By:
-----------------------------------
Title:
THE BANK OF NEW YORK
By:
-----------------------------------
Title:
<PAGE>
THE BANK OF NOVA SCOTIA
By:
-----------------------------------
Title:
BARCLAYS BANK PLC
By:
-----------------------------------
Title:
CITIBANK, N.A.
By:
-----------------------------------
Title:
CREDIT SUISSE FIRST BOSTON
By:
-----------------------------------
Title:
By:
-----------------------------------
Title:
DRESDNER BANK AG, NEW YORK
AND GRAND CAYMAN BRANCHES
By:
-----------------------------------
Title:
By:
-----------------------------------
Title:
<PAGE>
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By:
-----------------------------------
Title:
COMMERZBANK AG, ATLANTA
AGENCY
By:
-----------------------------------
By: Harry P. Yergey
Title: SVP & Manager
By:
-----------------------------------
By: Brian J. Campbell
Title: VP
CREDIT LYONNAIS ATLANTA
AGENCY
By:
-----------------------------------
Title:
MARINE MIDLAND BANK
By:
-----------------------------------
Title:
<PAGE>
NORTHERN TRUST COMPANY
(CHICAGO)
By:
-----------------------------------
Title:
WACHOVIA BANK (ATLANTA)
By:
-----------------------------------
Title:
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SCHEDULE I
Commitments
- ---------------------------------------------
BANK COMMITMENT
- ---- ----------
The Chase Manhattan Bank $21,470,588.24
First Union National Bank of Florida $21,470,588.24
NationsBank, N.A. $21,470,588.24
Bank of America National
Trust and Savings Assoc. $21,470,588.24
ABN AMRO Bank N.V., New York Branch $14,705,882.35
The Bank of New York $14,705,882.35
The Bank of Nova Scotia $14,705,882.35
Barclays Bank PLC $14,705,882.35
Citibank, N.A. $14,705,882.35
Credit Suisse First Boston $14,705,882.35
Dresdner Bank AG, New York and
Grand Cayman Branches $14,705,882.35
Morgan Guaranty Trust Company
of New York $14,705,882.35
Commerzbank AG, Atlanta Agency $10,588,235.29
Credit Lyonnais Atlanta Agency $10,588,235.29
Marine Midland Bank $10,588,235.29
Northern Trust Company (Chicago) $7,352,941.18
Wachovia Bank (Atlanta) $7,352,941.18
TOTAL $250,000,000
============
</TABLE>
i
<PAGE>
EXECUTION COPY
- -------------------------------------------------------------------------------
364-DAY CREDIT AGREEMENT
DATED AS OF
MAY 14, 1998
AMONG
W. R. GRACE & CO.-CONN.,
W. R. GRACE & CO.,
The Banks Party Hereto,
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
and
NATIONSBANK, N.A.,
as Co-Documentation Agents
THE CHASE MANHATTAN BANK
as Administrative Agent,
and
CHASE SECURITIES INC.,
as Arranger
- -------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
SECTION 1. DEFINITIONS......................................................................................... 1
1.1 Defined Terms...................................................................................... 1
1.2 Other Definitional Provisions...................................................................... 13
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS..................................................................... 13
2.1 Commitments........................................................................................ 13
2.2 Obligations of Borrowers; Revolving Credit Notes................................................... 14
2.3 Procedure for Revolving Credit Borrowing........................................................... 15
2.4 Extension of Termination Date...................................................................... 15
SECTION 3. BILATERAL OPTION LOANS.............................................................................. 17
3.1 Requests for Offers................................................................................ 17
3.2 Reports to Administrative Agent; Determination of Dollar Equivalents............................... 17
3.3 Judgment Currency.................................................................................. 18
3.4 Repayments......................................................................................... 18
SECTION 4. BID LOANS........................................................................................... 19
4.1 The Bid Loans...................................................................................... 19
4.2 Procedure for Bid Loans............................................................................ 19
4.3 Repayments......................................................................................... 20
4.4 Interest on Bid Loans.............................................................................. 20
4.5 Obligations of Borrowers; Bid Loan Notes........................................................... 21
SECTION 5. LOAN FACILITY COMMON PROVISIONS..................................................................... 22
5.1 Interest Rates and Payment Dates................................................................... 22
5.2 Facility Fee, etc.................................................................................. 22
5.3 Termination or Reduction of Commitments; Change of Control Date.................................... 24
5.4 Prepayments........................................................................................ 25
5.5 Conversion and Continuation Options................................................................ 25
5.6 Minimum Amounts of Eurodollar Tranches............................................................. 26
5.7 Computation of Interest and Fees................................................................... 26
5.8 Inability to Determine Interest Rate............................................................... 26
5.9 Pro Rata Treatment and Payments.................................................................... 27
5.10 Illegality........................................................................................ 28
5.11 Requirements of Law............................................................................... 28
5.12 Taxes ............................................................................................ 30
5.13 Indemnity......................................................................................... 31
SECTION 6. REPRESENTATIONS AND WARRANTIES...................................................................... 31
6.1 Corporate Existence; Compliance with Law........................................................... 31
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6.2 Corporate Power, Authorization; Enforceable Obligations............................................ 32
6.3 No Legal Bar....................................................................................... 32
6.4 No Material Litigation............................................................................. 32
6.5 Ownership of Properties............................................................................ 32
6.6 Financial Condition................................................................................ 33
6.7 Disclosure of Contingent Liabilities............................................................... 33
6.8 ERISA ............................................................................................ 33
6.9 Certain Federal Regulations........................................................................ 33
6.10 No Default........................................................................................ 33
6.11 Taxes ............................................................................................ 34
6.12 Investment Company Act; Other Regulations......................................................... 34
6.13 Purpose of Loans.................................................................................. 34
6.14 Environmental Matters............................................................................. 34
6.15 Principal Subsidiaries............................................................................ 34
6.16 Year 2000......................................................................................... 34
SECTION 7. CONDITIONS PRECEDENT................................................................................ 35
7.1 Conditions to Effectiveness........................................................................ 35
7.2 Conditions to Each Loan............................................................................ 36
SECTION 8. AFFIRMATIVE COVENANTS............................................................................... 37
8.1 Financial Statements............................................................................... 37
8.2 Certificates; Other Information.................................................................... 37
8.3 Payment of Obligations............................................................................. 38
8.4 Conduct of Business and Maintenance of Existence................................................... 38
8.5 Insurance.......................................................................................... 39
8.6 Inspection of Property, Books and Records; Discussions............................................. 39
8.7 Notices............................................................................................ 39
8.8 Environmental Laws................................................................................. 40
8.9 Year 2000 Compliance............................................................................... 40
SECTION 9. NEGATIVE COVENANTS.................................................................................. 40
9.1 Financial Condition Covenants...................................................................... 41
9.2 Limitation on Liens................................................................................ 41
9.3 Limitation on Fundamental Changes.................................................................. 43
9.4 Limitation on Asset Transfers to Foreign Subsidiaries.............................................. 43
9.5 Limitation on Subordinated Debt.................................................................... 43
SECTION 10. EVENTS OF DEFAULT.................................................................................. 43
SECTION 11. THE ADMINISTRATIVE AGENT........................................................................... 46
11.1 Appointment....................................................................................... 46
11.2 Delegation of Duties.............................................................................. 46
11.3 Exculpatory Provisions............................................................................ 46
</TABLE>
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11.4 Reliance by Administrative Agent.................................................................. 46
11.5 Notice of Default................................................................................. 47
11.6 Non-Reliance on Administrative Agent and Other Banks.............................................. 47
11.7 Indemnification................................................................................... 48
11.8 Administrative Agent in Its Individual Capacity................................................... 48
11.9 Successor Administrative Agent.................................................................... 48
11.10 Co-Agents........................................................................................ 48
SECTION 12. GUARANTEES......................................................................................... 49
12.1 Parent Guarantee.................................................................................. 49
12.2 Company Guarantee................................................................................. 49
12.3 No Subrogation, Contribution, Reimbursement or Indemnity.......................................... 49
12.4 Amendments, etc., with respect to the Obligations................................................. 50
12.5 Guarantee Absolute and Unconditional.............................................................. 50
12.6 Reinstatement..................................................................................... 51
12.7 Payments.......................................................................................... 51
SECTION 13. MISCELLANEOUS...................................................................................... 52
13.1 Amendments and Waivers; Replacement of Banks...................................................... 52
13.2 Notices........................................................................................... 53
13.3 No Waiver; Cumulative Remedies.................................................................... 54
13.4 Survival of Representations and Warranties........................................................ 54
13.5 Payment of Expenses and Taxes..................................................................... 54
13.6 Successors and Assigns; Participations; Purchasing Banks.......................................... 55
13.7 Adjustments; Set-off.............................................................................. 58
13.8 Counterparts...................................................................................... 58
13.9 Severability...................................................................................... 59
13.10 Integration...................................................................................... 59
13.11 GOVERNING LAW.................................................................................... 59
13.12 Submission to Jurisdiction; Waivers.............................................................. 59
13.13 Acknowledgments.................................................................................. 60
13.14 WAIVERS OF JURY TRIAL............................................................................ 60
13.15 Additional Borrowers............................................................................. 60
</TABLE>
iii
<PAGE>
SCHEDULES
Schedule I Commitments; Lending Offices and Addresses for
Notices
Schedule II Principal Subsidiaries
EXHIBITS
Exhibit A Form of Revolving Credit Note
Exhibit B Form of Bid Loan Note
Exhibit C Form of Bid Loan Confirmation
Exhibit D Form of Bid Loan Offer
Exhibit E Form of Bid Loan Request
Exhibit F-1 Form of Opinion of Counsel to the Company and the Parent
Exhibit F-2 Form of Opinion of Simpson Thacher & Bartlett
Exhibit G Form of Officer's Certificate
Exhibit H Form of Commitment Transfer Supplement
Exhibit I Form of Notice of Additional Borrower
iv
<PAGE>
Page
364-DAY CREDIT AGREEMENT, dated as of May 14, 1998, among W.
R. GRACE & CO.-CONN., a Connecticut corporation (the "Company"), W. R. GRACE &
CO. (formerly named Grace Specialty Chemicals, Inc.), a Delaware corporation
(the "Parent"), the several banks from time to time parties to this Agreement
(the "Banks"), the co-agents signatories hereto (the "Co-Agents"), BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a [national banking
corporation], and NATIONSBANK, N.A., a national association, as
co-documentation agents (each, in such capacity, a "Co-Documentation Agent"),
THE CHASE MANHATTAN BANK, a New York banking corporation, as administrative
agent for the Banks hereunder (in such capacity, the "Administrative Agent")
and CHASE SECURITIES INC., as arranger (in such capacity, the "Arranger").
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"ABR Loans": Loans the rate of interest applicable to which
is based upon the Alternate Base Rate.
"Additional Bank": as defined in subsection 2.4(b).
"Affiliate": as to any Person, (a) any other Person (other
than a Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person or (b) any
Person who is a director, officer, shareholder or partner (i) of such
Person, (ii) of any Subsidiary of such Person or (iii) of any Person
described in the preceding clause (a). For purposes of this
definition, "control" of a Person means the power, directly or
indirectly, either to (i) vote 10% or more of the securities having
ordinary voting power for the election of directors of such Person or
(ii) direct or cause the direction of the management and policies of
such Person whether by contract or otherwise.
"Aggregate Outstanding Bilateral Option Loans": at any time,
(i) the aggregate outstanding principal amount of all Dollar Bilateral
Loans and (ii) the aggregate Dollar Equivalents at such time with
respect to all outstanding Alternative Currency Bilateral Loans.
"Agreement": this 364-Day Credit Agreement, as the same may
be amended, supplemented or otherwise modified from time to time.
"Alternate Base Rate": for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greater of
(a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. "Prime Rate"
shall mean the rate of interest per annum publicly announced from time
to time by the Administrative Agent as its prime rate in effect at its
principal office in New York
<PAGE>
City. "Federal Funds Effective Rate" shall mean, for any day, the
weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds
brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for
the day of such transactions received by the Administrative Agent from
three federal funds brokers of recognized standing selected by it. If
for any reason the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is
unable to ascertain the Federal Funds Effective Rate, for any reason,
including, the inability or failure of the Administrative Agent to
obtain sufficient quotations in accordance with the terms hereof, the
Alternate Base Rate shall be determined without regard to clause (b)
of the first sentence of this definition until the circumstances
giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal
Funds Effective Rate shall be effective on the effective date of such
change in the Prime Rate or the Federal Funds Effective Rate,
respectively.
"Alternative Currency": any currency other than Dollars which
is freely transferable and convertible into Dollars.
"Alternative Currency Bilateral Loan": a Loan made by a Bank
to any Borrower in an Alternative Currency pursuant to Section 3.
"Applicable Margin": for any day on which the long term
senior unenhanced, unsecured debt of the Company is rated by both S&P
and Moody's, the rate per annum under the caption "Margin" (a "Margin
Rate") set forth below opposite the S&P and Moody's ratings applicable
to such debt on such day (or, if such ratings are set opposite two
different Margin Rates, then the Applicable Margin shall be the lower
of said two Margin Rates):
Margin S&P Moody's
-------------------------------------------------
.450% BB+ or lower Ba1 or lower
.300% BBB- Baa3
.240% BBB Baa2
.210% BBB+ Baa1
.195% A- or higher A3 or higher
provided that if on any day the long term senior unenhanced, unsecured
debt of the Company is rated by only one of either S&P or Moody's, the
Applicable Margin will be determined based on the rating by such
rating agency, and provided, further, that if on any day the long term
senior unenhanced, unsecured debt of the Company is rated by neither
S&P nor Moody's, the Applicable Margin will be determined based on the
rating of such debt by Duff & Phelps, Fitch or another nationally
recognized statistical rating organization agreed to by and among the
Company, the Administrative Agent and the Majority Banks (each, a
<PAGE>
Page
"Substitute Rating Agency") and will be the Margin Rate set forth
above opposite the S&P and Moody's ratings comparable to such
Substitute Rating Agency's rating of such debt on such date, and
provided, further, that if on any day the long term senior unenhanced,
unsecured debt of the Company is rated by none of S&P, Moody's or any
Substitute Rating Agency, the Company, the Administrative Agent and
the Banks will negotiate in good faith to determine an alternative
basis for calculating the Applicable Margin consistent with the table
set forth above and, if agreement on such alternative basis is not
reached within 30 days, the Applicable Margin will be calculated on an
alternative basis determined by the Administrative Agent and the Banks
in their reasonable discretion consistent with the table above, and
until such alternative basis is determined the Applicable Margin will
be the Applicable Margin last determined as provided in the table
above.
"Available Commitment": as to any Bank at any time, an amount
equal to the excess, if any, of (a) the amount of such Bank's
Commitment over (b) the Loan Outstandings of such Bank at such time.
"Bid Loan": each Bid Loan made pursuant to Section 4.
"Bid Loan Banks": Banks which have outstanding Bid Loans or
which are making Bid Loans.
"Bid Loan Confirmation": each confirmation by the Borrower of
its acceptance of Bid Loan Offers, which Bid Loan Confirmation shall
be substantially in the form of Exhibit C.
"Bid Loan Note": as defined in subsection 4.5(c);
collectively, the "Bid Loan Notes".
"Bid Loan Offer": each offer by a Bank to make Bid Loans
pursuant to a Bid Loan Request, which Bid Loan Offer shall contain the
information specified in Exhibit D.
"Bid Loan Request": each request by a Borrower for Banks to
submit bids to make Bid Loans at a fixed rate, which shall contain the
information in respect of such requested Bid Loans specified in
Exhibit E and shall be delivered to the Administrative Agent.
"Bilateral Option Loan": a Loan made by a Bank to a Borrower
pursuant to Section 3. Bilateral Option Loans may be either Dollar
Bilateral Loans or Alternative Currency Bilateral Loans.
"Bilateral Option Loan Report": as defined in subsection 3.2.
"Board": The Board of Governors of the Federal Reserve System
of the United States of America or any successor thereto.
<PAGE>
Page
"Borrower": the Company and any Subsidiary of the Company
with respect to which a Notice of Additional Borrower has been given
and all conditions precedent to the effectiveness thereof have been
satisfied.
"Borrowing Date": any Business Day specified in a notice
pursuant to subsection 2.3 and 4.2, as a date on which a Borrower
requests the Banks to make Loans hereunder, or any date that a
Bilateral Option Loan is made in accordance with subsection 3.1.
"Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or
required by law to close.
"Capitalized Lease": any lease of property, real or personal,
the obligations of the lessee in respect of which are required to be
capitalized in accordance with GAAP.
"Change of Control Date": (i) the first day on which the
Company determines that any Person or group of related Persons has
direct or indirect beneficial ownership of 30% or more of the
outstanding capital stock of the Parent having ordinary voting power
(other than stock having such power only by reason of the happening of
a contingency) for the election of a majority of the board of
directors of the Parent or (ii) the first day on which any Person or
group of related Persons shall acquire all or substantially all of the
assets of the Parent.
"Chase": The Chase Manhattan Bank.
"Closing Date": the first date on which the conditions set
forth in subsection 7.1 have been satisfied or waived.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Commitment": as to any Bank, the obligation of such Bank to
make Revolving Credit Loans hereunder to the Borrowers in an aggregate
principal amount at any one time outstanding not to exceed the amount
set forth opposite such Bank's name on Schedule I under the heading
"Commitment".
"Commitment Percentage": as to any Bank at any time, the
percentage of the aggregate Commitments then constituted by such
Bank's Commitment.
"Commitment Period": the period from and including the date
hereof to but not including the Termination Date or such earlier date
on which the Commitments shall terminate as provided herein.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Company within
the meaning of Section 4001(a)(14) of ERISA or is
<PAGE>
Page
part of a group which includes the Company and which is treated as a
single employer under subsection (b) or (c) of Section 414 of the
Code.
"Consolidated Debt": at a particular date, with respect to
the Parent and its Subsidiaries, and without duplication, the sum of
the amounts set forth on a consolidated balance sheet of the Parent
and its Subsidiaries prepared as of such date in accordance with GAAP
opposite the captions (1) "Long-term debt" (or the equivalent caption)
and (2) "Short-term debt" (or the equivalent caption) but always to
include all indebtedness for borrowed money of the Parent and its
Subsidiaries in accordance with GAAP.
"Consolidated Interest Expense": for any period, with respect
to the Parent and its Subsidiaries, the sum of the amounts which, in
conformity with GAAP, would be (i) set forth opposite the caption
"Interest expense and related financing costs" (or the equivalent
caption) and (ii) calculated as interest expense and included in the
amount set forth opposite the caption "Income/(loss) from discontinued
operations" (or the equivalent caption), each on the consolidated
statement of operations of the Parent and its Subsidiaries for such
period.
"Consolidated Net Income": for any period, net income or loss
of the Parent and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, provided that there shall
be excluded from such net income or loss (a) the income of any Person
in which any other Person (other than the Parent or any of its
Subsidiaries or any director holding qualifying shares in compliance
with applicable law) has a joint interest, except to the extent of the
amount of dividends or other distributions actually paid to the Parent
or any of its Subsidiaries by such Person during such period and (b)
the income (or loss) of any Person accrued prior to the date it
becomes a Subsidiary or is merged into or consolidated with the Parent
or any of its Subsidiaries or the date that Person's assets are
acquired by the Parent or any of its Subsidiaries.
"Continuing Banks": as defined in subsection 2.4(b).
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or
any of its property is bound.
"Default": any of the events specified in Section 10, whether
or not any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
"Dollar Bilateral Loan": a Bilateral Option Loan denominated
in Dollars.
"Dollar Equivalent": on any date of determination by the
Administrative Agent pursuant to subsection 3.2(b) or 3.2(c), as
applicable, in respect of any Alternative Currency Bilateral Loan the
amount of Dollars obtained by converting the outstanding amount of
currency of such Alterative Currency Bilateral Loan, as specified in
the then most recent
<PAGE>
Page
Bilateral Option Loan Report, into Dollars at the spot rate for the
purchase of Dollars with such currency as quoted by the Administrative
Agent at its principal foreign exchange trading operations office in
New York City on such date.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"Domestic Indebtedness": any Indebtedness of the Parent and
any Domestic Subsidiary.
"Domestic Subsidiary": any Subsidiary of the Parent other
than a Foreign Subsidiary.
"Duff & Phelps": Duff & Phelps, Inc.
"EBIT": for any period, with respect to the Parent and its
Subsidiaries, Consolidated Net Income for such period, plus, without
duplication and to the extent deducted from revenues in determining
Consolidated Net Income for such period, the sum of (a) the aggregate
amount of Consolidated Interest Expense for such period, (b) the
aggregate amount of income tax expense for such period, (c) all
extraordinary charges during such period, and (d) all other non-cash
charges during such period, including, but not limited to, (1) asset
disposals, (2) the implementation or modified application of financial
accounting standards, and (3) other special transactions (including,
but not limited to, charges relating to Restructuring Activities,
asset impairment, discontinued operations and asbestos-related
litigation, claims and reimbursements), and minus, without duplication
and to the extent added to revenues in determining Consolidated Net
Income for such period, the sum of (i) all extraordinary gains during
such period and (ii) all other non-cash gains, including those listed
in clause (d) above, during such period, all as determined on a
consolidated basis in accordance with GAAP.
"EBITDA": for any period, EBIT plus (i) all amounts which
would be set forth opposite the caption "Depreciation and
amortization" (or the equivalent caption) and (ii) any amount
calculated as depreciation and amortization and included in the amount
set forth opposite the caption "Income/(loss) from discontinued
operations" (or the equivalent caption), each on the consolidated
statement of operations of the Parent and its Subsidiaries prepared in
accordance with GAAP for such period.
"Environmental Laws": any and all federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees or requirements of any Governmental Authority
regulating, relating to or imposing liability or standards of conduct
concerning environmental protection matters, including without
limitation, Hazardous Materials, as now or may at any time hereafter
be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
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"Eurocurrency Reserve Requirements": for any day as applied
to a Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of any reserve requirements in
effect on such day (including, without limitation, basic,
supplemental, marginal and emergency reserves under any regulations of
the Board of Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D
of such Board) maintained by a member bank of such System.
"Eurodollar Loans": Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
equal to the rate at which Chase is offered Dollar deposits at or
about 10:00 A.M., New York City time, two Business Days prior to the
beginning of such Interest Period in the interbank eurodollar market
where the eurodollar and foreign currency and exchange operations in
respect of its Eurodollar Loans are then being conducted for delivery
on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of its
Eurodollar Loan to be outstanding during such Interest Period.
"Eurodollar Tranche": the collective reference to Eurodollar
Loans, the Interest Periods with respect to all of which begin on the
same date and end on the same later date (whether or not such Loans
shall originally have been made on the same day).
"Event of Default": any of the events specified in Section
10, provided that any requirement for the giving of notice, the lapse
of time, or both, has been satisfied.
"Excluded Subsidiaries": GN Holdings, Inc., a Delaware
corporation; CCHP, Inc., a Delaware corporation; Assignment America,
Inc., a Delaware corporation; Cross Country Staffing, a Delaware
general partnership, and each of their respective Subsidiaries.
"Existing Termination Date": as defined in subsection 2.4(a).
"FASB 5": Statement of Financial Accounting Standards No. 5,
Accounting for Contingencies, of the Financial Accounting Standards
Board, as the same may be from time to time supplemented, amended or
interpreted by such Board.
"Fitch": Fitch IBCA, Inc. and its successors and assigns.
"Foreign Subsidiary": any Subsidiary of the Parent (i) that
is organized under the laws of any jurisdiction other than any state
(including the District of Columbia), territory or possession of the
United States of America (a "foreign jurisdiction"), or (ii) more than
50 percent of the book value of the assets of which (as of the end of
the most recent fiscal
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period for which financial statements are required to have been
provided pursuant to subsection 8.1(a) or (b)) are located in one or
more foreign jurisdictions, or (iii) more than 50 percent of the Net
Sales and Revenues of which (for the most recent fiscal year for which
financial statements are required to have been provided pursuant to
subsection 8.1(a)) were from sales made and/or services provided in
one or more foreign jurisdictions, or (iv) more than 50 percent of the
book value of the assets of which (as of the end of the most recent
fiscal period for which financial statements are required to have been
provided pursuant to subsection 8.1(a) or (b)) consists of equity
interests in and/or Indebtedness of one or more Subsidiaries that are
"Foreign Subsidiaries" within clauses (i), (ii), (iii) or (iv) of this
definition.
"Foreign Subsidiary Indebtedness": any Indebtedness of any
Foreign Subsidiary.
"GAAP": generally accepted accounting principles in the
United States of America in effect from time to time.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Hazardous Materials": any hazardous materials, hazardous
wastes, hazardous constituents, hazardous or toxic substances,
petroleum products (including crude oil or any fraction thereof),
defined or regulated as such in or under any Environmental Law.
"Indebtedness": of any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (other than current trade
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices) or which is evidenced by a note,
bond, debenture or similar instrument, (b) all obligations of such
Person under Capitalized Leases, and (c) without duplication, all
"loss contingencies" of such Person of the types described in
paragraph 12 of FASB 5, whether or not disclosed or required to be
disclosed on the financial statements or footnotes thereto of such
Person pursuant to GAAP.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Interest Payment Date": (a) as to any ABR Loan, the
fifteenth day of each March, June, September and December to occur
while such Loan is outstanding and, if different, the Termination
Date, and (b) as to any Eurodollar Loan having an Interest Period of
three months or less, the last day of such Interest Period, and (c) as
to any Eurodollar Loan having an Interest Period longer than three
months, if any, as agreed by the Borrower of such Loan and the Banks.
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"Interest Period": with respect to any Eurodollar Loan:
(i) initially, the period commencing on the
borrowing or conversion date, as the case may be, with
respect to such Eurodollar Loan and ending one or two weeks,
or one, two, three or six months thereafter, or such other
period as may be requested by the Borrower and agreed to by
the Banks making such Loan, as selected by the Borrower of
such Loan in its notice of borrowing or notice of conversion,
as the case may be, given with respect thereto; and
(ii) thereafter, each period commencing on the
last day of the next preceding Interest Period applicable to
such Eurodollar Loan and ending one or two weeks, or one,
two, three or six months thereafter, or such other period as
may be requested by the Borrower and agreed to by the Banks
making such Loan, as selected by such Borrower by irrevocable
notice to the Administrative Agent and the Banks which made
such Eurodollar Loan not less than two Business Days prior to
the last day of the then current Interest Period with respect
thereto;
provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
(1) if any Interest Period pertaining to a
Eurodollar Loan would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless the result of such
extension would be to carry such Interest Period into another
calendar month in which event such Interest Period shall end
on the immediately preceding Business Day;
(2) any Interest Period that would otherwise extend
beyond the Termination Date shall end on the Termination
Date; and
(3) any Interest Period pertaining to a Eurodollar
Loan that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month.
"Lien": any mortgage, pledge, hypothecation, assignment as
security, security deposit arrangement, encumbrance, lien (statutory
or other), conditional sale or other title retention agreement or
other similar arrangement.
"Loan": any loan made by any Bank pursuant to this Agreement.
"Loan Documents": this Agreement, the Notes and the Notices
of Additional Borrower.
"Loan Outstandings": as to any Bank at any time, the sum of
(a) the aggregate principal amount of all Revolving Credit Loans made
by such Bank then outstanding, and (b)
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such Bank's Commitment Percentage multiplied by the aggregate
principal amount of all Bid Loans then outstanding.
"Loan Parties": the collective reference to the Company, the
other Borrowers and the Parent.
"Majority Banks": at any time, Banks the Commitment
Percentages of which aggregate (or, if at such time all of the
Commitments shall have been terminated, Banks the Commitment
Percentages of which immediately prior to such termination aggregated)
at least 51%.
"Material Adverse Effect": a material adverse effect on (a)
the business, operations, properties, or condition (financial or
otherwise) of the Parent and its Subsidiaries taken as a whole, (b)
the ability of the Company, or any Borrower or any other Loan Party to
perform their respective obligations hereunder and under the other
Loan Documents to which such Person is a party, or (c) the validity or
enforceability of the Loan Documents or the rights or remedies of the
Administrative Agent or the Banks hereunder or thereunder.
"Moody's": Moody's Investors Services, a division of Dun &
Bradstreet Corporation, and its successors and assigns.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Sales and Revenues": with respect to any Person for any
period, all sales and operating revenues of such Person during such
period computed in accordance with GAAP after deducting therefrom
sales returns, discounts and allowances.
"Notes": the collective reference to the Revolving Credit
Notes and the Bid Loan Notes, if any.
"Notice of Additional Borrower": as defined in subsection
13.15(a).
"Obligations": the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity
of the Loans and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to any of the Loan Parties or any of the
Borrowers, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) the Loans and the Notes, if
any, and all other obligations and liabilities of any of the Loan
Parties or the Borrowers to the Administrative Agent or to the Banks,
whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, this Agreement, the Notes, any other Loan
Document and any other document made, delivered or given in connection
herewith or therewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs,
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expenses (including, without limitation, all fees and disbursements of
counsel to the Administrative Agent or to the Banks that are required
to be paid by the Loan Parties and/or the Borrowers pursuant to the
terms of this Agreement) or any other obligation hereunder or
thereunder.
"Parent": W. R. Grace & Co. (formerly named Grace Specialty
Chemicals, Inc.), a Delaware corporation.
"Parent Guarantee": as defined in subsection 12.1.
"Participant": as defined in subsection 13.6(b).
"Payment Sharing Notice": a written notice from the Company
or any Bank informing the Administrative Agent that an Event of
Default has occurred and is continuing and directing the
Administrative Agent to allocate payments thereafter received from the
Borrower in accordance with subsection 5.9(c).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which the Company or a Commonly
Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Prepayment Date": as defined in subsection 5.3(b).
"Principal Subsidiary": (a) any Borrower and (b) any other
Subsidiary if it shall have Total Assets at the end of the most recent
fiscal year for which financial statements are required to have been
furnished pursuant to subsection 8.1(a) in excess of $75,000,000 or
have had during such year Net Sales and Revenues in excess of
$75,000,000.
"Purchasing Banks": as defined in subsection 13.6(c).
"Register": as defined in subsection 13.6(d).
"Regulation U": Regulation U of the Board.
"Regulation X": Regulation X of the Board.
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"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the thirty day
notice requirement is waived under PBGC Reg. ss. 4043.
"Requested Bank": as defined in subsection 3.1(a).
"Requested Termination Date": as defined in subsection
2.4(a).
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its property or to which such Person or any of its property is
subject.
"Responsible Officer": the chief executive officer, the
president, the chief financial officer or the treasurer, assistant
treasurer or controller of, respectively, the Parent and the Company.
"Restructuring Activities": all reductions in carrying value
of assets or investments and provisions for the termination and/or
relocation of operations and employees.
"Revolving Credit Loans": as defined in subsection 2.1(a).
"Revolving Credit Notes": as defined in subsection 2.2.
"SEC": the Securities and Exchange Commission, and any
successor or analogous federal Governmental Authority.
"Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"S&P": Standard & Poor's Ratings Services, and its successors
and assigns.
"Subsidiary": as to any Person, a corporation, partnership or
other entity which is required to be consolidated with such Person in
accordance with GAAP; provided, that any such corporation, partnership
or other entity which is controlled by a receiver or trustee under any
bankruptcy, insolvency or similar law shall continue to be a
"Subsidiary" of such Person for purposes of this Agreement. Unless
otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Parent.
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"Substitute Rating Agency": as defined in the definition of
"Applicable Margin".
"Terminating Banks": as defined in subsection 2.4(b).
"Termination Date": May 12, 1999 or such later date to which
the Termination Date may be extended pursuant to subsection 2.4.
"Total Assets": with respect to any Person at any time, the
total of all assets appearing on the asset side of the balance sheet
of such Person prepared in accordance with GAAP as of such time.
"Transferee": as defined in subsection 13.6(f).
"Type": as to any Loan, its nature as an ABR Loan or a
Eurodollar Loan.
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in the Notes, if any, or any certificate or other document
made or delivered pursuant hereto.
(b) As used herein and in the Notes, if any, and any
certificate or other document made or delivered pursuant hereto, accounting
terms relating to the Parent and its Subsidiaries not defined in subsection
1.1, to the extent not defined, shall have the respective meanings given to
them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement, unless
otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Commitments. (a) Subject to the terms and conditions
hereof, each Bank severally agrees to make revolving credit loans ("Revolving
Credit Loans") to any Borrower from time to time during the Commitment Period
in an aggregate principal amount at any one time outstanding not to exceed the
amount of such Bank's Commitment, provided that no Bank shall make any
Revolving Credit Loan if, after giving effect to such Loan, the aggregate Loan
Outstandings of all of the Banks plus the Aggregate Outstanding Bilateral
Option Loans would exceed the aggregate Commitments.
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(b) The Revolving Credit Loans may from time to time be (i)
Eurodollar Loans, (ii) ABR Loans or (iii) a combination thereof, as determined
by the Borrower thereof and notified to the Administrative Agent in accordance
with subsections 2.3 and 5.5, provided that no Revolving Credit Loan shall be
made as a Eurodollar Loan maturing after the Termination Date.
2.2 Obligations of Borrowers; Revolving Credit Notes. (a)
Each Borrower agrees that each Revolving Credit Loan made by each Bank to such
Borrower pursuant hereto shall constitute the promise and obligation of such
Borrower to pay to the Administrative Agent, on behalf of such Bank, at the
office of the Administrative Agent specified in subsection 13.2, in lawful
money of the United States of America and in immediately available funds the
aggregate unpaid principal amount of all Revolving Credit Loans made by such
Bank to such Borrower pursuant to subsection 2.1, which amounts shall be due
and payable (whether at maturity or by acceleration) as set forth in this
Agreement and, in any event, on the Termination Date.
(b) Each Borrower agrees that each Bank and the
Administrative Agent are authorized to record (i) the date, amount and Type of
each Revolving Credit Loan made by such Bank to such Borrower pursuant to
subsection 2.1, (ii) the date of each continuation thereof pursuant to
subsection 5.5(b), (iii) the date of each conversion of all or a portion
thereof to another Type pursuant to subsection 5.5(a), (iv) the date and amount
of each payment or prepayment of principal of each such Revolving Credit Loan
and (v) in the case of each such Revolving Credit Loan which is a Eurodollar
Loan, the length of each Interest Period and the Eurodollar Rate with respect
thereto, in the books and records of such Bank or the Administrative Agent, as
the case may be, and in such manner as is reasonable and customary for such
Bank or the Administrative Agent, as the case may be, and a certificate of an
officer of such Bank or the Administrative Agent, as the case may be, setting
forth in reasonable detail the information so recorded, shall constitute prima
facie evidence of the accuracy of the information so recorded; provided that
the failure to make any such recording shall not in any way affect the
obligations of such Borrower hereunder.
(c) Each Borrower agrees that, upon the request to the
Administrative Agent by any Bank at any time, the Revolving Credit Loans made
by such Bank to such Borrower shall be evidenced by a promissory note of such
Borrower, substantially in the form of Exhibit A with appropriate insertions as
to Borrower, payee, date and principal amount (a "Revolving Credit Note"),
payable to the order of such Bank and in a principal amount equal to the lesser
of (a) the amount of the initial Commitment of such Bank and (b) the aggregate
unpaid principal amount of all Revolving Credit Loans made by such Bank to such
Borrower. Upon the request to the Administrative Agent by any such Bank at any
time, such Borrower shall execute and deliver to such Bank a Revolving Credit
Note conforming to the requirements hereof and executed by a duly authorized
officer of such Borrower. Each Bank is hereby authorized to record the date,
Type and amount of each Revolving Credit Loan made by such Bank to such
Borrower, each continuation thereof, each conversion of all or a portion
thereof to another Type, the date and amount of each payment or prepayment of
principal thereof and, in the case of Eurodollar Loans, the length of each
Interest Period and the Eurodollar Rate with respect thereto, on the schedule
annexed to and constituting a part of its Revolving Credit Note and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded; provided that the failure to make any such recording
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shall not in any way affect the obligations of such Borrower hereunder or
thereunder. Each Revolving Credit Note shall (x) be dated the Closing Date, (y)
be stated to mature on the Termination Date and (z) provide for the payment of
interest in accordance with subsection 5.1.
2.3 Procedure for Revolving Credit Borrowing. Any Borrower
may borrow under the Commitments from all Banks during the Commitment Period on
any Business Day, provided that such Borrower shall give the Administrative
Agent irrevocable notice (which notice must be received by the Administrative
Agent (a) prior to 4:00 P.M., New York City time, three Business Days prior to
the requested Borrowing Date, if all or any part of the requested Revolving
Credit Loans are to be initially Eurodollar Loans, or (b) prior to 10:00 A.M.,
New York City time, on the requested Borrowing Date, otherwise), specifying (i)
the amount to be borrowed, (ii) the requested Borrowing Date, (iii) whether the
borrowing is to be of Eurodollar Loans, ABR Loans or a combination thereof and
(iv) if the borrowing is to be entirely or partly of Eurodollar Loans, the
respective amounts of each such Type of Loan and the respective lengths of the
initial Interest Periods therefor. Each borrowing under the Commitments shall
be in an amount equal to $5,000,000 or a whole multiple of $1,000,000 in excess
thereof (or, in the case of ABR Loans, if the amount of the Available
Commitments minus the Aggregate Outstanding Bilateral Option Loans is less than
$5,000,000, such lesser amount). Upon receipt of such notice from such
Borrower, the Administrative Agent shall promptly notify each Bank thereof.
Each Bank will make the amount of its pro rata share of each such borrowing
available to the Borrower at the office of the Administrative Agent specified
in subsection 13.2 prior to 12:00 noon, New York City time, on the Borrowing
Date requested by such Borrower in funds immediately available to the
Administrative Agent. Such borrowing will then be made available to such
Borrower on the books of such office with the aggregate of the amounts made
available to the Administrative Agent by the Banks and in like funds as
received by the Administrative Agent.
2.4 Extension of Termination Date. (a) The Company may
request, in a notice given as herein provided to the Administrative Agent and
each of the Banks not less than 45 days and not more than 60 days prior to the
Termination Date then in effect ("Existing Termination Date"), that the
Termination Date be extended, which notice shall specify a date (which shall be
the Existing Termination Date) as of which the requested extension is to be
effective (the "Effective Date"), and the new Termination Date to be in effect
following such extension (the "Requested Termination Date"), which date shall
be no more than 364 days after the effectiveness of such extension (with the
Effective Date being counted as the first day). Each Bank shall, not later than
a date 30 days prior to the Effective Date, notify the Company and the
Administrative Agent of its election to extend or not to extend the Termination
Date with respect to its Commitment. Notwithstanding any provision of this
Agreement to the contrary, any notice by any Bank of its willingness to extend
the Termination Date with respect to its Commitment shall be revocable by such
Bank in its sole and absolute discretion at any time more than 30 days prior to
the Effective Date. Any Bank which shall not timely notify the Company and the
Administrative Agent of its election to extend the Termination Date shall be
deemed to have elected not to extend the Termination Date with respect to its
Commitment.
(b) If any one or more Banks shall timely notify the Company
and the Administrative Agent pursuant to paragraph (a) of this subsection 2.4
of their election not to extend their Commitments or shall be deemed to have
elected not to extend their Commitments, (such Banks
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being called "Terminating Banks"), then the Company may (i) designate from the
Banks other than Terminating Banks (the "Continuing Banks") one or more such
Continuing Banks to increase their Commitments, which Continuing Banks shall
have given notice to the Company and the Administrative Agent of their
willingness to so increase their Commitments, (ii) with notice to the
Administrative Agent, designate one or more other banking institutions willing
to extend Commitments until the Requested Termination Date (any such banking
institution, an "Additional Bank"), or (iii) any combination thereof, the
aggregate amount of the increases of such Continuing Banks' Commitments and the
amount of such Additional Banks' Commitments not to exceed the aggregate of the
Commitments of the Terminating Banks. Any such increase in the Commitment of a
Continuing Bank shall be evidenced by a written instrument executed by such
Continuing Bank, the Company and the Administrative Agent, and shall take
effect on the Existing Termination Date. Any Additional Bank shall, on the
Existing Termination Date, execute and deliver to the Company and the
Administrative Agent a "Commitment Transfer Supplement", satisfactory to the
Company and the Administrative Agent, setting forth the amount of such
Additional Bank's Commitment and containing its agreement to become, and to
perform all the obligations of, a Bank hereunder, and the Commitment of such
Additional Bank shall become effective on the Existing Termination Date.
(c) The Company and each other Borrower, if any, shall
deliver to each Continuing Bank and each Additional Bank which shall have
requested Revolving Credit Notes pursuant to subsection 2.2(c), on the Existing
Termination Date in exchange for each Revolving Credit Note, if any, of each of
the Borrowers held by such Bank, new Revolving Credit Notes, maturing on the
Requested Termination Date, in the principal amount of such Bank's Commitment
after giving effect to the adjustments made pursuant to this subsection 2.4.
(d) If some of or all the Banks shall have elected to extend
their Commitments as provided in this subsection 2.4, then (i) the Commitments
of the Continuing Banks and any Additional Banks shall continue until the
Requested Termination Date specified in the notice from the Company, and as to
such Banks the term "Termination Date", as used herein shall on and after the
Effective Date mean such Requested Termination Date; (ii) the Commitments of
the Terminating Banks shall continue until the Termination Date in effect prior
to such extension, and shall then terminate, and as to the Terminating Banks,
the term "Termination Date", as used herein, shall continue to mean such
Existing Termination Date; and (iii) from and after the Termination Date in
effect prior to such extension, the term "Banks" shall be deemed to include the
Additional Banks.
SECTION 3. BILATERAL OPTION LOANS
3.1 Requests for Offers. (a) From time to time during the
period from the Closing Date until the Termination Date, any Borrower may
request any or all of the Banks (each such Bank to which such a request is
made, a "Requested Bank") to make offers to make Bilateral Option Loans,
provided that immediately after making any such Bilateral Option Loan, the
aggregate Loan Outstandings of all the Banks plus the Aggregate Outstanding
Bilateral Option Loans will not exceed the aggregate Commitments. Any such
request shall specify the principal amount and maturity date of the Bilateral
Option Loans for which such Borrower is requesting offers, whether such
Bilateral Option Loans are requested to be Dollar Bilateral Loans or
Alternative Currency Bilateral Loans, the
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time by which offers to make such Bilateral Option Loans must be made by such
Requested Bank and by which such offers shall be accepted or rejected by such
Borrower, and if all or any part of the requested Bilateral Option Loans are
requested to be made as Alternative Currency Bilateral Loans, the Alternative
Currency to be applicable thereto. Each Requested Bank may, but shall have no
obligation to, make such offers on such terms and conditions as are
satisfactory to such Requested Bank, and such Borrower may, but shall have no
obligation to, accept any such offers. No Bilateral Option Loan may mature
after the Termination Date.
(b) Each Borrower and Requested Bank shall separately agree
as to the procedures, documentation, lending office and other matters relating
to any Bilateral Option Loan.
3.2 Reports to Administrative Agent; Determination of Dollar
Equivalents. (a) The Borrower shall deliver to the Administrative Agent a
report in respect of each Bilateral Option Loan (a "Bilateral Option Loan
Report") by 2:00 P.M. (New York City time) on the date on which the applicable
Borrower accepts any Bilateral Option Loan, on the date on which any principal
amount thereof is repaid prior to the scheduled maturity date, or on the
scheduled maturity date if payment thereof is not made on such scheduled
maturity date, specifying for such Bilateral Option Loan the date on which such
Bilateral Option Loan was or will be made, such amount of principal is or will
be repaid or such payment was not made as the case may be; in the case of
Alternative Currency Bilateral Loans, the Alternative Currency thereof; and the
principal amount of such Bilateral Option Loan or principal prepayment or
repayment or the amount paid (in the case of any Alternative Currency Bilateral
Loan, expressed in the Alternative Currency therefor).
(b) Upon receipt of a Bilateral Option Loan Report with
respect to the acceptance of a Bilateral Option Loan, the Administrative Agent
shall determine the Dollar Equivalent thereof.
(c) If on any Borrowing Date on which after giving effect to
the Loans made on such date, the sum of the aggregate Loan Outstandings of all
the Banks plus the Aggregate Outstanding Bilateral Option Loans exceeds 85% of
the aggregate Commitments, then the Administrative Agent shall redetermine as
of such Borrowing Date, on the basis of the most recently delivered Bilateral
Option Loan Report for each Bilateral Option Loan, the Dollar Equivalent of
each Alternative Currency Bilateral Loan then outstanding. In addition, for so
long as the condition specified in the preceding sentence remains in effect,
the Administrative Agent shall determine, at the end of each fiscal quarter of
the Company, on the basis of the most recently delivered Bilateral Option Loan
Report for each Bilateral Option Loan, the Dollar Equivalent of each
Alternative Currency Bilateral Loan then outstanding.
(d) The Administrative Agent shall promptly notify the
Company of each Dollar Equivalent under this subsection 3.2.
3.3 Judgment Currency. If for the purpose of obtaining
judgment in any court, it is necessary to convert a sum due from any Borrower
hereunder or under any of the Notes in the currency expressed to be payable
herein or under the Notes (the "specified currency") into another currency, the
parties hereto agree, to the fullest extent that they may effectively do so,
that the rate
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of exchange used shall be that at which in accordance with normal banking
procedures the Administrative Agent could purchase the specified currency with
such other currency at the Administrative Agent's New York office on the
Business Day preceding that on which final judgment is given. The obligations
of each Borrower in respect of any sum due to any Bank or the Administrative
Agent hereunder or under any Note shall, notwithstanding any judgment in a
currency other than the specified currency, be discharged only to the extent
that on the Business Day following receipt by such Bank or the Administrative
Agent (as the case may be) of any sum adjudged to be so due in such other
currency such Bank or the Administrative Agent (as the case may be) may in
accordance with normal banking procedures purchase the specified currency with
such other currency; if the amount of the specified currency so purchased is
less than the sum originally due to such Bank or the Administrative Agent, as
the case may be, in the specified currency, each Borrower agrees, to the
fullest extent that it may effectively do so, as a separate obligation and
notwithstanding any such judgment, to indemnify such Bank or the Administrative
Agent, as the case may be, against such difference, and if the amount of the
specified currency so purchased exceeds:
(a) the sum originally due to any Bank or the Administrative
Agent, as the case may be, and
(b) any amounts shared with other Banks as a result of
allocations of such excess as a disproportionate payment to such Bank
under subsection 13.7,
such Bank or the Administrative Agent, as the case may be, agrees to remit such
excess to the applicable Borrower.
3.4 Repayments. Each Borrower shall repay to each Bank which
has made a Bilateral Option Loan on the maturity date of each Bilateral Option
Loan (such maturity date being that specified in the documentation referred to
in subsection 3.1(a)) the then unpaid principal amount of such Bilateral Option
Loan.
SECTION 4. BID LOANS
4.1 The Bid Loans. Any Borrower may borrow Bid Loans from
time to time on any Business Day during the period from the Closing Date until
the Termination Date, in the manner set forth in this Section 4 and in amounts
such that the aggregate Loan Outstandings of all the Banks at any time plus the
Aggregate Outstanding Bilateral Option Loans at such time will not exceed the
aggregate Commitments at such time, and provided, further, that no such Bid
Loan shall be made if, after giving effect thereto, any Bid Loans would mature
after the Termination Date.
4.2 Procedure for Bid Loans. (a) A Borrower shall request Bid
Loans by delivering a Bid Loan Request to the Administrative Agent, in writing,
by facsimile transmission, or by telephone, confirmed by facsimile
transmission, not later than 1:00 P.M. (New York City time) one Business Day
prior to the proposed Borrowing Date. Each Bid Loan Request may solicit bids
for Bid Loans in an aggregate principal amount of $5,000,000 or a whole
multiple of $1,000,000 in excess thereof and
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for not more than three alternative maturity dates for such Bid Loans. The
Administrative Agent shall promptly notify each Bank by facsimile transmission
of the contents of each Bid Loan Request received by it.
(b) Upon receipt of notice from the Administrative Agent of
the contents of a Bid Loan Request, any Bank that elects, in its sole
discretion, to do so, shall irrevocably offer to make one or more Bid Loans at
a rate of interest determined by such Bank in its sole discretion for each such
Bid Loan. Any such irrevocable offer shall be made by delivering a Bid Loan
Offer to the Administrative Agent, by telephone, immediately confirmed by
facsimile transmission, before 9:30 A.M. (New York City time) on the proposed
Borrowing Date, setting forth the maximum amount of Bid Loans for each maturity
date, and the aggregate maximum amount for all maturity dates, which such Bank
would be willing to make (which amounts may, subject to subsection 4.1, exceed
such Bank's Commitments) and the rate of interest at which such Bank is willing
to make each such Bid Loan; the Administrative Agent shall advise the Borrower
before 10:00 A.M. (New York City time) on the proposed Borrowing Date of the
contents of each such Bid Loan Offer received by it. If the Administrative
Agent in its capacity as a Bank shall, in its sole discretion, elect to make
any such offer, it shall advise the Borrower of the contents of its Bid Loan
Offer before 9:15 A.M. (New York City time) on the proposed Borrowing Date.
(c) The Borrower shall before 10:30 A.M. (New York City
time) on the proposed Borrowing Date, in its absolute discretion, either:
(i) cancel such Bid Loan Request by giving the
Administrative Agent telephone notice to that effect, and the
Administrative Agent shall give prompt telephone notice
thereof to the Banks and the Bid Loans requested thereby
shall not be made; or
(ii) accept one or more of the offers made by any Bank
or Banks by giving telephone notice to the Administrative
Agent (confirmed as soon as practicable thereafter by
delivery to the Administrative Agent of a Bid Loan
Confirmation in writing or by facsimile transmission) of the
amount of Bid Loans for each relevant maturity date to be
made by each Bank (which amount for each such maturity date
shall be equal to or less than the maximum amount for such
maturity date specified in the Bid Loan Offer of such Bid
Loan Bank, and for all maturity dates included in such Bid
Loan Offer shall be equal to or less than the aggregate
maximum amount specified in such Bid Loan Offer for all such
maturity dates) and reject any remaining offers made by
Banks; provided, however, that (x) the Borrower may not
accept offers for Bid Loans for any maturity date in an
aggregate principal amount in excess of the maximum principal
amount requested in the related Bid Loan Request, (y) if the
Borrower accepts any of such offers, it must accept offers
strictly based upon pricing for such relevant maturity date
and no other criteria whatsoever and (z) if two or more Banks
submit offers for any maturity date at identical pricing and
the Borrower accepts any of such
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offers but does not wish to (or by reason of the limitations
set forth in subsection 4.1 or in clause (x) of this proviso,
cannot) borrow the total amount offered by such Banks with
such identical pricing, the Borrower shall accept offers from
all of such Banks in amounts allocated among them pro rata
according to the amounts offered by such Banks.
(d) If the Borrower accepts pursuant to clause (c) (ii) above
one or more of the offers made by any Bid Loan Bank or Bid Loan Banks, the
Administrative Agent shall notify before 11:00 A.M. (New York City time) each
Bid Loan Bank which has made such an offer, of the aggregate amount of such Bid
Loans to be made on such Borrowing Date for each maturity date and of the
acceptance or rejection of any offers to make such Bid Loans made by such Bid
Loan Bank. Each Bid Loan Bank which is to make a Bid Loan shall, before 12:00
Noon (New York City time) on the Borrowing Date specified in the Bid Loan
Request applicable thereto, make available to the Administrative Agent at its
office set forth in subsection 13.2 the amount of Bid Loans to be made by such
Bid Loan Bank, in immediately available funds. The Administrative Agent will
make such funds available to the Borrower at or before 2:00 P.M. (New York City
time) on such date at the Administrative Agent's aforesaid address. As soon as
practicable after each Borrowing Date, the Administrative Agent shall notify
each Bank of the aggregate amount of Bid Loans advanced on such Borrowing Date
and the respective maturity dates thereof.
4.3 Repayments. Each Borrower shall repay to the
Administrative Agent for the account of each Bid Loan Bank which has made a Bid
Loan on the maturity date of each Bid Loan (such maturity date being that
specified by the Borrower for repayment of such Bid Loan in the related Bid
Loan Request) the then unpaid principal amount of such Bid Loan. The Borrowers
shall not have the right to prepay any principal amount of any Bid Loan without
the prior written consent of the Bid Loan Bank which made such Bid Loan.
4.4 Interest on Bid Loans. Each Borrower which shall have
borrowed a Bid Loan shall pay interest on the unpaid principal amount of such
Bid Loan from the Borrowing Date to the stated maturity date thereof, at the
rate of interest determined pursuant to subsection 4.2 above (calculated on the
basis of a 360 day year for actual days elapsed), payable on the interest
payment date or dates specified by such Borrower for such Bid Loan in the
related Bid Loan Request. If all or a portion of the principal amount of any
Bid Loan shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue principal amount shall, without
limiting any rights of any Bank under this Agreement, bear interest from the
date on which such payment was due at a rate per annum which is 2% above the
rate which would otherwise be applicable to such Bid Loan until the scheduled
maturity date with respect thereto, and for each day thereafter at a rate per
annum which is 2% above the Alternate Base Rate until paid in full (as well
after as before judgment).
4.5 Obligations of Borrowers; Bid Loan Notes. (a) Each
Borrower agrees that each Bid Loan made by each Bid Loan Bank to such Borrower
pursuant hereto shall constitute the promise and obligation of such Borrower to
pay to the Administrative Agent, on behalf of such Bid Loan Bank, at the office
of the Administrative Agent specified in subsection 13.2, in lawful money of
the United
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States of America and in immediately available funds the aggregate unpaid
principal amount of each Bid Loan made by such Bid Loan Bank to such Borrower
pursuant to subsection 4.2, which amounts shall be due and payable (whether at
maturity or by acceleration) as set forth in the Bid Loan Request related to
such Bid Loan and in this Agreement.
(b) Each Borrower agrees that each Bid Loan Bank and the
Administrative Agent are authorized to record (i) the date and amount of each
Bid Loan made by such Bid Loan Bank to such Borrower pursuant to subsection
4.2, and (ii) the date and amount of each payment or prepayment of principal of
each such Bid Loan, in the books and records of such Bid Loan Bank or the
Administrative Agent, as the case may be, and in such manner as is reasonable
and customary for such Bank or the Administrative Agent, as the case may be,
and a certificate of an officer of such Bid Loan Bank or the Administrative
Agent, as the case may be, setting forth in reasonable detail the information
so recorded, shall constitute prima facie evidence of the accuracy of the
information so recorded; provided that the failure to make any such recording
shall not in any way affect the obligations of such Borrower hereunder.
(c) Each Borrower agrees that, upon the request to the
Administrative Agent by any Bid Loan Bank at any time, the Bid Loans made by
such Bid Loan Bank to any Borrower shall be evidenced by a promissory note of
such Borrower, substantially in the form of Exhibit B with appropriate
insertions (a "Bid Loan Note"), payable to the order of such Bid Loan Bank and
representing the obligation of such Borrower to pay the unpaid principal amount
of all Bid Loans made by such Bid Loan Bank, with interest on the unpaid
principal amount from time to time outstanding of each Bid Loan evidenced
thereby as prescribed in subsection 4.4. Upon the request to the Administrative
Agent by any such Bid Loan Bank at any time, such Borrower shall execute and
deliver to such Bid Loan Bank a Bid Loan Note conforming to the requirements
hereof and executed by a duly authorized officer of such Borrower. Each Bid
Loan Bank is hereby authorized to record the date and amount of each Bid Loan
made by such Bank, the maturity date thereof, the date and amount of each
payment of principal thereof and the interest rate with respect thereto on the
schedule annexed to and constituting part of its Bid Loan Note, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded; provided, however, that the failure to make any such
recordation shall not affect the obligations of such Borrower hereunder or
under any Bid Loan Note. Each Bid Loan Note shall be dated the Closing Date and
each Bid Loan evidenced thereby shall bear interest for the period from and
including the Borrowing Date thereof on the unpaid principal amount thereof
from time to time outstanding at the applicable rate per annum determined as
provided in, and such interest shall be payable as specified in, subsection
4.4.
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SECTION 5. LOAN FACILITY COMMON PROVISIONS
5.1 Interest Rates and Payment Dates. (a) Each Eurodollar
Loan shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such
Interest Period plus the Applicable Margin.
(b) Each ABR Loan shall bear interest at a fluctuating rate
per annum equal to the Alternate Base Rate.
(c) Except as otherwise provided in subsection 4.4, if all or
a portion of (i) the principal amount of any Loan or (ii) any interest payable
thereon shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum which is (x) in the case of overdue principal, the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
subsection plus 2% or (y) in the case of overdue interest, the rate described
in paragraph (b) of this subsection plus 2%, in each case from the date of such
non-payment until such amount is paid in full (as well after as before
judgment).
(d) Interest shall be payable in arrears on each Interest
Payment Date, provided that interest accruing pursuant to paragraph (c) of this
subsection shall be payable on demand.
(e) Subject to the limitations set forth herein, each
Borrower may use the Loans by borrowing, prepaying and reborrowing the Loans,
all in accordance with the terms and conditions hereof.
5.2 Facility Fee, etc. (a) The Company agrees to pay to the
Administrative Agent for the account of each Bank a facility fee for the period
from and including the date hereof to the Termination Date, computed at the
rate per annum determined as set forth in paragraph (b) of this subsection on
the average daily amount of the Commitment of such Bank during the period for
which payment is made, payable quarterly in arrears on the fifteenth day of
each March, June, September and December and on the Termination Date or such
earlier date as the Commitments shall terminate as provided herein, commencing
on the first of such dates to occur after the date hereof.
(b) The rate per annum at which such facility fee under
paragraph (a) above shall be computed (the "Applicable Facility Fee Rate"), for
any day on which the long term senior unenhanced, unsecured debt of the Company
is rated by both S&P and Moody's, shall be the rate per annum under the caption
"Facility Fee Rate" (a "Facility Fee Rate") set forth below opposite the S&P
and Moody's ratings applicable to such debt on such day (or, if such ratings
are set opposite two different rates under said caption, then the Applicable
Facility Fee Rate shall be the lower of said two Facility Fee Rates):
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FACILITY FEE
RATE S&P MOODY'S
--------------------------------------------------------
.1500% BB+ or lower Ba1 or lower
.1000% BBB- Baa3
.0850% BBB Baa2
.0650% BBB+ Baa1
.0550% A- or higher A3 or higher
provided that if on any day the long term senior unenhanced, unsecured debt of
the Company is rated by only one of S&P or Moody's, such rate will be
determined based on the rating by such rating agency, and provided, further,
that if on any day the long term senior unenhanced, unsecured debt of the
Company is rated by neither S&P nor Moody's, the Applicable Facility Fee Rate
will be determined based on the rating of such debt by a Substitute Rating
Agency and will be the Facility Fee Rate set forth above opposite the S&P and
Moody's ratings comparable to the Substitute Rating Agency's rating of such
debt on such date, and provided, further, that if on any day the long term
senior unenhanced, unsecured debt of the Company is rated by none of S&P,
Moody's or any Substitute Rating Agency, the Company, the Administrative Agent
and the Banks will negotiate in good faith to determine an alternative basis
for calculating such rate consistent with the table set forth above and, if
agreement on such alternative basis is not reached with 30 days, such rate will
be calculated on an alternative basis determined by the Administrative Agent
and the Banks in their reasonable discretion consistent with the table above,
and until such alternative basis is determined such rate will be the rate last
determined as provided in the table above.
(c) The Company agrees to pay to the Administrative Agent on
the Closing Date for the account of each Bank an upfront fee in an amount equal
to (i) the rate set forth below opposite the aggregate amount of such Bank's
initial Commitment on the Closing Date (the "Initial Commitment") multiplied by
(ii) such Bank's Initial Commitment:
Initial Commitment Rate
------------------ ----
$50,000,000 or higher .125%
$35,000,000 .100%
$25,000,000 .075%
$17,000,000 .050%
<PAGE>
(d) The Company agrees to pay to the Administrative Agent and
the Arranger the fees in the amounts and on the dates previously agreed to in
writing by the Company, the Administrative Agent and the Arranger.
5.3 Termination or Reduction of Commitments; Change of
Control Date. (a) The Company shall have the right, upon not less than five
Business Days' notice to the Administrative Agent, to terminate the Commitments
or, from time to time, to reduce the amount of the Commitments, provided that
no such termination or reduction shall be permitted to the extent that, after
giving effect thereto and to any prepayments of Loans made on the effective
date thereof, the sum of the aggregate Loan Outstandings of all the Banks, plus
the Aggregate Outstanding Bilateral Option Loans would exceed the Commitments
then in effect. Any such partial reduction shall be in an amount equal to
$5,000,000 or a whole multiple of $1,000,000 in excess thereof and shall reduce
permanently the Commitments then in effect.
(b) (i) In the event that a Change of Control Date shall
occur, (A) the Company shall, within 10 days after such Change of Control Date,
give each Bank notice thereof in writing describing in reasonable detail the
facts and circumstances giving rise thereto, and (B) such Bank, by written
notice given to the Company not later than 30 days after the Change of Control
Date, may declare the Commitments of such Bank to be terminated in full or
reduced as of the date of (or as of a later date specified in) such notice to
the Company, and may require that the Borrowers prepay as provided in this
subsection 5.3 any Loans payable to such Bank and outstanding on such date to
the extent the principal amount thereof exceeds such Bank's Commitment, if any,
remaining after such termination or reduction. To the extent such Bank so
requires, the Borrowers shall prepay such Loans on the 75th day after the date
of the Company's notice or, in the event such 75th day is not a Business Day,
the Business Day next succeeding such 75th day ("Prepayment Date").
(ii) On the Prepayment Date, the Borrowers shall prepay
the unpaid principal amount of the Loans payable to such Bank, without premium
or penalty, together with accrued interest on the amount prepaid to the
Prepayment Date.
(iii) Subsections 5.9(a), (b) and (c) shall not apply to
prepayments under this subsection 5.3(b).
(iv) Paragraph (a) of this subsection 5.3 hereof shall
not apply to any Commitment reductions pursuant to this paragraph (b).
(v) In the event that a Change of Control Date shall
occur, the Company shall not thereafter, without the prior written consent of
the Majority Banks, borrow any additional Loan (other than a Bilateral Option
Loan) in order to make, directly or indirectly, any payment or prepayment on
any Indebtedness subordinated as to the payment of principal and interest or on
liquidation to the prior payment of any of the Obligations.
5.4 Prepayments. (a) Any Borrower may at any time and from
time to time upon at least four Business Days' irrevocable notice to the
Administrative Agent, in the case of Eurodollar
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Loans, or upon at least one Business Day's irrevocable notice to the
Administrative Agent, in the case of ABR Loans, prepay the Loans (other than
Bid Loans), in whole or in part, without premium or penalty (subject to
subsection 5.13), specifying the date and amount of prepayment and whether the
prepayment is of Eurodollar Loans, ABR Loans or a combination thereof, and, if
of a combination thereof, the amount allocable to each. Upon receipt of any
such notice the Administrative Agent shall promptly notify each Bank thereof.
If any such notice is given, the amount specified in such notice shall be due
and payable on the date specified therein. Partial prepayments shall be in an
aggregate principal amount of $5,000,000 or a whole multiple of $1,000,000 in
excess thereof.
(b) If at any time, the Administrative Agent shall determine
(which determination shall be conclusive in the absence of manifest error) that
the sum of the aggregate Loan Outstandings of all the Banks plus the Aggregate
Outstanding Bilateral Option Loans exceeds the aggregate Commitments, the
Borrowers shall immediately prepay the Loans in an aggregate principal amount
equal to such excess.
5.5 Conversion and Continuation Options. (a) Any Borrower may
elect at any time and from time to time (subject to subsection 5.13) to convert
its Eurodollar Loans to ABR Loans by giving the Administrative Agent at least
two Business Days' prior irrevocable notice of such election. Any Borrower may
elect at any time and from time to time to convert its ABR Loans to Eurodollar
Loans by giving the Administrative Agent irrevocable notice of such election
(which notice must be received by the Administrative Agent prior to 4:00 P.M.,
New York City time, three Business Days prior to the requested conversion
date). Any such notice of conversion to Eurodollar Loans shall specify the
length of the initial Interest Period or Interest Periods therefor. Upon
receipt of any such notice the Administrative Agent shall promptly notify each
Bank thereof. All or any part of outstanding Eurodollar Loans and ABR Loans may
be converted as provided herein, provided that (i) no Loan may be converted
into a Eurodollar Loan when any Event of Default has occurred and is continuing
and the Administrative Agent or the Majority Banks have determined that such a
conversion is not appropriate, and (ii) any such conversion may only be made
if, after giving effect thereto, subsection 5.6 shall not have been
contravened.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower thereof giving notice to the Administrative Agent, in accordance with
the applicable provisions of the term "Interest Period" set forth in subsection
1.1, of the length of the next Interest Period to be applicable to such Loans,
provided that no Eurodollar Loan may be continued as such (i) when any Event of
Default has occurred and is continuing and the Administrative Agent or the
Majority Banks have determined that such a continuation is not appropriate, or
(ii) if, after giving effect thereto, subsection 5.6 would be contravened and
provided, further, that if any Borrower shall fail to give any required notice
as described above in this paragraph or if such continuation is not permitted
pursuant to the preceding proviso such Loans shall be automatically converted
to ABR Loans on the last day of such then expiring Interest Period.
5.6 Minimum Amounts of Eurodollar Tranches. All borrowings,
conversions and continuations of Loans hereunder and all selections of Interest
Periods hereunder shall be in such
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amounts and be made pursuant to such elections so that, after giving effect
thereto, the aggregate principal amount of the Loans comprising each Eurodollar
Tranche shall be equal to $5,000,000 or a whole multiple of $1,000,000 in
excess thereof.
5.7 Computation of Interest and Fees. (a) Interest on ABR
Loans and facility fees shall be calculated on the basis of a 365- (or 366-, as
the case may be) day year for the actual days elapsed. Interest on Eurodollar
Loans shall be calculated on the basis of a 360-day year for the actual days
elapsed. The Administrative Agent shall as soon as practicable notify the
Borrowers and the Banks of each determination of a Eurodollar Rate. Any change
in the interest rate on a Loan resulting from a change in the Prime Rate shall
become effective as of the opening of business on the day on which such change
in the Prime Rate is announced. The Administrative Agent shall as soon as
practicable notify the Borrowers and the Banks of the effective date and the
amount of each such change in interest rate.
(b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrowers and the Banks in the absence of
manifest error. The Administrative Agent shall, at the request of the Company,
deliver to the Company a statement showing in reasonable detail the quotations
and calculations used by the Administrative Agent in determining any interest
rate pursuant to subsections 5.1 and 5.7(a).
5.8 Inability to Determine Interest Rate. In the event that
prior to the first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrowers)
that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period, or
(b) the Administrative Agent shall have received notice from
the Majority Banks that the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and fairly
reflect the cost to such Banks (as conclusively certified by such
Banks) of making or maintaining their affected Loans during such
Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to
the Borrowers and the Banks as soon as practicable thereafter. If such notice
is given (x) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as ABR Loans, (y) any Loans that were to have
been converted on the first day of such Interest Period to Eurodollar Loans
shall be continued as ABR Loans and (z) any outstanding Eurodollar Loans shall
be converted, on the first day of such Interest Period, to ABR Loans. Until
such notice has been withdrawn by the Administrative Agent, no further
Eurodollar Loans shall be made or continued as such, nor shall any Borrower
have the right to convert Loans to Eurodollar Loans.
5.9 Pro Rata Treatment and Payments. (a) Each borrowing by
any Borrower of Revolving Credit Loans from the Banks hereunder, each payment
by the Company on account of any
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facility fee hereunder, and any reduction of the Commitments of the Banks shall
be made pro rata according to the respective Commitment Percentages of the
Banks.
(b) Whenever any payment received by the Administrative Agent
or any Bank under this Agreement or any Note is insufficient to pay in full all
amounts then due and payable to the Administrative Agent and the Banks under
this Agreement and the Notes, and the Administrative Agent has not received a
Payment Sharing Notice (or if the Administrative Agent has received a Payment
Sharing Notice but the Event of Default specified in such Payment Sharing
Notice has been cured or waived), such payment shall be distributed and applied
by the Administrative Agent and the Banks in the following order: first, to the
payment of fees and expenses due and payable to the Administrative Agent in its
capacity as Administrative Agent under and in connection with this Agreement;
second, to the payment of all expenses due and payable under subsection 13.5,
ratably among the Banks in accordance with the aggregate amount of such
payments owed to each such Bank; third, to the payment of fees due and payable
under subsections 5.2(a) and (b), ratably among the Banks in accordance with
their Commitment Percentages; fourth, to the payment of interest then due and
payable on the Loans, ratably among the Banks in accordance with the aggregate
amount of interest owed to each such Bank; and fifth, to the payment of the
principal amount of the Loans which is then due and payable, ratably among the
Banks in accordance with the aggregate principal amount owed to each such Bank.
(c) After the Administrative Agent has received a Payment
Sharing Notice which remains in effect, all payments received by the
Administrative Agent under this Agreement or any Note shall be distributed and
applied by the Administrative Agent and the Banks in the following order:
first, to the payment of all amounts described in clauses first through third
of the foregoing paragraph (b), in the order set forth therein; and second, to
the payment of the interest accrued on and the principal amount of all of the
Loans, regardless of whether any such amount is then due and payable, ratably
among the Banks in accordance with the aggregate accrued interest plus the
aggregate principal amount owed to such Bank.
(d) All payments (including prepayments) to be made by any
Borrower hereunder and under the Notes, whether on account of principal,
interest, fees or otherwise, shall be made without set-off or counterclaim and
shall be made prior to 3:00 P.M., New York City time, on the due date thereof
(i) in the case of fees and Loans other than Bilateral Option Loans, to the
Administrative Agent, for the account of the Banks, at the Administrative
Agent's office specified in subsection 13.2, and (ii) in the case of Bilateral
Option Loans made by any Bank, to such Bank, at the Bank's office specified in
Schedule I (or, with respect to Alternative Currency Bilateral Loans, if
different, at such other office of the Bank that it shall designate), in each
case in Dollars (or, with respect to Alternative Currency Bilateral Loans, in
the relevant Alternative Currency) and in immediately available funds. If any
payment hereunder becomes due and payable on a day other than a Business Day,
such payment shall be extended to the next succeeding Business Day (unless,
with respect to any payment on a Eurodollar Loan, the result of such extension
would be to extend such payment into another calendar month, in which event
such payment shall be made on the immediately preceding Business Day), and,
with respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension.
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(e) Unless the Administrative Agent shall have been notified
in writing by the Bank prior to a Borrowing Date that such Bank will not make
the amount of any Loan it has committed to make on such date available to the
Administrative Agent, the Administrative Agent may assume that such Bank has
made such amount available to the Administrative Agent on such Borrowing Date,
and the Administrative Agent may, in reliance upon such assumption, make
available to the applicable Borrower a corresponding amount. If such amount is
made available to the Administrative Agent on a date after such Borrowing Date,
such Bank shall pay to the Administrative Agent on demand an amount equal to
the product of (i) the daily average Federal Funds Effective Rate during such
period, times (ii) the amount of the Loan such Bank was committed to make,
times (iii) a fraction the numerator of which is the number of days that elapse
from and including such Borrowing Date to the date on which such Bank's Loan
shall have become immediately available to the Administrative Agent and the
denominator of which is 360. A certificate of the Administrative Agent
submitted to any Bank with respect to any amounts owing under this subsection
shall be conclusive in the absence of manifest error. If such Bank's Commitment
Percentage of such borrowing is not in fact made available to the
Administrative Agent by such Bank within three Business Days of such Borrowing
Date, the Administrative Agent shall be entitled to recover such amount with
interest thereon at the rate per annum applicable to ABR Loans hereunder, on
demand, from such Borrower.
5.10 Illegality. Notwithstanding any other provision herein,
if any change after the date hereof in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Bank to
make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the
commitment of such Bank hereunder to make Eurodollar Loans, continue Eurodollar
Loans as such and convert ABR Loans to Eurodollar Loans shall forthwith be
cancelled and (b) such Bank's Loans then outstanding as Eurodollar Loans, if
any, shall be converted automatically to ABR Loans on the respective last days
of the then current Interest Periods with respect to such Loans or within such
earlier period as required by law. If any such conversion of a Eurodollar Loan
occurs on a day which is not the last day of the then current Interest Period
with respect thereto, the Borrower of such Loan shall pay to such Bank such
amounts, if any, as may be required pursuant to subsection 5.13.
5.11 Requirements of Law. (a) In the event that any change
after the date hereof in any Requirement of Law or in the interpretation or
application thereof or compliance by any Bank with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority made subsequent to the date hereof:
(i) shall subject any Bank to any tax of any kind
whatsoever with respect to this Agreement, any Note or any Eurodollar
Loan made by it, or change the basis of taxation of payments to such
Bank in respect thereof (except for taxes covered by subsection 5.12
and changes in taxes based upon or measured by income of such Bank);
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, deposits or other liabilities in or for the
account of, advances, loans or other extensions of credit by, or any
other
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acquisition of funds by, any office of such Bank which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Bank any other condition;
and the result of any of the foregoing is to increase the cost to such Bank, by
an amount which such Bank deems in its reasonable judgment to be material, of
making, converting into, continuing or maintaining Eurodollar Loans or to
reduce any amount receivable hereunder in respect thereof then, in any such
case, the Company shall promptly pay such Bank, upon its demand, any additional
amounts necessary to compensate such Bank for such increased cost or reduced
amount receivable. If any Bank becomes entitled to claim any additional amounts
pursuant to this subsection, it shall promptly notify the Company, through the
Administrative Agent, of the event by reason of which it has become so
entitled. A certificate as to any additional amounts payable pursuant to this
subsection setting forth the calculation thereof in reasonable detail (as
determined by such Bank in its reasonable discretion) submitted by such Bank,
through the Administrative Agent, to the Company shall be conclusive in the
absence of manifest error. This covenant shall survive the termination of this
Agreement and the payment of the Notes and all other amounts payable hereunder.
(b) In the event that any Bank shall have determined that any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Bank or any
corporation controlling such Bank with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof does or shall have the effect of
reducing the rate of return on such Bank's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Bank
or such corporation could have achieved but for such change or compliance
(taking into consideration such Bank's or such corporation's policies with
respect to capital adequacy) by an amount deemed by such Bank to be material,
then from time to time, after submission by such Bank to the Company (with a
copy to the Administrative Agent) of a written request therefor, the Company
shall pay to such Bank such additional amount or amounts as will compensate
such Bank for such reduction. A certificate as to any additional amount payable
pursuant to this subsection setting forth the calculation thereof in reasonable
detail (as determined by such Bank in its reasonable discretion) through the
Administrative Agent, to the Company shall be conclusive in the absence of
manifest error.
(c) Upon request by any Bank, through the Administrative
Agent, from time to time, the Borrowers shall pay the cost of all Eurocurrency
Reserve Requirements applicable to the Eurodollar Loans made by such Bank. If a
Bank is or becomes entitled to receive payments in respect of Eurocurrency
Reserve Requirements, pursuant to this subsection 5.11(c), it shall promptly
notify the Borrowers thereof through the Administrative Agent. A certificate as
to the amount of such Eurocurrency Reserve Requirements setting forth the
calculation thereof in reasonable detail (as determined by such Bank in its
reasonable discretion) submitted by such Bank, through the Administrative
Agent, to the Borrowers shall be conclusive in the absence of manifest error.
This covenant shall survive the termination of this Agreement and the payment
of the Loans and all other amounts payable hereunder.
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5.12 Taxes. (a) All payments made by any Borrower under this
Agreement and any Notes shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority, excluding, in the case of the Administrative
Agent and each Bank, net income taxes and franchise taxes (imposed in lieu of
net income taxes) that would not have been imposed on the Administrative Agent
or such Bank, as the case may be, in the absence of a present or former
connection between the jurisdiction of the government or taxing authority
imposing such tax and the Administrative Agent or such Bank (other than a
connection arising solely from the Administrative Agent or such Bank having
executed, delivered or performed its obligations or received a payment under,
or enforced, this Agreement or any Notes) or any political subdivision or
taxing authority thereof or therein (all such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions and withholdings being hereinafter
called "Taxes"). If any Taxes are required to be withheld from any amounts
payable to the Administrative Agent or any Bank hereunder or under any Notes,
the amounts so payable to the Administrative Agent or such Bank shall be
increased to the extent necessary to yield to the Administrative Agent or such
Bank (after payment of all Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement and the
Notes. Whenever any Taxes are payable by any Borrower in respect of any payment
made hereunder, as promptly as possible thereafter any Borrower shall send to
the Administrative Agent for its own account or for the account of such Bank,
as the case may be, a certified copy of an original official receipt received
by such Borrower showing payment thereof. If such Borrower fails to pay any
Taxes when due to the appropriate taxing authority or fails to remit to the
Administrative Agent the required receipts or other required documentary
evidence, such Borrower shall indemnify the Administrative Agent and the Banks
for any incremental taxes, interest or penalties that may become payable by the
Administrative Agent or any Bank as a result of any such failure. The
agreements in this subsection shall survive the termination of this Agreement
and the payment of the Notes and all other amounts payable hereunder.
(b) Each Bank that is not incorporated under the laws of the
United States of America or a state thereof agrees that it will deliver to the
Company and the Administrative Agent (i) two duly completed copies of United
States Internal Revenue Service Form 1001 or 4224 or successor applicable form,
as the case may be, and (ii) an Internal Revenue Service Form W-8 or W-9 or
successor applicable form. Each such Bank also agrees to deliver to the Company
and the Administrative Agent two further copies of the said Form 1001 or 4224
and Form W-8 or W-9, or successor applicable forms or other manner of
certification, as the case may be, on or before the date that any such form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the Company, and
such extensions or renewals thereof as may reasonably be requested by the
Company or the Administrative Agent, unless in any such case an event
(including, without limitation, any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Bank from duly completing and delivering any such form with respect to it and
such Bank so advises the Company and the Administrative Agent. Such Bank shall
certify (i) in the case of a Form 1001 or 4224, that it is entitled to receive
payments under this Agreement without deduction or withholding of any United
States federal income
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taxes and (ii) in the case of a Form W-8 or W-9, that it is entitled to an
exemption from United States backup withholding tax.
5.13 Indemnity. Each Borrower agrees to indemnify each Bank
and to hold each Bank harmless from any loss or expense which such Bank may
sustain or incur as a consequence of (a) default by any Borrower in payment
when due of the principal amount of or interest on any Eurodollar Loan, (b)
default by any Borrower in making a borrowing of, conversion into or
continuation of Eurodollar Loans after such Borrower has given a notice
requesting the same in accordance with the provisions of this Agreement, (c)
default by any Borrower in making any prepayment after such Borrower has given
a notice thereof in accordance with the provisions of this Agreement or (d) the
making of a payment or prepayment of Eurodollar Loans on a day which is not the
last day of an Interest Period with respect thereto, including, without
limitation, in each case, any such loss or expense arising from the
reemployment of funds obtained by it or from fees payable to terminate the
deposits from which such funds were obtained. This covenant shall survive the
termination of this Agreement and the payment of the Loans or Notes, if any,
and all other amounts payable hereunder.
SECTION 6. REPRESENTATIONS AND WARRANTIES
To induce the Banks to enter into this Agreement, each of the
Company and the Parent represents and warrants to the Administrative Agent and
each Bank that:
6.1 Corporate Existence; Compliance with Law. Each Loan Party
(a) is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation, (b) is duly qualified and
in good standing in each jurisdiction wherein, in the opinion of the Company
and the Parent, the conduct of its business or the ownership of its properties
requires such qualification and (c) is in compliance with all Requirements of
Law, except to the extent that the failure to comply with paragraph (a), (b) or
(c) of this subsection would not, in the aggregate, reasonably be expected to
have a Material Adverse Effect.
6.2 Corporate Power, Authorization; Enforceable Obligations.
Each Loan Party has the corporate power and authority to make, deliver and
perform its obligations under the Loan Documents to which it is or will be a
party, and has taken all necessary corporate action to authorize (i) in the
case of the Borrowers, the borrowings under this Agreement and any Notes to
which it is or will be a party on the terms and conditions hereof and thereof
and (ii) the execution, delivery and performance of this Agreement and the Loan
Documents to which it is or will be a party. This Agreement has been, and any
Note and the other Loan Documents to which it is or will be a party will be,
duly executed and delivered on behalf of each relevant Loan Party. This
Agreement constitutes, and each of the Notes, if any, and the other Loan
Documents when executed and delivered will constitute, a legal, valid and
binding obligation of the Loan Party thereto, enforceable against such Loan
Party in accordance with its terms, such enforceability subject to limitations
under any applicable bankruptcy, insolvency, moratorium or other laws affecting
creditors' rights and by general equitable principles (whether applied in a
proceeding in equity or at law). No consent of any
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other party (including stockholders of the Parent) and no consent, license,
approval or authorization of, or registration or declaration with, any
Governmental Authority is required to be obtained by any Loan Party in
connection with the execution, delivery, performance, validity or
enforceability of this Agreement and any Notes.
6.3 No Legal Bar. The execution, delivery and performance of
this Agreement, the Notes and the other Loan Documents, the borrowings
hereunder and the use of the proceeds thereof, will not violate or contravene
any material provision of any Requirement of Law or material Contractual
Obligation of the Parent, the Company or any of its Subsidiaries and will not
result in, or require, the creation or imposition of any material Lien (other
than Liens permitted under subsection 9.2) on any of its or their respective
properties or revenues pursuant to any such Requirement of Law or Contractual
Obligation.
6.4 No Material Litigation. There is no legal action,
administrative proceeding or arbitration (whether or not purportedly on behalf
of the Parent or the Company or any of its Subsidiaries) presently pending, or
to the knowledge of the Parent or the Company threatened, against or affecting
the Parent or the Company or any of its Subsidiaries which would reasonably be
expected to have a Material Adverse Effect, except that the foregoing is
subject to the fact that the Parent and the Company cannot predict at this time
the results and impact, if any, of (i) those investigations and litigations
incorporated by reference in Item 3 of the Parent's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997 referred to in subsection 6.6 to
the extent that inability to make such a prediction or determine liability is
stated in Item 3 and (ii) the governmental investigation and related matters
described in Note 3 to the Consolidated Financial Statements referred to in
Item 3.
6.5 Ownership of Properties. Each of the Parent, the Company
and each of its Subsidiaries is the tenant under valid leases or has good title
to substantially all its properties and assets, real and personal (except
defects in title and other matters that would not reasonably be expected to
have a Material Adverse Effect), subject to no Lien except as permitted to
exist under subsection 9.2.
6.6 Financial Condition. The consolidated balance sheet of
the Parent (or its predecessor) and its Subsidiaries as at December 31, 1997
and the related consolidated statements of operations, shareholders' equity and
of cash flows (together with the related notes), included or incorporated in
the Parent's Annual Report on Form 10-K filed with the SEC for the fiscal year
ended December 31, 1997, present fairly in all material respects the financial
position of the Parent (or its predecessor) and its Subsidiaries as at such
dates and the results of their operations and their cash flows for the fiscal
years then ended. All of such financial statements, including the notes to such
financial statements, have been prepared in conformity with GAAP (subject, in
the case of interim statements, to normal year-end adjustments and to the fact
that such financial statements may be abbreviated and may omit footnotes or
contain incomplete footnotes) consistently applied throughout the periods
involved except as stated therein.
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6.7 Disclosure of Contingent Liabilities. To the best of the
knowledge and belief of the Parent, neither the Parent nor any of its
Subsidiaries has any contingent obligation, liability for taxes, long-term
leases, unusual forward or other liabilities, which are material in amount in
relation to the consolidated financial condition of the Parent and its
Subsidiaries taken as a whole and which are not disclosed in the financial
statements (including the related notes) described in subsection 6.6 above.
6.8 ERISA. Each Plan that is intended to qualify under
Section 401(a) of the Code satisfies in all material respects the applicable
requirements for qualification under that Code Section. No Reportable Event has
occurred and is continuing with respect to any such Plan, and neither the
Parent nor any of its Subsidiaries has incurred any liability to the PBGC under
Section 4062 of ERISA with respect to any such Plan that would reasonably be
expected to have a Material Adverse Effect.
6.9 Certain Federal Regulations. Neither the Company nor any
of its Subsidiaries is engaged in or will engage in the business of extending
credit for the purposes of "purchasing" or "carrying" any "margin stock" within
the respective meanings of each of the quoted terms under Regulation U of the
Board, and no part of the proceeds of any Loan will be used for any purpose
which violates, or which would be inconsistent with, the provisions of
Regulation U or X of the Board.
6.10 No Default. Neither the Parent nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which would reasonably be expected to have a
Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.
6.11 Taxes. (a) Each of the Parent and its Subsidiaries has
filed or caused to be filed all tax returns which, to the knowledge of the
Parent, are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than any the amount or validity
of which are currently being contested in good faith by appropriate proceedings
and with respect to which adequate reserves to the extent required in
conformity with GAAP, have been provided on the books of the Parent or its
Subsidiaries, as the case may be) except insofar as the failure to make such
filings or payments would not reasonably be expected to have a Material Adverse
Effect; and (b) no tax Lien (other than a Lien permitted under subsection
9.2(a)) has been filed, and, to the knowledge of the Parent, no claim is being
asserted, with respect to any such tax, fee or other charge which would
reasonably be expected to have a Material Adverse Effect.
6.12 Investment Company Act; Other Regulations. None of the
Parent, the Company or any of its Subsidiaries is an "investment company", or a
company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended. None of the Parent, the Company or
any other Borrower is subject to regulation under any Federal or State statute
or regulation which limits its ability to incur Indebtedness.
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6.13 Purpose of Loans. The proceeds of the Loans shall be
used by the Borrowers for general corporate purposes (which may include
purchases by the Parent of its capital stock).
6.14 Environmental Matters. To the best of the knowledge of
the Parent, the operations of the Parent and its Subsidiaries and all parcels
of real estate owned or operated by the Parent or its Subsidiaries are in
compliance with all Environmental Laws, except where the failure to so comply
would not reasonably be expected to have a Material Adverse Effect.
6.15 Principal Subsidiaries. Set forth on Schedule II are all
of the Principal Subsidiaries as of the date hereof.
6.16 Year 2000. Any reprogramming relating to the year 2000
required to permit the proper functioning, in and following the year 2000, in
all material respects, of (i) the computer systems of the Parent and its
Subsidiaries and (ii) any material equipment of the Parent and its Subsidiaries
containing embedded microchips and the testing of all such systems and
equipment, as so reprogrammed, is expected to be completed by June 30, 1999.
The aggregate cost to the Parent and its Subsidiaries of such reprogramming and
testing and of the reasonably foreseeable consequences of year 2000 to the
Parent and its Subsidiaries (including, without limitation, reprogramming
errors and the failure of others' systems or equipment) is not expected to
result in a Default or a Material Adverse Effect.
SECTION 7. CONDITIONS PRECEDENT
7.1 Conditions to Effectiveness. The parties hereto
acknowledge that the effectiveness of this Agreement is subject to the
satisfaction of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have
received (i) this Agreement, executed and delivered by a duly
authorized officer of each of the Loan Parties, with a counterpart for
each Bank, (ii) for the account of each Bank so requesting, a
Revolving Credit Note and a Bid Loan Note conforming to the
requirements hereof and executed by a duly authorized officer of the
Borrowers and (iii) an incumbency certificate of each of the Loan
Parties which covers such officers.
(b) Corporate Proceedings. The Administrative Agent shall
have received, with a counterpart for each Bank, a copy of the
resolutions, in form and substance satisfactory to the Administrative
Agent, of the Board of Directors of each of the Loan Parties
authorizing (i) the execution, delivery and performance of the Loan
Documents to which it is or will be a party and (ii) the borrowings
contemplated hereunder (in the case of each Borrower), certified by
the Secretary or an Assistant Secretary of such Loan Party as of the
Closing Date, which certificate shall state that the resolutions
thereby certified have not been amended, modified, revoked or
rescinded and shall be in form and substance satisfactory to the
Administrative Agent.
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(c) Legal Opinions. The Administrative Agent shall have
received, with a counterpart for each Bank, the following executed
legal opinions:
(i) the executed legal opinion of counsel to
the Company and the Parent who may be the General Counsel of
the Company, substantially in the form of Exhibit F-1;
(ii) to the extent required pursuant to
subsection 13.15(a)(ii), the executed legal opinion of
counsel to any other Borrower, in form and substance
reasonably satisfactory to the Administrative Agent; and
(iii) the executed legal opinion of Simpson
Thacher & Bartlett, counsel to the Administrative Agent,
substantially in the form of Exhibit F-2.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative
Agent may reasonably require.
(d) Officer's Certificate. The Administrative Agent shall
have received, with a counterpart for each Bank, a certificate
respecting accuracy of representations and warranties, the absence of
events having a Material Adverse Effect and the absence of Defaults
and Events of Default, substantially in the form of Exhibit G hereto,
signed by a Responsible Officer on behalf of each of the Company and
the Parent.
(e) Additional Matters. All corporate and other proceedings,
and all documents, instruments and other legal matters in connection
with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Administrative Agent, and
the Administrative Agent shall have received such other documents and
legal opinions in respect of any aspect or consequence of the
transactions contemplated hereby or thereby as it shall reasonably
request.
(f) Fees. The Administrative Agent shall have received, on
behalf of itself, the Banks and the Arranger, the fees to be received
on the Closing Date referred to in subsection 5.2.
7.2 Conditions to Each Loan. The agreement of each Bank to
make any Loan requested to be made by it on any date is subject to the
satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by each of the Loan Parties in or
pursuant to subsections 6.1, 6.2, 6.3, 6.5, 6.9, 6.10, 6.11, 6.12 and
6.13 of this Agreement and in or pursuant to any other Loan Document
to which it is or will be a party, shall be true and correct in all
material respects on and as of such date as if made on and as of such
date, and the representation and warranty made
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pursuant to subsection 6.6 shall be true and correct in all material
respects with respect to the financial statements most recently
delivered pursuant to subsection 8.1, mutatis mutandis, as if such
financial statements delivered pursuant to subsection 8.1 were the
financial statements referred to in subsection 6.6.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
Loans requested to be made on such date.
Each borrowing by the Borrowers hereunder shall constitute a representation and
warranty by the Loan Parties as of the date of such Loan that the conditions
contained in this subsection 7.2 have been satisfied.
SECTION 8. AFFIRMATIVE COVENANTS
Each of the Company and the Parent hereby agrees that, so
long as the Commitments remain in effect, any Note remains outstanding and
unpaid or any other amount is owing to any Bank or the Administrative Agent
hereunder, each of the Company and the Parent shall and the Company (except in
the case of delivery of financial information, reports and notices) shall cause
each of its Principal Subsidiaries to:
8.1 Financial Statements. Furnish to each Bank:
(a) as soon as available, but in any event within 120 days
after the end of each fiscal year of the Parent, a copy of the
consolidated balance sheet of the Parent and its Subsidiaries as at
the end of such year and the related consolidated statements of
operations, shareholders' equity and cash flows for such year (as
included or incorporated by reference in the Parent's Annual Report on
Form 10-K or successor form filed with the SEC for each such fiscal
year), setting forth in each case in comparative form the figures for
the previous year, reported on without a "going concern" or like
qualification or exception, or qualification arising out of the scope
of the audit, by Price Waterhouse LLP or other independent certified
public accountants of nationally recognized standing not unacceptable
to the Majority Banks; and
(b) as soon as available, but in any event not later than 75
days after the end of each of the first three quarterly periods of
each fiscal year of the Parent, the unaudited consolidated balance
sheet of the Parent and its Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of operations for
such quarter and the related unaudited consolidated statements of
operations and cash flows for the portion of the fiscal year through
the end of such quarter (as included in the Parent's Quarterly Report
on Form 10-Q or successor form filed with the SEC for each such
period), setting forth in each case in comparative form the figures
for the corresponding period of the previous year, certified by a
Responsible Officer as being fairly stated in all material respects
when
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considered in relation to the consolidated financial statements of the
Parent and its Subsidiaries.
All such financial statements shall be prepared in conformity with GAAP
(subject, in the case of interim statements, to normal year-end adjustments and
to the fact that such financial statements may be abbreviated and may omit
footnotes or contain incomplete footnotes) applied consistently throughout the
periods reflected therein and with prior periods (except as disclosed therein).
8.2 Certificates; Other Information. Furnish to each Bank:
(a) concurrently with the delivery of the financial
statements referred to in subsection 8.1(a), a certificate of the
independent certified public accountants reporting on such financial
statements stating that in making the examination necessary therefor
no knowledge was obtained of any Default or Event of Default, except
as specified in such certificate;
(b) concurrently with the delivery of the financial
statements referred to in subsections 8.1(a) and 8.1(b), a certificate
of a Responsible Officer of the Parent in his capacity as such officer
stating that, (i) to the best of such Officer's knowledge, each of the
Borrowers and the Parent during such period has observed or performed
all of its covenants and other agreements, and satisfied every
condition contained in this Agreement and in the Notes and the other
Loan Documents to which it is a party to be observed, performed or
satisfied by it, (ii) to the best of such Officer's knowledge, the
representation and warranty contained in subsection 6.16 is true and
correct as of the date of delivery of such financial statements and
certificate and (iii) that such Officer has obtained no knowledge of
any Default or Event of Default except as specified in such
certificate and showing in detail the calculation of compliance with
subsections 9.1 and 9.2;
(c) concurrently with the delivery of the financial
statements referred to in subsection 8.1(a), a list of the Principal
Subsidiaries as of the corresponding fiscal year end, certified by a
Responsible Officer in his capacity as such officer;
(d) within ten Business Days after the same are sent, copies
of all financial statements and reports which the Parent sends to its
shareholders generally relating to the business of the Parent and its
Subsidiaries, and within ten Business Days after the same are filed,
copies of all reports on Forms 10-K, 10-Q, 8-K, 8 and 10, and
Schedules 13D, 13E-3, 13E-4, 13-G, 14D-1 and 14D-9, or successor forms
or schedules, and the final prospectus in each effective registration
statement (other than registration statements on Form S-8) and each
post-effective amendment to such registration statement which the
Parent may make to, or file with, the SEC; and
(e) promptly, subject to reasonable confidentiality
requirements agreed to by the Company and such Bank, such additional
financial and other information as any Bank may from time to time
reasonably request.
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8.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves, to the extent required in conformity with GAAP with respect
thereto, have been provided on the books of the Parent or its Subsidiaries, as
the case may be, and except to the extent that the failure to so pay, discharge
or otherwise satisfy such obligations would not result in a Default or Event of
Default under Section 10(e)(i).
8.4 Conduct of Business and Maintenance of Existence.
Preserve, renew and keep in full force and effect its corporate existence and
take all reasonable action to maintain all corporate rights, privileges and
franchises necessary or desirable in the normal conduct of its business, except
as otherwise permitted pursuant to subsection 9.3; comply with all Contractual
Obligations and Requirements of Law except to the extent that failure to comply
therewith would not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
8.5 Insurance. Maintain with financially sound and reputable
insurance companies (which may include, without limitation, captive insurers),
such insurance coverage as is reasonable for the business activities of the
Parent and its Subsidiaries; and furnish to the Administrative Agent, upon
written request, such information as the Administrative Agent may reasonably
request as to its insurance program.
8.6 Inspection of Property, Books and Records; Discussions.
Permit representatives of any Bank (subject to reasonable safety and
confidentiality requirements) to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired and to discuss the business,
operations, properties and financial and other condition of the Parent and its
Subsidiaries with officers and employees of the Parent and its Subsidiaries
and, provided representatives of the Parent are given an opportunity to
participate, with its independent certified public accountants.
8.7 Notices. Promptly give notice to the Administrative Agent
and each Bank of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Parent or any of its Subsidiaries or (ii)
litigation, investigation or proceeding which may exist at any time
between the Parent or any of its Subsidiaries and any Governmental
Authority, which in either case, would reasonably be expected to have
a Material Adverse Effect;
(c) any litigation or proceeding affecting the Parent or any
of its Subsidiaries in which the then reasonably anticipated exposure
of the Parent and its Subsidiaries is $10,000,000 or more and not
covered by insurance, or in which injunctive or similar relief is
sought which is then reasonably anticipated to have an adverse
economic effect on the Parent and its Subsidiaries of $10,000,000 or
more;
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(d) the following events, as soon as possible and in any
event within 30 days after the Company or the Parent knows or has
reason to know thereof: (i) the occurrence or expected occurrence of
any Reportable Event with respect to any Plan, or any withdrawal from,
or the termination, Reorganization or Insolvency of any Multiemployer
Plan or (ii) the institution of proceedings or the taking of any other
action by the PBGC or the Company or the Parent or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the
withdrawal from, or the terminating, Reorganization or Insolvency of,
any Plan, where in connection with any of the events described in (i)
or (ii) above the liability to the Company or a Commonly Controlled
Entity would reasonably be expected to be $10,000,000 or more;
(e) any upgrading, downgrading or cessation in the rating of
the long term senior unenhanced, unsecured debt of the Company by the
rating agency or agencies whose rating on such debt is then being used
to determine the Applicable Margin and the Facility Fee Rate; and
(f) a development or event which would reasonably be expected
to have a Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action each of the Company and the Parent proposes to
take with respect thereto.
8.8 Environmental Laws.
(a) Comply with all Environmental Laws and obtain and comply
with and maintain any and all licenses, approvals, registrations or permits
required by Environmental Laws, except to the extent that failure to do so
would not be reasonably expected to have a Material Adverse Effect; and
(b) Defend, indemnify and hold harmless the Administrative
Agent and the Banks, and their respective employees, agents, officers and
directors, from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature known or
unknown, contingent or otherwise, arising out of, or in any way relating to the
violation of or noncompliance with any Environmental Laws applicable to the
real property owned or operated by the Company, the Parent or any of the
Company's Subsidiaries, or any orders, requirements or demands of Governmental
Authorities related thereto, including, without limitation, attorney's and
consultant's fees, investigation and laboratory fees, court costs and
litigation expenses, except to the extent that any of the foregoing arise out
of the gross negligence or willful misconduct of the party seeking
indemnification therefor.
8.9 Year 2000 Compliance. Complete, by June 30, 1999, any
reprogramming relating to the year 2000 required to permit the proper
functioning, in and following the year 2000, of (i) the computer systems of the
Parent and its Subsidiaries and (ii) any material equip ment of the Parent and
its Subsidiaries containing embedded microchips and the testing of all such
systems and
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equipment, except to the extent that failure to do so would not be
reasonably expected to have a Material Adverse Effect.
SECTION 9. NEGATIVE COVENANTS
The Parent hereby agrees that, so long as the Commitments
remain in effect, any Note remains outstanding and unpaid or any other amount
is owing to any Bank or the Administrative Agent hereunder, it shall not, and
(except with respect to subsections 9.1 and 9.5(b)) shall not permit any of its
Subsidiaries to, directly or indirectly:
9.1 Financial Condition Covenants.
(a) Consolidated Debt to EBITDA. Permit on the last day of
any fiscal quarter of the Company commencing with June 30, 1998, the ratio of
Consolidated Debt as at the end of such fiscal quarter to EBITDA for the period
of four consecutive fiscal quarters then ended to be greater than 3.5 to 1.0.
(b) Interest Coverage. Permit for any period of four
consecutive fiscal quarters ending on the last day of any fiscal quarter of the
Company commencing with June 30, 1998, the ratio of EBIT for such four fiscal
quarter period to Consolidated Interest Expense for such four fiscal quarter
period to be less than 2.0 to 1.0.
9.2 Limitation on Liens. Create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues (which property,
assets or revenues are or would be reflected from time to time on the
consolidated financial statements of the Parent and its Subsidiaries in
accordance with GAAP), whether now owned or hereafter acquired, except for:
(a) Liens for taxes or other governmental charges not yet due
or which are being contested in good faith by appropriate proceedings,
provided that adequate reserves with respect thereto are maintained on
the books of the Parent or its Subsidiaries, as the case may be, to
the extent required in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, vendors', landlords', brokers', bankers' and other like
Liens arising in the ordinary course of business relating to
obligations which are not overdue for a period of more than 60 days or
which are being contested in good faith and Liens arising out of
judgments or awards that are either discharged within 60 days after
entry or execution of which has been stayed pending the outcome of
appeal or review proceedings;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation and deposits securing liability to insurance carriers
under insurance or self-insurance arrangements;
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(d) pledges, deposits and similar arrangements in connection
with or to secure performance of bids, tenders, leases and other
deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business and contractual rights of
other Persons to make set-offs and to require security in connection
with letters of credit, currency, commodity and interest rate
contracts, surety bonds, leases, banking and brokerage agreements and
other transactions in the ordinary course of business;
(e) leases, easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business which
would not reasonably be expected to have a Material Adverse Effect;
(f) Liens on the property, assets or revenues of a Person
which becomes a Subsidiary after the date hereof, to the extent that
(i) such Liens existed at the time such Person became a Subsidiary and
were not created in anticipation thereof, (ii) any such Lien is not
extended to cover any property, assets or revenues of such Person
after the time such Person becomes a Subsidiary, and (iii) the amount
of Indebtedness secured thereby is not thereafter increased;
(g) Liens arising in connection with (i) industrial
development, pollution control or other tax exempt financing
transactions, provided that such Liens do not at any time encumber any
property other than the property financed by such transaction and
other property, assets or revenues related to the property so financed
on which Liens are customarily granted in connection with such
transactions, or (ii) conveyances of any production payment or other
obligation to make a production payment (A) which is to be made solely
from production from oil, gas or other underground mineral properties
dedicated thereto or (B) as to which production payment amount the
obligee's sole recourse is to such properties;
(h) Liens (including, without limitation, Liens incurred in
connection with Capitalized Leases, operating leases and
sale-leaseback transactions) securing Indebtedness of the Parent and
its Subsidiaries incurred to finance the acquisition of fixed or
capital assets, and refinancings thereof, provided that (i) such Liens
do not at any time encumber any property other than the property
financed by such Indebtedness and other property, assets or revenues
related to the property so financed on which Liens are customarily
granted in connection with such financings or refinancings, and (ii)
the principal amount of Indebtedness secured by any such Lien shall at
no time exceed 100% of the greater of the original purchase price of
such property at the time it was acquired and the fair market value of
such property as reasonably determined by a Responsible Officer of the
Company in good faith thereafter, plus fees and other costs related to
the financing or refinancing thereof which have been agreed upon in an
arm's length manner;
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(i) Liens incurred in connection with accounts receivable
sale transactions entered into by the Parent or its Subsidiaries;
(j) Liens securing Contractual Obligations of any Subsidiary
to the Parent, the Company or any Domestic Subsidiary;
(k) Liens on the property, assets or revenues of any Foreign
Subsidiary or any Excluded Subsidiary; and
(l) Liens (not otherwise permitted hereunder) which secure
obligations in an aggregate amount at any time outstanding not
exceeding an amount equal to 5% of the amount recorded opposite the
caption "Properties and equipment, net" (or the equivalent caption) on
the consolidated balance sheet of the Parent and its Subsidiaries most
recently delivered to the Administrative Agent pursuant to subsection
8.1.
9.3 Limitation on Fundamental Changes. Convey, sell, lease,
assign, transfer or otherwise dispose of (including by merger, consolidation,
sale of stock, liquidation or dissolution) all or substantially all of the
property, assets or business of the Parent and its Subsidiaries taken as a
whole.
9.4 Limitation on Asset Transfers to Foreign Subsidiaries.
With respect to the Parent or any Domestic Subsidiary, convey, sell, lease,
assign, transfer or otherwise dispose of (collectively, a "transfer") any of
its property, business or assets (including, without limitation leasehold
interests), whether now owned or hereafter acquired, to any Foreign Subsidiary,
except such transfers which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
9.5 Limitation on Subordinated Debt. Permit any Subsidiary of
the Parent (other than the Company) to create, incur, assume or suffer to exist
any subordinated indebtedness other than (a) subordinated indebtedness of a
Person which becomes a Subsidiary after the date hereof to the extent such
indebtedness existed at the time such Person became a Subsidiary and was not
incurred in anticipation thereof and any refinancings of such indebtedness
after such time so long as the principal amount thereof is not increased or (b)
subordinated indebtedness of such Subsidiary held by the Parent or any other
Subsidiary of the Parent.
SECTION 10. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) Any Borrower shall fail to pay any principal of any Loan
or Note when due in accordance with the terms thereof or hereof; or
any Borrower shall fail to pay any interest on any Loan or Note, or
any other amount payable hereunder, within five Business Days after
any such interest or other amount becomes due in accordance with the
terms thereof or hereof; or
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(b) Any representation or warranty made, or pursuant to
subsection 7.2, deemed made, by any Loan Party herein or in any other
Loan Document or which is contained in any certificate, document or
financial or other statement furnished at any time under or in
connection with this Agreement shall prove to have been incorrect in
any material adverse respect on or as of the date made or deemed made;
or
(c) The Parent or any Subsidiary shall default in the
observance or performance of any agreement contained in subsection
9.1, 9.3, 9.4 or 9.5; or
(d) Any Loan Party shall default in the observance or
performance of any other agreement contained in this Agreement (other
than as provided in paragraphs (a) through (c) of this Section), and
such default shall continue unremedied for a period of 30 days; or
(e) The Parent or any of its Subsidiaries (other than the
Excluded Subsidiaries) shall (i) default in any payment of principal
of or interest on, or any other amount payable with respect to, any
(A) Domestic Indebtedness (other than the Notes and Loans) in an
aggregate principal amount for all such Domestic Indebtedness of
$10,000,000 or more, or (B) Foreign Subsidiary Indebtedness (other
than the Notes and Loans) in an aggregate principal amount for all
such Foreign Subsidiary Indebtedness of $20,000,000 or more, beyond
the period of grace (not to exceed 30 days), if any, provided in the
instrument or agreement under which such Indebtedness was created; or
(ii) default in the observance or performance of any other agreement
relating to any such Indebtedness in the amounts specified in clause
(i) above or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or
condition exist in any case which continues uncured or unwaived (and,
if waived, without any change in the material terms of such
Indebtedness) after the expiration of all applicable grace periods,
the effect of which default or other event or condition is to cause,
or to permit the holder or holders of such Indebtedness (or a trustee
or agent on behalf of such holder or holders) to cause, with the
giving of notice if required, such Indebtedness to become due prior to
its stated maturity; or
(f) (i) The Parent or any Principal Subsidiary (other than
the Excluded Subsidiaries) shall commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other
relief with respect to it or its debts, or (B) seeking appointment of
a receiver, trustee, custodian or other similar official for it or for
all or any substantial part of its assets, or the Parent or any such
Principal Subsidiary shall make a general assignment for the benefit
of its creditors; or (ii) there shall be commenced against the Parent
or any such Principal Subsidiary any case, proceeding or other action
of a nature referred to in clause (i) above which (A) results in the
entry of an order for relief or any such adjudication or appointment
or (B) remains undismissed, undischarged or unbonded for a period of
60 days; or (iii) there shall be commenced against the Parent or any
such Principal Subsidiary any case, proceeding or other action seeking
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issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not
have been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (iv) the Parent or any such
Principal Subsidiary shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the
acts set forth in clause (i), (ii) or (iii) above; or (v) the Parent
or any such Principal Subsidiary shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts
as they become due; or
(g) (i) Any Person shall engage in any non-exempt "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan, (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not
waived, shall exist with respect to any Plan, (iii) a Reportable Event
shall occur with respect to, or judicial proceedings shall commence to
have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any Single Employer Plan, which Reportable
Event or commencement of judicial proceedings or appointment of a
trustee is, in the reasonable opinion of the Majority Banks, likely to
result in the termination of such Plan for purposes of Title IV of
ERISA, (iv) any Single Employer Plan shall terminate for purposes of
Title IV of ERISA, (v) the Company or any Commonly Controlled Entity
shall, or in the reasonable opinion of the Majority Banks is likely
to, incur any liability in connection with a withdrawal from, or the
Insolvency or Reorganization of, a Multiemployer Plan or (vi) any
other event or condition shall occur or exist, with respect to a Plan;
and in each case in clauses (i) through (vi) above, such event or
condition, together with all other such events or conditions, if any,
could reasonably be expected to subject the Company or any of its
Subsidiaries to any tax, penalty or other liabilities which in the
aggregate would have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against
the Parent or any of its Subsidiaries in aggregate amounts (not paid
or fully covered by insurance) of $10,000,000 or more and all such
judgments or decrees shall not have been vacated, discharged, stayed
or bonded pending appeal within 60 days from the entry thereof; or
(i) The Parent shall cease to own directly or indirectly of
record and beneficially free and clear of Liens at least 75% of the
shares of the issued and outstanding capital stock of the Company;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i), (ii) or (iii) of paragraph (f) above with respect to any of the
Borrowers, automatically the Commitments to such Borrower shall immediately
terminate and the Loans made to such Borrower hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement and the Notes of such
Borrower shall immediately become due and payable, and (B) if such event is any
other Event of Default, either or both of the following actions may be taken:
(i) with the consent of the Majority Banks, the Administrative Agent may, or
upon the request of the Majority Banks, the Administrative Agent shall, by
notice to the Company declare the Commitments of any or all of the Borrowers to
be terminated forthwith, whereupon such Commitments shall immediately
terminate; and (ii) with the
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consent of the Majority Banks, the Administrative Agent may, or upon the
request of the Majority Banks, the Administrative Agent shall, by notice of
default to the Company and the Parent, declare the Loans hereunder made to any
or all of the Borrowers (with accrued interest thereon) and all other amounts
owing by such Borrower under this Agreement and the Notes of such Borrower to
be due and payable forthwith, whereupon the same shall immediately become due
and payable. Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
SECTION 11. THE ADMINISTRATIVE AGENT
11.1 Appointment. Each Bank hereby irrevocably designates and
appoints Chase as the Administrative Agent of such Bank under this Agreement
and the other Loan Documents, and each such Bank irrevocably authorizes Chase,
as the Administrative Agent for such Bank, to take such action on its behalf
under the provisions of this Agreement and the other Loan Documents and to
exercise such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.
11.2 Delegation of Duties. The Administrative Agent may
execute any of its duties under this Agreement and the other Loan Documents by
or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents
or attorneys-in-fact selected by it with reasonable care.
11.3 Exculpatory Provisions. Neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except for its or such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of the Banks for
any recitals, statements, representations or warranties made by any Loan Party
or any officer thereof contained in this Agreement or any other Loan Document
or in any certificate, report, statement or other document referred to or
provided for in, or received by the Administrative Agent under or in connection
with, this Agreement or any other Loan Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
the Notes or any other Loan Document or for any failure of any Loan Party to
perform its obligations hereunder or thereunder. The Administrative Agent shall
not be under any obligation to any Bank to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of any Loan Party.
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11.4 Reliance by Administrative Agent. The Administrative
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, statement, order or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Company, the
Parent or any other Borrower), independent accountants and other experts
selected by the Administrative Agent. The Administrative Agent may deem and
treat the payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Administrative Agent. The Administrative Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Majority Banks as it deems appropriate or it shall first be indemnified to
its satisfaction by the Banks against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such
action. The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement and the Notes and
the other Loan Documents in accordance with a request of the Majority Banks,
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all the Banks and all future holders of the Notes.
11.5 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Administrative Agent has received notice from a
Bank or any Loan Party referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that the Administrative Agent receives such a notice, the Administrative
Agent shall give notice thereof to the Banks. The Administrative Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Majority Banks; provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it
shall deem advisable in the best interests of the Banks.
11.6 Non-Reliance on Administrative Agent and Other Banks.
Each Bank expressly acknowledges that neither the Administrative Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact or Affiliates
has made any representations or warranties to it and that no act by the
Administrative Agent hereinafter taken, including any review of the affairs of
the Loan Parties, shall be deemed to constitute any representation or warranty
by the Administrative Agent to any Bank. Each Bank represents to the
Administrative Agent that it has, independently and without reliance upon the
Administrative Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Loan Parties and made its own decision to
make its Loans hereunder and enter into this Agreement. Each Bank also
represents that it will, independently and without reliance upon the
Administrative Agent 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 analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
financial and other condition and
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creditworthiness of the Loan Parties. Except for notices, reports and other
documents expressly required to be furnished to the Banks by the Administrative
Agent hereunder, the Administrative Agent shall not have any duty or
responsibility to provide any Bank with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Loan Parties which may come
into the possession of the Administrative Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
11.7 Indemnification. The Banks agree to indemnify the
Administrative Agent in its capacity as such (to the extent not reimbursed by
the Loan Parties and without limiting the obligation of the Parent, the Company
and any other Borrower to do so), ratably according to the respective amounts
of their Commitments as in effect on the date on which the claim for indemnity
by the Administrative Agent is sought, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at any
time (including, without limitation, at any time following the payment of the
Notes) be imposed on, incurred by or asserted against the Administrative Agent
in any way relating to or arising out of this Agreement, any of the other Loan
Documents or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by the Administrative Agent under or in connection with any of the foregoing;
provided that no Bank shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting solely from the
Administrative Agent's gross negligence or willful misconduct. The agreements
in this subsection shall survive the payment of the Notes and all other amounts
payable hereunder.
11.8 Administrative Agent in Its Individual Capacity. The
Administrative Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Parent, the Company or
any other Borrower as though the Administrative Agent were not the
Administrative Agent hereunder and under the other Loan Documents. With respect
to its Loans made or renewed by it and any Note issued to it, the
Administrative Agent shall have the same rights and powers under this Agreement
and the other Loan Documents as any Bank and may exercise the same as though it
were not the Administrative Agent, and the terms "Bank" and "Banks" shall
include the Administrative Agent in its individual capacity.
11.9 Successor Administrative Agent. The Administrative Agent
may resign as Administrative Agent upon 10 days' notice to the Banks. If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents, then the Majority Banks shall appoint from among
the Banks a successor agent for the Banks, which successor agent shall be
approved by the Company, whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon its
appointment, and the former Administrative Agent's rights, powers and duties as
Administrative Agent shall be terminated, without any other or further act or
deed on the part of such former Administrative Agent or any of the parties to
this Agreement or any holders of the Notes. After any retiring Administrative
Agent's resignation as Administrative Agent, the
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provisions of this subsection shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Administrative Agent under this
Agreement and the other Loan Documents.
11.10 Co-Agents. None of the Co-Agents shall have any rights
or obligations under this Agreement except in its capacity as a Bank hereunder.
SECTION 12. GUARANTEES
12.1 Parent Guarantee. The Parent hereby unconditionally and
irrevocably guarantees to the Administrative Agent and the Banks the prompt and
complete payment and performance by each of the Borrowers when due (whether at
the stated maturity, by acceleration or otherwise) of the Obligations owing to
the Administrative Agent and the Banks by such Borrowers. This guarantee (the
"Parent Guarantee") shall remain in full force and effect until the Obligations
of each of the Borrowers are indefeasibly paid in full, notwithstanding that
from time to time prior thereto any Borrower may be free from any Obligations.
The Parent agrees that whenever, at any time, or from time to time, it shall
make any payment to the Administrative Agent or any Bank on account of its
liability under this Parent Guarantee, it will notify the Administrative Agent
and such Bank in writing that such payment is made under this Parent Guarantee
for such purpose. No payment or payments made by any Borrower or any other
Person or received or collected by the Administrative Agent or any Bank from
any Borrower or any other Person by virtue of any action or proceeding or any
offset or appropriation or application, at any time or from time to time, in
reduction of or in payment of the Obligations of such Borrower shall be deemed
to modify, reduce, release or otherwise affect the liability of the Parent
under this Parent Guarantee, which shall remain obligated under this Parent
Guarantee, notwithstanding any such payment or payments until the Obligations
are paid in full.
12.2 Company Guarantee. The Company hereby unconditionally
and irrevocably guarantees to the Administrative Agent and the Banks, the
prompt and complete payment and performance by each of the other Borrowers when
due (whether at the stated maturity, by acceleration or otherwise) of the
Obligations owing to the Administrative Agent and the Banks by such Borrowers.
This guarantee (the "Company Guarantee") shall remain in full force and effect
until the Obligations of each such Borrower are indefeasibly paid in full,
notwithstanding that from time to time prior thereto any such Borrower may be
free from any Obligations. The Company agrees that whenever, at any time, or
from time to time, it shall make any payment to the Administrative Agent or any
Bank on account of its liability under this Company Guarantee, it will notify
the Administrative Agent and such Bank in writing that such payment is made
under this Company Guarantee for such purpose. No payment or payments made by
any such Borrower or any other Person or received or collected by the
Administrative Agent or any Bank from any such Borrower or any other Person by
virtue of any action or proceeding or any offset or appropriation or
application, at any time or from time to time, in reduction of or in payment of
the Obligations of such Borrowers shall be deemed to modify, reduce, release or
otherwise affect
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the liability of the Company under this Company Guarantee, which shall remain
obligated under this Company Guarantee, notwithstanding any such payment or
payments until the Obligations of such Borrowers are paid in full.
12.3 No Subrogation, Contribution, Reimbursement or
Indemnity. Notwithstanding anything to the contrary in the Parent Guarantee and
the Company Guarantee (together, the "Guarantees", each a "Guarantee"), the
Parent and the Company (together, the "Guaranteeing Parties," each a
"Guaranteeing Party") hereby irrevocably waives all rights which may have
arisen in connection with its Guarantee to be subrogated to any of the rights
(whether contractual, under the Bankruptcy Code, including Section 509 thereof,
under common law or otherwise) of the Administrative Agent or any Bank against
the Company or any other Borrowers (together, the "Guaranteed Parties", each a
"Guaranteed Party") for the payment of the Obligations. Each Guaranteeing Party
hereby further irrevocably waives all contractual, common law, statutory or
other rights of reimbursement, contribution, exoneration or indemnity (or any
similar right) from or against any Guaranteed Party or Parties or any other
Person which may have arisen in connection with its Guarantee. So long as the
Obligations remain outstanding, if any amount shall be paid by or on behalf of
any Guaranteed Party to the Guaranteeing Party on account of any of the rights
waived in this subsection, such amount shall be held by such Guaranteeing Party
in trust, segregated from other funds of such Guaranteeing Party, and shall,
forthwith upon receipt by such Guaranteeing Party, be turned over to the
Administrative Agent in the exact form received by such Guaranteeing Party
(duly endorsed by such Guaranteeing Party to the Administrative Agent, if
required), to be applied against the Obligations of such Guaranteed Party or
Parties, whether matured or unmatured, in such order as the Administrative
Agent may determine. The provisions of this subsection as they apply to each of
the Guaranteeing Parties shall survive the payment in full of the Obligations
of its Guaranteed Party or Parties.
12.4 Amendments, etc., with respect to the Obligations. Each
Guaranteeing Party shall remain obligated under its Guarantee notwithstanding
that, without any reservation of rights against such Guaranteeing Party, and
without notice to or further assent by such Guaranteeing Party, any demand for
payment of any of the Obligations made by the Administrative Agent or any Bank
may be rescinded by the Administrative Agent or such Bank, and any of the
Obligations continued, and the Obligations, or the liability of any other party
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised,
waived, surrendered or released by the Administrative Agent or any Bank, and
this Agreement, the Notes and the other Loan Documents may be amended,
modified, supplemented or terminated, in whole or in part, as the
Administrative Agent or the Banks (or the Majority Banks, as the case may be)
may deem advisable from time to time in accordance with the provisions of
subsection 13.1(a), and any collateral security, guarantee or right of set-off
at any time held by the Administrative Agent or any Bank for the payment of the
Obligations may be sold, exchanged, waived, surrendered or released. Neither
the Administrative Agent nor any Bank shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the
Obligations or for the obligations of any Guaranteeing Party under its
Guarantee or any property subject thereto.
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12.5 Guarantee Absolute and Unconditional. Each Guaranteeing
Party waives any and all notice of the creation, renewal, extension or accrual
of any of the Obligations and notice of or proof of reliance by the
Administrative Agent or any Bank upon its Guarantee or acceptance of its
Guarantee; the Obligations, and any of them, shall conclusively be deemed to
have been created, contracted or incurred in reliance upon the Guarantees; and
all dealings between the Borrowers and the Parent, on the one hand, and the
Administrative Agent and the Banks, on the other, shall likewise be
conclusively presumed to have been had or consummated in reliance upon the
Guarantees. Each Guaranteeing Party waives diligence, presentment, protest,
notice of intent to accelerate, notice of acceleration, demand for payment and
notice of default or nonpayment to or upon any Guaranteed Party or such
Guaranteeing Party with respect to the Obligations. The Guarantees shall be
construed as a continuing, absolute and unconditional guarantee of payment
without regard to (a) the validity or enforceability of this Agreement, any
Note, any other Loan Document, any of the Obligations or any collateral
security therefor or guarantee or right of set-off with respect thereto at any
time or from time to time held by the Administrative Agent or any Bank, (b) any
defense, offset or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by any of the
Guaranteed Parties against the Administrative Agent or any Bank or (c) any
other circumstance whatsoever (with or without notice to or knowledge of any of
the Guaranteed Parties or such Guaranteeing Party) which constitutes, or might
be construed to constitute, an equitable or legal discharge of any of the
Guaranteed Parties for the Obligations of such Guaranteed Party, or of such
Guaranteeing Party under its Guarantee, in bankruptcy or in any other instance.
When the Administrative Agent is pursuing its rights and remedies hereunder
against any Guaranteeing Party, the Administrative Agent or any Bank may, but
shall be under no obligation to, pursue such rights and remedies as it may have
against its Guaranteed Party or any other Person or against any collateral
security or guarantee for the Obligations or any right of offset with respect
thereto, and any failure by the Administrative Agent or any Bank to pursue such
other rights or remedies or to collect any payments from such Guaranteed Party
or such other Person or to realize upon any such collateral security or
guarantee or to exercise such right of offset or any release of such Guaranteed
Party or such other Person or of any such collateral security, guarantee or
right of offset, shall not relieve such Guaranteeing Party of any liability
under its Guarantee, and shall not impair or affect the rights and remedies,
whether express, implied or available as a matter of law, of the Administrative
Agent and the Banks against such Guaranteeing Party.
12.6 Reinstatement. Each Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Obligations of any Guaranteed Party thereunder is
rescinded or must otherwise be restored or returned by the Administrative Agent
or any Bank upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of such Guaranteed Party or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, such Guaranteed Party or any substantial part of any of its
property, or otherwise, all as though such payments had not been made.
12.7 Payments. Each Guaranteeing Party hereby agrees that the
Obligations will be paid to the Administrative Agent for the benefit of the
Administrative Agent and the Banks, as the case may be, without set-off or
counterclaim in Dollars or Alternative Currency, as
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appropriate, in immediately available funds at the office of the Administrative
Agent, c/o Loan and Agency Services Group (Clearing Account No. 144810547)
located at One Chase Manhattan Plaza, 8th Floor, New York, New York 10081.
SECTION 13. MISCELLANEOUS
13.1 Amendments and Waivers; Replacement of Banks. (a)
Neither this Agreement, any Note, any other Loan Document, nor any terms hereof
or thereof may be amended, supplemented or modified except in accordance with
the provisions of this subsection. With the written consent of the Majority
Banks, the Administrative Agent, the Parent and the Company may, from time to
time, enter into written amendments, supplements or modifications hereto and to
the Notes, if any, and the other Loan Documents for the purpose of adding any
provisions to this Agreement or the Notes, if any, or the other Loan Documents
or changing in any manner the rights of the Banks, the Parent or of the
Borrowers hereunder or thereunder or waiving, on such terms and conditions as
the Administrative Agent may specify in such instrument, any of the
requirements of this Agreement or the Notes, if any, or the other Loan
Documents or any Default or Event of Default and its consequences; provided,
however, that no such waiver and no such amendment, supplement or modification
shall (i) reduce the amount or extend the maturity of any Loan or Note or any
installment thereof, or reduce the rate or extend the time of payment of
interest thereon, or reduce any fee payable to any Bank hereunder, or change
the amount of any Bank's Commitment, in each case without the consent of the
Bank affected thereby, or (ii) amend, modify or waive any provision of this
subsection or reduce the percentage specified in the definition of Majority
Banks, or consent to the assignment or transfer by the Parent or any Borrower
of any of its rights and obligations under this Agreement and the other Loan
Documents, or amend, modify or waive any provision of Section 12, in each case
without the written consent of all the Banks, or (iii) amend, modify or waive
any provision of Section 11 without the written consent of the then
Administrative Agent. Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Banks and shall be binding upon
the Parent, the Borrowers, the Banks, the Administrative Agent, all future
holders of the Notes, if any, and all future obligees under the Loans. In the
case of any waiver, the Parent, the Borrowers, the Banks and the Administrative
Agent shall be restored to their former position and rights hereunder and under
the outstanding Loans or Notes, if any, and any other Loan Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
(b) Notwithstanding anything to the contrary contained in
subsection 13.1(a), so long as no Default or Event of Default has occurred and
is continuing the Borrowers and the Parent shall be permitted in their
discretion (but, if any Revolving Credit Loans are then outstanding, with the
consent of the Majority Banks (which consent shall not be unreasonably
withheld)) to amend this Agreement to replace one or more Banks without the
consent of any Bank to be so replaced pursuant to this subsection 13.1(b) (a
"Replaced Bank") and to provide for (w) the termination of the Commitments of
such Replaced Bank, (x) the addition to this Agreement of one or more other
banking institutions, or an increase in the Commitments of one or more of the
other Banks (with the consent of such other Banks), so that the total
Commitments
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after giving effect to such amendment shall be in the same amount as the total
Commitments immediately before giving effect to such amendment, (y) if any
Loans are outstanding at the time of such amendment, the making of such
additional Loans by such new financial institutions or other Bank or Banks, as
the case may be, as may be necessary to repay in full the outstanding Loans of
such Replaced Bank together with interest thereon and all accrued fees and
indemnities with respect thereto immediately before giving effect to such
amendment and (z) such other modifications to this Agreement as may be
necessary to effect the replacement of such Replaced Bank.
(c) Notwithstanding anything to the contrary contained in
paragraph (a) or (b) of this subsection 13.1, if as a result of a change in any
Requirement of Law after the date hereof any Borrower or the Parent has become
obligated to, or reasonably believes that it will become obligated to pay to
any Bank any increased amount pursuant to subsection 5.11, 5.12 or 5.13, and
such Bank shall not have waived payment of such increased amounts, then the
Borrowers and the Parent may, if no Default or Event of Default has occurred
and is continuing and payment of any such increased amounts as have become due
has been made or appropriately provided for, upon five Business Days' notice to
the Administrative Agent and such Bank, amend this Agreement, without the
consent of any Bank or the Administrative Agent, to replace any one or more of
the Banks to which such increased amounts have become payable or would become
payable and to provide for the matters referred to in clauses (w), (x), (y) and
(z) of subsection 13.1(b), and such replaced Bank or Banks shall be deemed to
be Replaced Banks for purposes of such clauses.
13.2 Notices. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made on receipt, addressed as follows in the case of
the Company, the Parent and the Administrative Agent, as set forth in paragraph
5 of the Notice of Additional Borrower relating to any Borrower other than the
Company, in the case of such other Borrower, and as set forth in Schedule I in
the case of the other parties hereto, or to such other address as may be
hereafter notified by the respective parties hereto and any future holders of
the Notes, if any, or any future obligees under the Loans:
The Company: W. R. Grace & Co.-Conn
One Town Center Road
Boca Raton, Florida 33486-1010
Attention: Treasurer
Telecopy: (561) 362-1944
Telephone: (561) 362-1949
The Parent: W. R. Grace & Co.
One Town Center Road
Boca Raton, Florida 33486-1010
Attention: Treasurer
Telecopy: (561) 362-1944
Telephone: (561) 362-1949
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The Administrative
Agent: The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: Mary Elisabeth Swerz
Telecopy: (212) 270-4142
Telephone: (212) 270-7939
With a copy to: Loan and Agency Services Group
One Chase Manhattan Plaza, 8th Floor
New York, New York 10081
Attention: Margaret Swales
Telecopy: (212) 552-5662
Telephone: (212) 552-7472
The Arranger: Chase Securities Inc.
270 Park Avenue
New York, New York 10017
Attention: Michael J. McGovern
Telecopy: (212) 270-3906
Telephone: (212) 270-1063
13.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Administrative Agent or any
Bank, any right, remedy, power or privilege hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
13.4 Survival of Representations and Warranties. All
representations and warranties made hereunder and in any document, certificate
or statement delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement and the Notes, if any.
13.5 Payment of Expenses and Taxes. The Company agrees (a) to
pay or reimburse the Administrative Agent for all its out-of-pocket costs and
expenses incurred in connection with the development, preparation and execution
of, and any amendment, supplement or modification to, this Agreement and any
Notes and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of
the transactions contemplated hereby and thereby, including, without
limitation, the fees and disbursements of counsel to the Administrative Agent,
(b) to pay or reimburse each Bank and the Administrative Agent for all its
costs and expenses incurred in connection with the enforcement or preservation
of any rights under this Agreement, any Notes, the other Loan Documents and any
such other documents, including, without limitation, fees and disbursements of
counsel to the Administrative Agent and to the several Banks, and (c) to pay,
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indemnify, and hold each Bank and the Administrative Agent harmless from, any
and all recording and filing fees and any and all liabilities with respect to,
or resulting from any delay in paying, stamp, excise and other transactional
taxes, if any, which may be payable or determined to be payable in connection
with the execution and delivery of, or consummation or administration of any of
the transactions contemplated by, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Agreement, any Notes,
the other Loan Documents and any such other documents, and (d) to pay,
indemnify, and hold each Bank and the Administrative Agent harmless from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever with respect to the execution, delivery and performance by
the Loan Parties, and administration and enforcement by the Administrative
Agent and the Banks of this Agreement, any Notes and the other Loan Documents
and any such other documents (all the foregoing, collectively, the "indemnified
liabilities"), provided, that the Company shall have no obligation hereunder to
the Administrative Agent or any Bank with respect to indemnified liabilities
arising from (i) the gross negligence or willful misconduct of the
Administrative Agent or any such Bank, (ii) legal proceedings commenced against
the Administrative Agent or any such Bank by any security holder or creditor
thereof arising out of and based upon rights afforded any such security holder
or creditor solely in its capacity as such, or (iii) legal proceedings
commenced against the Administrative Agent or any such Bank by any other Bank
or by any Transferee (as defined in subsection 13.6). The agreements in this
subsection shall survive repayment of the Loans or Notes, if any, and all other
amounts payable hereunder.
13.6 Successors and Assigns; Participations; Purchasing
Banks.
(a) This Agreement shall be binding upon and inure to the
benefit of the Parent, the Borrowers, the Banks, the Administrative Agent, all
future holders of the Notes, if any, all future obligees under the Loans and
their respective successors and assigns, except that neither the Parent nor any
Borrower may assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of each Bank.
(b) Any Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to one
or more banks or other entities ("Participants") participating interests in any
Loan owing to such Bank, any Note held by such Bank, any Commitments of such
Bank or any other interest of such Bank hereunder and under the other Loan
Documents. In the event of any such sale by a Bank of participating interests
to a Participant, such Bank's obligations under this Agreement to the other
parties to this Agreement shall remain unchanged, such Bank shall remain solely
responsible for the performance thereof, such Bank shall remain the holder of
any such Note, if any, and the obligee under any such Loan for all purposes
under this Agreement and the other Loan Documents, and the Parent, the
Borrowers and the Administrative Agent shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and obligations
under this Agreement and the other Loan Documents. The Parent and each of the
Borrowers agrees that if amounts outstanding under this Agreement and the Loans
or the Notes, if any, are due or unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set-off in respect of its
participating interest in
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amounts owing under this Agreement and any Loan or Note to the same extent as
if the amount of its participating interest were owing directly to it as a Bank
under this Agreement or any Loan or Note, provided that such Participant shall
only be entitled to such right of set-off if it shall have agreed in the
agreement pursuant to which it shall have acquired its participating interest
to share with the Banks the proceeds thereof as provided in subsection 13.7.
The Parent and each of the Borrowers also agrees that each Participant shall be
entitled to the benefits of subsections 5.11, 5.12, 5.13 and 13.5 with respect
to its participation in the Commitments and the Loans outstanding from time to
time; provided, that no Participant shall be entitled to receive any greater
amount pursuant to such subsections than the transferor Bank would have been
entitled to receive in respect of the amount of the participation transferred
by such transferor Bank to such Participant had no such transfer occurred.
(c) Any Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to any
Bank or any affiliate thereof and, with the consent of the Company and upon
notice to the Administrative Agent, to one or more additional banks or
financial institutions ("Purchasing Banks") all or any part of its rights and
obligations under this Agreement and the Loans or the Notes, if any, pursuant
to a Commitment Transfer Supplement, substantially in the form of Exhibit H,
executed by such Purchasing Bank, such transferor Bank (and, in the case of a
Purchasing Bank that is not then a Bank or an affiliate thereof, by the Company
and the Administrative Agent) and delivered to the Administrative Agent for its
acceptance and recording in the Register. Upon such execution, delivery,
acceptance and recording, from and after the Transfer Effective Date determined
pursuant to such Commitment Transfer Supplement, (x) the Purchasing Bank
thereunder shall be a party hereto and, to the extent provided in such
Commitment Transfer Supplement, have the rights and obligations of a Bank
hereunder with a Commitment as set forth therein, and (y) the transferor Bank
thereunder shall, to the extent provided in such Commitment Transfer
Supplement, be released from its obligations under this Agreement (and, in the
case of a Commitment Transfer Supplement covering all or the remaining portion
of a transferor Bank's rights and obligations under this Agreement, such
transferor Bank shall cease to be a party hereto). Such Commitment Transfer
Supplement shall be deemed to amend this Agreement to the extent, and only to
the extent, necessary to reflect the addition of such Purchasing Bank and the
resulting adjustment of Commitment Percentages arising from the purchase by
such Purchasing Bank of all or a portion of the rights and obligations of such
transferor Bank under this Agreement and the Loan or the Notes, if any. On or
prior to the Transfer Effective Date determined pursuant to such Commitment
Transfer Supplement, the relevant Borrower, at its own expense, if the
Purchasing Bank so requests, shall execute and deliver to the Administrative
Agent in exchange for any surrendered Revolving Credit Note and Bid Loan Note a
new Revolving Credit Note and Bid Loan Note to the order of such Purchasing
Bank in an amount equal to the Commitment assumed by it pursuant to such
Commitment Transfer Supplement and, if the transferor Bank has retained a
Commitment hereunder, new Notes to the order of the transferor Bank in an
amount equal to the Commitment retained by it hereunder. Such new Notes shall
be dated the Closing Date and shall otherwise be in the form of the Notes
replaced thereby. Any Notes surrendered by the transferor Bank shall be
returned by the Administrative Agent to the Company marked "cancelled".
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(d) The Administrative Agent shall maintain at its address
referred to in subsection 13.2 a copy of each Commitment Transfer Supplement
delivered to it and a register (the "Register") for the recordation of the
names and addresses of the Banks and the Commitment of, and principal amount of
the Loans owing to, each Bank from time to time. The entries in the Register
shall be conclusive, in the absence of manifest error, and the Parent, the
Borrowers, the Administrative Agent and the Banks may treat each Person whose
name is recorded in the Register as the owner of the Loan recorded therein for
all purposes of this Agreement. The Register shall be available for inspection
by the Parent, the Borrowers or any Bank at any reasonable time and from time
to time upon reasonable prior notice.
(e) Upon its receipt of a Commitment Transfer Supplement
executed by a transferor Bank and Purchasing Bank (and, in the case of a
Purchasing Bank that is not then a Bank or an affiliate thereof, by the Company
and the Administrative Agent) together with payment to the Administrative Agent
of a registration and processing fee of $3,500, the Administrative Agent shall
(i) promptly accept such Commitment Transfer Supplement (ii) on the Transfer
Effective Date determined pursuant thereto record the information contained
therein in the Register and give notice of such acceptance and recordation to
the Banks and the Company.
(f) The Parent and the Borrowers authorizes each Bank to
disclose to any Participant or Purchasing Bank (each, a "Transferee") and any
prospective Transferee any and all financial information in such Bank's
possession concerning such Borrower and its affiliates which has been delivered
to such Bank by or on behalf of the Parent, the Company or such Borrower
pursuant to this Agreement or which has been delivered to such Bank by or on
behalf of the Parent, the Company or such Borrower in connection with such
Bank's credit evaluation of such Borrower and its affiliates prior to becoming
a party to this Agreement.
(g) If, pursuant to this subsection, any interest in this
Agreement or any Note is transferred to any Transferee which is organized under
the laws of any jurisdiction other than the United States or any state thereof,
the transferor Bank shall cause such Transferee, concurrently with the
effectiveness of such transfer, (i) to represent to the transferor Bank (for
the benefit of the transferor Bank, the Administrative Agent, the Parent and
the Borrowers) that under applicable law and treaties no taxes will be required
to be withheld by the Administrative Agent, the Parent, the Borrowers or the
transferor Bank with respect to any payments to be made to such Transferee in
respect of the Loans, (ii) to furnish to the transferor Bank (and, in the case
of any Purchasing Bank registered in the Register, the Administrative Agent,
the Parent and the Company) either U.S. Internal Revenue Service Form 4224 or
U.S. Internal Revenue Service Form 1001 (wherein such Transferee claims
entitlement to complete exemption from U.S. federal withholding tax on all
interest payments hereunder) and (iii) to agree (for the benefit of the
transferor Bank, the Administrative Agent, the Parent and the Company) to
provide the transferor Bank (and, in the case of any Purchasing Bank registered
in the Register, the Administrative Agent, the Parent and the Company) a new
Form 4224 or Form 1001 upon the expiration or obsolescence of any previously
delivered form and comparable statements in accordance with applicable U.S.
laws and regulations and amendments duly executed and completed by such
Transferee, and to comply from time to time with all applicable U.S. laws and
regulations with regard to such withholding tax exemption.
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(h) Nothing herein shall prohibit any Bank from pledging or
assigning any Note to any Federal Reserve Bank in accordance with applicable
law.
13.7 Adjustments; Set-off.
(a) If any Bank (a "benefitted Bank") shall at any time
receive any payment of all or part of its Revolving Credit Loans, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 10(f), or otherwise), in a greater proportion than any
such payment to or collateral received by any other Bank, if any, in respect of
such other Bank's Revolving Credit Loans, or interest thereon, such benefitted
Bank shall purchase for cash from the other Banks such portion of each such
other Bank's Loan, or shall provide such other Banks with the benefits of any
such collateral, or the proceeds thereof, as shall be necessary to cause such
benefitted Bank to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Banks; provided, however, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
benefitted Bank, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest. Each
Borrower agrees that each Bank so purchasing a portion of another Bank's Loan
may exercise all rights of payment (including, without limitation, rights of
set-off) with respect to such portion as fully as if such Bank were the direct
holder of such portion.
(b) In addition to any rights and remedies of the Banks
provided by law, each Bank shall have the right, without prior notice to the
Parent and the Borrowers, any such notice being expressly waived by the Parent
and the Borrowers, to the extent permitted by applicable law, upon any amount
not being paid when due and payable by any Borrower hereunder or under the
Notes (whether at the stated maturity, by acceleration or otherwise) to set-off
and appropriate and apply against such amount any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct
or indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Bank or any branch or agency thereof to or for the credit or the
account of the Parent or such Borrower. Each Bank agrees promptly to notify the
Parent, the Borrowers and the Administrative Agent after any such set-off and
application made by such Bank, provided that the failure to give such notice
shall not affect the validity of such set-off and application.
13.8 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. A set of the copies of this Agreement signed by all
the parties shall be lodged with the Parent, the Company and the Administrative
Agent.
13.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
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13.10 Integration. This Agreement represents the agreement of
the Parent, each Borrower, the Administrative Agent and the Banks with respect
to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Administrative Agent or any Bank relative
to subject matter hereof not expressly set forth or referred to herein, in the
other Loan Documents or in any documentation entered into pursuant to
subsection 3.1(b).
13.11 GOVERNING LAW. THIS AGREEMENT (INCLUDING SECTION 12)
AND THE NOTES AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
13.12 Submission to Jurisdiction; Waivers. (a) The Parent,
each Borrower, the Administrative Agent and the Banks hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal
action or proceeding relating to this Agreement and the other Loan
Documents to which it is a party, or for recognition and enforcement
of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the Courts of the State of New York sitting in New
York County, the courts of the United States of America for the
Southern District of New York, and the appellate courts from any
thereof;
(ii) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(iii) agrees that service of process in any such action
or proceeding may be effected by mailing a copy thereof by registered
or certified mail (or any substantially similar form of mail), postage
prepaid, to the Parent or such Borrower at its address set forth in
subsection 13.2 or, with respect to Borrowers other than the Company,
the Notice of Additional Borrower relating to such Borrower or at such
other address of which the Administrative Agent shall have been
notified pursuant thereto;
(iv) agrees that nothing herein shall affect the right
to effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and
(v) waives, to the maximum extent not prohibited by
law, any right it may have to claim or recover in any legal action or
proceeding referred to in this subsection any special, exemplary,
punitive or consequential damages.
(b) Each Borrower other than the Company hereby appoints and
empowers the Parent and the Company, 1114 Avenue of the Americas, New York, New
York 10036-7794, Attention: Treasurer, as its authorized agent (the "Process
Administrative Agent") to receive on behalf of such Borrower service of any and
all process and documents in any such legal action or
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proceeding brought in a New York state or federal court sitting in New York
City. It is understood that a copy of such process served on the Process
Administrative Agent will be promptly hand delivered or mailed (by registered
or certified airmail if available), postage prepaid, to such Borrower at its
address set forth in paragraph 5 of such Borrower's Notice of Additional
Borrower, but the failure of such Borrower to receive such copy shall not
affect in any way the service of such process on the Process Administrative
Agent. If the Process Administrative Agent shall refuse or be prevented from
acting as agent, notice thereof shall immediately be given by such Borrowers to
the Administrative Agent by registered or certified airmail (if available),
postage prepaid, and such Borrowers agree promptly to designate another agent
in New York City, satisfactory to the Administrative Agent, to serve in place
of the Process Administrative Agent and deliver to the Administrative Agent
written evidence of such substitute agent's acceptance of such designation.
13.13 Acknowledgments. The Parent, each Borrower, the
Administrative Agent and the Banks hereby acknowledge that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the Notes and the other
Loan Documents;
(b) neither the Administrative Agent nor any Bank has any
fiduciary relationship with or duty to the Parent or such Borrower, as
the case may be, arising out of or in connection with this Agreement
or any of the other Loan Documents, and the relationship between
Administrative Agent and Banks, on one hand, and the Parent and the
Borrowers, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and
(c) as to any matter relating to any Loan Documents, no joint
venture exists among the Banks or among the Parent, the Borrowers and
the Banks.
13.14 WAIVERS OF JURY TRIAL. THE PARENT, THE BORROWERS, THE
ADMINISTRATIVE AGENT AND THE BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
THE NOTES OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
13.15 Additional Borrowers. (a) Any Subsidiary of the Company
shall have the right to become a "Borrower" hereunder, and to borrow hereunder
subject to the terms and conditions hereof applicable to a Borrower and to the
following additional conditions:
(i) the Company shall deliver a notice in substantially
the form of Exhibit I hereto (a "Notice of Additional Borrower")
signed by such Subsidiary and countersigned by the Parent and the
Company to the Administrative Agent and the Banks stating that such
Subsidiary desires to become a "Borrower" under this Agreement and
agrees to be bound by the terms hereof. From the time of receipt of
such Notice of Additional Borrower by the Administrative Agent and the
Banks and subject to the satisfaction of each condition precedent
contained in such Notice of Additional Borrower, such
<PAGE>
Page
Subsidiary shall be a "Borrower" hereunder with all of the rights and
obligations of a Borrower hereunder; provided, however, that the
Company may revoke a Notice of Additional Borrower with respect to any
Subsidiary (other than the Company) upon five Business Days' written
notice to the Administrative Agent, so long as such Borrower has no
Obligations outstanding. No Notice of Additional Borrower relating to
a Subsidiary may be revoked as to amounts owed by such Subsidiary to
the Banks under this Agreement or any Notes or when an irrevocable
notice pursuant to subsection 2.3, or a notice of acceptance pursuant
to subsection 3.1 or 4.2, has been given by such Subsidiary as a
Borrower and is effective;
(ii) if such Subsidiary is a Foreign Subsidiary, if
reasonably requested by the Majority Banks, such Notice of Additional
Borrower shall be accompanied by an opinion of counsel for such
Subsidiary as specified in paragraph 4(a)(ii) of such Notice of
Additional Borrower;
(iii) and the other conditions set forth in such Notice
of Additional Borrower shall have been satisfied (including the
representations and warranties contained therein being true and
correct as of the date thereof).
(b) Promptly, upon receipt of any Notice of Additional
Borrower by the Administrative Agent, the Administrative Agent shall notify
each Bank thereof, and shall deliver to each Bank copies of each document
delivered to the Administrative Agent pursuant to such Notice of Additional
Borrower.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered in New York, New York by their
proper and duly authorized officers as of the day and year first above written.
W. R. GRACE & CO.-CONN.
By:
-----------------------------------
Title:
W. R. GRACE & CO.
By:
-----------------------------------
Title:
THE CHASE MANHATTAN BANK, as
Administrative Agent and as a Bank
By:
-----------------------------------
Title:
CHASE SECURITIES INC., as Arranger
By:
-----------------------------------
Title:
FIRST UNION NATIONAL BANK OF
FLORIDA
By:
-----------------------------------
Title:
<PAGE>
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Co-Documentation Agent and as a Bank
By:
-----------------------------------
Title:
NATIONSBANK, N.A., as Co-
Documentation Agent and as a Bank
By:
-----------------------------------
Title:
ABN AMRO BANK N.V.
By:
-----------------------------------
Title:
By:
-----------------------------------
Title:
THE BANK OF NEW YORK
By:
-----------------------------------
Title:
THE BANK OF NOVA SCOTIA
By:
-----------------------------------
Title:
<PAGE>
BARCLAYS BANK PLC
By:
-----------------------------------
Title:
CITIBANK, N.A.
By:
-----------------------------------
Title:
CREDIT SUISSE FIRST BOSTON
By:
-----------------------------------
Title:
By:
-----------------------------------
Title:
DRESDNER BANK AG, NEW YORK
AND GRAND CAYMAN BRANCHES
By:
-----------------------------------
Title:
By:
-----------------------------------
Title:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By:
-----------------------------------
Title:
<PAGE>
COMMERZBANK AG, ATLANTA
AGENCY
By:
-----------------------------------
By: Harry P. Yergey
Title: SVP & Manager
By:
-----------------------------------
By: Brian J. Campbell
Title: VP
CREDIT LYONNAIS ATLANTA
AGENCY
By:
-----------------------------------
Title:
MARINE MIDLAND BANK
By:
-----------------------------------
Title:
NORTHERN TRUST COMPANY
(CHICAGO)
By:
-----------------------------------
Title:
<PAGE>
WACHOVIA BANK (ATLANTA)
By:
-----------------------------------
Title:
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
----------
<S> <C>
Commitments
- ---------------------------------------------
BANK COMMITMENT
- ---- ----------
The Chase Manhattan Bank $51,529,411.76
First Union National Bank of Florida $51,529,411.76
Bank of America National Trust
& Savings Association $51,529,411.76
NationsBank, N.A. $51,529,411.76
ABN AMRO Bank N.V., New York Branch $35,294,117.65
The Bank of New York $35,294,117.65
The Bank of Nova Scotia $35,294,117.65
Barclays Bank PLC $35,294,117.65
Citibank, N.A. $35,294,117.65
Credit Suisse First Boston $35,294,117.65
Dresdner Bank AG, New York and
Grand Cayman Branches $35,294,117.65
Morgan Guaranty Trust Company
of New York $35,294,117.65
Commerzbank AG, Atlanta Agency $25,411,764.71
Credit Lyonnais Atlanta Agency $25,411,764.71
Marine Midland Bank $25,411,764.71
Northern Trust Company (Chicago) $17,647,058.82
Wachovia Bank (Atlanta) $17,647,058.82
TOTAL $600,000,000
============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 12
W. R. GRACE & CO. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS (a)
(in millions, except ratios)
(Unaudited)
Six Months Ended
Years Ended December 31,(c) June 30,
----------------------------------------------------- ----------------------
1997(d) 1996(e) 1995(f) 1994(g) 1993(h) 1998 1997(c)(d)
-------- -------- -------- -------- -------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net income/(loss) from continuing operations....... $ 88.2 $112.9 $(324.8) $(185.4) $(106.7) $ 37.3 $ 91.7
Add/(deduct):
Provision for/(benefit from) income taxes...... 55.2 70.4 (192.4) (120.9) (55.5) 23.9 57.0
Income taxes of 50%-owned companies............ -- -- -- -- .1 -- --
Equity in unremitted (earnings)/losses
of less than 50%-owned companies............. (7.0) (.4) .8 (.6) (.5) (4.6) --
Interest expense and related financing costs,
including amortization of capitalized interest 87.6 160.8 179.8 138.5 122.7 25.3 40.3
Estimated amount of rental expense
deemed to represent the interest factor 6.9 8.4 8.5 10.1 11.3 2.8 2.7
---------- ---------- ---------- --------- --------- -------- --------
Income/(loss) as adjusted.......................... $230.9 $352.1 $(328.1) $(158.3) $ (28.6) $ 84.7 $ 191.7
========== ========== ========== ========= ========= ======== ========
Combined fixed charges and preferred stock
dividends:
Interest expense and related financing costs,
including capitalized interest............... $ 92.4 $177.1 $ 195.5 $ 143.2 $122.8 $ 24.6 $ 49.6
Estimated amount of rental expense
deemed to represent the interest factor...... 6.9 8.4 8.5 10.1 11.3 2.8 2.7
---------- ---------- ---------- --------- --------- -------- --------
Fixed charges...................................... 99.3 185.5 204.0 153.3 134.1 27.4 52.3
Preferred stock dividend requirements(b)........... -- .6 .5 .5 .8 -- --
---------- ---------- ---------- --------- --------- -------- --------
Combined fixed charges and preferred
stock dividends................................. $ 99.3 $186.1 $ 204.5 $ 153.8 $134.9 $ 27.4 $ 52.3
========== ========== ========== ========= ========= ======== ========
Ratio of earnings to fixed charges.............. 2.33 1.90 (i) (i) (i) 3.09 3.66
========== ========== ========== ========= ========= ======== ========
Ratio of earnings to combined fixed charges
and preferred stock dividends................... 2.33 1.89 (i) (i) (i) 3.09 3.66
========== ========== ========== ========= ========= ======== ========
</TABLE>
(a) Grace's preferred stocks were retired in 1996; for additional
information, see Note 1 to the Consolidated Financial
Statements in the 1996 10-K.
(b) For each period with an income tax provision, the preferred
stock dividend requirements have been increased to an amount
representing the pretax earnings required to cover such
requirements based on Grace's effective tax rate.
(c) Certain amounts have been restated to conform to the 1998
presentation.
(d) Includes a pretax gain of $103.1 on the sale of a business,
offset by a pretax provision of $47.8 for restructuring costs
and asset impairments.
(e) Includes a pretax gain of $326.4 on the sale of a business,
offset by pretax provisions of $229.1 for asbestos-related
liabilities and insurance coverage and $34.7 for
restructuring costs and asset impairments.
(f) Includes pretax provisions of $275.0 for asbestos-related
liabilities and insurance coverage; $151.3 relating to
restructuring costs, asset impairments and other activities;
$77.0 for environmental liabilities at former manufacturing
sites; and $30.0 for corporate governance activities.
<PAGE>
(g) Includes a pretax provision of $316.0 relating to
asbestos-related liabilities and insurance coverage.
(h) Includes a pretax provision of $159.0 relating to
asbestos-related liabilities and insurance coverage.
(i) As a result of the losses incurred for the years ended
December 31, 1995, 1994 and 1993, Grace was unable to fully
cover the indicated fixed charges.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 72,600
<SECURITIES> 0
<RECEIVABLES> 369,100
<ALLOWANCES> 5,100
<INVENTORY> 132,400
<CURRENT-ASSETS> 831,400<F1>
<PP&E> 1,475,500
<DEPRECIATION> 824,100
<TOTAL-ASSETS> 2,415,100<F1>
<CURRENT-LIABILITIES> 830,200
<BONDS> 0
0
0
<COMMON> 800
<OTHER-SE> 307,700
<TOTAL-LIABILITY-AND-EQUITY> 2,415,100
<SALES> 710,700<F2>
<TOTAL-REVENUES> 731,900
<CGS> 433,800
<TOTAL-COSTS> 433,800
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,200<F3>
<INCOME-PRETAX> 61,200
<INCOME-TAX> 23,900
<INCOME-CONTINUING> 37,300
<DISCONTINUED> (2,600)<F4>
<EXTRAORDINARY> (35,200)<F5>
<CHANGES> 0
<NET-INCOME> (500)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
<FN>
<F1> Includes net assets of discontinued operations of $8,200.
<F2> Excludes sales of $431,200 of the Packaging Business, which was classified
as a discontinued operation as of December 31, 1997.
<F3> Excludes interest expense allocated to Grace's discontinued operations
of $13,300 ($8,700 after-tax).
<F4> Includes pretax operating income of the Packaging Business of $60,500
($39,900 after-tax), allocated interest expense of $13,300 ($8,700
after-tax), costs related to the Packaging Business transaction of
$32,600 ($28,300 after-tax) and a related pension plan curtailment loss of
$8,400 ($5,500 after-tax).
<F5> Reflects extraordinary loss on extinguishment of debt, net of tax.
</FN>
</TABLE>
