SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
{ X } QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1998 Commission File #0-8408
OR
{ } TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
WOODWARD GOVERNOR COMPANY
(Exact name of registrant as specified in its charter)
Delaware 36-1984010
(State or other jurisdiction of (I.R.S. Employer identification No.)
incorporation or organization)
5001 North Second Street, Rockford, Illinois 61125-7001
(Address of principal executive offices)
Registrant's telephone number - (815) 877-7441
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
As of July 31, 1998, 11,305,466 shares of common stock with a par
value of $.00875 cents per share were outstanding.
<PAGE>
WOODWARD GOVERNOR COMPANY
FORM 10-Q
For the Quarter Ended June 30, 1998
INDEX
Description
Part I. Financial Information
Item 1. Financial Statements
Statements of Consolidated Earnings for the
three months ended June 30, 1998 and 1997
Statements of Consolidated Earnings for the nine
months ended June 30, 1998 and 1997
Consolidated Balance Sheets as of June 30, 1998
and September 30, 1997
Statements of Consolidated Cash Flows for the nine
months ended June 30, 1998 and 1997
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Part II. Other Information
Signatures
<PAGE>
<TABLE>
WOODWARD GOVERNOR MPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED EARNINGS
for the three months ended June 30, 1998 and 1997
(in thousands except per share amounts)
(Unaudited)
<CAPTION>
1998 1997
<S> <C> <C> <C> <C>
Net billings for products and services $119,399 $115,761
Costs and expenses:
Cost of goods sold 87,186 87,247
Sales, service and administrative
expenses 19,655 17,967
Other:
Interest expense $1,018 $701
Interest income (117) (204)
Other expense, net 2,422 3,323 918 1,415
Total costs and expenses 110,164 106,629
Earnings before income taxes and
equity in loss of unconsolidated
affiliate 9,235 9,132
Income taxes 3,714 3,562
Earnings before equity in loss of
unconsolidated affiliate 5,521 5,570
Equity in loss of unconsolidated affiliate,
net of tax 630 732
Net earnings $4,891 $4,838
Basic and diluted earnings per share $ 0.43 $ 0.42
Average number of basic shares
outstanding 11,299 11,447
Average number of diluted
shares outstanding 11,337 11,487
Cash dividends per share $0.2325 $0.2325
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED EARNINGS
for the nine months ended June 30, 1998 and 1997
(in thousands except per share amounts)
(Unaudited)
<CAPTION>
1998 1997
<S> <C> <C> <C> <C>
Net billings for products and services $330,699 $321,336
Costs and expenses:
Cost of goods sold 241,808 238,212
Sales, service and administrative
expenses 57,786 53,234
Other:
Interest expense $1,803 $1,913
Interest income (541) (594)
Other expense, net 4,437 5,699 3,058 4,377
Total costs and expenses 305,293 295,823
Earnings before income taxes and
equity in loss of unconsolidated
affiliate 25,406 25,513
Income taxes 10,163 9,950
Earnings before equity in loss of
unconsolidated affiliate 15,243 15,563
Equity in loss of unconsolidated
affiliate, net of tax 2,479 2,157
Net earnings $12,764 $13,406
Basic earnings per share $ 1.12 $ 1.17
Diluted earnings per share $ 1.12 $ 1.16
Average number of basic shares
outstanding 11,355 11,493
Average number of diluted
shares outstanding 11,399 11,530
Cash dividends per share $0.6975 $0.6975
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands of dollars)
<CAPTION>
JUNE SEPTEMBER
30, 1998 30, 1997
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $7,421 $14,999
Accounts receivable, less allowance
for losses of $3,602 for June
and $2,757 for September 95,941 91,806
Inventories 108,844 83,249
Deferred income taxes 19,878 19,651
Total current assets 232,084 209,705
Property, plant and equipment, at cost:
Land 5,657 5,842
Buildings and improvements 122,485 119,997
Machinery and equipment 210,087 188,758
Construction in progress 4,348 2,270
342,577 316,867
Less allowance for depreciation 215,330 205,919
Property, plant and equipment - net 127,247 110,948
Intangibles and other assets 168,576 8,933
Deferred income taxes 19,555 18,524
Total assets $547,462 $348,110
Liabilities and shareholders' equity
Current liabilities:
Short-term borrowings $ 83,272 $ 7,908
Current portion of long-term debt 4,979 4,979
Accounts payable and accrued
expenses 88,844 64,824
Taxes on income 6,173 7,167
Total current liabilities 183,268 84,878
Long-term debt, less current portion 117,659 17,717
Other liabilities 37,801 34,901
Commitments and contingencies - -
Shareholders' equity represented by:
Preferred stock - -
Common stock 106 106
Additional paid-in capital 13,302 13,283
Unearned ESOP compensation (12,200) (12,128)
Currency translation adjustment 7,237 9,391
Retained earnings 220,340 215,211
228,785 225,863
Less treasury stock, at cost 20,051 15,249
208,734 210,614
Total liabilities and shareholders'
equity $547,462 $348,110
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
for the nine months ended June 30, 1998 and 1997
(in thousands of dollars)
(Unaudited)
<CAPTION>
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 12,764 $13,406
Adjustments to reconcile net earnings to
net cash provided (used) by operating
activities,
Depreciation and amortization 19,775 17,763
Equity in loss of unconsolidated affiliate 4,132 3,536
Changes in assets and liabilities,
net of effect of business acquisitions:
Accounts receivable 6,006 (94)
Inventories (9,938) 2,821
Current liabilities, other than
short-term borrowings and current
portion of long-term debt (6,955) (3,095)
Other, net (2,886) (198)
Total adjustments 10,134 20,733
Net cash provided by operating activities 22,898 34,139
Cash flows from investing activities:
Payments for purchase of property, plant
and equipment (14,627) (13,401)
Investment in unconsolidated affiliate (4,375) (5,300)
Business acquisitions, net of cash (169,451) -
Other 650 363
Net cash used in investing activities (187,803) (18,338)
Cash flows from financing activities:
Cash dividends paid (7,915) (8,019)
Proceeds from sales of treasury stock 38 184
Purchases of treasury stock (4,866) (3,761)
Proceeds from long-term debt 100,000 -
Payments of long-term debt (5,197) (45)
Net proceeds from short-term borrowings 75,616 (2,563)
Tax benefit applicable to ESOP dividend 279 273
Net cash used in financing activities 157,955 (13,931)
Effect of exchange rate changes on cash (628) (660)
Net change in cash and cash equivalents (7,578) 1,210
Cash and cash equivalents,
beginning of year 14,999 13,070
Cash and cash equivalents, end of period $ 7,421 $ 14,280
Supplemental cash flow information:
Cash paid during the year for:
Interest expense $ 1,240 $ 1,626
Income taxes $ 6,596 $ 5,872
Noncash investing and financing activities:
Liabilities assumed in business
acquisitions $25,446 $ -
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Financial Statements
The consolidated balance sheet as of June 30, 1998, and the statements
of consolidated earnings and cash flows for the three and nine month
periods ended June 30, 1998 and 1997, have been prepared by the Company
without audit. The September 30, 1997 consolidated balance sheet was
derived from audited financial statements, but does not include all
disclosures required by generally accepted accounting principles.
Information furnished in this 10-Q report is based in part on
approximations and is subject to year-end adjustment and audit. The
figures do reflect all adjustments necessary, in the opinion of
management, to present fairly the Company's financial position as of
June 30, 1998, and the results of its operations for the three and nine
month periods ended June 30, 1998 and 1997, and cash flows for the nine
month periods then ended. All such adjustments are of a normal and
recurring nature. The statements have been prepared in accordance with
accounting policies set forth in the company's 1997 annual report on
Form 10-K and should be read in conjunction with the Notes to
Consolidated Financial Statements therein. The statements of
consolidated earnings for the three and nine month periods ended June
30, 1998 are not necessarily indicative of the results to be expected
for other interim periods or for the full year.
Note 2 - Business Acquisitions
During the quarter ended June 30, 1998, the Company acquired two
businesses. The acquisitions have been accounted for under the purchase
method, and accordingly, the operating results have been included in
the consolidated results since the dates of acquisition.
In May 1998, the Company purchased the net assets of Baker Electrical
Products, Inc. of Memphis, Michigan, a manufacturer of electromagnetic
coils for anti-lock braking systems, for approximately $7,000,000. The
excess of the purchase price over the estimated fair value of the
assets acquired approximated $5,000,000 and is being amortized over 15
years.
In June 1998, the Company acquired the stock of Fuel Systems Textron,
Inc. (renamed Woodward FST, Inc.), a subsidiary of Textron, Inc.
(Textron), for $160,000,000, and incurred acquisition costs of
approximately $2,500,000. FST is a leading designer, developer, and
manufacturer of fuel injection nozzles, spray manifolds, and fuel
metering and distribution valves for gas turbine engines in the
aircraft (commercial and military) and industrial markets, and also
provides commercial repair and overhaul services. Total revenues of
FST for the year ended December 31, 1997 were approximately
$82,000,000.
In accordance with the FST acquisition agreement, the Company has the
option to elect Internal Revenue Service Code 338(h)(10) to treat the
transaction as an asset purchase for tax purposes. The Company must
<PAGE>
notify Textron of this election by September 1, 1998 and will be
required to make an additional payment to Textron, not to exceed
$13,500,000, as compensation for the additional tax liability Textron
would recognize under this election. The Company expects to elect
Section 338(h)(10) treatment, as the estimated future tax benefits
outweigh the maximum required payment to Textron.
In connection with the acquisition of FST, the Company recorded
intangible assets for goodwill, customer relationships, process
technology, assembled workhorse and patents. These intangibles are
being amortized over a weighted average of 30 years. The amount of the
intangible assets recorded at the acquisition date is expected to be
approximately $150,000,000.
The amounts recorded relating to the acquisitions are currently subject
to adjustment subsequent to June 30, 1998 as the Company has not yet
completed the final allocation of the purchase price. Pro forma
financial information related to the FST acquisition will be included
in a subsequent Form 8-K filing.
The transactions were financed by a $100,000,000 term loan ("Term
Loan") and a revolving line of credit facility ("Revolver") up to a
maximum amount of $150,000,000. Borrowings under the Revolver are at
rates that vary with the LIBOR rate, money market rate or the prime
rate and carries a facility fee of 0.25%. The outstanding principal
amount of the Revolver is due 5 years from inception of the credit
facility. The Term Loan rate varies with the LIBOR rate. Required
principal payments of the Term Loan are: $3,750,000 in 1999,
$16,250,000 in 2000, $20,000,000 in 2001, $20,000,000 in 2002 and
$40,000,000 in 2003. The provisions of the Term Loan agreement require
the Company to maintain a minimum fixed charge coverage ratio and a
maximum funded debt to total capitalization ratio, as defined in the
agreement.
Note 3 - Earnings per Share
On October 1, 1997, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 128, "Earnings per Share". This new
standard simplifies the calculations of earnings per share and requires
presentation of both basic and diluted earnings per share on the
Statements of Consolidated Earnings. Diluted earnings per share
reflects the impact of outstanding stock options, if exercised. The
Company's calculation of diluted earnings per share did not differ from
basic earnings per share for the quarter ended June 30, 1997 and 1998
nor in the year-to-date period ended June 30, 1998. Diluted earnings
per share for the year-to-date period ended June 30, 1997 differed by
$.01 from basic earnings per share.
<PAGE>
Note 4 - Basic and Diluted Earnings per Share
The following is a reconciliation of the numerators and denominators
for the computation of basic and diluted earnings per share:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
June 30, June 30,
(in 000's except per share amounts)
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Basic Earnings per Share:
Net earnings $ 4,891 $4,838 $12,764 $ 13,406
Shares:
Weighted average common shares 11,299 11,447 11,355 11,493
Basic Earnings per Share $ 0.43 $ 0.42 $ 1.12 $ 1.17
Diluted Earnings per Share:
Net earnings $4,891 $4,838 $12,764 $ 13,406
Shares:
Weighted average shares
from above 11,299 11,447 11,355 11,493
Add: Additional dilutive effect
of outstanding stock options 38 40 44 37
Weighted average shares, as adjusted
for dilution 11,337 11,487 11,399 11,530
Diluted Earnings per Share $ 0.43 $ 0.42 $ 1.12 $ 1.16
</TABLE>
The following options were not included in the computation of diluted
earnings per share as the options' exercise prices were greater than
the average market price of the common shares during the respective
quarter and year-to-date periods:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE
DATE OPTIONS PRICE
<S> <C> <C>
6/25/97 1,000 $33.75
10/1/97 20,000 34.88
11/17/97 138,340 32.25
1/14/98 55,701 32.00
</TABLE>
<PAGE>
PART I - ITEM 2
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
During the third quarter of fiscal 1998, the Company achieved
significant progress towards the implementation of its strategic growth
plan, completing two acquisitions and launching a new operating group.
Financial results were comparable to last year despite the effects of
the Asian economic slowdown, the strong dollar, and increased caution
among a number of customers.
The strategic highlight of the quarter was the acquisition of the Fuel
Systems subsidiary of Textron Inc., which was renamed Woodward FST,
Inc. The addition of FST, a leading manufacturer of fuel injection
nozzles, spray manifolds, and fuel metering and distribution valves,
significantly augments the company's aircraft engine fuel delivery
system capabilities, and positions them for an expanded role in
customers' engine programs. FST, which also serves the industrial
engine market, generated revenues of $82 million in 1997 and is
expected to have minimal impact on fiscal 1998 earnings. To reflect the
broadened strategic thrust to better serve the total engine fuel
delivery market, the Aircraft Controls group has been renamed Aircraft
Engine Systems.
Earlier in the quarter, the Company launched the Automotive Products
group, which is focused on control systems for industrial engines and
turbines with less than 300 horsepower and smaller than those served by
our Industrial Controls group. The Company believes there is a
significant opportunity to serve this industrial market using
automotive derivative technology. In May, the Automotive Products group
acquired privately held Baker Electrical Products, Inc., of Memphis,
Michigan. Baker makes electromagnetic coils for anti-lock braking
systems, and, more generally, provides Woodward with low-cost, high-
quality production capabilities for solenoids used in industrial
applications. Long-term plans call for pursuing additional
acquisitions, joint ventures, and license agreements to supplement our
own technology and production capabilities to serve this market.
Results of Operations
For the quarter ended June 30, 1998, net billings for products and
services rose 3 percent to $119,399,000, from $115,761,000 a year ago.
Shipments by the Aircraft Engine Systems group increased 5 percent to
$54,694,000, primarily as a result of the addition of FST in June.
Industrial Controls' shipments were $62,357,000, off 2 percent from a
year ago, despite strong growth for some of the group's products--
notably, engineered systems. Automotive Products' shipments were
$2,348,000 for the quarter.
On the cost side, the improved gross margins reflect ongoing efforts to
increase efficiency as well as a favorable revenue mix, including a
healthy proportion of aftermarket products and services. Increased
sales, service and administrative expenses were attributable in part to
investments in new business development efforts, including the
Automotive Products group. The increase in other expense-net reflects
<PAGE>
the amortization of intangibles from acquisitions as well as the effect
of foreign currency fluctuations. Net earnings for the quarter were
$4,891,000, or $0.43 per diluted share, compared with $4,838,000, or
$0.42 per diluted share, a year ago. Woodward's equity in the loss of
its unconsolidated GENXON(tm) Power Systems, LLC affiliate reduced
earnings per share for both periods by $0.06.
For the first nine months of fiscal 1998, net billings for products and
services were $330,699,000, up 3 percent from $321,336,000 in the
corresponding period a year ago. Shipments by Aircraft Engine Systems
rose 5 percent to $145,912,000; Industrial Controls' shipments of
$182,439,000 were virtually identical to the previous year's level. Net
earnings were $12,764,000, or $1.12 per diluted share, compared with
$13,406,000, or $1.17 per diluted share, in part because Woodward's
portion of GENXON's loss, $0.22 per share, was $0.03 greater than a
year earlier.
Financial Condition
As a result of recent acquisitions the following asset balances
increased; inventories by $25,595,000, accounts receivable by
$4,135,000, property, plant and equipment-net by $21,400,000 and
intangibles and other assets by $159,642,000 due principally to
intangibles recorded in the transactions. Additionally, the following
liability balances increased; short-term borrowings by $75,364,000,
accounts payable and accrued liabilities by $24,020,000, long-term debt
by $99,942,000 and other liabilities by $2,900,000.
Exclusive of the recent acquisitions, accounts receivable decreased
$5,761,000 from the September 30, 1998 level of $91,806,000 to
$86,045,000 as a result of higher shipment levels at the end of the
fiscal year. Inventories increased to $92,840,000 at June 30, 1998
from $83,249,000 at September 30, 1998 partly due to the additional
inventory needed to meet anticipated product demand over the next
several months. Property, plant and equipment - net decreased from
$110,948,000 at September 30, 1997 to $105,847,000 due to capital
expenditures being less than depreciation expense. Accounts payable
and accrued expenses decreased $8,713,000 to $56,111,000 from the
September 30, 1998 level of $64,824,000 due in part to reductions in
trade payables and member benefit accruals.
The company's effective tax rate for the nine months ended June 30,
1998 and 1997 was 40.0% and 39.0%, respectively. The effective tax
rate for the fiscal year ended September 30, 1997 was 38.6%.
On June 25, 1998, the Board of Directors declared a quarterly dividend
of twenty-three and one-quarter cents ($.2325) per share. The dividend
is payable on September 1, 1998 to shareholders of record at the close
of business on August 14, 1998.
<PAGE>
Year 2000 Project
The Company has completed an enterprise-wide assessment of its
operations to identify and prioritize systems that will be affected by
the year 2000. In addition to assessing its core information system
hardware and software, the Company has evaluated its manufactured
products, manufacturing equipment and facilities. An implementation
plan to resolve identified year 2000 issues has been developed and it
is anticipated that all corrective efforts and testing will be
completed by March 1999, allowing adequate time for testing. Costs of
corrective efforts, principally system reprogramming and upgrades, are
not anticipated to be material and are estimated to be less than
$1,500,000.
New Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 130, "Reporting Comprehensive Income" and SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information",
both of which become effective in fiscal year 1999. The Company has not
yet determined the impact these new statements will have on the
consolidated financial statements and related disclosures.
In February 1998, FASB issued SFAS No. 132, "Employers' Disclosure
about Pensions and Other Postretirement Benefits". The Company does not
not expect the adoption of this pronouncement to have a material effect
on the results of operations or financial condition.
In June 1998 the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". Currently the Company does not
expect the adoption of this pronouncement to have a material effect on
results of operations or financial condition.
Forward-looking Statements
This quarterly report contains forward-looking statements reflecting
management's current expectations concerning shipment levels, business
performance, joint venture outlook and growth prospects. These
statements involve risks and uncertainties including changes in product
demand, competition, effectiveness of process improvement programs,
impact of currency exchange rate changes, and other factors discussed
in the Company's 1997 Annual Report on Form 10-K filed with the
Securities and Exchange Commission. Actual future results and trends
may differ materially from these expectations.
<PAGE>
PART II - OTHER INFORMATION
Item 6(b)
a) Exhibits
4. $250,000,000 credit agreement dated June 15, 1998 between
the Company and Wachovia Bank N.A.
27. Financial data schedule
b) Two form 8-K's were filed for the quarter ended June 30, 1998; one
on June 1, 1998 and another on June 30, 1998 to report the
acquisition of Fuel Systems Textron, Inc. (FST) a subsidiary of
Textron, Inc.
<PAGE>
SIGNATURES
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.
WOODWARD GOVERNOR COMPANY
August 14, 1998 /s/ John A. Halbrook
John A. Halbrook, President
and Chief Executive Officer
August 14, 1998 /s/ Stephen P. Carter
Stephen P. Carter, Vice
President, Chief Financial
Officer and Treasurer
$250,000,000
CREDIT AGREEMENT
dated as of
JUNE 15, 1998
among
WOODWARD GOVERNOR COMPANY
THE BANKS FROM TIME TO TIME PARTY HERETO
and
WACHOVIA BANK, N.A.,
as Agent and a Bank
<PAGE>
TABLE OF CONTENTS
CREDIT AGREEMENT
ARTICLE I i
DEFINITIONS i
SECTION 1.01. Definitions i
SECTION 1.02. Accounting Terms and Determinations 16
SECTION 1.03. Use of Defined Terms 16
SECTION 1.04. Terminology 16
SECTION 1.05. References 16
ARTICLE II 16
THE CREDITS 16
SECTION 2.01. Commitments to Make Loans 16
SECTION 2.02. Method of Borrowing, Conversion and
Continuation 17
SECTION 2.03. Money Market Loans 20
SECTION 2.04. Notes 23
SECTION 2.05. Scheduled Repayment of the Loans 24
SECTION 2.07. Fees 28
SECTION 2.08. Optional Termination or Reduction of
Revolving Credit Commitments 29
SECTION 2.09. Mandatory Reduction and Termination of
Revolving Credit Commitments 29
SECTION 2.10. Optional Prepayments 29
SECTION 2.11. Mandatory Prepayments 30
SECTION 2.12. General Provisions as to Payments 31
SECTION 2.13. Computation of Interest and Fees 32
ARTICLE III 33
CONDITIONS TO BORROWINGS 33
SECTION 3.01. Conditions to First Borrowing 33
SECTION 3.02. Conditions to All Borrowings 34
<PAGE>
ARTICLE IV 35
REPRESENTATIONS AND WARRANTIES 35
SECTION 4.01. Corporate Existence and Power 35
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention 35
SECTION 4.03. Binding Effect 36
SECTION 4.04. Financial Information 36
SECTION 4.05. Litigation 36
SECTION 4.06. Compliance with ERISA 36
SECTION 4.07. Taxes 37
SECTION 4.08. Subsidiaries 37
SECTION 4.09. Not an Investment Company 37
SECTION 4.10 Public Utility Holding Company Act 37
SECTION 4.11. Ownership of Property; Liens 37
SECTION 4.12. No Default 37
SECTION 4.13. Full Disclosure 37
SECTION 4.14. Environmental Matters 37
SECTION 4.15. Compliance with Laws 38
SECTION 4.16. Capital Stock 38
SECTION 4.17. Margin Stock 38
SECTION 4.18. Insolvency 39
SECTION 4.19. Year 2000 Plan 39
ARTICLE V 39
COVENANTS 39
SECTION 5.01. Information 39
SECTION 5.02. Inspection of Property, Books and Records 41
SECTION 5.03. Ratio of Consolidated Funded Debt to
Consolidated Total Capitalization 41
SECTION 5.04. Fixed Charges Coverage 41
SECTION 5.05. Loans or Advances 42
SECTION 5.06. Investments 42
SECTION 5.07. Negative Pledge 42
SECTION 5.08. Maintenance of Existence 43
SECTION 5.09. Dissolution 43
SECTION 5.10. Consolidations, Mergers and Sales of Assets 43
SECTION 5.11. Use of Proceeds 44
SECTION 5.12. Compliance with Laws; Payment of Taxes 44
SECTION 5.13. Insurance 44
SECTION 5.14. Change in Fiscal Year 45
SECTION 5.15. Maintenance of Property 45
<PAGE>
SECTION 5.16. Environmental Notices 45
SECTION 5.17. Environmental Matters 45
SECTION 5.18. Environmental Release 45
SECTION 5.19. Transactions with Affiliates 45
SECTION 5.20. Limitation on Priority Debt 45
SECTION 5.21. Material Subsidiaries 45
SECTION 5.22 Permitted Securitization 46
ARTICLE VI 46
DEFAULTS 46
SECTION 6.01. Events of Default 46
SECTION 6.02. Notice of Default 49
ARTICLE VII 49
THE AGENT 49
SECTION 7.01. Appointment, Powers and Immunities 49
SECTION 7.02. Reliance by Agent 50
SECTION 7.03. Defaults 50
SECTION 7.04. Rights of Agent and its Affiliates as a Bank 51
SECTION 7.05. Indemnification 51
SECTION 7.06. CONSEQUENTIAL DAMAGES 51
SECTION 7.07. Payee of Note Treated as Owner 51
SECTION 7.08. Non-Reliance on Agent and Other Banks 52
SECTION 7.09. Failure to Act 52
SECTION 7.10. Resignation or Removal of Agent 52
ARTICLE VIII 53
CHANGE IN CIRCUMSTANCES; COMPENSATION 53
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair 53
SECTION 8.02. Illegality 53
SECTION 8.03. Increased Cost and Reduced Return 54
SECTION 8.04. Base Rate Loans Substituted for Euro-Dollar
Loans 55
SECTION 8.05. Compensation 55
ARTICLE IX 56
MISCELLANEOUS 56
SECTION 9.01. Notices 56
<PAGE>
SECTION 9.02. No Waivers 57
SECTION 9.03. Expenses; Documentary Taxes; Indemnification 57
SECTION 9.04. Setoffs; Sharing of Set-Offs 57
SECTION 9.05. Amendments and Waivers 58
SECTION 9.06. Margin Stock Collateral 59
SECTION 9.07. Successors and Assigns 59
SECTION 9.08. Confidentiality 61
SECTION 9.09. Representation by Banks 62
SECTION 9.10. Obligations Several 62
SECTION 9.11. Survival of Certain Obligations 62
SECTION 9.12. Georgia Law 62
SECTION 9.13. Severability 62
SECTION 9.14. Interest 62
SECTION 9.15. Interpretation 63
SECTION 9.16. Consent to Jurisdiction 63
SECTION 9.17. Counterparts 63
<PAGE>
CREDIT AGREEMENT
AGREEMENT dated as of June 15, 1998 among WOODWARD GOVERNOR
COMPANY, a Delaware corporation, the BANKS from time to time
party hereto and WACHOVIA BANK, N.A., as Agent and a Bank.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions . The terms as defined in
this Section 1.01 shall, for all purposes of this Agreement and
any amendment hereto (except as herein otherwise expressly
provided or unless the context otherwise requires), have the
meanings set forth herein:
"Acquisition" means any transaction pursuant to which the
Borrower or any of its Subsidiaries directly or indirectly, in
its own name or by or through a nominee or an agent (a) acquires
equity Securities (or warrants, options or other rights to
acquire such Securities) of any Person other than the Borrower or
any Person which is not then a Subsidiary of the Borrower,
pursuant to a solicitation of tenders therefor, or in one or more
negotiated block, market or other transactions not involving a
tender offer, or a combination of any of the foregoing, or
(b) makes any Person a Subsidiary of the Borrower, or causes any
Person to be merged into the Borrower or any of its Subsidiaries,
in any case pursuant to a merger, purchase of assets or any
reorganization providing for the delivery or issuance to the
holders of such Person's then outstanding Securities, in exchange
for such Securities, of cash or Securities of the Borrower or any
of its Subsidiaries, or a combination thereof, or (c) purchases
all or substantially all of the business or assets of any Person.
"Acquisition Document" means that certain Purchase and Sale
Agreement dated as of May 29, 1998 between the Borrower, as
purchaser, and Textron Inc., as seller, together with all
agreements, exhibits, schedules and annexes and documents
executed or delivered in connection therewith.
"Adjusted London Interbank Offered Rate" has the meaning set
forth in Section 2.06(e).
"Affiliate" of any Person means (i) any other Person which
directly, or indirectly through one or more intermediaries,
controls such Person, (ii) any other Person which directly, or
indirectly through one or more intermediaries, is controlled by
or is under common control with such Person, or (iii) any other
Person of which such Person owns, directly or indirectly, 20% or
more of the common stock or equivalent equity interests. As used
herein, the term "control" means possession, directly or
indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership
of voting securities, by contract or otherwise.
<PAGE>
"Agent" means Wachovia Bank, N.A., a national banking
association organized under the laws of the United States of
America, in its capacity as agent for the Banks hereunder, and
its successors and permitted assigns in such capacity.
"Agent's Letter Agreement" means that certain letter
agreement, dated as of May 15, 1998, between the Borrower and the
Agent relating to the structure of the Loans, and certain fees
from time to time payable by the Borrower to the Agent, together
with all amendments and modifications thereto.
"Agreement" means this Credit Agreement, together with all
amendments and supplements hereto.
"Applicable Facility Fee Rate" has the meaning set forth in
Section 2.07(a).
"Applicable Margin" has the meaning set forth in
Section 2.06(a).
"Assignee" has the meaning set forth in Section 9.07(c).
"Assignment and Acceptance" means an Assignment and
Acceptance executed in accordance with Section 9.07(c) in the
form attached hereto as Exhibit J.
"Authority" has the meaning set forth in Section 8.02.
"Bank" means each bank listed on the signature pages hereof
as having a Term Loan Commitment and a Revolving Credit
Commitment, and its successors and assigns.
"Base Rate" means for any Base Rate Loan for any day, the
rate per annum equal to the higher as of such day of (i) the
Prime Rate, and (ii) one-half of one percent above the Federal
Funds Rate for such day. For purposes of determining the Base
Rate for any day, changes in the Prime Rate and the Federal Funds
Rate shall be effective on the date of each such change.
"Base Rate Loan" means the Loans or any portion thereof
which bears or is to bear interest at a rate based upon the Base
Rate.
"Borrower" means Woodward Governor Company, a Delaware
corporation, and its successors and permitted assigns.
"Borrowing" means a borrowing hereunder consisting of
Revolving Credit Loans made to the Borrower at the same time by,
in the case of a Revolving Credit Borrowing, the Banks, or, in
the case of a Money Market Borrowing, one or more of the Banks,
in each case pursuant to Article II. A Borrowing is a "Revolving
Credit Borrowing" if such Loans are Revolving Credit Loans or a
"Money Market Borrowing" if such Loans are Money Market Loans. A
Borrowing is a "Base Rate Borrowing" if such Loans are Base Rate
Loans or a "Euro-Dollar Borrowing" if such Loans are Euro-Dollar
Loans.
<PAGE>
"Capital Stock" means any nonredeemable capital stock of the
Borrower or any Consolidated Subsidiary (to the extent issued to
a Person other than the Borrower), whether common or preferred.
"Capital Lease" means at any date any lease of Property
which in accordance with GAAP would be required to be capitalized
on a balance sheet of the lessee.
"Capitalized Lease Obligations" of a Person means the amount
of the obligations of such Person under Capital Leases which
would be shown as a liability on a balance sheet of such Person,
prepared in accordance with GAAP.
"CERCLA" means the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. (cc)9601 et seq. and its
implementing regulations and amendments.
"Change of Law" shall have the meaning set forth in
Section 8.02.
"Closing Certificate" has the meaning set forth in Section
3.01(e).
"Closing Date" means June 15, 1998.
"Code" means the Internal Revenue Code of 1986, as amended,
or any successor Federal tax code. Any reference to any
provision of the Code shall also be deemed to be a reference to
any successor provision or provisions thereof.
"Compliance Certificate" has the meaning set forth in
Section 5.01(c).
"Consolidated Fixed Charges" for any period means the sum of
(i) Consolidated Interest Expense for such period, and (ii) all
payment obligations of the Borrower and its Consolidated
Subsidiaries for such period under all operating leases and
rental agreements.
"Consolidated Funded Debt" means, at any time, all Debt of
the Borrower and its Consolidated Subsidiaries plus all
Securitization Facility Attributed Debt at such time, determined
on a consolidated basis.
"Consolidated Interest Expense" for any period means the sum
of (i) interest, whether expensed or capitalized, in respect of
Debt of the Borrower or any of its Consolidated Subsidiaries
outstanding during such period and (ii) all imputed interest,
whether in the form of "yield", "discount" or similar item, that
accrues during such period in respect of all Securitization
Facility Attributed Debt.
<PAGE>
"Consolidated Net Income" means, for any period, the Net
Income of the Borrower and its Consolidated Subsidiaries
determined on a consolidated basis, but excluding
(i) extraordinary items and (ii) any equity interests of the
Borrower or any Subsidiary in the unremitted earnings of any
Person that is not a Subsidiary.
"Consolidated Net Worth" means, at any time, the
shareholders' equity of the Borrower and its Consolidated
Subsidiaries, as set forth or reflected on the most recent
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries prepared in accordance with GAAP, but excluding any
Redeemable Preferred Stock of the Borrower or any of its
Consolidated Subsidiaries. Shareholders' equity generally would
include, but not be limited to (i) the par or stated value of all
outstanding Capital Stock, (ii) capital surplus, (iii) retained
earnings, and (iv) various deductions such as (A) purchases of
treasury stock, (B) valuation allowances, (C) receivables due
from an employee stock ownership plan, (D) employee stock
ownership plan debt guarantees, and (E) translation adjustments
for foreign currency transactions.
"Consolidated Operating Profits" means, for any period, the
Operating Profits of the Borrower and its Consolidated
Subsidiaries.
"Consolidated Subsidiary" means at any date any Subsidiary
or other entity the accounts of which, in accordance with GAAP,
would be consolidated with those of the Borrower in its
consolidated financial statements as of such date.
"Consolidated Total Assets" means, at any time, the Total
Assets of the Borrower and its Consolidated Subsidiaries,
determined on a consolidated basis.
"Consolidated Total Capitalization" means, at any time, the
sum of (a) Consolidated Net Worth at such time and (b)
Consolidated Funded Debt at such time.
"Controlled Group" means all members of a controlled group
of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414 of
the Code.
"Debt" of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments, (iii) all obligations of such
Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee
under capital leases, (v) all obligations of such Person to
reimburse any bank or other Person in respect of amounts payable
under a banker's acceptance, (vi) all Redeemable Preferred Stock
of such Person (in the event such Person is a corporation), (vii)
all obligations (absolute or contingent) of such Person to
reimburse any bank or other Person in respect of amounts paid
under a letter of credit or similar instrument with an expiration
date more than one year from such date, (viii) all Debt of
others secured by a Lien on any asset of such Person, whether or
<PAGE>
not such Debt is assumed by such Person, (ix) all Debt of others
Guaranteed by such Person, (x) all obligations of such Person
with respect to interest rate protection agreements, foreign
currency exchange agreements or other hedging agreements (valued
as the termination value thereof) computed in accordance with a
method approved by the International Swaps and Derivatives
Association and agreed to by such Person in the applicable
hedging agreement, if any, and (xi) the principal balance
outstanding under any synthetic lease, tax retention operating
lease, off-balance sheet loan or similar off-balance sheet
financing product to which such Person is a party, where such
transaction is considered borrowed money indebtedness for tax
purposes but is classified as an operating lease in accordance
with GAAP.
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of
time or both would, unless cured or waived in writing, become an
Event of Default.
"Default Rate" means, with respect to any Loan, on any day,
the sum of 2% plus the then highest interest rate (including the
Applicable Margin) which may be applicable to any Loans hereunder
(irrespective of whether any such type of Loans are actually
outstanding hereunder).
"Dollars" or "$" means dollars in lawful currency of the
United States of America.
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in Atlanta, Georgia
or New York, New York are authorized or required by law to close.
"Domestic Material Subsidiary" means any Material Subsidiary
which is organized under the laws of any state or territory of
the United States of America.
"Environment" means soil, surface waters, ground waters,
land, sediments, surface or subsurface strata, ambient air and
any other environmental medium.
"Environmental Authority" means any foreign, federal, state,
local or regional government that exercises any form of
jurisdiction or authority under any Environmental Requirement.
"Environmental Authorizations" means all licenses, permits,
orders, approvals, notices, registrations or other legal
prerequisites for conducting the business of the Borrower or any
Subsidiary required by any Environmental Requirement.
"Environmental Judgments and Orders" means all judgments,
decrees or orders arising from or in any way associated with any
Environmental Requirements, whether or not entered upon consent
or written agreements with an Environmental Authority or other
entity arising from or in any way associated with any
Environmental Requirement, whether or not incorporated in a
judgment, decree or order.
<PAGE>
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or other governmental
restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or
petroleum products, chemicals or industrial, toxic or hazardous
substances or wastes into the environment, including, without
limitation, ambient air, surface water, groundwater or land, or
otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products,
chemicals or industrial, toxic or hazardous substances or wastes
or the clean-up or other remediation thereof.
"Environmental Liabilities" means any liabilities, whether
accrued, contingent or otherwise, arising from and in any way
associated with any Environmental Requirements.
"Environmental Notices" means notice from any Environmental
Authority or by any other person or entity, of possible or
alleged noncompliance with or liability under any Environmental
Requirement, including without limitation any complaints,
citations, demands or requests from any Environmental Authority
or from any other person or entity for correction of any
violation of any Environmental Requirement or any investigations
concerning any violation of any Environmental Requirement.
"Environmental Proceedings" means any judicial or
administrative proceedings arising from or in any way associated
with any Environmental Requirement.
"Environmental Releases" means releases as defined in CERCLA
or under any applicable state or local environmental law or
regulation.
"Environmental Requirements" means any legal requirement
relating to the Environment and applicable to the Borrower, any
Subsidiary or the Properties, including but not limited to any
such requirement under CERCLA or similar state legislation and
all federal, state and local laws, ordinances, regulations,
orders, writs, decrees and common law.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, or any successor law. Any
reference to any provision of ERISA shall also be deemed to be a
reference to any successor provision or provisions thereof.
"Euro-Dollar Business Day" means any Domestic Business Day
on which dealings in Dollar deposits are carried out in the
London interbank market.
"Euro-Dollar Loan" means the Loans or any portion thereof
which bears or is to bear interest at a rate based upon the
London Interbank Offered Rate.
"Euro-Dollar Reserve Percentage" has the meaning set forth
in Section 2.06(e).
<PAGE>
"Event of Default" has the meaning set forth in Section
6.01.
"Facility Fee Determination Date" has the meaning set forth
in Section 2.07(a).
"Facility Fee Payment Date" means each March 31, June 30,
September 30 and December 31.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the next higher 1/100th of 1%)
equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if the day for which
such rate is to be determined is not a Domestic Business Day, the
Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so
published on the next succeeding Domestic Business Day, and (ii)
if such rate is not so published for any day, the Federal Funds
Rate for such day shall be the average rate charged to Wachovia
on such day on such transactions as determined by the Agent.
"Fiscal Quarter" means any fiscal quarter of the Borrower.
"Fiscal Year" means any fiscal year of the Borrower.
"GAAP" means generally accepted accounting principles
applied on a basis consistent with those which, in accordance
with Section 1.02, are to be used in making the calculations for
purposes of determining compliance with the terms of this
Agreement.
"Guarantee" by any Person means any obligation, contingent
or otherwise, of such Person directly or indirectly guaranteeing
any Debt or other obligation of any other Person and, without
limiting the generality of the foregoing, any obligation, direct
or indirect, contingent or otherwise, of such Person (i) to
secure, purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether
arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to
provide collateral security, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of
such Debt or other obligation of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or
in part), provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Guarantors" means the Domestic Material Subsidiaries from
time to time party to the Guaranty.
<PAGE>
"Guaranty" means the Guaranty Agreement dated as of even
date herewith executed by each Guarantor in favor of the Agent,
substantially in the form attached hereto as Exhibit L, as
modified, amended, supplemented or restated from time to time.
"Hazardous Materials" includes, without limitation, (a)
solid or hazardous waste, as defined in the Resource Conservation
and Recovery Act of 1980, 42 U.S.C. cc6901 et seq. and its
implementing regulations and amendments, or in any applicable
state or local law or regulation, (b) any "hazardous substance",
"pollutant" or "contaminant", as defined in CERCLA, or in any
applicable state or local law or regulation, (c) gasoline, or any
other petroleum product or by-product, including crude oil or any
fraction thereof, (d) toxic substances, as defined in the Toxic
Substances Control Act of 1976, or in any applicable state or
local law or regulation and (e) insecticides, fungicides, or
rodenticides, as defined in the Federal Insecticide, Fungicide,
and Rodenticide Act of 1975, or in any applicable state or local
law or regulation, as each such Act, statute or regulation may be
amended from time to time.
"Income Available for Fixed Charges" for any period means
(a) the sum of (i) Consolidated Net Income, (ii) taxes on income,
(iii) Consolidated Fixed Charges and (iv) amortization of
goodwill, less (b) cash dividends paid by the Borrower, all
determined with respect to the Borrower and its Consolidated
Subsidiaries on a consolidated basis for such period and in
accordance with GAAP.
"Indebtedness" of any Person means at any date, without
duplication, (i) all obligations of such Person for borrowed
money, and (ii) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments.
"Indemnity, Subrogation and Contribution Agreement" means
the Indemnity, Subrogation and Contribution Agreement to be
entered into among the Borrower, the Guarantors and the Agent,
substantially in the form attached hereto as Exhibit M, as
modified, amended, supplemented or restated from time to time.
"Interest Period" means: (1) with respect to each Euro-
Dollar Loan, the period commencing on the date that such Euro-
Dollar Loan is first made, converted or continued and ending on
the numerically corresponding day in the first, second, third or
sixth month thereafter, as the Borrower may elect; provided that:
(a) any Interest Period (subject to clauses (c) and
(d) below) which would otherwise end on a day which is not a
Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case such Interest
Period shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-
Dollar Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the appropriate
subsequent calendar month) shall, subject to clauses (c) and (d)
below, end on the last Euro-Dollar Business Day of the
appropriate subsequent calendar month;
<PAGE>
(c) with respect to Term Loans, no Interest Period may
be selected that would begin before and end after a scheduled
principal payment date set forth in Section 2.05(a) if, after
giving effect to such selection, the aggregate outstanding
principal amount of (i) Euro-Dollar Loans with Interest Periods
ending on or before such scheduled principal payment date, and
(ii) Base Rate Loans, would not be at least equal to the amount
of principal required to be repaid on such scheduled payment
date; and
(d) no Interest Period may be selected which begins
before the Term Loan Maturity Date or the Revolving Credit
Maturity Date and would otherwise end after the Term Loan
Maturity Date or the Revolving Credit Maturity Date,
respectively.
(2) with respect to each Base Rate Borrowing, the period
commencing on the date that such Base Rate Loan is first made and
ending 30 days thereafter; provided that:
(a) any Interest Period (subject to clause (b) below)
which would otherwise end on a day which is not a Domestic
Business Day shall be extended to the next succeeding Domestic
Business Day; and
(b) no Interest Period may be selected which begins
before the Term Loan Maturity Date or the Revolving Credit
Maturity Date and would otherwise end after the Term Loan
Maturity Date or the Revolving Credit Maturity Date,
respectively.
(3) with respect to each Money Market Borrowing, the period
commencing on the date of such Borrowing and ending 7 to 180 days
thereafter, as the Borrower may indicate in the applicable Money
Market Quote Request; provided that:
(a) any Interest Period (subject to clause (b) below)
which would otherwise end on a day which is not a Domestic
Business Day shall be extended to the next succeeding Domestic
Business Day; and
(b) no Interest Period may be selected which begins
before the Revolving Credit Maturity Date and would otherwise end
after the Revolving Credit Maturity Date.
"Interest Rate Election Notice" means a duly completed
notice substantially in the form of Exhibit B, or such other form
as the Agent may from time to time approve for use by the
Borrower in choosing the interest rate applicable to Term Loans
as provided in this Agreement.
"Investment" means any investment in any Person, whether by
means of purchase or acquisition of obligations or securities of
such Person, capital contribution to such Person, loan or advance
to such Person, making of a time deposit with such Person,
Guarantee or assumption of any obligation of such Person or
otherwise.
<PAGE>
"Lending Office" means, as to each Bank, its office located
at its address set forth on the signature pages hereof (or
identified on the signature pages hereof as its Lending Office)
or such other office as such Bank may hereafter designate as its
Lending Office by notice to the Borrower and the Agent.
"Lien" means, with respect to any asset, any mortgage, deed
to secure debt, deed of trust, lien, pledge, charge, security
interest, security title, preferential arrangement which has the
practical effect of constituting a security interest or
encumbrance, servitude or encumbrance of any kind in respect of
such asset to secure or assure payment of a Debt or a Guarantee,
whether by consensual agreement or by operation of statute or
other law, or by any agreement, contingent or otherwise, to
provide any of the foregoing. For the purposes of this
Agreement, the Borrower or any Subsidiary shall be deemed to own
subject to a Lien any asset which it has acquired or holds
subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title
retention agreement relating to such asset.
"Loan" means a Term Loan, a Revolving Credit Loan or a Money
Market Loan and "Loans" means Term Loans, Revolving Credit Loans
or Money Market Loans, or any or all of them, as the context
shall require.
"Loan Documents" means this Agreement, the Notes, the
Guaranty, any other document evidencing, relating to, securing or
guaranteeing the payment of the Loans, and any other document or
instrument delivered from time to time in connection with this
Agreement, the Notes, the Guaranty, or the Loans, as such
documents and instruments may be amended or supplemented from
time to time.
"Loan Parties" means collectively the Borrower and each
Subsidiary of the Borrower that is now or hereafter a party to
any of the Loan Documents.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.06(e).
"Margin Stock" means "margin stock" as defined in Regulation
T, U or X of the Board of Governors of the Federal Reserve
System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Material Adverse Effect" means, with respect to any event,
act, condition or occurrence of whatever nature (including any
adverse determination in any litigation, arbitration, or
governmental investigation or proceeding), whether singly or in
conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences, whether or
not related, a material adverse change in, or a material adverse
effect upon, any of (a) the financial condition, operations,
business, properties or prospects of the Borrower and its
Consolidated Subsidiaries taken as a whole, (b) the rights and
<PAGE>
remedies of the Agent or the Banks under the Loan Documents, or
the ability of the Loan Parties to perform their respective
obligations under the Loan Documents to which they are a party,
as applicable, or (c) the legality, validity or enforceability of
any Loan Document.
"Material Subsidiaries" means (i) on the Closing Date, each
of the Subsidiaries listed on Schedule 1.01 hereto and (ii) on
any date after the Closing Date, any Subsidiary of the Borrower
which has either (i) Total Assets on the last day of the Fiscal
Quarter most recently ended equal to or greater than 5% of
Consolidated Total Assets on the last day of the Fiscal Quarter
most recently ended, or (ii) Operating Profits for the period of
4 consecutive Fiscal Quarters most recently ended prior to such
date equal to or greater than 5% of Consolidated Operating
Profits for such period of 4 consecutive Fiscal Quarters;
provided that any Subsidiary of the Borrower that is a "foreign
sales corporation" as defined in Section 922(a) of the Code shall
not be deemed to be a Material Subsidiary.
"Money Market Loan" means a Loan which bears or is to bear
interest at a Money Market Rate.
"Money Market Note" has the meaning set forth in Section
2.04(c).
"Money Market Quote" means an offer by a Bank to make a
Money Market Loan in accordance with Section 2.03(c).
"Money Market Quote Request" has the meaning set forth in
Section 2.03(b).
"Money Market Rate" has the meaning set forth in Section
2.03(c)(ii)(C).
"Multiemployer Plan" shall have the meaning set forth in
Section 4001(a)(3) of ERISA.
"Net Income" means, as applied to any Person for any period,
the aggregate amount of net income of such Person, after taxes,
for such period, as determined in accordance with GAAP.
"Net Proceeds of Capital Stock/Conversion of Debt" means any
and all proceeds (whether cash or non-cash) or other
consideration received by the Borrower or a Consolidated
Subsidiary in respect of the issuance of Capital Stock (including
without limitation, the aggregate amount of any and all Debt
converted into Capital Stock), after deducting therefrom all
reasonable and customary costs and expenses incurred by the
Borrower or such Consolidated Subsidiary directly in connection
with the issuance of such Capital Stock.
"Net Proceeds of Indebtedness" means any and all proceeds
(whether cash or non-cash) received by the Borrower or a
Consolidated Subsidiary in respect of the incurrence or the
private or public issuance of Indebtedness of the Borrower or
such Consolidated Subsidiary, after deducting therefrom all
reasonable and customary costs and expenses incurred by the
Borrower or such Consolidated Subsidiary directly in connection
with the issuance of such Indebtedness.
<PAGE>
"Notes" means any or all of the Term Loan Notes, the
Revolving Credit Notes and the Money Market Notes and all
promissory notes delivered in substitution or exchange therefor,
in each case as the same shall be modified, amended,
supplemented, restated, extended, consolidated, renewed or
replaced and in effect from time to time.
"Notice of Borrowing" has the meaning set forth in Section
2.02 (b).
"Obligations" means all indebtedness, obligations and
liabilities to the Banks or the Agent existing on the date of
this Agreement or arising thereafter, direct or indirect, joint
or several, absolute or contingent, matured or unmatured,
liquidated or unliquidated, secured or unsecured, arising by
contract, operation of law or otherwise, of the Loan Parties
under this Agreement or any other Loan Document.
"Officer's Certificate" has the meaning set forth in Section
3.01(f).
"Operating Profits" means, as applied to any Person for any
period, the operating income of such Person for such period, as
determined in accordance with GAAP.
"Participant" has the meaning set forth in Section 9.07(b).
"Participating Subsidiary" means any Subsidiary of the
Borrower that is a participant in a Permitted Securitization.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Pending Acquisition" means the acquisition by the Borrower
of 100% of the issued and outstanding capital stock of Fuel
Systems Textron Inc. from Textron Inc.
"Permitted Acquisitions" means the Pending Acquisition and
other Acquisitions (a) which are (i) non-hostile and (ii) of
Persons engaged in the same or substantially similar lines of
business as the Borrower and its Consolidated Subsidiaries, and
(b) as to which the Borrower has delivered to the Banks a
certificate of the chief financial officer or the chief
accounting officer of the Borrower certifying (and, in the case
of Sections 5.03 through 5.07, inclusive, and Section 5.10,
including calculations evidencing) pro-forma compliance with the
terms of this Agreement after giving effect to such Acquisition.
"Permitted Securitization" mean any financing program
providing for the sale or transfer of Securitization Assets by
the Borrower and its Participating Subsidiaries, in transactions
purporting to be sales (and treated as sales for GAAP purposes),
to one or more limited purpose financing companies, special
purpose entities and/or other financial institutions, in each
case, on a limited recourse basis as to the Borrower and the
Participating Subsidiaries.
<PAGE>
"Person" means an individual, a corporation, a limited
liability company, a partnership (including without limitation, a
joint venture), an unincorporated association, a trust or any
other entity or organization, including, but not limited to, a
government or political subdivision or an agency or
instrumentality thereof.
"Plan" means at any time an employee pension benefit plan
which is covered by Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Code and is either (i)
maintained by a member of the Controlled Group for employees of
any member of the Controlled Group or (ii) maintained pursuant to
a collective bargaining agreement or any other arrangement under
which more than one employer makes contributions and to which a
member of the Controlled Group is then making or accruing an
obligation to make contributions or has within the preceding 5
plan years made contributions.
"Prime Rate" refers to that interest rate so denominated and
set by Wachovia from time to time as an interest rate basis for
borrowings. The Prime Rate is but one of several interest rate
bases used by Wachovia. Wachovia lends at interest rates above
and below the Prime Rate.
"Priority Debt" means (a) any Debt of the Borrower or any
Subsidiary secured by any Lien permitted pursuant to Section
5.07, and (b) any Debt of any Subsidiary which is not a
Guarantor; provided, however, that Priority Debt shall not
include (i) any Debt owed by any Subsidiary to the Borrower or
any Wholly-Owned Subsidiary, and (ii) any Debt incurred to
refinance any Debt of any Subsidiary outstanding on the Closing
Date to the extent the amount of Debt so incurred is not in
excess of the amount of Debt refinanced.
"Properties" means all real property owned, leased or
otherwise used or occupied by the Borrower or any Subsidiary,
wherever located.
"Quotation Date" has the meaning set forth in Section
2.03(b).
"Rate Determination Date" has the meaning set forth in
Section 2.06(c).
"Receivables Subsidiary" means a special purpose, bankruptcy
remote Wholly Owned Subsidiary of the Borrower which may be
formed for the sole and exclusive purpose of engaging in
activities in connection with the purchase, sale and financing of
Securitization Assets in connection with and pursuant to a
Permitted Securitization.
"Redeemable Preferred Stock" of any Person means any
preferred stock issued by such Person which is at any time prior
to the later of the Term Loan Maturity Date or the Revolving
Credit Maturity Date either (i) mandatorily redeemable (by
sinking fund or similar payments or otherwise) or (ii) redeemable
at the option of the holder thereof.
"Required Banks" means at any time Banks having at least 66
2/3% of the aggregate amount of the Term Loan Commitment and the
Revolving Credit Commitments or, if the Term Loan Commitments and
the Revolving Credit Commitments are no longer in effect, Banks
holding at least 66 2/3% of the aggregate outstanding principal
amount of the Notes.
<PAGE>
"Revolving Credit Commitment" means with respect to each
Bank (i) the amount set forth opposite the name of such Bank
under the heading "Revolving Credit Commitment" on the signature
pages hereof, or (ii) as to any Bank that enters into an
Assignment and Acceptance (whether as transferor Bank or as
Assignee thereunder), the amount of such Bank's Revolving Credit
Commitment after giving effect to such Assignment and Acceptance.
"Revolving Credit Loans" means Loans made to the Borrower by
the Banks pursuant to Section 2.02 (b).
"Revolving Credit Maturity Date" means June 15, 2003.
"Revolving Credit Note" has the meaning set forth in
Section 2.04 (b).
"Securitization Assets" means all accounts receivable,
general intangibles, instruments, documents, chattel paper and
investment property (whether now existing or arising in the
future) of the Borrower or any of its Subsidiaries which are sold
or transferred pursuant to a Permitted Securitization, and any
assets related thereto, including without limitation (i) all
collateral given by any of the foregoing, (ii) all contracts and
all guarantees (but not by the Borrower or any of its
Subsidiaries) or other obligations directly related to any of the
foregoing, (iii) other related assets including those set forth
in the Securitization Documents, and (iv) proceeds of all of the
foregoing.
"Securitization Documents" shall mean all documentation
relating to any Permitted Securitization.
"Securitization Facility Attributed Debt" at any time shall
mean the aggregate net outstanding amount theretofore paid to the
Receivables Subsidiary, the Borrower or Participating
Subsidiaries in respect of the Securitization Assets sold or
transferred by it in connection with a Permitted Securitization
(it being the intent of the parties that the amount of
Securitization Facility Attributed Debt at any time outstanding
approximate as closely as possible the principal amount of Debt
which would be outstanding at such time under the Permitted
Securitization if the same were structured as a secured lending
agreement rather than a purchase agreement).
"Security" has the meaning assigned to such term in
Section 2(l) of the Securities Act of 1933, as amended.
"Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other
persons performing similar functions are at the time directly or
indirectly owned by the Borrower.
<PAGE>
"Taxes" has the meaning set forth in Section 2.12(c).
"Term Loans" means the loans made to the Borrower by the
Banks pursuant to Section 2.01(a).
"Term Loan Commitment" means with respect to each Bank
(i) the amount set forth opposite the name of such Bank under the
heading "Term Loan Commitment" on the signature pages hereof, or
(ii) as to any Bank that enters into an Assignment and Acceptance
(whether as transferor Bank or as Assignee thereunder), the
amount of such Bank's Term Loan Commitment after giving effect
to such Assignment and Acceptance.
"Term Loan Maturity Date" has the meaning set forth in
Section 2.05(a).
"Term Loan Note" has the meaning set forth in
Section 2.04(a).
"Third Parties" means all lessees, sublessees, licensees and
other users of the Properties, excluding those users of the
Properties in the ordinary course of the Borrower's business and
on a temporary basis.
"Total Assets" of any Person means, at any time, the total
assets of such Person, as set forth or reflected or as should be
set forth or reflected on the most recent balance sheet of such
Person, prepared in accordance with GAAP.
"Total Unused Commitment" means at any date, an amount equal
to (i) the aggregate amount of the Revolving Credit Commitments
of all the Banks at such time, less (ii) the aggregate
outstanding principal amount of the Revolving Credit Loans of all
of the Banks at such time.
"Transferee" has the meaning set forth in Section 9.07(d).
"Wachovia" means Wachovia Bank, N.A., a national banking
association and its successors.
"Wholly Owned Subsidiary" means any Subsidiary all of the
shares of capital stock or other ownership interests of which
(except directors' qualifying shares) are at the time directly or
indirectly owned by the Borrower.
"Y2K Plan" has the meaning set forth in Section 4.19.
"Year 2000 Compliant and Ready" means that the Borrower's
and its Subsidiaries' hardware and software systems with respect
to the operation of its business and its general business plan
will: (i) handle date information involving any and all dates
before, during and/or after January 1, 2000, including accepting
input, providing output and performing date calculations in whole
or in part; (ii) operate, accurately without interruption on and
in respect of any and all dates before, during and/or after
<PAGE>
January 1, 2000 and without any change in performance; (iii)
respond to and process two digit year input without creating any
ambiguity as to the century; and (iv) store and provide date
input information without creating any ambiguity as to the
century.
SECTION 1.02. Accounting Terms and Determinations . Unless
otherwise specified herein, all terms of an accounting character
used herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required to
be delivered hereunder shall be prepared in accordance with GAAP,
applied on a basis consistent (except for changes concurred in by
the Borrower's independent public accountants or otherwise
required by a change in GAAP) with the most recent audited
consolidated financial statements of the Borrower and its
Consolidated Subsidiaries delivered to the Banks, unless with
respect to any such change concurred in by the Borrower's
independent public accountants or required by GAAP, in
determining compliance with any of the provisions of this
Agreement or any of the other Loan Documents: (i) the Borrower
shall have objected to determining such compliance on such basis
at the time of delivery of such financial statements, or (ii)
the Required Banks shall so object in writing within 30 days
after the delivery of such financial statements, in either of
which events such calculations shall be made on a basis
consistent with those used in the preparation of the latest
financial statements as to which such objection shall not have
been made (which, if objection is made in respect of the first
financial statements delivered under Section 5.01 hereof, shall
mean the financial statements referred to in Section 4.04).
SECTION 1.03. Use of Defined Terms . All terms
defined in this Agreement shall have the same meanings when used
in any of the other Loan Documents, unless otherwise defined
therein or unless the context shall otherwise require.
SECTION 1.04. Terminology . All personal pronouns
used in this Agreement, whether used in the masculine, feminine
or neuter gender, shall include all other genders; the singular
shall include the plural and the plural shall include the
singular. Titles of Articles and Sections in this Agreement are
for convenience only, and neither limit nor amplify the
provisions of this Agreement.
SECTION 1.05. References . Unless otherwise
indicated, references in this Agreement to "Articles",
"Exhibits", "Schedules", and "Sections" are references to
articles, exhibits, schedules and sections hereof.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Make Loans .
(a) Term Loans. The Banks hereby severally
establish, on the terms and conditions set forth herein, an
amortizing term loan facility in an aggregate principal amount
not to exceed $100,000,000.00, from which each Bank severally
agrees on the terms and conditions set forth herein to make Term
Loans to the Borrower in an amount up to but not in excess of the
<PAGE>
amount of such Bank's Term Loan Commitment. The Term Loans shall
be advanced to the Borrower upon satisfaction of the conditions
hereunder on the Closing Date. The amount of each Bank's pro
rata share of Term Loans shall be equal to such Bank's ratable
share (based on the Bank's respective Term Loan Commitment) of
the aggregate amount of the Term Loans to be borrowed by the
Borrower. The Term Loans shall initially be made as Euro-Dollar
Loans having an Interest Period, commencing on the Closing Date,
with a duration of one (1) month.
(b) Revolving Credit Loans. The Banks
severally agree, on the terms and conditions set forth herein, to
make Revolving Credit Loans to the Borrower from time to time
before the Revolving Credit Maturity Date; provided that,
immediately after each such Revolving Credit Loan is made, the
aggregate outstanding principal amount of Revolving Credit Loans
by each Bank shall not exceed the amount of its Revolving Credit
Commitment, provided further that the aggregate principal amount
of all Revolving Credit Loans, together with the aggregate
principal amount of all Money Market Loans, at any one time
outstanding shall not exceed the aggregate amount of the
Revolving Credit Commitments of all of the Banks at such time.
Each Borrowing under this Subsection shall be in an aggregate
principal amount (i) in the case of Euro-Dollar Loans, of
$5,000,000 or any larger multiple of $1,000,000 and (ii) in the
case of Base Rate Loans, of $1,000,000 or any larger multiple of
$100,000 (except that any such Borrowing may be in the aggregate
amount of the Total Unused Commitments) and shall be made from
the several Banks ratably in proportion to their respective
Revolving Credit Commitments. Within the foregoing limits, the
Borrower may borrow under this Section, repay or, to the extent
permitted by Section 2.10, prepay Revolving Credit Loans and
reborrow under this Subsection at any time before the Revolving
Credit Maturity Date.
SECTION 2.02. Method of Borrowing, Conversion and
Continuation
(a) Conversion to and Continuation of Interest Rates
for the Term Loans.
(i) With respect to the Term Loans, and on
the terms and subject to the conditions of this Agreement, the
Borrower may elect (A) at any time to convert Base Rate Loans to
Euro-Dollar Loans or to continue such Base Rate Loans for an
additional Interest Period, or (B) at the end of any Interest
Period with respect to Euro-Dollar Loans to convert such Euro-
Dollar Loans into Base Rate Loans or to continue such Euro-Dollar
Loans for an additional Interest Period. The Term Loans may be
continued as, or converted to, Base Rate Loans or Euro-Dollar
Loans in whole or in part. Borrower shall make each such
election by delivering to the Agent an Interest Rate Election
Notice prior to 11:00 a.m. (Atlanta, Georgia time) at least three
(3) Euro-Dollar Business days prior to the effective date of any
conversion to or continuation of Euro-Dollar Loans, and on the
same Domestic Business Day as the effective date of any
conversion to or continuation of Base Rate Loans, specifying (x)
in the case of a conversion to or a continuation of a Euro-Dollar
Loan, the Interest Period; (y) the date of conversion or
continuation (which shall be a Euro-Dollar Business Day, in the
case of a conversion to or continuation of a Euro-Dollar Loan and
a Domestic Business Day in the case of a conversion to or
continuation of a Base Rate Loan); and (z) the amount and type of
conversion or continuation. Upon timely receipt of an Interest
<PAGE>
Rate Election Notice, the Agent shall promptly notify the
Borrower and the Banks of the applicable interest rate for the
Interest Period selected in such Interest Rate Election Notice;
provided that the failure by the Agent to provide any such notice
shall not, in any way, affect or diminish the Borrower's
obligations to the Banks or the Banks' rights under this
Agreement, the Notes or any of the other Loan Documents. If,
within the time period required under this Section, the Agent
shall not have received an Interest Rate Election Notice from the
Borrower of an election to continue a Loan for an additional
Interest Period, then, upon the expiration of the Interest Period
therefor, such Loan shall be converted or continued automatically
as a Base Rate Loan.
(ii) Notwithstanding Section 2.02(a)(i), the
right of the Borrower to elect the interest rate option
applicable to the Term Loans shall be subject to the following
restrictions:
(A) A continuation or conversion of a Euro-
Dollar Loan or any conversion of a Base Rate Loan to a Euro-
Dollar Loan must be in an amount such that the aggregate amount
of the succeeding Euro-Dollar Loan is $5,000,000 or any greater
amount in multiples of $1,000,000; and
(B) A continuation of or conversion to a
Base Rate Loan shall be in a minimum amount of $1,000,000 or any
whole multiple of $100,000 in excess thereof.
(b) Revolving Credit Loans.
(i) The Borrower shall give the Agent notice
in the form attached hereto as Exhibit K (a "Notice of
Borrowing") prior to 11:00 A.M. (Atlanta, Georgia time) on the
Domestic Business Day of each Base Rate Borrowing and at least 3
Euro-Dollar Business Days before each Euro-Dollar Borrowing,
specifying:
(A) the date of such Borrowing, which shall
be a Domestic Business Day in the case of a Base Rate Borrowing
or a Euro-Dollar Business Day in the case of a Euro-Dollar
Borrowing,
(B) the aggregate amount
of such Borrowing,
(C) whether the Revolving Credit Loans
comprising such Borrowing are to be Base Rate Loans or Euro-
Dollar Loans, and
(D) in the case of a Euro-Dollar Borrowing,
the duration of the Interest Period applicable thereto, subject
to the provisions of the definition of Interest Period.
(ii) Upon receipt of a Notice of Borrowing,
the Agent shall promptly notify each Bank of the contents thereof
and of such Bank's ratable share of such Borrowing and such
Notice of Borrowing shall not thereafter be revocable by the
Borrower.
<PAGE>
(iii) Not later than 2:00 P.M. (Atlanta, Georgia
time) on the date of each Revolving Credit Borrowing, each Bank
shall (except as provided in subsection (b)(iv) of this Section)
make available its ratable share of such Revolving Credit
Borrowing, in Federal or other funds immediately available in
Atlanta, Georgia, to the Agent at its address referred to in or
specified pursuant to Section 9.01. Unless the Agent determines
that any applicable condition specified in Article III has not
been satisfied, the Agent will make the funds so received from
the Banks available to the Borrower at the Agent's aforesaid
address. Unless the Agent receives notice from a Bank, at the
Agent's address referred to in Section 9.01, no later than (i)
4:00 P.M. (local time at such address) on the Domestic Business
Day before the date of a Euro-Dollar Borrowing, or (ii) 11:30
A.M. (local time at such address) on the Domestic Business Day of
a Base Rate Borrowing, stating that such Bank will not make a
Revolving Credit Loan in connection with such Borrowing, the
Agent shall be entitled to assume that such Bank will make a
Revolving Credit Loan in connection with such Borrowing and, in
reliance on such assumption, the Agent may (but shall not be
obligated to) make available such Bank's ratable share of such
Borrowing to the Borrower for the account of such Bank. If the
Agent makes such Bank's ratable share available to the Borrower
and such Bank does not in fact make its ratable share of such
Borrowing available on such date, the Agent shall be entitled to
recover such Bank's ratable share from such Bank or the Borrower
(and for such purpose shall be entitled to charge such amount to
any account of the Borrower maintained with the Agent), together
with interest thereon for each day during the period from the
date of such Borrowing until such sum shall be paid in full at a
rate per annum equal to the rate at which the Agent determines
that it obtained (or could have obtained) overnight Federal funds
to cover such amount for each such day during such period,
provided that any such payment by the Borrower of such Bank's
ratable share and interest thereon shall be without prejudice to
any rights that the Borrower may have against such Bank. If such
Bank shall repay to the Agent such corresponding amount, such
amount so repaid shall constitute such Bank's Revolving Credit
Loan included in such Borrowing for purposes of this Agreement.
(iv) If any Bank makes a new Revolving Credit Loan
hereunder on a day on which the Borrower is to repay all or any
part of an outstanding Revolving Credit Loan from such Bank, such
Bank shall apply the proceeds of its new Revolving Credit Loan to
make such repayment and only an amount equal to the difference
(if any) between the amount being borrowed and the amount being
repaid shall be made available by such Bank to the Agent as
provided in subsection (b) (iii) of this Section, or remitted by
the Borrower to the Agent as provided in Section 2.12, as the
case may be.
(v) Notwithstanding anything to the contrary
contained herein, the proceeds of any Base Rate Borrowing shall
be applied first to repay the unpaid principal amount of all Base
Rate Loans (if any) which are Revolving Credit Loans outstanding
immediately before such Base Rate Borrowing.
(vi) In the event that a Notice of Borrowing fails
to specify whether the Loans comprising such Borrowing are to be
Base Rate Loans or Euro-Dollar Loans, such Loans shall be made as
Base Rate Loans. If the Borrower is otherwise entitled under
<PAGE>
this Agreement to repay any Loans maturing at the end of an
Interest Period applicable thereto with the proceeds of a new
Borrowing, and the Borrower fails to repay such Loans using its
own moneys and fails to give a Notice of Borrowing in connection
with such new Borrowing, a new Borrowing shall be deemed to be
made on the date such Loans mature in an amount equal to the
principal amount of the Loans so maturing, and the Loans
comprising such new Borrowing shall be Base Rate Loans.
(c) Notwithstanding anything to the contrary contained
in this Agreement, no Euro-Dollar Borrowing may be made if there
shall have occurred a Default or an Event of Default, which
Default or Event of Default shall not have been cured or waived
in writing.
(d) Notwithstanding anything to the contrary contained
herein, there shall not be more than 8 different Interest Periods
outstanding at the same time with respect to Euro-Dollar Loans.
SECTION 2.03. Money Market Loans.
(a) In addition to making Revolving Credit Borrowings,
at any time after the date on which the Borrower has delivered
the financial statements required under Section 5.01(b) for the
Fiscal Quarter ending on June 30, 1998 and the ratio of
Consolidated Funded Debt to Consolidated Total Capitalization is
less than 50%, the Borrower may, as set forth in this Section,
request the Banks to make offers to make Money Market Loans to
the Borrower. The Banks may, but shall have no obligation to,
make such offers and the Borrower may, but shall have no
obligation to, accept any such offers in the manner set forth in
this Section, provided that:
(i) there may be no more than 8 different
Interest Periods for both Euro-Dollar Loans constituting
Revolving Credit Loans and Money Market Loans outstanding at the
same time (for which purpose Interest Periods described in
different numbered clauses of the definition of the term
"Interest Period" shall be deemed to be different Interest
Periods even if they are coterminous); and
(ii) the aggregate principal amount of all
Money Market Loans, together with the aggregate principal amount
of all Revolving Credit Loans, at any one time outstanding shall
not exceed the aggregate amount of the Revolving Credit
Commitments of all of the Banks at such time.
(b) When the Borrower wishes to request offers to make
Money Market Loans, it shall give the Agent (which shall promptly
notify the Banks) notice substantially in the form of Exhibit E
hereto (a "Money Market Quote Request") so as to be received no
later than 12:00 P.M. (Atlanta, Georgia time) on the second
Domestic Business Day prior to the date of the Money Market
Borrowing proposed therein (or such other time and date as the
Borrower and the Agent, with the consent of the Required Banks,
may agree), specifying:
(i) the proposed date of such Money Market
Borrowing, which shall be a Domestic Business Day (the "Quotation
Date");
<PAGE>
(ii) the aggregate amount of such Money
Market Borrowing, which shall be at least $5,000,000 (and in
larger multiples of $1,000,000) but shall not cause the limits
specified in Section 2.03(a) to be violated; and
(iii) the duration of the Interest Period
applicable thereto, which shall be 7 to 180 days.
The Borrower may request offers to make Money Market Loans
for up to three different Interest Periods in a single Money
Market Quote Request; provided that the request for each separate
Interest Period shall be deemed to be a separate Money Market
Quote Request for a separate Money Market Borrowing. Except as
otherwise provided in the immediately preceding sentence, the
Borrower shall not deliver a Money Market Quote Request more
frequently than once every 5 Domestic Business Days.
(c)
(i) Each Bank may, but shall have no
obligation to, submit a Money Market Quote containing an offer to
make a Money Market Loan in response to any Money Market Quote
Request; provided that, if the Borrower's request under Section
2.03(b) specified more than one Interest Period, such Bank may,
but shall have no obligation to, make a single submission
containing a separate offer for each such Interest Period and
each such separate offer shall be deemed to be a separate Money
Market Quote. Each Money Market Quote must be submitted to the
Agent not later than 10:00 A.M. (Atlanta, Georgia time) on the
Quotation Date (or such other time and date as the Borrower and
the Agent, with the consent of the Required Banks, may agree);
provided that any Money Market Quote submitted by Wachovia may be
submitted, and may only be submitted, if Wachovia notifies the
Borrower of the terms of the offer contained therein not later
than 9:45 A.M. (Atlanta, Georgia time) on the Quotation Date.
Subject to Section 6.01, any Money Market Quote so made shall be
irrevocable except with the written consent of the Agent given on
the instructions of the Borrower.
(ii) Each Money Market Quote shall be in
substantially the form of Exhibit F hereto and shall specify:
(A) the proposed date of the Money Market
Borrowing and the duration of the Interest Period therefor, which
shall be 7 to 180 days;
(B) the maximum principal amount of the
Money Market Loan which the quoting Bank is willing to make for
the applicable Interest Period, which principal amount (x) may be
greater than or less than the Revolving Credit Commitment of the
quoting Bank, (y) shall be at least $5,000,000 or a larger
multiple of $1,000,000, and (z) may not exceed the principal
amount of the Money Market Borrowing for which offers were
requested;
<PAGE>
(C) the rate of interest per annum (rounded,
if necessary, to the nearest 1/100th of 1%) (the "Money Market
Rate") offered for each such Money Market Loan; and
(D) the identity of the quoting Bank.
Unless otherwise agreed by the Agent and the Borrower, no Money
Market Quote shall contain qualifying, conditional or similar
language or propose terms other than or in addition to those set
forth in the applicable Money Market Quote Request (other than
setting forth the maximum principal amount of the Money Market
Loan which the quoting Bank is willing to make for the applicable
Interest Period).
(d) The Agent shall as promptly as practicable after
the Money Market Quote is submitted (but in any event not later
than 10:30 A.M. (Atlanta, Georgia time) notify the Borrower of
the terms (i) of any Money Market Quote submitted by a Bank that
is in accordance with Section 2.03(c) and (ii) of any Money
Market Quote that amends, modifies or is otherwise inconsistent
with a previous Money Market Quote submitted by such Bank with
respect to the same Money Market Quote Request. Any such
subsequent Money Market Quote shall be disregarded by the Agent
unless such subsequent Money Market Quote is submitted solely to
correct a manifest error in such former Money Market Quote. The
Agent's notice to the Borrower shall specify (A) the maximum
aggregate principal amount of the Money Market Borrowing for
which offers have been received and (B) the maximum principal
amount and Money Market Rates so offered by each Bank
(identifying the Bank that made each Money Market Quote).
(e) Not later than 11:00 A.M. (Atlanta, Georgia time)
on the Quotation Date (or such other time and date as the
Borrower and the Agent, with the consent of the Required Banks,
may agree), the Borrower shall notify the Agent of its acceptance
or nonacceptance of the offers so notified to it pursuant to
Section 2.03(d) and the Agent shall promptly notify each Bank
that has submitted a Money Market Quote. In the case of
acceptance, such notice shall specify the aggregate principal
amount of offers for each Interest Period that are accepted. The
Borrower may accept any Money Market Quote in whole or in part
(provided that any Money Market Quote accepted in part from any
Bank shall not be less than the amount set forth in the Money
Market Quote of such Bank as the minimum principal amount of the
Money Market Loan such Bank was willing to make for the
applicable Interest Period); provided that:
(i) the aggregate principal amount of each
Money Market Borrowing may not exceed the applicable amount set
forth in the related Money Market Quote Request;
(ii) the aggregate principal amount of each
Money Market Borrowing shall be at least $5,000,000 (and in
larger multiples of $1,000,000) but shall not cause the limits
specified in Section 2.03(a) to be violated;
(iii) acceptance of offers may only be made in
ascending order of Money Market Rates; and
<PAGE>
(iv) the Borrower may not accept any offer where
the Agent has advised the Borrower that such offer fails to
comply with Section 2.03(c)(ii) or otherwise fails to comply with
the requirements of this Agreement (including, without
limitation, Section 2.03(a)).
If offers are made by two or more Banks with the same Money
Market Rates for a greater aggregate principal amount than the
amount in respect of which offers are accepted for the related
Interest Period, the principal amount of Money Market Loans in
respect of which such offers are accepted shall be allocated by
the Borrower among such Banks as nearly as possible (in multiples
of $100,000) in proportion to the aggregate principal amount of
such offers. Determinations by the Borrower of the amounts of
Money Market Loans shall be conclusive in the absence of manifest
error.
(f) Any Bank whose offer to make any Money Market Loan
has been accepted shall, not later than 2:00 P.M. (Atlanta,
Georgia time) on the Quotation Date, make the amount of such Loan
available to the Agent at its address referred to in Section 9.01
in immediately available funds. The amount so received by the
Agent shall, subject to the terms and conditions of this
Agreement, be made available to the Borrower on such date by
depositing the same, in immediately available funds, in an
account of such Borrower maintained with Wachovia.
SECTION 2.04. Notes .
(a) The Term Loans shall be evidenced by notes of the
Borrower for each Bank, payable to the order of such Bank, for
the account of its Lending Office in principal amounts equal to
the amount of such Bank's Term Loan Commitment. Each such note
shall be dated the date hereof and shall be substantially in the
form attached hereto as Exhibit A-1 (the "Term Loan Note") and
otherwise duly completed.
(b) The Revolving Credit Loans of each Bank shall be
evidenced by a single note in the form of Exhibit A-2 attached
hereto (individually, the "Revolving Credit Note" and
collectively, the "Revolving Credit Notes") payable to the order
of such Bank for the account of its Lending Office in an amount
equal to the original principal amount of such Bank's Revolving
Credit Commitment.
(c) The Money Market Loans made by any Bank to the
Borrower shall be evidenced by a single note in the form of
Exhibit A-3 attached hereto (the "Money Market Note") payable to
the order of such Bank for the account of its Lending Office.
(d) Upon receipt of each Bank's Notes pursuant to
Section 3.01, the Agent shall deliver such Notes to such Bank.
Each Bank shall record, and prior to any transfer of its Notes
shall endorse on the schedule forming a part thereof appropriate
notations to evidence, the date, amount and maturity of, and
<PAGE>
effective interest rate for, each Loan made by it, the date and
amount of each payment of principal made by the Borrower with
respect thereto and whether, in the case of such Bank's Term Loan
Note and Revolving Credit Note, such Loan is a Base Rate Loan or
Euro-Dollar Loan, and such schedule shall constitute rebuttable
presumptive evidence of the principal amount owing and unpaid on
such Bank's Notes; provided that the failure of any Bank to make,
or any error in making, any such recordation or endorsement shall
not affect the obligation of the Borrower hereunder or under the
Notes or the ability of any Bank to assign its Notes. Each Bank
is hereby irrevocably authorized by the Borrower so to endorse
its Notes and to attach to and make a part of any Note a
continuation of any such schedule as and when required.
SECTION 2.05. Scheduled Repayment of the Loans .
(a) Unless due sooner pursuant to the provisions of
Article VI, and subject to Section 2.10 and Section 2.11, the
aggregate principal amount of the Term Loans shall be due and
payable and shall be repaid by the Borrower in sixteen (16)
installments on the last Domestic Business Day of March, June,
September and December commencing September 30, 1999. The amount
of each such installment shall be equal to the amount set forth
below opposite the payment date for such principal installment:
<TABLE>
<CAPTION>
Payment Date in the
Month and Year Indicated: Principal Amount
<S> <C>
September 1999 $3,750,000
December 1999 $3,750,000
March 2000 $3,750,000
June 2000 $3,750,000
September 2000 $5,000,000
December 2000 $5,000,000
March 2001 $5,000,000
June 2001 $5,000,000
September 2001 $5,000,000
December 2001 $5,000,000
March 2002 $5,000,000
June 2002 $5,000,000
September 2002 $5,000,000
December 2002 $5,000,000
March 2003 $5,000,000
June 2003 Balance
</TABLE>
<PAGE>
The entire unpaid principal of, and all accrued and
unpaid interest on, the Term Loans, if not sooner
paid, shall be due and payable in full on June 30,
2003 (the "Term Loan Maturity Date").
(b) Each Revolving Credit Loan included in any
Borrowing and each Money Market Loan shall mature, and the
principal amount thereof shall be due and payable, on the earlier
of (i) the last day of the Interest Period applicable to such
Loan; or (ii) the Revolving Credit Maturity Date.
SECTION 2.06. Interest Rates.
(a) The "Applicable Margin" for Revolving Credit Loans
shall be determined quarterly based upon the ratio of
Consolidated Funded Debt to Consolidated Total Capitalization
(calculated as of the last day of each Fiscal Quarter), as
follows:
Ratio of Consolidated Funded Debt
to Consolidated Total Capitalization Base Rate Loans Euro-Dollar Loans
Greater than or equal to 50% 0% .50%
Greater than or equal to 40% but
less than 50% 0% .40%
Greater than or equal to 30% but
less than 40% 0% .35%
Less than 30% 0% .25%
(b) The "Applicable Margin" for Term Loans shall be
determined quarterly based upon the ratio of Consolidated Funded
Debt to Consolidated Total Capitalization (calculated as of the
last day of each Fiscal Quarter), as follows:
Ratio of Consolidated Funded Debt
to Consolidated Total Capitalization Base Rate Loans Euro-Dollar Loans
Greater than or equal to 50% 0% .75%
Greater than or equal to 40% but
less than 50% 0% .625%
Greater than or equal to 30% but
less than 40% 0% .50%
Less than 30% 0% .375%
(c) The Applicable Margin shall be determined
effective as of the date (herein, the "Rate Determination Date")
which is 60 days after the last day of the Fiscal Quarter as of
the end of which the foregoing ratio is being determined, based
on the quarterly financial statements for such Fiscal Quarter,
and the Applicable Margin so determined shall remain effective
from such Rate Determination Date until the date which is 60 days
after the last day of the Fiscal Quarter in which such Rate
<PAGE>
Determination Date falls (which latter date shall be a new Rate
Determination Date); provided that (i) for the period from and
including the Closing Date to but excluding the Rate
Determination Date next following the Closing Date, the
Applicable Margin shall be (A) 0% for Base Rate Loans and .50%
for Euro-Dollar Loans constituting Revolving Credit Loans and (B)
0% for Base Rate Loans and .75% for Euro-Dollar Loans
constituting Term Loans, (ii) in the case of any Applicable
Margin determined for the fourth and final Fiscal Quarter of a
Fiscal Year, the Rate Determination Date shall be the date which
is 120 days after the last day of such final Fiscal Quarter and
such Applicable Margin shall be determined based upon the annual
audited financial statements for the Fiscal Year ended on the
last day of such final Fiscal Quarter, and (iii) if on any Rate
Determination Date the Borrower shall have failed to deliver to
the Banks the financial statements required to be delivered
pursuant to Section 5.01(a) or Section 5.01(b) with respect to
the Fiscal Year or Fiscal Quarter, as the case may be, most
recently ended prior to such Rate Determination Date, then for
the period beginning on such Rate Determination Date and ending
on the earlier of (A) the date on which the Borrower shall
deliver to the Banks the financial statements to be delivered
pursuant to Section 5.01(b) with respect to such Fiscal Quarter
or any subsequent Fiscal Quarter, or (B) the date on which the
Borrower shall deliver to the Banks annual financial statements
required to be delivered pursuant to Section 5.01(a) with respect
to the Fiscal Year which includes such Fiscal Quarter or any
subsequent Fiscal Year, the Applicable Margin shall be determined
as if the ratio of Consolidated Funded Debt to Consolidated Total
Capitalization was more than 50% at all times during such period.
Any change in the Applicable Margin on any Rate Determination
Date shall result in a corresponding change, effective on and as
of such Rate Determination Date, in the interest rate applicable
to each Loan (other than Money Market Loans) outstanding on such
Rate Determination Date, provided that: (i) for Euro-Dollar
Loans, changes in the Applicable Margin shall only be effective
for Interest Periods commencing on or after the Rate
Determination Date; and (ii) no Applicable Margin shall be
decreased pursuant to this Section 2.06 if a Default is in
existence on the Rate Determination Date.
(d) Each Base Rate Loan shall bear interest on the
outstanding principal amount thereof, for each day from the date
such Loan is made until it becomes due, at a rate per annum equal
to the Base Rate for such day plus the Applicable Margin
applicable to such Loan . Such interest shall be payable for
each Interest Period on the last day thereof. Any overdue
principal of and, to the extent permitted by applicable law,
overdue interest on any Base Rate Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum
equal to the Default Rate.
(e) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of the
Applicable Margin applicable to such Euro-Dollar Loan plus the
applicable Adjusted London Interbank Offered Rate for such
Interest Period; provided that if any Euro-Dollar Loan shall, as
a result of clause (1)(c) of the definition of Interest Period,
have an Interest Period of less than one month, such Euro-Dollar
Loan shall bear interest during such Interest Period at the rate
applicable to Base Rate Loans during such period. Such interest
shall be payable for each Interest Period on the last day thereof
and, if such Interest Period is longer than 3 months, at
intervals of 3 months after the first day thereof. Any overdue
principal of and, to the extent permitted by applicable law,
<PAGE>
overdue interest on any Euro-Dollar Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum
equal to the Default Rate.
The "Adjusted London Interbank Offered Rate" applicable to
any Interest Period means a rate per annum equal to the quotient
obtained (rounded upward, if necessary, to the next higher
1/100th of 1%) by dividing (i) the applicable London Interbank
Offered Rate for such Interest Period by (ii) 1.00 minus the
Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Euro-
Dollar Loan means for the Interest Period of such Euro-Dollar
Loan the rate per annum determined on the basis of the rate for
deposits in Dollars of amounts equal or comparable to the
principal amount of such Euro-Dollar Loan offered for a term
comparable to such Interest Period, which rate appears on the
display designated as Page "3750" of the Telerate Service (or
such other page as may replace Page 3750 of that service or such
other service or services as may be nominated by the British
Banker's Association for the purpose of displaying London
Interbank Offered Rates for U.S. Dollar deposits) determined as
of 1:00p.m. New York City time, 2 Euro-Dollar Business Days prior
to the first day of such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum
reserve requirement for a member bank of the Federal Reserve
System in respect of "Eurocurrency liabilities" (or in respect of
any other category of liabilities which includes deposits by
reference to which the interest rate on Euro-Dollar Loans is
determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any
Bank to United States residents). The Adjusted London Interbank
Offered Rate shall be adjusted automatically on and as of the
effective date of any change in the Euro-Dollar Reserve
Percentage.
(f) Each Money Market Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the Money Market
Rate for such Loan quoted by the Bank making such Loan in
accordance with Section 2.03. Such interest shall be payable for
such Interest Period on the last day thereof and, if such
Interest Period is longer than 90 days, at intervals of 90 days
after the first day thereof. Any overdue principal of and, to
the extent permitted by law, overdue interest on any Money Market
Loan shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the Default Rate.
(g) Any change in the interest rate applicable to the
Loans, or any portion thereof, resulting from any change in the
Applicable Margins, the Base Rate or the Euro-Dollar Reserve
Percentage shall become effective as of the opening of business
on the day on which such change in the Applicable Margins, the
Base Rate or the Euro-Dollar Reserve Percentage, as the case may
be, becomes effective.
<PAGE>
(h) The Agent shall determine each interest rate
applicable to the Loans hereunder. The Agent shall give prompt
notice to the Borrower and the Banks by telecopy of each rate of
interest so determined, and its determination thereof shall be
conclusive in the absence of manifest error.
(i) After the occurrence and during the continuance of
a Default, the principal amount of the Loans (and, to the extent
permitted by applicable law, all accrued interest thereon) may,
at the election of the Required Banks, bear interest at the
Default Rate; provided, however, that automatically whether or
not the Required Banks elect to do so, any overdue principal of
and, to the extent permitted by law, overdue interest on any Loan
shall bear interest payable on demand, for each day until paid at
a rate per annum equal to the Default Rate.
SECTION 2.07. Fees .
(a) The Borrower shall pay to the Agent for the
ratable account of each Bank a facility fee equal to the product
of: (i) the aggregate of the daily average amounts of such
Bank's Revolving Credit Commitment, times (ii) a per annum
percentage equal to the Applicable Facility Fee Rate. Such
facility fee shall accrue from and including the Closing Date to
and including the Revolving Credit Maturity Date. Facility fees
shall be payable quarterly in arrears on the first Facility Fee
Payment Date following each Facility Fee Determination Date and
on the Revolving Credit Maturity Date; provided that should the
Revolving Credit Commitments be terminated at any time prior to
the Revolving Credit Maturity Date for any reason, the entire
accrued and unpaid facility fee shall be paid on the date of such
termination. The "Applicable Facility Fee Rate" shall be
determined quarterly based upon the ratio of Consolidated Funded
Debt to Consolidated Total Capitalization (calculated as of the
last day of each Fiscal Quarter) as follows:
Ratio of Consolidated Funded
Debt to Consolidated Applicable Facility
Total Capitalization Fee Rate
Greater than or equal to 50% .25%
Greater than or equal to 40% but
less than .50% .20%
Greater than or equal to 30% but
less than 40% .15%
Less than 30% .125%
The Applicable Facility Fee Rate shall be determined effective as
of the date (herein, the "Facility Fee Determination Date") which
is 60 days after the last day of the Fiscal Quarter as of the end
of which the foregoing ratio is being determined, based on the
quarterly financial statements for such Fiscal Quarter, and the
<PAGE>
Applicable Facility Fee Rate so determined shall remain effective
from such Facility Fee Determination Date until the date which is
60 days after the last day of the Fiscal Quarter in which such
Facility Fee Determination Date falls (which latter date shall be
a new Facility Fee Determination Date); provided that (i) for the
period from and including the Closing Date to but excluding the
Facility Fee Determination Date next following the Closing Date,
the Applicable Facility Fee Rate shall be .25%; (ii) in the case
of any Applicable Facility Fee Rate determined for the fourth and
final Fiscal Quarter of a Fiscal Year, the Facility Fee
Determination Date shall be the date which is 120 days after the
last day of such final Fiscal Quarter and such Applicable
Facility Fee Rate shall be determined based upon the annual
audited financial statements for the Fiscal Year ended on the
last day of such final Fiscal Quarter, and (iii) if on any
Facility Fee Determination Date the Borrower shall have failed to
deliver to the Banks the financial statements required to be
delivered pursuant to Section 5.01(a) or Section 5.01(b) with
respect to the Fiscal Year or the Fiscal Quarter, as the case may
be, most recently ended prior to such Facility Fee Determination
Date, then for the period beginning on such Facility Fee
Determination Date and ending on the earlier of (A) the date on
which the Borrower shall deliver to the Banks the financial
statements to be delivered pursuant to Section 5.01(b) with
respect to such Fiscal Quarter or any subsequent Fiscal Quarter,
and (B) the date on which the Borrower shall deliver to the Banks
annual financial statements required to be delivered pursuant to
Section 5.01(a) with respect to the Fiscal Year which includes
such Fiscal Quarter or any subsequent Fiscal Year, the Applicable
Facility Fee Rate shall be determined as if the ratio of
Consolidated Funded Debt to Consolidated Total Capitalization was
more than 50% at all times during such period; provided that the
Applicable Facility Fee Rate shall not be decreased pursuant to
this Section 2.07(a) if a Default is in existence on the related
Facility Fee Determination Date.
(b) The Borrower shall pay to the Agent, for the
account and sole benefit of the Agent, such fees and other
amounts at such times as set forth in the Agent's Letter
Agreement.
SECTION 2.08. Optional Termination or Reduction of
Revolving Credit Commitments . The Borrower may, upon at least 3
Domestic Business Days' notice to the Agent, terminate at any
time, or proportionately reduce from time to time by an aggregate
amount of at least $10,000,000 or any larger multiple of
$5,000,000, the Revolving Credit Commitments; provided, however,
no such termination or reduction shall be in an amount greater
than the Total Unused Commitments on the date of such termination
or reduction. If the Revolving Credit Commitments are terminated
in their entirety, all accrued fees (as provided under
Section 2.07) shall be payable on the effective date of such
termination.
SECTION 2.09. Mandatory Reduction and Termination of
Revolving Credit Commitments . The Revolving Credit Commitments
shall terminate on the Revolving Credit Maturity Date and any
Revolving Credit Loans or Money Market Loans then outstanding
(together with accrued interest thereon) shall be due and payable
on such date.
<PAGE>
SECTION 2.10. Optional Prepayments .
(a) Term Loans. The Borrower shall have the right at
any time, or from time to time, upon at least one Domestic
Business Day's prior written notice to the Agent, to prepay all
or a portion of the principal of the Term Loans which bear
interest at a rate based on the Base Rate, without premium or
penalty; provided that each partial prepayment shall be in an
aggregate principal amount of at least $10,000,000 or any whole
multiple of $5,000,000 in excess thereof. Any partial prepayment
pursuant to this subparagraph (a) shall be applied ratably to the
payment of the remaining principal installments of Term Loans
based on the amount of each such remaining principal installment.
Except as provided in Section 8.02, the Borrower may not prepay
all or any portion of any Euro-Dollar Loan prior to the last day
of an Interest Period applicable thereto. Upon receipt of a
notice of prepayment pursuant to this subparagraph (a), the Agent
shall promptly notify each Bank of the contents thereof and of
such Bank's ratable share of such prepayment and such notice
thereafter shall not be revocable by the Borrower.
(b) Revolving Credit Loans. The Borrower may, upon
at least 1 Domestic Business Day's notice to the Agent, prepay
any Base Rate Borrowing consisting of Revolving Credit Loans in
whole at any time, or from time to time in part in amounts
aggregating at least $1,000,000, or any larger multiple of
$100,000, by paying the principal amount to be prepaid together
with accrued interest thereon to the date of prepayment. Each
such optional prepayment shall be applied to prepay ratably the
Base Rate Loans which are Revolving Credit Loans of the several
Banks included in such Base Rate Borrowing. Except as provided
in Section 8.02, the Borrower may not prepay all or any portion
of the principal amount of any Euro-Dollar Loan or any Money
Market Loan prior to the last day of an Interest Period
applicable thereto. Upon receipt of a notice of prepayment
pursuant to this Subparagraph (b), the Agent shall promptly
notify each Bank of the contents thereof and of such Bank's
ratable share of such prepayment and such notice shall not
thereafter be revocable by the Borrower.
SECTION 2.11. Mandatory Prepayments .
(a) Mandatory Prepayments of Net Proceeds of
Indebtedness/Equity Issuance. In the event and on each occasion
that the Borrower or any of its Subsidiaries shall issue any
Capital Stock or issue or incur any Indebtedness, the Borrower
shall, concurrently with such issuance or incurrence,
immediately give the notice required by Section 2.11(c), and not
more than three (3) Euro-Dollar Business Days thereafter remit to
the Agent, as a mandatory prepayment of the Term Loans, an amount
equal to 50% of the Net Proceeds of Capital Stock/Conversion of
Debt (in the case of issuance of Capital Stock) or 100% of the
Net Proceeds of Indebtedness (in the case of issuance of
Indebtedness). Prepayments made pursuant to this Section 2.11(a)
shall be applied ratably to the payment of the remaining
principal installments of Term Loans based on the amount of each
such remaining principal installment.
(b) Mandatory Prepayment of Revolving Credit Loans. On
each date on which the Revolving Credit Commitments are reduced
pursuant to Section 2.08 or Section 2.09, the Borrower shall
repay or prepay such principal amount of the outstanding
Revolving Credit Loans, if any (together with interest accrued
thereon and any amounts due under Section 8.05(a)), as may be
necessary so that after such payment the aggregate unpaid
principal amount of the Revolving Credit Loans does not exceed
<PAGE>
the aggregate amount of the Revolving Credit Commitments as then
reduced. Each such payment or prepayment shall be applied to
repay or prepay ratably the Revolving Credit Loans of the several
Banks; provided that such prepayment shall be applied, first, to
Revolving Credit Loans outstanding on the date of such prepayment
(in direct order of maturity) and then, to the extent necessary,
to Money Market Loans outstanding on the date of such prepayment
(in direct order of maturity).
(c) General Prepayment Provisions. Except as
expressly provided in Section 2.10 and this Section, no
prepayment of the Loans or the Notes is permitted.
Notwithstanding anything to the contrary in this Section, the
Borrower shall give the Agent, not less than three (3) Euro-
Dollar Business Days or (if the only Loans to be prepaid are Base
Rate Loans) one (1) Domestic Business Day prior to the date of
any mandatory prepayment, written notice specifying the
prepayment date, the amount of such prepayment and that such
prepayment is being made pursuant to this Section (specifying the
subsection of this Section pursuant to which such prepayment is
being made). Such a notice having been given, the prepayment
amount specified therein and interest thereon shall be due on the
prepayment date specified therein. Any such notice shall be
irrevocable. The Borrower shall pay with any optional or
mandatory prepayment of the Loans all accrued interest on the
principal of the Loans so prepaid to the date of such prepayment,
all amounts required to be paid under Section 8.05 in connection
with such prepayment, and, upon the prepayment in whole of the
Loans, any and all other obligations of the Borrower hereunder.
SECTION 2.12. General Provisions as to Payments .
(a) The Borrower shall make each payment of principal
of, and interest on, the Loans and of facility fees hereunder,
not later than 11:00 A.M. (Atlanta, Georgia time) on the date
when due, in Federal or other funds immediately available in
Atlanta, Georgia, to the Agent at its address referred to in
Section 9.01. The Agent will promptly distribute to each Bank
its ratable share of each such payment received by the Agent for
the account of the Banks.
(b) Whenever any payment of principal of, or interest
on, Base Rate Loans or the Money Market Loans or of fees shall be
due on a day which is not a Domestic Business Day, the date for
payment thereof shall be extended to the next succeeding Domestic
Business Day. Whenever any payment of principal of, or interest
on, the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day unless
such Euro-Dollar Business Day falls in another calendar month, in
which case the date for payment thereof shall be the next
preceding Euro-Dollar Business Day. If the date for any payment
of principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.
<PAGE>
(c) All payments of principal, interest and fees and
all other amounts to be made by the Borrower pursuant to this
Agreement with respect to any Loan or fee relating thereto shall
be paid without deduction for, and free from, any tax, imposts,
levies, duties, deductions, or withholdings of any nature now or
at anytime hereafter imposed by any governmental authority or by
any taxing authority thereof or therein excluding in the case of
each Bank, taxes imposed on or measured by its net income, and
franchise taxes imposed on it, by the jurisdiction under the laws
of which such Bank is organized or any political subdivision
thereof and, in the case of each Bank, taxes imposed on its
income, and franchise taxes imposed on it, by the jurisdiction of
such Bank's applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, imposts,
levies, duties, deductions or withholdings of any nature being
"Taxes"). In the event that the Borrower is required by
applicable law to make any such withholding or deduction of Taxes
with respect to any Loan or fee or other amount, the Borrower
shall pay such deduction or withholding to the applicable taxing
authority, shall promptly furnish to any Bank in respect of which
such deduction or withholding is made all receipts and other
documents evidencing such payment and shall pay to such Bank
additional amounts as may be necessary in order that the amount
received by such Bank after the required withholding or other
payment shall equal the amount such Bank would have received had
no such withholding or other payment been made. If no
withholding or deduction of Taxes are payable in respect of any
Loan or fee relating thereto, the Borrower shall furnish any
Bank, at such Bank's request, a certificate from each applicable
taxing authority or an opinion of counsel acceptable to such
Bank, in either case stating that such payments are exempt from
or not subject to withholding or deduction of Taxes. If the
Borrower fails to provide such original or certified copy of a
receipt evidencing payment of Taxes or certificate(s) or opinion
of counsel of exemption, the Borrower hereby agrees to compensate
such Bank for, and indemnify it with respect to, the tax
consequences of the Borrower's failure to provide evidence of tax
payments or tax exemption.
In the event any Bank receives a refund of any Taxes paid by
the Borrower pursuant to this Section 2.12, it will pay to the
Borrower the amount of such refund promptly upon receipt thereof;
provided, however, if at any time thereafter it is required to
return such refund, the Borrower shall promptly repay to it the
amount of such refund.
Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 2.12 shall be applicable with
respect to any Participant, Assignee or other Transferee, and any
calculations required by such provisions (i) shall be made based
upon the circumstances of such Participant, Assignee or other
Transferee, and (ii) constitute a continuing agreement and shall
survive the termination of this Agreement and the payment in full
or cancellation of the Notes.
SECTION 2.13. Computation of Interest and Fees .
Interest on Base Rate Loans shall be computed on the basis of a
year of 360 days and paid for the actual number of days elapsed
(including the first day but excluding the last day). Interest
on Euro-Dollar Loans and interest on Money Market Loans shall be
computed on the basis of a year of 360 days and paid for the
actual number of days elapsed, calculated as to each Interest
Period from and including the first day thereof to but excluding
the last day thereof. Facility fees and any other fees payable
hereunder shall be computed on the basis of a year of 360 days
and paid for the actual number of days elapsed (including the
first day but excluding the last day).
<PAGE>
ARTICLE III
CONDITIONS TO BORROWINGS
SECTION 3.01. Conditions to First Borrowing . The
obligation of each Bank to make a Loan on the occasion of the
first Borrowing is subject to the satisfaction of the conditions
set forth in Section 3.02 and the following additional
conditions:
(a) receipt by the Agent from each of the parties
hereto of either (i) a duly executed counterpart of this
Agreement signed by such party or (ii) a facsimile transmission
stating that such party has duly executed a counterpart of this
Agreement and sent such counterpart to the Agent;
(b) receipt by the Agent of a duly executed Term Note,
Revolving Credit Note and Money Market Note for the account of
each Bank complying with the provisions of Section 2.04;
(c) receipt by the Agent of an opinion (together with
any opinions of local counsel relied on therein) of Baker &
McKenzie, counsel for the Borrower and the Guarantors, dated as
of the Closing Date, substantially in the form of Exhibit C
hereto and covering such additional matters relating to the
transactions contemplated hereby as the Agent or any Bank may
reasonably request;
(d) receipt by the Agent of an opinion of Womble
Carlyle Sandridge & Rice, PLLC, special counsel for the Agent,
dated as of the Closing Date, substantially in the form of
Exhibit D hereto and covering such additional matters relating to
the transactions contemplated hereby as the Agent may reasonably
request;
(e) receipt by the Agent of a certificate (the
"Closing Certificate"), dated the Closing Date, substantially in
the form of Exhibit G hereto, signed by a principal financial
officer of the Borrower, to the effect that (i) no Default has
occurred and is continuing on the date of the first Borrowing and
(ii) the representations and warranties of the Borrower contained
in Article IV are true on and as of the date of the first
Borrowing hereunder;
(f) receipt by the Agent of all documents which the
Agent or any Bank may reasonably request relating to the
existence of each Loan Party, the corporate authority for and the
validity of the Loan Documents, and any other matters relevant
hereto, all in form and substance satisfactory to the Agent,
<PAGE>
including without limitation a certificate of incumbency of each
Loan Party (the "Officer's Certificate"), signed by the Secretary
or an Assistant Secretary of such Loan Party, substantially in
the form of Exhibit H hereto, certifying as to the names, true
signatures and incumbency of the officer or officers of such Loan
Party authorized to execute and deliver the Loan Documents, and
certified copies of the following items: (i) such Loan Party's
Certificate of Incorporation, (ii) Bylaws, (iii) a certificate
of the Secretary of State of the State of such Loan Party's state
of incorporation, as to the good standing of the Loan Party in
such State, and (iv) the action taken by the Board of Directors
of such Loan Party authorizing its execution, delivery and
performance of the Loan Documents to which such Loan Party is a
party;
(g) receipt by the Agent of a Notice of Borrowing (in
the case of a Revolving Credit Borrowing) or a Money Market Quote
Request (in the case of a Money Market Borrowing); and
(h) the Banks shall have received copies of the
Acquisition Document and any material documents related to the
Pending Acquisition and shall be satisfied in the Banks' sole
discretion with the terms of the Pending Acquisition and the
Acquisition Document and any such additional material documents
related to the Pending Acquisition;
(i) the Borrower shall have demonstrated to the Agent
in the Agent's sole discretion that all conditions to the closing
of the Pending Acquisition required to be met have been met or
waived (with the Agent's consent), and that the Acquisition
Document is in full force and effect, and that the consummation
of the Pending Acquisition will occur immediately upon the
funding of the initial Loans under this Agreement;
(j) there shall not have occurred any event, act,
condition or occurrence of whatever nature (including any adverse
determination in any litigation, arbitration, or governmental
investigation or proceeding) whether singly or in conjunction
with any other event or events, act or acts, condition or
conditions, occurrence or occurrences, whether or not related,
which would have or cause a material adverse change in, or a
material adverse effect upon, any of the financial condition,
operations, business, properties or prospects of Fuel Systems
Textron Inc. since December 31, 1997; and
(k) such other documents or items as the Agent, the
Banks or their counsel may reasonably request.
SECTION 3.02. Conditions to All Borrowings . The
obligation of each Bank to make a Loan on the occasion of each
Borrowing is subject to the satisfaction of the following
conditions:
(a) either (i) receipt by the Agent of Notice of
Borrowing as required by Section 2.02 (if such Borrowing is not a
Money Market Borrowing), or (ii) compliance with the provisions
of Section 2.03 (if such Borrowing is a Money Market Borrowing);
<PAGE>
(b) the fact that, immediately before and after such
Borrowing, no Default shall have occurred and be continuing;
(c) the fact that the representations and warranties
of the Borrower contained in Article IV of this Agreement and the
representations and warranties of each of the Loan Parties
contained in the Loan Documents shall be true on and as of the
date of such Borrowing; and
(d) the fact that, immediately after such Borrowing
(i) the aggregate outstanding principal amount of the Revolving
Credit Loans of each Bank will not exceed the amount of its
Revolving Credit Commitment and (ii) the aggregate outstanding
principal amount of the Revolving Credit Loans will not exceed
the aggregate amount of the Revolving Credit Commitments of all
of the Banks as of such date.
Each Borrowing hereunder shall be deemed to be a representation
and warranty by the Borrower on the date of such Borrowing as to
the truth and accuracy of the facts specified in clauses (b), (c)
and (d) of this Section; provided that such Borrowing shall not
be deemed to be such a representation and warranty to the effect
set forth in Section 4.04(b) as to any event, act or condition
having a Material Adverse Effect which has theretofore been
disclosed in writing by the Borrower to the Banks if the
aggregate outstanding principal amount of the Loans immediately
after such Borrowing will not exceed the aggregate outstanding
principal amount thereof immediately before such Borrowing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power . The
Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
incorporation, is duly qualified to transact business in every
jurisdiction where, by the nature of its business, such
qualification is necessary, and has all corporate powers and all
governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted.
SECTION 4.02. Corporate and Governmental
Authorization; No Contravention . The execution, delivery and
performance by the Loan Parties of this Agreement, the Notes and
the other Loan Documents (i) are within the Loan Parties'
corporate powers, (ii) have been duly authorized by all necessary
corporate action, (iii) require no action by or in respect of, or
filing with, any governmental body, agency or official, (iv) do
not contravene, or constitute a default under, any provision of
applicable law or regulation or of the certificate of
incorporation or by-laws of the Borrower or of any agreement,
judgment, injunction, order, decree or other instrument binding
upon the Borrower or any of its Subsidiaries, and (v) do not
result in the creation or imposition of any Lien on any asset of
the Borrower or any of its Subsidiaries.
<PAGE>
SECTION 4.03. Binding Effect . This Agreement
constitutes a valid and binding agreement of the Borrower
enforceable in accordance with its terms, and the Notes and the
other Loan Documents, when executed and delivered in accordance
with this Agreement, will constitute valid and binding
obligations of each of the Loan Parties that are a party thereto
enforceable in accordance with their respective terms, provided
that the enforceability hereof and thereof is subject in each
case to general principles of equity and to bankruptcy,
insolvency and similar laws affecting the enforcement of
creditors' rights generally.
SECTION 4.04. Financial Information .
(a) The consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries as of September 30, 1997 and the
related consolidated statements of income, shareholders' equity
and cash flows for the Fiscal Year then ended, reported on by
Coopers & Lybrand L.L.P., copies of which have been delivered to
each of the Banks, and the unaudited consolidated financial
statements of the Borrower for the interim period ended March
31,1998, copies of which have been delivered to each of the
Banks, fairly present, in conformity with GAAP, the consolidated
financial position of the Borrower and its Consolidated
Subsidiaries as of such dates and their consolidated results of
operations and cash flows for such periods stated.
(b) Since September 30, 1997, there has been no event,
act, condition or occurrence having a Material Adverse Effect.
SECTION 4.05. Litigation . There is no action, suit
or proceeding pending, or to the knowledge of the Borrower
threatened, against or affecting the Borrower or any of its
Subsidiaries before any court or arbitrator or any governmental
body, agency or official which could have a Material Adverse
Effect or which in any manner draws into question the validity or
enforceability of, or could impair the ability of the Loan
Parties to perform their obligations under, this Agreement, the
Notes or any of the other Loan Documents.
SECTION 4.06. Compliance with ERISA .
(a) The Borrower and each member of the Controlled
Group have fulfilled their obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and are
in compliance in all material respects with the presently
applicable provisions of ERISA and the Code, with respect to each
Plan.
(b) Neither the Borrower nor any member of the
Controlled Group is obligated to contribute to any Multiemployer
Plan.
<PAGE>
SECTION 4.07. Taxes . There have been filed on behalf
of the Borrower and its Subsidiaries all Federal, state and local
income, excise, property and other tax returns which are required
to be filed by them and all taxes due pursuant to such returns or
pursuant to any assessment received by or on behalf of the
Borrower or any Subsidiary have been paid. The charges, accruals
and reserves on the books of the Borrower and its Subsidiaries in
respect of taxes or other governmental charges are, in the
opinion of the Borrower, adequate.
SECTION 4.08. Subsidiaries . Each of the Borrower's
Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation, is duly qualified to transact business in every
jurisdiction where, by the nature of its business, such
qualification is necessary, and has all corporate powers and all
governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted. The Borrower
has no Subsidiaries except those Subsidiaries listed on Schedule
4.08, which accurately sets forth each such Subsidiary's complete
name and jurisdiction of incorporation.
SECTION 4.09. Not an Investment Company . Neither the
Borrower nor any of its Subsidiaries is an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended.
SECTION 4.10 Public Utility Holding Company Act . Neither
the Borrower nor any of its Subsidiaries is a "holding company",
or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", as such terms are defined in the Public
Utility Holding Company Act of 1935, as amended.
SECTION 4.11. Ownership of Property; Liens . Each of
the Borrower and its Consolidated Subsidiaries has title to its
properties sufficient for the conduct of its business, and none
of such property is subject to any Lien except as permitted in
Section 5.07.
SECTION 4.12. No Default . Neither the Borrower nor
any of its Consolidated Subsidiaries is in default under or with
respect to any agreement, instrument or undertaking to which it
is a party or by which it or any of its property is bound which
could have or cause a Material Adverse Effect. No Default or
Event of Default has occurred and is continuing.
SECTION 4.13. Full Disclosure . All information
heretofore furnished by the Borrower to the Agent or any Bank for
purposes of or in connection with this Agreement or any
transaction contemplated hereby is, and all such information
hereafter furnished by the Borrower to the Agent or any Bank will
be, to the Borrower's knowledge, true, accurate and complete in
every material respect or based on reasonable estimates on the
date as of which such information is stated or certified. The
Borrower has disclosed to the Banks in writing any and all facts
which, to the Borrower's knowledge, could have or cause a
Material Adverse Effect.
<PAGE>
SECTION 4.14. Environmental Matters .
(a) To the Borrower's knowledge, except as set forth
on Schedule 4.14, (i) neither the Borrower nor any Subsidiary is
subject to any Environmental Liability which could reasonably be
expected to cause a Material Adverse Effect and (ii) neither the
Borrower nor any Subsidiary has been designated as a potentially
responsible party under CERCLA or under any state statute similar
to CERCLA. Except as set forth on Schedule 4.14, none of the
Properties has been identified on any current or proposed
National Priorities List under 40 C.F.R. 300 or similar state
lists.
(b) The Borrower has not used, produced, manufactured,
processed, treated, recycled, generated, stored, disposed of,
managed or otherwise handled at, or shipped or transported to or
from the Properties any Hazardous Materials except in material
compliance with applicable material Environmental Laws.
(c) Except as set forth on Schedule 4.14, the
Borrower, and each of its Subsidiaries has procured all material
Environmental Authorizations necessary for the conduct of its
business, and is in compliance with all Environmental Laws in
connection with the operation of the Properties and the
Borrower's, and each of its Subsidiary's, respective businesses,
except where the failure to comply with such Environmental Laws
could not reasonably be expected to have a Material Adverse
Effect.
(d) As used in this Section, "Borrower's knowledge"
means the knowledge of the officers, directors, managers and
employees of the Borrower and its Subsidiaries.
SECTION 4.15. Compliance with Laws . The Borrower and
each Subsidiary is in compliance with all applicable laws,
including, without limitation, all Environmental Laws, except
where any failure to comply with any such laws would not, alone
or in the aggregate, have a Material Adverse Effect.
SECTION 4.16. Capital Stock . All Capital Stock,
debentures, bonds, notes and all other securities of the Borrower
and its Subsidiaries presently issued and outstanding are validly
and properly issued in accordance with all applicable laws,
including, but not limited to, the "Blue Sky" laws of all
applicable states and the federal securities laws. The issued
shares of Capital Stock of the Borrower's Wholly Owned
Subsidiaries are owned by the Borrower free and clear of any Lien
or adverse claim. At least a majority of the issued shares of
capital stock of each of the Borrower's other Subsidiaries (other
than Wholly Owned Subsidiaries) is owned by the Borrower free and
clear of any Lien or adverse claim.
SECTION 4.17. Margin Stock . Neither the Borrower nor
any of its Subsidiaries is engaged principally, or as one of its
important activities, in the business of purchasing or carrying
any Margin Stock, and no part of the proceeds of any Loan will be
used to purchase or carry any Margin Stock or to extend credit to
others for the purpose of purchasing or carrying any Margin
Stock, or be used for any purpose which violates, or which is
inconsistent with, the provisions of Regulation X.
<PAGE>
SECTION 4.18. Insolvency . After giving effect to the
execution and delivery of the Loan Documents and the making of
the Loans under this Agreement, the Borrower will not be
"insolvent," within the meaning of such term as used in O.C.G.A.
(cc) 18-2-22 or as defined in (cc) 101 of Title 11 of the United States
Code or Section 2 of the Uniform Fraudulent Transfer Act, or any
other applicable state law pertaining to fraudulent transfers, as
each may be amended from time to time, or be unable to pay its
debts generally as such debts become due, or have an unreasonably
small capital to engage in any business or transaction, whether
current or contemplated.
SECTION 4.19. Year 2000 Plan . The Borrower has
developed and has delivered to the Agent and each Lender a
comprehensive plan (as such plan may be amended or modified in
the reasonable judgment of the Borrower, the "Y2K Plan") for
insuring that the Borrower's and its Subsidiaries' software and
hardware systems which impact or affect in any material way the
business operations of the Borrower and its Subsidiaries will be
Year 2000 Compliant and Ready. The Borrower and its Subsidiaries
have met the Y2K Plan milestones.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has any Term
Loan Commitment or and Revolving Credit Commitment hereunder or
any amount payable under any Note remains unpaid:
SECTION 5.01. Information . The Borrower will deliver
to each of the Banks:
(a) as soon as available and in any event within 90
days after the end of each Fiscal Year, a consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries as of the
end of such Fiscal Year and the related consolidated statements
of income, shareholders' equity and cash flows for such Fiscal
Year, setting forth in each case in comparative form the figures
for the previous fiscal year, all certified by Coopers & Lybrand
L.L.P. or other independent public accountants of nationally
recognized standing, with such certification to be free of
exceptions and qualifications not acceptable to the Required
Banks;
(b) as soon as available and in any event within 45
days after the end of each of the first 3 Fiscal Quarters of each
Fiscal Year, a consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such Fiscal Quarter
and the related statement of income and statement of cash flows
for such Fiscal Quarter and for the portion of the Fiscal Year
ended at the end of such Fiscal Quarter, setting forth in each
case in comparative form the figures for the corresponding Fiscal
Quarter and the corresponding portion of the previous Fiscal
Year, all certified (subject to normal year-end adjustments) as
to fairness of presentation, GAAP and consistency by the chief
financial officer or the chief accounting officer of the
Borrower;
<PAGE>
(c) simultaneously with the delivery of each set of
financial statements referred to in clauses (a) and (b) above, a
certificate, substantially in the form of Exhibit I (a
"Compliance Certificate"), of the chief financial officer or the
chief accounting officer of the Borrower (i) setting forth in
reasonable detail the calculations required to establish whether
the Borrower was in compliance with the requirements of Sections
5.03 through 5.05, inclusive, and 5.07 on the date of such
financial statements and (ii) stating whether any Default exists
on the date of such certificate and, if any Default then exists,
setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of
annual financial statements referred to in clause (a) above, a
statement of the firm of independent public accountants which
reported on such statements to the effect that nothing has come
to their attention to cause them to believe that any Default
existed on the date of such financial statements;
(e) within 5 Domestic Business Days after the Borrower
becomes aware of the occurrence of any Default, a certificate of
the chief financial officer or the chief accounting officer of
the Borrower setting forth the details thereof and the action
which the Borrower is taking or proposes to take with respect
thereto;
(f) promptly upon the mailing thereof to the
shareholders of the Borrower generally, copies of all financial
statements, reports and proxy statements so mailed;
(g) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and
annual, quarterly or monthly reports which the Borrower shall
have filed with the Securities and Exchange Commission;
(h) if and when the Borrower or any member of the
Controlled Group (i) gives or is required to give notice to the
PBGC of any "reportable event" (as defined in Section 4043 of
ERISA) with respect to any Plan which might constitute grounds
for a termination of such Plan under Title IV of ERISA, or knows
that the plan administrator of any Plan has given or is required
to give notice of any such reportable event, a copy of the notice
of such reportable event given or required to be given to the
PBGC; (ii) receives notice of complete or partial withdrawal
liability under Title IV of ERISA, a copy of such notice; or
(iii) receives notice from the PBGC under Title IV of ERISA of an
intent to terminate or appoint a trustee to administer any Plan,
a copy of such notice;
(i) promptly after the Borrower knows of the
commencement thereof, notice of any litigation, dispute or
proceeding involving a claim against the Borrower and/or any
Subsidiary for $10,000,000 or more in excess of amounts covered
in full by applicable insurance;
<PAGE>
(j) promptly upon the adoption thereof, copies of
all amendments and modifications to the Y2K Plan;
(k) within 5 Domestic Business Days after the
Borrower becomes aware of any deviations from the Y2K Plan which
would cause compliance with the Y2K Plan to be delayed or not
achieved, a statement of the chief financial officer of the
Borrower setting forth the details thereof and the action which
the Borrower is taking or proposes to take with respect thereto;
(l) promptly upon the receipt thereof, a copy of
any third party assessments of the Borrower's Y2K Plan together
with any recommendations made by such third party with respect to
Year 2000 compliance; and
(m) from time to time such additional information
regarding the financial position or business of the Borrower and
its Subsidiaries as the Agent, at the request of any Bank, may
reasonably request.
SECTION 5.02. Inspection of Property, Books and
Records . The Borrower will (i) keep, and will cause each
Subsidiary to keep, proper books of record and account in which
full, true and correct entries in conformity with GAAP shall be
made of all dealings and transactions in relation to its business
and activities; and (ii) permit, and will cause each Subsidiary
upon reasonable notice from any Bank to permit, representatives
of such Bank at such Bank's expense prior to the occurrence of an
Event of Default and at the Borrower's expense after the
occurrence of an Event of Default to visit and inspect any of
their respective properties, to examine and make abstracts from
any of their respective books and records and to discuss their
respective affairs, finances and accounts with their respective
officers, employees and independent public accountants. The
Borrower agrees to cooperate and assist in such visits and
inspections, in each case at such reasonable times and as often
as may reasonably be desired.
SECTION 5.03. Ratio of Consolidated Funded Debt to
Consolidated Total Capitalization . The ratio of Consolidated
Funded Debt to Consolidated Total Capitalization will not exceed
(a) .60 to 1.00 at any time from and including the Closing Date
to but excluding September 30,1999, (b) .55 to 1.00 at any time
from and including September 30, 1999 to but excluding
September 30, 2000 and (c) .50 to 1.00 at any time after
September 29, 2000.
SECTION 5.04. Fixed Charges Coverage . At the end of
each Fiscal Quarter, commencing with the Fiscal Quarter ending
June 30, 1998, the ratio of Income Available for Fixed Charges
for the period of 4 Fiscal Quarters then ended to Consolidated
Fixed Charges for the period of 4 Fiscal Quarters then ended,
shall not have been less than (a) 2.00 to 1.00 for all Fiscal
Quarters ending prior to but excluding September 30, 2000, and
(b) 2.50 to 1.00 for all Fiscal Quarters ending on or after
September 30, 2000.
<PAGE>
SECTION 5.05. Loans or Advances . Neither the
Borrower nor any of its Subsidiaries shall make loans or advances
to any Person except: (i) loans or advances to employees not
exceeding Five Million Dollars ($5,000,000) in the aggregate
outstanding made in the ordinary course of business and
consistently with practices existing on September 30, 1997; and
(ii) deposits required by government agencies or public
utilities; and (iii) loans or advances to Subsidiaries which are
Guarantors; provided that after giving effect to the making of
any loans, advances or deposits permitted by clause (i), (ii) or
(iii) of this Section, no Default shall have occurred and be
continuing.
SECTION 5.06. Investments . Neither the Borrower nor
any of its Subsidiaries shall make Investments in any Person
except as permitted by Section 5.05 and except (i) Investments
in direct obligations issued or unconditionally guaranteed by
the United States Government maturing within five years, (ii)
Investments in certificates of deposit issued by a commercial
bank whose credit is satisfactory to the Agent, (iii)
Investments in commercial paper rated A-1 or the equivalent
thereof by Standard & Poor's Ratings Services or P-1 or the
equivalent thereof by Moody's Investors Service, Inc. and in
either case maturing within one year after the date of
acquisition, (iv) Investments in tender bonds the payment of the
principal of and interest on which is fully supported by a letter
of credit issued by a United States bank whose long-term
certificates of deposit are rated at least AA or the equivalent
thereof by Standard & Poor's Ratings Services and Aa or the
equivalent thereof by Moody's Investors Service, Inc., (v)
Investments in swap contracts and other hedging agreements
entered into in the ordinary course of business, (vi) Investments
in any Guarantor, (vii) Permitted Acquisitions, and/or (viii)
other Investments, the aggregate amount of which does not at any
time exceed 10% of Consolidated Net Worth.
SECTION 5.07. Negative Pledge . Neither the Borrower
nor any Consolidated Subsidiary will create, assume or suffer to
exist any Lien on any asset now owned or hereafter acquired by
it, except:
(a) Liens existing on the date of this Agreement
securing Debt outstanding on the date of this Agreement in an
aggregate principal amount not exceeding $1,500,000;
(b) any Lien existing on any asset of any corporation
at the time such corporation becomes a Consolidated Subsidiary
and not created in contemplation of such event;
(c) any Lien on any asset securing Debt incurred or
assumed for the purpose of financing all or any part of the cost
of acquiring or constructing such asset, provided that such Lien
attaches to such asset concurrently with or within 18 months
after the acquisition or completion of construction thereof;
(d) any Lien on any asset of any corporation existing
at the time such corporation is merged or consolidated with or
into the Borrower or a Consolidated Subsidiary and not created in
contemplation of such event;
<PAGE>
(e) any Lien existing on any asset prior to the
acquisition thereof by the Borrower or a Consolidated Subsidiary
and not created in contemplation of such acquisition;
(f) Liens securing Debt owing by any Subsidiary to the
Borrower;
(g) any Lien arising out of the refinancing,
extension, renewal or refunding of any Debt secured by any Lien
permitted by any of the foregoing clauses of this Section,
provided that (i) such Debt is not secured by any additional
assets, and (ii) the amount of such Debt secured by any such Lien
is not increased;
(h) Liens incidental to the conduct of its business or
the ownership of its assets which (i) do not secure Debt and (ii)
do not in the aggregate materially detract from the value of its
assets or materially impair the use thereof in the operation of
its business;
(i) any Lien on Margin Stock;
(j) Liens on Securitization Assets sold or transferred
pursuant to a Permitted Securitization; and
(k) Liens not otherwise permitted by the foregoing
clauses of this Section securing Debt (other than indebtedness
represented by the Notes) in an aggregate principal amount at any
time outstanding which, when aggregated with all other Debt
secured by Liens permitted by the foregoing clauses (a) through
(i), inclusive, of this Section, does not exceed 10% of
Consolidated Net Worth.
SECTION 5.08. Maintenance of Existence . The Borrower
shall maintain its corporate existence and carry on its business,
and cause each Subsidiary to carry on its business, in
substantially the same manner and in substantially the same
fields as such business is now carried on and maintained.
SECTION 5.09. Dissolution . Neither the Borrower nor
any of its Subsidiaries shall suffer or permit dissolution or
liquidation either in whole or in part or redeem or retire any
shares of its own stock or that of any Subsidiary, except through
corporate reorganization to the extent permitted by Section 5.10.
SECTION 5.10. Consolidations, Mergers and Sales of
Assets . The Borrower will not, nor will it permit any
Subsidiary to, consolidate or merge with or into, or sell, lease
or otherwise transfer all or any substantial part of its assets
to, any other Person, or discontinue or eliminate any business
line or segment, provided that (a) the Borrower may merge with
another Person if (i) such Person was organized under the laws of
the United States of America or one of its states, (ii) the
Borrower is the corporation surviving such merger and (iii)
immediately after giving effect to such merger, no Default shall
have occurred and be continuing; (b) Subsidiaries of the Borrower
may merge with one another; (c) the foregoing limitation on the
<PAGE>
sale, lease or other transfer of assets and on the
discontinuation or elimination of a business line or segment
shall not prohibit, during any Fiscal Quarter, (i) a transfer of
assets by any Subsidiary to the Borrower or by the Borrower or
any Subsidiary to any Guarantor, (ii) a transfer of assets by any
Subsidiary which is not a Guarantor to any other Subsidiary which
is not a Guarantor, and (iii) a transfer of assets or the
discontinuance or elimination of a business line or segment (in a
single transaction or in a series of related transactions) unless
the aggregate assets to be so transferred or utilized in a
business line or segment to be so discontinued, when combined
with all other assets transferred, and all other assets utilized
in all other business lines or segments discontinued, during such
Fiscal Quarter and the immediately preceding seven Fiscal
Quarters (excluding, however, for purposes of this clause (c)
transfers of assets permitted by clauses (i) and (ii) of this
clause (c) and sales, contributions or other transfers of
Securitization Assets permitted by clause (d) below), either (x)
constituted more than 10% of Consolidated Total Assets at the end
of the eighth Fiscal Quarter immediately preceding such Fiscal
Quarter, or (y) contributed more than 10% of Consolidated
Operating Profits during the 8 consecutive Fiscal Quarters
immediately preceding such Fiscal Quarter; and (d) the Borrower
and its Subsidiaries may sell, contribute and make other
transfers of Securitization Assets pursuant to the Securitization
Documents under a Permitted Securitization.
SECTION 5.11. Use of Proceeds . No portion of the
proceeds of the Loans will be used by the Borrower or any
Subsidiary (i) in connection with, either directly or indirectly,
any tender offer for, or other acquisition of, stock of any
corporation with a view towards obtaining control of such other
corporation (other than Permitted Acquisitions), (ii) directly or
indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any Margin Stock, or
(iii) for any purpose in violation of any applicable law or
regulation.
SECTION 5.12. Compliance with Laws; Payment of Taxes .
The Borrower will, and will cause each of its Subsidiaries and
each member of the Controlled Group to, comply with applicable
laws (including but not limited to ERISA), regulations and
similar requirements of governmental authorities (including but
not limited to PBGC), except where the necessity of such
compliance is being contested in good faith through appropriate
proceedings diligently pursued. The Borrower will, and will
cause each of its Subsidiaries to, pay promptly when due all
taxes, assessments, governmental charges, claims for labor,
supplies, rent and other obligations which, if unpaid, might
become a lien against the property of the Borrower or any
Subsidiary, except liabilities being contested in good faith by
appropriate proceedings diligently pursued and against which, if
requested by the Agent, the Borrower shall have set up reserves
in accordance with GAAP.
SECTION 5.13. Insurance . The Borrower will maintain,
and will cause each of its Subsidiaries to maintain (either in
the name of the Borrower or in such Subsidiary's own name), with
financially sound and reputable insurance companies, insurance on
all its Property in at least such amounts and against at least
such risks as are usually insured against in the same general
area by companies of established repute engaged in the same or
similar business.
<PAGE>
SECTION 5.14. Change in Fiscal Year . The Borrower
will not change its Fiscal Year without the consent of the
Required Banks.
SECTION 5.15. Maintenance of Property . The Borrower
shall, and shall cause each Subsidiary to, maintain all of its
properties and assets in good condition, repair and working
order, ordinary wear and tear excepted.
SECTION 5.16. Environmental Notices . The Borrower
shall furnish to the Banks and the Agent prompt written notice of
all (i) Environmental Liabilities, (ii) pending, threatened or
anticipated Environmental Proceedings, Environmental Notices, and
Environmental Judgments and Orders, and (iii) Environmental
Releases at, on, in, under or in any way affecting the Properties
and which, in each case, have or could reasonably be expected to
have a Material Adverse Effect.
SECTION 5.17. Environmental Matters . The Borrower
and its Subsidiaries will not, and will not permit any Third
Party to, use, produce, manufacture, process, treat, recycle,
generate, store, dispose of, manage at, or otherwise handle or
ship or transport to or from the Properties any Hazardous
Materials in violation of applicable Environmental Laws, the use,
production, manufacture, processing, treatment, recycling,
generation, storage, disposal or management of which could
reasonably be expected to have a Material Adverse Effect.
SECTION 5.18. Environmental Release . The Borrower
agrees that upon the Borrower's knowledge of the occurrence of an
Environmental Release at or on any of the Properties it will, as
required by applicable Environmental Law, act promptly to
investigate the extent of, and to take appropriate remedial
action with respect to, such Environmental Release. As used in
this Section, "Borrower's knowledge" means the knowledge of the
officers, directors, managers and employees of the Borrower and
its Subsidiaries.
SECTION 5.19. Transactions with Affiliates . Neither
the Borrower nor any of its Subsidiaries shall enter into, or be
a party to, any transaction with any Affiliate of the Borrower or
such Subsidiary (which Affiliate is not the Borrower or a
Subsidiary), except as permitted by law and in the ordinary
course of business and pursuant to reasonable terms which are
fully disclosed to the Agent and the Banks, and are no less
favorable to Borrower or such Subsidiary than would be obtained
in a comparable arm's length transaction with a Person which is
not an Affiliate.
SECTION 5.20. Limitation on Priority Debt . The
Borrower shall not permit the outstanding principal amount of
Priority Debt to exceed, in the aggregate, more than 10% of
Consolidated Net Worth at any time.
SECTION 5.21. Material Subsidiaries . (a) Within
five (5) Domestic Business Days after Fuel Spray Technologies
Inc. becomes a Subsidiary, the Borrower shall cause (i) Fuel
Spray Technologies Inc. to become a party to and agree to be
bound by the terms of the Guaranty pursuant to an instrument in
form and substance satisfactory to the Agent, (ii) Fuel Spray
Technologies Inc. and each other Guarantor to enter into, and
<PAGE>
shall itself enter into, the Indemnity, Subrogation and
Contribution Agreement, and (iii) the items specified in Section
3.01(c) and (f) to be delivered to the Agent, modified
appropriately to refer to the instrument referred to in clause
(i) of this paragraph and to the Indemnity, Subrogation and
Contribution Agreement and Fuel Spray Technologies Inc.
(b) The Borrower shall cause any Person which becomes
a Domestic Material Subsidiary on or after the Closing Date to
become a party to, and agree to be bound by the terms of, the
Guaranty and the Indemnity, Subrogation and Contribution
Agreement pursuant to an instrument in form and substance
satisfactory to the Agent executed and delivered to the Agent
within ten (10) Domestic Business Days after the day on which
such Person became a Domestic Material Subsidiary. The Borrower
shall also cause the items specified in Section 3.01(c) and (f)
to be delivered to the Agent concurrently with the instrument
referred to above, modified appropriately to refer to such
instrument and such Domestic Material Subsidiary.
(c) Once any Subsidiary becomes a Domestic Material
Subsidiary and therefore becomes a party to the Guaranty and the
Indemnity, Subrogation and Contribution Agreement in accordance
with Section 5.21(b), such Subsidiary thereafter shall remain a
party to the Guaranty and the Indemnity, Subrogation and
Contribution Agreement without regard to the amount of its Total
Assets on any day or Operating Profits for any period.
SECTION 5.22 Permitted Securitization . The Borrower shall
not, nor shall it permit any of its Subsidiaries to, enter into
any Securitization Documents other than in connection with a
Permitted Securitization (unless such Securitization Documents
have been approved by the Required Banks or are non-material
documentation entered into pursuant to such approved
Securitization Documents) or amend or modify in any material
respect which is adverse to the Banks any of such Securitization
Documents unless such amendment or modification has been approved
by the Required Banks; provided, however, that if the
Securitization Documents, after giving effect to such amendment
or modification, would constitute a Permitted Securitization,
then such approval of the Required Banks shall not be required.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default . If one or more of
the following events ("Events of Default") shall have occurred
and be continuing:
(a) the Borrower shall fail to pay when due any
principal of any Loan or shall fail to pay any interest on any
Loan within five Domestic Business Days after such interest shall
become due, or shall fail to pay any fee or other amount payable
hereunder within five Domestic Business Days after such fee or
other amount becomes due; or
<PAGE>
(b) the Borrower shall fail to observe or perform any
covenant contained in Sections 5.02(ii), 5.03 to 5.11, inclusive,
or Section 5.14; or
(c) any Loan Party shall fail to observe or perform
any covenant or agreement contained or incorporated by reference
in this Agreement (other than those covered by clause (a) or (b)
above) for thirty days after the earlier of (i) the first day on
which a Loan Party has knowledge of such failure or (ii) written
notice thereof has been given to the Borrower by the Agent at the
request of any Bank; or
(d) any representation, warranty, certification or
statement made or deemed made by the Borrower or any other Loan
Party in Article IV of this Agreement, in any other Loan
Document, in any amendment hereto or thereto or in any
certificate, financial statement or other document delivered
pursuant to this Agreement, any other Loan Document or any such
amendment shall prove to have been incorrect or misleading in any
material respect when made (or deemed made); or
(e) the Borrower or any Subsidiary shall fail to make
any payment in respect of Debt outstanding (other than the Notes)
when due or within any applicable grace period; or
(f) any event or condition shall occur which results
in the acceleration of the maturity of Debt outstanding of the
Borrower or any Subsidiary in an aggregate amount in excess of
$10,000,000 for the Borrower and all Subsidiaries or the
mandatory prepayment or purchase of such Debt by the Borrower (or
its designee) or such Subsidiary (or its designee) prior to the
scheduled maturity thereof, or enables (or, with the giving of
notice or lapse of time or both, would enable) the holders of
such Debt or any Person acting on such holders' behalf to
accelerate the maturity thereof or require the mandatory
prepayment or purchase thereof prior to the scheduled maturity
thereof, without regard to whether such holders or other Person
shall have exercised or waived their right to do so; or
(g) the Borrower or any Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it
or any substantial part of its property, or shall consent to any
such relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally, or shall admit in
writing its inability, to pay its debts as they become due, or
shall take any corporate action to authorize any of the
foregoing; or
<PAGE>
(h) an involuntary case or other proceeding shall be
commenced against the Borrower or any Subsidiary seeking
liquidation, reorganization or other relief with respect to it or
its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and
unstayed for a period of 60 days; or an order for relief shall be
entered against the Borrower or any Subsidiary under the federal
bankruptcy laws as now or hereafter in effect; or
(i) the Borrower or any member of the Controlled Group
shall fail to pay when due any material amount which it shall
have become liable to pay to the PBGC or to a Plan under Title IV
of ERISA, which failure to pay could reasonably be expected to
cause a Material Adverse Effect; or the PBGC shall institute
proceedings under Title IV of ERISA to terminate or to cause a
trustee to be appointed to administer any such Plan or Plans or a
proceeding shall be instituted by a fiduciary of any such Plan or
Plans to enforce Section 515 or 4219(c)(5) of ERISA and such
proceeding shall not have been dismissed within 30 days
thereafter; or a condition shall exist by reason of which the
PBGC would be entitled to obtain a decree adjudicating that any
such Plan or Plans must be terminated; or the Borrower or any
other member of the Controlled Group shall enter into, contribute
or be obligated to contribute to, terminate or incur any
withdrawal liability with respect to, a Multiemployer Plan, where
such withdrawal liability could reasonably be expected to cause a
Material Adverse Effect; or
(j) one or more judgments or orders for the payment of
money in an aggregate amount in excess of $5,000,000 shall be
rendered against the Borrower or any Subsidiary and such judgment
or order shall continue unsatisfied and unstayed for a period of
30 days; or
(k) a federal tax lien shall be filed against the
Borrower or any Subsidiary under Section 6323 of the Code or a
lien of the PBGC shall be filed against the Borrower or any
Subsidiary under Section 4068 of ERISA and in either case such
lien shall remain undischarged for a period of 25 days after the
date of filing; or
(l) any Person or two or more Persons acting in
concert shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934) of 20% or more of the
outstanding shares of the voting stock of the Borrower; or (ii)
as of any date a majority of the Board of Directors of the
Borrower consists of individuals who were not either (A)
directors of the Borrower as of the corresponding date of the
previous year, (B) selected or nominated to become directors by
the Board of Directors of the Borrower of which a majority
consisted of individuals described in clause (A), or (C) selected
or nominated to become directors by the Board of Directors of the
Borrower of which a majority consisted of individuals described
in clause (A) and individuals described in clause (B);
<PAGE>
(m) if any provision of any Loan Document shall for
any reason cease to be valid and binding on any Loan Party, or
any Loan Party shall deny or disaffirm its obligations
thereunder; or
(n) the occurrence of any event, act or condition
which the Required Banks determine either does or has a
reasonable probability of causing a Material Adverse Effect.
then, and in every such event, the Agent shall (i) if requested
by the Required Banks, by notice to the Borrower terminate the
Term Loan Commitments and the Revolving Credit Commitments and
they shall thereupon terminate, and (ii) if requested by the
Required Banks, by notice to the Borrower declare the Notes
(together with accrued interest thereon) and all other amounts
payable hereunder and under the other Loan Documents to be, and
the Notes (together with all accrued interest thereon) and all
other amounts payable hereunder and under the other Loan
Documents shall thereupon become, immediately due and payable
without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; provided that if
any Event of Default specified in clause (g) or (h) above occurs
with respect to the Borrower, without any notice to the Borrower
or any other act by the Agent or the Banks, the Term Loan
Commitments and the Revolving Credit Commitments shall thereupon
automatically terminate and the Notes (together with accrued
interest thereon) and all other amounts payable hereunder and
under the other Loan Documents shall automatically become
immediately due and payable without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by
the Borrower. Notwithstanding the foregoing, the Agent shall
have available to it all other remedies at law or equity, and
shall exercise any one or all of them at the request of the
Required Banks.
SECTION 6.02. Notice of Default . The Agent shall
give notice to the Borrower of any Default under Section 6.01(c)
promptly upon being requested to do so by any Bank and shall
thereupon notify all the Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment, Powers and Immunities .
Each Bank hereby irrevocably appoints and authorizes the Agent to
act as its agent hereunder and under the other Loan Documents
with such powers as are specifically delegated to the Agent by
the terms hereof and thereof, together with such other powers as
are reasonably incidental thereto. The Agent: (a) shall have no
duties or responsibilities except as expressly set forth in this
Agreement and the other Loan Documents, and shall not by reason
of this Agreement or any other Loan Document be a trustee for any
Bank; (b) shall not be responsible to the Banks for any recitals,
statements, representations or warranties contained in this
Agreement or any other Loan Document, or in any certificate or
other document referred to or provided for in, or received by any
Bank under, this Agreement or any other Loan Document, or for the
validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document or any
<PAGE>
other document referred to or provided for herein or therein or
for any failure by any Loan Party to perform any of its
obligations hereunder or thereunder; (c) shall not be required to
initiate or conduct any litigation or collection proceedings
hereunder or under any other Loan Document except to the extent
requested by the Required Banks, and then only on terms and
conditions satisfactory to the Agent, and (d) shall not be
responsible for any action taken or omitted to be taken by it
hereunder or under any other Loan Document or any other document
or instrument referred to or provided for herein or therein or in
connection herewith or therewith, except for its own gross
negligence or willful misconduct. The Agent may employ agents
and attorneys-in-fact and shall not be responsible for the
negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The provisions of this
Article VII are solely for the benefit of the Agent and the
Banks, and the Loan Parties shall not have any rights as a third
party beneficiary of any of the provisions hereof. In performing
its functions and duties under this Agreement and under the other
Loan Documents, the Agent shall act solely as agent of the Banks
and does not assume and shall not be deemed to have assumed any
obligation towards or relationship of agency or trust with or for
the Borrower. The duties of the Agent shall be ministerial and
administrative in nature, and the Agent shall not have by reason
of this Agreement or any other Loan Document a fiduciary
relationship in respect of any Bank.
SECTION 7.02. Reliance by Agent . The Agent shall be
entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, telefax,
telegram or cable) believed by it to be genuine and correct and
to have been signed or sent by or on behalf of the proper Person
or Persons, and upon advice and statements of legal counsel,
independent accountants or other experts selected by the Agent.
As to any matters not expressly provided for by this Agreement or
any other Loan Document, the Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder and
thereunder in accordance with instructions signed by the Required
Banks, and such instructions of the Required Banks in any action
taken or failure to act pursuant thereto shall be binding on all
of the Banks.
SECTION 7.03. Defaults . The Agent shall not be
deemed to have knowledge of the occurrence of a Default or an
Event of Default (other than the non-payment of principal of or
interest on the Loans) unless the Agent has received notice from
a Bank or the Borrower specifying such Default or Event of
Default and stating that such notice is a "Notice of Default".
In the event that the Agent receives such a notice of the
occurrence of a Default or an Event of Default, the Agent shall
give prompt notice thereof to the Banks. The Agent shall give
each Bank prompt notice of each non-payment of principal of or
interest on the Loans, whether or not it has received any notice
of the occurrence of such non-payment. The Agent shall (subject
to Section 9.05) take such action with respect to such Default or
Event of Default as shall be directed by the Required Banks,
provided that, unless and until the Agent shall have received
such directions, the 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.
<PAGE>
SECTION 7.04. Rights of Agent and its Affiliates as a
Bank . With respect to any Loans made by Wachovia or an
Affiliate of Wachovia, such Affiliate and Wachovia in their
capacity as a Bank hereunder shall have the same rights and
powers hereunder as any other Bank and may exercise the same as
though it were not an Affiliate of Wachovia (or in Wachovia's
case, acting as the Agent), and the term "Bank" or "Banks" shall,
unless the context otherwise indicates, include such Affiliate of
Wachovia or Wachovia in its individual capacity. Such Affiliate
and Wachovia may (without having to account therefor to any Bank)
accept deposits from, lend money to and generally engage in any
kind of banking, trust or other business with the Borrower (and
any of its Affiliates) as if they were not an Affiliate of the
Agent or the Agent, respectively; and such Affiliate and Wachovia
may accept fees and other consideration from any Loan Party (in
addition to any agency fees and arrangement fees heretofore
agreed to between the Borrower and Wachovia) for services in
connection with this Agreement or any other Loan Document or
otherwise without having to account for the same to the Banks.
SECTION 7.05. Indemnification . Each Bank severally
agrees to indemnify the Agent, to the extent the Agent shall not
have been reimbursed by the Borrower, ratably in accordance with
its aggregate Term Loan Commitment and Revolving Credit
Commitment, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses
(including, without limitation, counsel fees and disbursements)
or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of this Agreement or any other Loan
Document or any other documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or
thereby (excluding, unless an Event of Default has occurred and
is continuing, the normal administrative costs and expenses
incident to the performance of its agency duties hereunder) or
the enforcement of any of the terms hereof or thereof or any such
other documents; provided, however, that no Bank shall be liable
for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Agent. If any indemnity
furnished to the Agent for any purpose shall, in the opinion of
the Agent, be insufficient or become impaired, the Agent may call
for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is
furnished.
SECTION 7.06. CONSEQUENTIAL DAMAGES . THE AGENT SHALL
NOT BE RESPONSIBLE OR LIABLE TO ANY BANK, ANY LOAN PARTY OR ANY
OTHER PERSON OR ENTITY FOR ANY PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
SECTION 7.07. Payee of Note Treated as Owner . The
Agent may deem and treat the payee of any Note as the owner
thereof for all purposes hereof unless and until a written notice
of the assignment or transfer thereof shall have been filed with
the Agent and the provisions of Section 9.07(c) have been
satisfied. Any requests, authority or consent of any Person who
at the time of making such request or giving such authority or
consent is the holder of any Note shall be conclusive and binding
on any subsequent holder, transferee or assignee of that Note or
of any Note or Notes issued in exchange therefor or replacement
thereof.
<PAGE>
SECTION 7.08. Non-Reliance on Agent and Other Banks .
Each Bank agrees that it has, independently and without reliance
on the Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit
analysis of each Loan Party and decision to enter into this
Agreement and that it will, independently and without reliance
upon the 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 analysis and decisions in taking or not taking
action under this Agreement or any of the other Loan Documents.
The Agent shall not be required to keep itself (or any Bank)
informed as to the performance or observance by any Loan Party of
this Agreement or any of the other Loan Documents or any other
document referred to or provided for herein or therein or to
inspect the properties or books of any Loan Party or any other
Person. Except for notices, reports and other documents and
information expressly required to be furnished to the Banks by
the Agent hereunder or under the other Loan Documents, the Agent
shall not have any duty or responsibility to provide any Bank
with any credit or other information concerning the affairs,
financial condition or business of any Loan Party or any other
Person (or any of their Affiliates) which may come into the
possession of the Agent.
SECTION 7.09. Failure to Act . Except for action
expressly required of the Agent hereunder or under the other Loan
Documents, the Agent shall in all cases be fully justified in
failing or refusing to act hereunder and thereunder unless it
shall receive further assurances to its satisfaction by the Banks
of their indemnification obligations under Section 7.05 against
any and all liability and expense which may be incurred by the
Agent by reason of taking, continuing to take, or failing to take
any such action.
SECTION 7.10. Resignation or Removal of Agent .
Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by giving notice
thereof to the Banks and the Borrower and the Agent may be
removed at any time with or without cause by the Required Banks.
Upon any such resignation or removal, the Required Banks shall
have the right to appoint a successor Agent with the prior
written consent of the Borrower (which consent shall not be
unreasonably withheld or delayed) if at the time of such
appointment no Default shall have occurred and be continuing. If
no successor Agent shall have been so appointed by the Required
Banks and shall have accepted such appointment within 30 days
after the retiring Agent's notice of resignation or the Required
Banks' removal of the retiring Agent, then the retiring Agent
may, on behalf of the Banks, appoint a successor Agent. Any
successor Agent shall be a bank which has a combined capital and
surplus of at least $500,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this
Article VII shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was
acting as the Agent hereunder.
<PAGE>
ARTICLE VIII
CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair . If on or prior to the first day of any
Interest Period:
(a) the Agent determines that deposits in Dollars (in
the applicable amounts) are not being offered in the relevant
market for such Interest Period, or
(b) the Required Banks advise the Agent that the
London Interbank Offered Rate as determined by the Agent will not
adequately and fairly reflect the cost to such Banks of funding
Euro-Dollar Loans for such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and
the Banks, whereupon until the Agent notifies the Borrower that
the circumstances giving rise to such suspension no longer exist,
the obligations of the Banks to make Euro-Dollar Loans shall be
suspended. Unless the Borrower notifies the Agent at least 2
Domestic Business Days before the date of any Borrowing of Euro-
Dollar Loans for which a Notice of Borrowing has previously been
given that it elects not to borrow on such date, such Borrowing
shall instead be made as a Base Rate Borrowing.
SECTION 8.02. Illegality . If, after the date hereof,
the adoption of any applicable law, rule or regulation, or any
change in any existing or future law, rule or regulation, or any
change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof (any such
authority, bank or agency being referred to as an "Authority" and
any such event being referred to as a "Change of Law"), or
compliance by any Bank (or its Lending Office) with any request
or directive (whether or not having the force of law) of any
Authority shall make it unlawful or impossible for any Bank (or
its Lending Office) to make, maintain or fund its Euro-Dollar
Loans and such Bank shall so notify the Agent, the Agent shall
forthwith give notice thereof to the other Banks and the
Borrower, whereupon until such Bank notifies the Borrower and the
Agent that the circumstances giving rise to such suspension no
longer exist, the obligation of such Bank to make Euro-Dollar
Loans shall be suspended. Before giving any notice to the Agent
pursuant to this Section, such Bank shall designate a different
Lending Office if such designation will avoid the need for giving
such notice and will not, in the judgment of such Bank, be
otherwise disadvantageous to such Bank. If such Bank shall
determine that it may not lawfully continue to maintain and fund
any of its outstanding Euro-Dollar Loans to maturity and shall so
specify in such notice, the Borrower shall immediately prepay in
full the then outstanding principal amount of each Euro-Dollar
Loan of such Bank, together with accrued interest thereon and any
amount due such Bank pursuant to Section 8.05(a). Concurrently
with prepaying each such Euro-Dollar Loan, the Borrower shall
borrow a Base Rate Loan in an equal principal amount from such
Bank (on which interest and principal shall be payable
contemporaneously with the related Euro-Dollar Loans of the other
Banks), and such Bank shall make such a Base Rate Loan.
<PAGE>
SECTION 8.03. Increased Cost and Reduced Return .
(a) If after the date hereof, a Change of Law or
compliance by any Bank (or its Lending Office) with any request
or directive (whether or not having the force of law) of any
Authority:
(i) shall subject any Bank (or its Lending
Office) to any tax, duty or other charge with respect to its
Euro-Dollar Loans, its Notes or its obligation to make Euro-
Dollar Loans, or shall change the basis of taxation of payments
to any Bank (or its Lending Office) of the principal of or
interest on its Euro-Dollar Loans or any other amounts due under
this Agreement in respect of its Euro-Dollar Loans or its
obligation to make Euro-Dollar Loans (except for changes in the
rate of tax on the overall net income of such Bank or its Lending
Office imposed by the jurisdiction in which such Bank's principal
executive office or Lending Office is located); or
(ii) shall impose, modify or deem applicable
any reserve, special deposit or similar requirement (including,
without limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System, but excluding with
respect to any Euro-Dollar Loan any such requirement included in
an applicable Euro-Dollar Reserve Percentage) against assets of,
deposits with or for the account of, or credit extended by, any
Bank (or its Lending Office); or
(iii) shall impose on any Bank (or its Lending
Office) or the London interbank market any other condition
affecting its Euro-Dollar Loans, its Notes or its obligation to
make Euro-Dollar Loans;
and the result of any of the foregoing is to increase the cost to
such Bank (or its Lending Office) of making or maintaining any
Euro-Dollar Loan, or to reduce the amount of any sum received or
receivable by such Bank (or its Lending Office) under this
Agreement or under its Notes with respect thereto, by an amount
deemed by such Bank to be material, then, within 15 days after
demand by such Bank (with a copy to the Agent), the Borrower
shall pay to such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction.
(b) If any Bank shall have determined that after the
date hereof the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change in any
existing or future law, rule or regulation, or any change in the
interpretation or administration thereof, or compliance by any
Bank (or its Lending Office) with any request or directive
regarding capital adequacy (whether or not having the force of
law) of any Authority, has or would have the effect of reducing
the rate of return on such Bank's capital as a consequence of its
obligations hereunder to a level below that which such Bank could
have achieved but for such adoption, change or compliance (taking
into consideration such Bank's policies with respect to capital
adequacy) by an amount deemed by such Bank to be material, then
from time to time, within 15 days after demand by such Bank, the
Borrower shall pay to such Bank such additional amount or amounts
as will compensate such Bank for such reduction.
<PAGE>
(c) Each Bank will promptly notify the Borrower and
the Agent of any event of which it has knowledge, occurring after
the date hereof, which will entitle such Bank to compensation
pursuant to this Section and will designate a different Lending
Office if such designation will avoid the need for, or reduce the
amount of, such compensation and will not, in the judgment of
such Bank, be otherwise disadvantageous to such Bank. A
certificate of any Bank claiming compensation under this Section
and setting forth the additional amount or amounts to be paid to
it hereunder shall be conclusive in the absence of manifest
error. In determining such amount, such Bank may use any
reasonable averaging and attribution methods.
(d) The provisions of this Section 8.03 shall be
applicable with respect to any Participant, Assignee or other
Transferee, and any calculations required by such provisions
shall be made based upon the circumstances of such Participant,
Assignee or other Transferee.
SECTION 8.04. Base Rate Loans Substituted for Euro-
Dollar Loans . If (i) the obligation of any Bank to make or
maintain Euro-Dollar Loans has been suspended pursuant to Section
8.02 or (ii) any Bank has demanded compensation under Section
8.03, and the Borrower shall, by at least 5 Euro-Dollar Business
Days' prior notice to such Bank through the Agent, have elected
that the provisions of this Section shall apply to such Bank,
then, unless and until such Bank notifies the Borrower that the
circumstances giving rise to such suspension or demand for
compensation no longer apply:
(a) all Loans which would otherwise be made by such
Bank as Euro-Dollar Loans shall be made instead as Base Rate
Loans (in all cases interest and principal on such Loans shall
be payable contemporaneously with the related Loans of the other
Banks), and
(b) after each of its Euro-Dollar Loans has been
repaid, all payments of principal which would otherwise be
applied to repay such Euro-Dollar Loans shall be applied to repay
its Base Rate Loans instead.
In the event that the Borrower shall elect that the provisions of
this Section shall apply to any Bank, the Borrower shall remain
liable for, and shall pay to such Bank as provided herein, all
amounts due such Bank under Section 8.03 in respect of the period
preceding the date of conversion of such Bank's Loans resulting
from the Borrower's election.
SECTION 8.05. Compensation . Upon the request of any
Bank, delivered to the Borrower and the Agent, the Borrower shall
pay to such Bank such amount or amounts as shall compensate such
Bank for any loss, cost or expense incurred by such Bank as a
result of:
<PAGE>
(a) any payment or prepayment (pursuant to Section
2.09, Section 2.10, Section 8.02 or otherwise) of a Euro-Dollar
Loan or a Money Market Loan on a date other than the last day of
an Interest Period for such Euro-Dollar Loan or Money Market
Loan, as the case may be;
(b) any failure by the Borrower to prepay a Euro-
Dollar Loan or a Money Market Loan on the date for such
prepayment specified in the relevant notice of prepayment
hereunder;
(c) any failure by the Borrower to borrow a Euro-
Dollar Loan on the date for the Euro-Dollar Borrowing of which
such Euro-Dollar Loan is a part specified in the applicable
Notice of Borrowing delivered pursuant to Section 2.02(b); or
(d) any failure by the Borrower to borrow a Money
Market Loan (with respect to which the Borrower has accepted a
Money Market Quote) on the date for the Money Market Borrowing of
which such Money Market Loan is a part specified in the
applicable Money Market Quote Request delivered pursuant to
Section 2.03;
such compensation to include, without limitation, with respect to
any Euro-Dollar Loan an amount equal to the excess, if any, of
(x) the amount of interest which would have accrued on the amount
so paid or prepaid or not prepaid or borrowed for the period from
the date of such payment, prepayment or failure to prepay or
borrow to the last day of the then current Interest Period for
such Euro-Dollar Loan (or, in the case of a failure to prepay or
borrow, the Interest Period for such Euro-Dollar Loan which would
have commenced on the date of such failure to prepay or borrow)
at the applicable rate of interest for such Euro-Dollar Loan
provided for herein over (y) the amount of interest (as
reasonably determined by such Bank) such Bank would have paid on
(i) deposits in Dollars of comparable amounts having terms
comparable to such period placed with it by leading banks in the
London interbank market.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices . All notices, requests and
other communications to any party hereunder shall be in writing
(including facsimile transmission or similar writing) and shall
be given to such party at its address or telecopy number set
forth on the signature pages hereof or such other address or
telecopy number as such party may hereafter specify for the
purpose by notice to each other party. Each such notice, request
or other communication shall be effective (i) if given by
telecopier, when such telecopy is transmitted to the telecopy
number specified in this Section and the telecopy machine used by
the sender provides a written confirmation that such telecopy has
been so transmitted or receipt of such telecopy transmission is
otherwise confirmed, (ii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid, and (iii) if given by any other
means, when delivered at the address specified in this Section;
provided that notices to the Agent under Article II or
Article VIII shall not be effective until received.
<PAGE>
SECTION 9.02. No Waivers . No failure or delay by the
Agent or any Bank in exercising any right, power or privilege
hereunder or under any Note or other Loan Document shall operate
as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
SECTION 9.03. Expenses; Documentary Taxes;
Indemnification .
(a) The Borrower shall pay (i) all out-of-pocket
expenses of the Agent, including fees and disbursements of
special counsel for the Banks and the Agent, in connection with
the preparation of this Agreement and the other Loan Documents,
any waiver or consent hereunder or thereunder or any amendment
hereof or thereof or any Default or alleged Default hereunder or
thereunder and (ii) if a Default occurs, all out-of-pocket
expenses incurred by the Agent or any Bank, including fees and
disbursements of counsel, in connection with such Default and
collection and other enforcement proceedings resulting therefrom,
including out-of-pocket expenses incurred in enforcing this
Agreement and the other Loan Documents.
(b) The Borrower shall indemnify the Agent and each
Bank against any transfer taxes, documentary taxes, assessments
or charges made by any Authority by reason of the execution and
delivery of this Agreement or the other Loan Documents.
(c) The Borrower shall indemnify the Agent, the Banks
and each Affiliate thereof and their respective directors,
officers, employees and agents from, and hold each of them
harmless against, any and all losses, liabilities, claims or
damages to which any of them may become subject, insofar as such
losses, liabilities, claims or damages arise out of or result
from any actual or proposed use by the Borrower of the proceeds
of any extension of credit by any Bank hereunder or breach by any
Loan Party of this Agreement or any other Loan Document or from
investigation, litigation (including, without limitation, any
actions taken by the Agent or any of the Banks to enforce this
Agreement or any of the other Loan Documents) or other proceeding
(including, without limitation, any threatened investigation or
proceeding) relating to the foregoing, and the Borrower shall
reimburse the Agent and each Bank, and each Affiliate thereof and
their respective directors, officers, employees and agents, upon
demand for any expenses (including, without limitation, legal
fees) incurred in connection with any such investigation or
proceeding; but excluding any such losses, liabilities, claims,
damages or expenses incurred by reason of the gross negligence or
willful misconduct of the Person to be indemnified.
<PAGE>
SECTION 9.04. Setoffs; Sharing of Set-Offs .
(a) The Borrower hereby grants to each Bank, as
security for the full and punctual payment and performance of the
obligations of the Borrower under this Agreement, a continuing
lien on and security interest in all deposits and other sums
credited by or due from such Bank to the Borrower or subject to
withdrawal by the Borrower; and regardless of the adequacy of any
collateral or other means of obtaining repayment of such
obligations, each Bank may at any time upon or after the
occurrence of any Event of Default, and without notice to the
Borrower, set off the whole or any portion or portions of any or
all such deposits and other sums against such obligations,
whether or not any other Person or Persons could also withdraw
money therefrom.
(b) Each Bank agrees that if it shall, by exercising
any right of set-off or counterclaim or otherwise, receive
payment of a proportion of the aggregate amount of principal and
interest owing with respect to the Revolving Credit Notes or Term
Notes held by it which is greater than the proportion received by
any other Bank in respect of the aggregate amount of all
principal and interest owing with respect to the Revolving Credit
Notes or Term Notes held by such other Bank, the Bank receiving
such proportionately greater payment shall purchase such
participations in the Revolving Credit Notes or Term Notes held
by the other Banks owing to such other Banks, and/or such other
adjustments shall be made, as may be required so that all such
payments of principal and interest with respect to the Revolving
Credit Notes or Term Notes held by the Banks owing to such other
Banks shall be shared by the Banks pro rata; provided that (i)
nothing in this Section shall impair the right of any Bank to
exercise any right of set-off or counterclaim it may have and to
apply the amount subject to such exercise to the payment of
indebtedness (including, without limitation, Money Market Loans)
of the Borrower other than its indebtedness under the Revolving
Credit Notes and Term Notes, and (ii) if all or any portion of
such payment received by the purchasing Bank is thereafter
recovered from such purchasing Bank, such purchase from each
other Bank shall be rescinded and such other Bank shall repay to
the purchasing Bank the purchase price of such participation to
the extent of such recovery together with an amount equal to such
other Bank's ratable share (according to the proportion of (x)
the amount of such other Bank's required repayment to (y) the
total amount so recovered from the purchasing Bank) of any
interest or other amount paid or payable by the purchasing Bank
in respect of the total amount so recovered. The Borrower
agrees, to the fullest extent it may effectively do so under
applicable law, that any holder of a participation in a Revolving
Credit Note or a Term Note, whether or not acquired pursuant to
the foregoing arrangements, may exercise rights of set-off or
counterclaim and other rights with respect to such participation
as fully as if such holder of a participation were a direct
creditor of the Borrower in the amount of such participation.
SECTION 9.05. Amendments and Waivers .
(a) Any provision of this Agreement, the Notes or any
other Loan Documents may be amended or waived if, but only if,
such amendment or waiver is in writing and is signed by the
Borrower and the Required Banks (and, if the rights or duties of
the Agent are affected thereby, by the Agent); provided that no
such amendment or waiver shall, unless signed by all the Banks,
(i) change the Term Loan Commitment or Revolving Credit
Commitment of any Bank or subject any Bank to any additional
<PAGE>
obligation, (ii) change the principal of or rate of interest on
any Loan or any fees hereunder, (iii) change the date fixed for
any payment of principal of or interest on any Loan or any fees
hereunder, (iv) change the amount of principal, interest or fees
due on any date fixed for the payment thereof, (v) change the
percentage of the Term Loan Commitments or Revolving Credit
Commitments or of the aggregate unpaid principal amount of the
Notes, or the percentage of Banks, which shall be required for
the Banks or any of them to take any action under this Section or
any other provision of this Agreement, (vi) change the manner of
application of any payments made under this Agreement or the
Notes, (vii) release or substitute all or any substantial part of
the collateral held as security for the Loans, or (viii) release
the Guaranty.
(b) The Borrower will not solicit, request or
negotiate for or with respect to any proposed waiver or amendment
of any of the provisions of this Agreement unless each Bank shall
be informed thereof by the Borrower and shall be afforded an
opportunity of considering the same and shall be supplied by the
Borrower with sufficient information to enable it to make an
informed decision with respect thereto. Executed or true and
correct copies of any waiver or consent effected pursuant to the
provisions of this Agreement shall be delivered by the Borrower
to each Bank forthwith following the date on which the same shall
have been executed and delivered by the requisite percentage of
Banks. The Borrower will not, directly or indirectly, pay or
cause to be paid any remuneration, whether by way of supplemental
or additional interest, fee or otherwise, to any Bank (in its
capacity as such) as consideration for or as an inducement to the
entering into by such Bank of any waiver or amendment of any of
the terms and provisions of this Agreement unless such
remuneration is concurrently paid, on the same terms, ratably to
all such Banks.
SECTION 9.06. Margin Stock Collateral . Each of the
Banks represents to the Agent and each of the other Banks that it
in good faith is not, directly or indirectly (by negative pledge
or otherwise), relying upon any Margin Stock as collateral in the
extension or maintenance of the credit provided for in this
Agreement.
SECTION 9.07. Successors and Assigns .
(a) The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that the Borrower may
not assign or otherwise transfer any of its rights under this
Agreement.
(b) Any Bank may at any time sell to one or more
Persons (each a "Participant") participating interests in any
Loan owing to such Bank, any Note held by such Bank, any Term
Loan Commitment hereunder, any Revolving Credit Commitment
hereunder or any other interest of such Bank hereunder. In the
event of any such sale by a Bank of a participating interest to a
Participant, such Bank's obligations under 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 for all purposes under this Agreement, and the Borrower
and the Agent shall continue to deal solely and directly with
such Bank in connection with such Bank's rights and obligations
under this Agreement. In no event shall a Bank that sells a
<PAGE>
participation be obligated to the Participant to take or refrain
from taking any action hereunder except that such Bank may agree
that it will not (except as provided below), without the consent
of the Participant, agree to (i) the change of any date fixed for
the payment of principal of or interest on the related Loan or
Loans, (ii) the change of the amount of any principal, interest
or fees due on any date fixed for the payment thereof with
respect to the related Loan or Loans, (iii) the change of the
principal of the related Loan or Loans, (iv) any change in the
rate at which either interest is payable thereon or (if the
Participant is entitled to any part thereof) facility fee is
payable hereunder from the rate at which the Participant is
entitled to receive interest or facility fee (as the case may be)
in respect of such participation, (v) the release or substitution
of all or any substantial part of the collateral held as security
for the Loans, or (vi) the release of the Guaranty. Each Bank
selling a participating interest in any Loan (other than Money
Market Loans), Note, Term Loan Commitment, Revolving Credit
Commitment or other interest under this Agreement shall, within
10 Domestic Business Days of such sale, provide the Borrower and
the Agent with written notification stating that such sale has
occurred and identifying the Participant and the interest
purchased by such Participant. The Borrower agrees that each
Participant shall be entitled to the benefits of Article VIII
with respect to its participation in Loans outstanding from time
to time.
(c) Any Bank may at any time assign to one or more
banks or financial institutions (each an "Assignee") all, or a
proportionate part of all, of its rights and obligations under
this Agreement, the Notes and the other Loan Documents, and such
Assignee shall assume all such rights and obligations, pursuant
to an Assignment and Acceptance in the form attached hereto as
Exhibit J, executed by such Assignee, such transferor Bank and
the Agent (and, in the case of: (i) an Assignee that is not then
a Bank or an Affiliate of a Bank; and (ii) an assignment not made
during the existence of a Default or an Event of Default, by the
Borrower); provided that (i) no interest may be sold by a Bank
pursuant to this paragraph (c) unless the Assignee shall agree to
assume ratably equivalent portions of the transferor Bank's Term
Loan and Revolving Credit Commitment, (ii) the amount of the Term
Loan and Revolving Credit Commitment of the assigning Bank being
assigned pursuant to such assignment (determined as of the
effective date of the assignment) shall be equal to $5,000,000
(or any larger multiple of $1,000,000), (iii) no interest may be
sold by a Bank pursuant to this paragraph (c) to any Assignee
that is not then a Bank or an Affiliate of a Bank without the
consent of the Borrower, which consent shall not be unreasonably
withheld, provided that the Borrower's consent shall not be
necessary with respect to any assignment made during the
existence of a Default or an Event of Default; and (iv) no
interest may be sold by a Bank pursuant to this paragraph (c) to
any Assignee that is not then a Bank or an Affiliate of a Bank
without the consent of the Agent, which consent shall not be
unreasonably withheld, provided, that although the Agent's
consent may not be necessary with respect to an Assignee that is
then a Bank or an Affiliate of a Bank, no such assignment shall
be effective until the conditions set forth in the following
sentence are satisfied; provided, further, that notwithstanding
anything to the contrary contained in this Agreement or any other
Loan Document, Wachovia may at any time and from time to time,
without the consent of the Borrower, assign to one or more
Assignees up to $80,000,000 of its Term Loans and up to
$120,000,000 of its Revolving Credit Commitment ("Initial
Assignments"). Upon (A) execution of the Assignment and
<PAGE>
Acceptance by such transferor Bank, such Assignee, the Agent and
(if applicable) the Borrower, (B) delivery of an executed copy of
the Assignment and Acceptance to the Borrower, the Agent and the
Collateral Agent, (C) payment by such Assignee to such transferor
Bank of an amount equal to the purchase price agreed between such
transferor Bank and such Assignee, and (D) except with respect to
the Initial Assignments, payment by the assigning Bank of a
processing and recordation fee of $3,500 to the Agent, such
Assignee shall for all purposes be a Bank party to this Agreement
and shall have all the rights and obligations of a Bank under
this Agreement (including, without limitation, the rights of a
Bank under Section 2.03) to the same extent as if it were an
original party hereto with a Term Loan and Revolving Credit
Commitment as set forth in such instrument of assumption, and the
transferor Bank shall be released from its obligations hereunder
to a corresponding extent, and no further consent or action by
the Borrower, the Banks or the Agent shall be required. Upon the
consummation of any transfer to an Assignee pursuant to this
paragraph (c), the transferor Bank, the Agent and the Borrower
shall make appropriate arrangements so that, if required, new
Notes are issued to each of such Assignee and such transferor
Bank.
(d) Subject to the provisions of Section 9.08, the
Borrower authorizes each Bank to disclose to any Participant,
Assignee or other transferee (each a "Transferee") and any
prospective Transferee any and all financial and other
information in such Bank's possession concerning the Borrower
which has been delivered to such Bank by the Borrower pursuant to
this Agreement or which has been delivered to such Bank by the
Borrower in connection with such Bank's credit evaluation prior
to entering into this Agreement.
(e) No Transferee shall be entitled to receive any
greater payment under Section 8.03 than the transferor Bank would
have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Borrower's
prior written consent or by reason of the provisions of
Section 8.02 or 8.03 requiring such Bank to designate a different
Lending Office under certain circumstances or at a time when the
circumstances giving rise to such greater payment did not exist.
(f) Anything in this Section 9.07 to the contrary
notwithstanding, any Bank may assign and pledge all or any
portion of the Loans and/or obligations owing to it to any
Federal Reserve Bank or the United States Treasury as collateral
security pursuant to Regulation A of the Board of Governors of
the Federal Reserve System and Operating Circular issued by such
Federal Reserve Bank, provided that any payment in respect of
such assigned Loans and/or obligations made by the Borrower to
the assigning and/or pledging Bank in accordance with the terms
of this Agreement shall satisfy the Borrower's obligations
hereunder in respect of such assigned Loans and/or obligations to
the extent of such payment. No such assignment shall release the
assigning and/or pledging Bank from its obligations hereunder.
SECTION 9.08. Confidentiality . Each Bank agrees to
exercise its best efforts to keep any information delivered or
made available by the Borrower to it which is clearly indicated
<PAGE>
to be confidential information, confidential from anyone other
than persons employed or retained by such Bank who are or are
expected to become engaged in evaluating, approving, structuring
or administering the Loans; provided, however, that nothing
herein shall prevent any Bank from disclosing such information
(i) to any other Bank, (ii) upon the order of any court or
administrative agency, (iii) upon the request or demand of any
regulatory agency or authority having jurisdiction over such
Bank, (iv) which has been publicly disclosed, (v) to the extent
reasonably required in connection with any litigation to which
the Agent, any Bank or their respective Affiliates may be a
party, (vi) to the extent reasonably required in connection with
the exercise of any remedy hereunder, (vii) to such Bank's legal
counsel and independent auditors and (viii) to any actual or
proposed Participant, Assignee or other Transferee of all or part
of its rights hereunder which has agreed in writing to be bound
by the provisions of this Section 9.08.
SECTION 9.09. Representation by Banks . Each Bank
hereby represents that it is a commercial lender or financial
institution which makes loans in the ordinary course of its
business and that it will make its Loans hereunder for its own
account in the ordinary course of such business; provided,
however, that, subject to Section 9.07, the disposition of the
Note or Notes held by that Bank shall at all times be within its
exclusive control.
SECTION 9.10. Obligations Several . The obligations
of each Bank hereunder are several, and no Bank shall be
responsible for the obligations or commitment of any other Bank
hereunder. Nothing contained in this Agreement and no action
taken by the Banks pursuant hereto shall be deemed to constitute
the Banks to be a partnership, an association, a joint venture or
any other kind of entity. The amounts payable at any time
hereunder to each Bank shall be a separate and independent debt,
and each Bank shall be entitled to protect and enforce its rights
arising out of this Agreement or any other Loan Document and it
shall not be necessary for any other Bank to be joined as an
additional party in any proceeding for such purpose.
SECTION 9.11. Survival of Certain Obligations .
Sections 8.03(a), 8.03(b), 8.05 and 9.03, and the obligations of
the Borrower thereunder, shall survive, and shall continue to be
enforceable notwithstanding, the termination of this Agreement
and the Term Loan Commitment and the Revolving Credit Commitment
and the payment in full of the principal of and interest on all
Loans.
SECTION 9.12. Georgia Law . This Agreement and each
Note shall be construed in accordance with and governed by the
law of the State of Georgia.
SECTION 9.13. Severability . In case any one or more
of the provisions contained in this Agreement, the Notes or any
of the other Loan Documents should be invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and
therein shall not in any way be affected or impaired thereby and
shall be enforced to the greatest extent permitted by law.
<PAGE>
SECTION 9.14. Interest . In no event shall the amount
of interest due or payable hereunder or under the Notes exceed
the maximum rate of interest allowed by applicable law, and in
the event any such payment is inadvertently made to any Bank by
the Borrower or inadvertently received by any Bank, then such
excess sum shall be credited as a payment of principal, unless
the Borrower shall notify such Bank in writing that it elects to
have such excess sum returned forthwith. It is the express
intent hereof that the Borrower not pay and the Banks not
receive, directly or indirectly in any manner whatsoever,
interest in excess of that which may legally be paid by the
Borrower under applicable law.
SECTION 9.15. Interpretation . No provision of this
Agreement or any of the other Loan Documents shall be construed
against or interpreted to the disadvantage of any party hereto by
any court or other governmental or judicial authority by reason
of such party having or being deemed to have structured or
dictated such provision.
SECTION 9.16. Consent to Jurisdiction . The Borrower
(a) submits to personal jurisdiction in the State of Georgia, the
courts thereof and the United States District Courts sitting
therein, for the enforcement of this Agreement, the Notes and the
other Loan Documents, (b) waives any and all personal rights
under the law of any jurisdiction to object on any basis
(including, without limitation, inconvenience of forum) to
jurisdiction or venue within the State of Georgia for the purpose
of litigation to enforce this Agreement, the Notes or the other
Loan Documents, and (c) agrees that service of process may be
made upon it in the manner prescribed in Section 9.01 for the
giving of notice to the Borrower. Nothing herein contained,
however, shall prevent the Agent from bringing any action or
exercising any rights against any security and against the
Borrower personally, and against any assets of the Borrower,
within any other state or jurisdiction.
SECTION 9.17. Counterparts . This Agreement may be
signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
<JPAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, under seal, by their respective
authorized officers as of the day and year first above written.
WOODWARD GOVERNOR COMPANY
By: Stephen P. Carter (SEAL)
Title: Vice President, Chief Financial
Officer and Treasurer
Woodward Governor Company
5001 North Second Street
Rockford, Illinois 61125
Attention: Stephen P. Carter
Telecopy number: (815) 877-9547
Telephone number: (815) 639-6800
COMMITMENTS WACHOVIA BANK, N.A., as Agent and a Bank
Term Loan Commitment By: Todd J. Eagle (SEAL)
$100,000,000 Title: Vice President
Revolving Credit Commitment Lending Office
$150,000,000 Wachovia Bank, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Manager Loan Syndications
Telecopy number: (404) 332-4005
Telephone number: (404) 332-1025
Notice Address
Wachovia Corporate Services, Inc.
70 West Madison Street, Suite 2440
Chicago, Illinois 60602
Attention: Neil G. Mesch
Telecopy number: (312) 853-0693
Telephone number: (312) 795-4341
Total Term Loan Commitments
$100,000,000
Total Revolving Credit Commitments
$150,000,000
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