<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 10/A
(AMENDMENT NO. 4)
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934
Lanier Worldwide, Inc.
- --------------------------------------------------------------------------------
(Exact name of Registrant as Specified in its Charter)
Delaware 59-2606737
- -------------------------------------------- ----------------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2300 Parklake Drive, Atlanta, Georgia 30345
- -------------------------------------------- ----------------------------------
(Address of Principal Executive Offices) (Zip code)
Registrant's telephone number, including area code (770) 621-1588
--------------------------
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
------------------- ------------------------------
Common Stock, par value $0.01 per share New York Stock Exchange, Inc.
Preferred Stock Purchase Rights New York Stock Exchange, Inc.
Securities to be registered pursuant to Section 12(g) of the Act:
None
- --------------------------------------------------------------------------------
(Title of Class)
EXPLANATORY NOTE
This Registration Statement has been prepared on a prospective basis on
the assumption that, among other things, the Distribution (as defined in the
Information Statement which is a part of this Registration Statement) and the
related transactions contemplated to occur prior to or contemporaneously with
the Distribution will be consummated as contemplated by the Information
Statement. There can be no assurance, however, that any or all of such
transactions will occur or will occur as so contemplated. Any significant
modifications or variations in the transactions contemplated will be reflected
in an amendment or supplement to this Registration Statement.
<PAGE> 2
CROSS REFERENCE
LANIER WORLDWIDE, INC.
I. INFORMATION INCLUDED IN INFORMATION STATEMENT AND INCORPORATED IN FORM
10 BY REFERENCE
CROSS-REFERENCE SHEET BETWEEN INFORMATION STATEMENT
AND ITEMS OF FORM 10
<TABLE>
<CAPTION>
Item
No. Item Caption Location in Information Statement
<S> <C> <C>
1. Business "SUMMARY;" "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF
OPERATIONS;" and "LANIER'S BUSINESS."
2. Financial Information "SUMMARY - LANIER WORLDWIDE,
INC. AND SUBSIDIARIES SUMMARY
HISTORICAL AND PRO FORMA
CONSOLIDATED FINANCIAL DATA;"
"LANIER WORLDWIDE, INC. AND
SUBSIDIARIES HISTORICAL AND
PRO FORMA CONSOLIDATED
CAPITALIZATION;" "LANIER
WORLDWIDE, INC. UNAUDITED PRO
FORMA CONSOLIDATED FINANCIAL
STATEMENTS;" "LANIER
WORLDWIDE, INC. SELECTED
FINANCIAL DATA;" "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND
RESULTS OF OPERATIONS;" and
"LANIER WORLDWIDE, INC. AND
SUBSIDIARIES CONSOLIDATED
FINANCIAL STATEMENTS."
3. Properties "LANIER'S BUSINESS - Properties"
4. Security Ownership of Certain "SECURITY OWNERSHIP OF CERTAIN
Beneficial Owners and BENEFICIAL OWNERS."
Management
5. Directors and Executive "LANIER'S MANAGEMENT."
Officers
6. Executive Compensation "LANIER'S MANAGEMENT."
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
7. Certain Relationships and "SUMMARY;" "THE DISTRIBUTION -
Related Transactions Relationship Between Harris And
Lanier Following The Distribution."
8. Legal Proceedings "LANIER'S BUSINESS - Legal Proceedings."
9. Market Price of and Dividends "SUMMARY;" and "THE DISTRIBUTION -
on the Registrant's Common Listing and Trading of the Lanier
Equity and Related Stockholder Shares" and "DIVIDEND POLICIES."
Matters
11. Description of Registrant's "DESCRIPTION OF LANIER'S CAPITAL
Securities to be Registered STOCK."
12. Indemnification of Officers and "LIABILITY AND INDEMNIFICATION OF
Directors DIRECTORS AND OFFICERS."
13. Financial Statements and "SUMMARY;" "LANIER WORLDWIDE, INC.
Supplementary Data UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS," "LANIER
WORLDWIDE, INC. SELECTED FINANCIAL
DATA;" and "LANIER WORLDWIDE, INC.
AND SUBSIDIARIES CONSOLIDATED
FINANCIAL STATEMENTS."
</TABLE>
II. INFORMATION NOT INCLUDED IN INFORMATION STATEMENT
Item 10. Recent Sales of Unregistered Securities.
None.
Item 14. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
Item 15. Financial Statements and Exhibits.
(a) List of Financial Statements. The following financial statements are
included in the Information statement:
Report of Independent Certified Public Accountants.
Lanier Worldwide, Inc. and Subsidiaries Consolidated Balance Sheets as of July
2, 1999, July 3, 1998, and June 27, 1997.
<PAGE> 4
Lanier Worldwide, Inc. and Subsidiaries Consolidated Statements of Income for
the Fiscal Years ended July 2, 1999, July 3, 1998 and June 27, 1997.
Lanier Worldwide, Inc. and Subsidiaries Consolidated Statements of Cash Flows
for the Fiscal Years ended July 2, 1999, July 3, 1998 and June 27, 1997.
Lanier Worldwide, Inc. and Subsidiaries Consolidated Statements of Changes in
Shareholder Equity for the Fiscal Years ended July 2, 1999, July 3, 1998 and
June 27, 1997.
(b) Exhibits. The following documents are filed as exhibits hereto:
Exhibit No.
- -----------
2.1 Form of Distribution Agreement.
3.1 Form of Amended and Restated Certificate of Incorporation of Lanier
Worldwide, Inc.**
3.2 Form of By-Laws of Lanier Worldwide, Inc.**
4.1 Form of Stockholder Protection Rights Agreement.**
4.2 Form of Certificate of Designation and Terms of Registrant's
Participating Preferred Stock.**
4.3 Form of certificate representing Lanier common stock.**
10.1 Form of Tax Disaffiliation Agreement.**
10.2A Commitment Letter with respect to Credit Agreement.**
10.2B Credit Agreement -- 5 Year Credit Agreement
10.2C Credit Agreement -- 364-Day Credit Agreement.
10.3 Form of Transition Services Agreement.**
10.4 Form of Distribution Agreement (filed as Exhibit 2.1).
10.5 Form of Employee Benefits Compensation and Allocation Agreement.
10.6 Form of Registration Rights Agreement.**
10.7 Form of Stock Incentive Plan.**
10.8 Lanier Worldwide, Inc. Supplemental Retirement Savings Plan.**
10.9 Lanier Worldwide, Inc. Supplemental Executive Retirement Plan.**
10.10 Form of Indemnification Agreement.**
10.11 Form of Employee Stock Purchase Plan.**
10.12 Form of Amended and Restated Key Contributor Incentive Plan.**
10.13 Form of Amended and Restated Long-term Incentive Plan for Key
Employees.**
10.14 Form of Executive Severance Agreement.**
10.15 Pension Equity Plan.**
10.16 Savings Incentive Plan.**
10.17 Form of Lanier Worldwide, Inc. Deferred Compensation Plan For Directors.
10.18 Form of Intellectual Property License Agreement.
12.1 Computation of Ratios of Earnings to Fixed Charges.**
21.1 List of Subsidiaries.
23.1 Consent of Independent Certified Public Accountants.
27.1 Financial Data Schedule.**
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* To be filed by amendment
** Previously filed
<PAGE> 5
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this Amendment No. 4 to the
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized.
LANIER WORLDWIDE, INC.
By /s/ Wesley E. Cantrell
-----------------------
Name: Wesley E. Cantrell
Title: President and Chief
Executive Officer
Dated: October 22, 1999
<PAGE> 6
[HARRIS LOGO]
[HARRIS LOGO]
HARRIS CORPORATION
1025 West NASA Boulevard
Melbourne, Florida 32919
October 25, 1999
Dear Fellow Stockholder:
I am pleased to inform you that the Board of Directors of Harris
Corporation has approved a pro rata distribution to Harris stockholders of
approximately 90% of the outstanding shares of common stock of Lanier Worldwide,
Inc., a worldwide independent provider of office products and document
management solutions, which is currently a subsidiary of Harris. Harris will
retain approximately 10% of the Lanier shares.
The distribution will take place on November 5, 1999. Each Harris
stockholder as of November 1, 1999 will receive one Lanier share for every
Harris share held on that date. The Lanier shares have been approved for listing
on the New York Stock Exchange, subject to official notice of issuance, under
the symbol "LR."
We believe that the distribution will meaningfully enhance value for Harris
stockholders and will give Lanier the financial and operational flexibility to
take advantage of significant growth opportunities in the office products and
document management solutions business. We believe that separating the two
companies will enhance the ability of each of Lanier and Harris to focus on
strategic initiatives and new business opportunities, as well as to improve cost
structures and operating efficiencies and to design equity-based compensation
programs targeted to its own performance. In addition, we expect that the
transition to an independent company will heighten Lanier management's focus,
provide Lanier with greater access to capital, and allow the investment
community to better measure Lanier's performance relative to its peers.
The enclosed Information Statement describes the distribution and provides
important financial and other information about Lanier. Please read it
carefully.
You do not have to take any action to receive your Lanier shares. You will
not be required to pay anything or to surrender your Harris shares. Account
statements reflecting your ownership of Lanier shares will be mailed to record
holders of Harris stock shortly after November 5, 1999. If you are a participant
in Harris' dividend reinvestment program and are entitled to receive a
fractional Lanier share, you will receive a check for its cash value. If you are
not a record holder of Harris stock, your Lanier shares should be credited to
your account with your stockbroker or nominee on or about November 8, 1999.
Following the distribution, you may also request physical stock certificates if
you wish. Information for making that request will be furnished with your
account statement.
Sincerely,
/s/ Phillip W. Farmer
Phillip W. Farmer
Chairman and Chief Executive Officer
<PAGE> 7
Lanier Worldwide, Inc.
2300 Parklake Drive,
N.E.
Atlanta, Georgia
30345-2979
770/496-9500
October 25, 1999
Dear Stockholder:
We are very pleased that you will soon be a stockholder of Lanier
Worldwide, Inc. We are a worldwide independent provider of office products and
document management solutions, together with related services and support.
Lanier is truly a global company. In fact, we have over 1,600 sales and service
centers in over 100 countries around the world, through which we continually
seek to provide "best of breed" products to our customers.
As a subsidiary of Harris Corporation, Lanier has been known for its
customer focused strategy. As an independent company, our highest priority will
continue to be customer satisfaction. We continually train our sales people and
service force on new products, technologies and techniques, and we believe that
this training, coupled with our commitment to viewing business interactions
through the eyes of our customers, will allow us to maintain our coveted
reputation in our industry.
We believe that the separation of our business from the businesses of our
corporate parent, Harris Corporation, will enhance our ability to grow our
businesses aggressively, both internally and through selective acquisitions. For
the first time, we will have the ability to offer our employees incentive
opportunities linked to Lanier's performance as a stand-alone company, which we
believe will aid our efforts to enhance employee performance.
As an independent company, we can more effectively focus on our objectives,
support the capital needs of our company and thus bring value to you as a
stockholder.
The Lanier shares you are receiving have been approved for listing on the
New York Stock Exchange, subject to official notice of issuance, under the
symbol "LR."
Our board, management and employees are excited about our future as an
independent company and we look forward to your support and participation in our
success.
Sincerely,
/s/ Wesley E. Cantrell
Wesley E. Cantrell
President and Chief Executive Officer
LOGO
LOGO
<PAGE> 8
INFORMATION STATEMENT RELATING TO THE SPINOFF OF
LANIER WORLDWIDE, INC.
FROM HARRIS CORPORATION
COMMON STOCK
(PAR VALUE $0.01 PER SHARE)
Harris Corporation is sending you this information statement to describe
the pro rata distribution to Harris stockholders of approximately 90% of the
outstanding common stock of Lanier Worldwide, Inc. In this distribution, you
will receive one share of Lanier common stock, together with an associated
preferred stock purchase right, for every share of Harris common stock that you
hold at the close of business on November 1, 1999. Harris will retain
approximately 10% of Lanier's common stock. See "The Distribution" beginning on
page 14.
Lanier is currently a wholly owned subsidiary of Harris and is a worldwide
independent provider of office products and document management solutions,
related services and support, with over 1,600 sales and service centers in over
100 countries around the world. See "Lanier's Business" beginning on page 38.
The distribution of Lanier shares will be effected at 11:59 p.m., Eastern
Daylight Time, on November 5, 1999. You do not have to take any action to
receive your Lanier shares. You will not be required to pay anything or to
surrender your Harris shares. Harris intends to distribute the Lanier shares by
book entry. The number of Harris shares that you own will not change as a result
of the distribution.
There is no current public trading market for the Lanier shares, although a
"when-issued" trading market may develop prior to completion of the
distribution. The Lanier shares have been approved for listing on the New York
Stock Exchange, subject to official notice of issuance, under the symbol "LR."
See "The Distribution -- Listing and Trading of the Lanier Shares" beginning on
page 16.
------------------------
NO VOTE OF STOCKHOLDERS IS REQUIRED IN CONNECTION WITH THE DISTRIBUTION. WE
ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY OR
YOUR SHARE CERTIFICATES.
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS DESCRIBED IN THIS
INFORMATION STATEMENT BEGINNING ON PAGE 7.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES TO BE ISSUED UNDER THIS
INFORMATION STATEMENT OR DETERMINED IF THIS INFORMATION STATEMENT IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS INFORMATION STATEMENT IS NOT AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY ANY SECURITIES.
THE DATE OF THIS INFORMATION STATEMENT IS OCTOBER 25, 1999.
<PAGE> 9
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
QUESTIONS AND ANSWERS ABOUT THE DISTRIBUTION................ iii
SUMMARY..................................................... 1
RISK FACTORS................................................ 7
INTRODUCTION................................................ 14
THE DISTRIBUTION............................................ 14
RELATIONSHIP BETWEEN HARRIS AND LANIER FOLLOWING THE
DISTRIBUTION.............................................. 19
LANIER WORLDWIDE, INC. AND SUBSIDIARIES HISTORICAL AND PRO
FORMA CONSOLIDATED CAPITALIZATION......................... 22
DIVIDEND POLICIES........................................... 23
LANIER WORLDWIDE, INC. UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS...................................... 24
LANIER WORLDWIDE, INC. SELECTED FINANCIAL DATA.............. 28
RECENT DEVELOPMENTS......................................... 29
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................. 30
LANIER'S BUSINESS........................................... 38
LANIER'S MANAGEMENT......................................... 45
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS............. 57
BENEFICIAL OWNERSHIP OF MANAGEMENT.......................... 58
DESCRIPTION OF LANIER'S CAPITAL STOCK....................... 58
CERTAIN ANTI-TAKEOVER PROVISIONS OF LANIER'S CERTIFICATE OF
INCORPORATION, BYLAWS AND RIGHTS AGREEMENT AND DELAWARE
LAW....................................................... 60
LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS..... 65
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.................... 66
ADDITIONAL INFORMATION...................................... 66
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.......... F-1
LANIER WORLDWIDE, INC. AND SUBSIDIARIES CONSOLIDATED
FINANCIAL STATEMENTS...................................... F-2
</TABLE>
ii
<PAGE> 10
QUESTIONS AND ANSWERS ABOUT THE DISTRIBUTION
The following section answers various questions that you may have with
respect to the pro rata distribution to Harris stockholders of approximately 90%
of the outstanding shares of Lanier common stock. We refer to this distribution
in this document as the "Distribution."
Q: WHY IS HARRIS EFFECTING THE DISTRIBUTION?
A: Harris' board of directors and management believe that the Distribution is
in the best interests of Harris, Lanier and Harris stockholders. Harris' board
of directors and management believe that separating Lanier from the rest of
Harris' businesses will allow both Lanier and Harris to focus on their
respective businesses and provide them with the flexibility to pursue different
strategies and react quickly to changing market environments. Lanier's business
is a distinct business with significant differences from Harris' other
operations with respect to its markets, products, capital needs and plans for
growth. Harris' board of directors and management believe that the Distribution
will enhance the ability of each of Lanier and Harris to focus on strategic
initiatives and new business opportunities, improve cost structures and
operating efficiencies and design equity-based compensation programs targeted to
its own performance. In addition, Harris' board of directors expects that the
transition to an independent company will heighten Lanier management's focus,
provide Lanier with greater access to capital, and allow the investment
community to measure Lanier's performance relative to its peers. For a more
detailed discussion of the reasons for the Distribution, see "The
Distribution -- Reasons for the Distribution" on page 14.
Q: WHY IS HARRIS RETAINING APPROXIMATELY 10% OF THE LANIER SHARES?
A: Harris will retain approximately 10% of the Lanier shares because the
contemplated future sale of these shares will provide Harris with a source of
cash following the Distribution. Harris intends to use this cash to make
acquisitions in the telecommunications equipment industry. See "The
Distribution -- Reasons for Harris' Retention of Lanier Shares" on page 15.
Q: WHEN WILL THE DISTRIBUTION OCCUR?
A: We currently anticipate completing the Distribution on November 5, 1999.
Q: WHAT BUSINESS WILL LANIER CONDUCT FOLLOWING THE DISTRIBUTION?
A: After the Distribution, Lanier will continue operating its current business.
See "Summary -- Lanier's Business" on page 1, "The Distribution -- Results of
the Distribution" beginning on page 15 and "Lanier's Business" beginning on page
38.
Q: WHAT WILL I RECEIVE AS A RESULT OF THE DISTRIBUTION?
A: For every share of Harris common stock that you own of record on November 1,
1999, you will receive one share of Lanier common stock. For example, if you own
123 shares of Harris common stock on November 1, you will receive 123 shares of
Lanier common stock.
Harris currently intends to distribute the Lanier shares by book entry. If
you are a record holder of Harris stock, instead of physical stock certificates,
you will receive from Lanier's transfer agent shortly after November 5, 1999 a
statement of your book entry account for the Lanier shares distributed to you.
Following the Distribution, you may request physical stock certificates if you
wish, and instructions for making that request will be furnished with your
account statement. If you are a participant in Harris' dividend reinvestment
plan and are entitled to receive a fractional Lanier share, you will receive a
check for the cash value of the fractional Lanier share, which may be taxable to
you. If you are not a record holder of Harris stock because such shares are held
on your behalf by your stockbroker or other nominee, your Lanier shares should
be credited to your account with your stockbroker or nominee on or about
November 8, 1999.
Associated with every share of Lanier common stock that you receive will be
one preferred stock purchase right. These rights are similar to the rights
associated with your existing shares of Harris common stock and may have certain
anti-takeover effects similar to Harris' current preferred stock purchase
rights. See "The Distribution -- Manner of Effecting the Distribution" on page
15, "Risk Factors -- Certain Provisions of Lanier's Restated Certificate of
Incorporation Bylaws and Rights Plan and the Tax Disaffiliaton Agreement May
iii
<PAGE> 11
Discourage Takeovers" beginning on page 11 and "Certain Anti-Takeover Provisions
of Lanier's Certificate of Incorporation, Bylaws and Rights Agreement and
Delaware Law" beginning on page 60.
Q: WHAT DO I HAVE TO DO TO RECEIVE MY LANIER SHARES?
A: Nothing. Your Lanier shares will be either reflected in an account statement
that Lanier's transfer agent will send to you shortly after November 5, 1999 or
credited to your account with your broker or nominee on or about November 8,
1999.
Q: WHEN WILL I RECEIVE MY LANIER SHARES?
A: If you hold your Harris shares in your own name, your account statement will
be mailed to you on or about November 5, 1999. You should allow several days for
the mail to reach you.
If you hold your Harris shares through your stockbroker, bank or other
nominee, you are probably not a stockholder of record and your receipt of Lanier
shares depends on your arrangements with the nominee that holds your Harris
shares for you. Harris anticipates that stockbrokers and banks generally will
credit their customers' accounts with Lanier shares on or about November 8,
1999, but you should check with your stockbroker, bank or other nominee. See
"The Distribution -- Manner of Effecting the Distribution" on page 15.
Q: HOW WILL THE DISTRIBUTION AFFECT THE MARKET PRICE OF MY HARRIS SHARES?
A: Following the Distribution, Harris shares will continue to be listed and
traded on the New York Stock Exchange under the symbol "HRS." As a result of the
Distribution, the trading price of Harris shares immediately following the
Distribution will likely be lower than immediately prior to the Distribution.
Until the market has fully analyzed the operations of Harris without the
operations of Lanier, the price of Harris shares may fluctuate significantly.
See "The Distribution -- Listing and Trading of the Lanier Shares" beginning on
page 16.
Q: WHERE WILL MY LANIER SHARES BE TRADED?
A: The Lanier shares have been approved for listing on the New York Stock
Exchange, subject to official notice of issuance, under the symbol "LR." Trading
of the Lanier shares may commence on a when-issued basis after the record date.
See "The Distribution -- Listing and Trading of the Lanier Shares" beginning on
page 16.
Q: HOW WILL THE CASH PAYMENT FOR FRACTIONAL SHARES BE DETERMINED AND PAID?
A: If your account with Harris' dividend reinvestment plan is credited with a
fractional share of Harris stock as of November 1, 1999, you will receive cash
in lieu of the fractional Lanier share that you are entitled to receive. Your
fractional Lanier share will be aggregated with the fractional Lanier shares of
other stockholders and sold in the open market by Harris' distribution agent.
You will receive a check for your share of the net proceeds of such sale. See
"The Distribution -- Manner of Effecting the Distribution" on page 15.
Q: WHAT IF I WANT TO SELL MY HARRIS SHARES OR MY LANIER SHARES?
A: You should consult with your own financial advisors, such as your
stockbroker, bank or tax advisor. Harris does not make recommendations on the
purchase, retention or sale of Harris shares or Lanier shares.
If you do decide to sell any shares, you should make sure your stockbroker,
bank or other nominee understands whether you want to sell your Harris shares or
your Lanier shares, or both. The following information may be helpful in
discussions with your stockbroker, bank or other nominee.
Beginning about November 1, 1999 and continuing through November 5, 1999,
New York Stock Exchange practices should generally allow you to sell your Harris
shares either together with the right to receive the Lanier shares in the
Distribution or without the right to receive the Lanier shares. If you sell your
Harris shares with the right to receive the Lanier shares, you (or your broker
or bank) will be required to deliver to the buyer the Lanier shares you receive
in the Distribution. You should also be able to sell your right to receive the
Lanier shares without selling your Harris shares.
Sales of Harris shares with the right to receive the Lanier shares should
generally settle in the three business day settlement period. Sales of Harris
shares without the right to receive the Lanier shares and sales of the Lanier
iv
<PAGE> 12
shares without Harris shares are expected to settle four business days following
the date account statements for the Lanier shares are mailed. Check with your
stockbroker, bank or other nominee. Beginning about November 8, 1999, you may
only sell your Harris shares and Lanier shares separately. Once again, check
with your stockbroker, bank or other nominee. See "The Distribution -- Listing
and Trading of the Lanier Shares" beginning on Page 16.
Q: HOW WILL THE DISTRIBUTION AFFECT THE DIVIDENDS I CURRENTLY RECEIVE ON MY
HARRIS SHARES?
A: Following the Distribution, Harris intends to pay quarterly dividends at an
initial annual rate expected to be substantially below Harris' current annual
dividend rate of $.96 per share. No determination has been made by Harris' board
of directors with respect to the initial dividend rate that will be paid
following the Distribution. The declaration and payment of dividends is at the
discretion of Harris' board of directors and will be subject to Harris'
financial results and the availability of surplus funds to pay dividends. The
declaration of dividends and the amount thereof will depend on a number of
factors, including Harris' financial condition, capital requirements, results of
operations, future business prospects and other factors Harris' board of
directors may deem relevant. No assurance can be given that Harris will pay any
dividends. See "Dividend Policies" on page 23.
Q: WILL LANIER PAY DIVIDENDS?
A: The declaration and payment of dividends is at the discretion of Lanier's
board of directors and will be subject to Lanier's financial results and the
availability of surplus funds to pay dividends. The amount of quarterly cash
dividends, if any, will depend on a number of factors, including Lanier's
financial condition, capital requirements, results of operations, future
business prospects and other factors Lanier's board of directors may deem
relevant, including restrictions on Lanier's ability to declare and pay
dividends on the Lanier shares contained in the revolving credit facility that
Lanier will enter into in connection with the Distribution. No assurance can be
given that Lanier will pay any dividends. See "Risk Factors -- Uncertainty of
Dividends" on page 11 and "Dividend Policies" on page 23 and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Credit Facility" beginning on page 33.
Q: WILL LANIER HAVE A DIVIDEND REINVESTMENT OR STOCK PURCHASE PLAN?
A: Lanier intends to establish a direct stock purchase and dividend
reinvestment plan that will enable holders to purchase additional Lanier shares
and to reinvest dividends, if any, into additional Lanier shares. See "Dividend
Policies" on page 23.
Q: WILL I HAVE TO PAY TAXES ON THE LANIER SHARES THAT I RECEIVE?
A: Based upon the opinion of Sullivan & Cromwell, special counsel to Harris,
Harris anticipates that the Distribution will be tax-free to Harris stockholders
for U.S. federal income tax purposes, except for any tax payable because of any
cash stockholders may receive in lieu of fractional Lanier shares. (You will be
entitled to receive cash in lieu of a fractional Lanier share only if you are a
participant in Harris' dividend reinvestment plan and your account with such
plan is credited with a fractional share of Harris common stock as of November
1, 1999). In addition, you may have to pay taxes if you sell your Lanier shares.
If you have any questions, please consult your tax advisor. See "Risk
Factors -- Failure to Qualify as a Tax-Free Transaction Could Result in
Substantial Liability" beginning on page 8 and "The Distribution -- Federal
Income Tax Consequences of the Distribution" beginning on page 17.
Q: WILL THERE BE ANY CHANGE IN THE UNITED STATES FEDERAL TAX BASIS OF MY HARRIS
SHARES AS A RESULT OF THE DISTRIBUTION?
A: Yes, your tax basis in your Harris shares will be reduced. If you are the
record holder of your Harris shares, you will receive information with your
account statement that will help you calculate the adjusted tax basis for your
Harris shares, as well as the tax basis for your Lanier shares. See "The
Distribution -- Federal Income Tax Consequences of the Distribution" beginning
on page 17.
v
<PAGE> 13
Q: WHERE CAN I GET MORE INFORMATION?
A: If you have any questions relating to the mechanics of the Distribution and
the delivery of account statements or the trading of Harris or Lanier shares
prior to the Distribution, you can contact the Distribution Agent:
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Ridgefield Park, NJ 07660
(201) 296-4040
For other questions related to the Distribution, Harris or Lanier, please
contact:
Georgeson Shareholder Communications, Inc.
17 State Street
New York, New York 10004
(800) 223-2064
After the Distribution, Lanier stockholders with inquiries relating to the
Distribution or their investment in Lanier should contact:
Lanier Worldwide, Inc.
2300 Parklake Drive, N.E.
Atlanta, Georgia 30345
Attention: Corporate Secretary
(770) 621-1588
After the Distribution, Harris stockholders with inquiries relating to the
Distribution or their investment in Harris should contact:
Harris Corporation
1025 West NASA Boulevard
Melbourne, Florida 32919
Attention: Corporate Secretary
(407) 727-9100
vi
<PAGE> 14
SUMMARY
This summary highlights selected information contained elsewhere in this
document. It is not complete and may not contain all of the information that is
important to you. To better understand the Distribution and Lanier, you should
read this entire document carefully, including the risks described beginning on
page 7 and the consolidated financial statements and the notes thereto beginning
on page F-1.
WHY WE SENT THIS DOCUMENT TO YOU
Harris Corporation ("Harris") sent you this document because you were an
owner of Harris common stock on November 1, 1999. This entitles you to receive a
pro rata distribution of one share of common stock of Lanier Worldwide, Inc.
("Lanier"), which is currently a wholly owned subsidiary of Harris, for every
Harris share you owned on that date. We refer to this distribution in this
document as the "Distribution." No action is required on your part to
participate in the Distribution and you do not have to pay cash or other
consideration to receive your Lanier shares.
This document describes Lanier's business, the relationship between Harris
and Lanier, and how this transaction benefits Harris and its stockholders, and
provides other information to assist you in evaluating the benefits and risks of
holding or disposing of the Lanier shares that you will receive in the
Distribution. You should be aware of certain risks relating to the Distribution
and Lanier's business, which are described in this document beginning on page 7.
LANIER'S BUSINESS
Lanier is a worldwide independent supplier of copiers, facsimiles and other
related automated office imaging equipment. With over 1,600 sales and service
locations in more than 100 countries, Lanier markets these products and related
services, parts and supplies to customers both on a direct sales basis and
through a worldwide network of independent dealers. Lanier provides customers
with a wide array of customized document management solutions including black
and white digital and analog copiers, color copiers, facsimile machines,
multifunction devices, dictation equipment, computer based health care
information management systems, associated parts and supplies, and a variety of
related outsourcing services, including legal support services. Lanier sources
substantially all of these products from a variety of manufacturers, seeking out
the "best-of-breed." Selected products undergo rigorous testing by Lanier, and
upgrades are often recommended to the manufacturers in order to meet Lanier's
demanding standards.
Lanier derives its revenues from three primary sources: (i) sales and
rentals of equipment and related supplies; (ii) service of equipment under
maintenance agreements, consulting, facilities management and other professional
services; and (iii) finance income. Revenues from these three sources in fiscal
year 1999 were $808 million, $623 million and $38 million, respectively.
Lanier's revenues from these three sources in fiscal year 1998 were $722
million, $533 million and $33 million, respectively. Revenues from these three
sources in fiscal year 1997 were $704 million, $466 million and $30 million,
respectively. Lanier's revenues from the sale, servicing and financing of
copiers in fiscal years 1999, 1998 and 1997 was $1,036 million, $884 million and
$826 million, respectively. Lanier's revenues from the sale, servicing and
financing of facsimile machines in fiscal year 1999, 1998 and 1997 was $166
million, $150 million and $157 million, respectively. Lanier's revenues from the
sale, servicing and financing of dictation equipment in fiscal years 1999, 1998
and 1997 was $130 million, $131 million and $137 million, respectively. Lanier's
revenues from the sale, servicing and financing of other office equipment in
fiscal years 1999, 1998 and 1997 was $137 million, $123 million and $80 million,
respectively.
Lanier targets sales of its products to four primary markets: (i)
global/national or "key" accounts; (ii) major accounts; (iii) commercial users;
and (iv) specific vertical industries, such as the health care and legal
industries. Some of Lanier's national account customers include Abbott
Laboratories, Corning, Inc., CountryWide Home Loans, Federal Express, Merck &
Company, Inc., Minnesota Mining & Manufacturing Co. and the National Aeronautics
& Space Administration (NASA). No national account customer represents more than
1% of Lanier's total sales.
1
<PAGE> 15
Lanier's goal is to become the leading global provider of document
management solutions and related services and support. In order to accomplish
this goal, Lanier intends to use the following strategies:
- continue to cultivate its "best of breed" sourcing and distribution
relationships;
- deliver integrated document management solutions to its customers;
- focus on customer satisfaction and retention;
- maintain and develop its effective marketing initiatives;
- attract, retain and incentivize its high caliber employees; and
- continue to add revenue and operating income through selective
acquisitions.
RECENT DEVELOPMENTS
Lanier reported lower revenue and earnings for the first quarter of fiscal
year 2000 compared to the same quarter of the prior fiscal year, primarily due
to the divestiture during the fourth quarter of fiscal year 1999 of Lanier's
direct sales operation in France and its U.S.-based medical transcription
business. Revenue declined to $318 million from $337 million in the fourth
quarter of fiscal year 1999. The strengthening of the dollar relative to
European currencies and pricing pressures associated with the industry
transition from analog technology to digital technology also contributed to
weaker sales.
Net income declined to $9.7 million from $13.5 million in the first quarter
of the prior fiscal year, reflecting the revenue decline as well as pricing
pressures. Cost reduction efforts underway at Lanier reduced overhead costs in
the first quarter to 31.0 percent of revenue. See "Recent Developments" on page
29.
THE DISTRIBUTION
DISTRIBUTING COMPANY....... Harris Corporation, a Delaware corporation.
DISTRIBUTED COMPANY........ Lanier Worldwide, Inc., a Delaware corporation.
PRIMARY PURPOSES OF
DISTRIBUTION............. Harris' board of directors believes that separating
Lanier from the rest of Harris' businesses will
allow both Lanier and Harris to focus on their
respective businesses and provide them with the
flexibility to pursue different strategies and
react quickly to changing market environments.
Lanier's business is a distinct business with
significant differences from Harris' other
operations with respect to its markets, products,
capital needs and plans for growth. Harris' board
of directors believes that separating the two
companies will enhance the ability of each of
Lanier and Harris to focus on strategic initiatives
and new business opportunities, improve cost
structures and operating efficiencies and design
equity-based compensation programs targeted to its
own performance. In addition, Harris' board of
directors believes that Lanier will have greater
access to capital as an independent company and
that the investment community will be better able
to measure Lanier's performance relative to its
peers. For a more detailed discussion of the
reasons for the Distribution, see "The
Distribution -- Reasons for the Distribution" on
page 14 and "-- Reasons for Harris' Retention of
Lanier Shares" on page 15.
LANIER SHARES TO BE
DISTRIBUTED................ We will distribute to Harris stockholders
approximately 79,150,272 shares of common stock,
par value $.01 per share, of Lanier (together with
the
2
<PAGE> 16
associated preferred stock purchase rights, the
"Lanier Shares"), based on approximately 79,150,272
Harris shares outstanding on October 15, 1999. The
Lanier Shares to be distributed will constitute
approximately 90% of the Lanier Shares outstanding
after the Distribution.
LANIER SHARES TO BE
RETAINED BY HARRIS......... Harris will retain approximately 8,794,474 of the
Lanier Shares, which represents approximately 10%
of the Lanier Shares outstanding following the
Distribution and Lanier will grant Harris certain
rights to cause Lanier to register these Lanier
Shares for sale under the securities laws. Harris
will retain such Lanier Shares because the
contemplated future sale of these shares will
provide Harris with a source of cash following the
Distribution. Harris has agreed not to sell its
Lanier Shares for six months following the
Distribution, but intends to sell its Lanier Shares
within two years following the Distribution. In
addition, Harris has agreed to vote its Lanier
Shares in proportion to votes cast by other Lanier
stockholders. See "Risk Factors -- The Possibility
of Substantial Sales May Have an Adverse Impact on
the Trading Price of the Lanier Shares" on page 8,
"The Distribution -- Reasons for Harris' Retention
of Lanier Shares" on page 15 and "The
Distribution -- Listing and Trading of the Lanier
Shares" beginning on page 16.
TRADING MARKET AND
SYMBOL..................... There is no current trading market for the Lanier
Shares, although a when-issued market may develop
prior to completion of the Distribution. The Lanier
Shares have been approved for listing on the New
York Stock Exchange, subject to official notice of
issuance, under the symbol "LR."
RECORD DATE................ If you owned Harris shares at the close of business
on November 1, 1999 (the "Record Date"), then you
will receive Lanier Shares in the Distribution.
DISTRIBUTION DATE.......... The Distribution will occur at 11:59 p.m., Eastern
Daylight Time, on November 5, 1999 (the
"Distribution Date"). If you are a record holder of
Harris stock, instead of physical stock
certificates you will receive from Lanier's
transfer agent shortly after November 5, 1999 a
statement of your book entry account for the Lanier
Shares distributed to you. Following the
Distribution, you may request physical stock
certificates if you wish, and instructions for
making that request will be furnished with your
account statement. If you are not a record holder
of Harris stock because such shares are held on
your behalf by your stockbroker or other nominee,
your Lanier Shares should be credited to your
account with your stockbroker or other nominee on
or about November 8, 1999.
DISTRIBUTION RATIO......... You will receive one Lanier Share for every Harris
share you held on the Record Date.
DISTRIBUTION AGENT......... ChaseMellon Shareholder Services, L.L.C.
TRANSFER AGENT AND
REGISTRAR FOR THE LANIER
SHARES................... ChaseMellon Shareholder Services, L.L.C.
FRACTIONAL SHARE
INTERESTS.................. Fractional Lanier Shares will not be issued. You
will be entitled to receive a fractional Lanier
Share only if you are a participant in Harris'
dividend reinvestment plan and your account with
such plan is credited with a fractional share of
Harris common stock as of the Record Date. Your
fractional Lanier Share will be aggregated with the
fractional Lanier Shares of other stockholders and
sold in the open market by Harris' Distribution
3
<PAGE> 17
Agent. You will receive a check for your pro rata
share of the net proceeds of such sale. See "The
Distribution -- Manner of Effecting the
Distribution" on page 15.
TAX CONSEQUENCES........... Sullivan & Cromwell, special counsel to Harris,
will render an opinion to Harris that the
Distribution will be tax-free to you for U.S.
federal income tax purposes except to the extent of
any cash you receive in lieu of fractional Lanier
Shares. See "Risk Factors -- Failure to Qualify as
a Tax-Free Transaction Could Result in Substantial
Liability" beginning on page 8 and "The
Distribution -- Federal Income Tax Consequences of
the Distribution" beginning on page 17.
RELATIONSHIP WITH HARRIS
AFTER THE DISTRIBUTION..... Immediately prior to the Distribution Date, Harris
and Lanier will enter into agreements to transfer
to Lanier selected assets and liabilities of Harris
related to Lanier's business, to transfer to Harris
selected assets and liabilities of Lanier related
to Harris' business, to arrange for the continued
provision of certain services by each company to
the other, to make arrangements for the
Distribution and to define the ongoing
relationships between Harris and Lanier. In
addition, Lanier will grant Harris registration
rights with respect to the Lanier Shares which
Harris will continue to own. Harris and Lanier will
also enter into an agreement providing for the
sharing of taxes incurred by them prior to the
Distribution and providing certain indemnification
rights with respect to tax matters. After the
Distribution, Harris and Lanier will not have any
other material contracts or other arrangements
between them other than arrangements made on an
arm's length basis. See "Relationship Between
Harris and Lanier Following the Distribution"
beginning on page 19.
BOARD OF DIRECTORS OF
LANIER..................... After the Distribution, Lanier will have an initial
board of seven directors, classified into three
classes. After their initial term, directors of
each class will serve three-year terms. See
"Lanier's Management" beginning on page 45.
MANAGEMENT OF LANIER....... Lanier's current executive officers will continue
to serve as executive officers of Lanier after the
Distribution. See "Lanier's Management" beginning
on page 45.
CREDIT FACILITY............ Prior to the Distribution, Lanier will incur debt
under a credit facility which Lanier has entered
into with certain major financial institutions (the
"Credit Facility") in connection with a cash
payment of approximately $546 million by Lanier to
Harris immediately prior to the Distribution. As a
result of this incurrence of debt and the
assumption by Lanier of certain of Harris'
indebtedness relating to Lanier's business, Lanier
will have approximately $700 million of
indebtedness net of cash on the Distribution Date.
The terms of the Credit Facility include customary
affirmative and negative covenants that, among
other things, require Lanier to satisfy certain
financial tests and maintain certain financial
ratios, and limit Lanier's ability to declare and
pay dividends on the Lanier Shares. Lanier may also
incur additional indebtedness from time to time,
for general corporate purposes, including working
capital requirements, capital expenditures and
future acquisitions. See "Management's Discussion
and Analysis of Financial Condition and Results of
Operations -- Credit Facility" beginning on page
33.
4
<PAGE> 18
POST-DISTRIBUTION DIVIDEND
POLICIES................. Lanier. Following the Distribution, Lanier's
dividend policy will be set by Lanier's board of
directors. The declaration and payment of dividends
is at the discretion of Lanier's board of directors
and will be subject to Lanier's financial results
and the availability of surplus funds to pay
dividends. The amount of quarterly cash dividends,
if any, will depend on a number of factors,
including Lanier's financial condition, capital
requirements, results of operations, future
business prospects and other factors Lanier's board
of directors may deem relevant, including
restrictions on Lanier's ability to declare and pay
dividends and distributions on the Lanier Shares
contained in the Credit Facility. No assurance can
be given that Lanier will pay any dividends. See
"Risk Factors -- Uncertainty of Dividends" on page
11 and "Dividend Policies" on page 23 and
"Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Credit
Facility" on beginning page 33.
Harris. Following the Distribution, Harris intends
to pay quarterly dividends at an initial annual
rate expected to be substantially below Harris'
current annual dividend rate of $.96 per share. No
determination has been made by Harris' board of
directors with respect to the initial dividend rate
that will be paid following the Distribution. The
payment and level of dividends is at the discretion
of Harris' board of directors and will be subject
to Harris' financial results and the availability
of surplus funds to pay dividends. The declaration
of dividends and the amount thereof will depend on
a number of factors, including Harris' financial
condition, capital requirements, results of
operations, future business prospects and other
factors Harris' board of directors may deem
relevant. No assurance can be given that Harris
will pay any dividends. See "Dividend Policies" on
page 23.
CERTAIN ANTI-TAKEOVER
EFFECTS.................... Certain provisions of Lanier's restated certificate
of incorporation and bylaws may have the effect of
making the acquisition of control of Lanier in a
transaction not approved by Lanier's board of
directors more difficult. The stockholder
protection rights agreement that Lanier will enter
into in connection with the Distribution also would
make such a transaction more difficult. Moreover,
certain provisions of the agreement providing for
certain tax disaffiliation and other tax-related
matters that Lanier will enter into in connection
with the Distribution could discourage potential
acquisition proposals. See "Risk Factors -- Certain
Provisions of Lanier's Restated Certificate of
Incorporation, Bylaws and Rights Plan and the Tax
Disaffiliation Agreement May Discourage Takeovers"
beginning on page 11 and "Certain Anti-Takeover
Provisions of Lanier's Certificate of
Incorporation, Bylaws and Rights Agreement and
Delaware Law" beginning on page 60.
RISK FACTORS............... You should review the risks relating to the
Distribution and Lanier's business described in
"Risk Factors" beginning on page 7.
5
<PAGE> 19
LANIER WORLDWIDE, INC. AND SUBSIDIARIES
SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
The summary historical and pro forma consolidated financial data of Lanier
set forth below is qualified in its entirety by, and should be read in
conjunction with, the Consolidated Financial Statements of Lanier, including the
Notes thereto, and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included elsewhere in this document. The income
statement data for each of the three fiscal years ended July 2, 1999 and the
balance sheet data as of July 2, 1999 and July 3, 1998 are derived from, and are
qualified by reference to, the consolidated financial statements included
elsewhere in this document that have been audited by Ernst & Young LLP, Lanier's
independent certified public accountants.
The summary pro forma consolidated financial data reflect adjustments to
the historical consolidated balance sheet of Lanier as if the Distribution had
occurred on July 2, 1999 and to the historical consolidated income statement of
Lanier as if the Distribution had occurred on July 4, 1998. The historical and
pro forma consolidated financial statements of Lanier do not necessarily reflect
the results of operations or financial position that Lanier would have had if
Lanier had been a separate, independent company for the periods indicated.
<TABLE>
<CAPTION>
HISTORICAL
------------------------------------------------------------------------------
FISCAL YEAR ENDED
------------------------------------------------------------------------------
PRO FORMA (A)
JUNE 30, JUNE 30, JUNE 30, JULY 3, JULY 2, JULY 2,
1995 1996 1997 1998 1999 1999
---------- ---------- ---------- ---------- ---------- -------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue from sales,
rentals and
services............. $1,023,544 $1,115,962 $1,170,014 $1,254,777 $1,430,488 $1,430,488
Gross margin............ 414,101 448,075 488,267 495,908 533,111 533,111
Income before income
taxes................ 82,747 90,603 101,907 99,401 111,270 67,422
Income taxes............ 30,454 33,331 38,208 36,604 40,000 23,338
Net income.............. 52,293 57,272 63,699 62,797 71,270 44,084
PRO FORMA INCOME PER
SHARE................... $ 0.50(B)
BALANCE SHEET DATA (END OF
PERIOD):
Total assets............ $1,011,404 $1,056,814 $1,075,307 $1,123,296 $1,337,708 $1,143,578
Long-term debt.......... 4,192 4,103 3,990 3,660 4,622 545,616
Shareholder equity...... 635,113 689,240 750,157 803,657 882,738 147,614
</TABLE>
- ---------------
(A) The pro forma consolidated financial data reflect the allocation of
additional debt and related interest expense, pro forma income adjustments,
forgiveness of intercompany loans and a cash payment to be made by Lanier to
Harris immediately prior to the Distribution. The aggregate amount of such
cash payment will be approximately $546 million, which is the sum of: (i)
$700 million; plus (ii) cash and cash equivalents of Lanier as of October 1,
1999; less (iii) the amount of indebtedness for borrowed money of Lanier as
of such date; and less (iv) amounts owed by Lanier under Lanier's European
asset securitization facility as of such date. Using financial information
as of July 2, 1999, the amount of the cash payment would have been
approximately $541 million. See "Lanier Worldwide, Inc. Unaudited Pro Forma
Consolidated Financial Statements" beginning on page 24 and the Notes
thereto. Pro forma results do not reflect elimination of Harris' charge of
$25.0 million and inclusion of pro forma expenses of $7.0 million.
(B) Pro forma income per share for the fiscal year ended July 2, 1999 is
computed based on 88,857,000 shares, which represents the number of Lanier
Shares which would have been distributed in the Distribution if it had
occurred on July 2, 1999 based on the number of Harris shares outstanding as
of such date, the retention of Lanier Shares by Harris and the conversion of
performance share awards.
6
<PAGE> 20
RISK FACTORS
This document contains forward-looking statements that reflect Lanier's
current assumptions and estimates of future performance and economic conditions.
Harris and Lanier may make these statements directly in this document or
incorporate such statements into this document by reference to other documents.
Harris and Lanier may also include statements pertaining to periods following
the Distribution. You can find many of these statements by looking for words
such as "believes," "expects," "anticipates," "estimates" or similar
expressions. Any forward-looking statements are subject to risks and
uncertainties that may cause actual results and future trends to differ
materially from those projected, stated, or implied by the forward-looking
statements.
Lanier's results and the accuracy of the forward-looking statements could
be affected by, among other things, general economic conditions in the markets
in which Lanier operates; economic developments that have a particularly adverse
effect on one or more of the markets served by Lanier; the ability to execute
management's internal operating plans; stability of key markets for office
products and document management solutions; fluctuation in foreign currency
exchange rates and the effectiveness of Lanier's currency hedging program;
worldwide demand and product and service pricing for office products and
document management solutions; and the other risk factors discussed below.
Lanier disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events, or otherwise.
In addition to the information contained elsewhere in this document, you
should carefully read the following risk factors related to the Distribution and
to Lanier.
RISKS RELATING TO THE DISTRIBUTION
THERE HAS NOT BEEN ANY PRIOR TRADING MARKET FOR THE LANIER SHARES
There is no current trading market for the Lanier Shares, although a
when-issued trading market may develop prior to completion of the Distribution.
The Lanier Shares have been approved for listing on the New York Stock Exchange,
subject to official notice of issuance, under the symbol "LR." See "The
Distribution -- Listing and Trading of the Lanier Shares" beginning on page 16.
There can be no assurance as to whether the Lanier Shares will be actively
traded or as to the prices at which the Lanier Shares will trade. Some of the
Harris stockholders who receive Lanier Shares may decide that they do not want
shares in an office products and document management solutions company, and may
sell their Lanier Shares following the Distribution. This may delay the
development of an orderly trading market in the Lanier Shares for a period of
time following the Distribution. Until the Lanier Shares are fully distributed
and an orderly market develops, the prices at which the Lanier Shares trade may
fluctuate significantly and may be lower or higher than the price that would be
expected for a fully distributed issue. Prices for Lanier Shares will be
determined in the marketplace and may be influenced by many factors, including
the depth and liquidity of the market for the shares, Lanier's results of
operations, what investors think of Lanier and the office products and document
management solutions industry, the amount of dividends that Lanier pays, changes
in economic conditions in the office products and document management solutions
industry and general economic and market conditions. In addition, the stock
market often experiences significant price fluctuations that are unrelated to
the operating performance of the specific companies whose stock is traded.
Market fluctuations could have a material adverse impact on the trading price of
the Lanier Shares. See "The Distribution -- Listing and Trading of the Lanier
Shares" beginning on page 16.
THE DISTRIBUTION MAY CAUSE FLUCTUATIONS IN TRADING PRICES OF HARRIS COMMON
STOCK
Following the Distribution, Harris common stock will continue to be listed
and traded on the New York Stock Exchange under the symbol "HRS." As a result of
the Distribution, the trading price of Harris common stock immediately following
the Distribution will likely be lower than the trading price of Harris common
stock immediately prior to the Distribution. The combined trading prices of
Harris common stock and the Lanier Shares after the Distribution may be less
than, equal to or greater than the trading prices of Harris common stock
immediately prior to the Distribution. Until the market has fully analyzed the
operations of Harris without the
7
<PAGE> 21
operations of Lanier, the prices at which Harris common stock trades may
fluctuate significantly. In addition, the stock market often experiences
significant price fluctuations that are unrelated to the operating performance
of the specific companies whose stock is traded. Market fluctuations could have
a material adverse effect on the trading price of Harris common stock. See "The
Distribution -- Listing and Trading of the Lanier Shares" beginning on page 16.
THE POSSIBILITY OF SUBSTANTIAL SALES MAY HAVE AN ADVERSE IMPACT ON THE TRADING
PRICE OF THE LANIER SHARES
Based on the number of shares of Harris common stock outstanding on October
15, 1999, Harris will distribute to its stockholders a total of approximately
79,150,272 Lanier Shares. Under the United States federal securities laws,
almost all of these shares may be resold immediately in the public market,
except for Lanier Shares held by affiliates of Lanier. Lanier cannot predict
whether stockholders will resell large numbers of Lanier Shares in the public
market following the Distribution or how quickly they may resell these Lanier
Shares. See "The Distribution -- Listing and Trading of the Lanier Shares"
beginning on page 16.
Harris will retain approximately 10% of the outstanding Lanier Shares and
Lanier will grant Harris certain rights entitling Harris to cause Lanier to
register its Lanier Shares under the securities laws. Harris has agreed not to
sell its Lanier Shares for six months following the Distribution, but intends to
sell these shares within two years after the Distribution. If Harris or Lanier
stockholders sell large numbers of Lanier Shares over a short period of time, or
if investors anticipate large sales of Lanier Shares over a short period of
time, this could adversely affect the trading price of the Lanier Shares. See
"The Distribution -- Listing and Trading of the Lanier Shares" beginning on page
16.
FAILURE TO QUALIFY AS A TAX-FREE TRANSACTION COULD RESULT IN SUBSTANTIAL
LIABILITY
Harris and Lanier intend for the Distribution generally to be tax-free for
federal income tax purposes. In connection with the Distribution, Sullivan &
Cromwell, special counsel to Harris, will render an opinion that the
Distribution will be tax-free to you for federal income tax purposes except to
the extent of any cash you receive in lieu of fractional Lanier Shares. This
opinion of counsel will not be binding on the Internal Revenue Service and, as a
result, we cannot assure you that the Distribution will qualify as a tax-free
transaction. Additionally, even though the Distribution is tax-free to Harris
stockholders, it is possible that the Distribution could be rendered taxable to
Harris as a result of a subsequent acquisition of Harris or Lanier.
If the Distribution were not to qualify for tax-free treatment, then, in
general, a substantial corporate tax would be payable by the consolidated group
of which Harris is the common parent based upon the difference between (1) the
aggregate fair market value of the Lanier Shares distributed in the Distribution
and (2) Harris' adjusted basis in the Lanier Shares. The corporate level tax
would be payable by Harris. However, under certain circumstances, Lanier has
agreed to indemnify Harris for all or a portion of this tax liability. See
"Relationship Between Harris and Lanier Following the Distribution -- Tax
Disaffiliation Agreement" beginning on page 20. This indemnification obligation,
if triggered, would have a material adverse effect on the results of operations
and financial position of Lanier. In addition, under the consolidated return
regulations, each member of Harris' consolidated group (including Lanier) is
severally liable for such tax liability.
Furthermore, if the Internal Revenue Service determines that the
Distribution does not qualify as tax-free for any reason other than a
post-Distribution acquisition of Harris or Lanier, each Harris stockholder who
receives Lanier Shares in the Distribution would generally be taxed as if he or
she received a dividend equal to the fair market value of his or her Lanier
Shares.
Harris would also incur a substantial corporate tax liability under Section
355(e) of the Internal Revenue Code of 1986, as amended (the "Code"), if Harris
or Lanier were to be acquired by a third party within two years after the
Distribution and Harris fails to prove that the subsequent acquisition of Harris
or Lanier and the Distribution were not made pursuant to a plan or a series of
related transactions. Lanier would be obligated to indemnify Harris for all or a
portion of this substantial corporate tax liability under the Tax Disaffiliation
Agreement under certain circumstances. This indemnification obligation would
have a material adverse effect on the results of operations and financial
position of Lanier. However, Harris stockholders would not recognize gain
8
<PAGE> 22
or loss under Section 355(e) of the Code solely because either Harris or Lanier
is acquired by a third party after the Distribution. See "The
Distribution -- Federal Income Tax Consequences of the Distribution" beginning
on page 17 and "Relationship Between Harris and Lanier Following the
Distribution -- Tax Disaffiliation Agreement" on page 20.
RISKS RELATING TO LANIER
LANIER HAS NO RECENT OPERATING HISTORY AS AN INDEPENDENT PUBLIC COMPANY
Lanier does not have a recent operating history as an independent public
company and since 1983 has relied on Harris for various financial,
administrative and managerial expertise in conducting its operations. Following
the Distribution, Lanier will maintain its own credit and banking relationships
and perform its own financial and investor relations functions. While Lanier has
been profitable as a subsidiary of Harris, there can be no assurance that as an
independent company profits will continue at the same level, if at all.
Additionally, there can be no assurance that Lanier will be able to put in place
successfully the financial, administrative and managerial structure necessary to
operate as an independent public company, or that the development of such
structure will not require a significant amount of management's time and other
resources.
HISTORICAL FINANCIAL INFORMATION MAY BE OF LIMITED RELEVANCE
The historical financial information included in this document does not
reflect the results of operations, financial position and cash flows of Lanier
in the future or the results of operations, financial position and cash flows of
Lanier had it operated as a separate stand-alone entity during the periods
presented. The financial information included herein does not reflect any
changes that may occur in the funding and operations of Lanier as a result of
the Distribution.
LANIER'S CREDIT FACILITY AND OTHER INDEBTEDNESS MAY RESTRICT CERTAIN
ACTIVITIES
Prior to the Distribution, Lanier will incur debt under the Credit Facility
in connection with a cash payment by Lanier to Harris immediately prior to the
Distribution and for general working capital purposes. The amount of such cash
payment is approximately $546 million, and was calculated based on the formula
described under "Relationship between Harris and Lanier Following the
Distribution -- Distribution Agreement" on page 19. Lanier will incur debt under
the Credit Facility of approximately the same amount. In addition to the debt to
be incurred under the Credit Facility, Lanier will assume or retain certain
indebtedness relating to Lanier's business. As a result of the incurrence of
debt under the Credit Facility and the assumption or retention by Lanier of this
indebtedness, Lanier will have approximately $700 million of indebtedness net of
cash on the Distribution Date. The terms of the Credit Facility include
customary affirmative and negative covenants that, among other things, require
Lanier to satisfy certain financial tests and maintain certain financial ratios,
and limit Lanier's ability to declare and pay dividends on the Lanier Shares.
Lanier may also incur additional indebtedness from time to time for general
corporate purposes, including working capital requirements, capital expenditures
and future acquisitions. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Credit Facility" beginning on page 33.
ADVERSE ECONOMIC CONDITIONS COULD AFFECT LANIER'S ABILITY TO SERVICE DEBT
Lanier's ability to service its indebtedness will depend on its future
operating performance, which will be affected by prevailing economic conditions
and financial and other factors, certain of which Lanier cannot control. While
Lanier believes that future operating cash flow, together with financing
arrangements, will be sufficient to finance current operating requirements,
Lanier's leverage and debt service requirements may make Lanier more vulnerable
to economic downturns. If Lanier could not service its indebtedness, it would be
forced to pursue one or more alternative strategies such as reducing its capital
expenditures, selling assets, restructuring or refinancing its indebtedness or
seeking additional equity capital (which may substantially dilute the ownership
interest of holders of Lanier Shares). There can be no assurance that Lanier can
effect any of these strategies on
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satisfactory terms, if at all. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources" on page 33.
CHANGES IN LANIER'S CREDIT STANDING COULD REDUCE LANIER'S ABILITY TO FINANCE
CUSTOMER PURCHASES
A portion of Lanier's operating income arises from the financing of its
customers' purchases of Lanier products. On average, 46% of Lanier's aggregate
sales in the United States, Puerto Rico, Canada and Australia are financed
through leases that typically have a term of 3 years. In Europe, 16% of Lanier's
sales derive from rental arrangements that differ from leases primarily because
customers may terminate the rental agreement more quickly and easily. Lanier's
ability to provide financing at competitive rates and realize operating income
is highly dependent upon its own costs of borrowing, which in turn depends upon
Lanier's credit standing. Significant changes in such standing could reduce the
profitability of Lanier's financing business and/or make Lanier's financing less
attractive to customers. Lanier cannot be certain that it can maintain credit
standing sufficient to realize profits on the portion of revenues derived from
financing arrangements.
LANIER OPERATES IN HIGHLY COMPETITIVE MARKETS
Lanier's competitors include the distribution units of large office
equipment manufacturers and independent distributors, as well as office
superstores and consumer electronics chains. As digital and other new technology
develops, Lanier may find itself competing with new distribution channels,
including computer distributors and value added resellers, for products
containing new technology. While Lanier is a significant distributor in the
office products and document management solutions market, certain competitors,
principally the distribution units of large office equipment manufacturers, may
have greater total financial, purchasing and/or sourcing power than Lanier.
Lanier believes that the principal competitive factors in the office products
and document management solutions market are price and product capabilities;
quality and speed of post-sales service support; availability of equipment,
parts and supplies; speed of delivery; financing terms; and availability of
financing, leasing or rental programs. See "Lanier's Business -- Lanier Products
and Services" beginning on page 39 and "-- Competition" on page 44.
LANIER'S SUCCESS WILL DEPEND ON ITS ABILITY TO RESPOND TO TECHNOLOGICAL
DEVELOPMENTS
The document imaging and management industry is undergoing an evolution in
product, moving toward digital technology in a multi-functional office
environment. Lanier's success will partly depend on its ability to respond to
this rapidly changing environment. There can be no assurance that Lanier will be
able to anticipate which products or technologies will gain market acceptance or
that, even if Lanier does correctly anticipate market demand, Lanier's suppliers
will be willing or able to supply such products to Lanier at competitive prices.
Further, there can be no assurance that Lanier will be able to obtain any
manufacturer's authorization necessary to market any newly developed equipment.
Additionally, new products containing new technology may be sold through other
channels of distribution. While it is possible that technological advancements,
including the lowered per unit cost that often accompanies technological
improvements, may enhance unit sales, this trend may reduce Lanier's sales
revenues, and reliability improvements may result in reduced service revenues.
Lanier will also incur increased expenses for the training of its sales and
service personnel to familiarize them with such new technologies. See "Lanier's
Business -- Industry Overview" beginning on page 38.
LANIER IS DEPENDENT ON OUTSIDE SUPPLIERS
Lanier relies on outside suppliers to manufacture the products that it
distributes, including Ricoh, Toshiba, Canon, Sharp and Okidata. Although Lanier
has long-term relationships with its suppliers, there can be no assurance that
products from Lanier's suppliers will continue to be available in the future.
Although Lanier has no reason to believe that access to current sources of
products will become restricted, loss of such access could have a material
adverse effect on Lanier's business, financial condition and results of
operations. See "Lanier's Business -- Suppliers" on page 44.
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LANIER IS DEPENDENT ON CERTAIN KEY PERSONNEL
Lanier's success depends to a significant extent on the continued service
of certain key management personnel. The loss or interruption of the services of
Lanier's senior management personnel or the inability to attract and retain
other qualified management, sales, marketing and technical employees could also
have an adverse effect on Lanier. Lanier intends to use a variety of incentive
plans to attract and retain key management personnel, including a stock
incentive plan, annual bonus plans, a pension plan and a 401(k) plan. See
"Lanier's Management" beginning on page 45.
LANIER IS SUBJECT TO RISKS RELATED TO INTERNATIONAL OPERATIONS
Lanier operates a multinational business and, accordingly, is subject to
risks inherent in international operations. Non-U.S. operations generated
approximately 39.2% of Lanier's fiscal year 1999 revenues and approximately
29.2% of Lanier's fiscal 1998 revenues. Due to the significant amount of
non-U.S. revenues, fluctuations in the value of foreign currencies relative to
the U.S. dollar could increase the volatility of Lanier's U.S.
dollar-denominated operating results. Lanier's non-U.S. operations are also
subject to political, economic and other risks inherent in operating in
countries outside the United States, including possible adverse government
regulation, imposition of import and export duties and quotas, currency
restrictions, price controls, potentially burdensome taxation and/or other
restrictive government actions. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Market Risk" on page 35.
LANIER IS SUBJECT TO RISKS RELATED TO FOREIGN CURRENCIES
Lanier purchases and sells a significant portion of its products using
currencies other than U.S. dollars. Approximately 39.5% of Lanier's fiscal year
1999 and 28.4% of Lanier's fiscal year 1998 cost of goods sold were denominated
in foreign currencies. Approximately 36.9% of Lanier's fiscal year 1999 and
25.8% of Lanier's fiscal year 1998 revenues were denominated in foreign
currencies. Due to the significant portion of products purchased and sold by
Lanier in foreign currencies, fluctuations in the value of foreign currencies
relative to the U.S. dollar could have a material adverse effect on Lanier's
U.S. dollar-denominated operating results. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Impact of Foreign
Exchange" on page 34.
UNCERTAINTY OF DIVIDENDS
The payment of dividends is at the discretion of Lanier's board of
directors and will be subject to Lanier's financial results, the availability of
surplus funds to pay dividends and restrictions under the Credit Facility. No
assurance can be given that Lanier will pay any dividends. See "Dividend
Policies" on page 23 and 'Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Credit Facility" beginning on page 33.
CERTAIN PROVISIONS OF LANIER'S RESTATED CERTIFICATE OF INCORPORATION, BYLAWS
AND RIGHTS PLAN AND THE TAX DISAFFILIATION AGREEMENT MAY DISCOURAGE TAKEOVERS
Lanier's restated certificate of incorporation and bylaws contain
provisions that may make more difficult or expensive or that may discourage a
tender offer, change in control or takeover attempt that is opposed by Lanier's
board of directors. In particular, Lanier's restated certificate of
incorporation and bylaws:
(1) classify Lanier's board of directors into three groups, so that
stockholders elect only one-third of the board each year;
(2) permit stockholders to remove directors only for cause and only by
the affirmative vote of at least 80% of Lanier's voting shares;
(3) permit a special stockholders' meeting to be called only by a
majority of the board of directors;
(4) do not permit stockholders to take action except at an annual or
special meeting of stockholders;
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(5) require stockholders to give Lanier advance notice to nominate
candidates for election to Lanier's board of directors or to make
stockholder proposals at a stockholders' meeting;
(6) permit Lanier's board of directors to issue, without stockholder
approval, preferred stock with such terms as the board may determine; and
(7) require the vote of the holders of at least 80% of Lanier's voting
shares for stockholder amendments to Lanier's bylaws.
The preferred stock purchase rights attached to the Lanier Shares would, in
effect, prevent a person or group from acquiring more than 15% of the total
number of Lanier Shares outstanding at anytime after the Distribution without
approval from Lanier's board of directors. In addition, Delaware law generally
restricts mergers and other business combinations between Lanier and any holder
of 15% or more of the Lanier Shares, unless the transaction or the 15%
acquisition is approved in advance by Lanier's board of directors. See
"Description of Lanier's Capital Stock" beginning on page 58 and "Certain
Anti-Takeover Provisions of Lanier's Certificate of Incorporation, Bylaws and
Rights Agreement and Delaware Law" beginning on page 60.
These provisions of Lanier's restated certificate of incorporation and
bylaws, Delaware law and the preferred stock purchase rights could discourage
potential acquisition proposals and could delay or prevent a change in control
of Lanier, even though a majority of Lanier's stockholders may consider such
proposals, if effected, desirable. Such provisions could also make it more
difficult for third parties to remove and replace the members of Lanier's board
of directors. Moreover, these provisions could diminish the opportunities for
stockholders to participate in certain tender offers, including tender offers at
prices above the then-current market value of the Lanier Shares, and may also
inhibit increases in the trading price of the Lanier Shares that could result
from takeover attempts or speculation.
In connection with the Distribution, Lanier has agreed to indemnify Harris
for all taxes and liabilities incurred solely because (1) Lanier breaches a
representation or covenant given to Sullivan & Cromwell in connection with
rendering its tax opinion, which contributes to an Internal Revenue Service
determination that the Distribution was not tax-free or (2) Lanier or an
affiliate's post-Distribution action or omission contributes to an Internal
Revenue Service determination that the Distribution was not tax-free. Unless
Harris effectively rebuts the presumption that a change in control transaction
involving Lanier or disposition of Lanier occurring prior to the second
anniversary of the Distribution Date is pursuant to the same plan or series of
related transactions as the Distribution, the Internal Revenue Service might
determine that the Distribution was not tax-free, giving rise to Lanier's
indemnification obligation. These provisions of the Tax Disaffiliation Agreement
may have the effect of discouraging or preventing an acquisition of Lanier or a
disposition of Lanier's businesses, which may in turn depress the market price
for the Lanier Shares. See "Relationship Between Harris and Lanier Following the
Distribution -- Tax Disaffiliation Agreement" on page 20.
LANIER IS SUBJECT TO RISKS OF SIGNIFICANT EXPENSE AND BUSINESS DISRUPTION DUE
TO YEAR 2000 PROBLEMS
Many currently installed computer systems and software products are coded
to accept only two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish 21st century dates from
20th century dates. As a result, prior to January 1, 2000, computer systems
and/or software used by many companies (including Lanier) will need to be
upgraded to comply with such "Year 2000" requirements. Significant uncertainty
exists in the software industry concerning the potential consequences of the
Year 2000 problem. Although Lanier has determined that it needs to replace or
modify several of its software systems and is in the process of replacing or
outsourcing many of its time sensitive software systems, there can be no
assurance that the costs of these programs will not be significantly greater
than expected, that compliance will be achieved in a timely manner, or that
Lanier's suppliers, customers or other third parties will bring their systems
into Year 2000 compliance in a timely manner. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Impact of Year
2000" beginning on page 35.
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EURO CONVERSION COULD ADVERSELY IMPACT LANIER'S SYSTEMS
On January 1, 1999, certain member nations of the European Economic and
Monetary Union ("EMU") adopted a common currency, the Euro. For a three-year
transition period, both the Euro and the individual countries' currencies will
remain in circulation. After January 1, 2002, the Euro will represent the sole
legal tender for EMU countries. The adoption of the Euro affects a multitude of
financial systems and business applications, as EMU countries begin to conduct
commerce in the Euro and in their existing national currencies.
For the fiscal year ended July 2, 1999, Lanier derived 20.7% of its
revenues from EMU countries. Lanier is currently addressing Euro-related issues
and their impact on Lanier's information systems, currency exchange rate risk,
taxation, contracts, competition and pricing. Action plans being implemented are
expected to result in compliance with all applicable laws and regulations.
However, there can be no certainty that Lanier's plans to address Euro-related
issues are adequate or that they will be successfully implemented or that
external factors will not have a material adverse effect upon Lanier's
operations or business in the EMU or elsewhere. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Euro Conversion"
beginning on page 37.
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INTRODUCTION
On October 22, 1999, Harris' board of directors declared a pro rata
distribution payable to the holders of record of Harris common stock at the
close of business on November 1, 1999 (the "Record Date"), of one share of
common stock (the "Lanier Common Stock") of Lanier, together with the associated
preferred stock purchase right (the shares of Lanier Common Stock and the
associated preferred stock purchase rights collectively, the "Lanier Shares"),
for every share of Harris common stock outstanding on the Record Date. The
Distribution will be effected at 11:59 p.m., Eastern Daylight Time, on November
5, 1999 (the "Distribution Date"). As a result of the Distribution,
approximately 90% of the outstanding Lanier Shares will be distributed to Harris
stockholders, and Harris will retain ownership of approximately 10% of the
outstanding Lanier Shares. Harris intends to distribute the Lanier Shares by
book entry. Instead of stock certificates, each Harris stockholder that is a
record holder of Harris shares will receive a statement of such stockholder's
book entry account for the Lanier Shares distributed to such stockholder.
Account statements reflecting ownership of the Lanier Shares will be mailed
shortly after the Distribution Date. Lanier Shares should be credited to
accounts with stockbrokers, banks or nominees of Harris stockholders that are
not record holders on or about November 8, 1999.
Lanier was incorporated in 1985 as the successor to a business established
in 1935 and acquired by Harris in 1983. Lanier's principal executive offices are
located at 2300 Parklake Drive, N.E., Atlanta, Georgia 30345, and its telephone
number is (770) 496-9500.
The business of Lanier constitutes a significant part of the business of
Harris. Following the Distribution, which was first announced on April 13, 1999,
and following the unrelated sale of Harris' semiconductor business, which was
consummated on August 13, 1999, Harris will be a more focused organization with
five divisions, all focusing on communications. Harris will provide
communications equipment, systems and support services -- concentrating on the
wireless, broadcast, government systems and network support markets.
THE DISTRIBUTION
REASONS FOR THE DISTRIBUTION
The board of directors and management of Harris believe that the
Distribution is in the best interests of Harris, Lanier and Harris stockholders.
Harris believes that the Distribution will meaningfully enhance value for Harris
stockholders and give Lanier the financial and operational flexibility to take
advantage of significant growth opportunities in the office products and
document management solutions business. Lanier's business is a distinct business
with significant differences from Harris' other operations with respect to its
markets, products, capital needs and plans for growth. Harris' board of
directors and management believe that the Distribution will enhance the ability
of each of Lanier and Harris to focus on strategic initiatives and new business
opportunities, improve cost structures and operating efficiencies and design
equity-based compensation programs targeted to its own performance. In addition,
Harris' board of directors expects that the transition to an independent company
will heighten Lanier management's focus, provide Lanier with greater access to
capital, and allow the investment community to measure Lanier's performance
relative to its peers.
In addition, the Distribution will give Lanier direct access to capital
markets. As part of Harris, Lanier competed with Harris' other core business
groups for capital to finance expansion and growth opportunities. As a separate
entity, Lanier will be free of Harris' capital structure restrictions and should
be in a better position to fund the implementation of its business strategy. The
Distribution will also enable Lanier to provide its management and employees
incentive compensation in the form of equity ownership in Lanier, enhancing
Lanier's ability to attract, retain and motivate key employees.
The separation will also enable Harris management to concentrate its
attention on the remaining Harris businesses. Harris management strongly
believes that these businesses may be expanded more effectively if Lanier is no
longer controlled by Harris.
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REASONS FOR HARRIS' RETENTION OF LANIER SHARES
Harris will retain approximately 10% of the outstanding Lanier Shares
because the contemplated future sale of these Lanier Shares will provide Harris
with a source of cash following the Distribution. Harris intends to use this
cash to make acquisitions in the telecommunications equipment industry.
MANNER OF EFFECTING THE DISTRIBUTION
The general terms and conditions relating to the Distribution will be set
forth in an Agreement and Plan of Distribution (the "Distribution Agreement")
between Harris and Lanier. See "Relationship between Harris and Lanier Following
the Distribution -- Distribution Agreement" beginning on page 19.
The Distribution will be made on the basis of one Lanier Share for every
share of Harris common stock outstanding on the Record Date. The actual total
number of Lanier Shares to be distributed will depend on the number of Harris
shares outstanding on the Record Date. Based upon the number of Harris shares
outstanding on October 15, 1999, approximately 79,150,272 Lanier Shares will be
distributed to Harris stockholders. The Lanier Shares to be distributed will
constitute approximately 90% of the outstanding Lanier Shares. Harris will
retain approximately 8,794,474 of the Lanier Shares, which represents
approximately 10% of the Lanier Shares outstanding following the Distribution.
Options to purchase Harris shares ("Harris Options") held by Lanier employees or
Harris employees who will become Lanier employees will be replaced by options to
purchase Lanier Shares ("Lanier Options"). The option price and number of shares
subject to each option will be adjusted so that the aggregate difference between
the market price and the option price will be equal for the Harris Options and
the Lanier Options. See "Relationship Between Harris and Lanier Following the
Distribution -- Employee Benefits and Compensation Allocation Agreement"
beginning on page 20. Performance share awards of Harris shares previously
granted to Lanier employees under the Harris Stock Incentive Plan will be
canceled and replaced by Lanier performance shares granted under the Lanier
Stock Incentive Plan (the "Lanier Stock Plan"). The Lanier Shares will be fully
paid and non-assessable and the holders thereof will not be entitled to
preemptive rights. See "Description of Lanier's Capital Stock" beginning on page
58.
Harris intends to use a book entry system to distribute the Lanier Shares
in the Distribution unless the stockholder requests a stock certificate.
Following the Distribution, each record holder of Harris stock on the Record
Date will receive from ChaseMellon Shareholder Services, L.L.C. (the
"Distribution Agent") a statement of the Lanier Shares credited to the
stockholder's account. After the Distribution, stockholders may request stock
certificates from Lanier's transfer agent instead of participating in the book
entry system.
Fractional Lanier Shares will not be issued. If a stockholder's account
with Harris' dividend reinvestment program is credited with a fractional Harris
share as of the Record Date, the Distribution Agent will aggregate all
fractional Lanier Shares that would otherwise have been credited to a
stockholder's account into whole shares, and sell such whole shares in the open
market at then prevailing prices on behalf of all stockholders entitled to
receive fractional shares, who will receive cash in the amount of their pro rata
share of the total sale proceeds, net of brokerage commissions. Such sales are
expected to be made as soon as practicable after the mailing of the account
statements to Harris stockholders.
No Harris stockholder will be required to pay any cash or other
consideration for the Lanier Shares received in the Distribution, or to
surrender or exchange Harris shares in order to receive Lanier Shares. The
Distribution will not affect the number of, or the rights attaching to,
outstanding Harris shares. No vote of Harris stockholders is required or sought
in connection with the Distribution, and Harris stockholders will have no
appraisal rights in connection with the Distribution.
In order to receive Lanier Shares in the Distribution, Harris stockholders
must be stockholders at the close of business on the Record Date.
RESULTS OF THE DISTRIBUTION
After the Distribution, Lanier will be a separate public company operating
its current office products and document management solutions business.
Immediately after the Distribution, Lanier expects to have approximately 10,321
holders of record of Lanier Shares and approximately 87,944,746 Lanier Shares
outstanding,
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based on the number of stockholders of record and outstanding Harris shares on
October 15, 1999, the distribution ratio of one Lanier Share for every Harris
share and the retention by Harris of approximately 10% of the outstanding Lanier
Shares. Harris Options held by Lanier employees or Harris employees who will
become Lanier employees will be replaced by Lanier Options. Performance share
awards granted to Lanier employees under the Harris Stock Incentive Plan will be
canceled and replaced by Lanier performance shares granted under the Lanier
Stock Plan. See "Relationship Between Harris and Lanier Following the
Distribution -- Employee Benefits and Compensation Allocation Agreement"
beginning on page 20. The actual number of Lanier Shares to be distributed will
be determined as of the Record Date. The Distribution will not affect the number
of outstanding Harris shares or any rights of Harris stockholders.
LISTING AND TRADING OF THE LANIER SHARES
The Lanier Shares have been approved for listing on the New York Stock
Exchange, subject to official notice of issuance, under the symbol "LR." A
stockholder who decides to sell any Lanier Shares or Harris shares should make
sure that such stockholder's stockbroker, bank or other nominee understands
whether such stockholder wants to sell Harris shares, Lanier Shares, or both.
Beginning on or about November 1, 1999 and continuing through November 5, 1999,
New York Stock Exchange practices should generally allow sales of Harris shares
either together with the right to receive the Lanier Shares in the Distribution
or without the right to receive the Lanier Shares. A stockholder that sells
Harris shares with the right to receive the Lanier Shares will be required to
deliver to the buyer the Lanier Shares received in respect of such Harris shares
in the Distribution. Stockholders should also be able to sell their rights to
receive Lanier Shares without selling Harris shares.
Sales of Harris shares with the right to receive the Lanier Shares should
generally settle in the three business day settlement period. Sales of Harris
shares without the right to receive the Lanier Shares and sales of the Lanier
Shares without Harris shares are expected to settle four business days following
the date account statements for the Lanier Shares are mailed. Beginning about
November 8, 1999, stockholders should only be able to sell Harris shares and
Lanier Shares separately. Stockholders should check with their brokers or banks.
The Lanier Shares distributed to Harris stockholders will be freely
transferable, except for Lanier Shares received by persons who may be deemed to
be "affiliates" of Lanier under the Securities Act. Persons who may be deemed to
be affiliates of Lanier after the Distribution generally include individuals or
entities that control, are controlled by, or are under common control with
Lanier and may include certain directors, officers and significant stockholders
of Lanier. Persons who are affiliates of Lanier will be permitted to sell their
Lanier Shares only pursuant to an effective registration statement under the
Securities Act or an exemption from the registration requirements of the
Securities Act, such as the exemptions afforded by Section 4(1) of the
Securities Act and the brokerage sales provisions of Rule 144 thereunder. It is
believed that persons who may be deemed to be affiliates of Lanier after the
Distribution will beneficially own approximately 312,819 Lanier Shares, or less
than 1% of the outstanding Lanier Shares.
Harris will retain approximately 10% of the outstanding Lanier Shares, and
Lanier will grant Harris certain rights entitling Harris to cause Lanier to
register Harris' Lanier Shares under the securities laws. Harris has agreed not
to sell its Lanier Shares for six months following the Distribution, but Harris
intends to sell its shares within two years after the Distribution. In addition,
Harris has agreed to vote its Lanier Shares in proportion to votes cast by other
Lanier stockholders. See "Relationship Between Harris and Lanier Following the
Distribution -- Registration Rights Agreement" on page 20.
There can be no assurance as to whether the Lanier Shares will be actively
traded or as to the prices at which Lanier Shares will trade. Some of the Harris
stockholders who receive Lanier Shares may decide that they do not want shares
in an office products and document management solutions company, and may sell
their Lanier Shares following the Distribution. This may delay the development
of an orderly trading market in the Lanier Shares for a period of time following
the Distribution. Until the Lanier Shares are fully distributed and an orderly
market develops, the prices at which the Lanier Shares trade may fluctuate
significantly and may be lower or higher than the price that would be expected
for a fully distributed issue. Prices for Lanier Shares will be determined in
the marketplace and may be influenced by many factors, including the depth and
liquidity of the market for the Lanier Shares, Lanier's results of operations,
what investors think of Lanier and the office products and document
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management solutions business, the amount of dividends that Lanier pays, changes
in economic conditions in the office products and document management solutions
business and general economic and market conditions.
Following the Distribution, Harris common stock will continue to be listed
and traded on the New York Stock Exchange under the symbol "HRS." As a result of
the Distribution, the trading price of Harris common stock immediately following
the Distribution will likely be lower than the trading price of Harris common
stock immediately prior to the Distribution. Until the market has fully analyzed
the operations of Harris without the operations of Lanier, the prices at which
Harris common stock trades may fluctuate significantly.
In addition, the stock market often experiences significant price
fluctuations that are unrelated to the operating performance of the specific
companies whose stock is traded. Market fluctuations could have a material
adverse impact on the trading price of the Lanier Shares and/or Harris common
stock.
FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION
The following summary of the material federal income tax consequences of
the Distribution is not a complete description of those consequences and, in
particular, may not address federal income tax considerations that affect the
treatment of a stockholder who acquired Harris stock pursuant to an employee
benefit plan. Each stockholder's individual circumstances may affect the tax
consequences of the Distribution to such stockholder. In addition, no
information is provided herein with respect to tax consequences under applicable
foreign, state or local laws. Consequently, each Harris stockholder is advised
to consult his or her own tax advisor as to the specific tax consequences of the
Distribution.
Neither Harris nor Lanier has requested an advance ruling from the Internal
Revenue Service as to the tax consequences of the Distribution.
GENERAL
Sullivan & Cromwell, special counsel to Harris, will render an opinion to
Harris and Lanier that the Distribution is a distribution described in Section
355 of the Code. As a consequence thereof, and assuming that Harris common stock
is a capital asset in the hands of a Harris stockholder:
- Except for any cash received in lieu of a fractional Lanier Share, a
Harris stockholder will not recognize any income, gain or loss as a
result of the receipt of Lanier Shares in the Distribution.
- A Harris stockholder's holding period for the Lanier Shares received in
the Distribution will include the period for which that stockholder's
Harris shares were held.
- A Harris stockholder's tax basis for Lanier Shares received in the
Distribution will be determined by allocating to the Lanier Shares, on
the basis of the relative fair market values of Harris shares and Lanier
Shares at the time of the Distribution, a portion of the stockholder's
basis in his or her Harris shares. The Harris stockholder's basis in his
or her Harris shares will be decreased by the portion allocated to the
Lanier Shares.
- The receipt of cash in lieu of a fractional Lanier Share will be treated
as a sale of the fractional Lanier Share, and a stockholder will
recognize gain or loss equal to the difference between the amount of cash
received and the stockholder's basis in the fractional Lanier Share, as
determined above. The gain or loss will be long-term capital gain or loss
if the holding period for the fractional Lanier Share, as determined
above, is more than one year.
- A Harris stockholder will not recognize any income, gain or loss as a
result of the receipt of the preferred stock purchase rights which are
attached to Lanier Common Stock in the Distribution, and the receipt of
such rights will have no effect on a stockholder's basis or holding
period in the Lanier Shares or the Harris shares. For federal income tax
purposes, the distribution of such rights will not occur unless and until
they become separately transferable.
- Neither Harris nor Lanier will recognize any gain or loss in the
Distribution other than deferred intercompany gains that may be triggered
as a result of the Distribution.
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Harris expects that the Distribution will trigger deferred gains resulting
in tax liabilities of less than $5 million that will be payable by Lanier under
the Tax Disaffiliation Agreement. Harris does not expect that the Distribution
will result in the recognition of any other deferred intercompany transactions
or excess loss accounts.
In rendering its opinion, Sullivan & Cromwell will rely upon analysis,
representations and future undertakings from Lanier and Harris and certain other
data, documentation and other materials that Sullivan & Cromwell deems necessary
for purposes of its opinion. The opinion of counsel will not be binding on the
Internal Revenue Service or the courts; accordingly, there can be no complete
assurance that the Distribution will qualify as a tax-free transaction to Harris
or Harris stockholders. In addition, the Distribution may become taxable to
Harris (but not Harris stockholders) if Harris or Lanier were to be acquired by
a third party within two years after the Distribution and Harris failed to prove
that the subsequent acquisition of Harris or Lanier and the Distribution were
not made pursuant to a plan or a series of related transactions.
INDEMNIFICATION
Lanier would be obligated to indemnify Harris under the Tax Disaffiliation
Agreement for the full amount of any liability of Harris incurred solely because
(1) Lanier breaches a representation or covenant given to Sullivan & Cromwell in
connection with rendering its tax opinion, which breach contributes to an
Internal Revenue Service determination that the Distribution was not tax-free,
or (2) Lanier or an affiliate's post-Distribution action or omission contributes
to an Internal Revenue Service determination that the Distribution was not
tax-free. Harris will indemnify Lanier for all taxes and liabilities incurred
solely because (1) Harris breaches a representation or covenant given to
Sullivan & Cromwell in connection with rendering its tax opinion, which breach
contributes to an Internal Revenue Service determination that the Distribution
was not tax-free, or (2) Harris or an affiliate's post-Distribution action or
omission contributes to an Internal Revenue Service determination that the
Distribution was not tax-free. If the Internal Revenue Service determines that
the Distribution was not tax-free for any other reason, Harris and Lanier will
indemnify each other against 50% of all taxes and liabilities. If triggered,
Lanier's indemnification obligation would have a material adverse effect on the
results of operations and financial position of Lanier.
Lanier will also indemnify Harris for any taxes resulting from any internal
realignment undertaken to facilitate the Distribution on or before the
Distribution Date. Any such taxes are not expected to be material.
For a description of the agreement pursuant to which Harris and Lanier have
provided for certain tax disaffiliation and other tax-related matters, see
"Relationship Between Harris and Lanier Following the Distribution -- Tax
Disaffiliation Agreement" on page 20.
INFORMATION REPORTING
Current Treasury regulations require each Harris stockholder who receives
Lanier Shares pursuant to the Distribution to attach to his or her federal
income tax return for the year in which the Distribution occurs a detailed
statement setting forth such data as may be appropriate in order to show the
applicability of Section 355 of the Code to the Distribution. Harris will
provide appropriate information to each holder of record of Harris common stock
as of the Record Date.
REASONS FOR FURNISHING THIS DOCUMENT
This document is being furnished solely to provide information to Harris
stockholders who will receive Lanier Shares in the Distribution. It is not, and
is not to be construed as, an inducement or encouragement to buy or sell any
securities of Harris or Lanier. Neither Harris nor Lanier will update the
information contained in this document except in the normal course of their
respective public disclosure practices. However, we will amend this document if
there is any material change in the terms of the Distribution or if Sullivan &
Cromwell will not render the opinion described above under "-- Federal Income
Tax Consequences of the Distribution."
18
<PAGE> 32
RELATIONSHIP BETWEEN HARRIS AND LANIER
FOLLOWING THE DISTRIBUTION
For purposes of governing certain of the ongoing relationships between
Harris and Lanier after the Distribution and to provide for an orderly
transition to the status of two independent companies, Harris and Lanier have
entered or will enter into the agreements described in this section. The forms
of agreements summarized in this section are included as exhibits to the
Registration Statement on Form 10 (including any amendments thereto, the
"Registration Statement") that Lanier has filed with the Securities and Exchange
Commission (the "Commission"), and the following summaries are qualified in
their entirety by reference to the agreements as so filed. See "Additional
Information" beginning on page 66.
DISTRIBUTION AGREEMENT
Prior to the Distribution Date, Harris and Lanier will enter into the
Distribution Agreement, which will provide for, among other things, the
principal corporate transactions required to effect the Distribution and certain
other agreements relating to the continuing relationship between Lanier and
Harris after the Distribution.
The Distribution Agreement will provide that on or prior to the
Distribution Date, Lanier will have issued to Harris a number of Lanier Shares
so that the total number of Lanier Shares owned by Harris immediately following
consummation of the Distribution will be one less than 10% of the outstanding
Lanier Shares. Harris will effect the Distribution by delivering a certificate
representing approximately 90% of such Lanier Shares to the Distribution Agent.
Although Harris and Lanier have generally held their assets separately,
Harris currently holds stock of business entities which are part of Lanier's
business, and Lanier currently holds stock of business entities which are a part
of Harris' business. Ownership of those entities will be transferred under the
Distribution Agreement so that their legal ownership reflects the way in which
they are reported financially. These transfers will have no accounting or
financial reporting impact upon either Harris or Lanier.
Under the Distribution Agreement and effective as of the Distribution Date,
Lanier will assume, and will agree to indemnify Harris against, all liabilities,
litigation and claims, including related insurance costs, arising out of
Lanier's business, and Harris will retain, and will agree to indemnify Lanier
against, all liabilities, litigation and claims, including related insurance
costs, arising out of Harris' businesses. The foregoing obligations will not
entitle an indemnified party to recovery to the extent any such liability is
covered by proceeds received by such party from any third party insurance
policy.
The Distribution Agreement will provide for a cash payment by Lanier to
Harris immediately prior to the Distribution and the assumption by Lanier of
certain of Harris' indebtedness relating to Lanier's business. The aggregate
amount of such cash payment will be approximately $546 million, which is the sum
of: (i) $700 million; plus (ii) cash and cash equivalents of Lanier as of
October 1, 1999; less (iii) the amount of indebtedness for borrowed money of
Lanier as of such date; and less (iv) amounts owed by Lanier under Lanier's
European asset securitization facility as of such date. Lanier will incur debt
under the Credit Facility of approximately the same amount. The amount of such
cash payment was determined based on Harris' goals of maximizing combined
stockholder value for Harris' present stockholders while providing Lanier with a
capital structure appropriate to its business. In addition to such cash payment,
pursuant to the Distribution Agreement Lanier will forgive domestic intercompany
accounts owed by Harris and settle certain intercompany accounts between Harris
and Lanier having an aggregate principal amount of approximately $194 million as
of July 2, 1999 and approximately $175 million as of October 1, 1999.
The Distribution Agreement will provide that each of Harris and Lanier
shall be granted access to certain records and information in the possession of
the other, and will require the retention by each of Harris and Lanier for a
period of eight years following the Distribution Date of all such information in
its possession.
TRANSITION SERVICES AGREEMENT
Harris and Lanier will enter into a Transition Services Agreement prior to
the Distribution Date under which, in exchange for the fees specified in such
agreement, Harris will agree to continue to provide certain
19
<PAGE> 33
administrative services to Lanier, including, information management services
and other services, and Lanier will agree to provide certain administrative
services to Harris. The Transition Services Agreement will provide that each of
Lanier and Harris will undertake to provide the same degree of care and
diligence as it uses in providing these services to itself and its subsidiaries.
Provision of services under the Transition Services Agreement will terminate no
later than one year following the Distribution Date. Lanier believes that the
terms and conditions of the Transition Services Agreement are as favorable to
Lanier as those available from unrelated parties for a comparable arrangement.
REGISTRATION RIGHTS AGREEMENT
Harris and Lanier will enter into a Registration Rights Agreement prior to
the Distribution Date in which Harris will agree not to offer, sell, contract to
sell or otherwise transfer or dispose of any of the Lanier Shares retained by
Harris during the period ending on the 180th calendar day following the
Distribution Date. The Registration Rights Agreement will provide that Harris
will vote its Lanier Shares on all matters in proportion to the way in which the
other Lanier stockholders vote their Lanier Shares. The Registration Rights
Agreement will also provide that at any time during the period commencing on the
120th calendar day after the Distribution Date and terminating upon the second
anniversary of the Distribution Date, Harris will have the right on two
occasions to require Lanier to file with the Commission a registration statement
under the Securities Act registering all or a portion of the Lanier Shares held
by Harris. On one of these occasions, Harris will be entitled to cause Lanier to
file with the Commission a "shelf" registration statement covering the resale of
the Lanier Shares retained by Harris. Lanier has agreed to use its reasonable
efforts to keep any such registration statement continuously effective for the
period of time terminating upon the earlier of the date that Harris no longer
holds any Lanier Shares or the second anniversary of the Distribution Date. The
Registration Rights Agreement will also provide that Lanier will take certain
actions to assist Harris in offering, marketing and selling the Lanier Shares
retained by Harris and pay certain expenses in connection therewith. In
addition, the Registration Rights Agreement will also provide that Lanier will
indemnify Harris against certain losses, claims, damages and liabilities,
including liabilities under the federal securities laws.
TAX DISAFFILIATION AGREEMENT
Harris and Lanier will enter into a Tax Disaffiliation Agreement (the "Tax
Disaffiliation Agreement") which sets out each party's rights and obligations
with respect to deficiencies and refunds, if any, of federal, state, local or
foreign taxes for periods before and after the Distribution and related matters
such as the filing of tax returns and the conduct of Internal Revenue Service
and other audits. Under the Tax Disaffiliation Agreement, Lanier will indemnify
Harris for any tax liability of Lanier or its affiliates for any period. Lanier
will also indemnify Harris for all taxes and liabilities incurred solely because
(1) Lanier breaches a representation or covenant given to Sullivan & Cromwell in
connection with rendering its tax opinion, which breach contributes to an
Internal Revenue Service determination that the Distribution was not tax-free or
(2) Lanier or an affiliate's post-Distribution action or omission contributes to
an Internal Revenue Service determination that the Distribution was not
tax-free. Harris will indemnify Lanier for all taxes and liabilities incurred
solely because (1) Harris breaches a representation or covenant given to
Sullivan & Cromwell in connection with rendering its tax opinion, which breach
contributes to an Internal Revenue Service determination that the Distribution
was not tax-free, or (2) Harris or an affiliate's post-Distribution action or
omission contributes to an Internal Revenue Service determination that the
Distribution was not tax-free. If the Internal Revenue Service determines that
the Distribution was not tax-free for any other reason, Harris and Lanier will
indemnify each other against 50% of all taxes and liabilities.
Lanier will also indemnify Harris for any taxes resulting from any internal
realignment undertaken to facilitate the Distribution on or before the
Distribution Date. Any such taxes are not expected to be material.
EMPLOYEE BENEFITS AND COMPENSATION ALLOCATION AGREEMENT
Prior to the Distribution, Harris and Lanier will enter into the Employee
Benefits and Compensation Allocation Agreement (the "Employee Benefits
Agreement"), which will contain certain provisions relating to employee
compensation, benefits and labor matters and the treatment of options to
purchase and awards with
20
<PAGE> 34
respect to Harris shares held by Lanier employees or Harris employees who will
become Lanier employees. The Employee Benefits Agreement will provide that
Harris Options held by Lanier employees or Harris employees who will become
Lanier employees will be replaced by Lanier Options. The option price and number
of shares subject to each option will be adjusted so that the aggregate
difference between the market price and the option price will be equal for the
Harris Options and the Lanier Options. The number of shares subject to each
Lanier Option will be determined by multiplying (i) the number of shares subject
to each Harris Option by (ii) a number equal to (A) the closing price of Harris
shares on the New York Stock Exchange on the Record Date, divided by (B) the
opening price of the Lanier Shares on the New York Stock Exchange on the day
following the Distribution Date (such result, the "Lanier Option Adjustment
Ratio"). Similarly, the price of each Lanier Option will be determined by
dividing the price of each Harris Option by the Lanier Option Adjustment Ratio.
Performance share awards granted to Lanier employees under Harris' Stock
Incentive Plan will be canceled and replacement performance shares will be
awarded under the Lanier Stock Plan by multiplying the number of performance
shares by the Lanier Option Adjustment Ratio.
21
<PAGE> 35
LANIER WORLDWIDE, INC. AND SUBSIDIARIES
HISTORICAL AND PRO FORMA CONSOLIDATED CAPITALIZATION
The following table sets forth the historical and pro forma consolidated
debt and capitalization of Lanier at July 2, 1999. This data should be read in
conjunction with the historical consolidated balance sheet of Lanier and the
unaudited pro forma consolidated balance sheet and the notes thereto, and the
introduction to the unaudited pro forma consolidated financial statements
appearing elsewhere in this document. The pro forma information set forth below
gives effect to the Distribution as if it had occurred on July 2, 1999. The pro
forma information may not necessarily reflect the debt and capitalization of
Lanier in the future or as it would have been had Lanier been a separate,
independent company at July 2, 1999 or had the Distribution actually been
effected on such date.
<TABLE>
<CAPTION>
JULY 2, 1999
----------------------------------------
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Short-term debt...................................... $ 138,011 -- $ 138,011
Current portion of long-term debt.................... 2,582 -- 2,582
Long-term debt....................................... 4,622 $ 540,994 (A) 545,616
Shareholder Equity:
Preferred stock, par value $1.00; authorized
1,000,000 shares; issued none................... -- -- --
Common stock, par value $1.00; authorized 1,000,000
shares; issued 41,893 shares.................... 42 847 (B) 889
Additional paid-in-capital......................... 329,679 (149,415)(C) 180,264
Retained earnings.................................. 586,556 (586,556)(C) --
Accumulated comprehensive loss..................... (33,539) -- (33,539)
---------- --------- ---------
Total shareholder equity............................. 882,738 (735,124) 147,614
---------- --------- ---------
Total capitalization................................. $1,027,953 $(194,130) $ 833,823
========== ========= =========
</TABLE>
NOTES TO PRO FORMA COMBINED CAPITALIZATION
The following adjustments were made to the balance sheet of Lanier as of July 2,
1999 to give effect to the Distribution as if it had occurred as of that date.
(A) To reflect additional debt of Lanier to be incurred on or prior to the
Distribution Date under the Credit Facility. Pro forma debt is subject to
change and the components may be revised prior to the Distribution Date.
(B) To reflect additional Lanier Shares to be distributed after giving effect to
the Distribution, Lanier Shares retained by Harris and the conversion of
performance share awards of Harris. Pro forma par value is $.01, 500,000,000
shares of Lanier Common Stock are assumed to be authorized, and 88,857,000
Lanier Shares are assumed to be outstanding.
(C) To reflect pro forma income adjustments, settlement of intercompany accounts
and a cash payment to be made by Lanier to Harris immediately prior to the
Distribution. The amount of such payment was calculated using the formula
described under "Relationship Between Harris and Lanier Following the
Distribution -- Distribution Agreement" on page 19 using financial
information as of July 2, 1999. See "Notes to Unaudited Pro Forma
Consolidated Income Statement" on page 27 and "Notes to Unaudited Pro Forma
Consolidated Balance Sheet" on page 26.
22
<PAGE> 36
DIVIDEND POLICIES
Following the Distribution, Lanier's dividend policy will be set by
Lanier's board of directors. The declaration and payment of dividends is at the
discretion of Lanier's board of directors and will be subject to Lanier's
financial results and the availability of surplus funds to pay dividends.
Delaware law prohibits Lanier from paying dividends or otherwise distributing
funds to its stockholders, except out of legally available funds. The amount of
quarterly cash dividends will depend on a number of factors, including Lanier's
financial condition, capital requirements, results of operations, future
business prospects and other factors the Lanier Board may deem relevant,
including restrictions on Lanier's ability to declare and pay dividends and
distributions on the Lanier Shares contained in the Credit Facility. No
assurance can be given that Lanier will pay any dividends. See "Risk
Factors -- Uncertainty of Dividends" on page 11 and "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Credit Facility"
beginning on page 33. Lanier intends to establish a direct stock purchase and
dividend reinvestment plan that will enable holders to purchase additional
Lanier Shares and to reinvest dividends, if any, into additional Lanier Shares.
Following the Distribution, Harris intends to pay quarterly dividends at an
initial annual rate substantially below Harris' current dividend rate of $.96
per share. No determination has been made by Harris' board of directors with
respect to the initial dividend rate that will be paid following the
Distribution. The payment and level of dividends is at the discretion of Harris'
board of directors and will be subject to Harris' financial results and the
availability of surplus funds to pay dividends. Delaware law prohibits Harris
from paying dividends or otherwise distributing funds to its stockholders,
except out of legally available funds. The declaration of dividends and the
amount thereof will depend on a number of factors, including Harris' financial
condition, capital requirements, results of operations, future business
prospects and other factors Harris' board of directors may deem relevant. No
assurance can be given that Harris will pay any dividends.
23
<PAGE> 37
LANIER WORLDWIDE, INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
INTRODUCTION TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Lanier was acquired by Harris in 1983 and has no recent operating history
as an independent company. The historical consolidated financial statements of
Lanier contained in this document reflect periods during which Lanier did not
operate as an independent company, and certain assumptions were made in
preparing such financial statements. Therefore, the historical consolidated
financial statements may not necessarily reflect the consolidated results of
operations or financial position that would have existed had Lanier been an
independent company.
The following unaudited pro forma consolidated financial statements of
Lanier make adjustments to the historical consolidated balance sheet at July 2,
1999 as if the Distribution had occurred on July 2, 1999, and the historical
consolidated income statements for the fiscal year ended July 2, 1999, as if the
Distribution had occurred on July 4, 1998.
The unaudited pro forma consolidated financial statements of Lanier should
be read in conjunction with the historical Consolidated Financial Statements of
Lanier and the Notes thereto contained elsewhere in this document. The pro forma
consolidated financial information is presented for informational purposes only
and may not necessarily reflect the future earnings, results of operations or
financial position of Lanier or what the earnings, results of operations or
financial position would have been had Lanier's businesses been operated as an
independent company for the periods indicated.
24
<PAGE> 38
LANIER WORLDWIDE, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JULY 2, 1999
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ----------
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents........................... $ 18,209 -- $ 18,209
Trade receivables................................... 348,604 -- 348,604
Receivables from parent............................. 194,521 $(194,130)(A) 391
Inventories......................................... 166,404 -- 166,404
Prepaid expenses.................................... 17,107 -- 17,107
Deferred income taxes............................... 39,276 -- 39,276
---------- --------- ----------
TOTAL CURRENT ASSETS........................ 784,121 (194,130) 589,991
OTHER ASSETS
Rental equipment-net................................ 140,718 -- 140,718
Property, plant and equipment-net................... 42,755 -- 42,755
Notes receivables-net............................... 203,657 -- 203,657
Intangibles-net..................................... 125,504 -- 125,504
Other............................................... 40,953 -- 40,953
---------- ----------
TOTAL OTHER ASSETS.......................... 553,587 -- 553,587
---------- --------- ----------
TOTAL ASSETS.......................................... $1,337,708 $(194,130) $1,143,578
========== ========= ==========
LIABILITIES AND SHAREHOLDER EQUITY
CURRENT LIABILITIES
Notes payable....................................... $ 138,011 -- $ 138,011
Trade payables...................................... 86,815 -- 86,815
Retirement plan accounts............................ 38,964 -- 38,964
Accrued compensation................................ 39,066 -- 39,066
Accrued interest and sundry taxes................... 21,772 -- 21,772
Other accrued items................................. 33,610 -- 33,610
Unearned service income............................. 57,898 -- 57,898
Income taxes........................................ 15,460 -- 15,460
Long-term debt-current portion...................... 2,582 -- 2,582
---------- --------- ----------
TOTAL CURRENT LIABILITIES................... 434,178 -- 434,178
OTHER LIABILITIES
Deferred income taxes............................... 16,170 -- 16,170
Long-term debt...................................... 4,622 540,994 (C) 545,616
SHAREHOLDER EQUITY
Common Stock, $1.00 par value, 1,000,000 shares
authorized; issued and outstanding 41,893
shares........................................... 42 847 (D) 889
(194,130)(A)
27,186 (B)
(540,994)(C)
(847)(D)
Additional paid-in capital.......................... 329,679 559,370 (C) 180,264
(27,186)(B) --
Retained earnings................................... 586,556 (559,370)(C)
Accumulated comprehensive loss...................... (33,539) -- (33,539)
---------- --------- ----------
TOTAL SHAREHOLDER EQUITY.................... 882,738 (735,124) 147,614
---------- --------- ----------
TOTAL LIABILITIES AND SHAREHOLDER EQUITY.............. $1,337,708 $(194,130) $1,143,578
========== ========= ==========
</TABLE>
25
<PAGE> 39
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
The following adjustments were made to Lanier's July 2, 1999 historical
consolidated balance sheet to give effect to the Distribution as if it had
occurred on that date:
(A) Forgiveness of intercompany accounts between Harris and Lanier.
(B) Accruals for additional interest expense, elimination of interest income on
indebtedness loans to Harris and the related tax benefit resulting from
these expenses.
(C) To reflect additional new indebtedness of Lanier to be incurred on or prior
to the Distribution Date under the Credit Facility for the purpose of the
cash payment to Harris. The aggregate amount of such payment was calculated
using the formula described under "Relationship Between Harris and Lanier
Following the Distribution -- Distribution Agreement," using financial
information as of July 2, 1999. The pro forma effect of the cash payment is
as follows:
<TABLE>
<S> <C>
$700,000
Add: Cash retained or assumed............................. 18,209
Less:
Historical debt assumed or retained.................... 145,215
Asset securitization (off balance sheet)............... 32,000
--------
Cash Payment.............................................. $540,994
========
</TABLE>
The increment to long-term debt is equal to the cash payment to Harris.
(D) To reflect additional Lanier Shares to be distributed after giving effect to
the Distribution, Lanier Shares retained by Harris and the conversion of
performance share awards of Harris. Pro forma par value is $.01, 500,000,000
shares of Lanier Common Stock are assumed to be authorized, and 88,857,000
Lanier Shares are assumed to be outstanding.
26
<PAGE> 40
LANIER WORLDWIDE, INC.
UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT
FOR THE FISCAL YEAR ENDED JULY 2, 1999
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ----------
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C>
REVENUE
Product sales and rentals......................... $ 807,468 -- $ 807,468
Service income.................................... 623,020 -- 623,020
Finance income.................................... 38,132 -- 38,132
---------- ----------
1,468,620 -- 1,468,620
COSTS AND EXPENSES
Cost of product sales and rentals................. 547,929 -- 547,929
Cost of service................................... 349,448 -- 349,448
Selling and administrative expenses............... 438,516(F) -- 438,516
Interest expenses................................. 22,692(A) 35,408 (B) 58,100
Other-net......................................... (1,235) 8,440 (C) 7,205
---------- -------- ----------
1,357,350 43,848 1,401,198
---------- -------- ----------
Income before income taxes........................ 111,270 (43,848) 67,422
Income taxes...................................... 40,000 (16,662)(D) 23,338
---------- -------- ----------
NET INCOME........................................ $ 71,270 $(27,186) $ 44,084
========== ======== ==========
Net income per share.............................. $ 0.50(E)
==========
</TABLE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT
The following adjustments were made to Lanier's historical consolidated income
statement for the fiscal year ended July 2, 1999.
(A) See discussion of "Other Income and Expense" on page 31.
(B) Adjustment to interest expense to reflect additional long-term debt of
Lanier using an annual estimated interest rate of 8.3% assuming $700 million
of indebtedness net of cash on July 4, 1998.
(C) Adjustment to eliminate interest income on loans from Lanier to Harris that
will be repaid to Lanier prior to the distribution date.
(D) Adjustment for income tax provision related to pretax adjustments.
(E) Net income per share is computed based on 88,857,000 shares, which
represents the number of Lanier Shares which would have been distributed in
the Distribution if it had occurred on July 2, 1999, based on the number of
Harris shares outstanding as of such date, the retention of Lanier Shares by
Harris and the conversion of Harris performance share awards.
(F) The pro forma statement does not include adjustments to administrative
expense to reflect the elimination of $25.0 million of costs charged to
Lanier by Harris or Lanier's estimate of $7.0 million for additional legal,
audit and other similar expenses that Lanier is expected to incur as a
publicly traded corporation. This charge by Harris was made based upon a
percentage of Lanier's net sales.
27
<PAGE> 41
LANIER WORLDWIDE, INC.
SELECTED FINANCIAL DATA
The selected historical consolidated financial data of Lanier set forth
below is qualified in its entirety by, and should be read in conjunction with,
the Consolidated Financial Statements of Lanier, including the Notes thereto,
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this document. The income statement data for
each of the three fiscal years ended July 2, 1999 and the balance sheet data as
of July 2, 1999 and July 3, 1998 are derived from, and are qualified by
reference to, the consolidated financial statements included elsewhere in this
document that have been audited by Ernst & Young LLP, Lanier's independent
certified public accountants.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
-----------------------------------------------------------------------------
JUNE 30, JUNE 30, JUNE 27, JULY 3, JULY 2, PROFORMA
1995 1996 1997 1998 1999 (A) JULY 2, 1999
---------- ---------- ---------- ---------- ---------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenue
Product sales and
rentals.............. $ 674,694 $ 719,803 $ 704,282 $ 721,791 $ 807,468 $ 807,468
Service income.......... 348,850 396,159 465,732 532,986 623,020 623,020
Finance income.......... 27,543 28,760 29,871 33,558 38,132 38,132
---------- ---------- ---------- ---------- ---------- ----------
1,051,087 1,144,722 1,199,885 1,288,335 1,468,620 1,468,620
Costs and Expenses
Cost of product sales
and rentals.......... 415,121 448,845 426,042 453,968 547,929 547,929
Cost of service......... 194,322 219,042 255,705 304,901 349,448 349,448
Selling and
administrative
expenses............. 349,840 370,004 399,470 410,452 438,516 438,516
Restructuring
expenses............. -- -- -- 8,500(B) -- --
Interest expenses....... 11,485 11,010 8,797 8,236 22,692 58,100
Other -- net............ (2,428) 5,218 7,964 2,877 (1,235) 7,205
---------- ---------- ---------- ---------- ---------- ----------
968,340 1,054,119 1,097,978 1,188,934 1,357,350 1,401,198
---------- ---------- ---------- ---------- ---------- ----------
Income before income
taxes................... 82,747 90,603 101,907 99,401 111,270 67,422
Income taxes.............. 30,454 33,331 38,208 36,604 40,000 23,338
---------- ---------- ---------- ---------- ---------- ----------
Net income................ $ 52,293 $ 57,272 $ 63,699 $ 62,797 $ 71,270 $ 44,084
========== ========== ========== ========== ========== ==========
Net income per share...... $ 0.50
==========
Financial Position (end of
period)
Total assets.............. $1,011,404 $1,056,814 $1,075,307 $1,123,296 $1,337,708 $1,143,578
Long-term debt............ 4,192 4,103 3,990 3,660 4,622 545,616
Shareholder equity........ 635,113 689,240 750,157 803,657 882,738 147,614
</TABLE>
- ---------------
(A) Includes the operations of the Copy System Division of Agfa-Gevaert Group
from the date of the July 9, 1998 acquisition.
(B) See "Fiscal Year ended July 3, 1998 Compared to Fiscal Year ended June 27,
1997 -- Restructuring Charge" on page 33.
28
<PAGE> 42
RECENT DEVELOPMENTS
Lanier reported lower revenue and earnings for the first quarter of fiscal
year 2000 compared to the same quarter of the prior fiscal year, primarily due
to the divestiture during the fourth quarter of fiscal year 1999 of Lanier's
direct sales operation in France and its U.S.-based medical transcription
business. Revenue declined to $318 million from $337 million in the fourth
quarter of fiscal year 1999. The strengthening of the dollar relative to
European currencies and pricing pressures associated with the industry
transition from analog technology to digital technology also contributed to
weaker sales.
Net income declined to $9.7 million from $13.5 million in the first quarter
of the prior fiscal year, reflecting the revenue decline as well as pricing
pressures. Cost reduction efforts underway at Lanier reduced overhead costs in
the first quarter to 31.0% of revenue. Lanier's condensed consolidated statement
of income information for the first quarter of fiscal year 2000 and the first
quarter of fiscal year 1999 is set forth below.
LANIER WORLDWIDE, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------
OCTOBER 1, OCTOBER 2,
1999 1998
---------- ----------
(IN MILLIONS)
<S> <C> <C>
REVENUE
Revenue from sales, rentals and services.................. $307.6 $328.0
Finance income............................................ 10.3 9.2
------ ------
317.9 337.2
COST AND EXPENSES
Cost of sales, rental and services........................ 195.5 201.1
Selling and administrative expenses....................... 98.6 110.9
Interest expenses......................................... 5.6 4.1
Other expense............................................. 2.5 --
------ ------
Income before income taxes................................ 15.7 21.1
Income taxes.............................................. 6.0 7.6
------ ------
Net income.................................................. $ 9.7 $ 13.5
====== ======
</TABLE>
29
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with "Unaudited Pro
Forma Consolidated Financial Statements," "Selected Financial Data," the
Consolidated Financial Statements of Lanier, including the Notes thereto, and
the other financial information appearing elsewhere in this document. Except for
the historical information contained herein, the discussions in this document
contain forward-looking statements that involve risks and uncertainties.
Lanier's actual results could differ materially from those discussed herein.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed under "Risk Factors" beginning on page 7, as well as
those discussed elsewhere in this document.
GENERAL
Lanier is a worldwide supplier of office equipment and facilities
management services. On April 13, 1999 Lanier's parent company, Harris,
announced that it would spin Lanier off into a separate publicly traded company.
Harris intends to accomplish this transaction through a U.S. tax-free
distribution of Lanier stock to Harris stockholders.
Lanier and its subsidiaries form a worldwide independent supplier of
copiers, facsimiles and other related automated office imaging equipment. With
over 1,600 sales and service locations in more than 100 countries, Lanier
markets these products and related services, parts and supplies to customers
both on a direct sales basis and through a worldwide network of independent
dealers. Lanier's centralized sales and service organizations give it a
competitive advantage in the pursuit of national and global account business.
Lanier provides customers with a wide array of customized document management
solutions including black and white digital and analog copiers, color copiers,
facsimile machines, multi-function devices, dictation equipment, computer based
health care information management systems, associated parts and supplies, and a
variety of related outsourcing services, including legal support services.
Lanier sources substantially all of these products from a variety of
manufacturers, seeking out the "best-of-breed."
In March 1997, Lanier acquired Quorum Group, Inc., a litigation services
company (the "Quorum Acquisition"). In July 1998, Lanier acquired the Copying
Systems Division of Agfa-Gevaert Group ("Agfa") for $168.3 million (the "Agfa
Acquisition"). The sale of Agfa private label products has added $201.5 million
in revenues for the year ended July 2, 1999. The combined effect of these sales
and the additional sales force presence provided by the Agfa Acquisition has
effectively doubled Lanier's sales and market size in the European office
equipment market.
In May 1999, Lanier sold its electronic medical transcription services
business to MedQuist Transcriptions, Ltd. for approximately $34.0 million. The
sale resulted in a pre-tax gain of $21.5 million. In June 1999, Lanier sold its
direct sales operations in France which resulted in a $4.0 million pre-tax loss.
In connection with its internal audit reviews in early 1999, Lanier
detected accounting misstatements by a former employee at one of its foreign
subsidiaries. These misstatements resulted in an overstatement of earnings over
the past five fiscal years in an aggregate amount of $10.0 million before income
taxes. The financial statements included in this document reflect the correction
of such misstatements. Lanier management has completed its investigation of
these matters and believes that no further correction will be required.
COMPONENTS OF NET INCOME
Lanier derives its revenues from three primary sources: (i) sales of
equipment and related supplies and rental equipment under operating lease
agreements; (ii) service of equipment under maintenance agreements, consulting,
facilities management and other professional services; and (iii) finance income
associated with leases. Revenues generated by these areas depend upon a number
of factors, such as the technological competitiveness of its product line,
demand for and price of equipment, Lanier's reputation for providing timely and
reliable service, Lanier's competition in the industry and general economic
conditions.
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Net Sales. Net sales consists of revenue from product sales, rentals and
service revenue, net of any returns and finance income.
Cost of Goods Sold. Cost of goods sold consists primarily of the cost of
new equipment, cost of supplies and parts, labor costs to provide services,
rental equipment depreciation and other direct operating costs. Lanier
depreciates its rental equipment primarily over periods of three to five years
on a straight-line basis.
Operating Expenses. Operating expenses consist of selling, administrative,
engineering and general expenses, including salaries, wages and related expenses
paid to employees, advertising costs, employee training costs, occupancy of
leased space directly related to sales or service, and other selling expenses.
Operating expenses also include all overhead expenses related to Lanier's
corporate offices, such as salaries, taxes and benefits, occupancy of corporate
leased space, training and travel expenses.
Other Income and Expense. Other income and expense consists of provisions
for bad debts, interest expense, amortization of goodwill, royalties and other
miscellaneous items of income and expense.
RESULTS OF OPERATIONS
Operating expenses include charges by Harris to Lanier for Lanier's
proportionate share of legal, financial, and other administrative expenses.
Following the Distribution, Lanier plans to acquire these services independently
of Harris. Although it is not possible to predict accurately what relationship
the future expense will bear to the historic expense for these items, Lanier
does not expect that the acquisition of these services from sources independent
of Harris will have any material adverse effect.
Interest expense reflected in the historical financial statements is
related to currently outstanding debt. Future interest expense will be
significantly higher as a result of debt incurred related to the Distribution.
See "-- Credit Facility" beginning on page 33.
FISCAL YEAR ENDED JULY 2, 1999 COMPARED TO FISCAL YEAR ENDED JULY 3, 1998
Net Sales. Net sales increased 14.0% to $1,430.5 million in fiscal year
1999 from $1,254.8 million in fiscal year 1998. This increase is primarily
attributable to the Agfa Acquisition, which was completed at the beginning of
the first quarter.
Product sales and rental revenue increased 11.9% to $807.5 million for the
fiscal year compared to $721.8 million for the prior fiscal year. Increased
sales and rentals resulting from the Agfa Acquisition were $101.3 million for
the fiscal year. The increase in product sales and rental revenues from the Agfa
Acquisition was partially offset by increased competition and by the continued
market transition from analog to digital copier technology. This transition has
resulted in a market-wide excess supply of analog copiers, which is driving down
prices on used and re-manufactured equipment.
Service revenue increased 16.9% to $623.0 million for the fiscal year from
$533.0 for the prior fiscal year. This increase is primarily due to the Agfa
Acquisition, which contributed $100.2 million of service revenue for the fiscal
year.
Sales from Lanier's operations outside of the United States increased by
53.2% to $569.2 million for the fiscal year compared to $371.5 million for the
prior fiscal year. Sales from Agfa private label products and services in Europe
and the United Kingdom provided $201.5 million for the fiscal year. Sales in the
United States decreased 2.5% to $861.3 million for the fiscal year from $883.8
million for the prior fiscal year.
Gross Margin. Gross margin on product and rental revenue declined to 32.2%
of net sales for the fiscal year compared to 37.1% for the prior fiscal year.
This decline was primarily a result of increased price competition on analog
products coupled with lower overall margins on digital products. Margins were
also impacted by management's decision to record a pre-tax charge to cost of
product sales and rentals of $8.0 million in order to write down obsolete analog
and older generation digital product lines to their net realizable values. This
action was primarily a result of the fact that the shift in technology in the
document imaging industry from analog products to digital products has occurred
at a much more rapid rate than either the industry or Lanier's management had
anticipated, resulting in an excess supply of analog and older generation
digital products.
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Lanier's sales of used analog products decreased 33% in unit terms during fiscal
year 1999, while placements of digital products increased by over 300% in unit
terms during the same period. This trend has accelerated during the third and
fourth quarters of fiscal year 1999. In the month of April 1999, for the first
time, sales of Lanier's digital products exceeded sales of its analog products.
Additionally, in recent months, Lanier has observed a dramatic decline in demand
for analog products. Lanier also recorded a $2.0 million inventory charge
related to a discontinued product line which is described below under "Other
Income and Expense." Service margins increased to 43.9% compared to 42.8% of net
sales for the prior fiscal year. This increase was the result of reductions in
personnel and related compensation expenses following Lanier's restructuring
actions and cost containment programs, which were initiated in fiscal year 1998
and completed in fiscal year 1999.
Operating Expenses. Selling and administrative expenses increased 6.8% to
$438.5 million for the fiscal year compared to $410.5 million for the prior
fiscal year. Selling and marketing expenses increased by $19.9 million in total
dollars as a result of the Agfa Acquisition, but decreased from 16.8% to 16.1%
of net sales. General and administrative expenses increased by $10.3 million in
total dollars as a result of the Agfa Acquisition, but decreased from 14.3% to
13.3% of net sales. This increase included $5.0 million of non-recurring
integration costs related to the Agfa Acquisition.
Other Income and Expense. Finance income increased $4.6 million for the
fiscal year over the prior fiscal year due to increased customer leasing.
Interest expense increased to $22.7 million as compared to $8.2 million during
the prior fiscal year primarily due to borrowings used to fund the Agfa
Acquisition. Other-net expense decreased $4.1 million for the fiscal year over
the prior fiscal year due primarily to the gain from sale of Lanier's electronic
medical transcription services to Medquist, offset by an increased provision for
doubtful accounts, loss from the sale of Lanier's direct sales operations in
France, and write-off of its investment in a technology-related company.
Lanier's management determined that its investment in this technology-related
company had been significantly impaired due to developments related to this
company and Lanier's decision to discontinue the product line which utilized the
software sold by the company. Lanier therefore recorded an impairment charge of
relating to these assets in 1999, which is described in Note R to the
accompanying financial statements.
Net Income. Net income increased 13.5% to $71.3 million for the fiscal year
compared to $62.8 million in the prior fiscal year. Net income for domestic
operations declined 8.1% to $48.7 million as compared to $53.0 million during
the prior fiscal year. Net income from international operations increased 130.6%
to $22.6 million from $9.8 million during the prior fiscal year. This increase
primarily resulted from the income generated by European operations from the
sale of Agfa products and services.
FISCAL YEAR ENDED JULY 3, 1998 COMPARED TO FISCAL YEAR ENDED JUNE 27, 1997
Net Sales. Net sales increased 7.2% to $1,254.8 million in fiscal year 1998
from $1,170.0 million in fiscal year 1997. Product sales and rental revenue in
Lanier's core business increased by $17.5 million. Of this amount, $8.6 million
resulted from the acquisition of six copy and dictation companies. The remainder
of the increase resulted from internal growth.
Service related revenue increased by $67.3 million, or 14.4%, to $533.0
million. The facilities management product line contributed $36.2 million of
this increase, primarily as a result of having a full year of revenue in fiscal
year 1998 as a result of the Quorum Acquisition. The incremental fiscal year
1998 revenue over fiscal year 1997 revenue resulting from the Quorum
Acquisition, which was completed during the third quarter of fiscal year 1997,
was $20.5 million. Lanier also acquired two other facilities management
companies in fiscal year 1998 which resulted in $6.6 million of incremental
revenue for the period. The remainder of the service revenue increase was a
result of growth in equipment service revenue and transcription services.
Lanier's sales outside the United States increased 2.6% to $371.5 million
in fiscal 1998 compared to $362.2 million in fiscal year 1997. Lanier's European
operation experienced a $12.8 million decrease, while sales in the Latin
American region increased $11.8 million. Lanier's operations in Australia,
Canada and the United Kingdom contributed to a smaller increase.
Gross Margin. Gross Margin decreased from 41.7% of net sales in fiscal year
1997 to 39.5% of net sales in fiscal year 1998. Gross margins were lower in
fiscal year 1998 as a result of increasing price competition
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throughout the copier industry. Margin pressure has also resulted from the lower
margin outsourcing and service based businesses becoming a larger portion of
Lanier's revenue.
Operating Expenses. Selling, administrative and general expenses for fiscal
year 1998 remained relatively constant in absolute dollars but decreased as a
percentage of net sales from 34.1% in fiscal year 1997 to 32.7% in fiscal year
1998. Selling, administrative and general expenses all contributed to reduced
operating expenses as a percentage of net sales.
Restructuring Charge. In fiscal year 1998, Lanier recorded a charge to
income of $8.5 million ($5.3 million after tax) related to the restructuring of
the organization. Of the total amount, approximately $3.0 million was used in
the U.S. operations and approximately $5.5 million was used in the European
operations. These cash charges reflect the costs of severance payments and
outplacement services for approximately 350 terminated employees. These
employees were from the general/administrative and service groups.
Other Income and Expense. Finance income increased $3.7 million in fiscal
year 1998 due to increased customer leasing. Interest expense decreased by $0.6
million from fiscal year 1997 due to a favorable average interest rate of 8.4%
in 1998 as compared to 9.2% in 1997. Other-net expense decreased $5.1 million in
fiscal year 1998 due primarily to lower provisions for doubtful accounts and
prior year expenses associated with acquisitions of new businesses.
Net Income. Net income for fiscal year 1998 decreased 1.4% to $62.8 million
from $63.7 million in fiscal year 1997. Fiscal year 1998 net income attributable
to domestic operations increased 0.6% to $53.0 million from $52.7 million in the
prior year. Net income attributable to international operations in 1998
decreased 10.9% to $9.8 million compared to $11.0 million in fiscal 1997.
LIQUIDITY AND CAPITAL RESOURCES
Lanier's net cash flow provided by operating activities was $57.6 million,
$146.4 million and $106.1 million in fiscal years 1999, 1998 and 1997,
respectively. The decrease in fiscal year 1999 operating cash flows was
primarily due to cash transfers and repayment of intercompany loans to Harris
offset by a $61.9 million reduction in inventory levels during the period.
Lanier used $222.1 million, $98.4 million and $107.5 million net cash in
investing activities during fiscal years 1999, 1998 and 1997, respectively.
During fiscal year 1999, Lanier used $171.1 million for acquiring new
businesses, $168.3 million of which related to the Agfa Acquisition.
Cash provided by financing activities was $90.1 million for the fiscal year
ended July 2, 1999, consisting of financing used in the Agfa Acquisition, net of
positive cash flows during the remainder of the fiscal year.
Lanier has no material commitments other than its supply agreements with
its vendors. Lanier will continue to make additional investment in facilities,
equipment and computer equipment in order to support its revenue growth.
Lanier's cash flow from operations, together with anticipated borrowing
arrangements, is expected to adequately finance its operating cash requirements
and capital expenditures for the next fiscal year. Lanier expects to fund future
acquisitions and long-term growth primarily with cash flows from operations,
borrowings under the Credit Facility and possible future sales of additional
equity or debt securities.
Capital expenditures for plant and equipment were $21.6 million for fiscal
year 1999, up $2.6 million from the total fiscal year 1998 expenditures. For
fiscal year 1999, $63.5 million was invested in equipment for rental to
customers, which is slightly less than the amount invested for fiscal year 1998.
CREDIT FACILITY
Prior to the Distribution, Lanier will incur debt under the Credit Facility
in connection with the payment of a cash payment of approximately $546 million
by Lanier to Harris immediately prior to the Distribution. As a result of this
incurrence of debt and the assumption or retention by Lanier of certain
indebtedness relating to Lanier's business, Lanier will have approximately $700
million of indebtedness net of cash on the Distribution Date.
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Lanier has executed definitive loan documents with ABN AMRO Bank N.V.,
SunTrust Bank, Atlanta and SunTrust Equitable Securities Corporation, Wachovia
Securities, Inc. and Wachovia Bank N.A.
The Credit Facility contains financial covenants. In particular, the Credit
Facility contains (i) a covenant regarding maintenance of a leverage ratio,
which is defined as total debt divided by EBITDA (earnings before interest,
taxes, depreciation and amortization), (ii) an interest coverage covenant, which
is defined as EBITDAR (earnings before interest, taxes, depreciation,
amortization and rental expense) divided by interest and rental expense and
(iii) a minimum net worth covenant. The Credit Facility restricts the ability of
Lanier and its subsidiaries to pay dividends or make other distributions and to
redeem, purchase or otherwise acquire shares of its capital stock, and prohibits
any such dividend, distribution, redemption, purchase or other acquisition
during the existence of a default or event of default thereunder.
Additionally, the Credit Facility contains covenants which, among other
things, require production of financial statements, notice of material
litigation and material governmental and environmental proceedings, compliance
with laws and contractual obligations, payment of taxes, maintenance of
insurance and Year 2000 compliance and limit the incurrence of additional
indebtedness, mergers, consolidations and sales of assets, dividends, stock
redemptions and the prepayment of other debt, investments and acquisitions,
capital expenditures, sales and leaseback transactions and transactions with
affiliates. The Credit Facility also contains customary events of default,
including payment defaults, inaccuracies of representations and warranties,
violation of covenants and cross defaults to other indebtedness of Lanier.
Lanier's indebtedness under the Credit Facility will be guaranteed by
Lanier's domestic subsidiaries, and will be secured by a pledge of the capital
stock of certain of Lanier's subsidiaries.
Lanier may also incur additional indebtedness under the Credit Facility
from time to time for general corporate purposes, including working capital,
capital expenditures and future acquisitions.
The final terms of the Credit Facility (including pricing, structure and
other terms) remain subject to possible change until the credit line available
thereunder has been fully syndicated in accordance with the terms of the
commitment letter and the definitive loan documents. Lanier anticipates that the
final syndication of the Credit Facility will occur after the Distribution.
However, the principal lenders under the Credit Facility will be fully committed
to make loans under the Facility (including the amount necessary to fund the
cash payment to be made by Lanier to Harris pursuant to the Distribution
Agreement prior to the Distribution), even if the final syndication is not
completed as of the Distribution Date.
This description is intended as a summary only and is qualified in its
entirety by reference to the 5-Year Credit Agreement and the 364-Day Credit
Agreement, which are included as exhibits to the Registration Statement.
In the fourth quarter of fiscal year 1999, Lanier sold receivables totaling
$36.5 million under its European asset securitization agreement. This
transaction is treated as a sale of receivables and therefore is not reflected
on the balance sheet. This amount is included in determining indebtedness as
stipulated in the dividend formula described in "Relationship Between Harris and
Lanier Following the Distribution -- Distribution Agreement" beginning on page
19.
IMPACT OF FOREIGN EXCHANGE
Lanier's international business is transacted in local currency. The impact
of translating the assets and liabilities of these operations to U.S. dollars is
included as a component of shareholder equity. At July 2, 1999 the cumulative
translation adjustment reduced shareholder equity by $33.5 million compared to a
reduction of $31.0 million at July 3, 1998.
Lanier utilizes exchange rate agreements with suppliers and foreign
currency hedging instruments to minimize the risks of international
transactions. Gains and losses resulting from currency rate fluctuations did not
have a material effect on Lanier's results in fiscal years 1999, 1998 or 1997.
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SEASONALITY AND INFLATION
Lanier's management does not believe that Lanier's business is subject to
significant fluctuations based on seasonal effects.
Lanier's management does not believe that the rate of inflation has had a
material effect on the operating results of Lanier because, to the extent
feasible, Lanier has consistently followed a practice of adjusting its prices to
reflect the impact of inflation on wages and salaries for employees and costs of
purchased materials and services.
MARKET RISK
Impact of Foreign Exchange. Lanier's international sales are generally
denominated in the currency of the customer, which exposes Lanier to
fluctuations in foreign currency exchange rates and to other material risks
associated with international operations. Lanier has not in the past suffered a
material adverse impact from currency fluctuations for any of the periods under
consideration. Lanier's risk from such activities has been reduced because
Lanier has been able to pay the expenses of its international operations in
local currencies, which has lessened the need for conversion into U.S. dollars.
In addition, Lanier utilizes exchange rate agreements which provided limited
protection against currency exchange risks. Factors that could impact the
effectiveness of Lanier's hedging program include volatility of currency markets
and the cost and availability of hedging instruments. A ten percent adverse
change in currency exchange rates for Lanier's foreign currency derivatives held
at July 2, 1999 would have an impact of approximately $15.7 million on the fair
value of such instruments. This quantification of exposure to the market risk
associated with foreign exchange financial instruments does not take into
account the offsetting impact of changes in the fair value of Lanier's foreign
denominated assets, liabilities, and firm commitments.
Gains and losses resulting from currency rate fluctuations did not have a
material effect on Lanier's results of operations in fiscal years 1999, 1998 or
1997, but Lanier's risk in this area may increase in this regard as Lanier's
international sales increase in volume and geographic distribution. The impact
of translating the assets and liabilities of those operations into U.S. dollars
is included as a component of Shareholder Equity.
Interest Rate Risk. The financial statements included in this document were
prepared based upon Lanier's current financing structure. Under this structure,
Harris provides financing to Lanier via its own lines of credit. Following the
Distribution, Lanier will arrange its own capital structure independent of
Harris. Although it is not possible to predict accurately the exact nature of
this capital structure or its related expense, Lanier does not expect an adverse
effect from this change.
IMPACT OF YEAR 2000
The Year 2000 statements set forth below are designated as "Year 2000
Readiness Disclosures" pursuant to the Year 2000 Information and Readiness
Disclosure Act.
Certain software and hardware systems are time sensitive. Older
time-sensitive systems often use a two-digit dating convention (e.g., "00"
rather than "2000") that could result in system failure and disruption of
operations as the Year 2000 approaches. The Year 2000 problem will impact
Lanier, its vendors and suppliers, customers, and other third parties that
interface with Lanier.
With regard to the Year 2000 problem, more than 40 project initiatives of
varying magnitudes have been identified throughout Lanier and its various
business operations. These initiatives relate to four basic aspects of Lanier
and its various business operations: internal information technology ("IT")
systems, including sales order processing, contract management, financial
systems and service management; internal non-IT systems, including office
equipment and test equipment; products; and material third-party relationships.
Each project has been assigned a leader and prioritized based on the size
of the task and the perceived business risk. Lanier has established a Year 2000
Task Force to manage Lanier's overall internal readiness and its business
continuity planning efforts, and has created a web site at www.lanier.com, on
which it provides detailed information and updates concerning Year 2000 issues,
Lanier's efforts to address such issues, and the Year 2000
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compliance of its products and internal systems. Lanier has substantially
completed all of its Year 2000 initiatives.
Internal IT Systems. Lanier has determined it needs to replace or modify
several of its software systems and is in the process of replacing or
outsourcing many of its time-sensitive software systems. In addition, Lanier has
programs for reprogramming other time-sensitive software and equipment. For
example, Lanier has replaced its accounts receivable and payable systems and its
internal purchasing system. Lanier has upgraded its general ledger system to be
Year 2000 compliant and has modified its sales order processing system, billing
system and its contract management system to be Year 2000 compliant. In October
1999, Lanier will transfer the compliant service system software to a new Year
2000 compliant Unix platform. As a result, Lanier believes that it will be
substantially complete with its internal IT systems by October 31, 1999.
Internal Non-IT Systems. Lanier believes that a limited number of its
non-IT systems, such as office equipment and test equipment with date-sensitive
software and embedded microprocessors, may be affected. Lanier believes that its
exposure related to non-IT systems is minimal and that a disruption of any of
these systems will not materially inhibit its ability to conduct business
operations.
Products. Lanier has initiated formal programs to advise and work with
customers to resolve Year 2000 problems. Lanier's current product offerings are
Year 2000 compliant, with limited exceptions. Customers who own older generation
products which are not Year 2000 compliant have been notified of the issue and,
wherever possible, been given suggestions for manual overrides of the particular
product. However, Lanier believes it has no material exposure to contingencies
related to the Year 2000 issue for the products it has sold. Lanier has Year
2000 exposure in its operating systems and business systems; including
engineering, order fulfillment, program management, financial and administrative
functions. It is Lanier's belief that the greatest potential risk from the Year
2000 issue could be its inability to meet commitment dates on delivery of
product and has focused the majority of Lanier's effort and dedicated resources
to address this issue. In addition, Lanier believes that a limited number of the
non-information technology systems, such as office equipment and test equipment
with date-sensitive software and embedded microprocessors may be affected, and
evaluation and remediation are underway.
Material Third-Party Relationships. Lanier has also initiated
communications with significant suppliers, customers, and other relevant third
parties to identify and minimize disruptions to Lanier's operations and to
assist in resolving Year 2000 issues. Lanier has identified 40 key suppliers and
performed an in-depth analysis of the product lines provided to Lanier in order
to ensure that such products are Year 2000 compliant. Additionally, Lanier has
identified critical parts and components necessary to support its existing
product lines and is building safety stocks of these items prior to the end of
the calendar year 1999. However, there can be no certainty that the systems and
products of other companies on which Lanier relies will not have an adverse
effect on Lanier's operations.
The estimated cost for resolving Year 2000 issues was approximately $11.5
million with an approximate remaining balance of $0.4 million planned for fiscal
year 2000. These costs are generally not incremental to existing information
technology budgets; internal resources were re-deployed and timetables for
implementation of replacement systems were accelerated. The largest portion of
this expenditure is being used to replace existing software and hardware.
Approximately $5.2 million of the above total is related to investments in
hardware or other capitalizable costs or operating leases which will be
amortized in current or future periods. Estimates of the Year 2000 related costs
are based on numerous assumptions and there is no certainty that estimates will
be achieved and actual costs could be materially greater than anticipated.
Specific factors that might cause such differences include, but are not limited
to, the continuing availability of personnel trained in this area, the ability
to timely identify and correct all relevant computer programs, and similar
uncertainties.
Lanier is working to identify and analyze the most likely worst-case
scenarios, any of which could have a material adverse effect on Lanier's ability
to provide products and services to its customers. These possible scenarios
include the failure of water and power supplies, the failure of communications
and financial systems, major transportation disruptions, and lack of Year 2000
readiness of third-party vendors and customers. Lanier continues to develop
contingency plans to address potential Year 2000 problems relating to the
infrastructure and Lanier's business partners as potential problems are
identified. Despite such efforts, an infrastructure problem or
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combination of the above-mentioned Year 2000 problems not within Lanier's
control could have a material adverse impact on Lanier's business and its
results of operations.
EURO CONVERSION
On January 1, 1999, certain member nations of the EMU adopted a common
currency, the Euro. For a three-year transition period, both the Euro and
individual participants' currencies will remain in circulation. After January 1,
2002, the Euro will be the sole legal tender for EMU countries. The adoption of
the Euro affects a multitude of financial systems and business applications as
the commerce of these nations will be transacted in the Euro and the existing
national currency. For fiscal year 1999, approximately 20.7% of Lanier's
revenues were derived from EMU countries.
Lanier is currently addressing Euro-related issues and its impact on
information systems, currency exchange rate risk, taxation, contracts,
competition, and pricing. For fiscal year 1999, Lanier did not experience an
adverse impact or material expense related to the adoption of the Euro. All cost
associated with the adoption of the Euro has been expensed by Lanier as
incurred. Lanier has completed the Euro-related information systems conversion
for all information systems except for its European financial systems. Lanier
has implemented the Euro-compliant version of its European financial systems;
however, several program inefficiencies remain which can be resolved only by the
financial systems' vendor. Lanier's management expects that these inefficiencies
will be corrected by the vendor so that Lanier's first customer conversion will
occur before November 30, 1999.
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LANIER'S BUSINESS
GENERAL
Lanier is a worldwide independent supplier of copiers, facsimiles and other
related automated office imaging equipment. With over 1,600 sales and service
locations in more than 100 countries, Lanier markets these products and related
services, parts and supplies to customers both on a direct sales basis and
through a worldwide network of independent dealers. Lanier provides customers
with a wide array of customized document management solutions including black
and white digital and analog copiers, color copiers, facsimile machines,
multi-function devices, dictation equipment, computer based health care
information management systems, associated parts and supplies, and a variety of
related outsourcing services, including legal support services. Lanier sources
substantially all of these products from a variety of manufacturers, seeking out
the "best-of-breed." Selected products undergo rigorous testing by Lanier, and
upgrades are often recommended to the manufacturers in order to meet Lanier's
demanding standards.
Lanier derives its revenues from three primary sources: (i) sales and
rentals of equipment and related supplies; (ii) service of equipment under
maintenance agreements, consulting, facilities management and other professional
services; and (iii) finance income. Revenues from these three sources in fiscal
year 1999 were $808 million, $623 million and $38 million, respectively.
Lanier's revenues from these three sources in fiscal year 1998 were $722
million, $533 million and $33 million, respectively. Revenues from these three
sources in fiscal year 1997 were $704 million, $466 million and $30 million,
respectively. Lanier's revenues from the sale, servicing and financing of
copiers in fiscal years 1999, 1998 and 1997 were $1,036 million, $884 million
and $826 million, respectively. Lanier's revenues from the sale, servicing and
financing of facsimile machines in fiscal years 1999, 1998 and 1997 were $166
million, $150 million and $157 million, respectively. Lanier's revenues from the
sale, servicing and financing of dictation equipment in fiscal years 1999, 1998
and 1997 were $130 million, $131 million and $137 million, respectively.
Lanier's revenues from the sale, servicing and financing of other office
equipment in fiscal years 1999, 1998 and 1997 were $137 million, $123 million,
and $80 million respectively.
Lanier targets sales of its products to four primary markets: (i)
global/national or "key" accounts; (ii) major accounts; (iii) commercial users;
and (iv) specific vertical industries, such as the health care and legal
industries. Some of Lanier's national account customers include Abbott
Laboratories, Corning, Inc., CountryWide Home Loans, Federal Express, Merck &
Company, Inc., Minnesota Mining & Manufacturing Co. and the National Aeronautics
& Space Administration (NASA). No national account customer represents more than
1% of Lanier's total sales.
Lanier, headquartered in Atlanta, Georgia, was founded in 1934 as The
Lanier Company, a Southeastern distributor of "Ediphone" dictation machines.
Lanier entered the copier business in 1955 as an independent distributor of 3M
"Thermofax" dry process copiers. In 1977, Lanier was spun-off as a separate
public company from its then-parent corporation, Oxford Industries. Lanier, then
known as Lanier Business Products, was subsequently acquired by Harris in 1983.
In 1985, Lanier was incorporated in Delaware as Harris/3M Document Products,
Inc., a joint enterprise between Lanier Business Products, Inc., a subsidiary of
Harris, and the Minnesota Mining and Manufacturing Co. Harris purchased 3M's
interest in that venture in 1989 and changed the name of the company to Lanier
Worldwide, Inc.
INDUSTRY OVERVIEW
The document imaging and management industry consists of the production and
supply of various imaging products and supplies, as well as the provision of
pre-sale consulting services and after-market product services. Lanier's
competitors include the distribution units of large office equipment
manufacturers and other independent distributors. According to industry sources,
the total global market for its document imaging and management products and
services will grow from approximately $75 billion in 1999 to approximately $97
billion in 2002.
Companies in the document imaging industry sell products primarily through
three channels of distribution: (i) direct customer sales; (ii) dealer sales;
and (iii) retail sales. Direct customer sales include sales calls by sales force
personnel, sales through telephone marketing and internet sales. Dealer sales
result from customer calls
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performed by independent or company-owned dealer outlets. Retail sales include
sales of low-end products, typically through national retail outlets or local
smaller retailers.
Traditionally, the products offered by companies in the document imaging
industry have used analog technology. Lanier's management believes, however,
that customers' increasing use of digital technology will eventually lead to the
replacement of analog products with digital products. According to industry
sources, approximately 378,000 digital copiers were sold in the United States in
1998 (or approximately 19.6% of new copiers shipped in 1998), an increase of
1,114% since the end of 1996. Industry sources predict that, by the end of 2003,
approximately 87% of all new copier placements will be digital machines. Digital
products, unlike analog products, can connect and communicate with other office
imaging equipment, enabling customers to more efficiently connect and utilize
their document management solutions over a wide array of configurations. Digital
products may also offer a wider array of more useful features, such as higher
quality copies, color capability, finishing capability and multi-function
capability. The market trend toward digital technology has also led document
management companies to include training for sales, service, maintenance and
help desk personnel with respect to the new digital products.
As document imaging products and services have become more complex and
service-intensive, customers have begun to seek outsourcing services, such as
facilities management services, and professional services that require expertise
in document imaging and management, such as consulting services and systems
integration services.
The document imaging industry as a whole remains highly fragmented, with
only a few large companies. Many customers purchase products through independent
dealers that operate only in a particular geographic area. As digital technology
replaces analog technology, many of these independent dealers may not have the
training to sell or service the new technology. Further, as customers
consolidate their accounts in order to integrate their document management
solutions, they may seek providers that have a larger geographic scope. Thus,
smaller independent dealers may determine to sell to larger companies in the
industry who have more training capability and cover a larger geographic area.
Further, the fragmented nature of the industry allows for consolidation in order
to achieve economies of scale and lower operating expenses on a company-wide
basis.
LANIER PRODUCTS AND SERVICES
Lanier offers its customers a comprehensive solution to their document
management needs through products and services that take advantage of
technological advancements and Lanier's experience in the document imaging and
management industry.
PRODUCTS
Lanier offers a full range of document copiers, from desktop units to high
speed and high volume systems. Within this range, Lanier offers both color
copiers and black and white copiers, as well as both analog and digital copiers.
Lanier offers several devices that perform more than one traditional function
that can print multiple original copies direct from the customer's networked
systems as a finished (i.e., stapled, collated, etc.) document product.
Lanier also offers a full range of facsimile machines. Lanier offers
multi-function products that can meet customers' facsimile needs, as well as
traditional stand-alone machines.
Finally, Lanier offers a range of both digital and analog dictation
products.
SERVICES
Product Support. Lanier's service force provides a range of product-support
services from traditional on-site repairs to after-market supplies such as toner
and paper products. Lanier supports many of its customers with around the clock,
seven days a week on-site service, and supports all of its customers' service
and help needs with a sophisticated logistics, call reception/dispatch and
multi-level help desk and hotline. Additionally, Lanier provides customer
application training and support if needed by the customer.
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Lanier has a worldwide service force of approximately 2,900 employees.
Lanier continually trains its sales force on new products, technologies, and
sales techniques. Because of the industry trend toward digital technology and
new systems, Lanier's management believes that its training and instruction
services, as well as its help desk and hotline, provide Lanier with an advantage
over its competitors.
Outsourcing Services. Lanier provides its customers with a wide range of
consulting and professional services, such as facilities management, systems
integration and other consulting services.
Through its facilities management services, Lanier can equip, staff and
manage most aspects of a customer's reprographic and document management needs
at the customer's facility. In addition to copying and printing, Lanier provides
file room maintenance, decentralized copier management, facility mail and
courier services and address list maintenance. Lanier seeks to work with the
customer to identify methods in which Lanier can help meet all of the customer's
document management needs, whether by implementation of new products or by
systems integration.
Lanier's systems integration services offer customers the ability to
leverage Lanier's substantial experience in the areas of connectivity and
efficiency of document management networks. Lanier helps customers enhance the
performance of their network by either adding new or enhanced technology
products or increasing the efficiency of the current system. As an example,
Lanier offers its health care clients a system that allows its customers to
connect a digital dictation station with the hospital database containing
patient records in order to enable doctors to view a patient's information while
at the same time dictating a diagnosis or prescription for the patient.
DOCutivity(TM) Approach. Lanier has implemented its DOCutivity(TM) approach
in order to improve its customers' document management productivity by
strategically integrating Lanier's products and services. DOCutivity(TM)
streamlines the process for customers and allows Lanier to provide each customer
with customized document analysis that will allow the customer to improve its
document productivity and efficiency. Each member of the Lanier sales force is
trained in the DOCutivity(TM) approach and analysis.
Through the DOCutivity(TM) approach, Lanier assesses the customer's
document management challenges and goals, while extensively analyzing the
customer's existing capabilities. Lanier's sales personnel examine the
customer's office and workgroup functions and determine the financial impact of
implementing a new, more productive and efficient document management solution
for the customer. Lanier's sales personnel then offer solutions to the customer
based on Lanier's extensive industry knowledge and experience, for an improved
document management strategy.
For example, one recent oil refinery customer sought to replace its analog
copiers supplied by multiple vendors on a cost-effective basis. Lanier sales
personnel used the DOCutivity(TM) analysis to implement a strategy to: (i)
reduce the customer's high cost of copying and print cartridges associated with
multiple vendors; (ii) improve efficiency by eliminating manual distribution of
documents; and (iii) eliminate redundancy in the document management cycle.
Lanier proposed an all-digital, multi-function device configuration connected to
the customer's Local Area Network. Through this configuration, Lanier helped the
customer (i) reduce costs by capturing original prints and their corresponding
replication and (ii) eliminate redundancy by combining the creation of originals
with both duplication and distribution. Overall, Lanier estimated that the
DOCutivity(TM) approach saved the customer approximately $144,000 per year in
excess costs.
PRODUCT FINANCING
A portion of Lanier's operating income arises from the financing of its
customers' purchases of Lanier products. On average, 46% of Lanier's aggregate
sales in the United States, Puerto Rico, Canada and Australia are financed
through leases that typically have a term of 3 years. In Europe, 16% of Lanier's
sales derive from rental arrangements that differ from leases primarily because
customers may terminate the rental agreement more quickly and easily. Lanier's
ability to provide financing at competitive rates and realize operating income
is highly dependent upon its own costs of borrowing, which, in turn, depend upon
Lanier's credit standing. Significant changes in such standing could reduce the
profitability of Lanier's financing business and/or make
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Lanier's financing less attractive to customers. Lanier cannot be certain that
it can maintain credit standing sufficient to realize profits on the portion of
its revenues derived from financing arrangements.
LANIER'S TARGET MARKETS
Lanier targets four primary markets: (i) global/national or "key" accounts;
(ii) major accounts; (iii) commercial accounts; and (iv) specific vertical
industry markets, such as the health care and legal industry.
National or "key" accounts are large corporations that tend to require full
document imaging and management throughout the customer's entire organization,
whether that organization is regional, national or global. Lanier management has
targeted these accounts with multiple sales and service entries as a growth
vehicle for Lanier because these accounts tend to generate substantial and
recurring revenues over longer-term contracts.
Some of Lanier's national or "key" accounts include Abbott Laboratories,
Corning, Inc., Countrywide Home Loans, Federal Express, Merck & Company, Inc.,
Minnesota Mining & Manufacturing Co. and the National Aeronautics & Space
Administration (NASA). No national account customer represents more than 1% of
Lanier's total sales.
Lanier has set specific criteria to define major accounts and identified a
list of these accounts in each district. Management is then focused on these
accounts utilizing major account representatives and the DOCutivity(TM)
methodology.
Lanier has also targeted commercial accounts, which are local or small
businesses. Sales to commercial accounts typically consist of the sale of Lanier
products, coupled with a maintenance and supply agreement.
Lanier also targets specific vertical industries that tend to involve more
intensive use of Lanier's products, such as the health care and legal
industries. Because of its heavy use of documents, Lanier sales and service
personnel target the legal market for the full range of Lanier products and
services. Lanier management believes that Lanier has a reputation for quality
products and superior after-sales service and support within the legal market.
Because of the legal market's use of multiple products that Lanier sells and
services, Lanier management believes that the legal market represents a
significant source for cross-selling opportunities.
Similarly, Lanier targets the health care industry because Lanier's
management believes it offers continued growth opportunities. Over 50% of the
hospitals in the United States use Lanier digital dictation systems, often in
multiple areas of the hospital. As digital systems become more accepted in other
areas of Lanier products (particularly copiers), management believes that Lanier
can leverage its reputation for digital dictation systems with these hospitals
in order to become the provider of choice for other products. In addition, the
increased complexity and connective nature of these products will allow Lanier
to offer to its health care customers its expertise in systems integration and
other consulting services.
STRATEGY
Lanier's goal is to become the leading global provider of document imaging
products and related services and support. In order to accomplish this goal,
Lanier intends to use the following strategies:
- continue to cultivate its "best of breed" sourcing and distribution
relationships;
- deliver integrated document management solutions to its customers;
- focus on customer satisfaction and retention;
- maintain and develop its effective marketing initiatives;
- attract, retain and incentivize its employees; and
- continue to add revenue and operating income through selective
acquisitions.
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Cultivate Sourcing and Distribution Relationships
Lanier has historically sought out the "best of breed" in its products by
sourcing products from a variety of manufacturers. Selected products undergo
rigorous testing by Lanier, and Lanier often recommends upgrades to its
suppliers. Lanier intends to continue to seek the best products available
throughout the world in order to offer the best possible products to its
customers. In particular, in order to maintain pace with the industry-wide shift
to digital products, Lanier intends to expand its offering of digital document
imaging products. Lanier believes that its current supplier relationships will
allow it to offer high-quality document imaging products in each segment of the
digital market. Lanier also intends to explore new relationships as
manufacturers develop new multi-function digital machines.
Deliver Integrated Document Management Solutions
Lanier sales personnel have been trained to approach every sales
opportunity using the DOCutivity(TM) sales method. Lanier seeks to offer its
customers a full range of products and services and to address its customers'
document production and management needs through an integrated document
solution. Management believes that this integrated DOCutivity(TM) approach
enables Lanier to be more successful in securing larger, national customers that
seek such comprehensive document solutions and generate substantial and
recurring revenues over longer term contracts. Management also believes that its
DOCutivity(TM) approach allows Lanier to cross sell its products and services,
as they comprise components of an integrated solution. Additionally, management
believes that as document management technology grows more complex, many
customers, particularly legal and other professional service providers, will
seek to outsource more of their document management functions. Lanier seeks to
continue to grow its facilities management business in order to meet the growth
in this document outsourcing market.
Focus on Customer Satisfaction
Lanier focuses on customer satisfaction as an opportunity to grow its
business through continuing and expanding its sales with existing customers.
Lanier analyzes its clients' document production and management needs and
challenges through the eyes of its customers, an approach Lanier refers to as
Customer Vision(TM). Management believes that this perspective allows Lanier to
align its business practices and processes with the way that its customers wish
to do business, build customer loyalty and foster long term customer
relationships. Lanier provides the Performance Promise(TM), which Lanier
believes is the document management industry's first and most comprehensive
product guarantee that covers all product lines and guarantees product
performance with 99% uptime, as well as a service availability guarantee. Lanier
also offers a 24 hour, seven day a week help desk to provide customer service
support by highly trained personnel that management believes helps contribute to
its reputation as a leading service provider in the industry. Lanier believes
that it has achieved customer satisfaction levels exceeding 90% in each of its
target markets in each of the last two fiscal years and has received customer
satisfaction awards from several of its customers, including Abbott
Laboratories, DuPont, Kinko's and Pacific Bell.
Maintain and Develop Effective Marketing Initiatives
Lanier believes that it has a high quality sales force that is trained in
effective sales techniques, sophisticated document imaging products, such as
digital and multi-function machines, and Lanier's DOCutivity(TM) sales approach.
Lanier seeks to capitalize on its trained sales force by cross selling its
products and services to its customers through the integrated DOCutivity(TM)
approach. Management also seeks to grow its business by marketing its global
presence to multi-national customers that seek a worldwide product and service
provider. Lanier is also expanding its low cost telemarketing initiative, which
currently accounts for a majority of the sales of its supplies and lower end
products. Lanier is also seeking to develop marketing and sales of its products
over the Internet.
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Attract, Retain and Incentivize Employees
Management believes that Lanier can stimulate internal growth by continuing
to attract and retain high quality employees. Management also believes that
Lanier can increase the productivity of its sales personnel through the use of
performance benchmarks and other incentive opportunities. Lanier management
believes that the ability to offer equity incentives to its employees that match
Lanier's performance as a stand-alone company will aid its efforts to increase
its employees' productivity.
Grow through Selective Acquisitions
Lanier will actively seek strategic acquisitions that complement its
existing businesses, either in Lanier's existing markets or in new markets.
Lanier seeks acquisition targets that embody a similar culture to Lanier's and
that management believes it can successfully integrate into Lanier's existing
businesses. Lanier seeks to make acquisitions that will enable Lanier to
leverage cost saving opportunities and increase revenue and operating income.
During the last three fiscal years, Lanier has acquired 18 businesses, including
the Copying Systems Division of Agfa in July 1998. The Agfa Acquisition added
$201.5 million in revenues for the fiscal year ended July 2, 1999, and doubled
Lanier's sales and market size in the European office equipment market.
EMPLOYEES
Lanier employs approximately 8,700 individuals throughout the world,
including 2,100 sales personnel. None of Lanier's United States employees is
covered by a collective bargaining agreement. Management believes that Lanier
has good relations with its employees.
SALES AND MARKETING
Lanier distributes its sales personnel both geographically and by target
market. Lanier operates domestically from 106 district offices in the United
States and operates internationally through subsidiaries and branches located in
27 countries throughout the world. Lanier is represented through independent
distributors in over 80 additional countries. Overall, Lanier operates over
1,600 sales and service locations throughout the world. Lanier's Global Accounts
Program enables its international customers to make supplier and equipment
selections on a worldwide basis through one agreement in order to improve the
customer's purchasing power, office productivity and operating efficiency.
Lanier has separate sales groups focused on each of its target markets, with
sales personnel dedicated to each of the global/national, major, commercial,
health care and legal target markets.
INTERNATIONAL OPERATIONS
Net sales from international operations were $569.2 million, or 39.8% of
Lanier's total net sales for fiscal year 1999 compared with $371.5 million, or
29.6%, for fiscal year 1998. Foreign operations represented 50.4% of long-lived
assets as of July 2, 1999, compared to 23.0% of long-lived assets as of July 3,
1998. Lanier's products are primarily produced in Asia.
The particular economic, social and political conditions for business
conducted outside of the United States differ from those encountered by domestic
operations. Management of Lanier believes that the composite business risk for
Lanier's international operations as a whole is somewhat greater than that faced
by its domestic operations as a whole. Lanier's international operations are
subject to political, economic and other risks inherent in operating in
countries outside the United States, including possible adverse government
regulation, imposition of import and export duties and quotas, currency
restrictions, price controls, potentially burdensome taxation and/or other
restrictive government actions. See "Risk Factors -- Lanier is Subject to Risks
Related to International Operations" on page 11. Nevertheless, Lanier's
management believes that these risks are offset by the diversification of
Lanier's international operations.
Financial information regarding Lanier's domestic and international
operations is contained in Note O to Lanier's Consolidated Financial Statements.
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SUPPLIERS
Lanier sources its products from multiple suppliers throughout the world,
including Ricoh, Toshiba, Canon, Sharp and Okidata. Although Lanier has
contractual relationships with many of its suppliers, Lanier continually seeks
the best products to offer to its customers and does not enter into exclusive
arrangements with any of its suppliers. Management does not believe that Lanier
depends on any one particular supplier.
TRADEMARKS AND LICENSES
Lanier distributes its products principally under the Lanier trademark.
Lanier expects to begin selling and servicing Hewlett-Packard's Mopier line of
products under the Hewlett-Packard trademark, in addition to products sold under
the Lanier trademark.
COMPETITION
Lanier operates in highly competitive markets. Lanier's competitors include
the distribution units of large office equipment manufacturers and independent
distributors, as well as office superstores and consumer electronics chains. As
digital and other new technology develops, Lanier may find itself competing with
new distribution channels, including computer distributors and value added
resellers, for products containing new technology. Principal areas of
competition in these markets include price and product capabilities, quality and
speed of post-sales service support, availability of equipment, parts and
supplies, speed of delivery, financing terms and availability of financing,
leasing or rental programs.
PROPERTIES
Lanier generally leases its business properties, with the exception of two
facilities that consist of a total of approximately 200,000 square feet located
in Wilmington, Delaware and Tucker, Georgia, neither of which are material to
the operations of Lanier as a whole. Lanier leases a total of approximately 1.6
million square feet of space for its business operations in the United States.
Management of Lanier believes that the properties Lanier occupies are, in
general, suitable and adequate for the purpose for which Lanier utilizes them.
LEGAL PROCEEDINGS
From time to time, as a normal incident of the nature and kind of business
in which Lanier is engaged, various claims or charges may be asserted and
litigation commenced against Lanier. In the opinion of Lanier's management, no
current claim or litigation would result in a material adverse effect on
Lanier's results of operations or financial condition.
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LANIER'S MANAGEMENT
BOARD OF DIRECTORS
The following table sets forth information as to the persons who are
expected to serve as directors of Lanier following the Distribution. As provided
in Lanier's restated certificate of incorporation, Lanier's board of directors
will be divided into three classes. The table sets forth the names of the
directors of each class and their original terms. Directors in each class
initially will serve until the annual meeting of stockholders held in the year
in which the term for such class expires and will serve thereafter for
three-year terms. Lanier initially intends to have a board of directors that
will consist of seven directors, two of whom are officers of Lanier. Information
concerning directors is set forth below:
<TABLE>
<CAPTION>
TERM POSITION WITH LANIER AND PRINCIPAL
NAME AGE EXPIRES POSITION BUSINESS AFFILIATIONS DURING PAST FIVE YEARS
---- --- ------- -------- --------------------------------------------
<S> <C> <C> <C> <C>
Wesley E. Cantrell............. 64 2002 Chairman of the Chief Executive Officer since March, 1987.
Board and Chief President, Lanier Business Products, 1977 to
Executive Officer 1987. Executive Vice President and National
Sales Manager, 1972 to 1977. Vice President,
1966 to 1972. Employed by Lanier since 1955.
Member of the board of directors of Ann
Taylor Stores Corp., Environmental Design
International Ltd. and Impact Ministries, a
not-for-profit organization, and member of
the advisory board of First Union National
Bank of Atlanta.
C. Lance Herrin................ 58 2001 President and Chief Chief Operating Officer since July, 1998.
Operating Officer Executive Vice President and General
Manager - U.S. Operations, 1993 to 1998.
Executive Vice President and General
Manager - Imaging Systems Division, 1987 to
1993. Executive Vice President, Lanier
Business Products, 1982 to 1987. Senior Vice
President, 1981 to 1982. Vice President,
1977 to 1981. Employed by Lanier since 1967.
Sidney E. Harris............... 49 2000 Director Dean, J. Mack Robinson College of Business,
Georgia State University since 1997. From
1987 through July 1997, Professor of
Management at the Peter F. Drucker Graduate
Management Center at the Claremont Graduate
School, Claremont, California. Director of
TransAmerica Investors, Inc., ServiceMaster
Company and Amresco, Inc.
David H. Hughes................ 55 2001 Director Chairman and Chief Executive Officer of
Hughes Supply, Inc. since November 1986.
Director of SunTrust Bank, Inc. and Brown &
Brown, Inc.
</TABLE>
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<TABLE>
<CAPTION>
TERM POSITION WITH LANIER AND PRINCIPAL
NAME AGE EXPIRES POSITION BUSINESS AFFILIATIONS DURING PAST FIVE YEARS
---- --- ------- -------- --------------------------------------------
<S> <C> <C> <C> <C>
Amos R. McMullian.............. 61 2000 Director Chairman and Chief Executive Officer of
Flowers Industries, Inc. Employed by Flowers
Industries, Inc. (or its predecessors) since
1963. Director of Keebler Foods Company.
Clarence B. Rogers, Jr......... 69 2002 Director Chairman of the Executive Committee of the
Board of Directors of Equifax, Inc. Director
of Sears Roebuck & Co., Morgan Stanley Dean
Witter & Co., Briggs & Stratton Corporation,
Oxford Industries, Inc. and ChoicePoint Inc.
John F. Ward................... 56 2002 Director Chairman, President and Chief Executive
Officer of Russell Corp. since April 1998.
President of J.F. Ward Group from September
1996 to April 1998. Chief Executive Officer
of Hanes Group and Senior Vice President of
Sara Lee Corp. from 1993 to September 1996.
</TABLE>
COMMITTEES OF THE BOARD OF DIRECTORS
Lanier's board of directors will establish three standing committees to
assist in the discharge of its responsibilities. The principal functions of each
committee are described below.
AUDIT COMMITTEE
The Audit Committee will assist the board of directors in ensuring that
Lanier's financial, auditing and reporting practices, procedures and controls
are within acceptable limits of sound practice and in accordance with applicable
laws and regulations. The Audit Committee will meet periodically with the
independent auditors, together with representatives of management, as
appropriate, for the purpose of reviewing the scope and results of the annual
audit of the financial statements and the recommendations of the auditors. The
Audit Committee will also evaluate the professional competency of the financial
staff and internal auditors, review the scope of the internal audit program,
review the nature and extent of non-audit professional services performed by the
auditors and annually recommend to the board of directors the firm of
independent public accountants to be selected as auditors of Lanier. From time
to time the Audit Committee may also undertake special projects, such as
reviewing Lanier's environmental policies.
NOMINATING AND COMPENSATION COMMITTEE
The Nominating and Compensation Committee will review and evaluate plans
for the development, training and utilization of Lanier's management resources;
review Lanier's compensation philosophy and will establish the compensation of
officers of Lanier other than the chief executive officer and president, whose
compensation will be recommended by the Nominating and Compensation Committee
and approved by all of the outside directors; and administer Lanier's stock
incentive and stock based compensation plans and other incentive plans. The
Nominating and Compensation Committee will also oversee the financial
administration and operation of Lanier's various retirement and pension plans,
including the selection and review of the performance of the investment funds
and the independent investment advisors for the plans.
The Nominating and Compensation Committee will manage succession at the
executive officer level and identify and promote candidates for and to executive
positions; identify, evaluate and recommend director nominees to the board of
directors to fill vacancies and to be elected at the annual meeting of the
stockholders; recommend directors' compensation and benefit plans to the board
of directors; recommend committees of the
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board of directors and committee members; set meeting schedules for the board of
directors and recommend meeting schedules for the committees; and facilitate the
board of directors' evaluation of its effectiveness. The committee will consider
suggestions for director nominees from all sources, including stockholders. Any
stockholder suggestion, together with an appropriate biographical summary,
should be sent to the Secretary of Lanier. In addition, Lanier's bylaws
establish certain requirements concerning stockholder nominations for election
of directors, including that notice of such nominations be delivered to the
Secretary of Lanier not less than 90 nor more than 120 days prior to the date of
the annual meeting of stockholders. Each notice of nomination is required to
contain the name and address of the stockholder who intends to make the
nomination; the name, address and written consent of the nominee and such other
nominee information as would be required to be disclosed in a proxy
solicitation.
EXECUTIVE COMMITTEE
The Executive Committee will be authorized to evaluate and review Lanier's
financial position, capital structure, significant capital asset transactions,
major acquisitions and divestitures, and during the intervals between the
meetings of the board of directors, to the extent permitted by law, to exercise
all of the powers of the board of directors (except for certain matters reserved
for the board of directors) in the management of the business of Lanier.
DIRECTORS' COMPENSATION
Non-employee directors will receive an annual retainer fee of $30,000. In
addition, non-employee directors who serve on the standing committees will
receive an additional annual fee of $1,500 for their services on each committee,
or $3,000 if serving as chairperson of a committee.
Each non-employee director will also receive $1,000 for attendance at each
board meeting. In addition, each non-employee director will receive $800 for
attendance at each committee meeting and for participation in a telephonic or
video conference meeting. Each non-employee director will also be reimbursed for
out-of-pocket expenses incurred in connection with attendance at board and
committee meetings. In addition, each non-employee director will be provided
travel, accident and disability insurance in the event that the director is
involved in an accident while traveling on business relating to Lanier.
Under the Lanier Stock Plan, which will be adopted in connection with the
Distribution, each non-employee director will be granted an option to purchase
10,000 Lanier Shares on the later of the Distribution Date or the date such
director joins Lanier's board of directors and thereafter, beginning in 2000,
will automatically be granted an option to purchase 2,000 Lanier Shares on the
first business day of the month following the month in which the annual meeting
is held. The options will be non-statutory options for tax purposes and will be
priced at 100% of the fair market value on the date of grant. Fifty percent of
the options will become exercisable on the first anniversary of the date of
grant and 25% on each of the next two succeeding anniversary dates; however, any
options outstanding for more than one year at the time a Change in Control (as
defined in the Lanier Stock Plan) of Lanier occurs will become immediately
exercisable. In the event of a director's retirement, vested options may be
exercised for three years thereafter; in the event of a director's termination
of service on the board of directors upon expiration of the director's term on
the board prior to retirement, vested options may be exercised for three months
thereafter; and in the event of a director's death or disability, vested options
may be exercised for twelve months thereafter. In no event may such options be
exercisable more than ten years after the date of grant. Neither Lanier's board
of directors nor any committee of the board of directors has any discretion with
respect to options granted to non-employee directors.
Under the Lanier Directors Deferred Compensation Plan (the "Directors'
Plan"), which will be adopted in connection with the Distribution, each
non-employee director may also elect to defer all or a portion of his or her
fees. A director's account will be credited with a number of units of Lanier
common stock equivalents based upon the fair market value of the Lanier Shares
on the date the fees otherwise would be paid. Once amounts are deferred they are
only payable following a director's resignation, retirement or death. Each
Lanier common stock unit will be credited with dividend equivalents, which are
deemed reinvested in additional Lanier common stock units on the dividend
payment date. Amounts deferred under the Directors Plan will be paid in whole
shares of
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<PAGE> 61
Lanier common stock and in cash for any factional shares as soon as practicable
following resignation, retirement or death. Within ninety days following a
Change in Control (as defined in the Directors' Plan), Lanier shall pay to each
director (or former director) a cash lump sum payment equal to the then
remaining balance in each such director's account.
In connection with the Distribution, each of the directors and executive
officers (including those named in the Summary Compensation Table below) will
enter into an indemnification agreement with Lanier pursuant to which each
director and executive officer shall be indemnified against expenses (including
attorneys' fees, judgments, fines, and amounts paid in settlement) actually and
reasonably incurred in connection with any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal or administrative or
investigative, to which he or she was, is, or is threatened to be made a party
by reason of being or having been such a director or officer, to the full extent
allowable under Delaware law.
Lanier has adopted a policy that directors retire from the board of
directors effective at the end of the month in which they reach age seventy-two.
In addition, a director is expected to automatically tender his or her
resignation in the event of retirement or other significant change in status
from the positions held at the time of election to the board of directors,
although the board of directors may opt to have such director continue to serve
on the board of directors.
EXECUTIVE OFFICERS
Listed below is certain information concerning individuals who are expected
to serve as executive officers of Lanier following the Distribution. These
individuals are currently responsible for the management of Lanier's business as
conducted in its capacity as a subsidiary of Harris.
<TABLE>
<CAPTION>
POSITION WITH LANIER AND PRINCIPAL
NAME AGE CURRENT POSITION BUSINESS AFFILIATIONS DURING PAST FIVE YEARS
---- --- ---------------- --------------------------------------------
<S> <C> <C> <C>
Wesley E. Cantrell.......... 64 Chairman of the Board and Chief Executive Officer since March, 1987.
Chief Executive Officer President, Lanier Business Products, 1977 to
1987. Executive Vice President and National
Sales Manager, 1972 to 1977. Vice President,
1966 to 1972. Employed by Lanier since 1955.
Member of the board of directors of Ann
Taylor Stores Corp., Environmental Design
International Ltd. and Impact Ministries, a
not-for-profit organization, and member of
the advisory board of First Union National
Bank of Atlanta.
C. Lance Herrin............. 58 President and Chief Chief Operating Officer since July, 1998.
Operating Officer Executive Vice President and General
Manager -- U.S. Operations, 1993 to 1998.
Executive Vice President and General
Manager -- Imaging Systems Division, 1987 to
1993. Executive Vice President, Lanier
Business Products, 1982 to 1987. Senior Vice
President, 1981 to 1982. Vice President,
1977 to 1981. Employed by Lanier since 1967.
</TABLE>
48
<PAGE> 62
<TABLE>
<CAPTION>
POSITION WITH LANIER AND PRINCIPAL
NAME AGE CURRENT POSITION BUSINESS AFFILIATIONS DURING PAST FIVE YEARS
---- --- ---------------- --------------------------------------------
<S> <C> <C> <C>
James A. MacLennan.......... 40 Executive Vice President and Executive Vice President and Chief Financial
Chief Financial Officer Officer since November, 1998. Vice
President, Finance, 1997 to 1998. Vice
President, Accounting, Noble Drilling Corp.,
1995 to 1997. Director-Risk/Audit, Noble
Drilling Corp., 1993 to 1995. Financial
Reporting Manager, Esso Australia, Ltd.,
1990 to 1993. Affiliate Advisor, Exxon Co.,
Intl., 1987 to 1990. Financial Analyst, Esso
UK, 1985 to 1987.
David J. Marini............. 45 Executive Vice President and General Manager, Worldwide Field Operations,
General Manager, Worldwide since July, 1998. Executive Vice President
Field Operations since 1991. Vice President, Scientific
Calculations Division of Harris Corporation,
1983 to 1991.
Paul M. Anderson............ 51 Vice President-Worldwide Vice President, Worldwide Marketing since
Marketing July, 1998. Vice President since 1989.
Employed by Lanier since 1972.
Vera M. Arthur.............. 44 Vice President-Human Vice President, Human Resources since April,
Resources 1999. Vice President, Marketing, 1993 to
1999. Various management positions, 1986 to
1993. International Marketing Services
Manager, Sangamo Weston, 1984 to 1986.
Export Operations Manager, Lanier Business
Products, 1979 to 1984.
Brian R. Bergin............. 52 Vice President-Worldwide Vice President, Worldwide Sourcing and
Sourcing and Development Development since November, 1998. Vice
President since 1992. Employed by Lanier
since 1976.
J. Michael Kelly............ 52 Vice President, General Corporate Secretary since January, 1999,
Counsel and Secretary Vice President since 1989. General Counsel
since 1987. Counsel, Harris Corporation,
1980 to 1987.
Timothy A. Vellek........... 44 Vice President-Worldwide Vice President, Worldwide Service since
Service August, 1998. Vice President since 1991.
Employed by Lanier since 1978.
</TABLE>
There is no family relationship between any of Lanier's executive officers
or directors and there are no arrangements or understandings between any of
Lanier's executive officers or directors and any other person pursuant to which
any of them was elected an officer or director, other than arrangements or
understandings with directors or officers of Lanier acting solely in their
capacities as such. Generally, following the Distribution, Lanier's executive
officers will be elected annually and will serve at the pleasure of Lanier's
board of directors.
Lanier has established suggested stock ownership guidelines for its
Chairman and Chief Executive Officer, President and Chief Operating Officer and
certain vice presidents. Target ownership levels are based on the officer's base
salary (three times base salary for the Chairman and Chief Executive Officer,
two and one half times base salary for the President and Chief Operating
Officer, two times base salary for executive vice presidents and up to one times
base salary for certain vice presidents). Attainment of the target levels may be
spread over a five-year period and the suggested ownership level is 25% of
target after two years and an additional 25% each year thereafter. All shares
owned (or beneficially owned) by the officer will be counted towards the target,
including, for example, shares owned for the officer's account under a qualified
retirement plan.
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<PAGE> 63
HISTORICAL COMPENSATION OF LANIER EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
annual and long-term compensation for services to Lanier for Lanier's chief
executive officer and the other four most highly compensated executives of
Lanier. During the fiscal years ended July 2, 1999, July 3, 1998 and June 27,
1997, the individuals were compensated in accordance with Harris' plans and
policies. All references in the following tables to stock and stock options
relate to awards of stock and stock options granted by Harris. Harris has not
granted stock appreciation rights. Such amounts do not reflect the compensation
such persons will receive following the Distribution. All share data have been
adjusted to reflect a two-for-one stock split effected by Harris in September
1997. Harris options held by Lanier employees will be replaced by Lanier
Options. The option price and number of shares subject to each Lanier Option
will be adjusted so that the aggregate difference between the market price and
the option price will be equal for the Harris Options and the Lanier Options.
The number of Lanier Shares subject to each Lanier Option will be determined by
multiplying the number of shares subject to each Harris Option by the Lanier
Option Adjustment Ratio, and the option price of each Lanier Option will be
determined by dividing the price of each Harris Option by the Lanier Option
Adjustment Ratio.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------------------
AWARDS PAYOUT
---------- ------------
ANNUAL COMPENSATION UNDERLYING
-------------------------------------- OPTIONS/ LTIP ALL OTHER
NAME AND PRINCIPAL FISCAL OTHER ANNUAL SARS PAYOUT(2)(3) COMPENSATION(4)
POSITION YEAR SALARY($) BONUS($) COMPENSATION(1) (#) ($) ($)
------------------ ------ --------- -------- --------------- ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Wesley E. Cantrell....... 1999 337,886 182,600 24,000 25,000 315,000 27,879
Chairman and 1998 312,115 352,501 26,400 25,986 407,100 26,386
Chief Executive Officer 1997 300,000 403,100 15,200 25,988 302,500 25,411
C. Lance Herrin.......... 1999 228,077 243,180 9,600 10,000 126,000 20,412
President and Chief 1998 218,077 255,585 10,560 8,000 159,300 20,046
Operating Officer 1997 206,154 292,320 6,080 8,000 176,000 7,677
James A. MacLennan(5).... 1999 165,385 44,886 0 1,800 0 8,281
Executive Vice 1998 152,462 48,921 0 0 0 1,968
President and 1997 43,269 12,499 0 0 0 132
Chief Financial Officer
David J. Marini.......... 1999 182,115 124,948 7,200 8,000 94,500 11,793
Executive Vice
President and 1998 169,038 181,070 7,920 13,658 119,475 11,538
General Manager, 1997 161,539 174,825 4,560 11,040 137,500 3,451
Worldwide Field
Operations
Paul M. Anderson......... 1999 124,615 101,700 1,920 3,300 31,500 10,382
Vice President -- 1998 88,654 122,283 2,640 2,000 39,825 7,443
Worldwide Marketing 1997 81,200 123,468 1,520 2,000 63,800 4,141
</TABLE>
- ---------------
(1) None of the executive officers named in the Summary Compensation Table
received personal benefits in excess of the lesser of $50,000 or 10% of
annual salary and bonus for fiscal 1999, 1998, or 1997; the amounts reported
represent dividend equivalent payments on outstanding performance shares
granted under the Harris Stock Incentive Plan for which the performance
period had not expired.
(2) The value of performance shares earned for the three-year performance period
ended July 2, 1999 (Mr. Cantrell -- 8,000 shares; Mr. Herrin -- 3,200
shares; Mr. Marini -- 2,400 shares; and Mr. Anderson -- 800 shares) is based
upon the closing price of Harris common stock on July 1, 1999 (the last
trading day of fiscal year 1999).
(3) Payouts for fiscal 1997 and 1998 were made pursuant to grants under the
Lanier Long Term Incentive Plan for key employees. The payments reflected in
the table for fiscal years 1997 and 1998 are for performance during the
three-year performance periods ended June 27, 1997 and July 3, 1998,
respectively.
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<PAGE> 64
(4) Amounts reported include:
(i) Contributions to the Lanier Savings Incentive Plan for fiscal year
1999: Mr. Cantrell -- $5,209; Mr. Herrin -- $5,258, Mr.
MacLennan -- $3,863, Mr. Marini -- $4,931 and Mr. Anderson -- $5,194; for
fiscal year 1998: Mr. Cantrell -- $5,935, Mr. Herrin -- $7,415, Mr.
MacLennan -- $847, Mr. Marini -- $6,403 and Mr. Anderson -- $6,034; for
fiscal year 1997: Mr. Cantrell -- $4,500, Mr. Herrin -- $4,500, Mr.
MacLennan -- $132, Mr. Marini -- $2,729 and Mr. Anderson -- $3,247.
(ii) Contributions to the Lanier Supplemental Executive Retirement
Savings Plan for fiscal year 1999: Mr. Cantrell -- $17,686, Mr.
Herrin -- $11,509, Mr. MacLennan -- $3,939, Mr. Marini -- $5,737 and Mr.
Anderson -- $3,529; for fiscal year 1998: Mr. Cantrell -- $15,537, Mr.
Herrin -- $7,681, Mr. MacLennan -- $920, Mr. Marini -- $4,398, and Mr.
Anderson -- $363.
(iii) The taxable portion of premiums on life insurance provided for
fiscal year 1999: Mr. Cantrell -- $4,984, Mr. Herrin -- $3,645, Mr.
MacLennan -- $479, Mr. Marini -- $1,125 and Mr. Anderson -- $1,659; for
fiscal year 1998: Mr. Cantrell -- $4,914, Mr. Herrin -- $4,950, Mr.
MacLennan -- $201, Mr. Marini -- $737, and Mr. Anderson -- $1,046; for
fiscal year 1997: Mr. Cantrell -- $4,914, Mr. Herrin -- $3,177, and Mr.
Anderson -- $894.
(5) Mr. MacLennan commenced employment with Lanier in March 1997; the amounts
reported for fiscal year 1997 reflect less than a full year of employment.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Shown below is additional information on grants of stock options made under
the Harris Stock Incentive Plan during Harris' fiscal year 1999. The amounts
shown for potential realizable values are based upon assumed annualized rates of
Harris stock price appreciation of five percent and ten percent over the full
ten year term (or shorter term) of the options, as required by the Commission,
and are not intended to represent or forecast possible future appreciation, if
any, of the price of Harris common stock.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
------------------------------------------------------ AT ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION --------------------------
NAME GRANTED(1) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
---- ------------ ------------ ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Wesley E. Cantrell...... 25,000 3.23 34.06 8/28/08 535,543 1,357,171
C. Lance Herrin......... 10,000 1.29 34.06 8/28/08 214,217 542,869
James A. MacLennan...... 1,800 0.23 38.56 11/24/08 43,653 110,626
David J. Marini......... 8,000 1.03 34.06 8/28/08 171,374 434,295
Paul M. Anderson........ 3,300 0.43 34.06 8/28/08 70,692 179,147
</TABLE>
- ---------------
(1) All stock option grants were made under the Harris Stock Incentive Plan. The
term of each stock option is generally ten years and is exercisable in
installments of 50% after one year, 75% after two years, and 100% after
three years. The exercise price is the closing price of a share of Harris
common stock on the date of the grant. The exercise price may be paid in
cash and/or shares of Harris common stock, or "cashless exercise" procedures
may be used. If shares of Harris common stock are delivered in payment of
the exercise price, a Restoration Stock Option ("RSO") is granted equal to
the number of shares used to exercise the stock option. The expiration date
of these options is the same as the expiration date of the underlying
options. RSO grants are non-qualified, and are exercisable commencing six
months after the date of grant at the market value on the grant date. In the
event of a change of control, outstanding options become immediately
exercisable.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
Shown below is information with respect to the number of Harris shares
acquired upon exercise of stock options and the aggregate gains realized on
exercises during fiscal year 1999 for those executive officers of Lanier
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<PAGE> 65
named in the Summary Compensation Table. The table also sets forth the number of
shares covered by exercisable and unexercisable options held by such executives
on July 2, 1999 and the aggregate gains that would have been realized had these
options been exercised on July 2, 1999, even though these options were not
exercised, and the unexercisable options could not have been exercised on July
2, 1999. These options were granted under the Harris Stock Incentive Plan.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
HARRIS SHARES VALUE FISCAL YEAR-END (#) FISCAL YEAR-END(2)($)
ACQUIRED ON REALIZED --------------------------- ---------------------------
NAME EXERCISE(#) (1)($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Wesley E. Cantrell.... 0 0 107,070 40,000 1,210,345 176,250
C. Lance Herrin....... 0 0 30,000 16,000 403,810 70,500
James A. MacLennan.... 0 0 0 1,800 0 1,463
David J. Marini....... 0 0 16,170 12,500 28,125 55,531
Paul M. Anderson...... 0 0 4,500 4,800 33,156 21,875
</TABLE>
- ---------------
(1) Market value on the date of exercise of Harris shares covered by exercised
options, less option exercise price.
(2) Market value of Harris shares underlying in-the-money options on July 2,
1999, less option exercise price. The market value is based on the July 2,
1999 closing price of $39.38 per share of the Harris common stock reported
as New York Exchange Composite Transactions.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
Shown below is information with respect to awards of performance shares
granted under the Harris Stock Incentive Plan during Harris fiscal year 1999 to
those Lanier executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUT UNDER
PERFORMANCE OR NON-STOCK PRICE-BASED PLANS
OTHER PERIOD ------------------------------------------
UNTIL THRESHOLD MAXIMUM
NUMBER OF MATURATION HARRIS TARGET HARRIS
NAME HARRIS SHARES OR PAYOUT SHARES(#) HARRIS SHARES(#) SHARES(#)
---- ------------- -------------- --------- ---------------- ---------
<S> <C> <C> <C> <C> <C>
Wesley E. Cantrell......... 5,000 6/30/01 0 5,000 10,000
C. Lance Herrin............ 2,000 6/30/01 0 2,000 4,000
James A. MacLennan......... 0 -- 0 0 0
David J. Marini............ 1,500 6/30/01 0 1,500 3,000
Paul M. Anderson........... 0 -- 0 0 0
</TABLE>
Awards of performance shares under the Harris Stock Incentive Plan to
participants are made at the beginning of each performance period and are earned
based on the performance of Lanier, Harris or some combination thereof. The
Harris Stock Incentive Plan is designed to motivate key employees to maximize
stockholder value by aligning their interests with stockholder interests. For
Lanier executives the payout is determined by the Management Development and
Compensation Committee of Harris' board of directors based upon financial
performance compared with strategic plan objectives. Performance criteria
include Lanier's net income and return on capital during the three-year
strategic plan cycle. Share payouts are made following the determination of the
committee and range from zero to a maximum of 200% of the original shares
awarded. Participants receive quarterly cash payments on the performance share
awards in an amount equal to dividends paid to stockholders on the Harris
shares.
LANIER DEFINED BENEFIT RETIREMENT PLANS
Lanier's domestic defined benefit retirement program consists of (i) a
tax-qualified, funded pension plan, the Lanier Pension Equity Plan (the "PEP"),
which is available to substantially all of the United States employees of
52
<PAGE> 66
Lanier and its participating subsidiaries and affiliated companies, and (ii) for
executive officers and other key employees, one non-qualified, unfunded Lanier
Supplemental Executive Retirement Plan (the "SERP") that provides benefits
which, but for certain limits imposed by the Internal Revenue Code on
tax-qualified plans, would be provided under the PEP. The PEP is a defined
benefit plan. The PEP and the SERP are fully paid by Lanier, and employees
become vested upon the completion of five years of service.
In July 1997, the PEP was amended to provide for a lump-sum retirement
benefit calculated by reference to a formula based upon final average pay, age
and years of service. However, if the determination of benefits payable to
individuals currently eligible for retirement or nearing retirement under the
revised PEP, including Mr. Cantrell and Mr. Herrin, would result in a reduction
of future benefit accruals under the PEP as in effect prior to the July 1997
amendment, the benefits payable to such a person would be as calculated under
the PEP without giving effect to the July 1997 amendment. Such employees will
receive annual pension benefits determined by adding (a) 1.22% of the average of
the employee's five highest consecutive years' compensation in the last ten
calendar years before retirement ("five-year average compensation") multiplied
by the lesser of the employee's years of service or 30 and (b) 0.33% of that
part of the employee's five-year average compensation in excess of a certain
amount, multiplied by the lesser of the employee's years of service or 30 (the
"Pre-July 1997 Formula"). Benefits are computed as a straight life annuity, but
may be converted to a lump sum or other form.
The pension benefits for Mr. MacLennan, Mr. Marini and Mr. Anderson under
the PEP is based on the July 1997 amendment and is stated as a lump sum benefit.
The formula for the lump sum benefit is the product of the employee's PEP
credits times the employee's five-year average compensation plus 50% of the
five-year average compensation in excess of a certain amount. PEP credits are
awarded for age and service performed on or after July 1, 1997 and for the
frozen accrued benefit calculated under the Pre-July 1997 Formula described
above determined as of June 30, 1997. Benefits are computed as a lump sum but
may be converted to a straight life annuity or other form.
The following table sets forth the estimated annual benefits under the PEP
and the SERP for Mr. Cantrell and Mr. Herrin calculating annual benefits under
the terms of the PEP (as in effect prior to the July 1997 amendment) and the
SERP payable at age 65 or older.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFITS
HIGHEST CONSECUTIVE FOR CREDITED YEARS OF SERVICE
5-YEAR AVERAGE --------------------------------------------
COMPENSATION 15 20 25 30
------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 250,000...................................... $ 56,600 $ 75,400 $ 94,300 $113,200
500,000...................................... 114,700 152,900 191,200 229,400
750,000...................................... 172,800 230,400 288,100 345,700
1,000,000...................................... 231,000 307,900 384,900 461,900
1,250,000...................................... 289,100 385,400 481,800 578,200
</TABLE>
The following table sets forth the estimated annual benefits under the PEP
and the SERP for Mr. MacLennan, Mr. Marini and Mr. Anderson, calculating
benefits under the terms of the PEP (as in effect after the July 1997 amendment)
and the SERP payable at age 65 or older:
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFITS FOR
HIGHEST CONSECUTIVE CREDITED YEARS OF SERVICE
5-YEAR AVERAGE --------------------------------------------
COMPENSATION 15 20 25 30
------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 250,000...................................... $ 51,260 $ 60,580 $ 69,900 $ 76,114
500,000...................................... 104,884 123,954 143,024 155,737
750,000...................................... 158,508 187,328 216,148 235,361
1,000,000...................................... 212,132 250,702 289,271 314,984
1,250,000...................................... 265,756 314,075 362,395 394,608
</TABLE>
Executives have estimated credited years of service under the PEP and the
SERP as follows:
Wesley E. Cantrell -- 30 years
C. Lance Herrin -- 28 years
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<PAGE> 67
James A. MacLennan -- 2 years
David J. Marini -- 7 years
Paul M. Anderson -- 29 years
Executives have estimated five-year average compensation under the PEP and
the SERP as follows:
<TABLE>
<S> <C>
Wesley E. Cantrell.......................................... $880,962
C. Lance Herrin............................................. $509,811
James A. MacLennan.......................................... $207,817
David J. Marini............................................. $391,592
Paul M. Anderson............................................ $208,048
</TABLE>
Compensation as in effect prior to the July 1997 amendment consists of base
salary, bonuses and sales commissions and, for periods prior to 1998, income
recognized upon the exercise of Harris stock options. Compensation as in effect
after the July 1997 amendment consists of gross income, including salary,
bonuses, sales commissions, vacation pay, compensation received while on an
authorized leave of absence, and short-term disability payments, but excluding
severance pay, payments made in consideration of a release of employment with
Lanier, payments attributable to domestic or foreign assignment differential,
any contest payments, any expense-related reimbursement, and payments made under
any long-term incentive plan, including income for the exercise of stock options
or the value of life insurance includible in the participant's gross income. For
periods prior to 1998, income recognized upon the exercise of Harris stock
options is included. Base salary includes certain deferred amounts.
Benefits under the PEP and the SERP are not subject to any deduction for
Social Security or other offset amounts.
LONG-TERM COMPENSATION
Equity-based incentive compensation for Lanier executives will be provided
under the Lanier Stock Plan, which will be adopted by Harris as the sole
stockholder of Lanier prior to the Distribution. The Lanier Stock Plan will
permit the granting of (1) stock based on performance criteria, (2) restricted
stock, (3) stock options, including incentive stock options, (4) stock
appreciation rights (freestanding or in tandem with stock options) and (5) other
awards valued by reference to, or otherwise based on, Lanier Common Stock, as
determined and approved by a committee comprised solely of at least two outside
directors (the "Committee").
Stock options provide value to the executives only when the price of Lanier
Shares increases above the option grant price.
In connection with the Distribution, stock options granted to Lanier
employees under the Harris Stock Incentive Plan will be replaced by Lanier
Options. The option price and number of shares subject to each Lanier Option
will be adjusted so that the aggregate difference between the market price and
the option price will be equal for the Harris Options and the Lanier Options.
The number of Lanier Shares subject to each Lanier Option will be determined by
multiplying the number of shares subject to each Harris Option by the Lanier
Option Adjustment Ratio and the option price of each Lanier Option will be
determined by dividing the price of each Harris Option by the Lanier Option
Adjustment Ratio.
Incentives may also be awarded in the form of performance share awards. The
Lanier Stock Plan will provide for the Committee to determine the applicable
performance goals utilizing one or more of the performance criteria set forth in
the Lanier Stock Plan, Lanier's strategic planning process and a period of time
(generally, three fiscal years) during which Lanier's performance is to be
measured. The Committee then will assign to each participant a number of
performance shares and establish a mechanism for computing the number of
performance shares that can be earned during the period based on Lanier's
performance. If the performance goals are satisfied the participant will receive
a number of Lanier Shares equal to the number of performance shares.
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<PAGE> 68
In connection with the Distribution, performance share awards granted to
Lanier employees under the Harris Stock Incentive Plan will be canceled and
replacement performance shares will be awarded under the Lanier Stock Plan by
multiplying the number of performance shares by the Lanier Option Adjustment
Ratio.
Cash-based long-term incentive compensation for Lanier executives will be
provided under the Lanier Long-Term Incentive Plan (the "LTIP"). The LTIP will
permit the granting of cash awards based on performance criteria. Awards granted
pursuant to the LTIP will be determined and approved by the Committee.
The LTIP will provide for the Committee to determine the applicable
performance criteria utilizing Lanier's strategic planning process and a period
of time (generally, three fiscal years) during which Lanier's performance is to
be measured. The Committee then will assign to each participant a cash award
target and establish a mechanism for computing the amount of the cash award that
can be earned during the period based on Lanier's performance.
The maximum amount that may be awarded to a participant each year is 200%
of such target award based on the degree of achievement of the performance
goals. The maximum incentive award payable to any executive officer in any year
will be $2,000,000. Upon the occurrence of a Change in Control (as defined in
the LTIP), Lanier will pay an amount not less than the target award for the
performance period. An employee may elect to defer all or a portion of any award
until normal retirement age. Interest will be paid on the amount deferred based
on the average long-term treasury bill rate. Stock options and performance share
awards made under the Lanier Stock Plan or cash awards paid under the LTIP may,
but are not required to, satisfy the exemption for performance-based
compensation under Section 162(m) of the Internal Revenue Code.
EMPLOYEE STOCK PURCHASE PLAN
The Lanier Employee Stock Purchase Plan (the "Stock Purchase Plan") will
permit eligible employees of Lanier, Lanier Professional Services, Inc. and
other subsidiaries of Lanier designated by the Chief Executive Officer and the
Chief Operating Officer, to periodically purchase Lanier Shares at a discount.
All employees of Lanier and designated subsidiaries may participate in the Stock
Purchase Plan, except those employees who have been employed for less than one
year and those employees whose customary employment is for no more than 20 hours
per week or no more than five months in any calendar year. In addition, a holder
of 5% or more of the Lanier Shares outstanding may not participate in the Stock
Purchase Plan, and an eligible employee may not purchase Lanier Shares at a rate
that exceeds $25,000 of Lanier Shares a year. Under the Stock Purchase Plan,
Lanier will offer Lanier Shares for purchase during the first and last six
months of each fiscal year. An eligible employee may elect to have from 1% to
15% of his or her compensation withheld (on an after-tax basis) during the
purchase period and Lanier Shares are purchased on the last day of such period.
The purchase price will be 85% of the fair market value of a Lanier Share on the
first day of the purchase period or on the last day of the purchase period,
whichever is less. For each six-month purchase period, an employee may not
purchase more than the number of whole Lanier Shares determined by dividing
$12,500 by the fair market value of a Lanier Share on the first day of the
purchase period. Employees may not sell Lanier Shares purchased under the Stock
Purchase Plan for one year after the date of purchase. The Stock Purchase Plan
is intended to satisfy the requirements of Section 423 of the Internal Revenue
Code.
LANIER DEFINED CONTRIBUTION RETIREMENT PLANS
Lanier's defined contribution retirement program consists of (i) a
tax-qualified funded defined contribution plan, the Lanier Savings Incentive
Plan (the "SIP"), which is available to substantially all of the United States
employees of Lanier and its participating subsidiaries and affiliated companies
and (ii) for executive officers and other key employees the non-qualified
unfunded Lanier Supplemental Executive Retirement Savings Plan (the "SIP SERP")
that provides benefits, which, but for certain limits imposed by the Internal
Revenue Code on tax-qualified plans, would be provided under the SIP. The SIP
will be funded by employee contributions and matching contributions (with
certain limitations) by Lanier, which may be made in cash or Lanier common
stock. An employee's interest in Lanier's matching contributions will vest based
on the employee's years of service and a five-year vesting schedule.
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<PAGE> 69
Benefits payable to an employee upon retirement will be based on the
contributions made by the employee, the contributions made by Lanier, if any,
and the performance of the employee's chosen investments. Therefore, Lanier
cannot estimate the annual benefits which will be payable to participate in the
SIP and the SIP SERP upon retirement at normal retirement age.
KEY CONTRIBUTOR PLAN
Lanier's Key Contributor Incentive Plan (the "Key Contributor Plan") links
a portion of total compensation for certain key employees to the attainment of
corporate financial objectives as approved by the plan administrator. Under the
Key Contributor Plan, a target annual incentive award is established for each
participant with quarterly targets. The maximum incentive amount that may be
awarded to a participant each year is 150% of such target annual award based on
the degree of achievement of pre-established performance goals, which may
include any combination of the following: Lanier's revenue, earnings per share
of common stock, net income, return on equity, return on capital, return on
assets, total shareholder return, return on sales or cash flow. The maximum
annual incentive award payable to any executive officer of Lanier is $2,000,000.
The awards are paid quarterly dependent upon attainment of quarterly performance
targets or the annual performance targets. Upon the occurrence of a Change in
Control (as defined in the Key Contributor Plan), Lanier will pay any annual
incentive awards to participants as soon as practicable in an amount not less
than the target annual incentive award as approved for the fiscal year. Annual
awards made under the Key Contributor Plan may, but are not required to, satisfy
the exemption for performance-based compensation under Section 162(m) of the
Internal Revenue Code.
SEVERANCE AND CHANGE IN CONTROL AGREEMENTS
In connection with the Distribution, the executive officers of Lanier will
enter into Executive Severance Agreements (each, a "Severance Agreement") which
will provide certain officers of Lanier with severance benefits in the event the
officer's employment is terminated by Lanier without Cause or by the executive
for Good Reason within two years following a Change in Control (all terms as
defined in the Severance Agreement). Under the Severance Agreement, the
executive agrees not to voluntarily terminate his or her employment with Lanier
during the six-month period following a Change in Control. The lump sum
severance benefit payable under the Severance Agreement equals the sum of (a)
the executive's unpaid base salary through date of termination, a pro rata
annual bonus (as determined under the Severance Agreement) and any compensation
deferred by the executive other than under a tax-qualified plan; and (b) three
times the executive's highest annual rate of base salary during the 12-month
period prior to the date of termination and three times the greater of the
executive's highest annual bonus in the last three years, the executive's target
bonus for the year during which the Change in Control occurred, or the
executive's target bonus for the year in which the executive's employment is
terminated. In addition, the executive receives for a period of two years
following termination the same level of medical, dental, accident, disability,
life insurance and any similar benefits or the cash equivalent to the value of
such benefits if the executive is prevented from participating in the plans. The
executive also receives reimbursement for any relocation expense related to
pursuit of other business opportunities incurred within two years following the
date of termination, for recruitment or placement services of up to $4,000 and
for professional financial or tax planning services of up to $5,000. The
Severance Agreement also provides for a tax gross-up payment to the executive in
the event that payment of any severance benefits are subject to excise tax
imposed under Section 4999 of the Internal Revenue Code. In addition, Lanier
shall reimburse the executive for any legal fees and costs with respect to any
dispute arising under the Severance Agreement.
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<PAGE> 70
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
All of the outstanding Lanier Shares are, and prior to the Distribution
will be, held beneficially and of record by Harris. After the Distribution,
Harris will retain approximately 10% of the outstanding Lanier Shares. The
following table sets forth each person or entity that is expected to own
beneficially more than 5% of the Lanier Shares outstanding immediately following
the Distribution, based on the ownership of Harris common stock as known to
Lanier.
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS(1)
------------------- -------------------- -----------
<S> <C> <C>
Harris Corporation...................................... 8,794,474(1) 9.99%
1025 West NASA Boulevard
Melbourne, FL 32919
The Prudential Insurance Company of America............. 7,965,692(2) 9.04%
751 Broad Street
Newark, NJ 07102-3777
J.P. Morgan & Co. Incorporated.......................... 4,971,371(3) 5.64%
60 Wall Street
New York, NY 10260
</TABLE>
- ---------------
(1) Based on the number of Lanier Shares outstanding on October 15, 1999.
(2) The information is based on an Amended Schedule 13G with respect to Harris
common stock filed by The Prudential Insurance Company of America
("Prudential") with the Commission on May 7, 1999 in which Prudential states
that it has sole dispositive and voting power with respect to 1,095,000 of
the Harris shares, shared dispositive power with respect to 6,867,693 of the
Harris shares and shares voting power with respect to 6,843,035 of the
Harris shares.
(3) The information is based on a Schedule 13G with respect to Harris common
stock filed by J.P. Morgan & Co. Incorporated ("J.P. Morgan") with the
Commission on February 22, 1999 in which J.P. Morgan states that it has sole
dispositive power with respect to 4,717,071 of the Harris shares, sole
voting power with respect to 3,509,011 of the Harris shares, shared
dispositive power with respect to 209,700 of the Harris shares and shared
voting power with respect to 99,300 of the Harris shares.
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<PAGE> 71
BENEFICIAL OWNERSHIP OF MANAGEMENT
All of the outstanding Lanier Shares are, and prior to the Distribution
will be, held beneficially and of record by Harris and no director or executive
of Lanier owns any Lanier Shares. The following table sets forth information
concerning the Lanier Shares that are projected to be beneficially owned after
the Distribution by each of the directors and each of the executive officers
named in the Summary Compensation Table and by all directors and executive
officers as a group. Unless otherwise indicated, the projections are based on
the number of Harris shares held by such persons as of September 28, 1999 and
reflect the Distribution Ratio of one Lanier Share for every share of common
stock of Harris held on the Record Date.
<TABLE>
<CAPTION>
NUMBER OF OPTIONS
SHARES DEFERRED EXERCISABLE
BENEFICIALLY STOCK WITHIN PERCENT
NAME OF BENEFICIAL OWNER OWNED(1)(2) UNITS(3) 60 DAYS(4) OF CLASS(5)
------------------------ ------------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Wesley E. Cantrell..................... 69,861 498 106,084 *
C. Lance Herrin........................ 12,262 318 30,000 *
Sidney E. Harris....................... 0 0 0 *
David H. Hughes........................ 0 0 0 *
Amos R. McMullian...................... 0 0 0 *
Clarence B. Rogers, Jr................. 0 0 0 *
John F. Ward........................... 0 0 0 *
James A. MacLennan..................... 148 109 0 *
David J. Marini........................ 18,783 55 16,902 *
Paul M. Anderson....................... 2,475 120 5,000 *
All executive officers and directors
as a group (14 persons).............. 108,005 1,121 166,841 *
</TABLE>
- ---------------
* Less than 1%.
(1) Unless otherwise indicated, and subject to community property laws where
applicable, Lanier believes that each of the persons named in the table has
sole voting and investment power with respect to the Lanier Shares indicated
as beneficially owned. The information is based on information supplied by
the directors and executive officers.
(2) The Lanier Shares reported include performance shares expected to be awarded
under Lanier's Stock Plan to be adopted in connection with the Distribution,
as discussed above under "Long-Term Compensation," and assumes a Lanier
Option Adjustment Ratio of 1:1. Under the Lanier's Stock Plan, the named
individuals would have sole voting power but no investment power, as
follows: Mr. Cantrell -- 15,000; Mr. Herrin -- 6,000; Mr. Marini -- 4,500;
and Mr. Anderson -- 1,000. The Lanier Shares reported also include shares
expected, based on data as of September 25, 1999, to be owned under Lanier's
SIP to be adopted in connection with the Distribution, as follows: Mr.
Cantrell -- 612; Mr. Herrin -- 95; Mr. MacLennan -- 148; Mr. Marini -- 39;
and Mr. Anderson -- 363.
(3) The Lanier Shares reported are amounts, as of September 25, 1999, deferred
in the form of stock equivalent units under the Lanier Supplemental
Executive Retirement Savings Plan, as discussed above under "Lanier Defined
Contribution Retirement Plans." The deferred stock equivalent units are
settled in cash following, or under certain circumstances prior to,
retirement, and may not be voted or transferred.
(4) The Lanier Shares reported relate to Lanier Options expected to be awarded
under Lanier's Stock Plan, as discussed above under "Long-Term
Compensation," and assumes a Lanier Option Adjustment Ratio of 1:1. The
Lanier Shares reported can be acquired through exercise of such Lanier
Options on or prior to November 27, 1999.
(5) Based on the number of Lanier Shares expected to be outstanding on the
Distribution Date.
DESCRIPTION OF LANIER'S CAPITAL STOCK
AUTHORIZED CAPITAL STOCK
Under Lanier's restated certificate of incorporation, the total number of
shares of all classes of stock that Lanier has authority to issue is
525,000,000, of which 25,000,000 are shares of preferred stock, without par
value, and 500,000,000 are shares of common stock, par value $0.01 per share.
Based on the number of Harris shares outstanding on October 15, 1999, 79,150,272
Lanier Shares, constituting approximately 90% of the Lanier Shares outstanding
as of such date, will be issued to stockholders of Harris on the Distribution
Date. Based on such number, Harris would retain 8,794,474 Lanier Shares, or
approximately 10% of the Lanier Shares. All of the Lanier Shares to be
distributed to Harris stockholders in the Distribution will be fully paid and
non-assessable.
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<PAGE> 72
Eight million Lanier Shares have been reserved for issuance under Lanier's Stock
Plan. No shares of preferred stock have been issued, although shares of
preferred stock have been reserved for issuance under the Rights Agreement (as
defined below). The Lanier Shares reported also include shares expected, based
on data as of September 25, 1999, under Lanier's SIP to be adopted in connection
with the Distribution as follows: Mr. Cantrell -- 612; Mr. Herrin -- 95; Mr.
MacLennan -- 148; Mr. Marini -- 39; and Mr. Anderson -- 363.
The following summary of certain terms of Lanier's capital stock describes
material provisions of, but does not purport to be complete and is subject to,
and qualified in its entirety by, Lanier's restated certificate of incorporation
and Lanier's bylaws, the forms of which are included as exhibits to the
Registration Statement, and by applicable provisions of law.
COMMON STOCK
The holders of the Lanier Shares will be entitled to one vote for each
share on all matters voted on by stockholders, and the holders of such shares
will possess all voting power, except as otherwise required by law or provided
in any resolution adopted by Lanier's board of directors with respect to any
series of preferred stock of Lanier. There are no cumulative voting rights.
Accordingly, the holders of a majority of the Lanier Shares voting for the
election of directors can elect all of the directors, if they choose to do so,
subject to any rights of the holders of preferred stock to elect directors.
Subject to any preferential or other rights of any outstanding series of
preferred stock of Lanier that may be designated by Lanier's board of directors,
the holders of the Lanier Shares will be entitled to such dividends as may be
declared from time to time by Lanier's board of directors from funds available
therefor, and upon liquidation will be entitled to receive pro rata all assets
of Lanier available for distribution to such holders. See "Risk
Factors -- Uncertainty of Dividends" on page 11 and "Dividend Policies" on page
23.
PREFERRED STOCK
Lanier's board of directors is authorized without further stockholder
approval (except as may be required by applicable law or New York Stock Exchange
regulations) to provide for the issuance of shares of preferred stock, in one or
more series, and to fix for each such series such voting powers, designations,
preferences and relative, participating, optional and other special rights, and
such qualifications, limitations or restrictions, as are stated in the
resolution adopted by Lanier's board of directors providing for the issuance of
such series and as are permitted by the Delaware General Corporation Law. See
"Certain Anti-Takeover Provisions of Lanier's Certificate of Incorporation,
Bylaws and Rights Agreement and Delaware Law -- Preferred Stock" on page 62.
Should Lanier's board of directors elect to exercise this authority, the rights
and privileges of holders of the Lanier Shares could be made subject to the
rights and privileges of any such series of preferred stock. Presently, Lanier
has no plans to issue any preferred stock, except that Lanier's Stockholder
Protection Rights Agreement (the "Rights Agreement") provides for the issuance
of shares of participating preferred stock under the circumstances specified in
the Rights Agreement, upon exercise or exchange of rights (the "Rights") issued
thereunder. See "Certain Anti-Takeover Provisions of Lanier's Certificate of
Incorporation, Bylaws and Rights Agreement and Delaware Law -- Stockholder
Protection Rights Agreement" beginning on page 62.
NO PREEMPTIVE RIGHTS
No holder of any stock of Lanier of any class authorized at the
Distribution Date will have any preemptive right to subscribe to any securities
of Lanier of any kind or class.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for Lanier immediately following the
Distribution will be ChaseMellon Shareholder Services, L.L.C.
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<PAGE> 73
CERTAIN ANTI-TAKEOVER PROVISIONS
OF LANIER'S CERTIFICATE OF INCORPORATION, BYLAWS AND
RIGHTS AGREEMENT AND DELAWARE LAW
GENERAL
Lanier's restated certificate of incorporation, Lanier's bylaws, the Rights
Agreement and the Delaware General Corporation Law contain certain provisions
that could delay or make more difficult an acquisition of control of Lanier not
approved by Lanier's board of directors, whether by means of a tender offer,
open market purchases, a proxy contest or otherwise. These provisions have been
implemented to enable Lanier, particularly (but not exclusively) in the initial
years of its existence as an independent, publicly owned company, to develop its
business in a manner which will foster its long-term growth without disruption
caused by the threat of a takeover not deemed by Lanier's board of directors to
be in the best interests of Lanier and its stockholders. See also
"-- Stockholder Protection Rights Agreement" beginning on page 62. These
provisions could have the effect of discouraging third parties from making
proposals involving an acquisition or change of control of Lanier, although such
a proposal, if made, might be considered desirable by a majority of Lanier's
stockholders. These provisions may also have the effect of making it more
difficult for third parties to cause the replacement of the current management
of Lanier without the concurrence of Lanier's board of directors. In addition,
certain provisions of the Tax Disaffiliation Agreement to be entered into by
Harris and Lanier may also have the effect of discouraging third parties from
making proposals involving an acquisition or change of control of Lanier prior
to the second anniversary of the Distribution Date. See "Relationship Between
Harris and Lanier Following the Distribution -- Tax Disaffiliation Agreement"
beginning on page 20. Set forth below is a description of the provisions
contained in Lanier's restated certificate of incorporation and bylaws, the
Rights Agreement and the Delaware General Corporation Law that could impede or
delay an acquisition of control of Lanier that Lanier's board of directors has
not approved. This description is intended as a summary only and is qualified in
its entirety by reference to Lanier's restated certificate of incorporation,
Lanier's bylaws and the Rights Agreement, the forms of which are included as
exhibits to the Registration Statement, as well as the Delaware General
Corporation Law.
CLASSIFIED BOARD OF DIRECTORS
Lanier's restated certificate of incorporation provides for Lanier's board
of directors to be divided into three classes of directors serving staggered
three-year terms. As a result, approximately one-third of Lanier's board of
directors will be elected each year. The first class of directors will initially
serve a one-year term, and the second class of directors will initially serve a
two-year term. Thereafter, each class of directors will be elected for a
three-year term. See "Lanier's Management -- Board of Directors" beginning on
page 45.
This provision could prevent a party who acquires control of a majority of
the outstanding voting stock from obtaining control of Lanier's board of
directors until the second annual stockholders meeting following the date on
which the acquiror obtains the controlling stock interest and could have the
effect of discouraging a potential acquiror from making a tender offer or
otherwise attempting to obtain control of Lanier and could thus increase the
likelihood that incumbent directors will retain their positions.
NUMBER OF DIRECTORS; REMOVAL; FILLING VACANCIES
Lanier's restated certificate of incorporation and bylaws provide that the
number of directors shall be fixed only by resolution at Lanier's board of
directors from time to time. Lanier's restated certificate of incorporation
provides that the directors may be removed by stockholders only both for cause
and by the affirmative vote of at least 80% of the shares entitled to vote.
Lanier's restated certificate of incorporation and bylaws provide that
vacancies on the board of directors may be filled only by a majority vote of the
remaining directors or by the sole remaining director.
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<PAGE> 74
STOCKHOLDER ACTION
Lanier's restated certificate of incorporation provides that stockholder
action may be taken only at an annual or special meeting of stockholders and
that stockholders may not act by written consent. Lanier's restated certificate
of incorporation and bylaws provide that special meetings of stockholders may be
called only by Lanier's board of directors. Stockholders are not permitted to
call a special meeting or to require Lanier's board of directors to call a
special meeting of stockholders.
ADVANCE NOTICE FOR STOCKHOLDER PROPOSALS OR NOMINATIONS AT MEETINGS
Lanier's bylaws establish an advance notice procedure for stockholder
proposals to be brought before any annual or special meeting of stockholders and
for nominations by stockholders of candidates for election as directors at an
annual meeting or a special meeting at which directors are to be elected.
Subject to any other applicable requirements, including, without limitation,
Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), only such business may be conducted at a meeting of stockholders as has
been brought before the meeting by, or at the direction of, Lanier's board of
directors, or by a stockholder who has given Lanier's Secretary timely written
notice, in proper form, of the stockholder's intention to bring that business
before the meeting. The presiding officer at such meeting has the authority to
make such determinations. Only persons who are nominated by, or at the direction
of, Lanier's board of directors, or who are nominated by a stockholder who has
given timely written notice, in proper form, to Lanier's Secretary prior to a
meeting at which directors are to be elected will be eligible for election as
directors of Lanier.
To be timely, notice of nominations or other business to be brought before
any meeting must be delivered to Lanier's Secretary not less than 90 days nor
more than 120 days prior to the first anniversary date of the annual meeting for
the preceding year; provided, however, that if the annual meeting is not
scheduled to be held within a period that commences 30 days before and ends 30
days after such anniversary date, such advance notice shall be given by the
later of (i) the close of business on the date 90 days prior to the date of the
annual meeting or (ii) the close of business on the tenth day following the date
that the meeting date is first publicly announced or disclosed.
Any stockholder who gives notice of a proposal must provide the text of the
proposal to be presented, a brief written statement of the reasons why he or she
favors the proposal, the stockholder's name and address, the number and class of
all shares of each class of Lanier stock owned, any material interest the
stockholder may have in the proposal (other than as a Lanier stockholder) and,
in the case of any person that holds Lanier stock through a nominee or "street
name" holder of record of such stock, evidence establishing such person's
indirect ownership of Lanier stock and entitlement to vote on the matter
proposed at the annual meeting.
The notice of any nomination for election as a director must set forth the
name of the nominee, the number and class of all shares of each class of Lanier
capital stock beneficially owned by the nominee, the information regarding the
nominee required by paragraphs (a), (e) and (f) of Item 401 of Regulation S-K
adopted by the Commission, the signed consent of each nominee to serve as a
director if elected, the nominating stockholder's name and address, the number
and class of shares of Lanier stock owned by such nominating stockholder and, in
the case of any person that holds Lanier stock through a nominee or "street
name" holder of record of such stock, evidence establishing such person's
indirect ownership of Lanier stock and entitlement to vote on the matter
proposed at the annual meeting.
AMENDMENTS TO BYLAWS
Lanier's restated certificate of incorporation provides that only Lanier's
board of directors or the holders of 80% of the shares of Lanier's capital stock
entitled to vote at an annual or special meeting of stockholders have the power
to amend or repeal Lanier's bylaws.
AMENDMENT OF THE CERTIFICATE OF INCORPORATION
Any proposal to amend, alter, change or repeal any provision of Lanier's
restated certificate of incorporation requires approval by the affirmative vote
of a majority of the voting power of all of the shares of Lanier's capital
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<PAGE> 75
stock entitled to vote on such matters, with the exception of certain provisions
of Lanier's restated certificate of incorporation which require a vote of 80% or
more of such voting power.
PREFERRED STOCK
Lanier's restated certificate of incorporation authorizes Lanier's board of
directors by resolution to issue one or more series of Preferred Stock and to
determine, with respect to any series of preferred stock, the terms and rights
of such series.
Lanier believes that the availability of the preferred stock will provide
Lanier with increased flexibility in structuring possible future financing and
acquisitions and in meeting other corporate needs which might arise. Having such
authorized shares available for issuance will allow Lanier to issue shares of
preferred stock without the expense and delay of a special stockholders'
meeting. The authorized shares of preferred stock, as well as Lanier Shares,
will be available for issuance without further action by Lanier's stockholders,
unless such action is required by applicable law or the rules of the New York
Stock Exchange or any other stock exchange on which Lanier's securities may be
listed. Although Lanier's board of directors has no intention at the present
time of doing so, it would have the power (subject to applicable law) to issue a
series of preferred stock that could, depending on the terms of such series,
impede the completion of a merger, tender offer or other takeover attempt. For
instance, subject to applicable law, such series of preferred stock might impede
a business combination by including class voting rights which would enable the
holder to block such a transaction. See "-- Stockholder Protection Rights
Agreement" below.
STOCKHOLDER PROTECTION RIGHTS AGREEMENT
Each share of Lanier Common Stock has attached to it one right (a "Right").
Each Right entitles its registered holder to purchase from Lanier, on or after
the Separation Time (as hereinafter defined), one one-hundredth of a share of
Participating Preferred Stock, no par value (the "Participating Preferred"), for
an exercise price which will be established by the board of directors of Lanier
prior to the Distribution (the "Exercise Price"), which price will be subject to
future adjustment. The Rights will not trade separately from the Lanier Common
Stock until the Separation Time.
The Rights will be evidenced by common stock certificates until the earlier
of (either, the "Separation Time") (i) the close of business on the tenth
business day (or such later date as Lanier's board of directors may from time to
time fix by resolution adopted prior to the Separation Time that would otherwise
have occurred) after the date on which any Person (as defined in the Rights
Agreement) commences a tender or exchange offer which, if consummated, would
result in such Person's becoming an Acquiring Person (as defined below) and (ii)
the first date (the "Stock Acquisition Date") of public announcement by Lanier
(by any means) that a Person has become an Acquiring Person; provided that if a
tender or exchange offer referred to in clause (i) is canceled, terminated or
otherwise withdrawn prior to the Separation Time without the purchase of any
shares of stock pursuant thereto, such offer shall be deemed never to have been
made. An Acquiring Person is any Person who is or becomes the Beneficial Owner
(as defined in the Rights Agreement) of 15% or more of the outstanding Lanier
Shares after the Distribution Date, excluding (i) Lanier, any majority-owned
subsidiary of Lanier or any employee stock ownership or other employee benefit
plan of Lanier or a subsidiary of Lanier (or any entity or trustee holding
shares of Lanier Common Stock pursuant to the terms of any such plan or for the
purpose of funding any such plan or funding other employee benefits for
employees of Lanier or any subsidiary of Lanier), (ii) any Person who is the
beneficial owner of 15% or more of the outstanding shares of Lanier Common Stock
on the date of the Rights Agreement or any Person who became the Beneficial
Owner of 15% or more of the outstanding Lanier Shares solely as a result of an
acquisition of Lanier Shares by Lanier, until such time as such Person acquires
additional Lanier Shares other than through a dividend or stock split, (iii) any
Person who becomes an Acquiring Person without any plan or intent to seek or
affect control of Lanier if such Person, upon notice by Lanier, promptly divests
sufficient securities to reduce its Beneficial Ownership below 15% or (iv) any
Person who Beneficially Owns Lanier Shares that were solely (A) acquired upon
exercise of an option granted by Lanier in connection with an agreement to merge
with, or acquire, Lanier entered into prior to a Stock Acquisition Date, (B)
owned by such Person and its Affiliates and Associates (as defined in the Rights
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<PAGE> 76
Agreement) at the time of such grant or (C) amounting to less than 1% of the
outstanding Lanier Shares, acquired by Affiliates and Associates of such Person
after the time of such grant.
The Rights Agreement provides that, until the Separation Time, the Rights
will be transferred with and only with the Lanier common stock. Lanier Share
certificates issued after the Record Time but prior to the Separation Time shall
evidence one Right for each share of Lanier common stock represented thereby and
shall contain a legend incorporating by reference the terms of the Rights
Agreement (as it may be amended from time to time). Promptly following the
Separation Time, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to holders of record of Lanier Shares at the
Separation Time.
The Rights will not be exercisable until the Separation Time. The Rights
will expire on the earliest of (i) the Exchange Time (as defined below), (ii)
the close of business on the tenth anniversary of the Record Time, unless
extended by action of Lanier's board of directors, (iii) the date on which the
Rights are redeemed as described below and (iv) immediately prior to the
effective time of a consolidation, merger or share exchange of Lanier (A) into
another corporation or (B) with another corporation where Lanier is the
surviving corporation but Lanier Shares are converted into cash or securities of
another corporation, in either case pursuant to an agreement that Lanier entered
into prior to a Stock Acquisition Date (in any such case, the "Expiration
Time").
The Exercise Price and the number of Rights outstanding, or in certain
circumstances the securities purchasable upon exercise of the Rights, may be
adjusted from time to time to prevent dilution in the event of a common stock
dividend on, or a subdivision or a combination into a smaller number of shares
of, Lanier Common Stock, or the issuance or distribution of any securities or
assets in respect of, in lieu of or in exchange for Lanier Common Stock.
In the event that prior to the Expiration Time a Flip-in Date (as defined
below) occurs, each Right (other than Rights Beneficially Owned by the Acquiring
Person or any affiliate or associate thereof, which Rights shall become void)
shall constitute the right to purchase from Lanier, upon the exercise thereof in
accordance with the terms of the Rights Agreement, that number of shares of
Lanier Common Stock having an aggregate market price (as defined in the Rights
Agreement), on the Stock Acquisition Date equal to twice the Exercise Price for
an amount in cash equal to the then current Exercise Price. In addition,
Lanier's board of directors may, at its option, at any time after a Flip-in Date
and prior to the time that an Acquiring Person becomes the Beneficial Owner of
more than 50% of the outstanding shares of Lanier Common Stock, elect to
exchange all (but not less than all) the then outstanding Rights (other than
Rights Beneficially Owned by the Acquiring Person or its Affiliates or
Associates, which Rights become void) for shares of Lanier Common Stock at an
exchange ratio of one share of Lanier Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date of the Separation Time (the "Exchange Ratio").
Immediately upon such action by Lanier's board of directors (the "Exchange
Time"), the right to exercise the Rights will terminate and each Right will
thereafter represent only the right to receive a number of shares of Lanier
Common Stock equal to the Exchange Ratio. A "Flip-In Date" is defined in the
Rights Agreement as any Stock Acquisition Date or such later date as Lanier's
board of directors may from time to time fix by resolution adopted prior to the
Flip-In Date that would otherwise have occurred.
Whenever Lanier becomes obligated under the preceding paragraph to issue
shares of Lanier Common Stock upon exercise of or in exchange for Rights,
Lanier, at its option, may substitute shares of participating preferred stock
for shares of Lanier Common Stock, at a ratio of one one-hundredth of a share of
the Participating Preferred for each share of Lanier Common Stock.
In the event that prior to the Expiration Time Lanier enters into,
consummates or permits to occur a transaction or series of transactions after
the time an Acquiring Person has become such in which, directly or indirectly,
(i) Lanier shall consolidate, merge or participate in a statutory share exchange
with any other Person if, at the time of the consolidation, merger or statutory
share exchange or at the time Lanier enters into any agreement with respect to a
consolidation, merger or share exchange, the Acquiring Person is the Beneficial
Owner of 90% or more of the outstanding shares of Lanier Common Stock or
controls Lanier's board of directors and either (A) any term of or arrangement
concerning the treatment of shares of Lanier Common Stock in such consolidation,
merger or statutory share exchange relating to the Acquiring Person is not
identical to the terms and arrangements relating to other holders of Lanier
Common Stock or (B) the person with whom the transaction
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<PAGE> 77
or transactions occur is the Acquiring Person or an affiliate or associate of
the Acquiring Person or (ii) Lanier or one or more of its subsidiaries sells or
otherwise transfers assets (A) aggregating more than 50% of the assets (measured
by either book value or fair market value) or (B) generating more than 50% of
the operating income or cash flow of Lanier and its subsidiaries taken as a
whole to any other Person (other than Lanier or one or more of its wholly owned
subsidiaries) or to two or more such Persons which are affiliated or otherwise
acting in concert, if, at the time of such sale or transfer of assets or at the
time Lanier (or any such subsidiary) enters into an agreement with respect to
such sale or transfer, the Acquiring Person controls Lanier's board of directors
(a "Flip-over Transaction or Event"), Lanier shall take such action as shall be
necessary to ensure, and shall not enter into, consummate or permit to occur
such Flip-over Transaction or Event until it shall have entered into a
supplemental agreement with the Person engaging in such Flip-over Transaction or
Event or the parent corporation thereof (the "Flip-over Entity"), for the
benefit of the holders of the Rights, provided that upon consummation or
occurrence of the Flip-over Transaction or Event (i) each Right shall thereafter
constitute the right to purchase from the Flip-over Entity, upon exercise
thereof in accordance with the terms of the Rights Agreement, that number of
shares of common stock of the Flip-over Entity having an aggregate market price
on the date of consummation or occurrence of such Flip-over Transaction or Event
equal to twice the Exercise Price for an amount in cash equal to the then
current Exercise Price and (ii) the Flip-over Entity shall thereafter be liable
for, and shall assume, by virtue of such Flip-over Transaction or Event and such
supplemental agreement, all the obligations and duties of Lanier pursuant to the
Rights Agreement.
Lanier's board of directors may, at its option, at any time prior to the
Flip-in Date, redeem all (but not less than all) the then outstanding Rights at
a redemption price of $.01 per Right. Immediately upon the action of Lanier's
board of directors to redeem the Rights, without any further action and without
any notice, the right to exercise the Rights will terminate and each Right will
thereafter represent only the right to receive the redemption price in cash or
securities of Lanier.
The holders of Rights will, solely by reason of their ownership of Rights,
have no rights as stockholders of Lanier, including the right to vote or to
receive dividends.
Lanier and the Rights Agent may from time to time supplement or amend the
Rights Agreement without the approval of any holders of Rights (i) prior to the
Flip-In Date, in any respect and (ii) on or after the Flip-In Date, to make any
changes that Lanier may deem necessary or desirable and which shall not
materially adversely affect the interests of the holders of Rights generally or
in order to cure any ambiguity or correct or supplement any inconsistent or
defective provision contained therein.
The Rights will not prevent a takeover of Lanier. However, the Rights may
cause substantial dilution to a person or group that acquires 15% or more of the
Lanier Shares unless the Rights are first redeemed by Lanier's board of
directors. Nevertheless, the rights should not interfere with a transaction that
is in the best interests of Lanier and its stockholders because the Rights can
be terminated on or prior to the Flip-in Date and before the transaction is
consummated.
As long as the rights are attached to Lanier Common Stock, Lanier will
issue one Right with each new share of Lanier Common Stock so that all shares
will have Rights attached. Prior to Distribution, Lanier's board of directors
will reserve an appropriate number of shares of participating preferred stock
for issuance upon exercise of the Rights.
The Rights Agreement (which includes as Exhibit A the forms of Rights
Certificate and Election to Exercise and as Exhibit B the form of Certificate of
Designation and Terms of the Participating Preferred Stock) is filed as an
exhibit to the Registration Statement. The foregoing description of the Rights
is qualified in its entirety by reference to the Rights Agreement and such
exhibits.
DELAWARE LAW
Under Section 203 of the Delaware General Corporation Law ("Section 203"),
which will be applicable to Lanier after the Distribution, certain "business
combinations" (defined generally to include mergers or consolidations between
the Delaware corporation and an interested stockholder and transactions with an
interested stockholder involving the assets or stock of the corporation or its
majority-owned subsidiaries and
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<PAGE> 78
transactions which increase the interested stockholder's percentage ownership of
stock) between a publicly held Delaware corporation and an "interested
stockholder" (defined generally as those stockholders who become beneficial
owners of 15% or more of a Delaware corporation's voting stock or their
affiliates) are prohibited for a three-year period following the date that such
stockholder became an interested stockholder, unless (i) the corporation has
elected in its certificate of incorporation not to be so governed, (ii) either
the business combination or the proposed acquisition of stock resulting in the
person becoming an interested stockholder was approved by the board of directors
of the corporation before the other party to the business combination became an
interested stockholder, (iii) upon consummation of the transaction that made it
an interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the commencement of the
transaction (excluding voting stock owned by officers who are also directors or
held in employee benefit plans in which the employees do not have a confidential
right to tender or vote stock held by the plan) or (iv) the business combination
was approved by the board of directors of the corporation and also ratified by
two-thirds of the voting stock which the interested stockholder did not own.
Under certain circumstances, Section 203 makes it more difficult for a
person who would be an interested stockholder to effect various business
combinations with a corporation for a three-year period, although the
stockholders may elect to exclude a corporation from the restrictions imposed
thereunder. Lanier's restated certificate of incorporation does not exclude
Lanier from restrictions imposed under Section 203. The provisions of Section
203 may encourage companies interested in acquiring Lanier to negotiate in
advance with Lanier's board of directors, since the stockholder approval
requirement would be avoided if a majority of the directors then in office
approved either the business combination or the transaction which results in the
stockholder becoming an interested stockholder. Such provisions also may have
the effect of preventing changes in the management of Lanier. It is possible
that such provisions could make it more difficult to accomplish transactions
which stockholders may otherwise deem to be in their best interests.
LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
LIMITATION ON LIABILITY OF DIRECTORS
Pursuant to authority conferred by Section 102 of the Delaware General
Corporation Law, Article Eleventh of Lanier's restated certificate of
incorporation ("Article Eleventh") eliminates the personal liability of Lanier's
directors to Lanier or its stockholders for monetary damages for breach of
fiduciary duty as a director, except to the extent that such exemption from
liability or limitation thereof is not permitted under the Delaware General
Corporation Law as currently in effect or as it may hereafter be amended. Under
the Delaware General Corporation Law as in effect on the date hereof, Lanier's
directors remain liable for (i) any breach of the duty of loyalty to Lanier or
its stockholders, (ii) any act or omission not in good faith or which involves
intentional misconduct or a knowing violation of law, (iii) any violation of
Section 174 of the Delaware General Corporation Law, which proscribes the
payment of dividends and stock purchases or redemptions under certain
circumstances and (iv) any transaction from which directors derive an improper
personal benefit.
Article Eleventh provides that any future repeal or amendment of its terms
(including any amendment or repeal of Article Eleventh made by virtue of any
change in the Delaware General Corporation Law) will not adversely affect any
rights of directors existing thereunder with respect to acts or omissions
occurring prior to such repeal or amendment.
INDEMNIFICATION
Lanier's bylaws and Section 145 of the Delaware General Corporation Law,
which allows, and in some cases requires, the indemnification of directors and
officers under certain circumstances, grant Lanier's directors and officers a
right to indemnification to the fullest extent permitted by law for all expenses
relating to civil, criminal, administrative or investigative procedures to which
they are a party (i) by reason of the fact that they are or were directors or
officers of Lanier or (ii) by reason of the fact that, while they are or were
directors or officers of Lanier, they are or were serving at the request of
Lanier as a director, officer or employee of another enterprise. Lanier's bylaws
further provide that an advancement for any such expenses shall only be made
upon delivery to
65
<PAGE> 79
Lanier by the indemnitee of an undertaking to repay all amounts so advanced if
it is ultimately determined that such indemnitee is not entitled to be
indemnified by Lanier.
INDEMNIFICATION AGREEMENTS
In connection with the Distribution, Lanier will enter into indemnification
agreements with certain of its directors and officers. These agreements will
require Lanier to indemnify these directors and officers with respect to their
activities as directors or officers of Lanier or when serving at Lanier's
request as a director, officer or trustee of another corporation, trust or other
enterprise against expenses (including attorneys' fees, judgments, fines and
amounts paid in settlement) actually and reasonably incurred by them in any
threatened, pending or completed suit or proceeding to which they are, or are
threatened to be made, parties as a result of their service to Lanier. Lanier
will agree to indemnify each indemnitee for any one or a combination of the
following, whichever is most advantageous to the indemnitee: (i) the benefits
provided by Lanier's restated certificate of incorporation and bylaws in effect
on the date of the indemnification agreement; (ii) the benefits provided by
Lanier's restated certificate of incorporation and bylaws at the time expenses
are incurred by the indemnitee; (iii) the benefits allowable under Delaware law
in effect on the date of the indemnification agreement; (iv) the benefits
allowable under the law of the jurisdiction under which Lanier exists at the
time expenses are incurred by the indemnitee; (v) the benefits available under
liability insurance obtained by Lanier; and (vi) such other benefits as may be
otherwise available to indemnitee under Lanier's existing practices. Under the
indemnification agreements, each indemnitee will continue to be indemnified even
after ceasing to occupy a position as an officer, director, employee or agent of
Lanier with respect to suits or proceedings arising out of acts or omissions
during his or her service to Lanier.
Each indemnitee will agree to notify Lanier promptly of any proceeding
brought or threatened and not to make any admission or settlement without
Lanier's consent, unless the indemnitee determines to undertake his or her own
defense and waives the benefits of the indemnification agreement.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The consolidated financial statements of Lanier Worldwide, Inc. and its
subsidiaries at July 2, 1999 and July 3, 1998, and for each of the three years
in the period ended July 2, 1999, appearing in this Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon appearing elsewhere herein, and are included in reliance upon
such report given on the authority of such firm as experts in accounting and
auditing.
ADDITIONAL INFORMATION
Lanier has filed with the Commission the Registration Statement under the
Exchange Act, with respect to the Lanier Common Stock and the preferred stock
purchase rights associated with each share of Lanier Common Stock. This document
does not contain all of the information set forth in the Registration Statement
and the exhibits and schedules thereto, to which reference is hereby made.
Statements made in this document as to the contents of any contract, agreement
or other document referred to herein are not necessarily complete. With respect
to each such contract, agreement or other document filed as an exhibit to the
Registration Statement, reference is made to such exhibit for a more complete
description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference.
The Registration Statement and the exhibits thereto filed by Lanier with
the Commission may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, as well as at the Regional Offices of the Securities and Exchange
Commission at Seven World Trade Center, Thirteenth Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such information can be obtained by mail from the
Public Reference Branch of the Securities and Exchange Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission
maintains a website that contains reports, proxy and information statements and
other information regarding statements regarding registrants that file
electronically with the
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Commission. The address of the Commission's website is http://www.sec.gov. The
address of Lanier's website is http://www.lanier.com.
After the Distribution, Lanier will be required to comply with the
reporting requirements of the Exchange Act and to file with the Commission
reports, proxy statements and other information as required by the Exchange Act.
Additionally, Lanier will be required to provide annual reports containing
audited financial statements to its stockholders in connection with its annual
meetings of stockholders. After the Distribution, these reports, proxy
statements and other information will be available to be inspected and copied at
the public reference facilities of the Commission or obtained by mail or over
the Internet from the Commission, as described above. After the Distribution,
the Lanier Shares will be listed on the New York Stock Exchange. When the Lanier
Shares commence trading on the New York Stock Exchange, such reports, proxy
statements and other information will be available for inspection at the offices
of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
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<PAGE> 81
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Shareholder
Lanier Worldwide, Inc.
We have audited the accompanying consolidated balance sheets of Lanier
Worldwide, Inc. and subsidiaries as of July 2, 1999 and July 3, 1998, and the
related consolidated statements of income, changes in shareholder equity and
cash flows for each of the three fiscal years in the period ended July 2, 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Lanier
Worldwide, Inc. and subsidiaries as of July 2, 1999 and July 3, 1998, and the
related consolidated statements of their operations and their cash flows for
each of the three fiscal years in the period ended July 2, 1999, in conformity
with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Orlando, Florida
July 27, 1999
F-1
<PAGE> 82
LANIER WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
JULY 2, JULY 3,
1999 1998
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents................................. $ 18,209 $ 87,096
Trade receivables......................................... 348,604 319,048
Receivables from parent................................... 194,521 14,327
Inventories............................................... 166,404 201,642
Prepaid expenses.......................................... 17,107 8,899
Deferred income taxes..................................... 39,276 36,243
---------- ----------
TOTAL CURRENT ASSETS.............................. 784,121 667,255
OTHER ASSETS
Rental equipment, less allowance for depreciation
($205,232 in 1999 and $158,792 in 1998)................ 140,718 109,567
Property, plant and equipment, less allowance for
depreciation ($76,053 in 1999 and $65,830 in 1998)..... 42,755 45,839
Notes receivables-net..................................... 203,657 179,989
Intangibles, less accumulated amortization ($38,610 in
1999 and $28,241 in 1998).............................. 125,504 100,452
Other..................................................... 40,953 20,194
---------- ----------
TOTAL OTHER ASSETS................................ 553,587 456,041
---------- ----------
TOTAL ASSETS................................................ $1,337,708 $1,123,296
========== ==========
LIABILITIES AND SHAREHOLDER EQUITY
CURRENT LIABILITIES
Notes payable............................................. $ 138,011 $ 52,918
Trade payables............................................ 86,815 44,606
Retirement plan accounts.................................. 38,964 32,833
Accrued compensation...................................... 39,066 27,187
Accrued interest and sundry taxes......................... 21,772 13,681
Other accrued items....................................... 33,610 31,833
Unearned service income................................... 57,898 67,004
Income taxes.............................................. 15,460 5,659
Long-term debt-current portion............................ 2,582 2,192
---------- ----------
TOTAL CURRENT LIABILITIES......................... 434,178 277,913
OTHER LIABILITIES
Deferred income taxes..................................... 16,170 38,066
Long-term debt............................................ 4,622 3,660
SHAREHOLDER EQUITY
Preferred Stock, without par value: authorized 1,000,000
shares, issued-none.................................... -- --
Common Stock, $1.00 par value, 1,000,000 shares
authorized; issued and outstanding 41,893 shares in
1999 and 1998.......................................... 42 42
Additional paid-in capital................................ 329,679 313,054
Retained earnings......................................... 586,556 521,578
Accumulated other comprehensive loss...................... (33,539) (31,017)
---------- ----------
TOTAL SHAREHOLDER EQUITY.......................... 882,738 803,657
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDER EQUITY.................... $1,337,708 $1,123,296
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
F-2
<PAGE> 83
LANIER WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------
JULY 2, JULY 3, JUNE 27,
1999 1998 1997
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
REVENUE
Product sales and rentals................................ $ 807,468 $ 721,791 $ 704,282
Service income........................................... 623,020 532,986 465,732
Finance income........................................... 38,132 33,558 29,871
---------- ---------- ----------
1,468,620 1,288,335 1,199,885
COST AND EXPENSES
Cost of product sales and rentals........................ 547,929 453,968 426,042
Cost of service.......................................... 349,448 304,901 255,705
Selling and administrative expenses...................... 438,516 410,452 399,470
Restructuring expenses................................... -- 8,500 --
Interest expense......................................... 22,692 8,236 8,797
Other-net................................................ (1,235) 2,877 7,964
---------- ---------- ----------
1,357,350 1,188,934 1,097,978
---------- ---------- ----------
Income before income taxes............................... 111,270 99,401 101,907
Income taxes............................................. 40,000 36,604 38,208
---------- ---------- ----------
NET INCOME................................................. $ 71,270 $ 62,797 $ 63,699
========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
F-3
<PAGE> 84
LANIER WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------------
JULY 2, JULY 3, JUNE 27,
1999 1998 1997
--------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net Income................................................ $ 71,270 $ 62,797 $ 63,699
Adjustments to Net Income:
Gain on sale of business................................ (21,532) -- --
Depreciation............................................ 109,832 72,838 62,641
Amortization............................................ 9,910 6,326 5,571
Non-current deferred income taxes....................... (21,896) 5,270 3,970
Changes in assets and liabilities:
Trade receivables....................................... 31,749 8,730 (78,421)
Receivable from parent.................................. (180,194) 54,637 97,109
Inventories............................................. 61,897 3,151 (51,799)
Prepaid expenses........................................ (8,345) (1,077) (1,743)
Trade payables and accrued liabilities.................. (12,387) (13,559) 13,372
Unearned service income................................. (42,199) (19,194) 843
Income taxes............................................ 25,775 (11,574) (1,006)
Other................................................... 33,689 (21,985) (8,147)
--------- -------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES................. 57,569 146,360 106,089
INVESTING ACTIVITIES
Proceeds from sale of business............................ 34,030 -- --
Capital expenditures:
Cash paid for acquired business......................... (171,117) (13,966) (12,459)
Plant and equipment..................................... (21,557) (15,837) (34,527)
Rental equipment........................................ (63,466) (68,622) (60,529)
--------- -------- ---------
NET CASH USED IN INVESTING ACTIVITIES..................... (222,110) (98,425) (107,515)
FINANCING ACTIVITIES
Proceeds from borrowings.................................. 108,026 62,596 101,149
Payments of borrowings.................................... (17,963) (46,856) (91,469)
--------- -------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES................. 90,063 15,740 9,680
Effect of exchange rates on cash and cash equivalents..... 5,591 4,774 (1,263)
--------- -------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.......... (68,887) 68,449 6,991
Cash and cash equivalents at beginning of year............ 87,096 18,647 11,656
--------- -------- ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR.................. $ 18,209 $ 87,096 $ 18,647
========= ======== =========
</TABLE>
See Notes to Consolidated Financial Statements
F-4
<PAGE> 85
LANIER WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER EQUITY
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------------------------------
JULY 2, JULY 3, JUNE 27,
1999 1998 1997
------------------ ------------------ ------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCK
Balance at beginning of year........ $ 42 $ 42 $ 41
Shares issued to affiliates (1,000
shares in 1997).................. -- -- 1
-------- -------- --------
Balance at end of year.............. 42 42 42
ADDITIONAL PAID IN CAPITAL
Balance at beginning of year........ 313,054 313,054 306,658
Capital contribution from parent.... 16,625 -- 6,396
-------- -------- --------
Balance at end of year.............. 329,679 313,054 313,054
RETAINED EARNINGS
Balance at beginning of year........ 521,578 458,781 395,082
Net income.......................... 71,270 $71,270 62,797 $62,797 63,699 $63,699
Dividend paid to parent............. (6,292) -- --
-------- -------- --------
Balance at end of year.............. 586,556 521,578 458,781
ACCUMULATED OTHER COMPREHENSIVE LOSS
Balance at beginning of year........ (31,017) (21,720) (12,541)
Change in cumulative translation
adjustments...................... (2,522) (2,522) (9,297) (9,297) (9,179) (9,179)
------- ------- -------
Total comprehensive income.......... $68,748 $53,500 $54,520
-------- ======= -------- ======= -------- =======
Balance at end of year.............. (33,539) (31,017) (21,720)
-------- -------- --------
Total Shareholder Equity.............. $882,738 $803,657 $750,157
======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements
F-5
<PAGE> 86
LANIER WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 2, 1999
NOTE A -- SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION -- The consolidated financial statements include the
accounts of Lanier Worldwide, Inc. and Subsidiaries ("Lanier"), including
certain subsidiaries partially or wholly owned by Harris that will be
transferred to Lanier prior to the distribution to shareholders. Lanier is a
wholly owned subsidiary of Harris Corporation ("Harris") that sells and leases
office equipment products and provides related services to this marketplace.
These statements have been prepared in conformity with generally accepted
accounting principles and require management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. Significant intercompany
transactions and accounts have been eliminated.
Corporate expense allocations charged by Harris are based on a percentage of
Lanier's net sales. These amounts were $25.0 million in 1999, $22.6 million in
1998 and $21.1 million in 1997. Lanier's management estimates that its cost to
perform these services on a stand-alone basis will be approximately $7.0
million. Estimated charges include administration expenses such as legal and
audit services, risk management, investor relations and board of director
charges. Interest expense is provided on direct borrowings of Lanier. Interest
expense of Harris has not been allocated to Lanier. It is not practicable to
estimate what shareholder equity would have been if Lanier had operated as an
unaffiliated entity. In the opinion of management, the allocation methods used
are reasonable.
Lanier sells products to other affiliated operations of Harris. Sales to these
operations were not material.
FISCAL YEAR -- Fiscal years end on the Friday nearest June 30. The 1999 and 1997
fiscal years included 52 weeks while 1998 fiscal year included 53 weeks.
CASH EQUIVALENTS -- Cash equivalents are temporary cash investments with a
maturity of three months or less when purchased. These investments include
accrued interest and are carried at the lower of cost or market.
CREDIT POLICY -- Lanier performs periodic credit evaluations of its customers'
financial positions and generally does not require collateral, except in the
case of certain leases in which Lanier maintains a security interest in the
leased equipment.
INVENTORIES -- Inventories are carried at the lower of cost, determined by the
First-In-First-Out (FIFO) method, or market.
RENTAL EQUIPMENT -- Rental equipment and service parts are carried on the basis
of cost. Depreciation is computed by the straight-line method using estimated
useful lives of up to five years.
BUILDINGS, MACHINERY AND EQUIPMENT -- Buildings, machinery and equipment are
carried on the basis of cost. Depreciation is computed by the straight-line
method using the estimated useful lives of the assets.
REVENUE RECOGNITION -- Revenue is recognized from sales when a product is
shipped, from rentals as they accrue, and from services and maintenance when
performed. Unearned income on service contracts is amortized by the
straight-line method over the term of the contracts.
ADVERTISING -- Advertising and promotional costs are expensed when incurred.
Advertising expense was $15.6 million in 1999, $13.5 million in 1998 and $15.5
million in 1997.
INCOME TAXES -- Lanier follows the liability method of accounting for income
taxes and is included with its parent, Harris, in a consolidated federal income
tax return. Harris requires each of its businesses to provide taxes on financial
statement pre-tax income or loss at applicable statutory tax rates. Amounts
receivable or payable for current and prior years' income taxes are treated as
intercompany transactions in accordance with Harris policy. Deferred income
taxes resulting from temporary differences between the financial statements and
the tax basis of assets and liabilities are separately classified on the balance
sheets.
F-6
<PAGE> 87
ASSET IMPAIRMENT -- Lanier accounts for long-lived asset impairment under
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
This Statement requires that long-lived assets and certain identifiable
intangibles to be held and used be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. In performing the review for recoverability, Lanier estimates
the future cash flows expected to result from the use of the asset. If the sum
of the estimated expected cash flows is less than the carrying amount of the
asset, an impairment loss is recognized. Measurement of an impairment loss is
based on the estimated fair value of the asset. Long-lived assets to be disposed
of are recorded at the lower of their carrying amount or estimated fair value
less cost to sell.
INTANGIBLES -- Intangibles resulting from acquisitions are being amortized by
the straight-line method principally over periods between 15 and 40 years.
NEW ACCOUNTING STANDARDS -- In June 1998, the Financial Accounting Standards
Board issued FAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities." The statement establishes standards for recording derivative
financial instruments and the recognition of gains or losses resulting from
changes in the fair values of those instruments. Lanier plans to adopt the new
standard in fiscal 2000, however, Lanier has not determined the anticipated
impact of FAS No. 133.
FUTURES AND FORWARD CONTRACTS -- When Lanier sells products outside the United
States or enters into purchase commitments, transactions are frequently
denominated in currencies other than U.S. dollars. To minimize the impact on
revenue and cost from currency fluctuations, Lanier enters into currency
exchange agreements that qualify for hedge accounting treatment. It is Lanier's
policy not to speculate in foreign currencies. Currency exchange agreements are
designated as, and are effective as, hedges of foreign currency commitments. In
addition, these agreements are consistent with the designated currency of the
underlying transaction and mature on or before the underlying transaction. Gains
and losses on currency exchange agreements that qualify as hedges are deferred
and recognized as an adjustment of the carrying amount of the hedged asset,
liability or commitment. Gains and losses on currency exchange agreements that
do not qualify as hedges are recognized in income based on changes in the fair
market value of the currency exchange agreement.
FOREIGN CURRENCY TRANSLATION -- The functional currency for international
subsidiaries is the local currency. Assets and liabilities are translated at
current rates of exchange, and income and expense items are translated at the
weighted average exchange rate for the year. The resulting translation
adjustments are recorded as a separate component of accumulated other
comprehensive loss.
NOTE B -- ACQUISITION
On July 9, 1998, Lanier acquired the Copying Systems Division of the
Agfa-Gevaert Group which is a member of the Bayer Group, Leverkusen, Germany
(the "Agfa Acquisition"). The transaction was accounted for as a purchase. The
purchase price, which is subject to adjustment, was $168.3 million in cash. The
purchase price exceeded the fair value of net assets acquired by approximately
$46.0 million, which is being amortized on a straight-line basis over 20 years.
The results of the Agfa Acquisition are included in the accompanying
consolidated financial statements from the date of acquisition.
In connection with the Agfa Acquisition, Lanier accrued as a cost of the
purchase approximately $8.6 million in connection with the planned termination
of approximately 160 employees of Agfa, principally sales and technical
personnel. Lanier paid approximately $6.6 million in 1999 related to such
terminations.
The following summarized unaudited pro forma combined financial information
assumes the acquisition had occurred at the beginning of each period:
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR
ENDED ENDED
JULY 2, 1999 JULY 3, 1998
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Net sales................................................... $1,430,448 $1,519,754
Net income.................................................. $ 71,270 $ 66,021
</TABLE>
F-7
<PAGE> 88
Pro forma results include the effects of purchase accounting adjustments and
additional interest expense as if the debt incurred in connection with the
acquisition had been outstanding from the beginning of each period. The pro
forma financial information is not necessarily indicative of either the results
of operations that would have occurred had the acquisition taken place at the
beginning of the periods presented or of future results of combined operations.
NOTE C -- SALE OF BUSINESS
In May 1999, Lanier sold its electronic medical transcription services business
for approximately $34 million. The resulting pre-tax gain of $21.5 million is
reflected in Other Income in the accompanying Consolidated Statement of Income.
NOTE D -- RESTRUCTURING
In 1998, Lanier recorded a $8.5 million charge ($5.3 million after income tax)
for the restructuring of its operations. Restructuring provisions are for the
reduction of approximately 350 employees, primarily service and administrative.
All employee terminations occurred and costs totaling $8.5 million were paid
during fiscal 1999.
NOTE E -- RECEIVABLES
Receivables are summarized below:
<TABLE>
<CAPTION>
1999 1998
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Accounts receivable......................................... $280,749 $245,120
Notes receivable due within one year-net.................... 89,075 83,038
-------- --------
369,824 328,158
Less allowances for collection losses....................... 21,220 9,110
-------- --------
$348,604 $319,048
======== ========
</TABLE>
In May 1999, Lanier entered into an asset-backed securitization program with a
bank which provides for the sale of up to $100 million of eligible trade
receivables of designated European subsidiaries. Lanier accounts for the sale of
receivables under this securitization program in accordance with Statement of
Financial Accounting Standards No. 125, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities." Receivables sold under
this program are excluded from accounts receivable in the Consolidated Balance
Sheet. As of July 2, 1999, Lanier had sold approximately $36.5 million of trade
accounts receivable, without recourse, to a third party. Amounts received from
the sale of those receivables are net of applicable interest and an allowance
for credit losses. To the extent that actual credit losses are less than the
allowance for credit losses, the remaining amount will be paid to Lanier. Lanier
has retained the responsibility for servicing accounts receivable sold.
NOTE F -- INVENTORIES
Inventories are summarized below:
<TABLE>
<CAPTION>
1999 1998
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Finished products........................................... $109,082 $152,980
Parts....................................................... 53,766 47,223
Raw materials and supplies.................................. 3,556 1,439
-------- --------
$166,404 $201,642
======== ========
</TABLE>
At July 2, 1999, Lanier was committed to purchase $3.4 million of inventory from
suppliers. Management believes the cost of this inventory approximates current
market value.
F-8
<PAGE> 89
NOTE G -- PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are summarized below:
<TABLE>
<CAPTION>
1999 1998
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Land........................................................ $ 854 $ 854
Buildings................................................... 20,073 18,982
Machinery and equipment..................................... 97,881 91,833
-------- --------
118,808 111,669
Less allowances for depreciation............................ 76,053 65,830
-------- --------
$ 42,755 $ 45,839
======== ========
</TABLE>
NOTE H -- CREDIT ARRANGEMENTS
Lanier has lines of credit for short-term borrowings aggregating $198.7 million
from various U.S. and foreign banks, of which $60.7 million was available on
July 2, 1999. These arrangements provide for borrowing at various interest
rates, are reviewed annually for renewal, and may be used on such terms as
Lanier and the banks mutually agree. These lines do not require compensating
balances. Short-term debt outstanding under these lines on July 2, 1999 was
$138.0 million. The weighted average interest rate for short-term debt was 5.1
percent at July 2, 1999 and 8.4 percent at July 3, 1998.
NOTE I -- LONG-TERM DEBT
Long-term debt includes the following:
<TABLE>
<CAPTION>
1999 1998
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Bank notes.................................................. $ 919 $ 870
Other notes................................................. 2,094 1,624
Capital leases.............................................. 1,309 766
Revenue bonds............................................... 300 400
-------- --------
$ 4,622 $ 3,660
======== ========
</TABLE>
The weighted average interest rate for long-term debt was 7.4 percent at July 2,
1999 and 7.8 percent at July 3, 1998. Maturities of long-term debt for the five
years following 1999 are: $2.6 million in 2000, $2.2 million in 2001, $0.9
million in 2002, $0.6 million in 2003 and $0.1 million in 2004.
NOTE J -- INTEREST EXPENSE
Total interest expense was $22.7 million in 1999, $8.2 million in 1998 and $8.8
million in 1997. Interest paid was $22.4 million in 1999, $8.2 million in 1998
and $8.5 million in 1997.
NOTE K -- LEASE COMMITMENTS
Total rental expense amounted to $45.8 million in 1999, $40.9 million in 1998
and $33.2 million in 1997. Future minimum rental commitments under
non-cancelable operating leases, primarily used for land and buildings, amounted
to approximately $89.7 million at July 2, 1999. These commitments for the years
following 1999 are: 2000 -- $37.2 million, 2001 -- $21.0 million, 2002 -- $15.1
million, 2003 -- $10.2 million, 2004 -- $3.7 million and $2.5 million
thereafter.
F-9
<PAGE> 90
NOTE L -- CUSTOMER LEASING
Lanier's net investment in sales-type leases is as follows:
<TABLE>
<CAPTION>
1999 1998
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Total minimum lease payments receivables.................... $347,759 $316,717
Residual value of equipment................................. 11,967 5,700
Less unearned finance income................................ 63,146 57,258
-------- --------
Present value of minimum lease payments receivable.......... 296,580 265,159
Less allowance for collection losses........................ 3,848 2,132
Less current portion........................................ 89,075 83,038
-------- --------
$203,657 $179,989
======== ========
</TABLE>
The amount of minimum rental payments receivable for sales-type leases for each
of the next five years are: 2000 -- $110.2 million, 2001 -- $108.6 million,
2002 -- $73.2 million, 2003 -- $36.3 million, and 2004 -- $19.5 million.
NOTE M -- RETIREMENT BENEFITS
Lanier has noncontributory defined benefit pension plans which cover employees
in the United States. Pension benefits are based principally on an employee's
years of service and compensation near retirement. Lanier's pension funding
policy is to deposit with an independent trustee amounts at least equal to those
required by law. A trust fund is maintained to provide pension benefits to plan
participants and beneficiaries.
F-10
<PAGE> 91
The projected benefit obligations, fair value of plan assets and net periodic
pension cost of Lanier's domestic pension plan include the following components
(in thousands):
<TABLE>
<CAPTION>
DOMESTIC FOREIGN
------------------- -------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION
BENEFIT OBLIGATION AT THE BEGINNING OF
YEAR................................. $106,667 $ 94,692 $ 24,669 $ 24,126
Service cost........................... 5,365 3,903 1,678 1,129
Interest cost.......................... 7,544 7,391 1,908 1,474
Actuarial gain......................... 795 6,875 541 (570)
Benefits paid.......................... (577) (6,194) (1,146) (500)
Settlements............................ (17,057) -- (397) --
Acquisition............................ -- -- 10,132 --
Foreign currency exchange rate
changes.............................. -- -- (1,665) (990)
-------- -------- -------- --------
BENEFIT OBLIGATION AT THE END OF
YEAR................................. $102,737 $106,667 $ 35,720 $ 24,669
======== ======== ======== ========
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning
of year.............................. $111,334 $ 86,981 $ 21,812 $ 19,317
Actual return on plan assets........... 6,811 26,032 1,160 3,059
Employer contribution.................. -- 4,515 1,549 619
Benefits paid.......................... (577) (6,194) (476) (490)
Settlements............................ (17,057) -- 234 113
Acquisition............................ -- -- 6,009 --
Foreign currency exchange rate
changes.............................. -- -- (1,351) (806)
-------- -------- -------- --------
FAIR VALUE OF PLAN ASSETS AT END OF
YEAR................................. $100,511 $111,334 $ 28,937 $ 21,812
======== ======== ======== ========
Funded status.......................... $ (2,226) $ 4,667 $ (6,783) $ (2,857)
Unamortized prior service cost......... (96) (106) (2) (41)
Unrecognized net actuarial loss........ (12,092) (16,973) (4,374) (5,581)
Unrecognized transition obligation..... (1,092) (1,367) -- --
-------- -------- -------- --------
PREPAID (ACCRUED) BENEFIT COST......... $(15,506) $(13,779) $(11,159) $ (8,479)
======== ======== ======== ========
DOMESTIC FOREIGN
------------------------------ ------------------------------
1999 1998 1997 1999 1998 1997
-------- -------- -------- -------- -------- --------
COMPONENTS OF NET PERIODIC BENEFIT COST
Service cost........................... $ 5,365 $ 3,903 $ 5,265 $ 1,678 $ 1,129 $ 1,109
Interest cost.......................... 7,544 7,391 6,843 1,908 1,474 1,690
Expected return on plan assets......... (8,707) (7,552) (6,177) (1,535) (1,366) (1,137)
Amortization of unrecognized transition
obligation........................... (275) (275) (275) 2 2 9
Prior service cost recognized.......... (10) (10) (10) (278) (59) (185)
Gain due to settlement................. (2,189) -- -- -- -- --
Net periodic pension cost.............. $ 1,728 $ 3,457 $ 5,646 $ 1,775 $ 1,180 $ 1,486
======== ======== ======== ======== ======== ========
</TABLE>
F-11
<PAGE> 92
The significant weighted-average assumptions used in determining the actuarial
present value of projected benefit obligations and the net pension expense are
as follows:
<TABLE>
<CAPTION>
DOMESTIC
--------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Discount Rate............................................. 7.3% 8.0% 7.8%
Expected increase in compensation levels.................. 4.0% 4.0% 4.5%
Expected long-term rate of return of assets............... 10.0% 10.0% 9.0%
</TABLE>
<TABLE>
<CAPTION>
FOREIGN
--------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Discount Rate............................................. 6.2% 4.5% 6.9%
Expected increase in compensation levels.................. 3.8% 3.0% 4.7%
Expected long-term rate of return of assets............... 6.7% 4.9% 7.2%
</TABLE>
The accumulated benefit obligation and the fair value of plan assets for foreign
pension plans with accumulated benefit obligations in excess of plan assets were
$14.7 million and $11.1 million, respectively, as of July 2, 1999 and $8.8
million and $7.1 million, respectively, as of July 3, 1998.
The projected benefit obligation and the fair value of plan assets for foreign
pension plans with projected benefit obligations in excess of plan assets were
$34.0 million and $26.9 million, respectively, as of July 2, 1999 and $19.5
million and $15.9 million, respectively, as of July 3, 1998.
Lanier is subject to statutory employee termination, retirement and death
indemnity obligations in certain foreign locations. This unfunded obligation was
approximately $6.6 million and $3.9 million at July 2, 1999 and July 3, 1998,
respectively. Lanier expensed approximately $1.0 million, $0.6 million, and $0.5
million associated with these obligations in the years ended July 2, 1999, July
3, 1998, and June 30, 1997, respectively.
Lanier has a Supplemental Executive Retirement Plan ("SERP") which provides
unfunded supplemental retirement benefits to certain executives. The SERP
provides for incremental pension payments partially to offset the reduction in
the amounts that would have been payable from Lanier's principal pension plan if
it were not for limitations imposed by federal income tax regulations. Expenses
of $1.0 million, $0.7 million, and $0.9 million were recognized in the fiscal
years ended July 2, 1999, July 3, 1998, and June 27, 1997, respectively. Amounts
accrued as of July 2, 1999 and July 3, 1998 related to the plan were $4.1
million and $3.0 million, respectively.
Retirement benefits include a fully funded savings plan for U.S. employees.
Employees may participate in the savings plan by contributing a portion of their
compensation. During the fiscal year ended June 27, 1997, Lanier matched 50% of
employee contributions up to 3 percent of each participating employee's
compensation. In fiscal year 1998, Lanier began matching 50 percent of employee
contributions up to 6 percent of each participating employee's compensation.
Matching contributions for the fiscal years ended July 2, 1999, July 3, 1998,
and June 27, 1997 were $4.9 million, $4.0 million, and $1.8 million,
respectively.
Retirement benefits also include an unfunded limited healthcare plan for
U.S.-based retirees and employees. Lanier accrues the estimated cost of these
medical benefits during an employee's active service life. Benefit obligations
and cost under this plan are not material.
F-12
<PAGE> 93
NOTE N -- INCOME TAXES
The provisions for income taxes are summarized below:
<TABLE>
<CAPTION>
1999 1998 1997
-------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
United States...................................... $ 33,007 $22,516 $25,115
International...................................... 23,969 3,039 5,548
State and local.................................... 7,952 4,418 5,478
-------- ------- -------
64,928 29,973 36,141
-------- ------- -------
Deferred:
United States...................................... (12,575) 3,571 989
International...................................... (9,864) 2,159 1,092
State and local.................................... (2,489) 901 (14)
-------- ------- -------
(24,928) 6,631 2,067
-------- ------- -------
$ 40,000 $36,604 $38,208
======== ======= =======
</TABLE>
The components of deferred income tax assets (liabilities) are as follows:
<TABLE>
<CAPTION>
1999 1998
---------------------- ----------------------
CURRENT NON-CURRENT CURRENT NON-CURRENT
------- ----------- ------- -----------
(IN THOUSANDS)
--------------
<S> <C> <C> <C> <C>
Inventory valuations.......................... $23,118 $ -- $14,850 $ --
Accruals...................................... 8,160 1,325 15,680 1,091
Depreciation.................................. -- 13,247 -- (37,915)
Leases........................................ (656) 8,873 (2,926) (12,595)
International tax loss carryforwards.......... -- 21,595 -- 6,501
All other-net............................... 8,654 (45,341) 8,639 11,353
------- -------- ------- --------
39,276 301 36,243 (31,565)
Valuation allowance........................... -- (15,869) -- (6,501)
------- -------- ------- --------
$39,276 $(16,170) $36,243 $(38,066)
======= ======== ======= ========
</TABLE>
A reconciliation of the statutory United States income tax rate to the effective
income tax rate follows:
<TABLE>
<CAPTION>
1999 1998 1997
----- ----- -----
<S> <C> <C> <C>
Statutory U.S. income tax rate.............................. 35.0% 35.0% 35.0%
State taxes................................................. 3.2 3.5 3.5
Foreign Income.............................................. (1.5) (2.0) --
Other items................................................. (0.8) 0.3 (1.0)
----- ----- -----
Effective income tax rate................................... 35.9% 36.8% 37.5%
----- ----- -----
</TABLE>
United States income taxes have not been provided on $163.0 million of
undistributed earnings of international subsidiaries because of the Lanier's
intention to reinvest these earnings. The determination of unrecognized deferred
U.S. tax liability for the undistributed earnings of international subsidiaries
is not practicable.
At July 2, 1999, Lanier had net international income tax loss carryforwards of
approximately $57.0 million. Loss carryforwards of $29.1 million will expire
between the years 2000 and 2009. The remaining $27.9 million of loss
carryforwards available for an indefinite period of time.
F-13
<PAGE> 94
Pretax income of international subsidiaries was $24.8 million in 1999, $21.4
million in 1998 and $20.5 million in 1997.
Income taxes paid were $39.0 million in 1999, $43.0 million in 1998 and $35.4
million in 1997.
NOTE O -- GEOGRAPHIC INFORMATION
Lanier operates exclusively in the office equipment industry. Substantially all
revenues result from the sale and rental of office equipment and related
services. All intercompany revenues are eliminated in computing revenues.
A summary of Lanier's operations by geographic area is summarized below:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
(IN THOUSANDS)
--------------
<S> <C> <C> <C>
United States Operations
Net sales.............................................. $875,532 $902,034 $823,947
Long-lived assets...................................... $173,749 $212,461 $194,686
International
Net sales.............................................. $554,956 $352,743 $346,067
Long-lived assets...................................... $176,181 $ 63,591 $ 57,588
</TABLE>
Export sales included in U.S. Operations were $14.2 million in 1999, $18.3
million in 1998, and $16.1 million in 1997.
NOTE P -- FINANCIAL INSTRUMENTS
The carrying values of cash equivalents, accounts receivable, notes receivable,
accounts payable, short-term debt and long-term debt approximate fair value.
Lanier uses foreign exchange contracts and options to hedge intercompany
accounts and off-balance-sheet foreign currency commitments. Specifically, these
foreign exchange contracts offset foreign currency denominated inventory and
purchase commitments from suppliers, accounts receivable from and future
committed sales to customers. Management believes the use of foreign currency
financial instruments should reduce the risks that arise from doing business in
international markets. Contracts are generally one year or less. At July 2,
1999, open foreign exchange contracts were $163.1 million (as described below),
of which $7.4 million were to hedge off-balance-sheet commitments. Additionally,
for the year ended July 2, 1999, Lanier purchased and sold $814.4 million of
foreign exchange forward and option contracts.
Deferred gains and losses are included on a net basis in the Consolidated
Balance Sheet as other assets and are recorded in income as part of the
underlying transaction when it is recognized.
At July 2, 1999, Lanier had $5.0 million in open option contracts. Total open
foreign exchange contracts at July 2, 1999, are described in the table below:
COMMITMENTS TO BUY FOREIGN CURRENCIES
(in millions)
<TABLE>
<CAPTION>
CONTRACT AMOUNT
--------------------- DEFERRED
FOREIGN GAINS MATURITIES
CURRENCY CURRENCY U.S. AND (LOSSES) (IN MONTHS)
-------- --------- -------- ------------ -----------
<S> <C> <C> <C> <C>
Canadian Dollar............................... 1.4 0.9 -- 6
Swiss Franc................................... 40.5 27.5 (1.3) 3
Euro.......................................... 26.9 30.0 (2.1) 10
French Franc.................................. 1.0 0.2 -- 3
Italian Lira.................................. 10,123.0 5.4 -- 3
Japanese Yen.................................. 604.8 4.9 -- 1-3
Norwegian Krone............................... 13.3 1.7 -- 6
</TABLE>
F-14
<PAGE> 95
COMMITMENTS TO SELL FOREIGN CURRENCIES
(in millions)
<TABLE>
<CAPTION>
CONTRACT AMOUNT
--------------------- DEFERRED
FOREIGN GAINS MATURITIES
CURRENCY CURRENCY U.S. AND (LOSSES) (IN MONTHS)
-------- --------- -------- ------------ -----------
<S> <C> <C> <C> <C>
Austrian Schilling............................ 57.0 4.3 -- 3
Australian Dollar............................. 0.5 0.4 -- 12
Canadian Dollar............................... 25.7 16.8 (0.6) 1-6
Swiss Franc................................... 84.7 61.3 6.7 3
Czech Republic Koruna......................... 27.5 0.9 0.1 6
Danish Krone.................................. 19.2 2.9 0.2 10
Euro.......................................... 3.8 4.0 0.1 10
French Franc.................................. 3.7 0.6 -- 3
Swedish Krona................................. 10.7 1.3 -- 12
</TABLE>
NOTE Q -- DISTRIBUTION OF LANIER STOCK
On April 13, 1999, Harris announced that it would spin Lanier off as a separate
publicly traded company. Harris intends to accomplish this transaction through a
distribution of Lanier stock to Harris shareholders that is expected to be tax
free to such shareholders for U.S. federal income tax purposes. The transaction
is expected to take place in the first quarter of fiscal year 2000.
NOTE R -- IMPAIRMENT CHARGES
In the fourth quarter of fiscal year 1999, Lanier recorded a $7.7 million
impairment charge related to its investment in a technology-related company.
The investment in the technology-related company (the "investee") was divided
into three components: (i) a $4.0 million equity investment; (ii) a $1.7 million
licensing agreement; and (iii) $2.0 million in inventory of a product line which
utilized software developed by the investee. In the fourth quarter of fiscal
year 1999, Lanier management decided to exit this product line because a
competitor's software technology had become the industry standard, the
investee's product technology had become obsolete, and Lanier's product line was
no longer marketable, rendering Lanier's equity investment not marketable. On
the basis of APB No. 18. paragraph 6, Lanier concluded that the decline in the
fair value of the equity investment was permanent, and accordingly wrote off the
investment to other expense in the fourth quarter of fiscal year 1999.
Additionally, Lanier expensed the unamortized portion of the licensing agreement
to selling and administrative expenses and wrote off the remaining inventory
less scrap value, to cost of product sales in connection with the decision to
exit the product line.
F-15
<PAGE> 96
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
EXHIBITS TO FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934
---------------------------
LANIER WORLDWIDE, INC.
EXHIBIT INDEX
-------------
Exhibit No.
- -----------
2.1 Form of Distribution Agreement.
3.1 Form of Amended and Restated Certificate of Incorporation of
Lanier Worldwide, Inc.**
3.2 Form of By-Laws of Lanier Worldwide, Inc.**
4.1 Form of Stockholder Protection Rights Agreement.**
4.2 Form of Certificate of Designation and Terms of Registrant's
Participating Preferred Stock.**
4.3 Form of certificate representing Lanier common stock**
10.1 Form of Tax Disaffiliation Agreement.**
10.2A Commitment Letter with respect to Credit Agreement.**
10.2B Credit Agreement -- 5-Year Credit Agreement.
10.2C Credit Agreement -- 364 Day Credit Agreement.
10.3 Form of Transition Services Agreement.**
10.4 Form of Distribution Agreement (filed as Exhibit 2.1).
10.5 Form of Employee Benefits Compensation and Allocation
Agreement.
10.6 Form of Registration Rights Agreement.**
10.7 Form of Stock Incentive Plan.**
10.8 Lanier Worldwide, Inc. Supplemental Retirement Savings Plan.**
10.9 Lanier Worldwide, Inc. Supplemental Executive Retirement Plan.**
10.10 Form of Indemnification Agreement.**
10.11 Form of Employee Stock Purchase Plan.**
10.12 Form of Amended and Restated Key Contributor Incentive Plan.**
10.13 Form of Amended and Restated Long-term Incentive Plan for Key
Employees.**
10.14 Form of Executive Severance Agreement.**
10.15 Pension Equity Plan.**
10.16 Savings Incentive Plan.**
10.17 Form of Lanier worldwide, Inc. Deferred Compensation Plan for
Directors.
10.18 Form of Intellectual Property License Agreement.
12.1 Computation of Ratios of Earnings to Fixed Charges.**
21.1 List of Subsidiaries.
23.1 Consent of Independent Certified Public Accountants.
27.1 Financial Data Schedule.**
- -------------
* To be filed by Amendment
** Previously filed.
<PAGE> 1
Exhibit 2.1
FORM OF
AGREEMENT AND PLAN OF DISTRIBUTION
BY AND BETWEEN
HARRIS CORPORATION
AND
LANIER WORLDWIDE, INC.
DATED AS OF o, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I.
DEFINITIONS
SECTION 1.1. General..................................................................................2
SECTION 1.2. Reference; Interpretation...............................................................14
ARTICLE II.
DISTRIBUTION AND OTHER TRANSACTIONS;
CERTAIN COVENANTS
SECTION 2.1 The Distribution and Other Transactions.................................................15
SECTION 2.2 Cash Payment and Closing Payment........................................................19
SECTION 2.3 Post-Distribution Adjustment............................................................19
SECTION 2.4 Intercompany Receivables................................................................21
SECTION 2.5 Assumption and Satisfaction of Liabilities..............................................21
SECTION 2.6 Resignations............................................................................21
SECTION 2.7 Further Assurances......................................................................22
SECTION 2.8 Limited Representations or Warranties...................................................22
SECTION 2.9 Removal of Certain Guarantees; Releases from Liabilities................................22
SECTION 2.10 Witness Services........................................................................23
SECTION 2.11 Transfers Not Effected Prior to the Distribution;
Transfers Deemed Effective as of the Distribution Date..................................24
SECTION 2.12 Conveyancing and Assumption Instruments.................................................24
SECTION 2.13 Ancillary Agreements....................................................................24
SECTION 2.14 Corporate Names.........................................................................25
SECTION 2.15 Non-Solicitation........................................................................25
ARTICLE III.
INDEMNIFICATION
SECTION 3.1 Indemnification by Harris...............................................................26
SECTION 3.2 Indemnification by Lanier...............................................................26
SECTION 3.3 Procedures for Indemnification..........................................................26
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 3.4 Indemnification Payments................................................................28
ARTICLE IV.
ACCESS TO INFORMATION
SECTION 4.1 Provision of Corporate Records..........................................................28
SECTION 4.2 Access to Information...................................................................29
SECTION 4.3 Reimbursement; Other Matters............................................................29
SECTION 4.4 Confidentiality.........................................................................29
SECTION 4.5 Privileged Matters......................................................................30
SECTION 4.6 Ownership of Information................................................................32
SECTION 4.7 Retention of Records....................................................................32
SECTION 4.8 Limitation of Liability; Release........................................................32
SECTION 4.9 Other Agreements Providing for Exchange of Information..................................33
ARTICLE V.
DISPUTE RESOLUTION
SECTION 5.1 Negotiation.............................................................................33
SECTION 5.2 Mediation...............................................................................33
SECTION 5.3 Arbitration.............................................................................34
SECTION 5.4 Continuity of Service and Performance...................................................34
SECTION 5.5 Other Remedies..........................................................................35
ARTICLE VI.
INSURANCE
SECTION 6.1 Policies and Rights Included Within Assets..............................................35
SECTION 6.2 Post-Distribution Date Claims...........................................................35
SECTION 6.3 Administration; Other Matters...........................................................36
SECTION 6.4 Agreement for Waiver of Conflict and Shared Defense.....................................38
SECTION 6.5 Cooperation.............................................................................38
</TABLE>
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<TABLE>
<CAPTION>
ARTICLE VII.
MISCELLANEOUS
<S> <C> <C>
SECTION 7.1 Complete Agreement; Construction........................................................39
SECTION 7.2 Ancillary Agreements....................................................................39
SECTION 7.3 Counterparts............................................................................39
SECTION 7.4 Survival of Agreements..................................................................39
SECTION 7.5 Distribution Expenses...................................................................39
SECTION 7.6 Notices.................................................................................40
SECTION 7.7 Waivers.................................................................................40
SECTION 7.8 Amendments..............................................................................40
SECTION 7.9 Assignment..............................................................................41
SECTION 7.10 Successors and Assigns..................................................................41
SECTION 7.11 Termination.............................................................................41
SECTION 7.12 Subsidiaries............................................................................41
SECTION 7.13 Third Party Beneficiaries...............................................................41
SECTION 7.14 Title and Headings......................................................................41
SECTION 7.15 Exhibits and Schedules..................................................................41
SECTION 7.16 GOVERNING LAW...........................................................................42
SECTION 7.17 Consent to Jurisdiction.................................................................42
SECTION 7.18 Severability............................................................................42
SECTION 7.19 Consolidation, Merger, Etc. Involving Lanier............................................42
SECTION 7.20 Consolidation, Merger, Etc. Involving Harris............................................43
Exhibit A Corporate Restructuring Transactions
Exhibit B Employee Benefits and Compensation Allocation Agreement
Exhibit C Intellectual Property Agreement
Exhibit D [Intentionally Left Blank]
Exhibit E Lanier Subsidiaries
Exhibit F Registration Rights Agreement
Exhibit G Tax Disaffiliation Agreement
Exhibit H Transition Services Agreement
Exhibit I Harris Information Statement Indemnification Statements
Exhibit J List of Contracts Between Harris and Lanier
Exhibit K Ancillary Workers Compensation Agreement
Schedule 1.1(a) Litigation
Schedule 2.2(b)(i) Payment Items
Schedule 2.2(b)(ii) Credit Items
Schedule 2.4(a) Deduction Items
Schedule 2.9(a) Guarantees
</TABLE>
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<PAGE> 5
AGREEMENT AND PLAN OF DISTRIBUTION
This AGREEMENT AND PLAN OF DISTRIBUTION (this "Agreement"), is
dated as of o, 1999, by and between Harris Corporation, a Delaware corporation
("Harris"), and Lanier Worldwide, Inc., a Delaware corporation and, prior to the
Distribution (as defined herein), a wholly owned subsidiary of Harris
("Lanier").
WHEREAS, Harris, acting through the Lanier Group (as defined
herein), currently conducts a number of businesses, including providing office
products and document management solutions, and in the past has conducted a
number of other businesses through the Lanier Group or its predecessors which
have been discontinued, sold or transferred (all such businesses collectively,
the "Lanier Business");
WHEREAS, Harris has determined to take certain steps to
transfer certain Assets (as defined herein) to Lanier and have Lanier assume
certain Liabilities (as defined herein) of Harris and Lanier has determined to
take certain steps to transfer certain Assets to Harris and have Harris assume
certain Liabilities of Lanier;
WHEREAS, the Board of Directors of Harris has authorized the
distribution to the holders of the issued and outstanding shares of common
stock, par value $1.00 per share, of Harris (the "Harris Common Stock") as of
the record date of approximately 90% of the issued and outstanding shares of
common stock, par value $0.01 per share, of Lanier (the "Lanier Common Stock"),
together with the associated preferred stock purchase rights (each share of such
stock, together with the associated preferred stock purchase right, a "Lanier
Share"), on the basis of one Lanier Share for each share of Harris Common Stock
(the "Distribution"); and
WHEREAS, the parties hereto have determined to set forth the
principal corporate and other transactions required to effect the Distribution
and to set forth other agreements that will govern certain other matters prior
to and following the Distribution.
NOW, THEREFORE, in consideration of the mutual covenants
contained in this Agreement, the parties hereby agree as follows:
<PAGE> 6
ARTICLE I.
DEFINITIONS
SECTION 1.1. General. Unless otherwise defined herein or
unless the context otherwise requires, as used in this Agreement, the following
terms shall have the following meanings:
"Action" shall mean any demand, action, suit, arbitration,
inquiry, proceeding or investigation by or before any Governmental
Authority or any arbitration or mediation tribunal.
"Affiliate" shall mean, when used with respect to any
specified Person, a Person that directly or indirectly controls, is
controlled by, or is under common control with such specified Person;
provided, however, that for purposes of this Agreement, any Person who
was a member of both Groups prior to the Distribution shall be deemed
to be an Affiliate only of the Group of which such Person is a member
following the Distribution. As used herein, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether
through the ownership of voting securities or other interests, by
contract or otherwise. Any contrary provision of this Agreement
notwithstanding, neither Harris nor any of its Subsidiaries shall be
deemed to be an Affiliate of Lanier.
"Agent" shall have the meaning set forth in Section 2.1(b) of
this Agreement.
"Agreement" shall have mean this Agreement.
"Agreement Disputes" shall have the meaning set forth in
Section 5.1 of this Agreement.
"Ancillary Agreements" shall mean all of the written
agreements, instruments, understandings, assignments or other
arrangements (other than this Agreement) entered into by the parties
hereto or any other member of their respective Groups in connection
with the transactions contemplated hereby, including the Conveyancing
and Assumption Instruments, the Employee Benefits Compensation and
Allocation Agreement, the Intellectual Property Agreement, the
Registration Rights Agreement, the Tax Disaffiliation Agreement, the
Transition Services Agreement, the Ancillary Workers Compensation
Agreement and the Subleases.
"Ancillary Workers Compensation Agreement" shall mean the
Ancillary Workers Compensation Agreement by and between Harris and
Lanier, which agreement shall be entered into prior to the Distribution
Date in the form attached hereto as Exhibit K.
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"Applicable Rate" shall mean the rate of interest per annum
announced from time to time by Citibank, N.A., as its prime lending
rate.
"Assets" shall mean assets, properties and rights, wherever
located (including in the possession of vendors or other third parties
or elsewhere), whether real, personal or mixed, tangible, intangible or
contingent, in each case whether or not recorded or reflected or
required to be recorded or reflected on the books and records or
financial statements of any Person, including the following:
(i) all accounting and other books, records and files
whether in paper, microfilm, microfiche, computer tape or
disc, magnetic tape or any other form;
(ii) all apparatus, computers and other electronic
data processing equipment, fixtures, machinery, equipment,
furniture, office equipment, automobiles, trucks, aircraft and
other transportation equipment, special and general tools,
test devices, prototypes and models and other tangible
personal property;
(iii) all inventories of materials, parts, raw
materials, supplies, work-in-process and finished goods and
products;
(iv) all interests in real property of whatever
nature, including easements, whether as owner, mortgagee or
holder of a security interest in real property, lessor,
sublessor, lessee, sublessee or otherwise;
(v) all interests in any capital stock or other
equity interests of any Subsidiary or any other Person, all
bonds, notes, debentures or other securities issued by any
Subsidiary or any other Person, all loans, advances or other
extensions of credit or capital contributions to any
Subsidiary or any other Person and all other investments in
securities of any Person;
(vi) all license agreements, leases of personal
property, open purchase orders for raw materials, supplies,
parts or services, unfilled orders for the manufacture and
sale of products and other contracts, agreements or
commitments (collectively, "Contracts");
(vii) all deposits, letters of credit and performance
and surety bonds;
(viii) all written technical information, data,
specifications, research and development information,
engineering drawings, operating and maintenance manuals, and
materials and analyses prepared by consultants and other Third
Parties;
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(ix) all domestic and foreign patents, copyrights,
trade names, trademarks, service marks and registrations and
applications for any of the foregoing, mask works, trade
secrets, inventions, data bases, other proprietary information
and licenses from Third Parties granting the right to use any
of the foregoing;
(x) all computer applications, programs and other
software, including operating software, network software,
firmware, middleware, design software, design tools, systems
documentation and instructions;
(xi) all cost information, sales and pricing data,
customer prospect lists, supplier records, customer and
supplier lists, customer and vendor data, correspondence and
lists, product literature, artwork, design, development and
manufacturing files, vendor and customer drawings,
formulations and specifications, quality records and reports
and other books, records, studies, surveys, reports, plans and
documents;
(xii) all prepaid expenses, trade accounts and other
accounts and notes receivable;
(xiii) all rights under contracts or agreements, all
claims or rights against any Person arising from the ownership
of any asset, all rights in connection with any bids or offers
and all claims, choses in action or similar rights, whether
accrued or contingent;
(xiv) all rights under insurance policies and all
rights in the nature of insurance, indemnification or
contribution;
(xv) all licenses, permits, approvals and
authorizations which have been issued by any Governmental
Authority;
(xvi) cash or cash equivalents, bank accounts, lock
boxes and other deposit arrangements; and
(xvii) interest rate, currency, commodity or other
swap, collar, cap or other hedging or similar agreements or
arrangements.
"Assignee" shall have the meaning set forth in Section 2.1(f)
of this Agreement.
"Business Day" shall mean any day other than a Saturday,
Sunday or a day on which commercial banking institutions located in The
City of New York are authorized or obligated by law or executive order
to close.
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"Calculation" shall have the meaning set forth in Section
2.3(a) of this Agreement.
"Cash Payment" shall have the meaning set forth in Section
2.2(a) of this Agreement.
"Claims Administration" shall mean the processing of claims
made under the Harris Shared Policies, including the reporting of
claims to the insurance carriers, management and defense of claims and
providing for appropriate releases upon settlement of claims.
"Closing Payment" shall have the meaning set forth in
Section 2.2(b) of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the Treasury regulations promulgated thereunder, including
any successor legislation.
"Commission" shall mean the Securities and Exchange
Commission.
"Contracts" shall have the meaning set forth in the definition
of Assets.
"Conveyancing and Assumption Instruments" shall mean,
collectively, the various agreements, instruments and other documents
to be or heretofore entered into to effect the Corporate Restructuring
Transactions or otherwise to effect the transfer of Assets and the
assumption of Liabilities in the manner contemplated by this Agreement,
the Ancillary Agreements and the Corporate Restructuring Transactions.
"Corporate Restructuring Transactions" shall mean,
collectively, (a) each of the mergers, transfers, conveyances,
contributions, assignments, dividends, assumptions, redemptions,
purchases and other transactions described and set forth on Exhibit A
attached hereto, and (b) such other mergers, transfers, conveyances,
contributions, assignments, dividends, assumptions, redemptions,
purchases and other transactions that may be appropriate or required to
be accomplished, effected or consummated by Harris or Lanier or any of
their respective Subsidiaries and Affiliates so that: (i) the Lanier
Assets, Lanier Liabilities and Lanier Business shall be owned, directly
or indirectly, by Lanier after giving effect to the Distribution; and
(ii) the Harris Assets, Harris Liabilities and Harris Business shall be
owned, directly or indirectly, by Harris after giving effect to the
Distribution.
"Credit Items" shall have the meaning set forth in Section
2.2(b) of this Agreement.
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"Deduction Items" shall have the meaning set forth in Section
2.4(a) of this Agreement.
"Distribution" shall have the meaning set forth in the
recitals to this Agreement.
"Distribution Date" shall mean such date as may be determined
by the Board of Directors of Harris, or such committee of such Board of
Directors as shall be designated by the Board of Directors of Harris,
as the date as of which the Distribution shall be effected.
"Distribution Record Date" shall mean such date as may be
determined by the Board of Directors of Harris, or such committee of
such Board of Directors as shall be designated by the Board of
Directors of Harris, as the record date for the Distribution.
"Effective Time" shall mean 11:59 p.m., New York City time, on
the Distribution Date.
"Employee Benefits Compensation and Allocation Agreement"
shall mean the Employee Benefits Compensation and Allocation Agreement
by and between Harris and Lanier, which agreement shall be entered into
prior to or on the Distribution Date in the form attached hereto as
Exhibit B.
"Environmental Laws" shall mean any and all federal, state,
local and foreign statutes, laws, regulations, ordinances, rules,
principles of common law, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or other
governmental restrictions (including without limitation the
Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. 9601, et seq.), whether now or hereafter in existence,
relating to the environment, natural resources, human health or safety,
endangered or threatened species of fish, wildlife and plants, or to
emissions, discharges or releases of pollutants, contaminant, petroleum
or petroleum products, chemicals or industrial, toxic or hazardous
substances or wastes into the environment (including without limitation
indoor or outdoor air, surface water, groundwater and surface or
subsurface soils), 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 investigation, cleanup or other remediation thereof.
"Ernst & Young" shall have the meaning set forth in Section
2.3(a) of this Agreement.
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"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, together with the rules and regulations promulgated
thereunder.
"Governmental Authority" shall mean any federal, state, local,
foreign or international court, government, department, commission,
board, bureau, agency, official, the NYSE or other regulatory,
administrative or governmental authority.
"Group" shall mean with respect to Harris, the Harris Group
and, with respect to Lanier, the Lanier Group.
"Harris" shall have the meaning set forth in the preamble to
this Agreement.
"Harris Accounts Payable" shall mean all of the accounts
payable arising from or out of the provision of goods or services to
any member of the Harris Group by any member of the Lanier Group under
the contracts or agreements set forth in Exhibit J.
"Harris Assets" shall mean, collectively, all the rights and
Assets owned or held by Harris or any Harris Subsidiary after giving
effect to the Corporate Restructuring Transactions, except the Lanier
Assets.
"Harris Business" shall mean each and every business conducted
at any time by Harris or any subsidiary controlled by Harris, except
the Lanier Business.
"Harris Common Stock" shall have the meaning set forth in the
recitals to this Agreement.
"Harris Group" shall mean Harris and each Person (other than
any member of the Lanier Group) that is a Harris Subsidiary.
"Harris Indemnitee" shall mean:
(i) Harris and each Affiliate thereof after giving
effect to the Corporate Restructuring Transactions and the
Distribution; and
(ii) each of the respective past, present and future
directors, officers, members, employees and agents of any of
the entities described in the immediately preceding clause (i)
and each of the heirs, executors, successors and assigns of
any of such directors, officers, members, employees and
agents, except in the case of clauses (i) and (ii), the Lanier
Indemnitees.
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"Harris Liabilities" shall mean collectively, all obligations
and Liabilities of Harris or any Harris Subsidiary after giving effect
to the Corporate Restructuring Transactions, except the Lanier
Liabilities.
"Harris Policies" shall mean all Policies, current or past,
that are owned or maintained by or on behalf of Harris or any Harris
Subsidiary that do not relate to the Lanier Business.
"Harris Shared Policies" shall mean all Policies, current or
past, which are owned or maintained by or on behalf of Harris or any
Harris Subsidiary which provide coverage for the Lanier Business, other
than Lanier Policies.
"Harris Subsidiaries" shall mean all of the Subsidiaries of
Harris other than Lanier and the Lanier Subsidiaries.
"Indemnifiable Losses" shall mean any and all losses,
liabilities, claims, damages, demands, costs or expenses (including
reasonable attorneys' fees and any and all out-of-pocket expenses)
reasonably incurred in investigating, preparing for or defending
against any Actions or potential Actions or in settling any Action or
potential Action or in satisfying any judgment, fine or penalty
rendered in or resulting from any Action.
"Indemnifying Party" shall have the meaning set forth in
Section 3.3 of this Agreement.
"Indemnitee" shall have the meaning set forth in Section 3.3
of this Agreement.
"Information Statement" shall mean the Information Statement
filed with the Commission as part of the Registration Statement and
mailed to the holders of shares of Harris Common Stock in connection
with the Distribution, including any amendments or supplements thereto.
"Insurance Administration" shall mean, with respect to each
Harris Shared Policy, the accounting for premiums,
retrospectively-rated premiums, defense costs, indemnity payments,
deductibles and retentions, as appropriate, under the terms and
conditions of each of the Harris Shared Policies; and the reporting to
excess insurance carriers of any losses or claims which may cause the
per-occurrence, per claim or aggregate limits of any Harris Shared
Policy to be exceeded, and the distribution of Insurance Proceeds as
contemplated by this Agreement.
"Insurance Proceeds" shall mean those monies (i) received by
an insured from an insurance carrier or (ii) paid by an insurance
carrier on behalf of an insured.
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"Insured Claims" shall mean those Liabilities that,
individually or in the aggregate, are covered within the terms and
conditions of any of the Harris Shared Policies, whether or not subject
to deductibles, co-insurance, uncollectibility or retrospectively-rated
premium adjustments.
"Intellectual Property Agreement" shall mean the Intellectual
Property Agreement by and between Harris and Lanier, which Agreement
shall be entered into prior to or on the Distribution Date in the form
attached hereto as Exhibit C.
"Intercompany Receivables" shall have the meaning set forth in
Section 2.4(b) of this Agreement.
"IRS" shall mean the Internal Revenue Service.
"Lanier Assets" shall mean collectively, all the rights and
Assets that are owned by Lanier or any Lanier Subsidiaries as of the
close of business on the Distribution Date and after giving effect to
the Corporate Restructuring Transactions, including:
(i) the capital stock of the Lanier Subsidiaries;
(ii) all of the Assets reflected on the Lanier Pro
Forma Balance Sheet or the accounting records supporting such
balance sheet that are to be owned by Lanier or any of the
Lanier Subsidiaries as of the close of business on the
Distribution Date;
(iii) all of the Assets expressly allocated to Lanier
or any of the Lanier Subsidiaries under this Agreement or any
of the Ancillary Agreements; and
(iv) any other Asset acquired by Harris or any of the
Harris Subsidiaries from the date of the Lanier Pro Forma
Balance Sheet to the close of business on the Distribution
Date that is owned by Harris, any of the Harris Subsidiaries,
Lanier or any of the Lanier Subsidiaries as of the close of
business on the Distribution Date and that is of a nature or
type that would have resulted in such Asset being included as
an Asset on the Lanier Pro Forma Balance Sheet had it been
acquired on or prior to the date of the Lanier Pro Forma
Balance Sheet, determined on a basis consistent with the
determination of the Assets included on the Lanier Pro Forma
Balance Sheet. No Asset shall be deemed a Lanier Asset solely
as a result of this clause (iv) unless a claim with respect
thereto is made by Lanier on or prior to the first anniversary
of the Distribution Date. As a clarification, no asset or
portion thereof held by Harris in any "rabbi trust" shall be
deemed to be a Lanier Asset.
"Lanier Business" shall have the meaning set forth in the
recitals to this Agreement.
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"Lanier Common Stock" shall have the meaning set forth in the
recitals to this Agreement.
"Lanier Group" shall mean Lanier, the Lanier Subsidiaries and
the corporations, partnerships and other entities which are
contemplated to remain or become a Subsidiary of Lanier in connection
with the Corporate Restructuring Transactions and the Distribution.
"Lanier Indemnitees" shall mean:
(i) Lanier and each Affiliate thereof after giving
effect to the Corporate Restructuring Transactions and the
Distribution; and
(ii) each of the respective past, present and future
directors, officers, members, employees and agents of any of
the entities described in the immediately preceding clause (i)
and each of the heirs, executors, successors and assigns of
any of such directors, officers, members, employees and
agents.
"Lanier Liabilities" shall mean:
(i) any and all Liabilities that are expressly
contemplated by this Agreement or any Ancillary Agreement (or
the Schedules hereto or thereto) as Liabilities to be assumed
by Lanier or any member of the Lanier Group, and all
agreements, obligations and Liabilities of any member of the
Lanier Group under this Agreement or any of the Ancillary
Agreements;
(ii) all Liabilities (other than Taxes and any
employee-related Liabilities which are specifically covered by
the Tax Disaffiliation Agreement and the Employee Benefits
Compensation and Allocation Agreement, respectively),
primarily relating to, arising out of or resulting from:
(A) the operation of the Lanier Business
(including any discontinued business or any business
which has been sold or transferred), as conducted at
any time prior to, on or after the Distribution Date
(including any Liability relating to, arising out of
or resulting from any act or failure to act by any
director, officer, employee, agent or representative
(whether or not such act or failure to act is or was
within such Person's authority));
(B) the operation of any business conducted
by Lanier or any Lanier Subsidiary at any time after
the Distribution Date (including any Liability
relating to, arising out of or resulting from any act
or failure to act by any director, officer, employee,
agent or representative (whether or not such act or
failure to act is or was within such Person's
authority)); or
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(C) any Lanier Assets; whether arising
before, on or after the Distribution Date; or
(iii) all Liabilities reflected as liabilities or
obligations on the Lanier Pro Forma Balance Sheet or the
accounting records supporting such balance sheet, and all
Liabilities arising or assumed after the date of such balance
sheet which, had they arisen or been assumed on or before such
date and been retained as of such date, would have been
reflected on such balance sheet, subject to any discharge of
such Liabilities subsequent to the date of the Lanier Pro
Forma Balance Sheet.
Notwithstanding the foregoing, the Lanier Liabilities shall
not include: (y) any Liabilities that are expressly contemplated by
this Agreement or any Ancillary Agreement (or the Schedules hereto or
thereto) as Liabilities to be retained or assumed by Harris or any
member of the Harris Group; or (z) all agreements and obligations of
any member of the Harris Group under this Agreement or any of the
Ancillary Agreements. Any contrary provision of this Agreement
notwithstanding, any Liabilities or Losses in respect of any litigation
or similar proceeding relating to the Lanier Business, including
without limitation the matters set forth on Schedule 1.1, shall
constitute Lanier Liabilities.
"Lanier Policies" shall mean all Policies, current or past,
which are owned or maintained by or on behalf of Harris or any Harris
Subsidiary, which relate specifically to the Lanier Business but do not
relate to the Harris Business, and which Policies are either maintained
by Lanier or a member of the Lanier Group or assignable to Lanier or a
member of the Lanier Group.
"Lanier Pro Forma Balance Sheet" shall mean the combined pro
forma balance sheet of the Lanier Group, including the notes thereto,
as of July 2, 1999 included in the Information Statement at the time at
which the Registration Statement is declared effective.
"Lanier Share" shall have the meaning set forth in the
recitals to this Agreement.
"Lanier Subsidiaries" shall mean all of the Subsidiaries
listed on Exhibit E.
"Law" shall mean all laws, statutes and ordinances and all
regulations, rules and other pronouncements of Governmental Authorities
having the effect of law of the United States, any foreign country, or
any domestic or foreign state, province, commonwealth, city, country,
municipality, territory, protectorate, possession or similar
instrumentality, or any Governmental Authority thereof.
"Liabilities" shall mean any and all debts, liabilities,
obligations, responsibilities, response actions, losses, damages
(whether compensatory, punitive or treble), fines, penalties
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<PAGE> 16
and sanctions, absolute or contingent, matured or unmatured, liquidated
or unliquidated, foreseen or unforeseen, joint, several or individual,
asserted or unasserted, accrued or unaccrued, known or unknown,
whenever arising, including without limitation those arising under or
in connection with any Law (including any Environmental Law), Action,
threatened Action, order or consent decree of any Governmental
Authority or any award of any arbitration tribunal, and those arising
under any contract, guarantee, commitment or undertaking, whether
sought to be imposed by a Governmental Authority, private party, or
party to this Agreement, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute, or
otherwise, and including any costs, expenses, interest, attorneys'
fees, disbursement and expense of counsel, expert and consulting fees
and costs related thereto or to the investigation or defense thereof.
"Losses" shall mean all losses, liabilities, damages, claims,
demands, judgments or settlements of any nature or kind, known or
unknown, fixed, accrued, absolute or contingent, liquidated or
unliquidated, including all reasonable costs and expenses (legal,
accounting or otherwise as such costs are incurred) relating thereto,
suffered by an Indemnitee.
"Notices" shall have the meaning set forth in Section 7.6 of
this Agreement.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Payment Items" shall have the meaning set forth in Section
2.2(b) of this Agreement.
"Person" shall mean any natural person, corporation, business
trust, limited liability company, joint venture, association, company,
partnership or government, or any agency or political subdivision
thereof.
"Policies" shall mean insurance policies and insurance
contracts of any kind (other than life and benefits policies or
contracts), including primary, excess and umbrella policies, master
comprehensive general liability policies, director and officer
liability, fiduciary liability, automobile, aircraft, property and
casualty, workers' compensation and employee dishonesty insurance
policies, bonds and self-insurance and captive insurance company
arrangements, together with the rights, benefits and privileges
thereunder.
"Post-Distribution Adjustment" shall have the meaning set
forth in Section 2.3(a) of this Agreement.
"Records" shall have the meaning set forth in Section 4.1 of
this Agreement.
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"Registration Rights Agreement" shall mean the Registration
Rights Agreement by and between Harris and Lanier, which agreement
shall be entered into prior to or on the Distribution Date in the form
attached hereto as Exhibit F.
"Registration Statement" shall mean the registration statement
on Form 10 to effect the registration of the Lanier Common Stock
pursuant to the Exchange Act.
"Representative" shall mean, with respect to any Person, any
of such Person's directors, officers, employees, agents, consultants,
advisors, accountants, attorneys and representatives.
"Resolution Period" shall have the meaning set forth in
Section 2.3(a) of this Agreement.
"Retained Shares" shall have the meaning set forth in Section
2.1(b) of this Agreement.
"Rules" shall have the meaning set forth in Section 5.3 of
this Agreement.
"Securities Act" shall mean the Securities Act of 1933, as
amended, together with the rules and regulations promulgated
thereunder.
"Subleases" shall mean the subleases and leases by and between
members of the Harris Group and members of the Lanier Group, which
subleases and leases shall be entered into prior to the Distribution
Date in such form as is agreed to by Harris and Lanier.
"Subsidiary" shall mean with respect to any specified Person,
any corporation or other legal entity of which such Person or any of
its Subsidiaries controls or owns, directly or indirectly, more than
50% of the stock or other equity interest entitled to vote on the
election of members to the board of directors or similar governing
body.
"tax" shall have the meaning set forth in the Tax
Disaffiliation Agreement.
"Tax Disaffiliation Agreement" shall mean the Tax
Disaffiliation Agreement by and between Harris and Lanier, which
agreement shall be entered into prior to or on the Distribution Date in
the form attached hereto as Exhibit G.
"Third Party" shall mean a Person who is not a party hereto or
a Subsidiary thereof.
"Third Party Claim" shall have the meaning set forth in
Section 3.3 of this Agreement.
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"Transition Services Agreement" shall mean the Transition
Services Agreement by and between Harris and Lanier, which agreement
shall be entered into prior to or on the Distribution Date in the form
attached hereto as Exhibit H.
"Unresolved Changes" shall have the meaning set forth in
Section 2.3(a) of this Agreement.
SECTION 1.2. Reference; Interpretation. References in this
Agreement to any gender include references to all genders, and references to the
singular include references to the plural and vice versa. The words "include",
"includes" and "including" when used in this Agreement shall be deemed to be
followed by the phrase "without limitation." Unless the context otherwise
requires, references in this Agreement to Articles, Sections, Exhibits and
Schedules shall be deemed references to Articles and Sections of, and Exhibits
and Schedules to, this Agreement. Unless the context otherwise requires, the
words "hereof", "hereby" and "herein" and words of similar meaning when used in
this Agreement refer to this Agreement in its entirety and not to any particular
Article, Section or provision of this Agreement. Neither this Agreement nor any
Ancillary Agreement shall be construed against either party as the principal
draftsperson hereof or thereof.
ARTICLE II.
DISTRIBUTION AND OTHER TRANSACTIONS;
CERTAIN COVENANTS
SECTION 2.1. The Distribution and Other Transactions. (a)
Certain Transactions. On or prior to the Distribution Date:
(i) Harris shall, on behalf of the Harris Group,
transfer or cause to be transferred to Lanier or another member of the
Lanier Group by means of the Corporate Restructuring Transactions,
effective prior to or as of the Effective Time, all of Harris' and the
Harris Subsidiaries' right, title and interest in the Lanier Assets.
(ii) Lanier shall, on behalf of the Lanier Group,
transfer or cause to be transferred to Harris or another member of the
Harris Group by means of the Corporate Restructuring Transactions,
effective prior to or as of the Effective Time, all of Lanier's and the
Lanier Subsidiaries' right, title and interest in the Harris Assets.
(iii) To the extent not indicated by the Corporate
Restructuring Transactions or otherwise agreed by the parties hereto,
Harris shall be entitled to designate the entity within each party's
respective Group to which any Assets are to be transferred pursuant to
this Section 2.1(a) upon the approval of Lanier, which approval shall
not be unreasonably withheld, delayed or conditioned.
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(b) Issuance to Harris. (i) On or prior to the Distribution
Date, Lanier shall issue and deliver to Harris a certificate or certificates
registered in the name of Harris required to effect the transactions set forth
on Exhibit A. Each Lanier Share delivered by Lanier to Harris shall be validly
issued, fully paid and nonassessable and free of any preemptive (or similar)
rights. Lanier hereby represents and warrants that on the Distribution Date and
prior to the Effective Time, Harris will own all of the outstanding Lanier
Shares.
(ii) Harris shall deliver to Harris' stock transfer
agent (the "Agent") the share certificates representing the Lanier
Shares issued to Harris by Lanier pursuant to Section 2.1(b)(i) which
are to be issued in the Distribution, endorsed by Harris in blank, for
the benefit of the holders of Harris Common Stock, and Harris shall
instruct the Agent to distribute, on or as soon as practicable
following the Distribution Date, such Common Stock to holders of record
of shares of Harris Common Stock on the Distribution Record Date as
further contemplated by the Information Statement and hereby. Lanier
shall provide any share certificates that the Agent shall require in
order to effect the Distribution.
(iii) The Lanier Shares issued in the Distribution
will be distributed only pursuant to a book entry system. Harris shall
instruct the Agent to deliver the Lanier Shares previously delivered to
the Agent to a depositary and to mail to each holder of record of
Harris Common Stock on the Distribution Record Date, a statement of the
whole Lanier Shares credited to such holder's account. If following the
Distribution a holder of Lanier Common Stock requests physical
certificates instead of participating in the book entry system, the
Agent will issue certificates for such shares, but only for whole
numbers of Lanier Shares. Cash will be given to holders of fractional
shares of Harris Common Stock on the Distribution Date in lieu of any
fractional Lanier Shares. The Agent will aggregate all fractional
Lanier Shares into whole Lanier Shares and sell the whole Lanier Shares
obtained thereby in the open market at then prevailing prices as soon
as practicable after the Distribution Date on behalf of holders who
would otherwise be entitled to receive such fractional share interests
and will distribute to each such holder such holder's ratable share of
the proceeds of such sale, net of brokerage commission incurred in such
sales, as soon as practicable after the Distribution Date.
(iv) The shares to be retained by Harris (the
"Retained Shares") will initially be held by Harris or one of its
Affiliates pursuant to the book entry system. Harris shall instruct the
Agent to deliver the Retained Shares to a depositary and to mail to
Harris a statement of the shares of Lanier Common Stock credited to
Harris' account.
(c) Charter; Bylaws; Rights Plan. On or prior to the
Distribution Date, Lanier and Harris shall have taken all necessary actions to
provide for the adoption of the form of Restated Certificate of Incorporation
and Bylaws and the execution and delivery of a Stockholder Protection Rights
Agreement, between Lanier and ChaseMellon Shareholder Services, L.L.C., as
Rights Agent,
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in substantially the form filed by Lanier with the Commission as exhibits to the
Registration Statement.
(d) Directors. On or prior to the Distribution Date, Harris
and Lanier shall have taken all necessary action to cause the Board of Directors
of Lanier to consist of the individuals identified in the Information Statement
as directors of Lanier.
(e) Certain Licenses and Permits. Without limiting the
generality of the obligations set forth in Section 2.1(a), on or prior to the
Distribution Date or as soon as reasonably practicable thereafter:
(i) Harris shall use its commercially reasonable best
efforts to transfer or cause to be transferred all transferable
licenses, permits and authorizations issued by any Governmental
Authority which relate solely to the Lanier Business but which are held
in the name of any member of the Harris Group, or in the name of any
employee, officer, director, stockholder or agent of any such member,
or otherwise, on behalf of a member of the Lanier Group to the
appropriate member of the Lanier Group; and
(ii) Lanier shall use its commercially reasonable
best efforts to transfer or cause to be transferred all transferable
licenses, permits and authorizations issued by Governmental Authorities
which relate primarily to the Harris Business but which are held in the
name of any member of the Lanier Group, or in the name of any employee,
officer, director, stockholder, or agent of any such member, or
otherwise, on behalf of a member of the Harris Group to the appropriate
member of the Harris Group.
(f) Transfer and Assignment of Certain Agreements. Without
limiting the generality of the obligations set forth in Section 2.1(a):
(i) Harris hereby agrees that on or prior to the
Distribution Date or as soon as reasonably practicable thereafter,
subject to the limitations set forth in this Section 2.1(f), it will,
and it will cause each member of the Harris Group to, assign, transfer
and convey to the appropriate member of the Lanier Group all of Harris'
or such member of the Harris Group's respective right, title and
interest in and to any and all Contracts primarily related to the
Lanier Business.
(ii) Lanier hereby agrees that on or prior to the
Distribution Date or as soon as reasonably practicable thereafter,
subject to the limitations set forth in this Section 2.1(f), it will,
and it will cause each member of the Lanier Group to, assign, transfer
and convey to the appropriate member of the Harris Group all of
Lanier's or such member of the Lanier Group's respective right, title
and interest in and to any and all Contracts primarily related to the
Harris Business.
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(iii) Subject to the provisions of this Section
2.1(f), any agreement to which any of the parties hereto or any of
their Subsidiaries is a party that inures to the benefit of more than
one of the Harris Business and Lanier Business shall be assigned in
part so that each party shall be entitled to the rights and benefits
inuring to its business under such agreement.
(iv) The assignee of any agreement assigned, in whole
or in part, hereunder (an "Assignee") shall assume and agree to pay,
perform, and fully discharge all obligations of the assignor under such
agreement or, in the case of a partial assignment under paragraph
(f)(iii), such Assignee's related portion of such obligations as
determined in accordance with the terms of the relevant agreement,
where determinable on the face thereof, and otherwise as determined in
accordance with the practice of the parties prior to the Distribution.
(v) Notwithstanding anything in this Agreement to the
contrary, this Agreement shall not constitute an agreement to assign
any agreement, in whole or in part, or any rights thereunder if the
agreement to assign or attempt to assign, without the consent of a
Third Party, would constitute a breach thereof or in any way adversely
affect the rights of the assignor or Assignee thereof. Until such
consent is obtained, or if an attempted assignment thereof would be
ineffective or would adversely affect the rights of any party hereto so
that the intended Assignee would not, in fact, receive all such rights,
the parties will cooperate with each other in any arrangement designed
to provide for the intended Assignee the benefits of, and to permit the
intended Assignee to assume liabilities under, any such agreement.
(g) Consents. The parties hereto shall use their commercially
reasonable efforts to obtain required consents to transfer and/or assignment of
licenses, permits and authorizations of Governmental Authorities and consents to
transfer and/or assignment of Contracts from Third Parties.
(h) Certain Liabilities. For purposes of this Agreement,
including Article III hereof, Harris and Lanier agree that (i) any and all
Liabilities arising from or based upon misstatements in or omissions from the
Registration Statement or the Information Statement under the captions set forth
on Exhibit I to this Agreement (insofar as such information relates to Harris or
the terms of the Distribution) shall be deemed to be Harris Liabilities and not
Lanier Liabilities and (ii) any and all Liabilities arising from or based upon
misstatements in or omissions from the Registration Statement or the Information
Statement other than those specified in Section 2.1(h)(i) shall be deemed to be
Lanier Liabilities and not Harris Liabilities.
(i) Election of Officers. On or prior to the Distribution
Date, Lanier shall take all actions necessary and desirable so that as of the
Distribution Date the officers of Lanier will be as set forth in the Information
Statement.
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(j) State Securities Laws. Prior to the Distribution Date,
Harris and Lanier shall take all such action as may be necessary or appropriate
under the securities or blue sky laws of states or other political subdivisions
of the United States in order to effect the Distribution.
(k) Listing Application; Notice to NYSE. (i) Prior to the
Distribution Date, Harris and Lanier shall prepare and file with the NYSE a
listing application and related documents and shall take all such other actions
with respect thereto as shall be necessary or desirable in order to cause the
NYSE to list on or prior to the Distribution Date, subject to official notice of
issuance, the Lanier Shares.
(ii) Prior to the Distribution, Harris shall, to the
extent possible, give the NYSE not less than ten days advance notice of
the Distribution Record Date in compliance with Rule 10b-17 under the
Exchange Act.
(l) Other Transactions. On or prior to the Distribution Date,
the parties hereto shall have consummated those other transactions in connection
with the Corporate Restructuring Transactions and the Distribution that are
contemplated by the Information Statement and not specifically referred to in
this Section 2.1.
SECTION 2.2 Cash Payment and Closing Payment.
(a) Prior to the Distribution Date, Lanier shall pay to Harris
cash in the aggregate amount of $545,614,009 (the "Cash Payment"), which is the
sum of: (i) $700,000,000; plus (ii) cash and cash equivalents of Lanier as of
October 1, 1999; less (iii) the amount of indebtedness for borrowed money of
Lanier as of such date; and less (iv) amounts owed by Lanier under Lanier's
European asset securitization facility as of such date. Harris and Lanier hereby
agree that the amount of the Cash Payment shall not be subject to alteration or
modification, except to correct errors in the calculation of particular items
constituting elements of the foregoing formula.
(b) Not fewer than five Business Days prior to the
Distribution Date, Harris shall prepare and deliver to Lanier an itemized
estimate of (i) the payment items set forth in Schedule 2.2(b)(i) (such items,
the "Payment Items") and (ii) the credit items set forth in Schedule 2.2(b)(ii)
(such items, the "Credit Items"), which estimate shall be prepared in good faith
on a basis consistent with Schedules 2.2(b)(i) and 2.2(b)(ii). On the Business
Day prior to the Distribution Date, (A) if the sum of such estimated Payment
Items equals or exceeds the sum of such estimated Credit Items, Lanier will pay
to Harris cash in the amount of such excess, if any, and (B) if the sum of such
estimated Credit Items exceeds the sum of such estimated Payment Items, Harris
will pay to Lanier cash in the amount of such excess (any such payment required
by this Section 2.2(b)(A) or (B), the "Closing Payment").
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SECTION 2.3 Post-Distribution Adjustment.
(a) (i) As soon as practicable, but in no event later than 90
days following the Distribution Date, Harris shall, on a basis
consistent with the methods, principles, practices and policies set
forth in Schedules 2.2(b)(i) and 2.2(b)(ii), prepare and deliver to
Lanier an itemized calculation of the Payment Items and Credit Items
(the "Calculation").
(ii) During the preparation of the Calculation and
the period of any review or dispute thereof, (A) Harris shall (i)
provide Lanier and Lanier's authorized representatives with full access
to the books, records, facilities and employees of Harris relating to
the determination of the Payment Items and Credit Items, and (ii)
cooperate fully with Lanier and Lanier's authorized representatives,
including the provision on a timely basis of all information reasonably
requested by Lanier, and (B) Lanier shall (i) provide Harris and
Harris' authorized representatives with full access to the books,
records, facilities and employees of Lanier, and (ii) cooperate fully
with Harris and Harris' authorized representatives, including the
provision on a timely basis of all information reasonably requested by
Harris relating to the determination of the Payment Items and Credit
Items.
(iii) After receipt of the Calculation, Lanier shall
have 30 days to review the Calculation, together with the workpapers
used in the preparation thereof. In connection therewith, Lanier and
its authorized representatives shall have full access to all relevant
books, records and employees of Harris relating to the determination of
the Payment Items and Credit Items. Unless Lanier delivers written
notice to Harris on or prior to the 30th day after Lanier's receipt of
the Calculation stating that Lanier has objections to the Calculation
and describing any such objections with particularity, Lanier shall be
deemed to have accepted and agreed to the Payment Items and Credit
Items set forth therein. If Lanier notifies Harris in writing of its
objections to the Calculation, Lanier and Harris shall, within 30 days
(or such longer period as the parties may agree in writing) following
the delivery of such written notice (the "Resolution Period"), attempt
to resolve their differences, and any resolution by them as to any
disputed amounts shall be final, binding and conclusive on the parties
for all purposes.
(iv) Any amounts remaining in dispute at the
conclusion of the Resolution Period ("Unresolved Changes") shall be
submitted to the office of Ernst & Young LLP located in New York, New
York ("Ernst & Young") within 10 days after the expiration of the
Resolution Period. Each party agrees to execute, if requested by Ernst
& Young, an engagement letter containing reasonable terms. All fees and
expenses relating to the work, if any, to be performed by Ernst & Young
shall be borne pro rata by Harris and Lanier in proportion to the
allocation of the dollar amount of the Unresolved Changes between
Harris and Lanier made by Ernst & Young, such that the prevailing party
shall pay the lesser portion of such fees and expenses. Ernst & Young
shall act as an arbitrator to determine,
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based on the provisions of this Section 2.3(a), only the Unresolved
Changes. Ernst & Young's determination of the Unresolved Changes shall
be made within 30 days of the submission to Ernst & Young of the
Unresolved Changes, shall be set forth in a written statement delivered
by Ernst & Young to Harris and Lanier and shall be final, binding and
conclusive on the parties for all purposes.
(v) In the event that Harris and Lanier agree or are
deemed to agree as to the Payment Items and Credit Items, then within
five Business Days following such agreement (A) if the sum of the
Payment Items, as determined in accordance with this Section 2.3,
equals or exceeds the sum of the Credit Items, as so determined, Lanier
will pay to Harris, or Harris will refund to Lanier, cash in an amount
necessary to cause Harris to have received, as a result of the Closing
Payment and the payment contemplated by this Section 2.3(a)(v)(A), the
exact amount of such excess, if any, and (B) if the sum of the Credit
Items, as determined in accordance with this Section 2.3, exceeds the
sum of the Payment Items, as so determined, Harris will pay to Lanier,
or Lanier will refund to Harris, cash in an amount necessary to cause
Lanier to have received, as a result of the Closing Payment and the
payment contemplated by this Section 2.3(a)(v)(B), the exact amount of
such excess (any such payment required by this Section 2.3(a)(v)(A) or
(B), a "Post-Distribution Adjustment"). In the event that there are
Unresolved Changes at the end of the Resolution Period, then (i) if
Harris and Lanier agree that a Post-Distribution Adjustment is owed to
one party regardless of the ultimate resolution of any Unresolved
Changes, then the minimum amount which Harris and Lanier agree is owed
to such party shall be paid within five Business Days after the end of
the Resolution Period and any additional amounts owing to such party
with respect to the Unresolved Changes shall be paid within five
Business Days after resolution thereof by Ernst & Young and (ii) in all
other cases, any and all payments shall be made within five Business
Days after resolution of the Unresolved Changes by Ernst & Young.
(vi) Any payments made pursuant to this Section
2.2(b) shall be accompanied by interest at the Applicable Rate from the
Distribution Date up to and including the date of payment, and payments
not made when due accrue at the Applicable Rate plus 4% per annum.
SECTION 2.4 Intercompany Receivables.
(a) Deduction Items. Not fewer than five Business Days prior
to the Distribution Date, Harris shall prepare and deliver to Lanier an itemized
estimate of the credit items (collectively, the "Deduction Items") set forth on
Schedule 2.4(a). Prior to the Distribution Date, Harris will cause the aggregate
balance of the intercompany payables owed by the Lanier Group to the Harris
Group to be reduced by an amount equal to the aggregate amount of the Deduction
Items. The parties agree that the Deduction Items will not be settled by means
of cash transfers.
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(b) Intercompany Receivables. Prior to the Effective Time, (i)
Lanier shall cause all intercompany receivables, payables and loans (other than
receivables, payables and loans otherwise specifically provided for hereunder,
including without limitation the Harris Accounts Payable, or under any Ancillary
Agreement, including payables created or required hereby or by any Ancillary
Agreement) (collectively, "Intercompany Receivables") owed by Harris or any
other member of the Harris Group located in the United States to Lanier or any
member of the Lanier Group to be forgiven, canceled and terminated as of the
Distribution Date, without the payment of any consideration therefor; (ii)
Harris shall cause all Intercompany Receivables owed by Lanier or any member of
the Lanier Group located in the United States to Harris or any other member of
the Harris Group to be forgiven, canceled and terminated as of the Distribution
Date without the payment of any consideration therefor; (iii) Harris shall cause
all Intercompany Receivables owed by any other member of the Harris Group
located outside the United States to Lanier or any member of the Lanier Group to
be paid and discharged in full in accordance with their respective terms; and
(iv) Lanier shall cause all Intercompany Receivables owed by any member of the
Lanier Group located outside the United States to Harris or any member of the
Harris Group to be paid and discharged in full in accordance with their
respective terms.
SECTION 2.5 Assumption and Satisfaction of Liabilities. Except
as otherwise specifically set forth in any Ancillary Agreement, from and after
the Effective Time, (i) Harris shall, and shall cause each member of the Harris
Group to, assume, pay, perform and discharge all Harris Liabilities in the
ordinary course of business, consistent with past practice, and (ii) Lanier
shall, and shall cause each member of the Lanier Group, to assume, pay, perform
and discharge all Lanier Liabilities in the ordinary course of business,
consistent with past practice. To the extent reasonably requested to do so by
another party hereto, each party hereto agrees to execute and deliver such
documents, in a form reasonably satisfactory to such party, as may be reasonably
necessary to evidence the assumption of any Liabilities hereunder.
SECTION 2.6 Resignations. Harris shall cause all its employees
to resign, effective as of the Effective Time, from all positions as officers or
directors of any member of the Lanier Group in which they serve, and Lanier
shall cause all its employees to resign, effective as of the Effective Time,
from all positions as officers or directors of any members of the Harris Group
in which they serve.
SECTION 2.7 Further Assurances. In case at any time after the
Effective Time any further action is reasonably necessary or desirable to carry
out the purposes of this Agreement and the Ancillary Agreements, the proper
officers of each party to this Agreement shall take all such necessary action.
Without limiting the foregoing, Harris and Lanier shall use their commercially
reasonable efforts promptly to obtain all consents and approvals, to enter into
all agreements and to make all filings and applications that may be required for
the consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements, including, without limitation, all applicable governmental
and regulatory filings.
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SECTION 2.8 Limited Representations or Warranties. Each of the
parties hereto agrees that no party hereto is, in this Agreement or in any other
agreement or document contemplated by this Agreement or otherwise, making any
representation or warranty whatsoever, as to title or value of Assets being
transferred. It is also agreed that, notwithstanding anything to the contrary
otherwise expressly provided in the relevant Conveyancing and Assumption
Instrument, all Assets either transferred to or retained by the parties, as the
case may be, shall be "as is, where is" and that (subject to Section 2.7) the
party to which such Assets are to be transferred hereunder shall bear the
economic and legal risk that such party's or any of the Subsidiaries' title to
any such Assets shall be other than good and marketable and free from
encumbrances. Similarly, each party hereto agrees that, except as otherwise
expressly provided in the relevant Conveyancing and Assumption Instrument, no
party hereto is representing or warranting in any way that the obtaining of any
consents or approvals, the execution and delivery of any agreements and the
making of any filings or applications contemplated by this Agreement will
satisfy the provisions of any or all applicable agreements or the requirements
of any or all applicable laws or judgments, it being agreed that the party to
which any Assets are transferred shall bear the economic and legal risk that any
necessary consents or approvals are not obtained or that any requirements of
laws or judgments are not complied with.
SECTION 2.9 Removal of Certain Guarantees; Releases from
Liabilities.
(a) Except as otherwise specified in any Ancillary Agreement,
Lanier shall use its commercially reasonable efforts to have, on or prior to the
Distribution Date, or as soon as practicable thereafter, any member of the
Harris Group removed as guarantor of or obligor for any Lanier Liability,
including in respect of those guarantees set forth on Schedule 2.9(a) of this
Agreement.
(b) If Lanier is unable to obtain, or to cause to be obtained,
any such required removal as set forth in clause (a) of this Section 2.9, the
applicable guarantor or obligor shall continue to be bound as such and, unless
not permitted by law or the terms thereof, the relevant beneficiary shall or
shall cause one of its Subsidiaries, as agent or subcontractor for such
guarantor or obligor to pay, perform and discharge fully all the obligations or
other liabilities of such guarantor or obligor thereunder from and after the
date hereof.
(c) If (i) Lanier is unable to obtain, or to cause to be
obtained, any such required removal as set forth in clause (a) of this Section
2.9, or (ii) Lanier Liabilities arise from and after the Effective Time but
before a member of the Harris Group which is a guarantor or obligor with
reference to any such Lanier Liability is removed pursuant to Section 2.9(a),
then such guarantor or obligor shall be indemnified by Lanier for all Lanier
Liabilities incurred by it in its capacity as guarantor or obligor. Without
limiting the foregoing, Lanier shall, or shall cause a member of the Lanier
Group to, reimburse any such member of the Harris Group which is a guarantor or
obligor as soon as practicable (but in no event later than 30 days) following
delivery by Harris to Lanier of notice of a payment made pursuant to this
Section 2.9 in respect of Lanier Liabilities.
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(d) In the event that at any time before or after the
Distribution Date Harris identifies any letters of credit, interest rate or
foreign exchange contracts, surety bonds or other Contracts (excluding
guarantees) that relate primarily to the Lanier Business but for which a member
of the Harris Group has contingent, secondary, joint, several or other Liability
of any nature whatsoever, Lanier shall, at its expense, take such actions and
enter into such agreements and arrangements as Harris may reasonably request to
effect Harris' (or a member of the Harris Group's ) release or substitution.
(e) The parties hereto shall use commercially reasonable
efforts to obtain, or cause to be obtained, any consent, substitution or
amendment required to novate or assign all obligations under any Contracts or
Liabilities of any nature whatsoever transferred under this Agreement, or to
obtain in writing the unconditional release of the assignor so that in each such
case, Harris shall be solely responsible for the Harris Liabilities and Lanier
shall be solely responsible for the Lanier Liabilities; provided, however, that
no party shall be obligated to pay any consideration therefor (except for filing
fees or other similar charges) to any Third Party from whom such consent,
substitution, amendment or release is requested. Whether or not any such
consent, substitution, amendment or release is obtained, nothing in this Section
2.9(e) shall in any way limit the obligations of the parties under Article III.
SECTION 2.10 Witness Services. At all times from and after the
Distribution Date, each of Harris and Lanier shall use their commercially
reasonable efforts to make available to the other, upon reasonable written
request, its and its Subsidiaries' officers, directors, employees and agents as
witnesses to the extent that (i) such persons may reasonably be required in
connection with the prosecution or defense of any Action in which the requesting
party from time to time be involved and (ii) there is no conflict in the Action
between the requesting party and Harris and Lanier, as applicable. A party
providing witness services to the other party under this Section shall be
entitled to receive from the recipient of such services, upon the presentation
of invoices therefor, payments for such amounts, relating to disbursements and
other out-of-pocket expenses (which shall be deemed to exclude the costs of
salaries and benefits of employees who are witnesses), as may be reasonably
incurred in providing such witness services.
SECTION 2.11 Transfers Not Effected Prior to the Distribution;
Transfers Deemed Effective as of the Distribution Date. To the extent that any
transfers contemplated by this Article II shall not have been consummated on or
prior to the Distribution Date, the parties shall cooperate to effect such
transfers as promptly following the Distribution Date as shall be practicable.
Nothing herein shall be deemed to require the transfer of any Assets or the
assumption of any Liabilities which by their terms or operation of law cannot be
transferred; provided, however, that the parties hereto and their respective
Subsidiaries shall cooperate to seek to obtain any necessary consents or
approvals for the transfer of all Assets and Liabilities contemplated to be
transferred pursuant to this Article II. In the event that any such transfer of
Assets or Liabilities has not been consummated, from and after the Distribution
Date the party retaining such Asset or Liability shall hold such Asset in trust
for the use and benefit of the party entitled thereto (at the expense of the
party entitled
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thereto) or retain such Liability for the account of the party by whom such
Liability is to be assumed pursuant hereto, as the case may be, and take such
other action as may be reasonably requested by the party to whom such Asset is
to be transferred, or by whom such Liability is to be assumed, as the case may
be, in order to place such party, insofar as is reasonably possible, in the same
position as would have existed had such Asset or Liability been transferred as
contemplated hereby. As and when any such Asset or Liability becomes
transferable, such transfer shall be effected forthwith. The parties agree that,
as of the Distribution Date, each party hereto shall be deemed to have acquired
complete and sole beneficial ownership over all of the Assets, together with all
rights, powers and privileges incident thereto, and shall be deemed to have
assumed in accordance with the terms of this Agreement all of the Liabilities,
and all duties, obligations and responsibilities incident thereto, which such
party is entitled to acquire or required to assume pursuant to the terms of this
Agreement. In the event that a Harris Asset or Harris Liability is transferred
to Lanier, then promptly upon the request of either party, the parties shall
cooperate to transfer such asset or liability to Harris. In the event that a
Lanier Asset or Lanier Liability is transferred to Harris, then promptly upon
the request of either party, the parties shall cooperate to transfer such asset
or liability to Lanier.
SECTION 2.12 Conveyancing and Assumption Instruments. In
connection with the transfers of Assets and the assumptions of Liabilities
contemplated by this Agreement, the parties shall execute or cause to be
executed by the appropriate entities the Conveyancing and Assumption Instruments
in substantially the form contemplated hereby for transfers to be effected
pursuant to New York law or the Laws of one of the other states of the United
States or, if not appropriate for a given transfer, and for transfers to be
effected pursuant to non-U.S. Laws, in such other form as the parties shall
reasonably agree. The transfer of capital stock shall be effected by means of
delivery of stock certificates and executed stock powers and notation on the
stock record books of the corporation or other legal entities involved, or by
such other means as may be required in any non- U.S. jurisdiction to transfer
title to stock and, to the extent required by applicable Law, by notation on
public registries.
SECTION 2.13 Ancillary Agreements. Prior to the Distribution
Date, each of Harris and Lanier shall enter into, and/or (where applicable)
shall cause members of their respective Groups to enter into, the Ancillary
Agreements and any other agreements in respect of the Distribution reasonably
necessary or appropriate in connection with the transactions contemplated hereby
and thereby.
SECTION 2.14 Corporate Names; Trademarks. Except as otherwise
specifically provided in any Ancillary Agreement:
(a) as soon as reasonably practicable after the Distribution
Date but in any event within six months thereafter, Lanier will, at its own
expense, remove (or, if necessary, on an interim basis, cover up) any and all
exterior signs and other identifiers located on any of its property or premises
or on the property or premises used by it or its Subsidiaries which refer or
pertain to Harris
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or which include the Harris name, logo or other trademark (including but not
limited to "Next Level Solutions" or any similar mark or any derivative thereof)
or other Harris intellectual property; and
(b) as soon as is reasonably practicable after the
Distribution Date but in any event within six months thereafter, Lanier will,
and will cause the Lanier Subsidiaries to, remove from all letterhead,
envelopes, invoices and other communications media of any kind, all references
to Harris, including the "Harris Corporation" name, logo and any other trademark
or other Harris intellectual property (except that Lanier shall not be required
to take any such action with respect to materials in the possession of
customers).
SECTION 2.15 Non-Solicitation. (a) For a period of two years
following the Distribution Date, Lanier will not and will not permit its agents
or any member of the Lanier Group to, directly or indirectly, solicit or recruit
for its employment any employee of the Harris Group as of the Distribution
without the prior written consent of Harris; provided, however, that nothing in
this Section 2.15(a) shall (i) prohibit the hiring of any Person who applied for
employment with the Lanier Group solely in response to any public medium
advertising or (ii) prohibit the hiring of any Person referred by any Person
whose principal business is the recruiting of prospective employees, provided
that such Person has been instructed in writing by Lanier prior to the referral
not to recruit any employees of the Harris Group.
(b) For a period of two years following the Distribution Date,
Harris will not and will not permit its agents or any member of the Harris Group
to, directly or indirectly, solicit or recruit for its employment any employee
of the Lanier Group as of the Distribution without the prior written consent of
Lanier; provided, however, that nothing in this Section 2.15(b) shall (i)
prohibit the hiring of any Person who applied for employment with the Harris
Group solely in response to any public medium advertising or (ii) prohibit the
hiring of any Person referred by any Person whose principal business is the
recruiting of prospective employees, provided that such Person has been
instructed in writing by Harris prior to the referral not to recruit any
employees of the Lanier Group.
ARTICLE III.
INDEMNIFICATION
SECTION 3.1 Indemnification by Harris. Except as otherwise
specifically set forth in any provision of this Agreement, Harris shall
indemnify, defend and hold harmless the Lanier Indemnitees from and against any
and all Indemnifiable Losses of the Lanier Indemnitees arising out of, by reason
of or otherwise in connection with the Harris Liabilities or alleged Harris
Liabilities, including any breach by Harris of any provision of this Section
3.1. Subject to the last sentence of Section 7.1, this Agreement is not intended
to address, and should not be interpreted to address, the matters specifically
and expressly covered by the Ancillary Agreements.
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SECTION 3.2 Indemnification by Lanier. Except as otherwise
specifically set forth in any provision of this Agreement, Lanier shall
indemnify, defend and hold harmless the Harris Indemnitees from and against any
and all Indemnifiable Losses of the Harris Indemnitees arising out of, by reason
of or otherwise in connection with the Lanier Liabilities or alleged Lanier
Liabilities, including any breach by Lanier of any provision of this Section
3.1. Subject to the last sentence of Section 7.1, this Agreement is not intended
to address, and should not be interpreted to address, the matters specifically
and expressly covered by the Ancillary Agreements.
SECTION 3.3 Procedures for Indemnification.
(a) Third Party Claims. If a claim or demand is made against a
Lanier Indemnitee or a Harris Indemnitee (each, an "Indemnitee") by any Person
who is not a party to this Agreement (a "Third Party Claim") as to which such
Indemnitee is entitled to indemnification pursuant to this Agreement, such
Indemnitee shall notify the party which is or may be required pursuant to
Section 3.1 or Section 3.2. hereof to make such indemnification (the
"Indemnifying Party") in writing, and in reasonable detail, of the Third Party
Claim promptly (and in any event within 15 Business Days) after receipt by such
Indemnitee of written notice of the Third Party Claim; provided, however, that
failure to give such notification shall not affect the indemnification provided
hereunder except to the extent the Indemnifying Party shall have been actually
prejudiced as a result of such failure (except that the Indemnifying Party shall
not be liable for any expenses incurred during the period in which the
Indemnitee failed to give such notice). Thereafter, the Indemnitee shall deliver
to the Indemnifying Party, promptly (and in any event within ten Business Days)
after the Indemnitee's receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnitee relating to the Third Party
Claim.
If a Third Party Claim is made against an Indemnitee, the
Indemnifying Party shall be entitled to participate in the defense thereof and,
if it so chooses and acknowledges in writing its obligation to indemnify the
Indemnitee therefor, to assume the defense thereof with counsel selected by the
Indemnifying Party; provided that such counsel is not reasonably objected to by
the Indemnitee. Should the Indemnifying Party so elect to assume the defense of
a Third Party Claim, the Indemnifying Party shall, within 30 days (or sooner if
the nature of the Third Party Claim so requires), notify the Indemnitee of its
intent to do so, and the Indemnifying Party shall thereafter not be liable to
the Indemnitee for legal or other expenses subsequently incurred by the
Indemnitee in connection with the defense thereof; provided, that such
Indemnitee shall have the right to employ counsel to represent such Indemnitee
if, in such Indemnitee's reasonable judgment, a conflict of interest between
such Indemnitee and such Indemnifying Party exists in respect of such claim
which would make representation of both such parties by one counsel
inappropriate, and in such event the fees and expenses of such separate counsel
shall be paid by such Indemnifying Party. If the Indemnifying Party assumes such
defense, the Indemnitee shall have the right to participate in the defense
thereof and to employ counsel, subject to the proviso of the preceding sentence,
at its own expense, separate from the counsel employed by the Indemnifying
Party, it being understood that the Indemnifying Party shall control such
defense. The Indemnifying Party shall be liable for the fees
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and expenses of counsel employed by the Indemnitee for any period during which
the Indemnifying Party has failed to assume the defense thereof (other than
during the period prior to the time the Indemnitee shall have given notice of
the Third Party Claim as provided above). If the Indemnifying Party so elects to
assume the defense of any Third Party Claim, all of the Indemnitees shall
cooperate with the Indemnifying Party in the defense or prosecution thereof,
including by providing or causing to be provided, Records and witnesses as soon
as reasonably practicable after receiving any request therefor from or on behalf
of the Indemnifying Party.
If the Indemnifying Party acknowledges in writing
responsibility for a Third Party Claim, then in no event will the Indemnitee
admit any liability with respect to, or settle, compromise or discharge, any
Third Party Claim without the Indemnifying Party's prior written consent;
provided, however, that the Indemnitee shall have the right to settle,
compromise or discharge such Third Party Claim without the consent of the
Indemnifying Party if the Indemnitee releases the Indemnifying Party from its
indemnification obligation hereunder with respect to such Third Party Claim and
such settlement, compromise or discharge would not otherwise adversely affect
the Indemnifying Party. If the Indemnifying Party acknowledges in writing
liability for a Third Party Claim, the Indemnitee will agree to any settlement,
compromise or discharge of a Third Party Claim that the Indemnifying Party may
recommend and that by its terms obligates the Indemnifying Party to pay the full
amount of the liability in connection with such Third Party Claim and releases
the Indemnitee completely in connection with such Third Party Claim and that
would not otherwise adversely affect the Indemnitee. If an Indemnifying Party
elects not to assume the defense of a Third Party Claim, or fails to notify an
Indemnitee of its election to do so as provided herein, such Indemnitee may
compromise, settle or defend such Third Party Claim.
Notwithstanding the foregoing, the Indemnifying Party shall
not be entitled to assume the defense of any Third Party Claim (and shall be
liable for the fees and expenses of counsel incurred by the Indemnitee in
defending such Third Party Claim) if the Third Party Claim seeks an order,
injunction or other equitable relief or relief for other than money damages
against the Indemnitee which the Indemnitee reasonably determines, after
conferring with its counsel, cannot be separated from any related claim for
money damages. If such equitable relief or other relief portion of the Third
Party Claim can be so separated from that for money damages, the Indemnifying
Party shall be entitled to assume the defense of the portion relating to money
damages.
(b) In the event of payment by an Indemnifying Party to any
Indemnitee in connection with any Third-Party Claim, such Indemnifying Party
shall be subrogated to and shall stand in the place of such Indemnitee as to any
events or circumstances in respect of which such Indemnitee may have any right
or claim relating to such Third-Party Claim against any claimant or plaintiff
asserting such Third-Party Claim. Such Indemnitee shall cooperate with such
Indemnifying Party in a reasonable manner, and at the cost and expense of such
Indemnifying Party, in prosecuting any subrogated right or claim.
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(c) The remedies provided in this Article III shall be
cumulative and shall not preclude assertion by any Indemnitee of any other
rights or the seeking of any and all other remedies against any Indemnifying
Party.
SECTION 3.4 Indemnification Payments. (a) Indemnification
required by this Article III shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when bills are
received or loss, liability, claim, damage or expense is incurred. If the
Indemnifying Party fails to make an indemnification payment required by this
Article III within 30 days after receipt of a bill therefore or notice that a
loss, liability, claim, damage or expense has been incurred, the Indemnifying
Party shall also be required to pay interest on the amount of such
indemnification payment, from the date of receipt of the bill or notice of the
loss, liability, claim, damage or expense to, but not including the date of
payment, at the Applicable Rate.
(b) The amount of any claim by an Indemnitee under this
Agreement shall be reduced to reflect any actual tax savings received by any
Indemnitee that result from the Indemnifiable Losses that gave rise to such
indemnity.
ARTICLE IV.
ACCESS TO INFORMATION
SECTION 4.1 Provision of Corporate Records.
(a) Other than in circumstances in which indemnification is
sought pursuant to Article III (in which event the provisions of such Article
will govern), after the Distribution Date, upon the prior written request by
Lanier for specific and identified agreements, documents, books, records or
files (collectively, "Records") which relate to (x) Lanier or the conduct of the
Lanier Business up to the Effective Time, or (y) any Ancillary Agreement (other
than the Tax Disaffiliation Agreement), Harris shall arrange, as soon as
reasonably practicable following the receipt of such request, to provide
appropriate copies of such Records (or the originals thereof if Lanier has a
reasonable need for such originals) in the possession or control of Harris or
any of the Harris Subsidiaries, but only to the extent such items are not
already in the possession or control of the requesting party.
(b) Other than in circumstances in which indemnification is
sought pursuant to Article III (in which event the provisions of such Article
will govern), after the Distribution Date, upon the prior written request by
Harris for specific and identified Records which relate to (x) Harris or the
conduct of the Harris Business up to the Effective Time, or (y) any Ancillary
Agreement (other than the Tax Disaffiliation Agreement), Lanier shall arrange,
as soon as reasonably practicable following the receipt of such request, to
provide appropriate copies of such Records (or the originals thereof if Harris
has a reasonable need for such originals) in the possession or control of Lanier
or
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any of the Lanier Subsidiaries, but only to the extent such items are not
already in the possession or control of the requesting party.
SECTION 4.2 Access to Information. Other than in circumstances
in which indemnification is sought pursuant to Article III (in which event the
provisions of such Article will govern), from and after the Distribution Date,
each of Harris and Lanier shall afford to the other and its authorized
Representatives reasonable access during normal business hours, subject to
appropriate restrictions for classified, privileged or confidential information,
to the personnel, properties, books and records of such party and its
Subsidiaries insofar as such access is reasonably required by the other party
and relates to (x) such other party or the conduct of its business prior to the
Effective Time or (y) any Ancillary Agreement.
SECTION 4.3 Reimbursement; Other Matters. Except to the extent
otherwise contemplated by any Ancillary Agreement, a party providing Records or
access to information to the other party under this Article IV shall be entitled
to receive from the recipient, upon the presentation of invoices therefor,
payments for such amounts, relating to supplies, disbursements and other
out-of-pocket expenses, as may be reasonably incurred in providing such Records
or access to information.
SECTION 4.4 Confidentiality. Neither (i) Harris nor the Harris
Subsidiaries nor (ii) Lanier nor the Lanier Subsidiaries shall use or permit the
use of (without the prior written consent of the other) and shall keep, and
shall cause its consultants and advisors to keep, confidential all information
concerning the other party in its possession, its custody or under its control
(except to the extent that (A) such information has been in the public domain
through no fault of such party or (B) such information has been later lawfully
acquired from other sources by such party or (C) this Agreement or any other
Ancillary Agreement or any other agreement entered into pursuant hereto permits
the use or disclosure of such information) to the extent such information, (w)
relates to or was acquired during the period up to the Effective Time, (x)
relates to any Ancillary Agreement, (y) is obtained in the course of performing
services for the other party pursuant to any Ancillary Agreement, or (z) is
based upon or is derived from information described in the preceding clauses
(w), (x) or (y), and each party shall not (without the prior written consent of
the other) otherwise release or disclose such information to any other Person,
except such party's auditors, attorneys consultants and advisors, unless
compelled to disclose such information by judicial or administrative process or
unless such disclosure is required by Law and such party has used commercially
reasonable efforts to consult with the other affected party or parties prior to
such disclosure.
SECTION 4.5 Privileged Matters. The parties hereto recognize
that legal and other professional services that have been and will be provided
prior to the Distribution Date have been and will be rendered for the benefit of
each of the members of the Harris Group, and the members of the Lanier Group,
and that each of the members of the Harris Group, and each of the members of the
Lanier Group should be deemed to be the client for the purposes of asserting all
privileges which may be asserted under applicable Law. Except as otherwise
specifically provided
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in the Tax Disaffiliation Agreement with respect to tax matters, to allocate the
interests of each party in the information as to which any party is entitled to
assert a privilege, the parties agree as follows:
(a) Harris shall be entitled, in perpetuity, to control the
assertion or waiver of all privileges in connection with privileged information
which relates solely to the Harris Business, whether or not the privileged
information is in the possession of or under the control of Harris or Lanier.
Harris shall also be entitled, in perpetuity, to control the assertion or waiver
of all privileges in connection with privileged information that relates solely
to the subject matter of any claims constituting Harris Liabilities, now pending
or which may be asserted in the future, in any lawsuits or other proceedings
initiated against or by Harris, whether or not the privileged information is in
the possession of or under the control of Harris or Lanier.
(b) Lanier shall be entitled, in perpetuity, to control the
assertion or waiver of all privileges in connection with privileged information
which relates solely to the Lanier Business, whether or not the privileged
information is in the possession of or under the control of Harris or Lanier.
Lanier shall also be entitled, in perpetuity, to control the assertion or waiver
of all privileges in connection with privileged information which relates solely
to the subject matter of any claims constituting Lanier Liabilities, now pending
or which may be asserted in the future, in any lawsuits or other proceedings
initiated against or by Lanier, whether or not the privileged information is in
the possession of Lanier or under the control of Harris or Lanier.
(c) The parties hereto agree that they shall have a shared
privilege, with equal right to assert or waive, subject to the restrictions in
this Section 4.5, with respect to all privileges not allocated pursuant to the
terms of Sections 4.5(a) and (b). All privileges relating to any claims,
proceedings, litigation, disputes, or other matters which involve Harris and
Lanier in respect of which such parties retain any responsibility or liability
under this Agreement, shall be subject to a shared privilege among them.
(d) No party hereto may waive any privilege which could be
asserted under any applicable Law, and in which any other party hereto has a
shared privileged, without the consent of the other party, which consent shall
not be unreasonably withheld or delayed, except to the extent reasonably
required in connection with any litigation with Third Parties or as provided in
subsection (e) below. Consent shall be in writing, or shall be deemed to be
granted unless written objection is made within twenty (20) days after notice
upon the other party requesting such consent.
(e) In the event of any litigation or dispute between or among
any of the parties hereto, any party and a Subsidiary of another party hereto,
or a Subsidiary of one party hereto and a Subsidiary of another party hereto,
either such party may waive a privilege in which the other party has a shared
privilege, without obtaining the consent of the other party, provided that such
waiver of a shared privilege shall be effective only as to the use of
information with respect to the litigation or dispute between the relevant
parties and/or their Subsidiaries, and shall not operate as a waiver of the
shared privilege with respect to Third Parties.
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(f) If a dispute arises between or among the parties hereto or
their respective Subsidiaries regarding whether a privilege should be waived to
protect or advance the interest of any party, each party agrees that it shall
negotiate in good faith, shall endeavor to minimize any prejudice to the rights
of the other parties, and shall not unreasonably withhold consent to any request
for waiver by another party. Each party hereto specifically agrees that it will
not withhold consent to waiver for any purpose except to protect its own
legitimate interests.
(g) Upon receipt by any party hereto or by any Subsidiary
thereof of any subpoena, discovery or other request which arguably calls for the
production or disclosure of information subject to a shared privilege or as to
which another party has the sole right hereunder to assert a privilege, or if
any party obtains knowledge that any of its or any of its Subsidiaries' current
or former directors, officers, agents or employees have received any subpoena,
discovery or other requests which arguably calls for the production or
disclosure of such privileged information, such party shall promptly notify the
other party of the existence of the request and shall provide the other party a
reasonable opportunity to review the information and to assert any rights it or
they may have under this Section 4.5 or otherwise to prevent the production or
disclosure of such privileged information.
(h) The transfer of all Records and other information pursuant
to this Agreement is made in reliance on the agreement of Harris and Lanier, as
set forth in Sections 4.4 and 4.5, to maintain the confidentiality of privileged
information and to assert and maintain all applicable privileges. The access to
information being granted pursuant to Sections 4.1 and 4.2 hereof, the agreement
to provide witnesses and individuals pursuant to Sections 2.10 and 3.3 hereof,
the furnishing of notices and documents and other cooperative efforts
contemplated by Section 3.3 hereof, and the transfer of privileged information
between and among the parties and their respective Subsidiaries pursuant to this
Agreement shall not be deemed a waiver of any privilege that has been or may be
asserted under this Agreement or otherwise.
SECTION 4.6 Ownership of Information. Any information owned by
one party or any of its Subsidiaries that is provided to a requesting party
pursuant to Article III or this Article IV shall be deemed to remain the
property of the providing party. Unless specifically set forth herein, nothing
contained in this Agreement shall be construed as granting or conferring rights
of license or otherwise in any such information.
SECTION 4.7 Retention of Records. Harris shall deliver to
Lanier upon Lanier's request all Records that are specifically identified by
Lanier and known by Harris, after reasonable inquiry, to be in its control or
possession relating to Lanier Assets, Lanier Liabilities or the Lanier Business.
Except (a) as provided in the Tax Disaffiliation Agreement or (b) when a longer
retention period is otherwise required by Law or agreed to in writing, the
Harris Group and the Lanier Group shall retain, for a period of at least eight
years, all Records relating to the Lanier Business as of the Effective Time.
Notwithstanding the foregoing, in lieu of retaining any specific Records, Harris
or Lanier may offer in writing to deliver such Records to the other and, if such
offer is not accepted
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within 90 days, the offered Records may be destroyed or otherwise disposed of at
any time. If a recipient of such offer shall request in writing prior to the
scheduled date for such destruction or disposal that any of Records proposed to
be destroyed or disposed of be delivered to such requesting party, the party
proposing the destruction or disposal shall promptly arrange for delivery of
such of the Records as was requested (at the cost of the requesting party).
SECTION 4.8 Limitation of Liability; Release. (a) No party
shall have any liability to any other party in the event that any information
exchanged or provided pursuant to this Agreement which is an estimate or
forecast, or which is based on an estimate or forecast, is found to be
inaccurate.
(b) Effective upon the Distribution and except as otherwise
specifically set forth in this Agreement, each of Harris and Lanier releases and
forever discharges the other and its Representatives and Subsidiaries, of and
from all debts, demands, actions, causes of action, suits, accounts, covenants,
contracts, agreements, damages, and any and all claims, demands and liabilities
whatsoever of every name and nature, both in law and in equity, against such
other party, its Representatives and Subsidiaries or any of its assigns, which
the releasing party has or ever had, which arise out of or relate to events,
circumstances or actions taken by such other party prior to the Distribution;
provided, however, that the foregoing general release shall not apply to this
Agreement, the Ancillary Agreements or the transactions contemplated hereby or
thereby or to the Harris Accounts Payable and shall not affect either party's
right to enforce this Agreement, any of the Ancillary Agreements or any of the
agreement or contracts set forth on Exhibit J, under which the Harris Accounts
Payable are owed, in accordance with their terms.
SECTION 4.9 Other Agreements Providing for Exchange of
Information. The rights and obligations granted under this Article IV are
subject to any specific limitations, qualifications or additional provisions on
the sharing, exchange or confidential treatment of information set forth in any
Ancillary Agreement.
ARTICLE V.
DISPUTE RESOLUTION
SECTION 5.1 Negotiation. In the event of a controversy,
dispute or claim arising out of, in connection with, or in relation to the
interpretation, performance, nonperformance, validity or breach of this
Agreement or otherwise arising out of, or in any way related to this Agreement
or the transactions contemplated hereby, including, without limitation, any
claim based on contract, tort, statute or constitution (but excluding any
controversy, dispute or claim arising out of any agreement relating to the use
or lease of real property if any Third Party is a party to such controversy,
dispute or claim) (collectively, "Agreement Disputes"), the management of the
parties shall negotiate in good faith for a reasonable period of time to settle
such Agreement Dispute,
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provided such reasonable period shall not, unless otherwise agreed by the
parties in writing, exceed 30 days from the time the parties began such
negotiations; provided, further, that in the event of any mediation or
arbitration in accordance with Sections 5.2 and 5.3 hereof, the parties shall
not assert the defenses of statute of limitations and laches arising for the
period beginning after the date the parties began negotiations hereunder, and
any contractual time period or deadline under this Agreement or any Ancillary
Agreement to which such Agreement Dispute relates shall not be deemed to have
passed until such Agreement Dispute has been resolved.
SECTION 5.2 Mediation. If after such reasonable period such
management are unable to settle such Agreement Dispute (and in any event, unless
otherwise agreed in writing by the parties, after 60 days have elapsed from the
time the parties began such negotiations) and the Agreement Dispute involves a
controversy, dispute or claim of less than $500,000, such Agreement Dispute
shall be determined, at the request of any party, by binding mediation conducted
in Orlando, Florida or at another location which the parties mutually select,
before a retired judge sitting on the panel of Judicial Arbitration & Mediation
Services, Inc. The mediation process shall continue as the exclusive method of
resolving the Agreement Dispute (other than negotiation between the parties)
until the earlier of the Agreement Dispute being resolved and the mediator
finding in good faith that all settlement possibilities have been exhausted and
that the matter is not resolvable through mediation. If the mediator makes such
a finding, at the request of any party, the Agreement Dispute shall then be
determined by binding arbitration in accordance with Section 5.3 hereof.
SECTION 5.3 Arbitration. If after such reasonable period such
management are unable to settle such Agreement Dispute (and in any event, unless
otherwise agreed in writing by the parties, after 60 days have elapsed from the
time the parties began such negotiations) and the Agreement Dispute involves a
controversy, dispute or claim of $500,000 or more, such Agreement Dispute shall
be determined, at the request of any party, by binding arbitration conducted in
Orlando, Florida or at another location which the parties mutually select,
before and in accordance with the then-existing International Arbitration Rules
of the American Arbitration Association (the "Rules"). In any dispute between
the parties hereto, the numbers of arbitrators shall be three. Any judgment or
award rendered by the arbitrator shall be final, binding and nonappealable
(except upon grounds specified in 9 U.S.C. Section 10(a) as in effect on the
date hereof). If the parties are unable to agree on an arbitrator or
arbitrators, the arbitrator or arbitrators shall be selected in accordance with
the Rules. Any controversy concerning whether an Agreement Dispute is an
arbitrable Agreement Dispute, whether arbitration has been waived, whether an
assignee of this Agreement is bound to arbitrate, or as to the interpretation of
enforceability of this Article V shall be determined by the arbitrator or
arbitrators. In resolving any dispute, the parties intend that the arbitrator or
arbitrators apply the substantive laws of the State of New York, without regard
to the choice of law principles thereof. The parties intend that the provisions
to arbitrate set forth herein be valid, enforceable and irrevocable. The parties
agree to comply with any award made in any such arbitration proceedings that has
become final in accordance with the Rules and agree to enforcement of or entry
of judgment upon such award, by any court of competent jurisdiction, including
(a) the state courts of the State of Florida, located in Orlando, or (b) the
United States District Court for the Middle District of
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Florida, in accordance with Section 7.17 hereof. The arbitrator or arbitrators
shall be entitled, if appropriate, to award any remedy in such proceedings,
including, without limitation, monetary damages, specific performance and all
other forms of legal and equitable relief; provided, however, the arbitrator or
arbitrators shall not be entitled to award punitive damages. Without limiting
the provisions of the Rules, unless otherwise agreed in writing by or among the
parties or permitted by this Agreement, the undersigned shall keep confidential
all matters relating to the arbitration or the award, provided such matters may
be disclosed (i) to the extent reasonably necessary in any proceeding brought to
enforce the award or for entry of a judgment upon the award and (ii) to the
extent otherwise required by Law. Nothing contained herein is intended to or
shall be construed to prevent any party, in accordance with Article 22(3) of the
Rules or otherwise, from applying to any court of competent jurisdiction for
interim measures or other provisional relief in connection with the subject
matter of any Agreement Disputes.
SECTION 5.4 Continuity of Service and Performance. Unless
otherwise agreed in writing, the parties will continue to provide service and
honor all other commitments under this Agreement and each Ancillary Agreement
during the course of dispute resolution pursuant to the provisions of this
Article V with respect to all matters not subject to such dispute, controversy
or claim.
SECTION 5.5 Other Remedies. Nothing in this Article V shall
limit the right that any party may otherwise have to seek to obtain (a)
preliminary injunctive relief in order to preserve the status quo pending the
resolution of a dispute or (b) temporary or permanent injunctive relief from any
breach of any provisions of this Agreement.
ARTICLE VI.
INSURANCE
SECTION 6.1 Policies and Rights Included Within Assets. The
Lanier Assets shall include (a) any and all rights of an insured party under
each of the Harris Shared Policies, subject to the terms of such Harris Shared
Policies and any limitations or obligations of Lanier contemplated by this
Article VI, specifically including rights of indemnity and the right to be
defended by or at the expense of the insurer, with respect to all claims, suits,
actions, proceedings, injuries, losses, liabilities, damages and expenses
incurred or claimed to have been incurred prior to the Distribution Date by any
party in or in connection with the conduct of the Lanier Business or, to the
extent any claim is made against Lanier or any of the Lanier Subsidiaries, the
conduct of the Harris Business, and which claims, suits, actions, proceedings,
injuries, losses, liabilities, damages and expenses may arise out of an insured
or insurable occurrence under one or more of such Harris Shared Policies;
provided, however, that nothing in this clause shall be deemed to constitute (or
to reflect) an assignment or transfer of such Harris Shared Policies, or any of
them, to Lanier, and (b) the Lanier Policies.
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SECTION 6.2 Post-Distribution Date Claims. (a) If, subsequent
to the Distribution Date, any Person shall assert a claim against Lanier or any
of the Lanier Subsidiaries (including where Lanier or the Lanier Subsidiaries
are joint defendants with other Persons) with respect to any claim, suit,
action, proceeding, injury, loss, liability, damage or expense incurred or
claimed to have been incurred prior to the Distribution Date in or in connection
with the conduct of the Lanier Business or, to the extent any claim is made
against Lanier or any of the Lanier Subsidiaries (including where Lanier or the
Lanier Subsidiaries are joint defendants with other Persons), the conduct of the
Harris Business and which claim, suit, action, proceeding, injury, loss,
liability, damage or expense may arise out of an insured or insurable occurrence
under one or more of the Harris Shared Policies, Harris shall assert and collect
any related Insurance Proceeds under such Harris Shared Policy on behalf of
Lanier and remit promptly to Lanier any Insurance Proceeds so collected, and
Harris shall further on behalf of Lanier assert any and all rights of an insured
party under such Harris Shared Policy with respect to such asserted claim,
specifically including rights of indemnity and the right to be defended by or at
the expense of the insurer and the right to any applicable Insurance Proceeds
thereunder; provided, however, that nothing in this Section 6.2 shall be deemed
to constitute (or to reflect) an assignment or transfer of the Harris Shared
Policies, or any of them, to Lanier.
SECTION 6.3 Administration; Other Matters. (a) Administration.
From and after the Distribution Date, Harris shall be responsible for (i)
Insurance Administration of the Harris Shared Policies and (ii) Claims
Administration (except as provided below) under such Harris Shared Policies with
respect to Harris Liabilities and Lanier Liabilities; provided that the
retention of such responsibilities by Harris is in no way intended to limit,
inhibit or preclude any right to insurance coverage for any Insured Claim of a
named insured under such Policies as contemplated by the terms of this
Agreement; and provided further that Harris' retention of the administrative
responsibilities for the Harris Shared Policies shall not relieve the party
submitting any Insured Claim of the primary responsibility for reporting such
Insured Claim accurately, completely and in a timely manner or of such party's
authority to settle any such Insured Claim within any period permitted or
required by the relevant Policy. Harris may discharge its administrative
responsibilities under this Section 6.3 by contracting for the provision of
services by independent parties. Each of the parties hereto shall administer and
pay any costs relating to defending its respective Insured Claims under Harris
Shared Policies to the extent such defense costs are not covered under such
Policies and shall be responsible for obtaining or reviewing the appropriateness
of releases upon settlement of its respective Insured Claims under Harris Shared
Policies. Lanier shall reimburse Harris promptly for all disbursements,
out-of-pocket expenses and direct and indirect costs of employees or agents of
Harris relating to Claims Administration and Insurance Administration
contemplated by this Section 6.3(a) on behalf of Lanier.
(b) Exceeding Policy Limits.
(i) Where Lanier Liabilities are specifically covered
under a Harris Shared Policy for periods prior to the Distribution
Date, or covering claims made after the
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Distribution Date with respect to an occurrence prior to the
Distribution Date, then from and after the Distribution Date Lanier may
claim coverage for Insured Claims under such Harris Shared Policy as
and to the extent that such insurance is available up to the full
extent of the applicable limits of liability of such Harris Shared
Policy (and may receive any Insurance Proceeds with respect thereto as
contemplated by Section 6.2 or Section 6.3(c) hereof), subject to the
terms of this Section 6.3.
(ii) Except as set forth in this Section 6.3(b),
Harris and Lanier shall not be liable to one another for claims not
reimbursed by insurers for any reason not within the control of Harris
or Lanier, as the case may be, including coinsurance provisions,
deductibles, quota share deductibles, self-insured retentions,
bankruptcy or insolvency of an insurance carrier, Harris Shared Policy
limitations or restrictions, any coverage disputes, any failure to
timely claim by Harris or Lanier or any defect in such claim or its
processing.
(c) Allocation of Insurance Proceeds. Insurance Proceeds
received with respect to claims, costs and expenses under the Harris Shared
Policies shall be paid to Harris, which shall thereafter administer the Harris
Shared Policies by paying the Insurance Proceeds, as appropriate, to Harris with
respect to Harris Liabilities and to Lanier with respect to the Lanier
Liabilities. Payment of the allocable portions of indemnity costs of Insurance
Proceeds resulting from such Policies will be made by Harris to the appropriate
party upon receipt from the insurance carrier. In the event that the aggregate
limits on any Harris Shared Policies are exceeded by the aggregate of
outstanding Insured Claims by the relevant parties hereto, such parties agree to
allocate the Insurance Proceeds received thereunder based upon their respective
percentage of the total of their bona fide claims which were covered under such
Harris Shared Policy (their "allocable portion of Insurance Proceeds"), and any
party who has received Insurance Proceeds in excess of such party's allocable
portion of Insurance Proceeds shall pay to the other party the appropriate
amount so that each party will have received its allocable portion of Insurance
Proceeds pursuant hereto. Each of the parties agrees to use commercially
reasonable efforts to maximize available coverage under those Harris Shared
Policies applicable to it, and to take all commercially reasonable steps to
recover from all other responsible parties in respect of an Insured Claim to the
extent coverage limits under a Harris Shared Policy have been exceeded or would
be exceeded as a result of such Insured Claim.
(d) Allocation of Deductibles. In the event that the parties
have bona fide claims under any Harris Shared Policy for which a deductible is
payable, the parties agree that the aggregate amount of the deductible paid
shall be borne by the parties in the same proportion which the Insurance
Proceeds received by each such party bears to the total Insurance Proceeds
received under the applicable Harris Shared Policy (their "allocable share of
the deductible"), and any party who has paid more than its allocable share of
the deductible shall be entitled to receive from the other party an appropriate
amount so that each party has borne its allocable share of the deductible
pursuant hereto.
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(e) Lanier shall be responsible for the full amount of the
deductible for general liability and automobile liability claims in connection
with the Lanier Business.
(f) Workers Compensation. With respect to any workers
compensation claims for the period prior to the Effective Time, the terms of the
Ancillary Workers Compensation Agreement, attached hereto as Exhibit K, shall
govern.
SECTION 6.4 Agreement for Waiver of Conflict and Shared
Defense. In the event that Insured Claims of more than one of the parties hereto
exist relating to the same occurrence, the parties shall jointly defend and
waive any conflict of interest necessary to the conduct of the joint defense.
Nothing in this Article VI shall be construed to limit or otherwise alter in any
way the obligations of the parties to this Agreement, including those created by
this Agreement, by operation of Law or otherwise.
SECTION 6.5 Cooperation. The parties agree to use their
commercially reasonable efforts to cooperate with respect to the various
insurance matters contemplated by this Agreement.
ARTICLE VII.
MISCELLANEOUS
SECTION 7.1 Complete Agreement; Construction. This Agreement,
including the Exhibits and Schedules, and the Ancillary Agreements shall
constitute the entire agreement between the parties with respect to the subject
matter hereof and shall supersede all previous negotiations, commitments and
writings with respect to such subject matter. In the event of any inconsistency
between this Agreement and any Schedule hereto, the Schedule shall prevail.
Other than Section 2.8, Section 4.5 and Article V, which shall prevail over any
inconsistent or conflicting provisions in any Ancillary Agreement,
notwithstanding any other provisions in this Agreement to the contrary, in the
event and to the extent that there shall be a conflict between the provisions of
this Agreement and the provisions of any Ancillary Agreement, such Ancillary
Agreement shall control.
SECTION 7.2 Ancillary Agreements. Subject to the last sentence
of Section 7.1, this Agreement is not intended to address, and should not be
interpreted to address, the matters specifically and expressly covered by the
Ancillary Agreements.
SECTION 7.3 Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more such counterparts have
been signed by each of the parties and delivered to the other parties.
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SECTION 7.4 Survival of Agreements. Except as otherwise
contemplated by this Agreement, all covenants and agreements of the parties
contained in this Agreement shall survive the Distribution Date.
SECTION 7.5 Distribution Expenses. Except as otherwise set
forth in this Agreement or any Ancillary Agreement, all costs and expenses
incurred on or prior to the Distribution Date (whether or not paid on or prior
to the Distribution Date) in connection with the preparation, execution,
delivery, printing and implementation of this Agreement and any Ancillary
Agreement, the Information Statement (including the Registration Statement) and
the Distribution and the consummation of the transactions contemplated thereby,
excluding the fees and expenses of Sullivan & Cromwell and Morgan Stanley & Co.
Incorporated shall be charged to and paid by Lanier. Such expenses shall be
deemed to be Lanier Liabilities. Except as otherwise set forth in this Agreement
or any Ancillary Agreement, each party shall bear its own costs and expenses
incurred after the Distribution Date. Any amount or expense to be paid or
reimbursed by any party hereto to any other party hereto shall be so paid or
reimbursed promptly after the existence and amount of such obligation is
determined and written demand therefor is made.
SECTION 7.6 Notices. All notices and other communications
hereunder shall be in writing, shall reference this Agreement and shall be hand
delivered or mailed by registered or certified mail (return receipt requested)
or sent by any means of electronic message transmission with delivery confirmed
(by voice or otherwise) to the parties at the following addresses (or at such
other addresses for a party as shall be specified by like notice) and will be
deemed given on the date on which such notice is received ("Notices"):
To Harris:
Harris Corporation
1025 West NASA Blvd.
Melbourne, Florida 32919
Attention: Corporate Secretary
Telephone: (407) 727-9163
Facsimile: (407) 727-9222
With a copy to:
Harris Corporation
1025 West NASA Blvd.
Melbourne, Florida 32919
Attention: Scott T. Mikuen
Telephone: (407) 727-9125
Facsimile: (407) 727-9234
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<PAGE> 43
To Lanier:
Lanier Worldwide, Inc.
2300 Parklake Drive, N.E.
Atlanta, Georgia 30345
Attention: General Counsel
Telephone: (770) 621-1063
Facsimile: (770) 621-1073
SECTION 7.7 Waivers. The failure of any party to require
strict performance by any other party of any provision in this Agreement will
not waive or diminish that party's right to demand strict performance thereafter
of that or any other provision hereof.
SECTION 7.8 Amendments. Subject to the terms of Section 7.11
hereof, this Agreement may not be modified or amended except by an agreement in
writing signed by each of the parties hereto.
SECTION 7.9 Assignment. This Agreement shall not be
assignable, in whole or in part, directly or indirectly, by any party hereto
without the prior written consent of the other party hereto, and any attempt to
assign any rights or obligations arising under this Agreement without such
consent shall be void.
SECTION 7.10 Successors and Assigns. The provisions to this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and permitted assigns.
SECTION 7.11 Termination. This Agreement (including Article
III hereof) may be terminated and the Distribution may be amended, modified or
abandoned at any time prior to the Distribution by and in the sole discretion of
Harris without the approval of Lanier or the stockholders of Harris. In the
event of such termination, no party shall have any liability of any kind to any
other party or any other person. After the Distribution, this Agreement may not
be terminated except by an agreement in writing signed by the parties; provided,
however, that Article III shall not be terminated or amended after the
Distribution in respect of the Third Party beneficiaries thereto without the
consent of such persons.
SECTION 7.12 Subsidiaries. Each of the parties hereto shall
cause to be performed, and hereby guarantees the performance of, all actions,
agreements and obligations set forth herein to be performed by any Subsidiary of
such party or by any entity that is contemplated to be a Subsidiary of such
party on and after the Distribution Date.
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SECTION 7.13 Third Party Beneficiaries. Except as provided in
Article III relating to Indemnitees, this Agreement is solely for the benefit of
the parties hereto and their respective Subsidiaries and Affiliates and should
not be deemed to confer upon Third Parties any remedy, claim, liability,
reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement.
SECTION 7.14 Title and Headings. Titles and headings to
sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
SECTION 7.15 Exhibits and Schedules. The Exhibits and
Schedules shall be construed with and as an integral part of this Agreement to
the same extent as if the same had been set forth verbatim herein.
SECTION 7.16 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK.
SECTION 7.17 Consent to Jurisdiction. Without limiting the
provisions of Article V hereof, each of the parties irrevocably submits to the
exclusive jurisdiction of (a) the state courts of the State of Florida, located
in the City of Orlando, and (b) the United States District Court for the Middle
District of Florida, for the purposes of any suit, action or other proceeding
arising out of this Agreement or any transaction contemplated hereby. Each of
the parties agrees to commence any action, suit or proceeding relating hereto
either in the United States District Court for the Middle District of Florida or
if such suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in the state courts of the State of Florida, located in
the City of Orlando. Each of the parties further agrees that service of any
process, summons, notice or document by U.S. registered mail to such party's
respective address set forth above shall be effective service of process for any
action, suit or proceeding in Florida with respect to any matters to which it
has submitted to jurisdiction in this Section 7.17. Each of the parties
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in (i) the state courts of the State of Florida, located in
the City of Orlando, or (ii) the United States District Court for the Middle
District of Florida, and hereby further irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.
SECTION 7.18 Severability. In the event any one or more of the
provisions contained in this Agreement should be held 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. The parties shall endeavor in good-faith
negotiations
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<PAGE> 45
to replace the invalid, illegal or unenforceable provisions with valid
provisions, the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.
SECTION 7.19 Consolidation, Merger, Etc. Involving Lanier.
Lanier shall not consolidate with or merge into any other Person or convey,
transfer or lease all or any substantial portion of its properties and assets to
any Person, and Lanier shall not permit any Person to consolidate with or merge
into Lanier or convey, transfer or lease all or any substantial portion of its
properties and assets to Lanier, unless, in each case Lanier shall consolidate
with or merge into another Person or convey, transfer or lease all or any
substantial portion of its properties and assets to any Person, the Person
formed by such consolidation or into which Lanier is merged or the Person which
acquires by conveyance or transfer, or which leases, all or any substantial
portion of properties and assets of Lanier shall be a corporation, partnership,
limited liability company or trust and shall expressly assume, by a written
agreement, executed and delivered to Harris, in form reasonably satisfactory to
Harris, all of the liabilities, obligations and expenses to be assumed by Lanier
under this Agreement and the due and punctual performance or observance of every
agreement and covenant of this Agreement on the part of Lanier to be performed
or observed.
SECTION 7.20 Consolidation, Merger, Etc. Involving Harris.
Harris shall not consolidate with or merge into any other Person or convey,
transfer or lease all or any substantial portion of its properties and assets to
any Person, and Harris shall not permit any Person to consolidate with or merge
into Harris or convey, transfer or lease all or any substantial portion of its
properties and assets to Harris, unless, in each case Harris shall consolidate
with or merge into another Person or convey, transfer or lease all or any
substantial portion of its properties and assets to any Person, the Person
formed by such consolidation or into which Harris is merged or the Person which
acquires by conveyance or transfer, or which leases, all or any substantial
portion of properties and assets of Harris shall be a corporation, partnership,
limited liability company or trust and shall expressly assume, by a written
agreement, executed and delivered to Lanier, in form reasonably satisfactory to
Lanier, all of the liabilities, obligations and expenses to be assumed by Harris
under this Agreement and the due and punctual performance or observance of every
agreement and covenant of this Agreement on the part of Harris to be performed
or observed.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the day and year first above written.
HARRIS CORPORATION
By______________________________
Name:
Title:
Witness:_______________________
Name:
LANIER WORLDWIDE, INC.
By______________________________
Name:
Title:
Witness:_______________________
Name:
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Exhibit 10.2B
Execution Copy
$700,000,000
5-YEAR CREDIT AGREEMENT
Dated as of October 20, 1999
among
LANIER WORLDWIDE, INC.,
as the Company,
the SUBSIDIARY BORROWERS,
THE INSTITUTIONS FROM TIME TO TIME
PARTIES HERETO AS LENDERS,
ABN AMRO BANK N.V.,
as Administrative Agent, Issuing Bank,
and Dollar Swing Line Bank,
ABN AMRO BANK N.V.,
BELGIUM BRANCH,
as Multicurrency Swing Line Bank,
SUNTRUST BANK, ATLANTA,
as Syndication Agent,
and
WACHOVIA BANK N.A.,
as Documentation Agent,
Arranged By
ABN AMRO BANK N.V.,
as Lead Arranger and Book Runner,
SUNTRUST EQUITABLE SECURITIES CORPORATION,
as Lead Arranger and Book Runner,
and
WACHOVIA SECURITIES, INC.,
as Co-Lead Arranger
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
ARTICLE I: DEFINITIONS...........................................................................................1
1.1 Certain Defined Terms....................................................................................1
1.2 References...............................................................................................7
1.3 Rounding and Other Consequential Changes.................................................................7
ARTICLE II: LOAN FACILITIES......................................................................................7
2.1 Revolving Loans..........................................................................................7
2.2 Competitive Bid Advances.................................................................................7
2.3 Swing Line Loans.........................................................................................7
2.4 Rate Options for all Advances; Maximum Interest Periods..................................................7
2.5 Optional Payments; Mandatory Prepayments.................................................................7
2.6 Reductions in Commitments................................................................................7
2.7 Method of Borrowing......................................................................................7
2.8 Method of Selecting Types and Interest Periods for Advances..............................................7
2.9 Minimum Amount of Each Advance...........................................................................7
2.10 Method of Selecting Types and Interest Periods for Conversion and........................................7
2.11 Default Rate.............................................................................................7
2.12 Method of Payment........................................................................................7
2.13 Evidence of Debt.........................................................................................7
2.14 Telephonic Notices.......................................................................................7
2.15 Promise to Pay; Interest and Fees; Interest Payment Dates; Interest and..................................7
2.16 Notification of Advances, Interest Rates, Prepayments and Aggregate......................................7
2.17 Lending Installations....................................................................................7
2.18 Non-Receipt of Funds by the Administrative Agent.........................................................7
2.19 Termination Date.........................................................................................7
2.20 Replacement of Certain Lenders...........................................................................7
2.21 Alternate Currency Loans.................................................................................7
2.22 Judgment Currency........................................................................................7
2.23 Market Disruption; Denomination of Amounts in Dollars; Dollar............................................7
2.24 Subsidiary Borrowers.....................................................................................7
ARTICLE III: THE LETTER OF CREDIT FACILITY........................................................................7
3.1 Obligation to Issue Letters of Credit....................................................................7
3.2 Transitional Provision...................................................................................7
3.3 Types and Amounts........................................................................................7
3.4 Conditions...............................................................................................7
3.5 Procedure for Issuance of Letters of Credit..............................................................7
3.6 Letter of Credit Participation...........................................................................7
3.7 Reimbursement Obligation.................................................................................7
3.8 Letter of Credit Fees....................................................................................7
3.9 Issuing Bank Reporting Requirements......................................................................7
3.10 Indemnification; Exoneration.............................................................................7
3.11 Cash Collateral..........................................................................................7
ARTICLE IV: CHANGE IN CIRCUMSTANCES..............................................................................7
4.1 Yield Protection.........................................................................................7
4.2 Changes in Capital Adequacy Regulations..................................................................7
4.3 Availability of Types of Advances........................................................................7
4.4 Funding Indemnification..................................................................................7
4.5 Lender Statements; Survival of Indemnity.................................................................7
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
ARTICLE V: CONDITIONS PRECEDENT..................................................................................7
5.1 Initial Advances and Letters of Credit...................................................................7
5.2 Initial Advance to Each New Subsidiary Borrower..........................................................7
5.3 Each Advance, Each Conversion or Continuation of an Advance, and Each Letter of Credit...................7
ARTICLE VI: REPRESENTATIONS AND WARRANTIES.......................................................................7
6.1 Organization; Corporate Powers...........................................................................7
6.2 Authorization and Validity...............................................................................7
6.3 No Conflict; Government Consent..........................................................................7
6.4 Financial Statements.....................................................................................7
6.5 Material Adverse Change..................................................................................7
6.6 Taxes....................................................................................................7
6.7 Litigation and Contingent Obligations....................................................................7
6.8 Subsidiaries.............................................................................................7
6.9 ERISA....................................................................................................7
6.10 Accuracy of Information..................................................................................7
6.11 Regulation U.............................................................................................7
6.12 Material Agreements......................................................................................7
6.13 Compliance With Laws.....................................................................................7
6.14 Ownership of Properties..................................................................................7
6.15 Statutory Indebtedness Restrictions......................................................................7
6.16 Environmental Matters....................................................................................7
6.17 Insurance................................................................................................7
6.18 Labor Matters............................................................................................7
6.19 Solvency.................................................................................................7
6.20 Year 2000 Issues.........................................................................................7
6.21 Default..................................................................................................7
6.22 Representations and Warranties of each Subsidiary Borrower...............................................7
6.23 Foreign Employee Benefit Matters.........................................................................7
ARTICLE VII: COVENANTS...........................................................................................7
7.1 Reporting................................................................................................7
7.2 Affirmative Covenants....................................................................................7
7.3 Negative Covenants.......................................................................................7
7.4 Financial Covenants......................................................................................7
ARTICLE VIII: DEFAULTS...........................................................................................7
8.1 Defaults.................................................................................................7
ARTICLE IX: ACCELERATION, DEFAULTING LENDERS; WAIVERS, AMENDMENTS AND REMEDIES...................................7
9.1 Termination of Revolving Loan Commitments; Acceleration..................................................7
9.2 Amendments...............................................................................................7
9.3 Preservation of Rights...................................................................................7
ARTICLE X: GUARANTY..............................................................................................7
10.1 Guaranty.................................................................................................7
10.2 Waivers..................................................................................................7
10.3 Guaranty Absolute........................................................................................7
10.4 Acceleration.............................................................................................7
10.5 Marshaling; Reinstatement................................................................................7
10.6 Subrogation..............................................................................................7
10.7 Termination Date.........................................................................................7
ARTICLE XI: GENERAL PROVISIONS...................................................................................7
11.1 Survival of Representations..............................................................................7
</TABLE>
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<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
11.2 Governmental Regulation..................................................................................7
11.3 Headings.................................................................................................7
11.4 Entire Agreement.........................................................................................7
11.5 Several Obligations; Benefits of this Agreement..........................................................7
11.6 Expenses; Indemnification................................................................................7
11.7 Numbers of Documents.....................................................................................7
11.8 Accounting...............................................................................................7
11.9 Severability of Provisions...............................................................................7
11.10 Nonliability of Lenders..................................................................................7
11.11 GOVERNING LAW............................................................................................7
11.12 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL..................................................7
11.13 Other Transactions.......................................................................................7
11.14 Agreement Effectiveness..................................................................................7
ARTICLE XII: THE ADMINISTRATIVE AGENT............................................................................7
12.1 Appointment; Nature of Relationship......................................................................7
12.2 Powers...................................................................................................7
12.3 General Immunity.........................................................................................7
12.4 No Responsibility for Loans, Creditworthiness, Recitals, Etc.............................................7
12.5 Action on Instructions of Lenders........................................................................7
12.6 Employment of Agents and Counsel.........................................................................7
12.7 Reliance on Documents; Counsel...........................................................................7
12.8 The Administrative Agent's, Issuing Banks', Swing Line Banks' and Alternate Currency
Banks' Reimbursement and Indemnification.......................................................................7
12.9 Rights as a Lender.......................................................................................7
12.10 Lender Credit Decision...................................................................................7
12.11 Successor Administrative Agent...........................................................................7
12.12 No Duties Imposed Upon Syndication Agent, Documentation Agent or Lead Arrangers..........................7
12.13 Collateral Agent.........................................................................................7
ARTICLE XIII: SETOFF; RATABLE PAYMENTS...........................................................................7
13.1 Setoff...................................................................................................7
13.2 Ratable Payments.........................................................................................7
13.3 Application of Payments..................................................................................7
13.4 Relations Among Lenders..................................................................................7
ARTICLE XIV: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS...................................................7
14.1 Successors and Assigns...................................................................................7
14.2 Participations...........................................................................................7
14.3 Assignments..............................................................................................7
14.4 Confidentiality..........................................................................................7
14.5 Dissemination of Information.............................................................................7
ARTICLE XV: NOTICES..............................................................................................7
15.1 Giving Notice............................................................................................7
15.2 Change of Address........................................................................................7
15.3 Authority of Company.....................................................................................7
ARTICLE XVI: COUNTERPARTS........................................................................................7
</TABLE>
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<PAGE> 5
EXHIBITS AND SCHEDULES
EXHIBITS
--------
EXHIBIT A -- Loan Commitments
(Definitions)
EXHIBIT A-1 -- Eurocurrency Payment Offices
EXHIBIT B -- Form of Borrowing/Conversion/Continuation Notice (Section
2.3 and Section 2.8 and Section 2.10)
EXHIBIT C -- Form of Request for Letter of Credit (Section 3.4)
EXHIBIT D -- Form of Assignment and Acceptance Agreement
(Sections 2.20 and 14.3)
EXHIBIT E -- Form of Officer's Certificate
(Section 7.1(A)(iii))
EXHIBIT F -- Form of Compliance Certificate
(Section 7.1(A)(iii))
EXHIBIT G-1 -- Form of Guaranty
(Definitions)
EXHIBIT G-2 -- Form of Subordination Agreement
(Definitions)
EXHIBIT H -- Form of Alternate Currency Addendum
(Definitions)
EXHIBIT I-1 -- Form of Revolving Loan Note (If Requested)
EXHIBIT I-2 -- Form of Term Loan Note (If Requested)
EXHIBIT I-3 -- Form of Competitive Bid Note (If Requested)
EXHIBIT J -- Form of Competitive Bid Quote Request
EXHIBIT K -- Form of Invitation for Competitive Bid Quotes
EXHIBIT L -- Form of Competitive Bid Quote
EXHIBIT M -- Form of Assumption Letter
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<PAGE> 6
SCHEDULES
---------
Schedule 1.1.1 -- Permitted Existing Contingent Obligations (Definitions)
Schedule 1.1.2 -- Permitted Existing Indebtedness (Definitions)
Schedule 1.1.3 -- Permitted Existing Liens (Definitions)
Schedule 3.2 -- Transitional Letters of Credit (Section 3.2)
Schedule 6.8 -- Subsidiaries (Section 6.8)
Schedule 7.2 -- Subsidiaries Subject to Stock Pledge (Section 7.2 (N)
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<PAGE> 7
5-YEAR CREDIT AGREEMENT
This 5-YEAR CREDIT AGREEMENT dated as of October 20, 1999 is entered
into by and among, LANIER WORLDWIDE, INC., a Delaware corporation (the
"COMPANY"), one or more Subsidiaries of the Company (whether now existing or
hereafter formed, collectively referred to herein as the "SUBSIDIARY
BORROWERS"), the institutions from time to time parties hereto as Lenders,
whether by execution of this Agreement or an Assignment Agreement pursuant to
SECTION 14.3, ABN AMRO BANK N.V. in its capacity as administrative agent (the
"ADMINISTRATIVE AGENT") for itself and the other Lenders, SUNTRUST BANK,
ATLANTA, as Syndication Agent (the "SYNDICATION AGENT") and WACHOVIA BANK N.A.,
as Documentation Agent (the "DOCUMENTATION AGENT"). The parties hereto agree as
follows:
ARTICLE I: DEFINITIONS
1.1 CERTAIN DEFINED TERMS. In addition to the terms defined above, the
following terms used in this Agreement shall have the following meanings,
applicable both to the singular and the plural forms of the terms defined.
As used in this Agreement:
"ABN" means ABN AMRO Bank N.V., in its individual capacity, and its
successors.
"ABSOLUTE RATE" means, with respect to an Absolute Rate Loan made by a
given Lender for the relevant Absolute Rate Interest Period, the rate of
interest per annum (rounded to the nearest 1/100 of 1%) offered by such Lender
and accepted by the Company.
"ABSOLUTE RATE ADVANCE" means a borrowing hereunder consisting of the
aggregate amount of the several Absolute Rate Loans made by some or all of the
Lenders to the Company at the same time and for the same Interest Period.
"ABSOLUTE RATE AUCTION" means a solicitation of Competitive Bid Quotes
setting forth Absolute Rates pursuant to SECTION 2.2.
"ABSOLUTE RATE INTEREST PERIOD" means, with respect to an Absolute Rate
Advance, a period of not fewer than seven (7) and not more than one hundred
eighty (180) days commencing on a Business Day selected by the Company pursuant
to this Agreement. If such Absolute Rate Interest Period would end on a day
which is not a Business Day, such Absolute Rate Interest Period shall end on the
next succeeding Business Day.
"ABSOLUTE RATE LOAN" means a Loan which bears interest at the Absolute
Rate.
"ACQUISITION" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Company or any of its Subsidiaries (i) acquires any going business or all or
substantially all of the assets of any firm, corporation or division thereof,
whether through purchase of assets, merger or otherwise or (ii) directly or
indirectly acquires (in one transaction or as the most recent transaction in a
series of transactions) at least a majority (in number
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of votes) of the securities of a corporation which have ordinary voting power
for the election of directors (other than securities having such power only by
reason of the happening of a contingency) or a majority (by percentage of voting
power) of the outstanding equity interests of another Person.
"ADMINISTRATIVE AGENT" means ABN in its capacity as administrative
agent for itself and the Lenders pursuant to ARTICLE XII hereof and any
successor Administrative Agent appointed pursuant to ARTICLE XII hereof.
"ADMINISTRATIVE AGENT FEE LETTER" means that certain fee letter between
the Company and the Administrative Agent, dated as of October 7, 1999.
"ADVANCE" means a borrowing hereunder consisting of the aggregate
amount of the several Loans made by some or all of the Lenders to the applicable
Borrower of the same Type (or on the same interest basis in the case of
Competitive Bid Advances) and, in the case of Eurocurrency Rate Advances and
Alternate Currency Loans, in the same currency and for the same Interest Period
and includes a Competitive Bid Advance.
"AFFECTED LENDER" is defined in SECTION 2.20 hereof.
"AFFILIATE" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person is the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934) of greater than five percent (5%) or more of any class of voting
securities (or other voting interests) of the controlled Person or possesses,
directly or indirectly, the power to direct or cause the direction of the
management or policies of the controlled Person, whether through ownership of
Capital Stock, by contract or otherwise.
"AGENTS" means each of the Administrative Agent, the Syndication Agent
and the Documentation Agent.
"AGGREGATE COMMITMENT" means, as of any date of determination, the sum
of (i) the Aggregate Revolving Loan Commitment as of such date and (ii) the
Aggregate Term Loan Commitment as of such date.
"AGGREGATE REVOLVING LOAN COMMITMENT" means the aggregate of the
Revolving Loan Commitments of all the Lenders, as may be adjusted from time to
time pursuant to the terms hereof. The initial Aggregate Revolving Loan
Commitment is Four Hundred Fifty Million and 00/100 Dollars ($450,000,000.00).
"AGGREGATE TERM LOAN COMMITMENT" means the aggregate of the Term Loan
Commitments of all the Lenders. The initial Aggregate Term Loan Commitment is
Two Hundred Fifty Million and 00/100 Dollars ($250,000,000.00).
"AGREED CURRENCIES" means (i) Dollars, (ii) so long as such currency
remains an Eligible Currency, euro, and (iii) any other Eligible Currency which
the applicable Borrower requests the Administrative Agent to include as an
Agreed Currency hereunder and which is agreed to by the
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Multicurrency Swing Line Bank and all of the Lenders with a Revolving Credit
Commitment; PROVIDED that the Administrative Agent shall promptly notify each
Lender of each such request and each Lender shall be deemed not to have agreed
to each such request unless its written consent thereto has been received by the
Administrative Agent within five (5) Business Days from the date of such
notification by the Administrative Agent to such Lender.
"AGREEMENT" means this 5-Year Credit Agreement, as it may be amended,
restated or otherwise modified and in effect from time to time.
"AGREEMENT ACCOUNTING PRINCIPLES" means generally accepted accounting
principles as in effect in the United States as of the date of this Agreement,
applied in a manner consistent with that used in preparing the financial
statements of the Company included in the Form 10 and referred to in SECTION 6.4
hereof.
"ALTERNATE BASE RATE" means, for any day, a fluctuating rate of
interest per annum equal to in the case of Loans in Dollars, the higher of (i)
the Prime Rate for such day and (ii) the sum of (a) the Federal Funds Effective
Rate for such day and (b) one half percent (.50%) per annum and in the case of
Loans in other Eligible Currencies, the comparable rate for such other Eligible
Currency, as reasonably determined by the Administrative Agent, the
Multicurrency Swing Line Lender or the Alternate Currency Bank, as applicable.
"ALTERNATE CURRENCY" shall mean any Eligible Currency which is not an
Agreed Currency and which the applicable Borrower requests the applicable
Alternate Currency Bank to include as an Alternate Currency hereunder and which
is acceptable to the applicable Alternate Currency Bank and with respect to
which an Alternate Currency Addendum has been executed by a Subsidiary Borrower
or the Company and the applicable Alternate Currency Bank in connection
therewith.
"ALTERNATE CURRENCY ADDENDUM" means an addendum substantially in the
form of EXHIBIT H with such modifications thereto as shall be approved by the
applicable Alternate Currency Bank and the Administrative Agent.
"ALTERNATE CURRENCY BANK" means ABN and any other Lender (or any
Affiliate, branch or agency thereof) to the extent it is party to an Alternate
Currency Addendum as the "Alternate Currency Bank" thereunder. If any agency,
branch or Affiliate of such Lender shall be a party to an Alternate Currency
Addendum, such agency, branch or Affiliate shall, to the extent of any
commitment extended and any Loans made by it, have all the rights of such Lender
hereunder; PROVIDED, HOWEVER, that such Lender shall to the exclusion of such
agency, branch or Affiliate, continue to have all the voting rights vested in it
by the terms hereof.
"ALTERNATE CURRENCY BORROWING" means any borrowing consisting of a Loan
made in an Alternate Currency.
"ALTERNATE CURRENCY COMMITMENT" means, for any Alternate Currency Bank
for each Alternate Currency, the obligation of such Alternate Currency Bank to
make Alternate Currency Loans not exceeding the Dollar Amount set forth in the
applicable Alternate Currency Addendum,
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as such amount may be modified from time to time pursuant to the terms of this
Agreement and the applicable Alternate Currency Addendum.
"ALTERNATE CURRENCY INTEREST PERIOD" means, with respect to any
Alternate Currency Loan, the Interest Period as set forth in, or determined in
accordance with, the applicable Alternate Currency Addendum.
"ALTERNATE CURRENCY LOAN" means any Loan denominated in an Alternate
Currency made by the applicable Alternate Currency Bank to a Subsidiary Borrower
or the Company pursuant to SECTION 2.21 and an Alternate Currency Addendum.
"ALTERNATE CURRENCY RATE" means, for any day for any Alternate Currency
Loan, the per annum rate of interest selected by the applicable Borrower under
and as set forth in the applicable Alternate Currency Addendum.
"APPLICABLE COMMITMENT FEE PERCENTAGE" means, as at any date of
determination, the rate per annum then applicable in the determination of the
amount payable under SECTION 2.15(C)(i) hereof determined in accordance with the
provisions of SECTION 2.15(D)(ii) hereof.
"APPLICABLE EUROCURRENCY MARGIN" means, as at any date of
determination, the rate per annum then applicable to Eurocurrency Rate Loans
determined in accordance with the provisions of SECTION 2.15(D)(ii) hereof.
"APPLICABLE FLOATING RATE MARGIN" means, as at any date of
determination, the rate per annum then applicable to Floating Rate Loans
determined in accordance with the provisions of SECTION 2.15(D)(ii) hereof.
"APPLICABLE L/C FEE PERCENTAGE" means, as at any date of determination,
a rate per annum equal to the Applicable Eurocurrency Margin for Eurocurrency
Rate Loans in effect on such date.
"APPROVED FUND" means, with respect to any Lender that is a fund or
commingled investment vehicle that invests in commercial loans, any other fund
that invests in commercial loans and is managed or advised by the same
investment advisor as such Lender or by an Affiliate of such investment advisor.
"APPROXIMATE EQUIVALENT AMOUNT" of any currency with respect to any
amount of Dollars shall mean the Equivalent Amount of such currency with respect
to such amount of Dollars at such date, rounded up to the nearest amount of such
currency as determined by the Administrative Agent from time to time.
"ASSET SALE" means, with respect to any Person, the sale, lease,
conveyance, disposition or other transfer by such Person of any of its assets
(including by way of a sale-leaseback transaction) to any Person other than the
Company or any of its wholly-owned Subsidiaries other than (i) the sale, rental
or lease of Inventory in the ordinary course of business (including sales of
leased Inventory and rental Inventory), (ii) the sale or other disposition of
any obsolete, excess, damaged or worn-out Equipment disposed of in the ordinary
course of business, (iii) the sale or liquidation of Cash
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Equivalents and (iv) the sale-leaseback of Equipment used in the facilities
management business of the Company and its Subsidiaries, to the extent such
Equipment has an aggregate net depreciated book value of no more than
$25,000,000 at any one time.
"ASSIGNMENT AGREEMENT" means an assignment and acceptance agreement
entered into in connection with an assignment pursuant to SECTION 14.3 hereof in
substantially the form of EXHIBIT D.
"ASSUMPTION LETTER" means a letter of a Subsidiary of the Company
addressed to the Lenders in substantially the form of EXHIBIT M hereto pursuant
to which such Subsidiary agrees to become a Subsidiary Borrower and agrees to be
bound by the terms and conditions hereof.
"AUTHORIZED OFFICER" means any of the Chairman of the Board, the
President, the Treasurer, any Vice President or the Chief Financial Officer of
the Company, acting singly.
"BENEFIT PLAN" means a defined benefit plan as defined in Section 3(35)
of ERISA (other than a Multiemployer Plan or a Foreign Employee Benefit Plan)
covered by Title IV of ERISA and in respect of which the Company or any other
member of the Controlled Group is, or within the immediately preceding six (6)
years was, an "employer" as defined in Section 3(5) of ERISA.
"BORROWER" means, as applicable, any of the Company and the Subsidiary
Borrowers, together with their respective successors and assigns; and
"BORROWERS" shall mean, collectively, the Company and the Subsidiary Borrowers.
"BORROWING DATE" means a date on which a Loan is made hereunder.
"BORROWING/CONVERSION/CONTINUATION NOTICE" is defined in SECTION 2.8
hereof.
"BUSINESS DAY" means (i) with respect to any borrowing, payment or rate
selection of Loans bearing interest at the Eurocurrency Rate or Eurocurrency Bid
Rate Advances, a day (other than a Saturday or Sunday) on which banks are open
for business in Chicago, Illinois and New York, New York and (x) in addition,
for Loans denominated in Agreed Currencies (other than euro), on which dealings
in Dollars and the other applicable Agreed Currencies are carried on in the
London interbank market and (y) in addition, for Loans denominated in euro, on
which dealings in euro are carried on in Brussels, Belgium interbank market, and
(ii) for all other purposes a day (other than a Saturday or Sunday) on which
banks are open for business in Chicago, Illinois and New York, New York.
"CAPITAL EXPENDITURES" means, without duplication, any expenditures for
any purchase or other acquisition of any asset which would be classified as a
fixed or capital asset on a consolidated balance sheet of the Borrower and its
Subsidiaries prepared in accordance with Agreement Accounting Principles
excluding (i) the cost of assets acquired with Capitalized Lease Obligations,
(ii) expenditures of insurance proceeds to rebuild or replace any asset after a
casualty loss and (iii) leasehold improvement expenditures for which the
Borrower or a Subsidiary is reimbursed promptly by the lessor.
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"CAPITAL STOCK" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person;
PROVIDED, HOWEVER, that "Capital Stock" shall not include any debt securities
convertible into equity securities prior to such conversion.
"CAPITALIZED LEASE" of a Person means any lease of property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.
"CAPITALIZED LEASE OBLIGATIONS" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be capitalized
on a balance sheet of such Person prepared in accordance with Agreement
Accounting Principles.
"CASH EQUIVALENTS" means (i) marketable direct obligations issued or
unconditionally guaranteed by the government of the United States and backed by
the full faith and credit of the United States government; (ii) domestic and
Eurocurrency certificates of deposit and time deposits, bankers' acceptances and
floating rate certificates of deposit issued by any commercial bank organized
under the laws of the United States, any state thereof, the District of
Columbia, any foreign bank, or its branches or agencies, the long-term
indebtedness of which institution at the time of acquisition is rated A- (or
better) by Standard & Poor's Ratings Group or A3 (or better) by Moody's
Investors Services, Inc., and which certificates of deposit and time deposits
are fully protected against currency fluctuations for any such deposits with a
term of more than ninety (90) days; (iii) shares of money market, mutual or
similar funds having assets in excess of $100,000,000 and the investments of
which are limited to (x) investment grade securities (i.e., securities rated at
least Baa by Moody's Investors Service, Inc. or at least BBB by Standard &
Poor's Ratings Group) and (y) commercial paper of United States and foreign
banks and bank holding companies and their subsidiaries and United States and
foreign finance, commercial industrial or utility companies which, at the time
of acquisition, are rated A-1 (or better) by Standard & Poor's Ratings Group or
P-1 (or better) by Moody's Investors Services, Inc. (all such institutions
being, "QUALIFIED INSTITUTIONS"); and (iv) commercial paper of Qualified
Institutions; PROVIDED that the maturities of such Cash Equivalents shall not
exceed three hundred sixty-five (365) days from the date of acquisition thereof.
"CHANGE" is defined in SECTION 4.2 hereof.
"CHANGE OF CONTROL" means an event or series of events by which:
(a) any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act of 1934), becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act of 1934, provided that a person shall be
deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time),
directly or indirectly, of twenty-five percent (25%) or more
of the combined
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voting power of the Company's outstanding Capital Stock
ordinarily having the right to vote at an election of
directors; or
(b) the majority of the board of directors of the Company fails to
consist of Continuing Directors; or
(c) the Company consolidates with or merges into another
corporation or conveys, transfers or leases all or
substantially all of its property to any Person, or any
corporation consolidates with or merges into the Company, in
either event pursuant to a transaction in which the
outstanding Capital Stock of the Company is reclassified or
changed into or exchanged for cash, securities or other
property.
"CLOSING DATE" means the date upon which the applicable conditions
precedent set forth in Article V have been satisfied and the initial Loans
hereunder made, which shall be on or after November 4, 1999.
"CODE" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"COLLATERAL AGENT" means ABN in its capacity as collateral agent for
the Lenders and the "Lenders" under the 364-Day Agreement.
"COMMISSION" means the Securities and Exchange Commission of the United
States of America and any Person succeeding to the functions thereof.
"COMMITMENT", as to each Lender, means (i) such Lender's Term Loan
Commitment and (ii) such Lender's Revolving Loan Commitment.
"COMPANY" means Lanier Worldwide, Inc., a Delaware corporation,
together with its successors and assigns, including a debtor-in-possession on
behalf of the Company.
"COMPETITIVE BID ADVANCE" means a borrowing hereunder consisting of the
aggregate amount of the several Competitive Bid Loans made by some or all of the
Lenders to the Company at the same time and for the same Interest Period.
"COMPETITIVE BID BORROWING NOTICE" is defined in SECTION 2.2(F).
"COMPETITIVE BID LOAN" means a Eurocurrency Bid Rate Loan or an
Absolute Rate Loan, or both, as the case may be and in either case in Dollars.
"COMPETITIVE BID MARGIN" means the margin above or below the applicable
Eurocurrency Base Rate offered for a Eurocurrency Bid Rate Loan, expressed as a
percentage (rounded to the nearest 1/100 of 1%) to be added to or subtracted
from such Eurocurrency Base Rate.
"COMPETITIVE BID RATE" means, for any day for any Competitive Bid Loan
for the relevant Interest Period, the per annum rate of interest selected by the
Company in accordance with SECTION 2.2.
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"COMPETITIVE BID QUOTE" means a Competitive Bid Quote substantially in
the form of EXHIBIT L hereto completed and delivered by a Lender to the
Administrative Agent in accordance with SECTION 2.2(D).
"COMPETITIVE BID QUOTE REQUEST" means a Competitive Bid Quote Request
substantially in the form of EXHIBIT J hereto completed and delivered by the
Company to the Administrative Agent in accordance with SECTION 2.2(B).
"CONSOLIDATED NET ASSETS" means the total assets of the Company and its
Subsidiaries on a consolidated basis (determined in accordance with Agreement
Accounting Principles), but excluding therefrom all goodwill and other
intangible assets under Agreement Accounting Principles.
"CONSOLIDATED NET SALES" means all product and supply sales and
rentals, facilities management revenues and service income (net of returns and
allowances and excluding financial income) shown on a consolidated income
statement of the Company and its Subsidiaries, prepared in accordance with
Agreement Accounting Principles.
"CONSOLIDATED NET WORTH" means, at a particular date, all amounts which
would be included under shareholders' equity on the consolidated balance sheet
for the Company and its consolidated Subsidiaries, in each case as determined in
accordance with Agreement Accounting Principles; excluding the effects, whether
positive or negative, of foreign exchange translation adjustments after the
Closing Date.
"CONTAMINANT" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos, polychlorinated biphenyls ("PCBs"), or any
constituent of any such substance or waste, and includes but is not limited to
these terms as defined in Environmental, Health or Safety Requirements of Law.
"CONTINGENT OBLIGATION", as applied to any Person, means any
Contractual Obligation, contingent or otherwise, of that Person with respect to
any Indebtedness of another or other obligation or liability of another,
including, without limitation, any such Indebtedness, obligation or liability of
another directly or indirectly guaranteed, endorsed (otherwise than for
collection or deposit in the ordinary course of business), co-made or discounted
or sold with recourse by that Person, or in respect of which that Person is
otherwise directly or indirectly liable, including Contractual Obligations
(contingent or otherwise) arising through any agreement to purchase, repurchase,
or otherwise acquire such Indebtedness, obligation or liability or any security
therefor, or to provide funds for the payment or discharge thereof (whether in
the form of loans, advances, stock purchases, capital contributions or
otherwise), or to maintain solvency, assets, level of income, or other financial
condition, or to make payment other than for value received. The amount of any
Contingent Obligation shall be equal to the portion of the obligation so
guaranteed or otherwise supported, in the case of known recurring obligations,
and the maximum reasonably anticipated liability in respect of the portion of
the obligation so guaranteed or otherwise supported assuming such Person is
required to perform thereunder, in all other cases.
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"CONTINUING DIRECTOR" means, with respect to any Person as of any date
of determination, any member of the board of directors of such Person who (a)
was a member of such board of directors on the Closing Date or, with respect to
the Company, was identified in the Form 10 as a Person who would become a member
of such board of directors in connection with the Spin-off, or (b) was nominated
for election or elected to such board of directors with the approval of the
Continuing Directors who were members of such board at the time of such
nomination or election.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any provision
of any equity or debt securities issued by that Person or any indenture,
mortgage, deed of trust, security agreement, pledge agreement, guaranty,
contract, undertaking, agreement or instrument, in any case in writing, to which
that Person is a party or by which it or any of its properties is bound, or to
which it or any of its properties is subject.
"CONTROLLED GROUP" means the group consisting of (i) any corporation
which is a member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Code) as the Company; (ii) a partnership or
other trade or business (whether or not incorporated) which is under common
control (within the meaning of Section 414(c) of the Code) with the Company; and
(iii) a member of the same affiliated service group (within the meaning of
Section 414(m) of the Code) as the Company, in each case ((i), (ii) or (iii))
giving effect to the consummation of the transactions contemplated by the Loan
Documents and the Spinoff Materials.
"CUSTOMARY PERMITTED LIENS" means:
(i) Liens (other than Environmental Liens and Liens in favor
of the IRS or the PBGC) with respect to the payment of taxes,
assessments or governmental charges in all cases which are not yet due
or (if foreclosure, distraint, sale or other similar proceedings shall
not have been commenced or any such proceeding after being commenced is
stayed) which are being contested in good faith by appropriate
proceedings properly instituted and diligently conducted and with
respect to which adequate reserves or other appropriate provisions are
being maintained in accordance with Agreement Accounting Principles;
(ii) Statutory Liens of landlords and Liens of suppliers,
mechanics, carriers, materialmen, warehousemen, service providers or
workmen and other similar Liens imposed by law created in the ordinary
course of business for amounts not more than sixty (60) days past due
or which thereafter can be paid without penalty or which are being
contested in good faith by appropriate proceedings properly instituted
and diligently conducted and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with
Agreement Accounting Principles;
(iii) Liens (other than Environmental Liens and Liens in favor
of the IRS or the PBGC) incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance or other types of social security benefits;
PROVIDED that all such Liens do not in the aggregate materially detract
from the value of the Company's or its Subsidiaries' assets or property
taken as a whole or materially impair the use thereof in the operation
of their businesses taken as a whole;
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(iv) Liens arising with respect to zoning restrictions,
easements, encroachments, licenses, reservations, covenants,
rights-of-way, utility easements, building restrictions and other
similar charges, restrictions or encumbrances on the use of real
property which do not in any case materially detract from the value of
the property subject thereto or materially interfere with the ordinary
use or occupancy of the real property or with the ordinary conduct of
the business of the Company or any of its Subsidiaries;
(v) Any interest or title of the lessor in the property
subject to any operating lease entered into by the Company or any of
its Subsidiaries in the ordinary course of business; and
(vi) Liens securing the performance of bids, tenders,
contracts, surety and appeal bonds, incurred in the ordinary course of
business, not to exceed at any time $10,000,000 in the aggregate.
"DEFAULT" means an event described in ARTICLE VIII hereof.
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
date that is ninety-one (91) days after the Revolving Loan Termination Date.
"DIVIDEND" means the cash dividend of approximately $550,000,000 to be
paid by the Company to Harris in connection with the Spin-off.
"DOCUMENTATION AGENT" means Wachovia Bank N.A., in its capacity as
documentation agent for the loan transaction evidenced by this Agreement,
together with its successors and assigns.
"DOL" means the United States Department of Labor and any Person
succeeding to the functions thereof.
"DOLLAR" and "$" means dollars in the lawful currency of the United
States of America.
"DOLLAR AMOUNT" of any currency at any date shall mean (i) the amount
of such currency if such currency is Dollars or (ii) the Equivalent Amount of
Dollars if such currency is any currency other than Dollars.
"DOLLAR SWING LINE BANK" means the Administrative Agent or any other
Lender as a successor Swing Line Bank pursuant to the terms hereof.
"DOLLAR SWING LINE COMMITMENT" means the obligation of the Dollar Swing
Line Bank to make Dollar Swing Line Loans up to a maximum principal amount of
$25,000,000 at any one time outstanding.
"DOLLAR SWING LINE LOAN" means a Loan made to the Company by the Dollar
Swing Line Bank pursuant to SECTION 2.3 hereof.
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"DOMESTIC SUBSIDIARY" means a Subsidiary of the Company organized under
the laws of a jurisdiction located in the United States of America (excluding
the Commonwealth of Puerto Rico).
"EBITDA" means, for any period, on a consolidated basis for the Company
and its Subsidiaries, the sum of the amounts for such period, without
duplication, of (i) Net Income, PLUS (ii) Interest Expense to the extent
deducted in computing Net Income, PLUS (iii) charges against income for foreign,
federal, state and local taxes to the extent deducted in computing Net Income,
PLUS (iv) depreciation expense to the extent deducted in computing Net Income,
PLUS (v) amortization expense, including, without limitation, amortization of
goodwill and other intangible assets to the extent deducted in computing Net
Income, PLUS (vi) other extraordinary non-cash charges to the extent deducted in
computing Net Income, MINUS (vii) other extraordinary non-cash credits to the
extent added in computing Net Income, PLUS (viii) nonrecurring after-tax losses
(or minus nonrecurring after-tax gains); PROVIDED that, with respect to fiscal
quarters ending on or before December 31, 1999, EBITDA shall be adjusted (x) to
add back all professional fees and expenses incurred by the Company in
connection with the Spin-off and this Agreement (not to exceed $15,000,000), to
the extent deducted in computing Net Income; (y) to add back the special charges
incurred by the Company for the fiscal quarter ended July 2, 1999, totaling
$18,700,000, and deducted in computing Net Income; and (z) to add back any
management fee charged by Harris to the Company, to the extent deducted in
computing Net Income, and to subtract the sum of $1,750,000 for each such fiscal
quarter (pro rated for the fiscal year ending December 31, 1999), representing
the PRO FORMA legal, audit and other similar expenses that the Company is
expected to incur after the Spin-off, all on the basis set forth in the PRO
FORMA adjustments described in Note (A) of the Unaudited Pro Forma Consolidated
Income Statement of the Company for the Fiscal Year ended July 2, 1999 set forth
in the Form 10.
"EBITDAR" means, for any period, on a consolidated basis for the
Company and its Subsidiaries, the sum of the amounts for such period, without
duplication, of (i) EBITDA, PLUS Rentals to the extent deducted in computing Net
Income.
"ELIGIBLE CURRENCY" means any currency other than Dollars with respect
to which the Administrative Agent or the applicable Borrower has not given
notice in accordance with SECTION 2.23 and that is readily available, freely
traded, in which deposits are customarily offered to banks in the London
interbank market (or other market where the Administrative Agent's or Alternate
Currency Bank's, as applicable, foreign currency operations in respect of such
currency are then being conducted), convertible into Dollars in the
international interbank market available to the Lenders in such market and as to
which an Equivalent Amount may be readily calculated. If, after the designation
pursuant to the terms of this Agreement of any currency as an Agreed Currency or
Alternate Currency, (i) currency control or other exchange regulations are
imposed in the country in which such currency is issued with the result that
different types of such currency are introduced, such country's currency is, in
the determination of the Administrative Agent, no longer readily available or
freely traded or (ii) in the determination of the Administrative Agent, an
Equivalent Amount for such currency is not readily calculable (each of CLAUSE
(i) and (ii), a "DISQUALIFYING EVENT"), then the Administrative Agent shall
promptly notify the Lenders and the Company, and such country's currency shall
no longer be an Agreed Currency or Alternate Currency until such time as the
Disqualifying Event(s) no longer exist, but in any event within five (5)
Business Days of
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<PAGE> 18
receipt of such notice from the Administrative Agent, the applicable Borrowers
shall repay all Loans in such currency to which the Disqualifying Event applies
or convert such Loan into Loans in Dollars or another Agreed Currency or
Alternate Currency, subject to the other terms contained in ARTICLES II and IV.
"ENVIRONMENTAL, HEALTH OR SAFETY REQUIREMENTS OF LAW" means all
Requirements of Law derived from or relating to foreign, federal, state and
local laws or regulations relating to or addressing pollution or protection of
the environment, or protection of worker health or safety, including, but not
limited to, the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. ss. 9601 ET SEQ., the Occupational Safety and Health Act of 1970,
29 U.S.C. ss. 651 ET SEQ., and the Resource Conservation and Recovery Act of
1976, 42 U.S.C. ss. 6901 ET SEQ., in each case including any amendments thereto,
any successor statutes, and any regulations or guidance promulgated thereunder,
and any state or local equivalent thereof.
"ENVIRONMENTAL LIEN" means a lien in favor of any Governmental
Authority for (a) any liability under Environmental, Health or Safety
Requirements of Law, or (b) damages arising from, or costs incurred by such
Governmental Authority in response to, a Release or threatened Release of a
Contaminant into the environment.
"EQUIPMENT" means all of the Company's and its Subsidiaries' present
and future (i) equipment, including, without limitation, machinery,
manufacturing, distribution, selling, data processing and office equipment,
assembly systems, tools, molds, dies, fixtures, appliances, furniture,
furnishings, vehicles, vessels, aircraft, aircraft engines, and trade fixtures,
(ii) other tangible personal property (other than the Company's or its
Subsidiaries' Inventory), and (iii) any and all accessions, parts and
appurtenances attached to any of the foregoing or used in connection therewith,
and any substitutions therefor and replacements, products and proceeds thereof.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock). Equity Interests will not
include any Incentive Arrangements or obligations or payments thereunder.
"EQUIVALENT AMOUNT" of any currency with respect to any amount of
Dollars at any date shall mean the equivalent in such currency of such amount of
Dollars, calculated on the basis of the arithmetic mean of the buy and sell spot
rates of exchange of the Administrative Agent or Alternate Currency Bank, as
applicable, in the London interbank market (or other market where the
Administrative Agent's or Alternate Currency Bank's, as applicable, foreign
exchange operations in respect of such currency are then being conducted) for
such other currency at or about 11:00 a.m. (local time) two (2) Business Days
prior to the date on which such amount is to be determined, rounded up to the
nearest amount of such currency as determined by the applicable Alternate
Currency Bank from time to time; PROVIDED, HOWEVER, that if at the time of any
such determination, for any reason, no such spot rate is being quoted, the
Administrative Agent or Alternate Currency Bank, as applicable, may use any
reasonable method it deems appropriate to determine such amount, and such
determination shall be conclusive absent manifest error.
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<PAGE> 19
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time including (unless the context otherwise requires) any
rules or regulations promulgated thereunder.
"EURO" means the euro referred to in the Council Regulation (EC) No.
1103/97 dated 17 June 1997 passed by the Council of the European Union, or, if
different, the then lawful currency of the member states of the European Union
that participate in the third stage of the Economic and Monetary Union.
"EUROCURRENCY AUCTION" means a solicitation of Competitive Bid Quotes
setting forth Competitive Bid Margins pursuant to SECTION 2.2.
"EUROCURRENCY BASE RATE" means, with respect to a Eurocurrency Rate
Loan or Eurocurrency Bid Rate Loan for any specified Interest Period, (a) for
any Eurocurrency Bid Rate Loan or Eurocurrency Rate Loan in any Agreed Currency
other than euro, either (i) the rate of interest per annum equal to the rate for
deposits in the applicable Agreed Currency in the approximate amount of the Pro
Rata Revolving Share or Pro Rata Term Share, as applicable, of the
Administrative Agent of such Eurocurrency Rate Advance with a maturity
approximately equal to such Interest Period which appears on Telerate Page 3740
or Telerate Page 3750, as applicable, or, if there is more than one such rate,
the average of such rates rounded to the nearest 1/100 of 1%, as of 11:00 a.m.
(London time) two (2) Business Days prior to the first day of such Interest
Period or (ii) if no such rate of interest appears on Telerate Page 3740 or
Telerate Page 3750, as applicable, for any specified Interest Period, the rate
at which deposits in the applicable Agreed Currency are offered by the
Administrative Agent to first-class banks in the London interbank market at
approximately 11:00 a.m. (London time) two (2) Business Days prior to the first
day of such Interest Period, in the approximate amount of the Pro Rata Revolving
Share or Pro Rata Term Share, as applicable, of the Administrative Agent of such
Eurocurrency Rate Loan, or, in the case of a Eurocurrency Bid Rate Loan, the
amount of the Eurocurrency Bid Rate Loan requested by the Company, and having a
maturity approximately equal to such Interest Period; and (b) with respect to
any Eurocurrency Rate Loan in euro for any Interest Period, the interest rate
per annum equal to the rate determined by the Administrative Agent to be the
rate at which deposits in euro appear on Telerate Page 248 as of 11:00 a.m.
(Brussels time), on the date that is two (2) TARGET Settlement Days preceding
the first day of such Interest Period; PROVIDED, that if such rate does not
appear on Telerate Page 248, then the Eurocurrency Base Rate shall be an
interest rate per annum equal to the arithmetic mean determined by the
Administrative Agent (rounded upwards to the nearest .01%) of the rates per
annum at which deposits in euro are offered by the three (3) leading banks in
the euro-zone interbank market on or about 11:00 a.m. (Brussels time), on the
date which is two (2) TARGET Settlement Days prior to the first day of such
Interest Period to other leading banks in the euro-zone interbank market, in the
case of each of CLAUSE (a) and CLAUSE (b), as adjusted for Reserves. The terms
"Telerate Page 3740", "Telerate Page 3750" and "Telerate Page 248" mean the
display designated as "Page 3740", "Page 3750" and "Page 248", as applicable, on
the Associated Press-Dow Jones Telerate Service (or such other page as may
replace Page 3740, Page 3750 or Page 248, as applicable, on the Associated
Press-Dow Jones Telerate Service or such other service as may be nominated by
the British Bankers' Association as the information vendor for the purpose of
displaying British Bankers' Association interest rate settlement rates for the
relevant Agreed Currency). Any Eurocurrency Base Rate determined on the basis of
the rate displayed on Telerate
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<PAGE> 20
Page 3740 or Telerate Page 3750 or Telerate Page 248 in accordance with the
foregoing provisions of this subparagraph shall be subject to corrections, if
any, made in such rate and displayed by the Associated Press-Dow Jones Telerate
Service within one hour of the time when such rate is first displayed by such
service.
"EUROCURRENCY BID RATE" means, with respect to a Eurocurrency Bid Rate
Loan made by a given Lender for the relevant Interest Period, the sum of (a) the
Eurocurrency Base Rate and (b) the Competitive Bid Margin offered by such Lender
and accepted by the Company.
"EUROCURRENCY BID RATE ADVANCE" means a Competitive Bid Advance which
bears interest at a Eurocurrency Bid Rate.
"EUROCURRENCY BID RATE LOAN" means a Loan which bears interest at the
Eurocurrency Bid Rate.
"EUROCURRENCY PAYMENT OFFICE" of the Administrative Agent shall mean,
for each of the Agreed Currencies, any agency, branch or Affiliate of the
Administrative Agent, specified as the "Eurocurrency Payment Office" for such
Agreed Currency in EXHIBIT A-1 hereto or such other agency, branch, Affiliate or
correspondence bank of the Administrative Agent, as it may from time to time
specify to the applicable Borrowers and each Lender as its Eurocurrency Payment
Office.
"EUROCURRENCY RATE" means, with respect to a Eurocurrency Rate Loan for
the relevant Interest Period, the Eurocurrency Base Rate applicable to such
Interest Period PLUS the then Applicable Eurocurrency Margin, changing as and
when the Applicable Eurocurrency Margin changes.
"EUROCURRENCY RATE ADVANCE" means an Advance (other than a Eurocurrency
Bid Rate Advance) which bears interest at the Eurocurrency Rate.
"EUROCURRENCY RATE LOAN" means a Loan made by a Lender pursuant to
SECTION 2.1, which bears interest at the Eurocurrency Rate.
"FACILITY TERMINATION DATE" shall mean the date on which all of the
Termination Conditions have been satisfied.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, an interest rate per
annum 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 for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 11:00 a.m. (New
York time) on such day on such transactions received by the Administrative Agent
from three Federal funds brokers of recognized standing selected by the
Administrative Agent in its sole discretion.
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<PAGE> 21
"FEE LETTERS" means, collectively, the Administrative Agent Fee Letter
and that certain fee letter, dated as of October 7, 1999, by and among the
Company, the Lead Arrangers and the Agents and the related letter dated October
20, 1999 from the Administrative Agent to the Company.
"FIXED-RATE ADVANCE" means an Advance which bears interest at the
Eurocurrency Rate, the Eurocurrency Bid Rate, the Absolute Rate or at a fixed
Alternate Currency Rate.
"FIXED-RATE LOANS" means, collectively, the Eurocurrency Rate Loans,
the Eurocurrency Bid Rate Loans, the Absolute Rate Loans and the Alternate
Currency Loans.
"FLOATING RATE" means, for any day for any Loan, a rate per annum equal
to (a) in the case of Loans in Dollars or Multicurrency Swing Line Loans in any
Agreed Currency, the Alternate Base Rate for such day, changing when and as the
Alternate Base Rate changes, PLUS the then Applicable Floating Rate Margin, and
(b) in the case of Alternate Currency Loans, the rate specified as such in the
applicable Alternate Currency Addendum.
"FLOATING RATE ADVANCE" means an Advance which bears interest at the
Floating Rate.
"FLOATING RATE LOAN" means a Loan, or portion thereof, which bears
interest at the Floating Rate.
"FOREIGN EMPLOYEE BENEFIT PLAN" means any employee benefit plan as
defined in Section 3(3) of ERISA which is maintained or contributed to for the
benefit of the employees of the Company, any of its Subsidiaries or any members
of its Controlled Group and is not covered by ERISA pursuant to ERISA Section
4(b)(4).
"FOREIGN SUBSIDIARY" means a Subsidiary of the Company which is not a
Domestic Subsidiary.
"FOREIGN PENSION PLAN" means any employee benefit plan as described in
Section 3(3) of ERISA for which the Company or any member of its Controlled
Group is a sponsor or administrator and which (i) is maintained or contributed
to for the benefit of employees of the Company, any of its Subsidiaries or any
member of its Controlled Group, (ii) is not covered by ERISA pursuant to Section
4(b)(4) of ERISA, and (iii) under applicable local law, is required to be funded
through a trust or other funding vehicle.
"FORM 10" means the Form 10/A (Amendment No. 3) Registration Statement
filed by the Company with the Commission on October 20, 1999 regarding the
Spin-off.
"GOVERNMENTAL ACTS" is defined in SECTION 3.10(A) hereof.
"GOVERNMENTAL AUTHORITY" means any nation or government, any federal,
state, local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative authority or
functions of or pertaining to government, including any authority or other
quasi-governmental entity established to perform any of such functions.
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<PAGE> 22
"GUARANTEED OBLIGATIONS" is defined in SECTION 10.1 hereof.
"GUARANTOR" means each Subsidiary of the Company that from time to time
is party to a Guaranty.
"GUARANTY" means each of (i) that certain Guaranty (and any and all
supplements thereto) executed from time to time by each Subsidiary Borrower that
is a Domestic Subsidiary and each other Domestic Subsidiary of the Company as
required pursuant to SECTION 7.2(K) in favor of the Administrative Agent for the
benefit of itself and the Holders of Obligations, in substantially the form of
EXHIBIT G-1 attached hereto, and (ii) the guaranty by the Company of all of the
Obligations of the Subsidiary Borrowers pursuant to this Agreement and the
Alternate Currency Addenda, in each case as amended, restated, supplemented or
otherwise modified from time to time.
"HARRIS" means Harris Corporation, a Delaware corporation, and its
successors and assigns.
"HEDGING AGREEMENTS" is defined in SECTION 7.3(P) hereof.
"HEDGING OBLIGATIONS" of a Person means any and all obligations of such
Person, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, commodity prices,
exchange rates or forward rates applicable to such party's assets, liabilities
or exchange transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, and (ii) any and all
cancellations, buy backs, reversals, terminations or assignments of any of the
foregoing.
"HOLDERS OF OBLIGATIONS" means the holders of the Obligations from time
to time and shall include (i) each Lender in respect of its Loans, (ii) each
Issuing Bank in respect of Reimbursement Obligations owed to it, (iii) the
Agents, the Lenders and the Issuing Banks in respect of all other present and
future obligations and liabilities of the Company or any of its Subsidiaries of
every type and description arising under or in connection with this Agreement or
any other Loan Document, (iv) each Indemnitee in respect of the obligations and
liabilities of the Company or any of its Subsidiaries to such Person hereunder
or under the other Loan Documents, and (v) their respective successors,
transferees and assigns.
"INCENTIVE ARRANGEMENTS" means any stock appreciation rights, "phantom"
stock plans, employment agreements, non-competition agreements, subscription and
stockholders agreements and other incentive and bonus plans and similar
arrangements made in connection with the retention of executives, officers or
employees of the Company and its Subsidiaries.
"INDEBTEDNESS" of a Person means, without duplication, such Person's
(i) obligations for borrowed money, including, without limitation, subordinated
indebtedness, (ii) obligations representing the deferred purchase price of
property or services (other than accounts payable arising in the ordinary course
of such person's business payable on terms customary in the trade), (iii)
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<PAGE> 23
obligations, whether or not assumed, secured by liens on or payable out of the
proceeds or production from property now or hereafter owned or acquired by such
Person, (iv) obligations which are evidenced by notes, acceptances, or other
similar instruments, (v) Capitalized Lease Obligations, (vi) Hedging
Obligations, (vii) Contingent Obligations, (viii) actual and contingent
reimbursement obligations in respect of letters of credit, (ix) outstanding
principal balances (representing securitized but unliquidated assets) under
asset securitization agreements (including, without limitation, the outstanding
principal balance of Receivables under Receivables transactions) and (x) the
implied debt component of synthetic leases of which such Person is lessee or any
other off-balance sheet financing arrangements (including, without limitation,
any such arrangements giving rise to any Off-Balance Sheet Liabilities).
"INTEREST EXPENSE" means, for any period, the total interest expense of
the Company and its consolidated Subsidiaries, whether paid or accrued
(including the interest component of Capitalized Leases, commitment fees and
fees for stand-by letters of credit), all as determined in conformity with
Agreement Accounting Principles.
"INTEREST PERIOD" means (i) any Alternate Currency Interest Period,
(ii) any Absolute Rate Interest Period, and (iii) with respect to a Eurocurrency
Rate Loan or a Eurocurrency Bid Rate Loan, a period of one (1), two (2), three
(3) or six (6) months, commencing on a Business Day selected by the applicable
Borrower on which a Eurocurrency Rate Advance is made to such Borrower pursuant
to this Agreement. Such Interest Period described in CLAUSE (iii) above shall
end on (but exclude) the day which corresponds numerically to such date one,
two, three or six months thereafter; PROVIDED, HOWEVER, that if there is no such
numerically corresponding day in such next, second, third or sixth succeeding
month, such Interest Period shall end on the last Business Day of such next,
second, third or sixth succeeding month. If an Interest Period would otherwise
end on a day which is not a Business Day, such Interest Period shall end on the
next succeeding Business Day, PROVIDED, HOWEVER, that if said next succeeding
Business Day falls in a new calendar month, such Interest Period shall end on
the immediately preceding Business Day.
"INVENTORY" shall mean any and all goods, including, without
limitation, goods in transit, wheresoever located, whether now owned or
hereafter acquired by the Company or any of its Subsidiaries, which are held for
sale, rental or lease, furnished under any contract of service or held as raw
materials, work in process or supplies, and all materials used or consumed in
the business of the Company or any of its Subsidiaries.
"INVESTMENT" means, with respect to any Person, (i) any purchase or
other acquisition by that Person of any Indebtedness, Equity Interests or other
securities, or of a beneficial interest in any Indebtedness, Equity Interests or
other securities, issued by any other Person, (ii) any purchase by that Person
of all or substantially all of the assets of a business (whether of a division,
branch, unit operation, or otherwise) conducted by another Person, and (iii) any
loan, advance (other than deposits with financial institutions available for
withdrawal on demand, prepaid expenses, accounts receivable, advances to
employees and similar items made or incurred in the ordinary course of business)
or capital contribution by that Person to any other Person, including all
Indebtedness to such Person arising from a sale of property by such Person other
than in the ordinary course of its business.
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<PAGE> 24
"INVITATION FOR COMPETITIVE BID QUOTES" means an Invitation for
Competitive Bid Quotes substantially in the form of EXHIBIT K hereto, completed
and delivered by the Administrative Agent to the Lenders in accordance with
SECTION 2.2(C).
"IRS" means the Internal Revenue Service and any Person succeeding to
the functions thereof.
"ISSUING BANKS" means ABN or any of its Affiliates or any of the Agents
or Managing Agents in its separate capacity as an issuer of Letters of Credit
pursuant to SECTION 3.1. The designation of any Lender as an Issuing Bank after
the date hereof shall be subject to the prior written consent of the
Administrative Agent, which consent shall not be unreasonably withheld, and of
the Company and such Lender.
"L/C Documents" is defined in SECTION 3.4 hereof.
"L/C Draft" means a draft drawn on an Issuing Bank pursuant to a Letter
of Credit.
"L/C Interest" shall have the meaning ascribed to such term in SECTION
3.6 hereof.
"L/C OBLIGATIONS" means, without duplication, an amount equal to the
sum of (i) the aggregate of the Dollar Amount then available for drawing under
each of the Letters of Credit, (ii) the Dollar Amount equal to the face amount
of all outstanding L/C Drafts corresponding to the Letters of Credit, which L/C
Drafts have been accepted by the applicable Issuing Bank, (iii) the aggregate
outstanding Dollar Amount of all Reimbursement Obligations at such time and (iv)
the aggregate Dollar Amount equal to the face amount of all Letters of Credit
requested by the Borrowers but not yet issued (unless the request for an
unissued Letter of Credit has been denied).
"LEAD ARRANGERS" means each of ABN, as Lead Arranger, SunTrust
Equitable Securities Corporation, as Lead Arranger, and Wachovia Securities,
Inc., as Co-Lead Arranger, in their respective capacities as arrangers for the
loan transaction evidenced by this Agreement.
"LENDERS" means the lending institutions listed on the signature pages
of this Agreement.
"LENDING INSTALLATION" means, with respect to a Lender or the
Administrative Agent, any office, branch, subsidiary or Affiliate of such Lender
or the Administrative Agent.
"LETTER OF CREDIT" means standby letters of credit to be (a) issued by
the Issuing Banks pursuant to SECTION 3.1 hereof or (b) deemed issued by the
Issuing Banks pursuant to SECTION 3.2 hereof.
"LEVERAGE RATIO" means, as of any date of determination, the ratio of
(a) Total Indebtedness on such date of determination to (b) EBITDA for the
period of four fiscal quarters ending on the fiscal quarter end occurring on
such date of determination.
"LIEN" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or security agreement or preferential
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<PAGE> 25
arrangement of any kind or nature whatsoever (including, without limitation, the
interest of a vendor or lessor under any conditional sale, Capitalized Lease or
other title retention agreement).
"LOAN(s)" means, (i) in the case of any Lender, such Lender's portion
of any Advance made pursuant to SECTION 2.1 hereof, in the case of any Alternate
Currency Bank, any Alternate Currency Loan made by it pursuant to SECTION 2.21
and the applicable Alternate Currency Addendum, in the case of any Lender which
has made a Competitive Bid Loan, any Competitive Bid Loan made by it pursuant to
SECTION 2.2, and in the case of any Swing Line Bank, any Swing Line Loan made by
it pursuant to SECTION 2.3, and (ii) collectively, all Revolving Loans, Term
Loans, Alternate Currency Loans, Competitive Bid Loans and Swing Line Loans.
"LOAN ACCOUNT" is defined in SECTION 2.13(A) hereof.
"LOAN DOCUMENTS" means this Agreement, each Alternate Currency Addendum
executed hereunder, each Assumption Letter executed hereunder, the Pledge
Agreement, the Guaranty, the Subordination Agreement, the Fee Letters and all
other documents, instruments, notes and agreements executed in connection
therewith or contemplated thereby (other than the 364-Day Credit Agreement and
the documents related thereto), as the same may be amended, restated or
otherwise modified and in effect from time to time.
"LOAN PARTIES" means each of the Company, each Subsidiary Borrower and
each of the Guarantors.
"MANAGING AGENTS" means those Lenders identified as 'Managing Agents'
on the signature pages hereto.
"MARGIN STOCK" shall have the meaning ascribed to such term in
Regulation U.
"MATERIAL ADVERSE EFFECT" means a material adverse effect upon (a) the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Company or the Company and its Subsidiaries,
taken as a whole, (b) the ability of the Company or any of its Subsidiaries to
perform their respective obligations under the Loan Documents, or (c) the
ability of the Lenders or the Agents to enforce the Obligations.
"MATERIAL SUBSIDIARY" means each Subsidiary Borrower and each other
Subsidiary having assets in excess of $10,000,000 or annual sales (determined as
of the most recently ended fiscal quarter) in excess of $20,000,000.
"MULTICURRENCY SWING LINE BANK" means ABN AMRO Bank N.V., Belgium
Branch or any other Lender as a successor Multicurrency Swing Line Bank pursuant
to the terms hereof.
"MULTICURRENCY SWING LINE COMMITMENT" means the obligation of the
Multicurrency Swing Line Bank to make Multicurrency Swing Line Loans up to a
maximum principal Dollar Amount of $25,000,000 at any one time outstanding.
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<PAGE> 26
"MULTICURRENCY SWING LINE LOAN" means a Loan made to the Company by the
Multicurrency Swing Line Bank pursuant to SECTION 2.3 hereof.
"MULTIEMPLOYER PLAN" means a "Multiemployer Plan" as defined in Section
4001(a)(3) of ERISA which is, or within the immediately preceding six (6) years
was, contributed to by either the Company or any member of the Controlled Group.
"NATIONAL CURRENCY UNIT" means the unit of currency (other than a euro)
of each member state of the European Union that participates in the third stage
of Economic and Monetary Union.
"NET INCOME" means, for any period, the net income (or loss) after
taxes of the Company and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period determined in conformity with
Agreement Accounting Principles.
"NOTICE OF ASSIGNMENT" is defined in SECTION 14.3(B) hereof.
"OBLIGATIONS" means all Loans, L/C Obligations, advances, debts,
liabilities, obligations, covenants and duties owing by the Borrowers or any of
their Subsidiaries to the Administrative Agent, any Lender, any Swing Line Bank,
any Arranger, any Affiliate of the Administrative Agent or any Lender, any
Issuing Bank or any Indemnitee, of any kind or nature, present or future,
arising under this Agreement, the L/C Documents, any Alternate Currency Addendum
or any other Loan Document, whether or not evidenced by any note, guaranty or
other instrument, whether or not for the payment of money, whether arising by
reason of an extension of credit, loan, guaranty, indemnification, or in any
other manner, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired. The term includes, without limitation,
all interest, charges, expenses, fees, reasonable attorneys' fees and
disbursements, reasonable paralegals' fees (in each case whether or not
allowed), and any other sum chargeable to the Company or any of its Subsidiaries
under this Agreement or any other Loan Document.
"OFF-BALANCE SHEET LIABILITIES" of a Person means (a) any repurchase
obligation or liability of such Person or any of its Subsidiaries with respect
to Receivables sold by such Person or any of its Subsidiaries, (b) any liability
of such Person or any of its Subsidiaries under any sale and leaseback
transactions which do not create a liability on the consolidated balance sheet
of such Person, (c) any liability of such Person or any of its Subsidiaries
under any financing lease or so-called "synthetic" lease transaction, or (d) any
obligations of such Person or any of its Subsidiaries arising with respect to
any other transaction which is the functional equivalent of or takes the place
of borrowing but which does not constitute a liability on the consolidated
balance sheets of such Person and its Subsidiaries.
"OTHER TAXES" is defined in SECTION 2.15(E)(ii) hereof.
"PARTICIPANTS" is defined in SECTION 14.2(A) hereof.
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<PAGE> 27
"PAYMENT DATE" means the last day of each March, June, September and
December, the Termination Date (or such earlier date on which the Aggregate
Commitment shall terminate or be cancelled), and the Facility Termination Date.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"PERMITTED ACQUISITION" is defined in SECTION 7.3(G) hereof.
"PERMITTED EXISTING CONTINGENT OBLIGATIONS" means the Contingent
Obligations of the Company and its Subsidiaries identified as such on SCHEDULE
1.1.1 to this Agreement.
"PERMITTED EXISTING INDEBTEDNESS" means the Indebtedness of the Company
and its Subsidiaries identified as such on SCHEDULE 1.1.2 to this Agreement.
"PERMITTED EXISTING LIENS" means the Liens on assets of the Company and
its Subsidiaries identified as such on SCHEDULE 1.1.3 to this Agreement.
"PERMITTED REFINANCING INDEBTEDNESS" means any replacement, renewal,
refinancing or extension of any Indebtedness permitted by this Agreement that
(i) does not exceed the aggregate principal amount (plus accrued interest and
any applicable premium and associated fees and expenses) of the Indebtedness
being replaced, renewed, refinanced or extended, (ii) does not have a Weighted
Average Life to Maturity at the time of such replacement, renewal, refinancing
or extension that is less than the Weighted Average Life to Maturity of the
Indebtedness being replaced, renewed, refinanced or extended, (iii) does not
rank at the time of such replacement, renewal, refinancing or extension senior
to the Indebtedness being replaced, renewed, refinanced or extended, and (iv)
does not contain terms (including, without limitation, terms relating to
security, amortization, interest rate, premiums, fees, covenants, event of
default and remedies) materially less favorable to the Company, its Subsidiaries
or the Lenders than those applicable to the Indebtedness being replaced,
renewed, refinanced or extended; PROVIDED, that Indebtedness being refinanced at
maturity may be subject to then current market rates of interest, provisions and
fees.
"PERSON" means any individual, corporation, firm, enterprise,
partnership, trust, incorporated or unincorporated association, joint venture,
joint stock company, limited liability company or other entity of any kind, or
any government or political subdivision or any agency, department or
instrumentality thereof.
"PLAN" means an employee benefit plan defined in Section 3(3) of ERISA,
other than a Multiemployer Plan, in respect of which the Company or any member
of the Controlled Group is, or within the immediately preceding six (6) years
was, an "employer" as defined in Section 3(5) of ERISA.
"PLEDGE AGREEMENT" means one or more pledge agreements, each in form
and substance reasonably satisfactory to the Administrative Agent, executed and
delivered by the Company and/or certain of its Subsidiaries pursuant to SECTION
7.2(N) HEREOF, as the same may be amended, supplemented or otherwise modified
from time to time.
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"PRIME RATE" means the "prime rate" of interest announced by ABN from
time to time at its Chicago office, changing when and as said prime rate
changes.
"PRO RATA REVOLVING SHARE" means, with respect to any Lender, the
percentage obtained by dividing (x) such Lender's Revolving Loan Commitment at
such time (as adjusted from time to time in accordance with the provisions of
this Agreement) by (y) the Aggregate Revolving Loan Commitment at such time (as
adjusted from time to time in accordance with the provisions of this Agreement);
PROVIDED, HOWEVER, if all of the Revolving Loan Commitments are terminated
pursuant to the terms of this Agreement, then "Pro Rata Revolving Share" means
the percentage obtained by dividing (x) the sum of (A) such Lender's Revolving
Loans, PLUS (B) such Lender's share of the obligations to purchase
participations in Alternate Currency Loans and Letters of Credit PLUS (C) such
Lender's share of the obligations to refund or purchase participations in Swing
Line Loans PLUS (D) such Lender's Competitive Bid Advances, by (y) the sum of
(A) the aggregate outstanding amount of all Revolving Loans, PLUS (B) the
aggregate outstanding amount of all Alternate Currency Loans and all Letters of
Credit, PLUS (C) the aggregate outstanding amount of all Swing Line Loans, PLUS
(D) the aggregate outstanding amount of all Competitive Bid Advances.
"PRO RATA SHARE" means, with respect to any Lender, the percentage
obtained by dividing (x) such Lender's Commitment at such time (as adjusted from
time to time in accordance with the provisions of this Agreement) by (y) the
Aggregate Commitment at such time (as adjusted from time to time in accordance
with the provisions of this Agreement); PROVIDED, HOWEVER, if all of the
Revolving Loan Commitments are terminated pursuant to the terms of this
Agreement, then "Pro Rata Share" means the percentage obtained by dividing (x)
the sum of (A) such Lender's Revolving Loans, PLUS (B) such Lender's Term Loans,
PLUS (C) such Lender's share of the obligations to purchase participations in
Alternate Currency Loans and Letters of Credit PLUS (D) such Lender's share of
the obligations to refund or purchase participations in Swing Line Loans PLUS
(E) such Lender's Competitive Bid Advances, by (y) the sum of (A) the aggregate
outstanding amount of all Revolving Loans, PLUS (B) the aggregate outstanding
amount of all Term Loans, PLUS (C) the aggregate outstanding amount of all
Alternate Currency Loans and all Letters of Credit, PLUS (D) the aggregate
outstanding amount of all Swing Line Loans, PLUS (E) the aggregate outstanding
amount of all Competitive Bid Advances.
"PRO RATA TERM SHARE" means, with respect to any Lender, the percentage
obtained by dividing such Lender's Term Loan Commitment by the Aggregate Term
Loan Commitment.
"PURCHASERS" is defined in SECTION 14.3(A) hereof.
"RATE OPTION" means the Eurocurrency Rate, the Floating Rate, the
Competitive Bid Rate or the Alternate Currency Rate, as applicable.
"RECEIVABLE(S)" means and includes all of the Company's and its
Subsidiaries' presently existing and hereafter arising or acquired accounts,
accounts receivable, notes receivable, and all present and future rights of the
Company or its Subsidiaries, as applicable, to payment for goods sold or leased
or for services rendered (except those evidenced by instruments or chattel
paper), whether or not they have been earned by performance, and all rights in
any merchandise or goods which any
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<PAGE> 29
of the same may represent, and all rights, title, security and guaranties with
respect to each of the foregoing, including, without limitation, any right of
stoppage in transit.
"REGISTER" is defined in SECTION 14.3(C) hereof.
"REGULATION T" means Regulation T of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by and to brokers and dealers of securities for the purpose
of purchasing or carrying margin stock (as defined therein).
"REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks, non-banks and non-broker lenders for the purpose
of purchasing or carrying Margin Stock applicable to member banks of the Federal
Reserve System.
"REGULATION X" means Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by foreign lenders for the purpose of purchasing or carrying
margin stock (as defined therein).
"REIMBURSEMENT OBLIGATION" is defined in SECTION 3.7 hereof.
"RELEASE" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including the movement of Contaminants
through or in the air, soil, surface water or groundwater.
"RENTALS" of a Person means the aggregate fixed amounts payable by such
Person under any lease of real or personal property.
"REPLACEMENT LENDER" is defined in SECTION 2.20 hereof.
"REPORTABLE EVENT" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation or otherwise
waived the requirement of Section 4043(a) of ERISA that it be notified within
thirty (30) days after such event occurs, PROVIDED, HOWEVER, that a failure to
meet the minimum funding standards of Section 412 of the Code and of Section 302
of ERISA shall be a Reportable Event regardless of the issuance of any such
waiver of the notice requirement in accordance with either Section 4043(a) of
ERISA or Section 412(d) of the Code.
"REQUIRED LENDERS" means Lenders hereunder whose Pro Rata Shares, in
the aggregate, are at least fifty-one percent (51%).
"REQUIREMENTS OF LAW" means, as to any Person, the charter and by-laws
or other organizational or governing documents of such Person, and any law, rule
or regulation, or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable
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<PAGE> 30
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject including, without limitation, the Securities Act
of 1933, the Securities Exchange Act of 1934, Regulations T, U and X, ERISA, the
Fair Labor Standards Act, the Worker Adjustment and Retraining Notification Act,
the Americans with Disabilities Act of 1990, and any environmental, labor,
employment, occupational safety or health law, rule or regulation, including
Environmental, Health or Safety Requirements of Law.
"RESERVES" shall mean the maximum reserve requirement, as prescribed by
the Board of Governors of the Federal Reserve System (or any successor) with
respect to "Eurocurrency liabilities" or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Eurocurrency Rate Loans is determined or category of extensions of credit or
other assets which includes loans by a non-United States office of any Lender to
United States residents.
"RESTRICTED PAYMENT" means (i) any dividend or other distribution,
direct or indirect, on account of any Equity Interests of the Company or any of
its Subsidiaries now or hereafter outstanding, except a dividend payable solely
in the Company's Capital Stock (other than Disqualified Stock) or in options,
warrants or other rights to purchase such Capital Stock, (ii) any redemption,
retirement, purchase or other acquisition for value, direct or indirect, of any
Equity Interests of the Company or any of its Subsidiaries now or hereafter
outstanding, other than in exchange for other Equity Interests of the Company
(other than Disqualified Stock), (iii) any redemption, purchase, retirement,
defeasance, prepayment or other acquisition for value, direct or indirect, of
any Indebtedness subordinated to the Obligations, and (iv) any payment of a
claim for the rescission of the purchase or sale of, or for material damages
arising from the purchase or sale of, any Indebtedness (other than the
Obligations) or any Equity Interests of the Company, or any of its Subsidiaries,
or of a claim for reimbursement, indemnification or contribution arising out of
or related to any such claim for damages or rescission.
"REVOLVING CREDIT AVAILABILITY" means, at any particular time, the
amount by which (i) the Aggregate Revolving Loan Commitment at such time exceeds
(ii) (a) the Dollar Amount of the Revolving Credit Obligations outstanding at
such time, PLUS (b) the aggregate unused Alternate Currency Commitments at such
time, plus (c) the unused Multicurrency Swing Line Commitment.
"REVOLVING CREDIT OBLIGATIONS" means, at any particular time, the sum
of (i) the outstanding principal Dollar Amount of the Revolving Loans at such
time, PLUS (ii) the outstanding L/C Obligations at such time, PLUS (iii) the
Dollar Amount of the outstanding principal amount of the Alternate Currency
Loans at such time, PLUS (iv) the outstanding principal amount of all
Competitive Bid Loans at such time PLUS (v) the outstanding principal amount of
all Swing Line Loans at such time.
"REVOLVING LOAN" is defined in SECTION 2.1 hereof.
"REVOLVING LOAN COMMITMENT" means, for each Lender, the obligation of
such Lender to make Revolving Loans, to purchase participations in Letters of
Credit, to refund or participate in Swing Line Loans and to participate in
Alternate Currency Loans not exceeding the amount set forth on EXHIBIT A to this
Agreement opposite its name thereon under the heading "Revolving Loan
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<PAGE> 31
Commitment" or the signature page of the assignment and acceptance by which it
became a Lender as such amount may be modified from time to time pursuant to the
terms of this Agreement or to give effect to any applicable assignment and
acceptance.
"REVOLVING LOAN TERMINATION DATE" means October 20, 2004.
"SALE AND LEASEBACK TRANSACTION" shall mean any lease, whether an
operating lease or a Capitalized Lease, of any property (whether real or
personal or mixed), (i) which the Company or one of its Subsidiaries sold or
transferred or is to sell or transfer to any other Person, or (ii) which the
Company or one of its Subsidiaries intends to use for substantially the same
purposes as any other property which has been or is to be sold or transferred by
the Company or one of its Subsidiaries to any other Person in connection with
such lease.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time.
"SINGLE EMPLOYER PLAN" means a Benefit Plan maintained by the Company
or any member of the Controlled Group for employees of the Company or any member
of the Controlled Group.
"SOLVENT" means, when used with respect to any Person, that at the time
of determination:
(i) the fair value of its assets (both at fair valuation
and at present fair saleable value) is equal to or in excess of the
total amount of its liabilities, including, without limitation,
contingent liabilities; and
(ii) it is then able and expects to be able to pay its debts
as they mature; and
(iii) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
With respect to contingent liabilities (such as litigation, guarantees and
pension plan liabilities), such liabilities shall be computed at the amount
which, in light of all the facts and circumstances existing at the time,
represent the amount which can be reasonably be expected to become an actual or
matured liability.
"SPIN-OFF" means the distribution of approximately ninety percent (90%)
of the Capital Stock of the Company by Harris to Harris's stockholders.
"SPIN-OFF MATERIALS" means the Form 10, the Distribution Agreement
referred to therein, the Tax Disaffiliation Agreement referred to therein and
the Transition Services Agreement referred to therein, the Registration Rights
Agreement referred to therein and the Employee Benefits and Compensation
Allocation Agreement referred to therein.
"SUBORDINATION AGREEMENT" means that certain Subordination Agreement
(and any and all supplements thereto) executed from time to time by each
Subsidiary of the Company listed on SCHEDULE 6.8 and each other Subsidiary of
the Company as required pursuant to SECTION 7.2(K) in favor of the
Administrative Agent for the benefit of itself and the Holders of Obligations,
in substantially the form of EXHIBIT G-2 attached hereto, as the same may be
amended, restated, supplemented or otherwise modified from time to time.
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"SUBSIDIARY" of a Person means (i) any corporation more than fifty
(50%) of the outstanding securities having ordinary voting power of which shall
at the time be owned or controlled, directly or indirectly, by such Person or by
one or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (ii) any partnership, association, limited liability company,
joint venture or similar business organization more than fifty percent (50%) of
the ownership interests having ordinary voting power of which shall at the time
be so owned or controlled. Unless otherwise expressly provided, all references
herein to a "Subsidiary" mean a Subsidiary of the Company.
"SUBSIDIARY BORROWER" means each of the Company's Subsidiaries listed
on the signature pages hereto and any other Subsidiaries of the Company duly
designated by the Company pursuant to SECTION 2.24 to request Advances
hereunder, which Subsidiary shall have delivered to the Administrative Agent an
Assumption Letter in accordance with SECTION 2.24 and such other documents as
may be required pursuant to this Agreement, in each case together with its
respective successors and assigns, including a debtor-in-possession on behalf of
such Subsidiary Borrower.
"SWING LINE BANK" means, as applicable, the Dollar Swing Line Bank or
the Multicurrency Swing Line Bank.
"SWING LINE COMMITMENT" means the sum of the Dollar Swing Line
Commitment and the Multicurrency Swing Line Commitment.
"SWING LINE LOAN" means, as applicable, a Dollar Swing Line Loan or a
Multicurrency Swing Line Loan.
"SYNDICATION AGENT" means SunTrust Bank, Atlanta, in its capacity as
syndication agent for the loan transaction evidenced by this Agreement, together
with its successors and assigns.
"364-DAY CREDIT AGREEMENT" means that certain 364-Day Credit Agreement,
dated as of October 20, 1999 among the Company, the subsidiary borrowers from
time to time parties thereto, the Agents and the financial institutions from
time to time parties thereto as lenders, as the same may be amended, restated,
supplemented or otherwise modified from time to time.
"TARGET SETTLEMENT DAY" means any day on which the Trans-European
Automated Real-Time Gross Settlement Express Transfer (TARGET) System is open.
"TAXES" is defined in SECTION 2.15(E)(i) hereof.
"TERM LOAN" means a term loan made by a Lender pursuant to SECTION
2.1(C) hereof and, collectively, all such term loans.
"TERM LOAN COMMITMENT" means, for each Lender, (i) prior to the making
of the Term Loans, the amount set forth on EXHIBIT A to this Agreement opposite
its name thereon under the heading "Term Loan Commitment" and (ii) after the
making of the Term Loans, the outstanding principal balance of its Term Loan.
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<PAGE> 33
"TERM LOAN TERMINATION DATE" means October 20, 2001.
"TERMINATION CONDITIONS" is defined in SECTION 2.19.
"TERMINATION DATE" means the earlier of (a) the later of (i) the
Revolving Loan Termination Date and (ii) the Term Loan Termination Date, and (b)
the date of termination in whole of the Aggregate Revolving Loan Commitment
pursuant to SECTION 2.6 hereof or the Revolving Loan Commitments pursuant to
SECTION 9.1 hereof.
"TERMINATION EVENT" means (i) a Reportable Event with respect to any
Benefit Plan; (ii) the withdrawal of the Company or any member of the Controlled
Group from a Benefit Plan during a plan year in which the Company or such
Controlled Group member was a "substantial employer" as defined in Section
4001(a)(2) of ERISA or the cessation of operations which results in the
termination of employment of twenty percent (20%) of Benefit Plan participants
who are employees of the Company or any member of the Controlled Group; (iii)
the imposition of an obligation on the Company or any member of the Controlled
Group under Section 4041 of ERISA to provide affected parties written notice of
intent to terminate a Benefit Plan in a distress termination described in
Section 4041(c) of ERISA; (iv) the institution by the PBGC or any similar
foreign governmental authority of proceedings to terminate a Benefit Plan or
Foreign Pension Plan; (v) any event or condition which constitutes grounds under
Section 4042 of ERISA which are reasonably likely to lead to the termination of,
or the appointment of a trustee to administer, any Benefit Plan; (vi) that a
foreign governmental authority shall appoint or institute proceedings to appoint
a trustee to administer any Foreign Pension Plan in place of the existing
administrator, or (vii) the partial or complete withdrawal of the Company or any
member of the Controlled Group from a Multiemployer Plan or Foreign Pension
Plan.
"TOTAL INDEBTEDNESS" means, without duplication, (a) all Indebtedness
of the Company and its Subsidiaries, on a consolidated basis, required to be
reflected on a balance sheet prepared in accordance with Agreement Accounting
Principles, PLUS, without duplication, (b) (i) the face amount of all
outstanding letters of credit (including Letters of Credit) in respect of which
the Company or any Subsidiary has any actual or contingent reimbursement
obligation, PLUS (ii) the principal amount of all Indebtedness of any Person in
respect of which the Company or any Subsidiary has a Contingent Obligation, PLUS
(iii) outstanding principal balances (representing securitized but unliquidated
assets) under asset securitization agreements (including, without limitation,
the outstanding principal balance of Receivables under Receivables
transactions), PLUS (iv) the implied debt component of synthetic leases of which
the Company or any Subsidiary is lessee or any other off-balance sheet financing
arrangements (including, without limitation, any such arrangements giving rise
to any Off-Balance Sheet Liabilities).
"TRANSFEREE" is defined in SECTION 14.5 hereof.
"TYPE" means, with respect to any Loan, its nature as a Floating Rate
Loan or a Eurocurrency Rate Loan.
"UNFUNDED LIABILITIES" means (i) in the case of Single Employer Plans,
the amount (if any) by which the aggregate accumulated benefit obligations
exceeds the aggregate fair market value of
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<PAGE> 34
assets of all Single Employer Plans as of the most recent measurement date for
which actuarial valuations have been completed and certified to the Company, all
as determined under FAS 87 using the methods and assumptions used by the Company
for financial accounting purposes, and (ii) in the case of Multiemployer Plans,
the withdrawal liability that would be incurred by the Controlled Group if all
members of the Controlled Group completely withdrew from all Multiemployer
Plans.
"UNMATURED DEFAULT" means an event which, but for the lapse of time or
the giving of notice, or both, would constitute a Default.
"WEIGHTED AVERAGE LIFE TO MATURITY" means when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"WHOLLY-OWNED SUBSIDIARY" of a Person means (i) any Subsidiary all of
the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more Wholly-Owned
Subsidiaries of such Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person, or (ii) any partnership, limited liability company,
association, joint venture or similar business organization 100% of the
ownership interests having ordinary voting power of which shall at the time be
so owned or controlled. Unless the context otherwise requires, "Wholly-Owned
Subsidiary" means a wholly-owned subsidiary of the Company.
"YEAR 2000 ISSUES" means, with respect to any Person, anticipated
costs, problems and uncertainties associated with the inability of certain
computer applications and imbedded systems to effectively handle data, including
dates, prior to, on and after January 1, 2000, as it affects the business,
operations, and financial condition of such Person and such Person's material
customers, suppliers and vendors.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms. Any accounting terms used in
this Agreement which are not specifically defined herein shall have the meanings
customarily given them in accordance with generally accepted accounting
principles in existence as of the date hereof.
1.2 REFERENCES. Any references to Subsidiaries of the Company set forth
herein shall not in any way be construed as consent by the Administrative Agent
or any Lender to the establishment, maintenance or acquisition of any
Subsidiary, except as may otherwise be permitted hereunder.
1.3 ROUNDING AND OTHER CONSEQUENTIAL CHANGES. Without prejudice to any
method of conversion or rounding prescribed by any legislative measures of the
Council of the European Union, each reference in this Agreement to a fixed
amount or to fixed amounts in a National Currency Unit to be paid to or by the
Administrative Agent shall be replaced by a reference to such comparable and
convenient fixed amount or fixed amounts in euro as the Administrative Agent may
from time to time specify unless such National Currency Unit remains available
and the Company and the Administrative Agent agree to use such National Currency
Unit instead of the euro.
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ARTICLE II: LOAN FACILITIES
2.1 REVOLVING LOANS; TERM LOANS.
(A) Upon the satisfaction of the conditions precedent set forth in
Sections 5.1, 5.2 and 5.3, as applicable, from and including the Closing Date
and prior to the Revolving Loan Termination Date, each Lender severally and not
jointly agrees, on the terms and conditions set forth in this Agreement, to make
revolving loans to the Borrowers from time to time, in Dollars or Eurocurrency
Rate Loans in any Agreed Currency, in a Dollar Amount not to exceed such
Lender's Pro Rata Revolving Share of Revolving Credit Availability at such time
(each individually, a "REVOLVING LOAN" and, collectively, the "REVOLVING
LOANS"); provided, however, that (i) at no time shall the Dollar Amount of the
Revolving Credit Obligations exceed the Aggregate Revolving Loan Commitment;
(ii) upon giving effect to each Advance, the aggregate outstanding principal
Dollar Amount of all Eurocurrency Rate Advances in Agreed Currencies other than
Dollars and all L/C Obligations in Agreed Currencies other than Dollars and all
Alternate Currency Loans shall not exceed $150,000,000 at any time (iii) at no
time shall the Dollar Amount of the Revolving Credit Obligations of any
Subsidiary Borrower that is a Domestic Subsidiary exceed $200,000,000; and (iv)
at no time shall the aggregate Dollar Amount of the Revolving Credit Obligations
of all Foreign Subsidiaries exceed $150,000,000. Subject to the terms of this
Agreement, the Borrowers may borrow, repay and reborrow Revolving Loans at any
time prior to the Revolving Termination Date. Revolving Loans made after the
third (3rd) Business Day after the Closing Date shall be, at the option of the
applicable Borrower, selected in accordance with Section 2.10, and shall be
either Floating Rate Loans or Eurocurrency Rate Loans. On the Revolving Loan
Termination Date, the applicable Borrower shall repay in full the outstanding
principal balance of the Revolving Loans. Each Advance under this Section 2.1
shall consist of Revolving Loans made by each Lender ratably in proportion to
such Lender's respective Pro Rata Revolving Share.
(B) Making of Revolving Loans. Promptly after receipt of the Borrowing/
Conversion/Continuation Notice under Section 2.8 in respect of Revolving Loans,
the Administrative Agent shall notify each Lender with a Revolving Loan
Commitment by telex or telecopy, or other similar form of transmission, of the
requested Revolving Loan. Each Lender with a Revolving Loan Commitment shall
make available its Revolving Loan in accordance with the terms of Section 2.7.
The Administrative Agent will promptly make the funds so received from the
Lenders available to the applicable Borrower at the Administrative Agent's
office in New York, New York on the applicable Borrowing Date and shall disburse
such proceeds in accordance with the applicable Borrower's disbursement
instructions set forth in such Borrowing/Conversion/Continuation Notice. The
failure of any Lender to deposit the amount described above with the
Administrative Agent on the applicable Borrowing Date shall not relieve any
other Lender of its obligations hereunder to make its Revolving Loan on such
Borrowing Date.
(C) TERM LOANS. Upon the satisfaction of the conditions precedent set
forth in Section 5.1, each Lender severally and not jointly agrees, on the terms
and conditions set forth in this Agreement, to make a single term loan to the
Company on the Closing Date, in Dollars, in an amount not to exceed such
Lender's Term Loan Commitment. Amounts borrowed as a Term Loan which are repaid
or prepaid by the Company may not be reborrowed. The Company shall repay all
outstanding principal and all accrued but unpaid interest on the Term Loan
Termination Date.
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2.2 COMPETITIVE BID ADVANCES.
(A) COMPETITIVE BID OPTION. In addition to Advances pursuant to Section
2.1, but subject to the terms and conditions of this Agreement (including,
without limitation, the limitation set forth in Section 2.2(B) as to the maximum
aggregate principal amount of all outstanding Advances hereunder), the Company
may, as set forth in this Section 2.2, request the Lenders, prior to the
Revolving Loan Termination Date, to make offers to make Competitive Bid Advances
to the Company in Dollars. Each Lender may, but shall have no obligation to,
make such offers and the Company may, but shall have no obligation to, accept
any such offers in the manner set forth in this Section 2.2. The aggregate
outstanding amount of Competitive Bid Advances shall reduce the available
portion of each Lender's Revolving Loan Commitment ratably relative to such
Lender's Pro Rata Revolving Share regardless of which Lender or Lenders make
such Competitive Bid Advances.
(B) COMPETITIVE BID QUOTE REQUEST. When the Company wishes to request
offers to make Competitive Bid Loans under this Section 2.2, it shall transmit
to the Administrative Agent by facsimile a Competitive Bid Quote Request
substantially in the form of Exhibit J hereto so as to be received no later than
(x) 11:00 a.m. (New York time) at least five (5) Business Days prior to the
Borrowing Date proposed therein, in the case of a Eurocurrency Auction or (y)
10:00 a.m. (New York time) at least one (1) Business Day prior to the Borrowing
Date proposed therein, in the case of an Absolute Rate Auction specifying:
(i) the proposed Borrowing Date, which shall be a Business
Day, for the proposed Competitive Bid Advance,
(ii) the aggregate principal amount of such Competitive Bid
Advance, which must be at least $10,000,000 (and in integral multiples
of $1,000,000 if in excess thereof),
(iii) whether the Competitive Bid Quotes requested are to set
forth a Eurocurrency Bid Rate or an Absolute Rate, or both, and
(iv) the Interest Period applicable thereto (which may not end
after the Revolving Loan Termination Date).
The Company may request offers to make Competitive Bid Loans for more than one
Interest Period in a single Competitive Bid Quote Request. No Competitive Bid
Quote Request shall be given within five (5) Business Days (or such other number
of days as the Company and the Administrative Agent may agree) of any other
Competitive Bid Quote Request. A Competitive Bid Quote Request that does not
conform substantially to the format of EXHIBIT J hereto shall be rejected, and
the Administrative Agent shall promptly notify the Company of such rejection by
facsimile. The aggregate amount of outstanding Competitive Bid Advances shall
not exceed $50,000,000. All Competitive Bid Loans shall be in Dollars.
(C) INVITATION FOR COMPETITIVE BID QUOTES. Promptly and in any event
before the close of business on the same Business Day of receipt of a
Competitive Bid Quote Request that is not rejected pursuant to Section 2.2(B),
the Administrative Agent shall send to each of the Lenders by facsimile an
Invitation for Competitive Bid Quotes substantially in the form of Exhibit K
hereto,
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which shall constitute an invitation by the Company to each Lender to submit
Competitive Bid Quotes offering to make the Competitive Bid Loans to which such
Competitive Bid Quote Request relates in accordance with this Section 2.2.
(D) SUBMISSION AND CONTENTS OF COMPETITIVE BID QUOTES. (i) Each Lender
may, in its sole discretion, submit a Competitive Bid Quote containing an offer
or offers to make Competitive Bid Loans in response to any Invitation for
Competitive Bid Quotes. Each Competitive Bid Quote must comply with the
requirements of this Section 2.2(D) and must be submitted to the Administrative
Agent by facsimile at its offices specified in or pursuant to Article XVII not
later than (x) 2:00 p.m. (New York time) at least four (4) Business Days prior
to the proposed Borrowing Date, in the case of a Eurocurrency Auction or (y)
10:00 a.m. (New York time) on the proposed Borrowing Date, in the case of an
Absolute Rate Auction (or, in either case upon reasonable prior notice to the
Lenders, such other time and date as the Company and the Administrative Agent
may agree); provided that Competitive Bid Quotes submitted by the Administrative
Agent may only be submitted if the Administrative Agent notifies the Company of
the terms of the offer or offers contained therein not later than 15 minutes
prior to the latest time at which the relevant Competitive Bid Quotes must be
submitted by the other Lenders. Subject to Articles V and XI, any Competitive
Bid Quote so made shall be irrevocable except with the written consent of the
Administrative Agent given on the instructions of the Company.
(ii) Each Competitive Bid Quote shall be in substantially the
form of EXHIBIT L hereto and shall in any case specify:
(a) the proposed Borrowing Date, which shall be the same as
that set forth in the applicable Invitation for Competitive Bid Quotes,
(b) the principal amount of the Competitive Bid Loan for which
each such offer is being made, which principal amount (1) may be
greater than, less than or equal to the Revolving Loan Commitment of
the quoting Lender, (2) must be at least $5,000,000 (and in integral
multiples of $1,000,000 if in excess thereof), and (3) may not exceed
the principal amount of Competitive Bid Loans for which offers were
requested,
(c) in the case of a Eurocurrency Auction, the Competitive Bid
Margin offered for each such Competitive Bid Loan,
(d) the minimum amount, if any, of the Competitive Bid Loan
which may be accepted by the Company,
(e) in the case of an Absolute Rate Auction, the Absolute Rate
offered for each such Competitive Bid Loan,
(f) the identity of the quoting Lender, and
(g) the applicable Interest Period.
(iii) The Administrative Agent shall reject any Competitive Bid Quote
that:
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(a) is not substantially in the form of EXHIBIT L hereto or
does not specify all of the information required by SECTION 2.2(D)(ii);
(b) contains qualifying, conditional or similar language,
other than any such language contained in EXHIBIT L hereto;
(c) proposes terms other than or in addition to those set
forth in the applicable Invitation for Competitive Bid Quotes; or
(d) arrives after the time set forth in Section 2.2(D)(i).
If any Competitive Bid Quote shall be rejected pursuant to this SECTION
2.2(D)(iii), then the Administrative Agent shall notify the relevant Lender of
such rejection as soon as practical.
(E) NOTICE TO COMPANY. The Administrative Agent shall promptly notify
the Company of the terms (i) of any Competitive Bid Quote submitted by a Lender
that is in accordance with SECTION 2.2(D) and (ii) of any Competitive Bid Quote
that amends, modifies or is otherwise inconsistent with a previous Competitive
Bid Quote submitted by such Lender with respect to the same Competitive Bid
Quote Request. Any such subsequent Competitive Bid Quote shall be disregarded by
the Administrative Agent unless such subsequent Competitive Bid Quote
specifically states that it is submitted solely to correct a manifest error in
such former Competitive Bid Quote. The Administrative Agent's notice to the
Company shall specify the aggregate principal amount of Competitive Bid Loans
for which offers have been received for each Interest Period specified in the
related Competitive Bid Quote Request and the respective principal amounts and
Eurocurrency Bid Rates or Absolute Rates, as the case may be, so offered.
(F) ACCEPTANCE AND NOTICE BY COMPANY. Not later than (x) 10:00 a.m.
(New York time) at least three (3) Business Days prior to the proposed Borrowing
Date, in the case of a Eurocurrency Auction or (y) 11:00 a.m. (New York time) on
the proposed Borrowing Date, in the case of an Absolute Rate Auction (or, in
either case upon reasonable prior notice to the Lenders, such other time and
date as the Company and the Administrative Agent may agree), the Company shall
notify the Administrative Agent of its acceptance or rejection of the offers so
notified to it pursuant to SECTION 2.2(E); PROVIDED, HOWEVER, that the failure
by the Company to give such notice to the Administrative Agent shall be deemed
to be a rejection of all such offers. In the case of acceptance, such notice (a
"COMPETITIVE BID BORROWING NOTICE") shall specify the aggregate principal amount
of offers for each Interest Period that are accepted. The Company may accept any
Competitive Bid Quote in whole or in part (subject to the terms of SECTION
2.2(D)(ii)(d)); PROVIDED that:
(a) the aggregate principal amount of each Competitive Bid
Advance may not exceed the applicable amount set forth in the related
Competitive Bid Quote Request,
(b) acceptance of offers may only be made on the basis of
ascending Eurocurrency Bid Rates or Absolute Rates, as the case may be,
and
(c) the Company may not accept any offer that is described in
SECTION 2.2(D)(iii) or that otherwise fails to comply with the
requirements of this Agreement.
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(G) ALLOCATION BY ADMINISTRATIVE AGENT. If offers are
made by two or more Lenders with the same Eurocurrency Bid Rates or
Absolute Rates, as the case may be, 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 Competitive Bid Loans
in respect of which such offers are accepted shall be allocated by the
Administrative Agent among such Lenders as nearly as possible (in such
multiples, not greater than $1,000,000, as the Administrative Agent may
deem appropriate) in proportion to the aggregate principal amount of
such offers PROVIDED, HOWEVER, that no Lender shall be allocated a
portion of any Competitive Bid Advance which is less than the minimum
amount which such Lender has indicated that it is willing to accept.
Allocations by the Administrative Agent of the amounts of Competitive
Bid Loans shall be conclusive in the absence of manifest error. The
Administrative Agent shall promptly, but in any event on the same
Business Day, notify each Lender of its receipt of a Competitive Bid
Borrowing Notice and the aggregate principal amount of such Competitive
Bid Advance allocated to each participating Lender.
(H) ADMINISTRATION FEE. The Company hereby agrees to pay to
the Administrative Agent an administration fee as detailed in the
Administrative Agent Fee Letter per each Competitive Bid Quote Request
transmitted by the Company to the Administrative Agent pursuant to
SECTION 2.2(B). Such administration fee shall be payable in arrears on
each Payment Date hereafter, on the Termination Date (or such earlier
date on which the Aggregate Revolving Loan Commitment shall terminate
or be canceled), and on the Facility Termination Date for any period
then ending for which such fee, if any, shall not have been theretofore
paid.
2.3 SWING LINE LOANS.
(A) AMOUNT OF SWING LINE LOANS. Upon the satisfaction of the conditions
precedent set forth in Section 5.1, 5.2 and 5.3, as applicable, from and
including the Closing Date and prior to the Revolving Loan Termination Date, the
Dollar Swing Line Bank agrees, on the terms and conditions set forth in this
Agreement, to make revolving swing line loans (each, individually, a "DOLLAR
SWING LINE LOAN" and collectively, the "DOLLAR SWING LINE LOANS") to the Company
from time to time in Dollars; provided, however, that at no time shall the
aggregate outstanding principal amount of all Dollar Swing Line Loans exceed the
Dollar Swing Line Commitment; and provided further that, at no time shall the
Dollar Amount of the Revolving Credit Obligations exceed the Aggregate Revolving
Loan Commitment; and provided, further, that at no time shall the sum of (a) the
outstanding principal amount of the Dollar Swing Line Loans plus (b) the Dollar
Amount of the Dollar Swing Line Bank's Pro Rata Revolving Share of the
Multicurrency Swing Line Loans plus (c) the Dollar Amount of the Dollar Swing
Line Bank's Pro Rata Revolving Share of the Revolving Credit Obligations, exceed
the Dollar Swing Line Bank's Revolving Loan Commitment at such time. Upon the
satisfaction of the conditions precedent set forth in Section 5.1, 5.2 and 5.3,
as applicable, from and including the Closing Date and prior to the Revolving
Loan Termination Date, the Multicurrency Swing Line Bank agrees, on the terms
and conditions set forth in this Agreement, to make revolving swing line loans
(each, individually, a "MULTICURRENCY SWING LINE LOAN" and collectively, the
"MULTICURRENCY SWING LINE LOANS") to the Borrowers from time to time in any
Agreed Currency other than Dollars; provided, however, that, after giving effect
to any Multicurrency Swing Line Loan, the aggregate outstanding principal Dollar
Amount of all
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Multicurrency Swing Line Loans shall not exceed the Multicurrency Swing Line
Commitment; provided further that at no time shall the Dollar Amount of the
Revolving Credit Obligations exceed the Aggregate Revolving Loan Commitment; and
provided further that at no time shall the sum of (a) the Dollar Amount of the
Multicurrency Swing Line Loans, plus (b) the Multicurrency Swing Line Bank's Pro
Rata Revolving Share of the Dollar Swing Line Loans, plus (c) principal amount
of the Dollar Amount of the Multicurrency Swing Line Bank's Pro Rata Revolving
Share of the Revolving Credit Obligations exceed the Multicurrency Swing Line
Bank's Revolving Loan Commitment at such time.
(B) BORROWING/CONVERSION/CONTINUATION NOTICE; INTEREST RATE. The
Company and/or the applicable Borrower shall deliver to the Administrative Agent
and the applicable Swing Line Bank a Borrowing/Conversion/Continuation Notice,
signed by it, (a) not later than 1:00 p.m. (New York time) on the Borrowing Date
of each Dollar Swing Line Loan (or at such later time as may be acceptable to
the Swing Line Bank in its sole discretion) or (b) not later than 11:00 a.m.
(Brussels time) on the Borrowing Date of each Multicurrency Swing Line Loan, in
each case, specifying (i) the applicable Borrowing Date (which date shall be a
Business Day and which may be the same date as the date the
Borrowing/Conversion/Continuation Notice is given, (ii) in the case of
Multicurrency Swing Line Loans, the Agreed Currency applicable thereto, and
(iii) the aggregate amount of the requested Swing Line Loan, the Dollar Amount
of which shall be not less than $1,000,000. The Swing Line Loans shall bear
interest at the Floating Rate.
(C) MAKING OF DOLLAR SWING LINE LOANS. Promptly after receipt of the
Borrowing/Conversion/ Continuation Notice under Section 2.3(B) in respect of
Dollar Swing Line Loans, the Administrative Agent shall notify each Lender by
telex or telecopy, or other similar form of transmission, of the requested
Dollar Swing Line Loan. Not later than 4:00 p.m. (New York time) on the
applicable Borrowing Date, the Dollar Swing Line Bank shall make available its
Dollar Swing Line Loan, in funds immediately available in New York, New York to
the Administrative Agent at its address specified pursuant to Article XV. The
Administrative Agent will promptly make the funds so received from the Dollar
Swing Line Bank available to the Company on the Borrowing Date at the
Administrative Agent's aforesaid address.
(D) MAKING OF MULTICURRENCY SWING LINE LOANS. Promptly after receipt of
the Borrowing/Conversion/ Continuation Notice under Section 2.3(B) in respect of
Multicurrency Swing Line Loans, the Administrative Agent shall notify each
Lender by telex or telecopy, or other similar form of transmission, of the
requested Multicurrency Swing Line Loan. Not later than 4:00 p.m. (Brussels
time) on the applicable Borrowing Date, the Multicurrency Swing Line Bank shall
make available its Multicurrency Swing Line Loan, in funds immediately available
to the Administrative Agent at its Eurocurrency Payment Office. The
Administrative Agent will promptly make the funds so received from the
Multicurrency Swing Line Bank available to the applicable Borrower on the
Borrowing Date at the Administrative Agent's aforesaid address.
(E) REPAYMENT OF DOLLAR SWING LINE LOANS. Each Dollar Swing Line Loan
shall be paid in full by the Company on or before the seventh (7th) Business Day
after the Borrowing Date for such Dollar Swing Line Loan. The Company may at any
time pay, without penalty or premium, all outstanding Dollar Swing Line Loans.
In addition, the Administrative Agent (i) may at any time in its sole discretion
with respect to any outstanding Dollar Swing Line Loan, or (ii) shall on the
seventh (7th) Business Day after the Borrowing Date of any Dollar Swing Line
Loan, require (by
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giving notice thereof to each Lender with a Revolving Loan Commitment not later
than 11:00 a.m. (New York time) on the date of such Loan) each Lender with a
Revolving Loan Commitment (including the Dollar Swing Line Bank) to make a
Revolving Loan in the amount of such Lender's Pro Rata Revolving Share of such
Dollar Swing Line Loan, for the purpose of repaying any outstanding portion such
Swing Line Loan. Not later than 3:00 p.m. (New York time) on the date of any
notice received pursuant to this Section 2.3(E), each Lender shall make
available its required Revolving Loan, in funds immediately available in Chicago
to the Administrative Agent at its address specified pursuant to Article XV.
Revolving Loans made pursuant to this Section 2.3(E) shall initially be Floating
Rate Loans and thereafter may be continued as Floating Rate Loans or converted
into Eurocurrency Rate Loans in the manner provided in Section 2.10 and subject
to the other conditions and limitations therein set forth and set forth in this
Article II. Unless a Lender shall have notified the Dollar Swing Line Bank,
prior to its making any Dollar Swing Line Loan, that any applicable condition
precedent set forth in Sections 5.1, 5.2 and 5.3, as applicable, had not then
been satisfied, such Lender's obligation to make Revolving Loans pursuant to
this Section 2.3(E) to repay Dollar Swing Line Loans shall be unconditional,
continuing, irrevocable and absolute and shall not be affected by any
circumstances, including, without limitation, (a) any set-off, counterclaim,
recoupment, defense or other right which such Lender may have against the
Administrative Agent, a Swing Line Bank or any other Person, (b) the occurrence
or continuance of a Default or Unmatured Default, (c) any adverse change in the
condition (financial or otherwise) of the Company, or (d) any other
circumstances, happening or event whatsoever. In the event that any Lender fails
to make payment to the Administrative Agent of any amount due under this Section
2.3(E), the Administrative Agent shall be entitled to receive, retain and apply
against such obligation the principal and interest otherwise payable to such
Lender hereunder until the Administrative Agent receives such payment from such
Lender or such obligation is otherwise fully satisfied. In addition to the
foregoing, if for any reason any Lender fails to make payment to the
Administrative Agent of any amount due under this Section 2.3(E) or may not make
any Revolving Loan required by this Section 2.3(E), such Lender shall be deemed,
at the option of the Administrative Agent, to have unconditionally and
irrevocably purchased from the applicable Swing Line Bank, without recourse or
warranty, an undivided interest and participation in the applicable Swing Line
Loan in the amount of such Revolving Loan, and such interest and participation
may be recovered from such Lender together with interest thereon at the Federal
Funds Effective Rate for each day during the period commencing on the date of
demand and ending on the date such amount is received. On the Revolving Loan
Termination Date, the Company shall repay in full the outstanding principal
balance of the Dollar Swing Line Loans.
(F) REPAYMENT OF MULTICURRENCY SWING LINE LOANS. Each Multicurrency
Swing Line Loan shall be paid in full by the Company on or before the seventh
(7th) Business Day after the Borrowing Date for such Multicurrency Swing Line
Loan. The Company may at any time pay, without penalty or premium, all
outstanding Multicurrency Swing Line Loans. In addition, the Administrative
Agent (i) may at any time in its sole discretion with respect to any outstanding
Multicurrency Swing Line Loan (ii) shall at any time at the direction of the
Multicurrency Swing Line Bank in its sole discretion with respect to any
outstanding Multicurrency Swing Line Loan, or (iii) shall on the seventh (7th)
Business Day after the Borrowing Date of any Multicurrency Swing Line Loan,
require (by giving notice thereof to each Lender with a Revolving Loan
Commitment not later than 10:00 a.m. (Brussels time) on the date of such Loan)
each Lender with a Revolving Loan Commitment (including the Multicurrency Swing
Line Bank) to make a Revolving Loan in the Dollar Amount of such Lender's Pro
Rata Revolving Share of such Multicurrency Swing Line Loan,
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for the purpose of repaying any outstanding portion such Swing Line Loan. Not
later than 2:00 p.m. (Brussels time) on the date of any notice received pursuant
to this Section 2.3(F), each Lender shall make available its required Revolving
Loan or Revolving Loans, in Dollars immediately available to the Administrative
Agent at its address specified in Section 2.3(D). Revolving Loans made pursuant
to this Section 2.3(F) shall initially be Floating Rate Loans and thereafter may
be continued as Floating Rate Loans or converted into Eurocurrency Rate Loans in
the manner provided in Section 2.10 and subject to the other conditions and
limitations therein set forth and set forth in this Article II. Unless a Lender
shall have notified the Multicurrency Swing Line Bank, prior to its making any
Multicurrency Swing Line Loan, that any applicable condition precedent set forth
in Sections 5.1, 5.2 and 5.3, as applicable, had not then been satisfied, such
Lender's obligation to make Revolving Loans pursuant to this Section 2.3(F) to
repay Multicurrency Swing Line Loans shall be unconditional, continuing,
irrevocable and absolute and shall not be affected by any circumstances,
including, without limitation, (a) any set-off, counterclaim, recoupment,
defense or other right which such Lender may have against the Administrative
Agent, a Swing Line Bank or any other Person, (b) the occurrence or continuance
of a Default or Unmatured Default, (c) any adverse change in the condition
(financial or otherwise) of the Company, or (d) any other circumstances,
happening or event whatsoever. In the event that any Lender fails to make
payment to the Administrative Agent of any amount due under this Section 2.3(F),
the Administrative Agent shall be entitled to receive, retain and apply against
such obligation the principal and interest otherwise payable to such Lender
hereunder until the Administrative Agent receives such payment from such Lender
or such obligation is otherwise fully satisfied. In addition to the foregoing,
if for any reason any Lender fails to make payment to the Administrative Agent
of any amount due under this Section 2.3(F) or may not make any Revolving Loan
required to be made by this Section 2.3(F), such Lender shall be deemed, at the
option of the Administrative Agent or the Multicurrency Swing Line Bank, to have
unconditionally and irrevocably purchased from the applicable Swing Line Bank,
without recourse or warranty, an undivided interest and participation in the
applicable Swing Line Loan in the amount of such Revolving Loan, and such
interest and participation may be recovered from such Lender together with
interest thereon at the Federal Funds Effective Rate for each day during the
period commencing on the date of demand and ending on the date such amount is
received. On the Termination Date, the applicable Borrower shall repay in full
the outstanding principal balance of the Multicurrency Swing Line Loans.
2.4 RATE OPTIONS FOR ALL ADVANCES; MAXIMUM INTEREST PERIODS. The
Revolving Loans and Term Loans may be Floating Rate Advances or Eurocurrency
Rate Advances, or a combination thereof, selected by the Company or the
applicable Borrower in accordance with SECTION 2.10; provided that until
syndication of the Aggregate Commitment and the commitments under the 364-Day
Credit Facility has been completed to the satisfaction of the Administrative
Agent, the Revolving Loans and Term Loans shall be Floating Rate Advances. The
Company or the applicable Borrower may select, in accordance with SECTION 2.10,
Rate Options and Interest Periods applicable to portions of the Revolving Loans,
Term Loans and Alternate Currency Loans; provided that there shall be no more
than ten (10) Interest Periods in effect with respect to all of the Loans at any
time (unless otherwise provided in the applicable Alternate Currency Addendum
with respect to Alternate Currency Loans). Each Alternate Currency Loan shall
bear interest on the outstanding principal amount thereof, for the Interest
Period applicable thereto, at the Alternate Currency Rate as set forth in the
applicable Alternate Currency Addendum.
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2.5 OPTIONAL PAYMENTS; MANDATORY PREPAYMENTS.
(A) OPTIONAL PAYMENTS. The Company or the applicable Borrower may from
time to time and at any time upon at least one (1) Business Day's prior written
notice repay or prepay without penalty or premium all or any part of outstanding
Floating Rate Advances in an aggregate minimum amount of $10,000,000 and in
integral multiples of $1,000,000 in excess thereof. Eurocurrency Rate Advances,
Eurocurrency Bid Rate Advances and Absolute Rate Advances may be voluntarily
repaid or prepaid prior to the last day of the applicable Interest Period,
subject to the indemnification provisions contained in Section 4.4, provided
that the applicable Borrower may not so prepay Eurocurrency Rate Advances,
Eurocurrency Bid Rate Advances or Absolute Rate Advances unless it shall have
provided at least four (4) Business Days' prior written notice to the
Administrative Agent of such prepayment. Each Subsidiary Borrower may, upon
prior written notice to the Administrative Agent and to the applicable Alternate
Currency Bank as prescribed in the applicable Alternate Currency Addendum and
specifying that it is prepaying all or a portion of its Alternate Currency
Loans, prepay its Alternate Currency Loans in whole at any time, or from time to
time in part in a Dollar Amount aggregating $5,000,000 or any larger multiple
Dollar Amount of $1,000,000 (or as otherwise specified in the applicable
Alternate Currency Addendum) by paying the principal amount to be paid together
with all accrued and unpaid interest thereon to and including the date of
payment; provided that any such payment occurring prior to the last day of any
Interest Period related to such Alternate Currency Loan shall be subject to the
indemnification provisions contained in Section 4.4.
(B) MANDATORY PREPAYMENTS OF REVOLVING LOANS. (i) If at any time and
for any reason (other than fluctuations in currency exchange rates) the Dollar
Amount of the Revolving Credit Obligations is greater than the Aggregate
Revolving Loan Commitment, the Company shall immediately make or cause to be
made a mandatory prepayment of the Revolving Credit Obligations in an amount
equal to such excess.
(ii) On the last Business Day of each month, the Administrative Agent
shall calculate the Dollar Amount of all outstanding Alternate Currency Loans
and Revolving Credit Obligations using, for each currency, the arithmetic mean
of the buy and sell spot rates of exchange of the Administrative Agent in the
London interbank market (or other market where the Administrative Agent's
foreign exchange operations in respect of such currency are then being
conducted) and if, on such Business Day:
(x) the Dollar Amount of the Revolving Credit Obligations
exceeds one hundred percent (100%) of the Aggregate
Revolving Loan Commitment as a result of fluctuations
in currency exchange rates, the applicable Borrower
shall immediately prepay Loans for the ratable
benefit of the Lenders in an aggregate amount such
that after giving effect thereto the Dollar Amount of
the Revolving Credit Obligations is less than or
equal to the Aggregate Revolving Loan Commitment; or
(y) the Dollar Amount of all outstanding Alternate
Currency Loans under the Alternate Currency Addenda
exceeds one hundred percent (100%) of the aggregate
Alternate Currency Commitments with respect thereto
as a result of fluctuations in currency exchange
rates, the applicable Borrower shall on
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such date prepay, or cause to be prepaid, Alternate
Currency Loans in an aggregate amount such that after
giving effect thereto the Dollar Amount of all such
Alternate Currency Loans is less than or equal to the
aggregate Alternate Currency Commitments with respect
thereto; or
(z) the Dollar Amount of the aggregate outstanding
principal amount of Alternate Currency Loans in the
same Alternate Currency exceeds the aggregate
Alternate Currency Commitments with respect thereto
as a result of fluctuations in currency exchange
rates, the applicable Borrowers shall on such date
prepay Alternate Currency Loans in such Alternate
Currency in an aggregate amount such that after
giving effect thereto the Dollar amount of all
Alternate Currency Loans is less than or equal to the
aggregate Alternate Currency Commitments with respect
thereto.
(iii) The Company shall make all mandatory prepayments required under
SECTION 2.6.
(iv) All of the mandatory prepayments made under this SECTION 2.5(B)
shall be applied first to Floating Rate Loans and to any Eurocurrency Rate Loans
and Alternate Currency Loans maturing on such date and then to subsequently
maturing Eurocurrency Rate Loans and Alternate Currency Loans in order of
maturity.
(C) Mandatory Prepayments of Term Loans. Upon the receipt by any
Borrower of (1) the proceeds from any sale of United States domestic Receivables
or (2) the proceeds from the incurrence of any single issue of Indebtedness in
excess of $50,000,000 which is not permitted by Section 7.3(D)(i)-(vi) hereof,
the Company shall immediately make a mandatory prepayment of the Term Loans in
an amount equal to such proceeds (applying the same first to accrued and unpaid
interest and then to principal).
2.6 REDUCTIONS IN COMMITMENTS. The Company may permanently reduce (i)
the Aggregate Revolving Loan Commitment in whole, or in part ratably among the
Lenders, in an aggregate minimum amount of $10,000,000 and in integral multiples
of $5,000,000 in excess of that amount (unless the Aggregate Revolving Loan
Commitment is reduced in whole), or (ii) the Swing Line Commitments in whole or
in part in amounts of $5,000,000 upon at least three (3) Business Day's prior
written notice to the Administrative Agent, which notice shall specify the
amount of any such reduction or (iii) in whole and terminate the Aggregate Term
Loan Commitment upon any reduction in whole of the Aggregate Revolving Loan
Commitment; provided, however, that the amount of the Aggregate Revolving Loan
Commitment may not be reduced below the aggregate principal Dollar Amount of the
outstanding Revolving Credit Obligations or below the aggregate amount of the
Swing Line Commitments. All accrued commitment fees shall be payable on the
effective date of any termination of all or any part the obligations of the
Lenders to make Loans hereunder. Each Subsidiary Borrower may, upon three (3)
Business Days prior written notice to the Administrative Agent and to the
applicable Alternate Currency Bank, terminate entirely at any time or reduce
from time to time by an aggregate amount of $5,000,000 or any larger multiple of
$1,000,000 (or as set forth on the applicable Alternate Currency Addendum), the
unused portions of the applicable Alternate Currency Commitment as specified by
the applicable Subsidiary Borrower in such notice to the Administrative Agent
and the applicable Alternate Currency Bank; provided, however, that at no time
shall the Alternate Currency Commitment of any Lender in
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respect of any Alternate Currency be reduced to an amount less than the total
outstanding principal amount of all Alternate Currency Loans of such Lender made
in such Alternate Currency.
2.7 METHOD OF BORROWING. Not later than 1:00 p.m. (New York time) on
each Borrowing Date, each Lender shall make available its Revolving Loan in
immediately available funds in the Agreed Currency to the Administrative Agent
at its address specified on its signature page hereto or as otherwise specified
pursuant to ARTICLE XV, unless the Administrative Agent has notified the Lenders
that such Loan is to be made available to the applicable Borrower at the
Administrative Agent's Eurocurrency Payment office, in which case each Lender
shall make available its Loan or Loans, in funds immediately available to the
Administrative Agent at its Eurocurrency Payment Office, not later than 12:00
noon (local time in the city of the Administrative Agent's Eurocurrency Payment
Office) in the Agreed Currency designated by the Administrative Agent. The
Administrative Agent will promptly make the funds so received from the Lenders
available to the applicable Borrower at the Administrative Agent's aforesaid
address.
2.8 METHOD OF SELECTING TYPES AND INTEREST PERIODS FOR ADVANCES. The
applicable Borrower shall select the Type of Advance and, in the case of each
Eurocurrency Rate Advance, the Interest Period, Agreed Currency and/or Alternate
Currency applicable to each Advance from time to time. The applicable Borrower
shall give the Administrative Agent irrevocable notice in substantially the form
of EXHIBIT B hereto (a "BORROWING/CONVERSION/CONTINUATION NOTICE") not later
than 10:00 a.m. (New York time) (a) on the Borrowing Date of each Floating Rate
Advance, and (b) three (3) Business Days before the Borrowing Date for each
Eurocurrency Rate Advance to be made in Dollars, and (c) four (4) Business Days
before the Borrowing Date for each Eurocurrency Rate Advance to be made in any
Agreed Currency other than Dollars and (d) three (3) Business Days before the
Borrowing Date for each Alternate Currency Loan (or such other period as may be
agreed to by the Administrative Agent and the applicable Borrower), and the
applicable Borrower shall give the applicable Alternate Currency Bank
irrevocable notice by 10:00 a.m. (local time) three (3) Business Days prior to
the Borrowing Date for such Alternate Currency Loan (or such other period as may
be agreed to by the applicable Alternate Currency Bank or specified in the
applicable Alternate Currency Addendum), specifying: (i) the Borrowing Date
(which shall be a Business Day) of such Advance; (ii) the aggregate amount of
such Advance; (iii) the Type of Advance selected; and (iv) in the case of each
Eurocurrency Rate Loan, the Interest Period and Agreed Currency or Alternate
Currency applicable thereto. Notwithstanding the foregoing, if the Company has
submitted a Competitive Bid Quote Request pursuant to SECTION 2.2(B), a
Borrowing/Conversion/Continuation Notice for a Floating Rate Advance may be
given not later than one (1) hour after the time which the Company is required
to reject one or more bids offered in connection with an Absolute Rate Auction
pursuant to SECTION 2.2(F) and a Borrowing/Conversion/Continuation Notice for a
Eurocurrency Rate Loan may be given not later than one (1) hour after the time
the Company is required to reject one or more bids offered in connection with a
Eurocurrency Auction pursuant to SECTION 2.2(F). Each Floating Rate Advance,
each Alternate Currency Loan bearing a fluctuating Alternate Currency Rate and
all Obligations other than Loans shall bear interest from and including the date
of the making of such Advance, in the case of Loans, and the date such
Obligation is due and owing in the case of such other Obligations, to (but not
including) the date of repayment thereof at the Floating Rate or Alternate
Currency Rate, as applicable, changing when and as such Floating Rate or
Alternate Currency Rate, as applicable, changes. Changes in the rate of interest
on that portion of any Advance maintained as a Floating Rate Loan will take
effect simultaneously with each change in the Alternate Base Rate.
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Changes in the rate of interest on any portion of any Alternate Currency Loan
bearing a fluctuating Alternate Currency Rate will take effect simultaneously
with each change in such Alternate Currency Rate. Each Eurocurrency Rate Advance
shall bear interest from and including the first day of the Interest Period
applicable thereto to (but not including) the last day of such Interest Period
at the interest rate determined as applicable to such Eurocurrency Rate Advance
and shall change as and when the Applicable Eurocurrency Margin changes.
2.9 MINIMUM AMOUNT OF EACH ADVANCE. Each Advance (other than an Advance
to repay a Swing Line Loan or Reimbursement Obligation) shall be in the minimum
Dollar Amount of $20,000,000 (or the Approximate Equivalent Amount of any Agreed
Currency other than Dollars or any Alternate Currency) and in Dollar Amount
multiples of $1,000,000 (or the Approximate Equivalent Amount of any Agreed
Currency other than Dollars or any Alternate Currency) if in excess thereof (or
such other amounts as may be specified in the applicable Alternate Currency
Addendum), provided, however, that any Floating Rate Advance may be in the
amount of the unused Aggregate Revolving Loan Commitment.
2.10 METHOD OF SELECTING TYPES AND INTEREST PERIODS FOR CONVERSION AND
CONTINUATION OF ADVANCES.
(A) RIGHT TO CONVERT. The applicable Borrower may elect from time to
time, subject to the provisions of Section 2.4 and this Section 2.10, to convert
all or any part of a Loan (other than a Competitive Bid Loan or Swing Line Loan)
of any Type into any other Type or Types of Loans (other than a Competitive Bid
Loan or Swing Line Loan); provided that any conversion of any Eurocurrency Rate
Advance shall be made on, and only on, the last day of the Interest Period
applicable thereto.
(B) AUTOMATIC CONVERSION AND CONTINUATION. Floating Rate Loans shall
continue as Floating Rate Loans unless and until such Floating Rate Loans are
converted into Eurocurrency Rate Loans. Eurocurrency Rate Loans shall continue
as Eurocurrency Rate Loans until the end of the then applicable Interest Period
therefor, at which time such Eurocurrency Rate Loans shall be automatically
converted into Floating Rate Loans unless the Company shall have given the
Administrative Agent notice in accordance with Section 2.10(D) requesting that,
at the end of such Interest Period, such Eurocurrency Rate Loans continue as a
Eurocurrency Rate Loan. Unless a Borrowing/Conversion/Continuation Notice shall
have timely been given in accordance with the terms of this Section 2.10,
Eurocurrency Rate Advances in an Agreed Currency other than Dollars and
Alternate Currency Loans shall automatically continue as Eurocurrency Rate
Advances in the same Agreed Currency or Alternate Currency Loans in the same
Alternate Currency, as applicable, with an Interest Period of one (1) month.
(C) NO CONVERSION POST-DEFAULT OR POST-UNMATURED DEFAULT.
Notwithstanding anything to the contrary contained in Section 2.10(A) or Section
2.10(B), no Loan may be converted into or continued as a Eurocurrency Rate Loan
(except with the consent of the Required Lenders) when any Default or Unmatured
Default has occurred and is continuing.
(D) BORROWING/CONVERSION/CONTINUATION NOTICE. The Company shall give
the Administrative Agent a Borrowing/Conversion/Continuation Notice with respect
to each conversion of a Floating Rate Loan into a Eurocurrency Rate Loan or
continuation of a Eurocurrency Rate Loan
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<PAGE> 47
not later than 10:00 a.m. (New York time) (x) three (3) Business Days prior to
the date of the requested conversion or continuation, with respect to any Loan
to be converted or continued as a Eurocurrency Rate Loan in Dollars, (y) four
(4) Business Days prior to the date of the requested conversion or continuation
with respect to any Loan to be converted or continued as a Eurocurrency Rate
Loan in an Agreed Currency other than Dollars, and (z) five (5) Business Days
before the date of the requested conversion or continuation Borrowing Date with
respect to the conversion or continuation of any Alternate Currency Loan (or
such other period as may be agreed to by the Administrative Agent), and the
applicable Subsidiary Borrower shall give the applicable Alternate Currency Bank
irrevocable notice by 10:00 a.m. (local time) three (3) Business Days prior to
the conversion or continuation of such Alternate Currency Loan (or such other
period as may specified in the applicable Alternate Currency Addendum),
specifying: (1) the requested date (which shall be a Business Day) of such
conversion or continuation; (2) the amount and Type of the Loan to be converted
or continued; and (3) the amount of Eurocurrency Rate Loan(s) or Alternate
Currency Loan(s), as applicable, into which such Loan is to be converted or
continued, the Agreed Currency or Alternate Currency, as applicable, and the
duration of the Interest Period applicable thereto.
(E) Notwithstanding anything herein to the contrary, (x) Eurocurrency
Rate Advances in an Agreed Currency may be continued as Eurocurrency Rate
Advances only in the same Agreed Currency, and (y) Alternate Currency Loans in
an Alternate Currency may be continued as Alternate Currency Loans only in the
same Alternate Currency.
2.11 DEFAULT RATE. After the occurrence and during the continuance of a
Default, each outstanding Loan shall bear interest at a rate equal to the rate
otherwise applicable thereto (giving effect to the provisions of SECTION
2.15(D)(ii)) plus 2% per annum.
2.12 METHOD OF PAYMENT. All payments of principal, interest, fees,
commissions and L/C Obligations hereunder shall be made, without setoff,
deduction or counterclaim (unless indicated otherwise in SECTION 2.15(E)), in
immediately available funds to the Administrative Agent (i) at the
Administrative Agent's address specified pursuant to ARTICLE XV with respect to
Advances or other Obligations denominated in Dollars and (ii) at the
Administrative Agent's Eurocurrency Payment Office with respect to any Advance
or other Obligations denominated in an Agreed Currency other than Dollars, or at
any other Lending Installation of the Administrative Agent specified in writing
by the Administrative Agent to the Company, by 2:00 p.m. (New York time) on the
date when due and shall be applied ratably among the Lenders with respect to any
principal and interest due in connection with Loans. Each Advance shall be
repaid or prepaid in the Agreed Currency in which it was made in the amount
borrowed and interest payable thereon shall also be paid in such currency. Each
payment delivered to the Administrative Agent for the account of any Lender
shall be delivered promptly by the Administrative Agent to such Lender in the
same type of funds which the Administrative Agent received at its address
specified pursuant to ARTICLE XV or at any Lending Installation specified in a
notice received by the Administrative Agent from such Lender. The Company
authorizes the Administrative Agent to charge the account of the Company
maintained with ABN, after one (1) Business Day's prior written notice to the
Company, for each payment of principal, interest, fees, commissions and L/C
Obligations as it becomes due hereunder. Each reference to the Administrative
Agent in this SECTION 2.12 shall also be deemed to refer, and shall apply
equally, to each Issuing Bank, in the case of payments required to be made by
the Company to any Issuing Bank pursuant to ARTICLE III.
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<PAGE> 48
All payments to be made by the Borrowers hereunder in respect of any
Alternate Currency Loans shall be made in the currencies in which such Loans are
denominated and in funds immediately available, at the office or branch from
which the Loan was made pursuant to SECTION 2.21 and the applicable Alternate
Currency Addendum not later than 3:00 p.m. (local time) on the date on which
such payment shall become due. Promptly upon receipt of any payment of principal
of the Alternate Currency Loans the applicable Alternate Currency Bank shall
give written notice to the Administrative Agent by telex or telecopy of the
receipt of such payment.
Notwithstanding the foregoing provisions of this Section, if, after the
making of any Advance in any currency other than Dollars, currency control or
exchange regulations are imposed in the country which issues such Agreed
Currency or Alternate Currency, as applicable, with the result that different
types of such Agreed Currency or Alternate Currency, as applicable, (the "NEW
CURRENCY") are introduced and the type of currency in which the Advance was made
(the "ORIGINAL CURRENCY") no longer exists or any Borrower is not able to make
payment to the Administrative Agent for the account of the Lenders or Alternate
Currency Bank, as applicable, in such Original Currency, then all payments to be
made by the Borrowers hereunder in such currency shall be made to the
Administrative Agent or Alternate Currency Bank, as applicable, in such amount
and such type of the New Currency or Dollars as shall be equivalent to the
amount of such payment otherwise due hereunder in the Original Currency, it
being the intention of the parties hereto that the Borrowers take all risks of
the imposition of any such currency control or exchange regulations. In
addition, notwithstanding the foregoing provisions of this Section, if, after
the making of any Advance in any currency other than Dollars, the applicable
Borrower is not able to make payment to the Administrative Agent for the account
of the Lenders or the applicable Alternate Currency Bank in the type of currency
in which such Advance was made because of the imposition of any such currency
control or exchange regulation, then such Advance shall instead be repaid when
due in Dollars in a principal amount equal to the Dollar Amount (as of the date
of repayment) of such Advance.
2.13 EVIDENCE OF DEBT.
(A) Each Lender shall maintain in accordance with its usual practice an
account or accounts (a "LOAN ACCOUNT") evidencing the indebtedness of the
Borrowers to such Lender owing to such Lender hereunder from time to time,
including the amounts of principal and interest payable and paid to such Lender
from time to time hereunder.
(B) The Register maintained by the Administrative Agent pursuant to
Section 14.3(C) shall include a control account, and a subsidiary account for
each Lender, in which accounts (taken together) shall be recorded (i) the date
and the amount of each Loan made hereunder, the Type thereof and the Interest
Period, if any, applicable thereto, (ii) the amount and the currency of any
principal or interest due and payable or to become due and payable from the
Borrowers to each Lender hereunder, (iii) the effective date and amount of each
Assignment Agreement delivered to and accepted by it and the parties thereto
pursuant to Section 14.3, (iv) the amount of any sum received by the
Administrative Agent hereunder for the account of the Lenders and each Lender's
share thereof, and (v) all other appropriate debits and credits as provided in
this Agreement, including, without limitation, all fees, charges, expenses and
interest.
(C) The entries made in the Loan Account, the Register and the other
accounts
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maintained pursuant to subsections (A) or (B) of this Section shall be
presumptively correct for all purposes, absent manifest error, unless the
applicable Borrower (or the Company on behalf of such Borrower) objects to
information contained in the Loan Accounts, the Register or the other accounts
within thirty (30) days of the applicable Borrower's receipt of such
information; provided that the failure of any Lender or the Administrative Agent
to maintain such accounts or any error therein shall not in any manner affect
the obligation of the Borrowers to repay the Obligations in accordance with the
terms of this Agreement.
(D) Any Lender may request that the Revolving Loans, the Term Loans or
Competitive Bid Loans made by it each be evidenced by a promissory note in
substantially the forms of Exhibit I-1, Exhibit I-2 or Exhibit I-3,
respectively, to evidence such Lender's Revolving Loans or Competitive Bid
Loans, as applicable. In such event, the applicable Borrower shall promptly
prepare, execute and deliver to such Lender a promissory note for such Loans
payable to the order of such Lender and in a form approved by the Administrative
Agent and consistent with the terms of this Agreement. Thereafter, the Loans
evidenced by such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 14.3) be represented by one or
more promissory notes in such form payable to the order of the payee named
therein.
2.14 TELEPHONIC NOTICES. The Borrowers authorize the Lenders and the
Administrative Agent to extend Loans, effect selections of Types of Advances and
submit Competitive Bid Quotes and to transfer funds based on telephonic notices
made by any person or persons the Administrative Agent or any Lender in good
faith believes to be acting on behalf of the applicable Borrower. The Borrowers
agree to deliver promptly to the Administrative Agent a written confirmation,
signed by an Authorized Officer, if such confirmation is requested by the
Administrative Agent or any Lender, of each telephonic notice. If the written
confirmation differs in any material respect from the action taken by the
Administrative Agent and the Lenders, the records of the Administrative Agent
and the Lenders shall govern absent manifest error. In case of disagreement
concerning such notices, if the Administrative Agent has recorded telephonic
borrowing notices, such recordings will be made available to the applicable
Borrower upon the Company's request therefor.
2.15 PROMISE TO PAY; INTEREST AND FEES; INTEREST PAYMENT DATES;
INTEREST AND FEE BASIS; TAXES; LOAN AND CONTROL ACCOUNTS.
(A) PROMISE TO PAY. All Loans shall be paid in full by the applicable
Borrowers on the earlier of (i) the Revolving Loan Termination Date (in the case
of Loans other than Term Loans) or Term Loan Termination Date (in the case of
Term Loans) and (ii) the Facility Termination Date; provided, that all
Competitive Bid Advances shall be paid in full by the Company on the last day of
the Interest Period applicable thereto, or, if earlier, on the Termination Date
or Facility Termination Date and all Swing Line Loans shall also be paid as set
forth in Section 2.3. Each Borrower unconditionally promises to pay when due the
principal amount of each Loan and all other Obligations incurred by it, and to
pay all unpaid interest accrued thereon, in accordance with the terms of this
Agreement and the other Loan Documents.
(B) INTEREST PAYMENT DATES. Interest accrued on each Floating Rate Loan
and each Alternate Currency Loan bearing a fluctuating Alternate Currency Rate
shall be payable on each Payment Date, commencing with the first such date to
occur after the date hereof, upon any prepayment whether by acceleration or
otherwise, and at maturity (whether by acceleration or
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otherwise). Interest accrued on each Fixed-Rate Loan shall be payable on the
last day of its applicable Interest Period, on any date on which the Fixed-Rate
Loan is prepaid, whether by acceleration or otherwise, and at maturity. Interest
accrued on each Fixed-Rate Loan having an Interest Period longer than three
months shall also be payable on the last day of each three-month interval during
such Interest Period. Interest accrued on the principal balance of all other
Obligations shall be payable in arrears (i) on the last day of each calendar
month, commencing on the first such day following the incurrence of such
Obligation, (ii) upon repayment thereof in full or in part, and (iii) if not
theretofore paid in full, at the time such other Obligation becomes due and
payable (whether by acceleration or otherwise).
(C) FEES.
(i) The Company shall pay to the Administrative Agent, for the
account of the Lenders in accordance with their Pro Rata Revolving
Shares, from and after the date of this Agreement until the Facility
Termination Date, a commitment fee accruing at the rate of the then
Applicable Commitment Fee Percentage on the unutilized portion of such
Lender's Revolving Loan Commitment (treating Letters of Credit, but not
Competitive Bid Loans or Swing Line Loans, as usage). The commitment
fee shall be payable in arrears on each Payment Date hereafter, and, in
addition, on any date on which the Aggregate Revolving Loan Commitment
shall be terminated in whole or, with respect to such terminated
amount, in part.
(ii) The Company shall pay to the Administrative Agent, for
the account of the Lenders in accordance with their Pro Rata Term
Shares, from and after the date of this Agreement until the earlier of
the Facility Termination Date and the making of the Term Loans, a
commitment fee accruing at the rate of the then Applicable Commitment
Fee Percentage on such Lender's Term Loan Commitment. The commitment
fee shall be payable in arrears at the time of the making of the Term
Loans and, in addition, on any date upon which the Aggregate Term Loan
Commitment shall be terminated.
(iii) The Company agrees to pay to the Administrative Agent,
for the sole account of the Administrative Agent, the Lead Arrangers
and the Agents (unless otherwise agreed between the Administrative
Agent, the Lead Arrangers, the Agents and any Lender) the fees set
forth in the Fee Letters, payable at the times and in the amounts set
forth therein.
(iv) The applicable Borrower agrees to pay to each Alternate
Currency Bank, for its sole account, a fronting fee equal to 0.25% of
the average daily outstanding Dollar Amount of all Alternate Currency
Loans made by such Alternate Currency Bank.
(D) Interest and Fee Basis; Applicable Floating Rate Margin, Applicable
Eurocurrency Margin and Applicable Commitment Fee Percentage.
(i) Interest on all Fixed-Rate Loans (except as provided
otherwise in the applicable Alternate Currency Addendum in the case of
an Alternate Currency Loan) and fees shall be calculated for actual
days elapsed on the basis of a 360-day year. Interest on all Floating
Rate Loans shall be calculated for actual days elapsed on the basis of
a 365-, or when appropriate 366-, day year. Interest shall be payable
for the day an Obligation is
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incurred but not for the day of any payment on the amount paid if
payment is received prior to 3:00 p.m. (New York time) at the place of
payment. If any payment of principal of or interest on a Loan or any
payment of any other Obligations shall become due on a day which is not
a Business Day, such payment shall be made on the next succeeding
Business Day and, in the case of a principal payment, such extension of
time shall be included in computing interest, fees and commissions in
connection with such payment.
(ii) The Applicable Floating Rate Margin, Applicable
Eurocurrency Margin and Applicable Commitment Fee Percentage shall be
determined on the basis of the then applicable Leverage Ratio as
described in this SECTION 2.15(D)(ii), from time to time by reference
to the following table:
<TABLE>
<CAPTION>
- ------------------------------------- ------------------- --------------------------------- --------------------------
APPLICABLE APPLICABLE
FLOATING APPLICABLE COMMITMENT
LEVERAGE RATIO RATE EUROCURRENCY FEE
MARGIN MARGIN PERCENTAGE
- ------------------------------------- ------------------- --------------------------------- --------------------------
<S> <C> <C> <C>
Less than 1.50 0.25% 1.25% 0.300%
- ------------------------------------- ------------------- --------------------------------- --------------------------
1.50 or greater, but less than 0.50% 1.50% 0.375%
2.00
- ------------------------------------- ------------------- --------------------------------- --------------------------
2.00 or greater, but less than 0.75% 1.75% 0.450%
2.50
- ------------------------------------- ------------------- --------------------------------- --------------------------
2.50 or greater, but less than 1.00% 2.00% 0.500%
3.00
- ------------------------------------- ------------------- --------------------------------- --------------------------
3.00 or greater 1.25% 2.25% 0.500%
- ------------------------------------- ------------------- --------------------------------- --------------------------
</TABLE>
The Applicable Floating Rate Margin, Applicable Eurocurrency
Margin and Applicable Commitment Fee Percentage shall be 1.00%, 2.00%
and 0.500%, respectively, until the Administrative Agent has received
the Company's financial statements for the fiscal quarter ending
September 30, 2000; PROVIDED that if the Leverage Ratio as reflected in
the most recently delivered financial statements, delivered pursuant to
SECTIONS 7.1(A)(i) and (ii), as applicable, is 3.00 or greater, the
Applicable Floating Rate Margin, Applicable Eurocurrency Margin and
Applicable Commitment Fee Percentage shall be 1.25%, 2.25% and 0.500%,
respectively. Thereafter, upon receipt of the financial statements to
be delivered by the Company in accordance with SECTION 7.1(A)(i) or
(ii), as applicable, for any fiscal quarter or, if earlier, upon
receipt of the Company's unaudited financial statements for any fiscal
year, the Applicable Floating Rate Margin, Applicable Eurocurrency
Margin and Applicable Commitment Fee Percentage shall be adjusted, such
adjustment being effective five (5) Business Days following the
Administrative Agent's receipt of such financial statements and the
compliance certificate required to be delivered in connection therewith
pursuant to SECTION 7.1(A)(iii); provided, that if the Company shall
not have timely delivered its financial statements in accordance with
SECTION 7.1(A)(i) or (ii), as applicable, then commencing on the date
upon which such financial statements should have been delivered and
continuing until such financial statements are actually delivered, it
shall be assumed for purposes of determining the Applicable Floating
Rate Margin, Applicable
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Eurocurrency Margin and Applicable Commitment Fee Percentage that the
Leverage Ratio was greater than 3.00 to 1.0. Notwithstanding the
foregoing, for so long as any Default shall have occurred and been
continuing, the Applicable Floating Rate Margin, Applicable
Eurocurrency Margin and Applicable Commitment Fee Percentage shall be
the highest Applicable Floating Rate Margin, Applicable Eurocurrency
Margin and Applicable Commitment Fee Margin set forth in the foregoing
table. At all times after the first anniversary of the Closing Date
until the Term Loans have been repaid in full, each of the Applicable
Floating Rate Margin and the Applicable Eurocurrency Margin shall
increase by 25 basis points.
(E) Taxes.
(i) Any and all payments by the Borrowers hereunder (whether
in respect of principal, interest, fees or otherwise) shall be made
free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings or
any interest, penalties and liabilities with respect thereto including
those arising after the date hereof as a result of the adoption of or
any change in any law, treaty, rule, regulation, guideline or
determination of a Governmental Authority or any change in the
interpretation or application thereof by a Governmental Authority but
excluding, in the case of each Lender and the Administrative Agent,
such taxes (including income taxes, franchise taxes and branch profit
taxes) as are imposed on or measured by such Lender's or the
Administrative Agent's, as the case may be, net income by the United
States of America or any Governmental Authority of the jurisdiction
under the laws of which such Lender or the Administrative Agent, as the
case may be, is organized (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings, and liabilities which the
Administrative Agent or a Lender determines to be applicable to this
Agreement, the other Loan Documents, the Revolving Loan Commitments,
the Loans or the Letters of Credit being hereinafter referred to as
"TAXES"). If any Borrower shall be required by law to deduct or
withhold any Taxes from or in respect of any sum payable hereunder or
under the other Loan Documents to any Lender or the Administrative
Agent, (i) the sum payable shall be increased as may be necessary so
that after making all required deductions or withholdings (including
deductions applicable to additional sums payable under this SECTION
2.15(E)) such Lender or Agent (as the case may be) receives an amount
equal to the sum it would have received had no such deductions or
withholdings been made, (ii) the applicable Borrower shall make such
deductions or withholdings, and (iii) the applicable Borrower shall pay
the full amount deducted or withheld to the relevant taxation authority
or other authority in accordance with applicable law. If a withholding
tax of the United States of America or any other Governmental Authority
shall be or become applicable (y) after the date of this Agreement, to
such payments by the applicable Borrower made to the Lending
Installation or any other office that a Lender may claim as its Lending
Installation, or (z) after such Lender's selection and designation of
any other Lending Installation, to such payments made to such other
Lending Installation, such Lender shall use reasonable efforts to make,
fund and maintain the affected Loans through another Lending
Installation of such Lender in another jurisdiction so as to reduce the
applicable Borrower's liability hereunder, if the making, funding or
maintenance of such Loans through such other Lending Installation of
such Lender does not, in the judgment of such Lender, otherwise
adversely affect such Loans, or obligations under the Revolving Loan
Commitments of such Lender.
(ii) In addition, the Borrowers agree to pay any present or
future stamp or documentary taxes or any other excise or property
taxes, charges, or similar levies which
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arise from any payment made hereunder, from the issuance of Letters of
Credit hereunder, or from the execution, delivery or registration of,
or otherwise with respect to, this Agreement, the other Loan Documents,
the Revolving Loan Commitments, the Loans or the Letters of Credit
(hereinafter referred to as "OTHER TAXES").
(iii) The Company and each Subsidiary Borrower shall indemnify
each Lender and the Administrative Agent for the full amount of Taxes
and Other Taxes (including, without limitation, any Taxes or Other
Taxes imposed by any Governmental Authority on amounts payable under
this SECTION 2.15(E)) paid by such Lender or the Administrative Agent
(as the case may be) and any liability (including penalties, interest,
and expenses) arising therefrom or with respect thereto, whether or not
such Taxes or Other Taxes were correctly or legally asserted. This
indemnification shall be made within thirty (30) days after the date
such Lender or the Administrative Agent (as the case may be) makes
written demand therefor. If the Taxes or Other Taxes with respect to
which the Company or any Subsidiary Borrower has made either a direct
payment to the taxation or other authority or an indemnification
payment hereunder are subsequently refunded to any Lender, such Lender
will return to the applicable Borrower an amount equal to the lesser of
the indemnification payment or the refunded amount. A certificate as to
any additional amount payable to any Lender or the Administrative Agent
under this SECTION 2.15(E) submitted to the applicable Borrower and the
Administrative Agent (if a Lender is so submitting) by such Lender or
the Administrative Agent shall show in reasonable detail the amount
payable and the calculations used to determine such amount and shall,
absent manifest error, be final, conclusive and binding upon all
parties hereto. With respect to such deduction or withholding for or on
account of any Taxes and to confirm that all such Taxes have been paid
to the appropriate Governmental Authorities, the applicable Borrower
shall promptly (and in any event not later than thirty (30) days after
receipt) furnish to each Lender and the Administrative Agent such
certificates, receipts and other documents as may be required (in the
reasonable judgment of such Lender or the Administrative Agent) to
establish any tax credit to which such Lender or the Administrative
Agent may be entitled.
(iv) Within thirty (30) days after the date of any payment of
Taxes or Other Taxes by the Company or any Subsidiary Borrower, the
Company shall furnish to the Administrative Agent the original or a
certified copy of a receipt evidencing payment thereof.
(v) Without prejudice to the survival of any other agreement
of the Company and the Subsidiary Borrowers hereunder, the agreements
and obligations of the Borrowers contained in this SECTION 2.15(E)
shall survive the payment in full of all Obligations, the termination
of the Letters of Credit and the termination of this Agreement.
(vi) Each Lender (including any Replacement Lender or
Purchaser) that is not created or organized under the laws of the
United States of America or a political subdivision thereof (each a
"NON-U.S. LENDER") shall deliver to the Company and the Administrative
Agent on or before the Closing Date, or, if later, the date on which
such Lender becomes a Lender pursuant to SECTION 12.3 hereof (and from
time to time thereafter upon the request of the Company or the
Administrative Agent, but only for so long as such Non-U.S. Lender
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is legally entitled to do so), either (1) (x) two (2) duly completed
copies of either (A) IRS Form W-8BEN (or, if delivered on or before
December 31, 1999, IRS Form 1001), or (B) IRS Form W-8ECI (or, if
delivered on or before December 31, 1999, IRS Form 4224), or in either
case an applicable successor form, and (y) for periods prior to January
1, 2000, a duly completed copy of IRS Form W-8 or W-9 or applicable
successor form; or (2) in the case of a Non-U.S. Lender that is not
legally entitled to deliver either form listed in CLAUSE (vi)(1)(x),
(x) a certificate of a duly authorized officer of such Non-U.S. Lender
to the effect that such Non-U.S. Lender is not (A) a "bank" within the
meaning of Section 881(c)(3)(A) of the Code, (B) a "10 percent
shareholder" of the Company or any Subsidiary Borrower within the
meaning of Section 881(c)(3)(B) of the Code, or (C) a controlled
foreign corporation receiving interest from a related person within the
meaning of Section 881(c)(3)(C) of the Code (such certificate, an
"EXEMPTION CERTIFICATE") and (y) two (2) duly completed copies of IRS
Form W-8BEN or applicable successor form. Each such Lender further
agrees to deliver to the Company and the Administrative Agent from time
to time a true and accurate certificate executed in duplicate by a duly
authorized officer of such Lender in a form satisfactory to the Company
and the Administrative Agent, before or promptly upon the occurrence of
any event requiring a change in the most recent certificate previously
delivered by it to the Company and the Administrative Agent pursuant to
this SECTION 2.15(E)(vi). Further, each Lender which delivers a form or
certificate pursuant to this CLAUSE (vi) covenants and agrees to
deliver to the Company and the Administrative Agent within fifteen (15)
days prior to the expiration of such form, for so long as this
Agreement is still in effect, another such certificate and/or two (2)
accurate and complete original newly-signed copies of the applicable
form (or any successor form or forms required under the Code or the
applicable regulations promulgated thereunder).
Each Lender shall promptly furnish to the Company and the
Administrative Agent such additional documents as may be reasonably
required by any Borrower or the Administrative Agent to establish any
exemption from or reduction of any Taxes or Other Taxes required to be
deducted or withheld and which may be obtained without undue expense to
such Lender. Notwithstanding any other provision of this SECTION
2.15(E), no Borrower shall be obligated to gross up any payments to any
Lender pursuant to SECTION 2.15(E)(i), or to indemnify any Lender
pursuant to SECTION 2.15(E)(iii), in respect of United States federal
withholding taxes to the extent imposed as a result of (x) the failure
of such Lender to deliver to the Company the form or forms and/or an
Exemption Certificate, as applicable to such Lender, pursuant to
SECTION 2.15(E)(vi), (y) such form or forms and/or Exemption
Certificate not establishing a complete exemption from U.S. federal
withholding tax or the information or certifications made therein by
the Lender being untrue or inaccurate on the date delivered in any
material respect, or (z) the Lender designating a successor Lending
Installation at which it maintains its Loans which has the effect of
causing such Lender to become obligated for tax payments in excess of
those in effect immediately prior to such designation; PROVIDED,
HOWEVER, that the applicable Borrower shall be obligated to gross up
any payments to any such Lender pursuant to SECTION 2.15(E)(i), and to
indemnify any such Lender pursuant to SECTION 2.15(E)(iii), in respect
of United States federal withholding taxes if (x) any such failure to
deliver a form or forms or an Exemption Certificate or the failure of
such form or forms or exemption certificate to establish a complete
exemption from U.S. federal withholding tax or inaccuracy or untruth
contained
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therein resulted from a change in any applicable statute, treaty,
regulation or other applicable law or any interpretation of any of the
foregoing occurring after the date hereof, which change rendered such
Lender no longer legally entitled to deliver such form or forms or
Exemption Certificate or otherwise ineligible for a complete exemption
from U.S. federal withholding tax, or rendered the information or the
certifications made in such form or forms or Exemption Certificate
untrue or inaccurate in any material respect, (y) the redesignation of
the Lender's Lending Installation was made at the request of the
Company or (z) the obligation to gross up payments to any such Lender
pursuant to SECTION 2.15(E)(i), or to indemnify any such Lender
pursuant to SECTION 2.15(E)(iii), is with respect to a Purchaser that
becomes a Purchaser as a result of an assignment made at the request of
the Company.
2.16 NOTIFICATION OF ADVANCES, INTEREST RATES, PREPAYMENTS AND
AGGREGATE REVOLVING LOAN COMMITMENT REDUCTIONS. Promptly after receipt thereof,
the Administrative Agent will notify each Lender of the contents of each
Aggregate Revolving Loan Commitment reduction notice,
Borrowing/Conversion/Continuation Notice, and repayment notice received by it
hereunder. The Administrative Agent will notify the applicable Borrower and each
Lender of the interest rate and Agreed Currency applicable to each Fixed-Rate
Loan promptly upon determination of such interest rate and Agreed Currency and
will give each Lender prompt notice of each change in the Alternate Base Rate.
2.17 LENDING INSTALLATIONS. Each Lender may book its Loans or Letters
of Credit at any Lending Installation selected by such Lender and may change its
Lending Installation from time to time. All terms of this Agreement shall apply
to any such Lending Installation. Each Lender may, by written or facsimile
notice to the Administrative Agent and the Company, designate a Lending
Installation through which Loans will be made by it and for whose account Loan
payments and/or payments of L/C Obligations are to be made.
2.18 NON-RECEIPT OF FUNDS BY THE ADMINISTRATIVE AGENT. Unless a
Borrower or a Lender, as the case may be, notifies the Administrative Agent
prior to the date on which it is scheduled to make payment to the Administrative
Agent of (i) in the case of a Lender, the proceeds of a Loan or (ii) in the case
of any Borrower, a payment of principal, interest or fees to the Administrative
Agent for the account of the Lenders, that it does not intend to make such
payment, the Administrative Agent may assume that such payment has been made.
The Administrative Agent may, but shall not be obligated to, make the amount of
such payment available to the intended recipient in reliance upon such
assumption. If such Lender or the applicable Borrower, as the case may be, has
not in fact made such payment to the Administrative Agent, the recipient of such
payment shall, on demand by the Administrative Agent, repay to the
Administrative Agent the amount so made available together with interest thereon
in respect of each day during the period commencing on the date such amount was
so made available by the Administrative Agent until the date the Administrative
Agent recovers such amount at a rate per annum equal to (i) in the case of
payment by a Lender, the Federal Funds Effective Rate for such day or (ii) in
the case of payment by a Borrower, the interest rate applicable to the relevant
Loan.
2.19 TERMINATION DATE. This Agreement shall be effective until the
Facility Termination Date. Notwithstanding the termination of this Agreement,
until (A) all of the Obligations (other than contingent indemnity obligations)
shall have been fully and indefeasibly paid and satisfied, (B) all commitments
of the Lenders to extend credit hereunder have expired or have been terminated
and
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(C) all of the Letters of Credit shall have expired, been canceled or terminated
(collectively, the "TERMINATION CONDITIONS"), all of the rights and remedies
under this Agreement and the other Loan Documents shall survive.
2.20 REPLACEMENT OF CERTAIN LENDERS. In the event a Lender ("AFFECTED
LENDER") shall have: (i) failed to fund its Pro Rata Revolving Share of any
Advance requested by the applicable Borrower, or to make payment in respect of
any Alternate Currency Loan purchased by such Lender pursuant to SECTION
2.21(E), which such Lender is obligated to fund under the terms of this
Agreement and which failure has not been cured, (ii) requested compensation from
any Borrower under SECTIONS 2.15(E), 4.1 or 4.2 to recover Taxes, Other Taxes or
other additional costs incurred by such Lender which are not being incurred
generally by the other Lenders except as provided under any applicable Alternate
Currency Addendum, or (iii) delivered a notice pursuant to SECTION 4.3 claiming
that such Lender is unable to extend Eurocurrency Rate Loans to the Company for
reasons not generally applicable to the other Lenders, then, in any such case,
after the engagement of one or more "Replacement Lenders" (as defined below) by
the Company and/or the Administrative Agent, the Company or the Administrative
Agent may make written demand on such Affected Lender (with a copy to the
Administrative Agent in the case of a demand by the Company and a copy to the
Company in the case of a demand by the Administrative Agent) for the Affected
Lender to assign, and such Affected Lender shall use commercially reasonable
efforts to assign pursuant to one or more duly executed Assignment Agreements
five (5) Business Days after the date of such demand, to one or more financial
institutions that comply with the provisions of SECTION 14.3(A) which the
Company or the Administrative Agent, as the case may be, shall have engaged for
such purpose ("REPLACEMENT LENDER"), all of such Affected Lender's rights and
obligations under this Agreement and the other Loan Documents (including,
without limitation, its Revolving Loan Commitment, all Loans owing to it, all of
its participation interests in existing Letters of Credit, and its obligation to
participate in additional Letters of Credit and Alternate Currency Loans
hereunder) in accordance with SECTION 14.3. The Administrative Agent is
authorized to execute one or more of such assignment agreements as
attorney-in-fact for any Affected Lender failing to execute and deliver the same
within five (5) Business Days after the date of such demand. With respect to
such assignment the Affected Lender shall be entitled to receive, in cash, all
amounts due and owing to the Affected Lender hereunder or under any other Loan
Document, including, without limitation, the aggregate outstanding principal
amount of the Loans owed to such Lender, together with accrued interest thereon
through the date of such assignment, amounts payable under SECTIONS 2.15(E),
4.1, and 4.2 with respect to such Affected Lender and compensation payable under
SECTION 2.15(C) in the event of any replacement of any Affected Lender under
CLAUSE (ii) or CLAUSE (iii) of this SECTION 2.20; provided that upon such
Affected Lender's replacement, such Affected Lender shall cease to be a party
hereto but shall continue to be entitled to the benefits of Sections 2.15(E),
4.1, 4.2, 4.4, and 11.7, as well as to any fees accrued for its account
hereunder and not yet paid, and shall continue to be obligated under Section
12.8.
2.21 ALTERNATE CURRENCY LOANS.
(A) Upon the satisfaction of the conditions precedent set forth in
Article V hereof and set forth in the applicable Alternate Currency Addendum,
from and including the later of the date of this Agreement and the date of
execution of the applicable Alternate Currency Addendum and prior to the
Termination Date (or such earlier termination date as shall be specified in or
pursuant to the applicable Alternate Currency Addendum), each Alternate Currency
Bank agrees, on the terms and
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conditions set forth in this Agreement and in the applicable Alternate Currency
Addendum, to make Alternate Currency Loans under such Alternate Currency
Addendum to the applicable Borrower party to such Alternate Currency Addendum
from time to time in the applicable Alternate Currency, in an amount not to
exceed each such Alternate Currency Bank's applicable Alternate Currency
Commitment; provided, however, at no time shall the Dollar Amount of the
outstanding principal amount of the Alternate Currency Loans for all Alternate
Currencies plus the outstanding principal amount of all Eurocurrency Rate Loans
in Agreed Currencies other than Dollars exceed the Dollar Amount of $150,000,000
other than as a result of currency fluctuations and then only to the extent
permitted in Section 2.5(B)(ii); provided, further, at no time shall the Dollar
Amount of the Alternate Currency Loans for any specific Alternate Currency
exceed the maximum amount specified as the maximum amount for such Alternate
Currency in the applicable Alternate Currency Addendum other than as a result of
currency fluctuations and then only to the extent permitted in Section
2.5(B)(ii). Subject to the terms of this Agreement and the applicable Alternate
Currency Addendum, the applicable Borrowers may borrow, repay and reborrow
Alternate Currency Loans in the applicable Alternate Currency at any time prior
to the Termination Date (or such earlier termination date as shall be specified
in or pursuant to the applicable Alternate Currency Addendum). On the
Termination Date (or such earlier termination date as shall be specified in or
pursuant to the applicable Alternate Currency Addendum), the outstanding
principal balance of the Alternate Currency Loans shall be paid in full by the
applicable Borrower and prior to the Termination Date (or such earlier
termination date as shall be specified in or pursuant to the applicable
Alternate Currency Addendum) prepayments of the Alternate Currency Loans shall
be made by the applicable Borrower if and to the extent required by Section
2.5(B)(ii).
(B) Borrowing Notice. When the applicable Borrower desires to borrow
under this Section 2.21, the applicable Borrower shall deliver to the applicable
Alternate Currency Bank and the Administrative Agent a
Borrowing/Conversion/Continuation Notice, signed by it, as provided in Section
2.8 specifying that such Borrower is requesting an Alternate Currency Loan
pursuant to this Section 2.21, and the Administrative Agent shall give prompt
notice to the Lenders of any such request for an Alternate Currency Loan. Any
Borrowing/Conversion/Continuation Notice given pursuant to this Section 2.21
shall be irrevocable.
(C) Termination. Except as otherwise required by applicable law, in no
event shall any Alternate Currency Bank have the right to accelerate the
Alternate Currency Loans outstanding under any Alternate Currency Addendum or to
terminate its commitments (if any) thereunder to make Alternate Currency Loans
prior to the stated termination date in respect thereof, except that each
Alternate Currency Bank shall have such rights upon an acceleration of the Loans
and a termination of the Revolving Credit Commitments pursuant to Article IX.
(D) Statements. Each Alternate Currency Bank shall furnish to the
Administrative Agent not less frequently than monthly, at the end of each Fiscal
Quarter, and at any other time at the reasonable request of the Administrative
Agent, a statement setting forth the outstanding Alternate Currency Loans made
and repaid during the period since the last such report under such Alternate
Currency Addendum.
(E) Risk Participation. Immediately and automatically upon the
occurrence of an Event of Default under Sections 8.1(A), (E) or (F), each Lender
shall be deemed to have unconditionally and irrevocably purchased from the
applicable Alternate Currency Bank, without recourse or
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warranty, an undivided interest in and participation in each Alternate Currency
Loan ratably in an amount equal to such Lender's Pro Rata Revolving Share of the
amount of principal and accrued interest of such Loan, and immediately and
automatically all Alternate Currency Loans shall be converted to and
redenominated in Dollars equal to the Dollar Amount of each such Alternate
Currency Loan determined as of the date of such conversion; provided, that to
the extent such conversion shall occur other than at the end of an Interest
Period, the applicable Borrower shall pay to the applicable Alternate Currency
Bank, all losses and breakage costs related thereto in accordance with Section
4.4. Each of the Lenders shall pay to the applicable Alternate Currency Bank not
later than two (2) Business Days following a request for payment from such
Alternate Currency Bank, in Dollars, an amount equal to the undivided interest
in and participation in the Alternate Currency Loan purchased by such Lender
pursuant to this Section 2.21(E). In the event that any Lender fails to make
payment to the applicable Alternate Currency Bank of any amount due under this
Section 2.21(E), the Administrative Agent shall be entitled to receive, retain
and apply against such obligation the principal and interest otherwise payable
to such Lender hereunder until the Administrative Agent receives from such
Lender an amount sufficient to discharge such Lender's payment obligation as
prescribed in this Section 2.21(E) together with interest thereon at the Federal
Funds Effective Rate for each day during the period commencing on the date of
demand by the applicable Alternate Currency Bank and ending on the date such
obligation is fully satisfied. The Administrative Agent will promptly remit all
payments received as provided above to the applicable Alternate Currency Bank.
In consideration of the risk participations prescribed in this Section 2.21(E),
each Lender shall receive, from the accrued interest paid for periods prior to
the conversion of any Alternate Currency Loan as described above by the
applicable Borrower on each Alternate Currency Loan, a fee equal to such
Lender's Pro Rata Revolving Share of the Applicable Eurocurrency Margin
component of the interest accrued on such Loan, as in effect from time to time
during the period such interest accrued. Such portion of the interest paid by
the applicable Borrower on Alternate Currency Loans to the applicable Alternate
Currency Bank shall be paid as promptly as possible by such Alternate Currency
Bank to the Administrative Agent, and the Administrative Agent shall as promptly
as possible convert such amount into Dollars at the spot rate of exchange in
accordance with its normal banking practices and apply such resulting amount
ratably among the Lenders (including the Alternate Currency Banks) in proportion
to their Pro Rata Revolving Share.
(F) Other Provisions Applicable to Alternate Currency Loans. The
specification of payment of Alternate Currency Loans in the related Alternate
Currency at a specific place pursuant to this Agreement is of the essence. Such
Alternate Currency shall be the currency of account and payment of such Loans
under this Agreement and the applicable Alternate Currency Addendum.
Notwithstanding anything in this Agreement, the obligation of the applicable
Borrower in respect of such Loans shall not be discharged by an amount paid in
any other currency or at another place, whether pursuant to a judgment or
otherwise, to the extent the amount so paid, on prompt conversion into the
applicable Alternate Currency and transfer to such Lender under normal banking
procedure, does not yield the amount of such Alternate Currency due under this
Agreement or the applicable Alternate Currency Addendum. In the event that any
payment, whether pursuant to a judgment or otherwise, upon conversion and
transfer, does not result in payment of the amount of such Alternate Currency
due under this Agreement or the applicable Alternate Currency Addendum, such
Lender shall have an independent cause of action against each of the Borrowers
for the currency deficit.
2.22 JUDGMENT CURRENCY. If, for the purposes of obtaining judgment in
any court, it is necessary to convert a sum due from any Borrower hereunder in
the currency expressed to be
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payable herein (the "SPECIFIED CURRENCY") into another currency, the parties
hereto agree, to the fullest extent that they may effectively do so, that the
rate of exchange used shall be that at which in accordance with normal banking
procedures the Administrative Agent could purchase the specified currency with
such other currency at the Administrative Agent's office in New York, New York
on the Business Day preceding that on which the final, non-appealable judgment
is given. The obligations of each Borrower in respect of any sum due to any
Lender or the Administrative Agent hereunder shall, notwithstanding any judgment
in a currency other than the specified currency, be discharged only to the
extent that on the Business Day following receipt by such Lender or the
Administrative Agent (as the case may be) of any sum adjudged to be so due in
such other currency such Lender or the Administrative Agent (as the case may be)
may in accordance with normal, reasonable banking procedures purchase the
specified currency with such other currency. If the amount of the specified
currency so purchased is less than the sum originally due to such Lender or the
Administrative Agent, as the case may be, in the specified currency, each
Borrower agrees, to the fullest extent that it may effectively do so, as a
separate obligation and notwithstanding any such judgment, to indemnify such
Lender or the Administrative Agent, as the case may be, against such loss, and
if the amount of the specified currency so purchased exceeds (a) the sum
originally due to any Lender or the Administrative Agent, as the case may be, in
the specified currency and (b) any amounts shared with other Lenders as a result
of allocations of such excess as a disproportionate payment to such Lender under
SECTION 13.2, such Lender or the Administrative Agent, as the case may be,
agrees to remit such excess to such Borrower.
2.23 MARKET DISRUPTION; DENOMINATION OF AMOUNTS IN DOLLARS; DOLLAR
EQUIVALENT OF REIMBURSEMENT OBLIGATIONS.
(A) Notwithstanding the satisfaction of all conditions referred to in
this Article II with respect to any Advance in any Agreed Currency other than
Dollars or an Alternate Currency, as applicable, if there shall occur on or
prior to the date of such Advance any change in national or international
financial, political or economic conditions or currency exchange rates or
exchange controls which would in the reasonable opinion of the Company, any
Subsidiary Borrower, any Alternate Currency Bank, the Administrative Agent or
the Required Lenders make it impracticable for the Eurocurrency Rate Loans or
Alternate Currency Loans comprising such Advance to be denominated in the Agreed
Currency or Alternate Currency, as applicable, specified by the applicable
Borrower, then the Administrative Agent shall forthwith give notice thereof to
such Borrower, the applicable Alternate Currency Bank and the Lenders, or the
applicable Borrower shall give notice to the Administrative Agent, the
applicable Alternate Currency Bank and the Lenders, as the case may be, and such
Eurocurrency Rate Loans or Alternate Currency Loans shall not be denominated in
such currency but shall be made on such Borrowing Date in Dollars, in an
aggregate principal amount equal to the Dollar Amount of the aggregate principal
amount specified in the related Borrowing Notice, as Floating Rate Loans, unless
the applicable Borrower notifies the Administrative Agent at least one (1)
Business Day before such date that (i) it elects not to borrow on such date or
(ii) it elects to borrow on a date at least three (3) Business Days thereafter
in a different Agreed Currency or Alternate Currency, as the case may be, in
which the denomination of such Loans would in the opinion of the Administrative
Agent, any Alternate Currency Bank, if applicable, and the Required Lenders be
practicable and in an aggregate principal amount equal to the Dollar Amount of
the aggregate principal amount specified in the related Borrowing Notice.
(B) Except as set forth in Sections 2.1, 2.5 and 2.21, all amounts
referenced in this
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Article II shall be calculated using the Dollar Amount determined based upon the
Equivalent Amount in effect as of the date of any determination thereof;
provided, however, to the extent that any Borrower shall be obligated hereunder
to pay in Dollars any Advance denominated in a currency other than Dollars, such
amount shall be paid in Dollars using the Dollar Amount of the Advance
(calculated based upon the Equivalent Amount in effect on the date of payment
thereof) and in the event that the applicable Borrower does not reimburse the
Administrative Agent and the Lenders are required to fund a purchase of a
participation in such Advance, such purchase shall be made in Dollars in an
amount equal to the Dollar Amount of such Advance (calculated based upon the
Equivalent Amount in effect on the date of payment thereof). Notwithstanding
anything herein to the contrary, the full risk of currency fluctuations shall be
borne by the Borrowers and the Borrowers agree to indemnify and hold harmless
each Issuing Bank, the Alternate Currency Banks, the Administrative Agent and
the Lenders from and against any loss resulting from any borrowing denominated
in a currency other than in Dollars and for which the Lenders are not reimbursed
on the day of such borrowing.
2.24 SUBSIDIARY BORROWERS. The Company may at any time or from time to
time, with the consent of the Administrative Agent add as a party to this
Agreement any Wholly-Owned Subsidiary to be a "Subsidiary Borrower" hereunder by
the execution and delivery to the Administrative Agent and the Lenders of (a) a
duly completed Assumption Letter by such Subsidiary, with the written consent of
the Company at the foot thereof and (b) such other guaranty and subordinated
intercompany indebtedness documents as may be reasonably required by the
Administrative Agent, such documents with respect to any additional Subsidiaries
to be substantially similar in form and substance to the Loan Documents executed
on or about the date hereof by the Subsidiaries parties hereto as of the Closing
Date. Upon such execution, delivery and consent such Subsidiary shall for all
purposes be a party hereto as a Subsidiary Borrower as fully as if it had
executed and delivered this Agreement. So long as the principal of and interest
on any Advances made to any Subsidiary Borrower under this Agreement shall have
been repaid or paid in full, all Letters of Credit issued for the account of
such Subsidiary Borrower have expired or been returned and terminated and all
other obligations of such Subsidiary Borrower under this Agreement shall have
been fully performed, the Company may, by not less than five (5) Business Days'
prior notice to the Administrative Agent (which shall promptly notify the
Lenders thereof), terminate such Subsidiary Borrower's status as a "Subsidiary
Borrower".
ARTICLE III: THE LETTER OF CREDIT FACILITY
3.1 OBLIGATION TO ISSUE LETTERS OF CREDIT. Subject to the terms and
conditions of this Agreement and in reliance upon the representations,
warranties and covenants of the Company herein set forth, each Issuing Bank
hereby agrees to issue for the account of the Company or any Subsidiary Borrower
through such Issuing Bank's branches as it and the Company may jointly agree,
one or more Letters of Credit denominated in Dollars, in an Agreed Currency or
in any other Eligible Currency agreed to by the Company and the applicable
Issuing Bank in accordance with this Article III, from time to time during the
period, commencing on the Closing Date and ending on the Business Day prior to
the Termination Date.
3.2 TRANSITIONAL PROVISION. SCHEDULE 3.2 contains a schedule of certain
letters of credit issued by ABN for the account of the Company and its
Subsidiaries prior to the Closing Date. From
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and after the time of the making of the initial Loans, such letters of credit
shall be deemed to be Letters of Credit issued pursuant to this Article III.
3.3 TYPES AND AMOUNTS. No Issuing Bank shall have any obligation to and
no Issuing Bank shall:
(A) issue (or amend) any Letter of Credit if on the date of
issuance (or amendment), before or after giving effect to the Letter of
Credit requested hereunder, (i) the Dollar Amount of the Revolving
Credit Obligations at such time would exceed the Aggregate Revolving
Loan Commitment at such time, or (ii) the aggregate outstanding Dollar
Amount of the L/C Obligations would exceed $80,000,000, or (iii) the
Dollar Amount of all Eurocurrency Rate Loans and Letters of Credit in
Agreed Currencies other than Dollars would exceed $150,000,000; or
(B) issue (or amend) any Letter of Credit which has an
expiration date later than the date which is the earlier of one (1)
year after the date of issuance thereof or the Termination Date;
PROVIDED, that any Letter of Credit with a one-year tenor may provide
for the renewal thereof for additional one-year periods (not to extend
beyond the Termination Date) with the consent of the applicable Issuing
Bank.
3.4 CONDITIONS. In addition to being subject to the satisfaction of the
conditions contained in SECTIONS 5.1, 5.2 and 5.3, the obligation of an Issuing
Bank to issue any Letter of Credit is subject to the satisfaction in full of the
following conditions:
(A) the Company shall have delivered to the applicable Issuing
Bank (at such times and in such manner as such Issuing Bank may
reasonably prescribe) and the Administrative Agent, a request for
issuance of such Letter of Credit in substantially the form of EXHIBIT
C hereto (each such request a "REQUEST FOR LETTER OF CREDIT"), duly
executed applications for such Letter of Credit, and such other
documents, instructions and agreements as may be required pursuant to
the terms thereof (all such applications, documents, instructions, and
agreements being referred to herein as the "L/C DOCUMENTS"), and the
proposed Letter of Credit shall be reasonably satisfactory to such
Issuing Bank as to form and content; and
(B) as of the date of issuance no order, judgment or decree of
any court, arbitrator or Governmental Authority shall purport by its
terms to enjoin or restrain the applicable Issuing Bank from issuing
such Letter of Credit and no law, rule or regulation applicable to such
Issuing Bank and no request or directive (whether or not having the
force of law) from a Governmental Authority with jurisdiction over such
Issuing Bank shall prohibit or request that such Issuing Bank refrain
from the issuance of Letters of Credit generally or the issuance of
that Letter of Credit.
3.5 PROCEDURE FOR ISSUANCE OF LETTERS OF CREDIT. (A) Subject to the
terms and conditions of this ARTICLE III and provided that the applicable
conditions set forth in SECTIONS 5.1, 5.2 and 5.3 hereof have been satisfied,
the applicable Issuing Bank shall, on the requested date, issue a Letter of
Credit on behalf of the Company or a Subsidiary Borrower, as applicable in
accordance with such Issuing Bank's usual and customary business practices and,
in this connection, such Issuing Bank
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may assume that the applicable conditions set forth in SECTION 5.3 hereof have
been satisfied unless it shall have received notice to the contrary from the
Administrative Agent or a Lender or has knowledge that the applicable conditions
have not been met.
(B) Promptly, and in any event not more than one (1) Business Day
following the date of issuance of any Letter of Credit, the applicable Issuing
Bank shall give the Administrative Agent written or telex notice, or telephonic
notice confirmed promptly thereafter in writing, of the issuance of a Letter of
Credit (PROVIDED, HOWEVER, that the failure to provide such notice shall not
result in any liability on the part of such Issuing Bank), and the
Administrative Agent shall promptly give notice to the Lenders of each such
issuance.
(C) No Issuing Bank shall extend or amend any Letter of Credit unless
the requirements of this SECTION 3.5 are met as though a new Letter of Credit
was being requested and issued.
3.6 LETTER OF CREDIT PARTICIPATION. On the date of this Agreement, with
respect to the Letters of Credit identified on SCHEDULE 3.2, and immediately
upon the issuance of each Letter of Credit hereunder, each Lender shall be
deemed to have automatically, irrevocably and unconditionally purchased and
received from the applicable Issuing Bank an undivided interest and
participation in and to such Letter of Credit, the obligations of the Company in
respect thereof, and the liability of such Issuing Bank thereunder
(collectively, an "L/C INTEREST") in an amount equal to the Dollar Amount
available for drawing under such Letter of Credit multiplied by such Lender's
Pro Rata Revolving Share.
3.7 REIMBURSEMENT OBLIGATION. (a) The Company agrees unconditionally,
irrevocably and absolutely to pay immediately to the Administrative Agent, for
the account of the Lenders, the amount of each advance drawn under or pursuant
to a Letter of Credit or an L/C Draft related thereto (such obligation of the
Company to reimburse the Administrative Agent for an advance made under a Letter
of Credit or L/C Draft being hereinafter referred to as a "REIMBURSEMENT
OBLIGATION" with respect to such Letter of Credit or L/C Draft), each such
reimbursement to be made by the Company no later than the Business Day on which
the applicable Issuing Bank makes payment of each such L/C Draft or, if the
Company shall have received notice of a Reimbursement Obligation later than 1:00
p.m. (New York time), on any Business Day or on a day which is not a Business
Day, no later than 1:00 p.m. (New York time), on the immediately following
Business Day or, in the case of any other draw on a Letter of Credit, the date
specified in the demand of such Issuing Bank. If the Company at any time fails
to repay a Reimbursement Obligation pursuant to this Section 3.7, the Issuing
Bank shall promptly notify the Administrative Agent and the Administrative Agent
shall promptly notify each Lender and the Company shall be deemed to have
requested to borrow Revolving Loans from the Lenders, as of the date of the
advance giving rise to the Reimbursement Obligation, equal in amount to the
Dollar Amount of the unpaid Reimbursement Obligation. Such Revolving Loans shall
be made as of the date of the payment giving rise to such Reimbursement
Obligation, automatically, without notice and without any requirement to satisfy
the conditions precedent otherwise applicable to an Advance of Revolving Loans.
(b) Each Lender with a Revolving Loan Commitment shall upon any notice
pursuant to SECTION 3.7(a) make available to the Administrative Agent for the
account of the relevant Issuing Bank an amount in Dollars and in immediately
available funds equal to its Pro Rata Revolving Share of the Dollar Equivalent
of the amount of the drawing, whereupon the Lenders shall
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(subject to SECTION 3.7(d)) each be deemed to have made a Revolving Loan
constituting a Floating Rate Advance, the proceeds of which Advance shall be
used to repay such Reimbursement Obligation. If any Lender so notified fails to
make available to the Administrative Agent for the account of the Issuing Bank
the amount of such Lender's Pro Rata Revolving Share of the Dollar Equivalent of
the amount of the drawing by no later than 3:00 p.m. (New York time) on the date
of the advance giving rise to the Reimbursement Obligation, then interest shall
accrue on such Lender's obligation to make such payment, from such date to the
date such Lender makes such payment, at a rate per annum equal to the Federal
Funds Effective Rate in effect from time to time during such period. The
Administrative Agent will promptly give notice of the occurrence of the draw,
but failure of the Administrative Agent to give any such notice in sufficient
time to enable any Lender to effect such payment on such date shall not relieve
such Lender from its obligations under this SECTION 3.7.
(c) Each Lender's obligation in accordance with this Agreement to make
the Revolving Loans, as contemplated by this SECTION 3.7, as a result of a
drawing under a Letter of Credit, shall be absolute and unconditional and
without recourse to the Issuing Banks and shall not be affected by any
circumstance, including (i) any set-off, counterclaim, recoupment, defense or
other right which such Revolving Lender may have against an Issuing Bank, the
Company or any other Person for any reason whatsoever; (ii) the occurrence or
continuance of a Default, an Event of Default or a Material Adverse Effect; or
(iii) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing.
(d) If, for any reason, the Company fails to repay a Reimbursement
Obligation on the day such Reimbursement Obligation arises and, for any reason,
the Lenders are unable to make or have no obligation to make Revolving Loans,
then such Reimbursement Obligation shall bear interest from and after such day,
until paid in full, at the interest rate applicable to a Floating Rate Advance.
3.8 LETTER OF CREDIT FEES. The Company agrees to pay:
(A) quarterly, in arrears, to the Administrative Agent for the
ratable benefit of the Lenders a letter of credit fee at a rate per
annum equal to the Applicable L/C Fee Percentage on the average daily
outstanding Dollar Amount available for drawing under all Letters of
Credit;
(B) quarterly, in arrears, to the applicable Issuing Bank, a
letter of credit fronting fee in an amount agreed to between the
Company and the applicable Issuing Bank on the average daily
outstanding face amount available for drawing under all Letters of
Credit issued by such Issuing Bank; and
(C) to the applicable Issuing Bank, all customary fees and
other issuance, amendment, document examination, negotiation and
presentment expenses and related charges in connection with the
issuance, amendment, presentation of L/C Drafts, and the like
customarily charged by such Issuing Banks with respect to standby and
commercial Letters of Credit, including, without limitation, standard
commissions with respect to commercial Letters of Credit, payable at
the time of invoice of such amounts.
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3.9 ISSUING BANK REPORTING REQUIREMENTS. In addition to the notices
required by SECTION 3.5(B), each Issuing Bank shall, no later than the tenth
(10th) Business Day following the last day of each month, provide to the
Administrative Agent, upon the Administrative Agent's request, schedules, in
form and substance reasonably satisfactory to the Administrative Agent, showing
the date of issue, account party, Agreed Currency and amount in such Agreed
Currency, expiration date and the reference number of each Letter of Credit
issued by it outstanding at any time during such month and the aggregate amount
paid by the Company during such month. In addition, upon the request of the
Administrative Agent, each Issuing Bank shall furnish to the Administrative
Agent copies of any Letter of Credit and any application for or reimbursement
agreement with respect to a Letter of Credit to which the Issuing Bank is party
and such other documentation as may reasonably be requested by the
Administrative Agent. Upon the request of any Lender, the Administrative Agent
will provide to such Lender information concerning such Letters of Credit.
3.10 INDEMNIFICATION; EXONERATION. (A) In addition to amounts payable
as elsewhere provided in this ARTICLE III, the Company hereby agrees to protect,
indemnify, pay and save harmless the Administrative Agent, each Issuing Bank and
each Lender from and against any and all liabilities and costs which the
Administrative Agent, such Issuing Bank or such Lender may incur or be subject
to as a consequence, direct or indirect, of (i) the issuance of any Letter of
Credit other than, in the case of the applicable Issuing Bank, as a result of
its gross negligence or willful misconduct, as determined by the final judgment
of a court of competent jurisdiction, or (ii) the failure of the applicable
Issuing Bank to honor a drawing under a Letter of Credit as a result of any act
or omission, whether rightful or wrongful, of any present or future de jure or
de facto Governmental Authority (all such acts or omissions herein called
"GOVERNMENTAL ACTS").
(B) As among the Company, the Lenders, the Administrative Agent and the
Issuing Banks, the Company assumes all risks of the acts and omissions of, or
misuse of such Letter of Credit by, the beneficiary of any Letters of Credit. In
furtherance and not in limitation of the foregoing, subject to the provisions of
the Letter of Credit applications and Letter of Credit reimbursement agreements
executed by the Company at the time of request for any Letter of Credit, neither
the Administrative Agent, any Issuing Bank nor any Lender shall be responsible
(in the absence of gross negligence or willful misconduct in connection
therewith, as determined by the final judgment of a court of competent
jurisdiction): (i) for the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any party in connection with the
application for and issuance of the Letters of Credit, even if it should in fact
prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent
or forged; (ii) for the validity or sufficiency of any instrument transferring
or assigning or purporting to transfer or assign a Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part, which
may prove to be invalid or ineffective for any reason; (iii) for failure of the
beneficiary of a Letter of Credit to comply duly with conditions not expressly
provided on the face of such Letter of Credit and required in order to draw upon
such Letter of Credit; (iv) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex, or
other similar form of teletransmission or otherwise; (v) for errors in
interpretation of technical trade terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any Letter of Credit or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of a Letter of Credit of the proceeds of any
drawing under such Letter of Credit; and (viii) for any consequences arising
from causes beyond the control of the Administrative Agent, the Issuing Banks
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and the Lenders, including, without limitation, any Governmental Acts. None of
the above shall affect, impair, or prevent the vesting of any Issuing Bank's
rights or powers under this SECTION 3.10.
(C) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by any Issuing
Bank under or in connection with the Letters of Credit or any related
certificates shall not, in the absence of gross negligence or willful
misconduct, as determined by the final judgment of a court of competent
jurisdiction, put the applicable Issuing Bank, the Administrative Agent or any
Lender under any resulting liability to the Company or relieve the Company of
any of its obligations hereunder to any such Person.
(D) Without prejudice to the survival of any other agreement of the
Company hereunder, the agreements and obligations of the Company contained in
this SECTION 3.10 shall survive the payment in full of principal and interest
hereunder, the termination of the Letters of Credit and the termination of this
Agreement.
3.11 CASH COLLATERAL. Notwithstanding anything to the contrary herein
or in any application for a Letter of Credit, after the occurrence and during
the continuance of a Default, the Company shall, on the Business Day that it
receives the Administrative Agent's demand, deliver to the Administrative Agent
for the benefit of the Lenders and the Issuing Banks, cash, or other collateral
of a type satisfactory to the Required Lenders, having a value, as determined by
such Lenders, equal to one hundred percent (100%) of the aggregate Dollar Amount
of the outstanding L/C Obligations. In addition, if the Revolving Credit
Availability is at any time less than the Dollar Amount of all contingent L/C
Obligations outstanding at any time, the Company shall deposit cash collateral
with the Administrative Agent in Dollars in an amount equal to one-hundred five
percent (105%) of the Dollar Amount by which such L/C Obligations exceed such
Revolving Credit Availability. Any such collateral shall be held by the
Administrative Agent in a separate account appropriately designated as a cash
collateral account in relation to this Agreement and the Letters of Credit and
retained by the Administrative Agent for the benefit of the Lenders and the
Issuing Banks as collateral security for the Company's obligations in respect of
this Agreement and each of the Letters of Credit and L/C Drafts. Such amounts
shall be applied to reimburse the Issuing Banks for drawings or payments under
or pursuant to Letters of Credit or L/C Drafts, or if no such reimbursement is
required, to payment of such of the other Obligations as the Administrative
Agent shall determine. If no Default shall be continuing, amounts remaining in
any cash collateral account established pursuant to this SECTION 3.11 which are
not to be applied to reimburse an Issuing Bank for amounts actually paid or to
be paid by such Issuing Bank in respect of a Letter of Credit or L/C Draft,
shall be returned to the Company within one (1) Business Day (after deduction of
the Administrative Agent's expenses incurred in connection with such cash
collateral account).
ARTICLE IV: CHANGE IN CIRCUMSTANCES
4.1 YIELD PROTECTION. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law) adopted after the date of this Agreement or any
interpretation or application thereof by any Governmental Authority charged with
the interpretation or application thereof, or the compliance of any Lender
therewith,
(A) subjects any Lender or any applicable Lending Installation to any
tax, duty, charge
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or withholding on or from payments due from any Borrower (excluding taxation of
the overall net income of any Lender or taxation of a similar basis, which are
governed by Section 2.15(E)), or changes the basis of taxation of payments to
any Lender in respect of its Revolving Loan Commitment, Loans, its L/C
Interests, the Letters of Credit or other amounts due it hereunder, or
(B) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Lender or any
applicable Lending Installation (other than reserves and assessments taken into
account in determining the interest rate applicable to Eurocurrency Rate Loans)
with respect to its Revolving Loan Commitment, Loans, L/C Interests or the
Letters of Credit, or
(C) imposes any other condition the result of which is to increase the
cost to any Lender or any applicable Lending Installation of making, funding or
maintaining its Revolving Loan Commitment, Loans, the L/C Interests or the
Letters of Credit or reduces any amount received by any Lender or any applicable
Lending Installation in connection with its Revolving Loan Commitment, Loans or
Letters of Credit, or requires any Lender or any applicable Lending Installation
to make any payment calculated by reference to the amount of Revolving Loan
Commitment, Loans or L/C Interests held or interest received by it or by
reference to the Letters of Credit, by an amount deemed material by such Lender;
and the result of any of the foregoing is to increase the cost to that Lender of
making, renewing or maintaining its Revolving Loan Commitment, Loans, L/C
Interests, or Letters of Credit or to reduce any amount received under this
Agreement, then, within fifteen (15) days after receipt by the Company or any
other Borrower of written demand by such Lender pursuant to SECTION 4.5, the
applicable Borrowers shall pay such Lender that portion of such increased
expense incurred or reduction in an amount received which such Lender determines
is attributable to making, funding and maintaining its Loans, L/C Interests,
Letters of Credit and its Revolving Loan Commitment.
4.2 CHANGES IN CAPITAL ADEQUACY REGULATIONS. If a Lender determines (i)
the amount of capital required or expected to be maintained by such Lender, any
Lending Installation of such Lender or any corporation controlling such Lender
is increased as a result of a "Change" (as defined below), and (ii) such
increase in capital will result in an increase in the cost to such Lender of
maintaining its Revolving Loan Commitment, Loans, L/C Interests, the Letters of
Credit or its obligation to make Loans hereunder, then, within fifteen (15) days
after receipt by the Company or any other Borrower of written demand by such
Lender pursuant to SECTION 4.5, the applicable Borrowers shall pay such Lender
the amount necessary to compensate for any shortfall in the rate of return on
the portion of such increased capital which such Lender reasonably determines is
attributable to this Agreement, its Revolving Loan Commitment, its Loans, its
L/C Interests, the Letters of Credit or its obligation to make Loans hereunder
(after taking into account such Lender's policies as to capital adequacy).
"CHANGE" means (i) any change after the date of this Agreement in the
"Risk-Based Capital Guidelines" (as defined below) excluding, for the avoidance
of doubt, the effect of any phasing in of such Risk-Based Capital Guidelines or
any other capital requirements passed prior to the date hereof, or (ii) any
adoption of or change in any other law, governmental or quasi-governmental rule,
regulation, policy, guideline, interpretation, or directive (whether or not
having the force of law) after the date of this Agreement which affects the
amount of capital required or expected to be maintained by any Lender or any
Lending Installation or any corporation controlling any Lender. "RISK-BASED
CAPITAL GUIDELINES" means (i) the risk-based capital
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guidelines in effect in the United States on the date of this Agreement,
including transition rules, and (ii) the corresponding capital regulations
promulgated by regulatory authorities outside the United States implementing the
July 1988 report of the Basle Committee on Banking Regulation and Supervisory
Practices Entitled "International Convergence of Capital Measurements and
Capital Standards," including transition rules, and any amendments to such
regulations adopted prior to the date of this Agreement.
4.3 AVAILABILITY OF TYPES OF ADVANCES. If (i) any Lender determines
that maintenance of its Eurocurrency Rate Loans at a suitable Lending
Installation would violate any applicable law, rule, regulation or directive,
whether or not having the force of law, or (ii) the Required Lenders determine
that (x) deposits of a type, currency or maturity appropriate to match fund
Fixed-Rate Advances are not available or (y) the interest rate applicable to a
Fixed-Rate Advance does not accurately reflect the cost of making or maintaining
such an Advance, then the Administrative Agent shall suspend the availability of
the affected Type of Advance and, in the case of any occurrence set forth in
clause (i), require any Advances of the affected Type to be repaid or converted
into another Type.
4.4 FUNDING INDEMNIFICATION. If any payment of a Fixed-Rate Advance
occurs on a date which is not the last day of the applicable Interest Period,
whether because of acceleration, prepayment, or otherwise, or a Fixed-Rate
Advance is not made on the date specified by the applicable Borrower for any
reason other than default by the Lenders, the Borrowers shall indemnify each
Lender for any loss or cost incurred by it resulting therefrom, including,
without limitation, any loss or cost in liquidating or employing deposits
acquired to fund or maintain the Fixed-Rate Advance or Swing Line Loan, as
applicable.
4.5 LENDER STATEMENTS; SURVIVAL OF INDEMNITY. If reasonably possible,
each Lender shall designate an alternate Lending Installation with respect to
its Fixed-Rate Loans to reduce any liability of any Borrower to such Lender
under SECTIONS 4.1 and 4.2 or to avoid the unavailability of a Type of Advance
under SECTION 4.3, so long as such designation is not, in such Lender's
judgment, disadvantageous to such Lender. Any demand for compensation pursuant
to this ARTICLE IV shall be in writing and shall state the amount due, if any,
under SECTION 4.1, 4.2 or 4.4 and shall set forth in reasonable detail the
calculations upon which such Lender determined such amount. Such written demand
shall be rebuttably presumed correct for all purposes. Determination of amounts
payable under such Sections in connection with a Fixed-Rate Loan shall be
calculated as though each Lender funded its Fixed-Rate Loan through the purchase
of a deposit of the type, currency and maturity corresponding to the deposit
used as a reference in determining the Fixed-Rate applicable to such Loan,
whether in fact that is the case or not. The obligations of the Company and the
other Borrowers under SECTIONS 4.1, 4.2 and 4.4 shall survive payment of the
Obligations and termination of this Agreement.
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ARTICLE V: CONDITIONS PRECEDENT
5.1 INITIAL ADVANCES AND LETTERS OF CREDIT. The Lenders shall not be
required to make the initial Loans or issue any Letters of Credit unless (i)
such initial Loans are made not later than November 15, 1999; and (ii) the
Company has furnished to the Administrative Agent each of the following, with
sufficient copies for the Lenders, and the other conditions set forth below have
been satisfied:
(A) Copies of the Spin-off Materials and such other information with
respect to the Spin-off as the Lead Arrangers may reasonably request, which
shall be in form and substance satisfactory to the Administrative Agent, and
evidence satisfactory to the Administrative Agent that all conditions precedent
thereunder or otherwise to the consummation of the Spin-off (other than payment
of the Dividend) shall have been satisfied (and not waived).
(B) Arrangements satisfactory to the Administrative Agent shall have
been made for the consummation of the Spin-off promptly following the initial
Loans.
(C) Copies of the Certificate of Incorporation of each of the Loan
Parties, together with all amendments thereto and a certificate of good
standing, all certified by the appropriate governmental officer in its
jurisdiction of incorporation.
(D) Copies, certified by the Secretary or Assistant Secretary of each
of the Loan Parties of their respective By-Laws and of their respective Board of
Directors' resolutions (and resolutions of other bodies, if any are deemed
necessary by counsel for any Lender) authorizing the execution of the Loan
Documents.
(E) An incumbency certificate, executed by the Secretary or Assistant
Secretary of each of the Loan Parties, which shall identify by name and title
and bear the signature of the officers of the applicable Loan Party authorized
to sign the Loan Documents and to make borrowings hereunder, upon which
certificate the Lenders shall be entitled to rely until informed of any change
in writing by the applicable Loan Party.
(F) A certificate, in form and substance satisfactory to the
Administrative Agent, signed by the chief financial officer of the Company,
stating that on the date of this Agreement (which shall be the initial Borrowing
Date) all the representations and warranties of the Loan Parties in the Loan
Documents are true and correct (unless such representation and warranty is made
as of a specific date, in which case, such representation and warranty shall be
true in all material respects as of such date) and no Default or Unmatured
Default has occurred and is continuing.
(G) The written opinions of the Loan Parties' US counsel, and, if
applicable, foreign counsel, addressed to the Agents and the Lenders, in form
and substance satisfactory to the Administrative Agent.
(H) Evidence reasonably satisfactory to the Administrative Agent that
the Company and each of its Subsidiaries (a) has made a reasonable assessment of
the Year 2000 Issues; (b) has a program for remediating the Year 2000 Issues,
including a timetable and budget of anticipated costs; and (c) has a source of
funds as required in such budget.
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(I) The capital structure and corporate structure of the Company and
its Subsidiaries is consistent in all material respects with the Spin-off
Materials, and there exists no injunction or temporary restraining order which,
in the reasonable judgment of the Administrative Agent, could prohibit or impose
material restrictions on the Spin-off or prohibit the making of the Loans and
the other transactions contemplated by the Loan Documents or any litigation
seeking such an injunction or restraining order.
(J) A written solvency certificate from the chief financial officer of
the Borrower in form and substance satisfactory to the Administrative Agent,
dated the initial Borrowing Date, with respect to the value, Solvency and other
factual information of or relating to, as the case may be, the Borrower and its
Subsidiaries on a consolidated basis, after giving effect to the Dividend, the
Spin-off, and the incurrence of Indebtedness related thereto (including the
initial extensions of credit hereunder).
(K) The Administrative Agent shall have received (i) pro forma opening
financial statements giving effect to the Spin-off which must not be materially
less favorable, in the Administrative Agent's reasonable judgment, than the
projections previously provided to the Lead Arrangers and which must
demonstrate, in the reasonable judgment of the Administrative Agent, together
with all other information then available to the Administrative Agent, that the
Company and its Subsidiaries can repay their debts and satisfy their respective
other obligations as and when due, and can comply with the financial covenants
set forth herein, (ii) a certificate from an Authorized Officer demonstrating to
the satisfaction of the Administrative Agent that as of October 1, 1999, but
giving pro forma effect to the Spin-off, the Company would have been in
compliance with the financial covenants in Section 7.4 at the level prescribed
for the fiscal quarter ending December 31, 1999 and (iii) such information as
the Administrative Agent may reasonably request to confirm the tax, legal and
business assumptions made in such pro forma financial statements.
(L) The Administrative Agent shall have received a satisfactory
business plan for the Company for the five fiscal years following the Closing
Date, including a projected consolidated balance sheet, consolidated statements
of income, retained earnings and cash flow with assumptions used in preparing
the statements.
(M) All governmental, shareholder and third party consents and
approvals necessary in connection with this Agreement, the Spin-off and the
other transactions contemplated hereby shall have been obtained; all such
consents and approvals shall be in full force and effect; and all applicable
waiting periods shall have expired without any action being taken by any
Governmental Authority that could restrain, prevent or impose any material
adverse conditions on the Spin-off or such other transactions or that could seek
or threaten any of the foregoing, and no law or regulation shall be applicable
which in the judgment of any of the Agents could have such effect.
(N) There shall not have occurred a material adverse change since June
30, 1999 in the business, assets, liabilities (actual or contingent),
operations, condition (financial or otherwise) or prospects of the Company and
its Subsidiaries taken as a whole.
(O) The Agents, Lenders and/or their Affiliates shall have received all
fees and expenses, including fees and expenses of Winston & Strawn, required to
be paid on or before the Closing Date.
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(P) The Administrative Agent shall have received evidence satisfactory
to it that all outstanding Indebtedness of the Company and its Subsidiaries
except for Permitted Existing Indebtedness has been paid in full and all Liens
securing such Indebtedness shall have been terminated.
(Q) Such other documents as the Administrative Agent or any Lender or
its counsel may have reasonably requested.
5.2 INITIAL ADVANCE TO EACH NEW SUBSIDIARY BORROWER. No Lender shall be
required to make an Advance hereunder or purchase participations in Letters of
Credit, Swing Line Loan or Alternate Currency Loans hereunder, no Issuing Lender
shall be required to issue a Letter of Credit hereunder, no Swing Line Bank
shall be required to make any Swing Line Loans hereunder, and no Alternate
Currency Bank shall be required to make any Alternate Currency Loans, in each
case, to a new Subsidiary Borrower added after the Closing Date unless the
Company has furnished or caused to be furnished to the Administrative Agent with
sufficient copies for the Lenders:
(A) The Assumption Letter executed and delivered by such
Subsidiary Borrower and containing the written consent of the
Company thereon, as contemplated by SECTION 2.24.
(B) Copies, certified by the Secretary, Assistant Secretary,
Director or Officer of the Subsidiary Borrower, of its Board
of Directors' resolutions (and resolutions of other bodies, if
any are deemed necessary by the Administrative Agent)
approving the Assumption Letter.
(C) An incumbency certificate, executed by the Secretary,
Assistant Secretary, Director or Officer of the Subsidiary
Borrower, which shall identify by name and title and bear the
signature of the officers of such Subsidiary Borrower
authorized to sign the Assumption Letter and the other
documents to be executed and delivered by such Subsidiary
Borrower hereunder, upon which certificate the Administrative
Agent and the Lenders shall be entitled to rely until informed
of any change in writing by the Company.
(D) An opinion of counsel to such Subsidiary Borrower, in form and
substance satisfactory to the Administrative Agent.
(E) Guaranty documentation and contribution agreement
documentation from such Subsidiary Borrower in form and
substance satisfactory to the Administrative Agent.
(F) With respect to the initial Advance or any Swing Line Loan
made to any Subsidiary Borrower organized under the laws of
England and Wales, the Administrative Agent shall have
received originals and/or copies, as applicable, of all
filings required to be made and such other evidence as the
Administrative Agent may require establishing to the
Administrative Agent's satisfaction that each Lender, Swing
Line Bank and Issuing Lender is entitled to receive payments
under the Loan Documents without deduction or withholding of
any English taxes or with such deductions and withholding of
English taxes as may be acceptable to the Administrative
Agent.
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5.3 EACH ADVANCE, EACH CONVERSION OR CONTINUATION OF AN ADVANCE, AND
EACH LETTER OF CREDIT. The Lenders shall not be required to make any Loan, or
convert or continue any Advance, or issue any Letter of Credit, unless on the
applicable Borrowing Date, or in the case of a Letter of Credit, the date on
which the Letter of Credit is to be issued:
(A) There exists no Default or Unmatured Default;
(B) All of the representations and warranties contained in
ARTICLE VI are true and correct in all material respects as of such
Borrowing Date (unless such representation and warranty is made as of a
specific date, in which case, such representation and warranty shall be
true in all material respects as of such date);
(C) (i) The Revolving Credit Obligations do not, and after
making such proposed Advance or issuing such Letter of Credit would
not, exceed the Aggregate Revolving Loan Commitment, and (ii) the
aggregate outstanding principal Dollar Amount of all Advances in Agreed
Currencies other than Dollars and all L/C Obligations in Agreed
Currencies other than Dollars and all Alternate Currency Loans does not
and would not exceed the Maximum Eurocurrency Amount; and
(D) the Administrative Agent has received a timely Borrowing
Notice with respect to the applicable Loan.
Each Borrowing/Conversion/Continuation Notice or Competitive Bid Quote
Request with respect to each such Advance and the letter of credit application
with respect to each Letter of Credit shall constitute a representation and
warranty by the Company that the conditions contained in SECTIONS 5.3(A), (B)
and (C) have been satisfied (except, in the case of any conversion or
continuation of a Loan, SECTION 6.5).
ARTICLE VI: REPRESENTATIONS AND WARRANTIES
In order to induce the Agents and the Lenders to enter into this
Agreement and to make the Loans and the other financial accommodations to the
Borrowers and to issue the Letters of Credit described herein, the Company
represents and warrants as follows to each Lender and the Administrative Agent
as of the date of this Agreement and on the Closing Date, giving effect to the
consummation of the transactions contemplated by the Loan Documents and the
Spin-off Materials as if each had occurred on the date hereof, and thereafter on
each date as required by SECTION 5.2 and 5.3:
6.1 ORGANIZATION; CORPORATE POWERS. Each of the Company and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of its jurisdiction of formation and has all requisite authority to conduct
its business in each jurisdiction in which its business is conducted, except
where the failure to do so would not have a Material Adverse Effect.
6.2 AUTHORIZATION AND VALIDITY. The Company has the requisite power and
authority and legal right to execute and deliver the Loan Documents and to
perform its obligations thereunder. The execution and delivery by the Company of
the Loan Documents and the performance of its
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obligations thereunder have been duly authorized by proper proceedings, and the
Loan Documents constitute legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally.
6.3 NO CONFLICT; GOVERNMENT CONSENT. Neither the execution and delivery
by the Company of the Loan Documents, nor the consummation of the transactions
therein contemplated, nor compliance with the provisions thereof will violate
any law, rule, regulation, order, writ, judgment, injunction, decree or award
binding on the Company or any Subsidiary or the Company's or any Subsidiary's
articles of incorporation or by-laws or other constitutive documents and
agreements or the provisions of any indenture, instrument or agreement to which
the Company or any Subsidiary is a party or is subject, or by which it, or its
property, is bound, or conflict with or constitute a default thereunder, or
result in the creation or imposition of any Lien in, of or on the property of
the Company or any of its Subsidiaries pursuant to the terms of any such
indenture, instrument or agreement. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any governmental or public body or authority, or any subdivision
thereof, is required to authorize the Company, or is required to be obtained by
the Company in connection with the execution, delivery and performance of, or
the legality, validity, binding effect or enforceability of, any of the Loan
Documents.
6.4 FINANCIAL STATEMENTS. Each of the consolidated financial statements
of the Company and its Subsidiaries for the fiscal years ended June 30, 1996,
June 27, 1997 and July 3, 1998 were prepared in accordance with Agreement
Accounting Principles except that restatements reflected in the Form 10 have not
been included for the Australian write-off and the 1998 restructuring reserves;
and the consolidated financial statements of the Company and its Subsidiaries
included in the Form 10 were prepared in accordance with Agreement Accounting
Principles and fairly present the consolidated financial condition and
operations of the Company and its Subsidiaries at such dates and the
consolidated results of their operations for the periods then ended.
6.5 MATERIAL ADVERSE CHANGE. Since July 2, 1999, there has occurred no
change in the business, assets, liabilities (actual or contingent), operations,
condition (financial or otherwise) or prospects, of the Company, or the Company
and its Subsidiaries taken as a whole or any other event which has had or could
reasonably be expected to have a Material Adverse Effect.
6.6 TAXES. The Company and the Subsidiaries have filed all United
States federal tax returns and all other material tax returns which are required
to be filed and have paid all taxes due pursuant to said returns or pursuant to
any assessment received by the Company or any Subsidiary, except such taxes, if
any, as are being contested in good faith and as to which adequate reserves have
been provided. No tax liens have been filed (other than to secure payment of
contested taxes in an amount not to exceed $5,000,000 in any one case and
$10,000,000 in the aggregate) and no claims are being asserted with respect to
any such taxes. The charges, accruals and reserves on the books of the Company
and the Subsidiaries in respect of any taxes or other governmental charges are
adequate.
6.7 LITIGATION AND CONTINGENT OBLIGATIONS. There is no litigation,
arbitration, governmental investigation, proceeding or inquiry pending or, to
the knowledge of the Company, threatened against or affecting the Company or any
of its Subsidiaries (i) challenging the Spin-off
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or validity or enforceability of any material provision of the Loan Documents or
(ii) which could reasonably be expected to have a Material Adverse Effect. There
is no material loss contingency within the meaning of Agreement Accounting
Principles which has not been reflected in the consolidated financial statements
of the Company set forth in the Form 10 or prepared and delivered pursuant to
SECTION 7.1(A) for the fiscal period during which such material loss contingency
was incurred. Neither the Company nor any of its Subsidiaries is subject to or
in default with respect to any final judgment, writ, injunction, restraining
order or order of any nature, decree, rule or regulation of any court or
Governmental Authority which could reasonably be expected to have a Material
Adverse Effect.
6.8 SUBSIDIARIES. SCHEDULE 6.8 hereto contains an accurate list of all
of the Subsidiaries of the Company in existence on the date of this Agreement,
setting forth their respective jurisdictions of formation and the percentage of
their respective capital stock owned directly or indirectly by the Company or
other Subsidiaries. All of the issued and outstanding Capital Stock of such
Subsidiaries have been duly authorized and issued and are fully paid and
non-assessable.
6.9 ERISA. As at March 31, 1999 the Unfunded Liabilities of all Single
Employer Plans did not in the aggregate exceed $0. Each Plan complies in all
material respects with all applicable requirements of law and regulations. No
Reportable Event has occurred with respect to any Single Employer Plan having
any Unfunded Liability which has or may reasonably be expected to result in a
liability to the Company in excess of $10,000,000. Neither the Company nor any
other members of the Controlled Group has terminated any Single Employer Plan
without in each instance funding all vested benefit obligations thereunder. Each
member of the Controlled Group has fulfilled its minimum funding obligations
with respect to each Multiemployer Plan.
6.10 ACCURACY OF INFORMATION. No information, exhibit or report
furnished by the Company or any Subsidiary to any Agent or to any Lender in
connection with the negotiation of, or compliance with, the Loan Documents,
including, without limitation, the Form 10, contained any material misstatement
of fact or omitted to state a material fact or any fact necessary to make the
statements contained therein not materially misleading.
6.11 REGULATION U. Margin Stock constitutes less than 25% of those
assets of the Company and its Subsidiaries which are subject to any limitation
on sale, pledge, or other restriction hereunder.
6.12 MATERIAL AGREEMENTS. Neither the Company nor any of its
Subsidiaries is a party to any Contractual Obligation the performance of which
could reasonably be expected to have a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries is subject to any charter or other
restriction in any constitutive agreement or document affecting its business,
properties, financial condition, prospects or results of operations which could
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any Subsidiary is in default in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in any Contractual
Obligation to which it is a party, which default could reasonably be expected to
have a Material Adverse Effect.
6.13 COMPLIANCE WITH LAWS. The Company and its Subsidiaries have
complied with all Requirements of Law except to the extent that such
non-compliance could not reasonably be
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expected to have a Material Adverse Effect. Neither the Company nor any
Subsidiary has received any notice to the effect that its operations are not in
material compliance with any Requirements of Law or the subject of any federal
or state investigation evaluating whether any remedial action is needed to
respond to a release of any toxic or hazardous waste or substance into the
environment, which non-compliance or remedial action could reasonably be
expected to have a Material Adverse Effect.
6.14 OWNERSHIP OF PROPERTIES. On the date of this Agreement, the
Company and its Subsidiaries have good title, free of all Liens, to all of the
properties and assets reflected in the financial statements included in the Form
10 as owned by it, except Liens permitted under SECTION 7.3(C).
6.15 STATUTORY INDEBTEDNESS RESTRICTIONS. Neither the Company nor any
of its Subsidiaries is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, or the
Investment Company Act of 1940, or any other federal or state statute or
regulation which limits its ability to incur indebtedness or its ability to
consummate the transactions contemplated hereby.
6.16 ENVIRONMENTAL MATTERS. Each of the Company and its Subsidiaries is
in compliance with all Environmental, Health or Safety Requirements of Laws in
effect in each jurisdiction where it is presently doing business and as to which
the failure to so comply, in the aggregate for all such failures, would not
reasonably be likely to subject the Company to liability that would have a
Material Adverse Effect. Neither the Company nor any Subsidiary is subject to
any liability under the Environmental, Health or Safety Requirements of Laws in
effect in each jurisdiction where it is presently doing business that could
reasonably be expected to have a Material Adverse Effect. As of the date hereof,
neither the Company nor any Subsidiary has received any:
(A) notice from any Governmental Authority by which any of the
Company's or such Subsidiary's present or previously-owned or leased property
has been identified in any manner by any such Governmental Authority as a
hazardous substance disposal or removal site, "Super Fund" clean-up site or
candidate for removal or closure pursuant to any Environmental, Health or Safety
Requirements of Law; or
(B) notice of any Lien arising under or in connection with any
Environmental, Health or Safety Requirements of Law that has attached to any of
the Company's or such Subsidiary's owned or leased property or any revenues of
the Company's or such Subsidiary's owned or leased property; or
(C) communication, written or oral, from any Governmental Authority
concerning action or omission by the Company or such Subsidiary in connection
with its ownership or leasing of any property resulting in the release of any
hazardous substance resulting in any violation of any Environmental, Health or
Safety Requirements of Law;
where the effect of which, in the aggregate for all such notices and
communications, could reasonably be expected to have a Material Adverse Effect.
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6.17 INSURANCE. The properties and assets and business of the Company
and its Subsidiaries are insured with financially sound and reputable insurance
companies not Subsidiaries of the Company (unless consented to by the
Administrative Agent), in such amounts, with such deductibles and covering such
risks as are customarily carried by companies engaged in similar businesses and
are similarly situated.
6.18 LABOR MATTERS. As of the Closing Date, no labor disputes, strikes
or walkouts affecting the operations of the Company or any of its Subsidiaries,
are pending, or, to the Company's knowledge, threatened, planned or contemplated
which could reasonably be expected to have a Material Adverse Effect.
6.19 SOLVENCY. After giving effect to (i) the extensions of credit to
be made hereunder and under the 364-Day Agreement on the Closing Date and the
Dividend to be paid on the Closing Date or such other date as Loans requested
hereunder are made, (ii) the other transactions contemplated by this Agreement
and the other Loan Documents, including the Spin-off and (iii) the payment and
accrual of all transaction costs with respect to the foregoing, the Company and
its Subsidiaries taken as a whole are Solvent.
6.20 YEAR 2000 ISSUES. Each of the Company and its Subsidiaries has
made a reasonable assessment of the Year 2000 Issues and has a program for
remediating the Year 2000 Issues on a timely basis. Based on this assessment and
program, the Company does not reasonably anticipate any Material Adverse Effect
as a result of Year 2000 Issues.
6.21 DEFAULT. No Default or Unmatured Default has occurred and is
continuing.
6.22 REPRESENTATIONS AND WARRANTIES OF EACH SUBSIDIARY BORROWER. Each
Subsidiary Borrower represents and warrants to the Lenders that:
(A) Organization and Corporate Powers. Such Subsidiary Borrower (i) is
a company duly formed and validly existing and in good standing under the laws
of the state or country of its organization (such jurisdiction being hereinafter
referred to as the "Home Country"); (ii) has the requisite power and authority
to own its property and assets and to carry on its business substantially as now
conducted except where the failure to have such requisite authority would not
have a material adverse effect on such Subsidiary Borrower; and (iii) has the
requisite power and authority and legal right to execute and deliver the
Alternate Currency Addendum to which it is a party and each other Loan Document
to which it is a party and the performance by it of its obligations thereunder
have been duly authorized by proper corporate proceedings.
(B) Binding Effect. Each Loan Document, including, without limitation,
any Alternate Currency Addendum, executed by such Subsidiary Borrower is the
legal, valid and binding obligations of such Subsidiary Borrower enforceable in
accordance with their respective terms, except as enforceability may be limited
by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and general equitable principles.
(C) No Conflict; Government Consent. Neither the execution and delivery
by such Subsidiary Borrower of the Loan Documents to which it is a party, nor
the consummation by it of the transactions therein contemplated to be
consummated by it, nor compliance by such Subsidiary Borrower with the
provisions thereof will violate any law, rule, regulation, order, writ,
judgment,
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injunction, decree or award binding on such Subsidiary Borrower or any of its
Subsidiaries or such Subsidiary Borrower's or any of its Subsidiaries' memoranda
or articles of association or the provisions of any indenture, instrument or
agreement to which such Subsidiary Borrower or any of its Subsidiaries is a
party or is subject, or by which it, or its property, is bound, or conflict with
or constitute a default thereunder, or result in the creation or imposition of
any lien in, of or on the property of such Subsidiary Borrower or any of its
Subsidiaries pursuant to the terms of any such indenture, instrument or
agreement in any such case which violation, conflict, default, creation or
imposition could reasonably be expected to have a material adverse effect on
such Subsidiary Borrower. No order, consent, approval, license, authorization,
or validation of, or filing, recording or registration with, or exemption by,
any governmental agency is required to authorize, or is required in connection
with the execution, delivery and performance of, or the legality, validity,
binding effect or enforceability of, any of the Loan Documents.
(D) Filing. To ensure the enforceability or admissibility in evidence
of this Agreement and each Loan Document to which such Subsidiary Borrower is a
party (including, without limitation, any Alternate Currency Addendum) in its
Home Country, it is not necessary that this Agreement or any other Loan Document
to which such Subsidiary Borrower is a party or any other document be filed or
recorded with any court or other authority in its Home Country or that any stamp
or similar tax be paid to or in respect of this Agreement or any other Loan
Document of such Subsidiary Borrower. The qualification by any Lender or the
Administrative Agent for admission to do business under the laws of such
Subsidiary Borrower's Home Country does not constitute a condition to, and the
failure to so qualify does not affect, the exercise by any Lender or the
Administrative Agent of any right, privilege, or remedy afforded to any Lender
or the Administrative Agent in connection with the Loan Documents to which such
Subsidiary Borrower is a party or the enforcement of any such right, privilege,
or remedy against such Subsidiary Borrower. The performance by any Lender or the
Administrative Agent of any action required or permitted under the Loan
Documents will not (i) violate any law or regulation of such Subsidiary
Borrower's Home Country or any political subdivision thereof, (ii) result in any
tax or other monetary liability to such party pursuant to the laws of such
Subsidiary Borrower's Home Country or political subdivision or taxing authority
thereof (provided that, should any such action result in any such tax or other
monetary liability to the Lender or the Administrative Agent, the Borrowers
hereby agree to indemnify such Lender or the Administrative Agent, as the case
may be, against (x) any such tax or other monetary liability and (y) any
increase in any tax or other monetary liability which results from such action
by such Lender or the Administrative Agent and, to the extent the Borrowers make
such indemnification, the incurrence of such liability by the Administrative
Agent or any Lender will not constitute a Default) or (iii) violate any rule or
regulation of any federation or organization or similar entity of which the such
Subsidiary Borrower's Home Country is a member.
(E) No Immunity. Neither such Subsidiary Borrower nor any of its assets
is entitled to immunity from suit, execution, attachment or other legal process.
Such Subsidiary Borrower's execution and delivery of the Loan Documents to which
it is a party constitute, and the exercise of its rights and performance of and
compliance with its obligations under such Loan Documents will constitute,
private and commercial acts done and performed for private and commercial
purposes.
(F) Application of Representations and Warranties. It is understood and
agreed by the parties hereto that the representations and warranties of each
Subsidiary Borrower in this Section 6.22 shall only be applicable to such
Subsidiary Borrower on and after the date of its execution of
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an Assumption Letter and, if applicable, an Alternate Currency Addendum.
6.23 FOREIGN EMPLOYEE BENEFIT MATTERS. (a) Each Foreign Employee
Benefit Plan is in compliance in all material respects with all laws,
regulations and rules applicable thereto and the respective requirements of the
governing documents for such Plan; (b) the aggregate of the accumulated benefit
obligations under all Foreign Pension Plans does not exceed to any material
extent the current fair market value of the assets held in the trusts or similar
funding vehicles for such Plans; (c) with respect to any Foreign Employee
Benefit Plan maintained or contributed to by the Company or any Subsidiary or
any member of its Controlled Group (other than a Foreign Pension Plan),
reasonable reserves have been established in accordance with prudent business
practice or where required by ordinary accounting practices in the jurisdiction
in which such Plan is maintained; and (d) there are no material actions, suits
or claims (other than routine claims for benefits) pending or, to the knowledge
of the Company and its Subsidiaries, threatened against the Company or any
Subsidiary of it or any member of its Controlled Group with respect to any
Foreign Employee Benefit Plan.
ARTICLE VII: COVENANTS
The Company covenants and agrees that so long as any Revolving Loan
Commitments are outstanding and thereafter until payment in full of all of the
Obligations (other than contingent indemnity obligations) and termination of all
Letters of Credit, unless the Required Lenders shall otherwise give prior
written consent:
7.1 REPORTING. The Company shall:
(A) Financial Reporting. Send to the Agents and the Lenders:
(i) QUARTERLY REPORTS. As soon as practicable and in any event
within forty-five (45) days after the end of the first three quarterly
periods of each of its fiscal years, for itself and the Subsidiaries,
consolidated and consolidating unaudited balance sheets as at the end
of each such period and consolidated and consolidating statement of
income and consolidated and consolidating statement of changes in
owners' equity, and a statement of cash flows for the period from the
beginning of such fiscal year to the end of such quarter, presented on
the same basis as described in SECTION 7.1(A)(ii) and on a comparative
basis with the statements for such period in the prior fiscal year of
the Company.
(ii) ANNUAL REPORTS. As soon as practicable, and in any event
within ninety (90) days after the end of each of its fiscal years, (a)
an audit report, certified (as to consolidated, but not consolidating
statements) by internationally recognized independent certified public
accountants, prepared in accordance with generally accepted accounting
principles, on a consolidated and consolidating basis for itself and
the Subsidiaries, including balance sheets as of the end of such
period, related statement of income and consolidated and consolidating
statement of changes in owners' equity, and a statement of cash flows,
which audit report shall be unqualified and shall state that such
financial statements fairly present the consolidated financial position
of the Company and its Subsidiaries as at the dates indicated and the
results of operations and cash flows for the periods indicated in
conformity with
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generally accepted accounting principles and that the examination by
such accountants in connection with such consolidated and consolidating
financial statements has been made in accordance with generally
accepted auditing standards and (b) projected balance sheets,
statements of income and cash flows for the three succeeding fiscal
years, prepared in accordance with generally accepted accounting
principles, on a consolidated basis, together with the appropriate
supporting details and a statement of underlying assumptions, all in
form similar to those delivered to the Lead Arrangers prior to the
Closing Date.
(iii) OFFICER'S CERTIFICATE. Together with each delivery of
any financial statement (a) pursuant to CLAUSES (i) and (ii) of this
SECTION 7.1(A), an Officer's Certificate of the Company, substantially
in the form of EXHIBIT E attached hereto and made a part hereof,
stating that as of the date of such Officer's Certificate no Default or
Unmatured Default exists, or if any Default or Unmatured Default
exists, stating the nature and status thereof and (b) pursuant to
CLAUSES (i) and (ii) of this SECTION 7.1(A), a compliance certificate,
substantially in the form of EXHIBIT F attached hereto and made a part
hereof, signed by the Company's chief financial officer, chief
accounting officer or treasurer, setting forth calculations for the
period then ended for SECTION 2.5(B), if applicable, which demonstrate
compliance, when applicable, with the provisions of SECTIONS 7.3(A)
through (G) and SECTION 7.4, and which calculate the Leverage Ratio for
purposes of determining the then Applicable Floating Rate Margin,
Applicable Eurocurrency Margin and Applicable Commitment Fee
Percentage.
(B) NOTICE OF DEFAULT. Promptly upon any of the chief executive
officer, chief operating officer, chief financial officer, treasurer, controller
or general counsel of the Company obtaining actual knowledge (i) of any
condition or event which constitutes a Default or Unmatured Default, or becoming
aware that any Lender or Administrative Agent has given any written notice to
any Authorized Officer with respect to a claimed Default or Unmatured Default
under this Agreement, or (ii) that any Person has given any written notice to
any Authorized Officer or any Subsidiary of the Company or taken any other
action with respect to a claimed default or event or condition of the type
referred to in Section 8.1(D), the Company shall deliver to the Administrative
Agent and the Lenders an Officer's Certificate specifying (a) the nature and
period of existence of any such claimed default, Default, Unmatured Default,
condition or event, (b) the notice given or action taken by such Person in
connection therewith, and (c) what action the Company has taken, is taking and
proposes to take with respect thereto.
(C) LAWSUITS. (i) Promptly upon the Company obtaining actual knowledge
of the institution of, or written threat of, any action, suit, proceeding,
governmental investigation or arbitration, by or before any Governmental
Authority, against or affecting the Company or any of its Subsidiaries or any
property of the Company or any of its Subsidiaries not previously disclosed
pursuant to Section 6.7, which action, suit, proceeding, governmental
investigation or arbitration exposes, or in the case of multiple actions, suits,
proceedings, governmental investigations or arbitrations arising out of the same
general allegations or circumstances which expose, in the Company's reasonable
judgment, the Company or any of its Subsidiaries to liability in an amount
aggregating $10,000,000 or more (exclusive of claims covered by insurance
policies of the Company or any of its Subsidiaries unless the
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insurers of such claims have disclaimed coverage or reserved the right to
disclaim coverage on such claims and exclusive of claims covered by the
indemnity of a financially responsible indemnitor in favor of the Company or any
of its Subsidiaries unless the indemnitor has disclaimed or reserved the right
to disclaim coverage thereof), give written notice thereof to the Administrative
Agent and the Lenders and provide such other information as may be reasonably
available to enable each Lender and the Administrative Agent and its counsel to
evaluate such matters; and (ii) in addition to the requirements set forth in
clause (i) of this Section 7.1(C), upon request of the Administrative Agent or
the Required Lenders, promptly give written notice of the status of any action,
suit, proceeding, governmental investigation or arbitration covered by a report
delivered pursuant to clause (i) above and provide such other information as may
be reasonably available to it that would not jeopardize any attorney-client
privilege by disclosure to the Lenders to enable each Lender and the
Administrative Agent and its counsel to evaluate such matters.
(D) ERISA NOTICES. Deliver or cause to be delivered to the
Administrative Agent and the Lenders, at the Company's expense, the following
information and notices as soon as reasonably possible, and in any event:
(i) within ten (10) Business Days after the Company, or within
twenty-five (25) Business Days after any member of the Controlled
Group, obtains knowledge that a Termination Event has occurred which
could reasonably be expected to subject the Company to liability in
excess of $25,000,000, a written statement of the chief financial
officer, treasurer or designee of the Company describing such
Termination Event and the action, if any, which the member of the
Controlled Group has taken, is taking or proposes to take with respect
thereto, and when known, any action taken or threatened by the IRS, DOL
or PBGC with respect thereto;
(ii) within ten (10) Business Days after the Company, or
within twenty-five (25) Business Days after any of its Subsidiaries,
obtains knowledge that a material non-exempt prohibited transaction
(defined in Sections 406 of ERISA and Section 4975 of the Code) has
occurred, a statement of the chief financial officer, treasurer or
designee of the Company describing such transaction and the action
which the Company or such Subsidiary has taken, is taking or proposes
to take with respect thereto;
(iii) within ten (10) Business Days after the Company, or
within twenty-five (25) Business Days after any of its Subsidiaries,
receives notice of any unfavorable determination letter from the IRS
regarding the qualification of a Plan under Section 401(a) of the Code,
copies of each such letter;
(iv) within ten (10) Business Days with respect to the
Company, and within twenty-five (25) Business Days with respect to a
member of the Controlled Group, after the filing thereof with the IRS,
a copy of each funding waiver request filed with respect to any Benefit
Plan and all communications received by the Company or a member of the
Controlled Group with respect to such request;
(v) within ten (10) Business Days after receipt by the
Company, or within twenty-five (25) Business Days after receipt by any
member of the Controlled Group, of the PBGC's intention to terminate a
Benefit Plan or to have a trustee appointed to administer a Benefit
Plan, copies of each such notice;
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(vi) within ten (10) Business Days after the Company, or
within twenty-five (25) days after any member of the Controlled Group,
fails to make a required installment or any other required payment
under Section 412 of the Code on or before the due date for such
installment or payment, a notification of such failure;
(vii) within ten (10) Business Days after the establishment of
any Foreign Employee Benefit Plan or the commencement of, or obligation
to commence, contributions to any Foreign Employee Benefit Plan to
which the Company or any Subsidiary was not previously contributing,
where the aggregate annual contributions to such Plan(s) resulting
therefrom are or could reasonably be expected to be in excess of
$10,000,000, notification of such establishment, commencement or
obligation to commence and the amount of such contributions; and
For purposes of this SECTION 7.1(D), the Company, any of its Subsidiaries and
any member of the Controlled Group shall be deemed to know all facts known by
the administrator of any Plan which is a Single Employer Plan and which is
sponsored by such Company, Subsidiary or member of the Controlled Group,
respectively, and shall be deemed to know all facts known by the administrator
of any other Plan which is a Single Employer Plan 15 days after knowledge by
such administrator.
(E) LABOR MATTERS. Notify the Administrative Agent and the Lenders in
writing, promptly upon an Authorized Officer learning of (i) any material labor
dispute to which the Company or any of its Subsidiaries may become a party,
including, without limitation, any strikes, lockouts or other disputes relating
to such Persons' plants and other facilities and (ii) any material Worker
Adjustment and Retraining Notification Act liability incurred with respect to
the closing of any plant or other facility of the Company or any of its
Subsidiaries.
(F) OTHER INDEBTEDNESS. Deliver to the Administrative Agent (i) a copy
of each regular report, notice or communication regarding potential or actual
defaults (including any accompanying officer's certificate) delivered by or on
behalf of the Company to the holders of funded Indebtedness with an aggregate
outstanding principal amount in excess of $10,000,000 pursuant to the terms of
the agreements governing such Indebtedness, such delivery to be made at the same
time and by the same means as such notice of default is delivered to such
holders, and (ii) a copy of each notice or other communication received by the
Company from the holders of funded Indebtedness with an aggregate outstanding
principal amount in excess of $10,000,000 regarding potential or actual defaults
pursuant to the terms of such Indebtedness, such delivery to be made promptly
after such notice or other communication is received by the Company.
(G) OTHER REPORTS. Deliver or cause to be delivered to the
Administrative Agent and the Lenders copies of (i) all financial statements,
reports and non-routine notices, if any, sent or made available generally by the
Company to its securities holders or filed with the Commission by the Company,
and (ii) all notifications received from the Commission by the Company or its
Subsidiaries pursuant to the Securities Exchange Act of 1934 and the rules
promulgated thereunder other than routine reminders or notices that do not
relate to specific violations of rules promulgated by the Commission. The
Company shall include the Administrative Agent and the Lenders on its standard
distribution lists for all press releases made available generally by the
Company or any of the Company's Subsidiaries to the public concerning material
developments in the business of the Company or any such Subsidiary.
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(H) ENVIRONMENTAL NOTICES. As soon as possible and in any event within
fifteen (15) days after receipt by the Company, deliver to the Administrative
Agent and the Lenders a copy of (i) any notice or claim to the effect that the
Company or any of its Subsidiaries is or may be liable to any Person as a result
of the Release by the Company, any of its Subsidiaries, or any other Person of
any Contaminant into the environment, and (ii) any notice alleging any violation
of any Environmental, Health or Safety Requirements of Law by the Company or any
of its Subsidiaries if, in either case, such notice or claim relates to an event
which could reasonably be expected to subject the Company and each of its
Subsidiaries to liability individually or in the aggregate in excess of
$10,000,000.
(I) OTHER INFORMATION. Promptly upon receiving a request therefor from
the Administrative Agent, prepare and deliver to the Administrative Agent and
the Lenders such other information with respect to the Company or any of its
Subsidiaries, as from time to time may be reasonably requested by the
Administrative Agent.
7.2 AFFIRMATIVE COVENANTS.
(A) CORPORATE EXISTENCE, ETC. The Company shall, and shall cause each
of its Subsidiaries to, at all times maintain its corporate existence and
preserve and keep, or cause to be preserved and kept, in full force and effect
its rights and franchises material to its businesses except where, in the case
of Subsidiaries, failure to do so could not reasonably be expected to have a
Material Adverse Effect.
(B) CORPORATE POWERS. The Company shall, and shall cause each of its
Subsidiaries to, qualify and remain qualified to do business in each
jurisdiction in which the nature of its business requires it to be so qualified
and where the failure to be so qualified will have or could reasonably be
expected to have a Material Adverse Effect.
(C) COMPLIANCE WITH LAWS, ETC. The Company shall, and shall cause its
Subsidiaries to, (a) comply with all Requirements of Law and all restrictive
covenants affecting such Person or the business, prospects, properties, assets
or operations of such Person, and (b) obtain as needed all permits necessary for
its operations and maintain such permits in good standing unless failure to
comply or obtain such permits could not reasonably be expected to have a
Material Adverse Effect.
(D) PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION. The Company shall
pay, and cause each of its Subsidiaries to pay, (i) all material taxes,
assessments and other governmental charges imposed upon it or on any of its
properties or assets or in respect of any of its franchises, business, income or
property before any penalty or interest accrues thereon, and (ii) all claims
(including, without limitation, claims for labor, services, materials and
supplies) for material sums which have become due and payable and which by law
have or may become a Lien (other than a Lien permitted by Section 7.3(C)) upon
any of the Company's or such Subsidiary's property or assets, prior to the time
when any penalty or fine shall be incurred with respect thereto; provided,
however, that no such taxes, assessments and governmental charges referred to in
clause (i) above or claims referred to in clause (ii) above (and interest,
penalties or fines relating thereto) need be paid if being contested in good
faith by appropriate proceedings diligently instituted and conducted and if such
reserve or other appropriate provision, if any, as shall be required in
conformity with Agreement Accounting Principles shall have been made therefor.
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(E) INSURANCE. The Company will maintain, and will cause to be
maintained on behalf of each of its Subsidiaries, insurance coverage by
financially sound and reputable insurance companies or associations, against
such casualties and contingencies, of such types and in such amounts as are
customary for companies engaged in similar businesses and owning and operating
similar properties, it being understood that the Company and its Subsidiaries
may self-insure against hazards and risks with respect to which, and in such
amounts, as the Company in good faith determines prudent and consistent with
sound financial practice, and as are customary for companies engaged in similar
businesses and owning and operating similar properties. The Company shall
furnish to any Lender upon request full information as to the insurance carried.
(F) INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. The Company
shall permit and cause each of the Company's Subsidiaries to permit, any
authorized representative(s) designated by either the Administrative Agent or
any Lender (unless a Default has occurred and is continuing, only in conjunction
with an inspection conducted by the Administrative Agent) to visit and inspect,
for a reasonable purpose, any of the properties of the Company or any of its
Subsidiaries, to examine, audit, check and make copies of their respective
financial and accounting records, books, journals, orders, receipts and any
correspondence and other data relating to their respective businesses or the
transactions contemplated hereby (including, without limitation, in connection
with environmental compliance, hazard or liability), and to discuss their
affairs, finances and accounts with their officers and their independent
certified public accountants, all upon reasonable notice and at such reasonable
times during normal business hours, as often as may be reasonably requested. The
Company shall keep and maintain, and cause each of the Company's Subsidiaries to
keep and maintain proper books of record and account in which entries in
conformity with Agreement Accounting Principles shall be made of all dealings
and transactions in relation to their respective businesses and activities.
(G) ERISA COMPLIANCE. The Company shall, and shall cause each of the
Company's Subsidiaries to, establish, maintain and operate all Plans to comply
in all material respects with the provisions of ERISA, the Code, all other
applicable laws, and the regulations and interpretations thereunder and the
respective requirements of the governing documents for such Plans, except for
failures to comply which, in the aggregate, would not be reasonably likely to
subject the Company or any of its Subsidiaries to liability, individually or in
the aggregate, in excess of $10,000,000.
(H) MAINTENANCE OF PROPERTY. The Company shall cause all property used
or useful in the conduct of its business or the business of any Subsidiary to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and shall cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times
and except to the extent that the failure to so maintain such property could not
be reasonably expected to have a Material Adverse Effect.
(I) ENVIRONMENTAL COMPLIANCE. The Company shall, and shall cause each
of the Company's Subsidiaries to comply with, all Environmental, Health or
Safety Requirements of Law, except where noncompliance could not reasonably be
expected to have a Material Adverse Effect.
(J) USE OF PROCEEDS. The Borrowers shall use the proceeds of the
Advances to fund the
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Dividend in whole or in part and to provide funds for the additional working
capital needs and other general corporate purposes of the Company and its
Subsidiaries, including, without limitation, the financing of Permitted
Acquisitions. The Company will not, nor will it permit any Subsidiary to, use
any of the proceeds of the Advances to make any Acquisition other than a
Permitted Acquisition made pursuant to Section 7.3(G).
(K) SUBSIDIARY GUARANTEES; SUBSIDIARY SUBORDINATION AGREEMENT. The
Company will:
(a) cause each Subsidiary Borrower that is a Domestic Subsidiary and
each Domestic Subsidiary which is a Wholly-Owned Subsidiary and has
assets with a book value in excess of $10,000,000 to execute the
Guaranty (and from and after the Closing Date cause each other
Subsidiary Borrower that is a Domestic Subsidiary and each other
Domestic Subsidiary which is a Wholly-Owned Subsidiary and has such
assets to execute and deliver to the Administrative Agent, within
ten (10) days after becoming a Subsidiary Borrower or another
Domestic Subsidiary which is a Wholly-Owned Subsidiary and has such
assets, as applicable, an assumption or joinder agreement pursuant
to which it agrees to be bound by the terms and provisions of the
Guaranty (whereupon such Subsidiary shall become a "Guarantor"
under this Agreement));
(b) in the event that at any time the book value of the assets of all
Domestic Subsidiaries which are not Wholly-Owned Subsidiaries and
are not Guarantors exceeds $100,000,000, within ten (10) days
thereafter cause one or more of such Subsidiaries to execute and
deliver to the Administrative Agent an assumption or joinder
agreement pursuant to which it or they agree to be bound by the
terms and provisions of the Guaranty (whereupon each such
Subsidiary shall become a "Guarantor" under this Agreement) such
that, after giving effect thereto, the book value of the assets of
all Domestic Subsidiaries which are not Wholly-Owned Subsidiaries
and are not Guarantors does not exceed $100,000,000;
(c) cause each Subsidiary, before it makes a loan to any of the
Borrowers, to execute the Subordination Agreement (and from and
after the Closing Date cause each other Subsidiary to execute and
deliver to the Administrative Agent, within ten (10) days after
becoming a Subsidiary, as applicable, an assumption or joinder
agreement pursuant to which it agrees to be bound by the terms and
provisions of the Subordination Agreement);
(d) deliver and cause such Subsidiaries to deliver corporate
resolutions, opinions of counsel, and such other corporate
documentation as the Administrative Agent may reasonably request,
all in form and substance reasonably satisfactory to the
Administrative Agent; and
(e) cause each Subsidiary which is a Subsidiary Borrower to be a
Wholly-Owned Subsidiary for so long as it remains a Subsidiary
Borrower.
(L) YEAR 2000 ISSUES. The Company shall, and shall cause each of its
Subsidiaries to,
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take all actions reasonably necessary to address the Year 2000 Issues so that
any such Year 2000 Issues will not have a Material Adverse Effect. The Company
shall provide the Administrative Agent and each of the Lenders information
regarding the Company's and its Subsidiaries' program to address Year 2000
Issues. The Company shall advise the Administrative Agent, if after the date
hereof, it determines that Year 2000 Issues could reasonably be expected to have
a Material Adverse Effect.
(M) FOREIGN EMPLOYEE BENEFIT COMPLIANCE. The Company shall, and
shall cause each of its Subsidiaries and each member of its Controlled Group to,
establish, maintain and operate all Foreign Employee Benefit Plans to comply in
all material respects with all laws, regulations and rules applicable thereto
and the respective requirements of the governing documents for such Plans,
except for failures to comply which, in the aggregate, would not be reasonably
likely to subject the Company or any of its Subsidiaries to liability,
individually or in the aggregate, in excess of $10,000,000.
(N) PLEDGE AGREEMENTS. Within 30 days after the date of this Agreement,
the Company and/or its Subsidiaries shall (a) grant, or cause to be granted, to
the Collateral Agent, to equally and ratably secure the Obligations, the
"Obligations" under the 364-Day Credit Agreement and all obligations of the
Company or its Subsidiaries under Hedging Agreements entered into in connection
with this Agreement or the 364-Day Credit Agreement, a pledge of 65% (or such
lesser percentage as is owned by the Company or applicable Subsidiary which is
not a Foreign Subsidiary) of the shares of the capital stock of each Subsidiary
listed on SCHEDULE 7.2, in each case pursuant to a Pledge Agreement and (b)
deliver to the Collateral Agent such Pledge Agreements, stock certificates and
stock powers relating to such shares and such opinions of counsel and other
documentation as the Collateral Agent may reasonably request. Notwithstanding
the foregoing, the Collateral Agent may, in its discretion, extend the time
period for delivery of the Pledge Agreements, stock certificates and stock
powers referenced in the preceding sentence. In addition, within 30 days (or, as
long as the Company uses its best efforts, such reasonably longer time as the
Company may need) after the date that any other Subsidiary is or becomes a
Foreign Subsidiary which is a Wholly-Owned Subsidiary, has assets with a book
value in excess of $10,000,000 and is owned by the Company and/or one or more
Domestic Subsidiaries, the Company shall, or as applicable shall cause its
Domestic Subsidiaries to, grant or cause to be granted to the Collateral Agent a
pledge of such Foreign Subsidiary's capital stock to the extent, in the manner
and accompanied by the documentation described in the preceding sentence.
7.3 NEGATIVE COVENANTS.
(A) SALE OF RECEIVABLES. The Company shall not, nor shall it permit any
Subsidiary to, sell or otherwise dispose of any Receivables, with or without
recourse, except that the Company and the Subsidiaries may sell, transfer or
pledge any of their respective Receivables; provided, in the case of United
States domestic Receivables that the proceeds from the sale of such Receivables
are used to prepay the Term Loans in accordance with Section 2.5(C).
(B) SALES OF ASSETS. The Company shall not, nor shall it permit any
Subsidiary to, consummate any Asset Sale, except:
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(i) Asset Sales in connection with the sale of Receivables
permitted under SECTION 7.3(A);
(ii) transfers of assets to the Company, between the Company
and any Guarantor which is a Domestic Subsidiary or between any such
Guarantors; and
(iii) sales, assignments, transfers, leases, conveyances or
other dispositions of other assets if such transaction (a) is for not
less than fair market value (as determined in good faith by the
Company's chief financial officer), and (b) when combined with all such
other transactions (each such transaction being valued at book value)
and all Sale and Leaseback Transactions (each such Sale and Leaseback
Transaction being valued at book value) during the period from the
Closing Date to the date of such proposed transaction, represents the
disposition of not greater than ten percent (10%) of the Company's
Consolidated Net Assets at the end of the fiscal year immediately
preceding that in which such transaction is proposed to be entered
into.
(C) LIENS. The Company shall not, nor shall it permit any Subsidiary
to, directly or indirectly create, incur, assume or permit to exist a Lien on or
with respect to the Capital Stock of any Subsidiary of the Company. In addition,
the Company shall not, nor shall it permit any Subsidiary to, directly or
indirectly create, incur, assume or permit to exist any Lien on or with respect
to any of their respective other property or assets except:
(i) Permitted Existing Liens;
(ii) Customary Permitted Liens;
(iii) Liens with respect to property acquired by the Company
or any of its Subsidiaries after the date hereof (and not created in
contemplation of such acquisition) pursuant to a Permitted Acquisition;
PROVIDED, that such Liens shall extend only to the property so
acquired;
(iv) Liens on Receivables created in connection with a
transaction permitted under SECTION 7.3(A); PROVIDED, that each such
Lien represents an interest no greater than the related purchaser's
pro-rata interest in the pool of eligible Receivables so sold;
(v) Liens securing Indebtedness of a Subsidiary to the
Company;
(vi) Additional Liens, provided the Indebtedness secured
thereby does not exceed in the aggregate $10,000,000;
(vii) Liens, if any, created by the Loan Documents or
otherwise securing the Obligations and Liens securing Indebtedness
under the 364-Day Credit Agreement only to the extent such Liens are
equal and ratable with, or subordinate to, any Liens granted to the
Administrative Agent for the benefit of the Lenders; and
(viii) The replacement, extension or renewal of any Lien
permitted above upon or in the same property theretofore subject
thereto in connection with the replacement,
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extension or renewal (pursuant to Permitted Refinancing Indebtedness)
of the obligations secured thereby.
(D) INDEBTEDNESS. The Company shall not, nor shall it permit any
Subsidiary to, cause or permit, directly or indirectly create, incur, assume or
otherwise become or remain directly or indirectly liable with respect to any
Indebtedness, except:
(i) the Obligations;
(ii) Permitted Existing Indebtedness and related Permitted
Refinancing Indebtedness of the type described in CLAUSE (i) of the
definition thereof;
(iii) Indebtedness in an aggregate principal amount not to
exceed $200,000,000 at any time incurred in connection with the 364-Day
Credit Agreement and related Permitted Refinancing Indebtedness of the
type described in CLAUSE (i) of the definition thereof;
(iv) Indebtedness arising from intercompany loans and advances
from the Company or any Subsidiary to any Domestic Subsidiary which is
a Guarantor; provided, that such Indebtedness shall be expressly
subordinate to the payment in full in cash of the Obligations;
(v) Contingent Obligations to the extent permitted under
SECTION 7.3(E);
(vi) Hedging Obligations;
(vii) Indebtedness incurred in connection with a
securitization to the extent such transaction is otherwise permitted
pursuant to SECTION 7.3(A);
(viii) additional unsecured Indebtedness in an aggregate
amount at any time outstanding not exceeding (a) $150,000,000, LESS (b)
the aggregate Dollar Amount of securitized (i) United States domestic
Receivables in excess of $250,000,000, and (ii) European Receivables in
excess of $100,000,000, LESS (c) the amount of Permitted Existing
Indebtedness, of which not more than $50,000,000 may be incurred by
Subsidiaries which are not Subsidiary Borrowers or Guarantors; and
(ix) additional unsecured Indebtedness, the proceeds of which
are used to repay the Term Loans.
(E) CONTINGENT OBLIGATIONS. The Company shall not, nor shall it permit
any Subsidiary to, directly or indirectly create or become or be liable with
respect to any Contingent Obligation, except: (i) recourse obligations resulting
from endorsement of negotiable instruments for collection in the ordinary course
of business; (ii) Permitted Existing Contingent Obligations; (iii) obligations,
warranties, guaranties and indemnities, not relating to Indebtedness of any
Person, which have been or are undertaken or made in the ordinary course of
business and not for the benefit of or in favor of an Affiliate of the Company
or such Subsidiary; (iv) Contingent Obligations of the Subsidiaries of the
Company (a) under the Guaranty to which they are a party and (b) as guarantors
of the 364-
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Day Credit Agreement, (v) obligations arising under or related to the Loan
Documents; (vi) Contingent Obligations in respect of other Indebtedness
permitted by Section 7.3(D) above, and (vii) additional Contingent Obligations
in an aggregate amount not to exceed in the aggregate five percent (5%) of
Consolidated Net Worth at any one time outstanding.
(F) RESTRICTED PAYMENTS. The Company shall not, nor shall it permit any
Subsidiary to, make or declare any Restricted Payments (other than (i) the
Dividend, and (ii) Restricted Payments to the Company or to a Wholly-Owned
Subsidiary of the Company); provided, however, that so long as no Default or an
Unmatured Default shall have occurred and be continuing at the date of
declaration or payment thereof or would result therefrom, the Company may make
Restricted Payments (in addition to the Dividend) in an aggregate amount of up
to 25% of Net Income for the prior fiscal year.
(G) CONDUCT OF BUSINESS; SUBSIDIARIES; ACQUISITIONS. The Company shall
not, nor shall it permit any Subsidiary to, engage in any business other than
the businesses engaged in by the Company on the date hereof and any business or
activities which are similar, related or incidental thereto or logical
extensions thereof. The Company shall not create, acquire or capitalize any
Subsidiary after the date hereof unless (i) no Default or Unmatured Default
which is not being cured shall have occurred and be continuing or would result
therefrom; (ii) after such creation, acquisition or capitalization, all of the
representations and warranties contained herein shall be true and correct in all
material respects (unless such representation and warranty is made as of a
specific date, in which case, such representation or warranty shall be true in
all material respects as of such date); and (iii) after such creation,
acquisition or capitalization the Company shall be in compliance with the terms
of Section 7.2(K). The Company shall not make any Acquisitions, other than
Acquisitions meeting the following requirements (each such Acquisition
constituting a "PERMITTED ACQUISITION"):
(i) no Default or Unmatured Default shall have occurred and be
continuing or would result from such Acquisition or the incurrence of
any Indebtedness in connection therewith;
(ii) the purchase is consummated pursuant to a negotiated
acquisition agreement on a non-hostile basis and approved by the target
company's board of directors (and shareholders, if necessary) prior to
the consummation of the Acquisition;
(iii) if the purchase price payable in respect to any such
Acquisition (including, without limitation, cash or stock consideration
paid and Indebtedness or other liabilities assumed) exceeds
$25,000,000, prior to each such Acquisition, the Company shall have
delivered to the Administrative Agent and the Lenders a certificate
from one of the Authorized Officers, demonstrating that after giving
effect to such Acquisition, on a PRO FORMA basis in respect of each
such Acquisition as if the Acquisition and such incurrence of
Indebtedness had occurred on the first day of the twelve-month period
ending on the last day of the Company's most recently completed fiscal
quarter, the Company would have been in compliance with the financial
covenants in SECTION 7.4 and not otherwise in Default;
(iv) if the purchase price for the Acquisition exceeds,
together with all other Permitted Acquisitions permitted under this
SECTION 7.3(G) during the same fiscal year, $150,000,000 (the
"PERMITTED ACQUISITION BASKET") (including the incurrence or assumption
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of any Indebtedness in connection therewith), the Required Lenders
shall have consented to such Acquisition; PROVIDED that (a) if the Term
Loans have been repaid and all of the Term Loan Commitments have been
irrevocably terminated, the Permitted Acquisition Basket shall be
$250,000,000 and (b) if the Term Loans have been repaid and all of the
Term Loan Commitments have been irrevocably terminated and the
Company's senior unsecured debt is rated "BBB" or better by Standard &
Poor's Ratings Group or "Baa" or better by Moody's Investors Services,
Inc., the Permitted Acquisition Basket shall be $350,000,000;
(v) the businesses being acquired shall be similar to that of
the Company and its Subsidiaries as of the Closing Date, related or
incidental thereto or logical extensions thereof; and
(vi) such Acquisition shall be structured as an asset
acquisition, as an acquisition of one hundred percent (100%) of the
outstanding voting securities of the target company or as a merger
permitted hereby.
(H) INVESTMENTS. Neither the Company nor any of its Subsidiaries shall
purchase or acquire, or make any commitment therefor, any capital stock, equity
interest, or any obligations or other securities of, or any interest in, any
Person, or make or commit to make any advance, loan, extension of credit or
capital contribution to or any other investment in, any Person including any
Affiliate of the Company, except for:
(i) Investments by the Company or any Subsidiary in any
Wholly-Owned Subsidiary which is a Guarantor;
(ii) Investments incurred in order to consummate Permitted
Acquisitions otherwise permitted herein;
(iii) Investments in Cash Equivalents; and
(iv) other Investments in an aggregate amount not to exceed
$20,000,000 (based on the initial amount invested).
(I) TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES. Neither the Company
nor any of its Subsidiaries shall directly or indirectly enter into or permit to
exist any transaction (including, without limitation, the purchase, sale, lease
or exchange of any property or the rendering of any service) with, or make loans
or advances to, any Affiliate of the Company which is not its Wholly-Owned
Subsidiary, on terms that are less favorable to the Company or any of its
Subsidiaries, as applicable, than those that might be obtained in an arm's
length transaction at the time from Persons who are not such a holder or
Affiliate, except for (i) Restricted Payments permitted by Section 7.3(F) and
(ii) as otherwise contemplated by the Spin-off Materials.
(J) RESTRICTION ON FUNDAMENTAL CHANGES. Neither the Company nor any of
its Subsidiaries shall enter into any merger or consolidation, or liquidate,
wind-up or dissolve (or suffer any liquidation or dissolution), or convey,
lease, sell, transfer or otherwise dispose of, in one transaction or series of
transactions, all or substantially all of the Company's consolidated business or
property (each such transaction a "FUNDAMENTAL CHANGE"), whether now or
hereafter acquired,
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except (i) Fundamental Changes permitted under Sections 7.3(B), 7.3(D) or
7.3(G), (ii) a Subsidiary of the Company may be merged into or consolidated with
the Company or any Wholly-Owned Subsidiary of the Company (in which case the
Company or such Wholly-Owned Subsidiary shall be the surviving corporation);
provided that if the predecessor Subsidiary was a Guarantor, the surviving
Subsidiary, if applicable, shall be a Guarantor hereunder, (iii) any liquidation
of any Subsidiary of the Company into the Company or another Subsidiary of the
Company, as applicable, and (iv) the Company may merge with any other Person, or
any Subsidiary of the Company may consolidate or merge with any other Person,
provided, that (A) no Default or Unmatured Default shall exist immediately after
giving effect to such Fundamental Change, (B) in the case of any merger of the
Company, the Company is the surviving corporation in such merger and such merger
is with a Person in a line of business substantially similar to that of the
Company and its Subsidiaries as of the Closing Date or any business or
activities which are similar, related or incidental thereto or logical
extensions thereof, and (C) in the case of any merger or consolidation of any
Subsidiary of the Company, the surviving corporation in such Fundamental Change
is or becomes as a result thereof a Wholly-Owned Subsidiary of the Company and
if the predecessor Subsidiary was a Guarantor, the surviving Subsidiary shall be
a Guarantor hereunder, and (D) such transaction is with a Person in a line of
business substantially similar to that of the Company and its Subsidiaries as of
the Closing Date.
(K) MARGIN REGULATIONS. Neither the Company nor any of its
Subsidiaries, shall use all or any portion of the proceeds of any credit
extended under this Agreement to purchase or carry Margin Stock.
(L) ERISA. (a) The Company shall not:
(i) engage, or permit any of its Subsidiaries to engage, in
any material prohibited transaction described in Sections 406 of ERISA
or 4975 of the Code for which a statutory or class exemption is not
available or a private exemption has not been previously obtained from
the DOL;
(ii) permit to exist any material accumulated funding
deficiency (as defined in Sections 302 of ERISA and 412 of the Code),
with respect to any Benefit Plan, whether or not waived;
(iii) fail, or permit any Controlled Group member to fail, to
pay timely required material contributions or material annual
installments due with respect to any waived funding deficiency to any
Benefit Plan;
(iv) terminate, or permit any Controlled Group member to
terminate, any Benefit Plan which would result in any material
liability of the Company or any Controlled Group member under Title IV
of ERISA;
(v) fail to make any material contribution or payment to any
Multiemployer Plan which the Company or any Controlled Group member may
be required to make under any agreement relating to such Multiemployer
Plan, or any law pertaining thereto;
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(vi) permit any material unfunded liabilities with respect to
any Foreign Pension Plan except to the extent that any such unfunded
liabilities are being funded by annual contributions made by the
Borrower or any member of its Controlled Group and such annual
contributions are not less than the minimum amounts, if any, required
under applicable local law;
(vii) fail, or permit any of its Subsidiaries or Controlled
Group members to fail, to pay any required contributions or payments to
a Foreign Pension Plan on or before the due date for such required
installment or payment;
(viii) fail, or permit any Controlled Group member to fail, to
pay any required material installment or any other payment required
under Section 412 of the Code on or before the due date for such
installment or other payment; or
(ix) amend, or permit any Controlled Group member to amend, a
Plan resulting in a material increase in current liability for the plan
year such that the Company or any Controlled Group member is required
to provide security to such Plan under Section 401(a)(29) of the Code.
(b) For purposes of this SECTION 7.3(L), "material" means any
noncompliance or basis for liability which could reasonably be likely to subject
the Company or any of its Subsidiaries to liability, individually or in the
aggregate, in excess of $25,000,000.
(M) CERTAIN DOCUMENTS. Neither the Company nor any of its Subsidiaries
shall amend, modify or otherwise change any of the terms or provisions of the
Distribution Agreement, the Tax Disaffiliation Agreement (as such terms are
referenced in the definition of "Spin-off Materials") or of any of their
respective constituent documents as in effect on the date hereof in any manner
materially adverse to the interests of the Lenders.
(N) FISCAL YEAR. Neither the Company nor any of its consolidated
Subsidiaries shall change its fiscal year for accounting or tax purposes from a
period consisting of the twelve-month period ending on the Friday nearest to the
last day of June of each year, except as required by Agreement Accounting
Principles or by law and disclosed to the Lenders and the Administrative Agent.
(O) SUBSIDIARY COVENANTS. The Company will not, and will not permit any
Subsidiary to, create or otherwise permit to exist or cause to become effective
any consensual encumbrance or restriction of any kind on the ability of any
Subsidiary to pay dividends or make any other distribution on its stock, or make
any other Restricted Payment, pay any Indebtedness or other Obligation owed to
the Company or any other Subsidiary, make loans or advances or other Investments
in the Company or any other Subsidiary, or sell, transfer or otherwise convey
any of its property to the Company or any other Subsidiary.
(P) HEDGING OBLIGATIONS. The Company shall not and shall not permit any
of its Subsidiaries to enter into any interest rate, commodity or foreign
currency exchange, swap, collar, cap or similar agreements evidencing Hedging
Obligations, other than interest rate, foreign currency or commodity exchange,
swap, collar, cap or similar agreements entered into by the Company or its
Subsidiaries pursuant to which the Company or its
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Subsidiaries has hedged its actual or anticipated interest rate, foreign
currency or commodity exposure. Such permitted hedging agreements entered into
by the Company or its Subsidiaries and any Lender or any Affiliate of any Lender
are sometimes referred to herein as "HEDGING AGREEMENTS."
(Q) CAPITAL EXPENDITURES. The Company shall not, and shall not permit
any of its Subsidiaries to, make Capital Expenditures in any fiscal year to the
extent that during any fiscal year the aggregate amount of Capital Expenditures
for the Company and its Subsidiaries would exceed (i) for fiscal years ending
prior to the third anniversary of the Closing Date, $150,000,000, and (ii)
thereafter, $175,000,000, in each case excluding any amount attributable to a
Permitted Acquisition.
(R) RESTRICTIVE AGREEMENTS. The Company shall not, nor shall it permit
any of its Subsidiaries to, enter into any indenture, agreement, instrument or
other arrangement which directly or indirectly prohibits or restrains, or has
the effect of prohibiting or restraining, or imposes materially adverse
conditions upon, the ability of the Company or any Subsidiary to create Liens
upon their assets securing the Obligations or of any Subsidiary to (a) pay
dividends or make other distributions (i) on its Capital Stock or (ii) with
respect to any other interest or participation in, or measured by, its profits,
(b) make loans or advances to the Company or any Subsidiary, (c) repay loans or
advances from the Company or any Subsidiary or (d) transfer any of its
properties to the Company or any Subsidiary.
7.4 FINANCIAL COVENANTS.
(A) MINIMUM COVERAGE RATIO. The Company shall maintain as of the end of
each fiscal quarter set forth below a ratio of (i) EBITDAR for the four fiscal
quarter period then ending to (ii) Interest Expense plus Rentals for such period
of not less than the ratio set forth below opposite such period:
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FISCAL QUARTER ENDING RATIO
--------------------- -----
December 31, 1999 through June 30, 2000 2.75
July 1, 2000 through June 29, 2001 2.75
June 30, 2001 through June 28, 2002 3.00
June 29, 2002 through June 27, 2003 3.25
June 28, 2003 through July 2, 2004 3.50
July 3, 2004 and thereafter 3.75
(B) MAXIMUM LEVERAGE RATIO. The Company shall maintain as of the end of
each fiscal quarter set forth below a Leverage Ratio for the four fiscal quarter
period then ending of not greater than the ratio set forth below opposite such
period:
FISCAL QUARTER ENDING RATIO
--------------------- -----
December 31, 1999 through June 30, 2000 3.25
July 1, 2000 through June 29, 2001 3.00
June 30, 2001 through June 28, 2002 2.75
June 29, 2002 through June 27, 2003 2.50
June 28, 2003 through July 2, 2004 2.25
July 3, 2004 and thereafter 2.00
(C) MINIMUM CONSOLIDATED NET WORTH. The Company shall not permit its
Consolidated Net Worth at any time to be less than the sum of (a) 85% of
Consolidated Net Worth on the date immediately following the Closing Date plus
(b) fifty percent (50%) of Net Income (if positive) calculated separately for
(i) the remainder of the quarterly accounting period in which the Closing Date
occurs and (ii) each subsequent quarterly accounting period, in each case,
excluding changes in cumulative foreign exchange translation adjustment.
ARTICLE VIII: DEFAULTS
8.1 DEFAULTS. Each of the following occurrences shall constitute a
Default under this Agreement:
(A) FAILURE TO MAKE PAYMENTS WHEN DUE. The Company or any Subsidiary
Borrower shall (i) fail to pay when due any of the Obligations consisting of
principal with respect to any Loan or (ii) shall fail to pay within five (5)
Business Days of the date when due any of the other Obligations under this
Agreement or the other Loan Documents.
(B) BREACH OF CERTAIN COVENANTS. The Company or any Subsidiary Borrower
shall fail duly and punctually to perform or observe any agreement, covenant or
obligation binding on it under:
(i) SECTIONS 7.1(B), 7.2(J), 7.2(K), 7.3 or 7.4 or
(ii) any section of this Agreement or any other Loan Document
not covered by SECTION 8.1(A) or 8.1(B)(i) and such failure shall
continue unremedied for thirty (30) days after the occurrence thereof.
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(C) BREACH OF REPRESENTATION OR WARRANTY. Any representation or
warranty made or deemed made by the Company or any Subsidiary Borrower to the
Administrative Agent or any Lender herein or by the Company or any Subsidiary
Borrower or any of their Subsidiaries in any of the other Loan Documents or in
any statement or certificate or information at any time given by any such Person
pursuant to any of the Loan Documents shall be false as to a material fact or
matter on the date as of which made or deemed made.
(D) Default as to Other Indebtedness.
(i) The Company or any of its Subsidiaries shall fail to pay
when due any Indebtedness arising under the 364-Day Agreement
aggregating in excess of $10,000,000 (any such Indebtedness being
"MATERIAL INDEBTEDNESS"); or the Company or any of its Subsidiaries
shall fail to perform (beyond the applicable grace period with respect
thereto, if any) any term, provision or condition contained in any
agreement under which any such Material Indebtedness was created or is
governed, or any other event shall occur or condition exist, the effect
of which default or event is to cause, or to permit the holder or
holders of such Material Indebtedness to cause, such Material
Indebtedness to become due prior to its stated maturity; or any
Material Indebtedness of the Borrower or any of its Subsidiaries shall
be declared to be due and payable or required to be prepaid or
repurchased (other than by a regularly scheduled payment) prior to the
stated maturity thereof.
(E) Involuntary Bankruptcy; Appointment of Receiver, Etc.
(i) An involuntary case shall be commenced against the Company
or any of the Company's Subsidiaries and the petition shall not be
dismissed, stayed, bonded or discharged within forty-five (45) days
after commencement of the case; or a court having jurisdiction in the
premises shall enter a decree or order for relief in respect of the
Company or any of the Company's Subsidiaries in an involuntary case,
under any applicable bankruptcy, insolvency or other similar law now or
hereinafter in effect; or any other similar relief shall be granted
under any applicable federal, state, local or foreign law.
(ii) A decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator,
trustee, custodian or other officer having similar powers over the
Company or any of the Company's Subsidiaries or over all or a
substantial part of the property of the Company or any of the Company's
Subsidiaries shall be entered; or an interim receiver, trustee or other
custodian of the Company or any of the Company's Subsidiaries or of all
or a substantial part of the property of the Company or any of the
Company's Subsidiaries shall be appointed or a warrant of attachment,
execution or similar process against any substantial part of the
property of the Company or any of the Company's Subsidiaries shall be
issued and any such event shall not be stayed, dismissed, bonded or
discharged within forty-five (45) days after entry, appointment or
issuance.
(F) VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. The Company or
any of the Company's Subsidiaries shall (i) commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, (ii) consent to the entry of an order for relief in an involuntary case,
or to the conversion of an involuntary case to a voluntary case, under
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any such law, (iii) consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a substantial part of its
property, (iv) make any assignment for the benefit of creditors or (v) take any
corporate action to authorize any of the foregoing.
(G) JUDGMENTS AND ATTACHMENTS. Any money judgment(s) (other than a
money judgment covered by insurance as to which the applicable insurance company
has not disclaimed or reserved the right to disclaim coverage), writ or warrant
of attachment, or similar process against the Company or any Material Subsidiary
or any of their respective assets involving in any single case or in the
aggregate an amount in excess of $10,000,000 is or are entered and shall remain
undischarged, unvacated, unbonded or unstayed for a period of thirty (30) days
or in any event later than fifteen (15) days prior to the date of any proposed
sale thereunder.
(H) DISSOLUTION. Any order, judgment or decree shall be entered against
the Company or any Material Subsidiary decreeing its involuntary dissolution or
split up and such order shall remain undischarged and unstayed for a period in
excess of forty-five (45) days; or the Company or any Material Subsidiary shall
otherwise dissolve or cease to exist except as specifically permitted by this
Agreement.
(I) TERMINATION EVENT. Any Termination Event occurs which the Required
Lenders believe is reasonably likely to subject the Company to liability in
excess of $25,000,000. The Unfunded Liabilities of all Single Employer Plans
shall exceed in the aggregate $50,000,000.
(J) WAIVER OF MINIMUM FUNDING STANDARD. If the plan administrator of
any Plan applies under Section 412(d) of the Code for a waiver of the minimum
funding standards of Section 412(a) of the Code and any Lender believes the
substantial business hardship upon which the application for the waiver is based
could reasonably be expected to subject either the Company or any Controlled
Group member to liability in excess of $25,000,000.
(K) CHANGE OF CONTROL. A Change of Control shall occur.
(L) GUARANTOR REVOCATION. Any Guaranty shall fail to remain in full
force or effect or any action shall be taken to discontinue or to assert the
invalidity or unenforceability of any Guaranty, or any Guarantor shall fail to
comply with any of the terms or provisions of any Guaranty to which it is a
party, or any Guarantor shall deny that it has any further liability under any
Guaranty to which it is a party, or shall give notice to such effect; in each
case other than a Guarantor's ceasing to be a Subsidiary Borrower pursuant to
Section 2.24 hereof or the disposition of such Guarantor in any transaction
permitted by Section 7.3(B) hereof.
(M) SPIN-OFF. The Spin-off shall not be consummated within three (3)
Business Days after the making of the initial Loans.
(N) PLEDGE AGREEMENT. Any Pledge Agreement shall fail to remain in full
force or effect or any action shall be taken to discontinue or to assert the
invalidity or unenforceability of any Pledge Agreement, or any pledgor under any
Pledge Agreement shall fail to comply with any of the terms or provisions of
such Pledge Agreement or shall deny, or give notice to such effect, that it has
any further liability under such Pledge Agreement.
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A Default shall be deemed "continuing" until cured or until waived in
writing in accordance with SECTION 9.2.
ARTICLE IX: ACCELERATION, DEFAULTING LENDERS; WAIVERS, AMENDMENTS AND REMEDIES
9.1 TERMINATION OF REVOLVING LOAN COMMITMENTS; ACCELERATION. If any
Default described in SECTION 8.1(E) or 8.1(F) occurs with respect to the Company
or any Subsidiary Borrower, the obligations of the Lenders to make Loans
(including, without limitation, Alternate Currency Loans) hereunder and the
obligation of any Issuing Banks to issue Letters of Credit hereunder shall
automatically terminate and the Obligations shall immediately become due and
payable without any election or action on the part of the Administrative Agent
or any Lender. If any other Default occurs, the Required Lenders may terminate
or suspend the obligations of the Lenders to make Loans (including, without
limitation, Alternate Currency Loans) hereunder and the obligation of the
Issuing Banks to issue Letters of Credit hereunder, or declare the Obligations
to be due and payable, or both, whereupon the Obligations shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which the Borrowers expressly waive.
9.2 AMENDMENTS. Subject to the provisions of this ARTICLE IX, the
Required Lenders (or the Administrative Agent with the consent in writing of the
Required Lenders) and the Borrowers may enter into agreements supplemental
hereto for the purpose of adding or modifying any provisions to the Loan
Documents or changing in any manner the rights of the Lenders or the Borrowers
hereunder or waiving any Default hereunder; provided, however, that no such
supplemental agreement shall, without the consent of each Lender affected
thereby:
(i) Postpone or extend the Revolving Loan Termination Date,
the Term Loan Termination Date or any other date fixed for any payment
of principal of, or interest on, the Loans, the Reimbursement
Obligations or any fees or other amounts payable to such Lender (except
with respect to a waiver of the application of the default rate of
interest pursuant to SECTION 2.11 hereof).
(ii) Reduce the principal amount of any Loans or L/C
Obligations, or reduce the rate or extend the time of payment of
interest or fees thereon.
(iii) Reduce the percentage specified in the definition of
Required Lenders or any other percentage of Lenders hereunder specified
to be the applicable percentage in this Agreement to act on specified
matters or amend the definitions of "Required Lenders", "Pro Rata
Revolving Share", "Pro Rata Share" or "Pro Rata Term Share."
(iv) Increase the amount of the Revolving Loan Commitment or
Term Loan Commitment of any Lender hereunder or increase any Lender's
Pro Rata Share, Pro Rata Revolving Share or Pro Rata Term Share.
(v) Permit the Company or any Subsidiary Borrower to assign
its rights under this Agreement.
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(vi) Release the Company from its obligations under the
Guaranty set forth in ARTICLE X hereof.
(vii) Amend this SECTION 9.2.
No amendment of any provision of this Agreement relating to (a) the
Administrative Agent shall be effective without the written consent of the
Administrative Agent, (b) any Issuing Bank shall be effective without the
written consent of such Issuing Bank and (c) any Swing Line Loan or Swing Line
Bank shall be effective without the written consent of the applicable Swing Line
Bank. The Administrative Agent may waive payment of the fee required under
SECTION 14.3(B) without obtaining the consent of any of the Lenders.
9.3 PRESERVATION OF RIGHTS. No delay or omission of the Lenders or the
Administrative Agent to exercise any right under the Loan Documents shall impair
such right or be construed to be a waiver of any Default or an acquiescence
therein, and the making of a Loan or the issuance of a Letter of Credit
notwithstanding the existence of a Default or the inability of the Company or
any other Borrower to satisfy the conditions precedent to such Loan or issuance
of such Letter of Credit shall not constitute any waiver or acquiescence. Any
single or partial exercise of any such right shall not preclude other or further
exercise thereof or the exercise of any other right, and no waiver, amendment or
other variation of the terms, conditions or provisions of the Loan Documents
whatsoever shall be valid unless in writing signed by the requisite number of
Lenders required pursuant to SECTION 9.2, and then only to the extent in such
writing specifically set forth. All remedies contained in the Loan Documents or
by law afforded shall be cumulative and all shall be available to the
Administrative Agent and the Lenders until the Obligations have been paid in
full.
ARTICLE X : GUARANTY
10.1 GUARANTY. For valuable consideration, the receipt of which is
hereby acknowledged, and to induce the Lenders to make advances to each
Subsidiary Borrower and to make, issue and participate in Letters of Credit,
Swing Line Loans and Alternate Currency Loans, the Company hereby absolutely and
unconditionally guarantees prompt payment when due, whether at stated maturity,
upon acceleration or otherwise, and at all times thereafter, of any and all
existing and future obligations including without limitation the Obligations, of
each Subsidiary Borrower to the Agents, the Lenders, the Swing Line Banks, the
Issuing Lenders, the Alternate Currency Banks, or any of them, under or with
respect to the Loan Documents or under or with respect to any Hedging Agreement
entered into in connection with this Agreement, whether for principal, interest,
fees, expenses or otherwise (collectively, the "GUARANTEED OBLIGATIONS", and
each such Subsidiary Borrower being an "OBLIGOR" and collectively, the
"OBLIGORS").
10.2 WAIVERS. The Company waives notice of the acceptance of this
guaranty and of the extension or continuation of the Guaranteed Obligations or
any part thereof. The Company further waives presentment, protest, notice of
notices delivered or demand made on any Obligor or action or delinquency in
respect of the Guaranteed Obligations or any part thereof, including any right
to require the Administrative Agent and the Lenders to sue any Obligor, any
other guarantor or any other Person obligated with respect to the Guaranteed
Obligations or any part thereof, or otherwise
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to enforce payment thereof against any collateral securing the Guaranteed
Obligations or any part thereof, and PROVIDED FURTHER that if at any time any
payment of any portion of the Guaranteed Obligations is rescinded or must
otherwise be restored or returned upon the insolvency, bankruptcy or
reorganization of any of the Obligors or otherwise, the Company's obligations
hereunder with respect to such payment shall be reinstated at such time as
though such payment had not been made and whether or not the Administrative
Agent or the Lenders are in possession of this guaranty. The Administrative
Agent and the Lenders shall have no obligation to disclose or discuss with the
Company their assessments of the financial condition of the Obligors.
10.3 GUARANTY ABSOLUTE. This guaranty is a guaranty of payment and not
of collection, is a primary obligation of the Company and not one of surety, and
the validity and enforceability of this guaranty shall be absolute and
unconditional irrespective of, and shall not be impaired or affected by any of
the following: (a) any extension, modification or renewal of, or indulgence with
respect to, or substitutions for, the Guaranteed Obligations or any part thereof
or any agreement relating thereto at any time; (b) any failure or omission to
enforce any right, power or remedy with respect to the Guaranteed Obligations or
any part thereof or any agreement relating thereto, or any collateral; (c) any
waiver of any right, power or remedy with respect to the Guaranteed Obligations
or any part thereof or any agreement relating thereto or with respect to any
collateral; (d) any release, surrender, compromise, settlement, waiver,
subordination or modification, with or without consideration, of any collateral,
any other guaranties with respect to the Guaranteed Obligations or any part
thereof, or any other obligation of any Person with respect to the Guaranteed
Obligations or any part thereof; (e) the enforceability or validity of the
Guaranteed Obligations or any part thereof or the genuineness, enforceability or
validity of any agreement relating thereto or with respect to any collateral;
(f) the application of payments received from any source to the payment of
obligations other than the Guaranteed Obligations, any part thereof or amounts
which are not covered by this guaranty even though the Administrative Agent and
the Lenders might lawfully have elected to apply such payments to any part or
all of the Guaranteed Obligations or to amounts which are not covered by this
guaranty; (g) any change in the ownership of any Obligor or the insolvency,
bankruptcy or any other change in the legal status of any Obligor; (h) the
change in or the imposition of any law, decree, regulation or other governmental
act which does or might impair, delay or in any way affect the validity,
enforceability or the payment when due of the Guaranteed Obligations; (i) the
failure of the Company or any Obligor to maintain in full force, validity or
effect or to obtain or renew when required all governmental and other approvals,
licenses or consents required in connection with the Guaranteed Obligations or
this guaranty, or to take any other action required in connection with the
performance of all obligations pursuant to the Guaranteed Obligations or this
guaranty; (j) the existence of any claim, setoff or other rights which the
Company may have at any time against any Obligor, or any other Person in
connection herewith or an unrelated transaction; (k) the Administrative Agent's
or any Lender's election, in any case or proceeding instituted under chapter 11
of the Bankruptcy Code, of the application of section 1111(b)(2) of the
Bankruptcy Code; (l) any borrowing, use of cash collateral, or grant of a
security interest by the Company, as debtor in possession, under section 363 or
364 of the United States Bankruptcy Code; (m) the disallowance of all or any
portion any Lender's claims for repayment of the Guaranteed Debt under section
502 or 506 of the United States Bankruptcy Code; or (n) any other circumstances,
whether or not similar to any of the foregoing, which could constitute a defense
to a guarantor other than the defense of payment; all whether or not the Company
shall have had notice or knowledge of any act or omission referred to in the
foregoing clauses (a) through (n) of this paragraph. It is agreed that the
Company's liability hereunder is several and independent of any other guaranties
or other obligations at any time
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in effect with respect to the Guaranteed Obligations or any part thereof and
that the Company's liability hereunder may be enforced regardless of the
existence, validity, enforcement or non-enforcement of any such other guaranties
or other obligations or any provision of any applicable law or regulation
purporting to prohibit payment by any Obligor of the Guaranteed Obligations in
the manner agreed upon between the Obligor and the Administrative Agent and the
Lenders.
10.4 ACCELERATION. The Company agrees that, as between the Company on
the one hand, and the Lenders and the Administrative Agent, on the other hand,
the obligations of each Obligor guaranteed under this ARTICLE X may be declared
to be forthwith due and payable, or may be deemed automatically to have been
accelerated, as provided in SECTION 9.1 hereof for purposes of this ARTICLE X,
notwithstanding any stay, injunction or other prohibition (whether in a
bankruptcy proceeding affecting such Obligor or otherwise) preventing such
declaration as against such Obligor and that, in the event of such declaration
or automatic acceleration, such obligations (whether or not due and payable by
such Obligor) shall forthwith become due and payable by the Company for purposes
of this ARTICLE X.
10.5 MARSHALING; REINSTATEMENT. None of the Lenders nor the
Administrative Agent nor any Person acting for or on behalf of the Lenders or
the Administrative Agent shall have any obligation to marshall any assets in
favor of the Company or against or in payment of any or all of the Guaranteed
Obligations. If the Company, any Borrower or any other guarantor of all or any
part of the Guaranteed Obligations makes a payment or payments to any Lender or
the Administrative Agent, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to such Borrower, the Company, such other guarantor
or any other Person, or their respective estates, trustees, receivers or any
other party, including, without limitation, the Company, under any bankruptcy
law, state or federal law, common law or equitable cause, then, to the extent of
such payment or repayment, the part of the Guaranteed Obligations which has been
paid, reduced or satisfied by such amount shall be reinstated and continued in
full force and effect as of the time immediately preceding such initial payment,
reduction or satisfaction.
10.6 SUBROGATION. Until the irrevocable payment in full of the
Obligations and termination of all commitments which could give rise to any
Guaranteed Obligation, the Company hereby (i) waives and postpones any right of
subrogation with respect to the Guaranteed Obligations, (ii) waives and
postpones any right to enforce any remedy which the Administrative Agent and/or
the Lenders now has or may hereafter have against the Company, any endorser or
any other guarantor of all or any part of the Guaranteed Obligations, and (iii)
waives and postpones any benefit of, and any right to participate in, any
security or collateral given to the Administrative Agent and/or the Lenders to
secure payment of the Guaranteed Obligations or any part thereof or any other
liability of any Obligor to the Administrative Agent and/or the Lenders.
10.7 TERMINATION DATE. This guaranty shall continue in effect until the
earlier of (a) the Facility Termination Date, and (b) the date on which this
Agreement has otherwise expired or been terminated in accordance with its terms
and all of the Guaranteed Obligations have been paid in full in cash.
ARTICLE XI: GENERAL PROVISIONS
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11.1 SURVIVAL OF REPRESENTATIONS. All representations and warranties of
the Company contained in this Agreement shall survive delivery of this Agreement
and the making of the Loans herein contemplated so long as any principal,
accrued interest, fees, or any other amount due and payable under any Loan
Document is outstanding and unpaid (other than contingent reimbursement and
indemnification obligations) and so long as the Revolving Loan Commitments have
not been terminated.
11.2 GOVERNMENTAL REGULATION. Anything contained in this Agreement to
the contrary notwithstanding, no Lender shall be obligated to extend credit to
the Company or any other Borrower in violation of any limitation or prohibition
provided by any applicable statute or regulation.
11.3 HEADINGS. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
11.4 ENTIRE AGREEMENT. The Loan Documents embody the entire agreement
and understanding among the Borrowers, the Agents and the Lenders and supersede
all prior agreements and understandings among the Borrowers, the Agents and the
Lenders relating to the subject matter thereof other than the Fee Letters.
11.5 SEVERAL OBLIGATIONS; BENEFITS OF THIS AGREEMENT. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other Lender (except to the extent to which
the Administrative Agent is authorized to act as such). The failure of any
Lender to perform any of its obligations hereunder shall not relieve any other
Lender from any of its obligations hereunder. This Agreement shall not be
construed so as to confer any right or benefit upon any Person other than the
parties to this Agreement and their respective successors and assigns.
11.6 EXPENSES; INDEMNIFICATION.
(A) Expenses. The Borrowers shall reimburse the Administrative Agent
for any reasonable costs and out-of-pocket expenses (including reasonable
attorneys' and paralegals' fees and time charges of attorneys and paralegals for
the Administrative Agent, Issuing Banks, Swing Line Banks and Alternative
Currency Banks paid or incurred by the Administrative Agent in connection with
the preparation, negotiation, execution, delivery, syndication, review, proposed
or completed amendment, waiver or modification, and administration of the Loan
Documents. The Borrowers also agree to reimburse the Agents, each Alternate
Currency Bank, and each Lead Arranger and each of the Lenders for any reasonable
costs and out-of-pocket expenses (including reasonable attorneys' and
paralegals' fees and time charges of attorneys and paralegals for the Agents,
each Alternate Currency Bank, each Lead Arranger and each Lender, which
attorneys and paralegals may be employees of such Agent, such Alternate Currency
Bank, such Lead Arranger, or the Lenders) paid or incurred by the Agents, the
Alternate Currency Banks or the Lead Arrangers or any Lender in connection with
the collection of the Obligations and enforcement of the Loan Documents. The
Administrative Agent shall provide the Borrowers with a detailed statement of
all reimbursements requested under this Section 11.6(A).
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(B) Indemnity. The Borrowers hereby further agree to indemnify the
Agents, the Lead Arrangers, the Alternate Currency Banks, the Issuing Banks and
each and all of the Lenders and each of their respective Affiliates, and each of
such Agent's, Lead Arranger's, Alternate Currency Bank's, Issuing Bank's,
Lender's and Affiliate's directors, officers, employees, attorneys and agents
(all such persons, "Indemnitees") against all losses, claims, damages,
penalties, judgments, liabilities and expenses (including, without limitation,
all expenses of litigation or preparation therefor whether or not such
Indemnitee is a party thereto) which any of them may pay or incur arising out of
or relating to this Agreement, the other Loan Documents, the transactions
contemplated hereby or the direct or indirect application or proposed
application of the proceeds of any Loan hereunder except to the extent that they
are determined in a final non-appealable judgment by a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
the party seeking indemnification.
(C) Waiver of Certain Claims. The Borrowers further agree to assert no
claim against any of the Indemnitees on any theory of liability seeking
consequential, special, indirect, exemplary or punitive damages.
(D) Survival of Agreements. The obligations and agreements of the
Borrowers under this Section 11.6 shall survive the termination of this
Agreement.
11.7 NUMBERS OF DOCUMENTS. All statements, notices, closing documents,
and requests hereunder shall be furnished to the Administrative Agent with
sufficient counterparts so that the Administrative Agent may furnish one to each
of the Lenders.
11.8 ACCOUNTING. Except with respect to the pricing grid calculations
in Section 2.15 and the financial covenant calculations in Section 7.4 both of
which shall be made in accordance with Agreement Accounting Principles as in
effect on the date hereof, all accounting terms used herein shall be interpreted
and all accounting determinations hereunder shall be made in accordance with
generally accepted accounting principles as in effect from time to time,
consistently applied.
11.9 SEVERABILITY OF PROVISIONS. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
11.10 NONLIABILITY OF LENDERS. The relationship between the Borrowers
and the Lenders and the Administrative Agent shall be solely that of borrower
and lender. Neither the Administrative Agent nor any Lender shall have any
fiduciary responsibilities to the Borrowers or the Guarantors. Neither the
Administrative Agent nor any Lender undertakes any responsibility to any
Borrower or Guarantor to review or inform any Borrower or Guarantor of any
matter in connection with any phase of the Borrowers' business or operations.
11.11 GOVERNING LAW. ANY DISPUTE BETWEEN ANY BORROWER AND THE
ADMINISTRATIVE AGENT, ANY LENDER OR ANY OTHER HOLDER OF OBLIGATIONS ARISING OUT
OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH, THIS
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AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, AND WHETHER ARISING IN CONTRACT,
TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL
LAWS (BUT WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF
NEW YORK.
11.12 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.
(A) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION (B), EACH
OF THE PARTIES HERETO AGREES THAT ALL DISPUTES AMONG THEM ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG
THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED
EXCLUSIVELY BY STATE OR FEDERAL COURTS LOCATED IN NEW YORK, BUT THE PARTIES
HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A
COURT LOCATED OUTSIDE OF NEW YORK. EACH OF THE PARTIES HERETO WAIVES IN ALL
DISPUTES BROUGHT PURSUANT TO THIS SUBSECTION (A) ANY OBJECTION THAT IT MAY HAVE
TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(B) OTHER JURISDICTIONS. EACH BORROWER AGREES THAT THE ADMINISTRATIVE
AGENT, ANY LENDER OR ANY OTHER HOLDER OF OBLIGATIONS SHALL HAVE THE RIGHT TO
PROCEED AGAINST EACH BORROWER OR ITS RESPECTIVE PROPERTY IN A COURT IN ANY
LOCATION TO ENABLE SUCH PERSON TO (1) OBTAIN PERSONAL JURISDICTION OVER ANY
BORROWER OR (2) IN ORDER TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN
FAVOR OF SUCH PERSON. EACH BORROWER AGREES THAT IT WILL NOT ASSERT ANY
PERMISSIVE UNRELATED COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY SUCH PERSON TO
REALIZE ON ANY SECURITY FOR THE OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF SUCH PERSON. EACH BORROWER WAIVES ANY OBJECTION THAT IT
MAY HAVE TO THE LOCATION OF THE COURT IN WHICH SUCH PERSON HAS COMMENCED A
PROCEEDING DESCRIBED IN THIS SUBSECTION (B).
(C) VENUE. EACH BORROWER IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS
OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF
ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH
IN ANY JURISDICTION SET FORTH ABOVE.
(D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES
ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN
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CONNECTION HEREWITH. EACH OF THE PARTIES HERETO AGREES AND CONSENTS THAT ANY
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(E) ADVICE OF COUNSEL. EACH OF THE PARTIES REPRESENTS TO EACH OTHER
PARTY HERETO THAT IT HAS DISCUSSED THIS AGREEMENT AND, SPECIFICALLY, THE
PROVISIONS OF SECTION 11.6 AND THIS SECTION 11.12, WITH ITS COUNSEL.
11.13 OTHER TRANSACTIONS. Each of the Agents, the Lead Arrangers, the
Lenders, the Issuing Banks, the Swing Line Banks and the Borrowers acknowledge
that the Agents and the Lenders (or Affiliates of the Agents and the Lenders)
may, from time to time, effect transactions for their own accounts or the
accounts of customers, and hold positions in loans or options on loans of the
Company, the Company's Subsidiaries and other companies that may be the subject
of this credit arrangement and nothing in this Agreement shall impair the right
of any such Person to enter into any such transaction (to the extent it is not
expressly prohibited by the terms of this Agreement) or give any other Person
any claim or right of action hereunder as a result of the existence of the
credit arrangements hereunder, all of which are hereby waived. In addition,
certain Affiliates of one or more of the Lenders are or may be securities firms
and as such may effect, from time to time, transactions for their own accounts
or for the accounts of customers and hold positions in securities or options on
securities of the Company, the Company's Subsidiaries and other companies that
may be the subject of this credit arrangement and nothing in this Agreement
shall impair the right of any such Person to enter into any such transaction (to
the extent it is not expressly prohibited by the terms of this Agreement) or
give any other Person any claim or right of action hereunder as a result of the
existence of the credit arrangements hereunder, all of which are hereby waived.
Other business units affiliated with each of the Agents may from time to time
provide other financial services and products to the Company and its
Subsidiaries.
11.14 AGREEMENT EFFECTIVENESS. This Agreement shall be binding upon the
signatories hereto upon its execution by all parties other than the
Multicurrency Swing Line Bank despite the fact that the Agreement has not been
signed by the Multicurrency Swing Line Bank. Notwithstanding any provision
herein to the contrary, unless and until the Multicurrency Swing Line Bank shall
have executed this Agreement (whereupon it shall be bound hereby) the Borrowers
shall not be entitled to borrow Multicurrency Swing Line Loans.
ARTICLE XII : THE ADMINISTRATIVE AGENT
12.1 APPOINTMENT; NATURE OF RELATIONSHIP. ABN is appointed by the
Lenders as the Administrative Agent hereunder and under each other Loan
Document, and each of the Lenders irrevocably authorizes the Administrative
Agent to act as the contractual representative of such Lender with the rights
and duties expressly set forth herein and in the other Loan Documents. The
Administrative Agent agrees to act as such contractual representative upon the
express conditions contained in this ARTICLE XII. Notwithstanding the use of the
defined term "Administrative Agent,"
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it is expressly understood and agreed that the Administrative Agent shall not
have any fiduciary responsibilities to any Holder of Obligations by reason of
this Agreement and that the Administrative Agent is merely acting as the
representative of the Lenders with only those duties as are expressly set forth
in this Agreement and the other Loan Documents. In its capacity as the Lenders'
contractual representative, the Administrative Agent (i) does not assume any
fiduciary duties to any of the Holders of Obligations, (ii) is a
"representative" of the Holders of Obligations within the meaning of Section
9-105 of the Uniform Commercial Code and (iii) is acting as an independent
contractor, the rights and duties of which are limited to those expressly set
forth in this Agreement and the other Loan Documents. Each of the Lenders, for
itself and on behalf of its Affiliates as Holders of Obligations, agrees to
assert no claim against the Administrative Agent on any agency theory or any
other theory of liability for breach of fiduciary duty, all of which claims each
Holder of Obligations waives.
12.2 POWERS. The Administrative Agent shall have and may exercise such
powers under the Loan Documents as are specifically delegated to the
Administrative Agent by the terms of each thereof, together with such powers as
are reasonably incidental thereto. The Administrative Agent shall have no
implied duties or fiduciary duties to the Lenders, or any obligation to the
Lenders to take any action hereunder or under any of the other Loan Documents
except any action specifically provided by the Loan Documents required to be
taken by the Administrative Agent.
12.3 GENERAL IMMUNITY. Neither the Administrative Agent nor any of its
directors, officers, agents or employees shall be liable to the Company, the
Lenders or any Lender for any action taken or omitted to be taken by it or them
hereunder or under any other Loan Document or in connection herewith or
therewith except to the extent such action or inaction is found in a final
judgment by a court of competent jurisdiction to have arisen primarily from the
gross negligence or willful misconduct of such Person.
12.4 NO RESPONSIBILITY FOR LOANS, CREDITWORTHINESS, RECITALS, ETC.
Neither the Administrative Agent nor any of its directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into,
or verify (i) any statement, warranty or representation made in connection with
any Loan Document or any borrowing hereunder; (ii) the performance or observance
of any of the covenants or agreements of any obligor under any Loan Document;
(iii) the satisfaction of any condition specified in Article V, except receipt
of items required to be delivered solely to the Administrative Agent; (iv) the
existence or possible existence of any Default or (v) the validity,
effectiveness or genuineness of any Loan Document or any other instrument or
writing furnished in connection therewith. The Administrative Agent shall not be
responsible to any Lender for any recitals, statements, representations or
warranties herein or in any of the other Loan Documents, or for the execution,
effectiveness, genuineness, validity, legality, enforceability, collectibility,
or sufficiency of this Agreement or any of the other Loan Documents or the
transactions contemplated thereby, or for the financial condition of any
guarantor of any or all of the Obligations, the Company or any of its
Subsidiaries.
12.5 ACTION ON INSTRUCTIONS OF LENDERS. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting,
hereunder and under any other Loan Document in accordance with written
instructions signed by the Required Lenders (or all of the Lenders in the event
that and to the extent that this Agreement expressly requires such), and such
instructions and any action taken or failure to act pursuant thereto shall be
binding on all of the Lenders and on all
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owners of Loans and on all Holders of Obligations. The Administrative Agent
shall be fully justified in failing or refusing to take any action hereunder and
under any other Loan Document unless it shall first be indemnified to its
satisfaction by the Lenders pro rata against any and all liability, cost and
expense that it may incur by reason of taking or continuing to take any such
action.
12.6 EMPLOYMENT OF AGENTS AND COUNSEL. The Administrative Agent may
execute any of its duties as the Administrative Agent hereunder and under any
other Loan Document by or through employees, agents, and attorneys-in-fact and
shall not be answerable to the Lenders, except as to money or securities
received by it or its authorized agents, for the default or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care. The
Administrative Agent shall be entitled to advice of counsel concerning the
contractual arrangement between the Administrative Agent and the Lenders and all
matters pertaining to the Administrative Agent's duties hereunder and under any
other Loan Document.
12.7 RELIANCE ON DOCUMENTS; COUNSEL. The Administrative Agent shall be
entitled to rely upon any notice, consent, certificate, affidavit, letter,
telegram, statement, paper or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and, in respect
to legal matters, upon the opinion of counsel selected by the Administrative
Agent, which counsel may be employees of the Administrative Agent.
12.8 THE ADMINISTRATIVE AGENT'S, ISSUING BANKS' AND ALTERNATE CURRENCY
BANKS' REIMBURSEMENT AND INDEMNIFICATION. (a) The Lenders agree to reimburse and
indemnify the Administrative Agent ratably in proportion to their respective Pro
Rata Shares (i) for any expenses incurred by the Administrative Agent on behalf
of the Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents and (ii) for any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Administrative Agent in any way
relating to or arising out of the Loan Documents or any other document delivered
in connection therewith or the transactions contemplated thereby, or the
enforcement of any of the terms thereof or of any such other documents, provided
that no Lender shall be liable for any of the foregoing to the extent any of the
foregoing is found in a final non-appealable judgment by a court of competent
jurisdiction to have arisen primarily from the gross negligence or willful
misconduct of the Administrative Agent.
(b) The Lenders with a Revolving Loan Commitment agree to
reimburse and indemnify the Administrative Agent, the Issuing Banks, the Swing
Line Banks and the Alternate Currency Banks ratably in proportion to their
respective Pro Rata Revolving Shares (i) any amounts not reimbursed by any
Borrower for which the Administrative Agent, the Issuing Banks, the Swing Line
Banks and the Alternate Currency Banks are entitled to reimbursement by any
Borrower under the Loan Documents, (ii) for any other expenses incurred by the
Administrative Agent, any Issuing Bank, any Swing Line Bank or any Alternate
Currency Bank on behalf of the Lenders, in connection with the preparation,
execution, delivery, administration and enforcement of the Loan Documents and
(iii) for any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the
Administrative Agent, any Issuing Bank, any Swing Line Bank or any Alternate
Currency Bank in any way relating to or arising out of the Loan Documents or any
other document delivered in connection therewith or
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the transactions contemplated thereby, or the enforcement of any of the terms
thereof or of any such other documents, provided that no Lender shall be liable
for any of the foregoing to the extent any of the foregoing is found in a final
non-appealable judgment by a court of competent jurisdiction to have arisen
primarily from the gross negligence or willful misconduct of the Administrative
Agent, the applicable Issuing Bank, the applicable Swing Line Bank or the
applicable Alternate Currency Bank.
12.9 RIGHTS AS A LENDER. With respect to its Revolving Loan Commitment,
Loans made by it, Swing Line Loans made by it, and Letters of Credit issued by
it, the Administrative Agent shall have the same rights and powers hereunder and
under any other Loan Document as any Lender or Issuing Bank and may exercise the
same as though it were not the Administrative Agent, and the term "Lender" or
"Lenders", "Swing Line Bank", "Swing Line Banks", "Issuing Bank" or "Issuing
Banks" shall, unless the context otherwise indicates, include the Administrative
Agent in its individual capacity. The Administrative Agent may accept deposits
from, lend money to, and generally engage in any kind of trust, debt, equity or
other transaction, in addition to those contemplated by this Agreement or any
other Loan Document, with the Company or any of its Subsidiaries in which such
Person is not prohibited hereby from engaging with any other Person.
12.10 LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent, the Lead
Arrangers or any other Lender and based on the financial statements prepared by
the Company and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement and the other Loan Documents. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent, the Lead
Arrangers or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents.
12.11 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign at any time by giving written notice thereof to the Lenders and the
Company. Upon any such resignation, the Required Lenders shall have the right,
with the consent of the Company prior to the occurrence of a Default (which
consent shall not be unreasonably withheld), to appoint, on behalf of the
Borrowers and the Lenders, a successor Administrative Agent. If no successor
Administrative Agent shall have been so appointed by the Required Lenders and
shall have accepted such appointment within thirty days after the retiring
Administrative Agent's giving notice of resignation, then the retiring
Administrative Agent may appoint, on behalf of the Borrowers and the Lenders, a
successor Administrative Agent. Such successor Administrative Agent shall be a
commercial bank having capital and retained earnings of at least $500,000,000.
Upon the acceptance of any appointment as the Administrative Agent hereunder by
a successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder and under
the other Loan Documents. After any retiring Administrative Agent's resignation
hereunder as Administrative Agent, the provisions of this Article XII 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 Administrative Agent hereunder and
under the other Loan Documents.
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12.12 NO DUTIES IMPOSED UPON SYNDICATION AGENT, DOCUMENTATION AGENT OR
LEAD ARRANGERS. None of the Persons identified on the cover page to this
Agreement, the signature pages to this Agreement or otherwise in this Agreement
as a "Syndication Agent" or "Documentation Agent" or "Lead Arranger" shall have
any right, power, obligation, liability, responsibility or duty under this
Agreement other than, if such Person is a Lender, those applicable to all
Lenders as such. Without limiting the foregoing, none of the Persons identified
on the cover page to this Agreement, the signature pages to this Agreement or
otherwise in this Agreements as a "Syndication Agent" or "Documentation Agent"
or "Lead Arranger" shall have or be deemed to have any fiduciary duty to or
fiduciary relationship with any Lender. In addition to the agreements set forth
in SECTION 12.10, each of the Lenders acknowledges that it has not relied, and
will not rely, on any of the Persons so identified in deciding to enter into
this Agreement or in taking or not taking action hereunder.
12.13 COLLATERAL AGENT. ABN is appointed by the Lenders as the
Collateral Agent hereunder and under each of the Pledge Agreements. Each
reference to the Administrative Agent in this Article XII shall be deemed to
refer also to the Collateral Agent.
ARTICLE XIII: SETOFF; RATABLE PAYMENTS
13.1 SETOFF. In addition to, and without limitation of, any rights of
the Lenders under applicable law, if any Default occurs and is continuing, any
Indebtedness from any Lender to the Company or any other Borrower (including all
account balances, whether provisional or final and whether or not collected or
available) may be offset and applied toward the payment of the Obligations owing
to such Lender, whether or not the Obligations, or any part hereof, shall then
be due.
13.2 RATABLE PAYMENTS. If any Lender, whether by setoff or otherwise,
has payment made to it upon its Loans (other than payments received pursuant to
SECTIONS 4.1, 4.2 OR 4.4) in a greater proportion than that received by any
other Lender, such Lender agrees, promptly upon demand, to purchase a portion of
the Loans held by the other Lenders so that after such purchase each Lender will
hold its ratable proportion of Loans. If any Lender, whether in connection with
setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligation or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the benefits of such collateral ratably
in proportion to the obligations owing to them. In case any such payment is
disturbed by legal process, or otherwise, appropriate further adjustments shall
be made.
13.3 APPLICATION OF PAYMENTS. The Administrative Agent shall apply all
payments and prepayments in respect of any Obligations in the following order:
(A) first, to pay interest on and then principal of any portion of the
Loans which the Administrative Agent may have advanced on behalf of any Lender
for which the Administrative Agent has not then been reimbursed by such Lender
or the applicable Borrower and to pay any Swing Line Loan, Alternate Currency
Loan or Reimbursement Obligation that has not been unpaid;
(B) second, to the ratable payment of the Obligations then due and
payable; and
(C) third, to the ratable payment of all other Obligations.
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13.4 RELATIONS AMONG LENDERS. The Lenders are not partners or
co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Administrative Agent)
authorized to act for, any other Lender.
ARTICLE XIV: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
14.1 SUCCESSORS AND ASSIGNS. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrowers and
the Lenders and their respective successors and assigns, except that (A) no
Borrower shall have any right to assign its rights or obligations under the Loan
Documents without the consent of all of the Lenders, and any such assignment in
violation of this SECTION 14.1(A) shall be null and void, and (B) any assignment
by any Lender must be made in compliance with SECTION 14.3 hereof.
Notwithstanding clause (B) of this SECTION 14.1 or SECTION 14.3, (i) any Lender
may at any time, without the consent of any Borrower or the Administrative
Agent, assign all or any portion of its rights under this Agreement to a Federal
Reserve Bank and (ii) any Lender which is a fund or commingled investment
vehicle that invests in commercial loans in the ordinary course of its business
may at any time, without the consent of any Borrower or the Administrative
Agent, pledge or assign all or any part of its rights under this Agreement to a
trustee or other representative of holders of obligations owed or securities
issued by such Lender as collateral to secure such obligations or securities;
provided, however, that no such assignment or pledge shall release the
transferor Lender from its obligations hereunder. The Administrative Agent may
treat each Lender as the owner of the Loans made by such Lender hereunder for
all purposes hereof unless and until such Lender complies with SECTION 14.3
hereof in the case of an assignment thereof or, in the case of any other
transfer, a written notice of the transfer is filed with the Administrative
Agent. Any assignee or transferee of a Loan, Revolving Loan Commitment, L/C
Interest or any other interest of a lender under the Loan Documents agrees by
acceptance thereof to be bound by all the terms and provisions of the Loan
Documents. Any request, authority or consent of any Person, who at the time of
making such request or giving such authority or consent is the owner of any
Loan, shall be conclusive and binding on any subsequent owner, transferee or
assignee of such Loan.
14.2 PARTICIPATIONS.
(A) Permitted Participants; Effect. Subject to the terms set forth in
this Section 14.2, any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to one or more banks or other
entities ("PARTICIPANTS") participating interests in any Loan owing to such
Lender, any Revolving Loan Commitment of such Lender, any L/C Interest of such
Lender or any other interest of such Lender under the Loan Documents on a pro
rata or non-pro rata basis. Notice of such participation to the Company and the
Administrative Agent shall be required prior to any participation becoming
effective with respect to a Participant which is not a Lender or an Affiliate
thereof. Upon receiving said notice, the Administrative Agent shall record the
participation in the Register it maintains. Moreover, notwithstanding such
recordation, such participation shall not be considered an assignment under
Section 14.3 of this Agreement and such Participant shall not be considered a
Lender. In the event of any such sale by a Lender of participating interests to
a Participant, such Lender's obligations under the Loan Documents shall remain
unchanged, such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, such Lender shall remain the
owner of all Loans made by it for all purposes under the Loan Documents, all
amounts payable by the applicable Borrower under this Agreement shall be
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determined as if such Lender had not sold such participating interests, and the
applicable Borrower and the Administrative Agent shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under the Loan Documents except that, for purposes of Article IV
hereof, the Participants shall be entitled to the same rights as if they were
Lenders.
(B) Voting Rights. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, modification or waiver of
any provision of the Loan Documents other than any amendment, modification or
waiver with respect to any Loan, Letter of Credit or Revolving Loan Commitment
in which such Participant has an interest which forgives principal, interest or
fees or reduces the interest rate or fees payable pursuant to the terms of this
Agreement with respect to any such Loan or Revolving Loan Commitment, postpones
any date fixed for any regularly-scheduled payment of principal of, or interest
or fees on, any such Loan or Revolving Loan Commitment.
14.3 ASSIGNMENTS.
(A) PERMITTED ASSIGNMENTS. (i) Any Lender (each such assigning Lender
under this Section 14.3 being a "SELLER") may, in the ordinary course of its
business and in accordance with applicable law, at any time assign to one or
more banks or other entities (other than the Company or any of its Affiliates)
("PURCHASERS") all or a portion of its rights and obligations under this
Agreement (including, without limitation, its Revolving Loan Commitment, any
Loans owing to it, all of its participation interests in existing Letters of
Credit, Swing Line Loans and Alternate Currency Loans, and its obligation to
participate in additional Letters of Credit, Swing Line Loans and Alternate
Currency Loans hereunder) in accordance with the provisions of this Section
14.3. Such assignment shall be substantially in the form of Exhibit D hereto and
shall not be permitted hereunder unless such assignment is either for all of
such Seller's rights and obligations under the Loan Documents or, without the
prior written consent of the Administrative Agent and the Company, involves
loans and commitments as a consequence of which neither the Seller nor the
Purchaser will have a Commitment of less than $5,000,000 (for Sellers which are
Managing Agents or Agents) or $10,000,000 (for all other Sellers); provided that
the foregoing restrictions with respect to Commitments having a minimum
aggregate amount (i) shall not apply to any assignment between Lenders, or to an
Affiliate or Approved Fund of any Lender, and (ii) in any event may be waived by
the Administrative Agent and the Company). The written consent of the
Administrative Agent, and, prior to the occurrence of a Default, the Company
(which consent, in each such case, shall not be unreasonably withheld), shall be
required prior to an assignment becoming effective with respect to a Purchaser
which is not a Lender or an Affiliate or Approved Fund of such Lender.
(ii) Notwithstanding anything to the contrary contained herein, any
Lender (each such Lender, a "GRANTING BANK") may grant to a special purpose
funding vehicle (each such special purpose funding vehicle, a "SPC"), identified
as such in writing from time to time by the applicable Granting Bank to the
Administrative Agent and the Company, the option to provide to the Company and
the other Borrowers all or any part of any Advance that such Granting Bank would
otherwise be obligated to make to the applicable Borrower pursuant to this
Agreement; provided, that (i) nothing herein shall constitute a commitment by
any SPC to make any Advance, (ii) if an SPC elects not to exercise such option
or otherwise fails to provide all or any part of such Advance, the applicable
Granting Bank shall be obligated to make such Advance pursuant to the terms
hereof. The
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making of an Advance by any SPC hereunder shall utilize the Revolving Loan
Commitment of the applicable Granting Bank to the same extent, and as if, such
Advance were made by such Granting Bank. Each party hereto hereby agrees that no
SPC shall be liable for any indemnity or other similar payment obligation under
this Agreement (all liability for which shall remain with the applicable
Granting Bank). All notices hereunder to any Granting Bank or the related SPC,
and all payments in respect of the Obligations due to such Granting Bank or the
related SPC, shall be made to such Granting Bank. In addition, each Granting
Bank shall vote as a Lender hereunder without giving effect to any assignment
under this SECTION 14.3(A)(II), and not SPC shall have any vote as a Lender
under this Agreement for any purpose. In furtherance of the foregoing, each
party hereto hereby agrees (which agreement shall survive the termination of
this Agreement) that, prior to the date that is one year and one day after the
payment in full of all outstanding commercial paper or other senior indebtedness
of any SPC, it will not institute against, or join any other person in
instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under the laws of the United States or any
State thereto. In addition, notwithstanding anything to the contrary contained
in this SECTION 14.3, any SPC may (i) with notice to, but without the prior
written consent of, the Company and the Administrative Agent and without paying
any processing or administrative fee therefor, assign all or a portion of its
interest in any Advances to the Granting Bank or to any financial institutions
(consented to by the Company and the Administrative Agent in accordance with the
terms of SECTION 14.3(A)(I)) providing liquidity and/or credit support to or for
the account of such SPC to support the funding or maintenance of Advances and
(ii) disclose on a confidential basis any non-public information relating to its
Advances to any rating agency, commercial paper dealer or provider of any
surety, guarantee or credit or liquidity enhancement to such SPC. This SECTION
14.3(A)(II) may not be amended without the written consent of each SPC affected
thereby.
(B) Effect; Effective Date. Upon (i) delivery to the Administrative
Agent and the Alternate Currency Banks of a notice of assignment, substantially
in the form attached as Appendix I to Exhibit D hereto (a "NOTICE OF
ASSIGNMENT"), together with any consent required by Section 14.3(A) hereof, (ii)
payment of a $3,500 fee by the assignee or the assignor (as agreed) to the
Administrative Agent for processing such assignment (other than an assignment by
a Lender to an Affiliate of such Lender or an Approved Fund of such Lender), and
(iii) the completion of the recording requirements in Section 14.3(C), such
assignment shall become effective on the later of such date when the
requirements in clauses (i), (ii), and (iii) are met or the effective date
specified in such Notice of Assignment. The Notice of Assignment shall contain a
representation by the Purchaser to the effect that none of the consideration
used to make the purchase of the Revolving Loan Commitment, Loans and L/C
Obligations under the applicable assignment agreement are "plan assets" as
defined under ERISA and that the rights and interests of the Purchaser in and
under the Loan Documents will not be "plan assets" under ERISA. On and after the
effective date of such assignment, such Purchaser, if not already a Lender,
shall for all purposes be a Lender party to this Agreement and any other Loan
Documents executed by the Lenders and shall have all the rights and obligations
of a Lender under the Loan Documents, to the same extent as if it were an
original party hereto, and no further consent or action by any Borrower, the
Lenders, the Alternate Currency Banks or the Administrative Agent shall be
required to release the Seller with respect to the percentage of the Aggregate
Revolving Loan Commitment, Loans and Letter of Credit, Swing Line Loans and
Alternate Currency Loan participations assigned to such Purchaser. Upon the
consummation of any assignment to a Purchaser pursuant to this Section 14.3(B),
the Seller, the Administrative Agent, the
-103-
<PAGE> 110
Alternate Currency Banks and the Borrowers shall make appropriate arrangements
so that, to the extent notes have been issued to evidence any of the transferred
Loans, replacement notes are issued to such Seller and new notes or, as
appropriate, replacement notes, are issued to such Purchaser, in each case in
principal amounts reflecting their Revolving Loan Commitment, as adjusted
pursuant to such assignment. Notwithstanding anything to the contrary herein, no
Borrower shall, at any time, be obligated to pay under Section 2.15(E) to any
Lender that is a Purchaser, assignee or transferee any sum in excess of the sum
which such Borrower would have been obligated to pay to the Lender that was the
Seller, assignor or transferor had such assignment or transfer not been
effected.
(C) THE REGISTER. Notwithstanding anything to the contrary in this
Agreement, each Borrower hereby designates the Administrative Agent, and the
Administrative Agent hereby accepts such designation, to serve as such
Borrower's contractual representative solely for purposes of this Section
14.3(C). In this connection, the Administrative Agent shall maintain at its
address referred to in Section 15.1 a copy of each assignment delivered to and
accepted by it pursuant to this Section 14.3 and a register (the "REGISTER") for
the recordation of the names and addresses of the Lenders and the Revolving Loan
Commitment of, principal amount of and interest on the Loans owing to, each
Lender from time to time and whether such Lender is an original Lender or the
assignee of another Lender pursuant to an assignment under this Section 14.3.
The entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and the Company and each of its Subsidiaries, the
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by any Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
14.4 CONFIDENTIALITY. Subject to SECTION 14.5, the Administrative Agent
and the Lenders and their respective representatives shall hold all nonpublic
information obtained pursuant to the requirements of this Agreement and
identified as such by the Company or any other Borrower in accordance with such
Person's customary procedures for handling confidential information of this
nature and in accordance with safe and sound commercial lending or investment
practices and in any event may make disclosure reasonably required by a
prospective Transferee in connection with the contemplated participation or
assignment or as required or requested by any Governmental Authority or any
securities exchange or similar self-regulatory organization or representative
thereof or pursuant to a regulatory examination or legal process, or to any
direct or indirect contractual counterparty in swap agreements or such
contractual counterparty's professional advisor. In no event shall the
Administrative Agent or any Lender be obligated or required to return any
materials furnished by the Company; provided, however, each prospective
Transferee shall be required to agree that if it does not become a participant
or assignee it shall return all materials furnished to it by or on behalf of the
Company in connection with this Agreement.
14.5 DISSEMINATION OF INFORMATION. Each Borrower authorizes each Lender
to disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "TRANSFEREE") and any
prospective Transferee any and all information in such Lender's possession
concerning the Company and its Subsidiaries; provided that prior to any such
disclosure, such prospective Transferee shall agree to preserve in accordance
with SECTION 14.4 the confidentiality of any confidential information described
therein.
-104-
<PAGE> 111
ARTICLE XV: NOTICES
15.1 GIVING NOTICE. Except as otherwise permitted by SECTION 2.14 with
respect to Borrowing/Conversion/Continuation Notices, all notices and other
communications provided to any party hereto under this Agreement or any other
Loan Documents shall be in writing or by telex or by facsimile and addressed or
delivered to such party at its address set forth below its signature hereto or
at such other address as may be designated by such party in a notice to the
other parties. Any notice, if mailed and properly addressed with postage
prepaid, shall be deemed given when received; any notice, if transmitted by
telex or facsimile, shall be deemed given when transmitted (answerback confirmed
in the case of telexes).
15.2 CHANGE OF ADDRESS. The Borrowers, the Administrative Agent and any
Lender may each change the address for service of notice upon it by a notice in
writing to the other parties hereto.
15.3 AUTHORITY OF COMPANY. Each of the Subsidiary Borrowers, by its
execution hereof or of an Assumption Letter (i) irrevocably authorizes the
Company, on behalf of such Subsidiary Borrower, to give and receive all notices
under the Loan Documents and to make all elections under the Loan Documents and
to give all Borrowing/Conversion/Continuation Notices on its behalf, (ii) agrees
to be bound by any such notices or elections and (iii) agrees that the
Administrative Agent and Lenders may rely upon any such policies or elections as
if they had been given or made by such Subsidiary Borrower.
ARTICLE XVI: COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by the Company, the
Administrative Agent and the Lenders and each party has notified the
Administrative Agent by telex or telephone, that it has taken such action.
Remainder of This Page Intentionally Blank
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<PAGE> 112
IN WITNESS WHEREOF, the Company, the Subsidiary Borrowers, the Lenders
and the Administrative Agent have executed this Agreement as of the date first
above written.
LANIER WORLDWIDE, INC., as the Company
By: /s/ Wesley E. Cantrell
-----------------------------------------
Name:
Title:
Address: 2300 Parklake Drive
Atlanta, GA 30345
Attention: Vice President Finance and
Treasurer
Telephone No.: 770/621-1300
Facsimile No.: 770/621-1367
<PAGE> 113
LANIER EUROPE AG, as a Subsidiary Borrower
By: /s/ Wesley E. Cantrell
-----------------------------------------
Name:
Title:
Address: c/o Lanier Worldwide, Inc.
2300 Parklake Drive
Atlanta, GA 30345
Attention: Vice President Finance and
Treasurer
Telephone No.: 770/621-1300
Facsimile No.: 770/621-1367
<PAGE> 114
LANIER EUROPE B.V., as a Subsidiary Borrower
By: /s/ Wesley E. Cantrell
-----------------------------------------
Name:
Title:
Address: c/o Lanier Worldwide, Inc.
2300 Parklake Drive
Atlanta, GA 30345
Attention: Vice President Finance and
Treasurer
Telephone No.: 770/621-1300
Facsimile No.: 770/621-1367
<PAGE> 115
LANIER HOLDINGS, INC., as a Subsidiary Borrower
By: /s/ Wesley E. Cantrell
-----------------------------------------
Name:
Title:
Address: c/o Lanier Worldwide, Inc.
2300 Parklake Drive
Atlanta, GA 30345
Attention: Vice President Finance and
Treasurer
Telephone No.: 770/621-1300
Facsimile No.: 770/621-1367
<PAGE> 116
LANIER PUERTO RICO, INC., as a Subsidiary
Borrower
By: /s/ Wesley E. Cantrell
-----------------------------------------
Name:
Title:
Address: c/o Lanier Worldwide, Inc.
2300 Parklake Drive
Atlanta, GA 30345
Attention: Vice President Finance and
Treasurer
Telephone No.: 770/621-1300
Facsimile No.: 770/621-1367
<PAGE> 117
ABN AMRO BANK N.V., as Administrative Agent,
Issuing Bank, Dollar Swing Line Bank, Alternate
Currency Bank, and Lender
By: /s/ Paul Widuch
-----------------------------------------
Name: PAUL WIDUCH
Title: GROUP VICE PRESIDENT
By: /s/ Mary Honda
-----------------------------------------
Name: MARY HONDA
Title: VICE PRESIDENT
Address: 135 South LaSalle Street,
Suite 625
Chicago, Illinois 60603
Attention: Mary Honda
Telephone No.: (312) 904-5220
Facsimile No.: (312) 606-8425
With a copy to:
1325 Avenue of the Americas
9th Floor
New York, New York 10019
Attention: Linda Boardman
Telephone No.: (212) 314-1724
Facsimile No.: (212) 314-1712
<PAGE> 118
ABN AMRO BANK N.V., BELGIUM BRANCH, as
Multicurrency Swing Line Bank and Lender
By:
-----------------------------------------
Name:
Title:
By:
-----------------------------------------
Name:
Title:
Address: Ragentlaan 53
1000 Brussels
Belgium
Attention: Jan Van den Eynde
Koen Provoost
Telephone No.: 32 2 546 0150
Facsimile No.: 32 2 546 0400
<PAGE> 119
SUNTRUST BANK, ATLANTA, as Syndication Agent and
Lender
By: /s/ J. Christopher Deisley
-----------------------------------------
Name: J. CHRISTOPHER DEISLEY
Title: DIRECTOR
Address: 303 Peachtree Street
2nd Floor
Atlanta, GA 30308
Attention: J. Christopher Deisley
Telephone No.: (404) 588-8684
Facsimile No.: (404) 588-8833
<PAGE> 120
WACHOVIA BANK N.A., as Documentation Agent and
Lender
By: /s/ William R. McCamey
-----------------------------------------
Name: William R. McCamey
Title: Vice President
Address: 191 Peachtree Street
24th Floor
Atlanta, GA 30303
Attention: William McCamey
Telephone No.: (404) 332-6830
Facsimile No.: (404) 332-5016
<PAGE> 121
EXHIBIT A
TO
5-YEAR CREDIT AGREEMENT
Dated as of October 20, 1999
COMMITMENTS
LOAN COMMITMENTS
<TABLE>
<CAPTION>
Lender Amount of Revolving Amount of Term Total
- ------ ------------------- -------------- -----
Loan Commitment Loan Commitment Commitment
--------------- --------------- ----------
<S> <C> <C> <C>
ABN AMRO Bank N.V. $150,000,000 $83,333,333.34 $233,333,333.34
Suntrust Bank, Atlanta $150,000,000 $83,333,333.33 $233,333,333.33
Wachovia Bank N.A. $150,000,000 $83,333,333.33 $233,333,333.33
Total $450,000,000 $250,000,000 $700,000,000
</TABLE>
<PAGE> 122
EXHIBIT A-1
EUROCURRENCY PAYMENT OFFICES
- --------------------------------------------------------------------------------
AGREED CURRENCY ABN AMRO BANK N.V., AS ADMINISTRATIVE AGENT
- --------------------------------------------------------------------------------
DOLLARS ABN AMRO BANK N.V.
208 South LaSalle Street
Suite 1500
Chicago, IL 60604-1003
Attn: Loan Administration
Telephone No.: (312) 992-5150
Facsimile No.: (312) 992-5155
- --------------------------------------------------------------------------------
<PAGE> 123
EXHIBIT B
TO
5-YEAR CREDIT AGREEMENT
Dated as of October 20, 1999
FORM OF BORROWING/CONVERSION/CONTINUATION NOTICE
TO: ABN AMRO Bank N.V., as administrative agent for itself and the other
Lenders (the "ADMINISTRATIVE AGENT") under that certain 5-Year Credit
Agreement dated as of October 20, 1999 among Lanier Worldwide, Inc.
(the "Company"), the Subsidiary Borrowers from time to time party
thereto, the financial institutions parties thereto (the "Lenders"),
the Administrative Agent, Suntrust Bank, Atlanta, individually and as
Syndication Agent, and Wachovia Bank N.A., individually and as
Documentation Agent (such 5-Year Credit Agreement, as the same may be
amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement").
The [Company] [undersigned Subsidiary Borrower] hereby gives to the
Administrative Agent a [Borrowing/Conversion/Continuation Notice pursuant to
SECTION 2.8] [a Borrowing/ Conversion/Continuation Notice pursuant to SECTION
2.10] of the Credit Agreement, and the [Company] [undersigned Subsidiary
Borrower] hereby requests to [borrow] [convert] [continue] on ______ ___, ____
(the "BORROWING DATE") from the Lenders on a pro rata basis an aggregate
principal amount of:
[US $____________ ] [______________] in the Agreed Currency
described below] in Revolving Loans as a
[ ] Floating Rate Advance
[ ] Eurocurrency Rate Advance
- Applicable Interest Period of ________ month(s).
- Agreed Currency: _______.
<PAGE> 124
The undersigned hereby certifies to the Agents and the Lenders that (i)
the representations and warranties of the undersigned contained in
Article VI of the Credit Agreement are and shall be true and correct in
all material respects on and as of the date hereof and on and as of the
Borrowing Date (unless such representation and warranty is made as of a
specified date, in which case, such representation and warranty shall
be true and correct in all material respects as of such date) except
for changes in the Schedules to the Credit Agreement affecting
transactions permitted by or not in violation of the Credit Agreement;
(ii) no Default or Unmatured Default has occurred and is continuing on
the date hereof or on the Borrowing Date or will result from the making
of the proposed Advance; and (iii) the conditions set forth in SECTION
5.3 of the Credit Agreement have been satisfied.
Unless otherwise defined herein, terms defined in the Credit Agreement
shall have the same meanings in this Borrowing/Conversion/Continuation Notice.
Dated ________ __, 1999
[LANIER WORLDWIDE, INC.] [SUBSIDIARY
BORROWER]
By:
----------------------------------
Name:
Title:
-2-
<PAGE> 125
EXHIBIT C
TO
5-YEAR CREDIT AGREEMENT
Dated as of October 20, 1999
FORM OF REQUEST FOR LETTER OF CREDIT
TO: ______________________(1), an Issuing Bank under that certain 5-Year
Credit Agreement dated as of October 20, 1999 among Lanier Worldwide,
Inc. (the "Company"), the Subsidiary Borrowers from time to time party
thereto, the financial institutions parties thereto (the "Lenders"),
ABN AMRO Bank N.V., individually and as Administrative Agent, Suntrust
Bank, Atlanta, individually and as Syndication Agent, and Wachovia Bank
N.A., individually and as Documentation Agent (such 5-Year Credit
Agreement, as the same may be amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement").
TO: ABN AMRO BANK N.V.
Trade Services New York
335 Madison Avenue
16th Floor
New York, NY 10017
Attn: Joseph Todaro
Telecopier: (212) 370-8519
Confirmation: (212) 503-2983
WITH COPIES TO: 1) ABN AMRO BANK N.V., as Administrative Agent
135 South LaSalle Street
Chicago, IL 60603
Attn: Mary Honda
Telecopier: (312) 606-8425
Confirmation: (312) 904-5220
2) ABN AMRO BANK N.V., as Administrative Agent
1325 Avenue of the Americas
9th Floor
New York, New York 10019
Attn: Linda Boardman
Telecopier: (212) 314-1712
Confirmation: (212) 314-1724
Pursuant to SECTION 3.4 of the Credit Agreement, [the Company][the
undersigned Subsidiary Borrower] hereby gives to the Issuing Bank a request for
issuance of a Letter of
- ------------------------
(1) INSERT NAME OF ISSUING BANK.
<PAGE> 126
Credit on behalf of [____________, a Subsidiary of] the Company for the benefit
of _______________(2), in the following Agreed Currency: [___________], in the
amount of [US $______________] [_________ in such Agreed Currency], with an
effective date of _______________, ____ (the "Effective Date") and an expiry
date of _______________, ____.
The undersigned hereby certifies that (i) the representations and
warranties of the undersigned contained in Article VI of the Credit Agreement
are and shall be true and correct in all material respects on and as of the date
hereof and on and as of the Effective Date (unless such representation and
warranty is made as of a specified date, in which case, such representation and
warranty shall be true and correct in all material respects as of such date)
except for changes in the Schedules to the Credit Agreement affecting
transactions permitted by or not in violation of the Credit Agreement; (ii) no
Default or Unmatured Default has occurred and is continuing on the date hereof
or on the Effective Date or will result from the issuance of the proposed Letter
of Credit; and (iii) the conditions set forth in SECTIONS 3.4 and 5.3 of the
Credit Agreement have been satisfied.
Unless otherwise defined herein, terms defined in the Credit Agreement
shall have the same meanings in this Request for Letter of Credit.
Dated ________ ____, _____
[LANIER WORLDWIDE, INC.]
[SUBSIDIARY BORROWER]
By:
---------------------------------
Name:
Title:
- --------------------
(2) INSERT NAME OF BENEFICIARY.
2
<PAGE> 127
EXHIBIT D
TO
5-YEAR CREDIT AGREEMENT
Dated as of October 20, 1999
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
FORM OF ASSIGNMENT AGREEMENT
This Assignment Agreement (this "ASSIGNMENT AGREEMENT") between
______________ (the ASSIGNOR) and ____________ (the "ASSIGNEE") is dated as of
____ ___, _____. The parties hereto agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a 5-Year Credit
Agreement (which, as it may be amended, restated, supplemented, modified,
renewed or extended from time to time is herein called the "CREDIT AGREEMENT")
described in Item I of SCHEDULE 1 attached hereto ("SCHEDULE 1"). Capitalized
terms used herein and not otherwise defined herein shall have the meanings
attributed to them in the Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to
the Assignee, and the Assignee hereby purchases and assumes from the Assignor,
an interest in and to the Assignor's rights and obligations under the Credit
Agreement such that after giving effect to such assignment the Assignee shall
have purchased pursuant to this Assignment Agreement the percentage interest
specified in Item [3] of Schedule 1 of all outstanding rights and obligations
under the Credit Agreement relating to the facilities listed in Item [3] of
Schedule 1 and the other Loan Documents. The aggregate Commitment (or Loans, if
the applicable Commitment has been terminated) purchased by the Assignee
hereunder is set forth in Item [4] of Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment Agreement (the
"EFFECTIVE DATE") shall be the later of the date specified in SECTION 14.3(B) of
the Credit Agreement and the date specified in Item [5] of Schedule 1 or [two]
Business Days (or such shorter period agreed to by the Administrative Agent)
after a Notice of Assignment substantially in the form of APPENDIX I (attached
hereto) has been delivered to the Administrative Agent. Such Notice of
Assignment must include the consents, if any, required to be delivered to the
Administrative Agent and the Company by SECTION 14.3(A) of the Credit Agreement.
In no event will the Effective Date occur if the payments required to be made by
the Assignee to the Assignor on the Effective Date under SECTIONS 4 and 5 hereof
are not made on the proposed Effective Date. The Assignor will notify the
Assignee of the proposed Effective Date no later than the Business Day prior to
the proposed Effective Date. As of the Effective Date, (i) the Assignee shall
have the rights and obligations of a Lender under the Loan Documents with
respect to the rights and obligations assigned to the Assignee hereunder and
(ii) the Assignor shall relinquish its rights and be released from its
corresponding obligations under the Loan Documents with respect to the rights
and obligations assigned to the Assignee hereunder.
<PAGE> 128
4. PAYMENTS OBLIGATIONS. On and after the Effective Date, the Assignee
shall be entitled to receive from the Administrative Agent all payments of
principal, interest and fees with respect to the interest assigned hereby. The
Assignee shall advance funds directly to the Administrative Agent with respect
to all Loans and reimbursement payments made on or after the Effective Date with
respect to the interest assigned hereby. [In consideration for the sale and
assignment of Loans hereunder, (i) the Assignee shall pay the Assignor, on the
Effective Date, an amount equal to the principal amount of the portion of all
Floating Rate Loans assigned to the Assignee hereunder and (ii) with respect to
each Eurocurrency Rate Loan made by the Assignor and assigned to the Assignee
hereunder which is outstanding on the Effective Date, (a) on the last day of the
Interest Period therefor or (b) on such earlier date agreed to by the Assignor
and the Assignee or (c) on the date on which any such Eurocurrency Rate Loan
either becomes due (by acceleration or otherwise) or is prepaid (the date as
described in the foregoing clauses (a), (b) or (c) being hereinafter referred to
as the "PAYMENT DATE"), the Assignee shall pay the Assignor an amount equal to
the principal amount of the portion of such Eurocurrency Rate Loan assigned to
the Assignee which is outstanding on the Payment Date. If the Assignor and the
Assignee agree that the Payment Date for such Eurocurrency Rate Loan shall be
the Effective Date, they shall agree to the interest rate applicable to the
portion of such Loan assigned hereunder for the period from the Effective Date
to the end of the existing Interest Period applicable to such Eurocurrency Rate
Loan (the "AGREED INTEREST RATE") and any interest received by the Assignee in
excess of the Agreed Interest Rate shall be remitted to the Assignor. In the
event interest for the period from the Effective Date to but not including the
Payment Date is not paid by the applicable Borrower with respect to any
Eurocurrency Rate Loan sold by the Assignor to the Assignee hereunder, the
Assignee shall pay to the Assignor interest for such period on the portion of
such Eurocurrency Rate Loan sold by the Assignor to the Assignee hereunder at
the applicable rate provided by the Credit Agreement. In the event a prepayment
of any Eurocurrency Rate Loan which is existing on the Payment Date and assigned
by the Assignor to the Assignee hereunder occurs after the Payment Date but
before the end of the Interest Period applicable to such Eurocurrency Rate Loan,
the Assignee shall remit to the Assignor the excess of the prepayment penalty
paid with respect to the portion of such Eurocurrency Rate Loan assigned to the
Assignee hereunder over the amount which would have been paid if such prepayment
penalty was calculated based on the Agreed Interest Rate. The Assignee will also
promptly remit to the Assignor (i) any principal payments received from the
Administrative Agent with respect to Eurocurrency Rate Loans prior to the
Payment Date and (ii) any amounts of interest on Loans and fees received from
the Administrative Agent which relate to the portion of the Loans assigned to
the Assignee hereunder for periods prior to the Effective Date, in the case of
Floating Rate Loans or fees, or the Payment Date, in the case of Eurocurrency
Rate Loans, and not previously paid by the Assignee to the Assignor.](1) In the
event that either party hereto receives any payment to which the other party
hereto is entitled under this Assignment Agreement, then the party receiving
such amount shall promptly remit it to the other party hereto.
5. FEES PAYABLE BY THE ASSIGNEE. The [Assignee shall pay to the
Assignor a fee on each day on which a payment of interest or commitment fees is
made under the Credit
- --------------------
(1) EACH ASSIGNOR MAY INSERT ITS STANDARD PAYMENT PROVISIONS IN LIEU OF THE
PAYMENT TERMS INCLUDED IN THIS EXHIBIT.
2
<PAGE> 129
Agreement with respect to the amounts assigned to the Assignee hereunder (other
than a payment of interest or commitment fees for the period prior to the
Effective Date or, in the case of Eurocurrency Rate Loans, the Payment Date,
which the Assignee is obligated to deliver to the Assignor pursuant to Section 4
hereof). The amount of such fee shall be the difference between (i) the interest
or fee, as applicable, paid with respect to the amounts assigned to the Assignee
hereunder and (ii) the interest or fee, as applicable, which would have been
paid with respect to the amounts assigned to the Assignee hereunder if each
interest rate was ___of 1% less than the interest rate paid by the applicable
Borrower or if the commitment fee was ___ of 1% less than the commitment fee
paid by the applicable Borrower, as applicable. In addition, the] [Assignee]
[Assignor] agrees to pay a $3,500 processing fee required to be paid to the
Administrative Agent in connection with this Assignment Agreement.(2)
6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S
LIABILITY. The Assignor represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim created by the Assignor. The
Assignor represents and warrants that it has the power and authority and legal
right to execute and deliver this Assignment Agreement and to perform its
obligations hereunder. The execution and delivery by the Assignor of this
Assignment Agreement and the performance by it of its obligations hereunder have
been duly authorized by proper proceedings. It is understood and agreed that the
assignment and assumption hereunder are made without recourse to the Assignor
and that the Assignor makes no other representation or warranty of any kind to
the Assignee. Neither the Assignor, the Administrative Agent, nor any other
Lender, nor any of its officers, directors, employees, Agents or attorneys shall
be responsible for (i) the due execution, legality, validity, enforceability,
genuineness, sufficiency or collectability of any Loan Document, (ii) any
representation, warranty or statement made in or in connection with any of the
Loan Documents, (iii) the financial condition or creditworthiness of the
Borrowers or any guarantor, (iv) the performance of or compliance with any of
the terms or provisions of any of the Loan Documents, (v) inspecting any of the
property, books or records of the Borrowers, (vi) the validity, enforceability,
perfection, priority, condition, value or sufficiency of any collateral securing
or purporting to secure the Loans or (vii) any mistake, error of judgment, or
action taken or omitted to be taken in connection with the Loans or the Loan
Documents.
7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee represents and
warrants that it has the power and authority and legal right to execute and
deliver this Assignment Agreement and to perform its obligations hereunder. The
execution and delivery by the Assignee of this Assignment Agreement and the
performance by it of its obligations hereunder have been duly authorized by
proper proceedings. The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements requested by
the Assignee and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment Agreement, (ii) agrees that it will, independently and without
reliance upon the Administrative Agent, the Assignor or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not
- -------------------
(2) ASSIGNOR AND ASSIGNEE TO INSERT APPLICABLE PAYMENT TERMS.
3
<PAGE> 130
taking action under the Loan Documents, (iii) appoints and authorizes the
Administrative Agent to take such action as contractual representative on its
behalf and to exercise such powers under the Loan Documents as are delegated to
the Administrative Agent by the terms thereof, together with such powers as are
reasonably incidental thereto, (iv) agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Loan Documents
are required to be performed by it as a Lender, (v) agrees that its payment
instructions and notice instructions are as set forth in the attachment to
Schedule 1, (vi) confirms that none of the funds, monies, assets or other
consideration being used to make the purchase and assumption hereunder are "plan
assets" as defined under ERISA and that its rights, benefits and interests in
and under the Loan Documents will not be "plan assets" under ERISA, [and (vii)
attaches the forms prescribed by the Internal Revenue Service of the United
States certifying that the Assignee is entitled to receive payments under the
Loan Documents without deduction or withholding of any United States federal
income taxes].(3)
8. INDEMNITY. The Assignee agrees to indemnify and hold the Assignor
harmless against any and all losses, costs and expenses (including, without
limitation, reasonable attorneys' fees) and liabilities incurred by the Assignor
in connection with or arising in any manner from the Assignee's non-performance
of the obligations assumed under this Assignment Agreement.
9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee shall
have the right pursuant to SECTION 14.3(A) of the Credit Agreement to assign the
rights which are assigned to the Assignee hereunder to any entity or person,
provided that (i) any such subsequent assignment does not violate any of the
terms and conditions of the Loan Documents or any law, rule, regulation, order,
writ, judgment, injunction or decree and that any consent required under the
terms of the Loan Documents has been obtained and (ii) unless the prior written
consent of the Assignor is obtained, the Assignee is not thereby released from
its obligations to the Assignor hereunder, if any remain unsatisfied, including,
without limitation, its obligations under [SECTIONS 4, 5 and 8] hereof.
10. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in the
Aggregate Revolving Loan Commitment occurs between the date of this Assignment
Agreement and the Effective Date, the percentage interest specified in Item 3 of
Schedule 1 shall remain the same, but the dollar amount purchased shall be
recalculated based on such reduced Aggregate Commitment.
11. ENTIRE AGREEMENT. This Assignment Agreement and the attached Notice
of Assignment embody the entire agreement and understanding between the parties
hereto and supersede all prior agreements and understandings between the parties
hereto relating to the subject matter hereof.
12. GOVERNING LAW. This Assignment Agreement shall be governed by and
interpreted and enforced in accordance with the internal laws of the State of
New York.
- ------------------
(3) TO BE INSERTED IF THE ASSIGNEE IS NOT INCORPORATED UNDER THE LAWS OF
THE UNITED STATES, OR A STATE THEREOF.
4
<PAGE> 131
13. NOTICES. Notices shall be given under this Assignment Agreement in
the manner set forth in the Credit Agreement. For the purpose hereof, the
addresses of the parties hereto (until notice of a change is delivered) shall be
the address set forth in the attachment to Schedule 1.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above written.
[NAME OF ASSIGNOR]
By: ----------------------------
Name:
Title
[NAME OF ASSIGNEE]
By: ----------------------------
Name:
Title:
5
<PAGE> 132
SCHEDULE 1
TO ASSIGNMENT AGREEMENT
1. Description and Date of Credit Agreement: 5-Year Credit
Agreement dated as of October 20, 1999 among Lanier Worldwide,
Inc. (the "Company"), the Subsidiary Borrowers from time to
time party thereto, the financial institutions parties thereto
(the "Lenders"), ABN AMRO Bank N.V., individually and as
Administrative Agent, Suntrust Bank, Atlanta, individually and
as Syndication Agent, and Wachovia Bank N.A., individually and
as Documentation Agent.
2. Date of Assignment Agreement: ______, ___
3. Amounts to be Assigned(4) (As of Date of item 2 above):
<TABLE>
<CAPTION>
REVOLVING TERM
LOAN FACILITY LOAN FACILITY
<S> <C> <C>
TOTAL OF COMMITMENTS (LOANS)
UNDER THE CREDIT AGREEMENT $____________ $__________
ASSIGNEE'S PERCENTAGE OF EACH
FACILITY PURCHASED UNDER THE
ASSIGNMENT AGREEMENT ------% ------%
AMOUNT OF ASSIGNED SHARE OF
EACH FACILITY UNDER THE ASSIGNMENT AGREEMENT $___________
4. ASSIGNEE'S AGGREGATE (LOAN AMOUNT)
COMMITMENT AMOUNT PURCHASED HEREUNDER.
$____________ $__________
5. Proposed Effective Date: _______ __, ____
Accepted and Agreed:
</TABLE>
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
--------------------------- -------------------------
Name: Name:
Title: Title:
- ---------------------
(4) Amounts to be described in Dollars or Agreed Currency, as applicable.
6
<PAGE> 133
Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT
Attach Assignor's Administrative Information Sheet, which must
include notice address for the Assignor and the Assignee
7
<PAGE> 134
APPENDIX I
to Assignment Agreement
NOTICE
OF ASSIGNMENT
-------------
---------, ---
To: ABN AMRO Bank, N.V., as Administrative Agent [and as Alternate Currency
Banks]
ABN AMRO Bank, N.V.
135 South LaSalle Street
Chicago, Illinois 60674
Attention: Mary Honda
Telephone No.: 312/904-5220
Facsimile No.: 312/606-8425
ABN AMRO Bank, N.V.
1325 Avenue of the Americas
9th Floor
New York, NY 10019
Attention: Linda Boardman
Telephone No. 212/314-1724
Facsimile No.: 212/314-1712
LANIER WORLDWIDE, INC.
2300 Parklake Drive
Atlanta, GA 30345
Attention: Vice-President -- Treasurer
Telephone No.: 770/621-1300
Facsimile No.: 770/621-1367
From: [NAME OF ASSIGNOR] (the "Assignor")
[NAME OF ASSIGNEE] (the "Assignee")
1. We refer to that 5-year Credit Agreement (the "Credit Agreement")
described in Item 1 of Schedule 1 attached hereto ("Schedule 1"). Capitalized
terms used herein and not otherwise defined herein shall have the meanings
attributed to them in the Credit Agreement.
2. This Notice of Assignment (this "Notice") is given and delivered to
the Administrative Agent and the Alternate Currency Banks pursuant to SECTION
14.3(B) of the Credit Agreement.
8
<PAGE> 135
3. The Assignor and the Assignee have entered into an Assignment
Agreement, dated as of _____, __ (the "Assignment"), pursuant to which, among
other things, the Assignor has sold, assigned, delegated and transferred to the
Assignee, and the Assignee has purchased, accepted and assumed from the Assignor
the percentage interest specified in Item 3 of Schedule 1 of all outstanding
rights and obligations under the Credit Agreement relating to the facilities
listed in Item 3 of Schedule 1. The Effective Date of the Assignment shall be
the later of the date specified in SECTION 14.3(B) of the Credit Agreement and
the date specified in Item 5 of Schedule 1 or two Business Days (or such shorter
period as agreed to by the Administrative Agent) after this Notice of Assignment
and any consents and fees required by SECTIONS 14.3(A) AND 14.3(B) of the Credit
Agreement have been delivered to the Administrative Agent and the Alternate
Currency Banks, provided that the Effective Date shall not occur if any
condition precedent agreed to by the Assignor and the Assignee has not been
satisfied.
4. The Assignor and the Assignee hereby give to the Company and the
Alternate Currency Banks and the Administrative Agent notice of the assignment
and delegation referred to herein. The Assignor will confer with the
Administrative Agent before the date specified in Item 5 of Schedule 1 to
determine if the Assignment Agreement will become effective on such date
pursuant to Section 3 hereof, and will confer with the Administrative Agent to
determine the Effective Date pursuant to Section 3 hereof if it occurs
thereafter. The Assignor shall notify the Administrative Agent and the Alternate
Currency Banks if the Assignment Agreement does not become effective on any
proposed Effective Date as a result of the failure to satisfy the conditions
precedent agreed to by the Assignor and the Assignee. At the request of the
Administrative Agent, the Assignor will give the Administrative Agent written
confirmation of the satisfaction of the conditions precedent.
5. The Assignor of the Assignee shall pay to the Administrative Agent
on or before the Effective Date the processing fee of $3,500 required by SECTION
14.3(B) of the Credit Agreement.
6. If notes are outstanding on the Effective Date, the Assignor and the
Assignee may request and direct that the Administrative Agent prepared and cause
the Borrowers to execute and deliver new notes or, as appropriate, replacement
notes, to the Assignor and the Assignee. The Assignor and the Assignee, as
applicable, each agree to deliver to the Administrative Agent the original note
received by it from the Applicable Borrower upon its receipt of a new note in
the appropriate amount.
7. The Assignee advises the Administrative Agent and the Alternate
Currency Banks that notice and payment instructions are set forth in the
Attachment to Schedule 1.
8. The Assignee hereby represents and warrants that none of the funds,
monies, assets or other consideration being used to make the purchase pursuant
to the Assignment are "plan assets" as defined under ERISA and that its rights,
benefits, and interests in and under the Loan Documents will not be "plan
assets' under ERISA.
9. The Assignee authorizes the Administrative Agent and the Alternate
Currency Banks to act as its contractual representative under the Loan Documents
in accordance
9
<PAGE> 136
with the terms thereof. The Assignee acknowledges that the Administrative Agent
has no duty to supply information with respect to the Borrowers or the Loan
Documents to the Assignee until the Assignee becomes a party to the Credit
Agreement.
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE}
By: By:
-------------------------- ---------------------------
Name: Name:
Title: Title:
10
<PAGE> 137
ACKNOWLEDGED AND CONSENT TO:
______________, as Administrative [and as ______________, as the Company
Alternate Currency Bank]
By: By:
-------------------------- ---------------------------
Name: Name:
Title: Title:
[add additional Alternate Currency Banks]
[Attach photocopy of Schedule 1 to Assignment]
11
<PAGE> 138
EXHIBIT E
TO
5-YEAR CREDIT AGREEMENT
Dated as of October 20, 1999
FORM OF OFFICER'S CERTIFICATE
OFFICER'S CERTIFICATE
I, the undersigned, hereby certify that I am the ____________________
of Lanier Worldwide, Inc., a corporation duly organized and existing under the
laws of the State of Delaware (the "Company"). Capitalized terms used herein and
not otherwise defined herein are as defined in that certain 5-Year Credit
Agreement dated as of October 20, 1999 among the Company, the Subsidiary
Borrowers from time to time party thereto, the financial institutions parties
thereto (the "Lenders"), ABN AMRO Bank N.V., individually and as Administrative
Agent, Suntrust Bank, Atlanta, individually and as Syndication Agent, and
Wachovia Bank N.A., individually and as Documentation Agent (as amended,
restated, supplemented or modified from time to time, the "Credit Agreement").
I further certify on behalf of the Company, that as of the date hereof,
to the best of my knowledge, after diligent inquiry of all relevant persons at
the Company and its Subsidiaries, as of the date of this Officer's Certificate
no Default or Unmatured Default exists [other than the following (describe the
nature of the Default or Unmatured Default and the status thereof)].
IN WITNESS WHEREOF, I hereby subscribe my name on behalf of the Company
on this _____ day of ___________,_____.
-------------------------
[insert Name of Officer]
<PAGE> 139
EXHIBIT F
TO
5-YEAR CREDIT AGREEMENT
Dated as of October 20, 1999
FORM OF COMPLIANCE CERTIFICATE
Pursuant to SECTION 7.1(A)(iii) of the 5-Year Credit Agreement (as
amended, modified, restated or supplemented from time to time, the "Credit
Agreement"), dated as of October 20, 1999 among Lanier Worldwide, Inc. (the
"Company"), the Subsidiary Borrowers from time to time party thereto, the
financial institutions parties thereto (the "Lenders"), ABN AMRO Bank N.V.,
individually and as Administrative Agent, Suntrust Bank, Atlanta, individually
and as Syndication Agent, and Wachovia Bank N.A., individually and as
Documentation Agent (as amended, restated, supplemented or modified from time to
time, the "Credit Agreement") on behalf of the Lenders, the Company, through its
____________, hereby delivers to the Administrative Agent [, together with the
financial statements being delivered to the Administrative Agent pursuant to
SECTION 7.1(A) of the Credit Agreement,] this Compliance Certificate (the
"Certificate") [for the accounting period from _____________, ____ to
____________, ____]. Capitalized terms used herein shall have the meanings set
forth in the Credit Agreement. Subsection references herein relate to
subsections of the Credit Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected _________________ of the Company;
2. I have reviewed the terms of the Credit Agreement and I have made,
or have caused to be made under my supervision, a detailed review of the
transactions and conditions of the Company and its Subsidiaries during the
accounting period covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or event which constitutes
a Default or Unmatured Default during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate [except as set forth below]; and
4. Schedule I attached hereto sets forth financial data and
computations evidencing the Company's compliance with certain covenants of the
Credit Agreement, all of which data and computations are true, complete and
correct.
The foregoing certifications, together with the computations set forth in
Schedule I hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this ____ day of _________, 19/20__.
<PAGE> 140
SCHEDULE I
to COMPLIANCE CERTIFICATE
I. SECTION 2.15: PRICING CALCULATIONS
LEVERAGE RATIO (SECTION 2.15(d))
1. Total Indebtedness $__________
2. EBITDA for the period for
___________ to ____________ $__________
3. "Leverage Ratio" (Ratio of (1) to (2))
______ to 1.0
II. SECTION 7.3: NEGATIVE COVENANTS
A. INDEBTEDNESS (Section 7.3(D)(viii))
1. Permitted aggregate additional unsecured
Indebtedness $__________
2. Actual aggregate additional unsecured
Indebtedness $__________
3. State whether (2) is less than (1) Yes/No
B. RESTRICTED PAYMENTS (Section 7.3(F))
1. Permitted aggregate Restricted Payments
for the period from __________________
to __________________ (25% of Net
Income for prior fiscal years) $__________
2. Actual aggregate Restricted Payments
for the period from __________________
to __________________ $__________
3. State whether (2) is less than (1) Yes/No
C. ACQUISITIONS (Section 7.3(G))
1. Permitted aggregate permitted Acquisitions
for the period from _________________ to
___________________ $__________
2
<PAGE> 141
2. Actual aggregate Permitted Acquisitions
for the period from _________________ to
___________________ $__________
3. State whether (2) is less than (1) Yes/No
D. CAPITAL EXPENDITURES (Section 7.3(Q))
1. Permitted aggregate Capital Expenditures for the
period from _________________ to _________________
($150,000,000 for fiscal years ending prior to the
third anniversary of the Closing Date, $175,000,000
for fiscal years ending thereafter) $__________
2. Actual aggregate Capital Expenditures
for the period from _______________ to
___________________ $__________
3. State whether (2) is less than (1) Yes/No
III. SECTION 7.4: FINANCIAL COVENANTS
A. MINIMUM COVERAGE RATIO (SECTION 7.4(A))
1. EBITDAR for the period from
________ to ____________ $__________
2. Interest Expense plus Rentals
for the period from ____________
to ______________ $__________
3. "Coverage Ratio" (Ratio of (1) to (2)) ______ to 1.0
Minimum Leverage Ratio is as follows:
FISCAL QUARTER ENDING RATIO
--------------------- -----
December 31, 1999 through June 30, 2000 2.75
July 1, 2000 through June 29, 2001 2.75
June 30, 2001 through June 28, 2002 3.00
June 29, 2002 through June 27, 2003 3.25
June 28, 2003 through July 2, 2004 3.50
July 3, 2004 and thereafter 3.75
3
<PAGE> 142
B. MAXIMUM LEVERAGE RATIO (SECTION 7.4(B))
1. Total Indebtedness $__________
2. EBITDA for the period from __________
to ___________ $__________
3. "Leverage Ratio" (Ratio of (1) to (2)) ______to 1.0
Maximum Leverage Ratio is as follows:
FISCAL QUARTER ENDING RATIO
--------------------- -----
December 31, 1999 through June 30, 2000 3.25
July 1, 2000 through June 29, 2001 3.00
June 30, 2001 through June 28, 2002 2.75
June 29, 2002 through June 27, 2003 2.50
June 28, 2003 through July 2, 2004 2.25
July 3, 2004 and thereafter 2.00
C. MINIMUM CONSOLIDATED NET WORTH (SECTION 7.4(C))
1. Consolidated Net Worth as of the last day of
the fiscal quarter ending on ___________,_____ $__________
2. Eighty-five percent (85%) of Consolidated
Net Worth as of the date immediately following
the Closing Date $__________
3. Fifty percent (50%) of Net Income (if positive)
calculated separately for (i) the remainder of the
quarterly accounting period in which the Closing Date
occurs and (ii) each subsequent quarterly accounting
period, in each case excluding changes in cumulative
foreign exchange translation adjustment
$__________
4. Sum of 2) plus 3) $__________
5. State whether (1) is less than (4) YES/NO
The Company hereby certifies, through its __________, that the
information set forth above is accurate as of ____________,____________, to the
best of such officer's knowledge, after diligent inquiry, and that the financial
statements delivered herewith present fairly the financial position of the
Company and its Subsidiaries at the dates indicated and the results of their
operations and changes in their financial position for the periods indicated in
conformity with Agreement Accounting Principles, consistently applied.
4
<PAGE> 143
Dated: ________________,________
LANIER WORLDWIDE, INC.
By:
____________________________
Name:
Title:
5
<PAGE> 144
EXHIBIT G-1
FORM OF
SUBSIDIARIES GUARANTY (5 YEAR AGREEMENT)
----------------------------------------
This Subsidiaries Guaranty (this "GUARANTY") is made as of the 20th day
of October, 1999 by each of the corporations that is a signatory hereto
(individually, a "GUARANTOR"; collectively, the "GUARANTORS"), in favor of the
Agents and the Lenders (each as defined below), under the Credit Agreement
referred to below.
RECITALS:
A. Lanier Worldwide, Inc. (the "Company"), the Subsidiary Borrowers
from time to time party thereto, the institutions from time to time party
thereto as Lenders, ABN AMRO Bank N.V., individually and as Administrative
Agent, Suntrust Bank, Atlanta, individually and as Syndication Agent, and
Wachovia Bank N.A., individually and as Documentation Agent have entered into
that certain 5-Year Credit Agreement dated as of the date hereof (as from time
to time amended, restated, supplemented or otherwise modified, the "CREDIT
AGREEMENT"), providing, subject to the terms and conditions thereof, for
extensions of credit and other financial accomodations to be made by the Lenders
to the Company and the Subsidiaries;
B. Each of the Guarantors is a Wholly-Owned Subsidiary of the Company
and will receive substantial and direct benefits from the extensions of credit
contemplated by the Credit Agreement and is entering into this Guaranty to
induce the Agents and the Lenders to enter into the Credit Agreement and extend
credit to the Borrowers thereunder; and
C. The execution and delivery of this Guaranty is a condition precedent
to the obligation of the Lenders to extend credit to the Company and to the
Subsidiary Borrowers pursuant to the Credit Agreement;
NOW THEREFORE, in consideration of the foregoing and other
good and valuable consideration and as an inducement to the Lenders to enter
into the Credit Agreement and extend credit to the Company and to the Subsidiary
Borrowers, each Guarantor hereby agrees as follows:
1. Terms defined in the Credit Agreement and not otherwise
defined herein have, as used herein, the respective meanings provided for
therein.
2. Each Guarantor, jointly and severally, hereby absolutely,
irrevocably and unconditionally guarantees prompt, full and complete payment
when due, whether at stated maturity, upon acceleration or otherwise, and at all
times thereafter, of the Obligations, including, without limitation, (a) the
principal of and interest on each Advance made to the
<PAGE> 145
Company or any Subsidiary Borrower pursuant to the Credit Agreement, (b) any
Reimbursement Obligations of the Company or a Subsidiary Borrower, (c) any
obligations under or with respect to any Hedging Agreement entered into in
connection with the Credit Agreement and (d) all other amounts payable by the
Company and the Subsidiary Borrowers or any of their respective Subsidiaries
under the Credit Agreement and the other Loan Documents (collectively, the
"GUARANTEED DEBT"). This is a guaranty of payment and not a guaranty of
collection.
3. Each Guarantor waives notice of the acceptance of this
Guaranty and of the extension or incurrence of the Guaranteed Debt or any part
thereof. Each Guarantor further waives all setoffs and counterclaims and
presentment, protest, notice, filing of claims with a court in the event of
receivership, bankruptcy or reorganization of any Borrower, demand or action on
delinquency in respect of the Guaranteed Debt or any part thereof, including any
right to require the Agents or the Lenders to sue the Company, any Subsidiary
Borrower, any other Guarantor or any other Person obligated with respect to the
Guaranteed Debt or any part thereof, or otherwise to enforce payment thereof
against any collateral securing the Guaranteed Debt or any part thereof.
4. Each Guarantor hereby agrees that, to the fullest extent
permitted by law, its obligations hereunder shall be continuing, absolute and
unconditional under any and all circumstances and not subject to any reduction,
limitation, impairment, termination, defense (other than indefeasible payment in
full or a defense arising under the Agreement based upon the gross negligence or
willful misconduct of any Agent or Lender), setoff, counterclaim or recoupment
whatsoever (all of which are hereby expressly waived by it to the fullest extent
permitted by law), whether by reason of any claim of any character whatsoever,
including, without limitation, any claim of waiver, release, surrender,
alteration or compromise. The validity and enforceability of this Guaranty shall
not be impaired or affected by any of the following: (a) any extension,
modification or renewal of, or indulgence with respect to, or substitution for,
the Guaranteed Debt or any part thereof or any agreement relating thereto at any
time; (b) any failure or omission to perfect or maintain any lien on, or
preserve rights to, any security or collateral or to enforce any right, power or
remedy with respect to the Guaranteed Debt or any part thereof or any agreement
relating thereto, or any collateral securing the Guaranteed Debt or any part
thereof; (c) any waiver of any right, power or remedy or of any default with
respect to the Guaranteed Debt or any part thereof or any agreement relating
thereto or with respect to any collateral securing the Guaranteed Debt or any
part thereof; (d) any release, surrender, compromise, settlement, waiver,
subordination or modification, with or without consideration, of any collateral
securing the Guaranteed Debt or any part thereof, any other guaranties with
respect to the Guaranteed Debt or any part thereof, or any other obligations of
any person or entity with respect to the Guaranteed Debt or any part thereof;
(e) the enforceability or validity of the Guaranteed Debt or any part thereof or
the genuineness, enforceability or validity of any agreement relating thereto or
with respect to any collateral securing the Guaranteed Debt or any part thereof;
(f) the application of payments received from any source to the payment of
indebtedness other than the Guaranteed Debt, any part thereof or amounts which
are not covered by this Guaranty even though the Lenders might lawfully have
elected to apply such payments to any part or all of the Guaranteed Debt or to
amounts which are not covered by this Guaranty; (g) any change of ownership of
any Borrower or the insolvency, bankruptcy or any other change in the legal
status of any Borrower; (h) any change in, or the imposition of, any law,
decree, regulation or other governmental act which does or might impair,
-2-
<PAGE> 146
delay or in any way affect the validity, enforceability or the payment when due
of the Guaranteed Debt; (i) the failure of any Borrower to maintain in full
force, validity or effect or to obtain or renew when required all governmental
and other approvals, licenses or consents required in connection with the
Guaranteed Debt or this Guaranty, or to take any other action required in
connection with the performance of all obligations pursuant to the Guaranteed
Debt or this Guaranty; (j) the existence of any claim, setoff or other rights
which any Guarantor may have at any time against any Borrower or any other
Guarantor or any other Person in connection herewith or with any unrelated
transaction; (k) the Lenders' election, in any case or proceeding instituted
under chapter 11 of the United States Bankruptcy Code, of the application of
section 1111(b)(2) of the United States Bankruptcy Code; (l) any borrowing, use
of cash collateral, or grant of a security interest by any Borrower, as debtor
in possession, under section 363 or 364 of the United States Bankruptcy Code;
(m) the disallowance of all or any portion of any of the Lenders' claims for
repayment of the Guaranteed Debt under section 502 or 506 of the United States
Bankruptcy Code; or (n) any other fact or circumstance which might otherwise
constitute grounds at law or equity for the discharge or release of any
Guarantor from its obligations hereunder, all whether or not such Guarantor
shall have had notice or knowledge of any act or omission referred to in the
foregoing CLAUSES (a) THROUGH (n) of this paragraph. It is agreed that each
Guarantor's liability hereunder is independent of each other Guarantor's
liability hereunder with respect to the Guaranteed Debt and any other guaranties
or other obligations at any time in effect with respect to the Guaranteed Debt
or any part thereof, and that each Guarantor's liability hereunder may be
enforced regardless of the existence, validity, enforcement or non-enforcement
of any such other guaranties or other obligations or any provision of any
applicable law or regulation purporting to prohibit payment by any Borrower of
the Guaranteed Debt in the manner agreed upon among the Agents, the Lenders and
the Borrowers.
5. Credit may be granted or continued from time to time by the
Lenders to the Borrowers without notice to or authorization from any Guarantor
regardless of any Borrower's financial or other condition at the time of any
such grant or continuation. No Agent or Lender shall have an obligation to
disclose or discuss with any Guarantor its assessment of the financial condition
of any Borrower.
6. Each Guarantor authorizes the Lenders to take any action or
exercise any remedy with respect to any collateral from time to time securing
the Guaranteed Debt, which the Lenders in their sole discretion shall determine,
without notice to any Guarantor.
7. In the event the Lenders in their sole discretion elect to
give notice of any action with respect to any collateral securing the Guaranteed
Debt or any part thereof, ten (10) days' written notice mailed to the Guarantors
by ordinary mail at the address shown hereon shall be deemed reasonable notice
of any matters contained in such notice. Each Guarantor consents and agrees that
neither the Agents nor the Lenders shall be under any obligation to marshall any
assets in favor of any Guarantor or against or in payment of any or all of the
Guaranteed Debt.
8. In the event that acceleration of the time for payment of
any of the Guaranteed Debt is stayed upon the insolvency, bankruptcy or
reorganization of any Borrower, or otherwise, all such amounts shall nonetheless
be payable by each Guarantor forthwith upon demand by the Agents or the Lenders.
Each Guarantor further agrees that, to the extent that any Borrower makes a
payment or payments to any of the Lenders on the Guaranteed Debt, or the
-3-
<PAGE> 147
Agents or the Lenders receive any proceeds of collateral securing the Guaranteed
Debt, which payment or receipt of proceeds or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be returned or repaid to such Borrower, its estate, trustee, receiver, debtor in
possession or any other party, including, without limitation, each Guarantor,
under any insolvency or bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such payment, return or repayment, the
obligation or part thereof which has been paid, reduced or satisfied by such
amount shall be reinstated and continued in full force and effect as of the date
when such initial payment, reduction or satisfaction occurred.
9. No delay on the part of the Agents or the Lenders in the
exercise of any right, power or remedy shall operate as a waiver thereof, and no
single or partial exercise by the Agents or the Lenders of any right, power or
remedy shall preclude any further exercise thereof; nor shall any amendment,
supplement, modification or waiver of any of the terms or provisions of this
Guaranty be binding upon the Agents or the Lenders, except as expressly set
forth in a writing duly signed and delivered by the Agents. The failure by the
Agents or the Lenders at any time or times hereafter to require strict
performance by any Borrower or any Guarantor of any of the provisions,
warranties, terms and conditions contained in any promissory note, security
agreement, agreement, guaranty, instrument or document now or at any time or
times hereafter executed pursuant to the terms of, or in connection with, the
Agreement by any Borrower or any Guarantor and delivered to the Agents or the
Lenders shall not waive, affect or diminish any right of the Agents or the
Lenders at any time or times hereafter to demand strict performance thereof, and
such right shall not be deemed to have been waived by any act or knowledge of
the Agents or the Lenders, their agents, officers or employees, unless such
waiver is contained in an instrument in writing duly signed and delivered by the
Agents. No waiver by the Agents or the Lenders of any default shall operate as a
waiver of any other default or the same default on a future occasion, and no
action by the Agents or the Lenders permitted hereunder shall in any way affect
or impair the Agents' or the Lenders' rights or powers, or the obligations of
any Guarantor under this Guaranty. Any determination by a court of competent
jurisdiction of the amount of any Guaranteed Debt owing by any Borrower to the
Lenders shall be conclusive and binding on each Guarantor irrespective of
whether such Guarantor was a party to the suit or action in which such
determination was made.
10. Subject to the provisions of SECTION 8, this Guaranty
shall continue in effect until the Credit Agreement have terminated, the
Guaranteed Debt has been paid in full and the other conditions of this Guaranty
have been satisfied.
11. In addition to and without limitation of any rights,
powers or remedies of the Agents or the Lenders under applicable law, any time
after maturity of the Guaranteed Debt, whether by acceleration or otherwise, the
Agents or the Lenders may, in their sole discretion, with notice after the fact
to the Guarantors and regardless of the acceptance of any security or collateral
for the payment hereof, appropriate and apply toward the payment of the
Guaranteed Debt (a) any indebtedness due or to become due from any of the
Lenders to any Guarantor, and (b) any moneys, credits or other property
belonging to any Guarantor (including all account balances, whether provisional
or final and whether or not collected or available) at any time held by or
coming into the possession of any Agents or any Lender whether for deposit or
otherwise.
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<PAGE> 148
12. Each Guarantor agrees to pay all costs, fees and expenses
(including reasonable attorneys' fees and time charges, which attorneys may be
employees of an Agent or Lender) incurred by an Agent or Lender in collecting or
enforcing the obligations of each Guarantor under this Guaranty.
13. This Guaranty shall bind each Guarantor and its successors
and assigns and shall inure to the benefit of the Agents, the Lenders and their
successors and assigns. All references herein to the Lenders shall for all
purposes also include all Purchasers and Participants (as such terms are defined
in the Agreement). All references herein to a Borrower shall be deemed to
include its successors and assigns including, without limitation, a receiver,
trustee or debtor in possession of or for such Borrower.
14. THIS GUARANTY SHALL BE DEEMED TO HAVE BEEN MADE AT NEW
YORK, NEW YORK, AND SHALL BE CONSTRUED AND THE RIGHTS AND LIABILITIES OF THE
AGENTS, THE LENDERS AND THE GUARANTORS DETERMINED, IN ACCORDANCE WITH THE
INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE OF
NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY OTHER LOAN
DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED
STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF
THIS GUARANTY, EACH GUARANTOR, THE AGENTS AND THE LENDERS CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
COURTS. EACH GUARANTOR, THE AGENTS AND THE LENDERS IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
GUARANTY OR ANY DOCUMENT RELATED HERETO. EACH GUARANTOR, THE AGENTS AND THE
LENDERS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS,
WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
15. EACH GUARANTOR, THE LENDERS AND THE AGENTS EACH WAIVE
THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF OR RELATED TO THIS GUARANTY, THE OTHER LOAN DOCUMENTS, OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER
PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT
TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH GUARANTOR, THE LENDERS AND
THE AGENTS EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER
AGREE THAT THEIR
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<PAGE> 149
RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO
ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART,
TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS GUARANTY OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY
AND THE OTHER LOAN DOCUMENTS.
16. Wherever possible, each provision of this Guaranty shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity without invalidating the remainder of such provision or the
remaining provisions of this Guaranty.
17. Except as otherwise expressly provided herein, any notice
required or desired to be served, given or delivered to any party hereto under
this Guaranty shall be in writing by facsimile, U.S. mail or overnight courier
and addressed or delivered to such party (a) if to the Agents or the Lenders, at
their respective addresses set forth in the Agreement, or (b) if to any
Guarantor, at its address indicated on EXHIBIT A hereto, or to such other
address as the Agents or the Lenders or any Guarantor designates to the Agents
in writing. All notices by United States mail shall be sent certified mail,
return receipt requested. All notices hereunder shall be effective upon delivery
or refusal of receipt; PROVIDED, HOWEVER, that any notice transmitted by
facsimile shall be deemed given when transmitted.
18. Each Guarantor hereby represents and warrants to the
Agents and the Lenders that:
(a) each Guarantor is a corporation duly
incorporated, validly existing and in good standing under the laws of
its jurisdiction of incorporation and is duly qualified and in good
standing as a foreign corporation and is duly authorized to conduct its
business in each jurisdiction in which its business is conducted or
proposed to be conducted;
(b) each Guarantor has all requisite power and
authority (corporate and otherwise) and legal right to execute and
deliver this Guaranty and to perform its obligations hereunder;
(c) the execution and delivery by each Guarantor of
this Guaranty and the performance of its obligations hereunder have
been duly authorized by proper corporate proceedings and this Guaranty
constitutes the legal, valid and binding obligations of such Guarantor,
enforceable against such Guarantor in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally; and
(d) neither the execution and delivery by each
Guarantor of this Guaranty nor compliance with the provisions of this
Guaranty will, or at the relevant time did, (i) violate any law, rule,
regulation (including Regulation T, U or X), order, writ, judgment,
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<PAGE> 150
injunction, decree or award binding on any Guarantor or any Guarantor's
charter, articles or certificate of incorporation or by-laws, (ii)
violate the provisions of or require the approval or consent of any
party to any indenture, instrument or agreement to which any Guarantor
is a party or is subject, or by which it, or its property, is bound, or
conflict with or constitute a default thereunder, or result in the
creation or imposition of any Lien (other than Liens permitted by, and
created under, the Loan Documents) in, of or on the property of any
Guarantor pursuant to the terms of any such indenture, instrument or
agreement, or (iii) require any consent of the stockholders of any
Person or any Governmental Authority.
Each Guarantor agrees that the foregoing representations and warranties shall be
deemed to have been made by such Guarantor on the date of this Guaranty, and on
each Borrowing Date, Conversion/Continuation Date or Issuance Date.
19. It is understood that while the amount of the Guaranteed
Debt guaranteed hereby is not limited, if in any action or proceeding involving
any state, federal or foreign bankruptcy, insolvency or other law affecting the
rights of creditors generally, this Guaranty would be held or determined to be
void, invalid or unenforceable on account of the amount of the aggregate
liability under this Guaranty with respect to one or more of the Guarantors,
then, notwithstanding any other provision of this Guaranty to the contrary, the
aggregate amount of such liability shall, with respect to any such Guarantor,
without any further action of the Agents, the Lenders or any other Person, be
automatically limited and reduced with respect to any such Guarantor to the
highest amount which is valid and enforceable as determined in such action or
proceeding.
20. Pursuant to SECTION 7.2(N) of the Credit Agreement,
certain Subsidiaries are from time to time required to enter into this Guaranty
as a Guarantor. Upon execution and delivery after the date hereof by a
Subsidiary of a supplement in the form of EXHIBIT A hereto, such Subsidiary
shall become a Guarantor hereunder with the same force and effect as if
originally named as a Guarantor herein. The execution and delivery of any
instrument adding an additional Guarantor as a party to this Agreement shall not
require the consent of any Guarantor hereunder, of any Borrower or of any Agent
or Lender. The rights and obligations of each Guarantor hereunder shall remain
in full force and effect notwithstanding the addition of any new Guarantor as a
party hereto.
[signature page to follow]
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<PAGE> 151
IN WITNESS WHEREOF, each Guarantor has executed this Guaranty as of the
date first above written.
[SUBSIDIARY]
By:
-------------------------------
Its:
------------------------------
[SUBSIDIARY]
By:
-------------------------------
Name:
-----------------------------
Title:
-----------------------------
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<PAGE> 152
EXHIBIT A TO GUARANTY
JOINDER AGREEMENT
This Joinder Agreement dated as of ______________, ____ is delivered
pursuant to that certain Subsidiary Guaranty as of October 20, 1999 by the
direct and indirect subsidiaries of Lanier Worldwide, Inc. party thereto (as
amended, supplemented, or modified from time to time, the "Guaranty"). The
undersigned hereby agrees that on and after the date hereof it shall be a
"Guarantor" under the Guaranty and be obligated to perform all of the
obligations of a Guarantor thereunder and hereby makes the representations and
warranties therein as of the date first set forth above.
[GUARANTOR]
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
[address for notices]
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<PAGE> 153
EXHIBIT G-2
FORM OF SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (this "SUBORDINATION AGREEMENT") is made
as of the [___] day of October, 1999, by and among LANIER WORLDWIDE, INC., a
Delaware corporation (the "COMPANY"), each of the corporations that is a
signatory hereto (collectively, the "INITIAL GRANTORS" and along with each other
Subsidiary of the Company which become parties to this Subordination Agreement
by executing an Addendum hereto in the form attached as ANNEX I, the "GRANTORS")
in favor of the Agents and the Lenders under (and as defined in) the Credit
Agreement referred to below;
WITNESSETH:
WHEREAS, the Company, one or more Subsidiaries of the Company (whether
now existing or hereafter formed, collectively referred to herein as the
"SUBSIDIARY BORROWERS"), the institutions from time to time parties hereto as
Lenders, and ABN AMRO Bank N.V., in its capacity as Administrative Agent (the
"ADMINISTRATIVE AGENT"), SUNTRUST BANK, ATLANTA, as Syndication Agent (the
"SYNDICATION AGENT") and WACHOVIA BANK N.A., as Documentation Agent (the
"DOCUMENTATION AGENT"). have entered into a certain 5-Year Credit Agreement
dated as of October 20, 1999 (as the same may be amended, modified, supplemented
and/or restated, and as in effect from time to time, the " CREDIT AGREEMENT"),
providing, subject to the terms and conditions thereof, for extensions of credit
and other financial accommodations to be made by the Lenders to the Company and
the Subsidiary Borrowers;
WHEREAS, it is a condition precedent to the initial extensions of
credit by the Lenders under the Credit Agreement that each of the Grantors
execute and deliver this Subordination Agreement; and
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. Terms defined in the Credit Agreement and not
otherwise defined herein have, as used herein, the respective meanings provided
for therein.
SECTION 2. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the
Grantors represents and warrants (which representations and warranties shall be
deemed to have been renewed at the time of the making, conversion or
continuation of any Loan or issuance of any Letter of Credit) that:
(a) It is a corporation, limited liability company,
partnership or other commercial entity duly incorporated or formed, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or formation and has all requisite authority to conduct its
business as a foreign Person in each jurisdiction in which its business is
conducted, except where the failure to have such requisite authority would not
have a Material Adverse Effect.
<PAGE> 154
(b) It has the power and authority and legal right to execute
and deliver this Subordination Agreement and to perform its obligations
hereunder. The execution and delivery by it of this Subordination Agreement and
the performance by it of its obligations hereunder have been duly authorized by
proper proceedings, and this Subordination Agreement constitutes a legal, valid
and binding obligation of such Grantor, enforceable against such Grantor in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity (regardless of whether
enforcement is sought in equity or at law).
(c) Neither the execution and delivery by it of this
Subordination Agreement, nor the consummation by it of the transactions herein
contemplated, nor compliance by it with the terms and provisions hereof, will
violate any law, rule, regulation, order, writ, judgment, injunction, decree or
award binding on it or its certificate or articles of incorporation or by-laws,
limited liability company or partnership agreement (as applicable) or the
provisions of any indenture, instrument or material agreement to which it is a
party or is subject, or by which it, or its property, is bound, or conflict with
or constitute a default thereunder, or result in the creation or imposition of
any Lien in, of or on its property pursuant to the terms of any such indenture,
instrument or material agreement. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any Governmental Authority that has not been made, obtained or
given, or which, if not made, obtained or given, individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect, is
required to authorize, or is required in connection with the execution, delivery
and performance by it of this Subordination Agreement.
In addition to the foregoing, each of the Grantors covenants
that, so long as any Lender has any Commitment outstanding under the Credit
Agreement or any amount payable under the Credit Agreement or any other
Obligations shall remain unpaid, it will, and, if necessary, will enable the
Company to (to the extent practicable), fully comply with those covenants and
agreements of the Company applicable to each of the Grantors set forth in the
Credit Agreement.
SECTION 3. SUBORDINATION OF INTERCOMPANY INDEBTEDNESS. Each of the
Grantors agrees that any and all claims of such Grantor against either the
Company, any Subsidiary Borrower or any other Grantor hereunder (each an
"OBLIGOR"), any endorser or obligor of all or any part of the Obligations, or
against any of its properties shall be subordinate and subject in right of
payment to the prior payment, in full and in cash, of all Obligations; PROVIDED,
that, and not in contravention of the foregoing, so long as no Default or
Unmatured Default has occurred and is continuing such Grantor may make loans to
and receive payments in the ordinary course with respect to any "Intercompany
Indebtedness" (as defined below) to the extent permitted by the terms of the
Credit Agreement and the other Loan Documents. Notwithstanding any right of any
Grantor to ask, demand, sue for, take or receive any payment from any Obligor
all rights, liens and security interests of such Grantor, whether now or
hereafter arising and howsoever existing, in any assets of any other Obligor
shall be and are subordinated to the rights of the Lenders and the Agents in
those assets. No Grantor shall have any right to possession of any such asset or
to foreclose upon any such asset, whether by judicial action or otherwise,
unless and until all of the
<PAGE> 155
Obligations (other than contingent indemnity obligations) shall have been fully
paid and satisfied (in cash) and all financing arrangements pursuant to any Loan
Document among the Company or any Subsidiary Borrower and the Lenders have been
terminated. If all or any part of the assets of any Obligor, or the proceeds
thereof, are subject to any distribution, division or application to the
creditors of such Obligor, whether partial or complete, voluntary or
involuntary, and whether by reason of liquidation, bankruptcy, arrangement,
receivership, assignment for the benefit of creditors or any other action or
proceeding, or if the business of any such Obligor is dissolved or if
substantially all of the assets of any such Obligor are sold, then, and in any
such event, any payment or distribution of any kind or character, either in
cash, securities or other property, which shall be payable or deliverable upon
or with respect to any indebtedness of any Obligor to any Grantor ("INTERCOMPANY
INDEBTEDNESS") shall be paid or delivered directly to the Administrative Agent
for application on any of the Obligations, due or to become due, until such
Obligations (other than contingent indemnity obligations) shall have first been
fully paid and satisfied (in cash). Each Grantor irrevocably authorizes and
empowers the Administrative Agent to demand, sue for, collect and receive every
such payment or distribution and give acquittance therefor and to make and
present for and on behalf of such Grantor such proofs of claim and take such
other action, in the Administrative Agent's own name or in the name of such
Grantor or otherwise, as the Administrative Agent may deem necessary or
advisable for the enforcement of this SECTION 3. The Administrative Agent may
vote such proofs of claim in any such proceeding, receive and collect any and
all dividends or other payments or disbursements made thereon in whatever form
the same may be paid or issued and apply the same on account of any of the
Obligations. Should any payment, distribution, security or instrument or
proceeds thereof be received by any Grantor upon or with respect to the
Intercompany Indebtedness prior to the satisfaction of all of the Obligations
(other than contingent indemnity obligations) and the termination of all
financing arrangements among the Company or any Subsidiary Borrower and the
Agents and the Lenders, such Grantor shall receive and hold the same in trust,
as trustee, for the benefit of the Agents and the Lenders and shall forthwith
deliver the same to the Administrative Agent, for the benefit of the Agents and
the Lenders, in precisely the form received (except for the endorsement or
assignment of such Grantor where necessary), for application to any of the
Obligations, due or not due, and, until so delivered, the same shall be held in
trust by such Grantor as the property of the Lenders. If any such Grantor fails
to make any such endorsement or assignment to the Administrative Agent, the
Administrative Agent or any of its officers or employees are irrevocably
authorized to make the same. Each of the Grantors agrees that until the
Obligations (other than contingent indemnity obligations) have been paid in full
(in cash) and satisfied and all financing arrangements among the Company and the
Subsidiary Borrowers and the Agents and the Lenders have been terminated, no
Grantor will assign or transfer to any Person (other than the Administrative
Agent) any claim any such Grantor has or may have against any Obligor.
SECTION 4. SUCCESSORS AND ASSIGNS. This Subordination Agreement is for
the benefit of the Agents and the Lenders and their respective successors and
permitted assigns and in the event of an assignment of any amounts payable under
the Credit Agreement, any Hedging Agreement between the Company or any of its
Subsidiaries and any Lender or any Affiliate of any Lender, or the other Loan
Documents in accordance with the respective terms thereof, the rights
thereunder, to the extent applicable to the indebtedness so assigned, may be
transferred
<PAGE> 156
with such indebtedness. This Subordination Agreement shall be binding upon each
of the Grantors and their respective successors and assigns.
SECTION 5. CHANGES IN WRITING. Other than in connection with the
addition of additional Material Subsidiaries which become parties hereto by
executing an Addendum hereto in the form attached as Annex I, neither this
Subordination Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, but only in writing signed by each of the
Grantors and the Administrative Agent with the consent of the Required Lenders
under the Credit Agreement (or all of the Lenders if required pursuant to the
terms of SECTION 10.3 of the Credit Agreement).
SECTION 6. GOVERNING LAW. ANY DISPUTE BETWEEN ANY GRANTOR AND ANY AGENT
OR ANY LENDER, OR ANY OTHER HOLDER OF OBLIGATIONS ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH, THIS SUBORDINATION AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE
RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICTS
OF LAWS PROVISIONS) OF THE STATE OF NEW YORK.
SECTION 7. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.
(A) EXCLUSIVE JURISDICTION. EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION
(B), EACH OF THE PARTIES HERETO AGREES THAT ALL DISPUTES AMONG THEM ARISING OUT
OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
AMONG THEM IN CONNECTION WITH, THIS SUBORDINATION AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE
RESOLVED EXCLUSIVELY BY STATE OR FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK,
BUT THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE
TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK, NEW YORK. EACH OF THE
PARTIES HERETO WAIVES IN ALL DISPUTES BROUGHT PURSUANT TO THIS SUBSECTION (A)
ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE
DISPUTE.
(B) OTHER JURISDICTIONS. EACH OF THE GRANTORS AGREES THAT ANY AGENT,
ANY LENDER OR ANY HOLDER OF OBLIGATIONS SHALL HAVE THE RIGHT TO PROCEED AGAINST
THE GRANTOR OR ITS PROPERTY IN A COURT IN ANY LOCATION TO ENABLE SUCH PERSON TO
(1) OBTAIN PERSONAL JURISDICTION OVER SUCH GRANTOR OR (2) ENFORCE A JUDGMENT OR
OTHER COURT ORDER ENTERED IN FAVOR OF SUCH PERSON. EACH OF THE GRANTORS AGREES
THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT
BY SUCH PERSON TO REALIZE ON ANY SECURITY FOR
<PAGE> 157
THE OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SUCH
PERSON. EACH OF THE GRANTORS WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT IN WHICH A PERSON HAS COMMENCED A PROCEEDING DESCRIBED IN
THIS SUBSECTION (B).
(C) SERVICE OF PROCESS. EACH OF THE GRANTORS WAIVES PERSONAL SERVICE OF
ANY PROCESS UPON IT AND IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY
WRITS, PROCESS OR SUMMONSES IN ANY SUIT, ACTION OR PROCEEDING BY THE MAILING
THEREOF BY ANY AGENT OR THE HOLDERS OF OBLIGATIONS BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO THE GRANTORS IN CARE OF THE COMPANY AT THE ADDRESS
PROVIDED FOR NOTICES TO THE COMPANY UNDER THE CREDIT AGREEMENT. NOTHING HEREIN
SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF ANY AGENT OR THE HOLDERS OF
OBLIGATIONS TO SERVE ANY SUCH WRITS, PROCESS OR SUMMONSES IN ANY OTHER MANNER
PERMITTED BY APPLICABLE LAW. EACH OF THE GRANTORS IRREVOCABLY WAIVES ANY
OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS
SUBORDINATION AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED
OR DELIVERED IN CONNECTION HEREWITH IN ANY JURISDICTION SET FORTH ABOVE.
(D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES
ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS
SUBORDINATION AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED
OR DELIVERED IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SUBORDINATION AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
(E) WAIVER OF BOND. EACH OF THE GRANTORS WAIVES THE POSTING OF ANY BOND
OTHERWISE REQUIRED OF ANY PARTY HERETO IN CONNECTION WITH ANY JUDICIAL PROCESS
OR PROCEEDING TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
SUCH PARTY, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER,
PRELIMINARY OR PERMANENT INJUNCTION, THIS SUBORDINATION AGREEMENT OR ANY OTHER
LOAN DOCUMENT.
<PAGE> 158
(F) ADVICE OF COUNSEL. EACH OF THE PARTIES PRESENTS TO EACH OTHER PARTY
HERETO THAT IT HAS DISCUSSED THIS SUBORDINATION AGREEMENT AND, SPECIFICALLY, THE
PROVISIONS OF THIS SECTION 7, WITH ITS COUNSEL.
SECTION 8. NO STRICT CONSTRUCTION. The parties hereto have participated
jointly in the negotiation and drafting of this Subordination Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Subordination Agreement shall be construed as if drafted jointly by the parties
hereto and no presumption or burden of proof shall arise favoring or disfavoring
any party by virtue of the authorship of any provisions of this Subordination
Agreement.
SECTION 9. SEVERABILITY. Wherever possible, each provision of this
Subordination Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Subordination
Agreement shall be prohibited by or invalid under such law, such provision shall
be ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of this
Subordination Agreement.
SECTION 10. MERGER. This Subordination Agreement represents the final
agreement of the Grantors with respect to the matters contained herein and may
not be contradicted by evidence of prior or contemporaneous agreements, or
subsequent oral agreements, between the Grantors and any Lender or any Agent.
SECTION 11. HEADINGS. Section headings in this Subordination Agreement
are for convenience of reference only and shall not govern the interpretation of
any provision of this Subordination Agreement.
<PAGE> 159
IN WITNESS WHEREOF, each of the undersigned Grantors has caused this
Subordination Agreement to be duly executed by its authorized officer as of the
day and year first above written.
LANIER WORLDWIDE, INC.
By:
------------------------------
Its:
-----------------------------
[-----------------------------]
By:
------------------------------
Its:
-----------------------------
[------------------------------]
By:
------------------------------
Its:
-----------------------------
[------------------------------]
By:
------------------------------
Its:
-----------------------------
<PAGE> 160
ANNEX I TO SUBORDINATION AGREEMENT
Reference is hereby made to the Subordination Agreement (the
"Subordination Agreement") made as of the 20th day of October, 1999 by Lanier
Worldwide, Inc., a Delaware corporation and certain of its Subsidiaries
(collectively, the "Initial Grantors" and along with any other Subsidiaries of
the Company which have become parties thereto and together with the undersigned,
the "Grantors") in favor of the Agents and the Lenders under the Credit
Agreements. Capitalized terms used herein and not defined herein shall have the
meanings given to them in the Subordination Agreement. By its execution below,
the undersigned [name of new grantor], a [corporation] [partnership] [limited
liability company], agrees to become, and does hereby become a Grantor under the
Subordination Agreement and agrees to be bound by such Subordination Agreement
as if originally a party thereto. By its execution below, the undersigned
represents and warrants as to itself that all of the representations and
warranties contained in SECTION 2 of the Subordination Agreement are true and
correct in all respects as of the date hereof.
IN WITNESS WHEREOF, [NAME OF NEW GRANTOR], a [corporation]
[partnership] [limited liability company] has executed and delivered this Annex
I counterpart to the Subordination Agreement as of this _______________ day of
______________ __________,_______.
[NAME OF NEW GRANTOR]
By:
---------------------------
Title:
------------------------
<PAGE> 161
EXHIBIT H
TO
5-YEAR CREDIT AGREEMENT
Dated as of October 20, 1999
FORM OF ALTERNATE CURRENCY ADDENDUM
-----------------------------------
<PAGE> 162
[CURRENCY]
ALTERNATE CURRENCY ADDENDUM
[CURRENCY] ADDENDUM (including the Schedules hereto, the "ADDENDUM") dated as of
____________ __, ____ to the Credit Agreement (as defined below).
ARTICLE I
---------
DEFINITIONS
-----------
SECTION 1.01. DEFINED TERMS. As used in this Addendum, the following
terms shall have the meanings specified below:
"ALTERNATE CURRENCY LOAN" shall mean any extension of credit,
denominated in the Currency made to [applicable Borrower], a _________________
organized and existing under the laws of ______________, pursuant to SECTION
2.21 of the Credit Agreement and this Addendum. An Alternate Currency Loan shall
bear interest at the rates specified in SCHEDULE II.
["ASSOCIATED COSTS RATE" means for any Alternate Currency Loan
denominated in [currency] for any Interest Period, a percentage rate per annum,
as determined in accordance with Annex I attached hereto on the first day of
such Interest Period, determined by the Alternate Currency Bank as reflecting
the cost, loss or difference in return which would be suffered or incurred by
the Alternate Currency Bank as a result of: (a) funding (at the Eurocurrency
Rate and on a match funded basis) any special deposit or cash ratio deposit
required to be placed with the [applicable central bank] (or any other authority
which replaces all or any of its functions) and/or (b) any charge imposed by the
[applicable Governmental Authority] (or any other authority which replaces a or
any of its functions).]
"CREDIT AGREEMENT" shall mean the 5-Year Credit Agreement dated as of
October 20, 1999, among Lanier Worldwide, Inc., a Delaware corporation (the
"COMPANY"), the Subsidiary Borrowers from time to time party thereto, the
financial institutions from time to time party thereto as Lenders, and ABN AMRO
Bank, N.V. as contractual representative for itself and the other Lenders (the
"ADMINISTRATIVE AGENT"), as the same may be amended, waived, modified or
restated from time to time.
"CURRENCY" means [SPECIFY ALTERNATE CURRENCY].
SECTION 1.02. TERMS GENERALLY. Unless otherwise defined herein, terms
defined in the Credit Agreement shall have the same meanings in this Addendum.
Wherever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"'including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Sections and Schedules shall be deemed references to
Sections of and Schedules to this Addendum unless the context shall otherwise
require.
2
<PAGE> 163
ARTICLE II
THE CREDITS
-----------
SECTION 2.01. ALTERNATE CURRENCY LOANS. (a) This Addendum (as the same
may be amended, waived, modified or restated from time to time) is an "Alternate
Currency Addendum" as defined in the Credit Agreement and is, together with the
borrowings made hereunder, subject in all respects to the terms and provisions
of the Credit Agreement except to the extent that the terms and provisions of
the Credit Agreement are modified by this Addendum. The Alternate Currency Bank
party to this Addendum is set forth on SCHEDULE I.
(b) Any modifications to the interest payment dates, Interest Periods,
interest rates and any other special provisions applicable to Alternate Currency
Loans under this Addendum are set forth on SCHEDULE II. If SCHEDULE II states
"Same as Credit Agreement" with respect to any item listed thereon, then the
corresponding provisions of the Credit Agreement, without modification, shall
govern this Addendum and the Alternate Currency Loans made pursuant to this
Addendum.
(c) Any special borrowing procedures or funding arrangements for
Alternate Currency Loans under this Addendum, any provisions for the issuance of
promissory notes to evidence the Alternate Currency Loans made hereunder and any
additional information requirements applicable to Alternate Currency Loans under
this Addendum are set forth on SCHEDULE III. If no such special procedures,
funding arrangements, provisions or additional requirements are set forth on
SCHEDULE III, then the corresponding procedures, funding arrangements,
provisions and information requirements set forth in the Credit Agreement shall
govern this Addendum.
SECTION 2.02. MAXIMUM BORROWING AMOUNTS. (a) The Alternate Currency
Commitment is set forth on SCHEDULE I.
(b) The Company or the applicable Alternate Currency Borrower may
permanently reduce the Alternate Currency Commitment under this Addendum in
whole, or in part, in an aggregate minimum Dollar Amount equal to $1,000,000 (or
any larger multiple of $1,000,000) upon at least one (1) Business Day's prior
written notice to the Alternate Currency Bank, which notice shall be given not
later than 11:00 am. (London time) and shall specify the amount of such
reduction; PROVIDED, HOWEVER, that the amount of the Alternate Currency
Commitment may not be reduced below the aggregate principal amount of the
outstanding Alternate Currency Loans with respect thereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
The Alternate Currency Borrower party hereto makes and confirms each
representation and warranty applicable to the Alternate Currency Borrower or any
of its Subsidiaries contained in Article VI of the Credit Agreement. The
Alternate Currency Borrower represents and warrants to the Alternate Currency
Bank party to this Addendum that no Default or Unmatured
3
<PAGE> 164
Default has occurred and is continuing, and no Default or Unmatured Default
shall arise as a result of the making of Alternate Currency Loans hereunder or
any other transaction contemplated hereby.
ARTICLE IV
MISCELLANEOUS PROVISIONS
------------------------
SECTION 4.01. EFFECTIVENESS: AMENDMENT; TERMINATION. (a) This Addendum
shall not become effective until executed by the parties hereto and acknowledged
by the Administrative Agent.
(b) This Addendum may not be amended without the prior written consent
of the Alternate Currency Bank.
(c) This Addendum may not be terminated without the prior written
consent of the Alternate Currency Bank party hereto unless there are no
Alternate Currency Loans outstanding hereunder, in which case no such consent
shall be required; PROVIDED, HOWEVER, that all obligations of the Alternate
Currency Bank to lend hereunder shall automatically terminate on the Termination
Date.
SECTION 4.02. ASSIGNMENTS. ARTICLE XIV of the Credit Agreement shall
apply to assignments by the Alternate Currency Bank of obligations, commitments
and Loans hereunder; PROVIDED, HOWEVER, that the Alternate Currency Bank may not
assign any obligations, commitments or rights hereunder to any Person who is not
(and does not simultaneously become) a Lender under the Credit Agreement.
SECTION 4.03. NOTICES. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as follows:
(a) if to the Alternate Currency Borrower under this Addendum, at:
(b) if to the Alternate Currency Bank, to it at:
----------------------------------
----------------------------------
Attention: ----------------------------------
Telecopier:----------------------------------
Confirmation: ----------------------------------
with a copy to the Administrative Agent at its address or telecopy number
referenced in the Credit Agreement.
All notices and other communications given to any party hereto in accordance
with the provisions of this Addendum shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy to such party as provided in
4
<PAGE> 165
this Section or in accordance with the latest unrevoked direction from such
party given in accordance with this Section.
SECTION 4.04. APPLICABLE LAW. THIS ADDENDUM SHALL BE GOVERNED
BY AND INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK. WITHOUT LIMITING THE FOREGOING, ANY DISPUTE BETWEEN ANY
SUBSIDIARY BORROWER AND ANY AGENT, ANY LENDER, ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH, THIS ADDENDUM OR ANY OF THE OTHER LOAN DOCUMENTS, AND WHETHER
ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE
WITH THE INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF
THE STATE OF NEW YORK.
[Remainder of this Page Intentionally Blank]
5
<PAGE> 166
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
duly executed by their duly authorized officers, all as of the date and year
first above written.
[APPLICABLE BORROWER], as the
Alternate Currency Borrower under this
Addendum
By::
--------------------------------------
Name:
Title:
------------------------------------------
as the Alternate Currency Bank under this
Addendum
By::
--------------------------------------
Name:
Title:
Acknowledged this ___ day of
______________, _____
ABN AMRO BANK N.V.,
as Administrative Agent
By::
-----------------------
Name:
Title:
By::
-----------------------
Name:
Title:
6
<PAGE> 167
SCHEDULE I
to Alternate Currency Addendum
for [(Currency)]
ALTERNATE CURRENCY BANK
ALTERNATE CURRENCY COMMITMENT
- ---------------------------------------------------------------------------
Alternate Currency Bank Alternate Currency Commitment
Name
- ---------------------------------------------------------------------------
US $________________
- ---------------------------------------------------------------------------
7
<PAGE> 168
SCHEDULE II
to Alternate Currency Addendum
for [Currency]
MODIFICATIONS
1. BUSINESS DAY DEFINITION:
"BUSINESS DAY" shall mean a day (other than a Saturday or Sunday) on
which banks are open for business in ___________.
2. INTEREST PAYMENT DATES: [Same as Credit Agreement] [specify others]
3. INTEREST PERIODS: [Same as Credit Agreement] [specify others]
4. INTEREST RATES:
ALTERNATE CURRENCY LOANS: Each Alternate Currency Loan denominated in
the Currency and for which an Interest Period has been selected in accordance
with the terms of ARTICLE II of the Credit Agreement and this Addendum shall
bear interest from and including the first day of the Interest Period applicable
thereto to (but not including) the last day of such Interest Period at a rate
per annum equal to the sum of (i) the Eurocurrency Rate Base (determined by
reference to the amount of such Loan rather than any Pro-Rata share of the
Administrative Agent) for such Alternate Currency Loan for such Interest Period
PLUS (ii) the Applicable Eurocurrency Margin as in effect from time to time
during such Interest Period [PLUS (iii) the Associated Costs Rate for such
Alternate Currency Loan for such Interest Period]; PROVIDED, HOWEVER, after the
occurrence and during the continuance of a Default, the provisions of Section
2.11 of the Credit Agreement shall be applicable.
5. APPLICABLE MARGINS. Same as Credit Agreement.
6. MODIFICATIONS TO INTEREST PERIOD SELECTION/CONVERSION:
Notice of selection of Interest Period or conversion/continuation shall
be given by the applicable Alternate Currency Borrower to the Alternate Currency
Bank as follows:
Alternate Currency Loans: ______ a.m. (________ time) two Business Days
prior.
7. OTHER:
Additional Conditions Precedent: [None] [specify others]
Termination Date for Addendum: [Same as Credit Agreement] [specify
earlier date]
8
<PAGE> 169
Maximum Number of Interest Periods: [Unlimited (provided the Alternate Currency
Borrower is in compliance with minimum borrowing amounts and increments).]
[specify other]
Prepayment Notices: The applicable Alternate Currency Borrower shall be
permitted to prepay the Alternate Currency Loans provided notice thereof is
given to the Alternate Currency Bank not later than ______ am. (_______ time) at
least _____ (__) Business Day(s) prior to the date of such prepayment.
[Authorized Officer: In addition to the Authorized Officers set forth in the
Credit Agreement, those individuals designated in writing by an Authorized
Officer to borrow on behalf of a Borrower shall also be authorized to borrow
Alternate Currency Loans hereunder.]
9
<PAGE> 170
SCHEDULE III
to Alternate Currency Addendum
for Pounds Sterling
OTHER PROVISIONS
1. BORROWING PROCEDURES:
Notice of Borrowing shall be given by the Alternate Currency Borrower
to the Alternate Currency Bank as follows:
Alternate Currency Loans: ___:00 __.m. (________ time) on the date of
the proposed borrowing or such later time as the Alternate Currency
Bank shall agree to.
2. FUNDING ARRANGEMENTS:
Minimum amounts/increments for Alternate Currency Loans, repayments and
prepayments:
3. PROMISSORY NOTES: [None required] [Note form to be as specified by the
Alternate Currency Bank]
10
<PAGE> 171
ANNEX I
to Alternate Currency Addendum
for [Currency]
ASSOCIATED COSTS RATE
[complete if applicable]
11
<PAGE> 172
EXHIBIT I-1
TO
5-YEAR CREDIT AGREEMENT
Dated as of October 20, 1999
FORM OF REVOLVING LOAN NOTE (IF REQUESTED)
------------------------------------------
Attached
<PAGE> 173
REVOLVING LOAN NOTE
U.S. $[__________________] Chicago, Illinois
[DATE]
FOR VALUE RECEIVED, the undersigned, [LANIER WORLDWIDE, INC., a
Delaware corporation (the "Company")][____________, a ___________ corporation
(the "Subsidiary Borrower")], HEREBY UNCONDITIONALLY PROMISES TO PAY to the
order of [_______________] (the "Lender") the principal sum of [______________]
AND NO/100 DOLLARS ($[_________________]), or, if less, the aggregate unpaid
amount of all "Revolving Loans" (as defined in the Credit Agreement referred to
below) made by the Lender to such [Company] [Subsidiary Borrower] pursuant to
the "Credit Agreement" (as defined below), on the "Termination Date" (as defined
in the Credit Agreement) or on such earlier date as may be required by the terms
of the Credit Agreement. Capitalized terms used herein and not otherwise defined
herein are as defined in the Credit Agreement.
The [Company] [Subsidiary Borrower] promises to pay interest on the
unpaid principal amount of each Revolving Loan made to it from the date of such
Revolving Loan until such principal amount is paid in full at a rate or rates
per annum determined in accordance with the terms of the Credit Agreement.
Interest hereunder is due and payable at such times and on such dates as set
forth in the Credit Agreement.
Both principal and interest are payable in Dollars to the
Administrative Agent (as defined below), to such account as the Administrative
Agent may designate, in same day funds. At the time of each Revolving Loan, and
upon each payment or prepayment of principal of each Revolving Loan, the Lender
shall make a notation either on the schedule attached hereto and made a part
hereof, or in such Lender's own books and records, in each case specifying the
amount of such Revolving Loan, the respective Interest Period thereof (in the
case of Eurocurrency Rate Loans) or the amount of principal paid or prepaid with
respect to such Revolving Loan, as applicable; PROVIDED that the failure of the
Lender to make any such recordation or notation shall not affect the Obligations
of the [Company] [Subsidiary Borrower] hereunder or under the Credit Agreement.
This Revolving Loan Note is one of the promissory notes referred to in,
and is entitled to the benefits of, that certain 5-Year Credit Agreement dated
as of October 20, 1999 among Lanier Worldwide, Inc. (the "Company"), the
Subsidiary Borrowers from time to time party thereto, the financial institutions
parties thereto (the "Lenders"), ABN AMRO Bank N.V., individually and as
Administrative Agent, Suntrust Bank, Atlanta, individually and as Syndication
Agent, and Wachovia Bank N.A., individually and as Documentation Agent (as
amended, restated, supplemented or modified from time to time, the "Credit
Agreement"). The Credit Agreement, among other things, (i) provides for the
making of Revolving Loans by the Lender to the [Company] [Subsidiary Borrower]
under the Credit Agreement from time to time in an aggregate amount not to
exceed at any time outstanding the Dollar Amount first above mentioned, the
indebtedness of the [Company] [Subsidiary Borrower] resulting from each such
Revolving Loan to it being evidenced by this Revolving Loan Note, and (ii)
contains provisions for acceleration
2
<PAGE> 174
of the maturity hereof upon the happening of certain stated events and also for
prepayments of the principal hereof prior to the maturity hereof upon the terms
and conditions therein specified.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by the [Company] [Subsidiary Borrower].
Whenever in this Revolving Loan Note reference is made to the
Administrative Agent, the Lender or the [Company] [Subsidiary Borrower], such
reference shall be deemed to include, as applicable, a reference to their
respective successors and assigns. The provisions of this Revolving Loan Note
shall be binding upon and shall inure to the benefit of said successors and
assigns. The [Company's] [Subsidiary Borrower's] successors and assigns shall
include, without limitation, a receiver, trustee or debtor in possession of or
for the [Company] [Subsidiary Borrower].
This Revolving Loan Note shall be interpreted, and the rights and
liabilities of the parties hereto determined, in accordance with the laws of the
State of New York.
[LANIER WORLDWIDE, INC.]
[SUBSIDIARY BORROWER]
By:
-----------------------------------------
Name:
Title:
3
<PAGE> 175
SCHEDULE OF REVOLVING LOANS AND PAYMENTS OR PREPAYMENTS
-------------------------------------------------------
<TABLE>
<CAPTION>
Date Amount of Loan Type of Loan Interest Period/ Amount of Unpaid Notation Made
Rate Principal Paid or Principal By
Prepaid Balance
- -------------- --------------- --------------- ------------------- -------------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
4
<PAGE> 176
EXHIBIT I-2
TO
5-YEAR CREDIT AGREEMENT
Dated as of October 20, 1999
FORM OF TERM LOAN NOTE (IF REQUESTED)
-------------------------------------
Attached
<PAGE> 177
TERM LOAN NOTE
U.S. $[__________________] Chicago, Illinois
[DATE]
FOR VALUE RECEIVED, the undersigned, [LANIER WORLDWIDE, INC., a
Delaware corporation (the "Company")][____________, a ___________ corporation
(the "Subsidiary Borrower")], HEREBY UNCONDITIONALLY PROMISES TO PAY to the
order of [_______________] (the "Lender") the principal sum of [______________]
AND NO/100 DOLLARS ($[_________________]), or, if less, the unpaid amount of the
"Term Loan" (as defined in the Credit Agreement referred to below) made by the
Lender to such [Company] [Subsidiary Borrower] pursuant to the "Credit
Agreement" (as defined below), on the "Termination Date" (as defined in the
Credit Agreement) or on such earlier date as may be required by the terms of the
Credit Agreement. Capitalized terms used herein and not otherwise defined herein
are as defined in the Credit Agreement.
The [Company] [Subsidiary Borrower] promises to pay interest on the
unpaid principal amount of the Term Loan made to it from the date of the Term
Loan until such principal amount is paid in full at a rate or rates per annum
determined in accordance with the terms of the Credit Agreement. Interest
hereunder is due and payable at such times and on such dates as set forth in the
Credit Agreement.
This Term Loan Note is one of the promissory notes referred to in, and
is entitled to the benefits of, that certain 5-Year Credit Agreement dated as of
October 20, 1999 among Lanier Worldwide, Inc. (the "Company"), the Subsidiary
Borrowers from time to time party thereto, the financial institutions parties
thereto (the "Lenders"), ABN AMRO Bank N.V., individually and as Administrative
Agent, Suntrust Bank, Atlanta, individually and as Syndication Agent, and
Wachovia Bank N.A., individually and as Documentation Agent (as amended,
restated, supplemented or modified from time to time, the "Credit Agreement").
The Credit Agreement, among other things, (i) provides for the making of a Term
Loan by the Lender to the [Company] [Subsidiary Borrower] under the Credit
Agreement on the Closing Date in an aggregate amount not to exceed at any time
outstanding the Dollar Amount first above mentioned, the indebtedness of the
[Company] [Subsidiary Borrower] resulting from each such Term Loan to it being
evidenced by this Term Loan Note, and (ii) contains provisions for acceleration
of the maturity hereof upon the happening of certain stated events and also for
prepayments of the principal hereof prior to the maturity hereof upon the terms
and conditions therein specified.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by the [Company] [Subsidiary Borrower].
Whenever in this Term Loan Note reference is made to the Administrative
Agent, the Lender or the [Company] [Subsidiary Borrower], such reference shall
be deemed to include, as applicable, a reference to their respective successors
and assigns. The provisions of this Term Loan Note shall be binding upon and
shall inure to the benefit of said successors and assigns. The [Company's]
[Subsidiary Borrower's] successors and assigns shall include, without
2
<PAGE> 178
limitation, a receiver, trustee or debtor in possession of or for the [Company]
[Subsidiary Borrower].
This Term Loan Note shall be interpreted, and the rights and
liabilities of the parties hereto determined, in accordance with the laws of the
State of New York.
[LANIER WORLDWIDE, INC.]
[SUBSIDIARY BORROWER]
By:
-----------------------------------
Name:
Title:
3
<PAGE> 179
SCHEDULE OF TERM LOAN AND PAYMENTS OR PREPAYMENTS
Date Amount of Principal Unpaid Principal Balance Notation Made By
Paid or Prepaid
- --------------------------------------------------------------------------------
4
<PAGE> 180
EXHIBIT I-3
TO
5-YEAR CREDIT AGREEMENT
Dated as of October 20, 1999
FORM OF NOTE
------------
(Competitive Bid Loans)
BID NOTE
$ [DATE]
Lanier Worldwide, Inc., a Delaware corporation (the "Company"), promises to
pay to the order of _____________ (the "Lender") the aggregate unpaid principal
amount of all Competitive Bid Loans made by the Lender to the Company pursuant
to Section 2.2 of the 5-Year Credit Agreement hereinafter referred to (as the
same may be amended or modified, herein called the "Credit Agreement"), in
lawful money of the United States in immediately available funds at the main
office of ABN AMRO Bank N.V., as administrative agent (the "Administrative
Agent"), in Chicago, Illinois, together with interest, in like money and funds,
on the unpaid principal amount hereof at the rates and on the dates determined
in accordance with the Credit Agreement. The Company shall pay each Competitive
Bid Loan in full on the last day of such Competitive Bid Loan's applicable
Interest Period, or, if earlier, on the Termination Date or the Facility
Termination Date (as such terms are defined in the Credit Agreement), or, if
earlier, when due under SECTION 9.1 of the Credit Agreement.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or otherwise record in accordance with its usual practice, the
date and amount of each Competitive Bid Loan and the date and amount of each
principal payment hereunder; provided, however, that the failure to so record
shall not affect the Company's obligations hereunder or under the Credit
Agreement.
This Note (Competitive Bid Loans) is one of the Notes issued pursuant to,
and is entitled to the benefits of, the 5-Year Credit Agreement dated as of
October 20, 1999 among Lanier Worldwide, Inc. (the "Company"), the Subsidiary
Borrowers from time to time party thereto, the financial institutions parties
thereto (the "Lenders"), ABN AMRO Bank N.V., individually and as Administrative
Agent, Suntrust Bank, Atlanta, individually and as Syndication Agent, and
Wachovia Bank N.A., individually and as Documentation Agent to which Credit
Agreement reference is hereby made for a statement of the terms and conditions
under which this Note may be prepaid or its maturity date accelerated.
Capitalized terms used herein and not otherwise defined herein are used with the
meanings attributed to them in the Credit Agreement.
<PAGE> 181
LANIER WORLDWIDE, INC.
By:
---------------------------------
Name:
Title:
2
<PAGE> 182
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL TO
PROMISSORY NOTE (COMPETITIVE BID LOANS)
OF LANIER WORLDWIDE, INC.
Principal Amount Maturity of Principal
Date of Loan Interest Bond Amount Paid Balance
- ---- ------- ------------- ----------- -------
3
<PAGE> 183
EXHIBIT J
TO
5-YEAR CREDIT AGREEMENT
Dated as of October 20, 1999
FORM OF COMPETITIVE BID QUOTE REQUEST
-------------------------------------
(Section 2.2(B))
COMPETITIVE BID QUOTE REQUEST
________, 19__
To: ABN AMRO Bank N.V.,
as administrative agent (the "Administrative Agent")
From: Lanier Worldwide, Inc. (the "Company")
Re: 5-Year Credit Agreement (the "Credit Agreement") dated as of
October 20, 1999 among the Company, the financial institutions
parties thereto (the "Lenders"), ABN AMRO Bank N.V.,
individually and as Administrative Agent, Suntrust Bank,
Atlanta, individually and as Syndication Agent, and Wachovia
Bank N.A., individually and as Documentation Agent.
We hereby give notice pursuant to Section 2.2(B) of the Credit Agreement
that we request Competitive Bid Quotes for the following proposed Competitive
Bid Advance(s):
Borrowing Date: ___________, 19__
Principal Amount(1) Interest Period(2)
- ------------------- ------------------
$
Such Competitive Bid Quotes should offer a [Competitive Bid Margin]
[Absolute Rate].
Upon acceptance by the undersigned of any or all of the Competitive Bid
Advances offered by Lenders in response to this request, the undersigned shall
be deemed to affirm as of such date the representations and warranties made in
the Credit Agreement to the extent specified in Article V thereof. Capitalized
terms used herein have the meanings assigned to them in the Credit Agreement.
- ------------------
(1) Amount must be at least $5,000,000 and in integral multiples of $1,000,000
if in excess thereof.
(2) One, two, three or six months (Eurocurrency Auction) or at least 7 and up to
180 days (Absolute Rate Auction), subject to the provisions of the
definition of Interest Period.
<PAGE> 184
LANIER WORLDWIDE, INC.
By:
------------------------------------
Name:
Title:
2
<PAGE> 185
EXHIBIT K
TO
5-YEAR CREDIT AGREEMENT
Dated as of October 20, 1999
FORM OF INVITATION FOR COMPETITIVE BID QUOTES
---------------------------------------------
(Section 2.2 (C))
INVITATION FOR COMPETITIVE BID QUOTES
--------, ----
To: [Name of Bank]
Re: Invitation for Competitive Bid Quotes to
Lanier Worldwide, Inc. (the "Company")
Pursuant to SECTION 2.2 (C) of the 5-Year Credit Agreement dated as of October
20, 1999 (the "Credit Agreement") among the Company, the Subsidiary Borrowers
from time to time party thereto, the financial institutions parties thereto (the
"Lenders"), ABN AMRO Bank N.V., individually and as Administrative Agent,
Suntrust Bank, Atlanta, individually and as Syndication Agent, and Wachovia Bank
N.A., individually and as Documentation Agent, we are pleased on behalf of the
Company to invite you to submit Competitive Bid Quotes to the Company for the
following proposed Competitive Bid Advance(s):
Borrowing Date: _________ ____
Principal Amount Interest Period
- ---------------- ---------------
$
Such Competitive Bid Quotes should offer a [Competitive Bid Margin] [Absolute
Rate]. Your Competitive Bid Quote must comply with SECTION 2.2(D) of the Credit
Agreement and the foregoing terms in which the Competitive Bid Quote Request was
made. Capitalized terms used herein have the meanings assigned to them in the
Credit Agreement.
1
<PAGE> 186
Please respond to this invitation by no later than [2:00 p.m.] [10:00 a.m.] New
York time on __________,____.
ABN AMRO Bank N.V., as Administrative Agent
By:
----------------------------------------
Authorized Officer
2
<PAGE> 187
EXHIBIT L
TO
5-YEAR CREDIT AGREEMENT
Dated As of October 20, 1999
FORM OF COMPETITIVE BID QUOTE
-----------------------------
(Section 2.2 (D))
COMPETITIVE BID QUOTE
------------------------,-------
To: ABN AMRO Bank N.V.,
as administrative agent (the "Administrative Agent")
1325 Avenue of the Americas
9th Floor
New York, New York 10019
Attn: Linda Boardman
Telephone No.: (212) 314-1724
Facsimile No.: (212) 314-1712
Re: Competitive Bid Quote to Lanier Worldwide, Inc. (the
"Company")
In response to your invitation on behalf of the Company dated ________ ____, we
hereby make the following Competitive Bid Quote pursuant to SECTION 2.2(D) of
the Credit Agreement hereinafter referred to and on the following terms:
1. Quoting Bank: ______________
2. Person to contact at Quoting Bank: _____________
3. Borrowing Date: __________, ______(1)
4. We hereby offer to make Competitive Bid Loan(s) in the following
principal amounts, for the following Interest Periods and at the
following rates:
- --------------------------
(1) As specified in the related Invitation for Competitive Bid Quotes.
1
<PAGE> 188
Principal Interest [Competitive [Absolute Minimum
Amount(2) Period (3) Bid Margin(4)] Rate(5)] Amount(6)
$
We understand and agree that the offer(s) set forth above, subject to the
satisfaction of the applicable conditions set forth in the 5-Year Credit
Agreement dated as of October 20, 1999 among the Company, the Subsidiary
Borrowers from time to time party thereto, the financial institutions parties
thereto (the "Lenders"), Suntrust Bank, Atlanta, individually and as Syndication
Agent, and Wachovia Bank N.A., individually and as Documentation Agent, and
yourselves, as Administrative Agent on behalf of the Lenders, irrevocably
obligates us to make the Competitive Bid Loan(s) for which any offer(s) are
accepted, in whole or in part.
Very truly yours,
[NAME OF LENDER]
Dated:________ ____ By:
--------------------------------
Authorized Officer
- -----------------------
(2) Principal amount bid for each Interest Period may not exceed principal
amount requested. Bids must be made for $5,000,000 and in integral
multiples of $1,000,000 if in excess thereof.
(3) One, two, three or six months (Eurocurrency Auction) or at least 7 and
up to 180 days (Absolute Rate Auction), as specified in the related
Invitation for Competitive Bid Quotes.
(4) Competitive Bid Margin over or under the Eurocurrency Base Rate
determined for the applicable Interest Period. Specify percentage
(rounded to the nearest 1/100 of 1%) and specify whether "PLUS" or
"MINUS".
(5) Specify rate of interest per annum (rounded to the nearest 1/100 of
1%).
(6) Specify minimum amount which the Company may accept (see Section 2.1
(D)(ii)(d)).
2
<PAGE> 189
EXHIBIT M
TO
5-YEAR CREDIT AGREEMENT
Dated as October 20, 1999
FORM OF ASSUMPTION LETTER
-------------------------
----------, -----
To the Lenders party to the
Credit Agreement referred
to below
Ladies and Gentlemen:
Reference is made to the 5-Year Credit Agreement dated as of October
20, 1999 initially among Lanier Worldwide, Inc., the Subsidiary Borrowers from
time to time parties thereto, the Lenders parties thereto, ABN AMRO Bank N.V.,
individually and as Administrative Agent, Suntrust Bank, Atlanta, individually
and as Syndication Agent, and Wachovia Bank N.A., individually and Documentation
Agent (as amended and in effect from time to time, the "Credit Agreement").
Terms defined in the Credit Agreement and used herein are used herein as defined
therein.
The undersigned, _______ (the "Subsidiary"), a ______ [corporation],
wishes to become a "Subsidiary Borrower" under the Credit Agreement, and
accordingly hereby agrees that from the date hereof it shall become a
"Subsidiary Borrower" under the Credit Agreement and agrees that from the date
hereof and until the payment in full of the principal of and interest on all
Advances made to it under the Credit Agreement and performance of all of its
other obligations thereunder, and termination hereunder of its status as a
"Subsidiary Borrower" as provided below, it shall perform, comply with and be
bound by each of the provisions of the Credit Agreement which are stated to
apply to a "Borrower" or a "Subsidiary Borrower." Without limiting the
generality of the foregoing, the Subsidiary hereby represents and warrants that:
(i) each of the representations and warranties set forth in Sections 6.1, 6.2,
6.3, and 6.22 of the Credit Agreement is hereby made by such Subsidiary on and
as of the date hereof as if made on and as of the date hereof and as if such
Subsidiary is the "Company" and this Assumption Letter is the "Agreement"
referenced therein, and (ii) it has heretofore received a true and correct copy
of the Credit Agreement (including any modifications thereof or supplements or
waivers thereto) as in effect on the date hereof. In addition, the Subsidiary
hereby authorizes the Company to act on its behalf as and to the extent provided
for in Article II of the Credit Agreement in connection with the selection of
Types and Interest Periods for Advances and with the issuance of Letters of
Credit, and the conversion and continuation of Advances.
So long as the principal of and interest on all Advances and Letters of
Credit made to the Subsidiary under the Credit Agreement shall have been paid in
full and all other obligations of the Subsidiary under the Credit Agreement
shall have been fully performed, the Company may
1
<PAGE> 1
Exhibit 10.2C
[EXECUTION COPY]
$200,000,000
364-DAY CREDIT AGREEMENT
Dated as of October 20, 1999
among
LANIER WORLDWIDE, INC.,
as the Company,
the SUBSIDIARY BORROWERS,
THE INSTITUTIONS FROM TIME TO TIME
PARTIES HERETO AS LENDERS,
ABN AMRO BANK N.V.,
as Administrative Agent
SUNTRUST BANK, ATLANTA,
as Syndication Agent,
and
WACHOVIA BANK N.A.,
as Documentation Agent,
Arranged By
ABN AMRO BANK N.V.,
as Lead Arranger and Book Runner,
SUNTRUST EQUITABLE SECURITIES CORPORATION,
as Lead Arranger and Book Runner,
and
WACHOVIA SECURITIES, INC.,
as Co-Lead Arranger
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
SECTION PAGE
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<S> <C>
ARTICLE I: DEFINITIONS...........................................................................................2
1.1 CERTAIN DEFINED TERMS....................................................................................2
1.2 REFERENCES...............................................................................................2
ARTICLE II: REVOLVING LOAN FACILITIES............................................................................2
2.1 REVOLVING LOANS..........................................................................................2
2.2 (RESERVED)...............................................................................................2
2.3 (RESERVED)...............................................................................................2
2.4 RATE OPTIONS FOR ALL ADVANCES; MAXIMUM INTEREST PERIODS..................................................2
2.5 OPTIONAL PAYMENTS; MANDATORY PREPAYMENTS.................................................................2
2.6 REDUCTIONS IN COMMITMENTS................................................................................2
2.7 METHOD OF BORROWING......................................................................................2
2.8 METHOD OF SELECTING TYPES AND INTEREST PERIODS FOR ADVANCES..............................................2
2.9 MINIMUM AMOUNT OF EACH ADVANCE...........................................................................2
2.10 METHOD OF SELECTING TYPES AND INTEREST PERIODS FOR CONVERSION AND........................................2
2.11 DEFAULT RATE.............................................................................................2
2.12 METHOD OF PAYMENT........................................................................................2
2.13 EVIDENCE OF DEBT.........................................................................................2
2.14 TELEPHONIC NOTICES.......................................................................................2
2.15 PROMISE TO PAY; INTEREST AND FEES; INTEREST PAYMENT DATES; INTEREST AND..................................2
2.16 NOTIFICATION OF ADVANCES, INTEREST RATES, PREPAYMENTS AND AGGREGATE......................................2
2.17 LENDING INSTALLATIONS....................................................................................2
2.18 NON-RECEIPT OF FUNDS BY THE ADMINISTRATIVE AGENT.........................................................2
2.19 TERMINATION DATE.........................................................................................2
2.20 REPLACEMENT OF CERTAIN LENDERS...........................................................................2
2.21 ALTERNATE CURRENCY LOANS.................................................................................2
2.22 JUDGMENT CURRENCY........................................................................................2
2.23 (RESERVE)................................................................................................2
2.24 SUBSIDIARY BORROWERS.....................................................................................2
ARTICLE III: THE LETTER OF CREDIT FACILITY........................................................................2
ARTICLE IV: CHANGE IN CIRCUMSTANCES..............................................................................2
4.1 YIELD PROTECTION.........................................................................................2
4.2 CHANGES IN CAPITAL ADEQUACY REGULATIONS..................................................................2
4.3 AVAILABILITY OF TYPES OF ADVANCES........................................................................2
4.4 FUNDING INDEMNIFICATION..................................................................................2
4.5 LENDER STATEMENTS; SURVIVAL OF INDEMNITY.................................................................2
ARTICLE V: CONDITIONS PRECEDENT..................................................................................2
5.1 INITIAL ADVANCES.........................................................................................2
5.2 INITIAL ADVANCE TO EACH NEW SUBSIDIARY BORROWER..........................................................2
5.3 EACH ADVANCE AND EACH CONVERSION OR CONTINUATION OF AN ADVANCE...........................................2
ARTICLE VI: REPRESENTATIONS AND WARRANTIES.......................................................................2
6.1 ORGANIZATION; CORPORATE POWERS...........................................................................2
6.2 AUTHORIZATION AND VALIDITY...............................................................................2
6.3 NO CONFLICT; GOVERNMENT CONSENT..........................................................................2
6.4 FINANCIAL STATEMENTS.....................................................................................2
6.5 MATERIAL ADVERSE CHANGE..................................................................................2
</TABLE>
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<TABLE>
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6.6 TAXES....................................................................................................2
6.7 LITIGATION AND CONTINGENT OBLIGATIONS....................................................................2
6.8 SUBSIDIARIES.............................................................................................2
6.9 ERISA....................................................................................................2
6.10 ACCURACY OF INFORMATION..................................................................................2
6.11 REGULATION U.............................................................................................2
6.12 MATERIAL AGREEMENTS......................................................................................2
6.13 COMPLIANCE WITH LAWS.....................................................................................2
6.14 OWNERSHIP OF PROPERTIES..................................................................................2
6.15 STATUTORY INDEBTEDNESS RESTRICTIONS......................................................................2
6.16 ENVIRONMENTAL MATTERS....................................................................................2
6.17 INSURANCE................................................................................................2
6.18 LABOR MATTERS............................................................................................2
6.19 SOLVENCY.................................................................................................2
6.20 YEAR 2000 ISSUES.........................................................................................2
6.21 DEFAULT..................................................................................................2
6.22 REPRESENTATIONS AND WARRANTIES OF EACH SUBSIDIARY BORROWER...............................................2
6.23 FOREIGN EMPLOYEE BENEFIT MATTERS.........................................................................2
ARTICLE VII : COVENANTS..........................................................................................2
7.1 REPORTING................................................................................................2
7.2 AFFIRMATIVE COVENANTS....................................................................................2
7.3 NEGATIVE COVENANTS.......................................................................................2
7.4 FINANCIAL COVENANTS......................................................................................2
ARTICLE VIII: DEFAULTS...........................................................................................2
8.1 DEFAULTS.................................................................................................2
ARTICLE IX: ACCELERATION, DEFAULTING LENDERS; WAIVERS, AMENDMENTS AND REMEDIES...................................2
9.1 TERMINATION OF REVOLVING LOAN COMMITMENTS; ACCELERATION..................................................2
9.2 AMENDMENTS...............................................................................................2
9.3 PRESERVATION OF RIGHTS...................................................................................2
ARTICLE X: GUARANTY..............................................................................................2
10.1 GUARANTY.................................................................................................2
10.2 WAIVERS..................................................................................................2
10.3 GUARANTY ABSOLUTE........................................................................................2
10.4 ACCELERATION.............................................................................................2
10.5 MARSHALING; REINSTATEMENT................................................................................2
10.6 SUBROGATION..............................................................................................2
10.7 TERMINATION DATE.........................................................................................2
ARTICLE XI: GENERAL PROVISIONS...................................................................................2
11.1 SURVIVAL OF REPRESENTATIONS..............................................................................2
11.2 GOVERNMENTAL REGULATION..................................................................................2
11.3 HEADINGS.................................................................................................2
11.4 ENTIRE AGREEMENT.........................................................................................2
11.5 SEVERAL OBLIGATIONS; BENEFITS OF THIS AGREEMENT..........................................................2
11.6 EXPENSES; INDEMNIFICATION................................................................................2
11.7 NUMBERS OF DOCUMENTS.....................................................................................2
11.8 ACCOUNTING...............................................................................................2
11.9 SEVERABILITY OF PROVISIONS...............................................................................2
11.10 NONLIABILITY OF LENDERS..................................................................................2
11.11 GOVERNING LAW............................................................................................2
11.12 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL..................................................2
</TABLE>
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<TABLE>
<S> <C>
11.13 OTHER TRANSACTIONS.......................................................................................2
ARTICLE XII: THE ADMINISTRATIVE AGENT............................................................................2
12.1 APPOINTMENT; NATURE OF RELATIONSHIP......................................................................2
12.2 POWERS...................................................................................................2
12.3 GENERAL IMMUNITY.........................................................................................2
12.4 NO RESPONSIBILITY FOR LOANS, CREDITWORTHINESS, RECITALS, ETC.............................................2
12.5 ACTION ON INSTRUCTIONS OF LENDERS........................................................................2
12.6 EMPLOYMENT OF AGENTS AND COUNSEL.........................................................................2
12.7 RELIANCE ON DOCUMENTS; COUNSEL...........................................................................2
12.8 THE ADMINISTRATIVE AGENT'S, ISSUING BANKS', SWING LINE BANKS' AND ALTERNATE CURRENCY BANKS' REIMBURSEMENT
AND INDEMNIFICATION............................................................................................2
12.9 RIGHTS AS A LENDER.......................................................................................2
12.10 LENDER CREDIT DECISION...................................................................................2
12.11 SUCCESSOR ADMINISTRATIVE AGENT...........................................................................2
12.12 NO DUTIES IMPOSED UPON SYNDICATION AGENT, DOCUMENTATION AGENT OR LEAD ARRANGERS..........................2
12.13 COLLATERAL AGENT.........................................................................................2
ARTICLE XIII: SETOFF; RATABLE PAYMENTS...........................................................................2
13.1 SETOFF...................................................................................................2
13.2 RATABLE PAYMENTS.........................................................................................2
13.3 APPLICATION OF PAYMENTS..................................................................................2
13.4 RELATIONS AMONG LENDERS..................................................................................2
ARTICLE XIV: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS...................................................2
14.1 SUCCESSORS AND ASSIGNS...................................................................................2
14.2 PARTICIPATIONS...........................................................................................2
14.3 ASSIGNMENTS..............................................................................................2
14.4 CONFIDENTIALITY..........................................................................................2
14.5 DISSEMINATION OF INFORMATION.............................................................................2
ARTICLE XV: NOTICES..............................................................................................2
15.1 GIVING NOTICE............................................................................................2
15.2 CHANGE OF ADDRESS........................................................................................2
15.3 AUTHORITY OF COMPANY.....................................................................................2
ARTICLE XVI: COUNTERPARTS........................................................................................2
</TABLE>
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<PAGE> 5
EXHIBITS AND SCHEDULES
EXHIBITS
--------
EXHIBIT A -- Loan Commitments
(Definitions)
EXHIBIT B -- Form of Borrowing/Conversion/Continuation
Notice (Section 2.3 and Section 2.8 and
Section 2.10)
EXHIBIT C -- [Reserved]
EXHIBIT D -- Form of Assignment and Acceptance Agreement
(Sections 2.20 and 14.3)
EXHIBIT E -- Form of Officer's Certificate
(Section 7.1(A)(iii))
EXHIBIT F -- Form of Compliance Certificate
(Section 7.1(A)(iii))
EXHIBIT G-1 -- Form of Guaranty
(Definitions)
EXHIBIT G-2 -- Form of Subordination Agreement
(Definitions)
EXHIBIT H -- Form of Revolving Loan Note (If Requested)
EXHIBIT I -- Form of Assumption Letter
SCHEDULES
---------
Schedule 1.1.1 -- Permitted Existing Contingent Obligations
(Definitions)
Schedule 1.1.2 -- Permitted Existing Indebtedness
(Definitions)
Schedule 1.1.3 -- Permitted Existing Liens (Definitions)
Schedule 6.8 -- Subsidiaries (Section 6.8)
Schedule 7.2 -- Subsidiaries Subject to Stock Pledge
(Section 7.2(N))
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<PAGE> 6
364-DAY CREDIT AGREEMENT
This 364-DAY CREDIT AGREEMENT dated as of October 20, 1999 is entered
into by and among, LANIER WORLDWIDE, INC., a Delaware corporation (the
"COMPANY"), one or more Subsidiaries of the Company (whether now existing or
hereafter formed, collectively referred to herein as the "SUBSIDIARY
BORROWERS"), the institutions from time to time parties hereto as Lenders,
whether by execution of this Agreement or an Assignment Agreement pursuant to
SECTION 14.3, ABN AMRO BANK N.V. in its capacity as administrative agent (the
"ADMINISTRATIVE Agent") for itself and the other Lenders, SUNTRUST BANK,
ATLANTA, as Syndication Agent (the "SYNDICATION AGENT") and WACHOVIA BANK N.A.,
as Documentation Agent (the "DOCUMENTATION AGENT"). The parties hereto agree as
follows:
ARTICLE I: DEFINITIONS
1.1 CERTAIN DEFINED TERMS. In addition to the terms defined above, the
following terms used in this Agreement shall have the following meanings,
applicable both to the singular and the plural forms of the terms defined.
As used in this Agreement:
"ABN" means ABN AMRO Bank N.V., in its individual capacity, and its
successors.
"ACQUISITION" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Company or any of its Subsidiaries (i) acquires any going business or all or
substantially all of the assets of any firm, corporation or division thereof,
whether through purchase of assets, merger or otherwise or (ii) directly or
indirectly acquires (in one transaction or as the most recent transaction in a
series of transactions) at least a majority (in number of votes) of the
securities of a corporation which have ordinary voting power for the election of
directors (other than securities having such power only by reason of the
happening of a contingency) or a majority (by percentage of voting power) of the
outstanding equity interests of another Person.
"ADMINISTRATIVE AGENT" means ABN in its capacity as administrative
agent for itself and the Lenders pursuant to ARTICLE XII hereof and any
successor Administrative Agent appointed pursuant to ARTICLE XII hereof.
"ADMINISTRATIVE AGENT FEE LETTER" means that certain fee letter between
the Company and the Administrative Agent, dated as of October 7, 1999.
"ADVANCE" means a borrowing hereunder consisting of the aggregate
amount of the several Loans made by some or all of the Lenders to the applicable
Borrower of the same Type and, in the case of Eurocurrency Rate Advances, for
the same Interest Period.
"AFFECTED LENDER" is defined in SECTION 2.20 hereof.
"AFFILIATE" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control
<PAGE> 7
another Person if the controlling Person is the "beneficial owner" (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934) of greater than five
percent (5%) or more of any class of voting securities (or other voting
interests) of the controlled Person or possesses, directly or indirectly, the
power to direct or cause the direction of the management or policies of the
controlled Person, whether through ownership of Capital Stock, by contract or
otherwise.
"AGENTS" means each of the Administrative Agent, the Syndication Agent
and the Documentation Agent.
"AGGREGATE REVOLVING LOAN COMMITMENT" means the aggregate of the
Revolving Loan Commitments of all the Lenders, as may be adjusted from time to
time pursuant to the terms hereof. The initial Aggregate Revolving Loan
Commitment is Two Hundred Million and 00/100 Dollars ($200,000,000.00).
"AGREEMENT" means this 364-Day Credit Agreement, as it may be amended,
restated or otherwise modified and in effect from time to time.
"AGREEMENT ACCOUNTING PRINCIPLES" means generally accepted accounting
principles as in effect in the United States as of the date of this Agreement,
applied in a manner consistent with that used in preparing the financial
statements of the Company included in the Form 10 and referred to in SECTION 6.4
hereof.
"ALTERNATE BASE RATE" means, for any day, a fluctuating rate of
interest per annum equal to the higher of (i) the Prime Rate for such day and
(ii) the sum of (a) the Federal Funds Effective Rate for such day and (b) one
half percent (.50%) per annum.
"APPLICABLE COMMITMENT FEE PERCENTAGE" means, as at any date of
determination, the rate per annum then applicable in the determination of the
amount payable under SECTION 2.15(C)(i) hereof determined in accordance with the
provisions of SECTION 2.15(D)(ii) hereof.
"APPLICABLE EUROCURRENCY MARGIN" means, as at any date of
determination, the rate per annum then applicable to Eurocurrency Rate Loans
determined in accordance with the provisions of SECTION 2.15(D)(ii) hereof.
"APPLICABLE FLOATING RATE MARGIN" means, as at any date of
determination, the rate per annum then applicable to Floating Rate Loans
determined in accordance with the provisions of SECTION 2.15(D)(ii) hereof.
"APPROVED FUND" means, with respect to any Lender that is a fund or
commingled investment vehicle that invests in commercial loans, any other fund
that invests in commercial loans and is managed or advised by the same
investment advisor as such Lender or by an Affiliate of such investment advisor.
"ASSET SALE" means, with respect to any Person, the sale, lease,
conveyance, disposition or other transfer by such Person of any of its assets
(including by way of a sale-leaseback transaction) to any Person other than the
Company or any of its wholly-owned Subsidiaries other than (i) the sale,
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<PAGE> 8
rental or lease of Inventory in the ordinary course of business (including sales
of leased Inventory and rental Inventory), (ii) the sale or other disposition of
any obsolete, excess, damaged or worn-out Equipment disposed of in the ordinary
course of business, (iii) the sale or liquidation of Cash Equivalents and (iv)
the sale-leaseback of Equipment used in the facilities management business of
the Company and its Subsidiaries, to the extent such Equipment has an aggregate
net depreciated book value of no more than $25,000,000 at any one time.
"ASSIGNMENT AGREEMENT" means an assignment and acceptance agreement
entered into in connection with an assignment pursuant to SECTION 14.3 hereof in
substantially the form of EXHIBIT D.
"ASSUMPTION LETTER" means a letter of a Subsidiary of the Company
addressed to the Lenders in substantially the form of EXHIBIT I hereto pursuant
to which such Subsidiary agrees to become a Subsidiary Borrower and agrees to be
bound by the terms and conditions hereof.
"AUTHORIZED OFFICER" means any of the Chairman of the Board, the
President, the Treasurer, any Vice President or the Chief Financial Officer of
the Company, acting singly.
"BENEFIT PLAN" means a defined benefit plan as defined in Section 3(35)
of ERISA (other than a Multiemployer Plan or a Foreign Employee Benefit Plan)
covered by Title IV of ERISA and in respect of which the Company or any other
member of the Controlled Group is, or within the immediately preceding six (6)
years was, an "employer" as defined in Section 3(5) of ERISA.
"BORROWER" means, as applicable, any of the Company and the Subsidiary
Borrowers, together with their respective successors and assigns; and
"BORROWERS" shall mean, collectively, the Company and the Subsidiary Borrowers.
"BORROWING DATE" means a date on which a Loan is made hereunder.
"BORROWING/CONVERSION/CONTINUATION NOTICE" is defined in SECTION 2.8
hereof.
"BUSINESS DAY" means (i) with respect to any borrowing, payment or rate
selection of Loans bearing interest at the Eurocurrency Rate, a day (other than
a Saturday or Sunday) on which banks are open for business in Chicago, Illinois
and New York, New York, and (ii) for all other purposes a day (other than a
Saturday or Sunday) on which banks are open for business in Chicago, Illinois
and New York, New York.
"CAPITAL EXPENDITURES" means, without duplication, any expenditures for
any purchase or other acquisition of any asset which would be classified as a
fixed or capital asset on a consolidated balance sheet of the Borrower and its
Subsidiaries prepared in accordance with Agreement Accounting Principles
excluding (i) the cost of assets acquired with Capitalized Lease Obligations,
(ii) expenditures of insurance proceeds to rebuild or replace any asset after a
casualty loss and (iii) leasehold improvement expenditures for which the
Borrower or a Subsidiary is reimbursed promptly by the lessor.
-3-
<PAGE> 9
"CAPITAL STOCK" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person;
PROVIDED, HOWEVER, that "Capital Stock" shall not include any debt securities
convertible into equity securities prior to such conversion.
"CAPITALIZED LEASE" of a Person means any lease of property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.
"CAPITALIZED LEASE OBLIGATIONS" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be capitalized
on a balance sheet of such Person prepared in accordance with Agreement
Accounting Principles.
"CASH EQUIVALENTS" means (i) marketable direct obligations issued or
unconditionally guaranteed by the government of the United States and backed by
the full faith and credit of the United States government; (ii) domestic and
Eurocurrency certificates of deposit and time deposits, bankers' acceptances and
floating rate certificates of deposit issued by any commercial bank organized
under the laws of the United States, any state thereof, the District of
Columbia, any foreign bank, or its branches or agencies, the long-term
indebtedness of which institution at the time of acquisition is rated A- (or
better) by Standard & Poor's Ratings Group or A3 (or better) by Moody's
Investors Services, Inc., and which certificates of deposit and time deposits
are fully protected against currency fluctuations for any such deposits with a
term of more than ninety (90) days; (iii) shares of money market, mutual or
similar funds having assets in excess of $100,000,000 and the investments of
which are limited to (x) investment grade securities (i.e., securities rated at
least Baa by Moody's Investors Service, Inc. or at least BBB by Standard &
Poor's Ratings Group) and (y) commercial paper of United States and foreign
banks and bank holding companies and their subsidiaries and United States and
foreign finance, commercial industrial or utility companies which, at the time
of acquisition, are rated A-1 (or better) by Standard & Poor's Ratings Group or
P-1 (or better) by Moody's Investors Services, Inc. (all such institutions
being, "QUALIFIED INSTITUTIONS"); and (iv) commercial paper of Qualified
Institutions; PROVIDED that the maturities of such Cash Equivalents shall not
exceed three hundred sixty-five (365) days from the date of acquisition thereof.
"CHANGE" is defined in SECTION 4.2 hereof.
"CHANGE OF CONTROL" means an event or series of events by which:
(a) any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act of 1934), becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act of 1934, provided that a person shall be
deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time),
directly or indirectly, of twenty-five percent (25%) or more
of the combined
-4-
<PAGE> 10
voting power of the Company's outstanding Capital Stock
ordinarily having the right to vote at an election of
directors; or
(b) the majority of the board of directors of the Company fails to
consist of Continuing Directors; or
(c) the Company consolidates with or merges into another
corporation or conveys, transfers or leases all or
substantially all of its property to any Person, or any
corporation consolidates with or merges into the Company, in
either event pursuant to a transaction in which the
outstanding Capital Stock of the Company is reclassified or
changed into or exchanged for cash, securities or other
property.
"CLOSING DATE" means the date upon which the applicable conditions
precedent set forth in Article V have been satisfied and the initial Loans
hereunder made, which shall be on or after November 4, 1999.
"CODE" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"COLLATERAL AGENT" means ABN in its capacity as collateral agent for
the Lenders and the "Lenders" under the 364-Day Agreement.
"COMMISSION" means the Securities and Exchange Commission of the United
States of America and any Person succeeding to the functions thereof.
"COMPANY" means Lanier Worldwide, Inc., a Delaware corporation,
together with its successors and assigns, including a debtor-in-possession on
behalf of the Company.
"CONSOLIDATED NET ASSETS" means the total assets of the Company and its
Subsidiaries on a consolidated basis (determined in accordance with Agreement
Accounting Principles), but excluding therefrom all goodwill and other
intangible assets under Agreement Accounting Principles.
"CONSOLIDATED NET SALES" means all product and supply sales and
rentals, facilities management revenues and service income (net of returns and
allowances and excluding financial income) shown on a consolidated income
statement of the Company and its Subsidiaries, prepared in accordance with
Agreement Accounting Principles.
"CONSOLIDATED NET WORTH" means, at a particular date, all amounts which
would be included under shareholders' equity on the consolidated balance sheet
for the Company and its consolidated Subsidiaries, in each case as determined in
accordance with Agreement Accounting Principles; excluding the effects, whether
positive or negative, of foreign exchange translation adjustments after the
Closing Date.
"CONTAMINANT" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos, polychlorinated biphenyls ("PCBS"), or any
constituent of any such substance or waste, and includes but is not limited to
these terms as defined in Environmental, Health or Safety Requirements of Law.
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<PAGE> 11
"CONTINGENT OBLIGATION", as applied to any Person, means any
Contractual Obligation, contingent or otherwise, of that Person with respect to
any Indebtedness of another or other obligation or liability of another,
including, without limitation, any such Indebtedness, obligation or liability of
another directly or indirectly guaranteed, endorsed (otherwise than for
collection or deposit in the ordinary course of business), co-made or discounted
or sold with recourse by that Person, or in respect of which that Person is
otherwise directly or indirectly liable, including Contractual Obligations
(contingent or otherwise) arising through any agreement to purchase, repurchase,
or otherwise acquire such Indebtedness, obligation or liability or any security
therefor, or to provide funds for the payment or discharge thereof (whether in
the form of loans, advances, stock purchases, capital contributions or
otherwise), or to maintain solvency, assets, level of income, or other financial
condition, or to make payment other than for value received. The amount of any
Contingent Obligation shall be equal to the portion of the obligation so
guaranteed or otherwise supported, in the case of known recurring obligations,
and the maximum reasonably anticipated liability in respect of the portion of
the obligation so guaranteed or otherwise supported assuming such Person is
required to perform thereunder, in all other cases.
"CONTINUING DIRECTOR" means, with respect to any Person as of any date
of determination, any member of the board of directors of such Person who (a)
was a member of such board of directors on the Closing Date or, with respect to
the Company, was identified in the Form 10 as a Person who would become a member
of such board of directors in connection with the Spin-off, or (b) was nominated
for election or elected to such board of directors with the approval of the
Continuing Directors who were members of such board at the time of such
nomination or election.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any provision
of any equity or debt securities issued by that Person or any indenture,
mortgage, deed of trust, security agreement, pledge agreement, guaranty,
contract, undertaking, agreement or instrument, in any case in writing, to which
that Person is a party or by which it or any of its properties is bound, or to
which it or any of its properties is subject.
"CONTROLLED GROUP" means the group consisting of (i) any corporation
which is a member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Code) as the Company; (ii) a partnership or
other trade or business (whether or not incorporated) which is under common
control (within the meaning of Section 414(c) of the Code) with the Company; and
(iii) a member of the same affiliated service group (within the meaning of
Section 414(m) of the Code) as the Company, in each case ((i), (ii) or (iii))
giving effect to the consummation of the transactions contemplated by the Loan
Documents and the Spin-off Materials.
"CUSTOMARY PERMITTED LIENS" means:
(i) Liens (other than Environmental Liens and Liens in
favor of the IRS or the PBGC) with respect to the payment of taxes,
assessments or governmental charges in all cases which are not yet due
or (if foreclosure, distraint, sale or other similar proceedings shall
not have been commenced or any such proceeding after being commenced is
stayed) which are being contested in good faith by appropriate
proceedings properly instituted and
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<PAGE> 12
diligently conducted and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with
Agreement Accounting Principles;
(ii) Statutory Liens of landlords and Liens of suppliers,
mechanics, carriers, materialmen, warehousemen, service providers or
workmen and other similar Liens imposed by law created in the ordinary
course of business for amounts not more than sixty (60) days past due
or which thereafter can be paid without penalty or which are being
contested in good faith by appropriate proceedings properly instituted
and diligently conducted and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with
Agreement Accounting Principles;
(iii) Liens (other than Environmental Liens and Liens in
favor of the IRS or the PBGC) incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance or other types of social security benefits;
PROVIDED that all such Liens do not in the aggregate materially detract
from the value of the Company's or its Subsidiaries' assets or property
taken as a whole or materially impair the use thereof in the operation
of their businesses taken as a whole;
(iv) Liens arising with respect to zoning restrictions,
easements, encroachments, licenses, reservations, covenants,
rights-of-way, utility easements, building restrictions and other
similar charges, restrictions or encumbrances on the use of real
property which do not in any case materially detract from the value of
the property subject thereto or materially interfere with the ordinary
use or occupancy of the real property or with the ordinary conduct of
the business of the Company or any of its Subsidiaries;
(v) Any interest or title of the lessor in the property
subject to any operating lease entered into by the Company or any of
its Subsidiaries in the ordinary course of business; and
(vi) Liens securing the performance of bids, tenders,
contracts, surety and appeal bonds, incurred in the ordinary course of
business, not to exceed at any time $10,000,000 in the aggregate.
"DEFAULT" means an event described in ARTICLE VIII hereof.
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
date that is ninety-one (91) days after the Revolving Loan Termination Date.
"DIVIDEND" means the cash dividend of approximately $550,000,000 to be
paid by the Company to Harris in connection with the Spin-off.
"DOCUMENTATION AGENT" means Wachovia Bank N.A., in its capacity as
documentation agent for the loan transaction evidenced by this Agreement,
together with its successors and assigns.
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<PAGE> 13
"DOL" means the United States Department of Labor and any Person
succeeding to the functions thereof.
"DOLLAR" and "$" means dollars in the lawful currency of the United
States of America.
"DOMESTIC SUBSIDIARY" means a Subsidiary of the Company organized under
the laws of a jurisdiction located in the United States of America (excluding
the Commonwealth of Puerto Rico).
"EBITDA" means, for any period, on a consolidated basis for the Company
and its Subsidiaries, the sum of the amounts for such period, without
duplication, of (i) Net Income, PLUS (ii) Interest Expense to the extent
deducted in computing Net Income, PLUS (iii) charges against income for foreign,
federal, state and local taxes to the extent deducted in computing Net Income,
PLUS (iv) depreciation expense to the extent deducted in computing Net Income,
PLUS (v) amortization expense, including, without limitation, amortization of
goodwill and other intangible assets to the extent deducted in computing Net
Income, PLUS (vi) other extraordinary non-cash charges to the extent deducted in
computing Net Income, MINUS (vii) other extraordinary non-cash credits to the
extent added in computing Net Income, PLUS (viii) nonrecurring after-tax losses
(or MINUS nonrecurring after-tax gains); PROVIDED that, with respect to fiscal
quarters ending on or before December 31, 1999, EBITDA shall be adjusted (x) to
add back all professional fees and expenses incurred by the Company in
connection with the Spin-off and this Agreement (not to exceed $15,000,000), to
the extent deducted in computing Net Income; (y) to add back the special charges
incurred by the Company for the fiscal quarter ended July 2, 1999, totaling
$18,700,000, and deducted in computing Net Income; and (z) to add back any
management fee charged by Harris to the Company, to the extent deducted in
computing Net Income, and to subtract the sum of $1,750,000 for each such fiscal
quarter (pro rated for the fiscal year ending December 31, 1999), representing
the PRO FORMA legal, audit and other similar expenses that the Company is
expected to incur after the Spin-off, all on the basis set forth in the PRO
FORMA adjustments described in Note (A) of the Unaudited Pro Forma Consolidated
Income Statement of the Company for the Fiscal Year ended July 2, 1999 set forth
in the Form 10.
"EBITDAR" means, for any period, on a consolidated basis for the
Company and its Subsidiaries, the sum of the amounts for such period, without
duplication, of (i) EBITDA, PLUS Rentals to the extent deducted in computing Net
Income.
"ENVIRONMENTAL, HEALTH OR SAFETY REQUIREMENTS OF LAW" means all
Requirements of Law derived from or relating to foreign, federal, state and
local laws or regulations relating to or addressing pollution or protection of
the environment, or protection of worker health or safety, including, but not
limited to, the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. ss. 9601 ET SEQ., the Occupational Safety and Health Act of 1970,
29 U.S.C. ss. 651 ET SEQ., and the Resource Conservation and Recovery Act of
1976, 42 U.S.C. ss. 6901 ET SEQ., in each case including any amendments thereto,
any successor statutes, and any regulations or guidance promulgated thereunder,
and any state or local equivalent thereof.
"ENVIRONMENTAL LIEN" means a lien in favor of any Governmental
Authority for (a) any liability under Environmental, Health or Safety
Requirements of Law, or (b) damages arising from,
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<PAGE> 14
or costs incurred by such Governmental Authority in response to, a Release or
threatened Release of a Contaminant into the environment.
"EQUIPMENT" means all of the Company's and its Subsidiaries' present
and future (i) equipment, including, without limitation, machinery,
manufacturing, distribution, selling, data processing and office equipment,
assembly systems, tools, molds, dies, fixtures, appliances, furniture,
furnishings, vehicles, vessels, aircraft, aircraft engines, and trade fixtures,
(ii) other tangible personal property (other than the Company's or its
Subsidiaries' Inventory), and (iii) any and all accessions, parts and
appurtenances attached to any of the foregoing or used in connection therewith,
and any substitutions therefor and replacements, products and proceeds thereof.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock). Equity Interests will not
include any Incentive Arrangements or obligations or payments thereunder.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time including (unless the context otherwise requires) any
rules or regulations promulgated thereunder.
"EUROCURRENCY BASE RATE" means, with respect to a Eurocurrency Rate
Loan or for any specified Interest Period, either (i) the rate of interest per
annum equal to the rate for deposits in Dollars in the approximate amount of the
Pro Rata Share of the Administrative Agent of such Eurocurrency Rate Advance
with a maturity approximately equal to such Interest Period which appears on
Telerate Page 3750 or, if there is more than one such rate, the average of such
rates rounded to the nearest 1/100 of 1%, as of 11:00 a.m. (London time) two (2)
Business Days prior to the first day of such Interest Period or (ii) if no such
rate of interest appears on Telerate Page 3740 or Telerate Page 3750, as
applicable, for any specified Interest Period, the rate at which deposits in
Dollars are offered by the Administrative Agent to first-class banks in the
London interbank market at approximately 11:00 a.m. (London time) two (2)
Business Days prior to the first day of such Interest Period, in the approximate
amount of the Pro Rata Share of the Administrative Agent of such Eurocurrency
Rate Loan, and having a maturity approximately equal to such Interest Period.
The term "Telerate Page 3750" means the display designated as "Page 3750" on the
Associated Press-Dow Jones Telerate Service (or such other page as may replace
Page 3750, as applicable, on the Associated Press-Dow Jones Telerate Service or
such other service as may be nominated by the British Bankers' Association as
the information vendor for the purpose of displaying British Bankers'
Association interest rate settlement rates). Any Eurocurrency Base Rate
determined on the basis of the rate displayed on Telerate Page 3750 in
accordance with the foregoing provisions of this subparagraph shall be subject
to corrections, if any, made in such rate and displayed by the Associated
Press-Dow Jones Telerate Service within one hour of the time when such rate is
first displayed by such service.
"EUROCURRENCY RATE" means, with respect to a Eurocurrency Rate Loan for
the relevant Interest Period, the Eurocurrency Base Rate applicable to such
Interest Period PLUS the then Applicable Eurocurrency Margin, changing as and
when the Applicable Eurocurrency Margin changes.
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<PAGE> 15
"EUROCURRENCY RATE ADVANCE" means an Advance which bears interest at
the Eurocurrency Rate.
"EUROCURRENCY RATE LOAN" means a Loan made by a Lender pursuant to
SECTION 2.1, which bears interest at the Eurocurrency Rate.
"FACILITY TERMINATION DATE" shall mean the date on which all of the
Termination Conditions have been satisfied.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, an interest rate per
annum 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 for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 11:00 a.m. (New
York time) on such day on such transactions received by the Administrative Agent
from three Federal funds brokers of recognized standing selected by the
Administrative Agent in its sole discretion.
"FEE LETTERS" means, collectively, the Administrative Agent Fee Letter
and that certain fee letter, dated as of October 7, 1999, by and among the
Company, the Lead Arrangers and the Agents and the related letter dated October
20, 1999 from the Administrative Agent to the Company.
"FIXED-RATE ADVANCE" means an Advance which bears interest at the
Eurocurrency Rate.
"5-YEAR CREDIT AGREEMENT" means that certain 5-Year Credit Agreement,
dated as of October 20, 1999 among the Company, the subsidiary borrowers from
time to time parties thereto, the Agents and the financial institutions from
time to time parties thereto as lenders, as the same may be amended, restated,
supplemented or otherwise modified from time to time.
"FIXED-RATE LOANS" means, collectively, the Eurocurrency Rate Loans.
"FLOATING RATE" means, for any day for any Loan, a rate per annum equal
to the Alternate Base Rate for such day, changing when and as the Alternate Base
Rate changes, PLUS the then Applicable Floating Rate Margin.
"FLOATING RATE ADVANCE" means an Advance which bears interest at the
Floating Rate.
"FLOATING RATE LOAN" means a Loan, or portion thereof, which bears
interest at the Floating Rate.
"FOREIGN EMPLOYEE BENEFIT PLAN" means any employee benefit plan as
defined in Section 3(3) of ERISA which is maintained or contributed to for the
benefit of the employees of the Company, any of its Subsidiaries or any members
of its Controlled Group and is not covered by ERISA pursuant to ERISA Section
4(b)(4).
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<PAGE> 16
"FOREIGN SUBSIDIARY" means a Subsidiary of the Company which is not a
Domestic Subsidiary.
"FOREIGN PENSION PLAN" means any employee benefit plan as described in
Section 3(3) of ERISA for which the Company or any member of its Controlled
Group is a sponsor or administrator and which (i) is maintained or contributed
to for the benefit of employees of the Company, any of its Subsidiaries or any
member of its Controlled Group, (ii) is not covered by ERISA pursuant to Section
4(b)(4) of ERISA, and (iii) under applicable local law, is required to be funded
through a trust or other funding vehicle.
"FORM 10" means the Form 10/A (Amendment No. 3) Registration Statement
filed by the Company with the Commission on October 20, 1999 regarding the
Spin-off.
"GOVERNMENTAL ACTS" is defined in SECTION 3.10(A) hereof.
"GOVERNMENTAL AUTHORITY" means any nation or government, any federal,
state, local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative authority or
functions of or pertaining to government, including any authority or other
quasi-governmental entity established to perform any of such functions.
"GUARANTEED OBLIGATIONS" is defined in SECTION 10.1 hereof.
"GUARANTOR" means each Subsidiary of the Company that from time to time
is party to a Guaranty.
"GUARANTY" means each of (i) that certain Guaranty (and any and all
supplements thereto) executed from time to time by each Subsidiary Borrower that
is a Domestic Subsidiary and each other Domestic Subsidiary of the Company as
required pursuant to SECTION 7.2(K) in favor of the Administrative Agent for the
benefit of itself and the Holders of Obligations, in substantially the form of
EXHIBIT G-1 attached hereto, and (ii) the guaranty by the Company of all of the
Obligations of the Subsidiary Borrowers pursuant to this Agreement, as amended,
restated, supplemented or otherwise modified from time to time.
"HARRIS" means Harris Corporation, a Delaware corporation, and its
successors and assigns.
"HEDGING AGREEMENTS" is defined in SECTION 7.3(P) hereof.
"HEDGING OBLIGATIONS" of a Person means any and all obligations of such
Person, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, commodity prices,
exchange rates or forward rates applicable to such party's assets, liabilities
or exchange transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate
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<PAGE> 17
options, puts and warrants, and (ii) any and all cancellations, buy backs,
reversals, terminations or assignments of any of the foregoing.
"HOLDERS OF OBLIGATIONS" means the holders of the Obligations from time
to time and shall include (i) each Lender in respect of its Loans, (ii) the
Agents and the Lenders in respect of all other present and future obligations
and liabilities of the Company or any of its Subsidiaries of every type and
description arising under or in connection with this Agreement or any other Loan
Document, (iii) each Indemnitee in respect of the obligations and liabilities of
the Company or any of its Subsidiaries to such Person hereunder or under the
other Loan Documents, and (iv) their respective successors, transferees and
assigns.
"INCENTIVE ARRANGEMENTS" means any stock appreciation rights, "phantom"
stock plans, employment agreements, non-competition agreements, subscription and
stockholders agreements and other incentive and bonus plans and similar
arrangements made in connection with the retention of executives, officers or
employees of the Company and its Subsidiaries.
"INDEBTEDNESS" of a Person means, without duplication, such Person's
(i) obligations for borrowed money, including, without limitation, subordinated
indebtedness, (ii) obligations representing the deferred purchase price of
property or services (other than accounts payable arising in the ordinary course
of such person's business payable on terms customary in the trade), (iii)
obligations, whether or not assumed, secured by liens on or payable out of the
proceeds or production from property now or hereafter owned or acquired by such
Person, (iv) obligations which are evidenced by notes, acceptances, or other
similar instruments, (v) Capitalized Lease Obligations, (vi) Hedging
Obligations, (vii) Contingent Obligations, (viii) actual and contingent
reimbursement obligations in respect of letters of credit, (ix) outstanding
principal balances (representing securitized but unliquidated assets) under
asset securitization agreements (including, without limitation, the outstanding
principal balance of Receivables under Receivables transactions) and (x) the
implied debt component of synthetic leases of which such Person is lessee or any
other off-balance sheet financing arrangements (including, without limitation,
any such arrangements giving rise to any Off-Balance Sheet Liabilities).
"INTEREST EXPENSE" means, for any period, the total interest expense of
the Company and its consolidated Subsidiaries, whether paid or accrued
(including the interest component of Capitalized Leases, commitment fees and
fees for stand-by letters of credit), all as determined in conformity with
Agreement Accounting Principles.
"INTEREST PERIOD" means, with respect to a Eurocurrency Rate Loan, a
period of one (1), two (2), three (3) or six (6) months, commencing on a
Business Day selected by the applicable Borrower on which a Eurocurrency Rate
Advance is made to such Borrower pursuant to this Agreement. Such Interest
Period above shall end on (but exclude) the day which corresponds numerically to
such date one, two, three or six months thereafter; PROVIDED, HOWEVER, that if
there is no such numerically corresponding day in such next, second, third or
sixth succeeding month, such Interest Period shall end on the last Business Day
of such next, second, third or sixth succeeding month. If an Interest Period
would otherwise end on a day which is not a Business Day, such Interest Period
shall end on the next succeeding Business Day, PROVIDED, HOWEVER, that if said
next succeeding Business Day
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<PAGE> 18
falls in a new calendar month, such Interest Period shall end on the immediately
preceding Business Day.
"INVENTORY" shall mean any and all goods, including, without
limitation, goods in transit, wheresoever located, whether now owned or
hereafter acquired by the Company or any of its Subsidiaries, which are held for
sale, rental or lease, furnished under any contract of service or held as raw
materials, work in process or supplies, and all materials used or consumed in
the business of the Company or any of its Subsidiaries.
"INVESTMENT" means, with respect to any Person, (i) any purchase or
other acquisition by that Person of any Indebtedness, Equity Interests or other
securities, or of a beneficial interest in any Indebtedness, Equity Interests or
other securities, issued by any other Person, (ii) any purchase by that Person
of all or substantially all of the assets of a business (whether of a division,
branch, unit operation, or otherwise) conducted by another Person, and (iii) any
loan, advance (other than deposits with financial institutions available for
withdrawal on demand, prepaid expenses, accounts receivable, advances to
employees and similar items made or incurred in the ordinary course of business)
or capital contribution by that Person to any other Person, including all
Indebtedness to such Person arising from a sale of property by such Person other
than in the ordinary course of its business.
"IRS" means the Internal Revenue Service and any Person succeeding to
the functions thereof.
"LEAD ARRANGERS" means each of ABN, as Lead Arranger, SunTrust
Equitable Securities Corporation, as Lead Arranger, and Wachovia Securities,
Inc., as Co-Lead Arranger, in their respective capacities as arrangers for the
loan transaction evidenced by this Agreement.
"LENDERS" means the lending institutions listed on the signature pages
of this Agreement.
"LENDING INSTALLATION" means, with respect to a Lender or the
Administrative Agent, any office, branch, subsidiary or Affiliate of such Lender
or the Administrative Agent.
"LEVERAGE RATIO" means, as of any date of determination, the ratio of
(a) Total Indebtedness on such date of determination to (b) EBITDA for the
period of four fiscal quarters ending on the fiscal quarter end occurring on
such date of determination.
"LIEN" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, the interest of a vendor or lessor
under any conditional sale, Capitalized Lease or other title retention
agreement).
"LOAN(S)" means, (i) in the case of any Lender, such Lender's portion
of any Advance made pursuant to SECTION 2.1 hereof, and (ii) collectively, all
Revolving Loans.
"LOAN ACCOUNT" is defined in SECTION 2.13(A) hereof.
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<PAGE> 19
"LOAN DOCUMENTS" means this Agreement, each Assumption Letter executed
hereunder, the Pledge Agreement, the Guaranty, the Subordination Agreement, the
Fee Letters and all other documents, instruments, notes and agreements executed
in connection therewith or contemplated thereby (other than the 5-Year Credit
Agreement and the documents related thereto), as the same may be amended,
restated or otherwise modified and in effect from time to time.
"LOAN PARTIES" means each of the Company, each Subsidiary Borrower and
each of the Guarantors.
"MANAGING AGENTS" means those Lenders identified as "Managing Agents"
on the signature pages hereto.
"MARGIN STOCK" shall have the meaning ascribed to such term in
Regulation U.
"MATERIAL ADVERSE EFFECT" means a material adverse effect upon (a) the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Company or the Company and its Subsidiaries,
taken as a whole, (b) the ability of the Company or any of its Subsidiaries to
perform their respective obligations under the Loan Documents, or (c) the
ability of the Lenders or the Agents to enforce the Obligations.
"MATERIAL SUBSIDIARY" means each Subsidiary Borrower and each other
Subsidiary having assets in excess of $10,000,000 or annual sales (determined as
of the most recently ended fiscal quarter) in excess of $20,000,000.
"MULTIEMPLOYER PLAN" means a "Multiemployer Plan" as defined in Section
4001(a)(3) of ERISA which is, or within the immediately preceding six (6) years
was, contributed to by either the Company or any member of the Controlled Group.
"NET INCOME" means, for any period, the net income (or loss) after
taxes of the Company and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period determined in conformity with
Agreement Accounting Principles.
"NOTICE OF ASSIGNMENT" is defined in SECTION 14.3(B) hereof.
"OBLIGATIONS" means all Loans, advances, debts, liabilities,
obligations, covenants and duties owing by the Borrowers or any of their
Subsidiaries to the Administrative Agent, any Lender, any Arranger, any
Affiliate of the Administrative Agent or any Lender, or any Indemnitee, of any
kind or nature, present or future, arising under this Agreement, or any other
Loan Document, whether or not evidenced by any note, guaranty or other
instrument, whether or not for the payment of money, whether arising by reason
of an extension of credit, loan, guaranty, indemnification, or in any other
manner, whether direct or indirect (including those acquired by assignment),
absolute or contingent, due or to become due, now existing or hereafter arising
and however acquired. The term includes, without limitation, all interest,
charges, expenses, fees, reasonable attorneys' fees and disbursements,
reasonable paralegals' fees (in each case whether or not allowed), and any other
sum chargeable to the Company or any of its Subsidiaries under this Agreement or
any other Loan Document.
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<PAGE> 20
"OFF-BALANCE SHEET LIABILITIES" of a Person means (a) any repurchase
obligation or liability of such Person or any of its Subsidiaries with respect
to Receivables sold by such Person or any of its Subsidiaries, (b) any liability
of such Person or any of its Subsidiaries under any sale and leaseback
transactions which do not create a liability on the consolidated balance sheet
of such Person, (c) any liability of such Person or any of its Subsidiaries
under any financing lease or so-called "synthetic" lease transaction, or (d) any
obligations of such Person or any of its Subsidiaries arising with respect to
any other transaction which is the functional equivalent of or takes the place
of borrowing but which does not constitute a liability on the consolidated
balance sheets of such Person and its Subsidiaries.
"OTHER TAXES" is defined in SECTION 2.15(E)(ii) hereof.
"PARTICIPANTS" is defined in SECTION 14.2(A) hereof.
"PAYMENT DATE" means the last day of each March, June, September and
December, the Termination Date (or such earlier date on which the Aggregate
Commitment shall terminate or be cancelled), and the Facility Termination Date.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"PERMITTED ACQUISITION" is defined in SECTION 7.3(G) hereof.
"PERMITTED EXISTING CONTINGENT OBLIGATIONS" means the Contingent
Obligations of the Company and its Subsidiaries identified as such on SCHEDULE
1.1.1 to this Agreement.
"PERMITTED EXISTING INDEBTEDNESS" means the Indebtedness of the Company
and its Subsidiaries identified as such on SCHEDULE 1.1.2 to this Agreement.
"PERMITTED EXISTING LIENS" means the Liens on assets of the Company and
its Subsidiaries identified as such on SCHEDULE 1.1.3 to this Agreement.
"PERMITTED REFINANCING INDEBTEDNESS" means any replacement, renewal,
refinancing or extension of any Indebtedness permitted by this Agreement that
(i) does not exceed the aggregate principal amount (plus accrued interest and
any applicable premium and associated fees and expenses) of the Indebtedness
being replaced, renewed, refinanced or extended, (ii) does not have a Weighted
Average Life to Maturity at the time of such replacement, renewal, refinancing
or extension that is less than the Weighted Average Life to Maturity of the
Indebtedness being replaced, renewed, refinanced or extended, (iii) does not
rank at the time of such replacement, renewal, refinancing or extension senior
to the Indebtedness being replaced, renewed, refinanced or extended, and (iv)
does not contain terms (including, without limitation, terms relating to
security, amortization, interest rate, premiums, fees, covenants, event of
default and remedies) materially less favorable to the Company, its Subsidiaries
or the Lenders than those applicable to the Indebtedness being replaced,
renewed, refinanced or extended; PROVIDED, that Indebtedness being refinanced at
maturity may be subject to then current market rates of interest, provisions and
fees.
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"PERSON" means any individual, corporation, firm, enterprise,
partnership, trust, incorporated or unincorporated association, joint venture,
joint stock company, limited liability company or other entity of any kind, or
any government or political subdivision or any agency, department or
instrumentality thereof.
"PLAN" means an employee benefit plan defined in Section 3(3) of ERISA,
other than a Multiemployer Plan, in respect of which the Company or any member
of the Controlled Group is, or within the immediately preceding six (6) years
was, an "employer" as defined in Section 3(5) of ERISA.
"PLEDGE AGREEMENT" means one or more pledge agreements, each in form
and substance reasonably satisfactory to the Administrative Agent executed and
delivered by the Company and/or certain of its Subsidiaries pursuant to SECTION
7.2(N) hereof, as the same may be amended, supplemented or otherwise modified
from time to time.
"PRIME RATE" means the "prime rate" of interest announced by LaSalle
Bank National Association from time to time at its Chicago office, changing when
and as said prime rate changes.
"PRO RATA SHARE" means, with respect to any Lender, the percentage
obtained by dividing (x) such Lender's Revolving Loan Commitment at such time
(as adjusted from time to time in accordance with the provisions of this
Agreement) by (y) the Aggregate Revolving Loan Commitment at such time (as
adjusted from time to time in accordance with the provisions of this Agreement);
PROVIDED, HOWEVER, if all of the Revolving Loan Commitments are terminated
pursuant to the terms of this Agreement, then "Pro Rata Share" means the
percentage obtained by dividing (x) such Lender's Revolving Loans, by (y) the
aggregate outstanding amount of all Revolving Loans.
"PURCHASERS" is defined in SECTION 14.3(A) hereof.
"RATE OPTION" means the Eurocurrency Rate or the Floating Rate, as
applicable.
"RECEIVABLE(S)" means and includes all of the Company's and its
Subsidiaries' presently existing and hereafter arising or acquired accounts,
accounts receivable, notes receivable, and all present and future rights of the
Company or its Subsidiaries, as applicable, to payment for goods sold or leased
or for services rendered (except those evidenced by instruments or chattel
paper), whether or not they have been earned by performance, and all rights in
any merchandise or goods which any of the same may represent, and all rights,
title, security and guaranties with respect to each of the foregoing, including,
without limitation, any right of stoppage in transit.
"REGISTER" is defined in SECTION 14.3(C) hereof.
"REGULATION T" means Regulation T of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by and to brokers and dealers of securities for the purpose
of purchasing or carrying margin stock (as defined therein).
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"REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks, non-banks and non-broker lenders for the purpose
of purchasing or carrying Margin Stock applicable to member banks of the Federal
Reserve System.
"REGULATION X" means Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by foreign lenders for the purpose of purchasing or carrying
margin stock (as defined therein).
"RELEASE" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including the movement of Contaminants
through or in the air, soil, surface water or groundwater.
"RENTALS" of a Person means the aggregate fixed amounts payable by such
Person under any lease of real or personal property.
"REPLACEMENT LENDER" is defined in SECTION 2.20 hereof.
"REPORTABLE EVENT" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation or otherwise
waived the requirement of Section 4043(a) of ERISA that it be notified within
thirty (30) days after such event occurs, PROVIDED, HOWEVER, that a failure to
meet the minimum funding standards of Section 412 of the Code and of Section 302
of ERISA shall be a Reportable Event regardless of the issuance of any such
waiver of the notice requirement in accordance with either Section 4043(a) of
ERISA or Section 412(d) of the Code.
"REQUIRED LENDERS" means Lenders hereunder whose Pro Rata Shares, in
the aggregate, are at least fifty-one percent (51%).
"REQUIREMENTS OF LAW" means, as to any Person, the charter and by-laws
or other organizational or governing documents of such Person, and any law, rule
or regulation, or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is subject
including, without limitation, the Securities Act of 1933, the Securities
Exchange Act of 1934, Regulations T, U and X, ERISA, the Fair Labor Standards
Act, the Worker Adjustment and Retraining Notification Act, the Americans with
Disabilities Act of 1990, and any environmental, labor, employment, occupational
safety or health law, rule or regulation, including Environmental, Health or
Safety Requirements of Law.
"RESERVES" shall mean the maximum reserve requirement, as prescribed by
the Board of Governors of the Federal Reserve System (or any successor) with
respect to "Eurocurrency liabilities" or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Eurocurrency Rate Loans is determined or category of extensions of credit
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or other assets which includes loans by a non-United States office of any Lender
to United States residents.
"RESTRICTED PAYMENT" means (i) any dividend or other distribution,
direct or indirect, on account of any Equity Interests of the Company or any of
its Subsidiaries now or hereafter outstanding, except a dividend payable solely
in the Company's Capital Stock (other than Disqualified Stock) or in options,
warrants or other rights to purchase such Capital Stock, (ii) any redemption,
retirement, purchase or other acquisition for value, direct or indirect, of any
Equity Interests of the Company or any of its Subsidiaries now or hereafter
outstanding, other than in exchange for other Equity Interests of the Company
(other than Disqualified Stock), (iii) any redemption, purchase, retirement,
defeasance, prepayment or other acquisition for value, direct or indirect, of
any Indebtedness subordinated to the Obligations, and (iv) any payment of a
claim for the rescission of the purchase or sale of, or for material damages
arising from the purchase or sale of, any Indebtedness (other than the
Obligations) or any Equity Interests of the Company, or any of its Subsidiaries,
or of a claim for reimbursement, indemnification or contribution arising out of
or related to any such claim for damages or rescission.
"REVOLVING CREDIT AVAILABILITY" means, at any particular time, the
amount by which the Aggregate Revolving Loan Commitment at such time exceeds the
Revolving Credit Obligations outstanding at such time.
"REVOLVING CREDIT OBLIGATIONS" means, at any particular time, the
outstanding principal amount of the Revolving Loans at such time.
"REVOLVING LOAN" is defined in SECTION 2.1 hereof.
"REVOLVING LOAN COMMITMENT" means, for each Lender, the obligation of
such Lender to make Revolving Loans not exceeding the amount set forth on
EXHIBIT A to this Agreement opposite its name thereon under the heading
"Revolving Loan Commitment" or the signature page of the assignment and
acceptance by which it became a Lender as such amount may be modified from time
to time pursuant to the terms of this Agreement or to give effect to any
applicable assignment and acceptance.
"REVOLVING LOAN TERMINATION DATE" means October 18, 2000.
"SALE AND LEASEBACK TRANSACTION" shall mean any lease, whether an
operating lease or a Capitalized Lease, of any property (whether real or
personal or mixed), (i) which the Company or one of its Subsidiaries sold or
transferred or is to sell or transfer to any other Person, or (ii) which the
Company or one of its Subsidiaries intends to use for substantially the same
purposes as any other property which has been or is to be sold or transferred by
the Company or one of its Subsidiaries to any other Person in connection with
such lease.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time.
"SINGLE EMPLOYER PLAN" means a Benefit Plan maintained by the Company
or any member of the Controlled Group for employees of the Company or any member
of the Controlled Group.
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"SOLVENT" means, when used with respect to any Person, that at the time
of determination:
(i) the fair value of its assets (both at fair valuation and
at present fair saleable value) is equal to or in excess of the total
amount of its liabilities, including, without limitation, contingent
liabilities; and
(ii) it is then able and expects to be able to pay its debts
as they mature; and
(iii) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
With respect to contingent liabilities (such as litigation, guarantees and
pension plan liabilities), such liabilities shall be computed at the amount
which, in light of all the facts and circumstances existing at the time,
represent the amount which can be reasonably be expected to become an actual or
matured liability.
"SPIN-OFF" means the distribution of approximately ninety percent (90%)
of the Capital Stock of the Company by Harris to Harris's stockholders.
"SPIN-OFF MATERIALS" means the Form 10, the Distribution Agreement
referred to therein, the Tax Disaffiliation Agreement referred to therein and
the Transition Services Agreement referred to therein, the Registration Rights
Agreement referred to therein and the Employee Benefits and Compensation
Allocation Agreement referred to therein.
"SUBORDINATION AGREEMENT" means that certain Subordination Agreement
(and any and all supplements thereto) executed from time to time by each
Subsidiary of the Company listed on SCHEDULE 6.8 and each other Subsidiary of
the Company as required pursuant to SECTION 7.2(K) in favor of the
Administrative Agent for the benefit of itself and the Holders of Obligations,
in substantially the form of EXHIBIT G-2 attached hereto, as the same may be
amended, restated, supplemented or otherwise modified from time to time.
"SUBSIDIARY" of a Person means (i) any corporation more than fifty
(50%) of the outstanding securities having ordinary voting power of which shall
at the time be owned or controlled, directly or indirectly, by such Person or by
one or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (ii) any partnership, association, limited liability company,
joint venture or similar business organization more than fifty percent (50%) of
the ownership interests having ordinary voting power of which shall at the time
be so owned or controlled. Unless otherwise expressly provided, all references
herein to a "Subsidiary" mean a Subsidiary of the Company.
"SUBSIDIARY BORROWER" means each of the Company's Subsidiaries listed
on the signature pages hereto and any other Subsidiaries of the Company duly
designated by the Company pursuant to SECTION 2.24 to request Advances
hereunder, which Subsidiary shall have delivered to the Administrative Agent an
Assumption Letter in accordance with SECTION 2.24 and such other documents as
may be required pursuant to this Agreement, in each case together with its
respective successors and assigns, including a debtor-in-possession on behalf of
such Subsidiary Borrower.
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"SYNDICATION AGENT" means SunTrust Bank, Atlanta, in its capacity as
syndication agent for the loan transaction evidenced by this Agreement, together
with its successors and assigns.
"TAXES" is defined in SECTION 2.15(E)(i) hereof.
"TERMINATION CONDITIONS" is defined in SECTION 2.19.
"TERMINATION DATE" means the earlier of (a) the Revolving Loan
Termination Date and (b) the date of termination in whole of the Aggregate
Revolving Loan Commitment pursuant to SECTION 2.6 hereof or the Revolving Loan
Commitments pursuant to SECTION 9.1 hereof.
"TERMINATION EVENT" means (i) a Reportable Event with respect to any
Benefit Plan; (ii) the withdrawal of the Company or any member of the Controlled
Group from a Benefit Plan during a plan year in which the Company or such
Controlled Group member was a "substantial employer" as defined in Section
4001(a)(2) of ERISA or the cessation of operations which results in the
termination of employment of twenty percent (20%) of Benefit Plan participants
who are employees of the Company or any member of the Controlled Group; (iii)
the imposition of an obligation on the Company or any member of the Controlled
Group under Section 4041 of ERISA to provide affected parties written notice of
intent to terminate a Benefit Plan in a distress termination described in
Section 4041(c) of ERISA; (iv) the institution by the PBGC or any similar
foreign governmental authority of proceedings to terminate a Benefit Plan or
Foreign Pension Plan; (v) any event or condition which constitutes grounds under
Section 4042 of ERISA which are reasonably likely to lead to the termination of,
or the appointment of a trustee to administer, any Benefit Plan; (vi) that a
foreign governmental authority shall appoint or institute proceedings to appoint
a trustee to administer any Foreign Pension Plan in place of the existing
administrator, or (vii) the partial or complete withdrawal of the Company or any
member of the Controlled Group from a Multiemployer Plan or Foreign Pension
Plan.
"TOTAL INDEBTEDNESS" means, without duplication, (a) all Indebtedness
of the Company and its Subsidiaries, on a consolidated basis, required to be
reflected on a balance sheet prepared in accordance with Agreement Accounting
Principles, PLUS, without duplication, (b) (i) the face amount of all
outstanding letters of credit in respect of which the Company or any Subsidiary
has any actual or contingent reimbursement obligation, PLUS (ii) the principal
amount of all Indebtedness of any Person in respect of which the Company or any
Subsidiary has a Contingent Obligation, PLUS (iii) outstanding principal
balances (representing securitized but unliquidated assets) under asset
securitization agreements (including, without limitation, the outstanding
principal balance of Receivables under Receivables transactions), PLUS (iv) the
implied debt component of synthetic leases of which the Company or any
Subsidiary is lessee or any other off-balance sheet financing arrangements
(including, without limitation, any such arrangements giving rise to any
Off-Balance Sheet Liabilities).
"TRANSFEREE" is defined in SECTION 14.5 hereof.
"TYPE" means, with respect to any Loan, its nature as a Floating Rate
Loan or a Eurocurrency Rate Loan.
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"UNFUNDED LIABILITIES" means (i) in the case of Single Employer Plans,
the amount (if any) by which the aggregate accumulated benefit obligations
exceeds the aggregate fair market value of assets of all Single Employer Plans
as of the most recent measurement date for which actuarial valuations have been
completed and certified to the Company, all as determined under FAS 87 using the
methods and assumptions used by the Company for financial accounting purposes,
and (ii) in the case of Multiemployer Plans, the withdrawal liability that would
be incurred by the Controlled Group if all members of the Controlled Group
completely withdrew from all Multiemployer Plans.
"UNMATURED DEFAULT" means an event which, but for the lapse of time or
the giving of notice, or both, would constitute a Default.
"WEIGHTED AVERAGE LIFE TO MATURITY" means when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"WHOLLY-OWNED SUBSIDIARY" of a Person means (i) any Subsidiary all of
the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more Wholly-Owned
Subsidiaries of such Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person, or (ii) any partnership, limited liability company,
association, joint venture or similar business organization 100% of the
ownership interests having ordinary voting power of which shall at the time be
so owned or controlled. Unless the context otherwise requires, "Wholly-Owned
Subsidiary" means a wholly-owned subsidiary of the Company.
"YEAR 2000 ISSUES" means, with respect to any Person, anticipated
costs, problems and uncertainties associated with the inability of certain
computer applications and imbedded systems to effectively handle data, including
dates, prior to, on and after January 1, 2000, as it affects the business,
operations, and financial condition of such Person and such Person's material
customers, suppliers and vendors.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms. Any accounting terms used in
this Agreement which are not specifically defined herein shall have the meanings
customarily given them in accordance with generally accepted accounting
principles in existence as of the date hereof.
1.2 REFERENCES. Any references to Subsidiaries of the Company set forth
herein shall not in any way be construed as consent by the Administrative Agent
or any Lender to the establishment, maintenance or acquisition of any
Subsidiary, except as may otherwise be permitted hereunder.
ARTICLE II: LOAN FACILITIES
2.1 REVOLVING LOANS.
(A) Upon the satisfaction of the conditions precedent set forth in
SECTIONS 5.1, 5.2 and 5.3, as applicable, from and including the Closing Date
and prior to the Revolving Loan Termination
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Date, each Lender severally and not jointly agrees, on the terms and conditions
set forth in this Agreement, to make revolving loans to the Borrowers from time
to time, in Dollars, in an amount not to exceed such Lender's Pro Rata Share of
Revolving Credit Availability at such time (each individually, a "REVOLVING
LOAN" and, collectively, the "REVOLVING LOANS"); PROVIDED, HOWEVER, that at no
time shall the amount of the Revolving Credit Obligations exceed the Aggregate
Revolving Loan Commitment. Subject to the terms of this Agreement, the Borrowers
may borrow, repay and reborrow Revolving Loans at any time prior to the
Revolving Termination Date. Revolving Loans made after the third (3rd) Business
Day after the Closing Date shall be, at the option of the applicable Borrower,
selected in accordance with SECTION 2.10, and shall be either Floating Rate
Loans or Eurocurrency Rate Loans. On the Revolving Loan Termination Date, the
applicable Borrower shall repay in full the outstanding principal balance of the
Revolving Loans. Each Advance under this SECTION 2.1 shall consist of Revolving
Loans made by each Lender ratably in proportion to such Lender's respective Pro
Rata Share.
(B) MAKING OF REVOLVING LOANS. Promptly after receipt of the Borrowing/
Conversion/Continuation Notice under SECTION 2.8 in respect of Revolving Loans,
the Administrative Agent shall notify each Lender by telex or telecopy, or other
similar form of transmission, of the requested Revolving Loan. Each Lender shall
make available its Revolving Loan in accordance with the terms of SECTION 2.7.
The Administrative Agent will promptly make the funds so received from the
Lenders available to the applicable Borrower at the Administrative Agent's
office in New York, New York on the applicable Borrowing Date and shall disburse
such proceeds in accordance with the applicable Borrower's disbursement
instructions set forth in such Borrowing/Conversion/Continuation Notice. The
failure of any Lender to deposit the amount described above with the
Administrative Agent on the applicable Borrowing Date shall not relieve any
other Lender of its obligations hereunder to make its Revolving Loan on such
Borrowing Date.
2.2 (RESERVED).
2.3 (RESERVED).
2.4 RATE OPTIONS FOR ALL ADVANCES; MAXIMUM INTEREST PERIODS. The
Revolving Loans may be Floating Rate Advances or Eurocurrency Rate Advances, or
a combination thereof, selected by the Company or the applicable Borrower in
accordance with SECTION 2.10; provided that until syndication of the Aggregate
Commitment and the commitments under the 5-Year Credit Facility has been
completed to the satisfaction of the Administrative Agent, the Revolving Loans
shall be Floating Rate Advances. The Company or the applicable Borrower may
select, in accordance with SECTION 2.10, Rate Options and Interest Periods
applicable to portions of the Revolving Loans; provided that there shall be no
more than ten (10) Interest Periods in effect with respect to all of the Loans
at any time.
2.5 OPTIONAL PAYMENTS; MANDATORY PREPAYMENTS.
(A) OPTIONAL PAYMENTS. The Company may from time to time and at any
time upon at least one (1) Business Day's prior written notice repay or prepay
without penalty or premium all or any part of outstanding Floating Rate Advances
in an aggregate minimum amount of $10,000,000 and in integral multiples of
$1,000,000 in excess thereof. Eurocurrency Rate Advances may be voluntarily
repaid or prepaid prior to the last day of the applicable Interest Period,
subject to the
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indemnification provisions contained in SECTION 4.4, PROVIDED that the
applicable Borrower may not so prepay Eurocurrency Rate Advances unless it shall
have provided at least four (4) Business Days' prior written notice to the
Administrative Agent of such prepayment.
(B) MANDATORY PREPAYMENTS OF REVOLVING LOANS. (i) If at any time and for any
reason the amount of the Revolving Credit Obligations is greater than the
Aggregate Revolving Loan Commitment, the Company shall immediately make or cause
to be made a mandatory prepayment of the Revolving Credit Obligations in an
amount equal to such excess.
(ii) [RESERVED]
(iii) The Company shall make all mandatory prepayments required under
SECTION 2.6.
(iv) All of the mandatory prepayments made under this SECTION 2.5(B)
shall be applied first to Floating Rate Loans and to any Eurocurrency Rate Loans
maturing on such date and then to subsequently maturing Eurocurrency Rate Loans
in order of maturity.
2.6 REDUCTIONS IN COMMITMENTS. The Company may permanently reduce the
Aggregate Revolving Loan Commitment in whole, or in part ratably among the
Lenders, in an aggregate minimum amount of $10,000,000 and in integral multiples
of $5,000,000 in excess of that amount (unless the Aggregate Revolving Loan
Commitment is reduced in whole), provided, however, that the amount of the
Aggregate Revolving Loan Commitment may not be reduced below the aggregate
principal amount of the outstanding Revolving Credit Obligations. All accrued
commitment fees shall be payable on the effective date of any termination of all
or any part the obligations of the Lenders to make Loans hereunder.
2.7 METHOD OF BORROWING. Not later than 1:00 p.m. (New York time) on
each Borrowing Date, each Lender shall make available its Revolving Loan in
immediately available funds to the Administrative Agent at its address specified
on its signature page hereto or as otherwise specified pursuant to ARTICLE XV.
The Administrative Agent will promptly make the funds so received from the
Lenders available to the applicable Borrower at the Administrative Agent's
aforesaid address.
2.8 METHOD OF SELECTING TYPES AND INTEREST PERIODS FOR ADVANCES. The
applicable Borrower shall select the Type of Advance and, in the case of each
Eurocurrency Rate Advance, the Interest Period applicable to each Advance from
time to time. The applicable Borrower shall give the Administrative Agent
irrevocable notice in substantially the form of EXHIBIT B hereto (a
"BORROWING/CONVERSION/CONTINUATION NOTICE") not later than 10:00 a.m. (New York
time) (a) on the Borrowing Date of each Floating Rate Advance, and (b) three (3)
Business Days before the Borrowing Date for each Eurocurrency Rate Advance,
specifying: (i) the Borrowing Date (which shall be a Business Day) of such
Advance; (ii) the aggregate amount of such Advance; (iii) the Type of Advance
selected; and (iv) in the case of each Eurocurrency Rate Loan, the Interest
Period applicable thereto. Each Floating Rate Advance and all Obligations other
than Loans shall bear interest from and including the date of the making of such
Advance, in the case of Loans, and the date such Obligation is due and owing in
the case of such other Obligations, to (but not including) the date of repayment
thereof at the Floating Rate, changing when and as such Floating Rate changes.
Changes in the rate of interest on that portion of any Advance maintained as a
Floating Rate Loan will take effect simultaneously with each change in the
Alternate Base Rate. Each
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Eurocurrency Rate Advance shall bear interest from and including the first day
of the Interest Period applicable thereto to (but not including) the last day of
such Interest Period at the interest rate determined as applicable to such
Eurocurrency Rate Advance and shall change as and when the Applicable
Eurocurrency Margin changes.
2.9 MINIMUM AMOUNT OF EACH ADVANCE. Each Advance shall be in the
minimum amount of $20,000,000 and in multiples of $1,000,000 if in excess
thereof, provided, however, that any Floating Rate Advance may be in the amount
of the unused Aggregate Revolving Loan Commitment.
2.10 METHOD OF SELECTING TYPES AND INTEREST PERIODS FOR CONVERSION AND
CONTINUATION OF ADVANCES.
(A) RIGHT TO CONVERT. The applicable Borrower may elect from time to
time, subject to the provisions of SECTION 2.4 and this SECTION 2.10, to convert
all or any part of a Loan of any Type into any other Type or Types of Loans;
PROVIDED that any conversion of any Eurocurrency Rate Advance shall be made on,
and only on, the last day of the Interest Period applicable thereto.
(B) AUTOMATIC CONVERSION AND CONTINUATION. Floating Rate Loans shall
continue as Floating Rate Loans unless and until such Floating Rate Loans are
converted into Eurocurrency Rate Loans. Eurocurrency Rate Loans shall continue
as Eurocurrency Rate Loans until the end of the then applicable Interest Period
therefor, at which time such Eurocurrency Rate Loans shall be automatically
converted into Floating Rate Loans unless the Company shall have given the
Administrative Agent notice in accordance with SECTION 2.10(D) requesting that,
at the end of such Interest Period, such Eurocurrency Rate Loans continue as a
Eurocurrency Rate Loan.
(C) NO CONVERSION POST-DEFAULT OR POST-UNMATURED DEFAULT.
Notwithstanding anything to the contrary contained in SECTION 2.10(A) or SECTION
2.10(B), no Loan may be converted into or continued as a Eurocurrency Rate Loan
(except with the consent of the Required Lenders) when any Default or Unmatured
Default has occurred and is continuing.
(D) BORROWING/CONVERSION/CONTINUATION NOTICE. The Company shall give
the Administrative Agent a Borrowing/Conversion/Continuation Notice with respect
to each conversion of a Floating Rate Loan into a Eurocurrency Rate Loan or
continuation of a Eurocurrency Rate Loan not later than 10:00 a.m. (New York
time) three (3) Business Days prior to the date of the requested conversion or
continuation, with respect to any Loan to be converted or continued as a
Eurocurrency Rate Loan, specifying: (1) the requested date (which shall be a
Business Day) of such conversion or continuation; (2) the amount and Type of the
Loan to be converted or continued; and (3) the amount of Eurocurrency Rate
Loan(s) into which such Loan is to be converted or continued and the duration of
the Interest Period applicable thereto.
2.11 DEFAULT RATE. After the occurrence and during the continuance of a
Default, each outstanding Loan shall bear interest at a rate equal to the rate
otherwise applicable thereto (giving effect to the provisions of SECTION
2.15(D)(ii)) plus 2% per annum.
2.12 METHOD OF PAYMENT. All payments of principal, interest, fees and
commissions hereunder shall be made, without setoff, deduction or counterclaim
(unless indicated otherwise in SECTION 2.15(E)), in immediately available funds
to the Administrative Agent at the Administrative
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Agent's address specified pursuant to ARTICLE XV with respect to Advances or
other Obligations denominated in Dollars, or at any other Lending Installation
of the Administrative Agent specified in writing by the Administrative Agent to
the Company, by 2:00 p.m. (New York time) on the date when due and shall be
applied ratably among the Lenders with respect to any principal and interest due
in connection with Loans. Each payment delivered to the Administrative Agent for
the account of any Lender shall be delivered promptly by the Administrative
Agent to such Lender in the same type of funds which the Administrative Agent
received at its address specified pursuant to ARTICLE XV or at any Lending
Installation specified in a notice received by the Administrative Agent from
such Lender. The Company authorizes the Administrative Agent to charge the
account of the Company maintained with ABN, after one (1) Business Day's prior
written notice to the Company, for each payment of principal, interest, fees and
commissions.
2.13 EVIDENCE OF DEBT.
(A) Each Lender shall maintain in accordance with its usual practice an
account or accounts (a "LOAN ACCOUNT") evidencing the indebtedness of the
Borrowers to such Lender owing to such Lender hereunder from time to time,
including the amounts of principal and interest payable and paid to such Lender
from time to time hereunder.
(B) The Register maintained by the Administrative Agent pursuant to
SECTION 14.3(C) shall include a control account, and a subsidiary account for
each Lender, in which accounts (taken together) shall be recorded (i) the date
and the amount of each Loan made hereunder, the Type thereof and the Interest
Period, if any, applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrowers to each Lender
hereunder, (iii) the effective date and amount of each Assignment Agreement
delivered to and accepted by it and the parties thereto pursuant to SECTION
14.3, (iv) the amount of any sum received by the Administrative Agent hereunder
for the account of the Lenders and each Lender's share thereof, and (v) all
other appropriate debits and credits as provided in this Agreement, including,
without limitation, all fees, charges, expenses and interest.
(C) The entries made in the Loan Account, the Register and the other
accounts maintained pursuant to SUBSECTIONS (A) or (B) of this Section shall be
presumptively correct for all purposes, absent manifest error, unless the
applicable Borrower (or the Company on behalf of such Borrower) objects to
information contained in the Loan Accounts, the Register or the other accounts
within thirty (30) days of the applicable Borrower's receipt of such
information; PROVIDED that the failure of any Lender or the Administrative Agent
to maintain such accounts or any error therein shall not in any manner affect
the obligation of the Borrowers to repay the Obligations in accordance with the
terms of this Agreement.
(D) Any Lender may request that the Revolving Loans made by it each be
evidenced by a promissory note in substantially the form of EXHIBIT H, to
evidence such Lender's Revolving Loans, as applicable. In such event, the
applicable Borrower shall promptly prepare, execute and deliver to such Lender a
promissory note for such Loans payable to the order of such Lender and in a form
approved by the Administrative Agent and consistent with the terms of this
Agreement. Thereafter, the Loans evidenced by such promissory note and interest
thereon shall at all times (including after assignment pursuant to SECTION 14.3)
be represented by one or more promissory notes in such form payable to the order
of the payee named therein.
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2.14 TELEPHONIC NOTICES. The Borrowers authorize the Lenders and the
Administrative Agent to extend Loans and effect selections of Types of Advances
and to transfer funds based on telephonic notices made by any person or persons
the Administrative Agent or any Lender in good faith believes to be acting on
behalf of the applicable Borrower. The Borrowers agree to deliver promptly to
the Administrative Agent a written confirmation, signed by an Authorized
Officer, if such confirmation is requested by the Administrative Agent or any
Lender, of each telephonic notice. If the written confirmation differs in any
material respect from the action taken by the Administrative Agent and the
Lenders, the records of the Administrative Agent and the Lenders shall govern
absent manifest error. In case of disagreement concerning such notices, if the
Administrative Agent has recorded telephonic borrowing notices, such recordings
will be made available to the applicable Borrower upon the Company's request
therefor.
2.15 PROMISE TO PAY; INTEREST AND FEES; INTEREST PAYMENT DATES;
INTEREST AND FEE BASIS; TAXES; LOAN AND CONTROL ACCOUNTS.
(A) PROMISE TO PAY. All Loans shall be paid in full by the applicable
Borrowers on the earlier of (i) the Revolving Loan Termination Date and (ii) the
Facility Termination Date. Each Borrower unconditionally promises to pay when
due the principal amount of each Loan and all other Obligations incurred by it,
and to pay all unpaid interest accrued thereon, in accordance with the terms of
this Agreement and the other Loan Documents.
(B) INTEREST PAYMENT DATES. Interest accrued on each Floating Rate Loan
shall be payable on each Payment Date, commencing with the first such date to
occur after the date hereof, upon any prepayment whether by acceleration or
otherwise, and at maturity (whether by acceleration or otherwise). Interest
accrued on each Fixed-Rate Loan shall be payable on the last day of its
applicable Interest Period, on any date on which the Fixed-Rate Loan is prepaid,
whether by acceleration or otherwise, and at maturity. Interest accrued on each
Fixed-Rate Loan having an Interest Period longer than three months shall also be
payable on the last day of each three-month interval during such Interest
Period. Interest accrued on the principal balance of all other Obligations shall
be payable in arrears (i) on the last day of each calendar month, commencing on
the first such day following the incurrence of such Obligation, (ii) upon
repayment thereof in full or in part, and (iii) if not theretofore paid in full,
at the time such other Obligation becomes due and payable (whether by
acceleration or otherwise).
(C) Fees.
(i) The Company shall pay to the Administrative Agent,
for the account of the Lenders in accordance with their Pro Rata
Shares, from and after the date of this Agreement until the Facility
Termination Date, a commitment fee accruing at the rate of the then
Applicable Commitment Fee Percentage on the unutilized portion of such
Lender's Revolving Loan Commitment. The commitment fee shall be payable
in arrears on each Payment Date hereafter, and, in addition, on any
date on which the Aggregate Revolving Loan Commitment shall be
terminated in whole or, with respect to such terminated amount, in
part.
(ii) The Company agrees to pay to the Administrative
Agent, for the sole account of the Administrative Agent, the Lead
Arrangers and the Agents (unless otherwise agreed
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between the Administrative Agent, the Lead Arrangers, the Agents and
any Lender) the fees set forth in the Fee Letters, payable at the times
and in the amounts set forth therein.
(D) Interest and Fee Basis; Applicable Floating Rate Margin, Applicable
Eurocurrency Margin and Applicable Commitment Fee Percentage.
(i) Interest on all Fixed-Rate Loans and fees shall be
calculated for actual days elapsed on the basis of a 360-day year.
Interest on all Floating Rate Loans shall be calculated for actual days
elapsed on the basis of a 365-, or when appropriate 366-, day year.
Interest shall be payable for the day an Obligation is incurred but not
for the day of any payment on the amount paid if payment is received
prior to 3:00 p.m. (New York time) at the place of payment. If any
payment of principal of or interest on a Loan or any payment of any
other Obligations shall become due on a day which is not a Business
Day, such payment shall be made on the next succeeding Business Day
and, in the case of a principal payment, such extension of time shall
be included in computing interest, fees and commissions in connection
with such payment.
(ii) The Applicable Floating Rate Margin, Applicable
Eurocurrency Margin and Applicable Commitment Fee Percentage shall be
determined on the basis of the then applicable Leverage Ratio as
described in this SECTION 2.15(D)(ii), from time to time by reference
to the following table:
<TABLE>
<CAPTION>
- ------------------------------------- ------------------- --------------------------------- --------------------------
APPLICABLE
FLOATING RATE APPLICABLE COMMITMENT
LEVERAGE RATIO MARGIN APPLICABLE EUROCURRENCY MARGIN FEE PERCENTAGE
- ------------------------------------- ------------------- --------------------------------- --------------------------
<S> <C> <C> <C>
Less than 1.50 0.25% 1.25% 0.300%
- ------------------------------------- ------------------- --------------------------------- --------------------------
1.50 or greater, but less than 2.00 0.50% 1.50% 0.375%
- ------------------------------------- ------------------- --------------------------------- --------------------------
2.00 or greater, but less than 2.50 0.75% 1.75% 0.450%
- ------------------------------------- ------------------- --------------------------------- --------------------------
2.50 or greater, but less than 3.00 1.00% 2.00% 0.500%
- ------------------------------------- ------------------- --------------------------------- --------------------------
3.00 or greater 1.25% 2.25% 0.500%
- ------------------------------------- ------------------- --------------------------------- --------------------------
</TABLE>
The Applicable Floating Rate Margin, Applicable Eurocurrency
Margin and Applicable Commitment Fee Percentage shall be 1.00%, 2.00%
and 0.500%, respectively, until the Administrative Agent has received
the Company's financial statements for the fiscal quarter ending
September 30, 2000; PROVIDED that if the Leverage Ratio as reflected in
the most recently delivered financial statements, delivered pursuant to
SECTIONS 7.1(A)(i) and (ii), as applicable, is 3.00 or greater, the
Applicable Floating Rate Margin, Applicable Eurocurrency Margin and
Applicable Commitment Fee Percentage shall be 1.25%, 2.25% and 0.500%,
respectively. Thereafter, upon receipt of the financial statements to
be delivered by the Company in accordance with SECTION 7.1(A)(i) or
(ii), as applicable, for any fiscal quarter or, if earlier, upon
receipt of the Company's unaudited financial statements for any fiscal
year, the Applicable Floating Rate Margin, Applicable Eurocurrency
Margin and Applicable Commitment Fee Percentage shall be adjusted, such
adjustment being effective
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five (5) Business Days following the Administrative Agent's receipt of
such financial statements and the compliance certificate required to be
delivered in connection therewith pursuant to SECTION 7.1(A)(iii);
PROVIDED, that if the Company shall not have timely delivered its
financial statements in accordance with SECTION 7.1(A)(i) or (ii), as
applicable, then commencing on the date upon which such financial
statements should have been delivered and continuing until such
financial statements are actually delivered, it shall be assumed for
purposes of determining the Applicable Floating Rate Margin, Applicable
Eurocurrency Margin and Applicable Commitment Fee Percentage that the
Leverage Ratio was greater than 3.00 to 1.0. Notwithstanding the
foregoing, for so long as any Default shall have occurred and been
continuing, the Applicable Floating Rate Margin, Applicable
Eurocurrency Margin and Applicable Commitment Fee Percentage shall be
the highest Applicable Floating Rate Margin, Applicable Eurocurrency
Margin and Applicable Commitment Fee Margin set forth in the foregoing
table. At all times after the first anniversary of the Closing Date
until the "Term Loans" under the 5-Year Credit Agreement have been
repaid in full, each of the Applicable Floating Rate Margin and the
Applicable Eurocurrency Margin shall increase by 25 basis points.
(E) Taxes.
(i) Any and all payments by the Borrowers hereunder (whether
in respect of principal, interest, fees or otherwise) shall be made
free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings or
any interest, penalties and liabilities with respect thereto including
those arising after the date hereof as a result of the adoption of or
any change in any law, treaty, rule, regulation, guideline or
determination of a Governmental Authority or any change in the
interpretation or application thereof by a Governmental Authority but
excluding, in the case of each Lender and the Administrative Agent,
such taxes (including income taxes, franchise taxes and branch profit
taxes) as are imposed on or measured by such Lender's or the
Administrative Agent's, as the case may be, net income by the United
States of America or any Governmental Authority of the jurisdiction
under the laws of which such Lender or the Administrative Agent, as the
case may be, is organized (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings, and liabilities which the
Administrative Agent or a Lender determines to be applicable to this
Agreement, the other Loan Documents, the Revolving Loan Commitments or
the Loans being hereinafter referred to as "TAXES"). If any Borrower
shall be required by law to deduct or withhold any Taxes from or in
respect of any sum payable hereunder or under the other Loan Documents
to any Lender or the Administrative Agent, (i) the sum payable shall be
increased as may be necessary so that after making all required
deductions or withholdings (including deductions applicable to
additional sums payable under this SECTION 2.15(E)) such Lender or
Agent (as the case may be) receives an amount equal to the sum it would
have received had no such deductions or withholdings been made, (ii)
the applicable Borrower shall make such deductions or withholdings, and
(iii) the applicable Borrower shall pay the full amount deducted or
withheld to the relevant taxation authority or other authority in
accordance with applicable law. If a withholding tax of the United
States of America or any other Governmental Authority shall be or
become applicable (y) after the date of this Agreement, to such
payments by the applicable Borrower made to the Lending Installation or
any other office that a Lender may claim as its Lending Installation,
or (z) after such Lender's selection and
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<PAGE> 34
designation of any other Lending Installation, to such payments made to
such other Lending Installation, such Lender shall use reasonable
efforts to make, fund and maintain the affected Loans through another
Lending Installation of such Lender in another jurisdiction so as to
reduce the applicable Borrower's liability hereunder, if the making,
funding or maintenance of such Loans through such other Lending
Installation of such Lender does not, in the judgment of such Lender,
otherwise adversely affect such Loans, or obligations under the
Revolving Loan Commitments of such Lender.
(ii) In addition, the Borrowers agree to pay any present
or future stamp or documentary taxes or any other excise or property
taxes, charges, or similar levies which arise from any payment made
hereunder, from the issuance of Letters of Credit hereunder, or from
the execution, delivery or registration of, or otherwise with respect
to, this Agreement, the other Loan Documents, the Revolving Loan
Commitments or the Loans (hereinafter referred to as "OTHER TAXES").
(iii) The Company and each Subsidiary Borrower shall
indemnify each Lender and the Administrative Agent for the full amount
of Taxes and Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any Governmental Authority on amounts payable
under this SECTION 2.15(E)) paid by such Lender or the Administrative
Agent (as the case may be) and any liability (including penalties,
interest, and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be made within thirty (30) days
after the date such Lender or the Administrative Agent (as the case may
be) makes written demand therefor. If the Taxes or Other Taxes with
respect to which the Company or any Subsidiary Borrower has made either
a direct payment to the taxation or other authority or an
indemnification payment hereunder are subsequently refunded to any
Lender, such Lender will return to the applicable Borrower an amount
equal to the lesser of the indemnification payment or the refunded
amount. A certificate as to any additional amount payable to any Lender
or the Administrative Agent under this SECTION 2.15(E) submitted to the
applicable Borrower and the Administrative Agent (if a Lender is so
submitting) by such Lender or the Administrative Agent shall show in
reasonable detail the amount payable and the calculations used to
determine such amount and shall, absent manifest error, be final,
conclusive and binding upon all parties hereto. With respect to such
deduction or withholding for or on account of any Taxes and to confirm
that all such Taxes have been paid to the appropriate Governmental
Authorities, the applicable Borrower shall promptly (and in any event
not later than thirty (30) days after receipt) furnish to each Lender
and the Administrative Agent such certificates, receipts and other
documents as may be required (in the reasonable judgment of such Lender
or the Administrative Agent) to establish any tax credit to which such
Lender or the Administrative Agent may be entitled.
(iv) Within thirty (30) days after the date of any payment
of Taxes or Other Taxes by the Company or any Subsidiary Borrower, the
Company shall furnish to the Administrative Agent the original or a
certified copy of a receipt evidencing payment thereof.
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<PAGE> 35
(v) Without prejudice to the survival of any other
agreement of the Company and the Subsidiary Borrowers hereunder, the
agreements and obligations of the Borrowers contained in this SECTION
2.15(E) shall survive the payment in full of all Obligations and the
termination of this Agreement.
(vi) Each Lender (including any Replacement Lender or
Purchaser) that is not created or organized under the laws of the
United States of America or a political subdivision thereof (each a
"NON-U.S. LENDER") shall deliver to the Company and the Administrative
Agent on or before the Closing Date, or, if later, the date on which
such Lender becomes a Lender pursuant to SECTION 12.3 hereof (and from
time to time thereafter upon the request of the Company or the
Administrative Agent, but only for so long as such Non-U.S. Lender is
legally entitled to do so), either (1) (x) two (2) duly completed
copies of either (A) IRS Form W-8BEN (or, if delivered on or before
December 31, 1999, IRS Form 1001), or (B) IRS Form W-8ECI (or, if
delivered on or before December 31, 1999, IRS Form 4224), or in either
case an applicable successor form, and (y) for periods prior to January
1, 2000, a duly completed copy of IRS Form W-8 or W-9 or applicable
successor form; or (2) in the case of a Non-U.S. Lender that is not
legally entitled to deliver either form listed in CLAUSE (vi)(1)(x),
(x) a certificate of a duly authorized officer of such Non-U.S. Lender
to the effect that such Non-U.S. Lender is not (A) a "bank" within the
meaning of Section 881(c)(3)(A) of the Code, (B) a "10 percent
shareholder" of the Company or any Subsidiary Borrower within the
meaning of Section 881(c)(3)(B) of the Code, or (C) a controlled
foreign corporation receiving interest from a related person within the
meaning of Section 881(c)(3)(C) of the Code (such certificate, an
"EXEMPTION CERTIFICATE") and (y) two (2) duly completed copies of IRS
Form W-8BEN or applicable successor form. Each such Lender further
agrees to deliver to the Company and the Administrative Agent from time
to time a true and accurate certificate executed in duplicate by a duly
authorized officer of such Lender in a form satisfactory to the Company
and the Administrative Agent, before or promptly upon the occurrence of
any event requiring a change in the most recent certificate previously
delivered by it to the Company and the Administrative Agent pursuant to
this SECTION 2.15(E)(vi). Further, each Lender which delivers a form or
certificate pursuant to this CLAUSE (vi) covenants and agrees to
deliver to the Company and the Administrative Agent within fifteen (15)
days prior to the expiration of such form, for so long as this
Agreement is still in effect, another such certificate and/or two (2)
accurate and complete original newly-signed copies of the applicable
form (or any successor form or forms required under the Code or the
applicable regulations promulgated thereunder).
Each Lender shall promptly furnish to the Company and the
Administrative Agent such additional documents as may be reasonably
required by any Borrower or the Administrative Agent to establish any
exemption from or reduction of any Taxes or Other Taxes required to be
deducted or withheld and which may be obtained without undue expense to
such Lender. Notwithstanding any other provision of this SECTION
2.15(E), no Borrower shall be obligated to gross up any payments to any
Lender pursuant to SECTION 2.15(E)(i), or to indemnify any Lender
pursuant to SECTION 2.15(E)(iii), in respect of United States federal
withholding taxes to the extent imposed as a result of (x) the failure
of such Lender to deliver to the Company the form or forms and/or an
Exemption Certificate, as applicable to such Lender, pursuant to
SECTION 2.15(E)(vi), (y) such form or forms and/or
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<PAGE> 36
Exemption Certificate not establishing a complete exemption from U.S.
federal withholding tax or the information or certifications made
therein by the Lender being untrue or inaccurate on the date delivered
in any material respect, or (z) the Lender designating a successor
Lending Installation at which it maintains its Loans which has the
effect of causing such Lender to become obligated for tax payments in
excess of those in effect immediately prior to such designation;
PROVIDED, HOWEVER, that the applicable Borrower shall be obligated to
gross up any payments to any such Lender pursuant to SECTION
2.15(E)(i), and to indemnify any such Lender pursuant to SECTION
2.15(E)(iii) in respect of United States federal withholding taxes if
(x) any such failure to deliver a form or forms or an Exemption
Certificate or the failure of such form or forms or exemption
certificate to establish a complete exemption from U.S. federal
withholding tax or inaccuracy or untruth contained therein resulted
from a change in any applicable statute, treaty, regulation or other
applicable law or any interpretation of any of the foregoing occurring
after the date hereof, which change rendered such Lender no longer
legally entitled to deliver such form or forms or Exemption Certificate
or otherwise ineligible for a complete exemption from U.S. federal
withholding tax, or rendered the information or the certifications made
in such form or forms or Exemption Certificate untrue or inaccurate in
any material respect, (y) the redesignation of the Lender's Lending
Installation was made at the request of the Company or (z) the
obligation to gross up payments to any such Lender pursuant to SECTION
2.15(E)(i), or to indemnify any such Lender pursuant to SECTION
2.15(E)(iii), is with respect to a Purchaser that becomes a Purchaser
as a result of an assignment made at the request of the Company.
2.16 NOTIFICATION OF ADVANCES, INTEREST RATES, PREPAYMENTS AND
AGGREGATE REVOLVING LOAN COMMITMENT REDUCTIONS. Promptly after receipt thereof,
the Administrative Agent will notify each Lender of the contents of each
Aggregate Revolving Loan Commitment reduction notice,
Borrowing/Conversion/Continuation Notice, and repayment notice received by it
hereunder. The Administrative Agent will notify the applicable Borrower and each
Lender of the interest rate applicable to each Fixed-Rate Loan promptly upon
determination of such interest rate and will give each Lender prompt notice of
each change in the Alternate Base Rate.
2.17 LENDING INSTALLATIONS. Each Lender may book its Loans at any
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to any
such Lending Installation. Each Lender may, by written or facsimile notice to
the Administrative Agent and the Company, designate a Lending Installation
through which Loans will be made by it and for whose account Loan payments are
to be made.
2.18 NON-RECEIPT OF FUNDS BY THE ADMINISTRATIVE AGENT. Unless a
Borrower or a Lender, as the case may be, notifies the Administrative Agent
prior to the date on which it is scheduled to make payment to the Administrative
Agent of (i) in the case of a Lender, the proceeds of a Loan or (ii) in the case
of any Borrower, a payment of principal, interest or fees to the Administrative
Agent for the account of the Lenders, that it does not intend to make such
payment, the Administrative Agent may assume that such payment has been made.
The Administrative Agent may, but shall not be obligated to, make the amount of
such payment available to the intended recipient in reliance upon such
assumption. If such Lender or the applicable Borrower, as the case may be, has
not in fact made such payment to the Administrative Agent, the recipient of such
payment shall, on demand by the Administrative Agent, repay to the
Administrative Agent the amount so made available together with interest thereon
in respect of each day during the period commencing on the date such amount
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was so made available by the Administrative Agent until the date the
Administrative Agent recovers such amount at a rate per annum equal to (i) in
the case of payment by a Lender, the Federal Funds Effective Rate for such day
or (ii) in the case of payment by a Borrower, the interest rate applicable to
the relevant Loan.
2.19 TERMINATION DATE. This Agreement shall be effective until the
Facility Termination Date. Notwithstanding the termination of this Agreement,
until (A) all of the Obligations (other than contingent indemnity obligations)
shall have been fully and indefeasibly paid and satisfied and (B) all
commitments of the Lenders to extend credit hereunder have expired or have been
terminated (collectively, the "TERMINATION CONDITIONS"), all of the rights and
remedies under this Agreement and the other Loan Documents shall survive.
2.20 REPLACEMENT OF CERTAIN LENDERS. In the event a Lender ("AFFECTED
LENDER") shall have: (i) failed to fund its Pro Rata Share of any Advance
requested by the applicable Borrower, which such Lender is obligated to fund
under the terms of this Agreement and which failure has not been cured, (ii)
requested compensation from any Borrower under SECTIONS 2.15(E), 4.1 or 4.2 to
recover Taxes, Other Taxes or other additional costs incurred by such Lender
which are not being incurred generally by the other Lenders, or (iii) delivered
a notice pursuant to SECTION 4.3 claiming that such Lender is unable to extend
Eurocurrency Rate Loans to the Company for reasons not generally applicable to
the other Lenders, then, in any such case, after the engagement of one or more
"Replacement Lenders" (as defined below) by the Company and/or the
Administrative Agent, the Company or the Administrative Agent may make written
demand on such Affected Lender (with a copy to the Administrative Agent in the
case of a demand by the Company and a copy to the Company in the case of a
demand by the Administrative Agent) for the Affected Lender to assign, and such
Affected Lender shall use commercially reasonable efforts to assign pursuant to
one or more duly executed Assignment Agreements five (5) Business Days after the
date of such demand, to one or more financial institutions that comply with the
provisions of SECTION 14.3(A) which the Company or the Administrative Agent, as
the case may be, shall have engaged for such purpose ("REPLACEMENT LENDER"), all
of such Affected Lender's rights and obligations under this Agreement and the
other Loan Documents (including, without limitation, its Revolving Loan
Commitment and all Loans owing to it) in accordance with SECTION 14.3. The
Administrative Agent is authorized to execute one or more of such assignment
agreements as attorney-in-fact for any Affected Lender failing to execute and
deliver the same within five (5) Business Days after the date of such demand.
With respect to such assignment the Affected Lender shall be entitled to
receive, in cash, all amounts due and owing to the Affected Lender hereunder or
under any other Loan Document, including, without limitation, the aggregate
outstanding principal amount of the Loans owed to such Lender, together with
accrued interest thereon through the date of such assignment, amounts payable
under SECTIONS 2.15(E), 4.1, and 4.2 with respect to such Affected Lender and
compensation payable under SECTION 2.15(C) in the event of any replacement of
any Affected Lender under CLAUSE (ii) or CLAUSE (iii) of this SECTION 2.20;
provided that upon such Affected Lender's replacement, such Affected Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.15(E), 4.1, 4.2, 4.4, and 11.7, as well as to any fees
accrued for its account hereunder and not yet paid, and shall continue to be
obligated under SECTION 12.8.
2.21 (RESERVED).
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2.22 JUDGMENT CURRENCY. If, for the purposes of obtaining judgment in
any court, it is necessary to convert a sum due from any Borrower hereunder in
the currency expressed to be payable herein (the "SPECIFIED CURRENCY") into
another currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Administrative Agent could
purchase the specified currency with such other currency at the Administrative
Agent's office in New York, New York on the Business Day preceding that on which
the final, non-appealable judgment is given. The obligations of each Borrower in
respect of any sum due to any Lender or the Administrative Agent hereunder
shall, notwithstanding any judgment in a currency other than the specified
currency, be discharged only to the extent that on the Business Day following
receipt by such Lender or the Administrative Agent (as the case may be) of any
sum adjudged to be so due in such other currency such Lender or the
Administrative Agent (as the case may be) may in accordance with normal,
reasonable banking procedures purchase the specified currency with such other
currency. If the amount of the specified currency so purchased is less than the
sum originally due to such Lender or the Administrative Agent, as the case may
be, in the specified currency, each Borrower agrees, to the fullest extent that
it may effectively do so, as a separate obligation and notwithstanding any such
judgment, to indemnify such Lender or the Administrative Agent, as the case may
be, against such loss, and if the amount of the specified currency so purchased
exceeds (a) the sum originally due to any Lender or the Administrative Agent, as
the case may be, in the specified currency and (b) any amounts shared with other
Lenders as a result of allocations of such excess as a disproportionate payment
to such Lender under SECTION 13.2, such Lender or the Administrative Agent, as
the case may be, agrees to remit such excess to such Borrower.
2.23 (RESERVED).
2.24 SUBSIDIARY BORROWERS. The Company may at any time or from time to
time, with the consent of the Administrative Agent add as a party to this
Agreement any Wholly-Owned Subsidiary to be a "Subsidiary Borrower" hereunder by
the execution and delivery to the Administrative Agent and the Lenders of (a) a
duly completed Assumption Letter by such Subsidiary, with the written consent of
the Company at the foot thereof and (b) such other guaranty and subordinated
intercompany indebtedness documents as may be reasonably required by the
Administrative Agent, such documents with respect to any additional Subsidiaries
to be substantially similar in form and substance to the Loan Documents executed
on or about the date hereof by the Subsidiaries parties hereto as of the Closing
Date. Upon such execution, delivery and consent such Subsidiary shall for all
purposes be a party hereto as a Subsidiary Borrower as fully as if it had
executed and delivered this Agreement. So long as the principal of and interest
on any Advances made to any Subsidiary Borrower under this Agreement shall have
been repaid or paid in full and all other obligations of such Subsidiary
Borrower under this Agreement shall have been fully performed, the Company may,
by not less than five (5) Business Days' prior notice to the Administrative
Agent (which shall promptly notify the Lenders thereof), terminate such
Subsidiary Borrower's status as a "Subsidiary Borrower".
ARTICLE III: (RESERVED)
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ARTICLE IV: CHANGE IN CIRCUMSTANCES
4.1 YIELD PROTECTION. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law) adopted after the date of this Agreement or any
interpretation or application thereof by any Governmental Authority charged with
the interpretation or application thereof, or the compliance of any Lender
therewith,
(A) subjects any Lender or any applicable Lending Installation to any
tax, duty, charge or withholding on or from payments due from any Borrower
(excluding taxation of the overall net income of any Lender or taxation of a
similar basis, which are governed by SECTION 2.15(E)), or changes the basis of
taxation of payments to any Lender in respect of its Revolving Loan Commitment,
Loans or other amounts due it hereunder, or
(B) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Lender or any
applicable Lending Installation (other than reserves and assessments taken into
account in determining the interest rate applicable to Eurocurrency Rate Loans)
with respect to its Revolving Loan Commitment, Loans, or
(C) imposes any other condition the result of which is to increase the
cost to any Lender or any applicable Lending Installation of making, funding or
maintaining its Revolving Loan Commitment or Loans or reduces any amount
received by any Lender or any applicable Lending Installation in connection with
its Revolving Loan Commitment or Loans, or requires any Lender or any applicable
Lending Installation to make any payment calculated by reference to the amount
of Revolving Loan Commitment or Loans or interest received by it, by an amount
deemed material by such Lender;
and the result of any of the foregoing is to increase the cost to that Lender of
making, renewing or maintaining its Revolving Loan Commitment or Loans or to
reduce any amount received under this Agreement, then, within fifteen (15) days
after receipt by the Company or any other Borrower of written demand by such
Lender pursuant to SECTION 4.5, the applicable Borrowers shall pay such Lender
that portion of such increased expense incurred or reduction in an amount
received which such Lender determines is attributable to making, funding and
maintaining its Loans and its Revolving Loan Commitment.
4.2 CHANGES IN CAPITAL ADEQUACY REGULATIONS. If a Lender determines (i)
the amount of capital required or expected to be maintained by such Lender, any
Lending Installation of such Lender or any corporation controlling such Lender
is increased as a result of a "Change" (as defined below), and (ii) such
increase in capital will result in an increase in the cost to such Lender of
maintaining its Revolving Loan Commitment, Loans, or its obligation to make
Loans hereunder, then, within fifteen (15) days after receipt by the Company or
any other Borrower of written demand by such Lender pursuant to SECTION 4.5, the
applicable Borrowers shall pay such Lender the amount necessary to compensate
for any shortfall in the rate of return on the portion of such increased capital
which such Lender reasonably determines is attributable to this Agreement, its
Revolving Loan Commitment, its Loans or its obligation to make Loans hereunder
(after taking into account such Lender's policies as to capital adequacy).
"CHANGE" means (i) any change after the date of this Agreement in the
"Risk-Based Capital Guidelines" (as defined below) excluding, for the avoidance
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of doubt, the effect of any phasing in of such Risk-Based Capital Guidelines or
any other capital requirements passed prior to the date hereof, or (ii) any
adoption of or change in any other law, governmental or quasi-governmental rule,
regulation, policy, guideline, interpretation, or directive (whether or not
having the force of law) after the date of this Agreement which affects the
amount of capital required or expected to be maintained by any Lender or any
Lending Installation or any corporation controlling any Lender. "RISK-BASED
CAPITAL GUIDELINES" means (i) the risk-based capital guidelines in effect in the
United States on the date of this Agreement, including transition rules, and
(ii) the corresponding capital regulations promulgated by regulatory authorities
outside the United States implementing the July 1988 report of the Basle
Committee on Banking Regulation and Supervisory Practices Entitled
"International Convergence of Capital Measurements and Capital Standards,"
including transition rules, and any amendments to such regulations adopted prior
to the date of this Agreement.
4.3 AVAILABILITY OF TYPES OF ADVANCES. If (i) any Lender determines
that maintenance of its Eurocurrency Rate Loans at a suitable Lending
Installation would violate any applicable law, rule, regulation or directive,
whether or not having the force of law, or (ii) the Required Lenders determine
that (x) deposits of a type or maturity appropriate to match fund Fixed-Rate
Advances are not available or (y) the interest rate applicable to a Fixed-Rate
Advance does not accurately reflect the cost of making or maintaining such an
Advance, then the Administrative Agent shall suspend the availability of the
affected Type of Advance and, in the case of any occurrence set forth in clause
(i), require any Advances of the affected Type to be repaid or converted into
another Type.
4.4 FUNDING INDEMNIFICATION. If any payment of a Fixed-Rate Advance
occurs on a date which is not the last day of the applicable Interest Period,
whether because of acceleration, prepayment, or otherwise, or a Fixed-Rate
Advance is not made on the date specified by the applicable Borrower for any
reason other than default by the Lenders, the Borrowers shall indemnify each
Lender for any loss or cost incurred by it resulting therefrom, including,
without limitation, any loss or cost in liquidating or employing deposits
acquired to fund or maintain the Fixed-Rate Advance.
4.5 LENDER STATEMENTS; SURVIVAL OF INDEMNITY. If reasonably possible,
each Lender shall designate an alternate Lending Installation with respect to
its Fixed-Rate Loans to reduce any liability of any Borrower to such Lender
under SECTIONS 4.1 and 4.2 or to avoid the unavailability of a Type of Advance
under SECTION 4.3, so long as such designation is not, in such Lender's
judgment, disadvantageous to such Lender. Any demand for compensation pursuant
to this ARTICLE IV shall be in writing and shall state the amount due, if any,
under SECTION 4.1, 4.2 or 4.4 and shall set forth in reasonable detail the
calculations upon which such Lender determined such amount. Such written demand
shall be rebuttably presumed correct for all purposes. Determination of amounts
payable under such Sections in connection with a Fixed-Rate Loan shall be
calculated as though each Lender funded its Fixed-Rate Loan through the purchase
of a deposit of the type and maturity corresponding to the deposit used as a
reference in determining the Fixed-Rate applicable to such Loan, whether in fact
that is the case or not. The obligations of the Company and the other Borrowers
under SECTIONS 4.1, 4.2 and 4.4 shall survive payment of the Obligations and
termination of this Agreement.
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ARTICLE V: CONDITIONS PRECEDENT
5.1 INITIAL ADVANCES. The Lenders shall not be required to make the
initial Loans unless (i) such initial Loans are made not later than November 15,
1999; and (ii) the Company has furnished to the Administrative Agent each of the
following, with sufficient copies for the Lenders, and the other conditions set
forth below have been satisfied:
(A) Copies of the Spin-off Materials and such other information with
respect to the Spin-off as the Lead Arrangers may reasonably request, which
shall be in form and substance satisfactory to the Administrative Agent, and
evidence satisfactory to the Administrative Agent that all conditions precedent
thereunder or otherwise to the consummation of the Spin-off (other than payment
of the Dividend) shall have been satisfied (and not waived).
(B) Arrangements satisfactory to the Administrative Agent shall have
been made for the consummation of the Spin-off promptly following the initial
Loans.
(C) Copies of the Certificate of Incorporation of each of the Loan
Parties, together with all amendments thereto and a certificate of good
standing, all certified by the appropriate governmental officer in its
jurisdiction of incorporation.
(D) Copies, certified by the Secretary or Assistant Secretary of each
of the Loan Parties of their respective By-Laws and of their respective Board of
Directors' resolutions (and resolutions of other bodies, if any are deemed
necessary by counsel for any Lender) authorizing the execution of the Loan
Documents.
(E) An incumbency certificate, executed by the Secretary or Assistant
Secretary of each of the Loan Parties, which shall identify by name and title
and bear the signature of the officers of the applicable Loan Party authorized
to sign the Loan Documents and to make borrowings hereunder, upon which
certificate the Lenders shall be entitled to rely until informed of any change
in writing by the applicable Loan Party.
(F) A certificate, in form and substance satisfactory to the
Administrative Agent, signed by the chief financial officer of the Company,
stating that on the date of this Agreement (which shall be the initial Borrowing
Date) all the representations and warranties of the Loan Parties in the Loan
Documents are true and correct (unless such representation and warranty is made
as of a specific date, in which case, such representation and warranty shall be
true in all material respects as of such date) and no Default or Unmatured
Default has occurred and is continuing.
(G) The written opinions of the Loan Parties' US counsel, and, if
applicable, foreign counsel, addressed to the Agents and the Lenders, in form
and substance satisfactory to the Administrative Agent.
(H) Evidence reasonably satisfactory to the Administrative Agent that
the Company and each of its Subsidiaries (a) has made a reasonable assessment of
the Year 2000 Issues; (b) has a program for remediating the Year 2000 Issues,
including a timetable and budget of anticipated costs; and (c) has a source of
funds as required in such budget.
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(I) The capital structure and corporate structure of the Company and
its Subsidiaries is consistent in all material respects with the Spin-off
Materials, and there exists no injunction or temporary restraining order which,
in the reasonable judgment of the Administrative Agent, could prohibit or impose
material restrictions on the Spin-off or prohibit the making of the Loans and
the other transactions contemplated by the Loan Documents or any litigation
seeking such an injunction or restraining order.
(J) A written solvency certificate from the chief financial officer of
the Borrower in form and substance satisfactory to the Administrative Agent,
dated the initial Borrowing Date, with respect to the value, Solvency and other
factual information of or relating to, as the case may be, the Borrower and its
Subsidiaries on a consolidated basis, after giving effect to the Dividend, the
Spin-off, and the incurrence of Indebtedness related thereto (including the
initial extensions of credit hereunder).
(K) The Administrative Agent shall have received (i) pro forma opening
financial statements giving effect to the Spin-off which must not be materially
less favorable, in the Administrative Agent's reasonable judgment, than the
projections previously provided to the Lead Arrangers and which must
demonstrate, in the reasonable judgment of the Administrative Agent, together
with all other information then available to the Administrative Agent, that the
Company and its Subsidiaries can repay their debts and satisfy their respective
other obligations as and when due, and can comply with the financial covenants
set forth herein, (ii) a certificate from an Authorized Officer demonstrating to
the satisfaction of the Administrative Agent that as of October 1, 1999, but
giving pro forma effect to the Spin-off, the Company would have been in
compliance with the financial covenants in SECTION 7.4 at the level prescribed
for the fiscal quarter ending December 31, 1999 and (iii) such information as
the Administrative Agent may reasonably request to confirm the tax, legal and
business assumptions made in such pro forma financial statements.
(L) The Administrative Agent shall have received a satisfactory
business plan for the Company for the five fiscal years following the Closing
Date, including a projected consolidated balance sheet, consolidated statements
of income, retained earnings and cash flow with assumptions used in preparing
the statements.
(M) All governmental, shareholder and third party consents and
approvals necessary in connection with this Agreement, the Spin-off and the
other transactions contemplated hereby shall have been obtained; all such
consents and approvals shall be in full force and effect; and all applicable
waiting periods shall have expired without any action being taken by any
Governmental Authority that could restrain, prevent or impose any material
adverse conditions on the Spin-off or such other transactions or that could seek
or threaten any of the foregoing, and no law or regulation shall be applicable
which in the judgment of any of the Agents could have such effect.
(N) There shall not have occurred a material adverse change since June
30, 1999 in the business, assets, liabilities (actual or contingent),
operations, condition (financial or otherwise) or prospects of the Company and
its Subsidiaries taken as a whole.
(O) The Agents, Lenders and/or their Affiliates shall have received all
fees and expenses, including fees and expenses of Winston & Strawn, required to
be paid on or before the Closing Date.
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(P) The Administrative Agent shall have received evidence satisfactory
to it that all outstanding Indebtedness of the Company and its Subsidiaries
except for Permitted Existing Indebtedness has been paid in full and all Liens
securing such Indebtedness shall have been terminated.
(Q) Such other documents as the Administrative Agent or any Lender or
its counsel may have reasonably requested.
5.2 INITIAL ADVANCE TO EACH NEW SUBSIDIARY BORROWER. No Lender shall be
required to make an Advance hereunder to a new Subsidiary Borrower added after
the Closing Date unless the Company has furnished or caused to be furnished to
the Administrative Agent with sufficient copies for the Lenders:
(A) The Assumption Letter executed and delivered by such
Subsidiary Borrower and containing the written consent of the
Company thereon, as contemplated by SECTION 2.24.
(B) Copies, certified by the Secretary, Assistant Secretary,
Director or Officer of the Subsidiary Borrower, of its Board
of Directors' resolutions (and resolutions of other bodies, if
any are deemed necessary by the Administrative Agent)
approving the Assumption Letter.
(C) An incumbency certificate, executed by the Secretary,
Assistant Secretary, Director or Officer of the Subsidiary
Borrower, which shall identify by name and title and bear the
signature of the officers of such Subsidiary Borrower
authorized to sign the Assumption Letter and the other
documents to be executed and delivered by such Subsidiary
Borrower hereunder, upon which certificate the Administrative
Agent and the Lenders shall be entitled to rely until informed
of any change in writing by the Company.
(D) An opinion of counsel to such Subsidiary Borrower, in form and
substance satisfactory to the Administrative Agent.
(E) Guaranty documentation and contribution agreement
documentation from such Subsidiary Borrower in form and
substance satisfactory to the Administrative Agent.
(F) With respect to the initial Advance made to any Subsidiary
Borrower organized under the laws of England and Wales, the
Administrative Agent shall have received originals and/or
copies, as applicable, of all filings required to be made and
such other evidence as the Administrative Agent may require
establishing to the Administrative Agent's satisfaction that
each Lender, is entitled to receive payments under the Loan
Documents without deduction or withholding of any English
taxes or with such deductions and withholding of English taxes
as may be acceptable to the Administrative Agent.
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5.3 EACH ADVANCE AND EACH CONVERSION OR CONTINUATION OF AN ADVANCE. The
Lenders shall not be required to make any Loan, or convert or continue any
Advance, unless on the applicable Borrowing Date:
(A) There exists no Default or Unmatured Default;
(B) All of the representations and warranties contained in
ARTICLE VI are true and correct in all material respects as of such
Borrowing Date (unless such representation and warranty is made as of a
specific date, in which case, such representation and warranty shall be
true in all material respects as of such date);
(C) The Revolving Credit Obligations do not, and after making
such proposed Advance would not, exceed the Aggregate Revolving Loan
Commitment; and
(D) the Administrative Agent has received a timely Borrowing
Notice with respect to the applicable Loan.
Each Borrowing/Conversion/Continuation Notice with respect to each such
Advance shall constitute a representation and warranty by the Company that the
conditions contained in SECTIONS 5.3(A), (B) and (C) have been satisfied
(except, in the case of any conversion or continuation of a Loan, SECTION 6.5).
ARTICLE VI: REPRESENTATIONS AND WARRANTIES
In order to induce the Agents and the Lenders to enter into this
Agreement and to make the Loans and the other financial accommodations to the
Borrowers, the Company represents and warrants as follows to each Lender and the
Administrative Agent as of the date of this Agreement and on the Closing Date,
giving effect to the consummation of the transactions contemplated by the Loan
Documents and the Spin-off Materials as if each had occurred on the date hereof,
and thereafter on each date as required by SECTION 5.2 and 5.3:
6.1 ORGANIZATION; CORPORATE POWERS. Each of the Company and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of its jurisdiction of formation and has all requisite authority to conduct
its business in each jurisdiction in which its business is conducted, except
where the failure to do so would not have a Material Adverse Effect.
6.2 AUTHORIZATION AND VALIDITY. The Company has the requisite power and
authority and legal right to execute and deliver the Loan Documents and to
perform its obligations thereunder. The execution and delivery by the Company of
the Loan Documents and the performance of its obligations thereunder have been
duly authorized by proper proceedings, and the Loan Documents constitute legal,
valid and binding obligations of the Company enforceable against the Company in
accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally.
6.3 NO CONFLICT; GOVERNMENT CONSENT. Neither the execution and delivery
by the Company of the Loan Documents, nor the consummation of the transactions
therein contemplated, nor compliance with the provisions thereof will violate
any law, rule, regulation, order, writ,
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judgment, injunction, decree or award binding on the Company or any Subsidiary
or the Company's or any Subsidiary's articles of incorporation or by-laws or
other constitutive documents and agreements or the provisions of any indenture,
instrument or agreement to which the Company or any Subsidiary is a party or is
subject, or by which it, or its property, is bound, or conflict with or
constitute a default thereunder, or result in the creation or imposition of any
Lien in, of or on the property of the Company or any of its Subsidiaries
pursuant to the terms of any such indenture, instrument or agreement. No order,
consent, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, any governmental or public body
or authority, or any subdivision thereof, is required to authorize the Company,
or is required to be obtained by the Company in connection with the execution,
delivery and performance of, or the legality, validity, binding effect or
enforceability of, any of the Loan Documents.
6.4 FINANCIAL STATEMENTS. Each of the consolidated financial statements
of the Company and its Subsidiaries for the fiscal years ended June 30, 1996,
June 27, 1997 and July 3, 1998 were prepared in accordance with Agreement
Accounting Principles except that restatements reflected in the Form 10 have not
been included for the Australian write-off and the 1998 restructuring reserves;
and the consolidated financial statements of the Company and its Subsidiaries
included in the Form 10 were prepared in accordance with Agreement Accounting
Principles and fairly present the consolidated financial condition and
operations of the Company and its Subsidiaries at such dates and the
consolidated results of their operations for the periods then ended.
6.5 MATERIAL ADVERSE CHANGE. Since July 2, 1999, there has occurred no
change in the business, assets, liabilities (actual or contingent), operations,
condition (financial or otherwise) or prospects, of the Company, or the Company
and its Subsidiaries taken as a whole or any other event which has had or could
reasonably be expected to have a Material Adverse Effect.
6.6 TAXES. The Company and the Subsidiaries have filed all United
States federal tax returns and all other material tax returns which are required
to be filed and have paid all taxes due pursuant to said returns or pursuant to
any assessment received by the Company or any Subsidiary, except such taxes, if
any, as are being contested in good faith and as to which adequate reserves have
been provided. No tax liens have been filed (other than to secure payment of
contested taxes in an amount not to exceed $5,000,000 in any one case and
$10,000,000 in the aggregate) and no claims are being asserted with respect to
any such taxes. The charges, accruals and reserves on the books of the Company
and the Subsidiaries in respect of any taxes or other governmental charges are
adequate.
6.7 LITIGATION AND CONTINGENT OBLIGATIONS. There is no litigation,
arbitration, governmental investigation, proceeding or inquiry pending or, to
the knowledge of the Company, threatened against or affecting the Company or any
of its Subsidiaries (i) challenging the Spin-off or validity or enforceability
of any material provision of the Loan Documents or (ii) which could reasonably
be expected to have a Material Adverse Effect. There is no material loss
contingency within the meaning of Agreement Accounting Principles which has not
been reflected in the consolidated financial statements of the Company set forth
in the Form 10 or prepared and delivered pursuant to SECTION 7.1(A) for the
fiscal period during which such material loss contingency was incurred. Neither
the Company nor any of its Subsidiaries is subject to or in default with respect
to any final judgment, writ, injunction, restraining order or order of any
nature, decree, rule or
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regulation of any court or Governmental Authority which could reasonably be
expected to have a Material Adverse Effect.
6.8 SUBSIDIARIES. SCHEDULE 6.8 hereto contains an accurate list of all
of the Subsidiaries of the Company in existence on the date of this Agreement,
setting forth their respective jurisdictions of formation and the percentage of
their respective capital stock owned directly or indirectly by the Company or
other Subsidiaries. All of the issued and outstanding Capital Stock of such
Subsidiaries have been duly authorized and issued and are fully paid and
non-assessable.
6.9 ERISA. As at March 31, 1999 the Unfunded Liabilities of all Single
Employer Plans did not in the aggregate exceed $0. Each Plan complies in all
material respects with all applicable requirements of law and regulations. No
Reportable Event has occurred with respect to any Single Employer Plan having
any Unfunded Liability which has or may reasonably be expected to result in a
liability to the Company in excess of $10,000,000. Neither the Company nor any
other members of the Controlled Group has terminated any Single Employer Plan
without in each instance funding all vested benefit obligations thereunder. Each
member of the Controlled Group has fulfilled its minimum funding obligations
with respect to each Multiemployer Plan.
6.10 ACCURACY OF INFORMATION. No information, exhibit or report
furnished by the Company or any Subsidiary to any Agent or to any Lender in
connection with the negotiation of, or compliance with, the Loan Documents,
including, without limitation, the Form 10, contained any material misstatement
of fact or omitted to state a material fact or any fact necessary to make the
statements contained therein not materially misleading.
6.11 REGULATION U. Margin Stock constitutes less than 25% of those
assets of the Company and its Subsidiaries which are subject to any limitation
on sale, pledge, or other restriction hereunder.
6.12 MATERIAL AGREEMENTS. Neither the Company nor any of its
Subsidiaries is a party to any Contractual Obligation the performance of which
could reasonably be expected to have a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries is subject to any charter or other
restriction in any constitutive agreement or document affecting its business,
properties, financial condition, prospects or results of operations which could
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any Subsidiary is in default in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in any Contractual
Obligation to which it is a party, which default could reasonably be expected to
have a Material Adverse Effect.
6.13 COMPLIANCE WITH LAWS. The Company and its Subsidiaries have
complied with all Requirements of Law except to the extent that such
non-compliance could not reasonably be expected to have a Material Adverse
Effect. Neither the Company nor any Subsidiary has received any notice to the
effect that its operations are not in material compliance with any Requirements
of Law or the subject of any federal or state investigation evaluating whether
any remedial action is needed to respond to a release of any toxic or hazardous
waste or substance into the environment, which non-compliance or remedial action
could reasonably be expected to have a Material Adverse Effect.
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6.14 OWNERSHIP OF PROPERTIES. On the date of this Agreement, the
Company and its Subsidiaries have good title, free of all Liens, to all of the
properties and assets reflected in the financial statements included in the Form
10 as owned by it, except Liens permitted under SECTION 7.3(C).
6.15 STATUTORY INDEBTEDNESS RESTRICTIONS. Neither the Company nor any
of its Subsidiaries is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, or the
Investment Company Act of 1940, or any other federal or state statute or
regulation which limits its ability to incur indebtedness or its ability to
consummate the transactions contemplated hereby.
6.16 ENVIRONMENTAL MATTERS. Each of the Company and its Subsidiaries is
in compliance with all Environmental, Health or Safety Requirements of Laws in
effect in each jurisdiction where it is presently doing business and as to which
the failure to so comply, in the aggregate for all such failures, would not
reasonably be likely to subject the Company to liability that would have a
Material Adverse Effect. Neither the Company nor any Subsidiary is subject to
any liability under the Environmental, Health or Safety Requirements of Laws in
effect in each jurisdiction where it is presently doing business that could
reasonably be expected to have a Material Adverse Effect. As of the date hereof,
neither the Company nor any Subsidiary has received any:
(A) notice from any Governmental Authority by which any of the
Company's or such Subsidiary's present or previously-owned or leased property
has been identified in any manner by any such Governmental Authority as a
hazardous substance disposal or removal site, "Super Fund" clean-up site or
candidate for removal or closure pursuant to any Environmental, Health or Safety
Requirements of Law; or
(B) notice of any Lien arising under or in connection with any
Environmental, Health or Safety Requirements of Law that has attached to any of
the Company's or such Subsidiary's owned or leased property or any revenues of
the Company's or such Subsidiary's owned or leased property; or
(C) communication, written or oral, from any Governmental Authority
concerning action or omission by the Company or such Subsidiary in connection
with its ownership or leasing of any property resulting in the release of any
hazardous substance resulting in any violation of any Environmental, Health or
Safety Requirements of Law;
where the effect of which, in the aggregate for all such notices and
communications, could reasonably be expected to have a Material Adverse Effect.
6.17 INSURANCE. The properties and assets and business of the Company
and its Subsidiaries are insured with financially sound and reputable insurance
companies not Subsidiaries of the Company (unless consented to by the
Administrative Agent), in such amounts, with such deductibles and covering such
risks as are customarily carried by companies engaged in similar businesses and
are similarly situated.
6.18 LABOR MATTERS. As of the Closing Date, no labor disputes, strikes
or walkouts affecting the operations of the Company or any of its Subsidiaries,
are pending, or, to the Company's
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knowledge, threatened, planned or contemplated which could reasonably be
expected to have a Material Adverse Effect.
6.19 SOLVENCY. After giving effect to (i) the extensions of credit to
be made hereunder and under the 364-Day Agreement on the Closing Date and the
Dividend to be paid on the Closing Date or such other date as Loans requested
hereunder are made, (ii) the other transactions contemplated by this Agreement
and the other Loan Documents, including the Spin-off and (iii) the payment and
accrual of all transaction costs with respect to the foregoing, the Company and
its Subsidiaries taken as a whole are Solvent.
6.20 YEAR 2000 ISSUES. Each of the Company and its Subsidiaries has
made a reasonable assessment of the Year 2000 Issues and has a program for
remediating the Year 2000 Issues on a timely basis. Based on this assessment and
program, the Company does not reasonably anticipate any Material Adverse Effect
as a result of Year 2000 Issues.
6.21 DEFAULT. No Default or Unmatured Default has occurred and is
continuing.
6.22 REPRESENTATIONS AND WARRANTIES OF EACH SUBSIDIARY BORROWER. Each
Subsidiary Borrower represents and warrants to the Lenders that:
(A) ORGANIZATION AND CORPORATE POWERS. Such Subsidiary Borrower (i) is
a company duly formed and validly existing and in good standing under the laws
of the state or country of its organization (such jurisdiction being hereinafter
referred to as the "HOME COUNTRY"); (ii) has the requisite power and authority
to own its property and assets and to carry on its business substantially as now
conducted except where the failure to have such requisite authority would not
have a material adverse effect on such Subsidiary Borrower; and (iii) has the
requisite power and authority and legal right to execute and deliver each Loan
Document to which it is a party and the performance by it of its obligations
thereunder have been duly authorized by proper corporate proceedings.
(B) BINDING EFFECT. Each Loan Document executed by such Subsidiary
Borrower is the legal, valid and binding obligations of such Subsidiary Borrower
enforceable in accordance with their respective terms, except as enforceability
may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and general equitable principles.
(C) NO CONFLICT; GOVERNMENT CONSENT. Neither the execution and delivery
by such Subsidiary Borrower of the Loan Documents to which it is a party, nor
the consummation by it of the transactions therein contemplated to be
consummated by it, nor compliance by such Subsidiary Borrower with the
provisions thereof will violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on such Subsidiary Borrower or any
of its Subsidiaries or such Subsidiary Borrower's or any of its Subsidiaries'
memoranda or articles of association or the provisions of any indenture,
instrument or agreement to which such Subsidiary Borrower or any of its
Subsidiaries is a party or is subject, or by which it, or its property, is
bound, or conflict with or constitute a default thereunder, or result in the
creation or imposition of any lien in, of or on the property of such Subsidiary
Borrower or any of its Subsidiaries pursuant to the terms of any such indenture,
instrument or agreement in any such case which violation, conflict, default,
creation or imposition could reasonably be expected to have a material adverse
effect on such Subsidiary Borrower. No order, consent, approval, license,
authorization, or validation of, or filing, recording
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or registration with, or exemption by, any governmental agency is required to
authorize, or is required in connection with the execution, delivery and
performance of, or the legality, validity, binding effect or enforceability of,
any of the Loan Documents.
(D) FILING. To ensure the enforceability or admissibility in evidence
of this Agreement and each Loan Document to which such Subsidiary Borrower is a
party in its Home Country, it is not necessary that this Agreement or any other
Loan Document to which such Subsidiary Borrower is a party or any other document
be filed or recorded with any court or other authority in its Home Country or
that any stamp or similar tax be paid to or in respect of this Agreement or any
other Loan Document of such Subsidiary Borrower. The qualification by any Lender
or the Administrative Agent for admission to do business under the laws of such
Subsidiary Borrower's Home Country does not constitute a condition to, and the
failure to so qualify does not affect, the exercise by any Lender or the
Administrative Agent of any right, privilege, or remedy afforded to any Lender
or the Administrative Agent in connection with the Loan Documents to which such
Subsidiary Borrower is a party or the enforcement of any such right, privilege,
or remedy against such Subsidiary Borrower. The performance by any Lender or the
Administrative Agent of any action required or permitted under the Loan
Documents will not (i) violate any law or regulation of such Subsidiary
Borrower's Home Country or any political subdivision thereof, (ii) result in any
tax or other monetary liability to such party pursuant to the laws of such
Subsidiary Borrower's Home Country or political subdivision or taxing authority
thereof (PROVIDED that, should any such action result in any such tax or other
monetary liability to the Lender or the Administrative Agent, the Borrowers
hereby agree to indemnify such Lender or the Administrative Agent, as the case
may be, against (x) any such tax or other monetary liability and (y) any
increase in any tax or other monetary liability which results from such action
by such Lender or the Administrative Agent and, to the extent the Borrowers make
such indemnification, the incurrence of such liability by the Administrative
Agent or any Lender will not constitute a Default) or (iii) violate any rule or
regulation of any federation or organization or similar entity of which the such
Subsidiary Borrower's Home Country is a member.
(E) NO IMMUNITY. Neither such Subsidiary Borrower nor any of its assets
is entitled to immunity from suit, execution, attachment or other legal process.
Such Subsidiary Borrower's execution and delivery of the Loan Documents to which
it is a party constitute, and the exercise of its rights and performance of and
compliance with its obligations under such Loan Documents will constitute,
private and commercial acts done and performed for private and commercial
purposes.
(F) APPLICATION OF REPRESENTATIONS AND WARRANTIES. It is understood and
agreed by the parties hereto that the representations and warranties of each
Subsidiary Borrower in this SECTION 6.22 shall only be applicable to such
Subsidiary Borrower on and after the date of its execution of an Assumption
Letter.
6.23 FOREIGN EMPLOYEE BENEFIT MATTERS. (a) Each Foreign Employee
Benefit Plan is in compliance in all material respects with all laws,
regulations and rules applicable thereto and the respective requirements of the
governing documents for such Plan; (b) the aggregate of the accumulated benefit
obligations under all Foreign Pension Plans does not exceed to any material
extent the current fair market value of the assets held in the trusts or similar
funding vehicles for such Plans; (c) with respect to any Foreign Employee
Benefit Plan maintained or contributed to by the Company or any Subsidiary or
any member of its Controlled Group (other than a Foreign
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Pension Plan), reasonable reserves have been established in accordance with
prudent business practice or where required by ordinary accounting practices in
the jurisdiction in which such Plan is maintained; and (d) there are no material
actions, suits or claims (other than routine claims for benefits) pending or, to
the knowledge of the Company and its Subsidiaries, threatened against the
Company or any Subsidiary of it or any member of its Controlled Group with
respect to any Foreign Employee Benefit Plan.
ARTICLE VII: COVENANTS
The Company covenants and agrees that so long as any Revolving Loan
Commitments are outstanding and thereafter until payment in full of all of the
Obligations (other than contingent indemnity obligations), unless the Required
Lenders shall otherwise give prior written consent:
7.1 REPORTING. The Company shall:
(A) FINANCIAL REPORTING. Send to the Agents and the Lenders:
(i) QUARTERLY REPORTS. As soon as practicable and in any event
within forty-five (45) days after the end of the first three quarterly
periods of each of its fiscal years, for itself and the Subsidiaries,
consolidated and consolidating unaudited balance sheets as at the end
of each such period and consolidated and consolidating statement of
income and consolidated and consolidating statement of changes in
owners' equity, and a statement of cash flows for the period from the
beginning of such fiscal year to the end of such quarter, presented on
the same basis as described in SECTION 7.1(A)(ii) and on a comparative
basis with the statements for such period in the prior fiscal year of
the Company.
(ii) ANNUAL REPORTS. As soon as practicable, and in any event
within ninety (90) days after the end of each of its fiscal years, (a)
an audit report, certified (as to consolidated, but not consolidating
statements) by internationally recognized independent certified public
accountants, prepared in accordance with generally accepted accounting
principles, on a consolidated and consolidating basis for itself and
the Subsidiaries, including balance sheets as of the end of such
period, related statement of income and consolidated and consolidating
statement of changes in owners' equity, and a statement of cash flows,
which audit report shall be unqualified and shall state that such
financial statements fairly present the consolidated financial position
of the Company and its Subsidiaries as at the dates indicated and the
results of operations and cash flows for the periods indicated in
conformity with generally accepted accounting principles and that the
examination by such accountants in connection with such consolidated
and consolidating financial statements has been made in accordance with
generally accepted auditing standards and (b) projected balance sheets,
statements of income and cash flows for the three succeeding fiscal
years, prepared in accordance with generally accepted accounting
principles, on a consolidated basis, together with the appropriate
supporting details and a statement of underlying assumptions, all in
form similar to those delivered to the Lead Arrangers prior to the
Closing Date.
(iii) OFFICER'S CERTIFICATE. Together with each delivery of
any financial statement (a) pursuant to CLAUSES (i) and (ii) of this
SECTION 7.1(A), an Officer's Certificate of the
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Company, substantially in the form of EXHIBIT E attached hereto and
made a part hereof, stating that as of the date of such Officer's
Certificate no Default or Unmatured Default exists, or if any Default
or Unmatured Default exists, stating the nature and status thereof and
(b) pursuant to CLAUSES (i) and (ii) of this SECTION 7.1(A), a
compliance certificate, substantially in the form of EXHIBIT F attached
hereto and made a part hereof, signed by the Company's chief financial
officer, chief accounting officer or treasurer, setting forth
calculations for the period then ended for SECTION 2.5(B), if
applicable, which demonstrate compliance, when applicable, with the
provisions of SECTIONS 7.3(A) through (G) and SECTION 7.4, and which
calculate the Leverage Ratio for purposes of determining the then
Applicable Floating Rate Margin, Applicable Eurocurrency Margin and
Applicable Commitment Fee Percentage.
(B) NOTICE OF DEFAULT. Promptly upon any of the chief executive
officer, chief operating officer, chief financial officer, treasurer, controller
or general counsel of the Company obtaining actual knowledge (i) of any
condition or event which constitutes a Default or Unmatured Default, or becoming
aware that any Lender or Administrative Agent has given any written notice to
any Authorized Officer with respect to a claimed Default or Unmatured Default
under this Agreement, or (ii) that any Person has given any written notice to
any Authorized Officer or any Subsidiary of the Company or taken any other
action with respect to a claimed default or event or condition of the type
referred to in SECTION 8.1(D), the Company shall deliver to the Administrative
Agent and the Lenders an Officer's Certificate specifying (a) the nature and
period of existence of any such claimed default, Default, Unmatured Default,
condition or event, (b) the notice given or action taken by such Person in
connection therewith, and (c) what action the Company has taken, is taking and
proposes to take with respect thereto.
(C) LAWSUITS. (i) Promptly upon the Company obtaining actual knowledge
of the institution of, or written threat of, any action, suit, proceeding,
governmental investigation or arbitration, by or before any Governmental
Authority, against or affecting the Company or any of its Subsidiaries or any
property of the Company or any of its Subsidiaries not previously disclosed
pursuant to SECTION 6.7, which action, suit, proceeding, governmental
investigation or arbitration exposes, or in the case of multiple actions, suits,
proceedings, governmental investigations or arbitrations arising out of the same
general allegations or circumstances which expose, in the Company's reasonable
judgment, the Company or any of its Subsidiaries to liability in an amount
aggregating $10,000,000 or more (exclusive of claims covered by insurance
policies of the Company or any of its Subsidiaries unless the insurers of such
claims have disclaimed coverage or reserved the right to disclaim coverage on
such claims and exclusive of claims covered by the indemnity of a financially
responsible indemnitor in favor of the Company or any of its Subsidiaries unless
the indemnitor has disclaimed or reserved the right to disclaim coverage
thereof), give written notice thereof to the Administrative Agent and the
Lenders and provide such other information as may be reasonably available to
enable each Lender and the Administrative Agent and its counsel to evaluate such
matters; and (ii) in addition to the requirements set forth in CLAUSE (i) of
this SECTION 7.1(C), upon request of the Administrative Agent or the Required
Lenders, promptly give written notice of the status of any action, suit,
proceeding, governmental investigation or arbitration covered by a report
delivered pursuant to CLAUSE (i) above and provide such other information as may
be reasonably available to it that would not jeopardize any attorney-client
privilege by disclosure to the Lenders to enable each Lender and the
Administrative Agent and its counsel to evaluate such matters.
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(D) ERISA NOTICES. Deliver or cause to be delivered to the
Administrative Agent and the Lenders, at the Company's expense, the following
information and notices as soon as reasonably possible, and in any event:
(i) within ten (10) Business Days after the Company, or within
twenty-five (25) Business Days after any member of the Controlled
Group, obtains knowledge that a Termination Event has occurred which
could reasonably be expected to subject the Company to liability in
excess of $25,000,000, a written statement of the chief financial
officer, treasurer or designee of the Company describing such
Termination Event and the action, if any, which the member of the
Controlled Group has taken, is taking or proposes to take with respect
thereto, and when known, any action taken or threatened by the IRS, DOL
or PBGC with respect thereto;
(ii) within ten (10) Business Days after the Company, or
within twenty-five (25) days after any of its Subsidiaries, obtains
knowledge that a material non-exempt prohibited transaction (defined in
Sections 406 of ERISA and Section 4975 of the Code) has occurred, a
statement of the chief financial officer, treasurer or designee of the
Company describing such transaction and the action which the Company or
such Subsidiary has taken, is taking or proposes to take with respect
thereto;
(iii) within ten (10) Business Days after the Company, or
within twenty-five (25) days after any of its Subsidiaries, receives
notice of any unfavorable determination letter from the IRS regarding
the qualification of a Plan under Section 401(a) of the Code, copies of
each such letter;
(iv) within ten (10) Business Days with respect to the
Company, and within twenty-five (25) days with respect to a member of
the Controlled Group, after the filing thereof with the IRS, a copy of
each funding waiver request filed with respect to any Benefit Plan and
all communications received by the Company or a member of the
Controlled Group with respect to such request;
(v) within ten (10) Business Days after receipt by the
Company, or within twenty-five (25) Business Days of the receipt by any
member of the Controlled Group of the PBGC's intention to terminate a
Benefit Plan or to have a trustee appointed to administer a Benefit
Plan, copies of each such notice;
(vi) within ten (10) Business Days after the Company, or
within twenty-five (25) days after any member of the Controlled Group,
fails to make a required installment or any other required payment
under Section 412 of the Code on or before the due date for such
installment or payment, a notification of such failure;
(vii) within ten (10) Business Days after the establishment of
any Foreign Employee Benefit Plan or the commencement of, or obligation
to commence, contributions to any Foreign Employee Benefit Plan to
which the Company or any Subsidiary was not previously contributing,
where the aggregate annual contributions to such Plan(s) resulting
therefrom are or could reasonably be expected to be in excess of
$10,000,000, notification
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of such establishment, commencement or obligation to commence and the
amount of such contributions; and
For purposes of this SECTION 7.1(D), the Company, any of its Subsidiaries and
any member of the Controlled Group shall be deemed to know all facts known by
the administrator of any Plan which is a Single Employer Plan and which is
sponsored by such Company, Subsidiary or member of the Controlled Group,
respectively, and shall be deemed to know all facts known by the administrator
of any other Plan which is a Single Employer Plan fifteen (15) days after
knowledge by such administrator.
(E) LABOR MATTERS. Notify the Administrative Agent and the Lenders in
writing, promptly upon an Authorized Officer learning of (i) any material labor
dispute to which the Company or any of its Subsidiaries may become a party,
including, without limitation, any strikes, lockouts or other disputes relating
to such Persons' plants and other facilities and (ii) any material Worker
Adjustment and Retraining Notification Act liability incurred with respect to
the closing of any plant or other facility of the Company or any of its
Subsidiaries.
(F) OTHER INDEBTEDNESS. Deliver to the Administrative Agent (i) a copy
of each regular report, notice or communication regarding potential or actual
defaults (including any accompanying officer's certificate) delivered by or on
behalf of the Company to the holders of funded Indebtedness with an aggregate
outstanding principal amount in excess of $10,000,000 pursuant to the terms of
the agreements governing such Indebtedness, such delivery to be made at the same
time and by the same means as such notice of default is delivered to such
holders, and (ii) a copy of each notice or other communication received by the
Company from the holders of funded Indebtedness with an aggregate outstanding
principal amount in excess of $10,000,000 regarding potential or actual defaults
pursuant to the terms of such Indebtedness, such delivery to be made promptly
after such notice or other communication is received by the Company.
(G) OTHER REPORTS. Deliver or cause to be delivered to the
Administrative Agent and the Lenders copies of (i) all financial statements,
reports and non-routine notices, if any, sent or made available generally by the
Company to its securities holders or filed with the Commission by the Company,
and (ii) all notifications received from the Commission by the Company or its
Subsidiaries pursuant to the Securities Exchange Act of 1934 and the rules
promulgated thereunder other than routine reminders or notices that do not
relate to specific violations of rules promulgated by the Commission. The
Company shall include the Administrative Agent and the Lenders on its standard
distribution lists for all press releases made available generally by the
Company or any of the Company's Subsidiaries to the public concerning material
developments in the business of the Company or any such Subsidiary.
(H) ENVIRONMENTAL NOTICES. As soon as possible and in any event within
fifteen (15) days after receipt by the Company, deliver to the Administrative
Agent and the Lenders a copy of (i) any notice or claim to the effect that the
Company or any of its Subsidiaries is or may be liable to any Person as a result
of the Release by the Company, any of its Subsidiaries, or any other Person of
any Contaminant into the environment, and (ii) any notice alleging any violation
of any Environmental, Health or Safety Requirements of Law by the Company or any
of its Subsidiaries if, in either case, such notice or claim relates to an event
which could reasonably be expected to subject the Company and each of its
Subsidiaries to liability individually or in the aggregate in excess of
$10,000,000.
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(I) OTHER INFORMATION. Promptly upon receiving a request therefor from
the Administrative Agent, prepare and deliver to the Administrative Agent and
the Lenders such other information with respect to the Company or any of its
Subsidiaries, as from time to time may be reasonably requested by the
Administrative Agent.
7.2 AFFIRMATIVE COVENANTS.
(A) CORPORATE EXISTENCE, ETC. The Company shall, and shall cause each
of its Subsidiaries to, at all times maintain its corporate existence and
preserve and keep, or cause to be preserved and kept, in full force and effect
its rights and franchises material to its businesses except where, in the case
of Subsidiaries, failure to do so could not reasonably be expected to have a
Material Adverse Effect.
(B) CORPORATE POWERS. The Company shall, and shall cause each of its
Subsidiaries to, qualify and remain qualified to do business in each
jurisdiction in which the nature of its business requires it to be so qualified
and where the failure to be so qualified will have or could reasonably be
expected to have a Material Adverse Effect.
(C) COMPLIANCE WITH LAWS, ETC. The Company shall, and shall cause its
Subsidiaries to, (a) comply with all Requirements of Law and all restrictive
covenants affecting such Person or the business, prospects, properties, assets
or operations of such Person, and (b) obtain as needed all permits necessary for
its operations and maintain such permits in good standing unless failure to
comply or obtain such permits could not reasonably be expected to have a
Material Adverse Effect.
(D) PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION. The Company shall
pay, and cause each of its Subsidiaries to pay, (i) all material taxes,
assessments and other governmental charges imposed upon it or on any of its
properties or assets or in respect of any of its franchises, business, income or
property before any penalty or interest accrues thereon, and (ii) all claims
(including, without limitation, claims for labor, services, materials and
supplies) for material sums which have become due and payable and which by law
have or may become a Lien (other than a Lien permitted by SECTION 7.3(C)) upon
any of the Company's or such Subsidiary's property or assets, prior to the time
when any penalty or fine shall be incurred with respect thereto; PROVIDED,
HOWEVER, that no such taxes, assessments and governmental charges referred to in
CLAUSE (i) above or claims referred to in CLAUSE (ii) above (and interest,
penalties or fines relating thereto) need be paid if being contested in good
faith by appropriate proceedings diligently instituted and conducted and if such
reserve or other appropriate provision, if any, as shall be required in
conformity with Agreement Accounting Principles shall have been made therefor.
(E) INSURANCE. The Company will maintain, and will cause to be
maintained on behalf of each of its Subsidiaries, insurance coverage by
financially sound and reputable insurance companies or associations, against
such casualties and contingencies, of such types and in such amounts as are
customary for companies engaged in similar businesses and owning and operating
similar properties, it being understood that the Company and its Subsidiaries
may self-insure against hazards and risks with respect to which, and in such
amounts, as the Company in good faith determines prudent and consistent with
sound financial practice, and as are customary for companies engaged in similar
businesses and owning and operating similar properties. The Company shall
furnish to any Lender upon request full information as to the insurance carried.
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(F) INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. The
Company shall permit and cause each of the Company's Subsidiaries to permit, any
authorized representative(s) designated by either the Administrative Agent or
any Lender (unless a Default has occurred and is continuing, only in conjunction
with an inspection conducted by the Administrative Agent) to visit and inspect,
for a reasonable purpose, any of the properties of the Company or any of its
Subsidiaries, to examine, audit, check and make copies of their respective
financial and accounting records, books, journals, orders, receipts and any
correspondence and other data relating to their respective businesses or the
transactions contemplated hereby (including, without limitation, in connection
with environmental compliance, hazard or liability), and to discuss their
affairs, finances and accounts with their officers and their independent
certified public accountants, all upon reasonable notice and at such reasonable
times during normal business hours, as often as may be reasonably requested. The
Company shall keep and maintain, and cause each of the Company's Subsidiaries to
keep and maintain proper books of record and account in which entries in
conformity with Agreement Accounting Principles shall be made of all dealings
and transactions in relation to their respective businesses and activities.
(G) ERISA COMPLIANCE. The Company shall, and shall cause each of the
Company's Subsidiaries to, establish, maintain and operate all Plans to comply
in all material respects with the provisions of ERISA, the Code, all other
applicable laws, and the regulations and interpretations thereunder and the
respective requirements of the governing documents for such Plans, except for
failures to comply which, in the aggregate, would not be reasonably likely to
subject the Company or any of its Subsidiaries to liability, individually or
in the aggregate, in excess of $10,000,000.
(H) MAINTENANCE OF PROPERTY. The Company shall cause all property
used or useful in the conduct of its business or the business of any Subsidiary
to be maintained and kept in good condition, repair and working order and
supplied with all necessary equipment and shall cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as
in the judgment of the Company may be necessary so that the business carried
on in connection therewith may be properly and advantageously conducted at all
times and except to the extent that the failure to so maintain such property
could not be reasonably expected to have a Material Adverse Effect.
(I) ENVIRONMENTAL COMPLIANCE. The Company shall, and shall cause each
of the Company's Subsidiaries to comply with, all Environmental, Health or
Safety Requirements of Law, except where noncompliance could not reasonably be
expected to have a Material Adverse Effect.
(J) USE OF PROCEEDS. The Borrowers shall use the proceeds of the
Advances to fund the Dividend in whole or in part and to provide funds for the
additional working capital needs and other general corporate purposes of the
Company and its Subsidiaries, including, without limitation, the financing of
Permitted Acquisitions. The Company will not, nor will it permit any Subsidiary
to, use any of the proceeds of the Advances to make any Acquisition other than a
Permitted Acquisition made pursuant to SECTION 7.3(G).
(K) Subsidiary Guarantees; Subsidiary Subordination Agreement. The
Company will:
(a) cause each Subsidiary Borrower that is a Domestic Subsidiary
and each Domestic Subsidiary which is a Wholly-Owned
Subsidiary and has assets with a book value
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in excess of $10,000,000 to execute the Guaranty (and from and
after the Closing Date cause each other Subsidiary Borrower
that is a Domestic Subsidiary and each other Domestic
Subsidiary which is a Wholly-Owned Subsidiary and has such
assets to execute and deliver to the Administrative Agent,
within ten (10) days after becoming a Subsidiary Borrower or
another Domestic Subsidiary which is a Wholly-Owned Subsidiary
and has such assets, as applicable, an assumption or joinder
agreement pursuant to which it agrees to be bound by the terms
and provisions of the Guaranty (whereupon such Subsidiary
shall become a "Guarantor" under this Agreement));
(b) in the event that at any time the book value of the assets of
all Domestic Subsidiaries which are not Wholly-Owned
Subsidiaries and are not Guarantors exceed $100,000,000,
within ten (10) days thereafter cause one or more of such
Subsidiaries to execute and deliver to the Administrative
Agent an assumption or joinder agreement pursuant to which it
or they agree to be bound by the terms and provisions of the
Guaranty (whereupon each such Subsidiary shall become a
"Guarantor" under this Agreement) such that, after giving
effect thereto, the book value of the assets of all Domestic
Subsidiaries which are not Wholly-Owned Subsidiaries and are
not Guarantors do not exceed $100,000,000;
(c) cause each Subsidiary, before it makes a loan to any of the
Borrowers, to execute the Subordination Agreement (and from
and after the Closing Date cause each other Subsidiary to
execute and deliver to the Administrative Agent, within ten
(10) days after becoming a Subsidiary, as applicable, an
assumption or joinder agreement pursuant to which it agrees to
be bound by the terms and provisions of the Subordination
Agreement);
(d) deliver and cause such Subsidiaries to deliver corporate
resolutions, opinions of counsel, and such other corporate
documentation as the Administrative Agent may reasonably
request, all in form and substance reasonably satisfactory to
the Administrative Agent; and
(e) cause each Subsidiary which is a Subsidiary Borrower to be a
Wholly-Owned Subsidiary for so long as it remains a Subsidiary
Borrower.
(L) YEAR 2000 ISSUES. The Company shall, and shall cause each of its
Subsidiaries to, take all actions reasonably necessary to address the Year 2000
Issues so that any such Year 2000 Issues will not have a Material Adverse
Effect. The Company shall provide the Administrative Agent and each of the
Lenders information regarding the Company's and its Subsidiaries' program to
address Year 2000 Issues. The Company shall advise the Administrative Agent, if
after the date hereof, it determines that Year 2000 Issues could reasonably be
expected to have a Material Adverse Effect.
(M) FOREIGN EMPLOYEE BENEFIT COMPLIANCE. The Company shall, and shall
cause each of its Subsidiaries and each member of its Controlled Group to,
establish, maintain and operate all Foreign Employee Benefit Plans to comply in
all material respects with all laws, regulations and
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rules applicable thereto and the respective requirements of the governing
documents for such Plans, except for failures to comply which, in the aggregate,
would not be reasonably likely to subject the Company or any of its Subsidiaries
to liability, individually or in the aggregate, in excess of $10,000,000.
(N) PLEDGE AGREEMENTS. Within 30 days after the date of this Agreement,
the Company and/or its Subsidiaries shall (a) grant, or cause to be granted, to
the Collateral Agent, to equally and ratably secure the Obligations, the
"Obligations" under the 364-Day Credit Agreement and all obligations of the
Company or its Subsidiaries under Hedging Agreements entered into in connection
with this Agreement or the 364-Day Credit Agreement, a pledge of 65% (or such
lesser percentage as is owned by the Company or applicable Subsidiary which is
not a Foreign Subsidiary) of the shares of the capital stock of each Subsidiary
listed on SCHEDULE 7.2, in each case pursuant to a Pledge Agreement and (b)
deliver to the Collateral Agent such Pledge Agreements, stock certificates and
stock powers relating to such shares and such opinions of counsel and other
documentation as the Collateral Agent may reasonably request. Notwithstanding
the foregoing, the Collateral Agent may, in its discretion, extend the time
period for delivery of the Pledge Agreements, stock certificates and stock
powers referenced in the preceding sentence. In addition, within 30 days (or, as
long as the Company uses its best efforts, such reasonably longer time as the
Company may need) after the date that any other Subsidiary is or becomes a
Foreign Subsidiary which is a Wholly-Owned Subsidiary, has assets with a book
value in excess of $10,000,000 and is owned by the Company and/or one or more
Domestic Subsidiaries, the Company shall, or as applicable shall cause its
Domestic Subsidiaries to, grant or cause to be granted to the Collateral Agent a
pledge of such Foreign Subsidiary's capital stock to the extent, in the manner
and accompanied by the documentation described in the preceding sentence.
7.3 NEGATIVE COVENANTS.
(A) SALE OF RECEIVABLES. The Company shall not, nor shall it permit any
Subsidiary to, sell or otherwise dispose of any Receivables, with or without
recourse, except that the Company and the Subsidiaries may sell, transfer or
pledge any of their respective Receivables; provided, in the case of United
States domestic Receivables that the proceeds from the sale of such Receivables
are used to prepay the Term Loans (as defined in the 5-Year Credit Agreement) in
accordance with Section 2.5(C) of the 5-Year Credit Agreement.
(B) SALES OF ASSETS. The Company shall not, nor shall it permit any
Subsidiary to, consummate any Asset Sale, except:
(i) Asset Sales in connection with the sale of Receivables
permitted under SECTION 7.3(A);
(ii) transfers of assets to the Company, between the Company
and any Guarantor which is a Domestic Subsidiary or between any such
Guarantors; and
(iii) sales, assignments, transfers, leases, conveyances or
other dispositions of other assets if such transaction (a) is for not
less than fair market value (as determined in good faith by the
Company's chief financial officer), and (b) when combined with all such
other transactions (each such transaction being valued at book value)
and all Sale and
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Leaseback Transactions (each such Sale and Leaseback Transaction being
valued at book value) during the period from the Closing Date to the
date of such proposed transaction, represents the disposition of not
greater than ten percent (10%) of the Company's Consolidated Net Assets
at the end of the fiscal year immediately preceding that in which such
transaction is proposed to be entered into.
(C) LIENS. The Company shall not, nor shall it permit any Subsidiary
to, directly or indirectly create, incur, assume or permit to exist a Lien on or
with respect to the Capital Stock of any Subsidiary of the Company. In addition,
the Company shall not, nor shall it permit any Subsidiary to, directly or
indirectly create, incur, assume or permit to exist any Lien on or with respect
to any of their respective other property or assets except:
(i) Permitted Existing Liens;
(ii) Customary Permitted Liens;
(iii) Liens with respect to property acquired by the Company
or any of its Subsidiaries after the date hereof (and not created in
contemplation of such acquisition) pursuant to a Permitted Acquisition;
PROVIDED, that such Liens shall extend only to the property so
acquired;
(iv) Liens on Receivables created in connection with a
transaction permitted under SECTION 7.3(A); PROVIDED, that each such
Lien represents an interest no greater than the related purchaser's
pro-rata interest in the pool of eligible Receivables so sold;
(v) Liens securing Indebtedness of a Subsidiary to the
Company;
(vi) Additional Liens, provided the Indebtedness secured
thereby does not exceed in the aggregate $10,000,000;
(vii) Liens, if any, created by the Loan Documents or
otherwise securing the Obligations and Liens securing Indebtedness
under the 5-Year Credit Agreement only to the extent such Liens are
equal and ratable with, or subordinate to, any Liens granted to the
Administrative Agent for the benefit of the Lenders; and
(viii) The replacement, extension or renewal of any Lien
permitted above upon or in the same property theretofore subject
thereto in connection with the replacement, extension or renewal
(pursuant to Permitted Refinancing Indebtedness) of the obligations
secured thereby.
(D) INDEBTEDNESS. The Company shall not, nor shall it permit
any Subsidiary to, cause or permit, directly or indirectly create,
incur, assume or otherwise become or remain directly or indirectly
liable with respect to any Indebtedness, except:
(i) the Obligations;
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(ii) Permitted Existing Indebtedness and related Permitted
Refinancing Indebtedness of the type described in CLAUSE (i) of the
definition thereof;
(iii) Indebtedness in an aggregate principal amount not to
exceed $700,000,000 at any time incurred in connection with the 5-Year
Credit Agreement and related Permitted Refinancing Indebtedness of the
type described in CLAUSE (i) of the definition thereof;
(iv) Indebtedness arising from intercompany loans and advances
from the Company or any Subsidiary to any Domestic Subsidiary which is
a Guarantor; provided, that such Indebtedness shall be expressly
subordinate to the payment in full in cash of the Obligations;
(v) Contingent Obligations to the extent permitted under
SECTION 7.3(E);
(vi) Hedging Obligations;
(vii) Indebtedness incurred in connection with a
securitization of Receivables; and
(viii) additional unsecured Indebtedness in an aggregate
amount at any time outstanding not exceeding (a) $150,000,000, LESS (b)
the aggregate amount of securitized (i) United States domestic
Receivables in excess of $250,000,000, and (ii) European Receivables in
excess of $100,000,000, less (c) the amount of Permitted Existing
Indebtedness, of which not more than $50,000,000 may be incurred by
Subsidiaries which are not Subsidiary Borrowers or Guarantors; and
(ix) additional unsecured Indebtedness, the proceeds of which
are used to repay the Term Loans under the 5-Year Agreement.
(E) CONTINGENT OBLIGATIONS. The Company shall not, nor shall it permit
any Subsidiary to, directly or indirectly create or become or be liable with
respect to any Contingent Obligation, except: (i) recourse obligations resulting
from endorsement of negotiable instruments for collection in the ordinary course
of business; (ii) Permitted Existing Contingent Obligations; (iii) obligations,
warranties, guaranties and indemnities, not relating to Indebtedness of any
Person, which have been or are undertaken or made in the ordinary course of
business and not for the benefit of or in favor of an Affiliate of the Company
or such Subsidiary; (iv) Contingent Obligations of the Subsidiaries of the
Company (a) under the Guaranty to which they are a party and (b) as guarantors
of the 5-Year Credit Agreement, (v) obligations arising under or related to the
Loan Documents; (vi) Contingent Obligations in respect of other Indebtedness
permitted by Section 7.3(D) above, and (vii) additional Contingent Obligations
in an aggregate amount not to exceed in the aggregate five percent (5%) of
Consolidated Net Worth at any one time outstanding.
(F) RESTRICTED PAYMENTS. The Company shall not, nor shall it permit any
Subsidiary to, make or declare any Restricted Payments (other than (i) the
Dividend, and (ii) Restricted Payments to the Company or to a Wholly-Owned
Subsidiary of the Company); provided, however, that so long as no Default or an
Unmatured Default shall have occurred and be continuing at the date of
declaration or payment thereof or would result therefrom, the Company may make
Restricted
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Payments (in addition to the Dividend) in an aggregate amount of up to 25% of
Net Income for the prior fiscal year.
(G) CONDUCT OF BUSINESS; SUBSIDIARIES; ACQUISITIONS. The Company shall
not, nor shall it permit any Subsidiary to, engage in any business other than
the businesses engaged in by the Company on the date hereof and any business or
activities which are similar, related or incidental thereto or logical
extensions thereof. The Company shall not create, acquire or capitalize any
Subsidiary after the date hereof unless (i) no Default or Unmatured Default
which is not being cured shall have occurred and be continuing or would result
therefrom; (ii) after such creation, acquisition or capitalization, all of the
representations and warranties contained herein shall be true and correct in all
material respects (unless such representation and warranty is made as of a
specific date, in which case, such representation or warranty shall be true in
all material respects as of such date); and (iii) after such creation,
acquisition or capitalization the Company shall be in compliance with the terms
of SECTION 7.2(K). The Company shall not make any Acquisitions, other than
Acquisitions meeting the following requirements (each such Acquisition
constituting a "PERMITTED ACQUISITION"):
(i) no Default or Unmatured Default shall have occurred and be
continuing or would result from such Acquisition or the incurrence of
any Indebtedness in connection therewith;
(ii) the purchase is consummated pursuant to a negotiated
acquisition agreement on a non-hostile basis and approved by the target
company's board of directors (and shareholders, if necessary) prior to
the consummation of the Acquisition;
(iii) if the purchase price payable in respect to any such
Acquisition (including, without limitation, cash or stock consideration
paid and Indebtedness or other liabilities assumed) exceeds
$25,000,000, prior to each such Acquisition, the Company shall have
delivered to the Administrative Agent and the Lenders a certificate
from one of the Authorized Officers, demonstrating that after giving
effect to such Acquisition, on a PRO FORMA basis in respect of each
such Acquisition as if the Acquisition and such incurrence of
Indebtedness had occurred on the first day of the twelve-month period
ending on the last day of the Company's most recently completed fiscal
quarter, the Company would have been in compliance with the financial
covenants in SECTION 7.4 and not otherwise in Default;
(iv) if the purchase price for the Acquisition exceeds,
together with all other Permitted Acquisitions permitted under this
SECTION 7.3(G) during the same fiscal year, $150,000,000 (the
"PERMITTED ACQUISITION BASKET") (including the incurrence or assumption
of any Indebtedness in connection therewith), the Required Lenders
shall have consented to such Acquisition; PROVIDED that (a) if the
"Term Loans" under the 5-Year Credit Agreement have been repaid and all
of the "Term Loan Commitments" under the 5-Year Credit Agreement have
been irrevocably terminated, the Permitted Acquisition Basket shall be
$250,000,000 and (b) if the Term Loans have been repaid and all of the
Term Loan Commitments have been irrevocably terminated and the
Company's senior unsecured debt is rated "BBB" or better by Standard &
Poor's Ratings Group or "Baa" or better by Moody's Investors Services,
Inc., the Permitted Acquisition Basket shall be $350,000,000;
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(v) the businesses being acquired shall be similar to that of
the Company and its Subsidiaries as of the Closing Date, related or
incidental thereto or logical extensions thereof; and
(vi) such Acquisition shall be structured as an asset
acquisition, as an acquisition of one hundred percent (100%) of the
outstanding voting securities of the target company or as a merger
permitted hereby.
(H) INVESTMENTS. Neither the Company nor any of its Subsidiaries shall
purchase or acquire, or make any commitment therefor, any capital stock, equity
interest, or any obligations or other securities of, or any interest in, any
Person, or make or commit to make any advance, loan, extension of credit or
capital contribution to or any other investment in, any Person including any
Affiliate of the Company, except for:
(i) Investments by the Company or any Subsidiary in any
Wholly-Owned Subsidiary which is a Guarantor;
(ii) Investments incurred in order to consummate Permitted
Acquisitions otherwise permitted herein;
(iii) Investments in Cash Equivalents; and
(iv) other Investments in an aggregate amount not to exceed
$20,000,000 (based on the initial amount invested).
(I) TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES. Neither the Company
nor any of its Subsidiaries shall directly or indirectly enter into or permit to
exist any transaction (including, without limitation, the purchase, sale, lease
or exchange of any property or the rendering of any service) with, or make loans
or advances to, any Affiliate of the Company which is not its Wholly-Owned
Subsidiary, on terms that are less favorable to the Company or any of its
Subsidiaries, as applicable, than those that might be obtained in an arm's
length transaction at the time from Persons who are not such a holder or
Affiliate, except for (i) Restricted Payments permitted by SECTION 7.3(F) and
(ii) as otherwise contemplated by the Spin-off Materials.
(J) RESTRICTION ON FUNDAMENTAL CHANGES. Neither the Company nor any of
its Subsidiaries shall enter into any merger or consolidation, or liquidate,
wind-up or dissolve (or suffer any liquidation or dissolution), or convey,
lease, sell, transfer or otherwise dispose of, in one transaction or series of
transactions, all or substantially all of the Company's consolidated business or
property (each such transaction a "FUNDAMENTAL Change"), whether now or
hereafter acquired, except (i) Fundamental Changes permitted under SECTIONS
7.3(B), 7.3(D) or 7.3(G), (ii) a Subsidiary of the Company may be merged into or
consolidated with the Company or any Wholly-Owned Subsidiary of the Company (in
which case the Company or such Wholly-Owned Subsidiary shall be the surviving
corporation); provided that if the predecessor Subsidiary was a Guarantor, the
surviving Subsidiary, if applicable, shall be a Guarantor hereunder, (iii) any
liquidation of any Subsidiary of the Company into the Company or another
Subsidiary of the Company, as applicable, and (iv) the Company may merge with
any other Person, or any Subsidiary of the Company may consolidate or merge with
any other Person, PROVIDED, that (A) no Default or Unmatured Default
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shall exist immediately after giving effect to such Fundamental Change, (B) in
the case of any merger of the Company, the Company is the surviving corporation
in such merger and such merger is with a Person in a line of business
substantially similar to that of the Company and its Subsidiaries as of the
Closing Date or any business or activities which are similar, related or
incidental thereto or logical extensions thereof, and (C) in the case of any
merger or consolidation of any Subsidiary of the Company, the surviving
corporation in such Fundamental Change is or becomes as a result thereof a
Wholly-Owned Subsidiary of the Company and if the predecessor Subsidiary was a
Guarantor, the surviving Subsidiary shall be a Guarantor hereunder, and (D) such
transaction is with a Person in a line of business substantially similar to that
of the Company and its Subsidiaries as of the Closing Date.
(K) MARGIN REGULATIONS. Neither the Company nor any of its
Subsidiaries, shall use all or any portion of the proceeds of any credit
extended under this Agreement to purchase or carry Margin Stock.
(L) ERISA. (a) The Company shall not:
(i) engage, or permit any of its Subsidiaries to engage, in
any material prohibited transaction described in Sections 406 of ERISA
or 4975 of the Code for which a statutory or class exemption is not
available or a private exemption has not been previously obtained from
the DOL;
(ii) permit to exist any material accumulated funding
deficiency (as defined in Sections 302 of ERISA and 412 of the Code),
with respect to any Benefit Plan, whether or not waived;
(iii) fail, or permit any Controlled Group member to fail, to
pay timely required material contributions or material annual
installments due with respect to any waived funding deficiency to any
Benefit Plan;
(iv) terminate, or permit any Controlled Group member to
terminate, any Benefit Plan which would result in any material
liability of the Company or any Controlled Group member under Title IV
of ERISA;
(v) fail to make any material contribution or payment to any
Multiemployer Plan which the Company or any Controlled Group member may
be required to make under any agreement relating to such Multiemployer
Plan, or any law pertaining thereto;
(vi) permit any material unfunded liabilities with respect to
any Foreign Pension Plan except to the extent that any such unfunded
liabilities are being funded by annual contributions made by the
Borrower or any member of its Controlled Group and such annual
contributions are not less than the minimum amounts, if any, required
under applicable local law;
(vii) fail, or permit any of its Subsidiaries or Controlled
Group members to fail, to pay any required contributions or payments to
a Foreign Pension Plan on or before the due date for such required
installment or payment;
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(viii) fail, or permit any Controlled Group member to fail, to
pay any required material installment or any other payment required
under Section 412 of the Code on or before the due date for such
installment or other payment; or
(ix) amend, or permit any Controlled Group member to amend, a
Plan resulting in a material increase in current liability for the plan
year such that the Company or any Controlled Group member is required
to provide security to such Plan under Section 401(a)(29) of the Code.
(b) For purposes of this SECTION 7.3(L), "material" means any
noncompliance or basis for liability which could reasonably be likely to
subject the Company or any of its Subsidiaries to liability, individually or
in the aggregate, in excess of $25,000,000.
(M) CERTAIN DOCUMENTS. Neither the Company nor any of its Subsidiaries
shall amend, modify or otherwise change any of the terms or provisions of the
Distribution Agreement, the Tax Disaffiliation Agreement (as such terms are
referenced in the definition of "Spin-off Materials") or of any of their
respective constituent documents as in effect on the date hereof in any manner
materially adverse to the interests of the Lenders.
(N) FISCAL YEAR. Neither the Company nor any of its consolidated
Subsidiaries shall change its fiscal year for accounting or tax purposes from a
period consisting of the twelve-month period ending on the Friday nearest to the
last day of June of each year, except as required by Agreement Accounting
Principles or by law and disclosed to the Lenders and the Administrative Agent.
(O) SUBSIDIARY COVENANTS. The Company will not, and will not permit any
Subsidiary to, create or otherwise permit to exist or cause to become effective
any consensual encumbrance or restriction of any kind on the ability of any
Subsidiary to pay dividends or make any other distribution on its stock, or make
any other Restricted Payment, pay any Indebtedness or other Obligation owed to
the Company or any other Subsidiary, make loans or advances or other Investments
in the Company or any other Subsidiary, or sell, transfer or otherwise convey
any of its property to the Company or any other Subsidiary.
(P) HEDGING OBLIGATIONS. The Company shall not and shall not permit any
of its Subsidiaries to enter into any interest rate, commodity or foreign
currency exchange, swap, collar, cap or similar agreements evidencing Hedging
Obligations, other than interest rate, foreign currency or commodity exchange,
swap, collar, cap or similar agreements entered into by the Company or its
Subsidiaries pursuant to which the Company or its Subsidiaries has hedged its
actual or anticipated interest rate, foreign currency or commodity exposure.
Such permitted hedging agreements entered into by the Company or its
Subsidiaries and any Lender or any Affiliate of any Lender are sometimes
referred to herein as "HEDGING AGREEMENTS."
(Q) CAPITAL EXPENDITURES. The Company shall not, and shall not permit
any of its Subsidiaries to, make Capital Expenditures in any fiscal year to the
extent that during any fiscal year the aggregate amount of Capital Expenditures
for the Company and its Subsidiaries would exceed (i) for the fiscal years
ending prior to the third anniversary of the Closing Date, $150,000,000, and
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(ii) thereafter, $175,000,000, in each case excluding any amount attributable to
a Permitted Acquisition.
(R) RESTRICTIVE AGREEMENTS. The Company shall not, nor shall it permit
any of its Subsidiaries to, enter into any indenture, agreement, instrument or
other arrangement which directly or indirectly prohibits or restrains, or has
the effect of prohibiting or restraining, or imposes materially adverse
conditions upon, the ability of the Company or any Subsidiary to create Liens
upon their assets securing the Obligations or of any Subsidiary to (a) pay
dividends or make other distributions (i) on its Capital Stock or (ii) with
respect to any other interest or participation in, or measured by, its profits,
(b) make loans or advances to the Company or any Subsidiary, (c) repay loans or
advances from the Company or any Subsidiary or (d) transfer any of its
properties to the Company or any Subsidiary.
7.4 FINANCIAL COVENANTS.
(A) MINIMUM COVERAGE RATIO. The Company shall maintain as of the end of
each fiscal quarter set forth below a ratio of (i) EBITDAR for the four fiscal
quarter period then ending to (ii) Interest Expense plus Rentals for such period
of not less than the ratio set forth below opposite such period:
FISCAL QUARTER ENDING RATIO
--------------------- -----
December 31, 1999 through June 30, 2000 2.75
July 1, 2000 and thereafter 2.75
(B) MAXIMUM LEVERAGE RATIO. The Company shall maintain as of the end of
each fiscal quarter set forth below a Leverage Ratio for the four fiscal quarter
period then ending of not greater than the ratio set forth below opposite such
period:
FISCAL QUARTER ENDING RATIO
--------------------- -----
December 31, 1999 through June 30, 2000 3.25
July 1, 2000 and thereafter 3.00
(C) MINIMUM CONSOLIDATED NET WORTH. The Company shall not permit its
Consolidated Net Worth at any time to be less than the sum of (a) 85% of
Consolidated Net Worth on the date immediately following the Closing Date plus
(b) fifty percent (50%) of Net Income (if positive) calculated separately for
(i) the remainder of the quarterly accounting period in which the Closing Date
occurs and (ii) each subsequent quarterly accounting period, in each case,
excluding changes in cumulative translation adjustment.
ARTICLE VIII: DEFAULTS
8.1 DEFAULTS. Each of the following occurrences shall constitute a
Default under this Agreement:
(A) FAILURE TO MAKE PAYMENTS WHEN DUE. The Company or any Subsidiary
Borrower shall (i) fail to pay when due any of the Obligations consisting of
principal with respect to any Loan or (ii) shall fail to pay within five (5)
Business Days of the date when due any of the other Obligations under this
Agreement or the other Loan Documents.
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(B) BREACH OF CERTAIN COVENANTS. The Company or any Subsidiary Borrower
shall fail duly and punctually to perform or observe any agreement, covenant or
obligation binding on it under:
(i) SECTIONS 7.1(B), 7.2(J), 7.2(K), 7.3 or 7.4 or
(ii) any section of this Agreement or any other Loan Document
not covered by SECTION 8.1(A) or 8.1(B)(i) and such failure shall
continue unremedied for thirty (30) DAYS AFTER the occurrence thereof.
(C) BREACH OF REPRESENTATION OR WARRANTY. Any representation or
warranty made or deemed made by the Company or any Subsidiary Borrower to the
Administrative Agent or any Lender herein or by the Company or any Subsidiary
Borrower or any of their Subsidiaries in any of the other Loan Documents or in
any statement or certificate or information at any time given by any such Person
pursuant to any of the Loan Documents shall be false as to a material fact or
matter on the date as of which made or deemed made.
(D) Default as to Other Indebtedness.
(i) The Company or any of its Subsidiaries shall fail to pay
when due any Indebtedness arising under the 5-Year Agreement
aggregating in excess of $10,000,000 (any such Indebtedness being
"MATERIAL INDEBTEDNESS"); or the Company or any of its Subsidiaries
shall fail to perform (beyond the applicable grace period with respect
thereto, if any) any term, provision or condition contained in any
agreement under which any such Material Indebtedness was created or is
governed, or any other event shall occur or condition exist, the effect
of which default or event is to cause, or to permit the holder or
holders of such Material Indebtedness to cause, such Material
Indebtedness to become due prior to its stated maturity; or any
Material Indebtedness of the Borrower or any of its Subsidiaries shall
be declared to be due and payable or required to be prepaid or
repurchased (other than by a regularly scheduled payment) prior to the
stated maturity thereof.
(E) Involuntary Bankruptcy; Appointment of Receiver, Etc.
(i) An involuntary case shall be commenced against the Company
or any of the Company's Subsidiaries and the petition shall not be
dismissed, stayed, bonded or discharged within forty-five (45) days
after commencement of the case; or a court having jurisdiction in the
premises shall enter a decree or order for relief in respect of the
Company or any of the Company's Subsidiaries in an involuntary case,
under any applicable bankruptcy, insolvency or other similar law now or
hereinafter in effect; or any other similar relief shall be granted
under any applicable federal, state, local or foreign law.
(ii) A decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator,
trustee, custodian or other officer having similar powers over the
Company or any of the Company's Subsidiaries or over all or a
substantial part of the property of the Company or any of the Company's
Subsidiaries shall be entered; or an interim receiver, trustee or other
custodian of the Company or any of the Company's Subsidiaries or of all
or a substantial part of the property of the Company or any
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of the Company's Subsidiaries shall be appointed or a warrant of
attachment, execution or similar process against any substantial part
of the property of the Company or any of the Company's Subsidiaries
shall be issued and any such event shall not be stayed, dismissed,
bonded or discharged within forty-five (45) days after entry,
appointment or issuance.
(F) VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. The Company or
any of the Company's Subsidiaries shall (i) commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, (ii) consent to the entry of an order for relief in an involuntary case,
or to the conversion of an involuntary case to a voluntary case, under any such
law, (iii) consent to the appointment of or taking possession by a receiver,
trustee or other custodian for all or a substantial part of its property, (iv)
make any assignment for the benefit of creditors or (v) take any corporate
action to authorize any of the foregoing.
(G) JUDGMENTS AND ATTACHMENTS. Any money judgment(s) (other than a
money judgment covered by insurance as to which the applicable insurance company
has not disclaimed or reserved the right to disclaim coverage), writ or warrant
of attachment, or similar process against the Company or any Material Subsidiary
or any of their respective assets involving in any single case or in the
aggregate an amount in excess of $10,000,000 is or are entered and shall remain
undischarged, unvacated, unbonded or unstayed for a period of thirty (30) days
or in any event later than fifteen (15) days prior to the date of any proposed
sale thereunder.
(H) DISSOLUTION. Any order, judgment or decree shall be entered against
the Company or any Material Subsidiary decreeing its involuntary dissolution or
split up and such order shall remain undischarged and unstayed for a period in
excess of forty-five (45) days; or the Company or any Material Subsidiary shall
otherwise dissolve or cease to exist except as specifically permitted by this
Agreement.
(I) TERMINATION EVENT. Any Termination Event occurs which the Required
Lenders believe is reasonably likely to subject the Company to liability in
excess of $25,000,000. The Unfunded Liabilities of all Single Employer Plans
shall exceed in the aggregate $50,000,000.
(J) WAIVER OF MINIMUM FUNDING STANDARD. If the plan administrator of
any Plan applies under Section 412(d) of the Code for a waiver of the minimum
funding standards of Section 412(a) of the Code and any Lender believes the
substantial business hardship upon which the application for the waiver is based
could reasonably be expected to subject either the Company or any Controlled
Group member to liability in excess of $25,000,000.
(K) CHANGE OF CONTROL. A Change of Control shall occur.
(L) GUARANTOR REVOCATION. Any Guaranty shall fail to remain in full
force or effect or any action shall be taken to discontinue or to assert the
invalidity or unenforceability of any Guaranty, or any Guarantor shall fail to
comply with any of the terms or provisions of any Guaranty to which it is a
party, or any Guarantor shall deny that it has any further liability under any
Guaranty to which it is a party, or shall give notice to such effect; in each
case other than a Guarantor's ceasing to be a Subsidiary Borrower pursuant to
SECTION 2.24 hereof or the disposition of such Guarantor in any transaction
permitted by SECTION 7.3(B) hereof.
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(M) SPIN-OFF. The Spin-off shall not be consummated within three (3)
Business Days after the making of the initial Loans.
(N) PLEDGE AGREEMENTS. Any Pledge Agreement shall fail to remain in
full force or effect or any action shall be taken to discontinue or to assert
the invalidity or unenforceability of any Pledge Agreement, or any pledgor under
any Pledge Agreement shall fail to comply with any of the terms or provisions of
such Pledge Agreement or shall deny, or give notice to such effect, that it has
any further liability under such Pledge Agreement.
A Default shall be deemed "continuing" until cured or until waived in
writing in accordance with SECTION 9.2.
ARTICLE IX: ACCELERATION, DEFAULTING LENDERS; WAIVERS, AMENDMENTS AND REMEDIES
9.1 TERMINATION OF REVOLVING LOAN COMMITMENTS; ACCELERATION. If any
Default described in SECTION 8.1(E) or 8.1(F) occurs with respect to the Company
or any Subsidiary Borrower, the obligations of the Lenders to make Loans
hereunder shall automatically terminate and the Obligations shall immediately
become due and payable without any election or action on the part of the
Administrative Agent or any Lender. If any other Default occurs, the Required
Lenders may terminate or suspend the obligations of the Lenders to make Loans
hereunder, or declare the Obligations to be due and payable, or both, whereupon
the Obligations shall become immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which the Borrowers expressly
waive.
9.2 AMENDMENTS. Subject to the provisions of this ARTICLE IX, the
Required Lenders (or the Administrative Agent with the consent in writing of the
Required Lenders) and the Borrowers may enter into agreements supplemental
hereto for the purpose of adding or modifying any provisions to the Loan
Documents or changing in any manner the rights of the Lenders or the Borrowers
hereunder or waiving any Default hereunder; provided, however, that no such
supplemental agreement shall, without the consent of each Lender affected
thereby:
(i) Postpone or extend the Revolving Loan Termination Date or
any other date fixed for any payment of principal of, or interest on,
the Loans or any fees or other amounts payable to such Lender (except
with respect to a waiver of the application of the default rate of
interest pursuant to SECTION 2.11 hereof).
(ii) Reduce the principal amount of any Loans, or reduce the
rate or extend the time of payment of interest or fees thereon.
(iii) Reduce the percentage specified in the definition of
Required Lenders or any other percentage of Lenders hereunder specified
to be the applicable percentage in this Agreement to act on specified
matters or amend the definitions of "Required Lenders" or "Pro Rata
Share."
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(iv) Increase the amount of the Revolving Loan Commitment of
any Lender hereunder or increase any Lender's Pro Rata Share.
(v) Permit the Company or any Subsidiary Borrower to assign
its rights under this Agreement.
(vi) Release the Company from its obligations under the
Guaranty set forth in ARTICLE X hereof.
(vii) Amend this SECTION 9.2.
No amendment of any provision of this Agreement relating to the
Administrative Agent shall be effective without the written consent of the
Administrative Agent. The Administrative Agent may waive payment of the fee
required under SECTION 14.3(B) without obtaining the consent of any of the
Lenders.
9.3 PRESERVATION OF RIGHTS. No delay or omission of the Lenders or the
Administrative Agent to exercise any right under the Loan Documents shall impair
such right or be construed to be a waiver of any Default or an acquiescence
therein, and the making of a Loan notwithstanding the existence of a Default or
the inability of the Company or any other Borrower to satisfy the conditions
precedent to such Loan shall not constitute any waiver or acquiescence. Any
single or partial exercise of any such right shall not preclude other or further
exercise thereof or the exercise of any other right, and no waiver, amendment or
other variation of the terms, conditions or provisions of the Loan Documents
whatsoever shall be valid unless in writing signed by the requisite number of
Lenders required pursuant to SECTION 9.2, and then only to the extent in such
writing specifically set forth. All remedies contained in the Loan Documents or
by law afforded shall be cumulative and all shall be available to the
Administrative Agent and the Lenders until the Obligations have been paid in
full.
ARTICLE X: GUARANTY
10.1 GUARANTY. For valuable consideration, the receipt of which is
hereby acknowledged, and to induce the Lenders to make advances to each
Subsidiary Borrower, the Company hereby absolutely and unconditionally
guarantees prompt payment when due, whether at stated maturity, upon
acceleration or otherwise, and at all times thereafter, of any and all existing
and future obligations including without limitation the Obligations, of each
Subsidiary Borrower to the Agents, the Lenders, or any of them, under or with
respect to the Loan Documents or under or with respect to any Hedging Agreement
entered into in connection with this Agreement, whether for principal, interest,
fees, expenses or otherwise (collectively, the "GUARANTEED OBLIGATIONS", and
each such Subsidiary Borrower being an "OBLIGOR" and collectively, the
"OBLIGORS").
10.2 WAIVERS. The Company waives notice of the acceptance of this
guaranty and of the extension or continuation of the Guaranteed Obligations or
any part thereof. The Company further waives presentment, protest, notice of
notices delivered or demand made on any Obligor or action or delinquency in
respect of the Guaranteed Obligations or any part thereof, including any right
to require the Administrative Agent and the Lenders to sue any Obligor, any
other guarantor or any
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other Person obligated with respect to the Guaranteed Obligations or any part
thereof, or otherwise to enforce payment thereof against any collateral securing
the Guaranteed Obligations or any part thereof, and PROVIDED FURTHER that if at
any time any payment of any portion of the Guaranteed Obligations is rescinded
or must otherwise be restored or returned upon the insolvency, bankruptcy or
reorganization of any of the Obligors or otherwise, the Company's obligations
hereunder with respect to such payment shall be reinstated at such time as
though such payment had not been made and whether or not the Administrative
Agent or the Lenders are in possession of this guaranty. The Administrative
Agent and the Lenders shall have no obligation to disclose or discuss with the
Company their assessments of the financial condition of the Obligors.
10.3 GUARANTY ABSOLUTE. This guaranty is a guaranty of payment and not
of collection, is a primary obligation of the Company and not one of surety, and
the validity and enforceability of this guaranty shall be absolute and
unconditional irrespective of, and shall not be impaired or affected by any of
the following: (a) any extension, modification or renewal of, or indulgence with
respect to, or substitutions for, the Guaranteed Obligations or any part thereof
or any agreement relating thereto at any time; (b) any failure or omission to
enforce any right, power or remedy with respect to the Guaranteed Obligations or
any part thereof or any agreement relating thereto, or any collateral; (c) any
waiver of any right, power or remedy with respect to the Guaranteed Obligations
or any part thereof or any agreement relating thereto or with respect to any
collateral; (d) any release, surrender, compromise, settlement, waiver,
subordination or modification, with or without consideration, of any collateral,
any other guaranties with respect to the Guaranteed Obligations or any part
thereof, or any other obligation of any Person with respect to the Guaranteed
Obligations or any part thereof; (e) the enforceability or validity of the
Guaranteed Obligations or any part thereof or the genuineness, enforceability or
validity of any agreement relating thereto or with respect to any collateral;
(f) the application of payments received from any source to the payment of
obligations other than the Guaranteed Obligations, any part thereof or amounts
which are not covered by this guaranty even though the Administrative Agent and
the Lenders might lawfully have elected to apply such payments to any part or
all of the Guaranteed Obligations or to amounts which are not covered by this
guaranty; (g) any change in the ownership of any Obligor or the insolvency,
bankruptcy or any other change in the legal status of any Obligor; (h) the
change in or the imposition of any law, decree, regulation or other governmental
act which does or might impair, delay or in any way affect the validity,
enforceability or the payment when due of the Guaranteed Obligations; (i) the
failure of the Company or any Obligor to maintain in full force, validity or
effect or to obtain or renew when required all governmental and other approvals,
licenses or consents required in connection with the Guaranteed Obligations or
this guaranty, or to take any other action required in connection with the
performance of all obligations pursuant to the Guaranteed Obligations or this
guaranty; (j) the existence of any claim, setoff or other rights which the
Company may have at any time against any Obligor, or any other Person in
connection herewith or an unrelated transaction; (k) the Administrative Agent's
or any Lender's election, in any case or proceeding instituted under chapter 11
of the Bankruptcy Code, of the application of section 1111(b)(2) of the
Bankruptcy Code; (l) any borrowing, use of cash collateral, or grant of a
security interest by the Company, as debtor in possession, under section 363 or
364 of the United States Bankruptcy Code; (m) the disallowance of all or any
portion any Lender's claims for repayment of the Guaranteed Debt under section
502 or 506 of the United States Bankruptcy Code; or (n) any other circumstances,
whether or not similar to any of the foregoing, which could constitute a defense
to a guarantor other than the defense of payment; all whether or not the Company
shall have had notice or knowledge of any act or omission referred to in the
foregoing clauses (a) through (n) of this paragraph. It is agreed that the
Company's
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liability hereunder is several and independent of any other guaranties or other
obligations at any time in effect with respect to the Guaranteed Obligations or
any part thereof and that the Company's liability hereunder may be enforced
regardless of the existence, validity, enforcement or non-enforcement of any
such other guaranties or other obligations or any provision of any applicable
law or regulation purporting to prohibit payment by any Obligor of the
Guaranteed Obligations in the manner agreed upon between the Obligor and the
Administrative Agent and the Lenders.
10.4 ACCELERATION. The Company agrees that, as between the Company on
the one hand, and the Lenders and the Administrative Agent, on the other hand,
the obligations of each Obligor guaranteed under this ARTICLE X may be declared
to be forthwith due and payable, or may be deemed automatically to have been
accelerated, as provided in SECTION 9.1 hereof for purposes of this ARTICLE X,
notwithstanding any stay, injunction or other prohibition (whether in a
bankruptcy proceeding affecting such Obligor or otherwise) preventing such
declaration as against such Obligor and that, in the event of such declaration
or automatic acceleration, such obligations (whether or not due and payable by
such Obligor) shall forthwith become due and payable by the Company for purposes
of this ARTICLE X.
10.5 MARSHALING; REINSTATEMENT. None of the Lenders nor the
Administrative Agent nor any Person acting for or on behalf of the Lenders or
the Administrative Agent shall have any obligation to marshall any assets in
favor of the Company or against or in payment of any or all of the Guaranteed
Obligations. If the Company, any Borrower or any other guarantor of all or any
part of the Guaranteed Obligations makes a payment or payments to any Lender or
the Administrative Agent, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to such Borrower, the Company, such other guarantor
or any other Person, or their respective estates, trustees, receivers or any
other party, including, without limitation, the Company, under any bankruptcy
law, state or federal law, common law or equitable cause, then, to the extent of
such payment or repayment, the part of the Guaranteed Obligations which has been
paid, reduced or satisfied by such amount shall be reinstated and continued in
full force and effect as of the time immediately preceding such initial payment,
reduction or satisfaction.
10.6 SUBROGATION. Until the irrevocable payment in full of the
Obligations and termination of all commitments which could give rise to any
Guaranteed Obligation, the Company hereby (i) waives and postpones any right of
subrogation with respect to the Guaranteed Obligations, (ii) waives and
postpones any right to enforce any remedy which the Administrative Agent and/or
the Lenders now has or may hereafter have against the Company, any endorser or
any other guarantor of all or any part of the Guaranteed Obligations, and (iii)
waives and postpones any benefit of, and any right to participate in, any
security or collateral given to the Administrative Agent and/or the Lenders to
secure payment of the Guaranteed Obligations or any part thereof or any other
liability of any Obligor to the Administrative Agent and/or the Lenders.
10.7 TERMINATION DATE. This guaranty shall continue in effect until the
earlier of (a) the Facility Termination Date, and (b) the date on which this
Agreement has otherwise expired or been terminated in accordance with its terms
and all of the Guaranteed Obligations have been paid in full in cash.
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ARTICLE XI: GENERAL PROVISIONS
11.1 SURVIVAL OF REPRESENTATIONS. All representations and warranties of
the Company contained in this Agreement shall survive delivery of this Agreement
and the making of the Loans herein contemplated so long as any principal,
accrued interest, fees, or any other amount due and payable under any Loan
Document is outstanding and unpaid (other than contingent reimbursement and
indemnification obligations) and so long as the Revolving Loan Commitments have
not been terminated.
11.2 GOVERNMENTAL REGULATION. Anything contained in this Agreement to
the contrary notwithstanding, no Lender shall be obligated to extend credit to
the Company or any other Borrower in violation of any limitation or prohibition
provided by any applicable statute or regulation.
11.3 HEADINGS. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
11.4 ENTIRE AGREEMENT. The Loan Documents embody the entire agreement
and understanding among the Borrowers, the Agents and the Lenders and supersede
all prior agreements and understandings among the Borrowers, the Agents and the
Lenders relating to the subject matter thereof other than the Fee Letters.
11.5 SEVERAL OBLIGATIONS; BENEFITS OF THIS AGREEMENT. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other Lender (except to the extent to which
the Administrative Agent is authorized to act as such). The failure of any
Lender to perform any of its obligations hereunder shall not relieve any other
Lender from any of its obligations hereunder. This Agreement shall not be
construed so as to confer any right or benefit upon any Person other than the
parties to this Agreement and their respective successors and assigns.
11.6 EXPENSES; INDEMNIFICATION.
(A) EXPENSES. The Borrowers shall reimburse the Administrative Agent
for any reasonable costs and out-of-pocket expenses (including reasonable
attorneys' and paralegals' fees and time charges of attorneys and paralegals for
the Administrative Agent, paid or incurred by the Administrative Agent in
connection with the preparation, negotiation, execution, delivery, syndication,
review, proposed or completed amendment, waiver or modification, and
administration of the Loan Documents. The Borrowers also agree to reimburse the
Agents, each Lead Arranger and each of the Lenders for any reasonable costs and
out-of-pocket expenses (including reasonable attorneys' and paralegals' fees and
time charges of attorneys and paralegals for the Agents, each Lead Arranger and
each Lender, which attorneys and paralegals may be employees of such Agent, such
Lead Arranger, or the Lenders) paid or incurred by the Agents, the Lead
Arrangers or any Lender in connection with the collection of the Obligations and
enforcement of the Loan Documents. The Administrative Agent shall provide the
Borrowers with a detailed statement of all reimbursements requested under this
SECTION 11.6(A).
(B) INDEMNITY. The Borrowers hereby further agree to indemnify the
Agents, the Lead Arrangers, and each and all of the Lenders and each of their
respective Affiliates, and each of such
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Agent's, Lead Arranger's, Lender's and Affiliate's directors, officers,
employees, attorneys and agents (all such persons, "INDEMNITEES") against all
losses, claims, damages, penalties, judgments, liabilities and expenses
(including, without limitation, all expenses of litigation or preparation
therefor whether or not such Indemnitee is a party thereto) which any of them
may pay or incur arising out of or relating to this Agreement, the other Loan
Documents, the transactions contemplated hereby or the direct or indirect
application or proposed application of the proceeds of any Loan hereunder except
to the extent that they are determined in a final non-appealable judgment by a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of the party seeking indemnification.
(C) WAIVER OF CERTAIN CLAIMS. The Borrowers further agree to assert no
claim against any of the Indemnitees on any theory of liability seeking
consequential, special, indirect, exemplary or punitive damages.
(D) SURVIVAL OF AGREEMENTS. The obligations and agreements of the
Borrowers under this SECTION 11.6 shall survive the termination of this
Agreement.
11.7 NUMBERS OF DOCUMENTS. All statements, notices, closing documents,
and requests hereunder shall be furnished to the Administrative Agent with
sufficient counterparts so that the Administrative Agent may furnish one to each
of the Lenders.
11.8 ACCOUNTING. Except with respect to the pricing grid calculations
in SECTION 2.15 and the financial covenant calculations in SECTION 7.4 both of
which shall be made in accordance with Agreement Accounting Principles as in
effect on the date hereof, all accounting terms used herein shall be interpreted
and all accounting determinations hereunder shall be made in accordance with
generally accepted accounting principles as in effect from time to time,
consistently applied.
11.9 SEVERABILITY OF PROVISIONS. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
11.10 NONLIABILITY OF LENDERS. The relationship between the Borrowers
and the Lenders and the Administrative Agent shall be solely that of borrower
and lender. Neither the Administrative Agent nor any Lender shall have any
fiduciary responsibilities to the Borrowers or the Guarantors. Neither the
Administrative Agent nor any Lender undertakes any responsibility to any
Borrower or Guarantor to review or inform any Borrower or Guarantor of any
matter in connection with any phase of the Borrowers' business or operations.
11.11 GOVERNING LAW. ANY DISPUTE BETWEEN ANY BORROWER AND THE
ADMINISTRATIVE AGENT, ANY LENDER OR ANY OTHER HOLDER OF OBLIGATIONS ARISING OUT
OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE
RESOLVED IN
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ACCORDANCE WITH THE INTERNAL LAWS (BUT WITHOUT REGARD TO THE CONFLICTS OF LAWS
PROVISIONS) OF THE STATE OF NEW YORK.
11.12 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.
(A) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION (B), EACH
OF THE PARTIES HERETO AGREES THAT ALL DISPUTES AMONG THEM ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG
THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED
EXCLUSIVELY BY STATE OR FEDERAL COURTS LOCATED IN NEW YORK, BUT THE PARTIES
HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A
COURT LOCATED OUTSIDE OF NEW YORK. EACH OF THE PARTIES HERETO WAIVES IN ALL
DISPUTES BROUGHT PURSUANT TO THIS SUBSECTION (A) ANY OBJECTION THAT IT MAY HAVE
TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(B) OTHER JURISDICTIONS. EACH BORROWER AGREES THAT THE ADMINISTRATIVE
AGENT, ANY LENDER OR ANY OTHER HOLDER OF OBLIGATIONS SHALL HAVE THE RIGHT TO
PROCEED AGAINST EACH BORROWER OR ITS RESPECTIVE PROPERTY IN A COURT IN ANY
LOCATION TO ENABLE SUCH PERSON TO (1) OBTAIN PERSONAL JURISDICTION OVER ANY
BORROWER OR (2) IN ORDER TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN
FAVOR OF SUCH PERSON. EACH BORROWER AGREES THAT IT WILL NOT ASSERT ANY
PERMISSIVE UNRELATED COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY SUCH PERSON TO
REALIZE ON ANY SECURITY FOR THE OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF SUCH PERSON. EACH BORROWER WAIVES ANY OBJECTION THAT IT
MAY HAVE TO THE LOCATION OF THE COURT IN WHICH SUCH PERSON HAS COMMENCED A
PROCEEDING DESCRIBED IN THIS SUBSECTION (B).
(C) VENUE. EACH BORROWER IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS
OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF
ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH
IN ANY JURISDICTION SET FORTH ABOVE.
(D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES
ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO AGREES AND CONSENTS THAT ANY
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
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DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
(E) ADVICE OF COUNSEL. EACH OF THE PARTIES REPRESENTS TO EACH OTHER
PARTY HERETO THAT IT HAS DISCUSSED THIS AGREEMENT AND, SPECIFICALLY, THE
PROVISIONS OF SECTION 11.6 AND THIS SECTION 11.12, WITH ITS COUNSEL.
11.13 OTHER TRANSACTIONS. Each of the Agents, the Lead Arrangers, the
Lenders, and the Borrowers acknowledge that the Agents and the Lenders (or
Affiliates of the Agents and the Lenders) may, from time to time, effect
transactions for their own accounts or the accounts of customers, and hold
positions in loans or options on loans of the Company, the Company's
Subsidiaries and other companies that may be the subject of this credit
arrangement and nothing in this Agreement shall impair the right of any such
Person to enter into any such transaction (to the extent it is not expressly
prohibited by the terms of this Agreement) or give any other Person any claim or
right of action hereunder as a result of the existence of the credit
arrangements hereunder, all of which are hereby waived. In addition, certain
Affiliates of one or more of the Lenders are or may be securities firms and as
such may effect, from time to time, transactions for their own accounts or for
the accounts of customers and hold positions in securities or options on
securities of the Company, the Company's Subsidiaries and other companies that
may be the subject of this credit arrangement and nothing in this Agreement
shall impair the right of any such Person to enter into any such transaction (to
the extent it is not expressly prohibited by the terms of this Agreement) or
give any other Person any claim or right of action hereunder as a result of the
existence of the credit arrangements hereunder, all of which are hereby waived.
Other business units affiliated with each of the Agents may from time to time
provide other financial services and products to the Company and its
Subsidiaries.
ARTICLE XII: THE ADMINISTRATIVE AGENT
12.1 APPOINTMENT; NATURE OF RELATIONSHIP. ABN is appointed by the
Lenders as the Administrative Agent hereunder and under each other Loan
Document, and each of the Lenders irrevocably authorizes the Administrative
Agent to act as the contractual representative of such Lender with the rights
and duties expressly set forth herein and in the other Loan Documents. The
Administrative Agent agrees to act as such contractual representative upon the
express conditions contained in this ARTICLE XII. Notwithstanding the use of the
defined term "Administrative Agent," it is expressly understood and agreed that
the Administrative Agent shall not have any fiduciary responsibilities to any
Holder of Obligations by reason of this Agreement and that the Administrative
Agent is merely acting as the representative of the Lenders with only those
duties as are expressly set forth in this Agreement and the other Loan
Documents. In its capacity as the Lenders' contractual representative, the
Administrative Agent (i) does not assume any fiduciary duties to any of the
Holders of Obligations, (ii) is a "representative" of the Holders of Obligations
within the meaning of Section 9-105 of the Uniform Commercial Code and (iii) is
acting as an independent contractor, the rights and duties of which are limited
to those expressly set forth in this Agreement and the other Loan Documents.
Each of the Lenders, for itself and on behalf of its Affiliates as Holders of
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Obligations, agrees to assert no claim against the Administrative Agent on any
agency theory or any other theory of liability for breach of fiduciary duty, all
of which claims each Holder of Obligations waives.
12.2 POWERS. The Administrative Agent shall have and may exercise such
powers under the Loan Documents as are specifically delegated to the
Administrative Agent by the terms of each thereof, together with such powers as
are reasonably incidental thereto. The Administrative Agent shall have no
implied duties or fiduciary duties to the Lenders, or any obligation to the
Lenders to take any action hereunder or under any of the other Loan Documents
except any action specifically provided by the Loan Documents required to be
taken by the Administrative Agent.
12.3 GENERAL IMMUNITY. Neither the Administrative Agent nor any of its
directors, officers, agents or employees shall be liable to the Company, the
Lenders or any Lender for any action taken or omitted to be taken by it or them
hereunder or under any other Loan Document or in connection herewith or
therewith except to the extent such action or inaction is found in a final
judgment by a court of competent jurisdiction to have arisen primarily from the
gross negligence or willful misconduct of such Person.
12.4 NO RESPONSIBILITY FOR LOANS, CREDITWORTHINESS, RECITALS, ETC.
Neither the Administrative Agent nor any of its directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into,
or verify (i) any statement, warranty or representation made in connection with
any Loan Document or any borrowing hereunder; (ii) the performance or observance
of any of the covenants or agreements of any obligor under any Loan Document;
(iii) the satisfaction of any condition specified in ARTICLE V, except receipt
of items required to be delivered solely to the Administrative Agent; (iv) the
existence or possible existence of any Default or (v) the validity,
effectiveness or genuineness of any Loan Document or any other instrument or
writing furnished in connection therewith. The Administrative Agent shall not be
responsible to any Lender for any recitals, statements, representations or
warranties herein or in any of the other Loan Documents, or for the execution,
effectiveness, genuineness, validity, legality, enforceability, collectibility,
or sufficiency of this Agreement or any of the other Loan Documents or the
transactions contemplated thereby, or for the financial condition of any
guarantor of any or all of the Obligations, the Company or any of its
Subsidiaries.
12.5 ACTION ON INSTRUCTIONS OF LENDERS. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting,
hereunder and under any other Loan Document in accordance with written
instructions signed by the Required Lenders (or all of the Lenders in the event
that and to the extent that this Agreement expressly requires such), and such
instructions and any action taken or failure to act pursuant thereto shall be
binding on all of the Lenders and on all owners of Loans and on all Holders of
Obligations. The Administrative Agent shall be fully justified in failing or
refusing to take any action hereunder and under any other Loan Document unless
it shall first be indemnified to its satisfaction by the Lenders pro rata
against any and all liability, cost and expense that it may incur by reason of
taking or continuing to take any such action.
12.6 EMPLOYMENT OF AGENTS AND COUNSEL. The Administrative Agent may
execute any of its duties as the Administrative Agent hereunder and under any
other Loan Document by or through employees, agents, and attorneys-in-fact and
shall not be answerable to the Lenders, except as to money or securities
received by it or its authorized agents, for the default or misconduct of any
such
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agents or attorneys-in-fact selected by it with reasonable care. The
Administrative Agent shall be entitled to advice of counsel concerning the
contractual arrangement between the Administrative Agent and the Lenders and all
matters pertaining to the Administrative Agent's duties hereunder and under any
other Loan Document.
12.7 RELIANCE ON DOCUMENTS; COUNSEL. The Administrative Agent shall be
entitled to rely upon any notice, consent, certificate, affidavit, letter,
telegram, statement, paper or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and, in respect
to legal matters, upon the opinion of counsel selected by the Administrative
Agent, which counsel may be employees of the Administrative Agent.
12.8 THE ADMINISTRATIVE AGENT'S REIMBURSEMENT AND INDEMNIFICATION. The
Lenders agree to reimburse and indemnify the Administrative Agent ratably in
proportion to their respective Pro Rata Shares (i) for any expenses incurred by
the Administrative Agent on behalf of the Lenders, in connection with the
preparation, execution, delivery, administration and enforcement of the Loan
Documents and (ii) for any liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind and
nature whatsoever which may be imposed on, incurred by or asserted against the
Administrative Agent in any way relating to or arising out of the Loan Documents
or any other document delivered in connection therewith or the transactions
contemplated thereby, or the enforcement of any of the terms thereof or of any
such other documents, provided that no Lender shall be liable for any of the
foregoing to the extent any of the foregoing is found in a final non-appealable
judgment by a court of competent jurisdiction to have arisen primarily from the
gross negligence or willful misconduct of the Administrative Agent.
12.9 RIGHTS AS A LENDER. With respect to its Revolving Loan Commitment
and Loans made by it, the Administrative Agent shall have the same rights and
powers hereunder and under any other Loan Document as any Lender and may
exercise the same as though it were not the Administrative Agent, and the term
"Lender" or "Lenders", shall, unless the context otherwise indicates, include
the Administrative Agent in its individual capacity. The Administrative Agent
may accept deposits from, lend money to, and generally engage in any kind of
trust, debt, equity or other transaction, in addition to those contemplated by
this Agreement or any other Loan Document, with the Company or any of its
Subsidiaries in which such Person is not prohibited hereby from engaging with
any other Person.
12.10 LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent, the Lead
Arrangers or any other Lender and based on the financial statements prepared by
the Company and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement and the other Loan Documents. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent, the Lead
Arrangers or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents.
12.11 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign at any time by giving written notice thereof to the Lenders and the
Company. Upon any such resignation, the Required Lenders shall have the right,
with the consent of the Company prior to the occurrence of
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a Default (which consent shall not be unreasonably withheld), to appoint, on
behalf of the Borrowers and the Lenders, a successor Administrative Agent. If no
successor Administrative Agent shall have been so appointed by the Required
Lenders and shall have accepted such appointment within thirty days after the
retiring Administrative Agent's giving notice of resignation, then the retiring
Administrative Agent may appoint, on behalf of the Borrowers and the Lenders, a
successor Administrative Agent. Such successor Administrative Agent shall be a
commercial bank having capital and retained earnings of at least $500,000,000.
Upon the acceptance of any appointment as the Administrative Agent hereunder by
a successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder and under
the other Loan Documents. After any retiring Administrative Agent's resignation
hereunder as Administrative Agent, the provisions of this ARTICLE XII 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 Administrative Agent hereunder and
under the other Loan Documents.
12.12 NO DUTIES IMPOSED UPON SYNDICATION AGENT, DOCUMENTATION AGENT OR
LEAD ARRANGERS. None of the Persons identified on the cover page to this
Agreement, the signature pages to this Agreement or otherwise in this Agreement
as a "Syndication Agent" or "Documentation Agent" or "Lead Arranger" shall have
any right, power, obligation, liability, responsibility or duty under this
Agreement other than, if such Person is a Lender, those applicable to all
Lenders as such. Without limiting the foregoing, none of the Persons identified
on the cover page to this Agreement, the signature pages to this Agreement or
otherwise in this Agreements as a "Syndication Agent" or "Documentation Agent"
or "Lead Arranger" shall have or be deemed to have any fiduciary duty to or
fiduciary relationship with any Lender. In addition to the agreements set forth
in SECTION 12.10, each of the Lenders acknowledges that it has not relied, and
will not rely, on any of the Persons so identified in deciding to enter into
this Agreement or in taking or not taking action hereunder.
12.13 COLLATERAL AGENT. ABN is appointed by the Lenders as the
Collateral Agent hereunder and under each of the Pledge Agreements. Each
reference to the Administrative Agent in this ARTICLE XII shall be deemed to
refer also to the Collateral Agent.
ARTICLE XIII: SETOFF; RATABLE PAYMENTS
13.1 SETOFF. In addition to, and without limitation of, any rights of
the Lenders under applicable law, if any Default occurs and is continuing, any
Indebtedness from any Lender to the Company or any other Borrower (including all
account balances, whether provisional or final and whether or not collected or
available) may be offset and applied toward the payment of the Obligations owing
to such Lender, whether or not the Obligations, or any part hereof, shall then
be due.
13.2 RATABLE PAYMENTS. If any Lender, whether by setoff or otherwise,
has payment made to it upon its Loans (other than payments received pursuant to
SECTIONS 4.1, 4.2 or 4.4) in a greater proportion than that received by any
other Lender, such Lender agrees, promptly upon demand, to purchase a portion of
the Loans held by the other Lenders so that after such purchase each Lender will
hold its ratable proportion of Loans. If any Lender, whether in connection with
setoff or
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amounts which might be subject to setoff or otherwise, receives collateral or
other protection for its Obligation or such amounts which may be subject to
setoff, such Lender agrees, promptly upon demand, to take such action necessary
such that all Lenders share in the benefits of such collateral ratably in
proportion to the obligations owing to them. In case any such payment is
disturbed by legal process, or otherwise, appropriate further adjustments shall
be made.
13.3 APPLICATION OF PAYMENTS. The Administrative Agent shall apply all
payments and prepayments in respect of any Obligations in the following order:
(A) first, to pay interest on and then principal of any portion of the
Loans which the Administrative Agent may have advanced on behalf of any Lender
for which the Administrative Agent has not then been reimbursed by such Lender
or the applicable Borrower;
(B) second, to the ratable payment of the Obligations then due and
payable; and
(C) third, to the ratable payment of all other Obligations.
13.4 RELATIONS AMONG LENDERS. The Lenders are not partners or
co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Administrative Agent)
authorized to act for, any other Lender.
ARTICLE XIV: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
14.1 SUCCESSORS AND ASSIGNS. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrowers and
the Lenders and their respective successors and assigns, except that (A) no
Borrower shall have any right to assign its rights or obligations under the Loan
Documents without the consent of all of the Lenders, and any such assignment in
violation of this SECTION 14.1(A) shall be null and void, and (B) any assignment
by any Lender must be made in compliance with SECTION 14.3 hereof.
Notwithstanding CLAUSE (B) of this SECTION 14.1 or SECTION 14.3, (i) any Lender
may at any time, without the consent of any Borrower or the Administrative
Agent, assign all or any portion of its rights under this Agreement to a Federal
Reserve Bank and (ii) any Lender which is a fund or commingled investment
vehicle that invests in commercial loans in the ordinary course of its business
may at any time, without the consent of any Borrower or the Administrative
Agent, pledge or assign all or any part of its rights under this Agreement to a
trustee or other representative of holders of obligations owed or securities
issued by such Lender as collateral to secure such obligations or securities;
provided, however, that no such assignment or pledge shall release the
transferor Lender from its obligations hereunder. The Administrative Agent may
treat each Lender as the owner of the Loans made by such Lender hereunder for
all purposes hereof unless and until such Lender complies with SECTION 14.3
hereof in the case of an assignment thereof or, in the case of any other
transfer, a written notice of the transfer is filed with the Administrative
Agent. Any assignee or transferee of a Loan, Revolving Loan Commitment, or any
other interest of a lender under the Loan Documents agrees by acceptance thereof
to be bound by all the terms and provisions of the Loan Documents. Any request,
authority or consent of any Person, who at the time of making such request or
giving such authority or consent is the owner of any Loan, shall be conclusive
and binding on any subsequent owner, transferee or assignee of such Loan.
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<PAGE> 79
14.2 PARTICIPATIONS.
(A) PERMITTED PARTICIPANTS; EFFECT. Subject to the terms set forth in
this SECTION 14.2, any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to one or more banks or other
entities ("PARTICIPANTS") participating interests in any Loan owing to such
Lender, any Revolving Loan Commitment of such Lender, or any other interest of
such Lender under the Loan Documents on a pro rata or non-pro rata basis. Notice
of such participation to the Company and the Administrative Agent shall be
required prior to any participation becoming effective with respect to a
Participant which is not a Lender or an Affiliate thereof. Upon receiving said
notice, the Administrative Agent shall record the participation in the Register
it maintains. Moreover, notwithstanding such recordation, such participation
shall not be considered an assignment under SECTION 14.3 of this Agreement and
such Participant shall not be considered a Lender. In the event of any such sale
by a Lender of participating interests to a Participant, such Lender's
obligations under the Loan Documents shall remain unchanged, such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, such Lender shall remain the owner of all Loans made by it for
all purposes under the Loan Documents, all amounts payable by the applicable
Borrower under this Agreement shall be determined as if such Lender had not sold
such participating interests, and the applicable Borrower and the Administrative
Agent shall continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under the Loan Documents except that,
for purposes of ARTICLE IV hereof, the Participants shall be entitled to the
same rights as if they were Lenders.
(B) VOTING RIGHTS. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, modification or waiver of
any provision of the Loan Documents other than any amendment, modification or
waiver with respect to any Loan or Revolving Loan Commitment in which such
Participant has an interest which forgives principal, interest or fees or
reduces the interest rate or fees payable pursuant to the terms of this
Agreement with respect to any such Loan or Revolving Loan Commitment, postpones
any date fixed for any regularly-scheduled payment of principal of, or interest
or fees on, any such Loan or Revolving Loan Commitment.
14.3 ASSIGNMENTS.
(A) PERMITTED ASSIGNMENTS. (i) Any Lender (each such assigning Lender
under this SECTION 14.3 being a "SELLER") may, in the ordinary course of its
business and in accordance with applicable law, at any time assign to one or
more banks or other entities (other than the Company or any of its Affiliates)
("PURCHASERS") all or a portion of its rights and obligations under this
Agreement (including, without limitation, its Revolving Loan Commitment and any
Loans owing to it in accordance with the provisions of this SECTION 14.3. Such
assignment shall be substantially in the form of EXHIBIT D hereto and shall not
be permitted hereunder unless such assignment is either for all of such Seller's
rights and obligations under the Loan Documents or, without the prior written
consent of the Administrative Agent and the Company, involves loans and
commitments as a consequence of which neither the Seller nor the Purchaser will
have a Commitment of less than $5,000,000 (for Sellers which are Managing Agents
or Agents) or $10,000,000 (for all other Sellers) provided that the foregoing
restrictions with respect to Commitments having a minimum aggregate amount (i)
shall not apply to any assignment between Lenders, or to an Affiliate or
Approved Fund of any Lender, and (ii) in any event may be waived by the
Administrative Agent and the Company).
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<PAGE> 80
The written consent of the Administrative Agent, and, prior to the occurrence of
a Default, the Company (which consent, in each such case, shall not be
unreasonably withheld), shall be required prior to an assignment becoming
effective with respect to a Purchaser which is not a Lender or an Affiliate or
Approved Fund of such Lender.
(ii) Notwithstanding anything to the contrary contained herein, any
Lender (each such Lender, a "GRANTING BANK") may grant to a special purpose
funding vehicle (each such special purpose funding vehicle, a "SPC"), identified
as such in writing from time to time by the applicable Granting Bank to the
Administrative Agent and the Company, the option to provide to the Company and
the other Borrowers all or any part of any Advance that such Granting Bank would
otherwise be obligated to make to the applicable Borrower pursuant to this
Agreement; provided, that (i) nothing herein shall constitute a commitment by
any SPC to make any Advance, (ii) if an SPC elects not to exercise such option
or otherwise fails to provide all or any part of such Advance, the applicable
Granting Bank shall be obligated to make such Advance pursuant to the terms
hereof. The making of an Advance by any SPC hereunder shall utilize the
Revolving Loan Commitment of the applicable Granting Bank to the same extent,
and as if, such Advance were made by such Granting Bank. Each party hereto
hereby agrees that no SPC shall be liable for any indemnity or other similar
payment obligation under this Agreement (all liability for which shall remain
with the applicable Granting Bank). All notices hereunder to any Granting Bank
or the related SPC, and all payments in respect of the Obligations due to such
Granting Bank or the related SPC, shall be made to such Granting Bank. In
addition, each Granting Bank shall vote as a Lender hereunder without giving
effect to any assignment under this SECTION 14.3(A)(ii), and not SPC shall have
any vote as a Lender under this Agreement for any purpose. In furtherance of the
foregoing, each party hereto hereby agrees (which agreement shall survive the
termination of this Agreement) that, prior to the date that is one year and one
day after the payment in full of all outstanding commercial paper or other
senior indebtedness of any SPC, it will not institute against, or join any other
person in instituting against, such SPC any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under the laws of the United
States or any State thereto. In addition, notwithstanding anything to the
contrary contained in this SECTION 14.3, any SPC may (i) with notice to, but
without the prior written consent of, the Company and the Administrative Agent
and without paying any processing or administrative fee therefor, assign all or
a portion of its interest in any Advances to the Granting Bank or to any
financial institutions (consented to by the Company and the Administrative Agent
in accordance with the terms of SECTION 14.3(A)(i)) providing liquidity and/or
credit support to or for the account of such SPC to support the funding or
maintenance of Advances and (ii) disclose on a confidential basis any non-public
information relating to its Advances to any rating agency, commercial paper
dealer or provider of any surety, guarantee or credit or liquidity enhancement
to such SPC. This SECTION 14.3(A)(ii) may not be amended without the written
consent of each SPC affected thereby.
(B) EFFECT; EFFECTIVE DATE. Upon (i) delivery to the Administrative
Agent of a notice of assignment, substantially in the form attached as APPENDIX
I to EXHIBIT D hereto (a "NOTICE OF ASSIGNMENT"), together with any consent
required by SECTION 14.3(A) hereof, (ii) payment of a $3,500 fee by the assignee
or the assignor (as agreed) to the Administrative Agent for processing such
assignment (other than an assignment by a Lender to an Affiliate of such Lender
or an Approved Fund of such Lender), and (iii) the completion of the recording
requirements in SECTION 14.3(C), such assignment shall become effective on the
later of such date when the requirements in CLAUSES (i), (ii), and (iii) are met
or the effective date specified in such Notice of Assignment. The
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<PAGE> 81
Notice of Assignment shall contain a representation by the Purchaser to the
effect that none of the consideration used to make the purchase of the Revolving
Loan Commitment and Loans under the applicable assignment agreement are "plan
assets" as defined under ERISA and that the rights and interests of the
Purchaser in and under the Loan Documents will not be "plan assets" under ERISA.
On and after the effective date of such assignment, such Purchaser, if not
already a Lender, shall for all purposes be a Lender party to this Agreement and
any other Loan Documents executed by the Lenders and shall have all the rights
and obligations of a Lender under the Loan Documents, to the same extent as if
it were an original party hereto, and no further consent or action by any
Borrower, the Lenders, or the Administrative Agent shall be required to release
the Seller with respect to the percentage of the Aggregate Revolving Loan
Commitment, Loans assigned to such Purchaser. Upon the consummation of any
assignment to a Purchaser pursuant to this SECTION 14.3(B), the Seller, the
Administrative Agent and the Borrowers shall make appropriate arrangements so
that, to the extent notes have been issued to evidence any of the transferred
Loans, replacement notes are issued to such Seller and new notes or, as
appropriate, replacement notes, are issued to such Purchaser, in each case in
principal amounts reflecting their Revolving Loan Commitment, as adjusted
pursuant to such assignment. Notwithstanding anything to the contrary herein, no
Borrower shall, at any time, be obligated to pay under SECTION 2.15(E) to any
Lender that is a Purchaser, assignee or transferee any sum in excess of the sum
which such Borrower would have been obligated to pay to the Lender that was the
Seller, assignor or transferor had such assignment or transfer not been
effected.
(C) THE REGISTER. Notwithstanding anything to the contrary in this
Agreement, each Borrower hereby designates the Administrative Agent, and the
Administrative Agent hereby accepts such designation, to serve as such
Borrower's contractual representative solely for purposes of this SECTION
14.3(C). In this connection, the Administrative Agent shall maintain at its
address referred to in SECTION 15.1 a copy of each assignment delivered to and
accepted by it pursuant to this SECTION 14.3 and a register (the "REGISTER") for
the recordation of the names and addresses of the Lenders and the Revolving Loan
Commitment of, principal amount of and interest on the Loans owing to, each
Lender from time to time and whether such Lender is an original Lender or the
assignee of another Lender pursuant to an assignment under this SECTION 14.3.
The entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and the Company and each of its Subsidiaries, the
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by any Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
14.4 CONFIDENTIALITY. Subject to SECTION 14.5, the Administrative Agent
and the Lenders and their respective representatives shall hold all nonpublic
information obtained pursuant to the requirements of this Agreement and
identified as such by the Company or any other Borrower in accordance with such
Person's customary procedures for handling confidential information of this
nature and in accordance with safe and sound commercial lending or investment
practices and in any event may make disclosure reasonably required by a
prospective Transferee in connection with the contemplated participation or
assignment or as required or requested by any Governmental Authority or any
securities exchange or similar self-regulatory organization or representative
thereof or pursuant to a regulatory examination or legal process, or to any
direct or indirect contractual counterparty in swap agreements or such
contractual counterparty's professional advisor. In no event shall the
Administrative Agent or any Lender be obligated or required to return any
materials furnished by the Company; provided, however, each prospective
Transferee shall be required to
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<PAGE> 82
agree that if it does not become a participant or assignee it shall return all
materials furnished to it by or on behalf of the Company in connection with this
Agreement.
14.5 DISSEMINATION OF INFORMATION. Each Borrower authorizes each Lender
to disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "TRANSFEREE") and any
prospective Transferee any and all information in such Lender's possession
concerning the Company and its Subsidiaries; provided that prior to any such
disclosure, such prospective Transferee shall agree to preserve in accordance
with SECTION 14.4 the confidentiality of any confidential information described
therein.
ARTICLE XV: NOTICES
15.1 GIVING NOTICE. Except as otherwise permitted by SECTION 2.14 with
respect to Borrowing/Conversion/Continuation Notices, all notices and other
communications provided to any party hereto under this Agreement or any other
Loan Documents shall be in writing or by telex or by facsimile and addressed or
delivered to such party at its address set forth below its signature hereto or
at such other address as may be designated by such party in a notice to the
other parties. Any notice, if mailed and properly addressed with postage
prepaid, shall be deemed given when received; any notice, if transmitted by
telex or facsimile, shall be deemed given when transmitted (answerback confirmed
in the case of telexes).
15.2 CHANGE OF ADDRESS. The Borrowers, the Administrative Agent and any
Lender may each change the address for service of notice upon it by a notice in
writing to the other parties hereto.
15.3 AUTHORITY OF COMPANY. Each of the Subsidiary Borrowers, by its
execution hereof or of an Assumption Letter (i) irrevocably authorizes the
Company, on behalf of such Subsidiary Borrower, to give and receive all notices
under the Loan Documents and to make all elections under the Loan Documents and
to give all Borrowing/Conversion/Continuation Notices on its behalf, (ii) agrees
to be bound by any such notices or elections and (iii) agrees that the
Administrative Agent and Lenders may rely upon any such policies or elections as
if they had been given or made by such Subsidiary Borrower.
ARTICLE XVI: COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by the Company, the
Administrative Agent and the Lenders and each party has notified the
Administrative Agent by telex or telephone, that it has taken such action.
Remainder of This Page Intentionally Blank
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<PAGE> 83
IN WITNESS WHEREOF, the Company, the Subsidiary Borrowers, the Lenders
and the Administrative Agent have executed this Agreement as of the date first
above written.
LANIER WORLDWIDE, INC., as the Company
/s/ R. Cleys By: /s/ Wesley E. Cantrell
V.P. Finance ---------------------------------------
Name:
Title:
Address: 2300 Parklake Drive
Atlanta, GA 30345
Attention: Vice President Finance and
Treasurer
Telephone No.: 770/621-1300
Facsimile No.: 770/621-1367
<PAGE> 84
LANIER EUROPE AG, as a Subsidiary Borrower
By: /s/ Wesley E. Cantrell
---------------------------------------
Name:
Title:
Address: /o Lanier Worldwide, Inc.
2300 Parklake Drive
Atlanta, GA 30345
Attention: Vice President Finance and
Treasurer
Telephone No.: 770/621-1300
Facsimile No.: 770/621-1367
<PAGE> 85
LANIER EUROPE, B.V., as a Subsidiary
Borrower
By: /s/ Wesley E. Cantrell
---------------------------------------
Name:
Title:
Address: c/o Lanier Worldwide, Inc.
2300 Parklake Drive
Atlanta, GA 30345
Attention: Vice President Finance and
Treasurer
Telephone No.: 770/621-1300
Facsimile No.: 770/621-1367
<PAGE> 86
LANIER HOLDINGS, INC., as a Subsidiary
Borrower
By: /s/ Wesley E. Cantrell
---------------------------------------
Name:
Title:
Address: c/o Lanier Worldwide, Inc.
2300 Parklake Drive
Atlanta, GA 30345
Attention: Vice President Finance and
Treasurer
Telephone No.: 770/621-1300
Facsimile No.: 770/621-1367
<PAGE> 87
LANIER PUERTO RICO, INC., as a Subsidiary
Borrower
By: /s/ Wesley E. Cantrell
---------------------------------------
Name:
Title:
Address: c/o Lanier Worldwide, Inc.
2300 Parklake Drive
Atlanta, GA 30345
Attention: Vice President Finance and
Treasurer
Telephone No.: 770/621-1300
Facsimile No.: 770/621-1367
<PAGE> 88
ABN AMRO BANK N.V., as Administrative
Agent and Lender
By: /s/ Paul Widuch
--------------------------------------------------
Name: Paul Widuch
Title: GROUP VICE PRESIDENT
By: /s/ Mary L. Honda
--------------------------------------------------
Name: MARY L. HONDA
Title: VICE PRESIDENT
Address: 135 South LaSalle Street, Suite 625
Chicago, Illinois 60603
Attention: Mary Honda
Telephone No.: (312) 904-5220
Facsimile No.: (312) 606-8425
With a copy to:
1325 Avenue of the Americas
9th Floor
New York, New York 10019
Attention: Linda Boardman
Telephone No.: (212) 314-1724
Facsimile No.: (212) 314-1712
<PAGE> 89
SUNTRUST BANK, ATLANTA, as Syndication
Agent and Lender
By: /s/ J. Christopher Deisley
----------------------------------------
Name: J. CHRISTOPHER DEISLEY
Title: Director
Address: 303 Peachtree Street
2nd Floor
Atlanta, GA 30308
Attention: J. Christopher Deisley
Telephone No.: (404) 588-8684
Facsimile No.: (404) 588-8833
<PAGE> 90
WACHOVIA BANK N.A., as Documentation
Agent and Lender
By: /s/ William R McCamey
---------------------------------------
Name: William R McCamey
Title: Vice President
Address: 191 Peachtree Street
29th Floor
Atlanta, GA 30303
Attention: William McCamey
Telephone No.: (404) 332-6830
Facsimile No.: (404) 332-5016
<PAGE> 91
EXHIBIT A
TO
364-DAY CREDIT AGREEMENT
Dated as of October 20, 1999
COMMITMENTS
-----------
LOAN COMMITMENTS
<TABLE>
<CAPTION>
Lender Amount of Revolving Loan % of Aggregate Revolving Loan
------ ------------------------ -----------------------------
Commitment Commitment
---------- ----------
<S> <C> <C>
ABN AMRO Bank N.V. $66,666,666.66 33 1/3%
Suntrust Bank, Atlanta $66,666,666.67 33 1/3%
Wachovia Bank N.A. $66,666,666.67 33 1/3%
Total $200,000,000.00 100%
</TABLE>
<PAGE> 92
EXHIBIT B
TO
364-DAY CREDIT AGREEMENT
Dated as of October 20, 1999
FORM OF BORROWING/CONVERSION/CONTINUATION NOTICE
------------------------------------------------
TO: ABN AMRO Bank N.V., as administrative agent for itself and the other
Lenders (the "ADMINISTRATIVE AGENT") under that certain 364-Day Credit
Agreement dated as of October 20, 1999 among Lanier Worldwide, Inc.
(the "Company"), the Subsidiary Borrowers from time to time party
thereto, the financial institutions parties thereto (the "Lenders"),
the Administrative Agent, Suntrust Bank, Atlanta, individually and as
Syndication Agent, and Wachovia Bank N.A., individually and as
Documentation Agent (such 364-Day Credit Agreement, as the same may be
amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement").
The [Company] [undersigned Subsidiary Borrower] hereby gives to the
Administrative Agent a [Borrowing/Conversion/Continuation Notice pursuant to
SECTION 2.8] [a Borrowing/ Conversion/Continuation Notice pursuant to SECTION
2.10] of the Credit Agreement, and the [Company] [undersigned Subsidiary
Borrower] hereby requests to [borrow] [convert] [continue] on ______ ___, ____
(the "BORROWING DATE") from the Lenders on a pro rata basis an aggregate
principal amount of:
US $____________ in Revolving Loans as a
/ / Floating Rate Advance
/ / Eurocurrency Rate Advance
Applicable Interest Period of ________ month(s).
<PAGE> 93
The undersigned hereby certifies to the Agents and the Lenders that (i)
the representations and warranties of the undersigned contained in
Article VI of the Credit Agreement are and shall be true and correct in
all material respects on and as of the date hereof and on and as of the
Borrowing Date (unless such representation and warranty is made as of a
specified date, in which case, such representation and warranty shall
be true and correct in all material respects as of such date) except
for changes in the Schedules to the Credit Agreement affecting
transactions permitted by or not in violation of the Credit Agreement;
(ii) no Default or Unmatured Default has occurred and is continuing on
the date hereof or on the Borrowing Date or will result from the making
of the proposed Advance; and (iii) the conditions set forth in SECTION
5.3 of the Credit Agreement have been satisfied.
Unless otherwise defined herein, terms defined in the Credit Agreement
shall have the same meanings in this Borrowing/Conversion/Continuation Notice.
Dated _________ ___, 1999
[LANIER WORLDWIDE, INC.]
[SUBSIDIARY BORROWER]
By:
--------------------------------
Name:
Title:
2
<PAGE> 94
EXHIBIT D
TO
364-DAY CREDIT AGREEMENT
Dated as of October 20, 1999
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
-------------------------------------------
FORM OF ASSIGNMENT AGREEMENT
This Assignment Agreement (this "ASSIGNMENT AGREEMENT") between
______________ (the ASSIGNOR) and ____________ (the "ASSIGNEE") is dated as of
____ ___, _____. The parties hereto agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a 364-Day Credit
Agreement (which, as it may be amended, restated, supplemented, modified,
renewed or extended from time to time is herein called the "CREDIT AGREEMENT")
described in Item I of Schedule 1 attached hereto ("SCHEDULE 1"). Capitalized
terms used herein and not otherwise defined herein shall have the meanings
attributed to them in the Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to
the Assignee, and the Assignee hereby purchases and assumes from the Assignor,
an interest in and to the Assignor's rights and obligations under the Credit
Agreement such that after giving effect to such assignment the Assignee shall
have purchased pursuant to this Assignment Agreement the percentage interest
specified in Item [3] of Schedule 1 of all outstanding rights and obligations
under the Credit Agreement relating to the facilities listed in Item [3] of
Schedule 1 and the other Loan Documents. The aggregate Commitment (or Loans, if
the applicable Commitment has been terminated) purchased by the Assignee
hereunder is set forth in Item [4] of Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment Agreement (the
"EFFECTIVE DATE") shall be the later of the date specified in SECTION 14.3(B) of
the Credit Agreement and the date specified in Item [5] of Schedule 1 or [two]
Business Days (or such shorter period agreed to by the Administrative Agent)
after a Notice of Assignment substantially in the form of APPENDIX I (attached
hereto) has been delivered to the Administrative Agent. Such Notice of
Assignment must include the consents, if any, required to be delivered to the
Administrative Agent and the Company by SECTION 14.3(A) of the Credit Agreement.
In no event will the Effective Date occur if the payments required to be made by
the Assignee to the Assignor on the Effective Date under SECTIONS 4 AND 5 hereof
are not made on the proposed Effective Date. The Assignor will notify the
Assignee of the proposed Effective Date no later than the Business Day prior to
the proposed Effective Date. As of the Effective Date, (i) the Assignee shall
have the rights and obligations of a Lender under the Loan Documents with
respect to the rights and obligations assigned to the Assignee hereunder and
(ii) the Assignor shall relinquish its rights and be released from its
corresponding obligations under the Loan Documents with respect to the rights
and obligations assigned to the Assignee hereunder.
<PAGE> 95
4. PAYMENTS OBLIGATIONS. On and after the Effective Date, the Assignee
shall be entitled to receive from the Administrative Agent all payments of
principal, interest and fees with respect to the interest assigned hereby. The
Assignee shall advance funds directly to the Administrative Agent with respect
to all Loans and reimbursement payments made on or after the Effective Date with
respect to the interest assigned hereby. [In consideration for the sale and
assignment of Loans hereunder, (i) the Assignee shall pay the Assignor, on the
Effective Date, an amount equal to the principal amount of the portion of all
Floating Rate Loans assigned to the Assignee hereunder and (ii) with respect to
each Eurocurrency Rate Loan made by the Assignor and assigned to the Assignee
hereunder which is outstanding on the Effective Date, (a) on the last day of the
Interest Period therefor or (b) on such earlier date agreed to by the Assignor
and the Assignee or (c) on the date on which any such Eurocurrency Rate Loan
either becomes due (by acceleration or otherwise) or is prepaid (the date as
described in the foregoing clauses (a), (b) or (c) being hereinafter referred to
as the "PAYMENT DATE"), the Assignee shall pay the Assignor an amount equal to
the principal amount of the portion of such Eurocurrency Rate Loan assigned to
the Assignee which is outstanding on the Payment Date. If the Assignor and the
Assignee agree that the Payment Date for such Eurocurrency Rate Loan shall be
the Effective Date, they shall agree to the interest rate applicable to the
portion of such Loan assigned hereunder for the period from the Effective Date
to the end of the existing Interest Period applicable to such Eurocurrency Rate
Loan (the "AGREED INTEREST RATE") and any interest received by the Assignee in
excess of the Agreed Interest Rate shall be remitted to the Assignor. In the
event interest for the period from the Effective Date to but not including the
Payment Date is not paid by the applicable Borrower with respect to any
Eurocurrency Rate Loan sold by the Assignor to the Assignee hereunder, the
Assignee shall pay to the Assignor interest for such period on the portion of
such Eurocurrency Rate Loan sold by the Assignor to the Assignee hereunder at
the applicable rate provided by the Credit Agreement. In the event a prepayment
of any Eurocurrency Rate Loan which is existing on the Payment Date and assigned
by the Assignor to the Assignee hereunder occurs after the Payment Date but
before the end of the Interest Period applicable to such Eurocurrency Rate Loan,
the Assignee shall remit to the Assignor the excess of the prepayment penalty
paid with respect to the portion of such Eurocurrency Rate Loan assigned to the
Assignee hereunder over the amount which would have been paid if such prepayment
penalty was calculated based on the Agreed Interest Rate. The Assignee will also
promptly remit to the Assignor (i) any principal payments received from the
Administrative Agent with respect to Eurocurrency Rate Loans prior to the
Payment Date and (ii) any amounts of interest on Loans and fees received from
the Administrative Agent which relate to the portion of the Loans assigned to
the Assignee hereunder for periods prior to the Effective Date, in the case of
Floating Rate Loans or fees, or the Payment Date, in the case of Eurocurrency
Rate Loans, and not previously paid by the Assignee to the Assignor.](1) In the
event that either party hereto receives any payment to which the other party
hereto is entitled under this Assignment Agreement, then the party receiving
such amount shall promptly remit it to the other party hereto.
5. FEES PAYABLE BY THE ASSIGNEE. The [Assignee shall pay to the
Assignor a fee on each day on which a payment of interest or commitment fees is
made under the Credit
- ----------
(1) EACH ASSIGNOR MAY INSERT ITS STANDARD PAYMENT PROVISIONS IN LIEU OF
THE PAYMENT TERMS INCLUDED IN THIS EXHIBIT.
2
<PAGE> 96
Agreement with respect to the amounts assigned to the Assignee hereunder (other
than a payment of interest or commitment fees for the period prior to the
Effective Date or, in the case of Eurocurrency Rate Loans, the Payment Date,
which the Assignee is obligated to deliver to the Assignor pursuant to Section 4
hereof). The amount of such fee shall be the difference between (i) the interest
or fee, as applicable, paid with respect to the amounts assigned to the Assignee
hereunder and (ii) the interest or fee, as applicable, which would have been
paid with respect to the amounts assigned to the Assignee hereunder if each
interest rate was ___of 1% less than the interest rate paid by the applicable
Borrower or if the commitment fee was ___ of 1% less than the commitment fee
paid by the applicable Borrower, as applicable. In addition, the] [Assignee]
[Assignor] agrees to pay a $3,500 processing fee required to be paid to the
Administrative Agent in connection with this Assignment Agreement.(2)
6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S
LIABILITY. The Assignor represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim created by the Assignor. The
Assignor represents and warrants that it has the power and authority and legal
right to execute and deliver this Assignment Agreement and to perform its
obligations hereunder. The execution and delivery by the Assignor of this
Assignment Agreement and the performance by it of its obligations hereunder have
been duly authorized by proper proceedings. It is understood and agreed that the
assignment and assumption hereunder are made without recourse to the Assignor
and that the Assignor makes no other representation or warranty of any kind to
the Assignee. Neither the Assignor, the Administrative Agent, nor any other
Lender, nor any of its officers, directors, employees, Agents or attorneys shall
be responsible for (i) the due execution, legality, validity, enforceability,
genuineness, sufficiency or collectability of any Loan Document, (ii) any
representation, warranty or statement made in or in connection with any of the
Loan Documents, (iii) the financial condition or creditworthiness of the
Borrowers or any guarantor, (iv) the performance of or compliance with any of
the terms or provisions of any of the Loan Documents, (v) inspecting any of the
property, books or records of the Borrowers, (vi) the validity, enforceability,
perfection, priority, condition, value or sufficiency of any collateral securing
or purporting to secure the Loans or (vii) any mistake, error of judgment, or
action taken or omitted to be taken in connection with the Loans or the Loan
Documents.
7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee represents and
warrants that it has the power and authority and legal right to execute and
deliver this Assignment Agreement and to perform its obligations hereunder. The
execution and delivery by the Assignee of this Assignment Agreement and the
performance by it of its obligations hereunder have been duly authorized by
proper proceedings. The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements requested by
the Assignee and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment Agreement, (ii) agrees that it will, independently and without
reliance upon the Administrative Agent, the Assignor or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not
- ----------
(2) ASSIGNOR AND ASSIGNEE TO INSERT APPLICABLE PAYMENT TERMS.
3
<PAGE> 97
taking action under the Loan Documents, (iii) appoints and authorizes the
Administrative Agent to take such action as contractual representative on its
behalf and to exercise such powers under the Loan Documents as are delegated to
the Administrative Agent by the terms thereof, together with such powers as are
reasonably incidental thereto, (iv) agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Loan Documents
are required to be performed by it as a Lender, (v) agrees that its payment
instructions and notice instructions are as set forth in the attachment to
Schedule 1, (vi) confirms that none of the funds, monies, assets or other
consideration being used to make the purchase and assumption hereunder are "plan
assets" as defined under ERISA and that its rights, benefits and interests in
and under the Loan Documents will not be "plan assets" under ERISA, [and (vii)
attaches the forms prescribed by the Internal Revenue Service of the United
States certifying that the Assignee is entitled to receive payments under the
Loan Documents without deduction or withholding of any United States federal
income taxes].(3)
8. INDEMNITY. The Assignee agrees to indemnify and hold the Assignor
harmless against any and all losses, costs and expenses (including, without
limitation, reasonable attorneys' fees) and liabilities incurred by the Assignor
in connection with or arising in any manner from the Assignee's non-performance
of the obligations assumed under this Assignment Agreement.
9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee shall
have the right pursuant to SECTION 14.3(A) of the Credit Agreement to assign the
rights which are assigned to the Assignee hereunder to any entity or person,
provided that (i) any such subsequent assignment does not violate any of the
terms and conditions of the Loan Documents or any law, rule, regulation, order,
writ, judgment, injunction or decree and that any consent required under the
terms of the Loan Documents has been obtained and (ii) unless the prior written
consent of the Assignor is obtained, the Assignee is not thereby released from
its obligations to the Assignor hereunder, if any remain unsatisfied, including,
without limitation, its obligations under [SECTIONS 4, 5 AND 8] hereof.
10. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in the
Aggregate Revolving Loan Commitment occurs between the date of this Assignment
Agreement and the Effective Date, the percentage interest specified in Item 3 of
Schedule 1 shall remain the same, but the dollar amount purchased shall be
recalculated based on such reduced Aggregate Commitment.
11. ENTIRE AGREEMENT. This Assignment Agreement and the attached Notice
of Assignment embody the entire agreement and understanding between the parties
hereto and supersede all prior agreements and understandings between the parties
hereto relating to the subject matter hereof.
12. GOVERNING LAW. This Assignment Agreement shall be governed by and
interpreted and enforced in accordance with the internal laws of the State of
New York.
- ----------
(3) TO BE INSERTED IF THE ASSIGNEE IS NOT INCORPORATED UNDER THE LAWS OF
THE UNITED STATES, OR A STATE THEREOF.
4
<PAGE> 98
13. NOTICES. Notices shall be given under this Assignment Agreement in
the manner set forth in the Credit Agreement. For the purpose hereof, the
addresses of the parties hereto (until notice of a change is delivered) shall be
the address set forth in the attachment to Schedule 1.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above written.
[NAME OF ASSIGNOR]
By:
-----------------------
Name:
Title
[NAME OF ASSIGNEE]
By:
-----------------------
Name:
Title:
5
<PAGE> 99
SCHEDULE 1
TO ASSIGNMENT AGREEMENT
1. Description and Date of Credit Agreement: 364-Day Credit Agreement
dated as of October 20, 1999 among Lanier Worldwide, Inc. (the
"Company"), the Subsidiary Borrowers from time to time party thereto,
the financial institutions parties thereto (the "Lenders"), ABN AMRO
Bank N.V., individually and as Administrative Agent, Suntrust Bank,
Atlanta, individually and as Syndication Agent, and Wachovia Bank N.A.,
individually and as Documentation Agent.
2. Date of Assignment Agreement: ______, ___
3. Amounts to be Assigned(4) (As of Date of item 2 above):
REVOLVING
LOAN FACILITY
TOTAL OF COMMITMENTS (LOANS)
UNDER THE CREDIT AGREEMENT $____________
ASSIGNEE'S PERCENTAGE OF REVOLVING FACILITY
PURCHASED UNDER THE ASSIGNMENT AGREEMENT ________%
AMOUNT OF ASSIGNED SHARE OF
REVOLVING FACILITY UNDER THE ASSIGNMENT AGREEMENT $___________
4. ASSIGNEE'S AGGREGATE (LOAN AMOUNT)
COMMITMENT AMOUNT PURCHASED HEREUNDER. $___________
5. Proposed Effective Date: _______ __, ____
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: _________________________ By: ____________________________
Name: Name:
Title: Title:
- ----------
(4) Amounts to be described in Dollars.
<PAGE> 100
Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT
Attach Assignor's Administrative Information Sheet, which must
include notice address for the Assignor and the Assignee
7
<PAGE> 101
APPENDIX I
to Assignment Agreement
NOTICE
OF ASSIGNMENT
-------------
---------, ---
To: ABN AMRO Bank, N.V., as Administrative Agent
ABN AMRO Bank, N.V.
135 South LaSalle Street
Chicago, Illinois 60674
Attention: Mary Honda
Telephone No.: 312/904-5220
Facsimile No.: 312/606-8425
ABN AMRO BANK, N.V.
1325 Avenue of the Americas
9th Floor
New York, NY 10019
Attention: Linda Boardman
Telephone No.: 212/314-1724
Facsimile No.: 212/314-1712
LANIER WORLDWIDE, INC.
2300 Parklake Drive
Atlanta, GA 30345
Attention: Vice-President -- Treasurer
Telephone No.: 770/621-1300
Facsimile No.: 770/621-1367
From: [NAME OF ASSIGNOR] (the "Assignor")
[NAME OF ASSIGNEE] (the "Assignee")
1. We refer to that 364-Day Credit Agreement (the "Credit Agreement")
described in Item 1 of Schedule 1 attached hereto ("Schedule 1"). Capitalized
terms used herein and not otherwise defined herein shall have the meanings
attributed to them in the Credit Agreement.
2. This Notice of Assignment (this "Notice") is given and delivered to
the Administrative Agent pursuant to SECTION 14.3(B) of the Credit Agreement.
8
<PAGE> 102
3. The Assignor and the Assignee have entered into an Assignment
Agreement, dated as of _____, __ (the "Assignment"), pursuant to which, among
other things, the Assignor has sold, assigned, delegated and transferred to the
Assignee, and the Assignee has purchased, accepted and assumed from the Assignor
the percentage interest specified in Item 3 of Schedule 1 of all outstanding
rights and obligations under the Credit Agreement relating to the facilities
listed in Item 3 of Schedule 1. The Effective Date of the Assignment shall be
the later of the date specified in SECTION 14.3(B) of the Credit Agreement and
the date specified in Item 5 of Schedule 1 or two Business Days (or such shorter
period as agreed to by the Administrative Agent) after this Notice of Assignment
and any consents and fees required by SECTIONS 14.3(A) AND 14.3(B) of the Credit
Agreement have been delivered to the Administrative Agent and the Alternate
Currency Banks, provided that the Effective Date shall not occur if any
condition precedent agreed to by the Assignor and the Assignee has not been
satisfied.
4. The Assignor and the Assignee hereby give to the Company and the
Alternate Currency Banks and the Administrative Agent notice of the assignment
and delegation referred to herein. The Assignor will confer with the
Administrative Agent before the date specified in Item 5 of Schedule 1 to
determine if the Assignment Agreement will become effective on such date
pursuant to Section 3 hereof, and will confer with the Administrative Agent to
determine the Effective Date pursuant to Section 3 hereof if it occurs
thereafter. The Assignor shall notify the Administrative Agent and the Alternate
Currency Banks if the Assignment Agreement does not become effective on any
proposed Effective Date as a result of the failure to satisfy the conditions
precedent agreed to by the Assignor and the Assignee. At the request of the
Administrative Agent, the Assignor will give the Administrative Agent written
confirmation of the satisfaction of the conditions precedent.
5. The Assignor of the Assignee shall pay to the Administrative Agent
on or before the Effective Date the processing fee of $3,500 required by SECTION
14.3(B) of the Credit Agreement.
6. If notes are outstanding on the Effective Date, the Assignor and the
Assignee may request and direct that the Administrative Agent prepared and cause
the Borrowers to execute and deliver new notes or, as appropriate, replacement
notes, to the Assignor and the Assignee. The Assignor and the Assignee, as
applicable, each agree to deliver to the Administrative Agent the original note
received by it from the Applicable Borrower upon its receipt of a new note in
the appropriate amount.
7. The Assignee advises the Administrative Agent that notice and
payment instructions are set forth in the Attachment to Schedule 1.
8. The Assignee hereby represents and warrants that none of the funds,
monies, assets or other consideration being used to make the purchase pursuant
to the Assignment are "plan assets" as defined under ERISA and that its rights,
benefits, and interests in and under the Loan Documents will not be "plan
assets' under ERISA.
9. The Assignee authorizes the Administrative Agent to act as its
contractual representative under the Loan Documents in accordance with the terms
thereof. The Assignee acknowledges that the Administrative Agent has no duty to
supply information with respect to
9
<PAGE> 103
the Borrowers or the Loan Documents to the Assignee until the Assignee becomes a
party to the Credit Agreement.
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE}
By: By:
----------------------------- ----------------------------
Name: Name:
Title: Title:
10
<PAGE> 104
ACKNOWLEDGED AND CONSENT TO:
______________, as Administrative Agent ______________, as the Company
By: By:
----------------------------- ----------------------------
Name: Name:
Title: Title:
[add additional Alternate Currency Banks]
[Attach photocopy of Schedule 1 to Assignment]
11
<PAGE> 105
EXHIBIT E
TO
364-DAY CREDIT AGREEMENT
Dated as of October 20, 1999
FORM OF OFFICER'S CERTIFICATE
-----------------------------
OFFICER'S CERTIFICATE
I, the undersigned, hereby certify that I am the ____________________
of Lanier Worldwide, Inc., a corporation duly organized and existing under the
laws of the State of Delaware (the "Company"). Capitalized terms used herein and
not otherwise defined herein are as defined in that certain 364-Day Credit
Agreement dated as of October 20, 1999 among the Company, the Subsidiary
Borrowers from time to time party thereto, the financial institutions parties
thereto (the "Lenders"), ABN AMRO Bank N.V., individually and as Administrative
Agent, Suntrust Bank, Atlanta, individually and as Syndication Agent, and
Wachovia Bank N.A., individually and as Documentation Agent (as amended,
restated, supplemented or modified from time to time, the "Credit Agreement").
I further certify on behalf of the Company, that as of the date hereof,
to the best of my knowledge, after diligent inquiry of all relevant persons at
the Company and its Subsidiaries, as of the date of this Officer's Certificate
no Default or Unmatured Default exists [other than the following (describe the
nature of the Default or Unmatured Default and the status thereof)].
IN WITNESS WHEREOF, I hereby subscribe my name on behalf of the Company
on this _____ day of __________, ___.
-------------------------
[insert Name of Officer]
<PAGE> 106
EXHIBIT F
TO
364-DAY CREDIT AGREEMENT
Dated as of October 20, 1999
FORM OF COMPLIANCE CERTIFICATE
------------------------------
Pursuant to SECTION 7.1(A)(iii) of the 364-Day Credit Agreement (as
amended, modified, restated or supplemented from time to time, the "Credit
Agreement"), dated as of October 20, 1999 among Lanier Worldwide, Inc. (the
"Company"), the Subsidiary Borrowers from time to time party thereto, the
financial institutions parties thereto (the "Lenders"), ABN AMRO Bank N.V.,
individually and as Administrative Agent, Suntrust Bank, Atlanta, individually
and as Syndication Agent, and Wachovia Bank N.A., individually and as
Documentation Agent (as amended, restated, supplemented or modified from time to
time, the "Credit Agreement") on behalf of the Lenders, the Company, through its
____________, hereby delivers to the Administrative Agent [, together with the
financial statements being delivered to the Administrative Agent pursuant to
SECTION 7.1(A) of the Credit Agreement,] this Compliance Certificate (the
"Certificate") [for the accounting period from _____________, ____ to
____________, ____]. Capitalized terms used herein shall have the meanings set
forth in the Credit Agreement. Subsection references herein relate to
subsections of the Credit Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected _________________ of the Company;
2. I have reviewed the terms of the Credit Agreement and I have made,
or have caused to be made under my supervision, a detailed review of the
transactions and conditions of the Company and its Subsidiaries during the
accounting period covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or event which constitutes
a Default or Unmatured Default during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate [except as set forth below]; and
4. Schedule I attached hereto sets forth financial data and
computations evidencing the Company's compliance with certain covenants of the
Credit Agreement, all of which data and computations are true, complete and
correct.
The foregoing certifications, together with the computations set forth in
Schedule I hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this ____ day of _________, 19/20__.
<PAGE> 107
SCHEDULE I
to COMPLIANCE CERTIFICATE
<TABLE>
<CAPTION>
<S> <C>
I. SECTION 2.15: PRICING CALCULATIONS
LEVERAGE RATIO (SECTION 2.15(d))
1. Total Indebtedness $_____________
2. EBITDA for the period for
_________ to __________ $_____________
3. "Leverage Ratio" (Ratio of (1) to (2))
____TO 1.0
II. SECTION 7.3: NEGATIVE COVENANTS
A. INDEBTEDNESS (Section 7.3(D)(viii))
1. Permitted aggregate additional unsecured
Indebtedness $_____________
2. Actual aggregate additional unsecured
Indebtedness $_____________
3. State whether (2) is less than (1) Yes/No
B. RESTRICTED PAYMENTS (Section 7.3(F))
1. Permitted aggregate Restricted Payments
for the period from __________________
to __________________ (25% of Net
Income for prior fiscal years) $_____________
2. Actual aggregate Restricted Payments
for the period from __________________
to __________________ $_____________
3. State whether (2) is less than (1) Yes/No
C. ACQUISITIONS (Section 7.3(G))
1. Permitted aggregate permitted Acquisitions
for the period from _________________ to
___________________ $_____________
</TABLE>
2
<PAGE> 108
<TABLE>
<CAPTION>
<S> <C> <C>
2. Actual aggregate Permitted Acquisitions
for the period from _________________ to
___________________ $_____________
3. State whether (2) is less than (1) Yes/No
D. CAPITAL EXPENDITURES (Section 7.3(Q))
1. Permitted aggregate Capital Expenditures for the
period from _________________ to _________________
($150,000,000 for fiscal years ending prior to the
third anniversary of the Closing Date, $175,000,000
for fiscal years ending thereafter) $_____________
2. Actual aggregate Capital Expenditures
for the period from _______________ to
_________________ $_____________
3. State whether (2) is less than (1) Yes/No
III. SECTION 7.4: FINANCIAL COVENANTS
A. MINIMUM COVERAGE RATIO (SECTION 7.4(A))
1. EBITDAR for the period from
_______ to _________ $_____________
2. Interest Expense plus Rentals
for the period from __________
to____________ $_____________
3. "Coverage Ratio" (Ratio of (1) to (2)) _____TO 1.0
Minimum Leverage Ratio is as follows:
FISCAL QUARTER ENDING RATIO
--------------------- -----
December 31, 1999 through June 30, 2000 2.75
July 1, 2000 and thereafter 2.75
B. MAXIMUM LEVERAGE RATIO (SECTION 7.4(B))
1. Total Indebtedness $_____________
2. EBITDA for the period from
to ___________ $_____________
</TABLE>
3
<PAGE> 109
<TABLE>
<CAPTION>
<S> <C> <C>
3. "Leverage Ratio" (Ratio of (1) to (2)) _______TO 1.0
Maximum Leverage Ratio is as follows:
FISCAL QUARTER ENDING RATIO
--------------------- -----
December 31, 1999 through June 30, 2000 3.25
July 1, 2000 and thereafter 3.00
C. MINIMUM CONSOLIDATED NET WORTH (SECTION 7.4(C))
1. Consolidated Net Worth as of the last day of
the fiscal quarter ending on __________,_____ $_____________
2. Eighty-five percent (85%) of Consolidated
Net Worth as of the date immediately following
the Closing Date $_____________
3. Fifty percent (50%) of Net Income (if positive)
calculated separately for (i) the remainder of the
quarterly accounting period in which the Closing Date
occurs and (ii) each subsequent quarterly accounting
period, in each case excluding changes in cumulative
foreign exchange translation adjustment $_____________
4. Sum of 2) plus 3) $_____________
5. State whether (1) is less than (4) YES/NO
------
</TABLE>
The Company hereby certifies, through its ____________, that the
information set forth above is accurate as of ____________, __________, to
the best of such officer's knowledge, after diligent inquiry, and that the
financial statements delivered herewith present fairly the financial position
of the Company and its Subsidiaries at the dates indicated and the results of
their operations and changes in their financial position for the periods
indicated in conformity with Agreement Accounting Principles, consistently
applied.
Dated:
-----------------, ---------------
LANIER WORLDWIDE, INC.
By:
------------------------------
Name:
Title:
4
<PAGE> 110
EXHIBIT G-1
FORM OF
SUBSIDIARIES GUARANTY (364-DAY AGREEMENT)
-----------------------------------------
This Subsidiaries Guaranty (this "GUARANTY") is made as of the 20th day
of October, 1999 by each of the corporations that is a signatory hereto
(individually, a "GUARANTOR"; collectively, the "GUARANTORS"), in favor of the
Agents and the Lenders (each as defined below), under the Credit Agreement
referred to below.
RECITALS:
A. Lanier Worldwide, Inc. (the "Company"), the Subsidiary Borrowers
from time to time party thereto, the institutions from time to time party
thereto as Lenders, ABN AMRO Bank N.V., individually and as Administrative
Agent, Suntrust Bank, Atlanta, individually and as Syndication Agent, and
Wachovia Bank N.A., individually and as Documentation Agent have entered into
that certain 364-Day Credit Agreement dated as of the date hereof (as from time
to time amended, restated, supplemented or otherwise modified, the "CREDIT
AGREEMENT"), providing, subject to the terms and conditions thereof, for
extensions of credit and other financial accomodations to be made by the Lenders
to the Company and the Subsidiaries;
B. Each of the Guarantors is a Wholly-Owned Subsidiary of the Company
and will receive substantial and direct benefits from the extensions of credit
contemplated by the Credit Agreement and is entering into this Guaranty to
induce the Agents and the Lenders to enter into the Credit Agreement and extend
credit to the Borrowers thereunder; and
C. The execution and delivery of this Guaranty is a condition precedent
to the obligation of the Lenders to extend credit to the Company and to the
Subsidiary Borrowers pursuant to the Credit Agreement;
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration and as an inducement to the Lenders to enter into the
Credit Agreement and extend credit to the Company and to the Subsidiary
Borrowers, each Guarantor hereby agrees as follows:
1. Terms defined in the Credit Agreement and not otherwise defined
herein have, as used herein, the respective meanings provided for therein.
2. Each Guarantor, jointly and severally, hereby absolutely,
irrevocably and unconditionally guarantees prompt, full and complete payment
when due, whether at stated maturity, upon acceleration or otherwise, and at all
times thereafter, of the Obligations, including, without limitation, (a) the
principal of and interest on each Advance made to the
<PAGE> 111
Company or any Subsidiary Borrower pursuant to the Credit Agreement, (b) any
Reimbursement Obligations of the Company or a Subsidiary Borrower, (c) any
obligations under or with respect to any Hedging Agreement entered into in
connection with the Credit Agreement and (d) all other amounts payable by the
Company and the Subsidiary Borrowers or any of their respective Subsidiaries
under the Credit Agreement and the other Loan Documents (collectively, the
"GUARANTEED DEBT"). This is a guaranty of payment and not a guaranty of
collection.
3. Each Guarantor waives notice of the acceptance of this Guaranty and
of the extension or incurrence of the Guaranteed Debt or any part thereof. Each
Guarantor further waives all setoffs and counterclaims and presentment, protest,
notice, filing of claims with a court in the event of receivership, bankruptcy
or reorganization of any Borrower, demand or action on delinquency in respect of
the Guaranteed Debt or any part thereof, including any right to require the
Agents or the Lenders to sue the Company, any Subsidiary Borrower, any other
Guarantor or any other Person obligated with respect to the Guaranteed Debt or
any part thereof, or otherwise to enforce payment thereof against any collateral
securing the Guaranteed Debt or any part thereof.
4. Each Guarantor hereby agrees that, to the fullest extent permitted
by law, its obligations hereunder shall be continuing, absolute and
unconditional under any and all circumstances and not subject to any reduction,
limitation, impairment, termination, defense (other than indefeasible payment in
full or a defense arising under the Agreement based upon the gross negligence or
willful misconduct of any Agent or Lender), setoff, counterclaim or recoupment
whatsoever (all of which are hereby expressly waived by it to the fullest extent
permitted by law), whether by reason of any claim of any character whatsoever,
including, without limitation, any claim of waiver, release, surrender,
alteration or compromise. The validity and enforceability of this Guaranty shall
not be impaired or affected by any of the following: (a) any extension,
modification or renewal of, or indulgence with respect to, or substitution for,
the Guaranteed Debt or any part thereof or any agreement relating thereto at any
time; (b) any failure or omission to perfect or maintain any lien on, or
preserve rights to, any security or collateral or to enforce any right, power or
remedy with respect to the Guaranteed Debt or any part thereof or any agreement
relating thereto, or any collateral securing the Guaranteed Debt or any part
thereof; (c) any waiver of any right, power or remedy or of any default with
respect to the Guaranteed Debt or any part thereof or any agreement relating
thereto or with respect to any collateral securing the Guaranteed Debt or any
part thereof; (d) any release, surrender, compromise, settlement, waiver,
subordination or modification, with or without consideration, of any collateral
securing the Guaranteed Debt or any part thereof, any other guaranties with
respect to the Guaranteed Debt or any part thereof, or any other obligations of
any person or entity with respect to the Guaranteed Debt or any part thereof;
(e) the enforceability or validity of the Guaranteed Debt or any part thereof or
the genuineness, enforceability or validity of any agreement relating thereto or
with respect to any collateral securing the Guaranteed Debt or any part thereof;
(f) the application of payments received from any source to the payment of
indebtedness other than the Guaranteed Debt, any part thereof or amounts which
are not covered by this Guaranty even though the Lenders might lawfully have
elected to apply such payments to any part or all of the Guaranteed Debt or to
amounts which are not covered by this Guaranty; (g) any change of ownership of
any Borrower or the insolvency, bankruptcy or any other change in the legal
status of any Borrower; (h) any change in, or the imposition of, any law,
decree, regulation or other governmental act which does or might impair,
-2-
<PAGE> 112
delay or in any way affect the validity, enforceability or the payment when due
of the Guaranteed Debt; (i) the failure of any Borrower to maintain in full
force, validity or effect or to obtain or renew when required all governmental
and other approvals, licenses or consents required in connection with the
Guaranteed Debt or this Guaranty, or to take any other action required in
connection with the performance of all obligations pursuant to the Guaranteed
Debt or this Guaranty; (j) the existence of any claim, setoff or other rights
which any Guarantor may have at any time against any Borrower or any other
Guarantor or any other Person in connection herewith or with any unrelated
transaction; (k) the Lenders' election, in any case or proceeding instituted
under chapter 11 of the United States Bankruptcy Code, of the application of
section 1111(b)(2) of the United States Bankruptcy Code; (l) any borrowing, use
of cash collateral, or grant of a security interest by any Borrower, as debtor
in possession, under section 363 or 364 of the United States Bankruptcy Code;
(m) the disallowance of all or any portion of any of the Lenders' claims for
repayment of the Guaranteed Debt under section 502 or 506 of the United States
Bankruptcy Code; or (n) any other fact or circumstance which might otherwise
constitute grounds at law or equity for the discharge or release of any
Guarantor from its obligations hereunder, all whether or not such Guarantor
shall have had notice or knowledge of any act or omission referred to in the
foregoing CLAUSES (a) THROUGH (n) of this paragraph. It is agreed that each
Guarantor's liability hereunder is independent of each other Guarantor's
liability hereunder with respect to the Guaranteed Debt and any other guaranties
or other obligations at any time in effect with respect to the Guaranteed Debt
or any part thereof, and that each Guarantor's liability hereunder may be
enforced regardless of the existence, validity, enforcement or non-enforcement
of any such other guaranties or other obligations or any provision of any
applicable law or regulation purporting to prohibit payment by any Borrower of
the Guaranteed Debt in the manner agreed upon among the Agents, the Lenders and
the Borrowers.
5. Credit may be granted or continued from time to time by the Lenders
to the Borrowers without notice to or authorization from any Guarantor
regardless of any Borrower's financial or other condition at the time of any
such grant or continuation. No Agent or Lender shall have an obligation to
disclose or discuss with any Guarantor its assessment of the financial condition
of any Borrower.
6. Each Guarantor authorizes the Lenders to take any action or exercise
any remedy with respect to any collateral from time to time securing the
Guaranteed Debt, which the Lenders in their sole discretion shall determine,
without notice to any Guarantor.
7. In the event the Lenders in their sole discretion elect to give
notice of any action with respect to any collateral securing the Guaranteed Debt
or any part thereof, ten (10) days' written notice mailed to the Guarantors by
ordinary mail at the address shown hereon shall be deemed reasonable notice of
any matters contained in such notice. Each Guarantor consents and agrees that
neither the Agents nor the Lenders shall be under any obligation to marshall any
assets in favor of any Guarantor or against or in payment of any or all of the
Guaranteed Debt.
8. In the event that acceleration of the time for payment of any of the
Guaranteed Debt is stayed upon the insolvency, bankruptcy or reorganization of
any Borrower, or otherwise, all such amounts shall nonetheless be payable by
each Guarantor forthwith upon demand by the Agents or the Lenders. Each
Guarantor further agrees that, to the extent that any Borrower makes a payment
or payments to any of the Lenders on the Guaranteed Debt, or the
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Agents or the Lenders receive any proceeds of collateral securing the Guaranteed
Debt, which payment or receipt of proceeds or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be returned or repaid to such Borrower, its estate, trustee, receiver, debtor in
possession or any other party, including, without limitation, each Guarantor,
under any insolvency or bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such payment, return or repayment, the
obligation or part thereof which has been paid, reduced or satisfied by such
amount shall be reinstated and continued in full force and effect as of the date
when such initial payment, reduction or satisfaction occurred.
9. No delay on the part of the Agents or the Lenders in the exercise of
any right, power or remedy shall operate as a waiver thereof, and no single or
partial exercise by the Agents or the Lenders of any right, power or remedy
shall preclude any further exercise thereof; nor shall any amendment,
supplement, modification or waiver of any of the terms or provisions of this
Guaranty be binding upon the Agents or the Lenders, except as expressly set
forth in a writing duly signed and delivered by the Agents. The failure by the
Agents or the Lenders at any time or times hereafter to require strict
performance by any Borrower or any Guarantor of any of the provisions,
warranties, terms and conditions contained in any promissory note, security
agreement, agreement, guaranty, instrument or document now or at any time or
times hereafter executed pursuant to the terms of, or in connection with, the
Agreement by any Borrower or any Guarantor and delivered to the Agents or the
Lenders shall not waive, affect or diminish any right of the Agents or the
Lenders at any time or times hereafter to demand strict performance thereof, and
such right shall not be deemed to have been waived by any act or knowledge of
the Agents or the Lenders, their agents, officers or employees, unless such
waiver is contained in an instrument in writing duly signed and delivered by the
Agents. No waiver by the Agents or the Lenders of any default shall operate as a
waiver of any other default or the same default on a future occasion, and no
action by the Agents or the Lenders permitted hereunder shall in any way affect
or impair the Agents' or the Lenders' rights or powers, or the obligations of
any Guarantor under this Guaranty. Any determination by a court of competent
jurisdiction of the amount of any Guaranteed Debt owing by any Borrower to the
Lenders shall be conclusive and binding on each Guarantor irrespective of
whether such Guarantor was a party to the suit or action in which such
determination was made.
10. Subject to the provisions of SECTION 8, this Guaranty shall
continue in effect until the Credit Agreement have terminated, the Guaranteed
Debt has been paid in full and the other conditions of this Guaranty have been
satisfied.
11. In addition to and without limitation of any rights, powers or
remedies of the Agents or the Lenders under applicable law, any time after
maturity of the Guaranteed Debt, whether by acceleration or otherwise, the
Agents or the Lenders may, in their sole discretion, with notice after the fact
to the Guarantors and regardless of the acceptance of any security or collateral
for the payment hereof, appropriate and apply toward the payment of the
Guaranteed Debt (a) any indebtedness due or to become due from any of the
Lenders to any Guarantor, and (b) any moneys, credits or other property
belonging to any Guarantor (including all account balances, whether provisional
or final and whether or not collected or available) at any time held by or
coming into the possession of any Agents or any Lender whether for deposit or
otherwise.
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<PAGE> 114
12. Each Guarantor agrees to pay all costs, fees and expenses
(including reasonable attorneys' fees and time charges, which attorneys may be
employees of an Agent or Lender) incurred by an Agent or Lender in collecting or
enforcing the obligations of each Guarantor under this Guaranty.
13. This Guaranty shall bind each Guarantor and its successors and
assigns and shall inure to the benefit of the Agents, the Lenders and their
successors and assigns. All references herein to the Lenders shall for all
purposes also include all Purchasers and Participants (as such terms are defined
in the Agreement). All references herein to a Borrower shall be deemed to
include its successors and assigns including, without limitation, a receiver,
trustee or debtor in possession of or for such Borrower.
14. THIS GUARANTY SHALL BE DEEMED TO HAVE BEEN MADE AT NEW YORK, NEW
YORK, AND SHALL BE CONSTRUED AND THE RIGHTS AND LIABILITIES OF THE AGENTS, THE
LENDERS AND THE GUARANTORS DETERMINED, IN ACCORDANCE WITH THE INTERNAL LAWS,
WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE OF NEW YORK, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY OTHER LOAN
DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED
STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF
THIS GUARANTY, EACH GUARANTOR, THE AGENTS AND THE LENDERS CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
COURTS. EACH GUARANTOR, THE AGENTS AND THE LENDERS IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
GUARANTY OR ANY DOCUMENT RELATED HERETO. EACH GUARANTOR, THE AGENTS AND THE
LENDERS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS,
WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
15. EACH GUARANTOR, THE LENDERS AND THE AGENTS EACH WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS GUARANTY, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR
ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH GUARANTOR, THE LENDERS AND THE
AGENTS EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER
AGREE THAT THEIR
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<PAGE> 115
RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO
ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART,
TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS GUARANTY OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY
AND THE OTHER LOAN DOCUMENTS.
16. Wherever possible, each provision of this Guaranty shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity without invalidating the remainder of such provision or the
remaining provisions of this Guaranty.
17. Except as otherwise expressly provided herein, any notice required
or desired to be served, given or delivered to any party hereto under this
Guaranty shall be in writing by facsimile, U.S. mail or overnight courier and
addressed or delivered to such party (a) if to the Agents or the Lenders, at
their respective addresses set forth in the Agreement, or (b) if to any
Guarantor, at its address indicated on EXHIBIT A hereto, or to such other
address as the Agents or the Lenders or any Guarantor designates to the Agents
in writing. All notices by United States mail shall be sent certified mail,
return receipt requested. All notices hereunder shall be effective upon delivery
or refusal of receipt; PROVIDED, HOWEVER, that any notice transmitted by
facsimile shall be deemed given when transmitted.
18. Each Guarantor hereby represents and warrants to the Agents and the
Lenders that:
(a) each Guarantor is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and is duly qualified and in good standing as a foreign
corporation and is duly authorized to conduct its business in each
jurisdiction in which its business is conducted or proposed to be
conducted;
(b) each Guarantor has all requisite power and authority
(corporate and otherwise) and legal right to execute and deliver this
Guaranty and to perform its obligations hereunder;
(c) the execution and delivery by each Guarantor of this
Guaranty and the performance of its obligations hereunder have been
duly authorized by proper corporate proceedings and this Guaranty
constitutes the legal, valid and binding obligations of such Guarantor,
enforceable against such Guarantor in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally; and
(d) neither the execution and delivery by each Guarantor of
this Guaranty nor compliance with the provisions of this Guaranty will,
or at the relevant time did, (i) violate any law, rule, regulation
(including Regulation T, U or X), order, writ, judgment,
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injunction, decree or award binding on any Guarantor or any Guarantor's
charter, articles or certificate of incorporation or by-laws, (ii)
violate the provisions of or require the approval or consent of any
party to any indenture, instrument or agreement to which any Guarantor
is a party or is subject, or by which it, or its property, is bound, or
conflict with or constitute a default thereunder, or result in the
creation or imposition of any Lien (other than Liens permitted by, and
created under, the Loan Documents) in, of or on the property of any
Guarantor pursuant to the terms of any such indenture, instrument or
agreement, or (iii) require any consent of the stockholders of any
Person or any Governmental Authority.
Each Guarantor agrees that the foregoing representations and warranties shall be
deemed to have been made by such Guarantor on the date of this Guaranty, and on
each Borrowing Date, Conversion/Continuation Date or Issuance Date.
19. It is understood that while the amount of the Guaranteed Debt
guaranteed hereby is not limited, if in any action or proceeding involving any
state, federal or foreign bankruptcy, insolvency or other law affecting the
rights of creditors generally, this Guaranty would be held or determined to be
void, invalid or unenforceable on account of the amount of the aggregate
liability under this Guaranty with respect to one or more of the Guarantors,
then, notwithstanding any other provision of this Guaranty to the contrary, the
aggregate amount of such liability shall, with respect to any such Guarantor,
without any further action of the Agents, the Lenders or any other Person, be
automatically limited and reduced with respect to any such Guarantor to the
highest amount which is valid and enforceable as determined in such action or
proceeding.
20. Pursuant to SECTION 7.2(N) of the Credit Agreement, certain
Subsidiaries are from time to time required to enter into this Guaranty as a
Guarantor. Upon execution and delivery after the date hereof by a Subsidiary of
a supplement in the form of EXHIBIT A hereto, such Subsidiary shall become a
Guarantor hereunder with the same force and effect as if originally named as a
Guarantor herein. The execution and delivery of any instrument adding an
additional Guarantor as a party to this Agreement shall not require the consent
of any Guarantor hereunder, of any Borrower or of any Agent or Lender. The
rights and obligations of each Guarantor hereunder shall remain in full force
and effect notwithstanding the addition of any new Guarantor as a party hereto.
[signature page to follow]
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IN WITNESS WHEREOF, each Guarantor has executed this Guaranty as of the
date first above written.
[SUBSIDIARY]
By:
--------------------------------
Its:
-------------------------------
[SUBSIDIARY]
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
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<PAGE> 118
EXHIBIT A TO GUARANTY
---------------------
JOINDER AGREEMENT
This Joinder Agreement dated as of ________________, __________ is
delivered pursuant to that certain Subsidiary Guaranty as of October 20, 1999 by
the direct and indirect subsidiaries of Lanier Worldwide, Inc. party thereto (as
amended, supplemented, or modified from time to time, the "Guaranty"). The
undersigned hereby agrees that on and after the date hereof it shall be a
"Guarantor" under the Guaranty and be obligated to perform all of the
obligations of a Guarantor thereunder and hereby makes the representations and
warranties therein as of the date first set forth above.
[GUARANTOR]
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
[address for notices]
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EXHIBIT G-2
FORM OF SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (this "SUBORDINATION AGREEMENT") is made
as of the 20th day of October, 1999, by and among Lanier Worldwide, Inc., a
Delaware corporation (the "COMPANY"), each of the corporations that is a
signatory hereto (collectively, the "INITIAL GRANTORS" and along with each other
Subsidiary of the Company which become parties to this Subordination Agreement
by executing an Addendum hereto in the form attached as ANNEX I, the "GRANTORS")
in favor of the Agents and the Lenders under (and as defined in) the Credit
Agreement referred to below;
WITNESSETH:
WHEREAS, the Company, one or more Subsidiaries of the Company (whether
now existing or hereafter formed, collectively referred to herein as the
"SUBSIDIARY BORROWERS"), the institutions from time to time parties hereto as
Lenders, and ABN AMRO Bank N.V., in its capacity as Administrative Agent (the
"ADMINISTRATIVE AGENT"), SUNTRUST BANK, ATLANTA, as Syndication Agent (the
"SYNDICATION AGENT") and WACHOVIA BANK N.A., as Documentation Agent (the
"DOCUMENTATION AGENT"). have entered into a certain 364-Day Credit Agreement
dated as of October 20, 1999 (as the same may be amended, modified, supplemented
and/or restated, and as in effect from time to time, the "CREDIT AGREEMENT"),
providing, subject to the terms and conditions thereof, for extensions of credit
and other financial accommodations to be made by the Lenders to the Company and
the Subsidiary Borrowers;
WHEREAS, it is a condition precedent to the initial extensions of
credit by the Lenders under the Credit Agreement that each of the Grantors
execute and deliver this Subordination Agreement; and
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. Terms defined in the Credit Agreement and not
otherwise defined herein have, as used herein, the respective meanings provided
for therein.
SECTION 2. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the
Grantors represents and warrants (which representations and warranties shall be
deemed to have been renewed at the time of the making, conversion or
continuation of any Loan or issuance of any Letter of Credit) that:
(a) It is a corporation, limited liability company, partnership
or other commercial entity duly incorporated or formed, validly existing and in
good standing under the laws of its jurisdiction of incorporation or formation
and has all requisite authority to conduct its business as a foreign Person in
each jurisdiction in which its business is conducted, except where the failure
to have such requisite authority would not have a Material Adverse Effect.
<PAGE> 120
(b) It has the power and authority and legal right to execute
and deliver this Subordination Agreement and to perform its obligations
hereunder. The execution and delivery by it of this Subordination Agreement and
the performance by it of its obligations hereunder have been duly authorized by
proper proceedings, and this Subordination Agreement constitutes a legal, valid
and binding obligation of such Grantor, enforceable against such Grantor in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity (regardless of whether
enforcement is sought in equity or at law).
(c) Neither the execution and delivery by it of this Subordination
Agreement, nor the consummation by it of the transactions herein contemplated,
nor compliance by it with the terms and provisions hereof, will violate any law,
rule, regulation, order, writ, judgment, injunction, decree or award binding on
it or its certificate or articles of incorporation or by-laws, limited liability
company or partnership agreement (as applicable) or the provisions of any
indenture, instrument or material agreement to which it is a party or is
subject, or by which it, or its property, is bound, or conflict with or
constitute a default thereunder, or result in the creation or imposition of any
Lien in, of or on its property pursuant to the terms of any such indenture,
instrument or material agreement. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any Governmental Authority that has not been made, obtained or
given, or which, if not made, obtained or given, individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect, is
required to authorize, or is required in connection with the execution, delivery
and performance by it of this Subordination Agreement.
In addition to the foregoing, each of the Grantors covenants
that, so long as any Lender has any Commitment outstanding under the Credit
Agreement or any amount payable under the Credit Agreement or any other
Obligations shall remain unpaid, it will, and, if necessary, will enable the
Company to (to the extent practicable), fully comply with those covenants and
agreements of the Company applicable to each of the Grantors set forth in the
Credit Agreement.
SECTION 3. SUBORDINATION OF INTERCOMPANY INDEBTEDNESS. Each of the
Grantors agrees that any and all claims of such Grantor against either the
Company, any Subsidiary Borrower or any other Grantor hereunder (each an
"OBLIGOR"), any endorser or obligor of all or any part of the Obligations, or
against any of its properties shall be subordinate and subject in right of
payment to the prior payment, in full and in cash, of all Obligations; PROVIDED,
that, and not in contravention of the foregoing, so long as no Default or
Unmatured Default has occurred and is continuing such Grantor may make loans to
and receive payments in the ordinary course with respect to any "Intercompany
Indebtedness" (as defined below) to the extent permitted by the terms of the
Credit Agreement and the other Loan Documents. Notwithstanding any right of any
Grantor to ask, demand, sue for, take or receive any payment from any Obligor
all rights, liens and security interests of such Grantor, whether now or
hereafter arising and howsoever existing, in any assets of any other Obligor
shall be and are subordinated to the rights of the Lenders and the Agents in
those assets. No Grantor shall have any right to possession of any such asset or
to foreclose upon any such asset, whether by judicial action or otherwise,
unless and until all of the
<PAGE> 121
Obligations (other than contingent indemnity obligations) shall have been fully
paid and satisfied (in cash) and all financing arrangements pursuant to any Loan
Document among the Company or any Subsidiary Borrower and the Lenders have been
terminated. If all or any part of the assets of any Obligor, or the proceeds
thereof, are subject to any distribution, division or application to the
creditors of such Obligor, whether partial or complete, voluntary or
involuntary, and whether by reason of liquidation, bankruptcy, arrangement,
receivership, assignment for the benefit of creditors or any other action or
proceeding, or if the business of any such Obligor is dissolved or if
substantially all of the assets of any such Obligor are sold, then, and in any
such event, any payment or distribution of any kind or character, either in
cash, securities or other property, which shall be payable or deliverable upon
or with respect to any indebtedness of any Obligor to any Grantor ("INTERCOMPANY
INDEBTEDNESS") shall be paid or delivered directly to the Administrative Agent
for application on any of the Obligations, due or to become due, until such
Obligations (other than contingent indemnity obligations) shall have first been
fully paid and satisfied (in cash). Each Grantor irrevocably authorizes and
empowers the Administrative Agent to demand, sue for, collect and receive every
such payment or distribution and give acquittance therefor and to make and
present for and on behalf of such Grantor such proofs of claim and take such
other action, in the Administrative Agent's own name or in the name of such
Grantor or otherwise, as the Administrative Agent may deem necessary or
advisable for the enforcement of this SECTION 3. The Administrative Agent may
vote such proofs of claim in any such proceeding, receive and collect any and
all dividends or other payments or disbursements made thereon in whatever form
the same may be paid or issued and apply the same on account of any of the
Obligations. Should any payment, distribution, security or instrument or
proceeds thereof be received by any Grantor upon or with respect to the
Intercompany Indebtedness prior to the satisfaction of all of the Obligations
(other than contingent indemnity obligations) and the termination of all
financing arrangements among the Company or any Subsidiary Borrower and the
Agents and the Lenders, such Grantor shall receive and hold the same in trust,
as trustee, for the benefit of the Agents and the Lenders and shall forthwith
deliver the same to the Administrative Agent, for the benefit of the Agents and
the Lenders, in precisely the form received (except for the endorsement or
assignment of such Grantor where necessary), for application to any of the
Obligations, due or not due, and, until so delivered, the same shall be held in
trust by such Grantor as the property of the Lenders. If any such Grantor fails
to make any such endorsement or assignment to the Administrative Agent, the
Administrative Agent or any of its officers or employees are irrevocably
authorized to make the same. Each of the Grantors agrees that until the
Obligations (other than contingent indemnity obligations) have been paid in full
(in cash) and satisfied and all financing arrangements among the Company and the
Subsidiary Borrowers and the Agents and the Lenders have been terminated, no
Grantor will assign or transfer to any Person (other than the Administrative
Agent) any claim any such Grantor has or may have against any Obligor.
SECTION 4. SUCCESSORS AND ASSIGNS. This Subordination Agreement is for
the benefit of the Agents and the Lenders and their respective successors and
permitted assigns and in the event of an assignment of any amounts payable under
the Credit Agreement, any Hedging Agreement between the Company or any of its
Subsidiaries and any Lender or any Affiliate of any Lender, or the other Loan
Documents in accordance with the respective terms thereof, the rights
thereunder, to the extent applicable to the indebtedness so assigned, may be
transferred
<PAGE> 122
with such indebtedness. This Subordination Agreement shall be binding upon each
of the Grantors and their respective successors and assigns.
SECTION 5. CHANGES IN WRITING. Other than in connection with the
addition of additional Material Subsidiaries which become parties hereto by
executing an Addendum hereto in the form attached as Annex I, neither this
Subordination Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, but only in writing signed by each of the
Grantors and the Administrative Agent with the consent of the Required Lenders
under the Credit Agreement (or all of the Lenders if required pursuant to the
terms of SECTION 10.3 of the Credit Agreement).
SECTION 6. GOVERNING LAW. ANY DISPUTE BETWEEN ANY GRANTOR AND ANY AGENT
OR ANY LENDER, OR ANY OTHER HOLDER OF OBLIGATIONS ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH, THIS SUBORDINATION AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE
RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICTS
OF LAWS PROVISIONS) OF THE STATE OF NEW YORK.
SECTION 7. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.
(A) EXCLUSIVE JURISDICTION. EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION
(B), EACH OF THE PARTIES HERETO AGREES THAT ALL DISPUTES AMONG THEM ARISING OUT
OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
AMONG THEM IN CONNECTION WITH, THIS SUBORDINATION AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE
RESOLVED EXCLUSIVELY BY STATE OR FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK,
BUT THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE
TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK, NEW YORK. EACH OF THE
PARTIES HERETO WAIVES IN ALL DISPUTES BROUGHT PURSUANT TO THIS SUBSECTION (A)
ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE
DISPUTE.
(B) OTHER JURISDICTIONS. EACH OF THE GRANTORS AGREES THAT ANY AGENT,
ANY LENDER OR ANY HOLDER OF OBLIGATIONS SHALL HAVE THE RIGHT TO PROCEED AGAINST
THE GRANTOR OR ITS PROPERTY IN A COURT IN ANY LOCATION TO ENABLE SUCH PERSON TO
(1) OBTAIN PERSONAL JURISDICTION OVER SUCH GRANTOR OR (2) ENFORCE A JUDGMENT OR
OTHER COURT ORDER ENTERED IN FAVOR OF SUCH PERSON. EACH OF THE GRANTORS AGREES
THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT
BY SUCH PERSON TO REALIZE ON ANY SECURITY FOR
<PAGE> 123
THE OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SUCH
PERSON. EACH OF THE GRANTORS WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT IN WHICH A PERSON HAS COMMENCED A PROCEEDING DESCRIBED IN
THIS SUBSECTION (B).
(C) SERVICE OF PROCESS. EACH OF THE GRANTORS WAIVES PERSONAL SERVICE OF
ANY PROCESS UPON IT AND IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY
WRITS, PROCESS OR SUMMONSES IN ANY SUIT, ACTION OR PROCEEDING BY THE MAILING
THEREOF BY ANY AGENT OR THE HOLDERS OF OBLIGATIONS BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO THE GRANTORS IN CARE OF THE COMPANY AT THE ADDRESS
PROVIDED FOR NOTICES TO THE COMPANY UNDER THE CREDIT AGREEMENT. NOTHING HEREIN
SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF ANY AGENT OR THE HOLDERS OF
OBLIGATIONS TO SERVE ANY SUCH WRITS, PROCESS OR SUMMONSES IN ANY OTHER MANNER
PERMITTED BY APPLICABLE LAW. EACH OF THE GRANTORS IRREVOCABLY WAIVES ANY
OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS
SUBORDINATION AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED
OR DELIVERED IN CONNECTION HEREWITH IN ANY JURISDICTION SET FORTH ABOVE.
(D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES
ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO OR
INCIDENTAL TO REH RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS
SUBORDINATION AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED
OR DELIVERED IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SUBORDINATION AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
(E) WAIVER OF BOND. EACH OF THE GRANTORS WAIVES THE POSTING OF ANY BOND
OTHERWISE REQUIRED OF ANY PARTY HERETO IN CONNECTION WITH ANY JUDICIAL PROCESS
OR PROCEEDING TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
SUCH PARTY, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER,
PRELIMINARY OR PERMANENT INJUNCTION, THIS SUBORDINATION AGREEMENT OR ANY OTHER
LOAN DOCUMENT.
<PAGE> 124
(F) ADVICE OF COUNSEL. EACH OF THE PARTIES PRESENTS TO EACH OTHER PARTY
HERETO THAT IT HAS DISCUSSED THIS SUBORDINATION AGREEMENT AND, SPECIFICALLY, THE
PROVISIONS OF THIS SECTION 7, WITH ITS COUNSEL.
SECTION 8. NO STRICT CONSTRUCTION. The parties hereto have participated
jointly in the negotiation and drafting of this Subordination Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Subordination Agreement shall be construed as if drafted jointly by the parties
hereto and no presumption or burden of proof shall arise favoring or disfavoring
any party by virtue of the authorship of any provisions of this Subordination
Agreement.
SECTION 9. SEVERABILITY. Wherever possible, each provision of this
Subordination Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Subordination
Agreement shall be prohibited by or invalid under such law, such provision shall
be ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of this
Subordination Agreement.
SECTION 10. MERGER. This Subordination Agreement represents the final
agreement of the Grantors with respect to the matters contained herein and may
not be contradicted by evidence of prior or contemporaneous agreements, or
subsequent oral agreements, between the Grantors and any Lender or any Agent.
SECTION 11. HEADINGS. Section headings in this Subordination Agreement
are for convenience of reference only and shall not govern the interpretation of
any provision of this Subordination Agreement.
<PAGE> 125
IN WITNESS WHEREOF, each of the undersigned Grantors has caused this
Subordination Agreement to be duly executed by its authorized officer as of the
day and year first above written.
LANIER WORLDWIDE, INC.
By:
---------------------------------
Its:
--------------------------------
[-----------------------------]
By:
---------------------------------
Its:
--------------------------------
[-----------------------------]
By:
---------------------------------
Its:
--------------------------------
[-----------------------------]
By:
---------------------------------
Its:
--------------------------------
<PAGE> 126
ANNEX I TO SUBORDINATION AGREEMENT
Reference is hereby made to the Subordination Agreement (the
"Subordination Agreement") made as of the 20th day of October, 1999 by Lanier
Worldwide, Inc., a Delaware corporation and certain of its Subsidiaries
(collectively, the "Initial Grantors" and along with any other Subsidiaries of
the Company which have become parties thereto and together with the undersigned,
the "Grantors") in favor of the Agents and the Lenders under the Credit
Agreements. Capitalized terms used herein and not defined herein shall have the
meanings given to them in the Subordination Agreement. By its execution below,
the undersigned [name of new grantor], a [corporation] [partnership] [limited
liability company], agrees to become, and does hereby become a Grantor under the
Subordination Agreement and agrees to be bound by such Subordination Agreement
as if originally a party thereto. By its execution below, the undersigned
represents and warrants as to itself that all of the representations and
warranties contained in SECTION 2 of the Subordination Agreement are true and
correct in all respects as of the date hereof.
IN WITNESS WHEREOF, [NAME OF NEW GRANTOR], a [corporation]
[partnership] [limited liability company] has executed and delivered this Annex
I counterpart to the Subordination Agreement as of this _______ day of
____________________, ____.
[NAME OF NEW GRANTOR]
By:
---------------------------------
Title:
------------------------------
<PAGE> 127
EXHIBIT H
TO
364-DAY CREDIT AGREEMENT
Dated as of October 20, 1999
FORM OF REVOLVING LOAN NOTE (IF REQUESTED)
------------------------------------------
Attached
<PAGE> 128
REVOLVING LOAN NOTE
U.S. $[__________________] Chicago, Illinois
[DATE]
FOR VALUE RECEIVED, the undersigned, [LANIER WORLDWIDE, INC., a
Delaware corporation (the "Company")][____________, a ___________ corporation
(the "Subsidiary Borrower")], HEREBY UNCONDITIONALLY PROMISES TO PAY to the
order of [_______________] (the "Lender") the principal sum of [______________]
AND NO/100 DOLLARS ($[_________________]), or, if less, the aggregate unpaid
amount of all "Revolving Loans" (as defined in the Credit Agreement referred to
below) made by the Lender to such [Company] [Subsidiary Borrower] pursuant to
the "Credit Agreement" (as defined below), on the "Termination Date" (as defined
in the Credit Agreement) or on such earlier date as may be required by the terms
of the Credit Agreement. Capitalized terms used herein and not otherwise defined
herein are as defined in the Credit Agreement.
The [Company] [Subsidiary Borrower] promises to pay interest on the
unpaid principal amount of each Revolving Loan made to it from the date of such
Revolving Loan until such principal amount is paid in full at a rate or rates
per annum determined in accordance with the terms of the Credit Agreement.
Interest hereunder is due and payable at such times and on such dates as set
forth in the Credit Agreement.
Both principal and interest are payable in Dollars to the
Administrative Agent (as defined below), to such account as the Administrative
Agent may designate, in same day funds. At the time of each Revolving Loan, and
upon each payment or prepayment of principal of each Revolving Loan, the Lender
shall make a notation either on the schedule attached hereto and made a part
hereof, or in such Lender's own books and records, in each case specifying the
amount of such Revolving Loan, the respective Interest Period thereof (in the
case of Eurocurrency Rate Loans) or the amount of principal paid or prepaid with
respect to such Revolving Loan, as applicable; PROVIDED that the failure of the
Lender to make any such recordation or notation shall not affect the Obligations
of the [Company] [Subsidiary Borrower] hereunder or under the Credit Agreement.
This Revolving Loan Note is one of the promissory notes referred to in,
and is entitled to the benefits of, that certain 364-Day Credit Agreement dated
as of October 20, 1999 among Lanier Worldwide, Inc. (the "Company"), the
Subsidiary Borrowers from time to time party thereto, the financial institutions
parties thereto (the "Lenders"), ABN AMRO Bank N.V., individually and as
Administrative Agent, Suntrust Bank, Atlanta, individually and as Syndication
Agent, and Wachovia Bank N.A., individually and as Documentation Agent (as
amended, restated, supplemented or modified from time to time, the "Credit
Agreement"). The Credit Agreement, among other things, (i) provides for the
making of Revolving Loans by the Lender to the [Company] [Subsidiary Borrower]
under the Credit Agreement from time to time in an aggregate amount not to
exceed at any time outstanding the Dollar Amount first above mentioned, the
indebtedness of the [Company] [Subsidiary Borrower] resulting from each such
Revolving Loan to it being evidenced by this Revolving Loan Note, and (ii)
contains provisions
2
<PAGE> 129
for acceleration of the maturity hereof upon the happening of certain stated
events and also for prepayments of the principal hereof prior to the maturity
hereof upon the terms and conditions therein specified.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by the [Company] [Subsidiary Borrower].
Whenever in this Revolving Loan Note reference is made to the
Administrative Agent, the Lender or the [Company] [Subsidiary Borrower], such
reference shall be deemed to include, as applicable, a reference to their
respective successors and assigns. The provisions of this Revolving Loan Note
shall be binding upon and shall inure to the benefit of said successors and
assigns. The [Company's] [Subsidiary Borrower's] successors and assigns shall
include, without limitation, a receiver, trustee or debtor in possession of or
for the [Company] [Subsidiary Borrower].
This Revolving Loan Note shall be interpreted, and the rights and
liabilities of the parties hereto determined, in accordance with the laws of the
State of New York.
[LANIER WORLDWIDE, INC.]
[SUBSIDIARY BORROWER]
By:_______________________________________
Name:
Title:
3
<PAGE> 130
SCHEDULE OF REVOLVING LOANS AND PAYMENTS OR PREPAYMENTS
-------------------------------------------------------
<TABLE>
<CAPTION>
Date Amount of Type of Interest Period/ Amount of Unpaid Notation
Loan Loan Rate Principal Paid Principal Made By
or Prepaid Balance
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
4
<PAGE> 131
EXHIBIT I
TO
364-DAY CREDIT AGREEMENT
Dated as October 20, 1999
FORM OF ASSUMPTION LETTER
-------------------------
----------, -----
To the Lenders party to the
Credit Agreement referred
to below
Ladies and Gentlemen:
Reference is made to the 364-Day Credit Agreement dated as of October
20, 1999 initially among Lanier Worldwide, Inc., the Subsidiary Borrowers from
time to time parties thereto, the Lenders parties thereto, ABN AMRO Bank N.V.,
individually and as Administrative Agent, Suntrust Bank, Atlanta, individually
and as Syndication Agent, and Wachovia Bank N.A., individually and Documentation
Agent (as amended and in effect from time to time, the "Credit Agreement").
Terms defined in the Credit Agreement and used herein are used herein as defined
therein.
The undersigned, _______ (the "Subsidiary"), a ______ [corporation],
wishes to become a "Subsidiary Borrower" under the Credit Agreement, and
accordingly hereby agrees that from the date hereof it shall become a
"Subsidiary Borrower" under the Credit Agreement and agrees that from the date
hereof and until the payment in full of the principal of and interest on all
Advances made to it under the Credit Agreement and performance of all of its
other obligations thereunder, and termination hereunder of its status as a
"Subsidiary Borrower" as provided below, it shall perform, comply with and be
bound by each of the provisions of the Credit Agreement which are stated to
apply to a "Borrower" or a "Subsidiary Borrower." Without limiting the
generality of the foregoing, the Subsidiary hereby represents and warrants that:
(i) each of the representations and warranties set forth in Sections 6.1, 6.2,
6.3, and 6.22 of the Credit Agreement is hereby made by such Subsidiary on and
as of the date hereof as if made on and as of the date hereof and as if such
Subsidiary is the "Company" and this Assumption Letter is the "Agreement"
referenced therein, and (ii) it has heretofore received a true and correct copy
of the Credit Agreement (including any modifications thereof or supplements or
waivers thereto) as in effect on the date hereof. In addition, the Subsidiary
hereby authorizes the Company to act on its behalf as and to the extent provided
for in Article II of the Credit Agreement in connection with the selection of
Types and Interest Periods for Advances and with the issuance of Letters of
Credit, and the conversion and continuation of Advances.
So long as the principal of and interest on all Advances and Letters of
Credit made to the Subsidiary under the Credit Agreement shall have been paid in
full and all other obligations of the Subsidiary under the Credit Agreement
shall have been fully performed, the Company may
1
<PAGE> 132
by not less than five Business Days' prior notice to the Lenders terminate its
status as a "Subsidiary Borrower."
CHOICE OF LAW. THIS ASSUMPTION LETTER SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (WITHOUT REGARD TO CONFLICTS OF LAW PROVISIONS) OF THE
STATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS.
IN WITNESS WHEREOF, the Subsidiary has duly executed and delivered this
Assumption Letter as of the date and year first above written.
[Name of Subsidiary Borrower]
By__________________________________________
Title:______________________________________
Address for Notices under the Credit Agreement:
Consented to:
LANIER WORLDWIDE, INC.
By:
------------------------------
Title:
---------------------------
2
<PAGE> 1
Exhibit 10.5
K&S DRAFT OCTOBER 19, 1999
--------------------------
EMPLOYEE BENEFITS AND COMPENSATION
ALLOCATION AGREEMENT
AGREEMENT, dated as of __________ 1999 (the "Agreement"), by and
between Harris Corporation ("Parent"), a Delaware corporation, and Lanier
Worldwide, Inc., a Delaware corporation ("Company").
WHEREAS, the Parent Board of Directors intends to effect the
Distribution (as defined herein); and
WHEREAS, Parent and Company wish to provide for the allocation of
assets and liabilities and certain other matters with respect to employee
benefit plans, executive compensation plans and certain other employee plans and
arrangements in connection with the Distribution.
NOW, THEREFORE, in consideration of the covenants and agreements set
forth herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
1.1 "Company Employee" means each employee of Company, including a
Company Transfer Employee.
1.2 "Company SERP" means the Lanier Worldwide, Inc. Supplemental
Executive Retirement Savings Plan and the Lanier Worldwide, Inc. Supplemental
Executive Retirement Plan. 1.1
<PAGE> 2
1.3 "Company Stock Incentive Plan" means the Lanier Worldwide, Inc.
Stock Incentive Plan.
1.4 "Company Transfer Employee" means each employee of Parent who
becomes an employee of Company on or after the Distribution Date and on or
before December 31, 1999.
1.5 "Code" means the Internal Revenue Code of 1986, as amended.
1.6 "Distribution" means the pro rata distribution to Parent's
stockholders of a number of shares of Company common stock that is equal to
approximately 90% of the shares of Company common stock outstanding after the
Distribution Date, as described in the Registration Statement on Form 10 and any
amendments thereto filed by the Company with the Securities and Exchange
Commission.
1.7 "Distribution Date" has the meaning given to such term in the
Registration Statement on Form 10 and any amendments thereto filed by the
Company with the Securities and Exchange Commission.
1.8 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.9 "Harris 401(k) Plan" means the Harris Corporation Retirement Plan.
1.10 "Harris Pension Plan" means the Harris Corporation Pension Plan.
1.11 "Parent Employee" means each employee of Parent, including a
Parent Transfer Employee.
1.12 "Parent Performance Shares" means performance share awards granted
under the Parent Stock Incentive Plan.
<PAGE> 3
1.13 "Parent SERP" means any nonqualified supplemental executive
retirement plan maintained for the benefit of Parent employees, or Company
Employees who were employed at any time by Parent.
1.14 "Parent Stock Incentive Plan" means the Harris Corporation Stock
Incentive Plan.
1.15 "Parent Stock Options" means stock options granted under the
Parent Stock Incentive Plan.
1.16 "Parent Transfer Employees" means employees of Company who become
employees of Parent on or after the Distribution Date and on or before December
31, 1999.
1.17 "PEP" means the Lanier Worldwide, Inc. Pension Equity Plan.
1.18 "Record Date" has the meaning given to such term in the
Registration Statement on Form 10 and any amendments thereto filed by the
Company with the Securities and Exchange Commission.
1.19 "SIP" means the Lanier Worldwide, Inc. Savings Incentive Plan, as
amended from time to time.
1.20 "Transfer Date" with respect to each Company Transfer Employee or
Parent Transfer Employee, means the first date on or after the Distribution Date
that he or she is actively at work for Company following a transfer from Parent,
or is actively at work for Parent following a transfer from Company, as
applicable.
ARTICLE II
RETIREMENT PLANS
2.1 SIP.
(a) IN GENERAL Company has previously established the SIP for the
benefit of its employees. As soon as practicable after the date hereof and
effective as of the Distribution Date,
-3-
<PAGE> 4
Company shall take, or cause to be taken, all necessary and appropriate action
to allow each Company Transfer Employee to be enrolled in the SIP as soon as
practicable after his or her Transfer Date. Effective no later than the
Distribution Date, Company shall cause the SIP to be amended such that amounts
under the SIP after such date shall not be applied to purchase the common stock
of Parent.
(b) SERVICE CREDIT. The employment of each Company Transfer Employee
with Parent shall be treated as employment with Company for purposes of
eligibility and vesting under the SIP.
(c) HARRIS 401(k) PLAN TRANSFER. Company shall take such action as is
necessary or appropriate to cause the SIP to accept the transfer of the assets
and liabilities of the Harris 401(k) Plan described in Section 2.2(d) of this
Agreement (including making amendments, as necessary or appropriate, to the SIP)
and to satisfy the requirements of Section 401(a) of the Code and related Code
Sections with respect to such transfer.
(d) PARENT EMPLOYEES' SIP ACCOUNT BALANCES. As soon as practicable
after January 1, 2000, the Company shall cause the SIP to transfer to the Harris
401(k) Plan the assets and liabilities of the SIP attributable to Parent
Employees (including any outstanding Parent Employee loans from the SIP).
2.2 HARRIS 401(k) PLAN.
(a) IN GENERAL. Parent has previously established the Harris 401(k)
Plan for the benefit of its employees. As soon as practicable after the date
hereof and effective as of the Distribution Date, Parent shall take, or cause to
be taken, all necessary and appropriate action to allow each Parent Transfer
Employee to be enrolled in the Harris 401(k) Plan as soon as practicable after
his or her Transfer Date.
-4-
<PAGE> 5
(b) SERVICE CREDIT. The employment of each Parent Transfer Employee
with Company shall be treated as employment with Parent for eligibility and
vesting purposes under the Harris 401(k) Plan.
(c) SIP TRANSFER. Parent shall take such action as is necessary or
appropriate to cause the Harris 401(k) Plan to accept the transfer of the assets
and liabilities of the SIP described in Section 2.1(d) of this Agreement
(including making amendments, as necessary or appropriate, to the Harris 401(k)
Plan) and to satisfy the requirements of Section 401(a) of the Code and related
Code Sections with respect to such transfer.
(d) COMPANY EMPLOYEES' HARRIS 401(K) PLAN ACCOUNT BALANCES . As soon as
practicable after January 1, 2000, Parent shall cause the Harris 401(k) Plan to
transfer to the SIP the assets and liabilities of the Harris 401(k) Plan
attributable to Company Employees (including any outstanding Company Employee
loans from the Harris 401(k) Plan).
2.3 PEP.
(a) IN GENERAL. Company has previously established the PEP for the
benefit of its employees. As soon as practicable after the date hereof and
effective as of the Distribution Date, Company shall take, or cause to be taken,
all necessary and appropriate action to allow Company Transfer Employees to be
enrolled in the PEP subject to the terms and conditions of the PEP.
(b) SERVICE CREDIT. The employment of each Company Transfer Employee
with Parent shall be treated as employment with Company for eligibility and
vesting purposes under the PEP.
(c) FORMER COMPANY EMPLOYEES' PEP ACCRUED BENEFITS. Each Parent
Employee with a vested benefit in the PEP may request (1) a distribution of the
vested portion of his or her PEP accrued benefit as soon as practicable after
January 1, 2000, (2) a rollover of the vested
-5-
<PAGE> 6
portion of his or her PEP accrued benefit to an "eligible retirement plan" (as
defined in Section 401(a)(31) of the Code) or (3), if the vested portion of his
or her PEP accrued benefit exceeds $5,000, that the vested portion of his or her
accrued benefit remain in the PEP.
(d) PEP TRUST AGREEMENT. Parent shall take such action as is necessary
or appropriate to cause the assets of the PEP that are invested in the Harris
Corporation Master Trust to be transferred to a trust established for the PEP.
2.4 HARRIS PENSION PLAN. Parent shall continue to be responsible for
any Financial Accounting Statement 87 liability with respect to the Harris
Pension Plan, and Parent shall assume all responsibility for the administration
and valuation of the Harris Pension Plan before and after the Distribution.
ARTICLE III
SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS
Company shall not assume any liability whatsoever with respect to the Parent
SERP, and Parent shall not assume any liability with respect to Company SERP.
The Company shall have no right to claim any assets held in a Parent rabbi
trust.
ARTICLE IV
STOCK INCENTIVE PLAN
4.1 ESTABLISHMENT OF COMPANY STOCK INCENTIVE PLAN. At or prior to the
Distribution Date, Company shall establish the Company Stock Incentive Plan for
the benefit of Company Employees who hold outstanding awards under the Parent
Stock Incentive Plan at the Distribution Date and such other Company Employees
as are designated by the Company to benefit under such Plan (such employees are
referred to hereinafter as the "Stock Incentive Employees").
-6-
<PAGE> 7
4.2 STOCK OPTIONS. As soon as practicable after the Distribution Date,
the Stock Incentive Employees shall surrender for cancellation their outstanding
Parent Stock Options, if any, in exchange for options to purchase shares of
Company common stock ("Company Stock Options"), and Parent Stock Options held by
Stock Incentive Employees shall be replaced with options to purchase shares of
Company common stock issued under the Company Stock Incentive Plan. The number
of shares subject to each Company Stock Option will be determined by multiplying
the number of shares subject to each Parent Stock Option by a number equal to
(a) the closing price of a share of Parent common stock on the New York Stock
Exchange on the Record Date, divided by (b) the opening price of a share of
Company common stock on the New York Stock Exchange on the day following the
Distribution Date (the "Company Adjustment Ratio"). The price of each Company
Stock Option will be determined by dividing the option price of each Parent
Stock Option by the Company Adjustment Ratio.
4.3 PERFORMANCE SHARES. As soon as practicable after the Distribution
Date, Parent Performance Shares held by the Stock Incentive Employees shall be
forfeited, and Company shall issue Company Performance Shares under the Company
Stock Incentive Plan to replace such Parent Performance Shares in an amount
equal to the result of multiplying the Parent Performance Shares by the Company
Adjustment Ratio. The performance targets for such Company Performance Shares
shall be established by Company as soon as practicable following the
Distribution Date. Notwithstanding the foregoing, prior to the forfeiture of the
Stock Incentive Employees' Parent Performance Shares, the Stock Incentive
Employees shall be paid all dividends and other distributions accrued with
respect to such Parent Performance Shares through and including the Distribution
Date including any dividend paid in shares of Company
-7-
<PAGE> 8
which will be paid in accordance with the terms of the Parent Stock Incentive
Plan including withholding for applicable taxes.
ARTICLE V
OTHER BENEFITS
5.1 CESSATION OR CONTINUATION OF COVERAGE. Effective as of his or her
Transfer Date, each Company Transfer Employee, together with dependents thereof,
shall cease to be covered by Parent's employee welfare benefit plans, including
but not limited to plans, programs, policies and arrangements which provide
medical and dental coverage, life and accident insurance and disability coverage
(collectively, "Welfare Plans"), and each Parent Transfer Employee, together
with dependents thereof, shall cease to be covered by Company's Welfare Plans.
Company Employees and their dependents shall continue to be covered under the
dependent care spending accounts covering such Company Employees immediately
before the Distribution Date ("Pre-Distribution Accounts") through December 31,
1999, and Parent shall continue to administer the Pre-Distribution Accounts
under the Accordia contract on behalf of Company Employees and their dependents
for claims incurred under the Pre-Distribution Accounts during the calendar year
1999. Company shall pay any administrative costs associated with the
administration of the claims described in the immediately preceding sentence and
continued participation by each Company Transfer Employee in his or her
Pre-Distribution Account during 1999 and after his or her Transfer Date shall be
determined under the terms of such Pre-Distribution Account.
5.2 RESPONSIBILITY FOR CLAIMS INCURRED. Parent shall retain
responsibility for all Welfare Plan claims incurred by each Company Transfer
Employee and his or her dependents prior to his or her Transfer Date, and
Company shall retain responsibility for all Welfare Plan claims incurred by each
Parent Transfer Employee and his or her dependents prior to his or her
-8-
<PAGE> 9
Transfer Date (other than any such claims incurred by Parent Transfer Employees
under the Harris Dependent Care Spending Account).
Company shall be responsible for all Welfare Plan claims incurred by
each Company Transfer Employee after his or her Transfer Date (other than any
such claims incurred by Company Transfer Employees under the Harris Dependent
Care Spending Account before January 1, 2000), and Parent shall be responsible
for all Welfare Plan claims incurred by each Parent Transfer Employee after his
or her Transfer Date. For purposes of this Section, a claim shall be deemed to
have been incurred on the date on which medical or other treatment or service
was rendered and not the date of the inception of the related illness or injury
or the date of submission of a claim related thereto.
5.3 CERTAIN HEALTH PLAN PROVISIONS.
(a) IN GENERAL. Any pre-existing condition requirement in any of
Company's Welfare Plans that are medical, dental or health plans shall be waived
with respect to Company Transfer Employees only to the extent required by any
applicable law, and any pre-existing condition requirement in any of Parent's
Welfare Plans that are medical, dental or health plans shall be waived with
respect to Parent Transfer Employees only to the extent required by any
applicable law.
(b) COMPANY RETIREES. Former employees retired from the Company who are
covered under any Parent Welfare Plan on August 31, 1999 shall cease to be
covered under such Parent Welfare Plan on September 1, 1999 and shall be covered
by a Company Welfare Plan starting on that date. Company shall be responsible
for any Financial Accounting Statement 106 liability and reporting with respect
to such retired Company employees.
-9-
<PAGE> 10
5.4 VACATION. Any earned, but not taken, vacation time with Parent of
each Company Transfer Employee shall become the responsibility of Company
effective as of his or her Transfer Date, and Parent shall cease to have any
liability in respect thereof. Any earned, but not taken, vacation time with
Company of each Parent Transfer Employee shall become the responsibility of
Parent, and Company shall cease to have any liability in respect thereof.
5.5 HARRIS CORPORATION MERIT SCHOLARSHIP PROGRAM. Company shall assume
the liability for the cost of funding any scholarship for the year 2000 for the
child of a Company Employee who has been selected to participate or who is
selected to participate in the Harris Corporation Merit Scholarship Program for
the year 2000.
Parent shall be responsible for the cost of funding any scholarship for
the year 2000 for the child of a Parent Employee who has been selected to
participate or who is selected to participate in the Harris Corporation Merit
Scholarship Program for the year 2000.
ARTICLE VI
MISCELLANEOUS
6.1 ENTIRE AGREEMENT. This Agreement and the Agreement and Plan of
Distribution between Company and Parent dated as of 1999 (the
"Distribution Agreement") shall constitute the entire agreement between the
parties with respect to the subject matter hereof and shall supersede all
previous negotiations, discussions, agreements and understandings with respect
to such subject matter.
6.2 INDEMNITY. Except as specifically provided in this Agreement and
the Distribution Agreement,
(a) Except as set forth in the Ancillary Workers Compensation
Agreement, Company shall be responsible for any and all Liabilities or Losses
(as such terms are defined in the
-10-
<PAGE> 11
Distribution Agreement) relating to the employment of Company Employees or
former Company Employees by the Company without regard to whether such
Liabilities or Losses are incurred before, on or after the Distribution Date and
shall indemnify and hold Parent harmless for such Liabilities and Losses; and
(b) Parent shall be responsible for any and all Liabilities or Losses
relating to the employment of Parent Employees or former Parent Employees by
Parent without regard to whether such Liabilities or Losses are incurred before,
on or after the Distribution Date and shall indemnify and hold Company harmless
for such Liabilities and Losses. Otherwise, the indemnification provisions of
Article III of the Distribution Agreement shall be applicable to this Agreement
and are hereby incorporated herein by reference.
6.3 CLAIMS AND DISPUTE RESOLUTION. The claims and dispute resolution
provisions of Article V of the Distribution Agreement shall be applicable to
this Agreement and are hereby incorporated herein by reference.
6.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed in the State of New York.
6.5 NOTICES. All notices and other communications hereunder shall be in
writing, shall reference this Agreement and shall be hand delivered or mailed by
registered or certified mail (return receipt requested) or sent by any means of
electronic message transmission with delivery confirmed (by voice or otherwise)
to the parties at the following addresses (or at such other addresses for a
party as shall be specified by like notice) and will be deemed given on the date
on which such notice is received:
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<PAGE> 12
To Parent:
Harris Corporation
1025 West NASA Blvd.
Melbourne, Florida 32919
Attention: Corporate Secretary
Telephone: (407) 727-9163
Facsimile: (407) 727-9222
With a copy to:
Harris Corporation
1025 West NASA Blvd.
Melbourne, Florida 32919
Attention: Scott T. Mikuen
Telephone: (407) 727-9125
Facsimile: (407) 727-9234
To Company:
Lanier Worldwide, Inc.
2300 Parklake Drive, N.E.
Atlanta, Georgia 30345
Attention: General Counsel
Telephone: (770) 621-1063
Facsimile: (770) 621-1073
6.6 AMENDMENTS. This Agreement may not be modified or amended except by
an agreement in writing signed by the parties.
6.7 SUCCESSORS AND ASSIGNS. Neither party may assign its rights or
delegate any of its duties or obligations under this Agreement without the prior
written consent of the other party. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties and their
respective successors and assigns.
6.8 NO THIRD PARTY BENEFICIARIES. This Agreement is solely for the
benefit of the parties hereto and their respective subsidiaries and should not
be deemed to confer upon third
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<PAGE> 13
parties any remedy, claim, liability, reimbursement, claim of action or other
right in excess of those existing without reference to this Agreement.
6.9 TITLES AND HEADINGS. Titles and headings to sections herein are
inserted for the convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.
6.10 ENFORCEABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any Jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such' prohibition or
unenforceability in any jurisdiction shall not invalidate or render such
provision unenforceable in any other jurisdiction.
6.11 ACCESS TO INFORMATION. Company and Parent shall provide each other
with access to information reasonably necessary in order to carry out the
provisions of this Agreement (including Parent files relating to retired company
employees and premium reconciliation for billing and collections through the
Distribution Date).
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto as of the date first
hereinabove written.
ATTEST: HARRIS CORPORATION
______________________________ By:___________________________
Title: Title:
ATTEST: LANIER WORLDWIDE, INC.
______________________________ By:___________________________
Title: Title:
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<PAGE> 1
Exhibit 10.17
LANIER WORLDWIDE, INC.
DEFERRED COMPENSATION PLAN
FOR DIRECTORS
<PAGE> 2
TABLE OF CONTENTS
Page
Section 1. PURPOSE........................................................1
Section 2. DEFINITIONS....................................................1
2.1 Account......................................................1
2.2 Beneficiary..................................................1
2.3 Board........................................................1
2.4 Change in Control............................................1
2.5 Director.....................................................3
2.6 Distribution Date............................................3
2.7 Effective Date...............................................3
2.8 Exchange Act.................................................3
2.9 Fees.........................................................3
2.10 Lanier.......................................................3
2.11 Plan.........................................................3
2.12 Stock........................................................3
2.13 Subsidiary...................................................3
Section 3. PARTICIPATION..................................................3
Section 4. DEFERRAL ELECTIONS.............................................4
4.1 Initial Deferral Elections...................................4
4.2 Annual Deferral Elections....................................4
4.3 Automatic Election Extension.................................4
4.4 Effective Date of Elections..................................4
Section 5. ACCOUNT ADJUSTMENTS............................................4
5.1 General......................................................4
5.2 Deferrals....................................................4
5.3 Phantom Investment Adjustments...............................5
Section 6. DISTRIBUTIONS..................................................5
6.1 General......................................................5
6.2 Beneficiary..................................................5
Section 7. NO FUNDING OBLIGATION..........................................5
-i-
<PAGE> 3
Section 8. MISCELLANEOUS..................................................6
8.1 No Liability.................................................6
8.2 Nonalienation; Binding Effect................................6
8.3 Construction.................................................6
8.4 Term of Office...............................................6
8.5 Exchange Act.................................................6
8.6 Amendment and Termination....................................6
-ii-
<PAGE> 4
Section 1.
PURPOSE
The purpose of this Plan is to allow a Director to elect to
defer the payment of such Director's Fees that are otherwise payable to such
Director and to pay the amounts deferred as adjusted for phantom investment
performance results upon the occurrence of a distribution event.
Section 2.
DEFINITIONS
2.1 ACCOUNT -- means the bookkeeping account maintained by Lanier to show
as of any date the interest of each Director in this Plan.
2.2 BENEFICIARY -- means the person or persons designated as such in
accordance with Section 6.2.
2.3 BOARD -- means the Board of Directors of Lanier.
2.4 CHANGE IN CONTROL -- means the occurrence of any one of the following
events:
(1) any "person" (as such term is defined in Section 3(a)(9) of the
Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange
Act) is or becomes a "beneficial owner" (as defined in Rule 13(d)(3) under
the Exchange Act), directly or indirectly, of securities of Lanier
representing 20% or more of the combined voting power of Lanier's then
outstanding securities eligible to vote for the election of the Board (the
"Company Voting Securities"); PROVIDED, HOWEVER, that the event described
in this paragraph (1) shall not be deemed to be a Change in Control by
virtue of any of the following acquisitions: (i) by Lanier or any
Subsidiary, (ii) by any employee benefit plan sponsored or maintained by
Lanier or any Subsidiary, (iii) by any underwriter temporarily holding
securities pursuant to an offering of such securities, (iv) pursuant to a
Non-Control Transaction (as defined in paragraph (3)), or (v) by a
corporate officer of Lanier or by any group of persons acting in concert
with a corporate officer;
(2) individuals who, on the Distribution Date, constitute the Board
(the "Incumbent Directors") cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director
subsequent to the Distribution Date, whose election or nomination for
election was approved by a vote of at least two-thirds (2/3) of the
Incumbent Directors who remain on the Board (either by a specific vote or
by approval of the proxy statement of Lanier in which such person is named
as a nominee for director, without objection to such nomination), shall
also be deemed to be an Incumbent Director; PROVIDED, HOWEVER, that no such
individual initially elected or
<PAGE> 5
nominated as a director of Lanier as a result of an actual or threatened
election contest with respect to directors or any other actual or
threatened solicitation of proxies or consents by or on behalf of any
person other than the Board shall be deemed to be an Incumbent Director;
(3) the consummation of a merger, consolidation, share exchange or
similar form of corporate reorganization of Lanier or any such type of
transaction involving Lanier or any of its Subsidiaries that requires the
approval of Lanier's stockholders (whether for such transaction or the
issuance of securities in the transaction or otherwise) (a "Business
Combination"), unless immediately following such Business Combination: (i)
more than 66 2/3% of the total voting power of the company resulting from
such Business Combination (including, without limitation, any company which
directly or indirectly has beneficial ownership of 100% of the Company
Voting Securities) eligible to elect directors of such company is
represented by shares that were Company Voting Securities immediately prior
to such Business Combination (either by remaining outstanding or being
converted), and such voting power is in substantially the same proportion
as the voting power of such Company Voting Securities immediately prior to
the Business Combination, (ii) no person (other than any publicly traded
holding company resulting from such Business Combination, any employee
benefit plan sponsored or maintained by Lanier (or the company resulting
from such Business Combination)) becomes the beneficial owner, directly or
indirectly, of 20% or more of the total voting power of the outstanding
voting securities eligible to elect directors of the company resulting from
such Business Combination, and (iii) at least a majority of the members of
the board of directors of the company resulting from such Business
Combination were Incumbent Directors at the time of the Board's approval of
the execution of the initial agreement providing for such Business
Combination (any Business Combination which satisfies the foregoing
conditions specified in (i), (ii) and (iii) shall be deemed to be a
"Non-Control Transaction"); or
(4) the stockholders of Lanier approve a plan of complete liquidation
or dissolution of Lanier or the direct or indirect sale or other
disposition of all or substantially all of the assets of Lanier and its
Subsidiaries.
Notwithstanding the foregoing, a Change in Control of Lanier shall not be
deemed to occur solely because any person acquires beneficial ownership of more
than 20% of the Company Voting Securities as a result of the acquisition of
Company Voting Securities by Lanier which reduces the number of Company Voting
Securities outstanding; PROVIDED, HOWEVER, that if after such acquisition by
Lanier such person becomes the beneficial owner of additional Company Voting
Securities that increases the percentage of outstanding Company Voting
Securities beneficially owned by such person, a Change in Control of Lanier
shall then occur.
-2-
<PAGE> 6
2.5 DIRECTOR -- means any person (other than a person who is an employee of
Lanier) who has been elected a member of the Board and any former member of the
Board for whom an Account is maintained under this Plan.
2.6 DISTRIBUTION DATE -- means ____________, 1999, which is the date that
Stock is distributed to the stockholders of Harris Corporation as a dividend on
their shares of the common stock of Harris Corporation.
2.7 EFFECTIVE DATE -- means the Distribution Date.
2.8 EXCHANGE ACT -- means the Securities Exchange Act of 1934, as amended.
2.9 FEES -- means any meeting fees and retainer fees which are payable to a
Director for services as a member of the Board.
2.10 LANIER -- means Lanier Worldwide, Inc. and any successor to Lanier
Worldwide, Inc.
2.11 PLAN -- means this Lanier Worldwide, Inc. Deferred Compensation Plan
for Directors.
2.12 STOCK -- means the $.01 par value common stock of Lanier, together
with the associated preferred stock purchase rights.
2.13 SUBSIDIARY -- means any corporation or other entity in which Lanier
has a direct or indirect ownership interest of more than 50% of the total
combined voting power of the then outstanding securities of such corporation or
other entity entitled to vote generally in the election of directors or in which
Lanier has the right to receive more than 50% of the distribution of profits or
of the assets on liquidation or dissolution.
Section 3.
PARTICIPATION
Each person who is a Director shall be eligible to participate
in this Plan on the later of the Effective Date or the date such Director joins
the Board.
-3-
<PAGE> 7
Section 4.
DEFERRAL ELECTIONS
4.1 INITIAL DEFERRAL ELECTIONS. A person who is a Director on the Effective
Date shall have the right at any time before the end of the 30-day period
immediately following such Effective Date to elect to defer the payment of all
or any part of the Fees that are otherwise payable to such Director after the
effective date of such deferral election. A person who is elected a Director
after the Effective Date (other than a person who was a Director immediately
before such election) shall have the right at any time before the end of the
30-day period immediately following the effective date of such Director's
election as a Director to elect to defer the payment of all or any part of the
Fees that are otherwise payable to such Director after the effective date of
such deferral election. A deferral election shall be irrevocable on the
effective date of the deferral election and shall remain irrevocable through the
end of the calendar year which includes such effective date.
4.2 ANNUAL DEFERRAL ELECTIONS. A Director shall have the right before the
beginning of any calendar year to elect to defer all or any part of his Fees
that are otherwise payable during such calendar year. Any election that is made
and that is not revoked before the beginning of such calendar year shall become
irrevocable on the first day of such calendar year and shall remain irrevocable
through the end of such calendar year.
4.3 AUTOMATIC ELECTION EXTENSION. A Director's deferral election for any
calendar year shall remain in effect and irrevocable during each subsequent
calendar year until such election is revoked by such Director and such
revocation shall only be effective for a calendar year beginning after the date
of the revocation.
4.4 EFFECTIVE DATE OF ELECTIONS. Any election or designation or revised
election or designation under this Plan shall be effective on the date that the
properly completed election or designation form is received by the Corporate
Secretary of Lanier before the Director's death.
Section 5.
ACCOUNT ADJUSTMENTS
5.1 GENERAL. A Director's benefit under this Plan shall be based entirely
on the dollar value of the Stock credited to such Director's Account at any
time, which will depend on the amount deferred under Section 4 and the phantom
investment adjustments made in accordance with this Section 5.
5.2 DEFERRALS. The Fees deferred by a Director shall be credited to such
Director's Account as of the date such Fees otherwise would have been payable to
the Director if no election had been made under Section 4.
-4-
<PAGE> 8
5.3 PHANTOM INVESTMENT ADJUSTMENTS. The Fees credited to a Director's
Account shall be deemed to purchase shares of Stock. The number of shares deemed
purchased shall be determined by dividing the credits made as of any date to the
Director's Account by the closing price of a share of Stock for such date as
accurately reported in THE WALL STREET JOURNAL. Any credits made to a Director's
Account shall be adjusted for any dividends that would have been payable in cash
or in property other than Stock on the shares of Stock credited to a Director's
Account, and the amount of such cash or the value of such property shall be
deemed to be reinvested in additional shares of Stock on the dividend payment
date based on the closing price of a share of Stock as accurately reported in
THE WALL STREET JOURNAL for such date. The credits made to a Director's Account
shall be adjusted for any dividend that would have been payable in Stock on the
shares of Stock credited to a Director's Account. An appropriate adjustment in
the shares of Stock deemed purchased for such Account shall be made whenever
there is a stock split or other adjustment or distribution made by Lanier with
respect to the Stock.
Section 6.
DISTRIBUTIONS
6.1 GENERAL. The balance credited to a Director's Account shall become
distributable upon the Director's death, resignation, removal or retirement as a
Director, or upon a Change in Control, whichever comes first ("distribution
event"). The distribution shall be made to the Director, or in the event of the
Director's death, to the Director's Beneficiary, in a single sum as soon as
practicable after a distribution event and in any event within 90 days after the
later of the date of the distribution event or, if the distribution event is
death, the date a Beneficiary is identified under Section 6.2. Distributions
under this Plan upon the Director's death, resignation, removal or retirement as
a Director shall be made in whole shares of Stock and in cash in lieu of any
fractional shares, and Distributions under this Plan upon a Change in Control
shall be made in cash.
6.2 BENEFICIARY. A Director shall designate (on a form provided for this
purpose) a person, or more than one person, as such Director's Beneficiary to
receive the balance credited to such Director's Account in the event of such
Director's death. A Director may change the Beneficiary designation at any time.
If no Beneficiary designation is in effect on the date a Director dies or if no
designated Beneficiary survives the Director, the Director's estate
automatically shall be treated as such Director's Beneficiary under this Plan.
Section 7.
NO FUNDING OBLIGATION
The obligations of Lanier to make any distributions under this Plan shall
be unfunded and unsecured; all distributions to, or on behalf of, a Director
under this Plan shall be made from the general assets of Lanier, and any claim
by a Director or Beneficiary against
-5-
<PAGE> 9
Lanier for any distribution under this Plan shall be treated the same as a claim
of any general and unsecured creditor of Lanier.
Section 8.
MISCELLANEOUS
8.1 NO LIABILITY. No Director and no Beneficiary of a Director shall have
the right to look to, or have any claim whatsoever against, any officers,
director, employee or agent of Lanier in such person's individual capacity for
the distribution of any Account.
8.2 NONALIENATION; BINDING EFFECT. No benefit or payment under this Plan
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, levy or charge, and any attempt so to
anticipate, alienate, sell, transfer, assign, pledge, encumber, levy upon or
charge the same shall be void. The provisions of this Plan shall be binding on
each Director and Beneficiary and on Lanier.
8.3 CONSTRUCTION. This Plan shall be construed in accordance with the laws
of the State of Georgia. Headings and subheadings have been added only for
convenience of reference and shall have no substantive effect whatsoever. All
references to Sections shall be to sections to this Plan. All references to the
singular shall include the plural and all references to the plural shall include
the singular.
8.4 TERM OF OFFICE. A Director's participation in this Plan shall not
constitute a contract for a Director to serve as a member of the Board for any
particular term or for any particular amount of Fees, and participation in this
Plan shall have no bearing whatsoever on such terms or Fees or on any other
conditions for membership on the Board.
8.5 EXCHANGE ACT. With respect to persons subject to Section 16 of the
Exchange Act, transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the Exchange Act and
any regulations promulgated thereunder. To the extent any provision of this Plan
fails to so comply, it shall be deemed null and void. Moreover, all transactions
under this Plan shall be executed in accordance with the requirements of Section
16(b) of the Exchange Act and any regulations promulgated thereunder.
8.6 AMENDMENT AND TERMINATION. The Board shall have the right to amend this
Plan from time to time and to terminate this Plan at any time; PROVIDED,
HOWEVER, the balance credited to each Account immediately after any such
amendment or termination shall be no less than the balance credited to such
Account immediately before such amendment or termination and no amendment or
termination shall adversely affect a Director's right to the distribution of his
or her Account or such Director's Beneficiary's right to the distribution of
such Account.
-6-
<PAGE> 1
Exhibit 10.18
FORM OF
INTELLECTUAL PROPERTY LICENSE AGREEMENT
BY AND BETWEEN
HARRIS CORPORATION
AND
LANIER WORLDWIDE, INC.
DATED AS OF ____________, 1999
<PAGE> 2
INTELLECTUAL PROPERTY LICENSE AGREEMENT
THIS INTELLECTUAL PROPERTY LICENSE AGREEMENT (this "Agreement") is
entered into as of ________________, 1999 (the "Effective Date") by and between
Harris Corporation, a corporation organized under the laws of the State of
Delaware ("Harris"), and Lanier Worldwide, Inc., a corporation organized under
the laws of the State of Delaware ("Lanier").
WHEREAS, on ____________, 1999 (the "Distribution Date"), Harris intends to make
a pro rata distribution ("Distribution") to its stockholders of approximately
90% of the shares of common stock, par value $0.01 per share, of Lanier
outstanding as of the Distribution Date; and
WHEREAS, in connection with the Distribution, Harris and Lanier wish to provide
(a) for the license by Harris to Lanier of patents and related intellectual
property owned by Harris on the Distribution Date and (b) for the sublicense by
Harris to Lanier of patents and related intellectual property which has been
licensed to Harris on or prior to the Distribution Date, upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and the mutual covenants
hereinafter, the parties hereto agree as follows:
ARTICLE 1 - DEFINITIONS:
For the purpose of this Agreement:
"Lanier Field of Use" means the scope of Lanier's business as described
in the Registration Statement on Form 10 filed with the Securities and
Exchange Commission in connection with the Distribution.
"Lanier Products" means its products, systems, or services that are
designed, made, used, sold, exchanged or otherwise disposed of by or on
behalf of Lanier in the Lanier Field of Use.
"Patents" means the patents and applications for patents owned and
controlled by Harris anywhere as of the date of this Agreement, or
under which Harris has the right to grant licenses or sublicenses of
the scope herein granted. Notwithstanding the above, Patents do not
include Patents owned or controlled by any third party under which
Harris is obligated to pay royalties or other consideration to such
third party, to the extent such payment would be caused or increased as
a result of an extension of license protection to Lanier, or if such
license or sublicense to Lanier is restricted, prohibited or would
result in any other adverse impact upon Harris.
2
<PAGE> 3
ARTICLE 2 - LICENSES GRANTED AND COVENANT
2.1 Subject to the terms and conditions of this Agreement, Harris hereby
grants to Lanier a NON-EXCLUSIVE, NON-TRANSFERABLE, WORLDWIDE LICENSE,
WITHOUT THE RIGHT TO SUBLICENSE (except as specifically permitted
hereunder), to the Patents and related technology which are owned and
controlled by Harris to make and Have Made, offer to sell, sell,
distribute and use Lanier Products, including, without limitation,
practicing any method or process involved in the manufacture, testing,
assembly, packaging, shipping, transportation of Lanier Products or use
thereof, under the Patents and related technology for the life of those
Patents, but only in the Lanier Field of Use. Subject to the terms and
conditions of this Agreement, Lanier may sublicense any rights granted
hereunder to any distributor, subcontractor or agent of Lanier as
reasonably necessary for the use or resale by such parties of Lanier
Products.
2.2 Subject to the terms and conditions of this Agreement, Harris hereby
covenants not to sue Lanier, its customers, manufacturers,
distributors, subcontractors, end users or agents for infringement of
any of the Patents and related technology based upon the manufacture,
use, sale, offer for sale or distribution of the Lanier Products.
2.3 Subject to the terms and conditions of this Agreement, Harris hereby
grants to Lanier a NON-EXCLUSIVE, NON-TRANSFERABLE, WORLDWIDE LICENSE,
WITHOUT THE RIGHT TO SUBLICENSE (except as specifically permitted
hereunder), the Patents which have been licensed to Harris from
third-parties prior to the date hereof to make and Have Made, offer to
sell, sell, distribute and use Lanier Products including, without
limitation, practicing any method or process involved in the
manufacture, testing, assembly, packaging, shipping, transportation of
Lanier Products or use thereof, under such Patents for the life of
those Patents, but only in the Lanier Field of Use.
2.4 No rights or licenses are herein granted to Lanier, expressly or by
implication, to use any Patents or practice under any Patents, other
than in accordance with this Article 2.
2.5 Notwithstanding anything herein to the contrary, no license or
sublicense is granted to Lanier hereunder if any such license or
sublicense would require the consent of a third party or is not
otherwise able to be licensed by Harris under the terms of any license
agreement or other obligations or instruments binding upon Harris.
Similarly, no license or sublicense is granted to Lanier hereunder if
any such license or sublicense would require Harris to pay royalties or
other consideration to a third party or would otherwise adversely
impact Harris.
2.6 A license to "Have Made" shall mean a license granted to a party to
subcontract only a portion of the manufacture or assembly of a Lanier
Product to a manufacturer, for the sole account of and for use or
resale by Lanier of Lanier
3
<PAGE> 4
Products. Notwithstanding the above, the immunity granted herein to
the manufacturer under the "Have Made" license shall not extend to the
sale by such a manufacturer of a product to a third party regardless
of the origin of the product design or manufacture or assembly of a
complete product or a portion thereof.
2.7 The parties acknowledge that Lanier is a beneficiary under that certain
Photocopy License ("License") between Harris and the Copyright
Clearance Center pursuant to which Lanier is permitted to reproduce and
distribute certain copyrighted works. Harris agrees to use commercially
reasonable efforts to amend the Photocopy License to permit Lanier to
continue to exercise the rights granted to Lanier under the Photocopy
License. If Lanier fails to obtain such amendment, Harris shall refund
to Lanier the unamortized portion of any license fees prepaid by Lanier
under the Photocopy License as of the Distribution Date.
ARTICLE 3 - PROPRIETARY INFORMATION
3.1 The Patents and related technology are owned by Harris. It is
recognized by the parties that such technology is, and shall remain,
the sole property of Harris, and that such represent property of Harris
developed at considerable time, effort, and expense. The Patents and
related technology owned or controlled by third-parties and sublicenses
hereunder are owned by Harris and other parties. Lanier shall not have
any ownership rights in any such patents or related technology.
ARTICLE 4 - DURATION AND TERMINATION
4.1 This Agreement shall come into effect upon the Effective Date and shall
continue until the sooner to occur of (a) the breach by Lanier of the
provisions of this Agreement and failure to cure such breach within 30
days following written notice of such breach by Harris, or (b) the
expiration of the last of the Patents to expire.
4.2 Upon any termination or expiration of this Agreement, Lanier shall
cease using the Patents and shall promptly return all such documents
and all copies of the same to Harris.
ARTICLE 5 - PATENT AND INTELLECTUAL PROPERTY LIABILITY
The Patents and related technology are licensed or sublicensed to Lanier "AS IS"
without representation or warranty, express or implied, including without
limitation any representation or warranty that practicing the Patents does not
result in the infringement of intellectual property rights of any third party.
Lanier shall be solely responsible and liable for any claim, damage, cost,
expense or liability it incurs arising out of threatened or claimed
infringements of Patents or other rights resulting from its use of the Patents,
or its activity in the manufacture, assembly, use sale, testing, maintenance or
repair, or other disposition of products. LANIER ACKNOWLEDGES AND AGREES THAT IT
MAY
4
<PAGE> 5
NOT BRING ANY CLAIMS OR OTHERWISE RECOVER ANY AMOUNT FROM HARRIS BY VIRTUE OF
EXERCISE OF THE RIGHTS GRANTED HEREUNDER.
Lanier agrees and acknowledges that Harris shall not be liable directly or
indirectly or as an indemnitor of Lanier (or Lanier's vendors) as a consequence
of any licenses or sublicenses granted hereunder.
ARTICLE 6 - GOVERNING LAW
This Agreement will be governed by and interpreted and construed in accordance
with the laws of New York.
ARTICLE 7 - ARBITRATION
Any dispute, disagreement, or question arising out of or relating to or
consequence of this Agreement, or to its construction or performance thereof,
shall be resolved in accordance with Article V of the Agreement and Plan of
Distribution, entered into by and between Harris and Lanier.
ARTICLE 8 - MISCELLANEOUS
8.1 Lanier shall not have the right to assign this Agreement to any third
party, by agreement, operation of law, or otherwise, without the prior
written consent of Harris, which may be unreasonably withheld by Harris
in its sole discretion.
8.2 This Agreement may be assigned by a party to any company or concern
acquiring substantially the entire business of such party relating to
Patents licensed hereunder, provided such assignee first agrees in
writing to be bound by all terms and conditions of this Agreement
including the obligations of such party hereunder.
8.3 Lanier shall defend, indemnify and hold Harris and its customers
harmless from and against all claims, causes of action, lawsuits, loss,
expenses, obligations, damages, and liability, including costs of
defense and reasonable attorneys fees, whether in contract or tort
(including negligence and strict liability), as a result of property
damage, personal injuries or death of any persons arising out of, or
proximately caused by, in whole or in part, any action or inaction by
Lanier or any defect (including any design defect) attributable to or
involving the manufacture, use, lease or sale of the Lanier Products.
8.4 This Agreement does not constitute a party as an agent, legal
representative, partner or affiliate of the other for any purpose
whatsoever, and it is understood that neither party is in any way
authorized to make any contract, agreement, warranty, or representation
on behalf of the other, or create any obligation, express or implied,
on behalf of the other.
5
<PAGE> 6
8.5 This Agreement contains the entire agreement between the parties hereto
respecting the subject matter hereof and there are no representations,
understandings, or agreements, oral or written, which are not expressly
included herein.
8.6 In the event that any one or more provisions of this Agreement shall be
declared to be illegal or unenforceable under any law, rule, or
regulations of any government having jurisdiction over the parties
hereto, such illegibility or unenforceability shall not affect the
validity and enforceability of the other provisions hereof, and the
parties hereto shall agree upon a modification to this Agreement with
respect to such illegal or unenforceable provisions to eliminate such
invalidity or unenforceability.
IN WITNESS WHEREOF, LANIER and HARRIS have caused this Agreement to be
executed, in duplicate, by their respective duly authorized officers on the
dates first above written.
LANIER WORLDWIDE, INC.
By: _______________________________
Name:______________________________
Title:_____________________________
Date:______________________________
HARRIS CORPORATION
By: _______________________________
Name:______________________________
Title:_____________________________
Date:______________________________
6
<PAGE> 1
EXHIBIT 21
LANIER SUBSIDIARIES (POST SPIN-OFF)
<TABLE>
<CAPTION>
SUBSIDIARY NAME JURISDICTION OF INCORPORATION D/B/A
- --------------- ----------------------------- -----
<S> <C> <C>
American Office Systems, Inc. United States - West Virginia
ECCO Parent Limited Ireland
Equipments de Bureau DMD LTEE Canada
Fredal Office Equipment, Inc. Canada
Harris Southwest Properties, Inc. United States - Delaware
Lanier (Australia) Pty. Ltd. Australia
Lanier Belgium N.V./S.A. Belgium
Lanier Burosysteme GmbH Austria
Lanier Burosysteme GmbH & Co. KG Austria
Lanier CV Netherlands
Lanier Canada, Inc. Canada
Lanier Colombia, S.A. Colombia
Lanier Ceska Republika, s.r.o. Czech Republic
Lanier de Chile, S.A. Chile
Lanier de Costa Rica, S.A. Costa Rica
Lanier de El Salvador, S.A. de C.V. El Salvador
Lanier de Guatemala, S.A. Guatemala
Lanier de Panama, S.A. Panama
Lanier Danmark A/S Denmark
Lanier Deutschland GmbH & Co. KG Germany
Lanier Deutschland Holding GmbH Germany
Lanier Deutschland Verwaltung GmbH Germany
Lanier Dominicana, S.A. Dominican Republic
Lanier Espana Holdings S.L. Spain
Lanier Espana S.A. Spain
Lanier Europe AG Switzerland
Lanier Europe B.V. Netherlands
Lanier Financial Services, Inc. United States - Georgia
LF, S.A. France
Lanier Hellas AEBE Greece
Lanier Holding AG Switzerland
Lanier Holding B.V. Netherlands
Lanier Holdings CV Netherlands
Lanier Holdings Pty. Ltd. Australia
Lanier Holdings, Inc. United States - Delaware
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
SUBSIDIARY NAME JURISDICTION OF INCORPORATION D/B/A
- --------------- ----------------------------- -----
<S> <C> <C>
Lanier Hungaria Kft Hungary
Lanier U.K. Holdings Ltd. United Kingdom
Lanier International, Inc. United States - Delaware
Lanier Ireland Limited Ireland
Lanier Italia, S. p. A. Italy
Lanier Leasing, Inc. United States - Delaware
Lanier Litigation Services, Inc. United States - Minnesota Quorum/Lanier
Lanier Luxembourg - S. a. r. l. Luxemberg
Lanier Norge A/S Norway
Lanier Pacific Pty. Ltd. Australia
Lanier Professional Services, Inc. United States - Delaware
Lanier Puerto Rico, Inc. Puerto Rico
Lanier (Schweiz) AG Switzerland
Lanier Singapore Pte. Ltd. Singapore
Lanier Suomi Oy Finland
Lanier Svenska AB Sweden
Lanier United Kingdom Limited United Kingdom
Maritime Mexico S.A. de C.V. Mexico
Maritime U.S.A., Inc. United States - Nevada
Newex AB Sweden
Quorum Lanier Philippines, Inc. Philippines
Quorum Litigation Services Private Limited India
Scotty Center OY Finland
Sigma 6 U.S.A., Inc. United States - Delaware
TAP Technology, Inc. United States - Delaware
</TABLE>
<PAGE> 1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Independent
Certified Public Accountants" and to the use of our report dated July 27, 1999
in the Registration Statement on Form 10 of Lanier Worldwide, Inc. dated
October 22, 1999.
/s/ Ernst & Young LLP
Orlando, Florida
October 21, 1999
