SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
Commission File Number 1-1136
BRISTOL-MYERS SQUIBB COMPANY
(Exact name of registrant as specified in its charter)
Delaware 22-079-0350
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
345 Park Avenue, New York, N.Y. 10154
(Address of principal executive offices)
Telephone: (212) 546-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, $.10 Par Value New York Stock Exchange
Pacific Exchange, Inc.
$2 Convertible Preferred Stock, $1 Par Value New York Stock Exchange
Pacific Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
The aggregate market value of voting stock held by non-affiliates of the
registrant as of February 28, 1998 was $99,481,748,374. At February 28,
1998, there were 994,247,077 shares of common stock outstanding.
Documents incorporated by reference
Proxy Statement for Annual Meeting of Stockholders on May 5, 1998. Part III
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PART I
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Item 1. BUSINESS.
DESCRIPTION OF BRISTOL-MYERS SQUIBB COMPANY
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General:
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Bristol-Myers Squibb Company ("Bristol-Myers Squibb" or the "Company") was
incorporated under the laws of the State of Delaware in August 1933 under the
name Bristol-Myers Company as successor to a New York business started in
1887. In 1989, the Bristol-Myers Company changed its name to Bristol-Myers
Squibb Company, as a result of a merger. The Company, through its divisions
and subsidiaries, is a major producer and distributor of pharmaceuticals,
consumer medicines, nutritionals, medical devices and beauty care products.
In general, the business of the Company's segments is not seasonal.
BUSINESS SEGMENTS
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Reference is made to Note 2 Acquisitions and Divestitures and Note 13 Segment
Information in the Notes to Consolidated Financial Statements included in Part
II, Item 8 of this Form 10-K Annual Report.
DESCRIPTION OF SEGMENTS
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PHARMACEUTICALS:
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This segment includes sales of prescription medicines, mainly cardiovascular,
anti-cancer, anti-infective and central nervous system drugs.
1997 1996 1995
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Cardiovascular $2,905 $2,816 $2,911
Anti-cancer 2,420 1,971 1,600
Anti-infective 2,235 1,856 1,701
Central nervous system 955 760 601
Other 1,417 1,263 932
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Total Segment $9,932 $8,666 $7,745
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The principal products in this segment are:
Cardiovascular:
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PRAVACHOL* Pravastatin sodium, an HMG Co-A reductase inhibitor
* Indicates brand names of products which are registered trademarks owned
by the Company.
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CAPOTEN*/CAPOZIDE* captopril, an angiotensin converting enzyme (ACE)
inhibitor
MONOPRIL* fosinopril sodium, a second-generation ACE inhibitor
with convenient once-a-day dosing
QUESTRAN* cholestyramine, a cholesterol-reducing agent
SOTACOR* sotalol, a beta blocker with unique antiarrhythmic
qualities
AVAPRO irbesartan, an angiotensin II receptor antagonist,
co-developed and jointly marketed with Sanofi S.A.
CORGARD*/CORZIDE* nadolol, a once-a-day beta blocker used in the
treatment of hypertension and angina pectoris
Anti-cancer:
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TAXOL*(R) paclitaxel, used in the treatment of refractory ovarian
cancer, the second-line treatment of AIDS-related
Kaposi's sarcoma, and in treatment of breast cancer
after failure of combination chemotherapy for
metastatic disease or relapse within six months of
adjuvant chemotherapy (with an exclusivity period,
granted pursuant to the Hatch-Waxman Act in the U.S.,
which expired in December 1997)
PARAPLATIN* carboplatin, a chemotherapeutic agent used in the
treatment of ovarian cancer
VEPESID* etoposide, used in the treatment of small-cell lung
cancer and refractory testicular cancer
PLATINOL* cisplatin, used in the treatment of ovarian, testicular
and advanced bladder cancer
Anti-infective:
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ZERIT* stavudine, used in the treatment of persons with
advanced HIV disease
CEFZIL* cefprozil, an oral cephalosporin used in the treatment
of respiratory infections
VIDEX* didanosine, an antiretroviral drug used in the
treatment of adult and pediatric patients with advanced
human immunodeficiency virus (HIV) infection
DURICEF* cefadroxil, an oral cephalosporin
MAXIPIME* cefepime, a fourth generation injectable cephalosporin
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VELOSEF* cephradine, an oral cephalosporin
AMIKIN* amikacin, an aminoglycoside
AZACTAM* aztreonam, a monobactam antibiotic
FUNGIZONE* amphotericin B, an anti-fungal
Central nervous system:
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BUSPAR* buspirone, a novel anti-anxiety agent that effectively
relieves persistent anxiety with or without
accompanying deprssive symptoms
SERZONE* nefazodone, an antidepressant treatment which offers a
low incidence of side-effects
STADOL NS* butorphanol NS, a prescription nasal spray analgesic
Other:
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DOVONEX* calcipotriene, a vitamin D3 analog for the treatment of
moderate psoriasis
LAC-HYDRIN* used in the treatment of moderate to severe dry skin
GLUCOPHAGE metformin, an oral anti-diabetes agent for type 2 non-
insulin-dependent diabetes
OVCON* an oral contraceptive
ESTRACE* stradiol, a low-dose estrogen replacement therapy
CONSUMER MEDICINES:
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This segment includes sales of analgesics, skin care, cough/cold remedies,
antiperspirants and deodorants, and other consumer medicines.
1997 1996 1995
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Analgesics $ 739 $ 718 $ 669
Other 612 561 551
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Total Segment $1,351 $1,279 $1,220
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The principal products in this segment are:
EXCEDRIN* analgesics
BUFFERIN*
EFFERALGAN*
DAFALGAN*
ASPIRINE UPSA*
KERI* a line of moisturizing body lotions and shower and bath
oils
SEA BREEZE* skin care products
COMTREX* a multi-symptom cold reliever
BAN* anti-perspirants and deodorants
VAGISTAT-1* for vaginal yeast infections
On March 14, 1998, the Company completed the sale of the assets related to the
BAN* brand of anti-perspirant and deodorant products.
BEAUTY CARE:
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This segment includes sales of haircoloring and hair care preparations and
other beauty care products.
1997 1996 1995
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Haircoloring $ 841 $ 812 $ 714
Hair care 794 586 487
Other 70 69 103
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Total Segment $1,705 $1,467 $1,304
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The principal products in this segment are:
NICE 'N EASY* haircolorings
MISS CLAIROL*
HYDRIENCE*
NATURAL INSTINCTS*
ULTRESS*
LOVING CARE*
HERBAL ESSENCES* complete lines of shampoos and conditioners
INFUSIUM 23*
DAILY DEFENSE*
SYSTEME BIOLAGE* professional hair care products sold
MATRIX ESSENTIALS* exclusively in beauty salons
VITAL NUTRIENTS*
VAVOOM*
MUM* anti-perspirants and deodorants
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NUTRITIONALS:
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This segment includes sales of infant formulas and other nutritional products.
1997 1996 1995
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Infant formulas $1,219 $1,201 $1,086
Other 692 592 506
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Total Segment $1,911 $1,793 $1,592
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The principal products in this segment are:
ENFAMIL* infant formula products
PROSOBEE*
NUTRAMIGEN*
LACTOFREE*
ENFAPRO* follow-up formula products for older babies
NEXT STEP*
ALACTA NF*
SUSTAGEN* nutritional supplements and specialties
CHOCO MILK*
ISOCAL*
SUSTACAL*
NUTRAMENT*
BOOST*
THERAGRAN* vitamins
PLUSSSZ*
POLY-VI-SOL*
POLY-VI-FLOR*
NATALINS*
MEDICAL DEVICES:
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This segment includes sales of orthopaedic implants, ostomy and wound care
products and other medical devices.
1997 1996 1995
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Orthopaedic implants $ 615 $ 644 $ 657
Ostomy 451 452 472
Other 736 764 777
------ ------ ------
Total Segment $1,802 $1,860 $1,906
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The principal products in this segment are:
NEXGEN* Complete Knee Solution
VERSYS* Hip System
CENTRALIGN* Precoat Hip Prosthesis orthopaedic implants
ACTIVE LIFE/ ostomy care products
COLODRESS*
SUR-FIT/
COMBIHESIVE/SECURE*
DUODERM* wound care products
SOURCES AND AVAILABILITY OF RAW MATERIALS
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Bristol-Myers Squibb, for the most part, purchases the principal raw
materials and supplies used in each industry segment in the open market.
Substantially all such materials are obtainable from a number of sources so
that the loss of any one source of supply would not have a material adverse
effect on the Company.
PATENTS, TRADEMARKS AND LICENSES
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The Company owns or is licensed under a number of patents in the United
States and foreign countries covering products, principally in the
pharmaceuticals and medical devices segments, and has also developed many
brand names and trademarks for products in each industry segment. The
Company considers the overall protection of its patent, trademark and license
rights to be of material value and acts to protect these rights from
infringement. The Company believes that no single patent or license is of
material importance in relation to the business as a whole.
COMPETITION, DISTRIBUTION AND CUSTOMERS
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The markets in which Bristol-Myers Squibb competes are generally broad based,
heavily competitive and include many competitors. The principal means of
competition utilized to market the products of Bristol-Myers Squibb include
quality, service, price and product performance. The products of the
pharmaceuticals segment and the medical devices segment are promoted on a
national and international basis in medical journals and directly to the
medical profession. The Company is also utilizing direct-to-consumer
advertising for a number of its pharmaceutical products. Most of the other
products of Bristol-Myers Squibb are generally advertised and promoted on a
national and international basis through the use of television, radio, print
media, consumer offers, and window and in-store displays. Bristol-Myers
Squibb's products are principally sold to the wholesale and retail trade both
nationally and internationally. Certain products of the pharmaceuticals and
medical devices segments are also sold to other drug manufacturers, hospitals
and the medical profession. None of the segments is dependent upon a single
customer, or a few customers, such that the loss of any one or more would
have a material adverse effect on the segment.
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RESEARCH AND DEVELOPMENT
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Research and development is essential to Bristol-Myers Squibb's businesses,
particularly to the Pharmaceuticals Segment. Management continues to place
great emphasis on these activities. Pharmaceutical research and development
is carried out by the Bristol-Myers Squibb Pharmaceutical Research Institute
which has major facilities in Princeton, Hopewell and New Brunswick, New
Jersey; and Wallingford, Connecticut. Pharmaceutical research and development
is also carried out at various other facilities in the United States and in
Belgium, France, Germany, Italy, Japan, and the United Kingdom.
Bristol-Myers Squibb spent $1,385 million in 1997, $1,276 million in 1996 and
$1,199 million in 1995 on company sponsored research and development
activities. Pharmaceutical research and development spending, as a percentage
of pharmaceutical sales, was 12.0% in 1997 compared to 12.3% in 1996 and 12.9%
in 1995.
REGULATION
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Most aspects of the Company's business are subject to some degree of
government regulation in the countries in which its operations are conducted.
The Company's policy is to comply fully with all regulatory requirements
applying to its products and operations. For some products, and in some
countries, government regulation is significant and, in general, there is a
trend to more stringent regulation. The Company devotes significant time,
effort and expense addressing the extensive governmental regulatory
requirements applicable to its business. Governmental regulatory actions can
result in the recall or seizure of products, suspension or revocation of the
authority necessary for the production or sale of a product, and other civil
and criminal sanctions.
In the United States, the drug, medical device, diagnostic, food and cosmetic
industries in which the Company operates have long been subject to regulation
by various federal, state and local agencies, primarily as to product
manufacture, safety, efficacy, advertising and labeling. Assuring compliance
with appropriate laws and regulations requires increasing expenditures of time
and resources.
In addition, governmental bodies in the United States as well as other
countries have expressed concern about costs relating to health care and, in
some cases, have focused attention on the pricing of drugs and on appropriate
drug utilization. Government regulation in these areas already exists in some
countries and may be expanded significantly in the United States and other
countries in the future.
While the Company is unable to predict the extent to which its business may
be affected by future regulatory developments, it believes that its
substantial experience dealing with governmental regulatory requirements and
restrictions on its operations throughout the world and its development of new
and improved products should enable it to compete effectively within this
environment.
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EMPLOYEES
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Bristol-Myers Squibb employed approximately 53,600 people at December 31,
1997.
DOMESTIC AND FOREIGN OPERATIONS
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Reference is made to Note 11 Financial Instruments, and Note 13 Segment
Information in the Notes to Consolidated Financial Statements included in Part
II, Item 8 of this Form 10-K Annual Report.
International operations are subject to certain risks which are inherent in
conducting business abroad, including possible nationalization or
expropriation, price and exchange controls, limitations on foreign
participation in local enterprises and other restrictive governmental actions.
In addition, changes in the relative value of currencies take place from time
to time and their effects may be favorable or unfavorable on Bristol-Myers
Squibb's operations. There are currency restrictions relating to repatriation
of earnings in certain countries.
Item 2. PROPERTIES.
Bristol-Myers Squibb's world headquarters is located at 345 Park Avenue, New
York, New York, where it leases approximately 841,800 square feet of floor
space, approximately 301,800 square feet of which is sublet to others. The
headquarters for the Company's segments are as follows: Pharmaceutical world
headquarters is located in Princeton, New Jersey; Consumer Medicines in
Plainsboro, New Jersey; Beauty Care in Stamford, Connecticut; Nutritionals in
Evansville, Indiana; and Medical Devices in Warsaw, Indiana.
Bristol-Myers Squibb manufactures products at forty-three major worldwide
locations with an aggregate floor space of approximately 12,896,000 square
feet. Forty-one facilities are owned by Bristol-Myers Squibb and two are
leased. The following table illustrates the segment and geographic location
of the Company's significant manufacturing facilities.
Cons Beauty Med
Pharm Med Care Nutri Dev Total
----- ----- ----- ----- ----- -----
United States 7 1 2 2 3 15
Europe, Mid East and Africa 5 5 1 1 1 13
Other Western Hemisphere 6 1 2 9
Pacific 4 1 1 6
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Total 22 7 4 6 4 43
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Portions of these facilities and other facilities owned or leased by
Bristol-Myers Squibb in the United States and elsewhere are used for
research, administration, storage and distribution. Bristol-Myers Squibb's
facilities are well-maintained, adequately insured and in satisfactory
condition.
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Item 3. LEGAL PROCEEDINGS.
Breast Implant Litigation
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Reference is made to Note 16 Contingencies in the Notes to Consolidated
Financial Statements included in Part II, Item 8 of this Form 10-K Annual
Report.
As of December 31, 1997, approximately 23,000 domestic and 1,300 foreign
breast implant recipients were plaintiffs in lawsuits pending in federal and
state courts in the United States and in certain courts in Canada and
Australia. Of the 23,000 domestic plaintiffs, about 12,300 have opted out of
the class action settlement described below. The remaining 10,700 plaintiffs
have chosen to participate in the settlement, and their lawsuits are expected
to be dismissed. Some 400 foreign breast implant recipients have opted out
of the Revised Settlement but the opt-out period has not yet expired for
foreign women. Only those suits filed by plaintiffs who have opted out of
the class action settlement may proceed in the United States. Appeals
related to the Revised Settlement are pending.
Other manufacturers of breast implants, as well as suppliers of component
parts and other parties, are also defendants in the majority of these cases.
Some of these plaintiffs have sued numerous manufacturers without specifying
the manufacturer of the implants involved.
In addition to individual suits, the Company has been named as a defendant,
together with other defendants, in a purported class action brought on behalf
of children allegedly exposed to silicone in utero and through breast milk.
(FEUER, ET AL., V. MCGHAN, ET AL., U.S.D.C, E. Dist. NY, 93-0146.) The
suit, which has not been certified as a class action, names all breast
implant manufacturers as defendants and seeks to establish a medical
monitoring fund. On April 11, 1996, a class action on behalf of all women in
the Canadian province of British Columbia was certified in the provincial
court of British Columbia on the single issue of whether silicone gel breast
implants are reasonably fit for their intended purpose (HARRINGTON V. DOW
CORNING CORPORATION ET AL., Supreme Court, British Columbia, C954330). A
previously certified class action lawsuit entitled IN RE: LOUISIANA BREAST
IMPLANT CLASS ACTION (previously SPITZFADEN, ET AL. VS. DOW CORNING CORP., ET
AL.), No. 92-2589, was decertified by the trial court in December 1997 and is
not expected to proceed as a class action.
The Company is a participant in a class action settlement approved by the
Honorable Sam C. Pointer, Jr., Chief Judge of the United States District
Court for the Northern District of Alabama (LINDSEY, ET AL., V. DOW CORNING,
ET AL., CV-94-P-11558-S), before whom all federal breast implant cases were
consolidated for pretrial purposes. On December 22, 1995, Judge Pointer
approved a revised settlement program (Revised Settlement) for resolution of
claims seeking damages for personal injuries from allegedly defective breast
implants. The Revised Settlement arises out of a class action settlement
approved by the Court on September 1, 1994. On January 16, 1996, the
Company, Baxter Healthcare Corporation and Baxter International
(collectively, Baxter), and Minnesota, Mining and Manufacturing Company (3M)
(hereinafter, the Settling Defendants) each paid $125 million into a court-
established fund as an initial reserve to pay claims under the Revised
Settlement. In 1997, the Company made additional contributions to the court-
established fund totaling approximately $190 million. McGhan Medical
Corporation and Union Carbide Corporation are also parties to the Revised
Settlement.
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The fifteen-year Revised Settlement program provides benefits to those breast
implant recipients who have had at least one breast implant manufactured by
one of the Settling Defendants (or their predecessors or subsidiaries).
Several kinds of benefits are available for eligible participants with breast
implants made by companies affiliated with Bristol-Myers Squibb, Baxter and
3M: (1) for current claimants, compensation generally ranging from $10,000 to
$50,000 based on disease and disability definitions of the original
settlement, plus supplemental benefits of an additional $15,000 to $50,000
for claimants with ruptured implants; (2) for current claimants seeking
higher benefits and for other registrants, compensation ranging from $75,000
to $250,000 based on more stringent disease and disability definitions (Long-
Term Benefits); and (3) although the Settling Defendants are not recommending
removal of implants absent some specific medical reason, a $3,000 payment for
those class members (other than late registrants) who seek removal of
implants. In addition, current claimants are eligible for an advance payment
of $5,000, and other registrants are eligible for an advance payment of
$1,000. For current claimants, benefits would be payable regardless of the
number of claimants seeking compensation, regardless of the total dollar
value of approved claims, and regardless of the outcome of appeals from the
order approving the settlement. For other registrants, benefits would be
subject to an aggregate $755 million limit for all participating companies
over the fifteen-year life of the program. The Company's individual
aggregate limit for such benefits is $400 million. In the event the dollar
value of the future claims subject to the limit exceeds this amount,
claimants may be afforded additional opt-out rights but without the right to
assert punitive or other statutory multiple damage claims. The Company's
obligations to make payments under the Revised Settlement are not affected by
the number of class members electing to opt out of the settlement or the
number of class members making claims under it. However, the Company's
obligations to fund Long-Term Benefits are cancelable if certain provisions
of the Revised Settlement are disapproved on appeal.
The Revised Settlement was the subject of an appeal filed by certain foreign
breast implant recipients. In November 1996, the Settling Defendants settled
that appeal, and the benefits of the Revised Settlement were extended, with
certain modifications, to foreign breast implant recipients. Pursuant to the
settlement, the Settling Defendants paid (on an equal basis) an aggregate of
$25 million into a court-approved settlement fund as an initial reserve for
payment of foreign claims.
Approximately 380,000 domestic class members (with implants of all
manufacturers, not just MEC, Baxter and 3M) registered with the original
settlement approved in 1994. Around 88,000 of these class members have
indicated that they received at least one breast implant manufactured by MEC
or a related company. Of these 88,000 registrants, 14,300 have opted out of
the Revised Settlement; 6,300 of these have proved to the satisfaction of
the claims office that they received a breast implant of MEC or a related
company, while the remaining 8,000 opt-outs have indicated their belief (but
have not proved) that they received an MEC breast implant. The 14,300 opt-
outs who have or claim to have MEC implants are among the 44,800 domestic
registrants (with implants of all manufacturers) who opted out of the Revised
Settlement. The Company has identified approximately 10,800 persons from
among the 44,800 opt-outs (with implants of all defendants, not just MEC) as
plaintiffs in lawsuits against it. An as yet undetermined number of these
10,800 plaintiffs do not have MEC implants and their claims against the
Company are expected to be dismissed. An additional 1,570 plaintiffs with
claims based upon MEC implants remain from among domestic class members who
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previously opted out of the settlement originally approved in 1994. Because
the opt-out period is essentially over for domestic class members, the number
of opt-outs is not expected to increase materially. However, because of
continuing uncertainties, it is still not possible to predict on any precise
basis the total number of women with MEC implants who will pursue lawsuits
against the Company.
The cost of the settlement is dependent upon complex and varying factors,
including the number of class members that participate, the kinds of claims
asserted and approved under the settlement, and their dollar value. In light
of the continuing uncertainties attendant to these and other factors, it is
not possible to achieve any precision at this time in estimating the cost of
the settlement to the Company.
In May of 1996, the Company, together with other Settling Defendants, entered
into a $50 million settlement of claims asserted by certain health insurers
based upon payments made or benefits provided by insurers and represented
health plans to participating registrants that allegedly involve or relate to
silicone gel breast implants. The Company has paid $20.2 million to the
settlement, which extinguishes the potential claims of the majority of the
U.S. commercial and non-governmental health care insurer market against both
the defendants and settlement class members.
In July of 1995, the Company entered into a $20.5 million (U.S. funds) class
action settlement with plaintiff representatives in the provinces of Ontario
and Quebec. The class includes persons who have or had MEC breast implants
and who reside in Ontario and Quebec or who received their MEC implants
there. The settlement, which had minimal opt-outs, has been approved by the
provincial courts of Ontario and Quebec.
The Company's insurers were notified of the breast implant claims and the
Revised Settlement, and generally reserved their rights or declined to
confirm coverage. The Company has reached settlements with many of the
insurers (generally in connection with coverage litigation filed by the
Company in Texas state court). The settlement agreements provided cash or
confirmed coverage. Legal proceedings remain unresolved against some of the
insurers.
The cost to the Company of resolving opt-out claims is subject to a number of
complex uncertainties. Primary among them is the difficulty of estimating
with any precision the quantity and quality of such claims. While there have
been large judgments, defendants have won more trials than they have lost,
and in 1996 and 1997, the Company's trial experience was highly favorable.
The Company has maintained throughout this litigation that breast implants do
not cause disease and medical and scientific data support the Company's
position. The Company's view has found strong support in the December 1996
decision of a federal judge in Oregon, who ruled to exclude the testimony of
plaintiffs' experts concerning a causal link between silicone gel breast
implants and systemic illness on the ground that it fails to satisfy
standards for reliability under current Supreme Court guidelines. In
addition, a science panel appointed by Judge Pointer is in the process of
reviewing the scientific literature regarding any relation between breast
implants and disease, and is expected to report its findings in 1998. The
results of continuing medical research and a variety of additional factors,
including the success of other legal defenses and the success of the Revised
Settlement program, might substantially affect the cost of resolving opt-out
cases.
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In the fourth quarter of 1993, the Company recorded a charge of $500 million
before taxes ($310 million after taxes) in respect of breast implant cases.
The charge consisted of $1.5 billion for potential liabilities and expenses,
offset by $1 billion of expected insurance proceeds. In the fourth quarters
of 1994 and 1995, the Company recorded additional special charges of $750
million before taxes ($488 million after taxes) and $950 million before taxes
($590 million after taxes), respectively, related to breast implant product
liability claims. Although the cost of the Revised Settlement and the
ongoing litigation cannot at present be predicted with any reasonable degree
of precision, the Company, based on the information set forth above and on
related estimates, continues to believe that previously established reserves
should be adequate to address these claims.
Infant Formula Matters
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The Company, one of its subsidiaries, and others are or have been defendants
in a number of antitrust actions in various states filed on behalf of
purported statewide classes of indirect purchasers of infant formula products
and by the Attorneys General of Louisiana, Minnesota and Mississippi,
alleging a price fixing conspiracy and other violations of state antitrust or
deceptive trade practice laws and seeking penalties and other relief. The
Company has previously reported reaching settlements and receiving final
court approval in the majority of these cases. The only open cases are in
Louisiana and Missouri. On November 6, 1997, the court in Louisiana
dismissed the plaintiffs' case. The plaintiffs are appealing that dismissal.
In Missouri, the Company has a motion to dismiss pending. The Company
believes that these actions are without merit and that their ultimate
disposition will not have a material adverse effect on the Company's results
of operations, liquidity or consolidated financial position.
Prescription Drug Litigation
- ----------------------------
As of December 31, 1997, the Company is a defendant in over 100 actions
brought against the Company and more than 30 other pharmaceutical
manufacturers, drug wholesalers and pharmacy benefit managers in various
federal district courts by certain chain drugstores, supermarket chains and
independent drugstores, suing either individually or as a representative of
a nationwide class of retail pharmacies that has been certified. These
cases, which have been coordinated for pretrial purposes in the United States
District Court for the Northern District of Illinois, seek treble damages and
injunctive relief on account of an alleged antitrust conspiracy concerning
the pricing and marketing of brand name prescription drugs in violation of
the Sherman Act; individual retailer plaintiffs also assert claims of
unlawful price discrimination under the Robinson-Patman Act. Discovery has
been completed with respect to claims concerning the alleged Sherman Act
violations. Completion of additional discovery with respect to Robinson-
Patman Act claims against the Company has been stayed. It is estimated that
the class members who have not opted out represent approximately two-thirds
of retail pharmacy purchases of brand name prescription drugs during the
alleged damages period. As of May 1, 1996, the Company, without admitting
any wrongdoing, reached an amended agreement to settle the class action. On
May 30, 1997, the United States Court of Appeals for the Seventh Circuit
dismissed appeals challenging the District Court's approval of the amended
class action settlement. On October 29, 1997, the class settlement became
final. Trial in the class case against the manufacturer and wholesaler
defendants who have not settled is scheduled for September 14, 1998, with
trial in the actions brought by the individual retailer plaintiffs to follow.
The largest opt-out retailer plaintiffs have purported to quantify their
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Sherman Act damage claims against the defendants, including the Company,
asserting damages aggregating approximately $2.4 billion before trebling. On
November 20, 1997, two large retail chains, Eckerd Corporation and American
Drug Stores, initiated similar actions in the Northern District of Illinois
against several manufacturer and wholesaler defendants, including the
Company. On August 15, 1997, the Seventh Circuit ruled on consolidated
appeals from several District Court rulings. The Appeals Court reversed the
District Court's denial of summary judgment to the manufacturer defendants,
including the Company, on the overcharge damages claims based on plaintiffs'
indirect purchases from wholesalers of defendant manufacturers' drugs.
However, the Court of Appeals also reversed the District Court's grant of
summary judgment to the wholesaler defendants in the class action and stated
that class and individual plaintiffs might be able to recover overcharge
damages on indirect purchases from wholesalers if they demonstrated that
wholesalers participated in the alleged Sherman Act violations. After
remand, the District Court granted the individual plaintiffs leave to amend
their complaints to join the wholesalers as defendants. Class action cases
brought by retail pharmacies in state courts against similar defendants
including the Company and alleging similar claims under state law have been
filed in California, Alabama, Wisconsin, Minnesota and Mississippi. Final
settlements have been approved in the Wisconsin and Minnesota class actions.
The Mississippi court has ruled that the case may not proceed as a class
action, but has refused to dismiss the claims of named plaintiffs. Class
action cases brought by consumers in state courts against similar defendants
including the Company and alleging similar claims under state law have been
brought in Alabama, California, Washington, New York, Arizona, the District
of Columbia, Maine, Michigan, Minnesota, Wisconsin, Kansas, Florida,
Tennessee and North Carolina. Four of these state consumer cases were
removed to federal court and transferred to the consolidated proceedings in
the Northern District of Illinois. These four cases have recently been
remanded to state court and all the consumer class actions are now in state
court. The consumer actions brought in Washington and New York have been
dismissed; an appeal is pending in New York. A consumer class has been
certified in the District of Columbia case, while class certification has
been denied in the Maine, Michigan and Minnesota consumer cases. Plaintiffs
in Minnesota responded to the denial of class certification by filing a new
consumer class action seeking only injunctive relief on August 14, 1997. In
July 1996, the Company received a subpoena from the Federal Trade Commission
(FTC) in an investigation it is conducting to determine whether U.S.
pharmaceutical manufacturers have engaged in unfair methods of competition by
engaging in unlawful concerted activities on prices of pharmaceutical
products. On May 27, 1997, the FTC served a second subpoena and a Civil
Investigative Demand (CID) on the Company for information and documents. The
Company responded to this CID and has completed its document production. On
December 31, 1997, the FTC requested additional documents. The Company
believes that the above-described actions are without merit and that their
ultimate disposition will not have a material adverse effect on the Company's
results of operations, liquidity or consolidated financial position.
Environmental Matters
- ---------------------
The Company, together with others, is a party to, or otherwise involved in,
a number of proceedings brought by the Environmental Protection Agency or
comparable state agencies under the Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA or Superfund) or comparable state laws
directed at the cleanup of hazardous waste sites. While it is not possible
to predict with certainty the outcome of these cases, the Company believes
that the ultimate disposition of these matters will not have a material
13
<PAGE>
adverse effect on the Company's results of operations, liquidity or
consolidated financial position.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
14
<PAGE>
PART IA
------------
EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------
The following are the executive corporate officers and the other executive
officers of the Registrant:
Positions and Offices Presently
Name Age Held with the Registrant
- ---------------- --- ---------------------------------
Charles A. Heimbold, Jr. 64 Chairman of the Board, Chief Executive
Officer and Director
Hamed M. Adbou, Ph.D. 57 President, Technical Operations, Worldwide
Medicines Group
Harrison M. Bains, Jr. 54 Treasurer and Vice President, Corporate
Staff
Samuel L. Barker, Ph.D. 55 Executive Vice President, Franchise
Management and Strategy, Worldwide
Medicines Group
Alice C. Brennan 45 Secretary, Head of the Office of Corporate
Conduct and Vice President, Corporate Staff
Peter R. Dolan 42 President, Pharmaceutical Group - Europe
and Worldwide Consumer Medicines
Donald J. Hayden, Jr. 42 President, Intercontinental, Worldwide
Medicines Group
George P. Kooluris 53 Senior Vice President, Corporate
Development, Corporate Staff
Richard J. Lane 47 President, U.S. Pharmaceutical Group
John L. McGoldrick 57 General Counsel and Senior Vice President,
Law and Strategic Planning, Corporate Staff
Michael F. Mee 55 Chief Financial Officer and Senior Vice
President, Corporate Staff
Christine A. Poon 45 President, Medical Devices Group
Peter S. Ringrose, Ph.D. 52 President, Bristol-Myers Squibb
Pharmaceutical Research Institute
Stephen I. Sadove 46 President, Worldwide Beauty Care and
Nutritionals
Frederick S. Schiff 50 Controller and Vice President, Financial
Operations, Corporate Staff
15
<PAGE>
John L. Skule 54 Vice President, Public Affairs, Corporate
Staff
Charles G. Tharp, Ph.D. 46 Senior Vice President, Human Resources,
Corporate Staff
Kenneth E. Weg 59 Executive Vice President, President,
Worldwide Medicines Group and Director
Persons who hold titles as elected corporate officers of the Registrant
were last elected or reelected to the office held at the general election of
officers by the Registrant's Board of Directors on May 6, 1997. Officers of
the Registrant serve in such capacity at the pleasure of the Board of
Directors of the Registrant.
CHARLES A. HEIMBOLD, JR. - From 1992 to 1996, President of the
Registrant. Mr. Heimbold has been a director of the Registrant since 1989,
the Chief Executive Officer of the Registrant since 1994 and Chairman of the
Board of Directors of the Registrant since 1995.
HAMED M. ABDOU, Ph.D. - From 1993 to 1995, Vice President QA/QC,
Technical Operations PG, a division of the Registrant, and from 1995 to 1997,
Senior Vice President, North America and Intercontinental Manufacturing,
Technical Operations PG, a division of the Registrant. Dr. Abdou has been
President, Technical Operations, Worldwide Medicines Group, a division of the
Registrant since 1997.
HARRISON M. BAINS, JR. - Mr. Bains has been Treasurer and Vice
President, Corporate Staff of the Registrant since 1988.
SAMUEL L. BARKER, Ph.D. - From 1992 to 1994, President, U.S.
Pharmaceutical Group, a division of the Registrant, from 1994 to 1995,
Executive Vice President, and President, U.S. Pharmaceutical Group, a
division of the Registrant and from 1995 to 1997, President, U.S.
Pharmaceutical Group, Worldwide Medicines Group, a division of the
Registrant. Dr. Barker has been Executive Vice President, Franchise
Management and Strategy, Worldwide Medicines Group, a division of the
Registrant since 1997.
ALICE C. BRENNAN - From 1992 to 1994, Secretary of American Cyanamid
Company, a pharmaceutical and agricultural company. Ms. Brennan has been
Secretary and Vice President, Corporate Staff of the Registrant since 1994
and Head of the Office of Corporate Conduct since 1997.
PETER R. DOLAN - From 1993 to 1995, President, Bristol-Myers Products,
a division of the Registrant, from 1995 to 1996, President, Mead Johnson
Nutritional Group, a division of the Registrant, and from 1996 to 1997,
President, Nutritionals and Medical Device Group, a division of the
Registrant. Mr. Dolan has been President, Pharmaceutical Group - Europe and
Worldwide Consumer Medicines, divisions of the Registrant since 1997.
16
<PAGE>
DONALD J. HAYDEN, JR. - From 1993 to 1994, Vice President & General
Manager, Bristol-Myers Oncology Division, Specialty Pharmaceuticals, a
division of the Registrant, in 1994, Vice President & General Manager,
Bristol-Myers Oncology Division, a division of the Registrant, from 1994 to
1995, Vice President & General Manager, Bristol-Myers Oncology/Immunology
Division, a division of the Registrant, in 1995, President Oncology &
Immunology, a division of the Registrant, from 1995 to 1997, Senior Vice
President, Worldwide Franchise Management and Business Development, a
division of the Registrant, and in 1997, President, Intercontinental
Pharmaceutical Group and Senior Vice President, Worldwide Business
Development, Worldwide Medicines Group, a division of the Registrant. Mr.
Hayden has been President, Intercontinental, Worldwide Medicines Group, a
division of the Registrant since 1997.
GEORGE P. KOOLURIS - From 1980 to 1993, Vice President, Corporate
Development, Corporate Staff of the Registrant. Mr. Kooluris has been Senior
Vice President, Corporate Development, Corporate Staff of the Registrant
since 1994.
RICHARD J. LANE - From 1993 to 1994, President, Human Health - U.S.,
Merck Co., Inc., in 1994, President, Human Health N.A., Merck & Co., Inc., a
pharmaceutical company, from 1994 to 1995, consultant Schering-Plough
Corporation, a pharmaceutical company, and in 1995, Senior Vice President
Marketing Operations, Sandoz Pharmaceuticals, a pharmaceutical, nutritionals
and chemicals company. From 1995 to 1997, Senior Vice President Marketing,
U.S. Pharmaceuticals, a division of the Registrant, and in 1997, President,
U.S. Primary Care, a division of the Registrant. Mr. Lane has been
President, U.S. Pharmaceuticals, a division of the Registrant since 1997.
JOHN L. McGOLDRICK - From 1974 to 1994, Partner, McCarter & English and
from 1995 to 1997, General Counsel and Senior Vice President, Corporate Staff
of the Registrant. Mr. McGoldrick has been General Counsel and Senior Vice
President, Law and Strategic Planning, Corporate Staff of the Registrant
since 1997.
MICHAEL F. MEE - From 1990 to 1993, director and from 1992 to 1993,
Chairman of the Board and Chief Financial Officer of Wang Laboratories, Inc.,
a provider of computer-based information processing products and services.
Mr. Mee has been Chief Financial Officer and Senior Vice President, Corporate
Staff of the Registrant since 1994.
CHRISTINE A. POON - From 1993 to 1994, Vice President, Business
Strategy, Specialty Pharmaceuticals, a division of the Registrant, from 1994
to 1995, President & General Manager - Canada, Pharmaceutical Group -
Intercontinental, a division of the Registrant, in 1995 Vice President OPS-
Planning - Intercontinental & President, Canada, a division of the
Registrant, from 1995 to 1996, Vice President, Canada and Northern Latin
America, Intercontinental, a division of the Registrant, from 1996 to 1997,
Senior Vice President, Intercontinental Northern Latin America and Canada, a
division of the Registrant, and in 1997, President, Latin America and Canada,
Worldwide Pharmaceutical Group, a division of the Registrant. Ms. Poon has
been President, Medical Devices Group, a division of the Registrant since
1997.
17
<PAGE>
PETER S. RINGROSE, Ph.D. - From 1992 to 1994, Senior Vice President,
Medicinal Research & Development, Europe and from 1994 to 1996, Senior Vice
President, Worldwide Discovery and Medicinal Research & Development, Europe
of Pfizer Inc., a health care company. Dr. Ringrose has been President,
Bristol-Myers Squibb Pharmaceutical Research Institute, a division of the
Registrant since 1997.
STEPHEN I. SADOVE - From 1991 to 1994, President, Clairol Incorporated,
a division of the Registrant, from 1994 to 1996, President, Worldwide Clairol
and 1996 to 1997, President, Worldwide Beauty Care, a division of the
Registrant. Mr. Sadove has been President, Worldwide Beauty Care and
Nutritionals, a division of the Registrant since 1997.
FREDERICK S. SCHIFF - From 1990 to 1997, Controller and Vice President,
Corporate Staff of the Registrant. Mr. Schiff has been Controller and Vice
President, Financial Operations, Corporate Staff of the Registrant since
1997.
JOHN L. SKULE - Mr. Skule has been Vice President, Public Affairs,
Corporate Staff of the Registrant since 1993.
CHARLES G. THARP, Ph.D. - Dr. Tharp has been Senior Vice President,
Human Resources, Corporate Staff of the Registrant since 1993.
KENNETH E. WEG - From 1993 to 1996, President, Bristol-Myers Squibb
Pharmaceutical Group, a division of the Registrant. Mr. Weg has been
President, Worldwide Medicines Group, a division of the Registrant, since
1997 and a director of the Registrant since 1995 and Executive Vice President
of the Registrant since 1995.
In addition to the positions and offices heretofore listed, all of the
foregoing executive corporate officers and other executive officers of the
Registrant are directors and/or officers of one or more affiliates of the
Registrant, with the exception of Mr. Skule and Dr. Tharp.
18
<PAGE>
PART II
------------
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS.
MARKET PRICES
- -------------
Bristol-Myers Squibb common and preferred stocks are traded on the New York
Stock Exchange and the Pacific Exchange, Inc. (symbol: BMY). A quarterly
summary of the high and low market prices is presented below:
1997 1996
------------------- ---------------------
High Low High Low
-------- -------- --------- ---------
Common:
First Quarter $69 1/4 $53 1/4 $45 1/8 $40 9/16
Second Quarter 85 3/4 57 1/4 45 1/8 39
Third Quarter 88 5/8 71 49 41 1/2
Fourth Quarter 98 3/16 80 58 3/16 48 1/4
Preferred:
During all four quarters of 1997 and the first quarter of 1996, there were
no trades of the Company's preferred stock. The Company's preferred stock
traded at a high of $369 and a low of $350 1/2 during the second quarter of
1996, a high of $370 and low of $364 during the third quarter of 1996 and
a high and low of $450 during the fourth quarter of 1996.
HOLDERS OF COMMON STOCK
- -----------------------
The approximate number of record holders of common stock at December 31,
1997 was 127,036.
The number of record holders is based upon the actual number of holders
registered on the books of Bristol-Myers Squibb at such date and does not
include holders of shares in "street names" or persons, partnerships,
associations, corporations or other entities identified in security position
listings maintained by depository trust companies.
19
<PAGE>
DIVIDENDS
- ---------
Dividend payments per share in 1997 and 1996 were:
Common Preferred
------------------- ----------------
1997 1996 1997 1996
------- --------- ----- -----
First Quarter $ .38 $ .37 1/2 $ .50 $ .50
Second Quarter .38 .37 1/2 .50 .50
Third Quarter .38 .37 1/2 .50 .50
Fourth Quarter .38 .37 1/2 .50 .50
------- --------- ----- -----
Year $ 1.52 $1.50 $2.00 $2.00
======= ========= ===== =====
In December 1997, the Board of Directors of the Company declared a quarterly
dividend of $.39 per share on the common stock of the Company, payable on
February 1, 1998 to shareholders of record as of January 2, 1998. The 1998
indicated annual payment of $1.56 per share represents the twenty-sixth
consecutive year that the Company has raised the dividend on its common
stock.
20
<PAGE>
Item 6. SELECTED FINANCIAL DATA.
FIVE-YEAR FINANCIAL SUMMARY
OPERATING RESULTS
- ---------------------------
(in millions,
except per share amounts)
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
Net Sales $16,701 $15,065 $13,767 $11,984 $11,413
------- ------- ------- ------- -------
Expenses:
Cost of products sold 4,464 3,965 3,637 3,122 3,029
Marketing, selling and
administrative 4,173 3,925 3,670 3,166 3,098
Advertising and product
promotion 2,241 1,946 1,646 1,367 1,255
Research and development 1,385 1,276 1,199 1,108 1,128
Other(*) (44) (60) 1,213 666 332
------- ------- ------- ------- -------
12,219 11,052 11,365 9,429 8,842
------- ------- ------- ------- -------
Earnings Before
Income Taxes(*) 4,482 4,013 2,402 2,555 2,571
Provision for income taxes 1,277 1,163 590 713 612
------- ------- ------- ------- -------
Net Earnings(*) $ 3,205 $ 2,850 $ 1,812 $ 1,842 $ 1,959
======= ======= ======= ======= =======
Dividends paid on common
and preferred stock $ 1,515 $ 1,507 $ 1,495 $ 1,485 $ 1,485
Earnings per
common share - Basic(*) 3.22 2.84 1.79 1.81 1.90
Earnings per
common share - Diluted(*) 3.14 2.80 1.78 1.81 1.89
Dividends per common share 1.52 1.50 1.48 1.46 1.44
(*) Includes a gain on the sale of a business of $225 million before taxes,
$140 million after taxes, in 1997. Includes a special charge for
pending and future product liability claims of $950 million before
taxes, $590 million after taxes, or $.58 per common share, basic and
diluted in 1995; $750 million before taxes, $488 million after taxes,
or $.48 per common share, basic and diluted in 1994; and $500 million
before taxes, $310 million after taxes, or $.30 per common share, basic
and diluted in 1993. Includes a provision for restructuring of $225
million before taxes, $140 million after taxes, in 1997 and $310 million
before taxes, $198 million after taxes, in 1995.
21
<PAGE>
Item 6. SELECTED FINANCIAL DATA. (Con't.)
FIVE-YEAR FINANCIAL SUMMARY
FINANCIAL POSITION AT DECEMBER 31
- ---------------------------------
(in millions)
except per share amounts)
1997 1996 1995 1994 1993
------- ------- ------- ------ ------
Current assets $ 7,736 $ 7,528 $ 7,018 $ 6,710 $ 6,570
Property, plant and
equipment 4,156 3,964 3,760 3,666 3,374
Total assets 14,977 14,685 13,929 12,910 12,101
Current liabilities 5,032 5,050 4,806 4,274 3,065
Long-term debt 1,279 966 635 644 588
Total liabilities 7,758 8,115 8,107 7,206 6,161
Stockholders' equity $ 7,219 $ 6,570 $ 5,822 $ 5,704 $ 5,940
Average common shares
outstanding - Basic 996 1,004 1,012 1,017 1,030
Average common shares
outstanding - Diluted 1,021 1,018 1,016 1,020 1,038
Reference is made to Note 2 Acquisitions and Divestitures, Note 8 Property,
Plant and Equipment and Note 16 Contingencies, appearing in the Notes to
Consolidated Financial Statements included in Part II, Item 8 of this Form
10-K Annual Report.
22
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Summary
In 1997, Bristol-Myers Squibb achieved record levels of sales, earnings and
earnings per share. Worldwide sales grew to $16.7 billion, an 11% increase
over 1996. Domestic sales, which represent 58% of worldwide sales, increased
14% to $9.6 billion, while international sales increased 7% to $7.1 billion.
Exchange rate fluctuations had an unfavorable effect of 3% on worldwide sales
and 8% on international sales. Sales growth resulted from a 14% increase due
to volume with no changes overall from pricing activity. In 1997,
significant contributions to the Company's sales growth were made by the
Company's most important products, many of which experienced double- and even
triple-digit sales growth on a worldwide basis.
Earnings before income taxes increased 12% to $4,482 million in 1997, net
earnings increased 12% to $3,205 million, basic earnings per share increased
13% to $3.22 and diluted earnings per share increased 12% to $3.14. Net
earnings and basic earnings per share have increased at compound annual
growth rates of 12% and 13%, respectively, over the past 10 years.
Bristol-Myers Squibb's financial position remains strong. At December 31,
1997, the Company held $1.8 billion in cash, time deposits and marketable
securities. Cash provided by operating activities totaled $2.5 billion and
continued to be the primary source of funding to finance dividend
distributions of $1.5 billion and treasury stock repurchases of $1.2 billion.
Dividends per common share were $1.52 in 1997, increasing from $1.50 per
share paid in 1996. The Company's payout ratio, calculated as dividends per
common share over basic earnings per common share, were 47.2%, 52.8% and
57.6%, in 1997, 1996 and 1995, respectively, excluding the 1995 special
charge and provision for restructuring. In December 1997, the Company
announced another dividend increase, the twenty-sixth consecutive year that
dividends have increased. The 1998 indicated annual payment is $1.56 per
share. Bristol-Myers Squibb's strong financial position is evidenced further
by its triple-A credit rating from both Moody's and Standard & Poor's, making
Bristol-Myers Squibb one of only seven U.S. companies with this distinction.
In 1997, Bristol-Myers Squibb established its long-term strategic objective
to be the number one company in earnings per share growth within its
competitive universe. To achieve this objective, the Company is making
strategic investments behind a number of high priority projects. The
Company's top priority project is to become the most productive, respected
and innovative pharmaceutical research and development organization in the
world. Other high priority projects focus on high growth products in fast
growing markets, including PRAVACHOL*, TAXOL*(R) (paclitaxel), GLUCOPHAGE and
HERBAL ESSENCES*, as well as enhancing the balanced strength of its core
businesses. During 1997, increases were made in advertising and promotion
expenditures, sales force personnel and research and development facilities
and personnel to help ensure the success of these high priority projects.
Total equity market capitalization was $94 billion as of December 31, 1997,
a 72.3% increase over last year. Total return to stockholders, share price
appreciation together with reinvested dividends, was 77.0% for 1997, which
compares favorably to the 33.4% return of the Standard & Poor's 500 Index.
23
<PAGE>
Employment levels at December 1997 increased to 53,600 from 51,200 at
December 1996, with increases in the pharmaceutical sales force and increases
due to acquisitions.
During the year, the Company made a number of strategic acquisitions. In
January 1998, the Company completed the acquisition of Redmond Products,
Inc., a leading hair care manufacturer in the United States which markets
well-known products including AUSSIE Mega Shampoo, AUSSIE 3 Minute Miracle
Conditioner and AUSSIE Sprunch Spray, among others. In Latin America, the
Company acquired Abeefe S.A., Peru's largest pharmaceutical manufacturer and
marketer of a broad range of prescription and nonprescription anti-infective,
respiratory, anti-inflammatory and dermatological products; CHOCO MILK*,
Mexico's leading milk-based nutritional supplement; and SAL DE UVAS PICOT*,
a leading effervescent antacid product.
Net Sales and Earnings
Worldwide sales increased 11% in 1997 to $16.7 billion, compared with
increases of 9% and 15% in 1996 and 1995, respectively. The consolidated
sales growth resulted from a 14% increase due to volume, a 3% decrease due to
unfavorable foreign exchange rate fluctuations and no changes overall from
pricing activity. In 1996, the 9% increase in sales reflected an 11%
increase due to volume, a 2% decrease due to unfavorable foreign exchange
rate fluctuations and no changes overall from pricing activity. In 1995, the
15% increase in sales reflected a 13% increase due to volume, while price
increases and exchange rate fluctuations each contributed 1% to growth on a
worldwide basis. Domestic sales increased 14% in 1997, and 10% in both 1996
and 1995, while international sales increased 7% in 1997, 9% in 1996 and 22%
in 1995. In general, the businesses of the Company's industry segments are
not seasonal.
Net earnings and basic earnings per share in 1997 increased 12% to $3,205
million and 13% to $3.22 per share from $2,850 million and $2.84 per share in
1996. 1995 net earnings and basic earnings per share were $1,812 million and
$1.79 per share ($2,600 million and $2.57 per share excluding the 1995
provision for restructuring and special charge). Diluted earnings per share
in 1997, 1996 and 1995 were $3.14, $2.80 and $1.78, respectively. Net
earnings margins increased to 19.2% in 1997 from 18.9% in both 1996 and 1995,
excluding the 1995 charges.
The effective income tax rate on earnings before income taxes was 28.5% in
1997 compared to 29.0% and 24.6% in 1996 and 1995, respectively. Excluding
the 1995 special charge and provision for restructuring, the effective income
tax rate on earnings before income taxes was 29.0% in 1995. The lower 1997
effective income tax rate compared to 1996 and 1995 resulted from increased
income in lower tax rate jurisdictions.
As described in the notes to the financial statements, in the fourth quarter
of 1997, the Company divested Linvatec Corporation, its arthroscopy and
surgical powered instrument business, for $370 million, resulting in a gain
of $225 million before taxes, $140 million after taxes. At the same time,
the Company recorded a provision for restructuring of $225 million before
taxes, $140 million after taxes. The provision for restructuring primarily
relates to the consolidation of plants and facilities and related employee
termination costs. In the fourth quarter of 1995, the Company recorded a
special charge to earnings of $950 million before taxes, $590 million after
taxes, or $.58 per common share, basic and diluted (see Note 16 -
Contingencies), as well as a provision for restructuring of $310 million
before taxes, $198 million after taxes.
24
<PAGE>
Expenses
Total costs and expenses as a percentage of sales were 73.2% in 1997 compared
with 73.4% in both 1996 and 1995, excluding the 1995 special charge and
provision for restructuring.
As a percentage of sales, cost of products sold increased to 26.7% in 1997
from 26.3% in 1996, principally due to incremental low margin Oncology
Therapeutic Network sales, partially offset by increased sales of higher
margin promoted pharmaceutical products. In 1996, cost of products sold as
a percentage of sales remained relatively unchanged at 26.3% compared to
26.4% in 1995. Excluding 1996 acquisitions, cost of products sold as a
percentage of sales decreased to 25.5% in 1996 due to a favorable product mix
and manufacturing efficiencies.
Advertising and promotion expenses in support of new and existing products
increased 15% to $2,241 million in 1997 from $1,946 million in 1996, and as
a percentage of sales, increased to 13.5% from 12.9%, principally due to
increased spending on direct-to-consumer campaigns for several pharmaceutical
products as well as incremental advertising support of beauty care products.
In 1996, advertising and promotion expenses increased 18% from 1995 levels
primarily due to incremental spending in the Pharmaceuticals and Beauty Care
Segments, supporting direct-to-consumer campaigns and new product launches,
respectively.
Marketing, selling and administrative expenses increased 6% to $4,173 million
in 1997 from $3,925 million in 1996, and as a percentage of sales, decreased
to 25.0% in 1997 from 26.1% in 1996 and 26.7% in 1995 as a direct result of
the Company's productivity programs and higher sales volumes.
The Company's investment in research and development totaled $1,385 million
in 1997, an increase of 9% over 1996, and as a percentage of sales, decreased
to 8.3% in 1997 from 8.5% in 1996. This spending level reflects the
Company's commitment to research over a broad range of therapeutic areas and
clinical development in support of new products. The Company acquired a new
research facility in Hopewell, N.J., and announced its intention to hire
2,000 additional scientists over the next several years. Over the past 10
years, research and development expenses have increased at a compound annual
growth rate of 10%. In 1997, research and development spending dedicated to
the research and development of pharmaceutical products was 12.0% of
pharmaceutical sales compared to 12.3% and 12.9% in 1996 and 1995,
respectively. During 1997, 1996 and 1995, the Company entered into a number
of research alliances, licensing agreements and biotechnology collaborations.
These agreements are providing important new products as well as early-stage
compounds for further development and new processes that will help the
Company screen for new drugs more effectively.
Business Segments
All five of the Company's business segments - Pharmaceuticals, Consumer
Medicines, Nutritionals, Medical Devices and Beauty Care - reported sales
increases, excluding foreign exchange, during the year. By the end of 1997,
Bristol-Myers Squibb had 63 products with more than $50 million in annual
sales, 33 of which had more than $100 million in annual sales.
25
<PAGE>
Sales in the Pharmaceuticals Segment, which is the Company's largest segment
at 59% of total Company, increased 15% to $9,932 million in 1997. Sales
growth resulted from a 17% increase in volume and a 1% increase in selling
prices, offset by a 3% decrease due to the unfavorable effect of foreign
exchange rate fluctuations. Domestic sales increased 23% and international
sales increased 13%, excluding foreign exchange, primarily due to volume
growth.
Sales of PRAVACHOL*, a cholesterol-lowering agent, and the Company's largest
selling product, were $1.4 billion, an increase of 34%. Domestic sales
increased 39% to $875 million. Results of the Long-term Intervention with
Pravastatin in Ischaemic Disease (LIPID) trial showed PRAVACHOL* treatment
reduced consequences of coronary heart disease, including heart attack,
stroke and death, by 20% to 30%. Sales of MONOPRIL*, a second generation
angiotensin converting enzyme (ACE) inhibitor with once-a-day dosing,
increased 28% to $328 million, with strong growth in both domestic and
international markets. The Company and Sanofi S.A. received U.S. marketing
clearance from the U.S. Food and Drug Administration (FDA) for irbesartan and
clopidogrel. Irbesartan, sold as AVAPRO in the United States, is an
angiotensin II receptor blocker for the treatment of hypertension, and
clopidogrel, to be sold as PLAVIX in the United States, is a platelet
inhibitor for the reduction of stroke and heart attack in patients with
atherosclerosis. AVAPRO was launched in the United States during the fourth
quarter, and PLAVIX is planned to launch in early 1998. Sales of
cardiovascular drugs, the largest product group in the segment, increased 3%
to $2,905 million. Due to the loss of patent exclusivity in several European
countries in the first quarter of 1997, and in the United States in February
1996, sales of captopril, an ACE inhibitor sold primarily under the trademark
CAPOTEN*, declined $296 million to $795 million. Excluding CAPOTEN* sales,
cardiovascular drugs increased 22%.
Sales of anti-cancer drugs increased 23% to $2,420 million. Sales of TAXOL*,
the Company's leading anti-cancer agent, increased 16% to $941 million. In
June and September 1997, the Company was granted use patents in the United
States covering specific dosage regimes for TAXOL*, and in August 1997, the
FDA cleared TAXOL* for use in second-line treatment of AIDS-related Kaposi's
sarcoma. Sales of PARAPLATIN*, which is used in combination therapy for the
treatment of ovarian cancer, increased 17%. Sales in the Oncology
Therapeutics Network (OTN), a specialty distributor of anti-cancer medicines
and related products, acquired in October 1996, were $480 million.
Anti-infective drug sales were $2,235 million, an increase of 20% over the
prior year. Strong growth was recorded for ZERIT* and VIDEX*, the Company's
two antiretroviral agents. Sales of ZERIT*, the Company's fastest growing
product, increased by $258 million, or 185% to $398 million, while sales of
VIDEX* grew 35% to $152 million. In December 1997, ZERIT* became the most
commonly prescribed thymidine nucleoside reverse transcriptase inhibitor in
HIV therapy in the United States, surpassing AZT. In August 1997, ZERIT*
received approval from the European Union for use in combination therapy for
first-line treatment of HIV, and in January 1997, a new oral solution of
ZERIT*, representing a significant addition to the limited therapeutic
options available to treat HIV-infected infants and children, was introduced.
Sales of CEFZIL*, an oral cephalosporin used in the treatment of respiratory
infections, and MAXIPIME*, a fourth generation injectable cephalosporin, also
contributed to the growth of anti-infectives.
26
<PAGE>
Sales of central nervous system drugs increased 26% to $955 million, due to
the strong growth of BUSPAR*, the Company's novel anti-anxiety agent, and
SERZONE*, an antidepressant that offers a low incidence of side effects.
Sales of BUSPAR* increased 20% to $443 million, while sales of SERZONE*
increased 70% to $185 million. In May 1997, studies presented at an American
Psychiatric Association meeting demonstrated that SERZONE* increased sleep
efficiency in people suffering from depression.
GLUCOPHAGE, an oral medication for type 2 (non-insulin-dependent) diabetes
continued to experience strong growth, with sales increasing 74% to $579
million. The Company has sponsored a public awareness program that offers
information to physicians and their patients on the proper management of type
2 diabetes, a serious undertreated medical condition that afflicts more than
15 million Americans. GLUCOPHAGE is the leading branded product in the United
States for this disease.
In 1996, Pharmaceuticals Segment sales increased 12% over 1995 levels.
Increases in sales of PRAVACHOL*, TAXOL*, PARAPLATIN*, ZERIT*, MONOPRIL*,
BUSPAR*, CEFZIL*, GLUCOPHAGE, SERZONE* and VIDEX* were partially offset by
decreases in sales of CAPOTEN*, due to the loss of patent exclusivity,
DURICEF*, QUESTRAN*, VEPESID* and ISOVUE*.
The margin on earnings before taxes decreased to 29.7% in 1997 from 30.4% in
1996 primarily due to increased investment in advertising and promotion
expenses in support of high priority products, and lower margin sales for
OTN. In 1996, the margin on earnings before taxes increased to 30.4% from
29.6% in 1995 due to a decrease, as a percentage of sales, in research and
development spending.
Sales in the Consumer Medicines Segment increased 6% to $1,351 million,
reflecting a 13% increase due to volume, a 6% decrease due to the unfavorable
effect of foreign exchange rate fluctuations and a 1% decrease in selling
prices. International sales increased 6% (17% excluding the unfavorable
effect of foreign exchange), while domestic sales increased 5%. Sales of
analgesic products increased 3% (9% excluding the effect of foreign
exchange), due to volume growth from EFFERALGAN* and ASPIRINE UPSA* from the
UPSA Group, as well as domestic growth of EXCEDRIN*. In January 1998, the
Company received clearance from the FDA to market EXCEDRIN* Migraine, the
first and only medication for migraine headache pain available to consumers
without a prescription. The SEA BREEZE* and KERI* lines of skin care
products also performed well, with strong growth in the Japanese marketplace.
VAGISTAT-1*, the first and only one-dose over-the-counter medication for
vaginal yeast infections, was introduced in April 1997.
In 1996, worldwide sales of Consumer Medicines increased 5% from 1995 levels,
(an increase of 11%, excluding foreign exchange), primarily due to increased
sales of EXCEDRIN*, BUFFERIN* and analgesics from the UPSA Group including
EFFERALGAN*, DAFALGAN* and ASPIRINE UPSA*.
The margin on earnings before taxes improved to 9.3% in 1997, from 7.7% in
1996 and 5.8% in 1995, as a result of efficiency gains due to productivity
programs.
Sales in the Nutritionals Segment increased 7% to $1,911 million, reflecting
a 10% increase due to volume, a 2% decrease due to the unfavorable effect of
foreign exchange rate fluctuations and a 1% decrease in selling prices.
International sales increased 15% (21% excluding the unfavorable effect of
foreign exchange), while domestic sales increased 1%. Mead Johnson continues
27
<PAGE>
to increase its worldwide and U.S. leadership position in the infant formula
market. Total infant formula sales increased due to growth of NUTRAMIGEN*,
LACTOFREE* and PROSOBEE* special infant formulas. Sales of ENFAMIL*, the
Company's largest selling infant formula, decreased 3% to $674 million
worldwide, while increasing 9% internationally to $167 million, excluding
foreign exchange. BOOST* and SUSTACAL* adult nutritional beverages, and
ALACTA NF*, a nutritious beverage for preschool-age children sold outside the
U.S., also contributed to sales growth.
In 1996, worldwide sales of Nutritionals increased 13% from 1995 levels,
primarily due to increased sales of infant formulas, including ENFAMIL*, and
adult consumer nutritionals.
The margin on earnings before taxes improved to 21.1% in 1997, from 20.7% in
1996 and 19.9% in 1995, primarily due to higher sales volumes, improved
manufacturing efficiencies and gains due to productivity programs.
In the Medical Devices Segment, sales of $1,802 million reflected a 3%
decrease from prior year levels. Volume gains of 2% were achieved, while
sales were impacted by a 1% decrease due to changes in selling prices and a
4% decrease due to the effect of foreign exchange. International sales
remained constant (excluding the effect of foreign exchange, sales increased
8%), while domestic sales decreased 6%. The Company's ConvaTec division is
the worldwide market share leader in ostomy and advanced wound care products.
Sales of ostomy and wound care products increased 6% and 16%, respectively,
excluding foreign exchange. The Company's Zimmer division continues to be
the world market share leader in knee and hip replacements. Worldwide sales
of knee prosthetic joint implants increased 2%, excluding the effect of
foreign exchange, led by growth of the NEXGEN* Complete Knee Solution. Hip
replacement sales decreased 4%, excluding the effect of foreign exchange.
Zimmer is restructuring to focus on its core businesses of orthopaedic
implants and fracture fixation devices. As discussed in the notes to the
financial statements, the Company completed the sale of Linvatec Corporation,
its arthroscopy and surgical powered instruments business, in December 1997.
Also, as part of its restructuring, Zimmer announced a 10% reduction in its
domestic work force, as well as a restructuring of its European business.
In 1996, worldwide sales of Medical Devices declined by $46 million and 2%,
although excluding foreign exchange, remained at 1995 levels. In 1995,
medical device sales increased 13% as a result of increased sales of knee
implants, and ostomy and wound care products. Excluding the acquisition of
Calgon Vestal Laboratories, and a divestiture in 1994, sales increased 7% in
1995.
The margin on earnings before taxes in the Medical Devices Segment decreased
to 20.0% in 1997, from 22.5% in 1996 and 22.8% in 1995, due to price
decreases, lower sales volumes and incremental manufacturing costs in
connection with recently introduced products.
Sales in the Beauty Care Segment increased 16% in 1997 to $1,705 million,
reflecting a 16% increase due to volume, a 1% increase due to pricing and a
1% decrease due to foreign exchange rate fluctuations. Excluding the effect
of foreign exchange, international sales increased 28% over 1996, while
domestic sales increased 12%. The Company's Clairol division is the number
one hair products company in the United States and continues to maintain its
market share leadership in U.S. haircolorings. Sales of the Company's hair
care products were especially strong, increasing 36% in 1997, primarily due
28
<PAGE>
to sales of the HERBAL ESSENCES* complete line of shampoos, conditioners,
styling aids and body wash, which increased 168% to $351 million, aided by
its launch into additional countries in 1997. Sales of INFUSIUM 23* hair
care products also contributed to growth of hair care products. In
September, Clairol launched DAILY DEFENSE*, a complete line of shampoos and
conditioners designed to purify and fortify hair to protect it from
environmental and styling stresses. Also in September, the Company's Matrix
Essentials division launched VITAL NUTRIENTS*, an innovative hair care line
that provides micro-nutrients, daily protection and internal moisture
balance. Haircoloring product sales increased 4%, benefiting from the
continued success of NICE N EASY*, NATURAL INSTINCTS*, salon haircolorings
and HYDRIENCE*, which increased 86% following its launch into international
markets.
In 1996, sales in the Beauty Care Segment increased 13% from 1995 levels,
primarily due to increased sales of haircoloring, hair and skin care
products.
The margin on earnings before taxes in 1997 was 17.1% compared to 17.0% in
1996, and increased from 15.3% in 1995 primarily due to higher volumes and
productivity programs, offset by the cost of new product introductions and
other spending programs.
Geographic Areas
Bristol-Myers Squibb products are available in virtually every country in the
world; its largest markets are the United States, France, Japan, Germany and
Canada.
Sales in the U.S., net of inter-area sales, increased 14% in 1997. Sales in
the Pharmaceuticals, Beauty Care and Nutritionals segments, comprised 59%,
12% and 11%, respectively, of the region's sales. Products with strong
growth in the region included PRAVACHOL*, GLUCOPHAGE, ZERIT*, HERBAL
ESSENCES*, TAXOL*, BUSPAR*, PARAPLATIN*, NUTRAMIGEN*, BOOST* and incremental
sales from the OTN acquisition. The margin on earnings before taxes
decreased to 24.5% in 1997 from 26.0% in 1996 primarily due to increases, as
a percentage of sales, in cost of products sold and advertising and promotion
expenses. In 1996, sales in the U.S. increased 10%, net of inter-area sales,
primarily due to anti-cancer and anti-infective drugs from the
Pharmaceuticals Segment, infant formulas from the Nutritionals Segment and
haircoloring and hair care products from the Beauty Care Segment. Strong
sales increases were achieved despite a 68% decline in sales of CAPOTEN*.
The margin on earnings before taxes increased to 26.0% in 1996 from 25.6% in
1995.
Sales in Europe, Mid-East and Africa, net of inter-area sales, increased 2%
(12% excluding foreign exchange). Pharmaceuticals and Consumer Medicines,
which comprised nearly 73% of sales in the region, increased 10% and 17%,
respectively, excluding foreign exchange. Products with strong growth in the
region included ZERIT*, PRAVACHOL*, TAXOL*, MAXIPIME*, EFFERALGAN*, PLUSSSZ*,
a vitamin-enriched effervescent drink, and the introductions of HERBAL
ESSENCES* and HYDRIENCE*. Increases in sales of these products were
partially offset by decreases in sales of CAPOTEN* due to the loss of
exclusivity in several European countries in early 1997. The margin on
earnings before taxes increased to 23.8% in 1997 from 21.9% in 1996 primarily
due to manufacturing efficiencies as a result of the Company's productivity
programs. In 1996, sales in Europe, Mid-East and Africa, net of inter-area
29
<PAGE>
sales, increased 8% (10% excluding foreign exchange), due to strong sales
growth of products from the Pharmaceuticals Segment including anti-cancer and
antiretroviral drugs, which were partially offset by decreases in sales of
CAPOTEN* and penicillins and from the Medical Devices Segment, including
ostomy and wound care products. In the Nutritionals Segment, sales of
PLUSSSZ* and vitamins from the 1996 acquisition of Pharmavit, as well as
analgesic products in the Consumer Medicines Segment, contributed to sales
growth in the region. The margin on earnings before taxes decreased to 21.9%
in 1996 from 22.7% in 1995.
Sales in Other Western Hemisphere countries, net of inter-area sales,
increased 25% in 1997 (26% excluding foreign exchange). Pharmaceuticals,
which comprised nearly 66% of the region's sales, increased 22%. Products
with strong growth included PRAVACHOL*, VIDEX*, ZERIT*, TAXOL*, introductory
sales of HYDRIENCE* and HERBAL ESSENCES*, and sales from the acquisitions of
CHOCO MILK* and SAL DE UVAS PICOT*. The margin on earnings before taxes
increased to 14.2% in 1997 from 11.1% in 1996 reflecting improved gross
margins due to manufacturing efficiencies. In 1996, sales in Other Western
Hemisphere countries increased 19% (25% excluding foreign exchange), due to
increased sales of cardiovascular, anti-cancer and anti-infective drugs from
the Pharmaceuticals Segment, infant formulas from the Nutritionals Segment,
and haircoloring and hair care products from the Beauty Care Segment. Sales
of pharmaceutical products from the 1996 acquisition of Argentia S.A. also
contributed to sales growth in the region. The margin on earnings before
taxes decreased to 11.1% in 1996 from 12.2% in 1995.
Sales in the Pacific region increased 5%, net of inter-area sales, (13%
excluding foreign exchange) in 1997. Pharmaceuticals and Nutritionals
comprised 38% and 30%, respectively, of the region's sales. Products with
strong growth included PRAVACHOL*, SEA BREEZE*, ZERIT*, TAXOL*, KERI*
products, ALACTA NF*, ENFAMIL* and the launch of HERBAL ESSENCES*. The
margin on earnings before taxes decreased to 3.2% in 1997 from 4.4% in 1996
due to increases, as a percentage of sales, in cost of products sold and
sales force expenses. In 1996, sales in the Pacific region, net of inter-
area sales, increased 2% (12% excluding foreign exchange), as a result of
increased sales from analgesics, infant formulas, school-age nutritional
beverages, skin care, anti-infective and cardiovascular drugs. The margin on
earnings before taxes decreased to 4.4% in 1996 from 5.8% in 1995, primarily
as a result of increases, as a percentage of sales, in advertising and
promotion expenditures in support of new and existing products.
Financial Position
Cash and cash equivalents, time deposits and marketable securities totaled
$1.8 billion at December 31, 1997, compared to $2.2 billion at both December
31, 1996 and 1995. Working capital was $2.7 billion at December 31, 1997,
compared to $2.5 billion and $2.2 billion at December 31, 1996 and 1995,
respectively. Cash and cash equivalents, time deposits and marketable
securities, and the conversion of other working capital items are expected to
fund near-term operations of the Company.
In August 1997, the Company issued $300 million principal amount of 6.875%
Debentures due August 1, 2097, and in November 1996, the Company issued $350
million principal amount of 6.80% Debentures due November 15, 2026. Proceeds
from the sale of these securities have been used for general corporate
purposes, including working capital, capital expenditures, stock repurchase
programs, repayment or refinancing of borrowings, and acquisitions.
30
<PAGE>
The Company is exposed to market risk, including changes in currency exchange
rates and interest rates. To reduce financial risks, the Company enters into
certain derivative financial instruments where available on a cost effective
basis to hedge its underlying economic exposure. These instruments are also
managed on a consolidated basis to efficiently net exposures and thus take
advantage of any natural offsets.
It is the Company's policy to hedge underlying economic exposures to reduce
foreign exchange and interest rate risk. Derivative financial instruments
are not used for trading purposes. Gains and losses on hedging transactions
are offset by gains and losses on the underlying exposures being hedged.
Foreign exchange option contracts and, to a lesser extent, forward contracts,
are used to hedge anticipated transactions. The Company's primary foreign
currency exposures in relation to the U.S. dollar are the French franc,
Deutsche mark, Spanish peseta and Japanese yen.
The table below summarizes the Company's outstanding foreign exchange option
contracts as of December 31, 1997. The fair value of option contracts, which
will change over time, is estimated based on forward currency rates and other
relevant market factors. The fair value of option contracts should be viewed
in relation to the fair value of the underlying hedged transactions and the
overall reduction in exposure to adverse fluctuations in foreign currency
exchange rates.
Dollars in Millions
Weighted
Average Notional Carrying Fair
Strike Price Amount Value Value Maturity
------------ -------- -------- ----- --------
Option Contracts Purchased
Right to Sell:
French franc FF 5.89 $461 $6 $19 1998
Deutsche mark DM 1.77 286 6 11 1998
Spanish peseta Pts 147.07 113 2 6 1998
Other Currencies Various 175 3 12 1998
Right to Buy:
Japanese yen Y 127.60 103 2 3 1998
Japanese yen for
Deutsche marks DM 73.77 113 2 3 1998
Other Currencies Various 28 1 1 1998
------ --- ---
$1,279 $22 $55
====== === ===
The Company maintains cash and cash equivalents, time deposits and marketable
securities with various financial institutions. These financial institutions
are located primarily in the U.S., Puerto Rico and Ireland, and Company
policy is designed to limit exposure to any one financial institution.
Cash and cash equivalents, time deposits and marketable securities at
December 31, 1997 were denominated primarily in U.S. dollar instruments with
near-term maturities. The average interest yield on cash and cash
equivalents was 5.6% at December 31, 1997 while interest yields on time
deposits and marketable securities averaged 5.1% at December 31, 1997.
31
<PAGE>
Short-term borrowings and long-term debt at December 31, 1997 are denominated
primarily in U.S. dollars but also include French franc short-term borrowings
due to banks of $191 million and Japanese yen long-term debt of $171 million.
Disclosures related to short-term borrowings and long-term debt are included
in the notes to the financial statements.
Internally generated cash provided by operations was $2.5 billion in 1997,
$2.6 billion in 1996 and $2.5 billion in 1995. Cash provided by operations
continued to be the Company's primary source of funds to finance operating
needs and expenditures for new plants and equipment. As part of the
Company's ongoing commitment to improve plant efficiency and maintain
superior research facilities, the Company has invested nearly $1.9 billion in
capital expansion over the past three years.
Cash provided by operations was also used to pay dividends of over $4.5
billion over the past three years, to fund acquisitions at a cost of $920
million over the last three years, and to finance the share repurchase
program. The Company's share repurchase program authorizes the purchase of
common stock from time to time in the open market or through private
transactions as market conditions permit. During 1997, the Company purchased
16.8 million shares of common stock at a cost of $1,162 million, bringing the
total shares acquired since the program's inception to 123 million. During
the past three years, the Company has repurchased 43 million shares at a cost
of $2.3 billion.
Return on Stockholder's Equity was 46.5% in 1997, 46.0% in 1996 and 45.1% in
1995, excluding the 1995 special charge and the provision for restructuring.
The Company will adopt recently issued Statement of Financial Accounting
Standards No. 132, Employers' Disclosures about Pensions and Other
Postretirement Benefits, in 1998. This statement does not change the
measurement or the recognition of pension and postretirement expenses. It
eliminates certain current disclosures, and requires additional disclosures
or changes on the benefit obligation and fair value of plan assets.
Subsequent to year end, the Company entered into two revolving credit
facility agreements totaling $500 million. They are available for use as
needed for general corporate purposes.
The Company has reviewed its information systems for YEAR 2000 compliance and
has initiated plans to remedy any deficiencies in a timely manner. As a
result of the review and action plan, the Company believes the cost of such
remedial corrective actions are not material to the Company's financial
position, results of operations or cash flows.
32
<PAGE>
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED STATEMENT OF EARNINGS, COMPREHENSIVE INCOME and
RETAINED EARNINGS
(in millions, except per share amounts)
Year Ended December 31,
EARNINGS ---------------------------
1997 1996 1995
------- ------- -------
Net Sales $16,701 $15,065 $13,767
------- ------- -------
Expenses:
Cost of products sold 4,464 3,965 3,637
Marketing, selling and administrative 4,173 3,925 3,670
Advertising and product promotion 2,241 1,946 1,646
Research and development 1,385 1,276 1,199
Provision for restructuring 225 - 310
Gain on sale of a business (225) - -
Special charge - - 950
Other (44) (60) (47)
------- ------- -------
12,219 11,052 11,365
------- ------- -------
Earnings Before Income Taxes 4,482 4,013 2,402
Provision for income taxes 1,277 1,163 590
------- ------- -------
Net Earnings $ 3,205 $ 2,850 $ 1,812
======= ======= =======
Earnings Per Common Share:
Basic $3.22 $2.84 $1.79
Diluted $3.14 $2.80 $1.78
Average Common Shares Outstanding:
Basic 996 1,004 1,012
Diluted 1,021 1,018 1,016
COMPREHENSIVE INCOME
- --------------------
Net Earnings $3,205 $2,850 $1,812
Other Comprehensive Income:
Foreign currency translation (195) (38) (21)
Tax effect 23 4 (5)
------ ------ ------
Total Other Comprehensive Income (172) (34) (26)
------ ------ ------
Comprehensive Income $3,033 $2,816 $1,786
====== ====== ======
The accompanying notes are an integral part of these financial statements.
33
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED STATEMENT OF EARNINGS, COMPREHENSIVE INCOME and
RETAINED EARNINGS
(in millions, except per share amounts)
Year Ended December 31,
--------------------------
1997 1996 1995
------ ------ ------
RETAINED EARNINGS
- -----------------
Retained Earnings, January 1 $ 9,260 $ 7,917 $7,600
Net earnings 3,205 2,850 1,812
------- ------- ------
12,465 10,767 9,412
Less dividends 1,515 1,507 1,495
------- ------- ------
Retained Earnings, December 31 $10,950 $ 9,260 $7,917
======= ======= ======
The accompanying notes are an integral part of these financial statements.
34
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED BALANCE SHEET
ASSETS
(dollars in millions)
December 31,
---------------------------
1997 1996 1995
------- ------- -------
ASSETS
- ------
Current Assets:
Cash and cash equivalents $ 1,456 $ 1,681 $ 1,645
Time deposits and marketable securities 338 504 533
Receivables, net of allowances 2,973 2,651 2,356
Inventories 1,799 1,669 1,451
Prepaid expenses 1,170 1,023 1,033
------- ------- -------
Total Current Assets 7,736 7,528 7,018
Property, Plant and Equipment 4,156 3,964 3,760
Insurance Recoverable 619 853 959
Excess of cost over net tangible assets
received in business acquisitions 1,625 1,508 1,219
Other Assets 841 832 973
------- ------- -------
$14,977 $14,685 $13,929
======= ======= =======
The accompanying notes are an integral part of these financial statements.
35
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
(dollars in millions)
December 31,
---------------------------
1997 1996 1995
------- ------- -------
LIABILITIES
- -----------
Current Liabilities:
Short-term borrowings $ 543 $ 513 $ 575
Accounts payable 1,017 1,064 848
Accrued expenses 1,939 1,962 1,939
Product liability 865 800 700
U.S. and foreign income taxes payable 668 711 744
------- ------- -------
Total Current Liabilities 5,032 5,050 4,806
Product Liability 171 1,031 1,645
Other Liabilities 1,276 1,068 1,021
Long-Term Debt 1,279 966 635
------- ------- -------
Total Liabilities 7,758 8,115 8,107
------- ------- -------
STOCKHOLDERS' EQUITY
- --------------------
Preferred stock, $2 convertible series:
Authorized 10 million shares; issued and
outstanding 12,936 in 1997, 15,245 in 1996
and 19,023 in 1995, liquidation value of
$50 per share - - -
Common stock, par value of $.10 per share:
Authorized 2.25 billion shares; issued
1,083,253,703 in 1997, 1,082,496,016 in
1996 and 540,185,639 in 1995 108 108 54
Capital in excess of par value of stock 544 382 375
Cumulative translation adjustments (533) (361) (327)
Retained earnings 10,950 9,260 7,917
------- ------- -------
11,069 9,389 8,019
Less cost of treasury stock - 90,069,383
common shares in 1997, 81,806,550 in
1996 and 34,953,311 in 1995 3,850 2,819 2,197
------- ------- -------
Total Stockholders' Equity 7,219 6,570 5,822
------- ------- -------
$14,977 $14,685 $13,929
======= ======= =======
The accompanying notes are an integral part of these financial statements.
36
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(dollars in millions)
Year Ended December 31,
--------------------------
1997 1996 1995
------ ------ ------
Cash Flows From Operating Activities:
Net Earnings $3,205 $2,850 $1,812
Depreciation and amortization 591 519 448
Provision for restructuring 225 - 310
Gain on sale of a business (225) - -
Special charge - - 950
Other operating items 33 (52) (34)
Receivables (479) (262) (319)
Inventories (288) (227) (50)
Accounts payable 2 177 155
Accrued expenses (181) 42 166
Income taxes 318 250 (252)
Product liability (795) (514) (441)
Insurance recoverable 234 106 9
Other assets and liabilities (164) (248) (255)
------ ------ ------
Net Cash Provided by Operating Activities 2,476 2,641 2,499
------ ------ ------
Cash Flows From Investing Activities:
Proceeds from sales of time deposits and
marketable securities 530 406 349
Purchases of time deposits and marketable
securities (363) (379) (80)
Additions to fixed assets (767) (601) (513)
Proceeds from sales of businesses 370 213 -
Business acquisitions (254) (316) (350)
Other, net (48) (40) (37)
------ ------ ------
Net Cash Used in Investing Activities (532) (717) (631)
------ ------ ------
Cash Flows From Financing Activities:
Short-term borrowings 81 (78) (181)
Long-term debt 328 346 (10)
Issuances of common stock under stock plans 117 206 71
Purchases of treasury stock (1,162) (852) (244)
Dividends paid (1,515) (1,507) (1,495)
------ ------ ------
Net Cash Used in Financing Activities (2,151) (1,885) (1,859)
------ ------ ------
Effect of Exchange Rates on Cash (18) (3) (6)
------ ------ ------
(Decrease) Increase in Cash and
Cash Equivalents (225) 36 3
Cash and Cash Equivalents at Beginning
of Year 1,681 1,645 1,642
------ ------ ------
Cash and Cash Equivalents at End of Year $1,456 $1,681 $1,645
====== ====== ======
The accompanying notes are an integral part of these financial statements.
37
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Note 1 ACCOUNTING POLICIES
- ---------------------------
Basis of Consolidation - The consolidated financial statements include
the accounts of Bristol-Myers Squibb Company and all of its
subsidiaries.
Cash and Cash Equivalents - Cash and cash equivalents primarily include
securities with a maturity of three months or less at the time of
purchase, recorded at cost, which approximates market.
Time Deposits and Marketable Securities - Time deposits and marketable
securities are available for sale and are recorded at fair value, which
approximates cost.
Inventory Valuation - Inventories are generally stated at average cost,
not in excess of market.
Capital Assets and Depreciation - Expenditures for additions, renewals
and betterments are capitalized at cost. Depreciation is generally
computed by the straight-line method based on the estimated useful lives
of the related assets.
Excess of Cost over Net Tangible Assets - The excess of cost over net
tangible assets received in business acquisitions is being amortized on
a straight-line basis over periods not exceeding 40 years.
Earnings Per Share - Basic earnings per common share are computed using
the weighted average number of shares outstanding during the year.
Diluted earnings per common share are computed using the weighted
average number of shares outstanding during the year, plus the
incremental shares outstanding assuming the exercise of dilutive stock
options.
Note 2 ACQUISITIONS AND DIVESTITURES
- -------------------------------------
In January 1998, the Company acquired Redmond Products, Inc., a leading
hair care manufacturer in the United States.
On December 31, 1997, the Company completed the sale of Linvatec
Corporation, its arthroscopy and surgical powered instrument business,
for $370 million in cash. The sale resulted in a gain of $225 million
before taxes, $140 million after taxes.
In November 1997, the Company acquired Abeefe S.A., Peru's largest
pharmaceutical manufacturer and marketer of a broad range of
prescription and nonprescription anti-infective, respiratory, anti-
inflammatory and dermatological products.
38
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
In July 1997, the Company acquired CHOCO MILK*, Mexico's leading milk-based
nutritional supplement.
In March 1997, the Company acquired SAL DE UVAS PICOT*, a leading
effervescent antacid product in Mexico.
In 1996, the Company acquired Pharmavit Gyogyszer-es Elelmiszeripari
Reszvenytarsasag, one of Hungary's leading manufacturers of over-the-counter
medicines, nutritional products and generic pharmaceuticals. The Company
also acquired Argentia S.A., one of Argentina's largest manufacturers and
marketers of ethical pharmaceuticals and completed the acquisition of
Oncology Therapeutics Network, a specialty distributor of anti-cancer
medicines and related products.
In 1995, the Company acquired A/S GEA Farmaceutisk Fabrik, a leading
manufacturer and marketer of branded generic pharmaceuticals for the
Scandinavian market, and completed the acquisition of Calgon Vestal
Laboratories, a wound and skin care and infection control products
business.
Note 3 RESTRUCTURING
- ---------------------
The Company recorded a $225 million restructuring charge, $140 million
after taxes, in the fourth quarter of 1997. The restructuring charge
primarily relates to the consolidation of plants and facilities, and
related employee terminations. The restructuring charge consists of
employee-related costs of $93 million, $74 million of asset write-downs
and $58 million of other related expenses.
The Company recorded a $310 million restructuring charge, $198 million
after taxes, in the fourth quarter of 1995. The restructuring charge
related to the consolidation of plants and facilities, and related
employee terminations. The restructuring charge consisted of employee-
related costs of $190 million, $100 million of asset write-downs and $20
million of other related expenses.
Note 4 OTHER INCOME AND EXPENSES
- ---------------------------------
Year Ended December 31,
-----------------------
1997 1996 1995
---- ---- ----
Interest income $106 $95 $139
Interest expense (118) (78) (97)
Other - net 56 43 5
---- ---- ----
$ 44 $ 60 $ 47
==== ==== ====
39
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Cash payments for interest were $110 million, $76 million and $93 million
in 1997, 1996 and 1995, respectively.
Note 5 FOREIGN CURRENCY TRANSLATION
- ------------------------------------
Cumulative translation adjustments, which represent the effect of
translating assets and liabilities of the Company's non-U.S. entities,
except those in highly inflationary economies, were:
1997 1996 1995
---- ---- ----
Balance, January 1 $361 $327 $301
Effect of balance sheet translations:
Amount 195 38 21
Tax effect (23) (4) 5
---- ---- ----
Balance, December 31 $533 $361 $327
==== ==== ====
Note 6 PROVISION FOR INCOME TAXES
- ----------------------------------
The components of earnings before income taxes were:
Year Ended December 31,
-----------------------
1997 1996 1995
------ ------ ------
U.S. $2,858 $2,332 $1,195
Non-U.S. 1,624 1,681 1,207
------ ------ ------
$4,482 $4,013 $2,402
====== ====== ======
The provision for income taxes consisted of:
Year Ended December 31,
------------------------
1997 1996 1995
------ ------ ------
Current:
U.S. $633 $462 $466
Non-U.S. 471 442 356
------ ------ ------
1,104 904 822
------ ------ ------
40
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Year Ended December 31,
-----------------------
1997 1996 1995
------ ----- -----
Deferred:
U.S. 220 232 (200)
Non-U.S. (47) 27 (32)
------ ----- -----
173 259 (232)
------ ----- -----
$1,277 $1,163 $590
====== ====== =====
Income taxes paid during the year were $898 million, $861 million and $856
million in 1997, 1996 and 1995, respectively.
The Company's provision for income taxes in 1997, 1996 and 1995 was
different from the amount computed by applying the statutory United States
Federal income tax rate to earnings before income taxes, as a result of
the following:
% of Earnings
Before Income Taxes
----------------------
1997 1996 1995
------ ----- -----
U.S. statutory rate 35.0% 35.0% 35.0%
Effect of operations in
Puerto Rico and Ireland (5.5) (5.5) (9.7)
State and local taxes .6 .6 .8
Other (1.6) (1.1) (1.5)
----- ----- -----
28.5% 29.0% 24.6%
===== ===== =====
Prepaid taxes at December 31, 1997, 1996 and 1995 were $818 million, $757
million and $786 million, respectively. The deferred income tax liability,
included in Other Liabilities, at December 31, 1997 and 1996 was $352 and $124
million, respectively. The deferred income tax asset, included in Other
Assets, at December 31, 1995 was $130 million.
The components of prepaid and deferred income taxes consisted of:
41
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
December 31,
----------------------
1997 1996 1995
---- ---- ----
Product liability $154 $383 $527
Postretirement and pension benefits 191 129 163
Restructuring 77 88 130
Depreciation (278) (245) (210)
Other 322 278 306
---- ---- ----
$466 $633 $916
==== ==== ====
The Company has settled its United States Federal income tax returns with the
Internal Revenue Service through 1991.
United States Federal income taxes have not been provided on substantially
all of the unremitted earnings of non-U.S. subsidiaries, since it is
management's practice and intent to reinvest such earnings in the operations
of these subsidiaries. The total amount of the net unremitted earnings of
non-U.S. subsidiaries was approximately $2.6 billion at December 31, 1997.
Note 7 INVENTORIES
- ------------------- December 31,
------------------------
1997 1996 1995
------ ------ ------
Finished goods $1,153 $ 994 $ 892
Work in process 197 223 180
Raw and packaging materials 449 452 379
------ ------ ------
$1,799 $1,669 $1,451
====== ====== ======
Note 8 PROPERTY, PLANT AND EQUIPMENT
- -------------------------------------
December 31,
-------------------------
1997 1996 1995
------ ------ ------
Land $ 180 $ 160 $ 160
Buildings 2,631 2,427 2,296
Machinery, equipment and fixtures 3,646 3,626 3,403
Construction in progress 544 433 405
------ ------ ------
7,001 6,646 6,264
Less accumulated depreciation 2,845 2,682 2,504
------ ------ ------
$4,156 $3,964 $3,760
====== ====== ======
42
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Note 9 SHORT-TERM BORROWINGS AND LONG-TERM DEBT
- ------------------------------------------------
Short-term borrowings included amounts primarily due to foreign banks of $524
million, $440 million and $558 million at December 31, 1997, 1996 and 1995,
respectively, and current installments of long-term debt of $19 million, $73
million and $17 million at December 31, 1997, 1996 and 1995, respectively.
The average interest rate on short-term borrowings was 13.9% at December 31,
1997 and 7.6% on current installments of long-term debt.
The Company has short-term lines of credit with domestic and foreign banks.
At December 31, 1997, the unused portions of these lines of credit were
approximately $200 million and $593 million, respectively.
The components of long-term debt were:
December 31,
--------------------------
1997 1996 1995
------ ---- ----
6.80% Debentures, due in 2026 $ 344 $344 -
7.15% Debentures, due in 2023 343 343 $343
6.875% Debentures, due in 2097 296 - -
Various Rate Yen Term Loans, due in 2003 70 76 -
3.51% Deutsche Mark Interest on Yen Principal
Term Loan, due in 2005 49 53 59
5.75% Industrial Revenue Bonds, due in 2024 34 34 34
5.00% Yen Term Loan, due in 2000 29 31 69
Various Rate Turkish Lira Term Loans,
due in 1999 26 - -
2.83% Yen Term Loan, due in 2002 24 27 -
Capitalized Leases 26 19 19
6.18% Yen Term Loan, paid in 1997 - - 64
Other, 4.30% to 10.25%,due in varying
amounts through 2014 38 39 47
------ ---- ----
$1,279 $966 $635
====== ==== ====
Subsequent to year end, the Company entered into two revolving credit
facility agreements totaling $500 million. They are available for use as
needed for general corporate purposes.
43
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Note 10 STOCKHOLDERS' EQUITY
- -----------------------------
Changes in capital shares and capital in excess of par value of stock were:
Capital in
Excess of
Shares of Common Stock Par Value
--------------------------- of Stock
Issued Treasury (in millions)
------------- ---------- ----------
Balance, December 31, 1994 540,173,669 32,887,848 $397
Issued pursuant to stock plans,
options and rights - (1,602,537) (22)
Conversions of preferred stock 11,970 - -
Purchases - 3,668,000 -
------------- ---------- ----
Balance, December 31, 1995 540,185,639 34,953,311 375
Effect of two-for-one
stock split 540,185,639 34,953,311 (54)
Issued pursuant to stock plans,
options and rights 221,032 (6,623,272) (25)
Conversions of preferred stock 31,960 - -
Purchases - 18,523,200 -
Other 1,871,746 - 86
------------- ---------- ----
Balance, December 31, 1996 1,082,496,016 81,806,550 382
Issued pursuant to stock plans
and options 738,151 (8,514,867) 162
Conversions of preferred stock 19,536 - -
Purchases - 16,777,700 -
------------- ---------- ----
Balance, December 31, 1997 1,083,253,703 90,069,383 $544
============= ========== ====
Each share of the Company's preferred stock is convertible into 8.48
shares of common stock and is callable at the Company's option. The
reductions in the number of issued shares of preferred stock in 1997, 1996
and 1995 were due to conversions into shares of common stock.
Dividends per common share were $1.52 in 1997, $1.50 in 1996 and $1.48 in
1995.
Stock Compensation Plans
- ------------------------
Under the Company's stock option plans, officers, directors and key
employees may be granted options to purchase the Company's common stock
at no less than 100% of the market price on the date the option is
granted. Options generally become exercisable in installments of 25% per
year on each of the first through the fourth anniversaries of the grant
date and have a maximum term of 10 years. Additionally, the plans provide
44
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
for the granting of stock appreciation rights whereby the grantee may
surrender exercisable options and receive common stock and/or cash
measured by the excess of the market price of the common stock over the
option exercise price. The plans also provide for the granting of
performance-based stock options to certain key executives.
Under the terms of the 1983 Stock Option Plan, as amended, additional
shares are authorized in the amount of 0.9% of the outstanding shares per
year through 2003 and incorporates the Company's long-term performance
award plan.
Under the TeamShare Stock Option Plan, all full-time employees, excluding
key executives, meeting certain years of service requirements are granted
options to purchase the Company's common stock at the market price on the
date the options are granted. The Company has authorized 30,000,000
shares for issuance under the plan. As of December 31, 1997, a total of
21,984,200 options were granted under the plan with generally 400 options
granted to each eligible employee. Individual grants generally become
exercisable on or after the third anniversary of the grant date.
The Company's restricted stock award plan provides for the granting of up
to 6,000,000 shares of common stock to key employees, subject to
restrictions as to continuous employment except in the case of death or
normal retirement. Restrictions generally expire over a five-year period
from date of grant. Compensation expense is recognized over the
restricted period. At December 31, 1997, a total of 1,253,352 shares were
outstanding under the plan.
The Company applies Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees, and related interpretations in accounting
for its plans. Accordingly, no compensation expense has been recognized
for its stock-based compensation plans other than for restricted stock and
performance-based awards. Had compensation cost for the Company's other
stock option plans been determined based upon the fair value at the grant
date for awards under these plans consistent with the methodology
prescribed under Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation, the Company's net income and
basic earnings per share would have been reduced by approximately $85
million, or $.09 per common share - basic and $.08 per common share -
diluted, in 1997, $55 million, or $.05 per common share, basic and diluted
in 1996 and $35 million, or $.03 per common share, basic and diluted in
1995. The fair value of the options granted during 1997, 1996 and 1995
was estimated as $12.82 per common share, $8.51 per share and $6.47 per
share, respectively, on the date of grant using the Black-Scholes option-
pricing model with the following assumptions:
45
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
1997 1996 1995
----- ----- -----
Dividend yield 4.3% 4.3% 4.2%
Volatility 19.3% 17.0% 18.2%
Risk-free interest rate 6.5% 6.5% 6.9%
Assumed forfeiture rate 3.0% 3.0% 3.0%
Expected life (years) 7 7 7
Stock option transactions were:
Weighted
Average of
Shares of Common Stock Exercise
-------------------------- Price
Available Under of Shares
for Option Plan Under Plan
----------- ----------- ----------
Balance, December 31, 1994 4,567,924 21,946,987 $56.99
Authorized 19,565,572 - -
Granted (13,449,952) 13,449,952 61.79
Exercised - (2,012,827) 40.96
Lapsed 1,129,560 (1,129,574) 61.92
----------- -----------
Balance, December 31, 1995 11,813,104 32,254,538 59.76
----------- -----------
Effect of two-for-one
stock split 11,813,104 32,254,538 -
Authorized 9,094,182 - -
Granted (16,179,560) 16,179,560 46.92
Exercised - (8,863,078) 27.62
Lapsed 1,788,528 (1,796,826) 33.00
----------- -----------
Balance, December 31, 1996 18,329,358 70,028,732 34.27
----------- -----------
Authorized 9,006,205 - -
Granted (11,347,801) 11,347,801 65.77
Exercised - (12,787,811) 30.34
Lapsed 2,284,788 (2,287,820) 45.63
----------- -----------
Balance, December 31, 1997 18,272,550 66,300,902 $40.08
=========== ===========
The following table summarizes information concerning currently outstanding
and exercisable options:
46
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Options Outstanding Options Exercisable
----------------------------------- --------------------
Weighted
Average Weighted Weighted
Range of Remaining Average Average
Exercise Number Contractual Exercise Number Exercise
Prices Outstanding Life Price Exercisable Price
- ------------ ----------- ----------- -------- ----------- ---------
$ 0 - $ 20 325,808 0.94 $14.07 325,808 $14.07
$20 - $ 40 40,931,295 6.02 30.88 22,779,341 31.10
$40 - $ 60 16,621,274 8.45 48.74 3,007,105 43.68
$60 - $ 80 7,620,950 9.18 67.36 - -
$80 - $100 801,575 9.55 82.10 - -
---------- ----------
66,300,902 26,112,254
========== ==========
At December 31, 1997, 104,710,291 shares of common stock were reserved
for issuance pursuant to stock plans, options and conversions of
preferred stock.
Note 11 FINANCIAL INSTRUMENTS
- ------------------------------
Foreign exchange option contracts and, to a lesser extent, forward
contracts, are used to hedge anticipated transactions.
The Company has exposures to net foreign currency denominated assets
and liabilities, which approximated $2,070 million, $1,640 million and
$1,385 million at December 31, 1997, 1996 and 1995, respectively,
primarily in Deutsche marks, French francs, Italian lire and Japanese
yen. The Company mitigates the effect of these exposures through
third-party borrowings and foreign exchange forward contracts.
The risk of loss associated with the types of foreign exchange option
contracts entered into by the Company is limited to premium amounts
paid for the option contracts. Premiums are deferred in Prepaid
expenses and amortized in the consolidated statement of earnings (in
the Other caption) over the time frame of the underlying hedged
transaction. Gains and losses related to the option contracts, which
qualify as hedges of foreign currency anticipated transactions, are
recognized in earnings when the hedged transactions are recognized.
Gains and losses on foreign exchange forward contracts are recognized
in the basis of the underlying transaction being hedged.
The notional amounts of the Company's foreign exchange option
contracts at December 31, 1997, 1996 and 1995 were $1,279 million,
$1,172 million and $1,126 million, respectively.
47
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
The Company does not anticipate any material adverse effect on its
financial position resulting from its involvement in these
instruments, nor does it anticipate non-performance by any of its
counterparties.
At December 31, 1997, 1996 and 1995, the carrying value of all
financial instruments, both short- and long-term, approximated their
fair values.
Note 12 LEASES
- ---------------
Minimum rental commitments under all noncancelable operating leases,
primarily real estate, in effect at December 31, 1997 were:
Years Ending December 31,
- -------------------------
1998 $116
1999 88
2000 71
2001 59
2002 45
Later years 159
----
Total minimum payments 538
Less total minimum sublease rentals 152
----
Net minimum rental commitments $386
====
Operating lease rental expense (net of sublease rental income of $26
million in 1997, $27 million in 1996 and $25 million in 1995) was $124
million in 1997, $129 million in 1996 and $135 million in 1995.
Note 13 SEGMENT INFORMATION
- ----------------------------
The major product categories for each business segment are as follows:
Year Ended December 31,
------------------------
1997 1996 1995
------ ------ ------
Pharmaceuticals
Cardiovascular $2,905 $2,816 $2,911
Anti-cancer 2,420 1,971 1,600
Anti-infective 2,235 1,856 1,701
Central nervous system 955 760 601
Consumer Medicines
48
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Analgesics 739 718 669
Nutritionals
Infant formulas 1,219 1,201 1,086
Medical Devices
Orthopaedic implants 615 644 657
Ostomy 451 452 472
Beauty Care
Haircolor 841 812 714
Hair care 794 586 487
Inter-area sales, which are usually billed at or above manufacturing
costs, by geographic area, were:
Year Ended December 31,
-------------------------
1997 1996 1995
------ ------ ------
United States $1,370 $1,210 $ 977
Europe, Mid-East and Africa 762 692 542
Other Western Hemisphere 32 59 49
Pacific 24 25 21
------ ------ ------
Total inter-area eliminations $2,188 $1,986 $1,589
====== ====== ======
Included in earnings before taxes of each segment is a cost of capital
charge. The offset to the cost of capital share is included in Other. In
addition, Other principally consists of interest income, interest expense and
certain administrative expenses, and in 1996, the cost of certain of the
Company's productivity programs. In 1997, Other includes the gain on sale of
a business of $225 million and the provision for restructuring of $225
million. In 1995, Other includes the provision for restructuring of $310
million and the special charge of $950 million for pending and future product
liability claims. Other assets principally consist of cash and cash
equivalents, time deposits and marketable securities and certain other
assets.
BUSINESS SEGMENTS Net Sales Earnings Before Taxes
- ----------------- ----------------------- ----------------------
1997 1996 1995 1997 1996 1995
------- ------- ------- ------ ------ ------
Pharmaceuticals $ 9,932 $ 8,666 $ 7,745 $2,945 $2,634 $2,290
Consumer Medicines 1,351 1,279 1,220 125 99 71
Nutritionals 1,911 1,793 1,592 403 371 317
Medical Devices 1,802 1,860 1,906 361 419 435
Beauty Care 1,705 1,467 1,304 292 250 200
------- ------- ------- ------ ------ ------
Net sales and earnings
before taxes $16,701 $15,065 $13,767 $4,126 $3,773 $3,313
======= ======= ======= ====== ====== ======
49
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
GEOGRAPHIC AREAS Net Sales Earnings Before Taxes
- ---------------- ------------------------ ------------------------
1997 1996 1995 1997 1996 1995
------- ------- ------- ------ ------ ------
United States $11,014 $ 9,661 $ 8,662 $2,700 $2,512 $2,220
Europe, Mid-East and
Africa 4,653 4,520 4,074 1,109 988 925
Other Western Hemisphere 1,586 1,307 1,097 225 145 134
Pacific 1,636 1,563 1,523 52 69 89
Inter-area eliminations (2,188) (1,986) (1,589) 40 59 (55)
------- ------ ------ ------ ----- -----
Net sales and earnings
before taxes $16,701 $15,065 $13,767 4,126 3,773 3,313
======= ======= =======
Other 356 240 (911)
------ ------ ------
Earnings before taxes $4,482 $4,013 $2,402
====== ====== ======
BUSINESS SEGMENTS Year-End Assets
- ----------------- --------------------------
1997 1996 1995
------- ------- -------
Pharmaceuticals $ 6,705 $ 6,098 $5,221
Consumer Medicines 1,573 1,450 1,474
Nutritionals 1,021 910 797
Medical Devices 1,225 1,376 1,407
Beauty Care 743 652 537
------- ------- ------
Identifiable segment assets $11,267 $10,486 $9,436
======= ======= ======
GEOGRAPHIC AREAS Year-End Assets
- ---------------- -------------------------
1997 1996 1995
------- ------- -------
United States $ 6,545 $ 5,925 $ 5,239
Europe, Mid-East and Africa 3,430 3,376 3,230
Other Western Hemisphere 1,063 741 462
Pacific 989 1,023 1,030
Inter-area eliminations (760) (579) (525)
------- ------- -------
Identifiable geographic assets 11,267 10,486 9,436
Other assets 3,710 4,199 4,493
------- ------- -------
Total assets $14,977 $14,685 $13,929
======= ======= =======
50
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Capital
BUSINESS SEGMENTS Expenditures Depreciation
- ----------------- ------------------ ----------------
1997 1996 1995 1997 1996 1995
---- ---- ---- ---- ---- ----
Pharmaceuticals $525 $402 $333 $241 $232 $225
Consumer Medicines 48 32 17 24 20 19
Nutritionals 55 43 60 43 45 30
Medical Devices 24 36 47 46 43 42
Beauty Care 53 67 33 20 26 26
---- ---- ---- ---- ---- ----
Business segment total 705 580 490 374 366 342
Other 62 21 23 23 21 23
---- ---- ---- ---- ---- ----
Total $767 $601 $513 $397 $387 $365
==== ==== ==== ==== ==== ====
Note 14 RETIREMENT BENEFIT PLANS
- ---------------------------------
The Company and certain of its subsidiaries have defined benefit pension
plans for regular full-time employees. The principal pension plan is the
Bristol-Myers Squibb Retirement Income Plan. The Company's funding policy
is to contribute amounts to provide for current service and to fund past
service liability. Plan benefits are primarily based on years of credited
service and on participants' compensation. Plan assets principally
consist of equity securities and fixed income securities.
Cost for the Company's defined benefit plans included the following
components:
Year Ended December 31,
-----------------------
1997 1996 1995
----- ----- -----
Service cost - benefits earned during the year $ 135 $ 127 $ 101
Interest cost on projected benefit obligation 203 191 183
Actual earnings on plan assets (504) (359) (406)
Net amortization and deferral 283 171 213
----- ----- -----
Net pension expense $ 117 $ 130 $ 91
===== ===== =====
The weighted average actuarial assumptions for the Company's pension plans
were as follows:
December 31,
-----------------------
1997 1996 1995
----- ----- -----
Discount rate 7.5% 7.8% 7.3%
Compensation increase 4.5% 4.8% 4.5%
Long-term rate of return 10.0% 10.0% 10.0%
51
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
The funded status of the plans was as follows:
December 31,
---------------------------
1997 1996 1995
------- ------- -------
Actuarial present value of
accumulated benefit obligation:
Vested $(2,174) $(2,044) $(2,059)
Non-vested (257) (252) (217)
------- ------- -------
$(2,431) $(2,296) $(2,276)
======= ======= =======
Total projected benefit obligation $(2,928) $(2,734) $(2,689)
Plan assets at fair value 2,949 2,596 2,307
------- ------- -------
Plan assets in excess of (less than)
projected benefit obligation 21 (138) (382)
Unamortized net assets at adoption (47) (62) (76)
Unrecognized prior service cost 56 67 78
Unrecognized net losses 13 235 516
Adjustment required to recognize minimum
pension liability recorded in Other Assets (22) (26) (48)
======= ======= =======
Prepaid pension expense $ 21 $ 76 $ 88
======= ======= =======
Plan assets in excess of (less than) projected benefit obligation included
$188 million, $184 million and $150 million in an unfunded benefit
equalization plan at December 31, 1997, 1996 and 1995, respectively.
Note 15 POSTRETIREMENT BENEFIT PLANS OTHER THAN PENSIONS
- ---------------------------------------------------------
The Company provides comprehensive medical and group life benefits to
substantially all U.S. retirees who elect to participate in the Company's
comprehensive medical and group life plans. The medical plan is
contributory. Contributions are adjusted periodically and vary by date
of retirement and the original retiring company. The life insurance plan
is non-contributory.
Cost for the Company's postretirement benefit plans included the following
components:
52
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Year Ended
December 31,
--------------------
1997 1996 1995
----- ----- -----
Service cost - benefits earned during the year $ 9 $ 9 $ 8
Interest cost on accumulated postretirement
benefit obligation 36 34 41
Actual earnings on plan assets (20) (13) (11)
Net amortization and deferral 9 6 7
---- ----- ----
Net postretirement benefit expense $ 34 $ 36 $ 45
==== ==== ====
The status of the plans was as follows:
December 31,
-------------------
1997 1996 1995
----- ----- -----
Accumulated postretirement benefit obligation:
Retirees $(338) $(347) $(403)
Fully eligible active plan participants (19) (17) (17)
Other active plan participants (171) (147) (159)
----- ----- -----
(528) (511) (579)
Plan assets at fair value 113 89 74
----- ----- -----
Accumulated postretirement benefit obligation
in excess of plan assets (415) (422) (505)
Unrecognized prior service cost 4 5 3
Unrecognized net (earnings) losses (65) (56) 38
----- ----- -----
Accrued postretirement benefit expense $(476) $(473) $(464)
===== ===== =====
For measurement purposes, an annual rate of increase in the per capita
cost of covered health care benefits of 7.8% for participants under age
65 and 7.0% for participants age 65 and over was assumed for 1998; the
rate was assumed to decrease gradually to 5.0% in 2007 and to remain at
that level thereafter. Increasing the assumed medical care cost trend
rates by 1 percentage point in each year would increase the accumulated
postretirement benefit obligation as of December 31, 1997 by $23 million
and the aggregate of the service and interest cost components of net
postretirement benefit expense for the year then ended by $2 million. The
weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 7.5% in 1997, 7.8% in 1996 and 7.3%
in 1995.
Plan assets principally consist of equity securities and fixed income
securities. The expected long-term rate of return on plan assets was
10.0% in 1997, 1996 and 1995.
53
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Note 16 CONTINGENCIES
- ----------------------
Various lawsuits, claims and proceedings of a nature considered normal to
its businesses are pending against the Company and certain of its
subsidiaries. The most significant of these are described below.
Reference is made to Item 3 Legal Proceedings in Part 1 of this Form 10-K
Annual Report.
Breast Implant Litigation
- -------------------------
As of December 31, 1997, approximately 24,000 persons were plaintiffs in
suits against the Company, its subsidiary, Medical Engineering Corporation
(MEC), and certain other subsidiaries, in federal and state courts in the
United States and in certain courts in Canada and Australia, alleging
damages for personal injuries of various types resulting from
polyurethane-covered breast implants and smooth-walled breast implants.
The Company, MEC and certain other defendants are participants in a
settlement program originally approved on September 1, 1994, and revised
on December 22, 1995, by the Federal District Court in Birmingham,
Alabama. About 11,000 of these plaintiffs are participating in the
revised settlement, and are expected to discontinue their lawsuits.
Separate class action settlements have been approved in the provincial
courts of Ontario and Quebec, and an agreement has been reached under
which other foreign breast implant recipients may settle their claims.
Approximately 380,000 domestic class members (with implants of all
manufacturers, not just MEC, Baxter and 3M) originally registered with the
revised settlement. Around 88,000 of these class members have indicated
that they received at least one breast implant manufactured by MEC or a
related company. Of these 88,000 registrants, 14,300 have opted out of
the revised settlement; 6,300 of these have proved to the satisfaction of
the claims office that they received a breast implant of MEC or a related
company, while the remaining 8,000 opt-outs have indicated their belief
(but have not proved) that they received an MEC breast implant. The
14,300 opt-outs who have or claim to have MEC implants are among the
44,800 domestic registrants (with implants of all manufacturers) who opted
out of the revised settlement. The Company has identified approximately
10,800 persons from among the 44,800 opt-outs (with implants of all
defendants, not just MEC) as plaintiffs in lawsuits against it. An as yet
undetermined number of these 10,800 plaintiffs do not have MEC implants
and their claims against the Company are expected to be dismissed. An
additional 1,570 claims based upon MEC implants remain from among domestic
class members who previously opted out of the settlement originally
approved in 1994. Because the opt-out period is essentially over, the
number of opt-outs in not expected to increase materially. However,
because of continuing uncertainties, it is still not possible to predict
on any precise basis the total number of women with MEC implants who will
pursue lawsuits against the Company.
The cost of the settlement is dependent upon complex and varying factors,
including the number of class members that participate, the kinds of
claims approved and their dollar value. The cost to the Company of
54
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
resolving opt-out claims is also subject to a number of complex uncertain-
ties in addition to the unknown quantity and quality of such claims. As
set forth in the Consolidated Statement of Cash Flows, in 1995, 1996 and
1997, the Company paid substantial sums to settle litigation and opt-out
claims and for litigation expenses, as well as to the revised settlement.
In connection with breast implant product liability claims, the Company
recorded special charges in 1993 of $500 million before taxes, $310
million after taxes, or $.30 per common share, basic and diluted; in 1994
of $750 million before taxes, $488 million after taxes, or $.48 per common
share, basic and diluted; and in 1995 of $950 million before taxes, $590
million after taxes, or $.58 per common share, basic and diluted. The
1993 special charge consisted of $1.5 billion (recorded as Product
Liability), offset by $1.0 billion of expected insurance proceeds
(recorded as Insurance Recoverable).
In light of the continuing uncertainties (including additional insurance
recoveries), the cost of the revised settlement and the ongoing litigation
cannot at present be predicted with any reasonable degree of precision.
However, the Company, based on the information set forth above and on
related estimates, continues to believe that previously established
reserves should be adequate to address these claims.
Other Actions
- -------------
The Company, one of its subsidiaries, and others are or have been
defendants in a number of antitrust actions in various states filed on
behalf of purported statewide classes of indirect purchasers of infant
formula products and by the Attorneys General of Louisiana, Minnesota and
Mississippi, alleging a price fixing conspiracy and other violations of
state antitrust or deceptive trade practice laws and seeking penalties and
other relief. The Company has previously reported reaching settlements
and receiving final court approval in the majority of these cases. The
only open cases are in Louisiana and Missouri. On November 6, 1997, the
court in Louisiana dismissed the plaintiffs' case. The plaintiffs are
appealing that dismissal. In Missouri, the Company has a motion to
dismiss pending.
As of December 31, 1997, the Company is a defendant in over 100 actions
brought against the Company and more than 30 other pharmaceutical
manufacturers, drug wholesalers and pharmacy benefit managers in various
federal district courts by certain chain drugstores, supermarket chains
and independent drugstores, suing either individually or as
representatives of a nationwide class of retail pharmacies that has been
certified. These cases, which have been coordinated for pretrial
purposes, all seek treble damages and injunctive relief on account of
alleged antitrust violations in the pricing and marketing of brand name
prescription drugs. The Company, without admitting any wrongdoing,
reached an amended agreement as of May 1, 1996, to settle the class
action, and that settlement has become final. The largest opt-out
retailer plaintiffs have purported to quantify their damage claims against
the defendants, including the Company, asserting damages aggregating
approximately $2.4 billion before trebling. Cases brought by retail
55
<PAGE>
pharmacies in state court under state law alleging similar grounds are
proceeding in California, Alabama, Mississippi, Wisconsin and Minnesota;
the Wisconsin and Minnesota cases are subject to settlements. Purported
class actions brought by consumers in state court under state law alleging
similar grounds have been brought in California, Washington, New York,
Arizona, Maine, Alabama, Michigan, Minnesota, Wisconsin, the District of
Columbia, Kansas, Florida, Tennessee and North Carolina.
While it is not possible to predict with certainty the outcome of these
cases, it is the opinion of management that these lawsuits, claims and
proceedings which are pending against the Company are without merit or
will not have a material adverse effect on the Company's operating
results, liquidity or consolidated financial position.
Note 17 SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
- ------------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
------- ------- ------- ------- ------
1997:
Net Sales $4,045 $4,064 $4,151 $4,441 $16,701
Gross Profit 2,967 2,967 3,041 3,262 12,237
Net Earnings * 810 738 855 802 3,205
Earnings Per Common Share
Basic .81 .74 .86 .81 3.22
Diluted .79 .73 .84 .78 3.14
1996:
Net Sales $3,669 $3,696 $3,745 $3,955 $15,065
Gross Profit 2,734 2,734 2,742 2,890 11,100
Net Earnings 726 655 753 716 2,850
Earnings Per Common Share
Basic .72 .65 .75 .71 2.84
Diluted .71 .64 .74 .70 2.80
* In 1997, the fourth quarter and annual results included a gain on the
sale of a business of $225 million ($140 million after taxes) and a
provision for restructuring of $225 million ($140 million after
taxes).
56
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Board of Directors
and Stockholders of
Bristol-Myers Squibb Company
In our opinion, the consolidated financial statements listed in the
index appearing under Item 14(a)(1) and (2) on page 59 present fairly,
in all material respects, the financial position of Bristol-Myers
Squibb Company and its subsidiaries at December 31, 1997, 1996 and
1995, and the results of their operations and their cash flows for the
years then ended in conformity with generally accepted accounting
principles. 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 of these statements in accordance with generally accepted
auditing standards which 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, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
- ------------------------
1177 Avenue of the Americas
New York, New York 10036
January 22, 1998
57
<PAGE>
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
PART III
---------
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
(a) Reference is made to the Proxy Statement for the Annual Meeting of
Stockholders on May 5, 1998 with respect to the Directors of the
Registrant which is incorporated herein by reference and made a part
hereof in response to the information required by Item 10.
(b) The information required by Item 10 with respect to the Executive
Officers of the Registrant has been included in Part IA of this Form
10-K Annual Report in reliance on General Instruction G of Form 10-K
and Instruction 3 to Item 401(b) of Regulation S-K.
Item 11. EXECUTIVE COMPENSATION.
Reference is made to the Proxy Statement for the Annual Meeting of
Stockholders on May 5, 1998 with respect to Executive Compensation which
is incorporated herein by reference and made a part hereof in response to
the information required by Item 11.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
Reference is made to the Proxy Statement for the Annual Meeting of
Stockholders on May 5, 1998 with respect to the security ownership of
certain beneficial owners and management which is incorporated herein by
reference and made a part hereof in response to information required by
Item 12.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Reference is made to the Proxy Statement for the Annual Meeting of
Stockholders on May 5, 1998 with respect to certain relationships and
related transactions which is incorporated herein by reference and made
a part hereof in response to the information required by Item 13.
58
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
Page
Number
------
(a)
1. Financial Statements 33-37
Notes to Consolidated Financial Statements 38-56
Report of Independent Accountants 57
2. Financial Statement Schedules
Schedule Page
Number Number
-------- ------
Valuation and qualifying accounts II S-1
All other schedules not included with this additional financial data
are omitted because they are not applicable or the required
information is included in the financial statements or notes thereto.
3. Exhibit List
The Exhibits listed below are identified by numbers corresponding to the
Exhibit Table of Item 601 of Regulation S-K. The Exhibits designated by two
asterisks (**) are management contracts or compensatory plans or arrangements
required to be filed pursuant to this Item 14. Unless otherwise indicated,
all Exhibits are part of Commission File Number 1-1136.
3a. Restated Certificate of Incorporation of Bristol-Myers Squibb
Company (filed as Exhibit 4a to Registrant's Registration Statement
on Form S-3, Registration Statement No. 33-33682, dated March 7,
1990, as amended through May 6, 1997).
3b. Bylaws of Bristol-Myers Squibb Company, as amended through January
1, 1998 (incorporated herein by reference to Exhibit 4(b) to
Registration Statement on Form S-8 filed March 5, 1998).
4a. Letter of Agreement dated March 28, 1984 (incorporated herein by
reference to Exhibit 4 to Form 10-K for the fiscal year ended
December 31, 1983).
4b. Indenture, dated as of June 1, 1993, between Bristol-Myers Squibb
Company and The Chase Manhattan Bank (National Association), as
trustee (incorporated herein by reference to Exhibit 4.1 to the Form
8-K dated May 27, 1993, and filed on June 3, 1993).
4c. Form of 7.15% Debenture Due 2023 of Bristol-Myers Squibb Company
(incorporated herein by reference to Exhibit 4.2 to the Form 8-K
dated May 27, 1993, and filed on June 3, 1993).
4d. Form of 6.80% Debenture Due 2026 of Bristol-Myers Squibb Company
(incorporated herein by reference to Exhibit 4e to the Form 10-K for
the fiscal year ended December 31, 1996).
59
<PAGE>
4e. Form of 6.875% Debenture Due 2097 of Bristol-Myers Squibb Company
(incorporated herein by reference to Exhibit 4f to the Form 10-Q for
the quarterly period ended September 30, 1997).
4f. Five Year Competitive Advance and Revolving Credit Facility
Agreement dated as of March 17, 1998 among Bristol-Myers Squibb
Company, the Borrowing Subsidiaries (as defined in the Agreement),
the Lenders listed in Schedule 2.1 to the Agreement, The Chase
Manhattan Bank as Administrative Agent and Citibank, N.A., as
Administrative Agent, filed herewith.
4g. 364-Day Competitive Advance and Revolving Credit Facility Agreement
dated as of March 17, 1998 among Bristol-Myers Squibb Company, the
Borrowing Subsidiaries (as defined in the Agreement), the Lenders
listed in Schedule 2.1 to the Agreement, The Chase Manhattan Bank as
Administrative Agent and Citibank, N.A., as Administrative Agent,
filed herewith.
**10a. Bristol-Myers Squibb Company 1997 Stock Incentive Plan, effective as
of May 6, 1997 and as amended effective December 2, 1997
(incorporated herein by reference to Exhibit 99(a) to the
Registration Statement on Form S-8 filed March 5, 1998), filed
herewith.
**10b. Bristol-Myers Squibb Company Executive Performance Incentive Plan
(incorporated herein by reference to Exhibit 10b to the Form 10-K
for the fiscal year ended December 31, 1996).
**10c. Bristol-Myers Squibb Company 1983 Stock Option Plan, as amended and
restated as of September 10, 1996, as amended January 1, 1997, filed
herewith.
**10d. Squibb Corporation 1982 Option, Restricted Stock and Performance
Unit Plan, as amended (incorporated herein by reference to Exhibit
10b to the Form 10-K for the fiscal year ended December 31, 1993).
**10e. Squibb Corporation 1986 Option, Restricted Stock and Performance
Unit Plan, as amended (as adopted, incorporated herein by reference
to Exhibit 10k to the Squibb Corporation Form 10-K for the fiscal
year ended December 31, 1988, File No. 1-5514; as amended effective
July 1, 1993, and incorporated herein by reference to Exhibit 10c to
the Form 10-K for the fiscal year ended December 31, 1993).
**10f. Bristol-Myers Squibb Company Performance Incentive Plan, as amended
(as adopted, incorporated herein by reference to Exhibit 2 to the
Form 10-K for the fiscal year ended December 31, 1978; as amended as
of January 8, 1990, incorporated herein by reference to Exhibit 19b
to the Form 10-K for the fiscal year ended December 31, 1990; as
amended on April 2, 1991, incorporated herein by reference to
Exhibit 19b to the Form 10-K for the fiscal year ended December 31,
1991; as amended effective January 1, 1994, incorporated herein by
reference to Exhibit 10d to the Form 10-K for the fiscal year ended
December 31, 1993; and as amended effective January 1, 1994,
incorporated herein by reference to Exhibit 10d to the Form
10-K for the fiscal year ended December 31, 1994).
**10g. Benefit Equalization Plan of Bristol-Myers Squibb Company and its
Subsidiary or Affiliated Corporations Participating in the Bristol-
Myers Squibb Company Retirement Income Plan or the Bristol-Myers
60
<PAGE>
Squibb Puerto Rico, Inc. Retirement Income Plan, as amended (as
amended and restated as of January 1, 1993, as amended effective
October 1, 1993, incorporated herein by reference to Exhibit 10e to
the Form 10-K for the fiscal year ended December 31, 1993; and as
amended effective February 1, 1995, incorporated herein by reference
to Exhibit 10e to the Form 10-K for the fiscal year ended December
31, 1995).
**10h. Benefit Equalization Plan of Bristol-Myers Squibb Company and its
Subsidiary or Affiliated Corporations Participating in the Bristol-
Myers Squibb Company Savings and Investment Program, as amended (as
amended and restated as of May 1, 1990, incorporated herein by
reference to Exhibit 19d to the Form 10-K for the fiscal year ended
December 31, 1990; as amended as of January 1, 1991, incorporated
herein by reference to Exhibit 19g to the Form 10-K for the fiscal
year ended December 31, 1990; as amended as of January 1, 1991,
incorporated herein by reference to Exhibit 19e to the Form 10-K for
the fiscal year ended December 31, 1991, as amended as of October 1,
1994, incorporated herein by reference to Exhibit 10f to the Form
10-K for the fiscal year ended December 31, 1994).
**10i. Squibb Corporation Supplementary Pension Plan, as amended (as
previously amended and restated, incorporated herein by reference to
Exhibit 19g to the Form 10-K for the fiscal year ended December 31,
1991; as amended as of September 14, 1993, and incorporated herein
by reference to Exhibit 10g to the Form 10-K for the fiscal year
ended December 31, 1993).
**10j. Bristol-Myers Squibb Company Restricted Stock Award Plan, as amended
(as adopted on November 7, 1989, incorporated herein by reference to
Exhibit 10t to the Form 10-K for the fiscal year ended December 31,
1989; as amended on December 4, 1990, incorporated herein by
reference to Exhibit 19a to the Form 10-K for the fiscal year ended
December 31, 1990; as amended effective July 1, 1993, incorporated
herein by reference to Exhibit 10h to the Form 10-K for the fiscal
year ended December 31, 1993; as amended effective December 6, 1994,
incorporated herein by reference to Exhibit 10h to the Form 10-K for
the fiscal year ended December 31, 1994).
**10k. Bristol-Myers Squibb Company Retirement Income Plan for Non-Employee
Directors, as amended to March 5, 1996 (incorporated herein by
reference to Exhibit 10k to the Form 10-K for the fiscal year ended
December 31, 1996).
**10l. Bristol-Myers Squibb Company 1987 Deferred Compensation Plan for
Non-Employee Directors, as amended to January 13, 1998, filed
herewith.
**10m. Bristol-Myers Squibb Company Non-Employee Directors' Stock Option
Plan, as amended (as approved by the Stockholders on May 1, 1990,
incorporated herein by reference to Exhibit 28 to Registration
Statement No. 33-38587 on Form S-8; as amended May 7, 1991,
incorporated herein by reference to Exhibit 19c to the Form 10-K for
the fiscal year ended December 31, 1991), as amended January 13,
1998, filed herewith.
**10n. Squibb Corporation Deferral Plan for Fees of Outside Directors, as
amended (as adopted, incorporated herein by reference to Exhibit 10e
to the Squibb Corporation Form 10-K for the fiscal year ended
61
<PAGE>
December 31, 1987, File No. 1-5514; as amended effective December
31, 1991, incorporated herein by reference to Exhibit 10m to the
Form 10-K for the fiscal year ended December 31, 1992).
**10o. Amendment to all of the Company's plans, agreements, legal documents
and other writings, pursuant to action of the Board of Directors on
October 3, 1989, to reflect the change of the Company's name to
Bristol-Myers Squibb Company (incorporated herein by reference to
Exhibit 10v to the Form 10-K for the fiscal year ended December 31,
1989).
**10p. Employment agreement of March 1998 for Charles A. Heimbold, Jr.,
filed herewith.
21. Subsidiaries of the Registrant (filed herewith).
23. Consent of Price Waterhouse LLP(filed herewith).
27. Bristol-Myers Squibb Company Financial Data Schedule (filed herewith).
99. Additional Exhibit (filed herewith).
(b) Reports on Form 8-K
None.
62
<PAGE>
SIGNATURES
-----------
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized.
BRISTOL-MYERS SQUIBB COMPANY
(Registrant)
By /s/ Charles A. Heimbold, Jr.
----------------------------------
Charles A. Heimbold, Jr.
Chairman of the Board and
Chief Executive Officer
March 31, 1998
----------------------------------
Date
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
---------- -------- -------
Chairman of the Board,
Chief Executive Officer
And Director (Principal
/s/ Charles A. Heimbold, Jr. Executive Officer) March 31, 1998
- ------------------------------
(Charles A. Heimbold, Jr.)
Chief Financial Officer
and Senior Vice President
Corporate Staff(Principal
/s/ Michael F. Mee Financial Officer) March 31, 1998
- ------------------------------
(Michael F. Mee)
Controller and Vice President,
Financial Operations,
Corporate Staff (Principal
/s/ Frederick S. Schiff Accounting Officer) March 31, 1998
- ------------------------------
(Frederick S. Schiff)
63
<PAGE>
Signature Title Date
- -------- ------ ------
/s/ Robert E. Allen Director March 31, 1998
- -----------------------------
(Robert E. Allen)
/s/ Vance D. Coffman Director March 31, 1998
- -----------------------------
(Vance D. Coffman)
/s/ Ellen V. Futter Director March 31, 1998
- -----------------------------
(Ellen V. Futter)
/s/ Louis V. Gerstner, Jr. Director March 31, 1998
- -----------------------------
(Louis V. Gerstner, Jr.)
/s/ Laurie H. Glimcher, M.D. Director March 31, 1998
- -----------------------------
(Laurie H. Glimcher, M.D.)
/s/ John D. Macomber Director March 31, 1998
- -----------------------------
(John D. Macomber)
/s/ James D. Robinson III Director March 31, 1998
- -----------------------------
(James D. Robinson III)
/s/ Andrew C. Sigler Director March 31, 1998
- -----------------------------
(Andrew C. Sigler)
/s/ Louis W. Sullivan, M.D. Director March 31, 1998
- -----------------------------
(Louis W. Sullivan, M.D.)
Executive Vice President,
President Worldwide Medicines
/s/ Kenneth E. Weg Group and Director March 31, 1998
- ----------------------------
(Kenneth E. Weg)
64
<PAGE>
EXHIBIT INDEX
-------------
The Exhibits listed below are identified by numbers corresponding to the
Exhibit Table of Item 601 of Regulation S-K. The Exhibits designed by
two asterisks (**) are management contracts or compensatory plans or
arrangements required to be filed pursuant to this Item 14. An asterisk
(*) in the Page column indicates that the Exhibit has been previously
filed with the Commission and is incorporated herein by reference.
Unless otherwise indicated, all Exhibits are part of Commission File
Number 1-1136.
Exhibit Number and Description Page
------------------------------ ----
3a. Restated Certificate of Incorporation of Bristol- *
Myers Squibb Company (incorporated herein by
reference to Exhibit 4a to Registration Statement
No. 33-33682 on Form S-3).
3b. Bylaws of Bristol-Myers Squibb Company, as amended *
through January 1, 1998 (incorporated herein by
reference to Exhibit 4(b) to Registration Statement
on Form S-8 filed March 5, 1998).
4a. Letter of Agreement dated March 28, 1984 *
(incorporated herein by reference to Exhibit 4 to
Form 10-K for the fiscal year ended December 31,1983).
4b. Indenture, dated as of June 1, 1993, between *
Bristol-Myers Squibb Company and The Chase
Manhattan Bank (National Association), as trustee
(incorporated herein by reference to Exhibit 4.1
to the Form 8-K dated May 27, 1993, and filed on
June 3, 1993).
4c. Form of 7.15% Debenture Due 2023 of Bristol-Myers *
Squibb Company (incorporated herein by reference
to Exhibit 4.2 to the Form 8-K dated May 27, 1993,
and filed on June 3, 1993).
4d. Form of 6.80% Debenture Due 2026 of Bristol-Myers *
Squibb Company (incorporated herein by reference to
Exhibit 4e to the Form 10-K for the fiscal year
ended December 31, 1996).
4e. Form of 6.875% Debenture Due 2097 of Bristol-Myers *
Squibb Company (incorporated herein by reference to
Exhibit 4f to the Form 10-Q for the quarterly period
ended September 30, 1997).
65
<PAGE>
Exhibit Number and Description Page
------------------------------ ----
4f. Five Year Competitive Advance and Revolving E-1-1
Credit Facility Agreement dated as of March 17,
1998 among Bristol-Myers Squibb Company, the
Borrowing Subsidiaries (as defined in the Agreement),
the Lenders listed in Schedule 2.1 to the Agreement,
The Chase Manhattan Bank as Administrative Agent and
Citibank, N.A., as Administrative Agent.
4g. 364-Day Competitive Advance and Revolving Credit E-2-1
Facility Agreement dated as of March 17, 1998 among
Bristol-Myers Squibb Company, the Borrowing
Subsidiaries (as defined in the Agreement), the Lenders
listed in Schedule 2.1 to the Agreement, The Chase
Manhattan Bank as Administrative Agent and Citibank,
N.A., as Administrative Agent.
** 10a. Bristol-Myers Squibb Company 1997 Stock Incentive E-3-1
Plan, effective as of May 6, 1997 and as amended
effective December 2, 1997 (incorporated herein
by reference to Exhibit 99(a) to the Registration
Statement on Form S-8 filed March 5, 1998).
** 10b. Bristol-Myers Squibb Company Executive Performance *
Incentive Plan (incorporated herein by reference to
Exhibit 10b to the Form 10-K for the fiscal year
ended December 31, 1996).
** 10c. Bristol-Myers Squibb Company 1983 Stock Option Plan, E-4-1
as amended and restated as of September 10, 1996, as
amended January 1, 1997.
** 10d. Squibb Corporation 1982 Option, Restricted Stock *
and Performance Unit Plan, as amended (incorporated
by reference to Exhibit 10b to the Form 10-K for
the fiscal year ended December 31, 1993).
** 10e. Squibb Corporation 1986 Option, Restricted Stock *
and Performance Unit Plan, as amended (as adopted,
incorporated herein by reference to Exhibit 10k to
the Squibb Corporation Form 10-K for the fiscal
year ended December 31, 1988, File No. 1-5514, as
amended July 1, 1993, incorporated herein
by reference to Exhibit 10c to the Form 10-K for
the fiscal year ended December 31, 1993).
** 10f. Bristol-Myers Squibb Company Performance Incentive *
Plan, as amended (as adopted, incorporated herein
by reference to Exhibit 2 to the Form 10-K for the
66
<PAGE>
Exhibit Number and Description Page
------------------------------ ----
fiscal year ended December 31, 1978; as amended as
of January 8, 1990, incorporated herein by reference
to Exhibit 19b to the Form 10-K for the fiscal year
ended December 31, 1990; as amended on April 2, 1991,
incorporated herein by reference to Exhibit 19b to
the Form 10-K for the fiscal year ended December 31,
1991; as amended effective on January 1, 1994, and
incorporated herein by reference to Exhibit 10d to the
Form 10-K for the fiscal year ended December 31, 1994).
** 10g. Benefit Equalization Plan of Bristol-Myers Squibb *
Company and its Subsidiary or Affiliated
Corporations Participating in the Bristol-Myers
Squibb Company Retirement Income Plan or the
Bristol-Myers Squibb Puerto Rico, Inc. Retirement
Income Plan, as amended (as amended and restated as
of January 1, 1993, as amended effective October 1,
1993, incorporated herein by reference to Exhibit
10e to the Form 10-K for the fiscal year ended
December 31, 1993 and amended effective February 1,
1995, incorporated by reference to Exhibit 10e
to the Form 10-K for the fiscal year ended
December 31, 1995).
** 10h. Benefit Equalization Plan of Bristol-Myers Squibb *
Company and its Subsidiary or Affiliated Corporations
Participating in the Bristol-Myers Squibb Company
Savings and Investment Program, as amended (as
amended and restated as of May 1, 1990, incorporated
herein by reference to Exhibit 19d to the Form 10-K
for the fiscal year ended December 31, 1990; as
amended as of January 1, 1991, incorporated herein
by reference to Exhibit 19g to the Form 10-K for the
fiscal year ended December 31, 1990; as amended as
of January 1, 1991, incorporated herein by reference
to Exhibit 19e to the Form 10-K for the fiscal year
ended December 31, 1991; as amended as of October 1,
1994, incorporated herein by reference to Exhibit
10f of the Form 10-K for the fiscal year ended
December 31, 1994).
** 10i. Squibb Corporation Supplementary Pension Plan, as *
amended (as previously amended and restated,
incorporated herein by reference to Exhibit 19g to
the Form 10-K for the fiscal year ended December 31,
1991; as amended on September 14, 1993, incorporated
by reference to Exhibit 10g to the Form 10-K for the
fiscal year ended December 31, 1993).
** 10j. Bristol-Myers Squibb Company Restricted Stock Award *
Plan, as amended (as adopted on November 7, 1989,
67
<PAGE>
Exhibit Number and Description Page
------------------------------ ----
incorporated herein by reference to Exhibit 10t to
the Form 10-K for the fiscal year ended December 31,
1989; as amended on December 4, 1990, incorporated
herein by reference to Exhibit 19a to the Form 10-K
for the fiscal year ended December 31, 1990; as
amended July 1, 1993, incorporated by reference to
Exhibit 10h to the Form 10-K for the fiscal year
ended December 31, 1993; as amended effective
December 6, 1994, incorporated by reference to
Exhibit 10h to the Form 10-K for the fiscal year
Ended January 31, 1994).
** 10k. Bristol-Myers Squibb Company Retirement Income Plan *
for Non-Employee Directors, as amended to March 5,1996
(incorporated herein by reference to Exhibit 10k
to the Form 10-K for the fiscal year ended December
31, 1996).
** 10l. Bristol-Myers Squibb Company 1987 Deferred E-5-1
Compensation Plan for Non-Employee Directors,
as amended to January 13, 1998.
** 10m. Bristol-Myers Squibb Company Non-Employee Directors' E-6-1
Stock Option Plan, as amended (as approved by the
Stockholders on May 1, 1990, incorporated herein by
reference to Exhibit 28 to Registration Statement
No. 33-38587 on Form S-8; as amended May 7, 1991,
incorporated herein by reference to Exhibit 19c to
the Form 10-K for the fiscal year ended December 31,
1991), as amended January 13, 1998.
** 10n. Squibb Corporation Deferral Plan for Fees of Outside *
Directors, as amended (as adopted, incorporated
herein by reference to Exhibit 10e to the Squibb
Corporation Form 10-K for the fiscal year ended
December 31, 1987, File No. 1-5514; as amended
effective December 31, 1991, incorporated herein
by reference to Exhibit 10m to the Form 10-K for
the fiscal year ended December 31, 1992).
** 10o. Amendment to all of the Company's plans, agreements, *
legal documents and other writings, pursuant to
action of the Board of Directors on October 3,
1989, to reflect the change of the Company's name to
Bristol-Myers Squibb Company (incorporated herein by
reference to Exhibit 10v to the Form 10-K for the
fiscal year ended December 31, 1989).
68
<PAGE>
Exhibit Number and Description Page
------------------------------ ----
** 10p. Employment agreement of March 1998 for Charles A. E-7-1
Heimbold, Jr.
21. Subsidiaries of the Registrant. E-8-1
23. Consent of Price Waterhouse LLP. E-9-1
27. Bristol-Myers Squibb Company Financial E-10-1
Data Schedule
99. Additional Exhibit E-11-1
69
<PAGE>
SCHEDULE II
-----------
BRISTOL-MYERS SQUIBB COMPANY
VALUATION AND QUALIFYING ACCOUNTS
(dollars in millions)
Additions
Balance at charged to Deductions- Balance at
beginning costs and bad debts end
Description of period expenses written off of period
- --------------- ---------- ---------- ------------ ----------
Allowances for
discounts and
doubtful accounts:
For the year ended
December 31, 1997 $107 $19 $17 $109
========== ========== ============ ===========
For the year ended
December 31, 1996 $100 $39 $32 $107
========== ========== ============ ===========
For the year ended
December 31, 1995 $77 $31 $8 $100
========== ========== ============ ===========
S-1
EXHIBIT 4f
----------
$250,000,000
FIVE YEAR COMPETITIVE ADVANCE AND
REVOLVING CREDIT FACILITY AGREEMENT
Dated as of March 17, 1998
Among
BRISTOL-MYERS SQUIBB COMPANY,
THE BORROWING SUBSIDIARIES,
THE LENDERS NAMED HEREIN,
CITIBANK, N.A., as Administrative Agent
and
THE CHASE MANHATTAN BANK, as Administrative Agent
E-1-1
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions. . . . . . . . . . . . . 1
SECTION 1.1 Defined Terms. . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Classification of Loans and Borrowings . . . . . 15
SECTION 1.3 Terms Generally. . . . . . . . . . . . . . . . . 16
SECTION 1.4 Accounting Terms; GAAP . . . . . . . . . . . . . 16
ARTICLE II
The Credits. . . . . . . . . . . . . 16
SECTION 2.1 Commitments. . . . . . . . . . . . . . . . . . . 16
SECTION 2.2 Loans and Borrowings . . . . . . . . . . . . . . 16
SECTION 2.3 Requests for Revolving Borrowings. . . . . . . . 17
SECTION 2.4 Competitive Bid Procedure. . . . . . . . . . . . 18
SECTION 2.5 Extension of Maturity Date . . . . . . . . . . . 20
SECTION 2.6 Increase of Commitments. . . . . . . . . . . . . 22
SECTION 2.7 Funding of Borrowings. . . . . . . . . . . . . . 23
SECTION 2.8 Interest Elections . . . . . . . . . . . . . . . 24
SECTION 2.9 Termination and Reduction of Commitments . . . . 25
SECTION 2.10 Repayment of Loans; Evidence of Debt. . . . . . 26
SECTION 2.11 Prepayment of Loans . . . . . . . . . . . . . . 27
SECTION 2.12 Fees. . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.13 Interest. . . . . . . . . . . . . . . . . . . . 28
SECTION 2.14 Alternate Rate of Interest. . . . . . . . . . . 28
SECTION 2.15 Increased Costs . . . . . . . . . . . . . . . . 29
SECTION 2.16 Break Funding Payments. . . . . . . . . . . . . 30
SECTION 2.17 Taxes . . . . . . . . . . . . . . . . . . . . . 31
SECTION 2.18 Payments Generally; Pro Rata Treatment;
Sharing of Set-offs . . . . . . . . . . . . 34
SECTION 2.19 Mitigation Obligations; Replacement of Lenders. 35
SECTION 2.20 Borrowing Subsidiaries. . . . . . . . . . . . . 36
ARTICLE III
Representations and Warranties . . . . . . . . 36
SECTION 3.1 Organization; Powers . . . . . . . . . . . . . . 36
SECTION 3.2 Authorization. . . . . . . . . . . . . . . . . . 37
SECTION 3.3 Enforceability . . . . . . . . . . . . . . . . . 37
E-1-2
<PAGE>
SECTION 3.4 Governmental Approvals . . . . . . . . . . . . . 37
SECTION 3.5 Financial Statements; No Material Adverse Change 37
SECTION 3.6 Litigation; Compliance with Laws . . . . . . . . 38
SECTION 3.7 Federal Reserve Regulations. . . . . . . . . . . 38
SECTION 3.8 Use of Proceeds. . . . . . . . . . . . . . . . . 38
SECTION 3.9 Taxes. . . . . . . . . . . . . . . . . . . . . . 38
SECTION 3.10 Employee Benefit Plans. . . . . . . . . . . . . 38
SECTION 3.11 Environmental and Safety Matters. . . . . . . . 39
SECTION 3.12 Properties. . . . . . . . . . . . . . . . . . . 39
SECTION 3.13 Investment and Holding Company Status . . . . . 39
ARTICLE IV
Conditions . . . . . . . . . . . . . 39
SECTION 4.1 Effective Date . . . . . . . . . . . . . . . . . 39
SECTION 4.2 Each Credit Event. . . . . . . . . . . . . . . . 40
SECTION 4.3 Initial Borrowing by Each Borrowing Subsidiary . 41
ARTICLE V
Covenants . . . . . . . . . . . . . 41
SECTION 5.1 Existence. . . . . . . . . . . . . . . . . . . . 41
SECTION 5.2 Business and Properties. . . . . . . . . . . . . 41
SECTION 5.3 Financial Statements, Reports, Etc.. . . . . . . 41
SECTION 5.4 Insurance. . . . . . . . . . . . . . . . . . . . 42
SECTION 5.5 Obligations and Taxes. . . . . . . . . . . . . . 42
SECTION 5.6 Litigation and Other Notices . . . . . . . . . . 42
SECTION 5.7 Books and Records. . . . . . . . . . . . . . . . 43
SECTION 5.8 Consolidations, Mergers, and Sales of Assets . . 43
SECTION 5.9 Liens. . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.10 Limitation on Sale and Leaseback Transactions . 44
ARTICLE VI
Events of Default . . . . . . . . . . . 45
ARTICLE VII
E-1-3
<PAGE>
The Administrative Agents . . . . . . . . . 47
ARTICLE VIII
Miscellaneous . . . . . . . . . . . . 50
SECTION 8.1 Notices. . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.2 Survival of Agreement. . . . . . . . . . . . . . 50
SECTION 8.3 Binding Effect . . . . . . . . . . . . . . . . . 51
SECTION 8.4 Successors and Assigns . . . . . . . . . . . . . 51
SECTION 8.5 Expenses; Indemnity. . . . . . . . . . . . . . . 54
SECTION 8.6 Applicable Law . . . . . . . . . . . . . . . . . 54
SECTION 8.7 Waivers; Amendment . . . . . . . . . . . . . . . 54
SECTION 8.8 Entire Agreement . . . . . . . . . . . . . . . . 55
SECTION 8.9 Severability . . . . . . . . . . . . . . . . . . 55
SECTION 8.10 Counterparts. . . . . . . . . . . . . . . . . . 55
SECTION 8.11 Headings. . . . . . . . . . . . . . . . . . . . 55
SECTION 8.12 Right of Setoff . . . . . . . . . . . . . . . . 56
SECTION 8.13 Jurisdiction; Consent to Service of Process . . 56
SECTION 8.14 Waiver of Jury Trial. . . . . . . . . . . . . . 56
SECTION 8.15 Conversion of Currencies. . . . . . . . . . . . 57
SECTION 8.16 Guaranty. . . . . . . . . . . . . . . . . . . . 57
SECTION 8.17 European Monetary Union . . . . . . . . . . . . 59
SCHEDULES:
Schedule 2.1 -- Commitments
EXHIBITS:
Exhibit A-1 -- Competitive Bid Request
Exhibit A-2 -- Notice of Competitive Bid Request
Exhibit A-3 -- Competitive Bid
Exhibit A-4 -- Competitive Bid Accept/Reject Letter
Exhibit A-5 -- Borrowing Request
Exhibit B -- Form of Assignment and Acceptance
Exhibit C -- Form of Opinion of Company's Counsel
Exhibit D -- Form of Administrative Questionnaire
Exhibit E -- Form of Borrowing Subsidiary Agreement
Exhibit F -- Form of Borrowing Subsidiary Termination
E-1-4
<PAGE>
FIVE YEAR COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY
AGREEMENT (the "Agreement") dated as of March 17, 1998, among BRISTOL-MYERS
SQUIBB COMPANY, a Delaware corporation (the "Company"), the BORROWING
SUBSIDIARIES (as defined herein), the lenders listed in Schedule 2.1 (the
"Lenders"), THE CHASE MANHATTAN BANK, a New York banking corporation, as
administrative agent for the Lenders (in such capacity, "Chase"), and CITIBANK,
N.A., as administrative agent for the Lenders (in such capacity, "Citibank";
Chase and Citibank are referred to herein individually as an "Administrative
Agent" and collectively as the "Administrative Agents") and as competitive
advance facility agent (in such capacity, the "Advance Agent").
The Company has requested that the Lenders, on the terms and subject
to the conditions herein set forth (i) extend credit to the Company and the
applicable Borrowing Subsidiaries to enable them to borrow on a standby
revolving credit basis on and after the date hereof and at any time and from
time to time prior to the Maturity Date (such term and each other capitalized
term used but not defined herein having the meaning assigned to it in Article
I) a principal amount not in excess of $250,000,000 (as such amount may be
increased pursuant to Section 2.6) and (ii) provide a procedure pursuant to
which the Company and the Borrowing Subsidiaries may invite the Lenders to bid
on an uncommitted basis on short-term borrowings by the Company or the
applicable Borrowing Subsidiary. The proceeds of such borrowings are to be
used for working capital and other general corporate purposes (other than
hostile acquisitions), including commercial paper backup and repurchase of
shares. The Lenders are willing to extend such credit on the terms and
subject to the conditions herein set forth.
Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.1 Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Alternate Base Rate.
"Administrative Fees" shall have the meaning assigned to such term
in Section 2.12(b).
"Administrative Questionnaire" shall mean an administrative
questionnaire delivered by a Lender pursuant to Section 8.4(e) in the form
of Exhibit D.
"Affiliate" shall mean, when used with respect to a specified
Person, another Person that directly, or indirectly, Controls or is Controlled
by or is under common Control with the Person specified.
E-1-5
<PAGE>
"Alternate Base Rate" shall mean for any day, a rate per annum equal
to the greatest of (a) the rate of interest per annum publicly announced from
time to time by Citibank as its base rate in effect at its principal office
in New York City, (b) 1/2 of one percent above the Federal Funds Effective
Rate and (c) the Base CD Rate in effect for such day plus 1%. If for any
reason Citibank shall have determined (which determination shall be conclusive
absent manifest error) that it is unable to ascertain the Base CD Rate or
Federal Funds Effective Rate, or both, specified in clause (b) or (c),
respectively, of the first sentence of this definition, for any reason,
including, without limitation, the inability or failure of Citibank to obtain
sufficient quotations in accordance with the terms hereof, the Alternate Base
Rate shall be determined without regard to clause (b) or (c), or both, of
the first sentence of this definition until the circumstances giving rise to
such inability no longer exist. Any change in the Alternate Base Rate shall
be effective on the effective date of any change in such rate.
"Alternative Currency" shall mean at any time, a common currency of
the European monetary union and any currency (other than Dollars) that is
readily available, freely traded and convertible into Dollars in the London
market and as to which a Dollar Equivalent can be calculated.
"Applicable Percentage" shall mean, with respect to any Lender, the
percentage of the total Commitments represented by such Lender's Commitment.
If the Commitments have terminated or expired, Applicable Percentage shall
mean, with respect to any Lender, the percentage of the aggregate outstanding
principal amount of the Loans represented by the aggregate outstanding
principal amount of each Lender's Loans.
"Applicable Rate" shall mean on any date, with respect to any
Eurocurrency Revolving Loan, or with respect to the facility fees payable
hereunder, as the case may be, the applicable rate per annum set forth
below under the caption "Eurocurrency Spread" or "Facility Fee Rate", as the
case may be, based upon the Ratings by Moody's and S&P, respectively, in
effect on such date:
E-1-6
<PAGE>
Ratings:
Eurocurrency Facility Fee
Spread Rate
------------ ------------
Category 1
Aa3 or higher by Moody's; .100% .050%
AA- or higher by S&P
Category 2
A3 or higher but lower .175% .075%
than Aa3 by Moody's;
A- or higher but lower
than AA- by S&P
Category 3
Baa2 or higher but lower .150% .125%
than A3 by Moody's;
BBB or higher but lower
than A- by S&P
Category 4
lower than Baa2 by Moody's; .300% .200%
lower than BBB by S&P
For purposes of the foregoing, (i) if the Ratings shall fall within different
Categories, the Applicable Rate shall be based upon the higher of the two
Ratings unless the Ratings are more than one level apart, in which case the
Applicable Rate shall be based upon the Rating one level below the higher
Rating, and (ii) if any Rating shall be changed (other than as a result of a
change in the rating system of the applicable Rating Agency), such change
shall be effective as of the date on which it is first announced by the Rating
Agency making such change. Each such change in the Applicable Rate shall
apply during the period commencing on the effective date of such change and
ending on the date immediately preceding the effective date of the next such
change. If the rating system of any Rating Agency shall change, the parties
hereto shall negotiate in good faith to amend this definition to reflect such
changed rating system. If either Rating Agency shall cease to be in the
business of rating corporate debt obligations or shall not otherwise have in
effect a Rating, the Applicable Rate shall be determined by reference to the
Rating from the other Rating Agency. The Company shall always cause a Rating
to be maintained by at least one Rating Agency.
"Assessment Rate" shall mean, for any day, the net annual assessment
rate (rounded upwards, if necessary, to the next higher Basis Point) as most
recently estimated by Citibank for determining the then current annual
assessment payable by Citibank to the Federal Deposit Insurance Corporation
(or any successor) for insurance by such Corporation (or such successor) of
time deposits made in dollars at Citibank's domestic offices.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee in the form of Exhibit B.
E-1-7
<PAGE>
"Availability Period" shall mean the period from and including the
Effective Date to but excluding the earlier of the Maturity Date and the date
of termination of the Commitments.
"Base CD Rate" shall mean the sum of (a) the product of (i) the
Average Weekly Three-Month Secondary CD Rate times (ii) a fraction of which
the numerator is 100% and the denominator is 100% minus the aggregate rates
of (A) basic and supplemental reserve requirements in effect on the date of
effectiveness of such Average Weekly Three-Month Secondary CD Rate, as set
forth below, under Regulation D of the Board applicable to certificates of
deposit in units of $100,000 or more issued by a "member bank" located in a
"reserve city" (as such terms are used in Regulation D) and (B) marginal
reserve requirements in effect on such date of effectiveness under Regulation
D applicable to time deposits of a "member bank" and (b) the Assessment Rate.
"Average Weekly Three-Month Secondary CD Rate" shall mean the three-month
secondary certificate of deposit ("CD") rate for the most recent weekly period
covered therein in the Federal Reserve Statistical release entitled "Weekly
Summary of Lending and Credit Measures (Averages of daily figures)" released
in the week during which occurs the day for which the CD rate is being
determined. The CD rate so reported shall be in effect, for the purposes of
this definition, for each day of the week in which the release date of such
publication occurs. If such publication or a substitute containing the
foregoing rate information is not published by the Federal Reserve for any
week, such average rate shall be determined by Citibank on the basis of
quotations received by it from three New York City negotiable certificate of
deposit dealers of recognized standing on the first Business Day of the week
succeeding such week for which such rate information is not published.
"Basis Point" shall mean 1/100th of 1%.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States of America.
"Board of Directors" shall mean either the board of directors of
the Company or any duly authorized committee thereof or any committee of
officers of the Company acting pursuant to authority granted by the board
of directors of the Company or any committee of such board.
"Borrower" shall mean the Company or any Borrowing Subsidiary.
"Borrowing" shall mean (a) Revolving Loans of the same Type, made,
converted or continued on the same date and, in the case of Eurocurrency
Loans, as to which a single Interest Period is in effect or (b) a Competitive
Loan or group of Competitive Loans of the same Type made on the same date and
as to which a single Interest Period is in effect.
"Borrowing Request" shall mean a request by the Company for a
Revolving Borrowing in accordance with Section 2.3.
"Borrowing Subsidiary" shall mean any Subsidiary of the Company
designated as a Borrowing Subsidiary by the Company pursuant to Section 2.20.
"Borrowing Subsidiary Agreement" shall mean a Borrowing Subsidiary
Agreement substantially in the form of Exhibit E.
E-1-8
<PAGE>
"Borrowing Subsidiary Obligations" shall mean the due and punctual
payment of (i) the principal of and interest on any Loans made by the Lenders
to the Borrowing Subsidiaries pursuant to this Agreement, when and as due,
whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, and (ii) all other monetary obligations, including
fees, costs, expenses and indemnities (including, without limitation, the
obligations described in Section 2.20) of the Borrowing Subsidiaries to the
Lenders under this Agreement and the other Loan Documents.
"Borrowing Subsidiary Termination" shall mean a Borrowing Subsidiary
Termination substantially in the form of Exhibit F.
"Business Day" shall mean any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York) on which banks
are open for business in New York City; provided, however, that, when used in
connection with a Eurocurrency Loan, the term "Business Day" shall also
exclude any day on which banks are not open for dealings in dollar deposits
in the London interbank market, or in the city which is the principal
financial center of the country of issuance of the applicable Alternative
Currency.
"Capital Lease Obligations" of any Person shall mean the obligations
of such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
"Change in Control" shall be deemed to have occurred if (a) any
Person or group of Persons (other than (i) the Company, (ii) any Subsidiary
or (iii) any employee or director benefit plan or stock plan of the Company
or a Subsidiary or any trustee or fiduciary with respect to any such plan
when acting in that capacity or any trust related to any such plan) shall
have acquired beneficial ownership of shares representing more than 20% of
the combined voting power represented by the outstanding Voting Shares of the
Company (within the meaning of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended, and the applicable rules and regulations
thereunder), or (b) during any period of 12 consecutive months, commencing
before or after the date of this Agreement, individuals who on the first day
of such period were directors of the Company (together with any replacement
or additional directors who were nominated or elected by a majority of
directors then in office) cease to constitute a majority of the Board of
Directors of the Company.
"Change in Law" shall mean (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule
or regulation or in the interpretation or application thereof by any
Governmental Authority after the date of this Agreement or (c) compliance by
any Lender (or, for purposes of Section 2.15(b), by any lending office of such
Lender or by such Lender's holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
"Class", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Revolving
Loans or Competitive Loans.
E-1-9
<PAGE>
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Commitment" shall mean, with respect to each Lender, the commitment
of such Lender to make Revolving Loans expressed as an amount representing
the maximum aggregate amount of such Lender's Revolving Credit Exposure
hereunder, as such commitment may be (a) reduced from time to time pursuant
to Section 2.9, (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 8.4, and (c) increased
pursuant to Section 2.6. The initial amount of each Lender's Commitment is
set forth on Schedule 2.1, or in the Assignment and Acceptance pursuant to
which such Lender shall have assumed its Commitment, as applicable. The
initial aggregate amount of the Lenders' Commitments is $250,000,000.
"Company" shall mean Bristol-Myers Squibb Company, a Delaware
corporation.
"Competitive Bid" shall mean an offer by a Lender to make a
Competitive Loan pursuant to Section 2.4.
"Competitive Bid Accept/Reject Letter" shall mean a notification
made by the Company pursuant to Section 2.4(d) in the form of Exhibit A-4.
"Competitive Bid Rate" shall mean, as to any Competitive Bid, the
Margin or the Fixed Rate, as applicable, offered by the Lender making such
Competitive Bid.
"Competitive Bid Request" shall mean a request made pursuant to
Section 2.4 in the form of Exhibit A-1.
"Competitive Borrowing" shall mean a Borrowing consisting of a
Competitive Loan or concurrent Competitive Loans from the Lender or Lenders
whose Competitive Bids for such Borrowing have been accepted under the bidding
procedure described in Section 2.4.
"Competitive Loan" shall mean a Loan made pursuant to Section 2.4.
Each Competitive Loan shall be a Eurocurrency Competitive Loan or a Fixed Rate
Loan.
"Competitive Loan Exposure" shall mean, with respect to any Lender
at any time, the sum of (a) the aggregate principal amount of the outstanding
Competitive Loans of such Lender denominated in Dollars and (b) the sum of the
Dollar Equivalents of the aggregate principal amounts of the outstanding
Competitive Loans of such Lender denominated in Alternative Currencies.
"Consolidated Net Tangible Assets" shall mean, with respect to the
Company, the total amount of its assets (less applicable reserves and other
properly deductible items) after deducting (i) all current liabilities
(excluding the amount of those which are by their terms extendable or renewable
at the option of the obligor to a date more than 12 months after the date as
of which the amount is being determined) and (ii) all goodwill, tradenames,
trademarks, patents, unamortized debt discount and expense and other like
intangible assets, all as set forth on the most recent balance sheet of the
Company and its consolidated subsidiaries and determined on a consolidated
basis in accordance with GAAP.
E-1-10
<PAGE>
"Consolidated Net Worth" shall mean at any time for the determination
thereof the sum of all amounts which, in conformity with GAAP, would be
included under the caption "total stockholders' equity" (or any like caption)
on a consolidated balance sheet of the Company and its Subsidiaries as at such
time.
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise. "Controlling" and "Controlled" have meanings correlative thereto.
"Currency" shall mean Dollars or any Alternative Currency.
"Debt" shall mean (i) all obligations represented by notes, bonds,
debentures or similar evidences of indebtedness; (ii) all indebtedness for
borrowed money or for the deferred purchase price of property or services
other than, in the case of any such deferred purchase price, on normal trade
terms and (iii) all rental obligations as lessee under leases which shall have
been or should be recorded as Capital Lease Obligations.
"Default" shall mean any event or condition which constitutes an
Event of Default or which upon notice, lapse of time or both would, unless
cured or waived, become an Event of Default.
"Dollar Equivalent" shall mean, with respect to any principal
amount of any Competitive Loan denominated in an Alternative Currency, the
equivalent in Dollars of such amount, determined by Citibank using the
Exchange Rate in effect for such Alternative Currency at approximately
11:00 a.m. London time on the date of the Competitive Bid Request that
resulted in the making of such Competitive Loan.
"Dollars" or "$" shall mean lawful money of the United States
of America.
"Effective Date" means the date on which the conditions specified
in Section 4.1 are satisfied (or waived in accordance with Section 8.7).
"Environmental and Safety Laws" shall mean any and all applicable
current and future treaties, laws (including without limitation common law),
regulations, enforceable requirements, binding determinations, orders,
decrees, judgments, injunctions, permits, approvals, authorizations,
licenses, permissions, written notices or binding agreements issued,
promulgated or entered by any Governmental Authority, relating to the
environment, to employee health or safety as it pertains to the use or
handling of, or exposure to, any hazardous substance or contaminant, to
preservation or reclamation of natural resources or to the management, release
or threatened release of any hazardous substance, contaminant, or noxious
odor, including without limitation the Hazardous Materials Transportation
Act, the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended by the Superfund Amendments and Reauthorization Act of
1986, the Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976 and the Hazardous and Solid Waste Amendments of 1984,
the Federal Water Pollution Control Act, as amended by the Clean Water Act of
1977, the Clean Air Act of 1970, as amended, the Toxic Substances Control Act
of 1976, the Occupational Safety and Health Act of 1970, as amended, the
Emergency Planning and Community Right-to-Know Act of 1986, the Safe Drinking
Water Act of 1974, as amended, any similar or implementing state law, all
amendments of any of them, and any regulations promulgated under any of them.
E-1-11
<PAGE>
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with the Company, is treated as a single employer
under Section 414 of the Code.
"ERISA Termination Event" shall mean (i) a "Reportable Event"
described in Section 4043 of ERISA and the regulations issued thereunder
(other than a "Reportable Event" not subject to the provision for 30-day notice
to the PBGC under such regulations), or (ii) the withdrawal of the Company or
any of its ERISA Affiliates from a "single employer" Plan during a plan year
in which it was a "substantial employer", both of such terms as defined in
Section 4001(a) of ERISA, or (iii) the filing of a notice of intent to
terminate a Plan or the treatment of a Plan amendment as a termination under
Section 4041 of ERISA, or (iv) the institution of proceedings to terminate a
Plan by the PBGC or (v) any other event or condition which is reasonably
likely to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Plan or (vi) the
partial or complete withdrawal of the Company or any ERISA Affiliate of the
Company from a Multiemployer Plan as defined in Section 4001(a)(3) of ERISA.
"Eurocurrency", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are
bearing interest at a rate determined by reference to the LIBO Rate.
"Event of Default" shall have the meaning assigned to such term in
Article VI.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Rate" shall mean, with respect to any Alternative Currency
on a particular date, the rate at which such Alternative Currency may be
exchanged into Dollars, as set forth on such date on the applicable Reuters
currency page with respect to such Alternative Currency; provided, that the
Company may make a one time election, with the approval of Citibank (such
approval not to be unreasonably withheld), to use Bloomberg currency pages
to determine Exchange Rate instead of Reuters currency pages. In the event
that such rate does not appear on the applicable Reuters currency page, or
Bloomberg currency page, as the case may be, the Exchange Rate with respect
to such Alternative Currency shall be determined by reference to such other
publicly available service for displaying exchange rates as may be agreed upon
by Citibank and the Company or, in the absence of such agreement, such
Exchange Rate shall instead be Citibank's spot rate of exchange in the London
interbank market or other market where its foreign currency exchange
operations in respect of such Alternative Currency is then being conducted,
at or about 10:00 A.M., local time, at such date for the purchase of Dollars
with such Alternative Currency for delivery two Business Days later; provided,
however, that if at the time of any such determination, for any reason, no
such spot rate is being quoted, Citibank may use any reasonable method it
deems appropriate to determine such rate, and such determination shall be
conclusive absent manifest error.
"Extension Letter" shall mean a letter from the Company requesting
an extension of the Maturity Date.
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"Federal Funds Effective Rate" shall mean, for any day, the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
released on the next succeeding Business Day by the Federal Reserve Bank of
New York, or, if such rate is not so released for any day which is a Business
Day, the arithmetic average (rounded upwards to the next 1/100th of 1%), as
determined by Citibank, of the quotations for the day of such transactions
received by Citibank from three Federal funds brokers of recognized standing
selected by it.
"Financial Officer" of any corporation shall mean the chief
inancial officer, principal accounting officer or treasurer of such
corporation.
"Fixed Rate" shall mean, with respect to any Competitive Loan
(other than a Eurocurrency Competitive Loan), the fixed rate of interest per
annum specified by the Lender making such Competitive Loan in its related
Competitive Bid.
"Fixed Rate Loan" shall mean a Competitive Loan bearing interest at
a Fixed Rate.
"Foreign Lender" shall mean, with respect to any Borrower, any
Lender that is organized under the laws of a jurisdiction other than that in
which such Borrower is located. For purposes of this definition, the United
States of America, each State thereof and the District of Columbia shall be
deemed to constitute a single jurisdiction.
"Funded Debt" shall mean Debt of the Company or a Subsidiary owning
Restricted Property maturing by its terms more than one year after its
creation and Debt classified as long-term debt under GAAP and, in the case of
Funded Debt of the Company, ranking at least pari passu with the Loans.
"GAAP" shall mean generally accepted accounting principles in the
United States of America.
"Governmental Authority" shall mean the government of any nation,
including, but not limited to, the United States of America, or any political
subdivision thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.
"Guarantee" of or by any Person (the "guarantor") shall mean any
obligation, contingent or otherwise, of the guarantor guaranteeing or having
the economic effect of guaranteeing any Indebtedness or other obligation of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b)
to purchase or lease property, securities or services for the purpose of
assuring the owner of such Indebtedness or other obligation of the payment
thereof, (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness or other obligation or
(d) as an account party in respect of any letter of credit or letter of
guaranty issued to support such Indebtedness or obligation; provided, that the
term Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business.
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"Hazardous Substances" shall mean any toxic, radioactive, mutagenic,
carcinogenic, noxious, caustic or otherwise hazardous substance, material or
waste, including petroleum, its derivatives, by-products and other
hydrocarbons, including, without limitation, polychlorinated biphenyls
("PCBs"), asbestos or asbestos-containing material, and any substance, waste
or material regulated or that could reasonably be expected to result in
liability under Environmental and Safety Laws.
"Indenture" shall mean the Indenture dated as of June 1, 1993
between the Company and Chase, as successor to The Chase Manhattan Bank
(National Association), as Trustee, as amended, supplemented or otherwise
modified from time to time.
"Interest Election Request" shall mean a request by the Company
to convert or continue a Revolving Borrowing in accordance with Section 2.8.
"Interest Payment Date" shall mean (a) with respect to any ABR Loan,
the last day of each March, June, September and December, (b) with respect to
any Eurocurrency Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurocurrency
Borrowing with an Interest Period of more than three months' duration, each
day prior to the last day of such Interest Period that occurs at intervals of
three months' duration after the first day of such Interest Period and (c)
with respect to any Fixed Rate Loan, the last day of the Interest Period
applicable to the Borrowing of which such Loan is a part and, in the case of
a Fixed Rate Borrowing with an Interest Period of more than 90 days' duration
(unless otherwise specified in the applicable Competitive Bid Request), each
day prior to the last day of such Interest Period that occurs at intervals of
90 days' duration after the first day of such Interest Period, and any other
dates that are specified in the applicable Competitive Bid Request as Interest
Payment Dates with respect to such Borrowing.
"Interest Period" shall mean (a) as to any Eurocurrency Borrowing,
the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is 1, 2, 3, 6 months
(or, if available, as determined by Citibank and each of the Lenders, 12
months) thereafter, as the Company may elect, and (b) as to any Fixed Rate
Borrowing, the period (which shall not be less than seven days or more than
360 days) commencing on the date of such Borrowing and ending on the date
specified in the applicable Competitive Bid Request; provided, that (i) if
any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless,
in the case of a Eurocurrency Borrowing only, such next succeeding Business
Day would fall in the next calendar month, in which case such Interest Period
shall end on the next preceding Business Day and (ii) any Interest Period
pertaining to a Eurocurrency Borrowing that commences on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall
end on the last Business Day of the last calendar month of such Interest
Period. For purposes hereof, the date of a Borrowing initially shall be the
date on which such Borrowing is made and, in the case of a Revolving
Borrowing, thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing.
"Lenders" shall mean (a) the financial institutions listed on
Schedule 2.1 (other than any such financial institution that has ceased to be
a party hereto, pursuant to an Assignment and Acceptance) and (b) any
financial institution that has become a party hereto pursuant to an
Assignment and Acceptance or pursuant to the provisions of Section 2.6.
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<PAGE>
"LIBO Rate" shall mean, with respect to any Eurocurrency Borrowing
for any Interest Period, the rate appearing on Page 3740 or Page 3750, as the
case may be, of Dow Jones Markets (or on any successor or substitute page of
such service, or any successor to or substitute for such service, providing
rate quotations comparable to those currently provided on such page of such
service, as determined by Citibank from time to time for purposes of
providing quotations of interest rates applicable to deposits in Dollars or
the applicable Alternative Currency in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for deposits in Dollars or
the applicable Alternative Currency with a maturity comparable to such Interest
Period. In the event that such rate is not available at such time for any
reason, then the "LIBO Rate" with respect to such Eurocurrency Borrowing for
such Interest Period shall be the rate per annum (rounded upwards, if
necessary, to the next Basis Point) equal to the arithmetic average of the
rates at which deposits in Dollars or the applicable Alternative Currency
approximately equal in principal amount to such Borrowing and for a maturity
comparable to such Interest Period are offered to the principal London
offices of the Reference Lenders (or, if any Reference Lender does not at
the time maintain a London office, the principal London office of any
Affiliate of such Reference Lender) in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period; provided, however,
that, if only two Reference Lenders notify Citibank of the rates offered to
such Reference Lenders (or any Affiliates of such Reference Lenders) as
aforesaid, the LIBO Rate with respect to such Eurocurrency Borrowing shall
be equal to the arithmetic average of the rates so offered to such Reference
Lenders (or any such Affiliates).
"Lien" shall mean any mortgage, lien, pledge, encumbrance, charge
or security interest.
"Loan Documents" means this Agreement, each Borrowing Subsidiary
Agreement, each Borrowing Subsidiary Termination and each promissory note
held by a Lender pursuant to Section 2.10(e).
"Loans" shall mean the loans made by the Lenders to the Borrowers
pursuant to this Agreement.
"Margin" shall mean, with respect to any Competitive Loan bearing
interest at a rate based on the LIBO Rate, the marginal rate of interest, if
any, to be added to or subtracted from the LIBO Rate in order to determine
the interest rate applicable to such Loan, as specified by the Lender making
such Loan in its related Competitive Bid.
"Margin Regulations" shall mean Regulations G, T, U and X of the
Board as from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Material Adverse Effect" shall mean a material adverse effect on
the business, operations, properties or financial condition of the Company
and its consolidated Subsidiaries, taken as a whole.
"Maturity", when used with respect to any Security, shall mean the
date on which the principal of such Security becomes due and payable as
provided therein or in the Indenture, whether on a Repayment Date, at the
Stated Maturity thereof or by declaration of acceleration, call for
redemption or otherwise.
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<PAGE>
"Maturity Date" shall mean March 17, 2003, subject to extension
pursuant to Section 2.5.
"Moody's" shall mean Moody's Investors Service, Inc. or any
successor thereto.
"Notice of Competitive Bid Request" shall mean a notification made
pursuant to Section 2.4 in the form of Exhibit A-2.
"Original Issue Discount Security" shall mean (i) any Security
which provides for an amount less than the principal amount thereof to be
due and payable upon a declaration of acceleration of the Maturity thereof,
and (ii) any other Security deemed an Original Issue Discount Security for
United States Federal income tax purposes.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred
to and defined in ERISA and any successor entity performing similar functions.
"Person" shall mean any natural Person, corporation, limited
liability company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan as defined in Section 4001(a)(3) of ERISA), subject to the
provisions of Title IV of ERISA or Section 412 of the Code that is maintained
for current or former employees, or any beneficiary thereof, of the Company
or any ERISA Affiliate.
"Rating Agencies" shall mean Moody's and S&P.
"Ratings" shall mean the ratings from time to time established by
the Rating Agencies for senior, unsecured, non-credit-enhanced long-term debt
of the Company.
"Reference Lenders" shall mean Chase, Citibank and Deutsche Bank AG.
"Register" shall have the meaning given such term in Section 8.4(d).
"Repayment Date", when used with respect to any Security to be
repaid, shall mean the date fixed for such repayment pursuant to such
Security.
"Required Lenders" shall mean, at any time, Lenders having
Revolving Credit Exposures and unused Commitments representing at least 51%
of the sum of the total Revolving Credit Exposures and unused Commitments at
such time; provided that, for purposes of declaring the Loans to be due and
payable pursuant to Article VI, and for all purposes after the Loans become
due and payable pursuant to Article VI or the Commitments shall have expired
or terminated, the Competitive Loan Exposures of the Lenders shall be
included in their respective Revolving Credit Exposures in determining the
Required Lenders.
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<PAGE>
"Restricted Property" shall mean (i) any manufacturing facility,
or portion thereof, owned or leased by the Company or any Subsidiary and
located within the continental United States of America which, in the opinion
of the Board of Directors of the Company, is of material importance to the
business of the Company and its Subsidiaries taken as a whole, but no such
manufacturing facility, or portion thereof, shall be deemed of material
importance if its gross book value (before deducting accumulated
depreciation) is less than 2% of Consolidated Net Tangible Assets, and (ii)
any shares of capital stock or indebtedness of any Subsidiary owning any such
manufacturing facility. As used in this definition, "manufacturing facility"
means property, plant and equipment used for actual manufacturing and for
activities directly related to manufacturing, and it excludes sales offices,
research facilities and facilities used only for warehousing, distribution or
general administration.
"Revolving Credit Exposure" shall mean, with respect to any Lender
at any time, the aggregate outstanding principal amount of such Lender's
Revolving Loans at such time.
"Revolving Loan" shall mean a Loan made pursuant to Section 2.3.
"Sale and Leaseback Transaction" shall mean any arrangement with
any Person pursuant to which the Company or any Subsidiary leases any
Restricted Property that has been or is to be sold or transferred by the
Company or the Subsidiary to such Person, other than (i) temporary leases
for a term, including renewals at the option of the lessee, of not more than
three years, (ii) leases between the Company and a Subsidiary or between
Subsidiaries, (iii) leases of Restricted Property executed by the time of,
or within 12 months after the latest of, the acquisition, the completion
of construction or improvement, or the commencement of commercial operation,
of such Restricted Property, and (iv) arrangements pursuant to any provision
of law with an effect similar to that under former Section 168(f)(8) of the
Internal Revenue Code of 1954.
"S&P" shall mean Standard & Poor's Ratings Group or any successor
thereto.
"SEC" shall mean the Securities and Exchange Commission.
"Security" or "Securities" shall mean any note or notes, bond or
bonds, debenture or debentures, or any other evidences of indebtedness, of
any series authenticated and delivered from time to time under the Indenture.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, shall mean the date
specified in such Security as the fixed date on which the principal of such
Security or such installment of principal or interest is due and payable.
"subsidiary" shall mean, with respect to any Person (the "parent")
at any date, (i) for purposes of Sections 5.9 and 5.10 only, any Person the
majority of the outstanding Voting Stock of which is owned, directly or
indirectly, by the parent or one or more subsidiaries of the parent of such
Person and (ii) for all other purposes under this Agreement, any corporation,
limited liability company, partnership, association or other entity the
accounts of which would be consolidated with those of the parent in the
parent's consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other
entity of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in
the case of a partnership, more than 50% of the general partnership interests
are, as of such date, owned, controlled or held.
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<PAGE>
"Subsidiary" shall mean a subsidiary of the Company.
"Taxes" shall mean any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any
Governmental Authority and all liabilities with respect thereto.
"Transactions" means the execution and delivery by the Borrowers of
this Agreement (or, in the case of the Borrowing Subsidiaries, the Borrowing
Subsidiary Agreements), the performance by the Borrowers of this Agreement,
the borrowing of the Loans and the use of the proceeds thereof.
"Type", when used in respect of any Loan or Borrowing, shall refer
to the Rate by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined. For purposes hereof, "Rate" shall
include the LIBO Rate, the Alternate Base Rate and the Fixed Rate.
"Value" shall mean, with respect to a Sale and Leaseback Transaction,
an amount equal to the present value of the lease payments with respect to
the term of the lease remaining on the date as of which the amount is being
determined, without regard to any renewal or extension options contained in
the lease, discounted at the weighted average interest rate on the Securities
of all series (including the effective interest rate on any Original Issue
Discount Securities) which are outstanding on the effective date of such Sale
and Leaseback Transaction and which have the benefit of Section 1007 of the
Indenture under which the Securities are issued.
"Voting Stock" shall mean, as applied to the stock of any
corporation, stock of any class or classes (however designated) having by the
terms thereof ordinary voting power to elect a majority of the members of the
board of directors (or other governing body) of such corporation other than
stock having such power only by reason of the happening of a contingency.
"Wholly Owned Subsidiary" of any Person shall mean a subsidiary of
such Person of which securities (except for directors' qualifying shares) or
other ownership interests representing 100% of the equity are, at the time
any determination is being made, owned 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.
SECTION 1.2 Classification of Loans and Borrowings. For purposes
of this Agreement, Loans may be classified and referred to by Class (e.g., a
"Revolving Loan") or by Type (e.g., a "Eurocurrency Loan") or by Class and
Type (e.g., a "Eurocurrency Revolving Loan"). Borrowings also may be
classified and referred to by Class (e.g., a "Revolving Borrowing") or by
Type (e.g., a "Eurocurrency Borrowing") or by Class and Type (e.g., a
"Eurocurrency Revolving Borrowing").
SECTION 1.3 Terms Generally. The definitions of terms herein
shall apply equally to the singular and plural forms of the terms defined.
Whenever 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". The word "will" shall be construed to have the same
meaning and effect as the word "shall". Unless the context requires
otherwise (a) any definition of or reference to any agreement, instrument
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<PAGE>
or other document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments,
supplements or modifications set forth herein), (b) any reference herein to
any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of
similar import, shall be construed to refer to this Agreement in its entirety
and not to any particular provision hereof, (d) all references herein to
Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, this Agreement and
(e) the words "asset" and "property" shall be construed to have the same
meaning and effect and to refer to any and all tangible and intangible assets
and properties, including cash, securities, accounts and contract rights.
SECTION 1.4 Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time.
ARTICLE II
The Credits
SECTION 2.1 Commitments. Subject to the terms and conditions set
forth herein, each Lender agrees to make Revolving Loans to the Company and
any Borrowing Subsidiary which is organized and existing under the laws of the
United States of America or any State thereof from time to time during the
Availability Period in Dollars in an aggregate principal amount that will not
result in (a) such Lender's Revolving Credit Exposure exceeding such Lender's
Commitment or (b) the sum of the total Revolving Credit Exposures plus the
total Competitive Loan Exposures exceeding the total Commitments. Within the
foregoing limits and subject to the terms and conditions set forth herein,
the Company and each applicable Borrowing Subsidiary may borrow, prepay and
reborrow Revolving Loans.
SECTION 2.2 Loans and Borrowings. (a) Each Revolving Loan shall
be made as part of a Borrowing consisting of Revolving Loans made by the
Lenders ratably in accordance with their respective Commitments. Each
Competitive Loan shall be made in accordance with the procedures set forth in
Section 2.4. The failure of any Lender to make any Loan required to be made
by it shall not relieve any other Lender of its obligations hereunder;
provided that the Commitments and Competitive Bids of the Lenders are several
and no Lender shall be responsible for any other Lender's failure to make
Loans as required.
(b) Subject to Section 2.14, (i) each Revolving Borrowing shall
be comprised entirely of ABR Loans or Eurocurrency Loans as the Company (on
its own behalf or on behalf of any other applicable Borrower) may request in
accordance herewith, and (ii) each Competitive Borrowing shall be comprised
entirely of Eurocurrency Loans or Fixed Rate Loans as the Company (on its own
behalf or on behalf of any other Borrower) may request in accordance herewith.
Each Lender at its option may make any Eurocurrency Loan by causing any
domestic or foreign branch or Affiliate of such Lender to make such Loan;
provided that any exercise of such option shall not affect the obligation of
any Borrower to repay such Loan in accordance with the terms of this Agreement.
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<PAGE>
(c) At the commencement of each Interest Period for any
Eurocurrency Revolving Borrowing, such Borrowing shall be in an aggregate
amount that is an integral multiple of $1,000,000 and not less than
$10,000,000. At the time that each ABR Revolving Borrowing is made, such
Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $10,000,000; provided that an ABR Revolving
Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the total Commitments. Each Competitive Borrowing denominated in
Dollars shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $10,000,000, and each Competitive Borrowing
denominated in an Alternative Currency shall be in an aggregate principal
amount that is not less than the Dollar Equivalent of $10,000,000.
Borrowings of more than one Type and Class may be outstanding at the same
time; provided that there shall not at any time be more than a total of 15
Eurocurrency Revolving Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the
Company (on its own behalf or on behalf of any other Borrower) shall not be
entitled to request, or to elect to convert or continue, any Borrowing if
the Interest Period requested with respect thereto would end after the
Maturity Date.
SECTION 2.3 Requests for Revolving Borrowings. To request a
Revolving Borrowing, the Company (on its own behalf or on behalf of any
other applicable Borrower) shall notify Citibank of such request by telephone
(a) in the case of a Eurocurrency Borrowing, not later than 10:30 a.m., New
York City time, three Business Days before the date of the proposed Borrowing
or (b) in the case of an ABR Borrowing, not later than 10:30 a.m., New York
City time, on the date of the proposed Borrowing. Each such telephonic
Borrowing Request shall be irrevocable and shall be confirmed promptly by
hand delivery or telecopy to Citibank of a written Borrowing Request in the
form of Exhibit A-5. Each such telephonic and written Borrowing Request
shall specify the following information in compliance with Section 2.2:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business
Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a
Eurocurrency Borrowing;
(iv) in the case of a Eurocurrency Borrowing, the initial
Interest Period to be applicable thereto, which shall
be a period contemplated by the definition of the term
"Interest Period";
(v) the location and number of the account of the Company or
the other applicable Borrowers to which funds are to be
disbursed, which shall comply with the requirements of
Section 2.7; and
(vi) the applicable Borrower.
If no election as to the Type of Revolving Borrowing is specified, then the
requested Revolving Borrowing shall be an ABR Borrowing. If no Interest
Period is specified with respect to any requested Eurocurrency Revolving
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Borrowing, then the Company shall be deemed to have selected an Interest
Period of one month's duration. Promptly following receipt of a Borrowing
Request in accordance with this Section, Citibank shall advise each Lender
of the details thereof and of the amount of such Lender's Loan to be made
as part of the requested Borrowing.
SECTION 2.4 Competitive Bid Procedure. (a) Subject to the
terms and conditions set forth herein, from time to time during the
Availability Period the Company (on its own behalf or on behalf of any other
Borrower) may request Competitive Bids and the Company (on its own behalf and
on behalf of any other Borrowers) may (but shall not have any obligation
to) accept Competitive Bids and borrow Competitive Loans; provided that no
Competitive Loan may be requested that would result in the sum of the total
Revolving Credit Exposures plus the total Competitive Loan Exposures exceeding
the total Commitments. To request Competitive Bids, the Company (on its own
behalf and on behalf of any other Borrowers) shall hand deliver or telecopy
to the Advance Agent a duly completed Competitive Bid Request in the form of
Exhibit A-1 hereto, to be received by the Advance Agent, in the case of a
Eurocurrency Borrowing, not later than 10:00 a.m., New York City time, four
Business Days before the date of the proposed Borrowing and, in the case of a
Fixed Rate Borrowing, not later than 10:00 a.m., New York City time, one
Business Day before the date of the proposed Borrowing. A Competitive Bid
Request that does not conform substantially to Exhibit A-1 may be rejected in
the Advance Agent's sole discretion, and the Advance Agent shall promptly
notify the Company of such rejection by telecopy. Each Competitive Bid
Request shall specify the following information in compliance with Section
2.2:
(i) the aggregate amount of the requested Borrowing;
(ii) the Currency of the requested Borrowing;
(iii) the date of such Borrowing, which shall be a Business
Day;
(iv) whether such Borrowing is to be a Eurocurrency Borrowing
or a Fixed Rate Borrowing;
(v) the Interest Period to be applicable to such Borrowing,
which shall be a period
(vi) the location and number of the account of the Company
or any other Borrower to
(vii) the applicable Borrower.
If no election as to the Currency of a Borrowing is specified in any
Competitive Bid Request, then the applicable Borrower shall be deemed to have
requested a Borrowing in Dollars. Promptly following receipt of a
Competitive Bid Request in accordance with this Section, the Advance Agent
shall notify the Lenders of the details thereof by telecopy, inviting the
Lenders to submit Competitive Bids.
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<PAGE>
(b) Each Lender may (but shall not have any obligation to) make
one or more Competitive Bids to such Borrower in response to a Competitive
Bid Request. Each Competitive Bid by a Lender must be received by the
Advance Agent by telecopy, in the form of Exhibit A-3 hereto, in the case of
a Eurocurrency Competitive Borrowing, not later than 9:30 a.m., New York City
time, three Business Days before the proposed date of such Competitive
Borrowing, and in the case of a Fixed Rate Borrowing, not later than
9:30 a.m., New York City time, on the proposed date of such Competitive
Borrowing. Competitive Bids that do not conform substantially to the format
of Exhibit A-3 may be rejected by the Advance Agent, and the Advance Agent
shall notify the applicable Lender as promptly as practicable. Each
Competitive Bid shall specify (i) the principal amount of the Competitive
Loan or Loans that the Lender is willing to make (which, in the case of a
Competitive Borrowing denominated in Dollars, shall be a minimum of
$5,000,000 and an integral multiple of $1,000,000 and, in the case of a
Competitive Borrowing denominated in an Alternative Currency, shall be a
minimum principal amount the Dollar Equivalent of which is equal to
$5,000,000, and which may equal the entire principal amount of the
Competitive Borrowing request by such Borrower), (ii) the Competitive Bid
Rate or Rates at which the Lender is prepared to make such Loan or Loans
(expressed as a percentage rate per annum in the form of a decimal to no
more than four decimal places) and (iii) the Interest Period applicable to
each such Loan and the last day thereof.
(c) The Advance Agent shall promptly notify such Borrower by
telecopy of the Competitive Bid Rate and the principal amount specified
in each Competitive Bid and the identity of the Lender that shall have made
such Competitive Bid.
(d) Subject only to the provisions of this paragraph, such
Borrower may accept or reject any Competitive Bid. Such Borrower shall
notify the Advance Agent by telephone, confirmed by telecopy in the form of
a Competitive Bid Accept/Reject Letter, whether and to what extent it has
decided to accept or reject each Competitive Bid, in the case of a
Eurocurrency Competitive Borrowing, not later than 2:00 p.m., New York City
time, three Business Days before the date of the proposed Competitive
Borrowing, and in the case of a Fixed Rate Borrowing, not later than 2:00
p.m., New York City time, on the proposed date of the Competitive Borrowing;
provided that (i) the failure of such Borrower to give such notice shall be
deemed to be a rejection of each Competitive Bid, (ii) such Borrower shall
not accept a Competitive Bid made at a particular Competitive Bid Rate if the
Company rejects a Competitive Bid made at a lower Competitive Bid Rate, (iii)
the aggregate amount of the Competitive Bids accepted by such Borrower shall
not exceed the aggregate amount of the requested Competitive Borrowing
specified in the related Competitive Bid Request, (iv) to the extent necessary
to comply with clause (iii) above, such Borrower may accept Competitive Bids
at the same Competitive Bid Rate in part, which acceptance, in the case of
multiple Competitive Bids at such Competitive Bid Rate, shall be made pro
rata in accordance with the amount of each such Competitive Bid, and (v)
except pursuant to clause (iv) above, no Competitive Bid shall be accepted
for a Competitive Loan unless such Competitive Loan is, in the case of a
Competitive Borrowing denominated in Dollars, in a minimum principal amount
of $5,000,000 and an integral multiple of $1,000,000 and, in the case of a
Competitive Borrowing denominated in an Alternative Currency, in a minimum
principal amount the Dollar Equivalent of which is $5,000,000; provided
further that if a Competitive Loan must be in an amount less than $5,000,000
or an amount in an Alternative Currency of which the Dollar Equivalent is
less than $5,000,000 because of the provisions of clause (iv) above, such
Competitive Loan may be for a minimum of $5,000,000 or an amount in
an Alternative Currency of which the Dollar Equivalent is $5,000,000 or any
integral multiple of $1,000,000 thereof, and in calculating the pro rata
allocation of acceptances of portions of multiple Competitive Bids at a
particular Competitive Bid Rate pursuant to clause (iv) the amounts shall
be rounded to integral multiples of $1,000,000 in a manner which shall be in
the discretion of such Borrower. A notice given by such Borrower pursuant to
this paragraph (d) shall be irrevocable.
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(e) The Advance Agent shall promptly notify each bidding Lender
by telecopy whether or not its Competitive Bid has been accepted (and, if so,
the amount and Competitive Bid Rate so accepted), and each successful bidder
will thereupon become bound, subject to the terms and conditions hereof, to
make the Competitive Loan in respect of which its Competitive Bid has been
accepted.
(f) If the Advance Agent shall elect to submit a Competitive Bid
in its capacity as a Lender, it shall submit such Competitive Bid directly to
the Company at least one quarter of an hour earlier than the time by which
the other Lenders are required to submit their Competitive Bids to the
Advance Agent pursuant to paragraph (b) of this Section.
(g) All notices required by this Section 2.4 shall be given
in accordance with Section 8.1.
SECTION 2.5 Extension of Maturity Date. (i) The Company may,
by sending an Extension Letter to Citibank (in which case Citibank shall
promptly deliver a copy to each of the Lenders), during the period of not less
than 30 days and not more than 60 days prior to any anniversary of the date
hereof, request that the Lenders extend the Maturity Date at the time in
effect to the first anniversary of such date. Each Lender, acting in its
sole discretion, shall, by notice to Citibank given not more than 20 days
after the date of the Extension Letter, advise Citibank in writing whether
or not such Lender agrees to such extension (each Lender that so advises
Citibank that it will not extend the Maturity Date, being referred to herein
as a "Non-extending Lender"); provided that any Lender that does not advise
Citibank by the 20th day after the date of the Extension Letter shall be
deemed to be a Non-extending Lender. The election of any Lender to agree
to such extension shall not obligate any other Lender to agree.
(ii) (A) If Lenders holding Commitments that aggregate at least
51% of the total Commitments on the 20th day after the date of the Extension
Letter shall not have agreed to extend the Maturity Date, then the Maturity
Date shall not be so extended and the outstanding principal balance of all
Loans and other amounts payable hereunder shall be payable on such Maturity
Date. (B) If (and only if) Lenders holding Commitments that aggregate at
least 51% of the total Commitments on the 20th day after the date of the
Extension Letter shall have agreed to extend the Maturity Date, then the
Maturity Date applicable to the Lenders that shall so have agreed, shall be
the first anniversary of the current Maturity Date. In the event of such
extension, the Commitment of each Non-extending Lender shall terminate on
the Maturity Date in effect prior to such extension, all Loans and other
amounts payable hereunder to such Non-extending Lenders shall become due
and payable on such Maturity Date and the total Commitment of the Lenders
hereunder shall be reduced by the Commitments of Non-extending Lenders so
terminated on such Maturity Date.
(iii) In the event that the conditions of clause (B) of paragraph
(ii) above have been satisfied, the Company shall have the right on or before
the Maturity Date in effect prior to the requested extension, at its own
expense, to require any Non-extending Lender to transfer and assign without
recourse (except as to title and the absence of Liens created by it) (in
accordance with and subject to the restrictions contained in Section 8.4)
all its interests, rights and obligations under this Agreement to one or more
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banks or other financial institutions identified to the Non-extending Lender,
which may include any Lender (each an "Additional Commitment Lender"),
provided that (x) such Additional Commitment Lender, if not already a Lender
hereunder, shall be subject to the approval of Citibank and the Company (such
approvals not to be unreasonably withheld), (y) such assignment shall become
effective as of a date specified by the Company (which shall not be later
than the Maturity Date in effect prior to the requested extension) and (z)
the Additional Commitment Lender shall pay to such Non-extending Lender in
immediately available funds on the effective date of such assignment the
principal of and interest accrued to the date of payment on the Loans made
by it hereunder and all other amounts accrued for its account or owed to it
hereunder. Notwithstanding the foregoing, no extension of the Maturity Date
shall become effective unless, on the Maturity Date in effect prior to the
requested extension the conditions set forth in paragraphs (a) and (b) of
Section 4.2 shall be satisfied (with all references in such paragraphs to a
Borrowing being deemed to be references to the current Maturity Date) and
Citibank shall have received a certificate to that effect dated such Maturity
Date and executed by a Financial Officer of the Company.
SECTION 2.6 Increase of Commitments. (a) The Company may, by
notice to Citibank (in which case Citibank shall promptly deliver a copy to
each of the Lenders), request that the total Commitments be increased by an
amount that will equal or exceed $20,000,000, but that will not result in the
total Commitments exceeding $500,000,000. Each such notice shall set forth
the amount of the requested increase in the total Commitments and the date on
which such increase is requested to become effective (which shall be not less
than 20 days or more than 45 days after the date of such notice (or such
shorter time as may be agreed upon by the Company and Citibank)), and shall
offer each Lender the opportunity to increase its Commitment by its
Applicable Percentage of the proposed increased amount. Each Lender shall,
by notice to the Company and Citibank given not more than 20 days after the
date of the Company's notice (or such shorter time as may be agreed upon by
the Company and Citibank), either agree to increase its Commitment by all or
a portion of the offered amount (each Lender so agreeing being an "Increasing
Lender") or decline to increase its Commitment (and any Lender that does not
deliver such a notice within such period of 20 days (or such shorter time as
may be agreed upon by the Company and Citibank) shall be deemed to have
declined to increase its Commitment) (each Lender so declining or deemed to
have declined being a "Non-increasing Lender"). In the event that, on the
20th day (or such shorter time as may be agreed upon by the Company and
Citibank) after the Company shall have delivered a notice pursuant to the
first sentence of this paragraph, the Lenders shall have agreed pursuant to
the preceding sentence to increase their Commitments by an aggregate amount
less than the increase in the total Commitments requested by the Company,
Citibank or the Company may arrange for one or more banks or other
financial institutions (any such bank or other financial institution as
referred to in this clause (a) being called an "Augmenting Lender"), which
may include any Lender, to extend Commitments or increase their existing
Commitments in an aggregate amount equal to the unsubscribed amount, provided
that each Augmenting Lender, if not already a Lender hereunder, shall be
subject to the approval of the Company and Citibank (which approvals shall
not be unreasonably withheld) and each Augmenting Lender shall execute all
such documentation as Citibank shall reasonably specify to evidence its
Commitment and its status as a Lender hereunder. Increases and new
Commitments created pursuant to this clause (a) shall become effective
on the date specified in the notice delivered by the Company pursuant to
the first sentence of this paragraph. Notwithstanding the foregoing, no
increase in the total Commitments (or in the Commitment of any Lender)
shall become effective under this paragraph unless, (i) on the date of
such increase, the conditions set forth in paragraphs (a) and (b) of Section
4.2 shall be satisfied (with all references in such paragraphs to a
Borrowing being deemed to be references to such increase) and Citibank shall
have received a certificate to that effect dated such date and executed by a
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<PAGE>
Financial Officer of the Company and (ii) to the extent requested from the
Company, Citibank shall have received (with sufficient copies for each of the
Lenders) documents consistent with those delivered on the Effective Date
under clauses (b) and (c) of Section 4.1 as to the corporate power and
authority of the Company to borrow hereunder after giving effect to such
increase.
(b) On the effective date (the "Increase Effective Date") of any
increase in the total Commitments pursuant to Section 2.6(a) (the "Commitment
Increase"), (i) the aggregate principal amount of the Loans outstanding (the
"Initial Loans") immediately prior to giving effect to the Commitment
Increase on the Increase Effective Date shall be deemed to be paid, (ii) each
Increasing Lender shall pay to Citibank in same day funds an amount equal to
the difference between (A) the product of (1) such Increasing Lender's
Applicable Percentage (calculated after giving effect to the Commitment
Increase) multiplied by (2) the amount of the Subsequent Borrowings (as
hereinafter defined) and (B) the product of (1) such Increasing Lender's
Applicable Percentage (calculated without giving effect to the Commitment
Increase) multiplied by (2) the amount of the Initial Loans, (iii) each
Augmenting Lender shall pay to Citibank in same day funds an amount equal
to the product of (1) such Augmenting Lender's Applicable Percentage
(calculated after giving effect to the Commitment Increase) multiplied by
(2) the amount of the Subsequent Borrowings, and (iv) after Citibank receives
the funds specified in clauses (ii) and (iii) above, Citibank shall pay to
each Non-increasing Lender the portion of such funds that is equal to the
difference between (A) the product of (1) such Non-increasing Lender's
Applicable Percentage (calculated without giving effect to the Commitment
Increase) multiplied by (2) the amount of the Initial Loans, and (B) the
product of (1) such Non-increasing Lender's Applicable Percentage (calculated
after giving effect to the Commitment Increase) multiplied by (2) the amount
of the Subsequent Borrowings, (v) after the effectiveness of the Commitment
Increase, the Company shall be deemed to have made new Borrowings (the
"Subsequent Borrowings") in an aggregate principal amount equal to the
aggregate principal amount of the Initial Loans and of the types and for
the Interest Periods specified in a Borrowing Request delivered to Citibank
in accordance with Section 2.3, (vi) each Non-increasing Lender, each
Increasing Lender and each Augmenting Lender shall be deemed to hold its
Applicable Percentage of each Subsequent Borrowing (calculated after giving
effect to the Commitment Increase) and (vii) the Company shall pay each
Increasing Lender and each Non-increasing Lender any and all accrued but
unpaid interest on the Initial Loans. The deemed payments made pursuant to
clause (i) above in respect of each Eurocurrency Loan shall be subject to
indemnification by the Company pursuant to the provisions of Section 2.16
if the Increase Effective Date occurs other than on the last day of the
Interest Period relating thereto. If requested by a Lender, the Company,
at its own expense, shall execute and deliver to Citibank on behalf of each
Increasing Lender and each Augmenting Lender a promissory note complying
with the provisions of Section 2.10(e) hereof, in a principal amount equal
to the Commitment of such Lender hereunder after giving effect to the
Commitment Increase. Each Increasing Lender shall promptly surrender to
Citibank any previous promissory note held by it, for return to the Company
and shall indemnify the Company for any claims, losses, damages or expenses
(including reasonable fees and disbursements of counsel) arising out of its
failure to surrender such promissory note, provided the Company does not
(unless pursuant to a final judgment of a court of competent jurisdiction)
make any payments in respect of such promissory note.
SECTION 2.7 Funding of Borrowings. (a) Each Lender shall make
each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds in Dollars or in the applicable
Alternative Currency, as the case may be, to the account of Citibank or an
Affiliate thereof most recently designated by it for such purpose by notice
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<PAGE>
to the Lenders, by 2:00 p.m., New York City time (or, in the case of any
Competitive Loan with respect to which a Borrower shall have requested
funding in another jurisdiction, to such account in such jurisdiction as
Citibank shall designate for such purpose by notice to the applicable
Lenders, by 2:00 p.m., local time). Citibank will make such Loans available
to such Borrower by promptly crediting the amounts so received, in like
funds, to an account of such Borrower maintained with Citibank in New York
City (or, in the case of any Competitive Loan with respect to which such
Borrower shall have requested funding in another jurisdiction, to such
account in such jurisdiction as such Borrower shall have designated in the
applicable Competitive Bid Request).
(b) Unless Citibank shall have received notice from a Lender
prior to the proposed date of any Borrowing that such Lender will not make
available to Citibank such Lender's share of such Borrowing, Citibank may
assume that such Lender has made such share available on such date in
accordance with paragraph (a) of this Section and may, in reliance upon
such assumption, make available to such Borrower a corresponding amount.
In such event, if a Lender has not in fact made its share of the applicable
Borrowing available to Citibank, then the applicable Lender and the
applicable Borrower severally agree to pay to Citibank forthwith on demand
such corresponding amount with interest thereon, for each day from and
including the date such amount is made available to such Borrower to but
excluding the date of payment to Citibank, at (i) in the case of such Lender,
the greater of the Federal Funds Effective Rate and a rate determined by
Citibank in accordance with banking industry rules on interbank compensation
or (ii) in the case of such Borrower, the interest rate on the applicable
Borrowing; provided that no repayment by such Borrower pursuant to this
sentence shall be deemed to be a prepayment for purposes of Section 2.16.
If such Lender pays such amount to Citibank, then such amount shall
constitute such Lender's Loan included in such Borrowing.
SECTION 2.8 Interest Elections. (a) Each Revolving Borrowing
initially shall be of the Type specified in the applicable Borrowing Request
and, in the case of a Eurocurrency Revolving Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request. Thereafter, the
Company (on its own behalf or on behalf of any other Borrower) may elect to
convert such Borrowing to a different Type or to continue such Borrowing and,
in the case of a Eurocurrency Revolving Borrowing, may elect Interest Periods
therefor, all as provided in this Section. The Company (on its own behalf or
on behalf of any other Borrower) may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising
such Borrowing, and the Loans comprising each such portion shall be
considered a separate Borrowing. This Section shall not apply to Competitive
Borrowings, which may not be converted or continued.
(b) To make an election pursuant to this Section, the Company
(on its own behalf or on behalf of any other Borrower) shall notify Citibank
of such election by telephone by the time that a Borrowing Request would be
required under Section 2.3 if the Company (on its own behalf or on behalf of
any other Borrower) were requesting a Revolving Borrowing of the Type resulting
from such election to be made on the effective date of such election. Each
such telephonic Interest Election Request shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to Citibank of a written
Interest Election Request in a form approved by Citibank and signed by the
Company.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.2:
(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with
respect to different portions thereof, the portions
thereof to be allocated to each resulting Borrowing (in
which case the information to be specified pursuant to
clauses (iii) and (iv) below shall be specified for each
resulting Borrowing);
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<PAGE>
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing
or a Eurocurrency Borrowing; and
(iv) if the resulting Borrowing is a Eurocurrency Borrowing,
the Interest Period to be applicable thereto after giving
effect to such election, which shall be a period
contemplated by the definition of the term "Interest
Period".
If any such Interest Election Request requests a Eurocurrency Borrowing but
does not specify an Interest Period, then the Company (on its own behalf or
on behalf of any other Borrower) shall be deemed to have selected an Interest
Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request,
Citibank shall advise each Lender of the details thereof and of such Lender's
portion of each resulting Borrowing.
(e) If the Company (on its own behalf or on behalf of any other
Borrower) fails to deliver a timely Interest Election Request with respect
to a Eurocurrency Revolving Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein,
at the end of such Interest Period such Borrowing shall be converted to an
ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of
Default has occurred and is continuing and Citibank, at the request of the
Required Lenders, so notifies the Company, then, so long as an Event of
Default is continuing (i) no outstanding Revolving Borrowing may be converted
to or continued as a Eurocurrency Borrowing and (ii) unless repaid, each
Eurocurrency Revolving Borrowing shall be converted to an ABR Borrowing at
the end of the Interest Period applicable thereto.
SECTION 2.9 Termination and Reduction of Commitments. (a)
Unless previously terminated, the Commitments shall terminate on the Maturity
Date.
(b) The Company may at any time terminate, or from time to time
reduce, the Commitments; provided that (i) each reduction of the Commitments
shall be in an amount that is an integral multiple of $1,000,000 and not less
than $10,000,000 and (ii) the Company shall not terminate or reduce the
Commitments if, after giving effect to any concurrent prepayment of the Loans
in accordance with Section 2.11, the sum of the Revolving Credit Exposures
plus the Competitive Loan Exposures would exceed the total Commitments.
(c) The Company shall notify Citibank of any election to terminate
or reduce the Commitments under paragraph (b) of this Section at least three
Business Days prior to the effective date of such termination or reduction,
specifying such election and the effective date thereof. Promptly following
receipt of any notice, Citibank shall advise the Lenders of the contents
thereof. Each notice delivered by the Company pursuant to this Section shall
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<PAGE>
be irrevocable; provided that a notice of termination of the Commitments
delivered by the Company may state that such notice is conditioned upon the
effectiveness of other credit facilities, in which case such notice may be
revoked by the Company (by notice to Citibank on or prior to the specified
effective date) if such condition is not satisfied. Any termination or
reduction of the Commitments shall be permanent (subject to the provisions of
Section 2.6). Each reduction of the Commitments shall be made ratably among
the Lenders in accordance with their respective Commitments.
SECTION 2.10 Repayment of Loans; Evidence of Debt. (a) Each
Borrower hereby unconditionally promises to pay (i) to Citibank for the
account of each Lender the then unpaid principal amount of its Revolving
Loans on the Maturity Date and (ii) to Citibank for the account of each
Lender the then unpaid principal amount of each Competitive Loan on the last
day of the Interest Period applicable to such Loan.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of each Borrower
to such Lender resulting from each Loan made by such Lender, including the
amounts of principal and interest payable and paid to such Lender from time
to time hereunder.
(c) Citibank shall maintain a Register pursuant to subsection
8.4(d), and an account for each Lender in which it shall record (i) the amount
of each Loan made hereunder and any promissory note evidencing such Loan, the
Class and Type thereof and the Interest Period applicable thereto, (ii) the
amount of any principal or interest due and payable or to become due and
payable from each Borrower to each Lender hereunder and (iii) the amount of
any sum received by Citibank hereunder for the account of the Lenders and
each Lender's share thereof.
(d) The entries made in the Register and the accounts of each
Lender maintained pursuant to paragraphs (b) and (c) of this Section shall
be prima facie evidence of the existence and amounts of the obligations
recorded therein; provided that the failure of any Lender or Citibank to
maintain such accounts or any error therein shall not in any manner affect
the obligation of any Borrower to repay the Loans in accordance with the
terms of this Agreement.
(e) Any Lender may request that Loans made by it be evidenced by
a promissory note for its Competitive Loans and a promissory note for its
Revolving Loans. In such event, the applicable Borrower shall prepare,
execute and deliver to such Lender a promissory note payable to the order of
such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) and in a form approved by Citibank. Thereafter, the Loans
evidenced by such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 8.4) be represented by one or
more promissory notes in such form payable to the order of the payee named
therein (or, if such promissory note is a registered note, to such payee and
its assigns).
SECTION 2.11 Prepayment of Loans. (a) The applicable Borrower
shall have the right at any time and from time to time to prepay any
Borrowing in whole or in part, subject to prior notice in accordance with
paragraph (b) of this Section; provided that no Borrower shall have the right
to prepay any Competitive Loan without the prior consent of the Lender thereof.
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<PAGE>
(b) The Company (on its own behalf or on behalf of any other
Borrower) shall notify Citibank by telephone (confirmed by telecopy) of
any prepayment hereunder (i) in the case of prepayment of a Eurocurrency
Revolving Borrowing, not later than 10:00 a.m., New York City time, three
Business Days before the date of prepayment and (ii) in the case of
prepayment of an ABR Revolving Borrowing, not later than 10:00 a.m., New
York City time, one Business Day before the date of prepayment. Each such
notice shall be irrevocable and shall specify the prepayment date and the
principal amount of each Borrowing or portion thereof to be prepaid; provided
that, if a notice of prepayment is given in connection with a conditional
notice of termination of the Commitments as contemplated by Section 2.9,
then such notice of prepayment may be revoked if such notice of termination
is revoked in accordance with Section 2.9. Promptly following receipt of any
such notice relating to a Revolving Borrowing, Citibank shall advise the
Lenders of the contents thereof. Each partial prepayment of any Revolving
Borrowing shall be in an amount that would be permitted in the case of an
advance of a Revolving Borrowing of the same Type as provided in Section
2.2. Each prepayment of a Revolving Borrowing shall be applied ratably to
the Loans included in the prepaid Borrowing. Prepayments shall be
accompanied by accrued interest to the extent required by Section 2.13.
SECTION 2.12 Fees. (a) The Company agrees to pay to Citibank
for the account of each Lender a facility fee, which shall accrue at the
Applicable Rate on the daily amount of the Commitment of such Lender (whether
used or unused) during the period from and including the date hereof to but
excluding the date on which such Commitment terminates; provided that, if
such Lender continues to have any Revolving Credit Exposure after its
Commitment terminates, then such facility fee shall continue to accrue on the
daily amount of such Lender's Revolving Credit Exposure from and including
the date on which its Commitment terminates to but excluding the date on
which such Lender ceases to have any Revolving Credit Exposure. Accrued
facility fees shall be payable in arrears on the last day of March, June,
September and December of each year and on the date on which the Commitments
terminate, commencing on the first such date to occur after the date hereof;
provided that any facility fees accruing after the date on which the
Commitments terminate shall be payable on demand. All facility fees shall be
computed on the basis of a year of 360 days and shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day).
(b) The Company agrees to pay to the Administrative Agents, for
their own account, the administrative, auction and other fees separately
agreed upon between the Company and the Administrative Agents (collectively,
the "Administrative Fees").
(c) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to Citibank for distribution, in the case of
facility fees, to the Lenders. Fees paid shall not be refundable under any
circumstances.
SECTION 2.13 Interest. (a) The Loans comprising each ABR
Borrowing shall bear interest at the Alternate Base Rate.
(b) The Loans comprising each Eurocurrency Borrowing shall bear
interest (i) in the case of a Eurocurrency Revolving Loan, at the LIBO Rate
for the Interest Period in effect for such Borrowing plus the Applicable
Rate, or (ii) in the case of a Eurocurrency Competitive Loan, at the LIBO
Rate for the Interest Period in effect for such Borrowing plus (or minus,
as applicable) the Margin applicable to such Loan.
(c) Each Fixed Rate Loan shall bear interest at the Fixed Rate
applicable to such Loan.
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(d) Notwithstanding the foregoing, if any principal of or interest
on any Loan or any fee or other amount payable by any Borrower hereunder is
not paid when due, whether at stated maturity, upon acceleration or
otherwise, such overdue amount shall bear interest, after as well as before
judgment, at a rate per annum equal to (i) in the case of overdue principal
of any Loan, 1% plus the rate otherwise applicable to such Loan as provided
in the preceding paragraphs of this Section or (ii) in the case of any other
amount, 1% plus the rate applicable to ABR Loans as provided in paragraph
(a) of this Section.
(e) Accrued interest on each Loan shall be payable in arrears on
each Interest Payment Date for such Loan and, in the case of Revolving Loans,
upon termination of the Commitments; provided that (i) interest accrued
pursuant to paragraph (d) of this Section shall be payable on demand, (ii)
in the event of any repayment or prepayment of any Loan (other than a
prepayment of an ABR Revolving Loan prior to the end of the Availability
Period), accrued interest on the principal amount repaid or prepaid shall
be payable on the date of such repayment or prepayment and (iii) in the event
of any conversion of any Eurocurrency Revolving Loan prior to the end of the
current Interest Period therefor, accrued interest on such Loan shall be
payable on the effective date of such conversion.
(f) All interest hereunder shall be computed on the basis of a
year of 360 days, except that interest computed by reference to the
Alternate Base Rate at time when the Alternate Base Rate is based on clause
(a) of the first sentence of the definition of Alternate Base Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and
in each case shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). The applicable
Alternate Base Rate or LIBO Rate shall be determined by Citibank, and such
determination shall be conclusive absent manifest error.
SECTION 2.14 Alternate Rate of Interest. If prior to the
commencement of any Interest Period for a Eurocurrency Borrowing:
(a) Citibank shall have determined (which determination shall be
made in good faith and shall be conclusive absent manifest error) that
adequate and reasonable means do not exist for ascertaining the LIBO Rate
for such Interest Period; or
(b) Citibank is advised by the Required Lenders (or, in the case
of a Eurocurrency Competitive Loan, the Lender that is required to make such
Loan) that the LIBO Rate for such Interest Period will not adequately and
fairly reflect the cost to such Lenders (or Lender) of making or maintaining
their Loans (or its Loan) included in such Borrowing for such Interest Period;
then Citibank shall give notice thereof to the Company (on its own behalf or
on behalf of the applicable Borrower) and the Lenders by telephone or telecopy
as promptly as practicable thereafter and, until Citibank notifies the Company
and the Lenders that the circumstances giving rise to such notice no longer
exist, (i) any Interest Election Request that requests the conversion of any
Revolving Borrowing to, or continuation of any Revolving Borrowing as, a
Eurocurrency Borrowing shall be ineffective, (ii) if any Borrowing Request
requests a Eurocurrency Revolving Borrowing, such Borrowing shall be made as
an ABR Borrowing and (iii) any request by the Company (on its own behalf or
on behalf of any Borrower) for a Eurocurrency Competitive Borrowing shall be
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ineffective; provided that (A) if the circumstances giving rise to such
notice do not affect all the Lenders, then requests by the Company for
Eurocurrency Competitive Borrowings may be made to Lenders that are not
affected thereby and (B) if the circumstances giving rise to such notice
affect only one Type of Borrowings, then the other Type of Borrowings shall
be permitted.
SECTION 2.15 Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender; or
(ii) impose on any Lender or the London interbank market any
other condition affecting this Agreement or Eurocurrency Loans or Fixed Rate
Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurocurrency Loan or Fixed Rate Loan
(or of maintaining its obligation to make any such Loan) by an amount deemed
by such Lender to be material or to reduce the amount of any sum received or
receivable by such Lender hereunder (whether of principal, interest or
otherwise) by an amount deemed by such Lender to be material, then the
applicable Borrower will pay to such Lender such additional amount or amounts
as will compensate such Lender for such additional costs incurred or reduction
suffered.
(b) If any Lender determines that any Change in Law regarding
capital requirements has or would have the effect of reducing the rate of
return on such Lender's capital or on the capital of such Lender's holding
company, if any, as a consequence of this Agreement or the Loans made by such
Lender to a level below that which such Lender or such Lender's holding
company could have achieved but for such Change in Law (taking into
consideration such Lender's policies and the policies of such Lender's
holding company with respect to capital adequacy) by an amount deemed by such
Lender to be material, then from time to time the Company will pay to such
Lender such additional amount or amounts as will compensate such Lender or
such Lender's holding company for any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or amounts
necessary to compensate such Lender or its holding company as specified in
paragraph (a) or (b) of this Section, and setting forth in reasonable detail
the manner in which such amount or amounts shall have been determined, shall
be delivered to the applicable Borrower and shall be conclusive absent
manifest error. The applicable Borrower shall pay such Lender the amount
shown as due on any such certificate within 10 days after receipt thereof.
(d) Failure or delay on the part of any Lender to demand
compensation pursuant to this Section shall not constitute a waiver of
such Lender's right to demand such compensation; provided that the Borrowers
shall not be required to compensate a Lender pursuant to this Section for any
increased costs or reductions incurred more than 60 days prior to the date
that such Lender notifies such Borrower of the Change in Law giving rise to
such increased costs or reductions and of such Lender's intention to claim
compensation therefor; provided further that, if the Change in Law giving
rise to such increased costs or reductions is retroactive, then the 60-day
period referred to above shall be extended to include the period of
retroactive effect thereof.
(e) Notwithstanding the foregoing provisions of this Section, a
Lender shall not be entitled to compensation pursuant to this Section in
respect of any Competitive Loan if the Change in Law that would otherwise
entitle it to such compensation shall have been publicly announced prior to
submission of the Competitive Bid pursuant to which such Loan was made.
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SECTION 2.16 Break Funding Payments. In the event of (a) the
payment of any principal of any Eurocurrency Loan or Fixed Rate Loan other
than on the last day of an Interest Period applicable thereto (including as
a result of an Event of Default), (b) the conversion of any Eurocurrency
Loan other than on the last day of the Interest Period applicable thereto,
(c) the failure to borrow, convert, continue or prepay any Revolving Loan on
the date specified in any notice delivered pursuant hereto (regardless of
whether such notice may be revoked under Section 2.11(b) and is revoked in
accordance therewith), (d) the failure to borrow any Competitive Loan after
accepting the Competitive Bid to make such Loan, or (e) the assignment of any
Eurocurrency Loan or Fixed Rate Loan other than on the last day of the
Interest Period applicable thereto as a result of a request by any Borrower
pursuant to Section 2.19, then, in any such event, the applicable Borrower
shall compensate each Lender for the out-of-pocket loss, cost and expense
attributable to such event. In the case of a Eurocurrency Loan, such loss,
cost or expense to any Lender shall be deemed to include an amount determined
by such Lender to be the present value of the excess, if any, of (i) its cost
of obtaining the funds for the Loan being paid, prepaid, refinanced or not
borrowed (assumed to be the LIBO Rate applicable thereto) for the period from
the date of such payment, prepayment, refinancing or failure to borrow or
refinance to the last day of the Interest Period for such Loan (or, in the
case of a failure to borrow or refinance the Interest Period for such Loan
which would have commenced on the date of such failure) over (ii) the amount
of interest (as reasonably determined by such Lender) that would be realized
by such Lender in reemploying the funds so paid, prepaid or not borrowed or
refinanced for such period or Interest Period, as the case may be. A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section and setting forth in
reasonable detail the manner in which such amount or amounts shall have been
determined shall be delivered to the applicable Borrower and shall be
conclusive absent manifest error. Such Borrower shall pay such Lender the
amount shown as due on any such certificate within 10 days after receipt
thereof.
SECTION 2.17 Taxes. (a) Any and all payments to the Lenders or
the Administrative Agents hereunder by a Borrower or on behalf of any Borrower
shall be made free and clear of and without deduction for any and all current
or future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding (i) taxes imposed on any
Administrative Agent or any Lender (or participant) as a result of a present
or former connection between such Administrative Agent or such Lender (or
participant) and the jurisdiction of the Governmental Authority imposing such
tax or any political subdivision or taxing authority thereof or therein (other
than as a result of entering into this Agreement, performing any obligations
hereunder, receiving any payments hereunder or enforcing any rights hereunder)
and (ii) any taxes that are attributable solely to the failure of any Non-U.S.
Lender (as defined in Section 2.17(g) below) to comply with Section 2.17 (g)
or 2.17(h) (all such nonexcluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities, collectively or individually, "Non-Excluded
Taxes"). If the relevant Borrower shall be required to deduct any
Non-Excluded Taxes from or in respect of any sum payable hereunder to any
Lender or any Administrative Agent, (i) the sum payable shall be increased by
the amount (an "Additional Amount") necessary so that after making all
required deductions (including deductions applicable to Additional Amounts
payable under this Section 2.17) such Lender or such Administrative Agent
(as the case may be) shall receive an amount equal to the sum it would have
received had no such deductions been made, (ii) the relevant Borrower shall
make such deductions and (iii) the relevant Borrower shall pay the full
amount deducted to the relevant Governmental Authority in accordance with
applicable law.
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(b) In addition, the relevant Borrower (or the Company, as
guarantor, as applicable) shall pay to the relevant Governmental Authority in
accordance with applicable law any current or future stamp, intangibles or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement
or any other Loan Document that are imposed by a Governmental Authority in a
jurisdiction in which the relevant Borrower or the Company is incorporated,
organized, managed and controlled or considered to have its seat or otherwise
has a connection (other than as a result of entering into this Agreement,
performing any obligations hereunder, receiving any payments hereunder or
enforcing any rights hereunder) ("Other Taxes").
(c) The relevant Borrower (or the Company, as guarantor, as
applicable) shall indemnify each Lender (or participant) and each
Administrative Agent for the full amount of Non-Excluded Taxes and Other
Taxes paid by such Lender (or participant) or such Administrative Agent, as
the case may be, and any liability (including penalties, interest and
expenses (including reasonable attorney's fees and expenses)) arising
therefrom or with respect thereto, whether or not such Non-Excluded Taxes or
Other Taxes were correctly or legally asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability
prepared by a Lender, or an Administrative Agent on its behalf and setting
forth in reasonable detail the manner in which such amount shall have been
determined, absent manifest error, shall be final, conclusive and binding
for all purposes. Such indemnification shall be made within 30 days after
the date the Lender or the Administrative Agent, as the case may be, makes
written demand therefor, which written demand shall be made within 60 days of
the date such Lender or Administrative Agent receives written demand for
payment of such Taxes or Other Taxes from the relevant Governmental Authority.
(d) If a Lender (or participant) or an Administrative Agent
receives a refund in respect of any Non-Excluded Taxes or Other Taxes as to
which it has been indemnified by the relevant Borrower or with respect to
which the relevant Borrower has paid Additional Amounts pursuant to this
Section 2.17, it shall within 30 days from the date of such receipt pay over
such refund to the relevant Borrower (but only to the extent of indemnity
payments made, or Additional Amounts paid, by the relevant Borrower under this
Section 2.17 with respect to the Taxes or Other Taxes giving rise to such
refund), net of all out-of-pocket expenses of such Lender (or participant)
or such Administrative Agent and without interest (other than interest paid
by the relevant Governmental Authority with respect to such refund);
provided, however, that the relevant Borrower, upon the request of such
Lender (or participant) or such Administrative Agent, agrees to repay the
amount paid over to the relevant Borrower (plus penalties, interest or other
charges) to such Lender (or participant) or such Administrative Agent in the
event such Lender (or participant) or such Administrative Agent is required
to repay such refund to such Governmental Authority.
(e) As soon as practicable after the date of any payment of Non-
Excluded Taxes or Other Taxes by the relevant Borrower to the relevant
Governmental Authority, the relevant Borrower will deliver to Citibank, at
its addresses referred to in Section 8.1, the original or a certified copy of
a receipt issued by such Governmental Authority evidencing payment thereof.
(f) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section
2.17 shall survive the payment in full of the principal of and interest on
all Loans made hereunder.
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(g) Each Lender (or participant) that is not a United States
Person as defined in Section 7701(a)(30) of the Code (a "Non-U.S. Lender")
shall deliver to the Borrower and Citibank two copies of either United
States Internal Revenue Service Form 1001 or Form 4224, or, in the case of
a Non-U.S. Lender claiming exemption from U.S. Federal withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of "portfolio
interest", a Form W-8, or any subsequent versions thereof or successors
thereto (and, if such Non-U.S. Lender delivers a Form W-8, a certificate
representing that such Non-U.S. Lender is not a bank for purposes of Section
881(c)(3)(A) of the Code, is not a 10 percent shareholder (within the meaning
of Section 881(c)(3)(B) of the Code) of the Company and is not a controlled
foreign corporation related to the Company (within the meaning of Section
881(c)(3)(C) of the Code)), properly completed and duly executed by such
Non-U.S. Lender claiming complete exemption from, or reduced rate of, U.S.
Federal withholding tax on payments by the Company under this Agreement.
Such forms shall be delivered by each Non-U.S. Lender on or before the date
it becomes a party to this Agreement (or, in the case of a participant, on or
before the date such participant becomes a participant hereunder) and on or
before the date, if any, such Non-U.S. Lender changes its applicable lending
office by designating a different lending office (a "New Lending Office").
In addition, each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender. Notwithstanding any other provision of this Section 2.17(g), a
Non-U.S. Lender shall not be required to deliver any form pursuant to this
Section 2.17(g) that such Non-U.S. Lender is not legally able to deliver.
(h) A Lender (or participant) that is entitled to an exemption
from or reduction of non-U.S. withholding tax under the law of the
jurisdiction in which a Borrowing Subsidiary is located, or any treaty to
which such jurisdiction is a party, with respect to payments under this
Agreement shall deliver to the Borrowing Subsidiary (with a copy to Citibank),
at the time or times prescribed by applicable law or reasonably requested
by the Borrowing Subsidiary, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to
be made without withholding or at a reduced rate, provided that such Lender
(or participant) is legally entitled to complete, execute and deliver such
documentation and in such Lender's reasonable judgment such completion,
execution or submission would not materially prejudice the legal position of
such Lender (or participant).
(i) The relevant Borrower shall not be required to indemnify any
Lender, or to pay any Additional Amounts to any Lender, in respect of any
withholding tax pursuant to paragraph (a) or (c) above to the extent that (i)
the obligation to withhold amounts with respect to such withholding tax was
in effect and would apply to amounts payable to such Lender on the date such
Lender became a party to this Agreement (or, in the case of a participant, on
the date such participant became a participant hereunder) or, with respect to
payments to a New Lending Office, the date such Non-U.S. Lender designated
such New Lending Office with respect to a Loan or, with respect to payments by
a Borrower pursuant to a Competitive Loan, as of the date the Company accepts
a Competitive Bid pursuant to Section 2.4(d); provided, however, that this
clause (i) shall not apply to any Lender (or participant) if the assignment,
participation, transfer or designation of a New Lending Office was made at
the request of the relevant Borrower; and provided further, however, that
this clause (i) shall not apply to the extent the indemnity payment or
Additional Amounts any Lender (or participant) would be entitled to receive
(without regard to this clause (i)) do not exceed the indemnity payment or
Additional Amounts that the Lender (or participant) making the assignment,
participation, transfer or designation of such New Lending Office would have
been entitled to receive in the absence of such assignment, participation,
transfer or designation, or (ii) the obligation to pay such Additional
Amounts would not have arisen but for a failure by such Lender (or
participant) to comply with the provisions of paragraph (g) or (h) above.
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(j) Any Lender (or participant) claiming any indemnity payment
or Additional Amounts payable pursuant to this Section 2.17 shall use
reasonable efforts (consistent with legal and regulatory restrictions) to file
any certificate or document reasonably requested in writing by the relevant
Borrower or to change the jurisdiction of its applicable lending office if
the making of such a filing or change would avoid the need for or reduce
the amount of any such indemnity payment or Additional Amounts that may
thereafter accrue and would not, in the sole determination of such Lender
(or participant), be otherwise disadvantageous to such Lender (or participant).
(k) Nothing contained in this Section 2.17 shall require any Lender
(or participant) or any Administrative Agent to make available any of its tax
returns (or any other information that it deems to be confidential or
proprietary).
SECTION 2.18 Payments Generally; Pro Rata Treatment; Sharing of
Set-offs. (a) Each Borrower shall make each payment required to be made by
it hereunder (whether of principal, interest, fees, or of amounts payable
under Section 2.15, 2.16 or 2.17, or otherwise) prior to 3:00 p.m., local
time at the place of payment, on the date when due, in immediately available
funds, without set-off or counterclaim. Any amounts received after such time
on any date may, in the discretion of Citibank, be deemed to have been
received on the next succeeding Business Day for purposes of calculating
interest thereon. All such payments shall be made to Citibank at its offices
at 399 Park Avenue, New York, New York, or such other location as Citibank
shall designate from time to time, except that payments pursuant to Sections
2.15, 2.16, 2.17 and 8.5 shall be made directly to the Persons entitled
thereto. Citibank shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment hereunder shall be due on a day that is not
a Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension. All payments
hereunder shall be made in Dollars or, in the case of Competitive Loans,
the applicable Currency, as the case may be.
(b) If at any time insufficient funds are received by and
available to Citibank to pay fully all amounts of principal, interest and
fees then due hereunder, such funds shall be applied (i) first, towards
payment of interest and fees then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of interest and fees then due
to such parties, and (ii) second, towards payment of principal then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal then due to such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans resulting in such Lender receiving
payment of a greater proportion of the aggregate amount of its Revolving
Loans and accrued interest thereon than the proportion received by any other
Lender, then the Lender receiving such greater proportion shall purchase
(for cash at face value) participations in the Revolving Loans of other
Lenders to the extent necessary so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate
amount of principal of and accrued interest on their respective Revolving
Loans; provided that (i) if any such participations are purchased and all
or any portion of the payment giving rise thereto is recovered, such
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participations shall be rescinded and the purchase price restored to the
extent of such recovery, without interest, and (ii) the provisions of this
paragraph shall not be construed to apply to any payment made by any
Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans to any assignee
or participant, other than to the Company or any Subsidiary or Affiliate
thereof (as to which the provisions of this paragraph shall apply). Each
Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against
such Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of such
Borrower in the amount of such participation.
(d) Unless Citibank shall have received notice from a Borrower
prior to the date on which any payment is due to Citibank for the account
of the Lenders hereunder that such Borrower will not make such payment,
Citibank may assume that such Borrower has made such payment on such date
in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders the amount due. In such event, if such Borrower
has not in fact made such payment, then each of the Lenders severally agrees
to repay to Citibank forthwith on demand the amount so distributed to such
Lender with interest thereon, for each day from and including the date such
amount is distributed to it to but excluding the date of payment to Citibank,
at the greater of the Federal Funds Effective Rate and a rate determined by
Citibank in accordance with banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be
made by it pursuant to Section 2.7(b) or 2.18(d), then Citibank may, in its
discretion (notwithstanding any contrary provision hereof), apply any amounts
thereafter received by Citibank for the account of such Lender to satisfy
such Lender's obligations under such Sections until all such unsatisfied
obligations are fully paid.
SECTION 2.19 Mitigation Obligations; Replacement of Lenders. (a)
If any Lender requests compensation under Section 2.15, or if any Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, then such
Lender shall use reasonable efforts to file any certificate or document
requested by the Company (consistent with legal and regulatory restrictions),
to designate a different lending office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the judgment of such Lender, such
filing, designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 2.15 or 2.17, as the case may be, in the future
and (ii) would not otherwise be disadvantageous to such Lender.
(b) If any Lender requests compensation under Section 2.15, or if
any Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17,
or if any Lender defaults in its obligation to fund Loans hereunder, then such
Borrower may, upon notice to such Lender and Citibank, require such Lender to
assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 8.4), all its interests, rights and
obligations under this Agreement (other than any outstanding Competitive
Loans held by it and any and all rights and interests related thereto) to
an assignee that shall assume such obligations (which assignee may be another
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Lender, if a Lender accepts such assignment); provided that (i) such Borrower
shall have received the prior written consent of the Administrative Agents
which consent shall not unreasonably be withheld, (ii) such Lender shall have
received payment of an amount equal to the outstanding principal of its Loans
(other than Competitive Loans), accrued interest thereon, accrued fees and
all other amounts payable to it hereunder, from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or such Borrower (in
the case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.15 or payments
required to be made pursuant to Section 2.17, such assignment will result in
a reduction in such compensation or payments.
SECTION 2.20 Borrowing Subsidiaries. The Company may designate
any Wholly Owned Subsidiary of the Company as a Borrowing Subsidiary. Upon
the receipt by Citibank of a Borrowing Subsidiary Agreement executed by such
a Wholly Owned Subsidiary and the Company, such Wholly Owned Subsidiary shall
be a Borrowing Subsidiary and a party to this Agreement. A Subsidiary shall
cease to be a Borrowing Subsidiary hereunder at such time as no Loans, fees
or any other amounts due in connection therewith pursuant to the terms hereof
shall be outstanding to such Subsidiary and such Subsidiary and the Company
shall have executed and delivered to Citibank a Borrowing Subsidiary
Termination; provided that, notwithstanding anything herein to the contrary,
no Borrowing Subsidiary shall cease to be a Borrowing Subsidiary solely
because it no longer is a Wholly Owned Subsidiary of the Company so long as
such Borrowing Subsidiary and the Company shall not have executed and
delivered to Citibank a Borrowing Subsidiary Termination and the Company's
guarantee of the Borrowing Subsidiary Obligations of such Borrowing
Subsidiary pursuant to Section 8.16 has not been released.
ARTICLE III
Representations and Warranties
The Company represents and warrants to each of the Lenders and each
of the Administrative Agents that:
SECTION 3.1 Organization; Powers. The Company (a) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has all requisite power and authority
to own its property and assets and to carry on its business as now conducted
and as proposed to be conducted and (c) is qualified to do business in every
jurisdiction where such qualification is required, except where the failure
so to qualify would not result in a Material Adverse Effect. Each Borrower
has the corporate power and authority to execute and deliver this Agreement
(or, in the case of the Borrowing Subsidiaries, the Borrowing Subsidiary
Agreements), to perform its obligations under this Agreement and to borrow
hereunder.
SECTION 3.2 Authorization. The Transactions (a) are within each
Borrower's corporate powers and have been duly authorized by all requisite
corporate action and (b) will not (i) violate (A) any provision of any law,
statute, rule or regulation (including, without limitation, the Margin
Regulations), (B) any provision of the certificate of incorporation or other
constitutive documents or by-laws of the Company or any Subsidiary, (C) any
order of any Governmental Authority or (D) any provision of any indenture,
agreement or other instrument to which the Company or any Subsidiary is a
party or by which it or any of its property is or may be bound, (ii) be in
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conflict with, result in a breach of or constitute (alone or with notice or
lapse of time or both) a default under any such indenture, agreement or other
instrument or (iii) result in the creation or imposition of any lien upon any
property or assets of the Company or any Subsidiary other than, in the case of
clauses (i)(A), (i)(C), (i)(D), (ii) and (iii), any such violations,
conflicts, breaches, defaults or liens that, individually or in the aggregate,
would not have a Material Adverse Effect.
SECTION 3.3 Enforceability. Each Loan Document constitutes or,
when executed and delivered, will constitute a legal, valid and binding
obligation of each Borrower party thereto, enforceable in accordance with
its terms (subject, as to enforceability, to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and to general principles of equity (regardless
of whether such enforceability is considered in a proceeding at law or in
equity)).
SECTION 3.4 Governmental Approvals. No action, consent or
approval of, registration or filing with or other action by any Governmental
Authority is required in connection with the Transactions.
SECTION 3.5 Financial Statements; No Material Adverse Change. (a)
The Company has heretofore furnished to the Administrative Agents and the
Lenders copies of (i) its audited consolidated financial statements for the
years ended December 31, 1995 and December 31, 1996, respectively, which were
included in its annual report on Form 10-K dated December 31, 1995 and
December 31, 1996, respectively (the "10-Ks"), filed with the SEC under the
Exchange Act and (ii) its unaudited consolidated financial statements for the
quarters ended March 31, 1997, June 30, 1997 and September 30, 1997, which
were included in its Quarterly Report on Form 10-Q dated March 31, 1997,
June 30, 1997 and September 30, 1997, respectively (the "10-Qs"), filed with
the SEC under the Exchange Act. Such financial statements present fairly, in
all material respects, the financial condition and the results of operations
of the Company and the Subsidiaries, taken as a whole, as of, and for
accounting periods ending on, such dates in accordance with GAAP (subject, in
the case of unaudited statements, to normal year-end audit adjustments and
the absence of footnotes).
(b) Since December 31, 1997, there has been no material adverse
effect on the business, operations, properties or financial condition of the
Company and its Subsidiaries, taken as a whole.
SECTION 3.6 Litigation; Compliance with Laws. (a) Except as
disclosed in either the most recent 10-K or the most recent 10-Q, as of the
date hereof, there are no actions, proceedings or investigations filed or
(to the knowledge of the Company) threatened against the Company or any
Subsidiary in any court or before any Governmental Authority or arbitration
board or tribunal which question the validity or legality of this Agreement,
the Transactions or any action taken or to be taken pursuant to this
Agreement and no order or judgment has been issued or entered restraining or
enjoining the Company from the execution, delivery or performance of this
Agreement nor is there any other action, proceeding or investigation filed
or (to the knowledge of the Company) threatened against the Company or any
Subsidiary in any court or before any Governmental Authority or arbitration
board or tribunal which would be reasonably likely to result in a Material
Adverse Effect.
(b) Neither the Company nor any Subsidiary is in violation of any
law, rule or regulation, or in default with respect to any judgment, writ,
injunction or decree of any Governmental Authority, where such violation or
default would be reasonably likely to result in a Material Adverse Effect.
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SECTION 3.7 Federal Reserve Regulations. No part of the proceeds
of any Loan will be used, whether directly or indirectly, and whether
immediately, incidentally or ultimately, for any purpose which entails a
violation of, or which is inconsistent with, the provisions of the Margin
Regulations.
SECTION 3.8 Use of Proceeds. All proceeds of the Loans shall be
used for the purposes referred to in the recitals to this Agreement.
SECTION 3.9 Taxes. The Company and the Subsidiaries have filed or
caused to be filed all Federal and material state, local and foreign Tax
returns which are required to be filed by them, and have paid or caused to be
paid all Taxes shown to be due and payable on such returns or on any
assessments received by any of them, other than any Taxes or assessments the
validity of which is being contested in good faith by appropriate proceedings,
and with respect to which appropriate accounting reserves have, to the extent
required by GAAP, been set aside.
SECTION 3.10 Employee Benefit Plans. The present aggregate value
of accumulated benefit obligations of all Plans and all foreign employee
pension benefit plans (based on those assumptions used for disclosure of such
obligations in corporate financial statements in accordance with GAAP) did
not, as of the most recent statements available, exceed the aggregate value
of the assets for all such plans. Except as would not individually or in the
aggregate have a Material Adverse Effect: (a) no ERISA Termination Event has
occurred or (b) each Plan has been established and administered in accordance
with its terms and in compliance with the applicable provisions of ERISA,
the Code and other applicable laws, rules and regulations.
SECTION 3.11 Environmental and Safety Matters. Other than
exceptions to any of the following that would not in the aggregate have a
Material Adverse Effect: (i) the Company and the Subsidiaries comply and
have complied with all applicable Environmental and Safety Laws; (ii) there
are and have been no Hazardous Substances at any property owned, leased or
operated by the Company now or in the past, or at any other location, that
could reasonably be expected to result in liability of the Company or any
Subsidiary under any Environmental and Safety Law or result in costs to any
of them arising out of any Environmental and Safety Law; (iii) there are no
past, present, or, to the knowledge of the Company and the Subsidiaries,
anticipated future events, conditions, circumstances, practices, plans, or
legal requirements that could reasonably be expected to prevent the Company
or any of the Subsidiaries from, or increase the costs to the Company or any
of the Subsidiaries of, complying with applicable Environmental and Safety
Laws or obtaining or renewing all material permits, approvals,
authorizations, licenses or permissions required of any of them pursuant to
any such law; and (iv) neither the Company nor any of the Subsidiaries has
retained or assumed, by contract or operation of law, any liability, fixed
or contingent, under any Environmental and Safety Law.
SECTION 3.12 Properties. (a) Each of the Company and its
Subsidiaries has good title to, or valid leasehold interests in, all its
real and personal property that are material to the business of the Company
and its Subsidiaries taken as a whole, except for minor defects in title that
do not interfere with its ability to conduct its business as currently
conducted or to utilize such properties for their intended purposes.
(b) Each of the Company and its Subsidiaries owns, or is licensed
to use, all trademarks, tradenames, copyrights, patents and other intellectual
property that are material to the business of the Company and its Subsidiaries
taken as a whole, and the use thereof by the Company and its Subsidiaries does
not infringe upon the rights of any other Person, except for any such
infringements that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
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SECTION 3.13 Investment and Holding Company Status. Neither the
Company nor any of its Subsidiaries is (a) an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (b)
a "holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
ARTICLE IV
Conditions
SECTION 4.1 Effective Date. The obligations of the Lenders to make
Loans hereunder shall not become effective until the date on which each of
the following conditions is satisfied (or waived in accordance with Section
8.7):
(a) Citibank (or its counsel) shall have received from each party
hereto either (i) a counterpart of this Agreement signed on
behalf of such party or (ii) written evidence satisfactory to
Citibank (which may include telecopy transmission of a signed
signature page of this Agreement) that such party has signed
a counterpart of this Agreement.
(b) Citibank shall have received a favorable written opinion
(addressed to the Administrative Agents and the Lenders and
dated the Effective Date) of Cravath, Swaine & Moore, counsel
to the Company, and John L. McGoldrick, Esq., Senior Vice
President Law and Strategic Planning and General Counsel of
the Company, collectively to the effect set forth in Exhibit C.
The Company hereby requests such counsel to deliver such
opinions.
(c) Citibank shall have received such documents and certificates
as Citibank or its counsel may reasonably request relating
to the organization, existence and good standing of the
Company, the authorization of the Transactions and any other
legal matters relating to the Company, this Agreement or the
Transactions, all in form and substance satisfactory to the
Administrative Agents and their counsel.
(d) Citibank shall have received a certificate, dated the
Effective Date and signed by the President, a Vice President
or a Financial Officer of the Company, confirming compliance
with the conditions set forth in paragraphs (a) and (b) of
Section 4.2.
(e) The Administrative Agents shall have received all fees and
other amounts due and payable on or prior to the Effective
Date, including, to the extent invoiced, reimbursement or
payment of all out-of-pocket expenses required to be
reimbursed or paid by the Company hereunder.
Citibank shall notify the Company and the Lenders of the Effective Date, and
such notice shall be conclusive and binding.
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SECTION 4.2 Each Credit Event. The obligation of each Lender to
make a Loan on the occasion of any Borrowing (other than a Borrowing made
solely to refinance outstanding Borrowings that does not increase the
aggregate principal amount of the Loans of any Lender outstanding) is
subject to the satisfaction of the following conditions:
(a) The representations and warranties of the Company set forth in
this Agreement other than those set forth in Sections 3.5(b), 3.6(a),
3.10 and 3.11 shall be true and correct in all material respects
(provided that such representations and warranties qualified as to
materiality shall be true and correct) on and as of the date of such
Borrowing with the same effect as though made on and as of such date,
except to the extent such representations and warranties expressly
relate to an earlier date.
(b) At the time of and immediately after giving effect to such
Borrowing, no Default shall have occurred and be continuing.
Each Borrowing shall be deemed to constitute a representation and warranty by
the Company on the date thereof as to the matters specified in paragraphs (a)
and (b) of this Section.
SECTION 4.3 Initial Borrowing by Each Borrowing Subsidiary. The
obligation of each Lender to make a Loan on the occasion of the first
Borrowing by each Borrowing Subsidiary is subject to the satisfaction of the
following condition:
Citibank (or their counsel) shall have received a Borrowing
Subsidiary Agreement properly executed by such Borrowing Subsidiary and
the Company.
ARTICLE V
Covenants
A. Affirmative Covenants. The Company covenants and agrees with
each Lender and each Administrative Agent that so long as this Agreement shall
remain in effect or the principal of or interest on any Loan, any fees or any
other amounts payable hereunder shall be unpaid, unless the Required Lenders
shall otherwise consent in writing, it will, and will cause each of the
Subsidiaries to:
SECTION 5.1 Existence. Do or cause to be done all things necessary
to preserve and keep in full force and effect its corporate existence and
its rights and franchises that are material to the business of the Company
and its Subsidiaries as a whole, except as expressly permitted under Section
5.7 and except, in the case of any Subsidiary, where the failure to do so
would not result in a Material Adverse Effect.
SECTION 5.2 Business and Properties. Comply in all respects with
all applicable laws, rules, regulations and orders of any Governmental
Authority (including Environmental and Safety Laws and ERISA), whether now
in effect or hereafter enacted except instances that could not, in the
aggregate, reasonably be expected to result in a Material Adverse Effect;
and at all times maintain and preserve all property material to the conduct
of the business of the Company and its Subsidiaries as a whole and keep such
property in good repair, working order and condition and from time to time
make, or cause to be made, all needful and proper repairs, renewals,
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additions, improvements and replacements thereto necessary in order that the
business carried on in connection therewith may be properly conducted at all
times, except where the failure to do so would not result in a Material
Adverse Effect.
SECTION 5.3 Financial Statements, Reports, Etc. Furnish to the
Administrative Agents and each Lender:
(a) within 95 days after the end of each fiscal year, its annual
report on Form 10-K as filed with the SEC, incl uding its consolidated
balance sheet and the related co nsolidated earnings statement showing
its co nsolidated financial condition as of the close of such fiscal
year and the consolidated results of its operations during such year,
all audited by Price Waterhouse LLP or other independent certified
public accountants of recognized national standing selected by the
Company and accompanied by an opinion of such accountants to the effect
that such consolidated financial statements fairly present the Company's
financial condition and results of operations on a consolidated basis in
accordance with GAAP;
(b) within 50 days after the end of each of the first three fiscal
quarters of each fiscal year, its quarterly report on Form 10-Q as filed
with the SEC, including its unaudited consolidated balance sheet and
related consolidated earnings statement, showing its consolidated
financial condition as of the close of such fiscal quarter and the
consolidated results of its operations during such fiscal quarter and the
then elapsed portion of the fiscal year (and each delivery of such
statements shall be deemed a representation that such statements fairly
present the Company's financial condition and results of operations on a
consolidated basis in accordance with GAAP, subject to normal year-end
audit adjustments and the absence of footnotes);
(c) concurrently with any delivery of financial statements under
paragraph (a) or (b) above, a certificate of a Financial Officer
certifying that no Event of Default or Default has occurred or, if such
an Event of Default or Default has occurred, specifying the nature and
extent thereof and any corrective action taken or proposed to be taken
with respect thereto;
(d) promptly after the same become publicly available, copies of
all reports on Form 8-K filed by it with the SEC, or any Governmental
Authority succeeding to any of or all the functions of the SEC, or
copies of all reports distributed to its shareholders, as the case may
be; and
(e) promptly, from time to time, such other information as any
Lender shall reasonably request through Citibank.
SECTION 5.4 Insurance. Keep its insurable properties adequately
insured at all times by financially sound and reputable insurers (which may
include captive insurers), and maintain such other insurance or self
insurance, to such extent and against such risks, including fire and other
risks insured against by extended coverage, as is customary with companies
similarly situated and in the same or similar businesses.
SECTION 5.5 Obligations and Taxes. Pay and discharge promptly
when due all material taxes, assessments and governmental charges imposed
upon it or upon its income or profits or in respect of its property, in each
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case before the same shall become delinquent or in default and before
penalties accrue thereon, unless and to the extent that the same are being
contested in good faith by appropriate proceedings and adequate reserves
with respect thereto shall, to the extent required by GAAP, have been set
aside.
SECTION 5.6 Litigation and Other Notices. Give Citibank written
notice of the following within five Business Days after any executive officer
of the Company obtains knowledge thereof:
(a) the filing or commencement of any action, suit or proceeding
which the Company reasonably expects to result in a Material Adverse
Effect;
(b) any Event of Default or Default, specifying the nature and
extent thereof and the action (if any) which is proposed to be taken
with respect thereto; and
(c) any change in any of the Ratings.
SECTION 5.7 Books and Records. Keep proper books of record and
account in which full, true and correct entries are made of all material
dealings and transactions in relation to its business and activities.
B. Negative Covenants. The Company covenants and agrees with each
Lender and each Administrative Agent that so long as this Agreement shall
remain in effect or the principal of or interest on any Loan, any fees or any
other amounts payable hereunder shall be unpaid, unless the Required Lenders
shall otherwise consent in writing, it will not, and will not permit any of
the Subsidiaries to:
SECTION 5.8 Consolidations, Mergers, and Sales of Assets. In the
case of the Company (a) consolidate or merge with or into any other Person or
liquidate, wind up or dissolve (or suffer any liquidation or dissolution) or
(b) sell, or otherwise transfer (in one transaction or a series of
transactions), or permit any Subsidiary to sell, or otherwise transfer (in
one transaction or a series of transactions), all or substantially all of
the assets of the Company and the Subsidiaries, taken as a whole, to any other
Person; provided that the Company may merge or consolidate with another Person
if (A) the Company is the corporation surviving such merger and (B)
immediately after giving effect to such merger or consolidation, no Default
or Event of Default shall have occurred and be continuing.
SECTION 5.9 Liens. Create, assume or suffer to exist any Lien
upon any Restricted Property to secure any Debt of the Company, any
Subsidiary or any other Person, without making effective provision whereby
the Loans that may then or thereafter be outstanding shall be secured by
such Lien equally and ratably with (or prior to) such Debt for so long as
such Debt shall be so secured, except that the foregoing shall not prevent
the Company or any Subsidiary from creating, assuming or suffering to exist
any of the following Liens:
(a) Liens existing on the date hereof;
(b) any Lien existing on property owned or leased by any Person at
the time it becomes a Subsidiary;
(c) any Lien existing on property at the time of the acquisition
thereof by the Company or any Subsidiary;
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(d) any Lien to secure any Debt incurred prior to, at the time of,
or within 12 months after the acquisition of any Restricted Property for
the purpose of financing all or any part of the purchase price thereof
and any Lien to the extent that it secures Debt which is in excess of
such purchase price and for the payment of which recourse may be had
only against such Restricted Property;
(e) any Lien to secure any Debt incurred prior to, at the time of,
or within 12 months after the completion of the construction, alteration,
repair or improvement of any Restricted Property for the purpose of
financing all or any part of the cost thereof and any Lien to the extent
that it secures Debt which is in excess of such cost and for the payment
of which recourse may be had only against such Restricted Property;
(f) any Liens securing Debt of a Subsidiary owing to the Company
or to another Subsidiary;
(g) any Liens securing industrial development, pollution control
or similar revenue bonds;
(h) any extension, renewal or replacement (or successive
extensions, renewals or replacements) in whole or in part of any Lien
referred to in clauses (a) through (g) above, so long as the principal
amount of the Debt secured thereby does not exceed the principal amount
of Debt so secured at the time of such extension, renewal or replacement
(except that, where an additional principal amount of Debt is incurred
to provide funds for the completion of a specific project, the additional
principal amount, and any related financing costs, may be secured by the
Lien as well) and such Lien is limited to the same property subject to
the Lien so extended, renewed or replaced (and improvements on such
property); and
(i) any Lien not permitted by clauses (a) through (h) above
securing Debt which, together with the aggregate outstanding principal
amount of all other Debt of the Company and its Subsidiaries owning
Restricted Property which would otherwise be subject to the foregoing
restrictions and the aggregate Value of existing Sale and Leaseback
Transactions which would be subject to the restrictions of Section
5.10 but for this clause (i), does not at any time exceed 10% of
Consolidated Net Tangible Assets.
SECTION 5.10 Limitation on Sale and Leaseback Transactions. Enter
into any Sale and Leaseback Transaction, or permit any Subsidiary owning
Restricted Property to do so, unless either:
(a) the Company or such Subsidiary would be entitled to incur
Debt, in a principal amount at least equal to the Value of such Sale and
Leaseback Transaction, which is secured by Liens on the property to be
leased (without equally and ratably securing the Loans) without violating
Section 5.9, or
(b) the Company, during the six months immediately following the
effective date of such Sale and Leaseback Transaction, causes to be
applied to (A) the acquisition of Restricted Property or (B) the
voluntary retirement of Funded Debt (whether by redemption, defeasance,
repurchase, or otherwise) an amount equal to the Value of such Sale and
Leaseback Transaction.
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ARTICLE VI
Events of Default
In case of the happening of any of the following events (each an
"Event of Default"):
(a) any representation or warranty made or deemed made in or in
connection with the execution and delivery of this Agreement or the Borrowings
hereunder or under any Borrowing Subsidiary Agreement shall prove to have been
false or misleading in any material respect when so made, deemed made or
furnished;
(b) default shall be made in the payment of any principal of any
Loan when and as the same shall become due and payable, whether at the due
date thereof or at a date fixed for prepayment thereof or by acceleration
thereof or otherwise;
(c) default shall be made in the payment of any interest on any
Loan or any fee or any other amount (other than an amount referred to in
paragraph (b) above) due hereunder, when and as the same shall become due and
payable, and such default shall continue unremedied for a period of three
Business Days;
(d) default shall be made in the due observance or performance of
any covenant, condition or agreement contained in Section 5.6, 5.8, 5.9
or 5.10;
(e) default shall be made in the due observance or performance of
any covenant, condition or agreement contained herein (other than those
specified in (b), (c) or (d) above) and such default shall continue unremedied
for a period of 30 days after notice thereof from any Administrative Agent or
any Lender to the Company;
(f) the Company or any Subsidiary shall (i) fail to pay any
principal or interest, regardless of amount, due in respect of one or more
items of Debt in an aggregate principal amount greater than or equal to 3% of
Consolidated Net Worth, when and as the same shall become due and payable
(giving effect to any applicable grace period), or (ii) fail to observe or
perform any other term, covenant, condition or agreement contained in any
agreement or instrument evidencing or governing any such Debt if the effect
of any failure referred to in this clause (ii) is to cause such Debt to become
due prior to its stated maturity;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking
(i) relief in respect of the Company or any Borrowing Subsidiary, or of a
substantial part of the property or assets of the Company or any Borrowing
Subsidiary, under Title 11 of the United States Code, as now constituted
or hereafter amended, or any other Federal or state bankruptcy, insolvency,
receivership or similar law, (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Company or any
Borrowing Subsidiary or for a substantial part of the property or assets
of the Company or any Borrowing Subsidiary or (iii) the winding up or
liquidation of the Company or any Borrowing Subsidiary; and such proceeding
or petition shall continue undismissed for 60 days or an order or decree
approving or ordering any of the foregoing shall be entered;
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(h) the Company or any Borrowing Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11 of
the United States Code, as now constituted or hereafter amended, or any other
Federal or state bankruptcy, insolvency, receivership or similar law,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition described
in (g) above, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for the
Company or any Borrowing Subsidiary or for a substantial part of the property
or assets of the Company or any Borrowing Subsidiary, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors,
(vi) become unable, admit in writing its inability or fail generally to pay
its debts as they become due or (vii) take any action for the purpose of
effecting any of the foregoing; or
(i) one or more judgments for the payment of money in an aggregate
amount equal to or greater than 3% of Consolidated Net Worth (exclusive of
any amount thereof covered by insurance) shall be rendered against the
Company, any Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution shall
not be effectively stayed, or any action shall be legally taken by a judgment
creditor to levy upon assets or properties of the Company or any Subsidiary
to enforce any such judgment;
(j) (i) a Plan of the Company or any Borrowing Subsidiary shall
fail to maintain the minimum funding standard required by Section 412 of the
Code for any plan year or a waiver of such standard is sought or granted
under Section 412(d), or (ii) an ERISA Termination Event shall have occurred
with respect to the Company or any Borrowing Subsidiary or an ERISA Affiliate
has incurred or is reasonably likely to incur a liability to or on account of
a Plan under Section 4062, 4063, 4064, 4201 or 4204 of ERISA, or (iii) the
Company or any Borrowing Subsidiary or any ERISA Affiliate shall engage in
any 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 United States Department
of Labor, or (iv) the Company or any Borrowing Subsidiary or any ERISA
Affiliate shall fail to pay any required installment or any other payment
required to be paid by such entity under Section 412 of the Code on or before
the due date for such installment or other payment, or (v) the Company or any
Borrowing Subsidiary or any ERISA Affiliate shall fail to make any contribution
or payment to any Multiemployer Plan (as defined in Section 4001(a)(3) of
ERISA) which the Company or any Borrowing Subsidiary or any ERISA Affiliate
is required to make under any agreement relating to such Multiemployer Plan
or any law pertaining thereto, and there shall result from any such event or
events either a liability or a material risk of incurring a liability to the
PBGC or a Plan which will have a Material Adverse Effect;
(k) a Change in Control shall occur; or
(l) at any time while a Borrowing Subsidiary Agreement is in
effect, the guarantee in Section 8.16 shall cease to be, or shall be asserted
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by the Company not to be, a valid and binding obligation on the part of the
Company; then, and in every such event (other than an event with respect to
the Company described in paragraph (g) or (h) above), and at any time
thereafter during the continuance of such event, Citibank, at the request of
the Required Lenders, shall, by notice to the Company or any Borrowing
Subsidiary (which notice to a Borrowing Subsidiary may be given to the
Company), take either or both of the following actions, at the same or
different times: (i) terminate forthwith the Commitments and (ii) declare
the Loans then outstanding to be forthwith due and payable in whole or in
part, whereupon the principal of the Loans so declared to be due and payable,
together with accrued interest thereon and any unpaid accrued fees and all
other liabilities of the Company or any Borrowing Subsidiary accrued
hereunder, shall become forthwith due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived anything contained herein to the contrary notwithstanding; and, in any
event with respect to the Company described in paragraph (g) or (h) above,
the Commitments shall automatically terminate and the principal of the Loans
then outstanding, together with accrued interest thereon and any unpaid
accrued fees and all other liabilities of the Company and the Borrowing
Subsidiaries accrued hereunder shall automatically become due and payable,
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived anything contained herein to the contrary
notwithstanding.
ARTICLE VII
The Administrative Agents
In order to expedite the transactions contemplated by this
Agreement, each of The Chase Manhattan Bank and Citibank, N.A. is hereby
appointed to act as an Administrative Agent on behalf of the Lenders and
Citibank is hereby appointed to act as Advance Agent on behalf of the Lenders.
Each of the Lenders hereby irrevocably authorizes each Administrative Agent
(which term, for purposes of this Article VII, shall be deemed to include the
Advance Agent) to take such actions on behalf of such Lender or holder and to
exercise such powers as are specifically delegated to the Administrative
Agents or an Administrative Agent individually, as the case may be, by the
terms and provisions hereof, together with such actions and powers as are
reasonably incidental thereto. Citibank is hereby expressly authorized by the
Lenders, without hereby limiting any implied authority, (a) to receive on
behalf of the Lenders all payments of principal of and interest on the Loans
and all other amounts due to the Lenders hereunder, and promptly to distribute
to each Lender its proper share of each payment so received; (b) to give
notice on behalf of each of the Lenders to the Company or any Borrowing
Subsidiary of any Event of Default of which Citibank has actual knowledge
acquired in connection with its agency hereunder; and (c) to distribute to
each Lender copies of all notices, financial statements and other materials
delivered by the Company or any Borrowing Subsidiary pursuant to this Agreement
as received by Citibank.
Neither Administrative Agent nor any of their respective directors,
officers, employees or agents shall be liable as such for any action taken or
omitted by any of them except for its or his or her own gross negligence or
willful misconduct, or be responsible for any statement, warranty or
representation herein or the contents of any document delivered in connection
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herewith, or be required to ascertain or to make any inquiry concerning the
performance or observance by the Company or any Borrowing Subsidiary of any
of the terms, conditions, covenants or agreements contained in this Agreement.
The Administrative Agents shall not be responsible to the Lenders for the due
execution, genuineness, validity, enforceability or effectiveness of this
Agreement or other instruments or agreements. The Administrative Agents may
deem and treat the Lender which makes any Loan as the holder of the
indebtedness resulting therefrom for all purposes hereof until it shall have
received notice from such Lender, given as provided herein, of the transfer
thereof. The Administrative Agents shall in all cases be fully protected in
acting, or refraining from acting, in accordance with written instructions
signed by the Required Lenders and, except as otherwise specifically provided
herein, such instructions and any action or inaction pursuant thereto shall
be binding on all the Lenders. The Administrative Agents shall, in the
absence of knowledge to the contrary, be entitled to rely on any instrument
or document believed by it in good faith to be genuine and correct and to
have been signed or sent by the proper Person or Persons. Neither
Administrative Agent nor any of their respective directors, officers,
employees or agents shall have any responsibility to the Company or any
Borrowing Subsidiary on account of the failure of or delay in performance or
breach by any Lender of any of its obligations hereunder or to any Lender on
account of the failure of or delay in performance or breach by any other
Lender or the Company of any of their respective obligations hereunder or in
connection herewith. The Administrative Agents may execute any and all duties
hereunder by or through their Affiliates, agents or employees and shall be
entitled to rely upon the advice of legal counsel selected by them with
respect to all matters arising hereunder and shall not be liable for any
action taken or suffered in good faith by them in accordance with the advice
of such counsel.
The Lenders hereby acknowledge that the Administrative Agents shall
be under no duty to take any discretionary action permitted to be taken by
them pursuant to the provisions of this Agreement unless they shall be
requested in writing to do so by the Required Lenders.
Subject, in the case of a resignation of both Administrative Agents,
to the appointment and acceptance of a successor Administrative Agent as
provided below, either Administrative Agent may resign at any time by
notifying the Lenders and the Company. Upon any such resignation of both
Administrative Agents, the Required Lenders shall have the right to appoint
a successor Administrative Agent acceptable to the Company. If no successor
shall have been so appointed by the Required Lenders and shall have accepted
such appointment within 30 days after the retiring Administrative Agents give
notice of their resignation, then the retiring Administrative Agents may, on
behalf of the Lenders, appoint a successor Administrative Agent which shall be
a bank with an office in New York, New York, having a combined capital and
surplus of at least $500,000,000 or an Affiliate of any such bank. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
bank, such successor shall succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Administrative Agents and the
retiring Administrative Agents shall be discharged from their duties and
obligations hereunder. If only one of the Administrative Agents shall resign,
the other Administrative Agent shall 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. After any Administrative Agent's resignation
hereunder, the provisions of this Article and Section 8.5 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 Administrative Agent.
With respect to the Loans made by them hereunder, each
Administrative Agent in its individual capacity and not as Administrative
Agent shall have the same rights and powers as any other Lender and may
exercise the same as though it were not an Administrative Agent, and such
Administrative Agent and its Affiliates may accept deposits from, lend money
to and generally engage in any kind of business with the Company or any
Subsidiary or other Affiliate thereof as if it were not an Administrative
Agent.
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Each Lender agrees (i) to reimburse the Administrative Agents, on
demand, in the amount of its Applicable Percentage of any expenses incurred
for the benefit of the Lenders by the Administrative Agents, including counsel
fees and compensation of agents and employees paid for services rendered on
behalf of the Lenders, which shall not have been reimbursed by the Company and
(ii) to indemnify and hold harmless the Administrative Agents and any of their
respective directors, officers, employees or agents, on demand, in the amount
of such pro rata share, from and against any and all liabilities, taxes,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against either of them in its capacity as
an Administrative Agent in any way relating to or arising out of this
Agreement or any action taken or omitted by either of them under this Agreement
to the extent the same shall not have been reimbursed by the Company; provided
that no Lender shall be liable to any Administrative Agent for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the gross negligence or
willful misconduct of such Administrative Agent or any of its directors,
officers, employees or agents.
Each Lender acknowledges that it has, independently and without
reliance upon any Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon any
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue
to make its own decisions in taking or not taking action under or based
upon this Agreement or any related agreement or any document furnished
hereunder or thereunder.
ARTICLE VIII
Miscellaneous
SECTION 8.1 Notices. Notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed or sent by telecopy, as follows:
(a) if to the Company, to Bristol-Myers Squibb Company,
345 Park Avenue, New York, New York 10154, Attention of the Treasurer
(Telecopy No. 212-605-9632) and the General Counsel (Telecopy No. 212-546-9562);
(b) if to The Chase Manhattan Bank, to it at One Chase Manhattan
Plaza, 8th Floor, New York, New York 10081, Attention of Vito Cipriano
(Telecopy No. 212-552-5662);
(c) if to Citibank, (i) for notices concerning operational matters,
to Citibank, N.A., c/o Citibank Delaware, Two Penns Way, Suite 200,
New Castle, DE 19720, Attention of Janet Wallace (Telecopy No. (302) 894-6120)
or (ii) for notices concerning credit matters, to Citibank, N.A.,
399 Park Avenue, New York, New York 10043, Attention of William E. Clark
(Telecopy No. 212-826-2371);
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(d) if to a Lender, to it at its address (or telecopy number) set
forth in Schedule 2.1 or in the Assignment and Acceptance pursuant to which
such Lender became a party hereto; and
(e) if to any Borrowing Subsidiary, to it at the address (or
telecopy number) set forth above for the Company. Each Borrowing Subsidiary
hereby irrevocably appoints the Company as its agent for the purpose of giving
on its behalf any notice and taking any other action provided for in this
Agreement and hereby agrees that it shall be bound by any such notice or
action given or taken by the Company hereunder irrespective of whether or not
any such notice shall have in fact been authorized by such Borrowing
Subsidiary and irrespective of whether or not the agency provided for herein
shall have theretofore been terminated.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement 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 this Section or in accordance
with the latest unrevoked direction from such party given in accordance with
this Section.
SECTION 8.2 Survival of Agreement. All covenants, agreements,
representations and warranties made by the Company herein and in the
certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement shall be considered to have been relied upon
by the Lenders and shall survive the making by the Lenders of the Loans
regardless of any investigation made by the Lenders or on their behalf, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under
this Agreement is outstanding and unpaid or the Commitments have not been
terminated.
SECTION 8.3 Binding Effect. This Agreement shall become effective
when it shall have been executed by the Company and the Administrative Agents
and when the Administrative Agents shall have received copies hereof
(telecopied or otherwise) which, when taken together, bear the signature of
each Lender, and thereafter shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, except that
neither the Company nor any Borrowing Subsidiary shall have the right to
assign any rights hereunder or any interest herein without the prior consent
of all the Lenders.
SECTION 8.4 Successors and Assigns. (a) Whenever in this
Agreement any of the parties is referred to, such reference shall be deemed
to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of any party that are contained in
this Agreement shall bind and inure to the benefit of its successors and
assigns.
(b) Each Lender may assign to one or more assignees all or a
portion of its interests, rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time
owing to it); provided, however, that, except in the case of an assignment
to another Lender or an Affiliate of a Lender, (i) each of the Company (so
long as no Event of Default shall have occurred and be continuing with respect
to the Company under clause (g) or (h) of Article VI of this Agreement) and
Citibank must give its prior written consent to such assignment (which consent
in each case shall not be unreasonably withheld) and (ii) the amount of the
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Commitment of the assigning Lender subject to each such assignment (determined
as of the date the Assignment and Acceptance with respect to such assignment
is delivered to Citibank) shall not be less than $10,000,000 unless it shall
be the entire amount of such Lender's Commitment. The parties to each
assignment shall execute and deliver to Citibank an Assignment and Acceptance,
and a processing and recordation fee of $3,000. Upon acceptance and recording
pursuant to paragraph (e) of this Section, from and after the effective date
specified in each Assignment and Acceptance, which effective date shall be at
least five Business Days after the execution thereof, (X) the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement and (Y) the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment
and Acceptance covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto (but shall continue to be entitled to the benefits of Sections
2.15, 2.16, 2.17 and 8.5, as well as to any fees accrued for its account
hereunder and not yet paid)). Notwithstanding the foregoing, any Lender
assigning its rights and obligations under this Agreement may retain any
Competitive Loans made by it outstanding at such time, and in such case shall
retain its rights hereunder in respect of any Loans so retained until such
Loans have been repaid in full in accordance with this Agreement.
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the assignee thereunder shall be deemed
to confirm to and agree with each other and the other parties hereto
as follows: (i) such assigning Lender warrants that it is the legal and
beneficial owner of the interest being assigned thereby free and clear of any
adverse claim; (ii) except as set forth in (i) above, such assigning Lender
makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any
other instrument or document furnished pursuant hereto or the financial
condition of the Company or the performance or observance by the Company of
any obligations under this Agreement or any other instrument or document
furnished pursuant hereto; (iii) such assignee represents and warrants that it
is legally authorized to enter into such Assignment and Acceptance;
(iv) such assignee confirms that it has received a copy of this Agreement,
together with copies of the most recent financial statements delivered pursuant
to Section 5.3 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (v) such assignee will independently and without
reliance upon any Administrative Agent, such assigning Lender 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; (vi) such assignee appoints and
authorizes the Administrative Agents to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to
the Administrative Agents by the terms hereof, together with such powers as
are reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
(d) Citibank shall maintain at one of its offices in the City of
New York a copy of each Assignment and Acceptance delivered to it and a
register for the recordation of the names and addresses of the Lenders, and
the Commitment of, and the principal amount of the Loans owing to, each Lender
pursuant to the terms hereof from time to time and any promissory notes
evidencing such Loans (the "Register"). The entries in the Register shall be
conclusive in the absence of manifest error and the Company, the other
Borrowers, the Administrative Agents and the Lenders may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement. No assignment or
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transfer of any Loan (or portion thereof) or any Note evidencing such Loan
shall be effected unless and until it has been recorded in the Register as
provided in this subsection 8.4(d). Notwithstanding any other provision of
this Agreement, any assignment or transfer of all or part of a promissory note
shall be registered on the Register only upon surrender for registration of
assignment or transfer of the promissory note (and each promissory note
shall expressly so provide), accompanied by a duly executed Assignment and
Acceptance, and thereupon one or more new promissory notes in the same
aggregate principal amount shall be issued to the designated Assignee
and the old promissory notes shall be returned by Citibank to the Borrower
marked "cancelled". The Register shall be available for inspection by each
party hereto, at any reasonable time and from time to time upon reasonable
prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee together with an
Administrative Questionnaire completed in respect of the assignee (unless
the assignee shall already be a Lender hereunder), the processing and
recordation fee referred to in paragraph (b) above and, if required, the
written consent of the Company to such assignment, Citibank shall (i) accept
such Assignment and Acceptance and (ii) record the information contained
therein in the Register.
(f) Each Lender may sell participations to one or more banks or
other entities in all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans owing
to it); provided, however, that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto or thereto for the performance of such
obligations, (iii) each participating bank or other entity shall be entitled
to the benefit of the cost protection provisions contained in Sections 2.15,
2.16 and 2.17 to the same extent as if it was the selling Lender (and limited
to the amount that could have been claimed by the selling Lender had it
continued to hold the interest of such participating bank or other entity, it
being further agreed that the selling Lender will not be permitted to make
claims against the Company under Section 2.15(b) for costs or reductions
resulting from the sale of a participation), except that all claims made
pursuant to such Sections shall be made through such selling Lender, and
(iv) the Company, the Administrative Agents and the other Lenders shall
continue to deal solely and directly with such selling Lender in connection
with such Lender's rights and obligations under this Agreement, and such
Lender shall retain the sole right to enforce the obligations of the Company
relating to the Loans and to approve any amendment, modification or waiver
of any provision of this Agreement (other than amendments, modifications or
waivers decreasing any fees payable hereunder or thereunder or the amount
of principal of or the rate at which interest is payable on the Loans,
extending the final scheduled maturity of the Loans or any date scheduled for
the payment of interest on the Loans or extending the Commitments).
(g) Any Lender or participant may, in connection with any
assignment or participation or proposed assignment or participation pursuant
to this Section, disclose to the assignee or participant or proposed assignee
or participant any information relating to the Company furnished to such
Lender; provided that, prior to any such disclosure, each such assignee or
participant or proposed assignee or participant shall be subject to the same
confidentiality agreement as are the Lenders.
(h) The Company and any Borrowing Subsidiary shall not assign or
delegate any rights and duties hereunder without the prior written consent
of all Lenders.
(i) Any Lender may at any time pledge or otherwise assign all or
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any portion of its rights under this Agreement to a Federal Reserve Bank;
provided that no such pledge shall release any Lender from its obligations
hereunder. In order to facilitate such an assignment to a Federal Reserve
Bank, the Company shall, at the request of the assigning Lender, duly execute
and deliver to the assigning Lender a promissory note or notes evidencing the
Loans made by the assigning Lender hereunder.
SECTION 8.5 Expenses; Indemnity. (a) The Company agrees to pay
all reasonable out-of-pocket expenses incurred by the Administrative Agents
in connection with entering into this Agreement or in connection with any
amendments, modifications or waivers of the provisions hereof or thereof
(including the reasonable fees, disbursements and other charges of a single
counsel), or incurred by the Administrative Agents or any Lender in
connection with the enforcement of their rights in connection with this
Agreement or in connection with the Loans made hereunder or thereunder,
including the fees and disbursements of counsel for the Administrative Agents
and, in the case of enforcement, each Lender.
(b) The Company agrees to indemnify each Administrative Agent, each
Lender, each of their Affiliates and the directors, officers, employees and
agents of the foregoing (each such Person being called an "Indemnitee")
against, and to hold each Indemnitee harmless from, any and all losses,
claims, damages, liabilities and related expenses, including reasonable
counsel fees and expenses, incurred by or asserted against any Indemnitee
arising out of (i) the consummation of the transactions contemplated by this
Agreement, (ii) the use of the proceeds of the Loans or (iii) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto; provided that (A) such
indemnity shall not, as to any Indemnitee, be available to the extent that
such losses, claims, damages, liabilities or related expenses are determined
by a final judgment of a court of competent jurisdiction to have resulted from
the gross negligence or willful misconduct of such Indemnitee and (B) such
indemnity shall not apply to losses, claims, damages, liabilities or related
expenses that result from disputes solely between Lenders.
(c) The provisions of this Section shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any
term or provision of this Agreement or any investigation made by or on behalf
of any Administrative Agent or any Lender. All amounts due under this
Section shall be payable on written demand therefor.
SECTION 8.6 Applicable Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 8.7 Waivers; Amendment. (a) No failure or delay of any
Administrative Agent or any Lender in exercising any power or right hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof
or the exercise of any other right or power. The rights and remedies of the
Administrative Agents and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies which they would otherwise have. No
waiver of any provision of this Agreement or consent to any departure
therefrom shall in any event be effective unless the same shall be permitted
by paragraph (b) below, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given. No notice
or demand on the Company or any Subsidiary in any case shall entitle such
party to any other or further notice or demand in similar or other
circumstances.
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(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Company and the Required Lenders; provided,
however, that no such agreement shall (i) decrease the principal amount of,
or extend the maturity of or any scheduled principal payment date or date for
the payment of any interest on any Loan, or waive or excuse any such payment
or any part thereof, or decrease the rate of interest on any Loan, or amend or
modify Section 8.16, without the prior written consent of each Lender
directly affected thereby, (ii) increase the Commitment (except pursuant to
Section 2.6), or decrease the facility fees of any Lender without the prior
written consent of such Lender or (iii) amend or modify the provisions of
Section 2.18 or Section 8.4(h), the provisions of this Section or the
definition of the "Required Lenders", without the prior written consent of
each Lender; provided further, however, that no such agreement shall amend,
modify or otherwise affect the rights or duties of any Administrative Agent
hereunder without the prior written consent of such Administrative Agent.
Each Lender shall be bound by any waiver, amendment or modification authorized
by this Section and any consent by any Lender pursuant to this Section shall
bind any assignee of its rights and interests hereunder.
SECTION 8.8 Entire Agreement. This Agreement constitutes the
entire contract among the parties relative to the subject matter hereof.
Any previous agreement among the parties with respect to the subject matter
hereof is superseded by this Agreement. Nothing in this Agreement, expressed
or implied, is intended to confer upon any party other than the parties hereto
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
SECTION 8.9 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 shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith negotiations 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 8.10 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract, and shall become
effective as provided in Section 8.3.
SECTION 8.11 Headings. Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 8.12 Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such
Lender to or for the credit or obligations of the Company and the applicable
Borrowing Subsidiary now or hereafter existing under this Agreement held by
such Lender, irrespective of whether or not such Lender shall have made any
demand under this Agreement and although such obligations may be unmatured.
Each Lender agrees promptly to notify the Company after such setoff and
application made by such Lender, but the failure to give such notice shall
not affect the validity of such setoff and application. The rights of each
Lender under this Section are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which such Lender
may have.
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SECTION 8.13 Jurisdiction; Consent to Service of Process.
(a) The Company and any Borrowing Subsidiary hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or Federal court of the United States
of America sitting in New York City, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement, or
for recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of
any such action or proceeding may be heard and determined in such New York
State or, to the extent permitted by law, in such Federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Subject to the foregoing and
to paragraph (b) below, nothing in this Agreement shall affect any right that
any party hereto may otherwise have to bring any action or proceeding relating
to this Agreement against any other party hereto in the courts of any
jurisdiction.
(b) Each of the parties hereto hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively
do so, any objection which it may now or thereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating to this
Agreement in any New York State or Federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in
any such court.
(c) Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 8.1. Nothing in this
Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 8.14 Waiver of Jury Trial. Each party hereto hereby
waives, to the fullest extent permitted by applicable law, any right it may
have to a trial by jury in respect of any litigation directly or indirectly
arising out of, under or in connection with this Agreement. Each party hereto
(a) certifies that no representative, agent or attorney of any other party has
represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver and (b) acknowledges
that it and other parties hereto have been induced to enter into this
Agreement by, among other things, the mutual waivers and certification in
this Section.
SECTION 8.15 Conversion of Currencies. (a) If, for the purpose of
obtaining judgment in any court, it is necessary to convert a sum owing
hereunder in one currency into another currency, each party hereto agrees, to
the fullest extent that it may effectively do so, that the rate of exchange
used shall be that at which in accordance with normal banking procedures in
the relevant jurisdiction the first currency could be purchased with such
other currency on the Business Day immediately preceding the day on which
final judgment is given.
(b) The obligations of each Borrower in respect of any sum due to
any party hereto or any holder of the obligations owing hereunder (the
"Applicable Creditor") shall, notwithstanding any judgment in a currency (the
"Judgment Currency") other than the currency in which such sum is stated to be
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due hereunder (the "Agreement Currency"), be discharged only to the extent
that, on the Business Day following receipt by the Applicable Creditor of any
sum adjudged to be so due in the Judgment Currency, the Applicable Creditor
may in accordance with normal banking procedures in the relevant jurisdiction
purchase the Agreement Currency with the Judgment Currency; if the amount of
the Agreement Currency so purchased is less than the sum originally due to the
Applicable Creditor in the Agreement Currency, such Borrower agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify the
Applicable Creditor against such loss. The obligations of the Borrowers
contained in this Section 8.15 shall survive the termination of this Agreement
and the payment of all other amounts owing hereunder.
SECTION 8.16 Guaranty. In order to induce the Lenders to make
Loans to the applicable Borrowing Subsidiaries, the Company hereby
unconditionally guarantees the Borrowing Subsidiary Obligations of all the
Borrowing Subsidiaries. The Company further agrees that the Borrowing
Subsidiary Obligations may be extended and renewed, in whole or in part,
without notice to or further assent from it, and that it will remain bound
upon its agreement hereunder notwithstanding any extension or renewal of
any Borrowing Subsidiary Obligation.
The Company waives promptness, diligence, presentment to, demand of
payment from and protest to the Borrowing Subsidiaries of any Borrowing
Subsidiary Obligations, and also waives notice of acceptance of its
obligations and notice of protest for nonpayment. The obligations of the
Company hereunder shall be absolute and unconditional and not be affected by
(a) the failure of any Lender or the Administrative Agents to assert any
claim or demand or to enforce any right or remedy against the Borrowing
Subsidiaries under the provisions of this Agreement or any of the other Loan
Documents or otherwise; (b) any rescission, waiver, amendment or modification
of any of the terms or provisions of this Agreement, any other Loan Documents
or any other agreement; (c) the failure of any Lender to exercise any right
or remedy against any Borrowing Subsidiaries; (d) the invalidity or
unenforceability of any Loan Document or (e) any other circumstance which
might otherwise constitute a defense available to or discharge of the
Borrower or a guarantor (other than payment).
The Company further agrees that its agreement hereunder constitutes
a promise of payment when due and not of collection, and waives any right to
require that any resort be had by any Lender to any balance of any deposit
account or credit on the books of any Lender in favor of any Borrowing
Subsidiary or any other Person.
The obligations of the Company hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, and shall not
be subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever, by reason of the invalidity, illegality or unenforceability of the
Borrowing Subsidiary Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of the Company hereunder shall
not be discharged or impaired or otherwise affected by the failure of
the Administrative Agents or any Lender to assert any claim or demand or to
enforce any remedy under this Agreement or under any other Loan Document or
any other agreement, by any waiver or modification in respect of any thereof,
by any default, failure or delay, wilful or otherwise, in the performance of
the Borrowing Subsidiary Obligations, or by any other act or omission which
may or might in any manner or to any extent vary the risk of the Company or
otherwise operate as a discharge of the Company as a matter of law or
equity.
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The Company further agrees that its obligations hereunder shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of or interest on any Borrowing
Subsidiary Obligation is rescinded or must otherwise be restored by the
Administrative Agents or any Lender upon the bankruptcy or reorganization of
any of the Borrowing Subsidiaries or otherwise.
In furtherance of the foregoing and not in limitation of any other
right which the Administrative Agents or any Lender may have at law or in
equity against the Company by virtue hereof, upon the failure of any Borrowing
Subsidiary to pay any Borrowing Subsidiary Obligation when and as the same
shall become due, whether at maturity, by acceleration, after notice of
prepayment or otherwise, the Company hereby promises to and will, upon
receipt of written demand by Citibank, forthwith pay, or cause to be paid,
in cash the amount of such unpaid Borrowing Subsidiary Obligation. In the
event that, by reason of the bankruptcy of any Borrowing Subsidiary,
(i) acceleration of Loans made to such Borrowing Subsidiary is prevented and
(ii) the Company shall not have prepaid the outstanding Loans and other
amounts due hereunder owed by such Borrowing Subsidiary, the Company will
forthwith purchase such Loans at a price equal to the principal amount thereof
plus accrued interest thereon and any other amounts due hereunder with respect
thereto. The Company further agrees that if payment in respect of any
Borrowing Subsidiary Obligation shall be due in a currency other than
Dollars and/or at a place of payment other than New York and if, by reason
of any Change in Law, disruption of currency or foreign exchange markets, war
or civil disturbance or similar event, payment of such Borrowing Subsidiary
Obligation in such currency or such place of payment shall be impossible or,
in the judgment of any applicable Lender, not consistent with the protection
of its rights or interests, then, at the election of any applicable Lender,
the Company shall make payment of such Borrowing Subsidiary Obligation in
Dollars (based upon the applicable Exchange Rate in effect on the date of
payment) and/or in New York, and shall indemnify such Lender against any
losses or expenses that it shall sustain as a result of such alternative
payment.
Upon payment by the Company of any Borrowing Subsidiary Obligations,
each Lender shall, in a reasonable manner, assign the amount of the Borrowing
Subsidiary Obligations owed to it and paid by the Company pursuant to this
guarantee to the Company, such assignment to be pro tanto to the extent to
which the Borrowing Subsidiary Obligations in question were discharged by the
Company, or make such disposition thereof as the Company shall direct (all
without recourse to any Lender and without any representation or warranty by
any Lender except with respect to the amount of the Borrowing Subsidiary
Obligations so assigned).
Upon payment by the Company of any sums as provided above, all
rights of the Company against any Borrowing Subsidiary arising as a result
thereof by way of right of subrogation or otherwise shall in all respects be
subordinated and junior in right of payment to the prior indefeasible payment
in full of all the Borrowing Subsidiary Obligations to the Lenders.
SECTION 8.17 European Monetary Union. If, as a result of the
implementation of European monetary union, (a) any currency ceases to be
lawful currency of the nation issuing the same and is replaced by a European
common currency, then any amount payable hereunder by any party hereto in such
currency shall instead be payable in the European common currency and the
amount so payable shall be determined by translating the amount payable in
such currency to such European common currency at the exchange rate recognized
by the European Central Bank for the purpose of implementing European monetary
union, or (b) any currency and a European common currency are at the same time
recognized by the central bank or comparable authority of the nation issuing
such currency as lawful currency of such nation, then (i) any Loan made at such
time shall be made in such European common currency and (ii) any other amount
payable by any party hereto in such currency shall be payable in such currency
or in such European common currency (in an amount determined as set forth in
E-1-57
<PAGE>
clause (a)), at the election of the obligor. Prior to the occurrence of the
event or events described in clause (a) or (b) of the preceding sentence, each
amount payable hereunder in any currency will continue to be payable only in
that currency. The Borrowers agree, at the request of the Required Lenders,
at the time of or at any time following the implementation of European
monetary union, to enter into an agreement amending this Agreement in such
manner as the Required Lenders shall reasonably request in order to avoid any
unfair burden or disadvantage resulting from the implementation of such
monetary union and to place the parties hereto in the position they would have
been in had such monetary union not been implemented, the intent being that
neither party will be adversely affected economically as a result of such
implementation and that reasonable provisions shall be adopted to govern
the borrowing, maintenance and repayment of Loans denominated in currencies
other than Dollars after the occurrence of the event or events described in
clause (a) or (b) of the preceding sentence.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
BRISTOL-MYERS SQUIBB COMPANY,
By
Name:
Title:
By
Name:
Title:
THE CHASE MANHATTAN BANK, individually and as
Administrative Agent,
By
Name:
Title:
CITIBANK, N.A., individually and as
Administrative Agent and
Advance Agent,
By
Name:
Title:
SWISS BANK CORPORATION, Stamford branch,
as a Lender
By: Title:
By: Title:
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<PAGE>
DRESDNER BANK AG, New York Branch and Grand Cayman Branch, as a Lender
By: Title:
By: Title:
BANCA MONTE DEI PASCHI DI SIENA S.p.A., as a Lender
By: Title:
BANCO SANTANDER S.A., New York branch, as a Lender
By: Title:
By: Title:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as a Lender
By: Title:
BANK OF TOKYO-MITSUBISHI TRUST COMPANY, as a Lender
By: Title:
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<PAGE>
BANQUE NATIONALE DE PARIS, as a Lender
By: Title:
By: Title:
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as a Lender
By: Title:
ROYAL BANK OF CANADA, as a Lender
By: Title:
THE BANK OF NEW YORK, as a Lender
By: Title:
THE NORTHERN TRUST COMPANY, as a Lender
By: Title:
DEUTSCHE BANK AG, New York branch and/or Cayman Islands branch, as a Lender
By: Title:
By: Title:
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<PAGE>
WACHOVIA BANK, N.A., as a Lender
By: Title:
BANK OF MONTREAL, as a Lender
By: Title:
ING BANK N.V., as a Lender
By: Title:
E-1-62
$250,000,000
364-DAY COMPETITIVE ADVANCE AND
REVOLVING CREDIT FACILITY AGREEMENT
Dated as of March 17, 1998
Among
BRISTOL-MYERS SQUIBB COMPANY,
THE BORROWING SUBSIDIARIES,
THE LENDERS NAMED HEREIN,
CITIBANK, N.A., as Administrative Agent
and
THE CHASE MANHATTAN BANK, as Administrative Agent
E-2-1
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions. . . . . . . . . . . . . 1
SECTION 1.1 Defined Terms. . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Classification of Loans and Borrowings . . . . . 14
SECTION 1.3 Terms Generally. . . . . . . . . . . . . . . . . 14
SECTION 1.4 Accounting Terms; GAAP . . . . . . . . . . . . . 15
ARTICLE II
The Credits. . . . . . . . . . . . . 15
SECTION 2.1 Commitments. . . . . . . . . . . . . . . . . . . 15
SECTION 2.2 Loans and Borrowings . . . . . . . . . . . . . . 15
SECTION 2.3 Requests for Revolving Borrowings. . . . . . . . 16
SECTION 2.4 Competitive Bid Procedure. . . . . . . . . . . . 17
SECTION 2.5 Extension of Maturity Date . . . . . . . . . . . 19
SECTION 2.6 Increase of Commitments. . . . . . . . . . . . . 20
SECTION 2.7 Funding of Borrowings. . . . . . . . . . . . . . 22
SECTION 2.8 Interest Elections . . . . . . . . . . . . . . . 23
SECTION 2.9 Termination and Reduction of Commitments . . . . 24
SECTION 2.10 Repayment of Loans; Evidence of Debt. . . . . . 25
SECTION 2.11 Prepayment of Loans . . . . . . . . . . . . . . 25
SECTION 2.12 Fees. . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.13 Interest. . . . . . . . . . . . . . . . . . . . 27
SECTION 2.14 Alternate Rate of Interest. . . . . . . . . . . 27
SECTION 2.15 Increased Costs . . . . . . . . . . . . . . . . 28
SECTION 2.16 Break Funding Payments. . . . . . . . . . . . . 29
SECTION 2.17 Taxes . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.18 Payments Generally; Pro Rata Treatment;
Sharing of Set-offs . . . . . . . . . . . 33
SECTION 2.19 Mitigation Obligations; Replacement of Lenders. 34
SECTION 2.20 Borrowing Subsidiaries. . . . . . . . . . . . . 35
ARTICLE III
Representations and Warranties . . . . . . . . 35
SECTION 3.1 Organization; Powers . . . . . . . . . . . . . . 35
SECTION 3.2 Authorization. . . . . . . . . . . . . . . . . . 36
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<PAGE>
SECTION 3.3 Enforceability . . . . . . . . . . . . . . . . . 36
SECTION 3.4 Governmental Approvals . . . . . . . . . . . . . 36
SECTION 3.5 Financial Statements; No Material Adverse Change 36
SECTION 3.6 Litigation; Compliance with Laws . . . . . . . . 37
SECTION 3.7 Federal Reserve Regulations. . . . . . . . . . . 37
SECTION 3.8 Use of Proceeds. . . . . . . . . . . . . . . . . 37
SECTION 3.9 Taxes. . . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.10 Employee Benefit Plans. . . . . . . . . . . . . 37
SECTION 3.11 Environmental and Safety Matters. . . . . . . . 37
SECTION 3.12 Properties. . . . . . . . . . . . . . . . . . . 38
SECTION 3.13 Investment and Holding Company Status . . . . . 38
ARTICLE IV
Conditions . . . . . . . . . . . . . 38
SECTION 4.1 Effective Date . . . . . . . . . . . . . . . . . 38
SECTION 4.2 Each Credit Event. . . . . . . . . . . . . . . . 39
SECTION 4.3 Initial Borrowing by Each Borrowing Subsidiary . 39
ARTICLE V
Covenants . . . . . . . . . . . . . 40
SECTION 5.1 Existence. . . . . . . . . . . . . . . . . . . . 40
SECTION 5.2 Business and Properties. . . . . . . . . . . . . 40
SECTION 5.3 Financial Statements, Reports, Etc.. . . . . . . 40
SECTION 5.4 Insurance. . . . . . . . . . . . . . . . . . . . 41
SECTION 5.5 Obligations and Taxes. . . . . . . . . . . . . . 41
SECTION 5.6 Litigation and Other Notices . . . . . . . . . . 41
SECTION 5.7 Books and Records. . . . . . . . . . . . . . . . 42
SECTION 5.8 Consolidations, Mergers, and Sales of Assets . . 42
SECTION 5.9 Liens. . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.10 Limitation on Sale and Leaseback Transactions . 43
ARTICLE VI
Events of Default . . . . . . . . . . . 44
ARTICLE VII
The Administrative Agents . . . . . . . . . 46
ARTICLE VIII
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<PAGE>
Miscellaneous . . . . . . . . . . . . 49
SECTION 8.1 Notices. . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.2 Survival of Agreement. . . . . . . . . . . . . . 49
SECTION 8.3 Binding Effect . . . . . . . . . . . . . . . . . 50
SECTION 8.4 Successors and Assigns . . . . . . . . . . . . . 50
SECTION 8.5 Expenses; Indemnity. . . . . . . . . . . . . . . 53
SECTION 8.6 Applicable Law . . . . . . . . . . . . . . . . . 53
SECTION 8.7 Waivers; Amendment . . . . . . . . . . . . . . . 53
SECTION 8.8 Entire Agreement . . . . . . . . . . . . . . . . 54
SECTION 8.9 Severability . . . . . . . . . . . . . . . . . . 54
SECTION 8.10 Counterparts. . . . . . . . . . . . . . . . . . 54
SECTION 8.11 Headings. . . . . . . . . . . . . . . . . . . . 54
SECTION 8.12 Right of Setoff . . . . . . . . . . . . . . . . 55
SECTION 8.13 Jurisdiction; Consent to Service of Process . . 55
SECTION 8.14 Waiver of Jury Trial. . . . . . . . . . . . . . 55
SECTION 8.15 Conversion of Currencies. . . . . . . . . . . . 56
SECTION 8.16 Guaranty. . . . . . . . . . . . . . . . . . . . 56
SECTION 8.17 European Monetary Union . . . . . . . . . . . . 58
SCHEDULES:
Schedule 2.1 -- Commitments
EXHIBITS:
Exhibit A-1 -- Competitive Bid Request
Exhibit A-2 -- Notice of Competitive Bid Request
Exhibit A-3 -- Competitive Bid
Exhibit A-4 -- Competitive Bid Accept/Reject Letter
Exhibit A-5 -- Borrowing Request
Exhibit B -- Form of Assignment and Acceptance
Exhibit C -- Form of Opinion of Company's Counsel
Exhibit D -- Form of Administrative Questionnaire
Exhibit E -- Form of Borrowing Subsidiary Agreement
Exhibit F -- Form of Borrowing Subsidiary Termination
E-2-4
<PAGE>
364-DAY COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY
AGREEMENT (the "Agreement") dated as of March 17, 1998, among BRISTOL-MYERS
SQUIBB COMPANY, a Delaware corporation (the "Company"), the BORROWING
SUBSIDIARIES (as defined herein), the lenders listed in Schedule 2.1 (the
"Lenders"), THE CHASE MANHATTAN BANK, a New York banking corporation,as
administrative agent for the Lenders (in such capacity, "Chase"), and
CITIBANK, N.A., as administrative agent for the Lenders (in such capacity,
"Citibank"; Chase and Citibank are referred to herein individually as an
"Administrative Agent" and collectively as the "Administrative Agents") and as
competitive advance facility agent (in such capacity, the "Advance Agent").
The Company has requested that the Lenders, on the terms and subject
to the conditions herein set forth (i) extend credit to the Company and the
applicable Borrowing Subsidiaries to enable them to borrow on a standby
revolving credit basis on and after the date hereof and at any time and from
time to time prior to the Maturity Date (such term and each other capitalized
term used but not defined herein having the meaning assigned to it in Article I)
a principal amount not in excess of $250,000,000 (as such amount may be
increased pursuant to Section 2.6) and (ii) provide a procedure pursuant to
which the Company and the Borrowing Subsidiaries may invite the Lenders to bid
on an uncommitted basis on short-term borrowings by the Company or the
applicable Borrowing Subsidiary. The proceeds of such borrowings are to be used
for working capital and other general corporate purposes (other than hostile
acquisitions), including commercial paper backup and repurchase of shares. The
Lenders are willing to extend such credit on the terms and subject to the
conditions herein set forth.
Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.1 Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Administrative Fees" shall have the meaning assigned to such term in
Section 2.12(b).
"Administrative Questionnaire" shall mean an administrative
questionnaire delivered by a Lender pursuant to Section 8.4(e) in the form of
Exhibit D.
E-2-5
<PAGE>
"Affiliate" shall mean, when used with respect to a specified Person,
another Person that directly, or indirectly, Controls or is Controlled by or is
under common Control with the Person specified.
"Alternate Base Rate" shall mean for any day, a rate per annum equal
to the greatest of (a) the rate of interest per annum publicly announced from
time to time by Citibank as its base rate in effect at its principal office in
New York City, (b) 1/2 of one percent above the Federal Funds Effective Rate and
(c) the Base CD Rate in effect for such day plus 1%. If for any reason Citibank
shall have determined (which determination shall be conclusive absent manifest
error) that it is unable to ascertain the Base CD Rate or Federal Funds
Effective Rate, or both, specified in clause (b) or (c), respectively, of the
first sentence of this definition, for any reason, including, without
limitation, the inability or failure of Citibank to obtain sufficient quotations
in accordance with the terms hereof, the Alternate Base Rate shall be determined
without regard to clause (b) or (c), or both, of the first sentence of this
definition until the circumstances giving rise to such inability no longer
exist. Any change in the Alternate Base Rate shall be effective on the
effective date of any change in such rate.
"Alternative Currency" shall mean at any time, a common currency of
the European monetary union and any currency (other than Dollars) that is
readily available, freely traded and convertible into Dollars in the London
market and as to which a Dollar Equivalent can be calculated.
"Applicable Percentage" shall mean, with respect to any Lender, the
percentage of the total Commitments represented by such Lender's Commitment. If
the Commitments have terminated or expired, Applicable Percentage shall mean,
with respect to any Lender, the percentage of the aggregate outstanding
principal amount of the Loans represented by the aggregate outstanding
principal amount of each Lender's Loans.
"Applicable Rate" shall mean on any date, (i) with respect to any
Eurocurrency Revolving Loan, 12 Basis Points per annum, and (ii) with respect to
facility fees payable hereunder, 3 Basis Points per annum.
"Assessment Rate" shall mean, for any day, the net annual assessment
rate (rounded upwards, if necessary, to the next higher Basis Point) as most
recently estimated by Citibank for determining the then current annual
assessment payable by Citibank to the Federal Deposit Insurance Corporation (or
any successor) for insurance by such Corporation (or such successor) of time
deposits made in dollars at Citibank's domestic offices.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee in the form of Exhibit B.
"Availability Period" shall mean the period from and including the
Effective Date to but excluding the earlier of the Maturity Date and the date of
termination of the Commitments.
"Base CD Rate" shall mean the sum of (a) the product of (i) the
E-2-6
<PAGE>
Average Weekly Three-Month Secondary CD Rate times (ii) a fraction of which the
numerator is 100% and the denominator is 100% minus the aggregate rates of
(A) basic and supplemental reserve requirements in effect on the date of
effectiveness of such Average Weekly Three-Month Secondary CD Rate, as set forth
below, under Regulation D of the Board applicable to certificates of deposit in
units of $100,000 or more issued by a "member bank" located in a "reserve city"
(as such terms are used in Regulation D) and (B) marginal reserve requirements
in effect on such date of effectiveness under Regulation D applicable to time
deposits of a "member bank" and (b) the Assessment Rate. "Average Weekly
Three-Month Secondary CD Rate" shall mean the three-month secondary certificate
of deposit ("CD") rate for the most recent weekly period covered therein in the
Federal Reserve Statistical release entitled "Weekly Summary of Lending and
Credit Measures (Averages of daily figures)" released in the week during which
occurs the day for which the CD rate is being determined. The CD rate so
reported shall be in effect, for the purposes of this definition, for each day
of the week in which the release date of such publication occurs. If such
publication or a substitute containing the foregoing rate information is not
published by the Federal Reserve for any week, such average rate shall be
determined by Citibank on the basis of quotations received by it from three New
York City negotiable certificate of deposit dealers of recognized standing on
the first Business Day of the week succeeding such week for which such rate
information is not published.
"Basis Point" shall mean 1/100th of 1%.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States of America.
"Board of Directors" shall mean either the board of directors of the
Company or any duly authorized committee thereof or any committee of officers of
the Company acting pursuant to authority granted by the board of directors of
the Company or any committee of such board.
"Borrower" shall mean the Company or any Borrowing Subsidiary.
"Borrowing" shall mean (a) Revolving Loans of the same Type, made,
converted or continued on the same date and, in the case of Eurocurrency Loans,
as to which a single Interest Period is in effect or (b) a Competitive Loan or
group of Competitive Loans of the same Type made on the same date and as to
which a single Interest Period is in effect.
"Borrowing Request" shall mean a request by the Company for a
Revolving Borrowing in accordance with Section 2.3.
"Borrowing Subsidiary" shall mean any Subsidiary of the Company
designated as a Borrowing Subsidiary by the Company pursuant to Section 2.20.
"Borrowing Subsidiary Agreement" shall mean a Borrowing Subsidiary
Agreement substantially in the form of Exhibit E.
"Borrowing Subsidiary Obligations" shall mean the due and punctual
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<PAGE>
payment of (i) the principal of and interest on any Loans made by the Lenders
to the Borrowing Subsidiaries pursuant to this Agreement, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, and (ii) all other monetary obligations, including fees, costs,
expenses and indemnities (including, without limitation, the obligations
described in Section 2.20) of the Borrowing Subsidiaries to the Lenders under
this Agreement and the other Loan Documents.
"Borrowing Subsidiary Termination" shall mean a Borrowing Subsidiary
Termination substantially in the form of Exhibit F.
"Business Day" shall mean any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York) on which banks are
open for business in New York City; provided, however, that, when used in
connection with a Eurocurrency Loan, the term "Business Day" shall also exclude
any day on which banks are not open for dealings in dollar deposits in the
London interbank market, or in the city which is the principal financial center
of the country of issuance of the applicable Alternative Currency.
"Capital Lease Obligations" of any Person shall mean the obligations
of such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
"Change in Control" shall be deemed to have occurred if (a) any Person
or group of Persons (other than (i) the Company, (ii) any Subsidiary or
(iii) any employee or director benefit plan or stock plan of the Company or a
Subsidiary or any trustee or fiduciary with respect to any such plan when acting
in that capacity or any trust related to any such plan) shall have acquired
beneficial ownership of shares representing more than 20% of the combined voting
power represented by the outstanding Voting Shares of the Company (within the
meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended, and the applicable rules and regulations thereunder), or (b) during any
period of 12 consecutive months, commencing before or after the date of this
Agreement, individuals who on the first day of such period were directors of the
Company (together with any replacement or additional directors who were
nominated or elected by a majority of directors then in office) cease to
constitute a majority of the Board of Directors of the Company.
"Change in Law" shall mean (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender (or,
for purposes of Section 2.15(b), by any lending office of such Lender or by such
Lender's holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.
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<PAGE>
"Class", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans
or Competitive Loans.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Commitment" shall mean, with respect to each Lender, the commitment
of such Lender to make Revolving Loans expressed as an amount representing the
maximum aggregate amount of such Lender's Revolving Credit Exposure hereunder,
as such commitment may be (a) reduced from time to time pursuant to Section 2.9,
(b) reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 8.4, and (c) increased pursuant to Section 2.6. The
initial amount of each Lender's Commitment is set forth on Schedule 2.1, or in
the Assignment and Acceptance pursuant to which such Lender shall have assumed
its Commitment, as applicable. The initial aggregate amount of the Lenders'
Commitments is $250,000,000.
"Company" shall mean Bristol-Myers Squibb Company, a Delaware
corporation.
"Competitive Bid" shall mean an offer by a Lender to make a
Competitive Loan pursuant to Section 2.4.
"Competitive Bid Accept/Reject Letter" shall mean a notification made
by the Company pursuant to Section 2.4(d) in the form of Exhibit A-4.
"Competitive Bid Rate" shall mean, as to any Competitive Bid, the
Margin or the Fixed Rate, as applicable, offered by the Lender making such
Competitive Bid.
"Competitive Bid Request" shall mean a request made pursuant to
Section 2.4 in the form of Exhibit A-1.
"Competitive Borrowing" shall mean a Borrowing consisting of a
Competitive Loan or concurrent Competitive Loans from the Lender or Lenders
whose Competitive Bids for such Borrowing have been accepted under the bidding
procedure described in Section 2.4.
"Competitive Loan" shall mean a Loan made pursuant to Section 2.4.
Each Competitive Loan shall be a Eurocurrency Competitive Loan or a Fixed Rate
Loan.
"Competitive Loan Exposure" shall mean, with respect to any Lender at
any time, the sum of (a) the aggregate principal amount of the outstanding
Competitive Loans of such Lender denominated in Dollars and (b) the sum of the
Dollar Equivalents of the aggregate principal amounts of the outstanding
Competitive Loans of such Lender denominated in Alternative Currencies.
"Consolidated Net Tangible Assets" shall mean, with respect to the
Company, the total amount of its assets (less applicable reserves and other
properly deductible items) after deducting (i) all current liabilities
(excluding the amount of those which are by their terms extendable or renewable
at the option of the obligor to a date more than 12 months after the date as of
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<PAGE>
which the amount is being determined) and (ii) all goodwill, tradenames,
trademarks, patents, unamortized debt discount and expense and other like
intangible assets, all as set forth on the most recent balance sheet of the
Company and its consolidated subsidiaries and determined on a consolidated basis
in accordance with GAAP.
"Consolidated Net Worth" shall mean at any time for the determination
thereof the sum of all amounts which, in conformity with GAAP, would be included
under the caption "total stockholders' equity" (or any like caption) on a
consolidated balance sheet of the Company and its Subsidiaries as at such time.
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise. "Controlling" and "Controlled" have meanings correlative thereto.
"Currency" shall mean Dollars or any Alternative Currency.
"Debt" shall mean (i) all obligations represented by notes, bonds,
debentures or similar evidences of indebtedness; (ii) all indebtedness for
borrowed money or for the deferred purchase price of property or services other
than, in the case of any such deferred purchase price, on normal trade terms and
(iii) all rental obligations as lessee under leases which shall have been or
should be recorded as Capital Lease Obligations.
"Default" shall mean any event or condition which constitutes an Event
of Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Dollar Equivalent" shall mean, with respect to any principal amount
of any Competitive Loan denominated in an Alternative Currency, the equivalent
in Dollars of such amount, determined by Citibank using the Exchange Rate in
effect for such Alternative Currency at approximately 11:00 a.m. London time on
the date of the Competitive Bid Request that resulted in the making of such
Competitive Loan.
"Dollars" or "$" shall mean lawful money of the United States of
America.
"Effective Date" means the date on which the conditions specified in
Section 4.1 are satisfied (or waived in accordance with Section 8.7).
"Environmental and Safety Laws" shall mean any and all applicable
current and future treaties, laws (including without limitation common law),
regulations, enforceable requirements, binding determinations, orders, decrees,
judgments, injunctions, permits, approvals, authorizations, licenses,
permissions, written notices or binding agreements issued, promulgated or
entered by any Governmental Authority, relating to the environment, to employee
health or safety as it pertains to the use or handling of, or exposure to, any
hazardous substance or contaminant, to preservation or reclamation of natural
E-2-10
<PAGE>
resources or to the management, release or threatened release of any hazardous
substance, contaminant, or noxious odor, including without limitation the
Hazardous Materials Transportation Act, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act of 1976 and the
Hazardous and Solid Waste Amendments of 1984, the Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1977, the Clean Air Act of
1970, as amended, the Toxic Substances Control Act of 1976, the Occupational
Safety and Health Act of 1970, as amended, the Emergency Planning and Community
Right-to-Know Act of 1986, the Safe Drinking Water Act of 1974, as amended, any
similar or implementing state law, all amendments of any of them, and any
regulations promulgated under any of them.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with the Company, is treated as a single employer
under Section 414 of the Code.
"ERISA Termination Event" shall mean (i) a "Reportable Event"
described in Section 4043 of ERISA and the regulations issued thereunder (other
than a "Reportable Event" not subject to the provision for 30-day notice to the
PBGC under such regulations), or (ii) the withdrawal of the Company or any of
its ERISA Affiliates from a "single employer" Plan during a plan year in which
it was a "substantial employer", both of such terms as defined in Section
4001(a) of ERISA, or (iii) the filing of a notice of intent to terminate a Plan
or the treatment of a Plan amendment as a termination under Section 4041 of
ERISA, or (iv) the institution of proceedings to terminate a Plan by the PBGC or
(v) any other event or condition which is reasonably likely to constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan or (vi) the partial or complete withdrawal
of the Company or any ERISA Affiliate of the Company from a Multiemployer Plan
as defined in Section 4001(a)(3) of ERISA.
"Eurocurrency", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the LIBO Rate.
"Event of Default" shall have the meaning assigned to such term in
Article VI.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Rate" shall mean, with respect to any Alternative Currency
on a particular date, the rate at which such Alternative Currency may be
exchanged into Dollars, as set forth on such date on the applicable Reuters
currency page with respect to such Alternative Currency; provided, that the
Company may make a one time election, with the approval of Citibank (such
approval not to be unreasonably withheld), to use Bloomberg currency pages to
determine Exchange Rate instead of Reuters currency pages. In the event that
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such rate does not appear on the applicable Reuters currency page, or Bloomberg
currency page, as the case may be, the Exchange Rate with respect to such
Alternative Currency shall be determined by reference to such other publicly
available service for displaying exchange rates as may be agreed upon by
Citibank and the Company or, in the absence of such agreement, such Exchange
Rate shall instead be Citibank's spot rate of exchange in the London interbank
market or other market where its foreign currency exchange operations in respect
of such Alternative Currency is then being conducted, at or about 10:00 A.M.,
local time, at such date for the purchase of Dollars with such Alternative
Currency for delivery two Business Days later; provided, however, that if at the
time of any such determination, for any reason, no such spot rate is being
quoted, Citibank may use any reasonable method it deems appropriate to determine
such rate, and such determination shall be conclusive absent manifest error.
"Extension Letter" shall mean a letter from the Company requesting an
extension of the Maturity Date.
"Federal Funds Effective Rate" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as released on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so released for any day which is a Business Day, the arithmetic
average (rounded upwards to the next 1/100th of 1%), as determined by Citibank,
of the quotations for the day of such transactions received by Citibank from
three Federal funds brokers of recognized standing selected by it.
"Financial Officer" of any corporation shall mean the chief financial
officer, principal accounting officer or treasurer of such corporation.
"Fixed Rate" shall mean, with respect to any Competitive Loan (other
than a Eurocurrency Competitive Loan), the fixed rate of interest per annum
specified by the Lender making such Competitive Loan in its related Competitive
Bid.
"Fixed Rate Loan" shall mean a Competitive Loan bearing interest at a
Fixed Rate.
"Foreign Lender" shall mean, with respect to any Borrower, any Lender
that is organized under the laws of a jurisdiction other than that in which such
Borrower is located. For purposes of this definition, the United States of
America, each State thereof and the District of Columbia shall be deemed to
constitute a single jurisdiction.
"Funded Debt" shall mean Debt of the Company or a Subsidiary owning
Restricted Property maturing by its terms more than one year after its creation
and Debt classified as long-term debt under GAAP and, in the case of Funded Debt
of the Company, ranking at least pari passu with the Loans.
"GAAP" shall mean generally accepted accounting principles in the
United States of America.
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"Governmental Authority" shall mean the government of any nation,
including, but not limited to, the United States of America, or any political
subdivision thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or
functions of or pertaining to government.
"Guarantee" of or by any Person (the "guarantor") shall mean any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof,
(c) to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
"Hazardous Substances" shall mean any toxic, radioactive, mutagenic,
carcinogenic, noxious, caustic or otherwise hazardous substance, material or
waste, including petroleum, its derivatives, by-products and other hydrocarbons,
including, without limitation, polychlorinated biphenyls ("PCBs"), asbestos or
asbestos-containing material, and any substance, waste or material regulated or
that could reasonably be expected to result in liability under Environmental and
Safety Laws.
"Indenture" shall mean the Indenture dated as of June 1, 1993 between
the Company and Chase, as successor to The Chase Manhattan Bank (National
Association), as Trustee, as amended, supplemented or otherwise modified from
time to time.
"Interest Election Request" shall mean a request by the Company to
convert or continue a Revolving Borrowing in accordance with Section 2.8.
"Interest Payment Date" shall mean (a) with respect to any ABR Loan,
the last day of each March, June, September and December, (b) with respect to
any Eurocurrency Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurocurrency
Borrowing with an Interest Period of more than three months' duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months' duration after the first day of such Interest Period and (c) with
respect to any Fixed Rate Loan, the last day of the Interest Period applicable
to the Borrowing of which such Loan is a part and, in the case of a Fixed Rate
Borrowing with an Interest Period of more than 90 days' duration (unless
otherwise specified in the applicable Competitive Bid Request), each day prior
to the last day of such Interest Period that occurs at intervals of 90 days'
duration after the first day of such Interest Period, and any other dates that
are specified in the applicable Competitive Bid Request as Interest Payment
Dates with respect to such Borrowing.
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"Interest Period" shall mean (a) as to any Eurocurrency Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is 1, 2, 3, 6 months (or, if
available, as determined by Citibank and each of the Lenders, 12 months)
thereafter, as the Company may elect, and (b) as to any Fixed Rate Borrowing,
the period (which shall not be less than seven days or more than 360 days)
commencing on the date of such Borrowing and ending on the date specified in the
applicable Competitive Bid Request; provided, that (i) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless, in the case of a
Eurocurrency Borrowing only, such next succeeding Business Day would fall in the
next calendar month, in which case such Interest Period shall end on the next
preceding Business Day and (ii) any Interest Period pertaining to a Eurocurrency
Borrowing that commences on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the last calendar
month of such Interest Period) shall end on the last Business Day of the last
calendar month of such Interest Period. For purposes hereof, the date of a
Borrowing initially shall be the date on which such Borrowing is made and, in
the case of a Revolving Borrowing, thereafter shall be the effective date of the
most recent conversion or continuation of such Borrowing.
"Lenders" shall mean (a) the financial institutions listed on Schedule
2.1 (other than any such financial institution that has ceased to be a party
hereto, pursuant to an Assignment and Acceptance) and (b) any financial
institution that has become a party hereto pursuant to an Assignment and
Acceptance or pursuant to the provisions of Section 2.6.
"LIBO Rate" shall mean, with respect to any Eurocurrency Borrowing for
any Interest Period, the rate appearing on Page 3740 or Page 3750, as the case
may be, of Dow Jones Markets (or on any successor or substitute page of such
service, or any successor to or substitute for such service, providing rate
quotations comparable to those currently provided on such page of such service,
as determined by Citibank from time to time for purposes of providing quotations
of interest rates applicable to deposits in Dollars or the applicable
Alternative Currency in the London interbank market) at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period, as the rate for deposits in Dollars or the applicable
Alternative Currency with a maturity comparable to such Interest Period. In the
event that such rate is not available at such time for any reason, then the
"LIBO Rate" with respect to such Eurocurrency Borrowing for such Interest Period
shall be the rate per annum (rounded upwards, if necessary, to the next Basis
Point) equal to the arithmetic average of the rates at which deposits in Dollars
or the applicable Alternative Currency approximately equal in principal amount
to such Borrowing and for a maturity comparable to such Interest Period are
offered to the principal London offices of the Reference Lenders (or, if any
Reference Lender does not at the time maintain a London office, the principal
London office of any Affiliate of such Reference Lender) in immediately
available funds in the London interbank market at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period; provided, however, that, if only two Reference Lenders notify Citibank
of the rates offered to such Reference Lenders (or any Affiliates of such
Reference Lenders) as aforesaid, the LIBO Rate with respect to such Eurocurrency
Borrowing shall be equal to the arithmetic average of the rates so offered to
such Reference Lenders (or any such Affiliates).
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"Lien" shall mean any mortgage, lien, pledge, encumbrance, charge or
security interest.
"Loan Documents" means this Agreement, each Borrowing Subsidiary
Agreement, each Borrowing Subsidiary Termination and each promissory note held
by a Lender pursuant to Section 2.10(e).
"Loans" shall mean the loans made by the Lenders to the Borrowers
pursuant to this Agreement.
"Margin" shall mean, with respect to any Competitive Loan bearing
interest at a rate based on the LIBO Rate, the marginal rate of interest, if
any, to be added to or subtracted from the LIBO Rate in order to determine the
interest rate applicable to such Loan, as specified by the Lender making such
Loan in its related Competitive Bid.
"Margin Regulations" shall mean Regulations G, T, U and X of the Board
as from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Material Adverse Effect" shall mean a material adverse effect on the
business, operations, properties or financial condition of the Company and its
consolidated Subsidiaries, taken as a whole.
"Maturity", when used with respect to any Security, shall mean the
date on which the principal of such Security becomes due and payable as provided
therein or in the Indenture, whether on a Repayment Date, at the Stated Maturity
thereof or by declaration of acceleration, call for redemption or otherwise.
"Maturity Date" shall mean March 16, 1999, subject to extension
pursuant to Section 2.5.
"Moody's" shall mean Moody's Investors Service, Inc. or any successor
thereto.
"Notice of Competitive Bid Request" shall mean a notification made
pursuant to Section 2.4 in the form of Exhibit A-2.
"Original Issue Discount Security" shall mean (i) any Security which
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity thereof, and (ii) any
other Security deemed an Original Issue Discount Security for United States
Federal income tax purposes.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA and any successor entity performing similar functions.
E-2-15
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"Person" shall mean any natural Person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan as defined in Section 4001(a)(3) of ERISA), subject to the
provisions of Title IV of ERISA or Section 412 of the Code that is maintained
for current or former employees, or any beneficiary thereof, of the Company or
any ERISA Affiliate.
"Rating Agencies" shall mean Moody's and S&P.
"Ratings" shall mean the ratings from time to time established by the
Rating Agencies for senior, unsecured, non-credit-enhanced long-term debt of the
Company.
"Reference Lenders" shall mean Chase, Citibank and Deutsche Bank AG.
"Register" shall have the meaning given such term in Section 8.4(d).
"Repayment Date", when used with respect to any Security to be repaid,
shall mean the date fixed for such repayment pursuant to such Security.
"Required Lenders" shall mean, at any time, Lenders having Revolving
Credit Exposures and unused Commitments representing at least 51% of the sum of
the total Revolving Credit Exposures and unused Commitments at such time;
provided that, for purposes of declaring the Loans to be due and payable
pursuant to Article VI, and for all purposes after the Loans become due and
payable pursuant to Article VI or the Commitments shall have expired or
terminated, the Competitive Loan Exposures of the Lenders shall be included in
their respective Revolving Credit Exposures in determining the Required Lenders.
"Restricted Property" shall mean (i) any manufacturing facility, or
portion thereof, owned or leased by the Company or any Subsidiary and located
within the continental United States of America which, in the opinion of the
Board of Directors of the Company, is of material importance to the business of
the Company and its Subsidiaries taken as a whole, but no such manufacturing
facility, or portion thereof, shall be deemed of material importance if its
gross book value (before deducting accumulated depreciation) is less than 2% of
Consolidated Net Tangible Assets, and (ii) any shares of capital stock or
indebtedness of any Subsidiary owning any such manufacturing facility. As used
in this definition, "manufacturing facility" means property, plant and equipment
used for actual manufacturing and for activities directly related to
manufacturing, and it excludes sales offices, research facilities and facilities
used only for warehousing, distribution or general administration.
"Revolving Credit Exposure" shall mean, with respect to any Lender at
any time, the aggregate outstanding principal amount of such Lender's Revolving
Loans at such time.
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"Revolving Loan" shall mean a Loan made pursuant to Section 2.3.
"Sale and Leaseback Transaction" shall mean any arrangement with any
Person pursuant to which the Company or any Subsidiary leases any Restricted
Property that has been or is to be sold or transferred by the Company or the
Subsidiary to such Person, other than (i) temporary leases for a term, including
renewals at the option of the lessee, of not more than three years, (ii) leases
between the Company and a Subsidiary or between Subsidiaries, (iii) leases of
Restricted Property executed by the time of, or within 12 months after the
latest of, the acquisition, the completion of construction or improvement, or
the commencement of commercial operation, of such Restricted Property, and (iv)
arrangements pursuant to any provision of law with an effect similar to that
under former Section 168(f)(8) of the Internal Revenue Code of 1954.
"S&P" shall mean Standard & Poor's Ratings Group or any successor
thereto.
"SEC" shall mean the Securities and Exchange Commission.
"Security" or "Securities" shall mean any note or notes, bond or
bonds, debenture or debentures, or any other evidences of indebtedness, of any
series authenticated and delivered from time to time under the Indenture.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, shall mean the date
specified in such Security as the fixed date on which the principal of such
Security or such installment of principal or interest is due and payable.
"subsidiary" shall mean, with respect to any Person (the "parent") at
any date, (i) for purposes of Sections 5.9 and 5.10 only, any Person the
majority of the outstanding Voting Stock of which is owned, directly or
indirectly, by the parent or one or more subsidiaries of the parent of such
Person and (ii) for all other purposes under this Agreement, any corporation,
limited liability company, partnership, association or other entity the accounts
of which would be consolidated with those of the parent in the parent's
consolidated financial statements if such financial statements were prepared in
accordance with GAAP as of such date, as well as any other corporation, limited
liability company, partnership, association or other entity of which securities
or other ownership interests representing more than 50% of the equity or more
than 50% of the ordinary voting power or, in the case of a partnership, more
than 50% of the general partnership interests are, as of such date, owned,
controlled or held.
"Subsidiary" shall mean a subsidiary of the Company.
"Taxes" shall mean any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority and all liabilities with respect thereto.
E-2-17
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"Transactions" means the execution and delivery by the Borrowers of
this Agreement (or, in the case of the Borrowing Subsidiaries, the Borrowing
Subsidiary Agreements), the performance by the Borrowers of this Agreement, the
borrowing of the Loans and the use of the proceeds thereof.
"Type", when used in respect of any Loan or Borrowing, shall refer to
the Rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined. For purposes hereof, "Rate" shall include the
LIBO Rate, the Alternate Base Rate and the Fixed Rate.
"Value" shall mean, with respect to a Sale and Leaseback Transaction,
an amount equal to the present value of the lease payments with respect to the
term of the lease remaining on the date as of which the amount is being
determined, without regard to any renewal or extension options contained in the
lease, discounted at the weighted average interest rate on the Securities of all
series (including the effective interest rate on any Original Issue Discount
Securities) which are outstanding on the effective date of such Sale and
Leaseback Transaction and which have the benefit of Section 1007 of the
Indenture under which the Securities are issued.
"Voting Stock" shall mean, as applied to the stock of any corporation,
stock of any class or classes (however designated) having by the terms thereof
ordinary voting power to elect a majority of the members of the board of
directors (or other governing body) of such corporation other than stock having
such power only by reason of the happening of a contingency.
"Wholly Owned Subsidiary" of any Person shall mean a subsidiary of
such Person of which securities (except for directors' qualifying shares) or
other ownership interests representing 100% of the equity are, at the time any
determination is being made, owned 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.
SECTION 1.2 Classification of Loans and Borrowings. For purposes of
this Agreement, Loans may be classified and referred to by Class (e.g., a
"Revolving Loan") or by Type (e.g., a "Eurocurrency Loan") or by Class and Type
(e.g., a "Eurocurrency Revolving Loan"). Borrowings also may be classified and
referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a
"Eurocurrency Borrowing") or by Class and Type (e.g., a "Eurocurrency Revolving
Borrowing").
SECTION 1.3 Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
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". The word
"will" shall be construed to have the same meaning and effect as the word
"shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
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(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.
SECTION 1.4 Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time.
ARTICLE II
The Credits
SECTION 2.1 Commitments. Subject to the terms and conditions set
forth herein, each Lender agrees to make Revolving Loans to the Company and any
Borrowing Subsidiary which is organized and existing under the laws of the
United States of America or any State thereof from time to time during the
Availability Period in Dollars in an aggregate principal amount that will not
result in (a) such Lender's Revolving Credit Exposure exceeding such Lender's
Commitment or (b) the sum of the total Revolving Credit Exposures plus the total
Competitive Loan Exposures exceeding the total Commitments. Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Company and each applicable Borrowing Subsidiary may borrow, prepay and reborrow
Revolving Loans.
SECTION 2.2 Loans and Borrowings. (a) Each Revolving Loan shall be
made as part of a Borrowing consisting of Revolving Loans made by the Lenders
ratably in accordance with their respective Commitments. Each Competitive Loan
shall be made in accordance with the procedures set forth in Section 2.4. The
failure of any Lender to make any Loan required to be made by it shall not
relieve any other Lender of its obligations hereunder; provided that the
Commitments and Competitive Bids of the Lenders are several and no Lender shall
be responsible for any other Lender's failure to make Loans as required.
(b) Subject to Section 2.14, (i) each Revolving Borrowing shall be
comprised entirely of ABR Loans or Eurocurrency Loans as the Company (on its own
behalf or on behalf of any other applicable Borrower) may request in accordance
herewith, and (ii) each Competitive Borrowing shall be comprised entirely of
Eurocurrency Loans or Fixed Rate Loans as the Company (on its own behalf or on
behalf of any other Borrower) may request in accordance herewith. Each Lender
at its option may make any Eurocurrency Loan by causing any domestic or foreign
branch or Affiliate of such Lender to make such Loan; provided that any exercise
of such option shall not affect the obligation of any Borrower to repay such
Loan in accordance with the terms of this Agreement.
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(c) At the commencement of each Interest Period for any Eurocurrency
Revolving Borrowing, such Borrowing shall be in an aggregate amount that is an
integral multiple of $1,000,000 and not less than $10,000,000. At the time that
each ABR Revolving Borrowing is made, such Borrowing shall be in an aggregate
amount that is an integral multiple of $1,000,000 and not less than $10,000,000;
provided that an ABR Revolving Borrowing may be in an aggregate amount that is
equal to the entire unused balance of the total Commitments. Each Competitive
Borrowing denominated in Dollars shall be in an aggregate amount that is an
integral multiple of $1,000,000 and not less than $10,000,000, and each
Competitive Borrowing denominated in an Alternative Currency shall be in an
aggregate principal amount that is not less than the Dollar Equivalent of
$10,000,000. Borrowings of more than one Type and Class may be outstanding at
the same time; provided that there shall not at any time be more than a total of
15 Eurocurrency Revolving Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the
Company (on its own behalf or on behalf of any other Borrower) shall not be
entitled to request, or to elect to convert or continue, any Borrowing if the
Interest Period requested with respect thereto would end after the Maturity
Date.
SECTION 2.3 Requests for Revolving Borrowings. To request a
Revolving Borrowing, the Company (on its own behalf or on behalf of any other
applicable Borrower) shall notify Citibank of such request by telephone (a) in
the case of a Eurocurrency Borrowing, not later than 10:30 a.m., New York City
time, three Business Days before the date of the proposed Borrowing or (b) in
the case of an ABR Borrowing, not later than 10:30 a.m., New York City time, on
the date of the proposed Borrowing. Each such telephonic Borrowing Request
shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to Citibank of a written Borrowing Request in the form of Exhibit A-5.
Each such telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.2:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a
Eurocurrency Borrowing;
(iv) in the case of a Eurocurrency Borrowing, the initial
Interest Period to be applicable thereto, which shall be a period contemplated
by the definition of the term "Interest Period";
(v) the location and number of the account of the Company or the
other applicable Borrowers to which funds are to be disbursed, which shall
comply with the requirements of Section 2.7; and
(vi) the applicable Borrower.
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If no election as to the Type of Revolving Borrowing is specified, then the
requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period
is specified with respect to any requested Eurocurrency Revolving Borrowing,
then the Company shall be deemed to have selected an Interest Period of one
month's duration. Promptly following receipt of a Borrowing Request in
accordance with this Section, Citibank shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing.
SECTION 2.4 Competitive Bid Procedure. (a) Subject to the terms and
conditions set forth herein, from time to time during the Availability Period
the Company (on its own behalf or on behalf of any other Borrower) may request
Competitive Bids and the Company (on its own behalf and on behalf of any other
Borrowers) may (but shall not have any obligation to) accept Competitive Bids
and borrow Competitive Loans; provided that no Competitive Loan may be requested
that would result in the sum of the total Revolving Credit Exposures plus the
total Competitive Loan Exposures exceeding the total Commitments. To request
Competitive Bids, the Company (on its own behalf and on behalf of any other
Borrowers) shall hand deliver or telecopy to the Advance Agent a duly completed
Competitive Bid Request in the form of Exhibit A-1 hereto, to be received by the
Advance Agent, in the case of a Eurocurrency Borrowing, not later than
10:00 a.m., New York City time, four Business Days before the date of the
proposed Borrowing and, in the case of a Fixed Rate Borrowing, not later than
10:00 a.m., New York City time, one Business Day before the date of the proposed
Borrowing. A Competitive Bid Request that does not conform substantially to
Exhibit A-1 may be rejected in the Advance Agent's sole discretion, and the
Advance Agent shall promptly notify the Company of such rejection by telecopy.
Each Competitive Bid Request shall specify the following information in
compliance with Section 2.2:
(i) the aggregate amount of the requested Borrowing;
(ii) the Currency of the requested Borrowing;
(iii) the date of such Borrowing, which shall be a Business Day;
(iv) whether such Borrowing is to be a Eurocurrency Borrowing or
a Fixed Rate Borrowing;
(v) the Interest Period to be applicable to such Borrowing,
which shall be a period contemplated by the definition of the term "Interest
Period";
(vi) the location and number of the account of the Company or
any other Borrower to which funds are to be disbursed, which shall comply with
the requirements of Section 2.7; and
(vii) the applicable Borrower.
If no election as to the Currency of a Borrowing is specified in any Competitive
Bid Request, then the applicable Borrower shall be deemed to have requested a
Borrowing in Dollars. Promptly following receipt of a Competitive Bid Request
in accordance with this Section, the Advance Agent shall notify the Lenders of
the details thereof by telecopy, inviting the Lenders to submit Competitive
Bids.
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(b) Each Lender may (but shall not have any obligation to) make one
or more Competitive Bids to such Borrower in response to a Competitive Bid
Request. Each Competitive Bid by a Lender must be received by the Advance Agent
by telecopy, in the form of Exhibit A-3 hereto, in the case of a Eurocurrency
Competitive Borrowing, not later than 9:30 a.m., New York City time, three
Business Days before the proposed date of such Competitive Borrowing, and in the
case of a Fixed Rate Borrowing, not later than 9:30 a.m., New York City time, on
the proposed date of such Competitive Borrowing. Competitive Bids that do not
conform substantially to the format of Exhibit A-3 may be rejected by the
Advance Agent, and the Advance Agent shall notify the applicable Lender as
promptly as practicable. Each Competitive Bid shall specify (i) the principal
amount of the Competitive Loan or Loans that the Lender is willing to make
(which, in the case of a Competitive Borrowing denominated in Dollars, shall be
a minimum of $5,000,000 and an integral multiple of $1,000,000 and, in the case
of a Competitive Borrowing denominated in an Alternative Currency, shall be a
minimum principal amount the Dollar Equivalent of which is equal to $5,000,000,
and which may equal the entire principal amount of the Competitive Borrowing
request by such Borrower), (ii) the Competitive Bid Rate or Rates at which the
Lender is prepared to make such Loan or Loans (expressed as a percentage rate
per annum in the form of a decimal to no more than four decimal places) and
(iii) the Interest Period applicable to each such Loan and the last day thereof.
(c) The Advance Agent shall promptly notify such Borrower by telecopy
of the Competitive Bid Rate and the principal amount specified in each
Competitive Bid and the identity of the Lender that shall have made such
Competitive Bid.
(d) Subject only to the provisions of this paragraph, such Borrower
may accept or reject any Competitive Bid. Such Borrower shall notify the
Advance Agent by telephone, confirmed by telecopy in the form of a Competitive
Bid Accept/Reject Letter, whether and to what extent it has decided to accept or
reject each Competitive Bid, in the case of a Eurocurrency Competitive
Borrowing, not later than 2:00 p.m., New York City time, three Business Days
before the date of the proposed Competitive Borrowing, and in the case of a
Fixed Rate Borrowing, not later than 2:00 p.m., New York City time, on the
proposed date of the Competitive Borrowing; provided that (i) the failure of
such Borrower to give such notice shall be deemed to be a rejection of each
Competitive Bid, (ii) such Borrower shall not accept a Competitive Bid made at a
particular Competitive Bid Rate if the Company rejects a Competitive Bid made at
a lower Competitive Bid Rate, (iii) the aggregate amount of the Competitive Bids
accepted by such Borrower shall not exceed the aggregate amount of the requested
Competitive Borrowing specified in the related Competitive Bid Request, (iv) to
the extent necessary to comply with clause (iii) above, such Borrower may accept
Competitive Bids at the same Competitive Bid Rate in part, which acceptance, in
the case of multiple Competitive Bids at such Competitive Bid Rate, shall be
made pro rata in accordance with the amount of each such Competitive Bid, and
(v) except pursuant to clause (iv) above, no Competitive Bid shall be accepted
for a Competitive Loan unless such Competitive Loan is, in the case of a
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<PAGE>
Competitive Borrowing denominated in Dollars, in a minimum principal amount of
$5,000,000 and an integral multiple of $1,000,000 and, in the case of a
Competitive Borrowing denominated in an Alternative Currency, in a minimum
principal amount the Dollar Equivalent of which is $5,000,000; provided further
that if a Competitive Loan must be in an amount less than $5,000,000 or an
amount in an Alternative Currency of which the Dollar Equivalent is less than
$5,000,000 because of the provisions of clause (iv) above, such Competitive Loan
may be for a minimum of $5,000,000 or an amount in an Alternative Currency of
which the Dollar Equivalent is $5,000,000 or any integral multiple of $1,000,000
thereof, and in calculating the pro rata allocation of acceptances of portions
of multiple Competitive Bids at a particular Competitive Bid Rate pursuant to
clause (iv) the amounts shall be rounded to integral multiples of $1,000,000 in
a manner which shall be in the discretion of such Borrower. A notice given by
such Borrower pursuant to this paragraph (d) shall be irrevocable.
(e) The Advance Agent shall promptly notify each bidding Lender by
telecopy whether or not its Competitive Bid has been accepted (and, if so, the
amount and Competitive Bid Rate so accepted), and each successful bidder will
thereupon become bound, subject to the terms and conditions hereof, to make the
Competitive Loan in respect of which its Competitive Bid has been accepted.
(f) If the Advance Agent shall elect to submit a Competitive Bid in
its capacity as a Lender, it shall submit such Competitive Bid directly to the
Company at least one quarter of an hour earlier than the time by which the other
Lenders are required to submit their Competitive Bids to the Advance Agent
pursuant to paragraph (b) of this Section.
(g) All notices required by this Section 2.4 shall be given in
accordance with Section 8.1.
SECTION 2.5 Extension of Maturity Date. (i) The Company may, by
sending an Extension Letter to Citibank (in which case Citibank shall promptly
deliver a copy to each of the Lenders), during the period of not less than 30
days and not more than 60 days prior to the then current Maturity Date, request
that the Lenders extend the Maturity Date at the time in effect to 364 days
after the Maturity Date then in effect. Each Lender, acting in its sole
discretion, shall, by notice to Citibank given not more than 20 days after the
date of the Extension Letter, advise Citibank in writing whether or not such
Lender agrees to such extension (each Lender that so advises Citibank that it
will not extend the Maturity Date, being referred to herein as a "Non-extending
Lender"); provided that any Lender that does not advise Citibank by the 20th day
after the date of the Extension Letter shall be deemed to be a Non-extending
Lender. The election of any Lender to agree to such extension shall not
obligate any other Lender to agree.
(ii) (A) If Lenders holding Commitments that aggregate at least 51% of
the total Commitments on the 20th day after the date of the Extension Letter
shall not have agreed to extend the Maturity Date, then the Maturity Date shall
not be so extended and the outstanding principal balance of all Loans and other
amounts payable hereunder shall be payable on such Maturity Date. (B) If (and
only if) Lenders holding Commitments that aggregate at least 51% of the total
Commitments on the 20th day after the date of the Extension Letter shall have
agreed to extend the Maturity Date, then the Maturity Date applicable to the
Lenders that shall so have agreed, shall be 364 days after the current Maturity
Date. In the event of such extension, the Commitment of each Non-extending
Lender shall terminate on the Maturity Date in effect prior to such extension,
all Loans and other amounts payable hereunder to such Non-extending Lenders
shall become due and payable on such Maturity Date and the total Commitment of
the Lenders hereunder shall be reduced by the Commitments of Non-extending
Lenders so terminated on such Maturity Date.
E-2-23
<PAGE>
(iii) In the event that the conditions of clause (B) of paragraph
(ii) above have been satisfied, the Company shall have the right on or before
the Maturity Date in effect prior to the requested extension, at its own
expense, to require any Non-extending Lender to transfer and assign without
recourse (except as to title and the absence of Liens created by it) (in
accordance with and subject to the restrictions contained in Section 8.4) all
its interests, rights and obligations under this Agreement to one or more banks
or other financial institutions identified to the Non-extending Lender, which
may include any Lender (each an "Additional Commitment Lender"), provided that
(x) such Additional Commitment Lender, if not already a Lender hereunder, shall
be subject to the approval of Citibank and the Company (such approvals not to be
unreasonably withheld), (y) such assignment shall become effective as of a date
specified by the Company (which shall not be later than the Maturity Date in
effect prior to the requested extension) and (z) the Additional Commitment
Lender shall pay to such Non-extending Lender in immediately available funds on
the effective date of such assignment the principal of and interest accrued to
the date of payment on the Loans made by it hereunder and all other amounts
accrued for its account or owed to it hereunder. Notwithstanding the foregoing,
no extension of the Maturity Date shall become effective unless, on the Maturity
Date in effect prior to the requested extension the conditions set forth in
paragraphs (a) and (b) of Section 4.2 shall be satisfied (with all references in
such paragraphs to a Borrowing being deemed to be references to the current
Maturity Date) and Citibank shall have received a certificate to that effect
dated such Maturity Date and executed by a Financial Officer of the Company.
SECTION 2.6 Increase of Commitments. (a) The Company may, by notice
to Citibank (in which case Citibank shall promptly deliver a copy to each of the
Lenders), request that the total Commitments be increased by an amount that will
equal or exceed $20,000,000, but that will not result in the total Commitments
exceeding $500,000,000. Each such notice shall set forth the amount of the
requested increase in the total Commitments and the date on which such increase
is requested to become effective (which shall be not less than 20 days or more
than 45 days after the date of such notice (or such shorter time as may be
agreed upon by the Company and Citibank)), and shall offer each Lender the
opportunity to increase its Commitment by its Applicable Percentage of the
proposed increased amount. Each Lender shall, by notice to the Company and
Citibank given not more than 20 days after the date of the Company's notice (or
such shorter time as may be agreed upon by the Company and Citibank), either
agree to increase its Commitment by all or a portion of the offered amount (each
Lender so agreeing being an "Increasing Lender") or decline to increase its
Commitment (and any Lender that does not deliver such a notice within such
period of 20 days (or such shorter time as may be agreed upon by the Company and
Citibank) shall be deemed to have declined to increase its Commitment) (each
Lender so declining or deemed to have declined being a "Non-increasing Lender").
In the event that, on the 20th day (or such shorter time as may be agreed upon
by the Company and Citibank) after the Company shall have delivered a notice
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<PAGE>
pursuant to the first sentence of this paragraph, the Lenders shall have agreed
pursuant to the preceding sentence to increase their Commitments by an aggregate
amount less than the increase in the total Commitments requested by the Company,
Citibank or the Company may arrange for one or more banks or other financial
institutions (any such bank or other financial institution as referred to in
this clause (a)being called an "Augmenting Lender"), which may include any
Lender, to extend Commitments or increase their existing Commitments in an
aggregate amount equal to the unsubscribed amount, provided that each Augmenting
Lender, if not already a Lender hereunder, shall be subject to the approval of
the Company and Citibank (which approvals shall not be unreasonably withheld)
and each Augmenting Lender shall execute all such documentation as Citibank
shall reasonably specify to evidence its Commitment and its status as a Lender
hereunder. Increases and new Commitments created pursuant to this clause
(a) shall become effective on the date specified in the notice delivered by the
Company pursuant to the first sentence of this paragraph. Notwithstanding the
foregoing, no increase in the total Commitments (or in the Commitment of any
Lender) shall become effective under this paragraph unless, (i) on the date of
such increase, the conditions set forth in paragraphs (a)and (b) of Section 4.2
shall be satisfied (with all references in such paragraphs to a Borrowing being
deemed to be references to such increase) and Citibank shall have received a
certificate to that effect dated such date and executed by a Financial Officer
of the Company and (ii) to the extent requested from the Company, Citibank shall
have received (with sufficient copies for each of the Lenders) documents
consistent with those delivered on the Effective Date under clauses (b) and (c)
of Section 4.1 as to the corporate power and authority of the Company to borrow
hereunder after giving effect to such increase.
(b) On the effective date (the "Increase Effective Date") of any
increase in the total Commitments pursuant to Section 2.6(a) (the "Commitment
Increase"), (i) the aggregate principal amount of the Loans outstanding (the
"Initial Loans") immediately prior to giving effect to the Commitment Increase
on the Increase Effective Date shall be deemed to be paid, (ii) each Increasing
Lender shall pay to Citibank in same day funds an amount equal to the difference
between (A) the product of (1) such Increasing Lender's Applicable Percentage
(calculated after giving effect to the Commitment Increase) multiplied by (2)
the amount of the Subsequent Borrowings (as hereinafter defined) and (B) the
product of (1) such Increasing Lender's Applicable Percentage (calculated
without giving effect to the Commitment Increase) multiplied by (2) the amount
of the Initial Loans, (iii) each Augmenting Lender shall pay to Citibank in same
day funds an amount equal to the product of (1) such Augmenting Lender's
Applicable Percentage (calculated after giving effect to the Commitment
Increase) multiplied by (2) the amount of the Subsequent Borrowings, and (iv)
after Citibank receives the funds specified in clauses (ii) and (iii) above,
Citibank shall pay to each Non-increasing Lender the portion of such funds that
is equal to the difference between (A) the product of (1) such Non-increasing
Lender's Applicable Percentage (calculated without giving effect to the
Commitment Increase) multiplied by (2) the amount of the Initial Loans, and (B)
the product of (1) such Non-increasing Lender's Applicable Percentage
(calculated after giving effect to the Commitment Increase) multiplied by (2)
the amount of the Subsequent Borrowings, (v) after the effectiveness of the
Commitment Increase, the Company shall be deemed to have made new Borrowings
(the "Subsequent Borrowings") in an aggregate principal amount equal to the
aggregate principal amount of the Initial Loans and of the types and for the
Interest Periods specified in a Borrowing Request delivered to Citibank in
accordance with Section 2.3, (vi) each Non-increasing Lender, each Increasing
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<PAGE>
Lender and each Augmenting Lender shall be deemed to hold its Applicable
Percentage of each Subsequent Borrowing (calculated after giving effect to the
Commitment Increase) and (vii) the Company shall pay each Increasing Lender and
each Non-increasing Lender any and all accrued but unpaid interest on the
Initial Loans. The deemed payments made pursuant to clause (i) above in respect
of each Eurocurrency Loan shall be subject to indemnification by the Company
pursuant to the provisions of Section 2.16 if the Increase Effective Date occurs
other than on the last day of the Interest Period relating thereto. If
requested by a Lender, the Company, at its own expense, shall execute and
deliver to Citibank on behalf of each Increasing Lender and each Augmenting
Lender a promissory note complying with the provisions of Section 2.10(e)
hereof, in a principal amount equal to the Commitment of such Lender hereunder
after giving effect to the Commitment Increase. Each Increasing Lender shall
promptly surrender to Citibank any previous promissory note held by it, for
return to the Company and shall indemnify the Company for any claims, losses,
damages or expenses (including reasonable fees and disbursements of counsel)
arising out of its failure to surrender such promissory note, provided the
Company does not (unless pursuant to a final judgment of a court of competent
jurisdiction) make any payments in respect of such promissory note.
SECTION 2.7 Funding of Borrowings. (a) Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds in Dollars or in the applicable Alternative
Currency, as the case may be, to the account of Citibank or an Affiliate thereof
most recently designated by it for such purpose by notice to the Lenders, by
2:00 p.m., New York City time (or, in the case of any Competitive Loan with
respect to which a Borrower shall have requested funding in another
jurisdiction, to such account in such jurisdiction as Citibank shall designate
for such purpose by notice to the applicable Lenders, by 2:00 p.m., local time).
Citibank will make such Loans available to such Borrower by promptly crediting
the amounts so received, in like funds, to an account of such Borrower
maintained with Citibank in New York City (or, in the case of any Competitive
Loan with respect to which such Borrower shall have requested funding in another
jurisdiction, to such account in such jurisdiction as such Borrower shall have
designated in the applicable Competitive Bid Request).
(b) Unless Citibank shall have received notice from a Lender prior to
the proposed date of any Borrowing that such Lender will not make available to
Citibank such Lender's share of such Borrowing, Citibank may assume that such
Lender has made such share available on such date in accordance with paragraph
(a) of this Section and may, in reliance upon such assumption, make available to
such Borrower a corresponding amount. In such event, if a Lender has not in
fact made its share of the applicable Borrowing available to Citibank, then the
applicable Lender and the applicable Borrower severally agree to pay to Citibank
forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to such Borrower
to but excluding the date of payment to Citibank, at (i) in the case of such
Lender, the greater of the Federal Funds Effective Rate and a rate determined by
Citibank in accordance with banking industry rules on interbank compensation or
(ii) in the case of such Borrower, the interest rate on the applicable
Borrowing; provided that no repayment by such Borrower pursuant to this sentence
shall be deemed to be a prepayment for purposes of Section 2.16. If such Lender
pays such amount to Citibank, then such amount shall constitute such Lender's
Loan included in such Borrowing.
E-2-26
<PAGE>
SECTION 2.8 Interest Elections. (a) Each Revolving Borrowing
initially shall be of the Type specified in the applicable Borrowing Request
and, in the case of a Eurocurrency Revolving Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request. Thereafter, the Company
(on its own behalf or on behalf of any other Borrower) may elect to convert such
Borrowing to a different Type or to continue such Borrowing and, in the case of
a Eurocurrency Revolving Borrowing, may elect Interest Periods therefor, all as
provided in this Section. The Company (on its own behalf or on behalf of any
other Borrower) may elect different options with respect to different portions
of the affected Borrowing, in which case each such portion shall be allocated
ratably among the Lenders holding the Loans comprising such Borrowing, and the
Loans comprising each such portion shall be considered a separate Borrowing.
This Section shall not apply to Competitive Borrowings, which may not be
converted or continued.
(b) To make an election pursuant to this Section, the Company (on its
own behalf or on behalf of any other Borrower) shall notify Citibank of such
election by telephone by the time that a Borrowing Request would be required
under Section 2.3 if the Company (on its own behalf or on behalf of any other
Borrower) were requesting a Revolving Borrowing of the Type resulting from such
election to be made on the effective date of such election. Each such
telephonic Interest Election Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to Citibank of a written Interest Election
Request in a form approved by Citibank and signed by the Company.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.2:
(i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing (in
which case the information to be specified pursuant to clauses (iii) and (iv)
below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing
or a Eurocurrency Borrowing; and
(iv) if the resulting Borrowing is a Eurocurrency Borrowing, the
Interest Period to be applicable thereto after giving effect to such election,
which shall be a period contemplated by the definition of the term "Interest
Period".
If any such Interest Election Request requests a Eurocurrency Borrowing but does
not specify an Interest Period, then the Company (on its own behalf or on behalf
of any other Borrower) shall be deemed to have selected an Interest Period of
one month's duration.
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<PAGE>
(d) Promptly following receipt of an Interest Election Request,
Citibank shall advise each Lender of the details thereof and of such Lender's
portion of each resulting Borrowing.
(e) If the Company (on its own behalf or on behalf of any other
Borrower) fails to deliver a timely Interest Election Request with respect to a
Eurocurrency Revolving Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing and Citibank, at the request of the Required
Lenders, so notifies the Company, then, so long as an Event of Default is
continuing (i) no outstanding Revolving Borrowing may be converted to or
continued as a Eurocurrency Borrowing and (ii) unless repaid, each Eurocurrency
Revolving Borrowing shall be converted to an ABR Borrowing at the end of the
Interest Period applicable thereto.
SECTION 2.9 Termination and Reduction of Commitments. (a) Unless
previously terminated, the Commitments shall terminate on the Maturity Date.
(b) The Company may at any time terminate, or from time to time
reduce, the Commitments; provided that (i) each reduction of the Commitments
shall be in an amount that is an integral multiple of $1,000,000 and not less
than $10,000,000 and (ii) the Company shall not terminate or reduce the
Commitments if, after giving effect to any concurrent prepayment of the Loans in
accordance with Section 2.11, the sum of the Revolving Credit Exposures plus the
Competitive Loan Exposures would exceed the total Commitments.
(c) The Company shall notify Citibank of any election to terminate or
reduce the Commitments under paragraph (b) of this Section at least three
Business Days prior to the effective date of such termination or reduction,
specifying such election and the effective date thereof. Promptly following
receipt of any notice, Citibank shall advise the Lenders of the contents
thereof. Each notice delivered by the Company pursuant to this Section shall be
irrevocable; provided that a notice of termination of the Commitments delivered
by the Company may state that such notice is conditioned upon the effectiveness
of other credit facilities, in which case such notice may be revoked by the
Company (by notice to Citibank on or prior to the specified effective date) if
such condition is not satisfied. Any termination or reduction of the
Commitments shall be permanent (subject to the provisions of Section 2.6). Each
reduction of the Commitments shall be made ratably among the Lenders in
accordance with their respective Commitments.
SECTION 2.10 Repayment of Loans; Evidence of Debt. (a) Each Borrower
hereby unconditionally promises to pay (i) to Citibank for the account of each
Lender the then unpaid principal amount of its Revolving Loans on the Maturity
Date and (ii) to Citibank for the account of each Lender the then unpaid
principal amount of each Competitive Loan on the last day of the Interest Period
applicable to such Loan.
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<PAGE>
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of each Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(c) Citibank shall maintain a Register pursuant to subsection 8.4(d),
and an account for each Lender in which it shall record (i) the amount of each
Loan made hereunder and any promissory note evidencing such Loan, the Class and
Type thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from each
Borrower to each Lender hereunder and (iii) the amount of any sum received by
Citibank hereunder for the account of the Lenders and each Lender's share
thereof.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to paragraphs (b) and (c) of this Section shall be prima
facie evidence of the existence and amounts of the obligations recorded therein;
provided that the failure of any Lender or Citibank to maintain such accounts or
any error therein shall not in any manner affect the obligation of any Borrower
to repay the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans made by it be evidenced by a
promissory note for its Competitive Loans and a promissory note for its
Revolving Loans. In such event, the applicable Borrower shall prepare, execute
and deliver to such Lender a promissory note payable to the order of such Lender
(or, if requested by such Lender, to such Lender and its registered assigns) and
in a form approved by Citibank. Thereafter, the Loans evidenced by such
promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 8.4) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its assigns).
SECTION 2.11 Prepayment of Loans. (a) The applicable Borrower shall
have the right at any time and from time to time to prepay any Borrowing in
whole or in part, subject to prior notice in accordance with paragraph (b) of
this Section; provided that no Borrower shall have the right to prepay any
Competitive Loan without the prior consent of the Lender thereof.
(b) The Company (on its own behalf or on behalf of any other Borrower)
shall notify Citibank by telephone (confirmed by telecopy) of any prepayment
hereunder (i) in the case of prepayment of a Eurocurrency Revolving Borrowing,
not later than 10:00 a.m., New York City time, three Business Days before the
date of prepayment and (ii) in the case of prepayment of an ABR Revolving
Borrowing, not later than 10:00 a.m., New York City time, one Business Day
before the date of prepayment. Each such notice shall be irrevocable and shall
specify the prepayment date and the principal amount of each Borrowing or
portion thereof to be prepaid; provided that, if a notice of prepayment is given
in connection with a conditional notice of termination of the Commitments as
contemplated by Section 2.9, then such notice of prepayment may be revoked if
such notice of termination is revoked in accordance with Section 2.9. Promptly
following receipt of any such notice relating to a Revolving Borrowing, Citibank
shall advise the Lenders of the contents thereof. Each partial prepayment of
any Revolving Borrowing shall be in an amount that would be permitted in the
case of an advance of a Revolving Borrowing of the same Type as provided in
Section 2.2. Each prepayment of a Revolving Borrowing shall be applied ratably
to the Loans included in the prepaid Borrowing. Prepayments shall be
accompanied by accrued interest to the extent required by Section 2.13.
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<PAGE>
SECTION 2.12 Fees. (a) The Company agrees to pay to Citibank for the
account of each Lender a facility fee, which shall accrue at the Applicable Rate
on the daily amount of the Commitment of such Lender (whether used or unused)
during the period from and including the date hereof to but excluding the date
on which such Commitment terminates; provided that, if such Lender continues to
have any Revolving Credit Exposure after its Commitment terminates, then such
facility fee shall continue to accrue on the daily amount of such Lender's
Revolving Credit Exposure from and including the date on which its Commitment
terminates to but excluding the date on which such Lender ceases to have any
Revolving Credit Exposure. Accrued facility fees shall be payable in arrears on
the last day of March, June, September and December of each year and on the date
on which the Commitments terminate, commencing on the first such date to occur
after the date hereof; provided that any facility fees accruing after the date
on which the Commitments terminate shall be payable on demand. All facility
fees shall be computed on the basis of a year of 360 days and shall be payable
for the actual number of days elapsed (including the first day but excluding the
last day).
(b) The Company agrees to pay to the Administrative Agents, for their
own account, the administrative, auction and other fees separately agreed upon
between the Company and the Administrative Agents (collectively, the
"Administrative Fees").
(c) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to Citibank for distribution, in the case of
facility fees, to the Lenders. Fees paid shall not be refundable under any
circumstances.
SECTION 2.13 Interest. (a) The Loans comprising each ABR Borrowing
shall bear interest at the Alternate Base Rate.
(b) The Loans comprising each Eurocurrency Borrowing shall bear
interest (i) in the case of a Eurocurrency Revolving Loan, at the LIBO Rate for
the Interest Period in effect for such Borrowing plus the Applicable Rate, or
(ii) in the case of a Eurocurrency Competitive Loan, at the LIBO Rate for the
Interest Period in effect for such Borrowing plus (or minus, as applicable) the
Margin applicable to such Loan.
(c) Each Fixed Rate Loan shall bear interest at the Fixed Rate
applicable to such Loan.
(d) Notwithstanding the foregoing, if any principal of or interest on
any Loan or any fee or other amount payable by any Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise,
such overdue amount shall bear interest, after as well as before judgment, at a
rate per annum equal to (i) in the case of overdue principal of any Loan, 1%
plus the rate otherwise applicable to such Loan as provided in the preceding
paragraphs of this Section or (ii) in the case of any other amount, 1% plus the
rate applicable to ABR Loans as provided in paragraph (a) of this Section.
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(e) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and, in the case of Revolving Loans, upon
termination of the Commitments; provided that (i) interest accrued pursuant to
paragraph (d) of this Section shall be payable on demand, (ii) in the event of
any repayment or prepayment of any Loan (other than a prepayment of an ABR
Revolving Loan prior to the end of the Availability Period), accrued interest on
the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any
Eurocurrency Revolving Loan prior to the end of the current Interest Period
therefor, accrued interest on such Loan shall be payable on the effective date
of such conversion.
(f) All interest hereunder shall be computed on the basis of a year of
360 days, except that interest computed by reference to the Alternate Base Rate
at time when the Alternate Base Rate is based on clause (a) of the first
sentence of the definition of Alternate Base Rate shall be computed on the basis
of a year of 365 days (or 366 days in a leap year), and in each case shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day). The applicable Alternate Base Rate or LIBO Rate shall
be determined by Citibank, and such determination shall be conclusive absent
manifest error.
SECTION 2.14 Alternate Rate of Interest. If prior to the
commencement of any Interest Period for a Eurocurrency Borrowing:
(a) Citibank shall have determined (which determination shall be made
in good faith and shall be conclusive absent manifest error) that adequate and
reasonable means do not exist for ascertaining the LIBO Rate for such Interest
Period; or
(b) Citibank is advised by the Required Lenders (or, in the case of a
Eurocurrency Competitive Loan, the Lender that is required to make such Loan)
that the LIBO Rate for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (or Lender) of making or maintaining their
Loans (or its Loan) included in such Borrowing for such Interest Period;
then Citibank shall give notice thereof to the Company (on its own behalf or on
behalf of the applicable Borrower) and the Lenders by telephone or telecopy as
promptly as practicable thereafter and, until Citibank notifies the Company and
the Lenders that the circumstances giving rise to such notice no longer exist,
(i) any Interest Election Request that requests the conversion of any Revolving
Borrowing to, or continuation of any Revolving Borrowing as, a Eurocurrency
Borrowing shall be ineffective, (ii) if any Borrowing Request requests a
Eurocurrency Revolving Borrowing, such Borrowing shall be made as an ABR
Borrowing and (iii) any request by the Company (on its own behalf or on behalf
of any Borrower) for a Eurocurrency Competitive Borrowing shall be ineffective;
provided that (A) if the circumstances giving rise to such notice do not affect
all the Lenders, then requests by the Company for Eurocurrency Competitive
Borrowings may be made to Lenders that are not affected thereby and (B) if the
circumstances giving rise to such notice affect only one Type of Borrowings,
then the other Type of Borrowings shall be permitted.
E-2-31
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SECTION 2.15 Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender; or
(ii) impose on any Lender or the London interbank market any
other condition affecting this Agreement or Eurocurrency Loans or Fixed Rate
Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurocurrency Loan or Fixed Rate Loan (or of
maintaining its obligation to make any such Loan) by an amount deemed by such
Lender to be material or to reduce the amount of any sum received or receivable
by such Lender hereunder (whether of principal, interest or otherwise) by an
amount deemed by such Lender to be material, then the applicable Borrower will
pay to such Lender such additional amount or amounts as will compensate such
Lender for such additional costs incurred or reduction suffered.
(b) If any Lender determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on such
Lender's capital or on the capital of such Lender's holding company, if any, as
a consequence of this Agreement or the Loans made by such Lender to a level
below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy) by an amount deemed by such Lender to be material, then from
time to time the Company will pay to such Lender such additional amount or
amounts as will compensate such Lender or such Lender's holding company for any
such reduction suffered.
(c) A certificate of a Lender setting forth the amount or amounts
necessary to compensate such Lender or its holding company as specified in
paragraph (a) or (b) of this Section, and setting forth in reasonable detail the
manner in which such amount or amounts shall have been determined, shall be
delivered to the applicable Borrower and shall be conclusive absent manifest
error. The applicable Borrower shall pay such Lender the amount shown as due on
any such certificate within 10 days after receipt thereof.
(d) Failure or delay on the part of any Lender to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender's right to
demand such compensation; provided that the Borrowers shall not be required to
compensate a Lender pursuant to this Section for any increased costs or
reductions incurred more than 60 days prior to the date that such Lender
notifies such Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender's intention to claim compensation therefor;
provided further that, if the Change in Law giving rise to such increased costs
or reductions is retroactive, then the 60-day period referred to above shall be
extended to include the period of retroactive effect thereof.
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(e) Notwithstanding the foregoing provisions of this Section, a Lender
shall not be entitled to compensation pursuant to this Section in respect of any
Competitive Loan if the Change in Law that would otherwise entitle it to such
compensation shall have been publicly announced prior to submission of the
Competitive Bid pursuant to which such Loan was made.
SECTION 2.16 Break Funding Payments. In the event of (a) the payment
of any principal of any Eurocurrency Loan or Fixed Rate Loan other than on the
last day of an Interest Period applicable thereto (including as a result of an
Event of Default), (b) the conversion of any Eurocurrency Loan other than on the
last day of the Interest Period applicable thereto, (c) the failure to borrow,
convert, continue or prepay any Revolving Loan on the date specified in any
notice delivered pursuant hereto (regardless of whether such notice may be
revoked under Section 2.11(b) and is revoked in accordance therewith), (d) the
failure to borrow any Competitive Loan after accepting the Competitive Bid to
make such Loan, or (e) the assignment of any Eurocurrency Loan or Fixed Rate
Loan other than on the last day of the Interest Period applicable thereto as a
result of a request by any Borrower pursuant to Section 2.19, then, in any such
event, the applicable Borrower shall compensate each Lender for the
out-of-pocket loss, cost and expense attributable to such event. In the case of
a Eurocurrency Loan, such loss, cost or expense to any Lender shall be deemed to
include an amount determined by such Lender to be the present value of the
excess, if any, of (i) its cost of obtaining the funds for the Loan being paid,
prepaid, refinanced or not borrowed (assumed to be the LIBO Rate applicable
thereto) for the period from the date of such payment, prepayment, refinancing
or failure to borrow or refinance to the last day of the Interest Period for
such Loan (or, in the case of a failure to borrow or refinance the Interest
Period for such Loan which would have commenced on the date of such failure)
over (ii) the amount of interest (as reasonably determined by such Lender) that
would be realized by such Lender in reemploying the funds so paid, prepaid or
not borrowed or refinanced for such period or Interest Period, as the case may
be. A certificate of any Lender setting forth any amount or amounts that such
Lender is entitled to receive pursuant to this Section and setting forth in
reasonable detail the manner in which such amount or amounts shall have been
determined shall be delivered to the applicable Borrower and shall be conclusive
absent manifest error. Such Borrower shall pay such Lender the amount shown as
due on any such certificate within 10 days after receipt thereof.
SECTION 2.17 Taxes. (a) Any and all payments to the Lenders or the
Administrative Agents hereunder by a Borrower or on behalf of any Borrower shall
be made free and clear of and without deduction for any and all current or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding (i) taxes imposed on any
Administrative Agent or any Lender (or participant) as a result of a present or
former connection between such Administrative Agent or such Lender (or
participant) and the jurisdiction of the Governmental Authority imposing such
tax or any political subdivision or taxing authority thereof or therein (other
than as a result of entering into this Agreement, performing any obligations
hereunder, receiving any payments hereunder or enforcing any rights hereunder)
and (ii) any taxes that are attributable solely to the failure of any Non-U.S.
Lender (as defined in Section 2.17(g) below) to comply with Section 2.17 (g) or
2.17(h) (all such nonexcluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities, collectively or individually, "Non-Excluded
E-2-33
<PAGE>
Taxes"). If the relevant Borrower shall be required to deduct any Non-Excluded
Taxes from or in respect of any sum payable hereunder to any Lender or any
Administrative Agent, (i) the sum payable shall be increased by the amount (an
"Additional Amount") necessary so that after making all required deductions
(including deductions applicable to Additional Amounts payable under this
Section 2.17) such Lender or such Administrative Agent (as the case may be)
shall receive an amount equal to the sum it would have received had no such
deductions been made, (ii) the relevant Borrower shall make such deductions and
(iii) the relevant Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) In addition, the relevant Borrower (or the Company, as guarantor,
as applicable) shall pay to the relevant Governmental Authority in accordance
with applicable law any current or future stamp, intangibles or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or registration
of, or otherwise with respect to, this Agreement or any other Loan Document that
are imposed by a Governmental Authority in a jurisdiction in which the relevant
Borrower or the Company is incorporated, organized, managed and controlled or
considered to have its seat or otherwise has a connection (other than as a
result of entering into this Agreement, performing any obligations hereunder,
receiving any payments hereunder or enforcing any rights hereunder) ("Other
Taxes").
(c) The relevant Borrower (or the Company, as guarantor, as
applicable) shall indemnify each Lender (or participant) and each Administrative
Agent for the full amount of Non-Excluded Taxes and Other Taxes paid by such
Lender (or participant) or such Administrative Agent, as the case may be, and
any liability (including penalties, interest and expenses (including reasonable
attorney's fees and expenses)) arising therefrom or with respect thereto,
whether or not such Non-Excluded Taxes or Other Taxes were correctly or legally
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability prepared by a Lender, or an Administrative Agent on
its behalf and setting forth in reasonable detail the manner in which such
amount shall have been determined, absent manifest error, shall be final,
conclusive and binding for all purposes. Such indemnification shall be made
within 30 days after the date the Lender or the Administrative Agent, as the
case may be, makes written demand therefor, which written demand shall be made
within 60 days of the date such Lender or Administrative Agent receives written
demand for payment of such Taxes or Other Taxes from the relevant Governmental
Authority.
(d) If a Lender (or participant) or an Administrative Agent receives
a refund in respect of any Non-Excluded Taxes or Other Taxes as to which it has
been indemnified by the relevant Borrower or with respect to which the relevant
Borrower has paid Additional Amounts pursuant to this Section 2.17, it shall
within 30 days from the date of such receipt pay over such refund to the
relevant Borrower (but only to the extent of indemnity payments made, or
Additional Amounts paid, by the relevant Borrower under this Section 2.17 with
respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of such Lender (or participant) or such Administrative
Agent and without interest (other than interest paid by the relevant
Governmental Authority with respect to such refund); provided, however, that the
relevant Borrower, upon the request of such Lender (or participant) or such
Administrative Agent, agrees to repay the amount paid over to the relevant
Borrower (plus penalties, interest or other charges) to such Lender (or
participant) or such Administrative Agent in the event such Lender (or
participant) or such Administrative Agent is required to repay such refund to
such Governmental Authority.
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<PAGE>
(e) As soon as practicable after the date of any payment of
Non-Excluded Taxes or Other Taxes by the relevant Borrower to the relevant
Governmental Authority, the relevant Borrower will deliver to Citibank, at its
addresses referred to in Section 8.1, the original or a certified copy of
a receipt issued by such Governmental Authority evidencing payment thereof.
(f) Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations contained in this Section 2.17 shall
survive the payment in full of the principal of and interest on all Loans made
hereunder.
(g) Each Lender (or participant) that is not a United States Person as
defined in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver
to the Borrower and Citibank two copies of either United States Internal Revenue
Service Form 1001 or Form 4224, or, in the case of a Non-U.S. Lender claiming
exemption from U.S. Federal withholding tax under Section 871(h) or 881(c) of
the Code with respect to payments of "portfolio interest", a Form W-8, or any
subsequent versions thereof or successors thereto (and, if such Non-U.S. Lender
delivers a Form W-8, a certificate representing that such Non-U.S. Lender is not
a bank for purposes of Section 881(c)(3)(A) of the Code, is not a 10 percent
shareholder (within the meaning of Section 881(c)(3)(B) of the Code) of the
Company and is not a controlled foreign corporation related to the Company
(within the meaning of Section 881(c)(3)(C) of the Code)), properly completed
and duly executed by such Non-U.S. Lender claiming complete exemption from, or
reduced rate of, U.S. Federal withholding tax on payments by the Company under
this Agreement. Such forms shall be delivered by each Non-U.S. Lender on or
before the date it becomes a party to this Agreement (or, in the case of a
participant, on or before the date such participant becomes a participant
hereunder) and on or before the date, if any, such Non-U.S. Lender changes its
applicable lending office by designating a different lending office (a "New
Lending Office"). In addition, each Non-U.S. Lender shall deliver such forms
promptly upon the obsolescence or invalidity of any form previously delivered by
such Non-U.S. Lender. Notwithstanding any other provision of this Section
2.17(g), a Non-U.S. Lender shall not be required to deliver any form pursuant to
this Section 2.17(g) that such Non-U.S. Lender is not legally able to deliver.
(h) A Lender (or participant) that is entitled to an exemption from or
reduction of non-U.S. withholding tax under the law of the jurisdiction in which
a Borrowing Subsidiary is located, or any treaty to which such jurisdiction is a
party, with respect to payments under this Agreement shall deliver to the
Borrowing Subsidiary (with a copy to Citibank), at the time or times prescribed
by applicable law or reasonably requested by the Borrowing Subsidiary, such
properly completed and executed documentation prescribed by applicable law as
will permit such payments to be made without withholding or at a reduced rate,
provided that such Lender (or participant) is legally entitled to complete,
execute and deliver such documentation and in such Lender's reasonable judgment
such completion, execution or submission would not materially prejudice the
legal position of such Lender (or participant).
E-2-35
<PAGE>
(i) The relevant Borrower shall not be required to indemnify any
Lender, or to pay any Additional Amounts to any Lender, in respect of any
withholding tax pursuant to paragraph (a) or (c) above to the extent that (i)
the obligation to withhold amounts with respect to such withholding tax was in
effect and would apply to amounts payable to such Lender on the date such Lender
became a party to this Agreement (or, in the case of a participant, on the date
such participant became a participant hereunder) or, with respect to payments to
a New Lending Office, the date such Non-U.S. Lender designated such New Lending
Office with respect to a Loan or, with respect to payments by a Borrower
pursuant to a Competitive Loan, as of the date the Company accepts a Competitive
Bid pursuant to Section 2.4(d); provided, however, that this clause (i) shall
not apply to any Lender (or participant) if the assignment, participation,
transfer or designation of a New Lending Office was made at the request of the
relevant Borrower; and provided further, however, that this clause (i) shall not
apply to the extent the indemnity payment or Additional Amounts any Lender (or
participant) would be entitled to receive (without regard to this clause (i)) do
not exceed the indemnity payment or Additional Amounts that the Lender (or
participant) making the assignment, participation, transfer or designation of
such New Lending Office would have been entitled to receive in the absence of
such assignment, participation, transfer or designation, or (ii) the obligation
to pay such Additional Amounts would not have arisen but for a failure by such
Lender (or participant) to comply with the provisions of paragraph (g) or (h)
above.
(j) Any Lender (or participant) claiming any indemnity payment or
Additional Amounts payable pursuant to this Section 2.17 shall use reasonable
efforts (consistent with legal and regulatory restrictions) to file any
certificate or document reasonably requested in writing by the relevant Borrower
or to change the jurisdiction of its applicable lending office if the making of
such a filing or change would avoid the need for or reduce the amount of any
such indemnity payment or Additional Amounts that may thereafter accrue and
would not, in the sole determination of such Lender (or participant), be
otherwise disadvantageous to such Lender (or participant).
(k) Nothing contained in this Section 2.17 shall require any Lender
(or participant) or any Administrative Agent to make available any of its tax
returns (or any other information that it deems to be confidential or
proprietary).
SECTION 2.18 Payments Generally; Pro Rata Treatment; Sharing of
Set-offs. (a) Each Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest, fees, or of amounts payable under
Section 2.15, 2.16 or 2.17, or otherwise) prior to 3:00 p.m., local time at the
place of payment, on the date when due, in immediately available funds, without
set-off or counterclaim. Any amounts received after such time on any date may,
in the discretion of Citibank, be deemed to have been received on the next
succeeding Business Day for purposes of calculating interest thereon. All such
payments shall be made to Citibank at its offices at 399 Park Avenue, New York,
New York, or such other location as Citibank shall designate from time to time,
except that payments pursuant to Sections 2.15, 2.16, 2.17 and 8.5 shall be made
directly to the Persons entitled thereto. Citibank shall distribute any such
payments received by it for the account of any other Person to the appropriate
recipient promptly following receipt thereof. If any payment hereunder shall be
due on a day that is not a Business Day, the date for payment shall be extended
to the next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such extension.
All payments hereunder shall be made in Dollars or, in the case of Competitive
Loans, the applicable Currency, as the case may be.
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(b) If at any time insufficient funds are received by and available to
Citibank to pay fully all amounts of principal, interest and fees then due
hereunder, such funds shall be applied (i) first, towards payment of interest
and fees then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of interest and fees then due to such parties, and
(ii) second, towards payment of principal then due hereunder, ratably among the
parties entitled thereto in accordance with the amounts of principal then due to
such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans resulting in such Lender receiving
payment of a greater proportion of the aggregate amount of its Revolving Loans
and accrued interest thereon than the proportion received by any other Lender,
then the Lender receiving such greater proportion shall purchase (for cash at
face value) participations in the Revolving Loans of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Revolving Loans; provided that (i) if any
such participations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by any Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans to any assignee
or participant, other than to the Company or any Subsidiary or Affiliate thereof
(as to which the provisions of this paragraph shall apply). Each Borrower
consents to the foregoing and agrees, to the extent it may effectively do so
under applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against such Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of such Borrower in the amount of such participation.
(d) Unless Citibank shall have received notice from a Borrower prior
to the date on which any payment is due to Citibank for the account of the
Lenders hereunder that such Borrower will not make such payment, Citibank may
assume that such Borrower has made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders
the amount due. In such event, if such Borrower has not in fact made such
payment, then each of the Lenders severally agrees to repay to Citibank
forthwith on demand the amount so distributed to such Lender with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to Citibank, at the greater of the
Federal Funds Effective Rate and a rate determined by Citibank in accordance
with banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.7(b) or 2.18(d), then Citibank may, in its
discretion (notwithstanding any contrary provision hereof), apply any amounts
thereafter received by Citibank for the account of such Lender to satisfy such
Lender's obligations under such Sections until all such unsatisfied obligations
are fully paid.
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SECTION 2.19 Mitigation Obligations; Replacement of Lenders. (a) If
any Lender requests compensation under Section 2.15, or if any Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, then such
Lender shall use reasonable efforts to file any certificate or document
requested by the Company (consistent with legal and regulatory restrictions), to
designate a different lending office for funding or booking its Loans hereunder
or to assign its rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the judgment of such Lender, such filing,
designation or assignment (i) would eliminate or reduce amounts payable pursuant
to Section 2.15 or 2.17, as the case may be, in the future and (ii) would not
otherwise be disadvantageous to such Lender.
(b) If any Lender requests compensation under Section 2.15, or if any
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17,
or if any Lender defaults in its obligation to fund Loans hereunder, then such
Borrower may, upon notice to such Lender and Citibank, require such Lender to
assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 8.4), all its interests, rights and
obligations under this Agreement (other than any outstanding Competitive Loans
held by it and any and all rights and interests related thereto) to an assignee
that shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that (i) such Borrower shall have
received the prior written consent of the Administrative Agents which consent
shall not unreasonably be withheld, (ii) such Lender shall have received payment
of an amount equal to the outstanding principal of its Loans (other than
Competitive Loans), accrued interest thereon, accrued fees and all other amounts
payable to it hereunder, from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or such Borrower (in the case of all
other amounts) and (iii) in the case of any such assignment resulting from a
claim for compensation under Section 2.15 or payments required to be made
pursuant to Section 2.17, such assignment will result in a reduction in such
compensation or payments.
SECTION 2.20 Borrowing Subsidiaries. The Company may designate any
Wholly Owned Subsidiary of the Company as a Borrowing Subsidiary. Upon the
receipt by Citibank of a Borrowing Subsidiary Agreement executed by such a
Wholly Owned Subsidiary and the Company, such Wholly Owned Subsidiary shall be a
Borrowing Subsidiary and a party to this Agreement. A Subsidiary shall cease to
be a Borrowing Subsidiary hereunder at such time as no Loans, fees or any other
amounts due in connection therewith pursuant to the terms hereof shall be
outstanding to such Subsidiary and such Subsidiary and the Company shall have
executed and delivered to Citibank a Borrowing Subsidiary Termination; provided
that, notwithstanding anything herein to the contrary, no Borrowing Subsidiary
shall cease to be a Borrowing Subsidiary solely because it no longer is a
Wholly Owned Subsidiary of the Company so long as such Borrowing Subsidiary and
the Company shall not have executed and delivered to Citibank a Borrowing
Subsidiary Termination and the Company's guarantee of the Borrowing Subsidiary
Obligations of such Borrowing Subsidiary pursuant to Section 8.16 has not been
released.
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ARTICLE III
Representations and Warranties
The Company represents and warrants to each of the Lenders and each of
the Administrative Agents that:
SECTION 3.1 Organization; Powers. The Company (a) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has all requisite power and authority to
own its property and assets and to carry on its business as now conducted and as
proposed to be conducted and (c) is qualified to do business in every
jurisdiction where such qualification is required, except where the failure so
to qualify would not result in a Material Adverse Effect. Each Borrower has the
corporate power and authority to execute and deliver this Agreement (or, in the
case of the Borrowing Subsidiaries, the Borrowing Subsidiary Agreements), to
perform its obligations under this Agreement and to borrow hereunder.
SECTION 3.2 Authorization. The Transactions (a) are within each
Borrower's corporate powers and have been duly authorized by all requisite
corporate action and (b) will not (i) violate (A) any provision of any law,
statute, rule or regulation (including, without limitation, the Margin
Regulations), (B) any provision of the certificate of incorporation or other
constitutive documents or by-laws of the Company or any Subsidiary, (C) any
order of any Governmental Authority or (D) any provision of any indenture,
agreement or other instrument to which the Company or any Subsidiary is a party
or by which it or any of its property is or may be bound, (ii) be in conflict
with, result in a breach of or constitute (alone or with notice or lapse of time
or both) a default under any such indenture, agreement or other instrument or
(iii) result in the creation or imposition of any lien upon any property or
assets of the Company or any Subsidiary other than, in the case of clauses
(i)(A), (i)(C), (i)(D), (ii) and (iii), any such violations, conflicts,
breaches, defaults or liens that, individually or in the aggregate, would not
have a Material Adverse Effect.
SECTION 3.3 Enforceability. Each Loan Document constitutes or, when
executed and delivered, will constitute a legal, valid and binding obligation of
each Borrower party thereto, enforceable in accordance with its terms (subject,
as to enforceability, to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity)).
SECTION 3.4 Governmental Approvals. No action, consent or approval
of, registration or filing with or other action by any Governmental Authority is
required in connection with the Transactions.
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SECTION 3.5 Financial Statements; No Material Adverse Change. (a)
The Company has heretofore furnished to the Administrative Agents and the
Lenders copies of (i) its audited consolidated financial statements for the
years ended December 31, 1995 and December 31, 1996, respectively, which were
included in its annual report on Form 10-K dated December 31, 1995 and
December 31, 1996, respectively (the "10-Ks"), filed with the SEC under the
Exchange Act and (ii) its unaudited consolidated financial statements for the
quarters ended March 31, 1997, June 30, 1997 and September 30, 1997, which were
included in its Quarterly Report on Form 10-Q dated March 31, 1997, June 30,
1997 and September 30, 1997, respectively (the "10-Qs"), filed with the SEC
under the Exchange Act. Such financial statements present fairly, in all
material respects, the financial condition and the results of operations of the
Company and the Subsidiaries, taken as a whole, as of, and for accounting
periods ending on, such dates in accordance with GAAP (subject, in the case of
unaudited statements, to normal year-end audit adjustments and the absence of
footnotes).
(b) Since December 31, 1997, there has been no material adverse effect
on the business, operations, properties or financial condition of the Company
and its Subsidiaries, taken as a whole.
SECTION 3.6 Litigation; Compliance with Laws. (a) Except as
disclosed in either the most recent 10-K or the most recent 10-Q, as of the date
hereof, there are no actions, proceedings or investigations filed or (to the
knowledge of the Company) threatened against the Company or any Subsidiary in
any court or before any Governmental Authority or arbitration board or tribunal
which question the validity or legality of this Agreement, the Transactions or
any action taken or to be taken pursuant to this Agreement and no order or
judgment has been issued or entered restraining or enjoining the Company from
the execution, delivery or performance of this Agreement nor is there any other
action, proceeding or investigation filed or (to the knowledge of the Company)
threatened against the Company or any Subsidiary in any court or before any
Governmental Authority or arbitration board or tribunal which would be
reasonably likely to result in a Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in violation of any law,
rule or regulation, or in default with respect to any judgment, writ, injunction
or decree of any Governmental Authority, where such violation or default would
be reasonably likely to result in a Material Adverse Effect.
SECTION 3.7 Federal Reserve Regulations. No part of the proceeds of
any Loan will be used, whether directly or indirectly, and whether immediately,
incidentally or ultimately, for any purpose which entails a violation of, or
which is inconsistent with, the provisions of the Margin Regulations.
SECTION 3.8 Use of Proceeds. All proceeds of the Loans shall be used
for the purposes referred to in the recitals to this Agreement.
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SECTION 3.9 Taxes. The Company and the Subsidiaries have filed or
caused to be filed all Federal and material state, local and foreign Tax returns
which are required to be filed by them, and have paid or caused to be paid all
Taxes shown to be due and payable on such returns or on any assessments received
by any of them, other than any Taxes or assessments the validity of which is
being contested in good faith by appropriate proceedings, and with respect to
which appropriate accounting reserves have, to the extent required by GAAP, been
set aside.
SECTION 3.10 Employee Benefit Plans. The present aggregate value of
accumulated benefit obligations of all Plans and all foreign employee pension
benefit plans (based on those assumptions used for disclosure of such
obligations in corporate financial statements in accordance with GAAP) did not,
as of the most recent statements available, exceed the aggregate value of the
assets for all such plans. Except as would not individually or in the aggregate
have a Material Adverse Effect: (a) no ERISA Termination Event has occurred or
(b) each Plan has been established and administered in accordance with its terms
and in compliance with the applicable provisions of ERISA, the Code and other
applicable laws, rules and regulations.
SECTION 3.11 Environmental and Safety Matters. Other than exceptions
to any of the following that would not in the aggregate have a Material Adverse
Effect: (i) the Company and the Subsidiaries comply and have complied with all
applicable Environmental and Safety Laws; (ii) there are and have been no
Hazardous Substances at any property owned, leased or operated by the Company
now or in the past, or at any other location, that could reasonably be expected
to result in liability of the Company or any Subsidiary under any Environmental
and Safety Law or result in costs to any of them arising out of any
Environmental and Safety Law; (iii) there are no past, present, or, to the
knowledge of the Company and the Subsidiaries, anticipated future events,
conditions, circumstances, practices, plans, or legal requirements that could
reasonably be expected to prevent the Company or any of the Subsidiaries from,
or increase the costs to the Company or any of the Subsidiaries of, complying
with applicable Environmental and Safety Laws or obtaining or renewing all
material permits, approvals, authorizations, licenses or permissions required of
any of them pursuant to any such law; and (iv) neither the Company nor any of
the Subsidiaries has retained or assumed, by contract or operation of law, any
liability, fixed or contingent, under any Environmental and Safety Law.
SECTION 3.12 Properties. (a) Each of the Company and its
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property that are material to the business of the Company and its
Subsidiaries taken as a whole, except for minor defects in title that do not
interfere with its ability to conduct its business as currently conducted or to
utilize such properties for their intended purposes.
(b) Each of the Company and its Subsidiaries owns, or is licensed to
use, all trademarks, tradenames, copyrights, patents and other intellectual
property that are material to the business of the Company and its Subsidiaries
taken as a whole, and the use thereof by the Company and its Subsidiaries does
not infringe upon the rights of any other Person, except for any such
infringements that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
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SECTION 3.13 Investment and Holding Company Status. Neither the
Company nor any of its Subsidiaries is (a) an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
ARTICLE IV
Conditions
SECTION 4.1 Effective Date. The obligations of the Lenders to make
Loans hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 8.7):
(a) Citibank (or its counsel) shall have received from each party
hereto either (i) a counterpart of this Agreement signed on behalf of such party
or (ii) written evidence satisfactory to Citibank (which may include telecopy
transmission of a signed signature page of this Agreement) that such party has
signed a counterpart of this Agreement.
(b) Citibank shall have received a favorable written opinion
(addressed to the Administrative Agents and the Lenders and dated the Effective
Date) of Cravath, Swaine & Moore, counsel to the Company, and John L.
McGoldrick, Esq., Senior Vice President Law and Strategic Planning and General
Counsel of the Company, collectively to the effect set forth in Exhibit C. The
Company hereby requests such counsel to deliver such opinions.
(c) Citibank shall have received such documents and certificates as
Citibank or its counsel may reasonably request relating to the organization,
existence and good standing of the Company, the authorization of the
Transactions and any other legal matters relating to the Company, this Agreement
or the Transactions, all in form and substance satisfactory to the
Administrative Agents and their counsel.
(d) Citibank shall have received a certificate, dated the Effective
Date and signed by the President, a Vice President or a Financial Officer of the
Company, confirming compliance with the conditions set forth in paragraphs (a)
and (b) of Section 4.2.
(e) The Administrative Agents shall have received all fees and other
amounts due and payable on or prior to the Effective Date, including, to the
extent invoiced, reimbursement or payment of all out-of-pocket expenses required
to be reimbursed or paid by the Company hereunder.
Citibank shall notify the Company and the Lenders of the Effective Date, and
such notice shall be conclusive and binding.
SECTION 4.2 Each Credit Event. The obligation of each Lender to make
a Loan on the occasion of any Borrowing (other than a Borrowing made solely to
refinance outstanding Borrowings that does not increase the aggregate principal
amount of the Loans of any Lender outstanding) is subject to the satisfaction of
the following conditions:
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(a) The representations and warranties of the Company set forth in
this Agreement other than those set forth in Sections 3.5(b), 3.6(a), 3.10 and
3.11 shall be true and correct in all material respects (provided that such
representations and warranties qualified as to materiality shall be true and
correct) on and as of the date of such Borrowing with the same effect as though
made on and as of such date, except to the extent such representations and
warranties expressly relate to an earlier date.
(b) At the time of and immediately after giving effect to such
Borrowing, no Default shall have occurred and be continuing.
Each Borrowing shall be deemed to constitute a representation and warranty by
the Company on the date thereof as to the matters specified in paragraphs (a)
and (b) of this Section.
SECTION 4.3 Initial Borrowing by Each Borrowing Subsidiary. The
obligation of each Lender to make a Loan on the occasion of the first Borrowing
by each Borrowing Subsidiary is subject to the satisfaction of the following
condition:
Citibank (or their counsel) shall have received a Borrowing Subsidiary
Agreement properly executed by such Borrowing Subsidiary and the Company.
ARTICLE V
Covenants
A. Affirmative Covenants. The Company covenants and agrees with each
Lender and each Administrative Agent that so long as this Agreement shall remain
in effect or the principal of or interest on any Loan, any fees or any other
amounts payable hereunder shall be unpaid, unless the Required Lenders shall
otherwise consent in writing, it will, and will cause each of the Subsidiaries
to:
SECTION 5.1 Existence. Do or cause to be done all things necessary
to preserve and keep in full force and effect its corporate existence and its
rights and franchises that are material to the business of the Company and its
Subsidiaries as a whole, except as expressly permitted under Section 5.7 and
except, in the case of any Subsidiary, where the failure to do so would not
result in a Material Adverse Effect.
SECTION 5.2 Business and Properties. Comply in all respects with all
applicable laws, rules, regulations and orders of any Governmental Authority
(including Environmental and Safety Laws and ERISA), whether now in effect or
hereafter enacted except instances that could not, in the aggregate, reasonably
be expected to result in a Material Adverse Effect; and at all times maintain
and preserve all property material to the conduct of the business of the Company
and its Subsidiaries as a whole and keep such property in good repair, working
order and condition and from time to time make, or cause to be made, all needful
and proper repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith may be
properly conducted at all times, except where the failure to do so would not
result in a Material Adverse Effect.
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SECTION 5.3 Financial Statements, Reports, Etc. Furnish to the
Administrative Agents and each Lender:
(a) within 95 days after the end of each fiscal year, its annual
report on Form 10-K as filed with the SEC, including its consolidated balance
sheet and the related consolidated earnings statement showing its consolidated
financial condition as of the close of such fiscal year and the consolidated
results of its operations during such year, all audited by Price Waterhouse LLP
or other independent certified public accountants of recognized national
standing selected by the Company and accompanied by an opinion of such
accountants to the effect that such consolidated financial statements fairly
present the Company's financial condition and results of operations on a
consolidated basis in accordance with GAAP;
(b) within 50 days after the end of each of the first three fiscal
quarters of each fiscal year, its quarterly report on Form 10-Q as filed with
the SEC, including its unaudited consolidated balance sheet and related
consolidated earnings statement, showing its consolidated financial condition as
of the close of such fiscal quarter and the consolidated results of its
operations during such fiscal quarter and the then elapsed portion of the fiscal
year (and each delivery of such statements shall be deemed a representation that
such statements fairly present the Company's financial condition and results of
operations on a consolidated basis in accordance with GAAP, subject to normal
year-end audit adjustments and the absence of footnotes);
(c) concurrently with any delivery of financial statements under
paragraph (a) or (b) above, a certificate of a Financial Officer certifying that
no Event of Default or Default has occurred or, if such an Event of Default or
Default has occurred, specifying the nature and extent thereof and any
corrective action taken or proposed to be taken with respect thereto;
(d) promptly after the same become publicly available, copies of all
reports on Form 8-K filed by it with the SEC, or any Governmental Authority
succeeding to any of or all the functions of the SEC, or copies of all reports
distributed to its shareholders, as the case may be; and
(e) promptly, from time to time, such other information as any Lender
shall reasonably request through Citibank.
SECTION 5.4 Insurance. Keep its insurable properties adequately
insured at all times by financially sound and reputable insurers (which may
include captive insurers), and maintain such other insurance or self insurance,
to such extent and against such risks, including fire and other risks insured
against by extended coverage, as is customary with companies similarly situated
and in the same or similar businesses.
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SECTION 5.5 Obligations and Taxes. Pay and discharge promptly when
due all material taxes, assessments and governmental charges imposed upon it or
upon its income or profits or in respect of its property, in each case before
the same shall become delinquent or in default and before penalties accrue
thereon, unless and to the extent that the same are being contested in good
faith by appropriate proceedings and adequate reserves with respect thereto
shall, to the extent required by GAAP, have been set aside.
SECTION 5.6 Litigation and Other Notices. Give Citibank written
notice of the following within five Business Days after any executive officer of
the Company obtains knowledge thereof:
(a) the filing or commencement of any action, suit or proceeding which
the Company reasonably expects to result in a Material Adverse Effect;
(b) any Event of Default or Default, specifying the nature and extent
thereof and the action (if any) which is proposed to be taken with respect
thereto; and
(c) any change in any of the Ratings.
SECTION 5.7 Books and Records. Keep proper books of record and
account in which full, true and correct entries are made of all material
dealings and transactions in relation to its business and activities.
B. Negative Covenants. The Company covenants and agrees with each
Lender and each Administrative Agent that so long as this Agreement shall remain
in effect or the principal of or interest on any Loan, any fees or any other
amounts payable hereunder shall be unpaid, unless the Required Lenders shall
otherwise consent in writing, it will not, and will not permit any of the
Subsidiaries to:
SECTION 5.8 Consolidations, Mergers, and Sales of Assets. In the
case of the Company (a) consolidate or merge with or into any other Person or
liquidate, wind up or dissolve (or suffer any liquidation or dissolution) or (b)
sell, or otherwise transfer (in one transaction or a series of transactions), or
permit any Subsidiary to sell, or otherwise transfer (in one transaction or a
series of transactions), all or substantially all of the assets of the Company
and the Subsidiaries, taken as a whole, to any other Person; provided that the
Company may merge or consolidate with another Person if (A) the Company is the
corporation surviving such merger and (B) immediately after giving effect to
such merger or consolidation, no Default or Event of Default shall have occurred
and be continuing.
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SECTION 5.9 Liens. Create, assume or suffer to exist any Lien upon
any Restricted Property to secure any Debt of the Company, any Subsidiary or any
other Person, without making effective provision whereby the Loans that may then
or thereafter be outstanding shall be secured by such Lien equally and ratably
with (or prior to) such Debt for so long as such Debt shall be so secured,
except that the foregoing shall not prevent the Company or any Subsidiary from
creating, assuming or suffering to exist any of the following Liens:
(a) Liens existing on the date hereof;
(b) any Lien existing on property owned or leased by any Person at the
time it becomes a Subsidiary;
(c) any Lien existing on property at the time of the acquisition
thereof by the Company or any Subsidiary;
(d) any Lien to secure any Debt incurred prior to, at the time of, or
within 12 months after the acquisition of any Restricted Property for the
purpose of financing all or any part of the purchase price thereof and any Lien
to the extent that it secures Debt which is in excess of such purchase price and
for the payment of which recourse may be had only against such Restricted
Property;
(e) any Lien to secure any Debt incurred prior to, at the time of, or
within 12 months after the completion of the construction, alteration, repair or
improvement of any Restricted Property for the purpose of financing all or any
part of the cost thereof and any Lien to the extent that it secures Debt which
is in excess of such cost and for the payment of which recourse may be had only
against such Restricted Property;
(f) any Liens securing Debt of a Subsidiary owing to the Company or to
another Subsidiary;
(g) any Liens securing industrial development, pollution control or
similar revenue bonds;
(h) any extension, renewal or replacement (or successive extensions,
renewals or replacements) in whole or in part of any Lien referred to in clauses
(a) through (g) above, so long as the principal amount of the Debt secured
thereby does not exceed the principal amount of Debt so secured at the time of
such extension, renewal or replacement (except that, where an additional
principal amount of Debt is incurred to provide funds for the completion of a
specific project, the additional principal amount, and any related financing
costs, may be secured by the Lien as well) and such Lien is limited to the same
property subject to the Lien so extended, renewed or replaced (and improvements
on such property); and
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(i) any Lien not permitted by clauses (a) through (h) above securing
Debt which, together with the aggregate outstanding principal amount of all
other Debt of the Company and its Subsidiaries owning Restricted Property which
would otherwise be subject to the foregoing restrictions and the aggregate Value
of existing Sale and Leaseback Transactions which would be subject to the
restrictions of Section 5.10 but for this clause (i), does not at any time
exceed 10% of Consolidated Net Tangible Assets.
SECTION 5.10 Limitation on Sale and Leaseback Transactions. Enter
into any Sale and Leaseback Transaction, or permit any Subsidiary owning
Restricted Property to do so, unless either:
(a) the Company or such Subsidiary would be entitled to incur Debt, in
a principal amount at least equal to the Value of such Sale and Leaseback
Transaction, which is secured by Liens on the property to be leased (without
equally and ratably securing the Loans) without violating Section 5.9, or
(b) the Company, during the six months immediately following the
effective date of such Sale and Leaseback Transaction, causes to be applied to
(A) the acquisition of Restricted Property or (B) the voluntary retirement of
Funded Debt (whether by redemption, defeasance, repurchase, or otherwise) an
amount equal to the Value of such Sale and Leaseback Transaction.
ARTICLE VI
Events of Default
In case of the happening of any of the following events (each an
"Event of Default"):
(a) any representation or warranty made or deemed made in or in
connection with the execution and delivery of this Agreement or the Borrowings
hereunder or under any Borrowing Subsidiary Agreement shall prove to have been
false or misleading in any material respect when so made, deemed made or
furnished;
(b) default shall be made in the payment of any principal of any Loan
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or by acceleration thereof or
otherwise;
(c) default shall be made in the payment of any interest on any Loan
or any fee or any other amount (other than an amount referred to in paragraph
(b) above) due hereunder, when and as the same shall become due and payable, and
such default shall continue unremedied for a period of three Business Days;
(d) default shall be made in the due observance or performance of any
covenant, condition or agreement contained in Section 5.6, 5.8, 5.9 or 5.10;
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(e) default shall be made in the due observance or performance of any
covenant, condition or agreement contained herein (other than those specified in
(b), (c) or (d) above) and such default shall continue unremedied for a period
of 30 days after notice thereof from any Administrative Agent or any Lender to
the Company;
(f) the Company or any Subsidiary shall (i) fail to pay any principal
or interest, regardless of amount, due in respect of one or more items of Debt
in an aggregate principal amount greater than or equal to 3% of Consolidated Net
Worth, when and as the same shall become due and payable (giving effect to any
applicable grace period), or (ii) fail to observe or perform any other term,
covenant, condition or agreement contained in any agreement or instrument
evidencing or governing any such Debt if the effect of any failure referred to
in this clause (ii) is to cause such Debt to become due prior to its stated
maturity;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of the Company or any Borrowing Subsidiary, or of a substantial part
of the property or assets of the Company or any Borrowing Subsidiary, under
Title 11 of the United States Code, as now constituted or hereafter amended, or
any other Federal or state bankruptcy, insolvency, receivership or similar law,
(ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Company or any Borrowing Subsidiary or
for a substantial part of the property or assets of the Company or any Borrowing
Subsidiary or (iii) the winding up or liquidation of the Company or any
Borrowing Subsidiary; and such proceeding or petition shall continue undismissed
for 60 days or an order or decree approving or ordering any of the foregoing
shall be entered;
(h) the Company or any Borrowing Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11 of
the United States Code, as now constituted or hereafter amended, or any other
Federal or state bankruptcy, insolvency, receivership or similar law, (ii)
consent to the institution of, or fail to contest in a timely and appropriate
manner, any proceeding or the filing of any petition described in (g) above,
(iii) apply for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Company or any Borrowing
Subsidiary or for a substantial part of the property or assets of the Company or
any Borrowing Subsidiary, (iv) file an answer admitting the material allegations
of a petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors, (vi) become unable, admit in writing
its inability or fail generally to pay its debts as they become due or (vii)
take any action for the purpose of effecting any of the foregoing; or
(i) one or more judgments for the payment of money in an aggregate
amount equal to or greater than 3% of Consolidated Net Worth (exclusive of any
amount thereof covered by insurance) shall be rendered against the Company, any
Subsidiary or any combination thereof and the same shall remain undischarged for
a period of 30 consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to levy upon
assets or properties of the Company or any Subsidiary to enforce any such
judgment;
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(j) (i) a Plan of the Company or any Borrowing Subsidiary shall fail
to maintain the minimum funding standard required by Section 412 of the Code for
any plan year or a waiver of such standard is sought or granted under Section
412(d), or (ii) an ERISA Termination Event shall have occurred with respect to
the Company or any Borrowing Subsidiary or an ERISA Affiliate has incurred or is
reasonably likely to incur a liability to or on account of a Plan under Section
4062, 4063, 4064, 4201 or 4204 of ERISA, or (iii) the Company or any Borrowing
Subsidiary or any ERISA Affiliate shall engage in any 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 United States Department of Labor, or (iv) the Company or any
Borrowing Subsidiary or any ERISA Affiliate shall fail to pay any required
installment or any other payment required to be paid by such entity under
Section 412 of the Code on or before the due date for such installment or other
payment, or (v) the Company or any Borrowing Subsidiary or any ERISA Affiliate
shall fail to make any contribution or payment to any Multiemployer Plan (as
defined in Section 4001(a)(3) of ERISA) which the Company or any Borrowing
Subsidiary or any ERISA Affiliate is required to make under any agreement
relating to such Multiemployer Plan or any law pertaining thereto, and there
shall result from any such event or events either a liability or a material risk
of incurring a liability to the PBGC or a Plan which will have a Material
Adverse Effect;
(k) a Change in Control shall occur; or
(l) at any time while a Borrowing Subsidiary Agreement is in effect,
the guarantee in Section 8.16 shall cease to be, or shall be asserted by the
Company not to be, a valid and binding obligation on the part of the Company;
then, and in every such event (other than an event with respect to the Company
described in paragraph (g) or (h) above), and at any time thereafter during the
continuance of such event, Citibank, at the request of the Required Lenders,
shall, by notice to the Company or any Borrowing Subsidiary (which notice to a
Borrowing Subsidiary may be given to the Company), take either or both of the
following actions, at the same or different times: (i) terminate forthwith the
Commitments and (ii) declare the Loans then outstanding to be forthwith due and
payable in whole or in part, whereupon the principal of the Loans so declared to
be due and payable, together with accrued interest thereon and any unpaid
accrued fees and all other liabilities of the Company or any Borrowing
Subsidiary accrued hereunder, shall become forthwith due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived anything contained herein to the contrary
notwithstanding; and, in any event with respect to the Company described in
paragraph (g) or (h) above, the Commitments shall automatically terminate and
the principal of the Loans then outstanding, together with accrued interest
thereon and any unpaid accrued fees and all other liabilities of the Company and
the Borrowing Subsidiaries accrued hereunder shall automatically become due and
payable, without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived anything contained herein to the
contrary notwithstanding.
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ARTICLE VII
The Administrative Agents
In order to expedite the transactions contemplated by this Agreement,
each of The Chase Manhattan Bank and Citibank, N.A. is hereby appointed to act
as an Administrative Agent on behalf of the Lenders and Citibank is hereby
appointed to act as Advance Agent on behalf of the Lenders. Each of the Lenders
hereby irrevocably authorizes each Administrative Agent (which term, for
purposes of this Article VII, shall be deemed to include the Advance Agent) to
take such actions on behalf of such Lender or holder and to exercise such powers
as are specifically delegated to the Administrative Agents or an Administrative
Agent individually, as the case may be, by the terms and provisions hereof,
together with such actions and powers as are reasonably incidental thereto.
Citibank is hereby expressly authorized by the Lenders, without hereby limiting
any implied authority, (a) to receive on behalf of the Lenders all payments of
principal of and interest on the Loans and all other amounts due to the Lenders
hereunder, and promptly to distribute to each Lender its proper share of each
payment so received; (b) to give notice on behalf of each of the Lenders to the
Company or any Borrowing Subsidiary of any Event of Default of which Citibank
has actual knowledge acquired in connection with its agency hereunder; and (c)
to distribute to each Lender copies of all notices, financial statements and
other materials delivered by the Company or any Borrowing Subsidiary pursuant to
this Agreement as received by Citibank.
Neither Administrative Agent nor any of their respective directors,
officers, employees or agents shall be liable as such for any action taken or
omitted by any of them except for its or his or her own gross negligence or
willful misconduct, or be responsible for any statement, warranty or
representation herein or the contents of any document delivered in connection
herewith, or be required to ascertain or to make any inquiry concerning the
performance or observance by the Company or any Borrowing Subsidiary of any of
the terms, conditions, covenants or agreements contained in this Agreement. The
Administrative Agents shall not be responsible to the Lenders for the due
execution, genuineness, validity, enforceability or effectiveness of this
Agreement or other instruments or agreements. The Administrative Agents may
deem and treat the Lender which makes any Loan as the holder of the indebtedness
resulting therefrom for all purposes hereof until it shall have received notice
from such Lender, given as provided herein, of the transfer thereof. The
Administrative Agents shall in all cases be fully protected in acting, or
refraining from acting, in accordance with written instructions signed by the
Required Lenders and, except as otherwise specifically provided herein, such
instructions and any action or inaction pursuant thereto shall be binding on all
the Lenders. The Administrative Agents shall, in the absence of knowledge to
the contrary, be entitled to rely on any instrument or document believed by it
in good faith to be genuine and correct and to have been signed or sent by the
proper Person or Persons. Neither Administrative Agent nor any of their
respective directors, officers, employees or agents shall have any
responsibility to the Company or any Borrowing Subsidiary on account of the
failure of or delay in performance or breach by any Lender of any of its
obligations hereunder or to any Lender on account of the failure of or delay in
performance or breach by any other Lender or the Company of any of their
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respective obligations hereunder or in connection herewith. The Administrative
Agents may execute any and all duties hereunder by or through their Affiliates,
agents or employees and shall be entitled to rely upon the advice of legal
counsel selected by them with respect to all matters arising hereunder and shall
not be liable for any action taken or suffered in good faith by them in
accordance with the advice of such counsel.
The Lenders hereby acknowledge that the Administrative Agents shall be
under no duty to take any discretionary action permitted to be taken by them
pursuant to the provisions of this Agreement unless they shall be requested in
writing to do so by the Required Lenders.
Subject, in the case of a resignation of both Administrative Agents,
to the appointment and acceptance of a successor Administrative Agent as
provided below, either Administrative Agent may resign at any time by notifying
the Lenders and the Company. Upon any such resignation of both Administrative
Agents, the Required Lenders shall have the right to appoint a successor
Administrative Agent acceptable to the Company. If no successor shall have been
so appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Administrative Agents give notice of their
resignation, then the retiring Administrative Agents may, on behalf of the
Lenders, appoint a successor Administrative Agent which shall be a bank with an
office in New York, New York, having a combined capital and surplus of at least
$500,000,000 or an Affiliate of any such bank. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor bank, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agents and the retiring
Administrative Agents shall be discharged from their duties and obligations
hereunder. If only one of the Administrative Agents shall resign, the other
Administrative Agent shall 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. After any
Administrative Agent's resignation hereunder, the provisions of this Article and
Section 8.5 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 Administrative Agent.
With respect to the Loans made by them hereunder, each Administrative
Agent in its individual capacity and not as Administrative Agent shall have the
same rights and powers as any other Lender and may exercise the same as though
it were not an Administrative Agent, and such Administrative Agent and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Company or any Subsidiary or other Affiliate thereof
as if it were not an Administrative Agent.
Each Lender agrees (i) to reimburse the Administrative Agents, on
demand, in the amount of its Applicable Percentage of any expenses incurred for
the benefit of the Lenders by the Administrative Agents, including counsel fees
and compensation of agents and employees paid for services rendered on behalf of
the Lenders, which shall not have been reimbursed by the Company and (ii) to
indemnify and hold harmless the Administrative Agents and any of their
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respective directors, officers, employees or agents, on demand, in the amount of
such pro rata share, from and against any and all liabilities, taxes,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against either of them in its capacity as an
Administrative Agent in any way relating to or arising out of this Agreement or
any action taken or omitted by either of them under this Agreement to the extent
the same shall not have been reimbursed by the Company; provided that no Lender
shall be liable to any Administrative Agent for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the gross negligence or willful
misconduct of such Administrative Agent or any of its directors, officers,
employees or agents.
Each Lender acknowledges that it has, independently and without
reliance upon any Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon any
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement
or any related agreement or any document furnished hereunder or thereunder.
ARTICLE VII
Miscellaneous
SECTION 8.1 Notices. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed or sent by telecopy, as follows:
(a) if to the Company, to Bristol-Myers Squibb Company, 345 Park
Avenue, New York, New York 10154, Attention of the Treasurer (Telecopy No.
212-605-9632) and the General Counsel (Telecopy No. 212-546-9562);
(b) if to The Chase Manhattan Bank, to it at One Chase Manhattan
Plaza, 8th Floor, New York, New York 10081, Attention of Vito Cipriano (Telecopy
No. 212-552-5662);
(c) if to Citibank, (i) for notices concerning operational matters, to
Citibank, N.A.,c/o Citibank Delaware, Two Penns Way, Suite 200, New Castle, DE
19720, Attention of Janet Wallace (Telecopy No. (302) 894-6120) or (ii) for
notices concerning credit matters, to Citibank, N.A., 399 Park Avenue, New York,
New York 10043, Attention of William E. Clark (Telecopy No. 212-826-2371);
(d) if to a Lender, to it at its address (or telecopy number) set
forth in Schedule 2.1 or in the Assignment and Acceptance pursuant to which such
Lender became a party hereto; and
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(e) if to any Borrowing Subsidiary, to it at the address (or telecopy
number) set forth above for the Company. Each Borrowing Subsidiary hereby
irrevocably appoints the Company as its agent for the purpose of giving on its
behalf any notice and taking any other action provided for in this Agreement and
hereby agrees that it shall be bound by any such notice or action given or taken
by the Company hereunder irrespective of whether or not any such notice shall
have in fact been authorized by such Borrowing Subsidiary and irrespective of
whether or not the agency provided for herein shall have theretofore been
terminated.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement 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 this Section or in accordance with the
latest unrevoked direction from such party given in accordance with this
Section.
SECTION 8.2 Survival of Agreement. All covenants, agreements,
representations and warranties made by the Company herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by the
Lenders and shall survive the making by the Lenders of the Loans regardless of
any investigation made by the Lenders or on their behalf, and shall continue in
full force and effect as long as the principal of or any accrued interest on any
Loan or any fee or any other amount payable under this Agreement is outstanding
and unpaid or the Commitments have not been terminated.
SECTION 8.3 Binding Effect. This Agreement shall become effective
when it shall have been executed by the Company and the Administrative Agents
and when the Administrative Agents shall have received copies hereof (telecopied
or otherwise) which, when taken together, bear the signature of each Lender, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that neither the Company nor
any Borrowing Subsidiary shall have the right to assign any rights hereunder or
any interest herein without the prior consent of all the Lenders.
SECTION 8.4 Successors and Assigns. (a) Whenever in this Agreement
any of the parties is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of any party that are contained in this Agreement shall bind and
inure to the benefit of its successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion
of its interests, rights and obligations under this Agreement (including all or
a portion of its Commitment and the Loans at the time owing to it); provided,
however, that, except in the case of an assignment to another Lender or an
Affiliate of a Lender, (i) each of the Company (so long as no Event of Default
shall have occurred and be continuing with respect to the Company under clause
(g) or (h) of Article VI of this Agreement) and Citibank must give its prior
written consent to such assignment (which consent in each case shall not be
unreasonably withheld) and (ii) the amount of the Commitment of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Acceptance with respect to such assignment is delivered to Citibank) shall
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not be less than $10,000,000 unless it shall be the entire amount of such
Lender's Commitment. The parties to each assignment shall execute and deliver
to Citibank an Assignment and Acceptance, and a processing and recordation fee
of $3,000. Upon acceptance and recording pursuant to paragraph (e) of this
Section, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five Business Days after the
execution thereof, (X) the assignee thereunder shall be a party hereto and, to
the extent of the interest assigned by such Assignment and Acceptance, have the
rights and obligations of a Lender under this Agreement and (Y) the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto (but shall continue to be entitled
to the benefits of Sections 2.15, 2.16, 2.17 and 8.5, as well as to any fees
accrued for its account hereunder and not yet paid)). Notwithstanding the
foregoing, any Lender assigning its rights and obligations under this Agreement
may retain any Competitive Loans made by it outstanding at such time, and in
such case shall retain its rights hereunder in respect of any Loans so retained
until such Loans have been repaid in full in accordance with this Agreement.
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim; (ii)
except as set forth in (i) above, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto or the financial condition of the Company or the performance or
observance by the Company of any obligations under this Agreement or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such Assignment and
Acceptance; (iv) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 5.3 and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (v) such assignee will independently and
without reliance upon any Administrative Agent, such assigning Lender 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; (vi) such assignee appoints and
authorizes the Administrative Agents to take such action as agent on its behalf
and to exercise such powers under this Agreement as are delegated to the
Administrative Agents by the terms hereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all the obligations which by the terms of
this Agreement are required to be performed by it as a Lender.
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(d) Citibank shall maintain at one of its offices in the City of New
York a copy of each Assignment and Acceptance delivered to it and a register for
the recordation of the names and addresses of the Lenders, and the Commitment
of, and the principal amount of the Loans owing to, each Lender pursuant to the
terms hereof from time to time and any promissory notes evidencing such Loans
(the "Register"). The entries in the Register shall be conclusive in the
absence of manifest error and the Company, the other Borrowers, the
Administrative Agents and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement. No assignment or transfer of any Loan (or
portion thereof) or any Note evidencing such Loan shall be effected unless and
until it has been recorded in the Register as provided in this subsection
8.4(d). Notwithstanding any other provision of this Agreement, any assignment
or transfer of all or part of a promissory note shall be registered on the
Register only upon surrender for registration of assignment or transfer of the
promissory note (and each promissory note shall expressly so provide),
accompanied by a duly executed Assignment and Acceptance, and thereupon one or
more new promissory notes in the same aggregate principal amount shall be issued
to the designated Assignee and the old promissory notes shall be returned by
Citibank to the Borrower marked "cancelled". The Register shall be available
for inspection by each party hereto, at any reasonable time and from time to
time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee together with an Administrative
Questionnaire completed in respect of the assignee (unless the assignee shall
already be a Lender hereunder), the processing and recordation fee referred to
in paragraph (b) above and, if required, the written consent of the Company to
such assignment, Citibank shall (i) accept such Assignment and Acceptance and
(ii) record the information contained therein in the Register.
(f) Each Lender may sell participations to one or more banks or other
entities in all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided, however, that (i) such Lender's obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto or thereto for the performance of such obligations, (iii) each
participating bank or other entity shall be entitled to the benefit of the cost
protection provisions contained in Sections 2.15, 2.16 and 2.17 to the same
extent as if it was the selling Lender (and limited to the amount that could
have been claimed by the selling Lender had it continued to hold the interest of
such participating bank or other entity, it being further agreed that the
selling Lender will not be permitted to make claims against the Company under
Section 2.15(b) for costs or reductions resulting from the sale of a
participation), except that all claims made pursuant to such Sections shall be
made through such selling Lender, and (iv) the Company, the Administrative
Agents and the other Lenders shall continue to deal solely and directly with
such selling Lender in connection with such Lender's rights and obligations
under this Agreement, and such Lender shall retain the sole right to enforce the
obligations of the Company relating to the Loans and to approve any amendment,
modification or waiver of any provision of this Agreement (other than
amendments, modifications or waivers decreasing any fees payable hereunder or
thereunder or the amount of principal of or the rate at which interest is
payable on the Loans, extending the final scheduled maturity of the Loans or any
date scheduled for the payment of interest on the Loans or extending the
Commitments).
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(g) Any Lender or participant may, in connection with any assignment
or participation or proposed assignment or participation pursuant to this
Section, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Company furnished to such Lender;
provided that, prior to any such disclosure, each such assignee or participant
or proposed assignee or participant shall be subject to the same confidentiality
agreement as are the Lenders.
(h) The Company and any Borrowing Subsidiary shall not assign or
delegate any rights and duties hereunder without the prior written consent of
all Lenders.
(i) Any Lender may at any time pledge or otherwise assign all or any
portion of its rights under this Agreement to a Federal Reserve Bank; provided
that no such pledge shall release any Lender from its obligations hereunder.
In order to facilitate such an assignment to a Federal Reserve Bank, the Company
shall, at the request of the assigning Lender, duly execute and deliver to the
assigning Lender a promissory note or notes evidencing the Loans made by the
assigning Lender hereunder.
SECTION 8.5 Expenses; Indemnity. (a) The Company agrees to pay all
reasonable out-of-pocket expenses incurred by the Administrative Agents in
connection with entering into this Agreement or in connection with any
amendments, modifications or waivers of the provisions hereof or thereof
(including the reasonable fees, disbursements and other charges of a single
counsel), or incurred by the Administrative Agents or any Lender in connection
with the enforcement of their rights in connection with this Agreement or in
connection with the Loans made hereunder or thereunder, including the fees and
disbursements of counsel for the Administrative Agents and, in the case of
enforcement, each Lender.
(b) The Company agrees to indemnify each Administrative Agent, each
Lender, each of their Affiliates and the directors, officers, employees and
agents of the foregoing (each such Person being called an "Indemnitee") against,
and to hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable counsel fees and
expenses, incurred by or asserted against any Indemnitee arising out of (i) the
consummation of the transactions contemplated by this Agreement, (ii) the use of
the proceeds of the Loans or (iii) any claim, litigation, investigation or
proceeding relating to any of the foregoing, whether or not any Indemnitee is a
party thereto; provided that (A) such indemnity shall not, as to any Indemnitee,
be available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a final judgment of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
such Indemnitee and (B) such indemnity shall not apply to losses, claims,
damages, liabilities or related expenses that result from disputes solely
between Lenders.
(c) The provisions of this Section shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the invalidity or unenforceability of any term or provision of this
Agreement or any investigation made by or on behalf of any Administrative Agent
or any Lender. All amounts due under this Section shall be payable on written
demand therefor.
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SECTION 8.6 Applicable Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 8.7 Waivers; Amendment. (a) No failure or delay of any
Administrative Agent or any Lender in exercising any power or right hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the
Administrative Agents and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies which they would otherwise have. No waiver
of any provision of this Agreement or consent to any departure therefrom shall
in any event be effective unless the same shall be permitted by paragraph (b)
below, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice or demand on the
Company or any Subsidiary in any case shall entitle such party to any other or
further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Company and the Required Lenders; provided, however, that no
such agreement shall (i) decrease the principal amount of, or extend the
maturity of or any scheduled principal payment date or date for the payment of
any interest on any Loan, or waive or excuse any such payment or any part
thereof, or decrease the rate of interest on any Loan, or amend or modify
Section 8.16, without the prior written consent of each Lender directly affected
thereby, (ii) increase the Commitment (except pursuant to Section 2.6), or
decrease the facility fees of any Lender without the prior written consent of
such Lender or (iii) amend or modify the provisions of Section 2.18 or Section
8.4(h), the provisions of this Section or the definition of the "Required
Lenders", without the prior written consent of each Lender; provided further,
however, that no such agreement shall amend, modify or otherwise affect the
rights or duties of any Administrative Agent hereunder without the prior written
consent of such Administrative Agent. Each Lender shall be bound by any waiver,
amendment or modification authorized by this Section and any consent by any
Lender pursuant to this Section shall bind any assignee of its rights and
interests hereunder.
SECTION 8.8 Entire Agreement. This Agreement constitutes the entire
contract among the parties relative to the subject matter hereof. Any previous
agreement among the parties with respect to the subject matter hereof is
superseded by this Agreement. Nothing in this Agreement, expressed or implied,
is intended to confer upon any party other than the parties hereto any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
SECTION 8.9 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 shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith negotiations 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.
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SECTION 8.10 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract, and shall become
effective as provided in Section 8.3.
SECTION 8.11 Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 8.12 Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or obligations of the Company and the applicable Borrowing
Subsidiary now or hereafter existing under this Agreement held by such Lender,
irrespective of whether or not such Lender shall have made any demand under this
Agreement and although such obligations may be unmatured. Each Lender agrees
promptly to notify the Company after such setoff and application made by such
Lender, but the failure to give such notice shall not affect the validity of
such setoff and application. The rights of each Lender under this Section are
in addition to other rights and remedies (including, without limitation, other
rights of setoff) which such Lender may have.
SECTION 8.13 Jurisdiction; Consent to Service of Process. (a) The
Company and any Borrowing Subsidiary hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or Federal court of the United States of America sitting in
New York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Subject to the foregoing and to paragraph (b) below, nothing
in this Agreement shall affect any right that any party hereto may otherwise
have to bring any action or proceeding relating to this Agreement against any
other party hereto in the courts of any jurisdiction.
(b) Each of the parties hereto hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or thereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
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(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 8.1. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 8.14 Waiver of Jury Trial. Each party hereto hereby waives,
to the fullest extent permitted by applicable law, any right it may have to a
trial by jury in respect of any litigation directly or indirectly arising out
of, under or in connection with this Agreement. Each party hereto (a) certifies
that no representative, agent or attorney of any other party has represented,
expressly or otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver and (b) acknowledges that it
and other parties hereto have been induced to enter into this Agreement by,
among other things, the mutual waivers and certification in this Section.
SECTION 8.15 Conversion of Currencies. (a) If, for the purpose of
obtaining judgment in any court, it is necessary to convert a sum owing
hereunder in one currency into another currency, each party hereto agrees, to
the fullest extent that it may effectively do so, that the rate of exchange used
shall be that at which in accordance with normal banking procedures in the
relevant jurisdiction the first currency could be purchased with such other
currency on the Business Day immediately preceding the day on which final
judgment is given.
(b) The obligations of each Borrower in respect of any sum due to any
party hereto or any holder of the obligations owing hereunder (the "Applicable
Creditor") shall, notwithstanding any judgment in a currency (the "Judgment
Currency") other than the currency in which such sum is stated to be due
hereunder (the "Agreement Currency"), be discharged only to the extent that, on
the Business Day following receipt by the Applicable Creditor of any sum
adjudged to be so due in the Judgment Currency, the Applicable Creditor may in
accordance with normal banking procedures in the relevant jurisdiction purchase
the Agreement Currency with the Judgment Currency; if the amount of the
Agreement Currency so purchased is less than the sum originally due to the
Applicable Creditor in the Agreement Currency, such Borrower agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify the
Applicable Creditor against such loss. The obligations of the Borrowers
contained in this Section 8.15 shall survive the termination of this Agreement
and the payment of all other amounts owing hereunder.
SECTION 8.16 Guaranty. In order to induce the Lenders to make Loans
to the applicable Borrowing Subsidiaries, the Company hereby unconditionally
guarantees the Borrowing Subsidiary Obligations of all the Borrowing
Subsidiaries. The Company further agrees that the Borrowing Subsidiary
Obligations may be extended and renewed, in whole or in part, without notice to
or further assent from it, and that it will remain bound upon its agreement
hereunder notwithstanding any extension or renewal of any Borrowing Subsidiary
Obligation.
The Company waives promptness, diligence, presentment to, demand of
payment from and protest to the Borrowing Subsidiaries of any Borrowing
Subsidiary Obligations, and also waives notice of acceptance of its obligations
and notice of protest for nonpayment. The obligations of the Company hereunder
shall be absolute and unconditional and not be affected by (a) the failure of
any Lender or the Administrative Agents to assert any claim or demand or to
enforce any right or remedy against the Borrowing Subsidiaries under the
provisions of this Agreement or any of the other Loan Documents or otherwise;
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(b) any rescission, waiver, amendment or modification of any of the terms or
provisions of this Agreement, any other Loan Documents or any other agreement;
(c) the failure of any Lender to exercise any right or remedy against any
Borrowing Subsidiaries; (d) the invalidity or unenforceability of any Loan
Document or (e) any other circumstance which might otherwise constitute a
defense available to or discharge of the Borrower or a guarantor (other than
payment).
The Company further agrees that its agreement hereunder constitutes a
promise of payment when due and not of collection, and waives any right to
require that any resort be had by any Lender to any balance of any deposit
account or credit on the books of any Lender in favor of any Borrowing
Subsidiary or any other Person.
The obligations of the Company hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, and shall not
be subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever, by reason of the invalidity, illegality or unenforceability of the
Borrowing Subsidiary Obligations or otherwise. Without limiting the generality
of the foregoing, the obligations of the Company hereunder shall not be
discharged or impaired or otherwise affected by the failure of the
Administrative Agents or any Lender to assert any claim or demand or to enforce
any remedy under this Agreement or under any other Loan Document or any other
agreement, by any waiver or modification in respect of any thereof, by any
default, failure or delay, wilful or otherwise, in the performance of the
Borrowing Subsidiary Obligations, or by any other act or omission which may or
might in any manner or to any extent vary the risk of the Company or otherwise
operate as a discharge of the Company as a matter of law or equity.
The Company further agrees that its obligations hereunder shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of or interest on any Borrowing
Subsidiary Obligation is rescinded or must otherwise be restored by the
Administrative Agents or any Lender upon the bankruptcy or reorganization of any
of the Borrowing Subsidiaries or otherwise.
In furtherance of the foregoing and not in limitation of any other
right which the Administrative Agents or any Lender may have at law or in equity
against the Company by virtue hereof, upon the failure of any Borrowing
Subsidiary to pay any Borrowing Subsidiary Obligation when and as the same shall
become due, whether at maturity, by acceleration, after notice of prepayment or
otherwise, the Company hereby promises to and will, upon receipt of written
demand by Citibank, forthwith pay, or cause to be paid, in cash the amount of
such unpaid Borrowing Subsidiary Obligation. In the event that, by reason of
the bankruptcy of any Borrowing Subsidiary, (i) acceleration of Loans made to
such Borrowing Subsidiary is prevented and (ii) the Company shall not have
prepaid the outstanding Loans and other amounts due hereunder owed by such
Borrowing Subsidiary, the Company will forthwith purchase such Loans at a price
equal to the principal amount thereof plus accrued interest thereon and any
other amounts due hereunder with respect thereto. The Company further agrees
that if payment in respect of any Borrowing Subsidiary Obligation shall be due
in a currency other than Dollars and/or at a place of payment other than New
York and if, by reason of any Change in Law, disruption of currency or foreign
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exchange markets, war or civil disturbance or similar event, payment of such
Borrowing Subsidiary Obligation in such currency or such place of payment shall
be impossible or, in the judgment of any applicable Lender, not consistent with
the protection of its rights or interests, then, at the election of any
applicable Lender, the Company shall make payment of such Borrowing Subsidiary
Obligation in Dollars (based upon the applicable Exchange Rate in effect on the
date of payment) and/or in New York, and shall indemnify such Lender against any
losses or expenses that it shall sustain as a result of such alternative
payment.
Upon payment by the Company of any Borrowing Subsidiary Obligations,
each Lender shall, in a reasonable manner, assign the amount of the Borrowing
Subsidiary Obligations owed to it and paid by the Company pursuant to this
guarantee to the Company, such assignment to be pro tanto to the extent to which
the Borrowing Subsidiary Obligations in question were discharged by the Company,
or make such disposition thereof as the Company shall direct (all without
recourse to any Lender and without any representation or warranty by any Lender
except with respect to the amount of the Borrowing Subsidiary Obligations so
assigned).
Upon payment by the Company of any sums as provided above, all rights
of the Company against any Borrowing Subsidiary arising as a result thereof by
way of right of subrogation or otherwise shall in all respects be subordinated
and junior in right of payment to the prior indefeasible payment in full of all
the Borrowing Subsidiary Obligations to the Lenders.
SECTION 8.17 European Monetary Union. If, as a result of the
implementation of European monetary union, (a) any currency ceases to be lawful
currency of the nation issuing the same and is replaced by a European common
currency, then any amount payable hereunder by any party hereto in such currency
shall instead be payable in the European common currency and the amount so
payable shall be determined by translating the amount payable in such currency
to such European common currency at the exchange rate recognized by the European
Central Bank for the purpose of implementing European monetary union, or (b) any
currency and a European common currency are at the same time recognized by the
central bank or comparable authority of the nation issuing such currency as
lawful currency of such nation, then (i) any Loan made at such time shall be
made in such European common currency and (ii) any other amount payable by any
party hereto in such currency shall be payable in such currency or in such
European common currency (in an amount determined as set forth in clause (a)),
at the election of the obligor. Prior to the occurrence of the event or events
described in clause (a) or (b) of the preceding sentence, each amount payable
hereunder in any currency will continue to be payable only in that currency.
The Borrowers agree, at the request of the Required Lenders, at the time of or
at any time following the implementation of European monetary union, to enter
into an agreement amending this Agreement in such manner as the Required Lenders
shall reasonably request in order to avoid any unfair burden or disadvantage
resulting from the implementation of such monetary union and to place the
parties hereto in the position they would have been in had such monetary union
not been implemented, the intent being that neither party will be adversely
affected economically as a result of such implementation and that reasonable
provisions shall be adopted to govern the borrowing, maintenance and repayment
of Loans denominated in currencies other than Dollars after the occurrence of
the event or events described in clause (a) or (b) of the preceding sentence.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
BRISTOL-MYERS SQUIBB COMPANY,
By
Name:
Title:
By
Name:
Title:
THE CHASE MANHATTAN BANK, individually and
as Administrative Agent,
By
Name:
Title:
CITIBANK, N.A., individually and as Administrative
Agent and Advance Agent,
By
Name:
Title:
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SWISS BANK CORPORATION, Stamford branch, as a Lender
By: Title:
By: Title:
DRESDNER BANK AG, New York Branch and Grand Cayman Branch, as a Lender
By: Title:
By: Title:
BANCA MONTE DEI PASCHI DI SIENA S.p.A., as a Lender
By: Title:
BANCO SANTANDER S.A., New York branch, as a Lender
By: Title:
By: Title:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as a Lender
By: Title:
BANK OF TOKYO-MITSUBISHI TRUST COMPANY, as a Lender
By: Title:
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<PAGE>
<PAGE>
BANQUE NATIONALE DE PARIS, as a Lender
By: Title:
By: Title:
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as a Lender
By: Title:
ROYAL BANK OF CANADA, as a Lender
By: Title:
THE BANK OF NEW YORK, as a Lender
By: Title:
THE NORTHERN TRUST COMPANY, as a Lender
By: Title:
DEUTSCHE BANK AG, New York branch and/or Cayman Islands branch, as a Lender
By: Title:
By: Title:
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<PAGE>
WACHOVIA BANK, N.A., as a Lender
By: Title:
BANK OF MONTREAL, as a Lender
By: Title:
ING BANK N.V., as a Lender
By: Title:
E-2-65
BRISTOL-MYERS SQUIBB COMPANY
1997 STOCK INCENTIVE PLAN
(as amended and restated as of December 2, 1997)
1. Purpose: The purpose of the 1997 Stock Incentive Plan is to secure for
the Company and its stockholders the benefits of the incentive inherent in
common stock ownership by the officers and key employees of the Company and its
Subsidiaries and Affiliates who will be largely responsible for the Company's
future growth and continued financial success and by providing long-term
incentives in addition to current compensation to certain key executives of the
Company and its Subsidiaries and Affiliates who contribute significantly to the
long-term performance and growth of the Company and such Subsidiaries and
Affiliates. It is intended that the former purpose will be effected through the
granting of stock options, stock appreciation rights, dividend equivalents
and/or restricted stock under the Plan and that the latter purpose will be
effected through an award conditionally granting performance units or
performance shares under the Plan, either independently or in conjunction with
and related to a nonqualified stock option grant under the Plan.
2. Definitions: For purposes of this Plan:
(a) "Affiliate" shall mean any entity in which the Company has an
ownership interest of at least 20%.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" shall mean the Company's common stock (par value
$.10 per share).
(d) "Company" shall mean the Issuer (the Bristol-Myers Squibb
Company), its Subsidiaries and Affiliates.
(e) "Disability" or "Disabled" shall mean qualifying for and
receiving payments under a disability pay plan of the Company or any Subsidiary
or Affiliate.
(f) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(g) "Fair Market Value" shall mean the average of the high and low
sale prices of a share of Common Stock on the New York Stock Exchange,
Inc. composite tape on the date of measurement or on any date as determined by
the Committee and if there were no trades on such date, on the day on which a
trade occurred next preceding such date.
(h) "Issuer" shall mean the Bristol-Myers Squibb Company.
(i) "Prior Plan" shall mean the Bristol-Myers Squibb Company 1983
Stock Option Plan as amended and restated effective as of September 10, 1996.
(j) "Retirement" shall mean termination of the employment of an
employee with the Company or a Subsidiary or Affiliate on or after (i) the
employee's 65th birthday or (ii) the employee's 55th birthday if the employee
has completed 10 years of service with the Company, its Subsidiaries and/or its
Affiliates. For purposes of this Section 2(j) and all other purposes of this
Plan, Retirement shall also mean termination of employment of an employee with
the Company or a Subsidiary or Affiliate for any reason (other than the
employee's death, disability, resignation, willful misconduct or activity
deemed detrimental to the interests of the Company) where, on termination, the
employee's age plus years of service (rounded up to the next higher whole
number) equals at least 70 and the employee has completed 10 years of service
with the Company, its Subsidiaries and/or its Affiliates.
Furthermore, an employee who makes an election to retire under Article 19 of
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<PAGE
the Bristol-Myers Squibb Company Retirement Income Plan (the "Retirement Income
Plan") shall have any additional years of age and service which are credited
under Article 19 of the Retirement Income Plan taken into account when
determining such employee's age and service under this Section 2(j). Such
election shall be deemed a Retirement for purposes of this Section 2(j) and all
other purposes of this Plan.
(k) "Subsidiary" shall mean any corporation which at the time
qualifies as a subsidiary of the Company under the definition of "subsidiary
corporation" in Section 424 of the Code.
3. Amount of Stock: The amount of stock which may be made subject to
grants of options or awards of performance units under the Plan in calendar
year 1997 shall not exceed an amount equal to the amount of shares available
for, and not made subject to, grants of options or awards under the Prior Plan
as of February 28, 1997. With respect to each succeeding year, the amount of
stock which may be made subject to grants of options or awards of performance
units under the Plan shall not exceed an amount equal to (i) 0.9% of the
outstanding shares of the Company's Common Stock on January 1 of such year
plus, subject to this Section 3, (ii) in any year the number of shares equal to
the amount of shares that were available for grants and awards in the prior
year but were not made subject to a grant or award in such prior year and (iii)
the number of shares that were subject to options or awards granted hereunder
or under the Prior Plan, which options or awards terminated or expired in the
prior year without being exercised. No individual may be granted options or
awards under Sections 6, 7 or 8 in the aggregate, in respect of more than
1,500,000 shares of the Company's Common Stock in a calendar year; upon a
change in stock the maximum number of shares shall be adjusted in number and
kind pursuant to Section 10. Aggregate shares issued under performance share
awards made pursuant to Section 7 and restricted stock awards made pursuant to
Section 8 may not exceed 10,000,000 shares over the life of the Plan. Common
Stock issued hereunder may be authorized and reissued shares or issued shares
acquired by the Company or its Subsidiaries on the market or otherwise.
4. Administration: The Plan shall be administered under the supervision of
the Board of Directors of the Company which shall exercise its powers, to the
extent herein provided, through the agency of a Compensation and Management
Development Committee (the "Committee") which shall be appointed by the Board
of Directors of the Company. The Committee shall consist of not less than three
(3) members of the Board who meet the definition of "outside director" under
the provisions of Section 162(m) of the Code and the definition of
"non-employee directors" under the provisions of the Exchange Act or rules or
regulations promulgated thereunder. No member of the Committee shall have been
within one year prior to appointment to, or while serving on, the Committee
granted or awarded equity securities of the Company pursuant to this or any
other plan of the Company except to the extent that participation in any such
plan or receipt of any such grant or award would not adversely affect the
Committee member's status as a "non-employee director" or as an "outside
director".
The Committee, from time to time, may adopt rules and regulations
("Regulations") for carrying out the provisions and purposes of the Plan and
make such other determinations, not inconsistent with the terms of the Plan, as
the Committee shall deem appropriate. The interpretation and construction of
any provision of the Plan by the Committee shall, unless otherwise determined
by the Board of Directors, be final and conclusive.
The Committee shall maintain a written record of its proceedings. A majority of
the Committee shall constitute a quorum, and the acts of a majority of the
members present at any meeting at which a quorum is present, or acts
unanimously approved in writing, shall be the acts of the Committee.
5. Eligibility: Options and awards may be granted only to present or
future officers and key employees of the Company and its Subsidiaries and
Affiliates, including Subsidiaries and Affiliates which become such after the
adoption of the Plan. Any officer or key employee of the Company or of any such
Subsidiary or Affiliate shall be eligible to receive one or more options or
awards under the Plan. Any director who is not an officer or employee of the
Company or one of its Subsidiaries or Affiliates and any member of the
Committee, during the time of the member's service as such or thereafter, shall
be ineligible to receive an option or award under the Plan. The adoption of
this Plan shall not be deemed to give any officer or employee any right to an
award or to be granted an option to purchase Common Stock of the Company,
except to the extent and upon such terms and conditions as may be determined
by the Committee.
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<PAGE>
6. Stock Options: Stock options under the Plan shall consist of incentive
stock options under Section 422 of the Code or nonqualified stock options
(options not intended to qualify as incentive stock options), as the Committee
shall determine. In addition, the Committee may grant stock appreciation
rights in conjunction with an option, as set forth in Section 6(b)(11), or may
grant awards in conjunction with an option, as set forth in Section 6(b)(10)
(an "Associated Option").
Each option shall be subject to the following terms and conditions:
(a) Grant of Options. The Committee shall (1) select the officers and
key employees of the Company and its Subsidiaries and Affiliates to whom
options may from time to time be granted, (2) determine whether incentive stock
options or nonqualified stock options are to be granted, (3) determine the
number of shares to be covered by each option so granted, (4) determine the
terms and conditions (not inconsistent with the Plan) of any option granted
hereunder (including but not limited to restrictions upon the options,
conditions of their exercise, or on the shares of Common Stock issuable upon
exercise thereof), (5) determine whether nonqualified stock options or
incentive stock options granted under the Plan shall include stock appreciation
rights and, if so, shall determine the terms and conditions thereof in
accordance with Section 6(b)(11) hereof, (6) determine whether any nonqualified
stock options granted under the Plan shall be Associated Options, and (7)
prescribe the form of the instruments necessary or advisable in the
administration of options.
(b) Terms and Conditions of Option. Any option granted under the Plan
shall be evidenced by a Stock Option Agreement executed by the Company and the
optionee, in such form as the Committee shall approve, which agreement shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions not inconsistent with the Plan, and in the case of an
incentive stock option not inconsistent with the provisions of the Code
applicable to incentive stock options, as the Committee shall prescribe:
(1) Number of Shares Subject to an Option. The Stock Option
Agreement shall specify the number of shares of Common Stock subject to the
Agreement. If the option is an Associated Option, the number of shares of
Common Stock subject to such Associated Option shall initially be equal to the
number of performance units or performance shares subject to the award, but one
share of Common Stock shall be canceled for each performance unit or
performance share paid out under the award.
(2) Option Price. The purchase price per share of Common Stock
purchasable under an option will be determined by the Committee but will be not
less than the Fair Market Value of a share of Common Stock on the date of the
grant of such option.
(3) Option Period. The period of each option shall be fixed by
the Committee, but no option shall be exercisable after the expiration of ten
years from the date the option is granted.
(4) Consideration. Each optionee, as consideration for the grant
of an option, shall remain in the continuous employ of the Company or of one of
its Subsidiaries or Affiliates for at least one year from the date of the
granting of such option, and no option shall be exercisable until after the
completion of such one year period of employment by the optionee.
(5) Exercise of Option. An option may be exercised in whole or
in part from time to time during the option period (or, if determined by the
Committee, in specified installments during the option period) by giving
written notice of exercise to the Company specifying the number of shares to be
purchased, such notice to be accompanied by payment in full of the purchase
price and Withholding Taxes (as defined in Section 11 hereof), unless an
election to defer receipt of shares is made under Section 12, due either by
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<PAGE>
certified or bank check, or in shares of Common Stock of the Company owned by
the optionee having a Fair Market Value at the date of exercise equal to such
purchase price, or in a combination of the foregoing; provided, however, that
payment in shares of Common Stock of the Company will not be permitted unless
at least 100 shares of Common Stock are required and delivered for such
purpose. No shares shall be issued until full payment therefor has been made.
An optionee shall have the rights of a stockholder only with respect to shares
of stock for which certificates have been issued to the optionee.
(6) Nontransferability of Options. No option or stock
appreciation right granted under the Plan shall be transferable by the optionee
otherwise than by will or by the laws of descent and distribution, and such
option or stock appreciation right shall be exercisable, during the optionee's
lifetime, only by the optionee. Notwithstanding the foregoing, the Committee
may set forth in a Stock Option Agreement at the time of grant or thereafter,
that the options (other than Incentive Stock Options) may be transferred to
members of the optionee's immediate family, to trusts solely for the benefit of
such immediate family members and to partnerships in which such family members
and/or trusts are the only partners. For this purpose, immediate family means
the optionee's spouse, parents, children, stepchildren, grandchildren and legal
dependants. Any transfer of options made under this provision will not be
effective until notice of such transfer is delivered to the Company.
(7) Retirement and Termination of Employment Other than by Death
or Disability. If an optionee shall cease to be employed by the Company or any
of its Subsidiaries or Affiliates for any reason (other than termination of
employment by reason of death or Disability) after the optionee shall have been
continuously so employed for one year after the granting of the option, the
option shall be exercisable only to the extent that the optionee was otherwise
entitled to exercise it at the time of such cessation of employment with the
Company, Subsidiary or Affiliate, but in no event after the expiration of the
option period set forth therein except that in the case of cessation of
employment other than by reason of Retirement or death, the option shall in no
event be exercisable after the date three months next succeeding such cessation
of employment. The Plan does not confer upon any optionee any right with
respect to continuation of employment by the Company or any of its Subsidiaries
or Affiliates.
(8) Disability of Optionee. An optionee who ceases to be
employed by reason of Disability shall be treated as though the optionee
remained in the employ of the Company or a Subsidiary or Affiliate until the
earlier of (i) cessation of payments under a disability pay plan of the
Company, Subsidiary or Affiliate, (ii) the optionee's death, or (iii) the
optionee's 65th birthday.
(9) Death of Optionee. In the event of the death of the optionee
while in the employ of the Company or of any of its Subsidiaries or Affiliates
or within whichever period after Retirement or cessation of employment of the
optionee specified in subsection (7) or (8) is applicable, and provided the
optionee shall have been continuously so employed for one year after the
granting of the option, the option shall be exercisable by the executors,
administrators, legatees or distributees of the optionee's estate, as the case
may be, at any time following death but in no event after the expiration of the
option period set forth therein and only to the extent that the optionee would
otherwise have been entitled to exercise it if the optionee were then living,
except that in the case of the death of an optionee after Retirement or other
cessation of employment, the option shall in no event be exercisable after the
later of (i) the date twelve months next succeeding such death or (ii) the last
day of the period after Retirement or other cessation of employment of the
optionee specified in Section 6(b)(7). In the event any option is exercised by
the executors, administrators, legatees or distributees of the estate of a
deceased optionee, the Company shall be under no obligation to issue stock
thereunder unless and until the Company is satisfied that the person or persons
exercising the option are the duly appointed legal representatives of the
deceased optionee's estate or the proper legatees or distributees thereof.
(10) Long-Term Performance Awards. The Committee may from time
to time grant nonqualified stock options under the Plan in conjunction with and
related to an award of performance units or performance shares made under a
Long-Term Performance Award as set forth in Section 7(b)(11). In such event,
notwithstanding any other provision hereof, (i) the number of shares to which
the Associated Option applies shall initially be equal to the number of
performance units or performance shares granted by the award, but such number
of shares shall be reduced on a one-share-for-one unit or share basis to the
extent that the Committee determines pursuant to the terms of the award, to pay
to the optionee or the optionee's beneficiary the performance units or
performance shares granted pursuant to such award; and (ii) such Associated
Option shall be cancelable in the discretion of the Committee, without the
consent of the optionee, under the conditions and to the extent specified in
the award.
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(11) Stock Appreciation Rights. In the case of any option
granted under the Plan, either at the time of grant or by amendment of such
option at any time after such grant there may be included a stock appreciation
right which shall be subject to such terms and conditions, not inconsistent
with the Plan, as the Committee shall impose, including the following:
(A) A stock appreciation right shall be exercisable to the
extent, and only to the extent, that the option in which it is included is at
the time exercisable, and may be exercised within such period only at such time
or times as may be determined by the Committee;
(B) A stock appreciation right shall entitle the optionee
(or any person entitled to act under the provisions of subsection (9) hereof)
to surrender unexercised the option in which the stock appreciation right is
included (or any portion of such option) to the Company and to receive from the
Company in exchange therefor that number of shares having an aggregate value
equal to (or, in the discretion of the Committee, less than) the excess of the
value of one share (provided such value does not exceed such multiple of the
option price per share as may be specified by the Committee) over the option
price per share specified in such option times the number of shares called for
by the option, or portion thereof, which is so surrendered. The Committee shall
be entitled to cause the Company to settle its obligation, arising out of the
exercise of a stock appreciation right, by the payment of cash equal to the
aggregate value of the shares the Company would otherwise be obligated to
deliver or partly by the payment of cash and partly by the delivery of shares.
Any such election shall be made within 30 business days after the receipt by
the Committee of written notice of the exercise of the stock appreciation
right. The value of a share for this purpose shall be the Fair Market Value
thereof on the last business day preceding the date of the election to exercise
the stock appreciation right;
(C) No fractional shares shall be delivered under this
subsection (11) but in lieu thereof a cash adjustment shall be made;
(D) If a stock appreciation right included in an option is
exercised, such option shall be deemed to have been exercised to the extent of
the number of shares called for by the option or portion thereof which is
surrendered on exercise of the stock appreciation right and no new option may
be granted covering such shares under this Plan; and
(E) If an option which includes a stock appreciation right
is exercised, such stock appreciation right shall be deemed to have been
canceled to the extent of the number of shares called for by the option or
portion thereof is exercised and no new stock appreciation rights may be
granted covering such shares under this Plan.
(12) Incentive Stock Options. In the case of any incentive stock
option granted under the Plan, the aggregate Fair Market Value of the shares
of Common Stock of the Company (determined at the time of grant of each option)
with respect to which incentive stock options granted under the Plan and any
other plan of the Company or its parent or a Subsidiary which are exercisable
for the first time by an employee during any calendar year shall not exceed
$100,000 or such other amount as may be required by the Code. In any year, the
maximum number of shares with respect to which incentive stock options may be
granted shall not exceed 4,000,000 shares.
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(13) Rights of Transferee. Notwithstanding anything to the
contrary herein, if an option has been transferred in accordance with
Section 6(b)(6), the option shall be exercisable solely by the transferee. The
option shall remain subject to the provisions of the Plan, including that it
will be exercisable only to the extent that the optionee or optionee's estate
would have been entitled to exercise it if the optionee had not transferred the
option. In the event of the death of the optionee prior to the expiration of
the right to exercise the transferred option, the period during which the
option shall be exercisable will terminate on the date one year following the
date of the optionee's death. In the event of the death of the transferee
prior to the expiration of the right to exercise the option, the period during
which the option shall be exercisable by the executors, administrators,
legatees and distributees of the transferee's estate, as the case may be, will
terminate on the date one year following the date of the transferee's death.
In no event will be the option be exercisable after the expiration of the
option period set forth in the Stock Option Agreement. The option shall be
subject to such other rules as the Committee shall determine.
7. Long-term Performance Awards: Awards under the Plan shall consist of
the conditional grant to the participants of a specified number of performance
units or performance shares. The conditional grant of a performance unit to a
participant will entitle the participant to receive a specified dollar value,
variable under conditions specified in the award, if the performance objectives
specified in the award are achieved and the other terms and conditions thereof
are satisfied. The conditional grant of a performance share to a participant
will entitle the participant to receive a specified number of shares of Common
Stock of the Company, or the equivalent cash value, if the objective(s)
specified in the award are achieved and the other terms and conditions thereof
are satisfied.
Each award will be subject to the following terms and conditions:
(a) Grant of Awards. The Committee shall (1) select the officers and
key executives of the Company and its Subsidiaries and Affiliates to whom
awards may from time to time be granted, (2) determine the number of
performance units or performance shares covered by each award, (3) determine
the terms and conditions of each performance unit or performance share awarded
and the award period and performance objectives with respect to each award, (4)
determine the periods during which a participant may request the Committee to
approve deferred payment of a percentage (not less than 25%) of an award (the
"Deferred Portion") and the interest or rate of return thereon or the basis on
which such interest or rate of return thereon is to be determined, (5)
determine whether payment with respect to the portion of an award which has not
been deferred (the "Current Portion") and the payment with respect to the
Deferred Portion of an award shall be made entirely in cash, entirely in Common
Stock or partially in cash and partially in Common Stock, (6) determine whether
the award is to be made independently of or in conjunction with a nonqualified
stock option granted under the Plan, and (7) prescribe the form of the
instruments necessary or advisable in the administration of the awards.
(b) Terms and Conditions of Award. Any award conditionally granting
performance units or performance shares to a participant shall be evidenced by
a Performance Unit Agreement or Performance Share Agreement, as applicable,
executed by the Company and the participant, in such form as the Committee
shall approve, which Agreement shall contain in substance the following terms
and conditions applicable to the award and such additional terms and conditions
as the Committee shall prescribe:
(1) Number and Value of Performance Units. The Performance Unit
Agreement shall specify the number of performance units conditionally granted
to the participant. If the award has been made in conjunction with the grant of
an Associated Option, the number of performance units granted shall initially
be equal to the number of shares which the participant is granted the right to
purchase pursuant to the Associated Option, but one performance unit shall be
canceled for each share of the Company's Common Stock purchased upon exercise
of the Associated Option or for each stock appreciation right included in such
option that has been exercised. The Performance Unit Agreement shall specify
the threshold, target and maximum dollar values of each performance unit and
corresponding performance objectives as provided under Section 6(b)(5). No
payout under a performance unit award to an individual Participant may exceed
0.15% of the pre-tax earnings of the Company for the fiscal year which
coincides with the final year of the performance unit period.
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(2) Number and Value of Performance Shares. The Performance
Share Agreement shall specify the number of performance shares conditionally
granted to the participant. If the award has been made in conjunction with the
grant of an Associated Option, the number of performance shares granted shall
initially be equal to the number of shares which the participant is granted the
right to purchase pursuant to the Associated Option, but one performance share
shall be canceled for each share of the Company's Common Stock purchased upon
exercise of the Associated Option or for each stock appreciation right included
in such option that has been exercised. The Performance Share Agreement shall
specify that each Performance Share will have a value equal to one (1) share of
Common Stock of the Company.
(3) Award Periods. For each award, the Committee shall designate
an award period with a duration to be determined by the Committee in its
discretion but in no event less than three calendar years within which
specified performance objectives are to be attained. There may be several award
periods in existence at any one time and the duration of performance objectives
may differ from each other.
(4) Consideration. Each participant, as consideration for the
award of performance units or performance shares, shall remain in the
continuous employ of the Company or of one of its Subsidiaries or Affiliates
for at least one year after the date of the making of such award, and no award
shall be payable until after the completion of such one year of employment by
the participant.
(5) Performance Objectives. The Committee shall establish
performance objectives with respect to the Company for each award period on the
basis of such criteria and to accomplish such objectives as the Committee may
from time to time determine. Performance criteria for awards under the Plan may
include one or more of the following measures of the operating performance:
a. Earnings d. Financial return ratios
b. Revenue e. Total Shareholder Return
c. Operating or net cash flows f. Market share
The Committee shall establish the specific targets for the selected criteria.
These targets may be set at a specific level or may be expressed as relative to
the comparable measure at comparison companies or a defined index. These
targets may be based upon the total Company or upon a defined business unit
which the executive has responsibility for or influence over.
(6) Determination and Payment of Performance Units or
Performance Shares Earned. As soon as practicable after the end of an award
period, the Committee shall determine the extent to which awards have been
earned on the basis of the Company's actual performance in relation to the
established performance objectives as set forth in the Performance Unit
Agreement or Performance Share Agreement and certify these results in writing.
The Performance Unit Agreement or Performance Share Agreement shall specify
that as soon as practicable after the end of each award period, the Committee
shall determine whether the conditions of Sections 7(b)(4) and 7(b)(5) hereof
have been met and, if so, shall ascertain the amount payable or shares which
should be distributed to the participant in respect of the performance units or
performance shares. As promptly as practicable after it has determined that an
amount is payable or should be distributed in respect of an award, the
Committee shall cause the Current Portion of such award to be paid or
distributed to the participant or the participant's beneficiaries, as the case
may be, in the Committee's discretion, either entirely in cash, entirely in
Common Stock or partially in cash and partially in Common Stock. The Deferred
Portion of an award shall be contingently credited and payable to the
participant over a deferred period and shall be credited with interest, rate of
return, or other valuation as determined by the Committee. The Committee, in
its discretion, shall determine the conditions upon, and method of, payment of
such Deferred Portions and whether such payment will be made entirely in cash,
entirely in Common Stock or partially in cash and partially in Common Stock.
E-3-7
<PAGE>
In making the payment of an award in Common Stock hereunder, the cash
equivalent of such Common Stock shall be determined by the Fair Market Value of
the Common Stock on the day the Committee designates the performance units
shall be payable.
(7) Nontransferability of Awards and Designation of
Beneficiaries. No award under this Section of the Plan shall be transferable by
the participant other than by will or by the laws of descent and distribution,
except that a participant may designate a beneficiary pursuant to the
provisions hereof.
If any participant or the participant's beneficiary shall attempt to assign the
participant's rights under the Plan in violation of the provisions thereof, the
Company's obligation to make any further payments to such participant or the
participant's beneficiaries shall forthwith terminate.
A participant may name one or more beneficiaries to receive any payment of an
award to which the participant may be entitled under the Plan in the event of
the participant's death, on a form to be provided by the Committee. A
participant may change the participant's beneficiary designation from time to
time in the same manner.
If no designated beneficiary is living on the date on which any payment becomes
payable to a participant's beneficiary, or if no beneficiary has been specified
by the participant, such payment will be payable to the person or persons in
the first of the following classes of successive preference:
(i) Widow or widower, if then living,
(ii) Surviving children, equally,
(iii) Surviving parents, equally,
(iv) Surviving brothers and sisters, equally,
(v) Executors or administrators
and the term "beneficiary" as used in the Plan shall include such person or
persons.
(8) Retirement and Termination of Employment Other Than by Death
or Disability. In the event of the Retirement prior to the end of an award
period of a participant who has satisfied the one year employment requirement
of Section 7(b)(4) with respect to an award prior to Retirement, the
participant, or his estate, shall be entitled to a payment of such award at the
end of the award period, pursuant to the terms of the Plan and the
participant's Performance Unit Agreement or Performance Share Agreement,
provided, however, that the participant shall be deemed to have earned that
proportion (to the nearest whole unit or share) of the value of the performance
units or performance shares granted to the participant under such award as the
number of months of the award period which have elapsed since the first day of
the calendar year in which the award was made to the end of the month in which
the participant's Retirement occurs, bears to the total number of months in the
award period, subject to the attainment of performance objectives associated
with the award as certified by the Committee. The participant's right to
receive any remaining performance units or performance shares shall be canceled
and forfeited.
Subject to Section 7(b)(6) hereof, the Performance Unit Agreement or
Performance Share Agreement shall specify that the right to receive the
performance units or performance shares granted to such participant shall be
conditional and shall be canceled, forfeited and surrendered if the
participant's continuous employment with the Company and its Subsidiaries and
Affiliates shall terminate for any reason, other than the participant's death,
Disability or Retirement prior to the end of the award period.
E-3-8
<PAGE>
(9) Disability of Participant. For the purposes of any award a
participant who becomes Disabled shall be deemed to have suspended active
employment by reason of Disability commencing on the date the participant
becomes entitled to receive payments under a disability pay plan of the Company
or any Subsidiary or Affiliate and continuing until the date the participant is
no longer entitled to receive such payments. In the event a participant becomes
Disabled during an award period but only if the participant has satisfied the
one year employment requirement of Section 7(b)(4) with respect to an award
prior to becoming Disabled, upon the determination by the Committee of the
extent to which an award has been earned pursuant to Section 7(b)(6) the
participant shall be deemed to have earned that proportion (to the nearest
whole unit) of the value of the performance units granted to the participants
under such award as the number of months of the award period in which the
participant was not Disabled bears to the total number of months in the award
period subject to the attainment of the performance objectives associated with
the award as certified by the Committee. The participant's right to receive
any remaining performance units shall be canceled and forfeited.
(10) Death of Participant. In the event of the death prior to
the end of an award period of a participant who has satisfied the one year
employment requirement with respect to an award prior to the date of death, the
participant's beneficiaries or estate, as the case may be, shall be entitled to
a payment of such award upon the end of the award period, pursuant to the terms
of the Plan and the participant's Performance Unit Agreement or Performance
Share Agreement, provided, however, that the participant shall be deemed to
have earned that proportion (to the nearest whole unit or share) of the value
of the performance units or performance shares granted to the participant under
such award as the number of months of the award period which have elapsed since
the first day of the calendar year in which the award was made to the end of
the month in which the participant's death occurs, bears to the total number of
months in the award period. The participant's right to receive any remaining
performance units or performance shares shall be canceled and forfeited.
The Committee may, in its discretion, waive, in whole or in part, such
cancellation and forfeiture of any performance units or performance shares.
(11) Grant of Associated Option. If the Committee determines
that the conditional grant of performance units or performance shares under the
Plan is to be made to a participant in conjunction with the grant of a
nonqualified stock option under the Plan, the Committee shall grant the
participant an Associated Option under the Plan subject to the terms and
conditions of this subsection (11). In such event, such award under the Plan
shall be contingent upon the participant's being granted such an Associated
Option pursuant to which: (i) the number of shares the optionee may purchase
shall initially be equal to the number of performance units or performance
shares conditionally granted by the award, (ii) such number of shares shall be
reduced on a one-share-for-one-unit or share basis to the extent that the
Committee determines, pursuant to Section 7(b)(6) hereof, to pay to the
participant or the participant's beneficiaries the performance units or
performance shares conditionally granted pursuant to the award, and (iii) the
Associated Option shall be cancelable in the discretion of the Committee,
without the consent of the participant, under the conditions and to the extent
specified herein and in Section 7(b)(6) hereof.
If no amount is payable in respect of the conditionally granted performance
units or performance shares, the award and such performance units or
performance shares shall be deemed to have been canceled, forfeited and
surrendered, and the Associated Option, if any, shall continue in effect in
accordance with its terms. If any amount is payable in respect of the
performance units or performance shares and such units or shares were granted
in conjunction with an Associated Option, the Committee shall, within 30 days
after the determination of the Committee referred to in the first sentence of
Section 7(b)(6), determine, in its sole discretion, either:
(A) to cancel in full the Associated Option, in which event
the value of the performance units or performance shares payable pursuant to
Sections 7(b)(5) and (6) shall be paid or the performance shares shall be
distributed;
E-3-9
<PAGE>
(B) to cancel in full the performance units or performance
shares, in which event no amount shall be paid to the participant in respect
thereof and no shares shall be distributed but the Associated Option shall
continue in effect in accordance with its terms; or
(C) to cancel some, but not all, of the performance units
or performance shares, in which event the value of the performance units
payable pursuant to Sections 7(b)(5) and (6) which have not been canceled
shall be paid and/or the performance shares shall be distributed and the
Associated Option shall be canceled with respect to that number of shares equal
to the number of conditionally granted performance units or performance shares
that remain payable.
Any action taken by the Committee pursuant to the preceding sentence shall be
uniform with respect to all awards having the same award period. If the
Committee takes no such action, it shall be deemed to have determined to cancel
in full the award in accordance with clause (b) above.
8. Restricted Stock: Restricted stock awards under the Plan shall consist
of grants of shares of Common Stock of the Issuer subject to the terms and
conditions hereinafter provided.
(a) Grant of Awards: The Committee shall (i) select the officers and
key employees to whom Restricted Stock may from time to time be granted, (ii)
determine the number of shares to be covered by each award granted, (iii)
determine the terms and conditions (not inconsistent with the Plan) of any
award granted hereunder, and (iv) prescribe the form of the agreement, legend
or other instrument necessary or advisable in the administration of awards
under the Plan.
(b) Terms and Conditions of Awards: Any restricted stock award
granted under the Plan shall be evidenced by a Restricted Stock Agreement
executed by the Issuer and the recipient, in such form as the Committee shall
approve, which agreement shall be subject to the following terms and conditions
and shall contain such additional terms and conditions not inconsistent with
the Plan as the Committee shall prescribe:
(1) Number of Shares Subject to an Award: The Restricted Stock
Agreement shall specify the number of shares of Common Stock subject to the
Award.
(2) Restriction Period: The period of restriction applicable to
each Award shall be established by the Committee but may not be less than one
year. The Restriction Period applicable to each Award shall commence on the
Award Date.
(3) Consideration: Each recipient, as consideration for the
grant of an award, shall remain in the continuous employ of the Company for at
least one year from the date of the granting of such award, and any shares
covered by such an award shall lapse if the recipient does not remain in the
continuous employ of the Company for at least one year from the date of the
granting of the award.
(4) Restriction Criteria: The Committee shall establish the
criteria upon which the restriction period shall be based. Restrictions may be
based upon either the continued employment of the recipient or upon the
attainment by the Company of one or more of the following measures of the
operating performance:
a. Earnings d. Financial return ratios
b. Revenue e. Total Shareholder Return
c. Operating or net cash flows f. Market share
The Committee shall establish the specific targets for the selected criteria.
These targets may be set at a specific level or may be expressed as relative to
the comparable measure at comparison companies or a defined index. Performance
objectives may be established in combination with restrictions based upon the
continued employment of the recipient. These targets may be based upon the
total Company or upon a defined business unit which the executive has
responsibility for or influence over.
E-3-10
<PAGE>
In cases where objective performance criteria are established, the Committee
shall determine the extent to which the criteria have been achieved and the
corresponding level to which restrictions will be removed from the Award or the
extent to which a participant's right to receive an Award should be lapsed in
cases where the performance criteria have not been met and shall certify these
determinations in writing. The Committee may provide for the determination of
the attainment of such restrictions in installments where deemed appropriate.
(c) Terms and Conditions of Restrictions and Forfeitures: The shares
of Common Stock awarded pursuant to the Plan shall be subject to the following
restrictions and conditions:
(1) During the Restriction Period, the participant will not be
permitted to sell, transfer, pledge or assign Restricted Stock awarded under
this Plan.
(2) Except as provided in Section 8(c)(i), or as the Committee
may otherwise determine, the participant shall have all of the rights of a
stockholder of the Issuer, including the right to vote the shares and receive
dividends and other distributions provided that distributions in the form of
stock shall be subject to the same restrictions as the underlying Restricted
Stock.
(3) In the event of a participant's retirement, death or
disability prior to the end of the Restriction Period for a participant who has
satisfied the one year employment requirement of Section 7(c)(iii) with respect
to an award prior to Retirement, death or Disability, the participant, or
his/her estate, shall be entitled to receive that proportion (to the nearest
whole share) of the number of shares subject to the Award granted as the number
of months of the Restriction Period which have elapsed since the Award date to
the date at which the participant's retirement, death or disability occurs,
bears to the total number of months in the Restriction Period. The
participant's right to receive any remaining shares shall be canceled and
forfeited and the shares will be deemed to be reacquired by the Issuer.
(4) In the event of a participant's retirement, death,
disability or in cases of special circumstances as determined by the Committee,
the Committee may, in its sole discretion when it finds that such an action
would be in the best interests of the Company, accelerate or waive in whole or
in part any or all remaining time based restrictions with respect to all or
part of such participant's Restricted Stock.
(5) Upon termination of employment for any reason during the
restriction period, subject to the provisions of paragraph (iii) above or in
the event that the participant fails promptly to pay or make satisfactory
arrangements as to the withholding taxes as provided in the following
paragraph, all shares still subject to restriction shall be forfeited by the
participant and will be deemed to be reacquired by the Company.
(6) A participant may, at any time prior to the expiration of
the Restriction Period, waive all right to receive all or some of the shares of
a Restricted Stock Award by delivering to the Company a written notice of such
waiver.
(7) Notwithstanding the other provisions of this Section 7, the
Committee may adopt rules which would permit a gift by a participant of
restricted shares to members of his/her immediate family (spouse, parents,
children, stepchildren, grandchildren or legal dependants) or to a Trust whose
beneficiary or beneficiaries shall be either such a person or persons or the
participant.
(8) Any attempt to dispose of Restricted Stock in a manner
contrary to the restrictions shall be ineffective.
E-3-11
<PAGE>
9. Determination of Breach of Conditions: The determination of the
Committee as to whether an event has occurred resulting in a forfeiture or a
termination or reduction of the Company's obligations in accordance with the
provisions of the Plan shall be conclusive.
10. Adjustment in the Event of Change in Stock: In the event of changes in
the outstanding Common Stock of the Company by reason of stock dividends,
recapitalization, mergers, consolidations, split-ups, combinations or exchanges
of shares and the like, the aggregate number and class of shares available
under the Plan, and the number, class and the price of shares subject to
outstanding options and/or awards and the number of performance units and/or
the dollar value of each unit shall be appropriately adjusted by the Committee,
whose determination shall be conclusive.
11. Taxes: Each participant shall, no later than the Tax Date (as defined
below), pay to the Company, or make arrangements satisfactory to the Committee
regarding payment of, any Withholding Tax (as defined below) with respect to an
Option or Award, and the Company shall, to the extent permitted by law, have
the right to deduct such amount from any payment of any kind otherwise due to
the participant. The Company shall also have the right to retain or sell
without notice, or to demand surrender of, shares of Common Stock in value
sufficient to cover the amount of any Withholding Tax (that is that portion of
any Applicable Tax, as defined below, required by any governmental entity to be
withheld or otherwise deducted and paid with respect to such Award), and to
make payment (or to reimburse itself for payment made) to the appropriate
taxing authority of an amount in cash equal to the amount of such Withholding
Tax, remitting any balance to the participant. For purposes of the paragraph,
the value of shares of Common Stock so retained or surrendered shall be the
average of the high and low sales prices per share on the New York Stock
Exchange composite tape on the date that the amount of the Withholding Tax is
to be determined (the "Tax Date") and the value of shares of Common Stock so
sold shall be the actual net sale price per share (after deduction of
commissions) received by the Company. Notwithstanding the foregoing, if the
stock options have been transferred, the optionee shall provide the Company
with funds sufficient to pay such Withholding Tax or Applicable Tax.
Furthermore, if such optionee does not satisfy his tax payment obligation and
the stock options have been transferred, the transferee may provide the funds
sufficient to enable the Company to pay such taxes. However, if the stock
options have been transferred, the Company shall have no right to retain or
sell without notice, or to demand surrender from the transferee of, shares of
Common Stock in order to pay such Withholding Tax or Applicable Tax.
Notwithstanding the foregoing, the participant shall be entitled to satisfy the
obligation to pay any Withholding Tax or to satisfy the obligation to pay any
tax to any governmental entity in respect of such Award, including any Federal,
state or local income tax up to an amount determined on the basis of the
highest marginal tax rate applicable to such participant, Federal Insurance
Contribution Act taxes or other governmental impost or levy (an "Applicable
Tax"), in whole or in part, by providing the Company with funds sufficient to
enable the Company to pay such Withholding Tax or Applicable Tax or by
requiring the Company to retain or to accept upon delivery thereof by the
participant shares of Common Stock having a Fair Market Value sufficient to
cover the amount of such Withholding Tax or Applicable Tax or in a greater
amount as deemed appropriate by the Company. Each election by a participant to
have shares retained or to deliver shares for this purpose shall be subject to
the following restrictions: (i) the election must be in writing and be made on
or prior to the Tax Date; (ii) the election must be irrevocable; (iii) the
election shall be subject to the disapproval of the Committee.
12. Deferral Election: Notwithstanding the provisions of Section 11, any
optionee or participant may elect, with the concurrence of the Committee and
consistent with any rules and regulations established by the Committee, to
defer the delivery of the proceeds of the exercise of any stock option not
transferred under the provisions of Section 6(b)(6) or stock appreciation
rights.
E-3-12
<PAGE>
(a) Election Timing: The election to defer the delivery of the
proceeds from any eligible award must be made at least six months prior to the
date such award is exercised or at such other time as the Committee may
specify. Deferrals will only be allowed for exercises which occur while the
optionee or participant is an active employee of the Company. Any election to
defer the delivery of proceeds from an eligible award shall be irrevocable as
long as the optionee or participant remains an employee of the Company.
(b) Stock Option Deferral: The deferral of the proceeds of stock
options may be elected by an optionee subject to the Regulations established by
the Committee. The proceeds from such an exercise shall be credited to the
optionee's deferred stock option account as the number of deferred share units
equivalent in value to those proceeds. Deferred share units shall be valued at
the Fair Market Value on the date of exercise. Subsequent to exercise, the
deferred share units shall be valued at the Fair Market Value of Common Stock
of the Company. Deferred share units shall accrue dividends at the rate paid
upon the Company's Common Stock credited in the form of additional deferred
share units. Deferred share units shall be distributed in shares of Company
Stock upon the termination of employment of the participant or at such other
date as may be approved by the Committee over a period of no more than 10
years.
(c) Stock Appreciation Right Deferral: Upon such exercise, the
Company will credit the optionee's deferred stock option account with the
number of deferred share units equivalent in value to the difference between
the Fair Market Value of a share of Common Stock on the exercise date and the
exercise price of the Stock Appreciation Right multiplied by the number of
shares exercised. Deferred share units shall be valued at the Fair Market Value
on the date of exercise. Subsequent to exercise, the deferred share units
shall be valued at the Fair Market Value of Common Stock of the Company.
Deferred share units shall accrue dividends at the rate paid upon the
Company's Common Stock credited in the form of additional deferred share units.
Deferred share units shall be distributed in shares of Common Stock upon the
termination of employment of the participant or at such other date as may be
approved by the Committee over a period of no more than 10 years.
(d) Accelerated Distributions: The Committee may, at its sole
discretion, allow for the early payment of an optionee's or participant's
deferred share units account in the event of an "unforeseeable emergency" or in
the event of the death or disability of the optionee or participant. An
"unforeseeable emergency" is defined as an unanticipated emergency caused by an
event beyond the control of the optionee or participant that would result in
severe financial hardship if the distribution were not permitted. Such
distributions shall be limited to the amount necessary to sufficiently address
the financial hardship. Any distributions under this provision shall be
consistent with the Regulations established under the Code. Additionally, the
Committee may use its discretion to cause deferred share unit accounts to be
distributed when continuing the Program is no longer in the best interest of
the Company.
(e) Assignability: No rights to deferred share unit accounts may be
assigned or subject to any encumbrance, pledge or charge of any nature except
that an optionee or participant may designate a beneficiary pursuant to any
rules established by the Committee.
13. Amendment of the Plan: The Board of Directors may amend or suspend the
Plan at any time and from time to time. No such amendment of the Plan may,
however, increase the maximum number of shares to be offered under options or
awards, or change the manner of determining the option price, or change the
designation of employees or class of employees eligible to receive options or
awards, or permit the transfer or issue of stock before payment therefor in
full, or, without the written consent of the optionee or participant, alter or
impair any option or award previously granted under the Plan or Prior Plan.
Notwithstanding the foregoing, if an option has been transferred in accordance
with Section 6(b)(6), written consent of the transferee (and not the optionee)
shall be necessary to alter or impair any option or award previously granted
under the Plan.
E-3-13
<PAGE>
14. Miscellaneous:
(a) By accepting any benefits under the Plan, each optionee or
participant and each person claiming under or through such optionee or
participant shall be conclusively deemed to have indicated acceptance and
ratification of, and consent to, any action taken or made to be taken or made
under the Plan by the Company, the Board, the Committee or any other Committee
appointed by the Board.
(b) No participant or any person claiming under or through him shall
have any right or interest, whether vested or otherwise, in the Plan or in any
option, or stock appreciation right or award thereunder, contingent or
otherwise, unless and until all of the terms, conditions and provisions of the
Plan and the Agreement that affect such participant or such other person shall
have been complied with.
(c) Nothing contained in the Plan or in any Agreement shall require
the Company to segregate or earmark any cash or other property.
(d) Neither the adoption of the Plan nor its operation shall in any
way affect the rights and powers of the Company or any of its Subsidiaries or
Affiliates to dismiss and/or discharge any employee at any time.
(e) Notwithstanding anything to the contrary in the Plan, neither the
Board nor the Committee shall have any authority to take any action under the
Plan where such action would affect the Company's ability to account for any
business combination as a "pooling of interests."
15. Term of the Plan: The Plan, if approved by stockholders, will be
effective May 6, 1997. The Plan shall expire on May 31, 2002 unless suspended
or discontinued by action of the Board of Directors. The expiration of the
Plan, however, shall not affect the rights of Optionees under options
theretofore granted to them or the rights of participants under awards
theretofore granted to them, and all unexpired options and awards shall
continue in force and operation after termination of the Plan except as they
may lapse or be terminated by their own terms and conditions.
E-3-14
BRISTOL-MYERS SQUIBB COMPANY
1983 STOCK OPTION PLAN
(as amended and restated effective as of January 1, 1997)
1. Purpose: The purpose of the 1983 Stock Option Plan (as amended and
restated effective as of January 1, 1997) (the "Plan") is to secure for the
Company and its stockholders the benefits of the incentive inherent in common
stock ownership by the officers and key employees of the Company and its
Subsidiaries and Affiliates who will be largely responsible for the Company's
future growth and continued financial success and by providing long-term
incentives in addition to current compensation to certain key executives of
the Company and its Subsidiaries and Affiliates who contribute significantly
to the long-term performance and growth of the Company and such Subsidiaries
and Affiliates. It is intended that the former purpose will be effected
through the grant of stock options and stock appreciation rights under the
Plan and that the latter purpose will be effected through an award
conditionally granting performance units under the Plan, either independently
or in conjunction with and related to a nonqualified stock option grant under
the Plan. The Bristol-Myers Squibb Company Long-Term Performance Award Plan
(as amended to January 17, 1983 and in effect as of December 31, 1992)
("LTPAP") has been merged into and consolidated with the Plan as of
January 1, 1993. As used herein, the term "Prior Plan" shall mean the
Bristol-Myers Squibb Company 1983 Stock Option Plan (as amended through
May 1, 1991 and in effect as of December 31, 1992) prior to its amendment
and restatement as of January 1, 1993.
2. Definitions: For purposes of this Plan:
(a) "Affiliate" shall mean any entity in which the Company has an
ownership interest of at least 20%.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" shall mean the Company's common stock (par value
$.10 per share).
(d) "Company" shall mean Bristol-Myers Squibb Company.
(e) "Disability" or "Disabled" shall mean qualifying for and receiving
payments under a disability pay plan of the Company or any Subsidiary or
Affiliate.
(f) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(g) "Fair Market Value" shall mean the average of the high and low sale
prices of a share of Common Stock on the New York Stock Exchange, Inc.
composite tape on the date of measurement or on any date as determined by
the Committee and if there were no trades on such date, on the day on which a
trade occurred next preceding such date.
(h) "Retirement" shall mean termination of the employment of an
employee with the Company or a Subsidiary or Affiliate on or after (i) the
employee's 65 th birthday or (ii) the employee's 55th birthday if the employee
has completed 10 years of service with the Company, its Subsidiaries and/or
its Affiliates. For purposes of this Section 2(h) and all other purposes of
this Plan, Retirement shall also mean termination of employment of an employee
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<PAGE>
with the Company or a Subsidiary or Affiliate for any reason (other than the
employee's death, disability, resignation, willful misconduct or activity
deemed detrimental to the interests of the Company) where, on termination,
the employee's age plus years of service (rounded up to the next higher
whole number) equals at least 70 and the employee has completed 10 years of
service with the Company, its Subsidiaries and/or its Affiliates.
Furthermore, an employee who makes an election to retire under Article 19
of the Bristol-Myers Squibb Company Retirement Income Plan (the "Retirement
Income Plan") shall have any additional years of age and service which are
credited under Article 19 of the Retirement Income Plan taken into account
when determining such employee's age and service under this Section 2(h).
Such election shall be deemed a Retirement for purposes of this Section 2(h)
and all other purposes of this Plan.
(i) "Subsidiary" shall mean any corporation which at the time
qualifies as a subsidiary of the Company under the definition of "subsidiary
corporation" in Section 424 of the Code.
3. Amount of Stock: The amount of stock which may be made subject to
grants of options or awards of performance units under the Plan in calendar
year 1993 shall not exceed an amount equal to (i) 0.9% of the outstanding
shares of the Company's Common Stock on January 1, 1993, plus (ii) the amount
of shares available for, and not made subject to, grants of options under
the Prior Plan as of January 1, 1993, less (iii) the number of shares subject
to options granted in 1993 under the Prior Plan and (iv) the number of shares
corresponding to awards of performance units outstanding under the LTPAP on
the date the Plan is approved by the stockholders of the Company. With
respect to each succeeding year, the amount of stock which may be made subject
to grants of options or awards of performance units under the Plan shall not
exceed an amount equal to (i) 0.9% of the outstanding shares of the Company's
Common Stock on January 1 of such year plus, subject to this Section 3,
(ii) in any year the number of shares equal to the amount of shares that were
available for grants and awards in the prior year but were not made subject
to a grant or award in such prior year and (iii) the number of shares that
were subject to options or awards granted hereunder or under the Prior Plan,
which options or awards terminated or expired in the prior year without being
exercised. Common Stock issued hereunder may be authorized and reissued
shares or issued shares acquired by the Company or its Subsidiaries on the
market or otherwise.
4. Administration: The Plan shall be administered under the supervision
of the Board of Directors of the Company which shall exercise its powers, to
the extent herein provided, through the agency of a Compensation and Management
Development Committee (the "Committee") which shall be appointed by the Board
of Directors of the Company and shall consist of not less than three directors
who shall serve at the pleasure of the Board. No member of the Committee
shall have been within one year prior to appointment to, or while serving on,
the Committee granted or awarded equity securities of the Company pursuant to
this or any other plan of the Company or its Subsidiaries or Affiliates except
to the extent that participation in any such plan or receipt of any such grant
or award would not adversely affect the Committee member's status as a
non-employee director for purposes of Rule 16b-3 under the Exchange Act.
The Committee, from time to time, may adopt rules and regulations for
carrying out the provisions and purposes of the Plan and make such other
determinations, not inconsistent with the terms of the Plan, as the Committee
shall deem appropriate. The interpretation and construction of any provision
of the Plan by the Committee shall, unless otherwise determined by the Board
of Directors, be final and conclusive.
The Committee shall maintain a written record of its proceedings. A
majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present,
or acts unanimously approved in writing, shall be the acts of the Committee.
5. Eligibility: Options and awards may be granted only to present or
future officers and key employees of the Company and its Subsidiaries and
Affiliates, including Subsidiaries and Affiliates which become such after
the adoption of the Plan. Any officer or key employee of the Company or of
any such Subsidiary or Affiliate shall be eligible to receive one or more
options or awards under the Plan. Any director who is not an officer or
employee of the Company or one of its Subsidiaries or Affiliates and any
member of the Committee, during the time of the member's service as such or
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<PAGE>
thereafter, shall be ineligible to receive an option or award under the Plan.
The adoption of this Plan shall not be deemed to give any officer or employee
any right to an award or to be granted an option to purchase Common Stock of
the Company, except to the extent and upon such terms and conditions as may be
determined by the Committee.
6. Stock Options: Stock options under the Plan shall consist of
incentive stock options under Section 422 of the Code or nonqualified stock
options (options not intended to qualify as incentive stock options), as the
Committee shall determine. In addition, the Committee may grant stock
appreciation rights in conjunction with an option, as set forth in Section
6(b)(11), or may grant awards in conjunction with an option, as set forth in
Section 6(b)(10) (an "Associated Option").
Each option shall be subject to the following terms and conditions:
(a) Grant of Options. The Committee shall (1) select the officers and
key employees of the Company and its Subsidiaries and Affiliates to whom
options may from time to time be granted, (2) determine whether incentive
stock options or nonqualified stock options, are to be granted, (3) determine
the number of shares to be covered by each option so granted, (4) determine
the terms and conditions (not inconsistent with the Plan) of any option
granted hereunder (including but not limited to restrictions upon the options,
conditions of their exercise, or on the shares of Common Stock issuable upon
exercise thereof), (5) determine whether nonqualified stock options or
incentive stock options granted under the Plan shall include stock
appreciation rights and, if so, shall determine the terms and conditions
thereof in accordance with Section 6(b)(11) hereof, (6) determine whether
any nonqualified stock options granted under the Plan shall be Associated
Options, and (7) prescribe the form of the instruments necessary or advisable
in the administration of options.
(b) Terms and Conditions of Option. Any option granted under the Plan
shall be evidenced by a Stock Option Agreement executed by the Company and
the optionee, in such form as the Committee shall approve, which agreement
shall be subject to the following terms and conditions and shall contain such
additional terms and conditions not inconsistent with the Plan, and in the
case of an incentive stock option not inconsistent with the provisions of the
Code applicable to incentive stock options, as the Committee shall prescribe:
(1) Number of Shares Subject to an Option. The Stock Option
Agreement shall specify the number of shares of Common Stock subject to
the Agreement. If the option is an Associated Option, the number of shares
of Common Stock subject to such Associated Option shall initially be equal
to the number of performance units subject to the award, but one share of
Common Stock shall be canceled for each performance unit paid out under the
award.
(2) Option Price. The purchase price per share of Common Stock
purchasable under an option will be determined by the Committee but will be
not less than the Fair Market Value of a share of Common Stock on the date of
the grant of such option.
(3) Option Period. The period of each option shall be fixed by the
Committee, but no option shall be exercisable after the expiration of ten
years from the date the option is granted.
(4) Consideration. Each optionee, as consideration for the grant of
an option, shall remain in the continuous employ of the Company or of one of
its Subsidiaries or Affiliates for at least one year from the date of the
granting of such option, and no option shall be exercisable until after the
completion of such one year period of employment by the optionee.
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<PAGE>
(5) Exercise of Option. An option may be exercised in whole or in
part from time to time during the option period (or, if determined by the
Committee, in specified installments during the option period) by giving
written notice of exercise to the Company specifying the number of shares to
be purchased, such notice to be accompanied by payment in full of the purchase
price and Withholding Taxes (as defined in Section 10 hereof) due either by
certified or bank check, or in shares of Common Stock of the Company owned by
the optionee having a Fair Market Value at the date of exercise equal to such
purchase price and Withholding Taxes due, or in a combination of the foregoing;
provided, however, that payment in shares of Common Stock of the Company will
not be permitted unless at least 100 shares of Common Stock are required and
delivered for such purpose. No shares shall be issued until full payment
therefor has been made. An optionee shall have the rights of a stockholder
only with respect to shares of stock for which certificates have been issued
to the optionee.
(6) Nontransferability of Options. No option or stock appreciation
right granted under the Plan shall be transferable by the optionee otherwise
than by will or by the laws of descent and distribution, and such option or
stock appreciation right shall be exercisable, during the optionee's lifetime,
only by the optionee. Notwithstanding the foregoing, the Committee may set
forth in a Stock Option Agreement at the time of grant or thereafter, that the
options may be transferred to members of the optionee's immediate family, to
trusts solely for the benefit of such immediate family members and to
partnerships in which such family members and/or trusts are the only partners.
For this purpose, immediate family members means the optionee's spouse,
parents, children, stepchildren, grandchildren and legal dependents. Any
transfer of options made under this provision will not be effective until
notice of such transfer is delivered to the Company.
(7) Retirement and Termination of Employment Other than by Death or
Disability. If an optionee shall cease to be employed by the Company or any
of its Subsidiaries or Affiliates for any reason (other than termination of
employment by reason of death or Disability) after the optionee shall have
been continuously so employed for one year after the granting of the option,
the option shall be exercisable only to the extent that the optionee was
otherwise entitled to exercise it at the time of such cessation of employment
with the Company, Subsidiary or Affiliate, but in no event after the
expiration of the option period set forth therein except that in the case of
cessation of employment other than by reason of Retirement or death, the option
shall in no event be exercisable after the date three months next succeeding
such cessation of employment. The Plan does not confer upon any optionee any
right with respect to continuation of employment by the Company or any of its
Subsidiaries or Affiliates.
(8) Disability of Optionee. An optionee who ceases to be employed
by reason of Disability shall be treated as though the optionee remained in
the employ of the Company or a Subsidiary or Affiliate until the earlier of
(i) cessation of payments under a disability pay plan of the Company,
Subsidiary or Affiliate, (ii) the optionee's death, or (iii) the optionee's
65th birthday.
(9) Death of Optionee. In the event of the death of the optionee
while in the employ of the Company or of any of its Subsidiaries or Affiliates
or within whichever period after Retirement or cessation of employment of the
optionee specified in subsection (7) or (8) is applicable, and provided the
optionee shall have been continuously so employed for one year after the
granting of the option, the option shall be exercisable by the executors,
administrators, legatees or distributees of the optionee's estate, as the case
may be, at any time following death but in no event after the expiration of
the option period set forth therein and only to the extent that the optionee
would otherwise have been entitled to exercise it if the optionee were then
living, except that in the case of the death of an optionee after Retirement
or other cessation of employment, the option shall in no event be exercisable
after the later of (i) the date twelve months next succeeding such death or
(ii) the last day of the period after Retirement or other cessation of
employment of the optionee specified in Section 6(b)(7). In the event any
option is exercised by the executors, administrators, legatees or distributees
of the estate of a deceased optionee, the Company shall be under no obligation
to issue stock thereunder unless and until the Company is satisfied that the
person or persons exercising the option are the duly appointed legal
representatives of the deceased optionee's estate or the proper legatees or
distributees thereof.
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<PAGE>
(10) Long Term Performance Awards. The Committee may from time to
time grant nonqualified stock options under the Plan in conjunction with and
related to an award of performance units made under a Long Term Performance
Award as set forth in Section 7(b)(11). In such event, notwithstanding any
other provision hereof, (i) the number of shares to which the Associated
Option applies shall initially be equal to the number of performance units
granted by the award, but such number of shares shall be reduced on a one
share-for-one unit basis to the extent that the Committee determines pursuant
to the terms of the award, to pay to the optionee or the optionee's
beneficiary the performance units granted pursuant to such award; and
(ii) such Associated Option shall be cancelable in the discretion of the
Committee, without the consent of the optionee, under the conditions and to
the extent specified in the award.
(11) Stock Appreciation Rights. In the case of any option granted
under the Plan, either at the time of grant or by amendment of such option at
any time after such grant there may be included a stock appreciation right
which shall be subject to such terms and conditions, not inconsistent with the
Plan, as the Committee shall impose, including the following:
(A) A stock appreciation right shall be exercisable to the
extent, and only to the extent, that the option in which it is included is at
the time exercisable, and may be exercised within such period only at such
time or times as may be determined by the Committee;
(B) A stock appreciation right shall entitle the optionee (or
any person entitled to act under the provisions of subsection (9) hereof) to
surrender unexercised the option in which the stock appreciation right is
included (or any portion of such option) to the Company and to receive from
the Company in exchange therefor that number of shares having an aggregate
value equal to (or, in the discretion of the Committee, less than) the excess
of the value of one share (provided such value does not exceed such multiple
of the option price per share as may be specified by the Committee) over the
option price per share specified in such option times the number of shares
called for by the option, or portion thereof, which is so surrendered. The
Committee shall be entitled to cause the Company to settle its obligation,
arising out of the exercise of a stock appreciation right, by the payment of
cash equal to the aggregate value of the shares the Company would otherwise be
obligated to deliver or partly by the payment of cash and partly by the
delivery of shares. Any such election shall be made within 30 business days
after the receipt by the Committee of written notice of the exercise of the
stock appreciation right. The value of a share for this purpose shall be the
Fair Market Value thereof on the last business day preceding the date of the
election to exercise the stock appreciation right;
(C) No fractional shares shall be delivered under this
subsection (11) but in lieu thereof a cash adjustment shall be made;
(D) If a stock appreciation right included in an option is
exercised, such option shall be deemed to have been exercised to the extent
of the number of shares called for by the option or portion thereof which is
surrendered on exercise of the stock appreciation right and no new option may
be granted covering such shares under this Plan; and
(E) If an option which includes a stock appreciation right is
exercised, such stock appreciation right shall be deemed to have been canceled
to the extent of the number of shares called for by the option or portion
thereof is exercised and no new stock appreciation rights may be granted
covering such shares under this Plan.
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<PAGE>
(12) Incentive Stock Options. In the case of any incentive stock
option granted under the Plan, the aggregate Fair Market Value of the shares
of Common Stock of the Company (determined at the time of grant of each
option) with respect to which incentive stock options granted under the Plan
and any other plan of the Company or its parent or a Subsidiary which are
exercisable for the first time by an employee during any calendar year shall
not exceed $100,000 or such other amount as may be required by the Code. In
any year, the maximum number of shares with respect to which incentive stock
options may be granted shall not exceed 4,000,000 shares.
(13) Rights of Transferee. Notwithstanding anything to the contrary
herein, if an option has been transferred in accordance with Section 6(b)(6),
the option shall be exercisable solely by the transferee. The option shall
remain subject to the provisions of the Plan, including that it will be
exercisable only to the extent that the optionee or optionee's estate would
have been entitled to exercise it if the optionee had not transferred the
option. In the event of the death of the optionee prior to the expiration of
the right to exercise the transferred option, the period during which the
option shall be exercisable will terminate on the date one year following the
date of the optionee's death. In the event of the death of the transferee
prior to the expiration of the right to exercise the option, the period during
which the option shall be exercisable by the executors, administrators,
legatees and distributees of the transferee's estate, as the case may be, will
terminate on the date one year following the date of the transferee's death.
In no event will the option be exercisable after the expiration of the option
period set forth in the Stock Option Agreement. The option shall be subject
to such other rules as the Committee shall determine.
7. Long-term Performance Awards: Awards under the Plan shall consist of
the conditional grant to the participants of a specified number of
performance units. The conditional grant of a performance unit to a
participant will entitle the participant to receive a specified dollar value,
variable under conditions specified in the award, if the performance objectives
specified in the award are achieved and the other terms and conditions thereof
are satisfied.
Each award will be subject to the following terms and conditions:
(a) Grant of Awards. The Committee shall (1) select the officers and key
executives of the Company and its Subsidiaries and Affiliates to whom awards
may from time to time be granted, (2) determine the number of performance
units covered by each award, (3) determine the terms and conditions of each
performance unit awarded and the award period and performance objectives with
respect to each award, (4) determine the periods during which a participant
may request the Committee to approve deferred payment of a percentage (50% or
100%) of an award (the "Deferred Portion") and the interest or rate of return
thereon or the basis on which such interest or rate of return thereon is to
be determined, (5) determine whether payment with respect to the portion of an
award which has not been deferred (the "Current Portion") and the payment with
respect to the Deferred Portion of an award shall be made entirely in cash,
entirely in Common Stock or partially in cash and partially in Common Stock,
(6) determine whether the award is to be made independently of or in
conjunction with a nonqualified stock option granted under the Plan, and (7)
prescribe the form of the instruments necessary or advisable in the
administration of the awards.
(b) Terms and Conditions of Award. Any award conditionally granting
performance units to a participant shall be evidenced by a Performance Unit
Agreement executed by the Company and the participant, in such form as the
Committee shall approve, which Agreement shall contain in substance the
following terms and conditions and such additional terms and conditions as the
Committee shall prescribe:
(1) Number of Performance Units. The Performance Unit Agreement
shall specify the number of performance units conditionally granted to the
participant. If the award has been made in conjunction with the grant of an
Associated Option, the number of performance units granted shall initially be
equal to the number of shares which the participant is granted the right to
purchase pursuant to the Associated Option, but one performance unit shall be
canceled for each share of the Company's Common Stock purchased upon exercise
of the Associated Option or for each stock appreciation right included in such
option that has been exercised.
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<PAGE>
(2) Value of Performance Units. The Performance Unit Agreement
shall specify the threshold, target and maximum dollar values of each
performance unit and corresponding performance objectives as provided under
Section 7(b)(5).
(3) Award Periods. For each award, the Committee shall designate
an award period with a duration to be determined by the Committee in its
discretion but in no event less than three calendar years within which
specified performance objectives are to be attained. There may be several
award periods in existence at any one time and the duration of performance
objectives may differ from each other.
(4) Consideration. Each participant, as consideration for the award
of performance units, shall remain in the continuous employ of the Company or
of one of its Subsidiaries or Affiliates for at least one year after the date
of the making of such award, and no award shall be payable until after the
completion of such one year of employment by the participant.
(5) Performance Objectives. The Committee shall establish
performance objectives with respect to the Company for each award period on the
basis of such criteria and to accomplish such objectives as the Committee may
from time to time determine. Performance objectives may include objective and
subjective criteria. During any award period, the Committee may adjust the
performance objectives for such award period as it deems equitable in
recognition of unusual or nonrecurring events affecting the Company, changes
in applicable tax laws or accounting principles, or such other factors as the
Committee may determine.
(6) Determination and Payment of Performance Units Earned. As soon
as practicable after the end of an award period, the Committee shall determine
the extent to which awards have been earned on the basis of the Company's
actual performance in relation to the established performance objectives as
set forth in the Performance Unit Agreement. The Performance Unit Agreement
shall specify that as soon as practicable after the end of each award period,
the Committee shall determine whether the conditions of Sections 7(b)(4) and
7(b)(5) hereof have been met and, if so, shall ascertain the amount payable to
the participant in respect of the performance units. As promptly as
practicable after it has determined that an amount is payable in respect of an
award, the Committee shall cause the Current Portion of such award to be paid
to the participant or the participant's beneficiaries, as the case may be, in
the Committee's discretion, either entirely in cash, entirely in Common Stock
or partially in cash and partially in Common Stock. The Deferred Portion of
an award shall be contingently credited and payable to the participant over a
deferred period and shall be credited with interest or a rate of return, as
determined by the Committee. The Committee, in its discretion, shall
determine the conditions upon, and method of, payment of such deferred
portions and whether such payment will be made entirely in cash, entirely in
Common Stock or partially in cash and partially in Common Stock.
In making the payment of an award in Common Stock hereunder, the cash
equivalent of such Common Stock shall be determined by the Fair Market Value
of the Common Stock on the day the Committee designates the performance units
shall be paid.
(7) Nontransferability of Awards and Designation of Beneficiaries.
No award under the Plan shall be transferable by the participant other than by
will or by the laws of descent and distribution, except that a participant may
designate a beneficiary pursuant to the provisions hereof.
If any participant or the participant's beneficiary shall attempt to
assign the participant's rights under the Plan in violation of the provisions
thereof, the Company's obligation to make any further payments to such
participant or the participant's beneficiaries shall forthwith terminate.
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<PAGE>
A participant may name one or more beneficiaries to receive any
payment of an award to which the participant may be entitled under the Plan in
the event of the participant's death, on a form to be provided by the
Committee. A participant may change the participant's beneficiary designation
from time to time in the same manner.
If no designated beneficiary is living on the date on which any
payment becomes payable to a participant's beneficiary, such payment will be
payable to the person or persons in the first of the following classes of
successive preference:
(I) Widow or widower, if then living,
(ii) Surviving children, equally,
(iii) Surviving parents, equally,
(iv) Surviving brothers and sisters, equally,
(v) Executors or administrators
and the term "beneficiary" as used in the Plan shall include such person
or persons.
(8) Retirement and Termination of Employment Other Than by Death or
Disability. In the event of the Retirement prior to the end of an award
period of a participant who has satisfied the one year employment requirement
of Section 7(b)(4) with respect to an award prior to Retirement, the
participant, or his estate, shall be entitled to a payment of such award at
the end of the award period, pursuant to the terms of the Plan and the
participant's Performance Unit Agreement, provided, however, that the
participant shall be deemed to have earned that proportion (to the nearest
whole unit) of the value of the performance units granted to the participant
under such award as the number of months of the award period which have elapsed
since the first day of the calendar year in which the award was made to the
end of the month in which the participant's Retirement occurs, bears to the
total number of months in the award period. The participant's rights in any
remaining performance units shall be canceled and forfeited.
Subject to Section 7(b)(6) hereof, the Performance Unit Agreement
shall specify that the rights of the participant in the performance units
granted to such participant shall be conditional and shall be canceled,
forfeited and surrendered if the participant's continuous employment with the
Company and its Subsidiaries and Affiliates shall terminate for any reason,
other than the participant's death, Disability or Retirement prior to the end
of the award period.
The Committee may, in its discretion, waive, in whole or in part, the
cancellation, forfeiture and surrender of any performance units.
(9) Disability of Participant. For the purposes of any award a
participant who becomes Disabled shall be deemed to have suspended active
employment by reason of Disability commencing on the date the participant
becomes entitled to receive payments under a disability pay plan of the
Company or any Subsidiary or Affiliate and continuing until the date the
participant is no longer entitled to receive such payments. In the event a
participant becomes Disabled during an award period but only if the
participant has satisfied the one year employment requirement of Section
7(b)(4) with respect to an award prior to becoming Disabled, upon the
determination by the Committee of the extent to which an award has been earned
pursuant to Section 7(b)(6) the participant shall be deemed to have earned
that proportion (to the nearest whole unit) of the value of the performance
units granted to the participants under such award as the number of months of
the award period in which the participant was not Disabled bears to the total
number of months of the award period. The participant's rights in any
remaining performance units shall be canceled and forfeited.
The Committee may, in its discretion, waive, in whole or in part,
such cancellation and forfeiture of any performance units.
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<PAGE>
(10) Death of Participant. In the event of the death prior to the
end of an award period of a participant who has satisfied the one year
employment requirement with respect to an award prior to the date of death,
the participant's beneficiaries or estate, as the case may be, shall be
entitled to a payment of such award upon the end of the award period, pursuant
to the terms of the Plan and the participant's Performance Unit Agreement,
provided, however, that the participant shall be deemed to have earned that
proportion (to the nearest whole unit) of the value of the performance units
granted to the participant under such award as the number of months of the
award period which have elapsed since the first day of the calendar year in
which the award was made to the end of the month in which the participant's
death occurs, bears to the total number of months in the award period. The
participant's rights in any remaining performance units shall be canceled and
forfeited.
The Committee may, in its discretion, waive, in whole or in part,
such cancellation and forfeiture of any performance units.
(11) Grant of Associated Option. If the Committee determines that
the conditional grant of performance units under the Plan is to be made to a
participant in conjunction with the grant of a nonqualified stock option under
the Plan, the Committee shall grant the participant an Associated Option under
the Plan subject to the terms and conditions of this subsection (11). In such
event, such award under the Plan shall be contingent upon the participant's
being granted such an Associated Option pursuant to which: (i) the number of
shares the optionee may purchase shall initially be equal to the number of
performance units conditionally granted by the award, (ii) such number of
shares shall be reduced on a one share-for-one unit basis to the extent that
the Committee determines, pursuant to Section 7(b)(6) hereof, to pay to the
participant or the participant's beneficiaries the performance units
conditionally granted pursuant to the award, and (iii) the Associated Option
shall be cancelable in the discretion of the Committee, without the consent of
the participant, under the conditions and to the extent specified herein and
in Section 7(b)(6) hereof.
If no amount is payable in respect of the conditionally granted
performance units, the award and such performance units shall be deemed to
have been canceled, forfeited and surrendered, and the Associated Option, if
any, shall continue in effect in accordance with its terms. If any amount is
payable in respect of the performance units and such units were granted in
conjunction with an Associated Option, the Committee shall, within 30 days
after the determination of the Committee referred to in the first sentence of
Section 7(b)(6), determine, in its sole discretion, either:
(A) to cancel in full the Associated Option, in which event the
value of the performance units payable pursuant to Sections 7(b)(5) and (6)
shall be paid;
(B) to cancel in full the performance units, in which event no
amount shall be paid to the participant in respect thereof but the Associated
Option shall continue in effect in accordance with its terms; or
(C) to cancel some, but not all, of the performance units, in
which event the value of the performance units payable pursuant to Sections
7(b)(5) and (6) which have not been canceled shall be paid and the Associated
Option shall be canceled with respect to that number of shares equal to the
number of conditionally granted performance units that remain payable.
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<PAGE>
Any action taken by the Committee pursuant to the preceding sentence
shall be uniform with respect to all awards having the same award period. If
the Committee takes no such action, it shall be deemed to have determined to
cancel in full the award in accordance with clause (B) above.
8. Determination of Breach of Conditions: The determination of the
Committee as to whether an event has occurred resulting in a forfeiture or a
termination or reduction of the Company's obligations in accordance with the
provisions of the Plan shall be conclusive.
9. Adjustment in the Event of Change in Stock: In the event of changes
in the outstanding Common Stock of the Company by reason of stock dividends,
recapitalization, mergers, consolidations, split-ups, combinations or
exchanges of shares and the like, the aggregate number and class of shares
available under the Plan, and the number, class and the price of shares
subject to outstanding options and/or awards and the number of performance
units and/or the dollar value of each unit shall be appropriately adjusted by
the Committee, whose determination shall be conclusive.
10. Taxes: In connection with the transfer of shares of Common Stock to
an optionee, subject to Section 16 of the Exchange Act, as the result of the
exercise of a nonqualified stock option or a stock appreciation right, or to a
participant subject to Section 16 of the Exchange Act, upon payment of an
award, the Company shall have the right to retain or sell without notice,
or to demand surrender of, shares of Common Stock having a Fair Market Value
(taking into account any commissions or other expenses the Company may incur
upon the sale of such shares) on the date that the amount required by any
governmental entity to be withheld or otherwise deducted and paid with respect
to such transfer ("Withholding Tax") is to be determined (the "Tax Date")
sufficient to cover the amount of any Applicable Tax (the amount of
Withholding Tax plus the incremental amount determined on the basis of the
highest marginal tax rate applicable to such optionee or participant, Federal
Insurance Contribution Act taxes or other governmental impost or levy), and to
make payment (or to reimburse itself for payment made) to the appropriate
taxing authority of an amount in cash equal to the amount of such Applicable
Tax, remitting any balance to the optionee or participant. Notwithstanding
the foregoing, if the stock options have been transferred, the optionee shall
provide the Company with funds sufficient to pay such Withholding or
Applicable Tax. Furthermore, if such optionee does not satisfy his withholding
obligation, the transferee may provide the funds sufficient to enable the
Company to pay such Withholding Tax or Applicable Tax. However, if the stock
options have been transferred, the Company shall have no right to retain or
sell without notice, or to demand surrender from the transferee of, shares of
Common Stock in order to pay such Withholding Tax or Applicable Tax.
An optionee or participant who is not an executive officer of the Company
subject to Section 16 of the Exchange Act shall be entitled to satisfy the
obligation to pay any Withholding Tax or Applicable Tax, by providing the
Company with funds sufficient to enable the Company to pay such Withholding
Tax or Applicable Tax or by requiring the Company to retain or to accept upon
delivery thereof by the optionee or participant shares of Common Stock
sufficient in value (determined in accordance with the last sentence of the
preceding paragraph), to cover the amount of such Withholding Tax or
Applicable Tax. Each election by an optionee or participant to have shares
retained or to deliver shares for this purpose shall be subject to the following
restrictions: (i) the election must be in writing and be made on or prior to
the Tax Date; (ii) the election must be irrevocable; (iii) the election shall
be subject to the disapproval of the Committee.
11. Amendment of the Plan: The Board of Directors may amend or suspend
the Plan at any time and from time to time. No such amendment of the Plan
may, however, increase the maximum number of shares to be offered under
options or awards, or change the manner of determining the option price, or
change the designation of employees or class of employees eligible to receive
options or awards, or permit the transfer or issue of stock before payment
therefor in full, or, without the written consent of the optionee or
participant, alter or impair any option or award previously granted under the
Plan, Prior Plan or LTPAP. Notwithstanding the foregoing, if an option has
been transferred in accordance with Section 6(b)(6), written consent of the
transferee (and not the optionee) shall be necessary to alter or impair any
option or award previously granted under the Plan.
E-4-10
<PAGE>
12. Amendment of Options Outstanding Under the Prior Plan: The Prior
Plan and certain nonqualified options granted and outstanding thereunder are
hereby amended to provide that any nonqualified option which is outstanding on
the date this Plan is adopted by a vote of the holders of a majority of the
shares of the Company's Common Stock and $2.00 Convertible Preferred Stock
present in person or by proxy at a duly held shareholders meeting at which a
quorum representing a majority of all outstanding voting stock is present
shall be exercisable in accordance with Sections 6(b)(7) and 6(b)(9), except
that for the purpose of such options "Retirement" shall additionally mean
termination of the employment of an employee after completing 35 years of
service with the Company or its Subsidiaries.
Furthermore, an employee who makes an election to retire under Article 19 of
the Retirement Income Plan shall have any additional years of age and service
which are credited under Article 19 of the Retirement Income Plan taken into
account when determining such employee's age and years of service with the
Company or its Subsidiaries under this Section 12. Such election shall be
deemed a Retirement for purposes of this Section 12 and all other purposes of
this Plan.
13. Miscellaneous: By accepting any benefits under the Plan, each
optionee or participant and each person claiming under or through such optionee
or participant shall be conclusively deemed to have indicated acceptance and
ratification of, and consent to, any action taken or made to be taken or made
under the Plan by the Company, the Board, the Committee or any other Committee
appointed by the Board. No participant or any person claiming under or
through him shall have any right or interest, whether vested or otherwise, in
the Plan or in any option, or stock appreciation right or award thereunder,
contingent or otherwise, unless and until all of the terms, conditions and
provisions of the Plan and the Agreement that affect such participant or such
other person shall have been complied with. Nothing contained in the Plan or
in any Agreement shall require the Company to segregate or earmark any cash or
other property. Neither the adoption of the Plan nor its operation shall in
any way affect the rights and powers of the Company or any of its Subsidiaries
or Affiliates to dismiss and/or discharge any employee at any time.
14. Term of the Plan: The Plan shall become effective as of
January 1, 1993 by action of the Board of Directors conditioned on and subject
to approval of the Plan, by a vote of the holders of a majority of the shares
of Common Stock and $2.00 Convertible Preferred Stock of the Company present
in person or by proxy at a duly held shareholders meeting at which a quorum
representing a majority of all outstanding voting stock is present. The Plan
shall terminate on December 31, 2002, or at such earlier date as may be
determined by the Board of Directors. Termination of the Plan, however, shall
not affect the rights of optionees under options theretofore granted to them
or the rights of participants under awards theretofore granted to them, and all
unexpired options and awards shall continue in force and operation after
termination of the Plan except as they may lapse or be terminated by their own
terms and conditions.
E-4-11
BRISTOL-MYERS SQUIBB COMPANY
1987 DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
AMENDED EFFECTIVE JANUARY 13, 1998
Section 1. Effective Date.
The effective date of this Bristol-Myers Squibb Company 1987 Deferred
Compensation Plan for Non-Employee Directors (the "Plan") is January 20, 1987.
Section 2. Eligibility.
Any Director of Bristol-Myers Squibb Company (the "Company") who is not
an Officer or employee of the Company or a subsidiary thereof is eligible to
participate in the Plan.
Section 3. Deferred Compensation Account.
There shall be established on the books of the Company for each
participant a deferred compensation account in the participant's name.
Section 4. Amount of Deferral.
Five Hundred (500) Share Units payable, as of February 1 of each year, to
the participant for membership on the Board of Directors shall be deferred and
credited to such participant's deferred compensation account as Share Units
equal to the number of shares of the Company's common stock which could have
been purchased with the amounts deferred, determined by dividing the dollar
value of the amounts deferred by the fair market value of a share of the
Company's common share as reported in The Wall Street Journal on the effective
date of such deferral until the cessation of the participant's service as a
Director. Twenty-five (25) percent of the basic fee payable to the
participant for membership on the Board of Directors shall be deferred and
credited to such participant's deferred compensation account as Share Units
equal to the number of shares of the Company's common stock which could have
been purchased with the amounts deferred, determined by dividing the dollar
value of the amounts deferred by the fair market value of a share of the
Company's common share as reported in The Wall Street Journal on the effective
date of such deferral until such time as the participant meets a guideline
level of Share Unit or Company common stock ownership established by the
Executive Compensation Committee of the Company. A participant may elect, by
filing the appropriate form pursuant to Section 9, to defer receipt for any
calendar year of either (1) all of the compensation payable to the participant
for serving on the Board of Directors and any committee thereof, (2) only the
basic fee payable to the participant for membership on the Board of Directors,
or (3) any percentage, in excess of twenty-five percent of the basic fee,
specified by the participant of the compensation payable to the participant
specified in clause (1) hereof.
E-5-1
<PAGE>
Section 5. Form and Computation of Deferred Amounts.
Effective with respect to amounts deferred after the Effective Date of
the Plan and subject to Section 4, a participant, at the time he elects to
participate in the Plan, shall elect to have the amounts deferred credited to
such participant's deferred compensation account as Treasury Units or Dollar
Units each equal to the number of shares of the Company's common stock which
could have been purchased with the amounts deferred determined by dividing the
dollar value of the amounts deferred by the fair market value of a share of
the Company's common share as reported in The Wall Street Journal on the
effective date of such deferral. Such deferrals shall be allocated to
Treasury Units, Dollar Units and/or Share Units in increments of 0%, 33 1/3%,
50%, 66 2/3% or 100%. The amount credited to a participant's deferred
compensation account as Treasury Units shall be credited with interest at a
rate to be set by the Executive Compensation Committee of the Company in
January of each year after a review of the six-month United States Treasury
bill discount rates for the preceding year. The amount credited to a
participant's deferred compensation account as Dollar Units shall be credited
with interest at a rate to be set by the Executive Compensation Committee in
January of each year after a review of investment return on the invested cash
of the Company. Upon payment by the Company of dividends on its common stock,
the amount credited to a participant's deferred compensation account as Share
Units shall be credited with an amount equal to the number of Share Units
multiplied by a fraction the numerator of which is the amount of such dividend
and the denominator of which is the fair market value of a Share of the
Company's common stock as reported in The Wall Street Journal on the day such
dividend is payable. The amount of Share Units in a participant's deferred
compensation account shall be adjusted in the discretion of the Executive
Compensation Committee to take into account a merger, consolidation,
reorganization, recapitalization, stock split or other change in corporate
structure of capitalization affecting the Company's common stock.
Section 6. Period of Deferral.
Subject to Section 4, a participant may elect to defer receipt of
compensation either (1) until a specified year in the future, (2) until the
cessation of the participant's service as a Director or (3) until the end of
the calendar year in which the cessation of the participant's service as a
Director occurs. If alternative (1) is elected, payment will be made or will
commence within sixty days after the beginning of the year specified; if
alternative (2) is elected, payment will be made or will commence within sixty
days after the cessation of the participant's service as a Director; and if
alternative (3) is elected, payment will be made or will commence within sixty
days after the end of the calendar year in which the cessation of the
participant's service as a Director occurs.
Section 7. Form of Payment.
A participant may elect to receive the compensation deferred under the
Plan in either (1) a lump sum in cash or (2) a number of installments in cash,
not more than ten, as specified by the participant. If installment payments
are elected, the amount of each installment shall be equal to the balance in
the participant's deferred compensation account divided by the number of
installments remaining to be paid (including the installment in question).
E-5-2
<PAGE>
Section 8. Death Prior to Receipt.
A participant may elect that, in the event he or she dies prior to
receipt of any or all of the amounts payable pursuant to this Plan, any
amounts remaining in the participant's deferred compensation account shall be
paid to the participant's estate in cash in either (1) a lump sum within sixty
days following notification to the Company of the participant's death or (2) a
number of annual installments, not more than ten, as specified by the
participant. If alternative (2) is elected and payment to the participant
pursuant to clause (2) of Section 7 has not commenced prior to death, the
initial installment payment hereunder shall be made sixty days after
notification to the Company of the participant's death, and the amount of each
such installment shall be determined as provided in the last sentence of
Section 7. If alternative (2) is elected and payment to the participant
pursuant to clause (2) of Section 7 had commenced prior to death, the
installment payments to the participant's estate shall be made at the same
time and in the same amount as such payments would have been made to the
participant had he or she survived. For purposes of this Section 8, any
amounts deferred as Share Units shall be converted to Dollar Units by
multiplying the number of Share Units credited to a participant's deferred
compensation account on the date of his death by the fair market value of a
share of the Company's common stock on such date as reported in The Wall
Street Journal.
Section 9. Time of Election of Deferral.
An election to defer compensation may be made by (i) a nominee for
election as a Director prior to his/her election for the calendar year in
which he/she is being elected (except that a person elected a Director by the
Board of Directors may make an election to defer compensation within 30 days
after his/her election as a Director, in which event such election to defer
compensation shall be effective only with respect to compensation paid after
the election to defer compensation is made) and (ii) a person then currently
serving as a Director for the next succeeding calendar year no later than the
preceding December 31. This election will be deemed to be an election to
defer compensation under this Plan for each succeeding calendar year, unless
(1) the participant elects, in accordance with Section 12, to discontinue the
deferral, (2) the Company discontinues the Plan, or (3) the election is
stated, in writing, to apply only to the current calendar year.
Section 10. Status of Previous Deferrals.
Any deferral election made under the Bristol-Myers Squibb Company Amended
and Restated Deferred Compensation Plan for Non-Employee Directors (the "Prior
Plan") shall be subject to and governed by the terms of the Prior Plan.
Section 11. Manner of Electing Deferral.
A participant may elect to defer compensation by giving written notice to
the Executive Compensation Committee of the Company on a form provided by the
Company, which notice shall include the amount to be deferred, the form in
which the amount deferred is to be credited, the period of deferral, the form
of payment, including the number of installments, if any.
E-5-3
<PAGE>
Section 12. Effect of Election.
An election to defer compensation including the form of deferral shall be
irrevocable by the participant once the calendar year to which it applies has
commenced. An election may be discontinued or modified by the participant
with respect to calendar years not yet begun by notifying the Executive
Compensation Committee of the Company in writing no later than November 30th
of the preceding year.
Section 13. Further Election.
Prior to the commencement of the year in which a participant has elected
to commence receipt of payment of amounts deferred, the participant shall have
the one-time right with regard to funds previously deferred to elect a further
deferral of the payment of such funds by delivering to the committee a written
statement in a form provided by the Company specifying the further period of
deferral and the form of payment, including the number of installments, if any.
In the event, however, there is a final determination by a court of
appropriate jurisdiction that the further deferral was ineffective for the
purpose of deferring tax obligations on the deferred amounts, then all amounts
on which the further deferral was determined to be ineffective shall be paid
to the participant within 15 days of such final determination being made, such
payment to be made pursuant to the previously elected deferral.
Section 14. Participant's Rights Unsecured.
The right of any participant to receive future payments under the
provisions of the Plan shall be an unsecured claim against the general assets
of the Company.
Section 15. Statement of Account.
A statement will be sent to each participant each year as to the value of
his/her deferred compensation account as of the end of the preceding year.
Section 16. Assignability.
No right to receive payments hereunder shall be transferable or
assignable by a participant, except by will or under the laws of descent and
distribution.
Section 17. Administration.
This Plan will be administered by the Executive Compensation Committee of
the Company, which shall have the authority to adopt rules and regulations to
carry out the Plan and to interpret, construe and implement the provisions of
the Plan.
Section 18. Amendment.
This Plan may at any time or from time to time be amended, modified or
terminated by the Company. No amendment, modification or termination shall,
without the consent of the participant, adversely affect such participant's
accruals in his/her deferred compensation account of the date of amendment,
modification or termination.
E-5-4
BRISTOL-MYERS SQUIBB COMPANY
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
AMENDED EFFECTIVE JANUARY 13, 1998
1. Purpose:
The purpose of the Bristol-Myers Squibb Company Non-Employee Directors'
Stock Option Plan ("the Plan") is to secure for Bristol-Myers Squibb Company
("the Company") and its stockholders the benefits of the incentive inherent in
increased common stock ownership by the members of the Board of Directors
("the Board") of the Company who are Eligible Directors as defined in the Plan.
2. Administration:
The Plan shall be administered by the Board. The Board shall have all
the powers vested in it by the terms of the Plan, such powers to include
authority (within the limitations described herein) to prescribe the form of
the agreement embodying awards of stock options made under the Plan
("Options"). The Board shall, subject to the provisions of the Plan, grant
Options under the Plan and shall have the power to construe the Plan, to
determine all questions arising thereunder and to adopt and amend such rules
and regulations for the administration of the Plan as it may deem desirable.
Any decision of the Board in the administration of the Plan, as described
herein, shall be final and conclusive. The Board may act only by a majority
of its members in office, except that the members thereof may authorize any
one or more of their number or the Secretary or any other officer of the
Company to execute and deliver documents on behalf of the Board. No member of
the Board shall be liable for anything done or omitted to be done by such
member or by any other member of the Board in connection with the Plan,
except for such member's own willful misconduct or as expressly provided
by statute.
3. Amount of Stock:
The stock which may be issued and sold under the Plan will be the Common
Stock (par value $.10 per share) of the Company, of a total number not
exceeding 500,000 shares, subject to adjustment as provided in Paragraph 6
below. The stock to be issued may be either authorized and unissued shares or
issued shares acquired by the Company or its subsidiaries. In the event that
Options granted under the Plan shall terminate or expire without being
exercised in whole or in part, new Options may be granted covering the shares
not purchased under such lapsed Options.
E-6-1
<PAGE>
4. Eligible Directors:
The members of the Board who are eligible to participate in the
Plan are persons who serve as directors of the Company after the effective
date of the Plan and:
(a) who are not current or former employees of the Company and
(b) who are not and, in the past, have not been eligible to receive
Options on Company stock by participation as an employee in another plan
sponsored by the Company or under a contractual arrangement with the Company.
5. Terms and Conditions of Options:
Each Option granted under the Plan shall be evidenced by an agreement in
such form as the Board shall prescribe from time to time in accordance with
the Plan and shall comply with the following terms and conditions:
(a) The Option exercise price shall be the fair market value of the
Common Stock shares subject to such Option on the date the Option is granted,
which shall be the average of the high and the low sales prices of a Common
Stock share on the date of grant as reported on the New York Stock Exchange
Composite Transactions Tape or, if the New York Stock Exchange is closed on
that date, on the last preceding date on which the New York Stock Exchange
was open for trading.
(b) Each year, as of the date of the Annual Meeting of Stockholders
of the Company, each Eligible Director who has been elected or reelected or
who is continuing as a member of the Board as of the adjournment of the Annual
Meeting shall automatically receive an Option for 2,000 shares of Common
Stock.
(c) The Option shall not be transferable by the optionee otherwise
than by will or the laws of descent and distribution, and shall be exercisable
during his lifetime only by him.
(d) No Option or any part of an Option shall be exercisable:
(i) before the Eligible Director has served one term-year as a
member of the Board since the date the Option was granted (as used herein,
the term "term-year" means that period from one Annual Meeting to the
subsequent Annual Meeting),
(ii) after the expiration of ten years from the date the Option
was granted,
(iii) unless, written notice of the exercise is delivered to the
Company specifying the number of shares to be purchased and payment in full is
made for the shares of Common Stock being acquired thereunder at the time of
exercise; such payment shall be made
(A) in United States dollars by certified check, or bank draft or
(B) by tendering to the Company Common Stock shares owned by the
person exercising the Option and having a fair market value equal to the cash
exercise price applicable to such Option, such fair market value to be the
average of the high and low sales prices of a Common Stock share on the date
of exercise as reported on the New York Stock Exchange Composite Transactions
Tape, or, if the New York Stock Exchange is closed on that date, on the last
preceding date on which the New York Stock Exchange was open for trading, or
E-6-2
<PAGE>
(C) by a combination of United States dollars and Common Stock
shares as aforesaid; and
(iv) unless the person exercising the Option has been, at all
times during the period beginning with the date of grant of the Option and
ending on the date of such exercise, an Eligible Director of the Company,
except that
(A) if such a person shall cease to be such an Eligible Director
for reasons other than retirement or death, while holding an Option that has
not expired and has not been fully exercised, such person, at any time within
one year after the date he ceases to be such an Eligible Director (but in no
event after the Option has expired under the provisions of subparagraph
5(d) (ii) above), may exercise the Option with respect to any Common Stock
shares as to which such person has not exercised the Option on the date
the person ceased to be such an Eligible Director; or
(B) if such person shall cease to be such an Eligible Director
by reason of retirement or death while holding an Option that has not expired
and has not been fully exercised, such person, or in the case of death, the
executors, administrators or distributees, as the case may be, may at any time
within five years after the date such person ceased to be such an Eligible
Director (but in no event after the Option has expired under the provisions of
subparagraph 5(d) (ii) above), exercise the Option with respect to any shares
of Common Stock as to which such person has not exercised the Option on the
date the person ceased to be such an Eligible Director, notwithstanding the
provisions of subparagraph 5(e) below.
(C) if any person who has ceased to be such an Eligible
Director for reasons other than death, shall die holding an Option that has
not been fully exercised, such person's executors, administrators, heirs or
distributees, as the case may be, may, at any time within the greater of
(1) one year after the date of death or (2) the remainder for the period in
which such person could have exercised the Option had the person not died,
(but in no event (under either (1) or (2) after the Option has expired under
the provisions of subparagraph 5(d) (ii) above)), exercise the Option with
respect to any shares as to which the decedent could have exercised the
Option at the time of death.
In the event any Option is exercised by the executors, administrators,
legatees or distributees of the estate of a deceased optionee, the Company
shall be under no obligation to issue stock thereunder unless and until the
Company is satisfied that the person or persons exercising the Option are the
duly appointed legal representatives of the deceased optionee's estate or the
or the proper legatees or distributees thereof.
(e) Subject to subparagraph 5(d) (i) above, one-quarter (25%) of the
total number of shares of Common Stock covered by the Option shall become
exercisable beginning on the earlier of (a) the first anniversary date of
the grant of the Option or (b) the completion of one term-year following the
grant of the Option; thereafter an additional one-quarter (25%) of the shares
shall become exercisable annually on the earlier of (a) the anniversary date
of the grant of the Option or (b) the completion of an additional term-year
of service as a member of the Board.
6. Adjustment in the Event of Change in Stock:
In the event of changes in the outstanding Common Stock of the Company
by reason of stock dividends, recapitalizations, mergers, consolidations,
split-ups, combinations or exchanges of shares and the like, the aggregate
number and class of shares available under the Plan, and the number, class and
the price of shares of Common Stock subject to outstanding Options shall be
appropriately adjusted by the Board, whose determination shall be conclusive.
E-6-3
<PAGE>
7. Miscellaneous Provisions:
(a) Except as expressly provided for in the Plan, no Eligible Director
or other person shall have any claim or right to be granted an Option under
the Plan. Neither the Plan nor any action taken hereunder shall be construed
as giving any Eligible Director any right to be retained in the service of
the Company.
(b) An optionee's rights and interest under the Plan may not be assigned
or transferred in whole or in part either directly or by operation of law or
otherwise (except in the event of an optionee's death, by will or the laws of
descent and distribution), including, but not by way of limitations,
execution, levy, garnishment, attachment, pledge, bankruptcy or in any other
manner, and no such right or interest of any participant in the Plan shall be
subject to any obligation or liability of such participant.
(c) No Common Stock shares shall be issued hereunder unless counsel for
the Company shall be satisfied that such issuance will be in compliance with
applicable federal, state and other securities laws and regulations.
(d) It shall be a condition to the obligation of the Company to issue
Common Stock shares upon exercise of an Option, that the optionee (or any
beneficiary or person entitled to act under subparagraph 5(d) (iv) above) pay
to the Company, upon its demand, such amount as may be requested by the Company
for the purpose of satisfying any liability to withhold federal, state, local
or foreign income or other taxes. If the amount requested is not paid, the
Company may refuse to issue Common Stock shares.
(e) The expenses of the Plan shall be borne by the Company.
(f) The Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the issuance of shares upon exercise of any Option under the
Plan and issuance of shares upon exercise of Options shall be subordinate to
the claims of the Company's general creditors.
(g) By accepting any Option or other benefit under the Plan, each
optionee and each person claiming under or through such person shall be
conclusively deemed to have indicated his acceptance and ratification of, and
consent to, any action taken under the Plan by the Company or the Board.
8. Amendment or Discontinuance:
The Plan may be amended at any time and from time to time by the Board as
the Board shall deem advisable, including, but not limited to amendments
necessary to qualify for any exemption or to comply with applicable law or
regulations provided, however, that except as provided in Paragraph 6 above,
the Board may not, without further approval by the shareholders of the Company
in accordance with Paragraph 10 below, increase the maximum number of shares
of Common Stock as to which Options may be granted under the Plan, increase
the number of shares subject to an Option, reduce the minimum Option exercise
price described in subparagraph 5(a) above, extend the period during which
Options may be granted or exercised under the Plan or change the class of
persons eligible to receive Options under the Plan. No amendment of the Plan
shall materially and adversely affect any right of any optionee with respect
to any Option theretofore granted without such optionee's written consent.
E-6-4
<PAGE>
9. Termination:
This Plan shall terminate upon the earlier of the following dates or
events to occur:
(a) upon the adoption of a resolution of the Board terminating
the Plan; or
(b) ten years from the date the Plan is initially approved and
adopted by the shareholders of the Company in accordance with
Paragraph 10 below.
10. Effective Date of Plan:
The Plan shall become effective as of May 1, 1990 or such later date as
the Board may determine, provided that the Company's stockholders shall
have adopted the Plan at the Company's 1990 Annual Meeting of Stockholders.
E-6-5
March 25, 1998
Mr. Charles A. Heimbold, Jr.
Chairman and Chief Executive Officer
Bristol-Myers Squibb Company
345 Park Avenue
New York, NY 10154-0037
Dear Charlie:
Over the four years since you assumed the role of Chief Executive Officer,
your leadership has significantly contributed to the Company's success, as
reflected in the substantial increase in the value of the Company by roughly
$70 billion as of year-end 1997. In light of this, the Compensation and
Management Development Committee has approved the following in exchange for
your agreement to serve as Chairman and Chief Executive Officer until
December 31, 2001, or such earlier date as the Board of Directors may
appoint your successor:
- You will be granted a Restricted Stock Award of 150,000 shares
which will vest upon your retirement.
- Your annual bonus target will be determined by the Board but
will not be less than 170% of your base salary, and your base
salary will not be less than in 1998.
- After your retirement you will be provided with the benefits,
support and agreements similar to those historically provided to
other retiring executives who served as Chairman and Chief
Executive Officer of the Company.
Bristol-Myers Squibb Company
By: /s/ Andrew C. Sigler
-----------------------------
Andrew C. Sigler
Chairman, Compensation and
Management Development Committee
Agreed to.
By: /s/ Charles A. Heimbold, Jr.
- --------------------------------
Charles A. Heimbold, Jr.
Chairman and Chief Executive Officer
Date: March 31, 1998
- ----------------------
E-7-1
EXHIBIT 21
- ----------
BRISTOL-MYERS SQUIBB COMPANY
SUBSIDIARY LIST
2309 Realty Corporation
345 Park Corporation
77 Wilson St., Corp.
A.G. Medical Services, P.A.
A/S GEA Farmaceutisk Fabrik
Abeefe S.A.
Agit Ges. fuer Informationssysteme und Techniken m.b.H.
Alive & Well, Inc.
Allard Laboratories, Inc.
Apothecon BV
Apothecon Farmaceutica Ltda.
Apothecon, Inc.
Apothecon, S.A.
Astel Laboratoires S.A.R.L.
B-MS GeneRx
B. L. Pharmaceuticals (Proprietary) Limited
Blisa, Inc.
BMS Holdings
BMS Music Company
Boclaro Inc.
Bristol (Iran) S.A.
Bristol Arzneimittel G.m.b.H.
Bristol Caribbean, Inc.
Bristol Foundation
Bristol Iran Private Company Limited
Bristol Laboratories Corporation
Bristol Laboratories Inc.
Bristol Laboratories International, S.A.
Bristol Laboratories Medical Information Systems Inc.
Bristol Pharmaceutical Information Center, S.A.
Bristol-Myers (Bangladesh) Inc.
Bristol-Myers (Japan) Limited
Bristol-Myers (Private) Limited
Bristol-Myers (Zaire) Ltd.
Bristol-Myers Award Superannuation Pty. Ltd.
Bristol-Myers Barceloneta, Inc.
Bristol-Myers Company Limited
Bristol-Myers de Mexico, S.A. de C.V.
Bristol-Myers Ecuatoriana S.A.
Bristol-Myers Foreign Sales Corporation
Bristol-Myers Ges.m.b.H.
Bristol-Myers Industrial (Dominicana), Inc.
Bristol-Myers International s.r.l.
Bristol-Myers Lion Ltd.
Bristol-Myers Middle East S.A.L.
Bristol-Myers Nederland Inc.
Bristol-Myers Oncology Therapeutic Network, Inc.
Bristol-Myers Overseas Corporation
Bristol-Myers Overseas Corporation (Guam Branch)
Bristol-Myers Overseas Corporation (Korea - Branch)
E-8-1
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
SUBSIDIARY LIST
Bristol-Myers Pakistan (Pvt.) Limited
Bristol-Myers S.A.
Bristol-Myers Squibb (Guangzhou) Ltd.
Bristol-Myers Squibb (Hong Kong) Limited
Bristol-Myers Squibb (Malaysia) Sendirian Berhad
Bristol-Myers Squibb (N.Z.) Limited
Bristol-Myers Squibb (Phil.) Inc.
Bristol-Myers Squibb (Proprietary) Limited
Bristol-Myers Squibb (Russia)
Bristol-Myers Squibb (Singapore) Pte. Limited
Bristol-Myers Squibb (Taiwan) Ltd.
Bristol-Myers Squibb (Thailand) Ltd.
Bristol-Myers Squibb (West Indies) Ltd.
Bristol-Myers Squibb A.E.B.E.
Bristol-Myers Squibb A.G.
Bristol-Myers Squibb Aktiebolag
Bristol-Myers Squibb Argentina, S.A.*
Bristol-Myers Squibb Asia/Pacific, Inc.
Bristol-Myers Squibb Asia/Pacific, Inc. (Singapore - Branch)
Bristol-Myers Squibb Auslandsbeteiligungs Holding, GmbH
Bristol-Myers Squibb Australia Pty. Ltd.
Bristol-Myers Squibb B.V.
Bristol-Myers Squibb Belgium, S.A.
Bristol-Myers Squibb Brasil, S.A.
Bristol-Myers Squibb Business Services Limited
Bristol-Myers Squibb Canada Inc.
Bristol-Myers Squibb Company
Bristol-Myers Squibb de Colombia S.A.
Bristol-Myers Squibb de Costa Rica, S.A.
Bristol-Myers Squibb de Guatemala, S. A.
Bristol-Myers Squibb de Mexico, S.A. de C.V.
Bristol-Myers Squibb de Venezuela, S.A.
Bristol-Myers Squibb del Ecuador, C.A.
Bristol-Myers Squibb Dominicana, S.A.
Bristol-Myers Squibb Export SA
Bristol-Myers Squibb Farmaceutica Portuguesa Limitada
Bristol-Myers Squibb G.m.b.H.
Bristol-Myers Squibb Ges. m.b.H.
Bristol-Myers Squibb Global Properties Ltd.
Bristol-Myers Squibb Holding Germany GMBH
Bristol-Myers Squibb Holdings B.V.
Bristol-Myers Squibb Holdings Limited
Bristol-Myers Squibb Holdings Limited (Ireland - Branch)
Bristol-Myers Squibb Holdings Limited (Kenya - Branch)
Bristol-Myers Squibb Ilaclari Limited Sirketi
Bristol-Myers Squibb Ilaclari, Inc.
Bristol-Myers Squibb Ilaclari, Inc. (Turkey - Branch)
Bristol-Myers Squibb International Company
Bristol-Myers Squibb International Corporation
Bristol-Myers Squibb International Corporation (Belgium - Branch)
Bristol-Myers Squibb International Corporation (Egypt - Branch)
E-8-2
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
SUBSIDIARY LIST
Bristol-Myers Squibb International Corporation (Spain - Branch)
Bristol-Myers Squibb International Insurance Company
Bristol-Myers Squibb International Limited
Bristol-Myers Squibb Investco, Inc.
Bristol-Myers Squibb K.K.
Bristol-Myers Squibb Korea Ltd.
Bristol-Myers Squibb Manufacturing
Bristol-Myers Squibb MEA S.A. (Saudi Arabia - Branch)
Bristol-Myers Squibb MEA S.A. (Switzerland)
Bristol-Myers Squibb MEA S.A.(Egypt - Branch)
Bristol-Myers Squibb Norway Ltd.
Bristol-Myers Squibb Pakistan (Pvt.) Ltd.
Bristol-Myers Squibb Peru, S.A.
Bristol-Myers Squibb Pharmaceuticals Limited (England)
Bristol-Myers Squibb Pharmaceuticals Limited (Ireland)
Bristol-Myers Squibb Products S.A.
Bristol-Myers Squibb Puerto Rico, Inc.
Bristol-Myers Squibb S.p.A.
Bristol-Myers Squibb Service Ltd.
Bristol-Myers Squibb Sp. z o.o.
Bristol-Myers Squibb Spol. s r.o.
Bristol-Myers Squibb Superannuation Plan Pty. Ltd.
Bristol-Myers Squibb Zentrum Fuer Forschung Und Fortbildung Im
Gesundheitswesen G.m.b.H.
Bristol-Myers Squibb, S.A.
Bristol-Myers Zimmer Award Superannuation Plan
Bristol-Salor Pharma G.m.b.H.
Cancer Research, Inc.
Carboplant Spezialimplante GmbH
CJG Partners, L.P.
Clairol de Mexico, S.A. de C.V.
Clairol Incorporated
Clairol International S.r.l.
Clairol Limited
Cliva S.A.
Compania Bristol-Myers Squibb de Centro America (El Salvador Branch)
Compania Bristol-Myers Squibb de Centro America (Honduras Branch)
Compania Bristol-Myers Squibb de Centro America (Nicaragua Branch)
Compania Bristol-Myers Squibb de Centro America (Panama Branch)
Convatec Limited
Convatec Sp. z o.o.
Convatec Spot s r.o.
Convatec Vertriebs G.m.b.H.
Convatec, S.A.
Delmed S.A.
Dermogroup S.R.L.
Duart Industries, Ltd.
E. R. Squibb & Sons de Venezuela, C.A.
E. R. Squibb & Sons Inter-American (Chile - Branch)
E. R. Squibb & Sons Inter-American Corporation
E. R. Squibb & Sons Inter-American Corporation (Colombia - Branch)
E. R. Squibb & Sons Inter-American Corporation (PRico - Branch)
E-8-3
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
SUBSIDIARY LIST
E. R. Squibb & Sons Limited
E. R. Squibb & Sons, Inc.
E. R. Squibb & Sons, Inc. (England - Branch)*
Elektrochemische Ges.Hirschfelde M.b.H.
ESS Partners, L.P.
EWI Corporation
F.A.I.R. Laboratories Limited
G.I.E. Centre de Recherche de Biologie Moleculaire
G.I.E. Institut de Recherche Squibb
Grove Insurance Company Ltd.
Grove Limited
Grove Products (Far East) Limited
Grove Products (Far East) Limited (India - Branch)
Hexachimie
Heyden Farmaceutica Portugesa Limitada
Iris Acquisition Corp.
JG Partners, L.P.
Kingsdown Medical Consultants Limited
Laboratoire Oberlin
Laboratoires Convatec S.A.
Laboratoires Guieu France S.a.r.l.
Laboratoires UPSA
Laboratori Guieu S.p.A.
Laboratorios Industriales Grove S.A.
Lawrence Laboratories Limited
Linson Investments Limited
Linson Pharma Inc.
Listo B.V.
Logics International, Inc.
Matrix Essentials, Inc.
Mead Johnson & Company
Mead Johnson (Guangzhou) Ltd.
Mead Johnson (Manufacturing) Jamaica Limited
Mead Johnson A.E.B.E.
Mead Johnson B.V.
Mead Johnson de Mexico, S.A. de C.V.
Mead Johnson Ecuador S.A.
Mead Johnson Farmaceutica Limitada
Mead Johnson International Limited (Argentine - Branch)
Mead Johnson International Limited (Canada)
Mead Johnson International Limited (Colombia - Branch)
Mead Johnson Jamaica Ltd.
Mead Johnson Limited
Mead Johnson Pharmaceutical, Inc.
Mead Johnson S.p.A.
MEC Subsidiary Corporation
Medical Engineering Corporation
Monarch Crown Corporation
Oncogen Limited Partnership
Oncology Therapeutics Network Automated Technologies, Inc.
Oncology Therapeutics Network Corporation
Oncology Therapeutics Network Joint Venture, L.P.
E-8-4
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
SUBSIDIARY LIST
Orthoplant Endoprothetik GmbH
Osmat S.A.
OTN Online, Inc.
OTN Parent Corp.
Oy Bristol-Myers Squibb (Finland) AB
P. T. Squibb Indonesia
Pharmagen
Pharmavit Rt.
PRB Partners, L.P.
Recherche et Propriete Industrielle
Redmond Products Distributing, Inc.
Redmond Products International, Inc.
Redmond Products, Inc.
Route 22 Real Estate Holding Corporation
RPI Management, Inc.
S+G Implants G.m.b.H.
Salorpharma G.m.b.H.
Schuppert Meubelen Holten B.V.
Seabrook Medical Systems, Inc.
Selecciones Mercantiles, S.A. de C.V.
Sino-American Shanghai Squibb Pharmaceuticals Limited
Societe Francaise de Complements Alimentaires
Squibb (Far East) Limited
Squibb (Far East) Limited (Taiwan - Branch)
Squibb (Nigeria) Limited
Squibb (Thailand) Limited
Squibb ApS
Squibb Convatec Medical Products Co. Ltd.
Squibb Corporation
Squibb Development Limited
Squibb Farmaceutica Portuguesa, Limitada
Squibb Industria Farmaceutica, S.A.
Squibb Manufacturing, Inc.
Squibb Middle East S.A. (Egypt - Branch)
Squibb Middle East S.A. (Jordan - Branch)
Squibb Middle East S.A. (Panama)
Squibb Overseas Investments, Inc.
Squibb Pacific Limited
Squibb Pharma G.m.b.H.
Squibb Properties, Inc.
Squibb Surgicare Limited
Squibb-von Heyden G.m.b.H.
Stamford Holdings B.V.
Swords Holdings I, L.L.C.
Swords Holdings II, L.L.C.
Swords Laboratories Limited
T S V Corporation
Tallosa, S.A.
Unterstuetzungskasse Bristol-Myers Squibb G.m.b.H.
Upsamedica LDA
Upsamedica SA NV
Upsamedica SpA
E-8-5
<PAGE>
BRISTOL-MYERS SQUIBB COMPANY
SUBSIDIARY LIST
Von Heyden Pharma G.m.b.H.
Wallingford Research, Inc.
Westwood-Intrafin, S.A.
Westwood-Squibb Holdings, Inc.
Westwood-Squibb Pharmaceuticals, Inc.
Zimmer B.V.
Zimmer Caribe, Inc.
Zimmer Chirurgie G.m.b.H.
Zimmer Europe Co-Ordination Centre N.V.
Zimmer Europe Limited
Zimmer Limited
Zimmer New Zealand Limited
Zimmer of Canada Limited
Zimmer Pte. Ltd.
Zimmer S. A. (France)
Zimmer S.A. (Spain)
Zimmer S.R.L.
Zimmer, Inc.
E-8-6
Exhibit 23
----------
CONSENT OF INDEPENDENT ACCOUNTANTS
- -----------------------------------
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Form S-8 (Nos.
33-30856, 33-31055, 33-35586, 33-38411, 33-38587, 33-44788, 333-47403,
33-52691, 33-58187 and 333-02873), Post-Effective Amendment No. 2 on Form
S-8 (No. 33-30756-02) to Form S-4 (No. 333-09519), Form S-3 (No. 33-33682)
and Pre-Effective Amendment No. 1 on Form S-3 (No. 33-62496) of
Bristol-Myers Squibb Company of our report dated January 22, 1998
appearing on page 57 of this Form 10-K.
/s/ Price Waterhouse LLP
- -------------------------------
PRICE WATERHOUSE LLP
New York, New York
March 31, 1998
E-9-1
<TABLE> <S> <C>
<ARTICLE>5
<LEGEND>
Exhibit 27 for Bristol-Myers Squibb for year ended 12/31/97
</LEGEND>
<MULTIPLIER>1000000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Dec-31-1997<F1>
<CASH> 1456
<SECURITIES> 338
<RECEIVABLES> 3082
<ALLOWANCES> 109
<INVENTORY> 1799
<CURRENT-ASSETS> 7736
<PP&E> 7001
<DEPRECIATION> 2845
<TOTAL-ASSETS> 14977
<CURRENT-LIABILITIES> 5032
<BONDS> 1279
0
0
<COMMON> 108
<OTHER-SE> 7111
<TOTAL-LIABILITY-AND-EQUITY> 14977
<SALES> 16701
<TOTAL-REVENUES> 16701
<CGS> 4464
<TOTAL-COSTS> 4464
<OTHER-EXPENSES> 3626
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 118
<INCOME-PRETAX> 4482
<INCOME-TAX> 1277
<INCOME-CONTINUING> 3205
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3205
<EPS-PRIMARY> 3.22
<EPS-DILUTED> 3.14
<FN>
<F1> Items reported as "zero" are not applicable or are immaterial to the
consolidated financial position of the Company.
</TABLE>
EXHIBIT 99.1
- ------------
Cautionary statement regarding forward looking statements made by the
Company, intended to have the benefit of the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995.
The Company is hereby filing a cautionary statement identifying important
factors that could cause the Company's actual results to differ materially
from those projected in forward looking statements made by or on behalf of
the Company. There are several communications made by or on behalf of the
Company (including the Company's Annual Report to Stockholders and Form 10-K)
which contain statements relating to goals, plans and projections
regarding its financial position, results of operations, market position
and product development, among other things, which are based on current
expectations that involve inherit risks and uncertainties including factors
that would delay, divert or change one of them in the next several years.
These important factors include --
New government laws and regulations, such as (i) health care
initiatives, (ii) changes in the FDA and foreign regulatory approval
processes which may cause delays in approving new products, (iii) tax
changes such as the phasing out of tax benefits heretofore available in the
United States and certain foreign countries.
Difficulties in developing new products; new products developed by
competitors which have lower prices or superior performance features or
which are otherwise competitive with the Company's current products; and
generic competition as the Company's products go off patent, as well as
possible problems with licensors.
Legal difficulties including negative results relating to patents;
adverse decisions in litigation including the breast implant cases and
other product liability cases; the inability to obtain adequate insurance
with respect to this type of liability; recalls of pharmaceutical products
or forced closings of manufacturing plants.
Increasing pricing pressures worldwide from managed care buyers and
institutional and governmental purchasers; changes of business conditions
including renewed inflation, higher interest rates and fluctuation of
foreign currency exchange rates.
No assurance can be given that any goal or plan set forth in forward
looking statements can be achieved and readers are cautioned not to place
undue reliance on such statements, which speak only as of the date made.
The Company undertakes no obligation to release publicly any revisions to
forward looking statements as a result of future events or developments.
E-11-1
