<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[XX] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-6324
BURLINGTON NORTHERN RAILROAD COMPANY
(Exact name of registrant as specified in its charter)
Delaware 41-6034000
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3800 Continental Plaza, 777 Main St.
Fort Worth, Texas 76102-5384
(Address of principal executive offices) (Zip Code)
(817) 333-2000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
---- ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding
----- -----------
Common stock, without par value
as of June 30, 1994* 1,000 shares
*Burlington Northern Railroad Company is a wholly owned subsidiary of Burlington
Northern Inc. (BNI) and there is no market data with respect to such shares.
Registrant meets the conditions set forth in General Instruction H(1)(a) and
(b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced
disclosure format permitted by General Instruction H(2).
<PAGE>
BURLINGTON NORTHERN RAILROAD COMPANY and SUBSIDIARIES
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION Page
----
Item 1. Financial Statements................................. 1
Item 2. Management's Analysis of Results of Operations....... 5
PART II OTHER INFORMATION
Item 1. Legal Proceedings.................................... 10
Item 6. Exhibits and Reports on Form 8-K..................... 12
(i)
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
BURLINGTON NORTHERN RAILROAD COMPANY and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Millions)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1994 1993 1994 1993
------ ------ ------- ------
<S> <C> <C> <C> <C>
Revenues.......................... $1,192 $1,142 $2,402 $2,312
Costs and expenses:
Compensation and benefits....... 423 414 868 854
Fuel............................ 89 89 172 177
Materials....................... 70 74 155 154
Equipment rents................. 122 102 238 201
Purchased services.............. 117 119 235 225
Depreciation.................... 82 82 163 165
Other........................... 115 116 219 224
------ ------ ----- -----
Total costs and expenses...... 1,018 996 2,050 2,000
------ ------ ----- -----
Operating income.................. 174 146 352 312
Interest expense.................. 21 22 42 42
Other income, net................. 2 4 4 5
------ ------ ----- -----
Income before income taxes and
cumulative effect of change in
accounting method............... 155 128 314 275
Income tax expense................ 60 47 122 102
------ ------ ----- -----
Income before cumulative effect of
change in accounting method..... 95 81 192 173
Cumulative effect of change in
accounting method, net of tax... - - (10) -
------ ------ ------ ------
Net income........................ $ 95 $ 81 $ 182 $ 173
====== ====== ====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
BURLINGTON NORTHERN RAILROAD COMPANY and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars In Millions)
(Unaudited)
<TABLE>
<CAPTION>
ASSETS June 30, December 31,
1994 1993
-------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents................... $ 18 $ 17
Accounts receivable, net.................... 574 591
Material and supplies....................... 117 91
Current portion of deferred income taxes.... 170 167
Other current assets........................ 46 23
------ ------
Total current assets...................... 925 889
Property and equipment, net................... 5,662 5,488
Investments in and advances to affiliates..... 96 104
Other assets.................................. 139 130
------ ------
Total assets.............................. $6,822 $6,611
====== ======
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable............................ $ 509 $ 498
Casualty and environmental reserves......... 274 286
Compensation and benefits payable........... 252 269
Taxes payable............................... 129 131
Accrued interest............................ 20 22
Other current liabilities................... 47 69
Current portion of long-term debt........... 28 177
Commercial paper............................ 204 26
------ ------
Total current liabilities.............. 1,463 1,478
Long-term debt................................ 723 702
Deferred income taxes......................... 1,368 1,329
Casualty and environmental reserves........... 410 426
Other liabilities............................. 182 182
------ ------
Total liabilities......................... 4,146 4,117
------ ------
Common stockholder's equity:
Common stock, without par value, 1,000
shares authorized, issued and outstanding. 1,191 1,191
Retained earnings........................... 1,485 1,303
------ ------
Total common stockholder's equity......... 2,676 2,494
------ ------
Total liabilities and stockholder's equity $6,822 $6,611
====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
BURLINGTON NORTHERN RAILROAD COMPANY and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars In Millions)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
---------------------
1994 1993
------ ------
<S> <C> <C>
Cash flows from operating activities:
Net income ....................................... $ 182 $ 173
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effect of change in accounting
method...................................... 10 -
Depreciation.................................. 163 165
Deferred income taxes......................... 43 32
Changes in current assets and liabilities:
Accounts receivable, net.................... 17 10
Materials and supplies...................... (27) 1
Other current assets........................ (23) (13)
Accounts payable............................ 11 (13)
Casualty and environmental reserves......... (12) 17
Compensation and benefits payable........... (19) (29)
Taxes payable............................... (2) 20
Accrued interest............................ (2) 5
Other current liabilities................... (22) (22)
Changes in long-term casualty and
environmental reserves...................... (16) (24)
Other, net.................................... (26) (29)
------ ------
Net cash provided by operating activities........... 277 292
------ ------
Cash flows from investing activities:
Additions to property and equipment............... (286) (217)
Collections from (advances to) affiliates, net.... 8 (110)
Proceeds from property and equipment dispositions 13 14
Other, net........................................ (11) (15)
------ ------
Net cash used in investing activities............... (276) (328)
------ ------
Cash flows from financing activities:
Net increase in commercial paper.................. 178 98
Payments on long-term debt........................ (178) (70)
Dividends paid.................................... - (24)
------ ------
Net cash provided by financing activities........... - 4
------ ------
Increase (decrease) in cash and cash equivalents.... 1 (32)
Cash and cash equivalents:
Beginning of period............................... 17 57
------ ------
End of period..................................... $ 18 $ 25
====== ======
Supplemental cash flow information:
Interest paid, net of amounts capitalized......... $ 42 $ 44
Income taxes paid, net of refunds................. 79 61
Supplemental, noncash investing and financing
activities information:
Assets financed through a capital lease obligation $ 50 $ -
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
BURLINGTON NORTHERN RAILROAD COMPANY and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Accounting policies
The 1993 Annual Report on Form 10-K for Burlington Northern Railroad
Company (Railroad), a wholly owned subsidiary of Burlington Northern Inc.
(BNI), includes a summary of significant accounting policies and should
be read in conjunction with this Form 10-Q. The statements for the
periods presented are condensed and do not contain all information
required by generally accepted accounting principles to be included in a
full set of financial statements. In the opinion of management, all
adjustments (consisting of only normal recurring adjustments) necessary
to present fairly Railroad's financial position as of June 30, 1994 and
December 31, 1993 and the results of operations for the three-month and
six-month periods ended June 30, 1994 and 1993 and cash flows for the
six-month periods ended June 30, 1994 and 1993 have been included. The
results of operations for any interim period are not necessarily
indicative of the results of operations to be expected for the entire
year.
2. Other income, net
Other income (expense), net includes the following (in millions):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1994 1993 1994 1993
------ ------ ------ ------
<S> <C> <C> <C> <C>
Interest income.............. $ 3 $ 3 $ 5 $ 5
Gain on property dispositions 1 5 3 6
Loss on sale of receivables.. (2) (2) (4) (5)
Miscellaneous, net........... - (2) - (1)
------ ------ ------ ------
Total........................ $ 2 $ 4 $ 4 $ 5
====== ====== ====== ======
</TABLE>
3. Accounting change
Effective January 1, 1994, Railroad adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits." The cumulative effect, net of $7 million income tax benefit,
of this change in accounting attributable to years prior to 1994, at the
time of adoption, was to decrease 1994 income by $10 million.
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<PAGE>
BURLINGTON NORTHERN RAILROAD COMPANY and SUBSIDIARIES
Item 2. Management's Analysis of Results of Operations
Results of Operations
Six months ended June 30, 1994 compared with six months ended June 30, 1993
Railroad had net income of $182 million for the first six months of 1994
compared with net income of $173 million for the same period in 1993.
Revenues
The following table presents Railroad's revenue information by business unit:
<TABLE>
<CAPTION>
Revenues Per
Revenues Revenue Ton Miles Revenue Ton Mile
--------------- ----------------- ----------------
Six months ended June 30, 1994 1993 1994 1993 1994 1993
- - ------------------------------------------------------------------------------------------------
(In Millions) (In Millions) (In Cents)
<S> <C> <C> <C> <C> <C> <C>
Coal............................... $ 835 $ 754 67,532 59,042 1.24 1.28
Agricultural Commodities........... 354 380 14,296 17,502 2.48 2.17
Intermodal......................... 350 357 11,681 11,537 3.00 3.09
Forest Products.................... 248 241 10,363 9,904 2.39 2.43
Chemicals.......................... 206 205 7,346 7,432 2.80 2.76
Consumer Products.................. 129 126 4,509 4,349 2.86 2.90
Minerals Processors................ 98 92 3,967 3,752 2.47 2.45
Iron & Steel...................... 84 87 3,994 4,048 2.10 2.15
Vehicles & Machinery............... 97 94 1,293 1,223 7.50 7.69
Aluminum, Nonferrous Metals & Ores 51 53 1,941 2,047 2.63 2.59
Shortlines and other............... (50) (77) (4,277) (5,468) - -
------ ------ ------- -------
Total.............................. $2,402 $2,312 122,645 115,368 1.96 2.00
====== ====== ======= =======
</TABLE>
Total revenues for the first six months of 1994 were $2,402 million compared
with revenues of $2,312 million for the same period in 1993. The $90 million
improvement was primarily attributable to Coal revenues. Lower Agricultural
Commodities revenues were offset by reduced Shortlines and other.
Coal revenues improved $81 million during the first six months of 1994 as a
result of increased traffic. This increase was primarily caused by a rise in
the demand for electricity as well as the need for utilities to replenish coal
stockpiles which were partially depleted during the 1993 summer flooding.
Partially offsetting the increase in traffic was a decline in revenues per
revenue ton mile. Lower yields resulted from continuing competitive pricing
pressures in contract renegotiations and declining cost indices.
Revenues from the transportation of Agricultural Commodities during 1994 were
$26 million less than the first six months of 1993, primarily as a result of a
decline in volumes. This decrease was principally caused by corn and soybean
revenues which were less than prior year revenues by $31 million and $10
million, respectively. These volume related declines were largely
attributable to reduced crop production and lower export demand. A $13
million improvement in barley revenues, caused by favorable market conditions
during the first six months of 1994 partially offset corn and soybean
results. The impact of the overall volume decline was reduced by an increase
in yield which is a product of traffic mix, price and length of haul.
-5-
<PAGE>
BURLINGTON NORTHERN RAILROAD COMPANY and SUBSIDIARIES
Item 2. Management's Analysis of Results of Operations
Revenues for Intermodal decreased $7 million, for the year, while Forest
Products and Minerals Processors revenues increased $7 million and $6 million,
respectively, when compared with the same period in 1993. Intermodal
revenues reflect Railroad's decision to close two intermodal hub centers in
Texas beginning in the second quarter of this year. Railroad has estimated
lost revenues in excess of $25 million for the first six months of 1994
relating to the closure of these hubs. Withdrawal from the Texas market,
however, has helped improve operating performance in Railroad's key intermodal
lanes, boosting revenues from existing customers and offsetting a portion of
the lost revenues. Increased housing starts during the current year
contributed to a $10 million improvement in lumber revenues within Forest
Products revenues, while improved Minerals Processors revenues resulted from
stronger clays and aggregates traffic caused by an increase in export demand.
Current year revenues for Chemicals, Consumer Products, Iron & Steel, Vehicles
& Machinery and Aluminum, Nonferrous Metals & Ores were relatively flat
compared with the same period in 1993.
Total current year revenues also benefited from a $27 million reduction in
Shortlines and other. This decline was partially due to a decrease in amounts
due to shortline railroads caused by less Railroad traffic on their lines,
additional haulage agreement revenues and increased miscellaneous revenues.
Expenses
Total operating expenses for the first six months of 1994 were $2,050 million
compared with expenses of $2,000 million for the same period in 1993. The
operating ratio for the six months ended June 30, 1994 was 85 percent, an
improvement of 2 percentage points compared with the same period in 1993.
Compensation and benefits expenses for the first six months of 1994 were $14
million greater when compared with 1993. The combination of higher traffic
volumes in 1994, the three percent basic wage increase for union represented
employees, effective July 1993, and severe winter weather in January and
February of 1994 caused an increase in excess of $18 million to wages and
related payroll taxes. Increases in salaries, related payroll taxes and
pension expense, due to a reduction in the discount rate used in determining
the projected benefit obligation, also contributed to higher compensation and
benefits expenses. These increases were partially offset by a $14 million
decrease due to reduced crew sizes in the Northern tier, decreases for cost of
living allowances and decreases in railroad unemployment and annuity taxes.
Fuel expenses for the first six months of 1994 were $5 million lower compared
with 1993 primarily due to a favorable price variance of $16 million. The
average price paid for diesel fuel decreased to 56.6 cents per gallon in 1994
from 61.7 cents per gallon in 1993 despite the 4.3 cents per gallon increase
in the federal fuel tax, effective October 1, 1993, enacted as part of the
Omnibus Budget Reconciliation Act of 1993. These savings were partially
offset by increased consumption due to higher traffic volumes and severe
weather experienced in January and February of 1994. Railroad has a program
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<PAGE>
BURLINGTON NORTHERN RAILROAD COMPANY and SUBSIDIARIES
Item 2. Management's Analysis of Results of Operations
to hedge against fluctuations in the price of its diesel fuel purchases. This
program includes forward purchases for delivery at fueling facilities and
petroleum futures contracts.
Materials expenses for the first six months of 1994 increased $1 million
compared with 1993, primarily due to higher track and locomotive materials
costs resulting from higher maintenance levels and severe winter weather
experienced in January and February of 1994. These costs were partially
offset by increased scrap sales due to the higher maintenance levels and a
reduction in expenditures for safety and protective equipment deployed in 1993.
Equipment rents expenses for the first six months of 1994 were $37 million
higher than the first six months of 1993. A significant factor was payments
of $11 million for failure to achieve service commitments under various
transportation agreements. Also contributing to the increase were higher
lease rentals, for both rail cars and locomotives, higher car-hire expenses
and increased rentals from an affiliate. These increases were attributable to
traffic volume growth coupled with decreased train velocity. Slower
performance resulted from severe weather operating conditions in January and
February of 1994 and general equipment congestion caused by the additional
rail cars in service.
Year-to-date purchased services expenses increased $10 million compared with
the same period in 1993. The most significant contributing factors were
higher intermodal and automotive traffic-related costs. These increases were
partially offset by payments received from The Atchison, Topeka and Santa Fe
Railway Company (ATSF) for the reimbursement of operating services provided by
BN to ATSF.
Depreciation expense for the first six months of 1994 was slightly lower than
the same period in 1993.
Other operating expenses were $5 million less compared with the first six
months of 1993. A $23 million decrease in costs associated with personal
injury claims was substantially offset by an increase in derailment-related
expenses of approximately $10 million and higher property taxes.
Interest expense for the year remained constant with 1993. A decrease in
interest expense due to a lower average outstanding debt balance in 1994 was
offset by a favorable court ruling in 1993 which reduced interest expense for
the 1993 period.
Other income, net was $1 million lower in 1994 compared with the same period
in 1993. This primarily resulted from lower net gains on property
dispositions occurring in 1994 as compared with 1993.
The effective tax rate was 38.8 percent for the first six months of 1994
compared with 37.1 percent for the same period in 1993. This increase
resulted primarily from the 1 percent increase in the corporate federal income
tax rate as a part of the Omnibus Budget Reconciliation Act of 1993. This
rate change was enacted in the third quarter of 1993 with retroactive
application. Previously issued financial statements were not adjusted.
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<PAGE>
BURLINGTON NORTHERN RAILROAD COMPANY and SUBSIDIARIES
Item 2. Management's Analysis of Results of Operations
Other Matters
- - -------------
Environmental issues
Railroad's operations, as well as those of its competitors, are subject to
extensive federal, state and local environmental regulation. In order to
comply with such regulation and to be consistent with Railroad's corporate
environmental policy, Railroad's operating procedures include practices to
protect the environment. Amounts expended relating to such practices are
inextricably contained in the normal day-to-day costs of Railroad's business
operations.
Under the requirements of the Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (Superfund) and certain other laws,
Railroad is potentially liable for the cost of clean-up of various
contaminated sites identified by the U.S. Environmental Protection Agency and
other agencies. Railroad has been notified that it is a potentially
responsible party (PRP) for study and clean-up costs at a number of sites and,
in many instances, is one of several PRPs. Railroad generally participates in
the clean-up of these sites through cost-sharing agreements with terms that
vary from site to site. Costs are typically allocated based on relative
volumetric contribution of material, the amount of time the site was owned or
operated, and/or the portion of the total site owned or operated by each PRP.
However, under Superfund and certain other laws, as a PRP, Railroad can be
held jointly and severally liable for all environmental costs associated with
a site.
Environmental costs include initial site surveys and environmental studies of
potentially contaminated sites as well as costs for remediation and
restoration of sites determined to be contaminated. Liabilities for
environmental clean-up costs are initially recorded when Railroad's liability
for environmental clean-up is both probable and a reasonable estimate of
associated costs can be made. Adjustments to initial estimates are recorded
as necessary based upon additional information developed in subsequent
periods. Railroad conducts an ongoing environmental contingency analysis,
which considers a combination of factors, including independent consulting
reports, site visits, legal reviews, analysis of the likelihood of
participation in and ability to pay for clean-up by other PRPs, and historical
trend analysis.
Railroad is involved in a number of administrative and judicial proceedings in
which it is being asked to participate in the clean-up of sites contaminated
by material discharged into the environment. Railroad paid approximately $9
million during the six months ended June 30, 1994 relating to mandatory
clean-up efforts, including amounts expended under federal and state voluntary
clean-up programs. At this time, Railroad expects to spend approximately $110
million in future years to remediate and restore these sites.
Liabilities for environmental costs represent Railroad's best estimates for
remediation and restoration of these sites and include asserted and unasserted
claims. Railroad's best estimate of unasserted claims was approximately $5
million as of June 30, 1994. Although recorded liabilities include Railroad's
best estimates of all costs, without reduction for anticipated recovery from
-8-
<PAGE>
BURLINGTON NORTHERN RAILROAD COMPANY and SUBSIDIARIES
Item 2. Management's Analysis of Results of Operations
insurance, Railroad's total clean-up costs at these sites cannot be predicted
with certainty due to various factors such as the extent of corrective actions
that may be required, evolving environmental laws and regulations, advances in
environmental technology, the extent of other PRPs participation in clean-up
efforts, developments in ongoing environmental analyses related to sites
determined to be contaminated, and developments in environmental surveys and
studies of potentially contaminated sites. As a result, charges to income for
environmental liabilities could possibly have a significant effect on results
of operations in a particular quarter or fiscal year as individual site
studies and remediation and restoration efforts proceed or as new sites
arise. However, expenditures associated with such liabilities are typically
paid out over a long period, in some cases up to 40 years, and are therefore
not expected to have a material adverse effect on Railroad's consolidated
financial position, cash flow or liquidity.
Proposed merger
As of June 29, 1994, BNI and Santa Fe Pacific Corporation (Santa Fe) entered
into an Agreement and Plan of Merger (the Agreement) pursuant to which, on the
terms and conditions set forth in the Agreement, Santa Fe will merge (the
Merger) with and into BNI, and BNI will be the surviving corporation. On June
30, 1994, BNI and Santa Fe issued a joint press release announcing, among
other things, the execution of the Agreement and describing the conversion of
each Santa Fe share into 0.27 of a share of BNI common stock to be effected
upon consummation of the proposed Merger. Consummation of the Merger is
subject to approval by the stockholders of BNI and Santa Fe, approval by the
Interstate Commerce Commission, approval under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, and other customary conditions. As is typical in
the context of a merger, upon stockholder approval, certain benefits of
Railroad officers and employees will vest. In particular, restrictions placed
upon certain BNI stock grants will lapse and the previously unearned
compensation relating to such restricted stock, included in BNI stockholders'
equity, will then be a non-cash charge to compensation and benefits expense.
As of June 30, 1994 such unearned compensation relating to restricted stock
was approximately $27 million. BNI is currently evaluating alternatives
pursuant to which such restrictions would continue to remain in effect by the
voluntary action of certain Railroad officers and employees and accordingly,
may delay the timing of recognition of the unearned compensation as expense
and the amount thereof. While BNI and Railroad expect to incur additional
costs related to the merger, it is anticipated that the combined company will
realize significant business and economic advantages not available to either
company on a stand alone basis.
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<PAGE>
BURLINGTON NORTHERN RAILROAD COMPANY and SUBSIDIARIES
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Wheat and Barley Transportation Rates
In September 1980 a class action lawsuit was filed against Railroad in United
States District Court for the District of Montana ("District Court")
challenging the reasonableness of Railroad's export wheat and barley rates.
The class consists of Montana grain producers and elevators. The plaintiffs
sought a finding that Railroad's single car export wheat and barley rates for
shipments moving from Montana to the Pacific Northwest were unreasonably high
and requested damages in the amount of $64 million. In March 1981 the District
Court referred the rate reasonableness issue to the Interstate Commerce
Commission ("ICC"). Subsequently, the State of Montana filed a complaint at
the ICC challenging Railroad's multiple car rates for Montana wheat and barley
movements occurring after October 1, 1980.
The ICC issued a series of decisions in this case from 1988 to 1991. Under
these decisions, the ICC applied a revenue to variable cost test to the rates
and determined that Railroad owed $9,685,918 in reparations plus interest. In
its last decision, dated November 26, 1991, the ICC found Railroad's total
reparations exposure to be $16,559,012 through July 1, 1991. The ICC also
found that Railroad's current rates were below a reasonable maximum and vacated
its earlier rate prescription order.
Railroad appealed to the United States Court of Appeals for the District of
Columbia Circuit ("D.C. Circuit") those portions of the ICC's decisions
concerning the post-October 1, 1980 rate levels. Railroad's primary contention
on appeal was that the ICC erred in using the revenue to variable cost rate
standard to judge the rates instead of Constrained Market Pricing/Stand Alone
Cost principles. The limited portions of decisions that cover pre-October 1,
1980 rates were appealed to the Montana District Court.
On March 24, 1992, the Montana District Court dismissed plaintiffs' case as to
all aspects other than those relating to pre-October 1, 1980 rates. On
February 9, 1993, the D.C. Circuit served its decision regarding the appeal of
the several ICC decisions in this case. The Court held that the ICC did not
adequately justify its use of the revenue to variable cost standard as Railroad
had argued and remanded the case to the ICC for further administrative
proceedings.
On July 22, 1993, the ICC served an order in response to the D.C. Circuits'
February 9, 1993 decision. In its order, the ICC stated it would use the
Constrained Market Pricing/Stand Alone Cost Standards in assessing the
reasonableness of Railroad wheat and barley rates moving from Montana to
Pacific Coast ports from 1978 forward. The ICC assigned the case to the Office
of Hearings to develop a procedural schedule. The parties are now engaged in
discovery.
Environmental Proceeding
On May 25, 1994, the United States Department of Justice ("Department") filed
suit on behalf of the United States Environmental Protection Agency ("EPA")
against Railroad in United States District Court for the Eastern District of
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<PAGE>
BURLINGTON NORTHERN RAILROAD COMPANY and SUBSIDIARIES
PART II OTHER INFORMATION
Wisconsin for the release of oil and hazardous substances into navigable waters
of the United States in the course of three derailments. Specifically
referenced are (1) the alleged release of hazardous substances into the Nemadji
River and its shoreline near Superior, Wisconsin, on June 30, 1992, (2) the
alleged release of oil into the North Platte River and its shoreline near
Guernsey, Wyoming, on January 9, 1993, and (3) the alleged release of oil into
a tributary of the Bighorn River near Worland, Wyoming, on May 6, 1993. The
suit claims that pursuant to 33 U.S.C. Section 1321(b)(7), Railroad is liable
to the United States for civil penalties of up to $25,000 per day of violation
or $1,000 per barrel of oil or per reportable quantity of each hazardous
substance discharged. The EPA calculates the statutory maximum penalty
associated with these three spills to be $10,137,000. Railroad's answer in the
suit is not yet due.
Under the applicable water pollution statutes it appears that some fine against
Railroad is likely. However, such statutes, specifically 33 U.S.C. Section
1321(b)(8), provide that penalties shall be mitigated based upon factors such
as the seriousness of the violation, the economic benefit to the violator, the
degree of culpability, the history of violation and the response of the
violator to minimize or mitigate the adverse effects of the spill.
Furthermore, issues concerning whether the Worland spill occurred in navigable
waters of the United States and whether the EPA's calculations for the Nemadji
spill are proper significantly affect the amount of any fine. Based upon the
facts of these spills and Railroad's conduct, all of the above-referenced
mitigation factors favor a substantially lower fine than that calculated by the
EPA and the Department.
Settlement meetings with the Department have involved discussions of the basis
for the Department's claims and penalty calculations, and Railroad has
presented mitigating factors in the context of the allegations. Progress
toward settlement has been achieved and the Railroad has made a settlement
proposal. The Department has visited the spill site, and the Railroad is
awaiting the government's settlement response. If a compromise is not reached,
however, Railroad believes that it has substantial defenses to, and evidence to
mitigate the severity of any fines which could be imposed. Railroad believes
it can demonstrate that the amounts claimed by the government are out of
proportion to any reasonable assessment. Accordingly, in litigation, Railroad
believes it should be successful in significantly reducing the amount of any
fine from the above calculated statutory maximum.
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<PAGE>
BURLINGTON NORTHERN RAILROAD COMPANY and SUBSIDIARIES
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
The following exhibits are filed as part of this report:
Designation Nature of Exhibit
----------- -----------------
10.1 364-Day Competitive Advance and Revolving
Credit Facility Agreement, dated as of May
6, 1994, between Burlington Northern
Railroad Company and a consortium of
lenders.
10.2 5-Year Competitive Advance and Revolving
Credit Facility Agreement, dated as of May
6, 1994, between Burlington Northern
Railroad Company and a consortium of
lenders.
10.3 Employment Agreement, dated April 22, 1994,
between Burlington Northern Railroad
Company and Mr. Ronald A. Rittenmeyer.
10.4 Employment Agreement, dated April 18, 1994,
between Burlington Northern Railroad
Company and Mr. Greg Swienton.
B. Reports on Form 8-K
During the period, a report on Form 8-K, dated June 29, 1994 was
filed attaching a press release announcing the execution of an
Agreement and Plan of Merger, dated as of June 29, 1994, between
Burlington Northern Inc. and Santa Fe Pacific Corporation describing
the conversion of Santa Fe shares to be effected upon consummation of
the proposed Merger and setting forth certain conditions upon which
the proposed Merger is contingent.
Items 2, 3, 4 and 5 of Part II were not applicable and have been
omitted.
-12-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BURLINGTON NORTHERN RAILROAD COMPANY
(Registrant)
By: /s/ Don S. Snyder
--------------------------------
Vice President, Controller
By: /s/ David C. Anderson
--------------------------------
Executive Vice President &
Chief Financial Officer
Date: August 4, 1994
-13-
<PAGE>
BURLINGTON NORTHERN RAILROAD COMPANY and SUBSIDIARIES
Exhibit Index
Sequentially
Exhibit Numbered
Number Description Page
- - ------- ----------- ------------
10.1 364-Day Competitive Advance and
Revolving Credit Facility Agreement,
dated as of May 6, 1994, between
Burlington Northern Railroad Company
and a consortium of lenders.
10.2 5-Year Competitive Advance and
Revolving Credit Facility Agreement,
dated as of May 6, 1994, between
Burlington Northern Railroad Company
and a consortium of lenders.
10.3 Employment Agreement, dated
April 22, 1994, between Burlington
Northern Railroad Company and
Mr. Ronald A. Rittenmeyer.
10.4 Employment Agreement, dated
April 18, 1994, between Burlington
Northern Railroad Company and
Mr. Greg Swienton.
<PAGE>
EXHIBIT 10.1
================================================================================
364-DAY COMPETITIVE ADVANCE AND REVOLVING CREDIT
FACILITY AGREEMENT
Dated as of May 6, 1994
among
BURLINGTON NORTHERN RAILROAD COMPANY,
THE LENDERS NAMED HEREIN,
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Administrative Agent
and
CHEMICAL BANK AGENCY SERVICES CORPORATION,
as Competitive Advance Facility Agent
================================================================================
[CS&M Ref. No. 6700-227]
[6700-070(X)RAF/CV08A.WPF/30D/4674W]
<PAGE>
TABLE OF CONTENTS
Article Section Page
- - ------- ------- ----
I. DEFINITIONS
1.01 Defined Terms ..................... 1
1.02 Terms Generally ................... 17
II. THE CREDITS
2.01 Commitments ....................... 18
2.02 Loans ............................. 18
2.03 Competitive Bid Procedure ......... 20
2.04 Standby Borrowing Procedure ....... 24
2.05 Refinancings ...................... 24
2.06 Conversion and Continuation of
Standby Borrowings .............. 25
2.07 Fees .............................. 27
2.08 Repayment of Loans ................ 28
2.09 Interest on Loans ................. 29
2.10 Default Interest .................. 30
2.11 Alternate Rate of Interest ........ 30
2.12 Termination and Reduction of
Commitments ..................... 31
2.13 Prepayment ........................ 32
2.14 Reserve Requirements; Change in
Circumstances ................... 33
2.15 Change in Legality ................ 35
2.16 Indemnity ......................... 36
2.17 Pro Rata Treatment ................ 37
2.18 Sharing of Setoffs ................ 37
2.19 Payments .......................... 38
2.20 Taxes ............................. 39
2.21 Termination or Assignment of
Commitments Under Certain
Circumstances ................... 42
III. REPRESENTATIONS AND WARRANTIES 43
IV. CONDITIONS OF LENDING
4.01 Conditions to Effectiveness of
Commitments ..................... 47
4.02 Conditions to All Borrowings ...... 48
[6700-070(X)RAF/CTO8A.wpf/19N/4674]
<PAGE>
Article Section Page
- - ------- ------- ----
V. AFFIRMATIVE COVENANTS
5.01 Existence; Businesses and
Properties ...................... 49
5.02 Insurance ......................... 49
5.03 Reporting Requirements ............ 50
5.04 Consolidated Tangible Net Worth ... 53
5.05 Taxes ............................. 53
VI. NEGATIVE COVENANTS
6.01 Debt .............................. 53
6.02 Sale, etc., of Assets ............. 53
6.03 Mergers, etc ...................... 55
6.04 Liens ............................. 55
6.05 Sales of Accounts Receivable ...... 56
VII. EVENTS OF DEFAULT ........................ 56
VIII. THE AGENTS ............................... 60
IX. MISCELLANEOUS
9.01 Notices ........................... 63
9.02 Survival of Agreement ............. 64
9.03 Binding Effect .................... 64
9.04 Successors and Assigns ............ 64
9.05 Expenses; Indemnity ............... 68
9.06 Right of Setoff ................... 70
9.07 Applicable Law .................... 70
9.08 Waivers; Amendment ................ 70
9.09 Interest Rate Limitation .......... 71
9.10 Entire Agreement .................. 71
9.11 Severability ...................... 71
9.12 Counterparts ...................... 72
9.13 Headings .......................... 72
9.14 Jurisdiction; Consent to Service of
Process ......................... 72
Exhibit A-1 Form of Competitive Bid Request
Exhibit A-2 Form of Notice of Competitive Bid Request
Exhibit A-3 Form of Competitive Bid
[6700-070(X)RAF/CT08A.wpf/19N/4674]
<PAGE>
Exhibit A-4 Form of Competitive Bid Accept/Reject Letter
Exhibit A-5 Form of Standby Borrowing Request
Exhibit B Administrative Questionnaire
Exhibit C Form of Assignment and Acceptance
Exhibit D Form of Opinion of Francis T. Kelly, Esq.,
Counsel for the Borrower
Exhibit E Form of Opinion of Douglas J. Babb, Vice
President and General Counsel of the
Borrower
Schedule 2.01 Commitments
Schedule 6.04(a) Existing Liens
[6700-070(X)RAF/CT08A.wpf/19N/4674]
<PAGE>
364-DAY COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY
AGREEMENT dated as of May 6, 1994, among BURLINGTON NORTHERN
RAILROAD COMPANY, a Delaware corporation (the "Borrower"); the
lenders listed in Schedule 2.01 hereto (the "Lenders"); TEXAS
COMMERCE BANK NATIONAL ASSOCIATION, a national banking
association, as administrative agent (in such capacity, the
"Administrative Agent") and CHEMICAL BANK AGENCY SERVICES
CORPORATION, as competitive advance facility agent (in such
capacity, the "CAF Agent").
The Borrower has requested the Lenders to extend credit to the
Borrower in order to enable it 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
Termination Date (as herein defined) a principal amount not in excess of
$300,000,000 at any time outstanding. The Borrower has also requested the
Lenders to provide a procedure pursuant to which the Borrower may invite the
Lenders to bid on an uncommitted basis on short-term borrowings by the Borrower.
The proceeds of such borrowings are to be used for general corporate purposes,
including providing backup liquidity for the Borrower's commercial paper program
and for acquisitions of any person approved by the board of directors or other
comparable body of such person. The Lenders are willing to extend such credit
to the Borrower on the terms and subject to the conditions herein set forth.
Accordingly, the Borrower, the Lenders, the Administrative Agent and
the CAF Agent agree as follows:
ARTICLE I. DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the
--------------
following terms shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
-------------
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
2
"ABR Loan" shall mean any Standby Loan bearing interest at a rate
--------
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Adjusted CD Rate" shall mean, with respect to any CD Borrowing for
----------------
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/100 of 1%) equal to the sum of (a) a rate per annum equal to the
product of (i) the Fixed CD Rate in effect for such Interest Period and (ii)
Statutory Reserves, plus (b) the Assessment Rate. For purposes hereof, the term
"Fixed CD Rate" shall mean the arithmetic average (rounded upwards, if
-------------
necessary, to the next 1/100 of 1%) of the prevailing rates per annum bid at or
about 10:00 a.m., New York City time, to each Reference Bank on the first
Business Day of the Interest Period applicable to such CD Borrowing by three New
York City negotiable certificate of deposit dealers of recognized standing for
the purchase at face value of negotiable certificates of deposit of such
Reference Bank in a principal amount approximately equal to such Reference
Bank's portion of such CD Borrowing and with a maturity comparable to such
Interest Period.
"Administrative Questionnaire" shall mean an Administrative
----------------------------
Questionnaire in the form of Exhibit B hereto.
"Affiliate" shall mean, when used with respect to a specified person,
---------
another person that directly, or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the person
specified.
"Agent Fees" shall have the meaning given such term in Section
----------
2.07(b).
"Agents" shall mean the CAF Agent and the Administrative Agent.
------
"Alternate Base Rate" shall mean, for any day, a rate per annum
-------------------
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of
(a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such
day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1%. For purposes hereof, "Prime Rate" shall mean as of a particular
----------
date, the prime rate most recently announced by the Administrative Agent and
thereafter entered in the minutes of the Administrative
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
3
Agent's Loan and Discount Committee, automatically fluctuating upward and
downward with and at the time specified in each such announcement without notice
to the Borrower or any other person, which prime rate may not necessarily
represent the lowest or best rate actually charged to a customer. "Base CD
-------
Rate" shall mean the sum of (a) the product of (i) the Three-Month Secondary CD
- - ----
Rate and (ii) Statutory Reserves and (b) the Assessment Rate. "Three-Month
-----------
Secondary CD Rate" shall mean, for any day, the secondary market rate for three-
- - -----------------
month certificates of deposit reported as being in effect on such day (or, if
such day shall not be a Business Day, the next preceding Business Day) by the
Board through the public information telephone line of the Federal Reserve Bank
of New York (which rate will, under the current practices of the Board, be
published in Federal Reserve Statistical Release H.15(519) during the week
following such day), or, if such rate shall not be so reported on such day or
such next preceding Business Day, the average of the secondary market quotations
for three month certificates of deposit of major money center banks in New York
City received at approximately 10:00 a.m., New York City time, on such day (or,
if such day shall not be a Business Day, on the next preceding Business Day) by
the Administrative Agent from three New York City negotiable certificate of
deposit dealers of recognized standing selected by it. "Federal Funds Effective
-----------------------
Rate" shall mean, for any day, the weighted average of the rates on overnight
- - ----
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for the day of
such transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Base CD
Rate or the Federal Funds Effective Rate or both for any reason, including the
inability of the Administrative Agent to obtain sufficient quotations in
accordance with the terms thereof, the Alternate Base Rate shall be determined
without regard to clause (b) or (c), or both, of the first sentence of this
definition, as appropriate, until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a
change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate shall be effective on the effective date of
[6700-070(A)RAF/A08A.WPF/30D/467AW]
<PAGE>
4
\such change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal
Funds Effective Rate, respectively.
"Applicable Fee Percentage" shall mean on any date the applicable
-------------------------
percentage set forth below based upon the ratings applicable on such date to
indebtedness outstanding under the Mortgage Indenture or similar senior,
secured, non-credit-enhanced long-term indebtedness of the Borrower (other than
the Northern Pacific 3% General Lien Bonds due 2047 and the St. Louis-San
Francisco 5% Debentures due 2006) for borrowed money ("Index Debt"):
<TABLE>
<CAPTION>
Applicable
Fee
Percentage
-----------
<S> <C>
Category 1
----------
A or higher by S&P; .100%
A2 or higher by Moody's
Category 2
----------
A- by S&P; .100%
A3 by Moody's
Category 3
----------
BBB+ by S&P; .125%
Baa1 by Moody's
Category 4
----------
BBB by S&P; .125%
Baa2 by Moody's
Category 5
----------
BBB- or lower by S&P; .150%
Baa3 or lower by Moody's
</TABLE>
For purposes of the foregoing, (i) if either Moody's or S&P shall not have in
effect a rating for Index Debt (other than because such rating agency shall no
longer be in the business of rating corporate debt obligations), then such
rating agency will be deemed to have established a rating for Index Debt in
Category 5; (ii) if the ratings established or deemed to have been established
by Moody's and S&P shall fall within different
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
5
Categories, the Applicable Fee Percentage shall be determined by reference to
the inferior (or numerically highest) Category, (iii) if any rating established
or deemed to have been established by Moody's or S&P shall be changed (other
than as a result of a change in the rating system of either Moody's or S&P),
such change shall be effective as of the date on which such change is first
announced by the rating agency making such change and (iv) in the event, and for
so long as, the commercial paper rating applicable to the Borrower shall be
lower than A-2 by S&P or lower than P-2 by Moody's or no such rating shall be in
effect from either Moody's or S&P (other than because such rating agency shall
no longer be in the business of rating corporate debt obligations), the
Applicable Fee Percentage shall be determined by reference to Category 5. Each
change in the Applicable Fee Percentage 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
either Moody's or S&P shall change, or if either such rating agency shall cease
to be in the business of rating corporate debt obligations, the Borrower and the
Lenders shall negotiate in good faith to amend the references to specific
ratings in this definition to reflect such changed rating system or the non-
availability of ratings from such rating agency, and pending agreement on such
amendment, the rating in effect immediately prior to such change or cessation
will be used in determining the Applicable Fee Percentage.
"Applicable Margin" shall mean on any date, with respect to Eurodollar
-----------------
Standby Loans, CD Loans or ABR Loans, as the case may be, the applicable spreads
set forth below based upon the ratings applicable on such date to the Borrower's
Index Debt:
<TABLE>
<CAPTION>
Eurodollar CD Loan ABR Loan
Loan Spread Spread Spread
----------- -------- ---------
<S> <C> <C> <C>
Category 1
- - ----------
A or higher by S&P; .200% .325% 0%
Category 2
- - ----------
A- by S&P; .225% .350% 0%
A3 by Moody's
</TABLE>
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
6
<TABLE>
<S> <C> <C> <C>
Category 3
- - ----------
BBB+ by S&P; .250% .375% 0%
Baa1 by Moody's
Category 4
- - ----------
BBB by S&P; .375% .500% 0%
Baa2 by Moody's
Category 5
- - ----------
BBB- or lower by S&P .500% .625% 0%
Baa3 or lower by Moody's
</TABLE>
For purposes of the foregoing, (i) if either Moody's or S&P shall not have in
effect a rating for Index Debt (other than because such rating agency shall no
longer be in the business of rating corporate debt obligations), then such
rating agency will be deemed to have established a rating for Index Debt in
Category 5; (ii) if the ratings established or deemed to have been established
by Moody's and S&P shall fall within different Categories, the Applicable Margin
shall be determined by reference to the inferior (or numerically higher)
Category, (iii) if any rating established or deemed to have been established by
Moody's or S&P shall be changed (other than as a result of a change in the
rating system of either Moody's or S&P), such change shall be effective as of
the date on which such change is first announced by the rating agency making
such change and (iv) in the event, and for so long as, the commercial paper
rating applicable to the Borrower shall be lower than A-2 by S&P or lower than
P-2 by Moody's or no such rating shall be in effect from either Moody's or S&P
(other than because such rating agency shall no longer be in the business of
rating corporate debt obligations), the Applicable Margin shall be determined by
reference to Category 5. Each change in the Applicable Margin shall apply to all
Eurodollar Standby Loans, CD Loans and ABR Loans that are outstanding at any
time 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 either Moody's or S&P shall change, or if
either such rating agency shall cease to be in the business of rating corporate
debt obligations, the Borrower and the Lenders shall negotiate in good faith to
amend the references to specific ratings in this definition to reflect such
changed rating system or the nonavailability of ratings from such rating agency,
and pending agreement on such amendment, the rating in effect immediately prior
to
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
7
such change or cessation will be used in determining the Applicable Margin.
"Assessment Rate" shall mean for any date the annual rate (rounded
---------------
upwards, if necessary, to the next 1/100 of 1%) most recently estimated by the
Administrative Agent as the then current net annual assessment rate that will be
employed in determining amounts payable by the Administrative Agent to the
Federal Deposit Insurance Corporation (or any successor) for insurance by such
Corporation (or such successor) of time deposits made in dollars at the
Administrative Agent's domestic offices.
"Assignment and Acceptance" shall mean an assignment and acceptance
-------------------------
entered into by a Lender and an assignee, and accepted by the Administrative
Agent, in the form of Exhibit C.
"Board" shall mean the Board of Governors of the Federal Reserve
-----
System of the United States.
"Borrowing" shall mean a group of Loans of a single Type made by the
---------
Lenders (or, in the case of a Competitive Borrowing, by the Lender or Lenders
whose Competitive Bids have been accepted pursuant to Section 2.03) on a single
date and as to which a single Interest Period is in effect.
"Business Day" shall mean any day (other than a day which is a
------------
Saturday, Sunday or legal holiday in the State of Texas or New York) on which
banks are open for business in Houston and New York City; provided, however,
-------- -------
that, when used in connection with a Eurodollar 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.
"CD Borrowing" shall mean a Borrowing comprised of CD Loans.
------------
"CD Loan" shall mean any Standby Loan bearing interest at a rate
-------
determined by reference to the Adjusted CD Rate in accordance with the
provisions of Article II.
A "Change in Control" shall be deemed to have occurred if (a) any
-----------------
person or group (within the meaning of Rule 13d-5 of the Securities and Exchange
Commission as in effect on the date hereof) shall own directly or indirectly,
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
8
beneficially or of record, shares representing more than 50% of the aggregate
ordinary voting power represented by the issued and outstanding capital stock of
the Parent (other than as the result of a transaction approved by the Parent's
Board of Directors), (b) a majority of the seats (other than vacant seats) on
the board of directors of the Parent shall at any time have been occupied by
persons who were neither (i) nominated by the board of directors of the Parent,
nor (ii) appointed by directors so nominated, (c) any person or group shall
otherwise directly or indirectly obtain control of the Parent (other than in a
transaction approved by the Parent's Board of Directors) or (d) the Parent shall
cease to control the Borrower.
"Closing Date" shall mean the date hereof.
------------
"Code" shall mean the Internal Revenue Code of 1986, as the same may
----
be amended from time to time.
"Commitment" shall mean, with respect to each Lender, the commitment
----------
of such Lender hereunder as set forth in Schedule 2.01 hereto, as such Lender's
Commitment may be permanently terminated or reduced from time to time pursuant
to Section 2.12. The Commitments shall automatically and permanently terminate
on the Termination Date.
"Competitive Bid" shall mean an offer by a Lender to make a
---------------
Competitive Loan pursuant to Section 2.03.
"Competitive Bid Accept/Reject Letter" shall mean a notification made
------------------------------------
by the Borrower pursuant to Section 2.03(d) in the form of Exhibit A-4.
"Competitive Bid Rate" shall mean, as to any Competitive Bid made by
--------------------
a Lender pursuant to Section 2.03(b), (i) in the case of a Eurodollar Loan, the
Margin, and (ii) in the case of a Fixed Rate Loan, the fixed rate of interest
offered by the Lender making such Competitive Bid.
"Competitive Bid Request" shall mean a request made pursuant to
-----------------------
Section 2.03 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 by the Borrower
under the bidding procedure described in Section 2.03.
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
9
"Competitive Loan" shall mean a loan from a Lender to the Borrower
----------------
pursuant to the bidding procedure described in Section 2.03. Each Competitive
Loan shall be a Eurodollar Competitive Loan or a Fixed Rate Loan.
"Consolidated Tangible Net Worth" shall mean preferred stockholder's
-------------------------------
and common stockholder's equity of the Borrower (other than mandatorily
redeemable preferred stock) minus intangible assets of the Borrower and its
consolidated Subsidiaries.
"Debt" shall mean, without duplication, (i) indebtedness for borrowed
----
money or for the deferred purchase price of property or services whether
evidenced by bonds, debentures, notes or similar instruments or otherwise (but
excluding, in any case, liabilities by endorsement of negotiable instruments for
deposit or collection and liabilities with respect to accounts payable incurred
in the ordinary course of business), (ii) obligations as lessee under leases
which shall have been or should be, in accordance with generally accepted
accounting principles, recorded as capital leases and (iii) obligations under
direct or indirect guarantees in respect of, and obligations to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness on obligations of persons (other than the Borrower and its
consolidated Subsidiaries) of the kinds referred to in clauses (i) and (ii)
above.
"Default" shall mean any event or condition which upon notice, lapse
-------
of time or both would constitute an Event of Default.
"dollars" or "$" shall mean lawful money of the United States of
------- -
America.
"Engagement Letter" shall mean the engagement letter dated April 7,
-----------------
1994, among the Borrower, the Administrative Agent and Chemical Securities Inc.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as the same may be amended from time to time.
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
10
"ERISA Affiliate" shall mean any person who for purposes of Title IV
---------------
of ERISA is a member of the Borrower's controlled group, or is under common
control with the Borrower, within the meaning of Section 414 of the Code and the
regulations promulgated and rulings issued thereunder.
"Eurodollar Borrowing" shall mean a Borrowing comprised of
--------------------
Eurodollar Loans.
"Eurodollar Competitive Borrowing" shall mean a Competitive Borrowing
--------------------------------
comprised of Eurodollar Competitive Loans.
"Eurodollar Competitive Loan" shall mean any Competitive Loan bearing
---------------------------
interest at a rate determined by reference to the LIBO Rate in accordance with
the provisions of Article II.
"Eurodollar Loan" shall mean any Eurodollar Competitive Loan or
---------------
Eurodollar Standby Loan.
"Eurodollar Standby Borrowing" shall mean a Standby Borrowing
----------------------------
comprised of Eurodollar Standby Loans.
"Eurodollar Standby Loan" shall mean any Standby Loan bearing
-----------------------
interest at a rate determined by reference to the LIBO Rate in accordance with
the provisions of Article II.
"Event of Default" shall have the meaning given such term in Article
----------------
VII.
"Existing Facility" shall mean the $500,000,000 Competitive Advance
-----------------
and Revolving Credit Facility Agreement dated as of October 18, 1991, among the
Borrower, the lenders named therein, Texas Commerce Bank National Association,
as administrative agent, and Chemical Bank, as facility agent.
"Existing Liens" shall mean Liens existing on the date hereof and
--------------
described on Schedule 6.04(a) hereto and any Lien arising out of the
refinancing, extension, renewal or refunding of any Debt secured by such Lien,
but only to the extent the amount of such Debt shall not be increased.
"Existing Mortgages" shall mean each security or other agreement of
------------------
whatever nature described within the Burlington Northern Railroad Company Long-
Term Debt Book
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
11
dated December 31, 1993, a copy of which has been delivered by the Borrower
to the Administrative Agent, as such agreements may have been amended or
modified to the date hereof or as they may be amended, supplemented, replaced or
modified from time to time hereafter.
"Facility B Credit Agreement" shall mean the $500,000,000
---------------------------
Competitive Advance and Revolving Credit Facility Agreement dated as of the
date hereof among the Borrower, the lenders named therein, Texas Commerce Bank
National Association, as administrative agent for the lenders, and Chemical Bank
Agency Services Corporation, as CAF Agent.
"Facility Fee" shall have the meaning assigned to such term in Section
------------
2.07(a).
"Federal Funds Effective Rate" shall have the meaning assigned
----------------------------
thereto in the definition of Alternate Base Rate.
"Fees" shall mean the Facility Fee and the Agent Fees.
----
"Fixed Rate Borrowing" shall mean a Borrowing comprised of Fixed
--------------------
Rate Loans.
"Fixed Rate Loan" shall mean any Competitive Loan bearing interest at
---------------
a fixed percentage rate per annum (expressed in the form of a decimal to no
more than four decimal places) specified by the Lender making such Loan in its
Competitive Bid.
"GAAP" shall mean United States generally accepted accounting
----
principles, applied on a basis consistent with the financial statements
referred to in paragraph (e) of Article III hereof.
"Governmental Authority" shall mean any Federal, state, local or
----------------------
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"ICC" shall mean the Interstate Commerce Commission or any successor
---
thereto.
"Index Debt" shall have the meaning assigned thereto in the
----------
definition of Applicable Fee Percentage.
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
12
"Insufficiency" shall mean, with respect to any Plan, the amount, if
-------------
any, by which the present value of the benefit liabilities under such Plan
exceeds the fair market value of the assets of such Plan.
"Interest Payment Date" shall mean, with respect to any Loan, the
---------------------
last day of the Interest Period applicable thereto and, in the case of a
Eurodollar Loan with an Interest Period of more than three months duration or a
Fixed Rate Loan or a CD Loan with an Interest Period of more than 90 days
duration, each day that would have been an Interest Payment Date for such Loan
had successive Interest Periods of three months duration or 90 days duration, as
the case may be, been applicable to such Loan and, in addition, the date of any
refinancing or conversion of such Loan with or to a Loan of a different Type.
"Interest Period" shall mean (a) as to any Eurodollar Borrowing, the
---------------
period commencing on the date of such Borrowing or on the last day of the
immediately preceding Interest Period applicable to such Borrowing, as the case
may be, and ending on the numerically corresponding day (or, if there is no
numerically corresponding day, on the last day) in the calendar month that is
(i) in the case of any Eurodollar Competitive Loan, any whole number of months
(but not more than 12 months) thereafter, as the Borrower may elect and (ii) in
the case of any Eurodollar Standby Loan, 1, 2, 3 or 6 months or, with the
approval of all the Lenders, 9 or 12 months thereafter, as the Borrower may
elect, (b) as to any CD Borrowing, a period of 30, 60, 90, 180, 270 or 360 days
duration, as the Borrower may elect, commencing on the date of such Borrowing,
(c) as to any ABR Borrowing, the period commencing on the date of such Borrowing
and ending on the date 90 days thereafter or, if earlier, on the Maturity Date
or the date of repayment, prepayment or conversion of such Borrowing and (d) as
to any Fixed Rate Borrowing, the period commencing on the date of such Borrowing
and ending on the date specified in the Competitive Bids in which the offer to
make the Fixed Rate Loans comprising such Borrowing were extended, which shall
not be earlier than seven days after the date of such Borrowing or later than
360 days after the date of such Borrowing; provided, however, that 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 Eurodollar Loans only, such next succeeding Business Day would fall in the
next calendar month, in which case such Interest Period shall end on the
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
13
next preceding Business Day. Interest shall accrue from and including the first
day of an Interest Period to but excluding the last day of such Interest Period.
"LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for
---------
any Interest Period, an interest rate per annum equal to the average (rounded
upwards, if necessary, to the next 1/16 of 1%) of the rates per annum at which
dollar deposits for a maturity comparable to such Interest Period are offered by
the principal London offices of the Reference Banks (or, if any Reference Bank
does not at the time maintain a London office, the principal London office of
any Affiliate of such Reference Bank) 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 in amounts approximately
equal to the amount of such Borrowing.
"Lien" shall mean any lien, security interest or other charge or
----
encumbrance, or any assignment of the right to receive income, or any other type
of preferential arrangement, in each case to secure any obligation of any
person.
"Loan" shall mean any Competitive Loan or Standby Loan.
----
"Loan Documents" shall mean this Agreement and the Fee Letter dated
--------------
April 7, 1994 among the Administrative Agent, Chemical Securities Inc. and the
Borrower.
"Margin" shall mean, as to any Eurodollar Competitive Loan, the margin
------
(expressed as a percentage rate per annum in the form of a decimal to no more
than four decimal places) to be added to or subtracted from the LIBO Rate in
order to determine the interest rate applicable to such Loan, as specified in
the Competitive Bid relating to such Loan.
"Margin Stock" shall have the meaning given such term under
------------
Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on the
-----------------------
financial condition or operations of the Borrower and its consolidated
Subsidiaries on a consolidated basis.
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
14
"Material Plan" shall mean any Plan the assets of which exceed
-------------
$50,000,000 or the liabilities of which for unfunded benefit liabilities
exceed $15,000,000.
"Maturity Date" shall mean May 3, 1996.
-------------
"Moody's" shall mean Moody's Investors Service.
-------
"Mortgage Indenture" shall mean the Consolidated Mortgage, dated
------------------
March 2, 1970, by Burlington Northern Inc. (the former name of the Borrower) to
Morgan Guaranty Trust Company of New York and Jacob M. Ford II, as trustees, as
amended to the date hereof and as amended, supplemented or modified from time to
time hereafter.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
------------------
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate (other
than one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
Section 414 of the Code) is making or accruing an obligation to make
contributions, or has within any of the preceding five plan years made or
accrued an obligation to make contributions, such plan being maintained pursuant
to one or more collective bargaining agreements.
"Multiple Employer Plan" shall mean a single employer plan, as
----------------------
defined in Section 4001(a)(15) of ERISA, which (i) is maintained for employees
of the Borrower or an ERISA Affiliate and at least one person other than the
Borrower and its ERISA Affiliates or (ii) was so maintained and in respect of
which the Borrower or an ERISA Affiliate could have liability under Section 4064
or 4069 of ERISA in the event such plan has been or were to be terminated.
"Parent" shall mean Burlington Northern Inc., a Delaware corporation.
------
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred
----
to and defined in ERISA, or any successor thereto.
"person" shall mean any natural person, corporation, business trust,
------
joint venture, association, company, partnership or government, or any agency or
political subdivision thereof.
"Plan" shall mean any pension plan (other than a Multiemployer Plan)
----
subject to the provisions of Title IV of
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
15
ERISA or Section 412 of the Code which is maintained for employees of the
Borrower or any ERISA Affiliate.
"Reference Banks" shall mean Texas Commerce Bank National Association,
---------------
Citibank, N.A. and The First National Bank of Chicago.
"Register" shall have the meaning given such term in Section 9.04(d).
--------
"Regulation D" shall mean Regulation D of the Board as from time to
------------
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation G" shall mean Regulation G of the Board as from time to
------------
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation U" shall mean Regulation U of the Board as from time to
------------
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation X" shall mean Regulation X of the Board as from time to
------------
time in effect and all official rulings and interpretations thereunder or
thereof.
"Required Lenders" shall mean, at any time, Lenders having
----------------
Commitments representing at least 55% of the Total Commitment or, for purposes
of acceleration pursuant to clause (ii) of Article VII, Lenders holding Loans
representing at least 55% of the aggregate principal amount of the Loans
outstanding.
"Responsible Officer" shall mean with respect to the subject matter
-------------------
of any covenant, agreement, or obligation of the Borrower contained in this
Agreement, the president, any vice president, treasurer, assistant treasurer or
other officer of the Borrower who in the normal performance of his or her
operational responsibility would have knowledge of such subject matter and the
requirements of such covenants, agreements or obligations of the Borrower with
respect thereto.
"S&P" shall mean Standard and Poor's Corporation.
---
"Standby Borrowing" shall mean a borrowing consisting of simultaneous
-----------------
Standby Loans from each of the Lenders.
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
16
"Standby Borrowing Request" shall mean a request made pursuant to
-------------------------
Section 2.04 in the form of Exhibit A-5.
"Standby Loans" shall mean the revolving loans made by the Lenders to
-------------
the Borrower pursuant to Section 2.04. Each Standby Loan shall be a Eurodollar
Standby Loan, a CD Standby Loan or an ABR Standby Loan.
"Statutory Reserves" shall mean a fraction (expressed as a decimal),
------------------
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves), expressed as a decimal
established by the Board and any other banking authority to which the
Administrative Agent is subject for new negotiable nonpersonal time deposits in
dollars of over $100,000 with maturities approximately equal to (i) the
applicable Interest Period, in the case of the Adjusted CD Rate, and (ii) three
months, in the case of the Base CD Rate (as such term is used in the definition
of "Alternate Base Rate"). Statutory Reserves shall be adjusted automatically on
and as of the effective date of any change in any reserve percentage.
"subsidiary" shall mean, with respect to any person (herein referred
----------
to as the "parent"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or more
than 50% of the general partnership interests are, at the time any determination
is being made, owned, controlled or held, or (b) which is, at the time any
determination is made, otherwise controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.
"Subsidiary" shall mean any subsidiary of the Borrower.
----------
"Termination Date" shall mean May 5, 1995.
----------------
"Termination Event" shall mean (i) a "reportable event," as such term
-----------------
is described in Section 4043 of ERISA, (ii) the withdrawal of the Borrower or
any ERISA Affiliate from a Multiple Employer Plan during a plan year in which it
was a "substantial employer," as such term is defined in Section 4001(a)(2) of
ERISA, or the incurrence of liability by the Borrower or any ERISA Affiliate
under Section 4064 of
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
17
ERISA upon the termination of a Multiple Employer Plan, (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, (iv) the institution of proceedings to
terminate a Plan by the PBGC under Section 4042 of ERISA, (v) a failure to make
a required installment or other payment (within the meaning of Section 412(n)(1)
of the Code) with respect to any Plan or (vi) any other event or condition which
might constitute grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Plan.
"Total Commitment" shall mean at any time the aggregate amount of the
----------------
Lenders' Commitments, as in effect at such time.
"Transfer" shall have the meaning given such term in Section 6.02.
--------
"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 Adjusted CD Rate, the Alternate Base Rate and the
Fixed Rate.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan
--------------------
as a result of a complete or partial withdrawal from such Multiemployer Plan,
as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions in Section 1.01
---------------
shall apply equally to both 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".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. 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; provided,
--------
however, that, for purposes of determining compliance with any covenant set
- - -------
forth in Section 5.04 or Article VI, such terms shall be construed in accordance
with GAAP as in effect on the date of this
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
18
Agreement applied on a basis consistent with the application used in preparing
the Borrower's audited financial statements referred to in paragraph (e) of
Article III.
ARTICLE II. THE CREDITS
SECTION 2.01. Commitments. Subject to the terms and conditions and
-----------
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, to make Standby Loans to the Borrower, at any
time and from time to time on and after the date hereof and until the earlier of
the Termination Date and the termination of the Commitment of such Lender, in an
aggregate principal amount at any time outstanding not to exceed such Lender's
Commitment minus the amount by which the Competitive Loans outstanding at such
time shall be deemed to have used such Commitment pursuant to Section 2.17,
subject, however, to the conditions that (a) at no time shall (i) the sum of (x)
the outstanding aggregate principal amount of all Standby Loans made by all
Lenders plus (y) the outstanding aggregate principal amount of all Competitive
Loans made by all Lenders exceed (ii) the Total Commitment and (b) at all times
the outstanding aggregate principal amount of all Standby Loans made by each
Lender shall equal the product of (i) the percentage which its Commitment
represents of the Total Commitment times (ii) the outstanding aggregate
principal amount of all Standby Loans made pursuant to Section 2.04. Each
Lender's Commitment is set forth opposite its respective name in Schedule 2.01.
Such Commitments may be terminated or reduced from time to time pursuant to
Section 2.12. Within the foregoing limits, the Borrower may borrow, pay or
prepay and reborrow hereunder, on and after the Closing Date and prior to the
Termination Date, subject to the terms, conditions and limitations set forth
herein.
SECTION 2.02. Loans. (a) Each Standby Loan shall be made as part
-----
of a Borrowing consisting of Loans made by the Lenders ratably in accordance
with their Commitments; provided, however, that the failure of any Lender to
-------- -------
make any Standby Loan shall not in itself relieve any other Lender of its
obligation to lend hereunder (it being understood, however, that no Lender shall
be responsible for the failure of any other Lender to make any Loan required to
be made by such other Lender). Each Competitive Loan shall be made in accordance
with the procedures set forth in Section 2.03. The Loans comprising
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
19
any Borrowing shall be (i) in the case of Competitive Loans, in an aggregate
principal amount which is an integral multiple of $1,000,000 and not less than
$5,000,000 and (ii) in the case of Standby Loans, in an aggregate principal
amount which is an integral multiple of $1,000,000 and not less than $20,000,000
(or an aggregate principal amount equal to the remaining balance of the
available Commitments).
(b) Each Competitive Borrowing shall be comprised entirely of
Eurodollar Competitive Loans or Fixed Rate Loans and each Standby Borrowing
shall be comprised entirely of Eurodollar Standby Loans, CD Loans or ABR Loans,
as the Borrower may request pursuant to Section 2.03 or 2.04, as applicable.
Each Lender may at its option make any Eurodollar 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 the Borrower to
repay such Loan in accordance with the terms of this Agreement. Borrowings of
more than one Type may be outstanding at the same time; provided, however, that
-------- -------
the Borrower shall not be entitled to request any Borrowing which, if made,
would result in an aggregate of more than twelve separate Standby Loans of any
Lender being outstanding hereunder at any one time. For purposes of the
foregoing, Loans having different Interest Periods, regardless of whether they
commence or end on the same date, shall be considered separate Loans.
(c) Subject to Section 2.05, each Lender shall make each Loan to be
made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds to the Administrative Agent in Houston, Texas, not
later than 1:00 p.m., New York City time, and the Administrative Agent shall by
3:00 p.m., New York City time, credit the amounts so received in immediately
available funds to an account designated by the Borrower with the Administrative
Agent or, if a Borrowing shall not occur on such date because any condition
precedent herein specified shall not have been met, return the amounts so
received to the respective Lenders. Competitive Loans shall be made by the
Lender or Lenders whose Competitive Bids therefor are accepted pursuant to
Section 2.03 in the amounts so accepted and Standby Loans shall be made by the
Lenders pro rata in accordance with Section 2.17. Unless the Administrative
Agent shall have received notice from a Lender prior to the date of any
Borrowing (or prior to 12:00 noon on the date of such borrowing, in the case of
an ABR Borrowing) that such
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
20
Lender will not make available to the Administrative Agent such Lender's portion
of such Borrowing, the Administrative Agent may assume that such Lender has made
such portion available to the Administrative Agent on the date of such Borrowing
in accordance with this paragraph (c) and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not have made
such portion available to the Administrative Agent, such Lender and the Borrower
severally agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Administrative Agent at (i) in the case of the Borrower, the
interest rate applicable at the time to the Loans comprising such Borrowing and
(ii) in the case of such Lender, the Federal Funds Effective Rate. If such
Lender shall repay to the Administrative Agent such corresponding amount, such
amount shall constitute such Lender's Loan as part of such Borrowing for
purposes of this Agreement.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request any Borrowing if the Interest Period
requested with respect thereto would end after the Termination Date.
SECTION 2.03. Competitive Bid Procedure. (a) In order to request
--------------------------
Competitive Bids, the Borrower shall hand deliver or telecopy (or communicate by
telephone with prompt confirmation by telecopy or in writing) to the CAF Agent
(with a copy to the Administrative Agent) a duly completed Competitive Bid
Request in the form of Exhibit A-1 hereto, to be received by the CAF Agent (and
the Administrative Agent) (i) in the case of a Eurodollar Competitive Borrowing,
not later than 10:30 a.m., New York City time, four Business Days before a
proposed Competitive Borrowing and (ii) in the case of a Fixed Rate Borrowing,
not later than 10:30 a.m., New York City time, one Business Day before a
proposed Competitive Borrowing. No CD Loan or ABR Loan shall be requested in,
or made pursuant to, a Competitive Bid Request. A Competitive Bid Request that
does not conform substantially to the format of Exhibit A-1 may be rejected in
the CAF Agent's sole discretion, and the CAF Agent shall promptly notify the
Borrower of such rejection by telecopier (or by telephone with prompt
confirmation by telecopier or in writing). Such request shall in each case
refer to this Agreement and specify (x) whether the
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
21
Borrowing then being requested is to be a Eurodollar Borrowing or a Fixed Rate
Borrowing, (y) the date of such Borrowing (which shall be a Business Day) and
the aggregate principal amount thereof which shall be in a minimum principal
amount of $5,000,000 and in an integral multiple of $1,000,000, and (z) the
Interest Period with respect thereto (which may not end after the Termination
Date). Promptly after its receipt of a Competitive Bid Request that is not
rejected as aforesaid, the CAF Agent shall invite by telecopier (in the form set
forth in Exhibit A-2 hereto) the Lenders to bid, on the terms and conditions of
this Agreement, to make Competitive Loans pursuant to the Competitive Bid
Request.
(b) Each Lender may, in its sole discretion, make one or more
Competitive Bids to the Borrower responsive to a Competitive Bid Request. Each
Competitive Bid by a Lender must be received by the CAF Agent via telecopier, in
the form of Exhibit A-3 hereto, (i) in the case of a Eurodollar Competitive
Borrowing, not later than 9:30 a.m., New York City time, three Business Days
before a proposed Competitive Borrowing and (ii) in the case of a Fixed Rate
Borrowing, not later than 9:30 a.m., New York City time, on the day of a
proposed Competitive Borrowing. Multiple bids will be accepted by the CAF Agent.
Competitive Bids that do not conform substantially to the format of Exhibit A-3
may be rejected by the CAF Agent, and the CAF Agent shall notify the Lender
making such nonconforming bid of such rejection as soon as practicable. Each
Competitive Bid shall refer to this Agreement and specify (x) the principal
amount (which shall be in a minimum principal amount of $5,000,000 and in an
integral multiple of $1,000,000 and which may equal the entire principal amount
of the Competitive Borrowing requested by the Borrower) of the Competitive Loan
or Loans that the Lender is willing to make to the Borrower, (y) the Competitive
Bid Rate or Rates at which the Lender is prepared to make the Competitive Loan
or Loans and (z) the Interest Period and the last day thereof. If any Lender
shall elect not to make a Competitive Bid, such Lender shall so notify the CAF
Agent by telecopier (I) in the case of Eurodollar Competitive Loans, not later
than 9:30 a.m., New York City time, three Business Days before a proposed
Competitive Borrowing, and (II) in the case of Fixed Rate Loans, not later than
9:30 a.m., New York City time, on the day of a proposed Competitive Borrowing;
provided, however, that failure by any Lender to give such notice shall not
- - -------- -------
cause such Lender to be obligated to make any Competitive Loan as part of such
Competitive Borrowing. A Competitive
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
22
Bid submitted by a Lender pursuant to this paragraph (b) shall be irrevocable.
(c) The CAF Agent shall promptly notify the Borrower by telecopier
(or by telephone promptly confirmed by telecopier) of all the Competitive Bids
made, the Competitive Bid Rate and the principal amount of each Competitive Loan
in respect of which a Competitive Bid was made and the identity of the Lender
that made each bid. The CAF Agent shall send a copy of all Competitive Bids to
the Borrower for its records as soon as practicable after completion of the
bidding process set forth in this Section 2.03.
(d) The Borrower may in its sole and absolute discretion, subject
only to the provisions of this paragraph (d), accept or reject any Competitive
Bid referred to in paragraph (c) above. The Borrower shall notify the CAF
Agent by telephone, confirmed by telecopier in the form of a Competitive Bid
Accept/Reject Letter, whether and to what extent it has decided to accept or
reject any of or all the bids referred to in paragraph (c) above, (x) in the
case of a Eurodollar Competitive Borrowing, not later than 10:30 a.m., New York
City time, three Business Days before a proposed Competitive Borrowing, and (y)
in the case of a Fixed Rate Borrowing, not later than 10:30 a.m., New York City
time, on the day of a proposed Competitive Borrowing; provided, however, that
-------- -------
(i) the failure by the Borrower to give such notice shall be deemed
to be a rejection of all the bids referred to in paragraph (c) above, (ii) the
Borrower shall not accept a bid made at a particular Competitive Bid Rate if the
Borrower has decided to reject a bid made at a lower Competitive Bid Rate, (iii)
the aggregate amount of the Competitive Bids accepted by the Borrower shall not
exceed the principal amount specified in the Competitive Bid Request, (iv) if
the Borrower shall accept a bid or bids made at a particular Competitive Bid
Rate but the amount of such bid or bids shall cause the total amount of bids to
be accepted by the Borrower to exceed the amount specified in the Competitive
Bid Request, then the Borrower shall accept a portion of such bid or bids in an
amount equal to the amount specified in the Competitive Bid Request less the
amount of all other Competitive Bids accepted with respect to such Competitive
Bid Request, which acceptance, in the case of multiple bids at such Competitive
Bid Rate, shall be made pro rata in accordance with the amount of each such bid
at such Competitive Bid Rate, and (v) except pursuant to clause (iv)
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
23
above, no bid shall be accepted for a Competitive Loan unless such Competitive
Loan is in a minimum principal amount of $5,000,000 and an integral multiple of
$1,000,000; provided further, however, that if a Competitive Loan must be in an
-------- ------- -------
amount less than $5,000,000 because of the provisions of clause (iv) above, such
Competitive Loan may be for a minimum of $1,000,000 or any integral multiple
thereof, and in calculating the pro rata allocation of acceptances of portions
of multiple bids at a particular Competitive Bid Rate pursuant to clause (iv)
above the amounts shall be rounded to integral multiples of $1,000,000 in a
manner which shall be in the discretion of the Borrower. A notice given by the
Borrower pursuant to this paragraph (d) shall be irrevocable.
(e) The CAF Agent shall promptly notify each bidding Lender whether
or not its Competitive Bid has been accepted (and if so, in what amount and at
what Competitive Bid Rate) by telecopy sent by the CAF Agent, and each
successful bidder will thereupon become bound, subject to the other applicable
conditions hereof, to make the Competitive Loan in respect of which its bid has
been accepted. The CAF Agent shall also promptly notify the Administrative
Agent of the Competitive Bids that have been accepted, the amounts thereof and
the Competitive Bid Rates applicable thereto.
(f) If the CAF Agent shall become a Lender and shall elect to
submit a Competitive Bid in its capacity as a Lender, it shall submit such bid
directly to the Borrower one quarter of an hour earlier than the earliest time
at which the other Lenders are required to submit their bids to the CAF Agent
pursuant to paragraph (b) above. The CAF Agent will in no event disclose the
terms of any Lender's Competitive Bid to any other Lender; provided that
--------
following the acceptance or rejection of Competitive Bids submitted in
response to any Competitive Bid Request, the CAF Agent may at the request of any
Lender disclose information as to the range of the Competitive Bid Rates at
which Competitive Bids were submitted or accepted.
(g) All notices required by this Section 2.03 shall be given in
accordance with Section 9.01. Notwithstanding any other provision contained in
this Section 2.03, the Borrower shall not request any Competitive Bids after the
Termination Date.
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
24
SECTION 2.04. Standby Borrowing Procedure. In order to request a
---------------------------
Standby Borrowing, the Borrower shall hand deliver or telecopy (or communicate
by telephone with prompt confirmation by telecopy or in writing) to the
Administrative Agent a duly completed Standby Borrowing Request in the form of
Exhibit A-5 (a) in the case of a Eurodollar Standby Borrowing, not later than
11:00 a.m., New York City time, three Business Days before a proposed borrowing,
(b) in the case of a CD Borrowing, not later than 11:00 a.m., New York City
time, two Business Days before a proposed borrowing and (c) in the case of an
ABR Borrowing, not later than 11:00 a.m., New York City time, on the day of a
proposed borrowing. No Fixed Rate Loan shall be requested or made pursuant to a
Standby Borrowing Request. Such notice shall be irrevocable and shall in each
case specify (i) whether the Borrowing then being requested is to be a
Eurodollar Borrowing, a CD Borrowing or an ABR Borrowing; (ii) the date of such
Borrowing (which shall be a Business Day) and the amount thereof which shall be
in a minimum principal amount of $20,000,000 and in an integral multiple of
$1,000,000; and (iii) if such Borrowing is to be a Eurodollar Borrowing or CD
Borrowing, the Interest Period with respect thereto. If no election as to the
Type of Borrowing is specified in any such notice, then the requested Borrowing
shall be an ABR Borrowing. If no Interest Period with respect to any Eurodollar
Borrowing or CD Borrowing is specified in any such notice, then the Borrower
shall be deemed to have selected an Interest Period of one month's duration, in
the case of a Eurodollar Borrowing, or 30 days' duration, in the case of a CD
Borrowing. If the Borrower shall not have given notice in accordance with this
Section 2.04 of its election to refinance a Standby Borrowing prior to the end
of the Interest Period in effect for such Borrowing, then the Borrower shall
(unless such Borrowing is repaid at the end of such Interest Period) be deemed
to have given notice of an election to refinance such Borrowing with an ABR
Borrowing. The Administrative Agent shall promptly advise the Lenders of any
notice given pursuant to this Section 2.04 and of each Lender's portion of the
requested Borrowing.
SECTION 2.05. Refinancings. The Borrower may refinance all or any
------------
part of any Competitive Borrowing or Standby Borrowing with a Borrowing of the
same or a different Type made pursuant to Section 2.03 or Section 2.04, subject
to the conditions and limitations set forth herein and elsewhere in this
Agreement, including
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25
refinancings of Competitive Borrowings with Standby Borrowings and Standby
Borrowings with Competitive Borrowings. Any Borrowing or part thereof so
refinanced shall be deemed to be repaid in accordance with Section 2.08 with the
proceeds of a new Borrowing hereunder and the proceeds of the new Borrowing, to
the extent they do not exceed the principal amount of the Borrowing being
refinanced, shall not be paid by the Lenders to the Administrative Agent or by
the Administrative Agent to the Borrower pursuant to Section 2.02(c); provided,
--------
however, that (i) if the principal amount extended by a Lender in a refinancing
- - -------
is greater than the principal amount extended by such Lender in the Borrowing
being refinanced, then such Lender shall pay such difference to the
Administrative Agent for distribution to the Lenders described in (ii) below,
(ii) if the principal amount extended by a Lender in the Borrowing being
refinanced is greater than the principal amount being extended by such Lender in
the refinancing, the Administrative Agent shall return the difference to such
Lender out of amounts received pursuant to (i) above, and (iii) to the extent
any Lender fails to pay the Administrative Agent amounts due from it pursuant to
(i) above, any Loan or portion thereof being refinanced with such amounts shall
not be deemed repaid in accordance with Section 2.08 and shall be payable by the
Borrower.
SECTION 2.06. Conversion and Continuation of Standby Borrowings. The
--------------------------------------------------
Borrower shall have the right at any time upon prior irrevocable notice to the
Administrative Agent (i) not later than 11:00 a.m., New York City time, one
Business Day prior to conversion, to convert any Eurodollar Standby Borrowing or
CD Borrowing into an ABR Borrowing, (ii) not later than 11:00 a.m., New York
City time, two Business Days prior to conversion or continuation, to convert any
Eurodollar Standby Borrowing or ABR Borrowing into a CD Borrowing or to continue
any CD Borrowing as a CD Borrowing for an additional Interest Period, (iii) not
later than 11:00 a.m., New York City time, three Business Days prior to
conversion or continuation, to convert any ABR Borrowing or CD Borrowing into a
Eurodollar Standby Borrowing or to continue any Eurodollar Standby Borrowing as
a Eurodollar Standby Borrowing for an additional Interest Period, (iv) not later
than 11:00 a.m., New York City time, three Business Days prior to conversion, to
convert the Interest Period with respect to any Eurodollar Standby Borrowing to
another permissible Interest Period and (v) not later than 11:00 a.m., New York
City time, two Business Days prior to conversion, to convert the Interest Period
with
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26
respect to any CD Borrowing to another permissible Interest Period, subject in
each case to the following:
(a) each conversion or continuation shall be made pro rata among the
Lenders in accordance with the respective principal amounts of the Loans
comprising the converted or continued Standby Borrowing;
(b) if less than all the outstanding principal amount of any Standby
Borrowing shall be converted or continued, the aggregate principal amount
of such Standby Borrowing converted or continued shall be an integral
multiple of $1,000,000 and not less than $20,000,000;
(c) if any Eurodollar Standby Borrowing or CD Borrowing is converted
at a time other than the end of the Interest Period applicable thereto, the
Borrower shall pay, upon demand, any amounts due to the Lenders pursuant to
Section 2.16;
(d) any portion of a Standby Borrowing maturing or required to be
repaid in less than one month may not be converted into or continued as a
Eurodollar Standby Borrowing;
(e) any portion of a Standby Borrowing maturing or required to be
repaid in less than 30 days may not be converted into or continued as a CD
Borrowing;
(f) any portion of a Eurodollar Standby Borrowing or CD Borrowing
which cannot be converted into or continued as a Eurodollar Standby
Borrowing or a CD Borrowing by reason of clauses (d) and (e) above shall be
automatically converted at the end of the Interest Period in effect for
such Borrowing into an ABR Borrowing; and
(g) no Interest Period may be selected for any Eurodollar Standby
Borrowing or CD Borrowing that would end later than the Maturity Date.
Each notice pursuant to this Section 2.06 shall be by hand delivery
or telecopier (or by telephone with prompt confirmation by telecopier or in
writing) and irrevocable and shall refer to this Agreement and specify (i) the
identity and amount of the Standby Borrowing that the Borrower requests be
converted or continued,
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27
(ii) whether such Standby Borrowing is to be converted to or continued as a
Eurodollar Standby Borrowing, a CD Borrowing or an ABR Borrowing, (iii) if such
notice requests a conversion, the date of such conversion (which shall be a
Business Day) and (iv) if such Standby Borrowing is to be converted to or
continued as a Eurodollar Standby Borrowing or CD Borrowing, the Interest Period
with respect thereto. If no Interest Period is specified in any such notice
with respect to any conversion to or continuation as a Eurodollar Standby
Borrowing or CD Borrowing, the Borrower shall be deemed to have selected an
Interest Period of one month's duration, in the case of a Eurodollar Standby
Borrowing, or 30 days' duration, in the case of a CD Borrowing. The
Administrative Agent shall advise the other Lenders of any notice given pursuant
to this Section 2.06 and of each Lender's portion of any converted or continued
Standby Borrowing. If the Borrower shall not have given notice in accordance
with this Section 2.06 to continue any Standby Borrowing into a subsequent
Interest Period (and shall not otherwise have given notice in accordance with
this Section 2.06 to convert such Standby Borrowing), such Standby Borrowing
shall, at the end of the Interest Period applicable thereto (unless repaid
pursuant to the terms hereof), automatically be continued into a new Interest
Period as an ABR Borrowing.
SECTION 2.07. Fees. (a) The Borrower agrees to pay to each Lender,
-----
through the Administrative Agent, on each March 31, June 30, September 30 and
December 31 and on the Termination Date or, in the event that Standby Loans are
outstanding on the Termination Date, on the Maturity Date, a facility fee (a
"Facility Fee") equal to the Applicable Fee Percentage on the daily average
amount of the Commitment of such Lender, whether used or unused (and whether or
not the conditions set forth in Section 4.01 shall have been satisfied) and,
after the Termination Date, on the daily average amount of the outstanding Loans
of such Lender, during the preceding quarter (or shorter period commencing with
the date hereof, or ending with the Maturity Date or any date on which the
Commitment of such Lender shall be terminated and all outstanding Loans of such
Lender repaid). All Facility Fees shall be computed on the basis of the actual
number of days elapsed in a year of 365 or 366 days, as appropriate. The
Facility Fee due to each Lender shall commence to accrue on the date of this
Agreement, and shall cease to accrue on the earlier of the Maturity Date and the
date on which the Commitment of such Lender shall have been terminated and all
outstanding Loans of such Lender repaid.
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28
(b) The Borrower agrees to pay the Agents, through the Administrative
Agent, for the Agents' own accounts, the fees set forth in the Engagement Letter
and in the Fee Letter dated April 7, 1994 among the Administrative Agent,
Chemical Securities Inc. and the Borrower (the "Agent Fees") at the times and in
the amounts set forth therein.
(c) All Fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, if and as appropriate,
among the Lenders. Once paid, none of the Fees (other than fees paid in error
and not required to have been paid under the terms of this Agreement) shall be
refundable under any circumstances.
SECTION 2.08. Repayment of Loans. (a) The Borrower agrees to pay
-------------------
the outstanding principal balance of each Competitive Loan on the last day of
the Interest Period applicable to such Competitive Loan and on the Termination
Date. The Borrower agrees to pay the outstanding principal balance of each
Standby Loan on the last day of the Interest Period applicable to such Standby
Loan, except that each Standby Loan outstanding on the Termination Date shall
become due and payable, and the Borrower agrees to pay the outstanding principal
balance of each such Loan, on the Maturity Date. Each Loan shall bear interest
from the date of the Borrowing of which such Loan is a part on the outstanding
principal balance thereof as set forth in Section 2.09.
(b) Each Lender shall, and is hereby authorized by the Borrower to,
maintain, in accordance with its usual practice, records evidencing the
indebtedness of the Borrower to such Lender hereunder from time to time,
including the amounts and Types of and the Interest Periods applicable to the
Loans made by such Lender from time to time and the amounts of principal and
interest paid to such Lender from time to time in respect of such Loans.
(c) The entries made in the records maintained pursuant to paragraph
(b) of this Section 2.08 and in the Register maintained by the Administrative
Agent pursuant to Section 9.04(d) shall be prima facie evidence of the existence
and amounts of the obligations of the Borrower to which such entries relate;
provided, however, that the failure of any Lender or the Administrative Agent to
- - -------- -------
maintain or to make any entry in such records or the Register, as applicable, or
any error therein shall not in
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<PAGE>
29
any manner affect the obligation of the Borrower to repay the Loans in
accordance with the terms of this Agreement.
SECTION 2.09. Interest on Loans. (a) Subject to the provisions of
------------------
Section 2.10, the Loans comprising each Eurodollar Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 360
days) at a rate per annum equal to (i) in the case of each Eurodollar Standby
Loan, the LIBO Rate for the Interest Period in effect for such Borrowing plus
the Applicable Margin from time to time in effect and (ii) in the case of each
Eurodollar Competitive Loan, the LIBO Rate for the Interest Period in effect for
such Borrowing plus the Margin offered by the Lender making such Loan and
accepted by the Borrower pursuant to Section 2.03.
(b) Subject to the provisions of Section 2.10, the Loans comprising
each CD Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 360 days) at a rate per annum equal to the
Adjusted CD Rate for the Interest Period in effect for such Borrowing plus the
Applicable Margin from time to time in effect.
(c) Subject to the provisions of Section 2.10, the Loans comprising
each ABR Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 365 or 366 days, as appropriate, when
determined by reference to the Prime Rate and over a year of 360 days at all
other times) at a rate per annum equal to the Alternate Base Rate.
(d) Subject to the provisions of Section 2.10, each Fixed Rate Loan
shall bear interest at a rate per annum (computed on the basis of the actual
number of days elapsed over a year of 360 days) equal to the fixed rate of
interest offered by the Lender making such Loan and accepted by the Borrower
pursuant to Section 2.03.
(e) Interest on each Loan shall be payable in arrears on each
Interest Payment Date applicable to such Loan except as otherwise provided in
this Agreement. The applicable LIBO Rate, Adjusted CD Rate or Alternate Base
Rate for each Interest Period or day within an Interest Period, as the case may
be, shall be determined by the Administrative Agent, and such determination
shall be conclusive absent manifest error. The Administrative Agent
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<PAGE>
30
shall promptly advise the Borrower and each Lender, as appropriate, of such
determination.
SECTION 2.10. Default Interest. If the Borrower shall default in the
-----------------
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, whether by scheduled maturity, notice of prepayment, acceleration
or otherwise, the Borrower shall on demand from time to time from the
Administrative Agent pay interest, to the extent permitted by law, on such
defaulted amount up to (but not including) the date of actual payment (after as
well as before judgment) at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 365 or 366 days, as appropriate,
when determined by reference to the Prime Rate and over a year of 360 days at
all other times) equal to the Alternate Base Rate plus 1%.
SECTION 2.11. Alternate Rate of Interest. (a) In the event, and on
---------------------------
each occasion, that on the day two Business Days prior to the commencement of
any Interest Period for a Eurodollar Borrowing the Administrative Agent shall
have determined (i) that dollar deposits in the principal amounts of the
Eurodollar Loans comprising such Borrowing are not generally available in the
London interbank market, or (ii) that the rates at which such dollar deposits
are being offered will not adequately and fairly reflect the cost to any Lender
of making or maintaining its Eurodollar Loan during such Interest Period, or
(iii) that reasonable means do not exist for ascertaining the LIBO Rate, the
Administrative Agent shall, as soon as practicable thereafter, give written or
telecopy notice of such determination to the Borrower and the Lenders. In the
event of any such determination, until the Administrative Agent shall have
advised the Borrower and the Lenders that the circumstances giving rise to such
notice no longer exist, (A) in the event the circumstances referred to in (i) or
(iii) above are applicable, any request by the Borrower for a Eurodollar
Competitive Borrowing pursuant to Section 2.03 shall be of no force and effect
and shall be denied by the CAF Agent and (B) any request by the Borrower for a
Eurodollar Standby Borrowing shall be deemed to be a request for an ABR
Borrowing (x) as to all Lenders, in the event the circumstances referred to in
(i) or (iii) above are applicable, or (y) as to each affected Lender, in the
event only the circumstances referred to in (ii) above are applicable. In the
event the circumstances referred to in (ii) above are applicable, all payments
and prepayments of principal which would otherwise have been made on account of
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<PAGE>
31
Eurodollar Loans of the affected Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of such Eurodollar Loans. Each
determination by the Administrative Agent hereunder shall be conclusive absent
demonstrable error.
(b) In the event, and on each occasion, that on or before the day on
which the Adjusted CD Rate for a CD Borrowing is to be determined the
Administrative Agent shall have determined (i) that such Adjusted CD Rate cannot
be determined for any reason, including the inability of the Administrative
Agent to obtain sufficient bids in accordance with the terms of the definition
of Fixed CD Rate, or (ii) that the Adjusted CD Rate for such CD Borrowing will
not adequately and fairly reflect the cost to any Lender of making or
maintaining its CD Loan during such Interest Period, the Administrative Agent
shall, as soon as practicable thereafter, give written or telecopy notice of
such determination to the Borrower and the Lenders. In the event of any such
determination, until the Administrative Agent shall have advised the Borrower
and the Lenders that the circumstances giving rise to such notice no longer
exist, any request by the Borrower for a CD Borrowing shall be deemed to be a
request for an ABR Borrowing (i) as to all Lenders, in the event the
circumstances referred to in (i) above are applicable, or (ii) as to each
affected Lender, in the event only the circumstances referred to in (ii) above
are applicable. In the event the circumstances referred to under (ii) above are
applicable, all payments and prepayments of principal which would otherwise have
been made on account of CD Loans of the affected Lender shall instead be applied
to repay the ABR Loans made by such Lender in lieu of such Loans. Each
determination by the Administrative Agent hereunder shall be conclusive absent
demonstrable error.
SECTION 2.12. Termination and Reduction of Commitments. (a) The
-----------------------------------------
Commitments shall be automatically terminated on the Termination Date.
(b) Upon at least three Business Days' prior irrevocable written or
telecopy notice to the Administrative Agent, the Borrower may at any time in
whole permanently terminate, or from time to time in part permanently reduce,
the Total Commitment; provided, however, that (i) each partial reduction of the
-------- -------
Total Commitment shall be in an integral multiple of $1,000,000 and in a minimum
principal amount of $10,000,000 and (ii) no such termination or
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32
reduction shall be made which would reduce the Total Commitment to an amount
less than the aggregate outstanding principal amount of the Competitive Loans.
(c) Each reduction in the Total Commitment hereunder shall be made
ratably among the Lenders in accordance with their respective Commitments. The
Borrower shall pay to the Administrative Agent for the account of the Lenders,
on the date of each termination or reduction, the Facility Fees on the amount of
the Commitments so terminated or reduced accrued to but not including the date
of such termination or reduction.
SECTION 2.13. Prepayment. (a) The Borrower shall have the right at
-----------
any time and from time to time to prepay any Standby Borrowing, in whole or in
part, upon giving written or telecopy notice (or telephone notice promptly
confirmed by written or telecopy notice) to the Administrative Agent: (i)
before 12:00 noon, New York City time, three Business Days prior to prepayment,
in the case of Eurodollar Loans, (ii) before 12:00 noon, New York City time, two
Business Days prior to prepayment, in the case of CD Loans, and (iii) before
12:00 noon, New York City time, one Business Day prior to prepayment, in the
case of ABR Loans; provided, however, that each partial prepayment shall be in
-------- -------
an amount which is an integral multiple of $1,000,000 and not less than
$10,000,000. The Borrower shall not have the right to prepay any Competitive
Borrowing.
(b) On the date of any termination or reduction of the Commitments
pursuant to Section 2.12, the Borrower shall pay or prepay so much of the
Standby Borrowings as shall be necessary in order that the aggregate principal
amount of the Competitive Loans and Standby Loans outstanding will not exceed
the Total Commitment after giving effect to such termination or reduction.
(c) Each notice of prepayment shall specify the prepayment date and
the principal amount of each Borrowing (or portion thereof) to be prepaid, shall
be irrevocable and shall commit the Borrower to prepay such Borrowing (or
portion thereof) by the amount stated therein on the date stated therein. All
prepayments under this Section 2.13 shall be subject to Section 2.16 but
otherwise without premium or penalty. All prepayments under this Section 2.13
shall be accompanied by accrued interest on the principal amount being prepaid
to the date of payment.
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33
SECTION 2.14. Reserve Requirements; Change in Circumstances. (a)
----------------------------------------------
Notwithstanding any other provision herein, if after the date of this Agreement
any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender of the
principal of or interest on any Eurodollar Loan, CD Loan or Fixed Rate Loan made
by such Lender or any Fees or other amounts payable hereunder (other than
changes in respect of taxes imposed on the overall net income of such Lender by
the jurisdiction in which such Lender has its principal office or by any
political subdivision or taxing authority therein), or shall 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 such Lender
(except any such reserve requirement which is reflected in the Adjusted CD
Rate), or shall impose on such Lender or the London interbank market any other
condition affecting this Agreement or any Eurodollar Loan, CD Loan or Fixed Rate
Loan 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 Eurodollar Loan,
CD Loan or Fixed Rate Loan 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 Borrower
will pay to such Lender upon demand such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered.
Notwithstanding the foregoing, no Lender shall be entitled to request
compensation under this paragraph with respect to any Competitive Loan if it
shall have been aware of the change giving rise to such request at the time of
submission of the Competitive Bid pursuant to which such Competitive Loan shall
have been made.
(b) If any Lender shall have determined that the applicability of any
law, rule, regulation or guideline adopted pursuant to or arising out of the
July 1988 report of the Basle Committee on Banking Regulations and Supervisory
Practices entitled "International Convergence of Capital Measurement and Capital
Standards", or the adoption after the date hereof of any other law, rule,
regulation or guideline regarding capital adequacy, or any change in any of the
foregoing or in the interpretation or administration of any of the foregoing by
any Governmental Authority, central bank or comparable agency charged with the
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34
interpretation or administration thereof, or compliance by any Lender (or any
lending office of such Lender) or any Lender's holding company with any request
or directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on 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 pursuant hereto to a level below that which such
Lender or such Lender's holding company could have achieved but for such
applicability, adoption, change or compliance (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 Borrower shall 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. It is acknowledged that the Facility Fee provided
for in this Agreement has been determined on the understanding that the Lenders
will not be required to maintain capital against their Commitments under
currently applicable laws, regulations and regulatory guidelines. In the event
the Lenders shall be advised by regulatory authorities or shall otherwise
determine on the basis of pronouncements of regulatory authorities that such
understanding is incorrect, it is agreed that the Lenders will be entitled to
make claims under this paragraph based upon prevailing market requirements for
commitments under comparable credit facilities against which capital is required
to be maintained.
(c) A certificate of a Lender setting forth such amount or amounts as
shall be necessary to compensate such Lender as specified in paragraph (a) or
(b) above, as the case may be, shall be delivered to the Borrower and shall be
conclusive absent demonstrable error. The Borrower shall pay each Lender the
amount shown as due on any such certificate delivered by it within 10 days after
the receipt of the same.
(d) Except as provided in this paragraph, failure on the part of any
Lender to demand compensation for any increased costs or reduction in amounts
received or receivable or reduction in return on capital with respect to any
period shall not constitute a waiver of such Lender's right to demand
compensation with respect to such period or any other period. The protection of
this Section shall be
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35
available to each Lender regardless of any possible contention of the invalidity
or inapplicability of the law, rule, regulation, guideline or other change or
condition which shall have occurred or been imposed. No Lender shall be
entitled to compensation under this Section 2.14 for any costs incurred or
reductions suffered with respect to any date unless it shall have notified the
Borrower that it will demand compensation for such costs or reductions under
paragraph (c) above not more than 60 days after the later of (i) such date and
(ii) the date on which it shall have become aware of such costs or reductions.
SECTION 2.15. Change in Legality. (a) Notwithstanding any other
-------------------
provision herein, if any change in any law or regulation or in the
interpretation thereof by any governmental authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by written notice
to the Borrower and to the Administrative Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be made by such
Lender hereunder, whereupon such Lender shall not submit a Competitive Bid
in response to a request for Eurodollar Competitive Loans and any request
by the Borrower for a Eurodollar Standby Borrowing shall, as to such Lender
only, be deemed a request for an ABR Borrowing unless such declaration
shall be subsequently withdrawn (and such Lender agrees to withdraw any
such declaration if legally permissible); and
(ii) require that all outstanding Eurodollar Loans made by it be
converted to ABR Loans (or in the case of a Eurodollar Competitive Loan, a
Loan bearing interest at a rate equal to the Alternate Base Rate), as of
the effective date of such notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal which would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
[6700-070(A)RAF/A08A.WPF/30D/4674W]
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36
(b) For purposes of this Section 2.15, a notice to the Borrower by
any Lender shall be effective as to each Eurodollar Loan, if lawful, on the last
day of the Interest Period currently applicable to such Eurodollar Loan; in all
other cases such notice shall be effective on the date of receipt by the
Borrower.
SECTION 2.16. Indemnity. The Borrower shall indemnify each Lender
----------
against any actual loss or expense which such Lender may sustain or incur as a
consequence of (a) any failure by the Borrower to fulfill on the date of any
borrowing hereunder the applicable conditions set forth in Article IV, (b) any
failure by the Borrower to borrow or to refinance, convert or continue any Loan
hereunder after irrevocable notice of such borrowing, refinancing or
continuation has been given pursuant to Section 2.03, 2.04 or 2.06, (c) any
payment, prepayment or conversion of a Eurodollar Loan, CD Loan or Fixed Rate
Loan required by any other provision of this Agreement or otherwise made or
deemed made, and any assignment of a Loan pursuant to Section 2.21, on a date
other than the last day of the Interest Period applicable thereto, (d) any
default in payment or prepayment of the principal amount of any Loan or any part
thereof or interest accrued thereon, as and when due and payable (at the due
date thereof, whether by scheduled maturity, acceleration, irrevocable notice of
prepayment or otherwise) or (e) the occurrence of any Event of Default,
including, in each such case, any actual loss or reasonable expense sustained or
incurred or to be sustained or incurred in liquidating or employing deposits
from third parties acquired to effect or maintain such Loan or any part thereof
as a Eurodollar Loan, CD Loan or Fixed Rate Loan. Such loss or reasonable
expense shall include an amount equal to the excess, if any, as reasonably
determined by such Lender, of (i) its cost of obtaining the funds for the Loan
being paid, prepaid, converted, not borrowed, not refinanced, not converted, not
continued or assigned (assumed to be the LIBO Rate or Adjusted CD Rate or, in
the case of a Fixed Rate Loan, the fixed rate of interest applicable thereto)
for the period from the date of such payment, prepayment, failure to borrow,
failure to refinance, failure to convert, failure to continue or assignment to
the last day of the Interest Period for such Loan (or, in the case of a failure
to borrow, refinance, convert or continue, 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
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37
reemploying the funds so paid, prepaid, not borrowed, not refinanced, not
converted, not continued or assigned for such period or Interest Period, as the
case may be. A certificate of any Lender setting forth any amount or amounts
which such Lender is entitled to receive pursuant to this Section shall be
delivered to the Borrower and shall be conclusive absent demonstrable error.
SECTION 2.17. Pro Rata Treatment. Except as required under Section
-------------------
2.15, each Standby Borrowing, each payment or prepayment of principal of any
Standby Borrowing, each payment of interest on the Standby Loans, each payment
of the Facility Fees, each reduction of the Commitments and each refinancing of
any Borrowing with a Standby Borrowing of any Type, shall be allocated pro rata
among the Lenders in accordance with their respective Commitments (or, if such
Commitments shall have expired or been terminated, in accordance with the
respective principal amounts of their outstanding Standby Loans). Each payment
of principal of any Competitive Borrowing shall be allocated pro rata among the
Lenders participating in such Borrowing in accordance with the respective
principal amounts of their outstanding Competitive Loans comprising such
Borrowing. Each payment of interest on any Competitive Borrowing shall be
allocated pro rata among the Lenders participating in such Borrowing in
accordance with the respective amounts of accrued and unpaid interest on their
outstanding Competitive Loans comprising such Borrowing. For purposes of
determining (i) the aggregate available Commitments of the Lenders at any time
and (ii) the available Commitment of each Lender, each outstanding Competitive
Borrowing shall be deemed to have utilized the Commitments of the Lenders
(including those Lenders which shall not have made Loans as part of such
Competitive Borrowing) pro rata in accordance with such respective Commitments.
Each Lender agrees that in computing such Lender's portion of any Borrowing to
be made hereunder, the Administrative Agent may, in its discretion, round each
Lender's percentage of such Borrowing to the next higher or lower whole dollar
amount.
SECTION 2.18. Sharing of Setoffs. Each Lender agrees that if it
-------------------
shall, through the exercise of a right of banker's lien, setoff or counterclaim
against the Borrower, or pursuant to a secured claim under Section 506 of Title
11 of the United States Code or other security or interest arising from, or in
lieu of, such secured claim, received by such Lender under any applicable
bankruptcy, insolvency or other similar law or otherwise, or by any other means,
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38
obtain payment (voluntary or involuntary) from the Borrower or its assets in
respect of any Standby Loan or Loans as a result of which the unpaid principal
portion of its Standby Loans shall be proportionately less than the unpaid
principal portion of the Standby Loans of any other Lender, it shall be deemed
simultaneously to have purchased from such other Lender at face value, and shall
promptly pay to such other Lender the purchase price for, a participation in the
Standby Loans of such other Lender, so that the aggregate unpaid principal
amount of the Standby Loans and participations in the Standby Loans held by each
Lender shall be in the same proportion to the aggregate unpaid principal amount
of all Standby Loans then outstanding as the principal amount of its Standby
Loans prior to such exercise of banker's lien, setoff or counterclaim or other
event was to the principal amount of all Standby Loans outstanding prior to such
exercise of banker's lien, setoff or counterclaim or other event; provided,
--------
however, that, if any such purchase or purchases or adjustments shall be made
- - -------
pursuant to this Section 2.18 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or
adjustment restored without interest. The Borrower expressly consents to the
foregoing arrangements and agrees that any Lender holding a participation in a
Standby Loan deemed to have been so purchased may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any and all moneys owing
by the Borrower to such Lender by reason thereof as fully as if such Lender had
made a Standby Loan directly to the Borrower in the amount of such
participation.
SECTION 2.19. Payments. (a) The Borrower shall make each payment
---------
(including principal of or interest on any Borrowing or any Fees or other
amounts) hereunder and under each other Loan Document not later than 12:00 noon,
New York City time, on the date when due in dollars to the Administrative Agent
at its offices at 712 Main Street, Houston, Texas, in immediately available
funds.
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case
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<PAGE>
39
be included in the computation of interest or Fees, if applicable.
SECTION 2.20. Taxes. (a) Any and all payments by the Borrower
------
hereunder shall be made, in accordance with Section 2.19, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding taxes, levies, imposts, deductions, charges and withholdings imposed
- - ---------
on the Administrative Agent's or any Lender's (or any transferee's or
assignee's, including a participation holder's (any such entity a "Transferee"))
net income and franchise, capital or license taxes imposed on the Administrative
Agent or any Lender (or Transferee) by the United States or any jurisdiction
under the laws of which it is organized, domiciled, resident or doing business
(other than doing business as a result of its participation in the transactions
contemplated by the Loan Documents) or any political subdivision thereof (all
such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to the Lenders (or any Transferee) or the Administrative Agent, (i)
the sum payable shall be increased by the amount necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 2.20) such Lender (or Transferee) or the
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 Borrower
(or the Administrative Agent, as applicable) shall make such deductions at the
applicable rate and (iii) the Borrower (or the Administrative Agent, as
applicable) shall pay the full amount deducted to the relevant taxing authority
or other Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify each Lender (or Transferee) and the
Administrative Agent for the full amount
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40
of Taxes and Other Taxes (including any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 2.20) paid by such Lender (or
Transferee) or the Administrative Agent, as the case may be, and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted by the relevant taxing authority or other Governmental Authority. Such
indemnification shall be made within 30 days after the date any Lender (or
Transferee) or the Administrative Agent, as the case may be, makes written
demand therefor; provided, however, that the Borrower shall not have any
-------- -------
obligation to indemnify the Administrative Agent or any Lender (or Transferee)
for interest and penalties that are imposed on the Administrative Agent or such
Lender (or Transferee) with respect to the period after the expiration of the
Notice Period with respect to any Tax if such Administrative Agent or such
Lender fails to give written notice to the Borrower within 45 days of its
receipt of any written assertion by the relevant taxing authority or other
Governmental Authority that such Tax is due with respect to the transactions
contemplated by the Loan Documents (such 45 day period being the "Notice Period"
referred to above). If a Lender (or Transferee) or the Administrative Agent
shall become aware that it is entitled to receive a refund (or a credit against
taxes not indemnifiable hereunder) in respect of Taxes or Other Taxes, it shall
promptly notify the Borrower of the availability of such refund (or credit) and
shall, within 30 days after receipt of a request by the Borrower, apply for such
refund at the Borrower's expense. If any Lender (or Transferee) or the
Administrative Agent receives a refund (or a credit against taxes not
indemnifiable hereunder) in respect of any Taxes or Other Taxes for which such
Lender (or Transferee) or the Administrative Agent has received payment from the
Borrower hereunder it shall promptly notify the Borrower of such refund (or
credit) and shall, within 30 days after receipt of a request by the Borrower (or
promptly upon receipt, if the Borrower has requested application for such refund
(or credit) pursuant hereto), repay such refund (or credit) to the Borrower, net
of all out-of-pocket expenses (including taxes not indemnifiable hereunder, to
the extent that no deduction or credit has previously been claimed and utilized
in connection therewith by such Lender) of such Lender but including interest
received from a taxing authority or other Governmental Authority and fairly
attributable to such refund; provided that the Borrower, upon the request of
--------
such Lender (or Transferee) or the Administrative Agent, agrees
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<PAGE>
41
to return such refund (plus penalties, interest or other charges) to such Lender
(or Transferee) or the Administrative Agent in the event such Lender (or
Transferee) or the Administrative Agent is required to repay such refund. Each
of the Administrative Agent, each Lender and each Transferee, with respect to
itself, agrees to indemnify and hold harmless the Borrower (and, in the case of
each Lender and each Transferee, to indemnify and hold harmless the
Administrative Agent) from any taxes, penalties, interest and other expenses,
costs and losses incurred or payable by the Borrower (or the Administrative
Agent, as applicable) as a result of the failure of the Borrower to comply with
clauses (ii) and (iii) of Section 2.20(a) in reliance on any form or certificate
provided to it by such person pursuant to Section 2.20(f).
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by the Borrower in respect of any payment to any Lender (or
Transferee) or the Administrative Agent, the Borrower will furnish to the
Administrative Agent, at its address referred to in Section 9.01, the original
or a certified copy of a receipt evidencing payment thereof or other customary
evidence of such payment.
(e) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section 2.20
shall survive the payment in full of the principal of and interest on all Loans
made hereunder.
(f) On or prior to the Closing Date (in the case of any Lender and
the Administrative Agent) and on or prior to the date any Transferee becomes a
Transferee hereunder (in the case of any Transferee), and, upon written request
of the Borrower or the Administrative Agent, on or prior to the immediately
following due date of any payment by the Borrower hereunder, each Lender (or
Transferee) which is organized outside the United States shall deliver to the
Borrower such certificates, documents or other evidence, as required by the Code
or Treasury Regulations issued pursuant thereto, including Internal Revenue
Service Form 1001 or Form 4224 and any other certificate or statement of
exemption required by Treasury Regulation Section 1.1441-1(a) or Section 1.1441-
6(c) or any subsequent version thereof, properly completed and duly executed by
such Lender (or Transferee) establishing that such payment is (i) not subject to
withholding under the Code because such payment
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<PAGE>
42
is effectively connected with the conduct by such Lender (or Transferee) of a
trade or business in the United States or (ii) totally exempt from United States
tax under a provision of an applicable tax treaty. Unless the Borrower and the
Administrative Agent have received forms or other documents satisfactory to them
indicating that payments hereunder and in respect of the Loans are not subject
to United States withholding tax the Borrower or the Administrative Agent shall
withhold taxes from such payments at the applicable statutory rate in the case
of payments to or for any Lender (or Transferee) organized under the laws of a
jurisdiction outside the United States.
(g) The Borrower shall not be required to pay any additional amounts
to any Lender (or Transferee) in respect of United States withholding tax
pursuant to paragraph (a) above except to the extent such United States
withholding tax (a) results from (i) a change in applicable law, regulation or
official interpretation thereof or (ii) an amendment, modification or revocation
of any applicable tax treaty or a change in official position regarding the
application or interpretation thereof, in each case after the Closing Date (and,
in the case of a Transferee, after the date of assignment or transfer) or (b) in
the case of a Transferee, is imposed at a rate that does not exceed the rate
(determined at the time of transfer or assignment) of United States withholding
tax with respect to which the Borrower was required to pay to such Transferee's
transferor or assignor.
SECTION 2.21. Termination or Assignment of Commitments Under Certain
---------------------------- -------------------------
Circumstances. (a) Any Lender (or Transferee) claiming any additional amounts
- - --------------
payable pursuant to Section 2.14 or Section 2.20 shall use reasonable efforts
(consistent with legal and regulatory restrictions) to file any certificate or
document requested by the 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 additional amounts which may
thereafter accrue and would not, in the sole determination of such Lender, be
otherwise disadvantageous to such Lender (or Transferee).
(b) In the event that any Lender shall have delivered a notice or
certificate pursuant to Section 2.14 or 2.15, or the Borrower shall be required
to make additional payments to any Lender under Section 2.20, the Borrower shall
have the right, at its own expense, upon
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43
notice to such Lender and the Administrative Agent, (a) to terminate the
Commitment of such Lender or (b) to require such Lender to transfer and assign
without recourse (in accordance with and subject to the restrictions contained
in Section 9.04) all its interests, rights and obligations under this Agreement
to another financial institution acceptable to the Administrative Agent which
shall assume such obligations; provided that (i) no such termination or
--------
assignment shall conflict with any law, rule or regulation or order of any
Governmental Authority and (ii) the Borrower or the assignee, as the case may
be, shall pay to the affected Lender in immediately available funds on the date
of such termination or 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.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to each of the Lenders that:
(a) The Borrower is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware. The Borrower
possesses all corporate powers and all other authorizations and licenses
necessary to engage in its business and operations as now conducted, the
failure to obtain or maintain which would result in a Material Adverse
Effect.
(b) The execution, delivery and performance by the Borrower of this
Agreement are within the Borrower's corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene (i) the
Borrower's certificate of incorporation or by-laws or (ii) any law or
contractual restriction binding on or affecting the Borrower.
(c) There is no authorization or approval or other action by, and no
notice to or filing with, any Governmental Authority (including, without
limitation, the ICC) required for the due execution, delivery and
performance by the Borrower of this Agreement which has not been obtained
or made, as the case may be.
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44
(d) This Agreement is the legal, valid and binding obligation of the
Borrower enforceable against the Borrower in accordance with its terms
except as enforceability may be limited by applicable bankruptcy,
insolvency, moratorium or other similar laws affecting the enforcement of
creditors' rights generally or by the applicability of equitable
principles.
(e) The consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at December 31, 1993, and the related
consolidated statements of income and cash flows for the fiscal year then
ended, copies of which have been furnished to each Lender, fairly present
the consolidated financial condition of the Borrower and such Subsidiaries
as at such date and the results of their operations for the period ended on
such date, all in accordance with GAAP consistently applied, and since
December 31, 1993, there has been no material adverse change in such
condition or operations.
(f) There is no pending or threatened action or proceeding against or
involving the Borrower before any Governmental Authority or arbitrator
which has a reasonable probability (taking into account the exhaustion of
all appeals) of resulting in a Material Adverse Effect.
(g) The Borrower has duly paid and discharged all taxes, assessments
and governmental charges upon it or against its properties now due and
payable, the failure to pay which would result in a Material Adverse Effect
unless and to the extent only that the same are being contested in good
faith and by appropriate proceedings by the Borrower.
(h) The Borrower has good title to its properties and assets except
for (i) existing or future liens, security interests, mortgages,
conditional sales arrangements and other encumbrances (including, without
limitation, reversionary title interests) either securing Debt or other
liabilities of the Borrower or any of its Subsidiaries or which the
Borrower in its reasonable business judgment determines would not be
reasonably expected to materially interfere with the railroad business or
railroad operations of the Borrower and its Subsidiaries as conducted from
time to time and (ii) irregularities therein which do not
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45
materially interfere with the business or operations of the Borrower and
its Subsidiaries as conducted from time to time.
(i) No Termination Event has occurred or is reasonably expected to
occur with respect to any Plan which, with the giving of notice or lapse of
time, or both, would constitute an Event of Default under paragraph (g) of
Article VII.
(j) The statement of assets and liabilities of each Plan covered by
the report of Coopers & Lybrand referred to below as of December 31, 1993,
and the statements of changes in fund balance and in financial position, or
the statement of changes in net assets available for plan benefits, for the
plan year then ended, reported on by Coopers & Lybrand, copies of which
have been furnished to the Administrative Agent, fairly present the
financial condition of such Plan as at such date and the results of
operations of such Plan for the plan year ended on such date.
(k) Neither the Borrower nor any ERISA Affiliate has incurred, or is
reasonably expected to incur, any Withdrawal Liability to any Multiemployer
Plan which, when aggregated with all other amounts required to be paid to
Multiemployer Plans in connection with Withdrawal Liability (as of the date
of determination), exceeds $50,000,000.
(l) Neither the Borrower nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization or has been
terminated, within the meaning of Title IV of ERISA, and no Multiemployer
Plan is reasonably expected to be in reorganization or to be terminated
within the meaning of Title IV of ERISA, the effect of which reorganization
or termination would be the occurrence of an Event of Default under
paragraph (i) of Article VII.
(m) Neither the Borrower nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying Margin Stock.
No part of the proceeds of any Loan will be used, whether directly or
indirectly, and whether immediately, incidentally or ultimately, for any
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46
purpose which entails a violation of, or which is inconsistent with, the
provisions of the Regulations of the Board, including Regulation G, U or X.
(n) Neither the Borrower nor any Subsidiary is (i) an "investment
company" as defined in, or subject to regulation under, the Investment
Company Act of 1940 or (ii) a "holding company" as defined in, or subject
to regulation under, the Public Utility Holding Company Act of 1935.
(o) The Borrower will use the proceeds of the Loans only for the
purposes specified in the preamble to this Agreement.
(p) Neither the Borrower nor any of its Subsidiaries is, to the best
of its knowledge, in violation of any law or statute, or in default with
respect to any judgment, writ, injunction, decree, rule or regulation of
any court or governmental agency or instrumentality, where such violation
or default would result in a Material Adverse Effect.
(q) On the Closing Date, there has been no material adverse change in
or affecting the business, assets, liabilities or operations of the
Borrower or in the condition (financial or otherwise) or prospects of the
Borrower from those shown in the information furnished to the Lenders prior
to the date hereof.
(r) To the best knowledge of the Borrower, on the Closing Date all
insurable properties of the Borrower and each Subsidiary are adequately
insured as part of an insurance program including risk retention and self
insurance by financially sound and reputable insurers to such extent and
against such risks and liabilities (including liability under Federal,
state, local and other statutes and regulations relating to the environment
or to employee health and safety) as is customary with companies similarly
situated and in the same or similar businesses.
ARTICLE IV. CONDITIONS OF LENDING
The obligations of the Lenders to make Loans hereunder are subject to
(a) the Commitments having become effective as provided in Section 4.01 below
and (b) the
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47
satisfaction of the conditions set forth in Section 4.02 below.
SECTION 4.01. Conditions to Effectiveness of Commitments. The
------------------------------ ------------
Commitments shall become effective at such time as the following conditions
shall have been satisfied:
(a) The Agents shall have received the favorable written opinion of
Francis T. Kelly, Esq., counsel for the Borrower, dated the date hereof and
addressed to the Agents and the Lenders, to the effect set forth in Exhibit
D hereto, and the Borrower hereby instructs such counsel to deliver such
opinion to the Agents.
(b) The Agents shall have received a favorable written opinion of
Douglas J. Babb, Vice President and General Counsel of the Borrower as to
certain ICC regulatory matters, dated the date hereof and addressed to the
Agents and the Lenders, to the effect set forth in Exhibit E hereto, and
the Borrower hereby instructs such counsel to deliver such opinion to the
Agents.
(c) All legal matters incident to this Agreement and the borrowings
hereunder shall be satisfactory to the Lenders and their counsel and to
Cravath, Swaine & Moore, counsel for the Agents.
(d) The Agents shall have received (i) a copy of the certificate or
articles of incorporation, including all amendments thereto, of the
Borrower, certified as of a date shortly before the date hereof by the
Secretary of State of the state of its organization, and a certificate as
to the good standing of the Borrower as of a date shortly before the date
hereof, from such Secretary of State; (ii) a certificate of the Secretary
or Assistant Secretary of the Borrower dated the date hereof and certifying
(A) that attached thereto is a true and complete copy of the by-laws of the
Borrower as in effect on the date hereof and at all times since a date
prior to the date of the resolutions described in clause (B) below, (B)
that attached thereto is a true and complete copy of resolutions duly
adopted by the Board of Directors of the Borrower authorizing the
execution, delivery and performance of the Loan Documents and the
borrowings hereunder, and that such resolutions have not been modified,
rescinded or amended and are in full force and effect, (C) that the
certificate or articles of incorporation of the
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48
Borrower have not been amended since the date of the last amendment thereto
shown on the certificate of good standing furnished pursuant to clause (i)
above, and (D) as to the incumbency and specimen signature of each officer
executing any Loan Document or any other document delivered in connection
herewith on behalf of the Borrower; (iii) a certificate of another officer
as to the incumbency and specimen signature of the Secretary or Assistant
Secretary executing the certificate pursuant to (ii) above; and (iv) such
other documents as the Lenders or their counsel or Cravath, Swaine & Moore,
counsel for the Agents, may reasonably request.
(e) The Agents shall have received a certificate, dated the date
hereof and signed by the treasurer or the chief financial officer of the
Borrower, confirming compliance with the conditions precedent set forth in
paragraphs (b) and (c) of Section 4.02.
(f) All fees, expenses and other amounts payable pursuant to the
Existing Facility, including all outstanding loans thereunder and accrued
interest thereon, shall have been paid in full, and the commitments of the
lenders thereunder shall have been terminated.
SECTION 4.02. Conditions to All Borrowings. On the date of each
-----------------------------
Borrowing, including each Borrowing in which Loans are refinanced with new Loans
as contemplated by Section 2.05:
(a) The Agents shall have received a notice of such Borrowing as
required by Section 2.03 or Section 2.04, as applicable.
(b) The representations and warranties set forth in Article III
hereof (except, in the case of a refinancing of a Standby Borrowing with a
new Standby Borrowing that does not increase the aggregate principal amount
of the Loans of any Lender outstanding, those contained in paragraphs (e),
(f), (g), (h) and (j) of Article III, and, except in the case of any
Borrowing on a date after the Closing Date, that contained in paragraph (j)
of Article III) shall be true and correct in all material respects 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
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49
extent such representations and warranties expressly relate to an earlier
date.
(c) The Borrower shall be in compliance with all the terms and
provisions set forth herein and in each other Loan Document on its part to
be observed or performed, and at the time of and immediately after such
Borrowing no Event of Default or Default shall have occurred and be
continuing.
Each Borrowing shall be deemed to constitute a representation and warranty by
the Borrower on the date of such Borrowing as to the matters specified in
paragraphs (b) and (c) of this Section 4.02.
ARTICLE V. AFFIRMATIVE COVENANTS
The Borrower covenants and agrees with each Lender and the Agents
that, so long as this Agreement shall remain in effect or the principal of or
interest on any Loan, any Fees or any other expenses or amounts payable under
any Loan Document shall be unpaid, unless the Required Lenders shall otherwise
consent in writing, the Borrower will:
SECTION 5.01. Existence; Businesses and Properties. (a) Preserve
-------------------------------------
and maintain its corporate existence, rights (charter and statute) and material
franchises, except as otherwise permitted by Sections 6.03 and 6.04.
(b) Comply in all material respects with all applicable laws, rules,
regulations and orders (including, without limitation, laws requiring payment of
all taxes, assessments and governmental charges imposed upon it or upon its
property except to the extent contested in good faith by appropriate
proceedings) except where the failure to so comply would not have a Material
Adverse Effect.
(c) Maintain and preserve all of its properties which are used in the
conduct of its business in good working order and condition, ordinary wear and
tear excepted, to the extent that any failure to do so would have a Material
Adverse Effect and except for dispositions thereof permitted by Section 6.02;
SECTION 5.02. Insurance. Maintain insurance with responsible and
----------
reputable insurance companies or
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50
associations in such amounts and covering such risks as is usually carried by
companies engaged in similar businesses and owning similar properties as the
Borrower.
SECTION 5.03. Reporting Requirements. Furnish to the Agents and each
-----------------------
Lender:
(a) within 60 days after the close of each of the first three quarters
of each of the Borrower's fiscal years, a copy of the quarterly report on
Form 10-Q containing the consolidated statement of income of the Borrower
and its consolidated Subsidiaries for the period from the beginning of such
fiscal year to the end of such quarter and the related consolidated balance
sheet of the Borrower and its consolidated Subsidiaries as at the end of
such period, each certified by the chief financial officer of the Borrower
and accompanied by a certificate of such officer stating (i) that such
statement of income and such balance sheet has been prepared in accordance
with GAAP, (ii) whether or not he or she has knowledge of the occurrence of
any Event of Default or Default which is continuing hereunder and, if so,
stating in reasonable detail the facts with respect thereto and (iii) all
relevant facts in reasonable detail to evidence, and the computations as
to, whether or not the Borrower is in compliance with the requirements set
forth in Sections 5.04, 6.01 and 6.02;
(b) within 120 days after the close of each of the Borrower's fiscal
years, a copy of the annual report on Form 10-K of the Borrower and its
consolidated Subsidiaries, including the opinion of independent certified
public accountants of internationally recognized standing, together with
financial statements consisting of the consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such year and
the related consolidated statements of income, retained earnings and cash
flows of the Borrower and its consolidated Subsidiaries for the year then
ended and accompanied by an opinion signed by said accountants stating that
(i) such financial statements have been prepared in accordance with GAAP
and (ii) in making the investigations necessary for said opinion they
obtained no knowledge, except as specifically stated, of any Event of
Default or Default which is continuing hereunder;
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51
(c) within 120 days after the close of each of the Borrower's fiscal
years, a certificate of the chief financial officer of the Borrower stating
(i) whether or not he or she has knowledge of the occurrence of any Event
of Default or Default which is continuing hereunder and, if so, stating in
reasonable detail the facts with respect thereto, and (ii) all relevant
facts in reasonable detail to evidence, and the computations as to, whether
or not the Borrower is in compliance with the requirements set forth in
Sections 5.04, 6.01 and 6.02;
(d) promptly upon their becoming available, all reports on Form 10-K,
10-Q or 8-K, or any successor form, and all proxy statements that the
Borrower or the Parent shall file with the Securities and Exchange
Commission or any national securities exchange;
(e) promptly in writing, notice of all litigation and of all
proceedings before any governmental or regulatory agencies affecting the
Borrower or any Subsidiary, except any litigation or proceeding which is
not likely to have any Material Adverse Effect;
(f) within three Business Days after a Responsible Officer of the
Borrower obtains knowledge of the occurrence of any Event of Default or
Default which is continuing, notice of such occurrence together with a
detailed statement by a Responsible Officer of the Borrower of the steps
being taken by the Borrower or the appropriate Subsidiary to cure the
effect of such event;
(g) as soon as practicable and in any event (i) within 30 days after
the Borrower or any ERISA Affiliate knows or has reason to know that any
Termination Event described in clause (i) of the definition of Termination
Event with respect to any Plan has occurred and (ii) within 10 days after
the Borrower or any ERISA Affiliate knows or has reason to know that any
other Termination Event with respect to any Plan has occurred, a statement
of the treasurer or the chief financial officer of the Borrower describing
such Termination Event and the action, if any, which the Borrower or such
ERISA Affiliate proposes to take with respect thereto;
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52
(h) promptly and in any event within two Business Days after receipt
thereof by the Borrower or any ERISA Affiliate, copies of each notice
received by the Borrower or any ERISA Affiliate from the PBGC stating its
intention to terminate any Plan or to have a trustee appointed to
administer any Plan;
(i) promptly and in any event within 30 days after the filing thereof
with the Internal Revenue Service, copies of each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) with respect to each
Plan;
(j) promptly and in any event within five Business Days after receipt
thereof by the Borrower or any ERISA Affiliate from the sponsor of a
Multiemployer Plan, a copy of each notice received by the Borrower or any
ERISA Affiliate concerning (i) the imposition of Withdrawal Liability by a
Multiemployer Plan, (ii) the determination that a Multiemployer Plan is, or
is expected to be, in reorganization within the meaning of Title IV of
ERISA, (iii) the termination of a Multiemployer Plan within the meaning of
Title IV of ERISA, or (iv) the amount of liability incurred, or expected to
be incurred, by the Borrower or any ERISA Affiliate in connection with any
event described in clause (i), (ii) or (iii) above;
(k) within 10 days after the due date for filing with the PBGC
pursuant to Section 412(n) of the Code of a notice of failure to make a
required installment or other payment with respect to a Plan, a statement
of the treasurer or the chief financial officer setting forth details as to
such failure and the action proposed to be taken with respect thereto,
together with a copy of such notice given to the PBGC; and
(l) as soon as practicable but in any event within 60 days of any
notice of request therefor, such other information respecting the financial
condition and results of operations of the Borrower as the Agents, or a
Lender through the Agents, may from time to time reasonably request.
Each balance sheet and other financial statement furnished pursuant to
paragraphs (a) and (b) of this Section 5.03 shall contain comparative
information which conforms to the
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53
presentation required in Form 10-Q and 10-K, as appropriate, under the
Securities Exchange Act of 1934, as amended.
SECTION 5.04. Consolidated Tangible Net Worth. Maintain Consolidated
--------------------------------
Tangible Net Worth of not less than $1,700,000,000.
SECTION 5.05. Taxes. Pay and discharge promptly all material taxes,
-----
assessments and governmental charges or levies, levied or assessed upon it or
upon its income or profits or in respect of its property, before the same shall
become delinquent or in default; provided, however, that such payment and
-------- -------
discharge shall not be required with respect to any such tax, assessment, charge
or levy so long as the validity or amount thereof shall be contested in good
faith by appropriate proceedings.
ARTICLE VI. NEGATIVE COVENANTS
The Borrower covenants and agrees with each Lender and the Agents
that, so long as this Agreement shall remain in effect or the principal of or
interest on any Loan, any Fees or any other expenses or amounts payable under
any Loan Document shall be unpaid, unless the Required Lenders shall otherwise
consent in writing, the Borrower will not:
SECTION 6.01. Debt. Create or suffer to exist, or permit its
-----
Subsidiaries to create or suffer to exist, any Debt if, immediately after giving
effect to such Debt and the receipt and application of any proceeds thereof, the
sum of the aggregate amount of Debt of the Borrower and its consolidated
Subsidiaries on a consolidated basis would exceed 140% of Consolidated Tangible
Net Worth. Notwithstanding anything contained in the foregoing to the contrary,
consolidated Debt of the Borrower and its consolidated Subsidiaries, taken as a
whole, shall not exceed at any time $3,000,000,000.
SECTION 6.02. Sale, etc., of Assets. Sell, lease, dispose of,
----------------------
distribute or otherwise transfer, whether in a single transaction or a series of
transactions (collectively, a "Transfer"), all or any part of the property of
the Borrower, provided that the Borrower may Transfer:
--------
(a) properties (other than properties Transferred pursuant to any
other clause of this Section 6.02)
[6700-070(A)RAF/A08A.WPF/30D/4674W]
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54
having an aggregate net book value for all such Transfers (determined with
respect to each such property based on the net book value reflected on the
most recent consolidated balance sheet of the Borrower delivered pursuant
to Section 5.03 prior to the Transfer thereof, in each case determined
without regard to any writedown in such net book value subsequent to the
date hereof) not in excess of 10% of the total book value of the assets of
the Borrower and its consolidated Subsidiaries (as reflected on the most
recent consolidated balance sheet of the Borrower delivered pursuant to
Section 5.03) less the excess of the net book value of all assets
transferred since the date of such balance sheet over the amount of cash
and the fair market value of all other consideration received in exchange
therefor;
(b) properties to any person, provided that the Borrower or any of its
--------
Subsidiaries or the Borrower and any of its Subsidiaries has the power,
direct or indirect, (i) to vote more than 50% of the securities or
interests having ordinary voting power for the election of directors or
comparable governing persons of such person or (ii) to direct or cause the
direction of the management and policies of such person (whether by
contract or otherwise);
(c) properties abandoned or retired from use in the ordinary course of
business;
(d) properties usable by the Borrower in the operation of its business
as a railroad company including, without limitation, the Transfer of
accounts receivable, provided that the Borrower Transfers such property in
--------
arms-length transactions in exchange for property or cash of substantially
equivalent fair market value usable by the Borrower in the operation of its
business as a railroad company, and provided further that the amount of
-------- -------
property constituting the excess, if any, of (i) the fair market value of
the property Transferred by the Borrower over (ii) the fair market value of
the property received by the Borrower in exchange therefor (in each case,
determined as of the date of such Transfer) may be transferred pursuant to
clause (a) above on and subject to the terms and conditions of such clause
(a); and
(e) property constituting Margin Stock.
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<PAGE>
55
SECTION 6.03. Mergers, etc. Merge or consolidate with any person, or
-------------
permit any of its Subsidiaries to merge or consolidate with any person, except
that (a) any Subsidiary may merge or consolidate with any other Subsidiary or
may merge or liquidate into the Borrower (if the Borrower shall be the
continuing or surviving corporation), (b) the Borrower or any Subsidiary may
merge or consolidate with any other corporation if (i) (A) the surviving
corporation shall be the Borrower or a Subsidiary or (B) the surviving
corporation, if not the Borrower or a Subsidiary, shall be a corporation
organized and existing under the laws of the United States or any state thereof
or the District of Columbia and shall expressly assume by a written assignment
executed and delivered to the Administrative Agent, in form and substance
satisfactory to the Administrative Agent, all of the rights and obligations of
the Borrower under this Agreement, and (ii) after giving effect to such merger
or consolidation no Event of Default or Default shall have occurred and be
continuing and (c) the Borrower and any Subsidiary may merge or consolidate as
required by a valid order of the ICC.
SECTION 6.04. Liens. Create or (in the case of clause (b) or (d)
------
below) suffer to exist, or permit its Subsidiaries to create or (in the case of
clause (b) or (d) below) suffer to exist, any Lien securing (a) Debt of the
Borrower or any of its consolidated Subsidiaries, (b) taxes imposed upon the
Borrower or any of its consolidated Subsidiaries, (c) reimbursement obligations
of the Borrower or any of its consolidated Subsidiaries in respect of letters of
credit or (d) liabilities of the Borrower or any of its consolidated
Subsidiaries asserted in any legal or other proceeding arising under the
Comprehensive Environmental, Response, Compensation and Liability Act of 1980,
as amended from time to time, or other similar Federal or state laws,
regulations or decrees relating to environmental protection or the release of
any hazardous or toxic materials into the environment, in each case, upon or
with respect to all or a portion of the cash or accounts receivable of the
Borrower or any of its consolidated Subsidiaries arising from income from
railroad operations generated in the ordinary course of business (and excluding
in any event cash and accounts receivable constituting the proceeds of the sale
or other disposition of property), except, in each case for Liens (A) in respect
------
of taxes, the nonpayment of which would not constitute a default under Section
5.01(b), (B) arising by operation of law in the ordinary course of business, (C)
on cash or other property
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
56
in any bank's possession arising either in the ordinary course of business and
securing daylight overdrafts and other Debt incurred in favor of such bank in
the ordinary course of the cash management program of the Borrower and its
Subsidiaries, or by operation of law, or contractually in the ordinary course of
establishing and/or maintaining deposit and other accounts, letters of credit
and other banking services (other than the incurrence of indebtedness for
borrowed money), (D) on cash or other property in any Lender's possession
securing (or entitling any Lender to set off against) amounts owing to any
Lender pursuant to this Agreement, (E) securing lessees' obligations under
leases referred to in clause (ii) of the definition of Debt, and (F) Liens in
respect of any liability referred to in clause (d) above which liability does
not have a reasonable probability (taking into account the exhaustion of all
corrective and other appropriate procedures and proceedings and/or all appeals)
of having a Material Adverse Effect; provided, however, that this Section 6.04
-------- -------
shall not restrict the creation or existence of (1) Existing Liens and Liens
under Existing Mortgages and (2) Liens securing Debt outstanding from time to
time under the Mortgage Indenture.
SECTION 6.05. Sales of Accounts Receivable. Sell any accounts
-----------------------------
receivable other than pursuant to the Borrower's receivables sale facilities and
any extensions, renewals or replacements of any thereof, provided that the
--------
aggregate amount of accounts receivable sold pursuant to this Section 6.05 shall
in no event exceed $300,000,000.
ARTICLE VII. EVENTS OF DEFAULT
In case of the happening (and during the continuance) of any of the
following events ("Events of Default"):
(a) The Borrower shall (i) fail to pay any principal of any Loan or
(ii) fail to pay any interest on any Loan or any other amount payable
hereunder or pursuant hereto, in each case referred to in this clause (ii)
within two Business Days after the same shall be due;
(b) Any representation or warranty made by the Borrower herein or by
the Borrower (or any of its officers) in connection with this Agreement
shall prove
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
57
to have been incorrect in any material respect when made or deemed made;
(c) The Borrower shall (i) fail to perform or observe any term,
covenant or agreement contained in Sections 5.04, 6.01, 6.02 or 6.03 of
this Agreement or (ii) fail to perform or observe any other term, covenant
or agreement contained in this Agreement on its part to be performed or
observed and any such failure referred to in this clause (ii) shall remain
unremedied for 30 days after written notice thereof shall have been given
to the Borrower by the Administrative Agent or by any Lender with a copy to
the Administrative Agent;
(d) The Borrower or any Subsidiary shall (i) fail to pay any Debt
(excluding Debt hereunder) of the Borrower or any Subsidiary (as the case
may be) in an aggregate principal amount of $50,000,000 or more, or any
installment of principal thereof or interest or premium thereon, when due
(whether by scheduled maturity, required prepayment, acceleration, demand
or otherwise) and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to such
Debt; (ii) default under any agreement or instrument relating to any Debt
(excluding Debt hereunder) in an aggregate principal amount of $25,000,000
or more, or any other event shall occur and shall continue after the
applicable grace period, if any, specified in such agreement or instrument,
if the effect of such default or event is to accelerate the maturity of
such Debt; or (iii) default under any agreement or instrument relating to
any Debt (excluding Debt hereunder) in an aggregate principal amount of
$101,000,000 or more, or any other event shall occur and shall continue
after the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such default or event is to permit the
acceleration of the maturity of such Debt, provided that, notwithstanding
--------
any provision contained in this paragraph (d) to the contrary, to the
extent that pursuant to the terms of any agreement or instrument relating
to any Debt referred to in this paragraph (d), any sale, pledge or disposal
of Margin Stock, or utilization of the proceeds thereof would result in a
breach of any covenant contained therein or otherwise give rise to a
default or event of default thereunder and/or
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
58
acceleration of the maturity of the Debt extended pursuant thereto and as a
result of such terms or of such sale, pledge, disposal, utilization,
breach, default, event of default or acceleration, or the provisions hereof
relating thereto, this Agreement or any Loan hereunder would otherwise be
subject to the margin requirements or any other restriction under
Regulation U, then such breach, default, event of default or acceleration
shall not constitute a Default or Event of Default under this paragraph
(d);
(e) (i) The Borrower or any Subsidiary shall (A) generally not pay
its debts as such debts become due; or (B) admit in writing its inability
to pay its debts generally; or (C) make a general assignment for the
benefit of creditors; (ii) any proceeding shall be instituted or consented
to by the Borrower or any Subsidiary seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any
law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of
a receiver, trustee, or other similar official for it or for any
substantial part of its property; (iii) any such proceeding shall have been
instituted against the Borrower or any Subsidiary and either (A) such
relief shall have been granted or (B) such proceeding shall have been
pending undismissed for a period of 60 consecutive days; or (iv) the
Borrower or any Subsidiary shall take any corporate action to authorize any
of the actions set forth above in this paragraph (e);
(f) (i) One or more final and non-appealable judgments or orders for
the payment of money in excess of $50,000,000 in the aggregate shall be
rendered against the Borrower and/or one or more Subsidiaries and
enforcement proceedings shall have been commenced by creditors upon such
judgments or orders; or (ii) one or more judgments or orders for the
payment of money in excess of $100,000,000 shall be rendered against the
Borrower and/or one or more Subsidiaries and either (x) enforcement
proceedings shall have been commenced by creditors upon such judgments or
orders or (y) there shall be any period of 20 consecutive days during which
a stay of enforcement of such judgments or orders, by
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<PAGE>
59
reason of a pending appeal or otherwise, shall not be in effect;
(g) Any Termination Event with respect to a Material Plan shall have
occurred and, 30 days after notice thereof shall have been given to the
Borrower by the Administrative Agent, (i) such Termination Event shall
still exist and (ii) the sum (determined as of the date of occurrence of
such Termination Event) of the Insufficiency of such Plan and the
Insufficiency of any and all other Plans with respect to which a
Termination Event shall have occurred and then exist (or in the case of a
Plan with respect to which a Termination Event described in clause (ii) of
the definition of Termination Event shall have occurred and then exist, the
liability related thereto), in each case in respect of which the Borrower
or any ERISA Affiliate has liability, is equal to or greater than
$50,000,000;
(h) The Borrower or any ERISA Affiliate shall have been notified by
the sponsor of a Multiemployer Plan that it has incurred Withdrawal
Liability to such Multiemployer Plan in an amount which, when aggregated
with all other amounts required to be paid to Multiemployer Plans in
connection with Withdrawal Liabilities (determined as of the date of such
notification), exceeds $50,000,000;
(i) The Borrower or any ERISA Affiliate shall have been notified by
the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of
ERISA, if as a result of such reorganization or termination the aggregate
annual contributions of the Borrower and its ERISA Affiliates to all
Multiemployer Plans which are then in reorganization or being terminated
have been or will be increased over the amounts contributed to such
Multiemployer Plans for the respective plan years which include the date
hereof by an amount exceeding $50,000,000; or
(j) There shall have occurred a Change in Control;
then, and in any such event, the Administrative Agent shall, at the request, or
may with the consent, of the Required Lenders, by notice to the Borrower, (i)
declare the Commit-
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
60
ment of each Lender to make Loans to be terminated, whereupon the same shall
forthwith terminate, and (ii) declare the Loans, all interest thereon and all
other amounts payable under this Agreement to be forthwith due and payable,
whereupon the Loans, all such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower;
provided, however, that if an Event of Default under paragraph (e) of this
- - -------- -------
Article VII (except under clause (i)(A) thereof) shall occur, (A) the Commitment
of each Lender to make Loans shall automatically be terminated and (B) the
Loans, all interest thereon and all other amounts payable under this Agreement
shall automatically become and be forthwith due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower.
ARTICLE VIII. THE AGENTS
In order to expedite the transactions contemplated by this Agreement,
Texas Commerce Bank National Association and Chemical Bank Agency Services
Corporation are hereby appointed to act as Administrative Agent and CAF Agent,
respectively, on behalf of the Lenders. Each of the Lenders hereby irrevocably
authorizes the Agents to take such actions on behalf of such Lender and to
exercise such powers as are specifically delegated to the Agents by the terms
and provisions hereof and of the other Loan Documents, together with such
actions and powers as are reasonably incidental thereto. The Administrative
Agent 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
Borrower of any Event of Default specified in this Agreement of which the
Administrative Agent 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 Borrower pursuant to this
Agreement as received by the Administrative Agent.
Neither the Agents nor any of their directors, officers, employees or
agents shall be liable as such for
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61
any action taken or omitted by any of them except for its, his or her own gross
negligence or wilful misconduct, or be responsible for any 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 Borrower of any of the terms, conditions,
covenants or agreements contained in any Loan Document other than those
expressly provided for herein. The Agents shall not be responsible to the
Lenders for the due execution, genuineness, validity, enforceability or
effectiveness (other than against the Agents) of this Agreement or any other
Loan Documents or other instruments or agreements. The 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. Each Agent
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 the
Agents nor any of their directors, officers, employees or agents shall have any
responsibility to the Borrower 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 Borrower of any of their respective obligations hereunder or
under any other Loan Document or in connection herewith or therewith. The
Agents may execute any and all duties hereunder by or through agents or
employees and shall be entitled to rely upon the advice of legal counsel
reasonably 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 it in
accordance with the advice of such counsel.
The Lenders hereby acknowledge that the Agents shall be under no duty
to take any discretionary action permitted to be taken by it pursuant to the
provisions of this Agreement unless it shall be requested in writing to do so by
the Required Lenders.
Subject to the appointment and acceptance of a successor Agent as
provided below, any Agent may resign at any time by notifying the Lenders and
the Borrower. Upon any such resignation, the Required Lenders shall have the
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62
right to appoint a successor. If no successor shall have been so appointed by
the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Agent gives notice of its resignation, then the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent which shall be a
bank with an office in the United States, having a combined capital and surplus
of at least $50,000,000 or an Affiliate of any such bank. Upon the acceptance
of any appointment as 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 Agent and the retiring Agent shall be discharged from its
duties and obligations hereunder. After any Agent's resignation hereunder, the
provisions of this Article and Section 9.05 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 Agent.
With respect to the Loans made by them hereunder, the Agents in their
individual capacity and not as Agents shall have the same rights and powers as
any other Lender and may exercise the same as though they were not the Agents,
and the Agents and their Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any Subsidiary or
other Affiliate thereof as if they were not the Agents.
Each Lender agrees (i) to reimburse the Agents, on demand, in the
amount of its pro rata share (based on its Commitment hereunder) of any
reasonable expenses incurred for the benefit of the Lenders by the 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 Borrower and (ii) to indemnify and hold harmless the Agents and any of
its 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 them in their capacity as the Agents or any of them in
any way relating to or arising out of this Agreement or any other Loan Document
or any action taken or omitted by it or any of them under this Agreement or any
other Loan Document, to the extent the same shall not have been reimbursed by
the Borrower; provided that no Lender shall be liable to the Agents for any
--------
portion of such liabilities, obligations, losses, damages,
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63
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the gross negligence or wilful misconduct of the Agents or any of their
directors, officers, employees or agents. Each Lender agrees that any
reasonable allocation of expenses or other amounts referred to in this paragraph
between this Agreement and the Facility B Credit Agreement shall be conclusive
and binding for all purposes.
Each Lender acknowledges that it has, independently and without
reliance upon the Agents 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 the Agents 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 other Loan Document, any related
agreement or any document furnished hereunder or thereunder.
ARTICLE IX. MISCELLANEOUS
SECTION 9.01. 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 by the sending party, as follows:
(a) if to the Borrower, to it at 3200 Continental Plaza, 777 Main
Street, Fort Worth, Texas 76102, Attention of Treasurer (Telecopy No. 817-
333-7484);
(b) if to the Administrative Agent, to it at 712 Main Street, Houston,
Texas 77002, Attention of Syndications Department (Telecopy No. 713-546-
2339); with a copy to Texas Commerce Bank National Association, 201 Main
Street, 3rd Floor, Fort Worth, Texas 76102, Attention of Corporate Banking
(Telecopy No. 817-878-7591);
(c) if to the CAF Agent, to it at 140 East 45th Street, 29th Floor,
New York, NY 10017-3162, Attention of: M. Terri Reilly; and
(d) if to a Lender, to it at its address (or telecopy number) set
forth in Schedule 2.01 or in the
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64
Assignment and Acceptance pursuant to which such Lender shall have become a
party hereto.
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, or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 9.01.
SECTION 9.02. Survival of Agreement. All covenants, agreements,
----------------------
representations and warranties made by the Borrower herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document 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 or any other Loan Document is outstanding and unpaid and so long
as the Commitments have not been terminated.
SECTION 9.03. Binding Effect. This Agreement shall become effective
---------------
when it shall have been executed by the Borrower and the Agents and when the
Administrative Agent shall have received copies hereof which, when taken
together, bear the signatures of each Lender, and thereafter shall be binding
upon and inure to the benefit of the Borrower, the Agents and each Lender and
their respective successors and assigns, except that the Borrower shall not have
the right to assign its rights hereunder or any interest herein without the
prior consent of all the Lenders.
SECTION 9.04. Successors and Assigns. (a) Whenever in this
-----------------------
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and permitted assigns of such party; and all
covenants, promises and agreements by or on behalf of the Borrower, the Agents
or the Lenders that are contained in this Agreement shall bind and inure to the
benefit of their respective successors and permitted assigns.
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
65
(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 (i) except in the case of an assignment to a Lender or an
- - -------
Affiliate of such Lender, the Borrower and the Administrative Agent must give
their prior written consent to such assignment (which consent shall not be
unreasonably withheld, taking into account such factors as the financial
responsibility and reputation of a proposed assignee), (ii) each such assignment
shall be of a constant, and not a varying, percentage of all the assigning
Lender's rights and obligations under this Agreement, (iii) 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 the Administrative Agent) shall not be less than $10,000,000 (and
integral multiples of $1,000,000) or, if less, the entire amount of the
assigning Lender's Commitment, (iv) the parties to each such assignment shall
execute and deliver to the Administrative Agent an Assignment and Acceptance,
and the assigning Lender shall deliver together therewith a processing and
recordation fee of $2,500 and (v) the assignee, if it shall not be a Lender,
shall deliver to the Administrative Agent and the CAF Agent an Administrative
Questionnaire. Upon acceptance and recording pursuant to paragraph (e) of this
Section 9.04, 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, (A) 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, (B) 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 2.14, 2.16, 2.20 and 9.05, as well as to any Fees
accrued for its account hereunder and not yet paid)) and (C) Schedule 2.01 shall
be deemed amended to give affect to such assignment. Not-withstanding 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
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
66
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 and that
its Commitment, and the outstanding balances of its Standby Loans and
Competitive Loans, in each case without giving effect to assignments thereof
which have not become effective, are as set forth in such Assignment and
Acceptance; (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 any other any instrument or document furnished pursuant hereto, or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement, any other Loan Document or any other instrument or
document furnished pursuant hereto or the financial condition of the Borrower or
any Subsidiary or the performance or observance by the Borrower or any
Subsidiary of any of its obligations under this Agreement, any other Loan
Document 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 5.03 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 the 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 Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to the
Administrative Agent 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
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
67
their terms all the obligations which by the terms of this Agreement are
required to be performed by it as a Lender.
(d) The Administrative Agent shall maintain at one of its offices in
The City of Houston 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 principal amount of the Loans owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive in the absence of demonstrable error and the
Borrower, the 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. The Register shall be available for inspection
by the Borrower and any Lender, 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, 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 Borrower and the
Administrative Agent to such assignment, the Administrative Agent shall (i)
accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Lenders.
(f) Each Lender may without the consent of the Borrower or the Agents
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 for the
performance of such obligations, (iii) the participating banks or other entities
shall be entitled to the benefit of the cost protection provisions contained in
Sections 2.14, 2.16 and 2.20 to the same extent as if they were Lenders and (iv)
the Borrower, the Agents and the other Lenders shall continue to deal solely and
directly with such 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 Borrower relating to the Loans and to approve any
amendment, modification
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
68
or waiver of any provision of this Agreement (other than amendments,
modifications or waivers decreasing any fees payable hereunder or the amount of
principal of or the rate at which interest is payable on the Loans, extending
any scheduled principal payment date or date fixed for the payment of interest
on the Loans or changing 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 9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower furnished to such Lender by
or on behalf of the Borrower; provided that, prior to any such disclosure of
--------
information designated by the Borrower as confidential, each such assignee or
participant or proposed assignee or participant shall execute an agreement
whereby such assignee or participant shall agree (subject to customary
exceptions) to preserve the confidentiality of such confidential information.
It is understood that confidential information relating to the Borrower would
not ordinarily be provided in connection with assignments or participations of
Competitive Loans.
(h) Any Lender may at any time assign all or any portion of its
rights under this Agreement to a Federal Reserve Bank; provided that no such
--------
assignment shall release a Lender from any of its obligations hereunder. In
order to facilitate such an assignment to a Federal Reserve Bank, the Borrower
shall, to the extent permissible without registration under applicable
regulations of the ICC, at the request of the assigning Lender, duly execute and
deliver to the assigning Lender a promissory note or notes evidencing the Loans
made to the Borrower by the assigning Lender hereunder.
(i) The Borrower shall not assign or delegate any of its rights or
duties hereunder without the prior written consent of the Lenders.
SECTION 9.05. Expenses; Indemnity. (a) The Borrower agrees to pay
--------------------
all out-of-pocket expenses incurred by the Agents in connection with the
preparation of this Agreement and the other Loan Documents or in connection with
any amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions hereby contemplated shall be consummated) or
incurred by the Agents or any Lender in connection with the enforcement or
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
69
protection of their rights in connection with this Agreement and the other Loan
Documents or in connection with the Loans made hereunder, including the
reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel
for the Agents, and, in connection with any such amendment, modification or
waiver or any such enforcement or protection, the reasonable fees, charges and
disbursements of any other counsel for the Agents or any Lender. The Borrower
further agrees that it shall indemnify the Lenders from and hold them harmless
against any documentary taxes, assessments or charges made by any Governmental
Authority by reason of the execution and delivery of this Agreement or any of
the other Loan Documents.
(b) The Borrower agrees to indemnify the Agents, each Lender and each
of their respective directors, officers, employees and agents (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, charges and disbursements, incurred by or
asserted against any Indemnitee arising out of, in any way connected with, or as
a result of (i) the execution or delivery of this Agreement or any other Loan
Document or any agreement or instrument contemplated thereby, the performance by
the parties thereto of their respective obligations thereunder or the
consummation of the transactions contemplated thereby, (ii) the use of the
proceeds of the Loans or (iii) any claim, litigation, investigation or
proceeding relating to any of the foregoing to which such Indemnitee reasonably
believes that it may become a party, whether or not any Indemnitee is a party
thereto; provided that 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 court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee.
(c) The provisions of this Section 9.05 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 other Loan Document, or any investigation
made by or on behalf of the Agents or any Lender. All amounts due under this
Section 9.05 shall be payable on written demand therefor.
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
70
SECTION 9.06. 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 the account of the Borrower against any of and all the
obligations of the Borrower now or hereafter existing under this Agreement and
other Loan Documents held by such Lender, irrespective of whether or not such
Lender shall have made any demand under this Agreement or such other Loan
Document and although such obligations may be unmatured. Each Lender agrees
promptly to notify the Borrower after any such setoff and application made by
such Lender, provided that 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 other rights of
setoff) which such Lender may have.
SECTION 9.07. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN
---------------
DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.
SECTION 9.08. Waivers; Amendment. (a) No failure or delay of the
-------------------
Agents 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 Agents and the Lenders
hereunder and under the other Loan Documents 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 any other Loan Document or consent to any
departure by the Borrower 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 Borrower in any case shall entitle the
Borrower 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
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
71
Borrower 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, without the prior written consent of each Lender
affected thereby, (ii) change or extend the Commitment 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 2.17, the provisions of this Section,
any provision of this agreement which by its terms requires the consent or
approval of all Lenders or the definition of "Required Lenders", without the
prior written consent of each Lender; provided further that no such agreement
----------------
shall amend, modify or otherwise affect the rights or duties of the Agents
hereunder without the prior written consent of the Agents.
SECTION 9.09. Interest Rate Limitation. Notwithstanding anything
-------------------------
herein to the contrary, if at any time the applicable interest rate, together
with all fees and charges which are treated as interest under applicable law
(collectively the "Charges"), as provided for herein or in any other document
executed in connection herewith, or otherwise contracted for, charged, received,
taken or reserved by any Lender, shall exceed the maximum lawful rate (the
"Maximum Rate") which may be contracted for, charged, taken, received or
reserved by such Lender in accordance with applicable law, the rate of interest
payable on the Loans of such Lender, together with all Charges payable to such
Lender, shall be limited to the Maximum Rate.
SECTION 9.10. Entire Agreement. This Agreement and the other Loan
-----------------
Documents constitute the entire contract between 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 and the other Loan
Documents. Nothing in this Agreement or in the other Loan Documents, expressed
or implied, is intended to confer upon any party other than the parties hereto
and thereto any rights, remedies, obligations or liabilities under or by reason
of this Agreement or the other Loan Documents.
SECTION 9.11. Severability. In the event any one or more of the
-------------
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
72
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good-faith
negotiations 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 9.12. 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 9.03.
SECTION 9.13. 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 9.14. Jurisdiction; Consent to Service of Process. (a) The
----------------------------------- --------
Borrower 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 the other Loan Documents, 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. Nothing in this Agreement shall affect any right that any
Lender may otherwise have to bring any action or proceeding relating to this
Agreement or the other Loan Documents against the Borrower or its properties in
the courts of any jurisdiction.
(b) The Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this agreement or
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
73
the other Loan Documents in any New York State or Federal court sitting in New
York City. 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 9.01. Nothing in this
Agreement will
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.
IN WITNESS WHEREOF, the Borrower, the Lenders, the Administrative
Agent and the CAF Agent have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.
BURLINGTON NORTHERN RAILROAD
COMPANY,
by
Robert F. McKenney
-------------------------------------
Name: Robert F. McKenney
Title: Senior Vice President
and Treasurer
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, individually and as
Administrative Agent,
by
Loren K. Jensen
-------------------------------------
Name: Loren K. Jensen
Title: Senior Vice President
CHEMICAL BANK AGENCY SERVICES
CORPORATION, as CAF Agent,
by
Janet M. Belden
-------------------------------------
Name: Janet M. Belden
Title: Vice President
ABN-AMRO BANK N.V.,
by by
Lila J. Donehoo Ronald A. Mahle
---------------------- ------------------------------------
Name: Lila J. Donehoo Name: Ronald A. Mahle
Title: Vice President Title: Vice President
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
THE BOATMEN'S NATIONAL BANK OF ST.
LOUIS,
by
Dwight D. Erdbruegger
-------------------------------------
Name: Dwight D. Erdbruegger
Title: Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
by
Wayne H. Riess
-------------------------------------
Name: Wayne H. Riess
Title: Vice President
THE BANK OF NEW YORK,
by
Julie E. Brennan
-------------------------------------
Name: Julie E. Brennan
Title: Vice President
THE BANK OF NOVA SCOTIA,
by
A. S. Norsworthy
-------------------------------------
Name: A. S. Norsworthy
Title: Assistant Agent
THE BANK OF TOKYO, LTD., Dallas
Agency,
by
J. Beckwith
-------------------------------------
Name: J. Beckwith
Title: Vice President
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
CAISSE NATIONALE DE CREDIT AGRICOLE,
by
David Bouhl
-------------------------------------
Name: David Bouhl
Title: First Vice President
THE CHASE MANHATTAN BANK, N.A.,
by
Francis M. Cox, III
-------------------------------------
Name: Francis M. Cox, III
Title: Vice President
CIBC, INC.,
by
J. D. Westland
-------------------------------------
Name: J. D. Westland
Title: Vice President
CITIBANK, N.A.,
by
Barbara A. Cohen
-------------------------------------
Name: Barbara A. Cohen
Title: Vice President
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", New York Branch
by
Anita Vogel
-------------------------------------
Name: Anita Vogel
Title: Vice President
by
Ian Reece
------------------------------------
Name: Ian Reece
Title: Vice President and Manager
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
CREDIT LYONNAIS New York Branch
by
Alain Papiasse
-------------------------------------
Name: Alain Papiasse
Title: Senior Vice President,
Deputy General Manager
CREDIT LYONNAIS Cayman Island Branch
by
Alain Papiasse
-------------------------------------
Name: Alain Papiasse
Title: Authorized Signature
THE DAI-ICHI KANGYO BANK, LIMITED,
Los Angeles Agency,
by
Tomohiro Nozaki
-------------------------------------
Name: Tomohiro Nozaki
Title: Senior Vice President
and Joint General
Manager
FIRST BANK NATIONAL ASSOCIATION,
by
Megan G. Mourning
-------------------------------------
Name: Megan G. Mourning
Title: Vice President
FIRST INTERSTATE BANK OF TEXAS N.A.,
by
Todd Robichaux
-------------------------------------
Name: Todd Robichaux
Title: Assistant Vice President
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON,
by
Dexter Freeman
-------------------------------------
Name: Dexter Freeman
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
by
Michael J. Kolosowsky
-------------------------------------
Name: Michael J. Kolosowsky
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston
Agency,
by
David Kelley
-------------------------------------
Name: David Kelley
Title: Vice President and
Senior Manager
MELLON BANK, N.A.,
by
V. Charles Jackson
-------------------------------------
Name: V. Charles Jackson
Title: Senior Vice President
MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION,
by
Edward A. Cheney
-------------------------------------
Name: Edward A. Cheney
Title: Vice President
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
THE MITSUBISHI BANK, LIMITED, New
York Branch,
by
Paula Mueller
-------------------------------------
Name: Paula Mueller
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF NEW
YORK,
by
Michael C. Mauer
-------------------------------------
Name: Michael C. Mauer
Title: Vice President
NBD BANK, N.A.,
by
D. Andrew Bateman
-------------------------------------
Name: D. Andrew Bateman
Title: First Vice President
THE NORTHERN TRUST COMPANY,
by
Martin G. Alston
-------------------------------------
Name: Martin G. Alston
Title: Vice President
PNC BANK, National Association,
by
Jeffrey S. Nurkiewicz
-------------------------------------
Name: Jeffrey S. Nurkiewicz
Title: Commercial Banking
Officer
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
THE SANWA BANK, LIMITED,
by
Blake Wright
-------------------------------------
Name: Blake Wright
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
Louis P. LaVille
-------------------------------------
Name: Louis P. LaVille
Title: Vice President
THE SUMITOMO BANK, LIMITED,
by
Hiroshi Amano
-------------------------------------
Name: Hiroshi Amano
Title: General Manager
THE TOKAI BANK, LIMITED,
by
Hitoshi Ozawa
-------------------------------------
Name: Hitoshi Ozawa
Title: Assistant General
Manager
THE TORONTO-DOMINION BANK,
by
Lisa Allison
-------------------------------------
Name: Lisa Allison
Title: Manager, Credit
Administration
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
UNION BANK OF SWITZERLAND, Houston
Agency,
by
Jan Buettgen
-------------------------------------
Name: Jan Buettgen
Title: Assistant Vice President
by
Evans Swann
-------------------------------------
Name: Evans Swann
Title: Vice President
WACHOVIA BANK OF GEORGIA, N.A.,
by
Terry L. Akins
-------------------------------------
Name: Terry L. Akins
Title: Senior Vice President
[6700-070(A)RAF/A08A.WPF/30D/4674W]
<PAGE>
EXHIBIT 10.2
================================================================================
5-YEAR COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY
AGREEMENT
Dated as of May 6, 1994
among
BURLINGTON NORTHERN RAILROAD COMPANY,
THE LENDERS NAMED HEREIN,
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Administrative Agent
and
CHEMICAL BANK AGENCY SERVICES CORPORATION,
as Competitive Advance Facility Agent
================================================================================
[CS&M Ref. No. 6700-227]
[6700-070(X)RAF/CV08B.WPF/30D/4674W]
<PAGE>
TABLE OF CONTENTS
Article Section Page
- - ------- ------- ----
I. DEFINITIONS
1.01 Defined Terms ..................... 1
1.02 Terms Generally ................... 17
II. THE CREDITS
2.01 Commitments ....................... 18
2.02 Loans ............................. 18
2.03 Competitive Bid Procedure ......... 20
2.04 Standby Borrowing Procedure ....... 23
2.05 Refinancings ...................... 24
2.06 Conversion and Continuation of
Standby Borrowings .............. 25
2.07 Fees .............................. 27
2.08 Repayment of Loans ................ 28
2.09 Interest on Loans ................. 28
2.10 Default Interest .................. 29
2.11 Alternate Rate of Interest ........ 29
2.12 Termination and Reduction of
Commitments ..................... 31
2.13 Prepayment ........................ 31
2.14 Reserve Requirements; Change in
Circumstances ................... 32
2.15 Change in Legality ................ 34
2.16 Indemnity ......................... 35
2.17 Pro Rata Treatment ................ 36
2.18 Sharing of Setoffs ................ 37
2.19 Payments .......................... 38
2.20 Taxes ............................. 38
2.21 Termination or Assignment of
Commitments Under Certain
Circumstances ................... 41
III. REPRESENTATIONS AND WARRANTIES ........... 42
IV. CONDITIONS OF LENDING
4.01 Conditions to Effectiveness of
Commitments ..................... 46
4.02 Conditions to All Borrowings ...... 47
[6700-070(X)RAF/CT08B.wpf/19N/4674]
<PAGE>
Article Section Page
- - ------- ------- ----
V. AFFIRMATIVE COVENANTS
5.01 Existence; Businesses and
Properties ...................... 48
5.02 Insurance ......................... 49
5.03 Reporting Requirements ............ 49
5.04 Consolidated Tangible Net Worth ... 52
5.05 Taxes ............................. 52
VI. NEGATIVE COVENANTS
6.01 Debt .............................. 52
6.02 Sale, etc., of Assets ............. 53
6.03 Mergers, etc ...................... 54
6.04 Liens ............................. 54
6.05 Sales of Accounts Receivable ...... 55
VII. EVENTS OF DEFAULT ........................ 56
VIII. THE AGENTS ............................... 59
IX. MISCELLANEOUS
9.01 Notices ........................... 62
9.02 Survival of Agreement ............. 63
9.03 Binding Effect .................... 64
9.04 Successors and Assigns ............ 64
9.05 Expenses; Indemnity ............... 68
9.06 Right of Setoff ................... 69
9.07 Applicable Law .................... 69
9.08 Waivers; Amendment ................ 69
9.09 Interest Rate Limitation .......... 70
9.10 Entire Agreement .................. 71
9.11 Severability ...................... 71
9.12 Counterparts ...................... 71
9.13 Headings .......................... 71
9.14 Jurisdiction; Consent to Service of
Process ......................... 71
Exhibit A-1 Form of Competitive Bid Request
Exhibit A-2 Form of Notice of Competitive Bid Request
Exhibit A-3 Form of Competitive Bid
[6700-070(X)RAF/CT08B.wpf/19N/4674]
<PAGE>
Exhibit A-4 Form of Competitive Bid Accept/Reject
Letter
Exhibit A-5 Form of Standby Borrowing Request
Exhibit B Administrative Questionnaire
Exhibit C Form of Assignment and Acceptance
Exhibit D Form of Opinion of Francis T. Kelly, Esq.,
Counsel for the Borrower
Exhibit E Form of Opinion of Douglas J. Babb, Vice
President and General Counsel of the
Borrower
Schedule 2.01 Commitments
Schedule 6.04(a) Existing Liens
[6700-070(X)RAF/CT08B.wpf/19N/4674]
<PAGE>
5-YEAR COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY
AGREEMENT dated as of May 6, 1994, among BURLINGTON NORTHERN
RAILROAD COMPANY, a Delaware corporation (the "Borrower"); the
lenders listed in Schedule 2.01 hereto (the "Lenders"); TEXAS
COMMERCE BANK NATIONAL ASSOCIATION, a national banking
association, as administrative agent (in such capacity, the
"Administrative Agent") and CHEMICAL BANK AGENCY SERVICES
CORPORATION, as competitive advance facility agent (in such
capacity, the "CAF Agent").
The Borrower has requested the Lenders to extend credit to the
Borrower in order to enable it 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 (as herein defined) a principal amount not in excess of
$500,000,000 at any time outstanding. The Borrower has also requested the
Lenders to provide a procedure pursuant to which the Borrower may invite the
Lenders to bid on an uncommitted basis on short-term borrowings by the Borrower.
The proceeds of such borrowings are to be used for general corporate purposes,
including providing backup liquidity for the Borrower's commercial paper program
and for acquisitions of any person approved by the board of directors or other
comparable body of such person. The Lenders are willing to extend such credit
to the Borrower on the terms and subject to the conditions herein set forth.
Accordingly, the Borrower, the Lenders, the Administrative Agent and
the CAF Agent agree as follows:
ARTICLE I. DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the
--------------
following terms shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
-------------
"ABR Loan" shall mean any Standby Loan bearing interest at a rate
--------
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
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<PAGE>
2
"Adjusted CD Rate" shall mean, with respect to any CD Borrowing for
----------------
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/100 of 1%) equal to the sum of (a) a rate per annum equal to the
product of (i) the Fixed CD Rate in effect for such Interest Period and (ii)
Statutory Reserves, plus (b) the Assessment Rate. For purposes hereof, the term
"Fixed CD Rate" shall mean the arithmetic average (rounded upwards, if
-------------
necessary, to the next 1/100 of 1%) of the prevailing rates per annum bid at or
about 10:00 a.m., New York City time, to each Reference Bank on the first
Business Day of the Interest Period applicable to such CD Borrowing by three New
York City negotiable certificate of deposit dealers of recognized standing for
the purchase at face value of negotiable certificates of deposit of such
Reference Bank in a principal amount approximately equal to such Reference
Bank's portion of such CD Borrowing and with a maturity comparable to such
Interest Period.
"Administrative Questionnaire" shall mean an Administrative
----------------------------
Questionnaire in the form of Exhibit B hereto.
"Affiliate" shall mean, when used with respect to a specified person,
---------
another person that directly, or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the person
specified.
"Agent Fees" shall have the meaning given such term in Section
----------
2.07(b).
"Agents" shall mean the CAF Agent and the Administrative Agent.
------
"Alternate Base Rate" shall mean, for any day, a rate per annum
-------------------
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of
(a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such
day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1%. For purposes hereof, "Prime Rate" shall mean as of a particular
----------
date, the prime rate most recently announced by the Administrative Agent and
thereafter entered in the minutes of the Administrative Agent's Loan and
Discount Committee, automatically fluctuating upward and downward with and at
the time specified in each such announcement without notice to the Borrower or
any other person, which prime rate may not
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
3
necessarily represent the lowest or best rate actually charged to a customer.
"Base CD Rate" shall mean the sum of (a) the product of (i) the Three-Month
- - -------------
Secondary CD Rate and (ii) Statutory Reserves and (b) the Assessment Rate.
"Three-Month Secondary CD Rate" shall mean, for any day, the secondary market
- - ------------------------------
rate for three-month certificates of deposit reported as being in effect on such
day (or, if such day shall not be a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day), or, if such rate shall not be so reported on such day
or such next preceding Business Day, the average of the secondary market
quotations for three month certificates of deposit of major money center banks
in New York City received at approximately 10:00 a.m., New York City time, on
such day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Administrative Agent from three New York City negotiable
certificate of deposit dealers of recognized standing selected by it. "Federal
-------
Funds Effective Rate" shall mean, for any day, the weighted average of the rates
- - --------------------
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the quotations for
the day of such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it. If for any reason
the Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Base CD
Rate or the Federal Funds Effective Rate or both for any reason, including the
inability of the Administrative Agent to obtain sufficient quotations in
accordance with the terms thereof, the Alternate Base Rate shall be determined
without regard to clause (b) or (c), or both, of the first sentence of this
definition, as appropriate, until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a change
in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective
Rate, respectively.
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
4
"Applicable Fee Percentage" shall mean on any date the applicable
-------------------------
percentage set forth below based upon the ratings applicable on such date to
indebtedness outstanding under the Mortgage Indenture or similar senior,
secured, non-credit-enhanced long-term indebtedness of the Borrower (other than
the Northern Pacific 3% General Lien Bonds due 2047 and the St. Louis-San
Francisco 5% Debentures due 2006) for borrowed money ("Index Debt"):
<TABLE>
<CAPTION>
Applicable
Fee
Percentage
-----------
<S> <C>
Category 1
----------
A or higher by S&P; .125%
A2 or higher by Moody's
Category 2
----------
A- by S&P; .150%
A3 by Moody's
Category 3
----------
BBB+ by S&P; .1875%
Baa1 by Moody's
Category 4
----------
BBB by S&P; .225%
Baa2 by Moody's
Category 5
----------
BBB- or lower by S&P; .350%
Baa3 or lower by Moody's
</TABLE>
For purposes of the foregoing, (i) if either Moody's or S&P shall not have in
effect a rating for Index Debt (other than because such rating agency shall no
longer be in the business of rating corporate debt obligations), then such
rating agency will be deemed to have established a rating for Index Debt in
Category 5; (ii) if the ratings established or deemed to have been established
by Moody's and S&P shall fall within different Categories, the Applicable Fee
Percentage shall be determined by reference to the inferior (or numerically
highest) Category, (iii) if any rating established or deemed to have been esta-
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
5
blished by Moody's or S&P shall be changed (other than as a result of a change
in the rating system of either Moody's or S&P), such change shall be effective
as of the date on which such change is first announced by the rating agency
making such change and (iv) in the event, and for so long as, the commercial
paper rating applicable to the Borrower shall be lower than A-2 by S&P or lower
than P-2 by Moody's or no such rating shall be in effect from either Moody's or
S&P (other than because such rating agency shall no longer be in the business of
rating corporate debt obligations), the Applicable Fee Percentage shall be
determined by reference to Category 5. Each change in the Applicable Fee
Percentage 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 either Moody's or S&P shall
change, or if either such rating agency shall cease to be in the business of
rating corporate debt obligations, the Borrower and the Lenders shall negotiate
in good faith to amend the references to specific ratings in this definition to
reflect such changed rating system or the non-availability of ratings from such
rating agency, and pending agreement on such amendment, the rating in effect
immediately prior to such change or cessation will be used in determining the
Applicable Fee Percentage.
"Applicable Margin" shall mean on any date, with respect to Eurodollar
-----------------
Standby Loans, CD Loans or ABR Loans, as the case may be, the applicable spreads
set forth below based upon the ratings applicable on such date to the Borrower's
Index Debt:
<TABLE>
<CAPTION>
Eurodollar CD Loan ABR Loan
Loan Spread Spread Spread
------------ -------- ---------
<S> <C> <C> <C>
Category 1
- - ----------
A or higher by S&P; .200% .325% 0%
Category 2
- - ----------
A- by S&P; .225% .350% 0%
A3 by Moody's
Category 3
- - ----------
BBB+ by S&P; .250% .375% 0%
</TABLE>
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
6
<TABLE>
<S> <C> <C> <C>
Category 4
- - ----------
BBB by S&P; .375% .500% 0%
Baa2 by Moody's
Category 5
- - ----------
BBB- or lower by S&P .500% .625% 0%
Baa3 or lower by Moody's
</TABLE>
For purposes of the foregoing, (i) if either Moody's or S&P shall not have in
effect a rating for Index Debt (other than because such rating agency shall no
longer be in the business of rating corporate debt obligations), then such
rating agency will be deemed to have established a rating for Index Debt in
Category 5; (ii) if the ratings established or deemed to have been established
by Moody's and S&P shall fall within different Categories, the Applicable Margin
shall be determined by reference to the inferior (or numerically higher)
Category, (iii) if any rating established or deemed to have been established by
Moody's or S&P shall be changed (other than as a result of a change in the
rating system of either Moody's or S&P), such change shall be effective as of
the date on which such change is first announced by the rating agency making
such change and (iv) in the event, and for so long as, the commercial paper
rating applicable to the Borrower shall be lower than A-2 by S&P or lower than
P-2 by Moody's or no such rating shall be in effect from either Moody's or S&P
(other than because such rating agency shall no longer be in the business of
rating corporate debt obligations), the Applicable Margin shall be determined by
reference to Category 5. Each change in the Applicable Margin shall apply to all
Eurodollar Standby Loans, CD Loans and ABR Loans that are outstanding at any
time 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 either Moody's or S&P shall change, or if
either such rating agency shall cease to be in the business of rating corporate
debt obligations, the Borrower and the Lenders shall negotiate in good faith to
amend the references to specific ratings in this definition to reflect such
changed rating system or the nonavailability of ratings from such rating agency,
and pending agreement on such amendment, the rating in effect immediately prior
to such change or cessation will be used in determining the Applicable Margin.
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
7
"Assessment Rate" shall mean for any date the annual rate (rounded
---------------
upwards, if necessary, to the next 1/100 of 1%) most recently estimated by the
Administrative Agent as the then current net annual assessment rate that will be
employed in determining amounts payable by the Administrative Agent to the
Federal Deposit Insurance Corporation (or any successor) for insurance by such
Corporation (or such successor) of time deposits made in dollars at the
Administrative Agent's domestic offices.
"Assignment and Acceptance" shall mean an assignment and acceptance
-------------------------
entered into by a Lender and an assignee, and accepted by the Administrative
Agent, in the form of Exhibit C.
"Board" shall mean the Board of Governors of the Federal Reserve
-----
System of the United States.
"Borrowing" shall mean a group of Loans of a single Type made by the
---------
Lenders (or, in the case of a Competitive Borrowing, by the Lender or Lenders
whose Competitive Bids have been accepted pursuant to Section 2.03) on a single
date and as to which a single Interest Period is in effect.
"Business Day" shall mean any day (other than a day which is a
------------
Saturday, Sunday or legal holiday in the State of Texas or New York) on which
banks are open for business in Houston and New York City; provided, however,
-------- -------
that, when used in connection with a Eurodollar 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.
"CD Borrowing" shall mean a Borrowing comprised of CD Loans.
------------
"CD Loan" shall mean any Standby Loan bearing interest at a rate
determined by reference to the Adjusted CD Rate in accordance with the
provisions of Article II.
A "Change in Control" shall be deemed to have occurred if (a) any
-----------------
person or group (within the meaning of Rule 13d-5 of the Securities and Exchange
Commission as in effect on the date hereof) shall own directly or indirectly,
beneficially or of record, shares representing more than 50% of the aggregate
ordinary voting power represented by the issued and outstanding capital stock of
the Parent (other than as the result of a transaction approved by the Parent's
Board of Directors), (b) a majority of the seats (other
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
8
than vacant seats) on the board of directors of the Parent shall at any time
have been occupied by persons who were neither (i) nominated by the board of
directors of the Parent, nor (ii) appointed by directors so nominated, (c) any
person or group shall otherwise directly or indirectly obtain control of the
Parent (other than in a transaction approved by the Parent's Board of Directors)
or (d) the Parent shall cease to control the Borrower.
"Closing Date" shall mean the date hereof.
------------
"Code" shall mean the Internal Revenue Code of 1986, as the same may
----
be amended from time to time.
"Commitment" shall mean, with respect to each Lender, the commitment
----------
of such Lender hereunder as set forth in Schedule 2.01 hereto, as such Lender's
Commitment may be permanently terminated or reduced from time to time pursuant
to Section 2.12. The Commitments shall automatically and permanently terminate
on the Maturity Date.
"Competitive Bid" shall mean an offer by a Lender to make a
---------------
Competitive Loan pursuant to Section 2.03.
"Competitive Bid Accept/Reject Letter" shall mean a notification
------------------------------------
made by the Borrower pursuant to Section 2.03(d) in the form of Exhibit A-4.
"Competitive Bid Rate" shall mean, as to any Competitive Bid made by
--------------------
a Lender pursuant to Section 2.03(b), (i) in the case of a Eurodollar Loan, the
Margin, and (ii) in the case of a Fixed Rate Loan, the fixed rate of interest
offered by the Lender making such Competitive Bid.
"Competitive Bid Request" shall mean a request made pursuant to
-----------------------
Section 2.03 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 by the Borrower
under the bidding procedure described in Section 2.03.
"Competitive Loan" shall mean a loan from a Lender to the Borrower
----------------
pursuant to the bidding procedure described
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
9
in Section 2.03. Each Competitive Loan shall be a Eurodollar Competitive Loan
or a Fixed Rate Loan.
"Consolidated Tangible Net Worth" shall mean preferred stockholder's
-------------------------------
and common stockholder's equity of the Borrower (other than mandatorily
redeemable preferred stock) minus intangible assets of the Borrower and its
consolidated Subsidiaries.
"Debt" shall mean, without duplication, (i) indebtedness for borrowed
----
money or for the deferred purchase price of property or services whether
evidenced by bonds, debentures, notes or similar instruments or otherwise (but
excluding, in any case, liabilities by endorsement of negotiable instruments for
deposit or collection and liabilities with respect to accounts payable incurred
in the ordinary course of business), (ii) obligations as lessee under leases
which shall have been or should be, in accordance with generally accepted
accounting principles, recorded as capital leases and (iii) obligations under
direct or indirect guarantees in respect of, and obligations to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness on obligations of persons (other than the Borrower and its
consolidated Subsidiaries) of the kinds referred to in clauses (i) and (ii)
above.
"Default" shall mean any event or condition which upon notice, lapse
-------
of time or both would constitute an Event of Default.
"dollars" or "$" shall mean lawful money of the United States of
------- -
America.
"Engagement Letter" shall mean the engagement letter dated April 7,
-----------------
1994, among the Borrower, the Administrative Agent and Chemical Securities Inc.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as the same may be amended from time to time.
"ERISA Affiliate" shall mean any person who for purposes of Title IV
---------------
of ERISA is a member of the Borrower's controlled group, or is under common
control with the Borrower, within the meaning of Section 414 of the Code and the
regulations promulgated and rulings issued thereunder.
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
10
"Eurodollar Borrowing" shall mean a Borrowing comprised of
--------------------
Eurodollar Loans.
"Eurodollar Competitive Borrowing" shall mean a Competitive Borrowing
--------------------------------
comprised of Eurodollar Competitive Loans.
"Eurodollar Competitive Loan" shall mean any Competitive Loan bearing
---------------------------
interest at a rate determined by reference to the LIBO Rate in accordance with
the provisions of Article II.
"Eurodollar Loan" shall mean any Eurodollar Competitive Loan or
---------------
Eurodollar Standby Loan.
"Eurodollar Standby Borrowing" shall mean a Standby Borrowing
----------------------------
comprised of Eurodollar Standby Loans.
"Eurodollar Standby Loan" shall mean any Standby Loan bearing
interest at a rate determined by reference to the LIBO Rate in accordance with
the provisions of Article II.
"Event of Default" shall have the meaning given such term in Article
----------------
VII.
"Existing Facility" shall mean the $500,000,000 Competitive Advance
-----------------
and Revolving Credit Facility Agreement dated as of October 18, 1991, among the
Borrower, the lenders named therein, Texas Commerce Bank National Association,
as administrative agent, and Chemical Bank, as facility agent.
"Existing Liens" shall mean Liens existing on the date hereof and
--------------
described on Schedule 6.04(a) hereto and any Lien arising out of the
refinancing, extension, renewal or refunding of any Debt secured by such Lien,
but only to the extent the amount of such Debt shall not be increased.
"Existing Mortgages" shall mean each security or other agreement of
------------------
whatever nature described within the Burlington Northern Railroad Company Long-
Term Debt Book dated December 31, 1993, a copy of which has been delivered by
the Borrower to the Administrative Agent, as such agreements may have been
amended or modified to the date hereof or as they may be amended, supplemented,
replaced or modified from time to time hereafter.
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
11
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
12
"Facility A Credit Agreement" shall mean the $300,000,000 Competitive
---------------------------
Advance and Revolving Credit Facility Agreement dated as of the date hereof
among the Borrower, the lenders named therein, Texas Commerce Bank National
Association, as administrative agent for the Lenders, and Chemical Bank Agency
Services Corporation, as CAF Agent.
"Facility Fee" shall have the meaning assigned to such term in Section
------------
2.07(a).
"Federal Funds Effective Rate" shall have the meaning assigned
----------------------------
thereto in the definition of Alternate Base Rate.
"Fees" shall mean the Facility Fee and the Agent Fees.
----
"Fixed Rate Borrowing" shall mean a Borrowing comprised of Fixed Rate
--------------------
Loans.
"Fixed Rate Loan" shall mean any Competitive Loan bearing interest at
---------------
a fixed percentage rate per annum (expressed in the form of a decimal to no more
than four decimal places) specified by the Lender making such Loan in its
Competitive Bid.
"GAAP" shall mean United States generally accepted accounting
----
principles, applied on a basis consistent with the financial statements
referred to in paragraph (e) of Article III hereof.
"Governmental Authority" shall mean any Federal, state, local or
----------------------
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"ICC" shall mean the Interstate Commerce Commission or any successor
---
thereto.
"Index Debt" shall have the meaning assigned thereto in the
----------
definition of Applicable Fee Percentage.
"Insufficiency" shall mean, with respect to any Plan, the amount, if
-------------
any, by which the present value of the benefit liabilities under such Plan
exceeds the fair market value of the assets of such Plan.
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
13
"Interest Payment Date" shall mean, with respect to any Loan, the
---------------------
last day of the Interest Period applicable thereto and, in the case of a
Eurodollar Loan with an Interest Period of more than three months duration or a
Fixed Rate Loan or a CD Loan with an Interest Period of more than 90 days
duration, each day that would have been an Interest Payment Date for such Loan
had successive Interest Periods of three months duration or 90 days duration, as
the case may be, been applicable to such Loan and, in addition, the date of any
refinancing or conversion of such Loan with or to a Loan of a different Type.
"Interest Period" shall mean (a) as to any Eurodollar Borrowing, the
---------------
period commencing on the date of such Borrowing or on the last day of the
immediately preceding Interest Period applicable to such Borrowing, as the case
may be, and ending on the numerically corresponding day (or, if there is no
numerically corresponding day, on the last day) in the calendar month that is
(i) in the case of any Eurodollar Competitive Loan, any whole number of months
(but not more than 12 months) thereafter, as the Borrower may elect and (ii) in
the case of any Eurodollar Standby Loan, 1, 2, 3 or 6 months or, with the
approval of all the Lenders, 9 or 12 months thereafter, as the Borrower may
elect, (b) as to any CD Borrowing, a period of 30, 60, 90, 180, 270 or 360 days
duration, as the Borrower may elect, commencing on the date of such Borrowing,
(c) as to any ABR Borrowing, the period commencing on the date of such Borrowing
and ending on the date 90 days thereafter or, if earlier, on the Maturity Date
or the date of repayment, prepayment or conversion of such Borrowing and (d) as
to any Fixed Rate Borrowing, the period commencing on the date of such Borrowing
and ending on the date specified in the Competitive Bids in which the offer to
make the Fixed Rate Loans comprising such Borrowing were extended, which shall
not be earlier than seven days after the date of such Borrowing or later than
360 days after the date of such Borrowing; provided, however, that 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 Eurodollar Loans 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. Interest shall accrue from and including the first day
of an Interest Period to but excluding the last day of such Interest Period.
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
14
"LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for
---------
any Interest Period, an interest rate per annum equal to the average (rounded
upwards, if necessary, to the next 1/16 of 1%) of the rates per annum at which
dollar deposits for a maturity comparable to such Interest Period are offered by
the principal London offices of the Reference Banks (or, if any Reference Bank
does not at the time maintain a London office, the principal London office of
any Affiliate of such Reference Bank) 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 in amounts approximately
equal to the amount of such Borrowing.
"Lien" shall mean any lien, security interest or other charge or
----
encumbrance, or any assignment of the right to receive income, or any other type
of preferential arrangement, in each case to secure any obligation of any
person.
"Loan" shall mean any Competitive Loan or Standby Loan.
----
"Loan Documents" shall mean this Agreement and the Fee Letter dated
--------------
April 7, 1994 among the Administrative Agent, Chemical Securities Inc. and the
Borrower.
"Margin" shall mean, as to any Eurodollar Competitive Loan, the margin
------
(expressed as a percentage rate per annum in the form of a decimal to no more
than four decimal places) to be added to or subtracted from the LIBO Rate in
order to determine the interest rate applicable to such Loan, as specified in
the Competitive Bid relating to such Loan.
"Margin Stock" shall have the meaning given such term under
------------
Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on the
-----------------------
financial condition or operations of the Borrower and its consolidated
Subsidiaries on a consolidated basis.
"Material Plan" shall mean any Plan the assets of which exceed
-------------
$50,000,000 or the liabilities of which for unfunded benefit liabilities exceed
$15,000,000.
"Maturity Date" shall mean May 6, 1999.
-------------
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
15
"Moody's" shall mean Moody's Investors Service.
-------
"Mortgage Indenture" shall mean the Consolidated Mortgage, dated
------------------
March 2, 1970, by Burlington Northern Inc. (the former name of the Borrower) to
Morgan Guaranty Trust Company of New York and Jacob M. Ford II, as trustees, as
amended to the date hereof and as amended, supplemented or modified from time to
time hereafter.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
------------------
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate (other
than one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
Section 414 of the Code) is making or accruing an obligation to make
contributions, or has within any of the preceding five plan years made or
accrued an obligation to make contributions, such plan being maintained pursuant
to one or more collective bargaining agreements.
"Multiple Employer Plan" shall mean a single employer plan, as
----------------------
defined in Section 4001(a)(15) of ERISA, which (i) is maintained for employees
of the Borrower or an ERISA Affiliate and at least one person other than the
Borrower and its ERISA Affiliates or (ii) was so maintained and in respect of
which the Borrower or an ERISA Affiliate could have liability under Section 4064
or 4069 of ERISA in the event such plan has been or were to be terminated.
"Parent" shall mean Burlington Northern Inc., a Delaware corporation.
------
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred
----
to and defined in ERISA, or any successor thereto.
"person" shall mean any natural person, corporation, business trust,
------
joint venture, association, company, partnership or government, or any agency or
political subdivision thereof.
"Plan" shall mean any pension plan (other than a Multiemployer Plan)
----
subject to the provisions of Title IV of ERISA or Section 412 of the Code which
is maintained for employees of the Borrower or any ERISA Affiliate.
"Reference Banks" shall mean Texas Commerce Bank National Association,
---------------
Citibank, N.A. and The First National Bank of Chicago.
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
16
"Register" shall have the meaning given such term in Section 9.04(d).
--------
"Regulation D" shall mean Regulation D of the Board as from time to
------------
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation G" shall mean Regulation G of the Board as from time to
------------
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation U" shall mean Regulation U of the Board as from time to
------------
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation X" shall mean Regulation X of the Board as from time to
------------
time in effect and all official rulings and interpretations thereunder or
thereof.
"Required Lenders" shall mean, at any time, Lenders having
----------------
Commitments representing at least 55% of the Total Commitment or,
for purposes of acceleration pursuant to clause (ii) of Article VII, Lenders
holding Loans representing at least 55% of the aggregate principal amount of the
Loans outstanding.
"Responsible Officer" shall mean with respect to the subject matter
-------------------
of any covenant, agreement, or obligation of the Borrower contained in this
Agreement, the president, any vice president, treasurer, assistant treasurer or
other officer of the Borrower who in the normal performance of his or her
operational responsibility would have knowledge of such subject matter and the
requirements of such covenants, agreements or obligations of the Borrower with
respect thereto.
"S&P" shall mean Standard and Poor's Corporation.
---
"Standby Borrowing" shall mean a borrowing consisting of simultaneous
-----------------
Standby Loans from each of the Lenders.
"Standby Borrowing Request" shall mean a request made pursuant to
-------------------------
Section 2.04 in the form of Exhibit A-5.
"Standby Loans" shall mean the revolving loans made by the Lenders to
-------------
the Borrower pursuant to
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
17
Section 2.04. Each Standby Loan shall be a Eurodollar Standby Loan, a CD
Standby Loan or an ABR Standby Loan.
"Statutory Reserves" shall mean a fraction (expressed as a decimal),
------------------
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves), expressed as a decimal
established by the Board and any other banking authority to which the
Administrative Agent is subject for new negotiable nonpersonal time deposits in
dollars of over $100,000 with maturities approximately equal to (i) the
applicable Interest Period, in the case of the Adjusted CD Rate, and (ii) three
months, in the case of the Base CD Rate (as such term is used in the definition
of "Alternate Base Rate"). Statutory Reserves shall be adjusted automatically
on and as of the effective date of any change in any reserve percentage.
"subsidiary" shall mean, with respect to any person (herein referred
----------
to as the "parent"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or more
than 50% of the general partnership interests are, at the time any determination
is being made, owned, controlled or held, or (b) which is, at the time any
determination is made, otherwise controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.
"Subsidiary" shall mean any subsidiary of the Borrower.
----------
"Termination Event" shall mean (i) a "reportable event," as such term
-----------------
is described in Section 4043 of ERISA, (ii) the withdrawal of the Borrower or
any ERISA Affiliate from a Multiple Employer Plan during a plan year in which it
was a "substantial employer," as such term is defined in Section 4001(a)(2) of
ERISA, or the incurrence of liability by the Borrower or any ERISA Affiliate
under Section 4064 of ERISA upon the termination of a Multiple Employer Plan,
(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, (iv) the
institution of proceedings to terminate a Plan by the PBGC under Section 4042 of
ERISA, (v) a failure to make a required installment or other payment (within the
meaning of Section 412(n)(1) of the
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
18
Code) with respect to any Plan or (vi) any other event or condition which might
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan.
"Total Commitment" shall mean at any time the aggregate amount of the
----------------
Lenders' Commitments, as in effect at such time.
"Transfer" shall have the meaning given such term in Section 6.02.
--------
"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 Adjusted CD Rate, the Alternate Base Rate and the Fixed Rate.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan
--------------------
as a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions in Section 1.01
---------------
shall apply equally to both 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".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. 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; provided,
--------
however, that, for purposes of determining compliance with any covenant set
- - -------
forth in Section 5.04 or Article VI, such terms shall be construed in accordance
with GAAP as in effect on the date of this Agreement applied on a basis
consistent with the application used in preparing the Borrower's audited
financial statements referred to in paragraph (e) of Article III.
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
19
ARTICLE II. THE CREDITS
SECTION 2.01. Commitments. Subject to the terms and conditions and
-----------
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, to make Standby Loans to the Borrower, at any
time and from time to time on and after the date hereof and until the earlier of
the Maturity Date and the termination of the Commitment of such Lender, in an
aggregate principal amount at any time outstanding not to exceed such Lender's
Commitment minus the amount by which the Competitive Loans outstanding at such
time shall be deemed to have used such Commitment pursuant to Section 2.17,
subject, however, to the conditions that (a) at no time shall (i) the sum of (x)
the outstanding aggregate principal amount of all Standby Loans made by all
Lenders plus (y) the outstanding aggregate principal amount of all Competitive
Loans made by all Lenders exceed (ii) the Total Commitment and (b) at all times
the outstanding aggregate principal amount of all Standby Loans made by each
Lender shall equal the product of (i) the percentage which its Commitment
represents of the Total Commitment times (ii) the outstanding aggregate
principal amount of all Standby Loans made pursuant to Section 2.04. Each
Lender's Commitment is set forth opposite its respective name in Schedule 2.01.
Such Commitments may be terminated or reduced from time to time pursuant to
Section 2.12. Within the foregoing limits, the Borrower may borrow, pay or
prepay and reborrow hereunder, on and after the Closing Date and prior to the
Maturity Date, subject to the terms, conditions and limitations set forth
herein.
SECTION 2.02. Loans. (a) Each Standby Loan shall be made as part
-----
of a Borrowing consisting of Loans made by the Lenders ratably in accordance
with their Commitments; provided, however, that the failure of any Lender to
-------- -------
make any Standby Loan shall not in itself relieve any other Lender of its
obligation to lend hereunder (it being understood, however, that no Lender shall
be responsible for the failure of any other Lender to make any Loan required to
be made by such other Lender). Each Competitive Loan shall be made in accordance
with the procedures set forth in Section 2.03. The Loans comprising any
Borrowing shall be (i) in the case of Competitive Loans, in an aggregate
principal amount which is an integral multiple of $1,000,000 and not less than
$5,000,000 and (ii) in the case of Standby Loans, in an aggregate principal
amount which is an integral multiple of $1,000,000 and not
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
20
less than $20,000,000 (or an aggregate principal amount equal to the remaining
balance of the available Commitments).
(b) Each Competitive Borrowing shall be comprised entirely of
Eurodollar Competitive Loans or Fixed Rate Loans and each Standby Borrowing
shall be comprised entirely of Eurodollar Standby Loans, CD Loans or ABR Loans,
as the Borrower may request pursuant to Section 2.03 or 2.04, as applicable.
Each Lender may at its option make any Eurodollar 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 the Borrower to
repay such Loan in accordance with the terms of this Agreement. Borrowings of
more than one Type may be outstanding at the same time; provided, however, that
-------- -------
the Borrower shall not be entitled to request any Borrowing which, if made,
would result in an aggregate of more than twelve separate Standby Loans of any
Lender being outstanding hereunder at any one time. For purposes of the
foregoing, Loans having different Interest Periods, regardless of whether they
commence or end on the same date, shall be considered separate Loans.
(c) Subject to Section 2.05, each Lender shall make each Loan to be
made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds to the Administrative Agent in Houston, Texas, not
later than 1:00 p.m., New York City time, and the Administrative Agent shall by
3:00 p.m., New York City time, credit the amounts so received in immediately
available funds to an account designated by the Borrower with the Administrative
Agent or, if a Borrowing shall not occur on such date because any condition
precedent herein specified shall not have been met, return the amounts so
received to the respective Lenders. Competitive Loans shall be made by the
Lender or Lenders whose Competitive Bids therefor are accepted pursuant to
Section 2.03 in the amounts so accepted and Standby Loans shall be made by the
Lenders pro rata in accordance with Section 2.17. Unless the Administrative
Agent shall have received notice from a Lender prior to the date of any
Borrowing (or prior to 12:00 noon on the date of such borrowing, in the case of
an ABR Borrowing) that such Lender will not make available to the Administrative
Agent such Lender's portion of such Borrowing, the Administrative Agent may
assume that such Lender has made such portion available to the Administrative
Agent on the date of such Borrowing in accordance with this paragraph (c) and
the
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
21
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower on such date a corresponding amount. If and to the extent that
such Lender shall not have made such portion available to the Administrative
Agent, such Lender and the Borrower severally agree to repay to the
Administrative Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to
the Borrower until the date such amount is repaid to the Administrative Agent at
(i) in the case of the Borrower, the interest rate applicable at the time to the
Loans comprising such Borrowing and (ii) in the case of such Lender, the Federal
Funds Effective Rate. If such Lender shall repay to the Administrative Agent
such corresponding amount, such amount shall constitute such Lender's Loan as
part of such Borrowing for purposes of this Agreement.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request any Borrowing if the Interest Period
requested with respect thereto would end after the Maturity Date.
SECTION 2.03. Competitive Bid Procedure. (a) In order to request
--------------------------
Competitive Bids, the Borrower shall hand deliver or telecopy (or communicate by
telephone with prompt confirmation by telecopy or in writing) to the CAF Agent
(with a copy to the Administrative Agent) a duly completed Competitive Bid
Request in the form of Exhibit A-1 hereto, to be received by the CAF Agent (and
the Administrative Agent) (i) in the case of a Eurodollar Competitive Borrowing,
not later than 10:30 a.m., New York City time, four Business Days before a
proposed Competitive Borrowing and (ii) in the case of a Fixed Rate Borrowing,
not later than 10:30 a.m., New York City time, one Business Day before a
proposed Competitive Borrowing. No CD Loan or ABR Loan shall be requested in,
or made pursuant to, a Competitive Bid Request. A Competitive Bid Request that
does not conform substantially to the format of Exhibit A-1 may be rejected in
the CAF Agent's sole discretion, and the CAF Agent shall promptly notify the
Borrower of such rejection by telecopier (or by telephone with prompt
confirmation by telecopier or in writing). Such request shall in each case
refer to this Agreement and specify (x) whether the Borrowing then being
requested is to be a Eurodollar Borrowing or a Fixed Rate Borrowing, (y) the
date of such Borrowing (which shall be a Business Day) and the aggregate
principal amount thereof which shall be in a minimum principal amount of
$5,000,000 and in an integral multiple
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
22
of $1,000,000, and (z) the Interest Period with respect thereto (which may not
end after the Maturity Date). Promptly after its receipt of a Competitive Bid
Request that is not rejected as aforesaid, the CAF Agent shall invite by
telecopier (in the form set forth in Exhibit A-2 hereto) the Lenders to bid, on
the terms and conditions of this Agreement, to make Competitive Loans pursuant
to the Competitive Bid Request.
(b) Each Lender may, in its sole discretion, make one or more
Competitive Bids to the Borrower responsive to a Competitive Bid Request. Each
Competitive Bid by a Lender must be received by the CAF Agent via telecopier, in
the form of Exhibit A-3 hereto, (i) in the case of a Eurodollar Competitive
Borrowing, not later than 9:30 a.m., New York City time, three Business Days
before a proposed Competitive Borrowing and (ii) in the case of a Fixed Rate
Borrowing, not later than 9:30 a.m., New York City time, on the day of a
proposed Competitive Borrowing. Multiple bids will be accepted by the CAF Agent.
Competitive Bids that do not conform substantially to the format of Exhibit A-3
may be rejected by the CAF Agent, and the CAF Agent shall notify the Lender
making such nonconforming bid of such rejection as soon as practicable. Each
Competitive Bid shall refer to this Agreement and specify (x) the principal
amount (which shall be in a minimum principal amount of $5,000,000 and in an
integral multiple of $1,000,000 and which may equal the entire principal amount
of the Competitive Borrowing requested by the Borrower) of the Competitive Loan
or Loans that the Lender is willing to make to the Borrower, (y) the Competitive
Bid Rate or Rates at which the Lender is prepared to make the Competitive Loan
or Loans and (z) the Interest Period and the last day thereof. If any Lender
shall elect not to make a Competitive Bid, such Lender shall so notify the CAF
Agent by telecopier (I) in the case of Eurodollar Competitive Loans, not later
than 9:30 a.m., New York City time, three Business Days before a proposed
Competitive Borrowing, and (II) in the case of Fixed Rate Loans, not later than
9:30 a.m., New York City time, on the day of a proposed Competitive Borrowing;
provided, however, that failure by any Lender to give such notice shall not
- - -------- -------
cause such Lender to be obligated to make any Competitive Loan as part of such
Competitive Borrowing. A Competitive Bid submitted by a Lender pursuant to this
paragraph (b) shall be irrevocable.
(c) The CAF Agent shall promptly notify the Borrower by telecopier
(or by telephone promptly confirmed
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
23
by telecopier) of all the Competitive Bids made, the Competitive Bid Rate and
the principal amount of each Competitive Loan in respect of which a Competitive
Bid was made and the identity of the Lender that made each bid. The CAF Agent
shall send a copy of all Competitive Bids to the Borrower for its records as
soon as practicable after completion of the bidding process set forth in this
Section 2.03.
(d) The Borrower may in its sole and absolute discretion, subject
only to the provisions of this paragraph (d), accept or reject any Competitive
Bid referred to in paragraph (c) above. The Borrower shall notify the CAF Agent
by telephone, confirmed by telecopier in the form of a Competitive Bid
Accept/Reject Letter, whether and to what extent it has decided to accept or
reject any of or all the bids referred to in paragraph (c) above, (x) in the
case of a Eurodollar Competitive Borrowing, not later than 10:30 a.m., New York
City time, three Business Days before a proposed Competitive Borrowing, and (y)
in the case of a Fixed Rate Borrowing, not later than 10:30 a.m., New York City
time, on the day of a proposed Competitive Borrowing; provided, however, that
-------- -------
(i) the failure by the Borrower to give such notice shall be deemed to be a
rejection of all the bids referred to in paragraph (c) above, (ii) the Borrower
shall not accept a bid made at a particular Competitive Bid Rate if the Borrower
has decided to reject a bid made at a lower Competitive Bid Rate, (iii) the
aggregate amount of the Competitive Bids accepted by the Borrower shall not
exceed the principal amount specified in the Competitive Bid Request, (iv) if
the Borrower shall accept a bid or bids made at a particular Competitive Bid
Rate but the amount of such bid or bids shall cause the total amount of bids to
be accepted by the Borrower to exceed the amount specified in the Competitive
Bid Request, then the Borrower shall accept a portion of such bid or bids in an
amount equal to the amount specified in the Competitive Bid Request less the
amount of all other Competitive Bids accepted with respect to such Competitive
Bid Request, which acceptance, in the case of multiple bids at such Competitive
Bid Rate, shall be made pro rata in accordance with the amount of each such bid
at such Competitive Bid Rate, and (v) except pursuant to clause (iv) above, no
bid shall be accepted for a Competitive Loan unless such Competitive Loan is in
a minimum principal amount of $5,000,000 and an integral multiple of $1,000,000;
provided further, however, that if a Competitive Loan must be in an amount less
- - -------- ------- ------
than $5,000,000 because of the
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
24
provisions of clause (iv) above, such Competitive Loan may be for a minimum of
$1,000,000 or any integral multiple thereof, and in calculating the pro rata
allocation of acceptances of portions of multiple bids at a particular
Competitive Bid Rate pursuant to clause (iv) above the amounts shall be rounded
to integral multiples of $1,000,000 in a manner which shall be in the discretion
of the Borrower. A notice given by the Borrower pursuant to this paragraph (d)
shall be irrevocable.
(e) The CAF Agent shall promptly notify each bidding Lender whether
or not its Competitive Bid has been accepted (and if so, in what amount and at
what Competitive Bid Rate) by telecopy sent by the CAF Agent, and each
successful bidder will thereupon become bound, subject to the other applicable
conditions hereof, to make the Competitive Loan in respect of which its bid has
been accepted. The CAF Agent shall also promptly notify the Administrative Agent
of the Competitive Bids that have been accepted, the amounts thereof and the
Competitive Bid Rates applicable thereto.
(f) If the CAF Agent shall become a Lender and shall elect to submit
a Competitive Bid in its capacity as a Lender, it shall submit such bid directly
to the Borrower one quarter of an hour earlier than the earliest time at which
the other Lenders are required to submit their bids to the CAF Agent pursuant to
paragraph (b) above. The CAF Agent will in no event disclose the terms of any
Lender's Competitive Bid to any other Lender; provided that following the
--------
acceptance or rejection of Competitive Bids submitted in response to any
Competitive Bid Request, the CAF Agent may at the request of any Lender disclose
information as to the range of the Competitive Bid Rates at which Competitive
Bids were submitted or accepted.
(g) All notices required by this Section 2.03 shall be given in
accordance with Section 9.01.
SECTION 2.04. Standby Borrowing Procedure. In order to request a
---------------------------
Standby Borrowing, the Borrower shall hand deliver or telecopy (or communicate
by telephone with prompt confirmation by telecopy or in writing) to the
Administrative Agent a duly completed Standby Borrowing Request in the form of
Exhibit A-5 (a) in the case of a Eurodollar Standby Borrowing, not later than
11:00 a.m., New York City time, three Business Days before a proposed borrowing,
(b) in the case of a CD Borrowing, not later than
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
25
11:00 a.m., New York City time, two Business Days before a proposed borrowing
and (c) in the case of an ABR Borrowing, not later than 11:00 a.m., New York
City time, on the day of a proposed borrowing. No Fixed Rate Loan shall be
requested or made pursuant to a Standby Borrowing Request. Such notice shall be
irrevocable and shall in each case specify (i) whether the Borrowing then being
requested is to be a Eurodollar Borrowing, a CD Borrowing or an ABR Borrowing;
(ii) the date of such Borrowing (which shall be a Business Day) and the amount
thereof which shall be in a minimum principal amount of $20,000,000 and in an
integral multiple of $1,000,000; and (iii) if such Borrowing is to be a
Eurodollar Borrowing or CD Borrowing, the Interest Period with respect thereto.
If no election as to the Type of Borrowing is specified in any such notice, then
the requested Borrowing shall be an ABR Borrowing. If no Interest Period with
respect to any Eurodollar Borrowing or CD Borrowing is specified in any such
notice, then the Borrower shall be deemed to have selected an Interest Period of
one month's duration, in the case of a Eurodollar Borrowing, or 30 days'
duration, in the case of a CD Borrowing. If the Borrower shall not have given
notice in accordance with this Section 2.04 of its election to refinance a
Standby Borrowing prior to the end of the Interest Period in effect for such
Borrowing, then the Borrower shall (unless such Borrowing is repaid at the end
of such Interest Period) be deemed to have given notice of an election to
refinance such Borrowing with an ABR Borrowing. The Administrative Agent shall
promptly advise the Lenders of any notice given pursuant to this Section 2.04
and of each Lender's portion of the requested Borrowing.
SECTION 2.05. Refinancings. The Borrower may refinance all or any
------------
part of any Competitive Borrowing or Standby Borrowing with a Borrowing of the
same or a different Type made pursuant to Section 2.03 or Section 2.04, subject
to the conditions and limitations set forth herein and elsewhere in this
Agreement, including refinancings of Competitive Borrowings with Standby
Borrowings and Standby Borrowings with Competitive Borrowings. Any Borrowing or
part thereof so refinanced shall be deemed to be repaid in accordance with
Section 2.08 with the proceeds of a new Borrowing hereunder and the proceeds of
the new Borrowing, to the extent they do not exceed the principal amount of the
Borrowing being refinanced, shall not be paid by the Lenders to the
Administrative Agent or by the Administrative Agent to the
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
26
Borrower pursuant to Section 2.02(c); provided, however, that (i) if the
-------- -------
principal amount extended by a Lender in a refinancing is greater than the
principal amount extended by such Lender in the Borrowing being refinanced, then
such Lender shall pay such difference to the Administrative Agent for
distribution to the Lenders described in (ii) below, (ii) if the principal
amount extended by a Lender in the Borrowing being refinanced is greater than
the principal amount being extended by such Lender in the refinancing, the
Administrative Agent shall return the difference to such Lender out of amounts
received pursuant to (i) above, and (iii) to the extent any Lender fails to pay
the Administrative Agent amounts due from it pursuant to (i) above, any Loan or
portion thereof being refinanced with such amounts shall not be deemed repaid in
accordance with Section 2.08 and shall be payable by the Borrower.
SECTION 2.06. Conversion and Continuation of Standby Borrowings. The
--------------------------------------------------
Borrower shall have the right at any time upon prior irrevocable notice to the
Administrative Agent (i) not later than 11:00 a.m., New York City time, one
Business Day prior to conversion, to convert any Eurodollar Standby Borrowing or
CD Borrowing into an ABR Borrowing, (ii) not later than 11:00 a.m., New York
City time, two Business Days prior to conversion or continuation, to convert any
Eurodollar Standby Borrowing or ABR Borrowing into a CD Borrowing or to continue
any CD Borrowing as a CD Borrowing for an additional Interest Period, (iii) not
later than 11:00 a.m., New York City time, three Business Days prior to
conversion or continuation, to convert any ABR Borrowing or CD Borrowing into a
Eurodollar Standby Borrowing or to continue any Eurodollar Standby Borrowing as
a Eurodollar Standby Borrowing for an additional Interest Period, (iv) not later
than 11:00 a.m., New York City time, three Business Days prior to conversion, to
convert the Interest Period with respect to any Eurodollar Standby Borrowing to
another permissible Interest Period and (v) not later than 11:00 a.m., New York
City time, two Business Days prior to conversion, to convert the Interest Period
with respect to any CD Borrowing to another permissible Interest Period, subject
in each case to the following:
(a) each conversion or continuation shall be made pro rata among the
Lenders in accordance with the respective principal amounts of the Loans
comprising the converted or continued Standby Borrowing;
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
27
(b) if less than all the outstanding principal amount of any Standby
Borrowing shall be converted or continued, the aggregate principal amount
of such Standby Borrowing converted or continued shall be an integral
multiple of $1,000,000 and not less than $20,000,000;
(c) if any Eurodollar Standby Borrowing or CD Borrowing is converted
at a time other than the end of the Interest Period applicable thereto, the
Borrower shall pay, upon demand, any amounts due to the Lenders pursuant to
Section 2.16;
(d) any portion of a Standby Borrowing maturing or required to be
repaid in less than one month may not be converted into or continued as a
Eurodollar Standby Borrowing;
(e) any portion of a Standby Borrowing maturing or required to be
repaid in less than 30 days may not be converted into or continued as a CD
Borrowing;
(f) any portion of a Eurodollar Standby Borrowing or CD Borrowing
which cannot be converted into or continued as a Eurodollar Standby
Borrowing or a CD Borrowing by reason of clauses (d) and (e) above shall be
automatically converted at the end of the Interest Period in effect for
such Borrowing into an ABR Borrowing; and
(g) no Interest Period may be selected for any Eurodollar Standby
Borrowing or CD Borrowing that would end later than the Maturity Date.
Each notice pursuant to this Section 2.06 shall be by hand delivery
or telecopier (or by telephone with prompt confirmation by telecopier or in
writing) and irrevocable and shall refer to this Agreement and specify (i) the
identity and amount of the Standby Borrowing that the Borrower requests be
converted or continued, (ii) whether such Standby Borrowing is to be converted
to or continued as a Eurodollar Standby Borrowing, a CD Borrowing or an ABR
Borrowing, (iii) if such notice requests a conversion, the date of such
conversion (which shall be a Business Day) and (iv) if such Standby Borrowing is
to be converted to or continued as a Eurodollar Standby Borrowing or CD
Borrowing, the Interest Period with respect thereto. If no Interest Period is
specified in any such notice with
[6700-070(X)RAF/A08B.WPF/30D/4674W]
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28
respect to any conversion to or continuation as a Eurodollar Standby Borrowing
or CD Borrowing, the Borrower shall be deemed to have selected an Interest
Period of one month's duration, in the case of a Eurodollar Standby Borrowing,
or 30 days' duration, in the case of a CD Borrowing. The Administrative Agent
shall advise the other Lenders of any notice given pursuant to this Section 2.06
and of each Lender's portion of any converted or continued Standby Borrowing.
If the Borrower shall not have given notice in accordance with this Section 2.06
to continue any Standby Borrowing into a subsequent Interest Period (and shall
not otherwise have given notice in accordance with this Section 2.06 to convert
such Standby Borrowing), such Standby Borrowing shall, at the end of the
Interest Period applicable thereto (unless repaid pursuant to the terms hereof),
automatically be continued into a new Interest Period as an ABR Borrowing.
SECTION 2.07. Fees. (a) The Borrower agrees to pay to each Lender,
-----
through the Administrative Agent, on each March 31, June 30, September 30 and
December 31 and on the Maturity Date, a facility fee (a "Facility Fee") equal to
the Applicable Fee Percentage on the daily average amount of the Commitment of
such Lender, whether used or unused (and whether or not the conditions set forth
in Section 4.01 shall have been satisfied), during the preceding quarter (or
shorter period commencing with the date hereof, or ending with the Maturity Date
or any date on which the Commitment of such Lender shall be terminated and all
outstanding Loans of such Lender repaid). All Facility Fees shall be computed
on the basis of the actual number of days elapsed in a year of 365 or 366 days,
as appropriate. The Facility Fee due to each Lender shall commence to accrue on
the date of this Agreement, and shall cease to accrue on the earlier of the
Maturity Date and the date on which the Commitment of such Lender shall have
been terminated and all outstanding Loans of such Lender repaid.
(b) The Borrower agrees to pay the Agents, through the Administrative
Agent, for the Agents' own accounts, the fees set forth in the Engagement Letter
and in the Fee Letter dated April 7, 1994 among the Administrative Agent,
Chemical Securities Inc. and the Borrower (the "Agent Fees") at the times and in
the amounts set forth therein.
(c) All Fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, if and as appropriate,
among the Lenders.
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29
Once paid, none of the Fees (other than fees paid in error and not required to
have been paid under the terms of this Agreement) shall be refundable under any
circumstances.
SECTION 2.08. Repayment of Loans. (a) The Borrower agrees to pay
-------------------
the outstanding principal balance of each Loan on the last day of the Interest
Period applicable to such Loan and on the Maturity Date. Each Loan shall bear
interest from the date of the Borrowing of which such Loan is a part on the
outstanding principal balance thereof as set forth in Section 2.09.
(b) Each Lender shall, and is hereby authorized by the Borrower to,
maintain, in accordance with its usual practice, records evidencing the
indebtedness of the Borrower to such Lender hereunder from time to time,
including the amounts and Types of and the Interest Periods applicable to the
Loans made by such Lender from time to time and the amounts of principal and
interest paid to such Lender from time to time in respect of such Loans.
(c) The entries made in the records maintained pursuant to paragraph
(b) of this Section 2.08 and in the Register maintained by the Administrative
Agent pursuant to Section 9.04(d) shall be prima facie evidence of the existence
and amounts of the obligations of the Borrower to which such entries relate;
provided, however, that the failure of any Lender or the Administrative Agent to
- - -------- -------
maintain or to make any entry in such records or the Register, as applicable, or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.
SECTION 2.09. Interest on Loans. (a) Subject to the provisions of
------------------
Section 2.10, the Loans comprising each Eurodollar Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 360
days) at a rate per annum equal to (i) in the case of each Eurodollar Standby
Loan, the LIBO Rate for the Interest Period in effect for such Borrowing plus
the Applicable Margin from time to time in effect and (ii) in the case of each
Eurodollar Competitive Loan, the LIBO Rate for the Interest Period in effect for
such Borrowing plus the Margin offered by the Lender making such Loan and
accepted by the Borrower pursuant to Section 2.03.
(b) Subject to the provisions of Section 2.10, the Loans comprising
each CD Borrowing shall bear interest
[6700-070(X)RAF/A08B.WPF/30D/4674W]
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30
(computed on the basis of the actual number of days elapsed over a year of 360
days) at a rate per annum equal to the Adjusted CD Rate for the Interest Period
in effect for such Borrowing plus the Applicable Margin from time to time in
effect.
(c) Subject to the provisions of Section 2.10, the Loans comprising
each ABR Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 365 or 366 days, as appropriate, when
determined by reference to the Prime Rate and over a year of 360 days at all
other times) at a rate per annum equal to the Alternate Base Rate.
(d) Subject to the provisions of Section 2.10, each Fixed Rate Loan
shall bear interest at a rate per annum (computed on the basis of the actual
number of days elapsed over a year of 360 days) equal to the fixed rate of
interest offered by the Lender making such Loan and accepted by the Borrower
pursuant to Section 2.03.
(e) Interest on each Loan shall be payable in arrears on each
Interest Payment Date applicable to such Loan except as otherwise provided in
this Agreement. The applicable LIBO Rate, Adjusted CD Rate or Alternate Base
Rate for each Interest Period or day within an Interest Period, as the case may
be, shall be determined by the Administrative Agent, and such determination
shall be conclusive absent manifest error. The Administrative Agent shall
promptly advise the Borrower and each Lender, as appropriate, of such
determination.
SECTION 2.10. Default Interest. If the Borrower shall default in the
-----------------
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, whether by scheduled maturity, notice of prepayment, acceleration
or otherwise, the Borrower shall on demand from time to time from the
Administrative Agent pay interest, to the extent permitted by law, on such
defaulted amount up to (but not including) the date of actual payment (after as
well as before judgment) at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 365 or 366 days, as appropriate,
when determined by reference to the Prime Rate and over a year of 360 days at
all other times) equal to the Alternate Base Rate plus 1%.
SECTION 2.11. Alternate Rate of Interest. (a) In the event, and on
---------------------------
each occasion, that on the day two
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31
Business Days prior to the commencement of any Interest Period for a Eurodollar
Borrowing the Administrative Agent shall have determined (i) that dollar
deposits in the principal amounts of the Eurodollar Loans comprising such
Borrowing are not generally available in the London interbank market, or (ii)
that the rates at which such dollar deposits are being offered will not
adequately and fairly reflect the cost to any Lender of making or maintaining
its Eurodollar Loan during such Interest Period, or (iii) that reasonable means
do not exist for ascertaining the LIBO Rate, the Administrative Agent shall, as
soon as practicable thereafter, give written or telecopy notice of such
determination to the Borrower and the Lenders. In the event of any such
determination, until the Administrative Agent shall have advised the Borrower
and the Lenders that the circumstances giving rise to such notice no longer
exist, (A) in the event the circumstances referred to in (i) or (iii) above are
applicable, any request by the Borrower for a Eurodollar Competitive Borrowing
pursuant to Section 2.03 shall be of no force and effect and shall be denied by
the CAF Agent and (B) any request by the Borrower for a Eurodollar Standby
Borrowing shall be deemed to be a request for an ABR Borrowing (x) as to all
Lenders, in the event the circumstances referred to in (i) or (iii) above are
applicable, or (y) as to each affected Lender, in the event only the
circumstances referred to in (ii) above are applicable. In the event the
circumstances referred to in (ii) above are applicable, all payments and
prepayments of principal which would otherwise have been made on account of
Eurodollar Loans of the affected Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of such Eurodollar Loans. Each
determination by the Administrative Agent hereunder shall be conclusive absent
demonstrable error.
(b) In the event, and on each occasion, that on or before the day on
which the Adjusted CD Rate for a CD Borrowing is to be determined the
Administrative Agent shall have determined (i) that such Adjusted CD Rate cannot
be determined for any reason, including the inability of the Administrative
Agent to obtain sufficient bids in accordance with the terms of the definition
of Fixed CD Rate, or (ii) that the Adjusted CD Rate for such CD Borrowing will
not adequately and fairly reflect the cost to any Lender of making or
maintaining its CD Loan during such Interest Period, the Administrative Agent
shall, as soon as practicable thereafter, give written or telecopy notice of
such determination to the Borrower and the Lenders. In the
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<PAGE>
32
event of any such determination, until the Administrative Agent shall have
advised the Borrower and the Lenders that the circumstances giving rise to such
notice no longer exist, any request by the Borrower for a CD Borrowing shall be
deemed to be a request for an ABR Borrowing (i) as to all Lenders, in the event
the circumstances referred to in (i) above are applicable, or (ii) as to each
affected Lender, in the event only the circumstances referred to in (ii) above
are applicable. In the event the circumstances referred to under (ii) above are
applicable, all payments and prepayments of principal which would otherwise have
been made on account of CD Loans of the affected Lender shall instead be applied
to repay the ABR Loans made by such Lender in lieu of such Loans. Each
determination by the Administrative Agent hereunder shall be conclusive absent
demonstrable error.
SECTION 2.12. Termination and Reduction of Commitments. (a) The
-----------------------------------------
Commitments shall be automatically terminated on the Maturity Date.
(b) Upon at least three Business Days' prior irrevocable written or
telecopy notice to the Administrative Agent, the Borrower may at any time in
whole permanently terminate, or from time to time in part permanently reduce,
the Total Commitment; provided, however, that (i) each partial reduction of the
-------- -------
Total Commitment shall be in an integral multiple of $1,000,000 and in a minimum
principal amount of $10,000,000 and (ii) no such termination or reduction shall
be made which would reduce the Total Commitment to an amount less than the
aggregate outstanding principal amount of the Competitive Loans.
(c) Each reduction in the Total Commitment hereunder shall be made
ratably among the Lenders in accordance with their respective Commitments. The
Borrower shall pay to the Administrative Agent for the account of the Lenders,
on the date of each termination or reduction, the Facility Fees on the amount of
the Commitments so terminated or reduced accrued to but not including the date
of such termination or reduction.
SECTION 2.13. Prepayment. (a) The Borrower shall have the right at
-----------
any time and from time to time to prepay any Standby Borrowing, in whole or in
part, upon giving written or telecopy notice (or telephone notice promptly
confirmed by written or telecopy notice) to the Administrative Agent: (i)
before 12:00 noon, New York City
[6700-070(X)RAF/A08B.WPF/30D/4674W]
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33
time, three Business Days prior to prepayment, in the case of Eurodollar Loans,
(ii) before 12:00 noon, New York City time, two Business Days prior to
prepayment, in the case of CD Loans, and (iii) before 12:00 noon, New York City
time, one Business Day prior to prepayment, in the case of ABR Loans; provided,
--------
however, that each partial prepayment shall be in an amount which is an integral
- - -------
multiple of $1,000,000 and not less than $10,000,000. The Borrower shall not
have the right to prepay any Competitive Borrowing.
(b) On the date of any termination or reduction of the Commitments
pursuant to Section 2.12, the Borrower shall pay or prepay so much of the
Standby Borrowings as shall be necessary in order that the aggregate principal
amount of the Competitive Loans and Standby Loans outstanding will not exceed
the Total Commitment after giving effect to such termination or reduction.
(c) Each notice of prepayment shall specify the prepayment date and
the principal amount of each Borrowing (or portion thereof) to be prepaid, shall
be irrevocable and shall commit the Borrower to prepay such Borrowing (or
portion thereof) by the amount stated therein on the date stated therein. All
prepayments under this Section 2.13 shall be subject to Section 2.16 but
otherwise without premium or penalty. All prepayments under this Section 2.13
shall be accompanied by accrued interest on the principal amount being prepaid
to the date of payment.
SECTION 2.14. Reserve Requirements; Change in Circumstances. (a)
----------------------------------------------
Notwithstanding any other provision herein, if after the date of this Agreement
any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender of the
principal of or interest on any Eurodollar Loan, CD Loan or Fixed Rate Loan made
by such Lender or any Fees or other amounts payable hereunder (other than
changes in respect of taxes imposed on the overall net income of such Lender by
the jurisdiction in which such Lender has its principal office or by any
political subdivision or taxing authority therein), or shall 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 such Lender
(except any such reserve requirement which is reflected in the Adjusted CD
Rate), or shall impose on such Lender or the
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
34
London interbank market any other condition affecting this Agreement or any
Eurodollar Loan, CD Loan or Fixed Rate Loan 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 Eurodollar Loan, CD Loan or Fixed Rate Loan 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 Borrower will pay to such Lender upon demand such additional
amount or amounts as will compensate such Lender for such additional costs
incurred or reduction suffered. Notwithstanding the foregoing, no Lender shall
be entitled to request compensation under this paragraph with respect to any
Competitive Loan if it shall have been aware of the change giving rise to such
request at the time of submission of the Competitive Bid pursuant to which such
Competitive Loan shall have been made.
(b) If any Lender shall have determined that the applicability of any
law, rule, regulation or guideline adopted pursuant to or arising out of the
July 1988 report of the Basle Committee on Banking Regulations and Supervisory
Practices entitled "International Convergence of Capital Measurement and Capital
Standards", or the adoption after the date hereof of any other law, rule,
regulation or guideline regarding capital adequacy, or any change in any of the
foregoing or in the interpretation or administration of any of the foregoing by
any Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or any
lending office of such Lender) or any Lender's holding company with any request
or directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on 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 pursuant hereto to a level below that which such
Lender or such Lender's holding company could have achieved but for such
applicability, adoption, change or compliance (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 Borrower shall 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.
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
35
(c) A certificate of a Lender setting forth such amount or amounts as
shall be necessary to compensate such Lender as specified in paragraph (a) or
(b) above, as the case may be, shall be delivered to the Borrower and shall be
conclusive absent demonstrable error. The Borrower shall pay each Lender the
amount shown as due on any such certificate delivered by it within 10 days after
the receipt of the same.
(d) Except as provided in this paragraph, failure on the part of any
Lender to demand compensation for any increased costs or reduction in amounts
received or receivable or reduction in return on capital with respect to any
period shall not constitute a waiver of such Lender's right to demand
compensation with respect to such period or any other period. The protection of
this Section shall be available to each Lender regardless of any possible
contention of the invalidity or inapplicability of the law, rule, regulation,
guideline or other change or condition which shall have occurred or been
imposed. No Lender shall be entitled to compensation under this Section 2.14
for any costs incurred or reductions suffered with respect to any date unless it
shall have notified the Borrower that it will demand compensation for such costs
or reductions under paragraph (c) above not more than 60 days after the later of
(i) such date and (ii) the date on which it shall have become aware of such
costs or reductions.
SECTION 2.15. Change in Legality. (a) Notwithstanding any other
-------------------
provision herein, if any change in any law or regulation or in the
interpretation thereof by any governmental authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by written notice
to the Borrower and to the Administrative Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be made by such
Lender hereunder, whereupon such Lender shall not submit a Competitive Bid
in response to a request for Eurodollar Competitive Loans and any request
by the Borrower for a Eurodollar Standby Borrowing shall, as to such Lender
only, be deemed a request for an ABR Borrowing unless such declaration
shall be subsequently withdrawn (and such Lender agrees to withdraw any
such declaration if legally permissible); and
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36
(ii) require that all outstanding Eurodollar Loans made by it be
converted to ABR Loans (or in the case of a Eurodollar Competitive Loan, a
Loan bearing interest at a rate equal to the Alternate Base Rate), as of
the effective date of such notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal which would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
(b) For purposes of this Section 2.15, a notice to the Borrower by
any Lender shall be effective as to each Eurodollar Loan, if lawful, on the last
day of the Interest Period currently applicable to such Eurodollar Loan; in all
other cases such notice shall be effective on the date of receipt by the
Borrower.
SECTION 2.16. Indemnity. The Borrower shall indemnify each Lender
----------
against any actual loss or expense which such Lender may sustain or incur as a
consequence of (a) any failure by the Borrower to fulfill on the date of any
borrowing hereunder the applicable conditions set forth in Article IV, (b) any
failure by the Borrower to borrow or to refinance, convert or continue any Loan
hereunder after irrevocable notice of such borrowing, refinancing or
continuation has been given pursuant to Section 2.03, 2.04 or 2.06, (c) any
payment, prepayment or conversion of a Eurodollar Loan, CD Loan or Fixed Rate
Loan required by any other provision of this Agreement or otherwise made or
deemed made, and any assignment of a Loan pursuant to Section 2.21, on a date
other than the last day of the Interest Period applicable thereto, (d) any
default in payment or prepayment of the principal amount of any Loan or any part
thereof or interest accrued thereon, as and when due and payable (at the due
date thereof, whether by scheduled maturity, acceleration, irrevocable notice of
prepayment or otherwise) or (e) the occurrence of any Event of Default,
including, in each such case, any actual loss or reasonable expense sustained or
incurred or to be sustained or incurred in liquidating or employing deposits
from third parties acquired to effect or maintain such Loan or any part thereof
as a Eurodollar Loan, CD Loan or Fixed Rate Loan.
[6700-070(X)RAF/A08B.WPF/30D/4674W]
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37
Such loss or reasonable expense shall include an amount equal to the excess, if
any, as reasonably determined by such Lender, of (i) its cost of obtaining the
funds for the Loan being paid, prepaid, converted, not borrowed, not refinanced,
not converted, not continued or assigned (assumed to be the LIBO Rate or
Adjusted CD Rate or, in the case of a Fixed Rate Loan, the fixed rate of
interest applicable thereto) for the period from the date of such payment,
prepayment, failure to borrow, failure to refinance, failure to convert, failure
to continue or assignment to the last day of the Interest Period for such Loan
(or, in the case of a failure to borrow, refinance, convert or continue, 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, not borrowed, not refinanced, not converted, not continued or assigned
for such period or Interest Period, as the case may be. A certificate of any
Lender setting forth any amount or amounts which such Lender is entitled to
receive pursuant to this Section shall be delivered to the Borrower and shall be
conclusive absent demonstrable error.
SECTION 2.17. Pro Rata Treatment. Except as required under Section
-------------------
2.15, each Standby Borrowing, each payment or prepayment of principal of any
Standby Borrowing, each payment of interest on the Standby Loans, each payment
of the Facility Fees, each reduction of the Commitments and each refinancing of
any Borrowing with a Standby Borrowing of any Type, shall be allocated pro rata
among the Lenders in accordance with their respective Commitments (or, if such
Commitments shall have expired or been terminated, in accordance with the
respective principal amounts of their outstanding Standby Loans). Each payment
of principal of any Competitive Borrowing shall be allocated pro rata among the
Lenders participating in such Borrowing in accordance with the respective
principal amounts of their outstanding Competitive Loans comprising such
Borrowing. Each payment of interest on any Competitive Borrowing shall be
allocated pro rata among the Lenders participating in such Borrowing in
accordance with the respective amounts of accrued and unpaid interest on their
outstanding Competitive Loans comprising such Borrowing. For purposes of
determining (i) the aggregate available Commitments of the Lenders at any time
and (ii) the available Commitment of each Lender, each outstanding Competitive
Borrowing shall be deemed to have utilized the Commitments of the Lenders
(including those
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38
Lenders which shall not have made Loans as part of such Competitive Borrowing)
pro rata in accordance with such respective Commitments. Each Lender agrees
that in computing such Lender's portion of any Borrowing to be made hereunder,
the Administrative Agent may, in its discretion, round each Lender's percentage
of such Borrowing to the next higher or lower whole dollar amount.
SECTION 2.18. Sharing of Setoffs. Each Lender agrees that if it
-------------------
shall, through the exercise of a right of banker's lien, setoff or counterclaim
against the Borrower, or pursuant to a secured claim under Section 506 of Title
11 of the United States Code or other security or interest arising from, or in
lieu of, such secured claim, received by such Lender under any applicable
bankruptcy, insolvency or other similar law or otherwise, or by any other means,
obtain payment (voluntary or involuntary) from the Borrower or its assets in
respect of any Standby Loan or Loans as a result of which the unpaid principal
portion of its Standby Loans shall be proportionately less than the unpaid
principal portion of the Standby Loans of any other Lender, it shall be deemed
simultaneously to have purchased from such other Lender at face value, and shall
promptly pay to such other Lender the purchase price for, a participation in the
Standby Loans of such other Lender, so that the aggregate unpaid principal
amount of the Standby Loans and participations in the Standby Loans held by each
Lender shall be in the same proportion to the aggregate unpaid principal amount
of all Standby Loans then outstanding as the principal amount of its Standby
Loans prior to such exercise of banker's lien, setoff or counterclaim or other
event was to the principal amount of all Standby Loans outstanding prior to such
exercise of banker's lien, setoff or counterclaim or other event; provided,
--------
however, that, if any such purchase or purchases or adjustments shall be made
- - -------
pursuant to this Section 2.18 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or
adjustment restored without interest. The Borrower expressly consents to the
foregoing arrangements and agrees that any Lender holding a participation in a
Standby Loan deemed to have been so purchased may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any and all moneys owing
by the Borrower to such Lender by reason thereof as fully as if such Lender had
made a Standby Loan directly to the Borrower in the amount of such
participation.
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39
SECTION 2.19. Payments. (a) The Borrower shall make each payment
---------
(including principal of or interest on any Borrowing or any Fees or other
amounts) hereunder and under each other Loan Document not later than 12:00 noon,
New York City time, on the date when due in dollars to the Administrative Agent
at its offices at 712 Main Street, Houston, Texas, in immediately available
funds.
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
interest or Fees, if applicable.
SECTION 2.20. Taxes. (a) Any and all payments by the Borrower
------
hereunder shall be made, in accordance with Section 2.19, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding taxes, levies, imposts, deductions, charges and withholdings imposed
- - ---------
on the Administrative Agent's or any Lender's (or any transferee's or
assignee's, including a participation holder's (any such entity a "Transferee"))
net income and franchise, capital or license taxes imposed on the Administrative
Agent or any Lender (or Transferee) by the United States or any jurisdiction
under the laws of which it is organized, domiciled, resident or doing business
(other than doing business as a result of its participation in the transactions
contemplated by the Loan Documents) or any political subdivision thereof (all
such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to the Lenders (or any Transferee) or the Administrative Agent, (i)
the sum payable shall be increased by the amount necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 2.20) such Lender (or Transferee) or the
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 Borrower
(or the Administrative Agent, as applicable) shall make such deductions at the
applicable rate and (iii) the Borrower (or
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
40
the Administrative Agent, as applicable) shall pay the full amount deducted to
the relevant taxing authority or other Governmental Authority in accordance with
applicable law.
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify each Lender (or Transferee) and the
Administrative Agent for the full amount of Taxes and Other Taxes (including any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.20) paid by such Lender (or Transferee) or the Administrative Agent,
as the case may be, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted by the relevant taxing
authority or other Governmental Authority. Such indemnification shall be made
within 30 days after the date any Lender (or Transferee) or the Administrative
Agent, as the case may be, makes written demand therefor; provided, however,
-------- -------
that the Borrower shall not have any obligation to indemnify the Administrative
Agent or any Lender (or Transferee) for interest and penalties that are imposed
on the Administrative Agent or such Lender (or Transferee) with respect to the
period after the expiration of the Notice Period with respect to any Tax if such
Administrative Agent or such Lender fails to give written notice to the Borrower
within 45 days of its receipt of any written assertion by the relevant taxing
authority or other Governmental Authority that such Tax is due with respect to
the transactions contemplated by the Loan Documents (such 45 day period being
the "Notice Period" referred to above). If a Lender (or Transferee) or the
Administrative Agent shall become aware that it is entitled to receive a refund
(or a credit against taxes not indemnifiable hereunder) in respect of Taxes or
Other Taxes, it shall promptly notify the Borrower of the availability of such
refund (or credit) and shall, within 30 days after receipt of a request by the
Borrower, apply for such refund at the Borrower's expense. If any Lender (or
Transferee) or the Administrative Agent receives a refund (or a credit against
taxes not indemnifiable hereunder) in respect of any Taxes or Other Taxes for
which such Lender (or Transferee) or the
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
41
Administrative Agent has received payment from the Borrower hereunder it shall
promptly notify the Borrower of such refund (or credit) and shall, within 30
days after receipt of a request by the Borrower (or promptly upon receipt, if
the Borrower has requested application for such refund (or credit) pursuant
hereto), repay such refund (or credit) to the Borrower, net of all out-of-pocket
expenses (including taxes not indemnifiable hereunder, to the extent that no
deduction or credit has previously been claimed and utilized in connection
therewith by such Lender) of such Lender but including interest received from a
taxing authority or other Governmental Authority and fairly attributable to such
refund; provided that the Borrower, upon the request of such Lender (or
--------
Transferee) or the Administrative Agent, agrees to return such refund (plus
penalties, interest or other charges) to such Lender (or Transferee) or the
Administrative Agent in the event such Lender (or Transferee) or the
Administrative Agent is required to repay such refund. Each of the
Administrative Agent, each Lender and each Transferee, with respect to itself,
agrees to indemnify and hold harmless the Borrower (and, in the case of each
Lender and each Transferee, to indemnify and hold harmless the Administrative
Agent) from any taxes, penalties, interest and other expenses, costs and losses
incurred or payable by the Borrower (or the Administrative Agent, as applicable)
as a result of the failure of the Borrower to comply with clauses (ii) and (iii)
of Section 2.20(a) in reliance on any form or certificate provided to it by such
person pursuant to Section 2.20(f).
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by the Borrower in respect of any payment to any Lender (or
Transferee) or the Administrative Agent, the Borrower will furnish to the
Administrative Agent, at its address referred to in Section 9.01, the original
or a certified copy of a receipt evidencing payment thereof or other customary
evidence of such payment.
(e) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section 2.20
shall survive the payment in full of the principal of and interest on all Loans
made hereunder.
(f) On or prior to the Closing Date (in the case of any Lender and
the Administrative Agent) and on or prior to the date any Transferee becomes a
Transferee hereunder
[6700-070(X)RAF/A08B.WPF/30D/4674W]
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42
(in the case of any Transferee), and, upon written request of the Borrower or
the Administrative Agent, on or prior to the immediately following due date of
any payment by the Borrower hereunder, each Lender (or Transferee) which is
organized outside the United States shall deliver to the Borrower such
certificates, documents or other evidence, as required by the Code or Treasury
Regulations issued pursuant thereto, including Internal Revenue Service Form
1001 or Form 4224 and any other certificate or statement of exemption required
by Treasury Regulation Section 1.1441-1(a) or Section 1.1441-6(c) or any
subsequent version thereof, properly completed and duly executed by such Lender
(or Transferee) establishing that such payment is (i) not subject to withholding
under the Code because such payment is effectively connected with the conduct by
such Lender (or Transferee) of a trade or business in the United States or (ii)
totally exempt from United States tax under a provision of an applicable tax
treaty. Unless the Borrower and the Administrative Agent have received forms or
other documents satisfactory to them indicating that payments hereunder and in
respect of the Loans are not subject to United States withholding tax the
Borrower or the Administrative Agent shall withhold taxes from such payments at
the applicable statutory rate in the case of payments to or for any Lender (or
Transferee) organized under the laws of a jurisdiction outside the United
States.
(g) The Borrower shall not be required to pay any additional amounts
to any Lender (or Transferee) in respect of United States withholding tax
pursuant to paragraph (a) above except to the extent such United States
withholding tax (a) results from (i) a change in applicable law, regulation or
official interpretation thereof or (ii) an amendment, modification or revocation
of any applicable tax treaty or a change in official position regarding the
application or interpretation thereof, in each case after the Closing Date (and,
in the case of a Transferee, after the date of assignment or transfer) or (b) in
the case of a Transferee, is imposed at a rate that does not exceed the rate
(determined at the time of transfer or assignment) of United States withholding
tax with respect to which the Borrower was required to pay to such Transferee's
transferor or assignor.
SECTION 2.21. Termination or Assignment of Commitments Under Certain
---------------------------- -------------------------
Circumstances. (a) Any Lender (or Transferee) claiming any additional amounts
- - --------------
payable pursuant to Section 2.14 or Section 2.20 shall use
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
43
reasonable efforts (consistent with legal and regulatory restrictions) to file
any certificate or document requested by the 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 additional
amounts which may thereafter accrue and would not, in the sole determination of
such Lender, be otherwise disadvantageous to such Lender (or Transferee).
(b) In the event that any Lender shall have delivered a notice or
certificate pursuant to Section 2.14 or 2.15, or the Borrower shall be required
to make additional payments to any Lender under Section 2.20, the Borrower shall
have the right, at its own expense, upon notice to such Lender and the
Administrative Agent, (a) to terminate the Commitment of such Lender or (b) to
require such Lender to transfer and assign without recourse (in accordance with
and subject to the restrictions contained in Section 9.04) all its interests,
rights and obligations under this Agreement to another financial institution
acceptable to the Administrative Agent which shall assume such obligations;
provided that (i) no such termination or assignment shall conflict with any law,
- - --------
rule or regulation or order of any Governmental Authority and (ii) the Borrower
or the assignee, as the case may be, shall pay to the affected Lender in
immediately available funds on the date of such termination or 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.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to each of the Lenders that:
(a) The Borrower is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware. The Borrower
possesses all corporate powers and all other authorizations and licenses
necessary to engage in its business and operations as now conducted, the
failure to obtain or maintain which would result in a Material Adverse
Effect.
(b) The execution, delivery and performance by the Borrower of this
Agreement are within the
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
44
Borrower's corporate powers, have been duly authorized by all necessary
corporate action, and do not contravene (i) the Borrower's certificate of
incorporation or by-laws or (ii) any law or contractual restriction binding
on or affecting the Borrower.
(c) There is no authorization or approval or other action by, and no
notice to or filing with, any Governmental Authority (including, without
limitation, the ICC) required for the due execution, delivery and
performance by the Borrower of this Agreement which has not been obtained
or made, as the case may be.
(d) This Agreement is the legal, valid and binding obligation of the
Borrower enforceable against the Borrower in accordance with its terms
except as enforceability may be limited by applicable bankruptcy,
insolvency, moratorium or other similar laws affecting the enforcement of
creditors' rights generally or by the applicability of equitable
principles.
(e) The consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at December 31, 1993, and the related
consolidated statements of income and cash flows for the fiscal year then
ended, copies of which have been furnished to each Lender, fairly present
the consolidated financial condition of the Borrower and such Subsidiaries
as at such date and the results of their operations for the period ended on
such date, all in accordance with GAAP consistently applied, and since
December 31, 1993, there has been no material adverse change in such
condition or operations.
(f) There is no pending or threatened action or proceeding against or
involving the Borrower before any Governmental Authority or arbitrator
which has a reasonable probability (taking into account the exhaustion of
all appeals) of resulting in a Material Adverse Effect.
(g) The Borrower has duly paid and discharged all taxes, assessments
and governmental charges upon it or against its properties now due and
payable, the failure to pay which would result in a Material Adverse Effect
unless and to the extent only that the same are being contested in good
faith and by appropriate proceedings by the Borrower.
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
45
(h) The Borrower has good title to its properties and assets except for
(i) existing or future liens, security interests, mortgages, conditional
sales arrangements and other encumbrances (including, without limitation,
reversionary title interests) either securing Debt or other liabilities of
the Borrower or any of its Subsidiaries or which the Borrower in its
reasonable business judgment determines would not be reasonably expected to
materially interfere with the railroad business or railroad operations of
the Borrower and its Subsidiaries as conducted from time to time and (ii)
irregularities therein which do not materially interfere with the business
or operations of the Borrower and its Subsidiaries as conducted from time
to time.
(i) No Termination Event has occurred or is reasonably expected to
occur with respect to any Plan which, with the giving of notice or lapse of
time, or both, would constitute an Event of Default under paragraph (g) of
Article VII.
(j) The statement of assets and liabilities of each Plan covered by
the report of Coopers & Lybrand referred to below as of December 31, 1993,
and the statements of changes in fund balance and in financial position, or
the statement of changes in net assets available for plan benefits, for the
plan year then ended, reported on by Coopers & Lybrand, copies of which
have been furnished to the Administrative Agent, fairly present the
financial condition of such Plan as at such date and the results of
operations of such Plan for the plan year ended on such date.
(k) Neither the Borrower nor any ERISA Affiliate has incurred, or is
reasonably expected to incur, any Withdrawal Liability to any Multiemployer
Plan which, when aggregated with all other amounts required to be paid to
Multiemployer Plans in connection with Withdrawal Liability (as of the date
of determination), exceeds $50,000,000.
(l) Neither the Borrower nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization or has been
terminated, within the meaning of Title IV of ERISA, and no Multiemployer
Plan is reasonably expected to be in reorganization or to be terminated
within the meaning
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
46
of Title IV of ERISA, the effect of which reorganization or termination
would be the occurrence of an Event of Default under paragraph (i) of
Article VII.
(m) Neither the Borrower nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying Margin Stock.
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 Regulations of the Board, including Regulation G, U or X.
(n) Neither the Borrower nor any Subsidiary is (i) an "investment
company" as defined in, or subject to regulation under, the Investment
Company Act of 1940 or (ii) a "holding company" as defined in, or subject
to regulation under, the Public Utility Holding Company Act of 1935.
(o) The Borrower will use the proceeds of the Loans only for the
purposes specified in the preamble to this Agreement.
(p) Neither the Borrower nor any of its Subsidiaries is, to the best
of its knowledge, in violation of any law or statute, or in default with
respect to any judgment, writ, injunction, decree, rule or regulation of
any court or governmental agency or instrumentality, where such violation
or default would result in a Material Adverse Effect.
(q) On the Closing Date, there has been no material adverse change in
or affecting the business, assets, liabilities or operations of the
Borrower or in the condition (financial or otherwise) or prospects of the
Borrower from those shown in the information furnished to the Lenders prior
to the date hereof.
(r) To the best knowledge of the Borrower, on the Closing Date all
insurable properties of the Borrower and each Subsidiary are adequately
insured as part of an insurance program including risk retention and self
insurance by financially sound and reputable insurers to such extent and
against such risks and liabilities
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
47
(including liability under Federal, state, local and other statutes and
regulations relating to the environment or to employee health and safety)
as is customary with companies similarly situated and in the same or
similar businesses.
ARTICLE IV. CONDITIONS OF LENDING
The obligations of the Lenders to make Loans hereunder are subject to
(a) the Commitments having become effective as provided in Section 4.01 below
and (b) the satisfaction of the conditions set forth in Section 4.02 below.
SECTION 4.01. Conditions to Effectiveness of Commitments. The
------------------------------ ------------
Commitments shall become effective at such time as the following conditions
shall have been satisfied:
(a) The Agents shall have received the favorable written opinion of
Francis T. Kelly, Esq., counsel for the Borrower, dated the date hereof and
addressed to the Agents and the Lenders, to the effect set forth in Exhibit
D hereto, and the Borrower hereby instructs such counsel to deliver such
opinion to the Agents.
(b) The Agents shall have received a favorable written opinion of
Douglas J. Babb, Vice President and General Counsel of the Borrower as to
certain ICC regulatory matters, dated the date hereof and addressed to the
Agents and the Lenders, to the effect set forth in Exhibit E hereto, and
the Borrower hereby instructs such counsel to deliver such opinion to the
Agents.
(c) All legal matters incident to this Agreement and the borrowings
hereunder shall be satisfactory to the Lenders and their counsel and to
Cravath, Swaine & Moore, counsel for the Agents.
(d) The Agents shall have received (i) a copy of the certificate or
articles of incorporation, including all amendments thereto, of the
Borrower, certified as of a date shortly before the date hereof by the
Secretary of State of the state of its organization, and a certificate as
to the good standing of the Borrower as of a date shortly before the date
hereof, from such Secretary of State; (ii) a certificate of the Secretary
or Assistant Secretary of the Borrower dated
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
48
the date hereof and certifying (A) that attached thereto is a true and
complete copy of the by-laws of the Borrower as in effect on the date
hereof and at all times since a date prior to the date of the resolutions
described in clause (B) below, (B) that attached thereto is a true and
complete copy of resolutions duly adopted by the Board of Directors of the
Borrower authorizing the execution, delivery and performance of the Loan
Documents and the borrowings hereunder, and that such resolutions have not
been modified, rescinded or amended and are in full force and effect, (C)
that the certificate or articles of incorporation of the Borrower have not
been amended since the date of the last amendment thereto shown on the
certificate of good standing furnished pursuant to clause (i) above, and
(D) as to the incumbency and specimen signature of each officer executing
any Loan Document or any other document delivered in connection herewith on
behalf of the Borrower; (iii) a certificate of another officer as to the
incumbency and specimen signature of the Secretary or Assistant Secretary
executing the certificate pursuant to (ii) above; and (iv) such other
documents as the Lenders or their counsel or Cravath, Swaine & Moore,
counsel for the Agents, may reasonably request.
(e) The Agents shall have received a certificate, dated the date
hereof and signed by the treasurer or the chief financial officer of the
Borrower, confirming compliance with the conditions precedent set forth in
paragraphs (b) and (c) of Section 4.02.
(f) All fees, expenses and other amounts payable pursuant to the
Existing Facility, including all outstanding loans thereunder and accrued
interest thereon, shall have been paid in full, and the commitments of the
lenders thereunder shall have been terminated.
SECTION 4.02. Conditions to All Borrowings. On the date of each
-----------------------------
Borrowing, including each Borrowing in which Loans are refinanced with new Loans
as contemplated by Section 2.05:
(a) The Agents shall have received a notice of such Borrowing as
required by Section 2.03 or Section 2.04, as applicable.
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<PAGE>
49
(b) The representations and warranties set forth in Article III
hereof (except, in the case of a refinancing of a Standby Borrowing with a
new Standby Borrowing that does not increase the aggregate principal amount
of the Loans of any Lender outstanding, those contained in paragraphs (e),
(f), (g), (h) and (j) of Article III, and, except in the case of any
Borrowing on a date after the Closing Date, that contained in paragraph (j)
of Article III) shall be true and correct in all material respects 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.
(c) The Borrower shall be in compliance with all the terms and
provisions set forth herein and in each other Loan Document on its part to
be observed or performed, and at the time of and immediately after such
Borrowing no Event of Default or Default shall have occurred and be
continuing.
Each Borrowing shall be deemed to constitute a representation and warranty by
the Borrower on the date of such Borrowing as to the matters specified in
paragraphs (b) and (c) of this Section 4.02.
ARTICLE V. AFFIRMATIVE COVENANTS
The Borrower covenants and agrees with each Lender and the Agents
that, so long as this Agreement shall remain in effect or the principal of or
interest on any Loan, any Fees or any other expenses or amounts payable under
any Loan Document shall be unpaid, unless the Required Lenders shall otherwise
consent in writing, the Borrower will:
SECTION 5.01. Existence; Businesses and Properties. (a) Preserve
-------------------------------------
and maintain its corporate existence, rights (charter and statute) and material
franchises, except as otherwise permitted by Sections 6.03 and 6.04.
(b) Comply in all material respects with all applicable laws, rules,
regulations and orders (including, without limitation, laws requiring payment of
all taxes, assessments and governmental charges imposed upon it or upon its
property except to the extent contested in good faith by
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
50
appropriate proceedings) except where the failure to so comply would not have a
Material Adverse Effect.
(c) Maintain and preserve all of its properties which are used in the
conduct of its business in good working order and condition, ordinary wear and
tear excepted, to the extent that any failure to do so would have a Material
Adverse Effect and except for dispositions thereof permitted by Section 6.02;
SECTION 5.02. Insurance. Maintain insurance with responsible and
----------
reputable insurance companies or associations in such amounts and covering such
risks as is usually carried by companies engaged in similar businesses and
owning similar properties as the Borrower.
SECTION 5.03. Reporting Requirements. Furnish to the Agents and each
-----------------------
Lender:
(a) within 60 days after the close of each of the first three quarters
of each of the Borrower's fiscal years, a copy of the quarterly report on
Form 10-Q containing the consolidated statement of income of the Borrower
and its consolidated Subsidiaries for the period from the beginning of such
fiscal year to the end of such quarter and the related consolidated balance
sheet of the Borrower and its consolidated Subsidiaries as at the end of
such period, each certified by the chief financial officer of the Borrower
and accompanied by a certificate of such officer stating (i) that such
statement of income and such balance sheet has been prepared in accordance
with GAAP, (ii) whether or not he or she has knowledge of the occurrence of
any Event of Default or Default which is continuing hereunder and, if so,
stating in reasonable detail the facts with respect thereto and (iii) all
relevant facts in reasonable detail to evidence, and the computations as
to, whether or not the Borrower is in compliance with the requirements set
forth in Sections 5.04, 6.01 and 6.02;
(b) within 120 days after the close of each of the Borrower's fiscal
years, a copy of the annual report on Form 10-K of the Borrower and its
consolidated Subsidiaries, including the opinion of independent certified
public accountants of internationally recognized standing, together with
financial statements consisting of the consolidated balance sheet of the
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<PAGE>
51
Borrower and its consolidated Subsidiaries as at the end of such year and
the related consolidated statements of income, retained earnings and cash
flows of the Borrower and its consolidated Subsidiaries for the year then
ended and accompanied by an opinion signed by said accountants stating that
(i) such financial statements have been prepared in accordance with GAAP
and (ii) in making the investigations necessary for said opinion they
obtained no knowledge, except as specifically stated, of any Event of
Default or Default which is continuing hereunder;
(c) within 120 days after the close of each of the Borrower's fiscal
years, a certificate of the chief financial officer of the Borrower stating
(i) whether or not he or she has knowledge of the occurrence of any Event
of Default or Default which is continuing hereunder and, if so, stating in
reasonable detail the facts with respect thereto, and (ii) all relevant
facts in reasonable detail to evidence, and the computations as to, whether
or not the Borrower is in compliance with the requirements set forth in
Sections 5.04, 6.01 and 6.02;
(d) promptly upon their becoming available, all reports on Form 10-K,
10-Q or 8-K, or any successor form, and all proxy statements that the
Borrower or the Parent shall file with the Securities and Exchange
Commission or any national securities exchange;
(e) promptly in writing, notice of all litigation and of all
proceedings before any governmental or regulatory agencies affecting the
Borrower or any Subsidiary, except any litigation or proceeding which is
not likely to have any Material Adverse Effect;
(f) within three Business Days after a Responsible Officer of the
Borrower obtains knowledge of the occurrence of any Event of Default or
Default which is continuing, notice of such occurrence together with a
detailed statement by a Responsible Officer of the Borrower of the steps
being taken by the Borrower or the appropriate Subsidiary to cure the
effect of such event;
(g) as soon as practicable and in any event (i) within 30 days after
the Borrower or any ERISA Affiliate knows or has reason to know that any
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
52
Termination Event described in clause (i) of the definition of Termination
Event with respect to any Plan has occurred and (ii) within 10 days after
the Borrower or any ERISA Affiliate knows or has reason to know that any
other Termination Event with respect to any Plan has occurred, a statement
of the treasurer or the chief financial officer of the Borrower describing
such Termination Event and the action, if any, which the Borrower or such
ERISA Affiliate proposes to take with respect thereto;
(h) promptly and in any event within two Business Days after receipt
thereof by the Borrower or any ERISA Affiliate, copies of each notice
received by the Borrower or any ERISA Affiliate from the PBGC stating its
intention to terminate any Plan or to have a trustee appointed to
administer any Plan;
(i) promptly and in any event within 30 days after the filing thereof
with the Internal Revenue Service, copies of each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) with respect to each
Plan;
(j) promptly and in any event within five Business Days after receipt
thereof by the Borrower or any ERISA Affiliate from the sponsor of a
Multiemployer Plan, a copy of each notice received by the Borrower or any
ERISA Affiliate concerning (i) the imposition of Withdrawal Liability by a
Multiemployer Plan, (ii) the determination that a Multiemployer Plan is, or
is expected to be, in reorganization within the meaning of Title IV of
ERISA, (iii) the termination of a Multiemployer Plan within the meaning of
Title IV of ERISA, or (iv) the amount of liability incurred, or expected to
be incurred, by the Borrower or any ERISA Affiliate in connection with any
event described in clause (i), (ii) or (iii) above;
(k) within 10 days after the due date for filing with the PBGC
pursuant to Section 412(n) of the Code of a notice of failure to make a
required installment or other payment with respect to a Plan, a statement
of the treasurer or the chief financial officer setting forth details as to
such failure and the action proposed to be taken with respect thereto,
together with a copy of such notice given to the PBGC; and
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53
(l) as soon as practicable but in any event within 60 days of any
notice of request therefor, such other information respecting the financial
condition and results of operations of the Borrower as the Agents, or a
Lender through the Agents, may from time to time reasonably request.
Each balance sheet and other financial statement furnished pursuant to
paragraphs (a) and (b) of this Section 5.03 shall contain comparative
information which conforms to the presentation required in Form 10-Q and 10-K,
as appropriate, under the Securities Exchange Act of 1934, as amended.
SECTION 5.04. Consolidated Tangible Net Worth. Maintain Consolidated
--------------------------------
Tangible Net Worth of not less than $1,700,000,000.
SECTION 5.05. Taxes. Pay and discharge promptly all material taxes,
-----
assessments and governmental charges or levies, levied or assessed upon it or
upon its income or profits or in respect of its property, before the same shall
become delinquent or in default; provided, however, that such payment and
-------- -------
discharge shall not be required with respect to any such tax, assessment, charge
or levy so long as the validity or amount thereof shall be contested in good
faith by appropriate proceedings.
ARTICLE VI. NEGATIVE COVENANTS
The Borrower covenants and agrees with each Lender and the Agents
that, so long as this Agreement shall remain in effect or the principal of or
interest on any Loan, any Fees or any other expenses or amounts payable under
any Loan Document shall be unpaid, unless the Required Lenders shall otherwise
consent in writing, the Borrower will not:
SECTION 6.01. Debt. Create or suffer to exist, or permit its
-----
Subsidiaries to create or suffer to exist, any Debt if, immediately after giving
effect to such Debt and the receipt and application of any proceeds thereof, the
sum of the aggregate amount of Debt of the Borrower and its consolidated
Subsidiaries on a consolidated basis would exceed 140% of Consolidated Tangible
Net Worth. Notwithstanding anything contained in the foregoing to the contrary,
consolidated Debt of the Borrower and its consolidated Subsidiaries, taken as a
whole, shall not exceed at any time $3,000,000,000.
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54
SECTION 6.02. Sale, etc., of Assets. Sell, lease, dispose of,
----------------------
distribute or otherwise transfer, whether in a single transaction or a series of
transactions (collectively, a "Transfer"), all or any part of the property of
the Borrower, provided that the Borrower may Transfer:
--------
(a) properties (other than properties Transferred pursuant to any
other clause of this Section 6.02) having an aggregate net book value for
all such Transfers (determined with respect to each such property based on
the net book value reflected on the most recent consolidated balance sheet
of the Borrower delivered pursuant to Section 5.03 prior to the Transfer
thereof, in each case determined without regard to any writedown in such
net book value subsequent to the date hereof) not in excess of 10% of the
total book value of the assets of the Borrower and its consolidated
Subsidiaries (as reflected on the most recent consolidated balance sheet of
the Borrower delivered pursuant to Section 5.03) less the excess of the net
book value of all assets transferred since the date of such balance sheet
over the amount of cash and the fair market value of all other
consideration received in exchange therefor;
(b) properties to any person, provided that the Borrower or any of its
--------
Subsidiaries or the Borrower and any of its Subsidiaries has the power,
direct or indirect, (i) to vote more than 50% of the securities or
interests having ordinary voting power for the election of directors or
comparable governing persons of such person or (ii) to direct or cause the
direction of the management and policies of such person (whether by
contract or otherwise);
(c) properties abandoned or retired from use in the ordinary course of
business;
(d) properties usable by the Borrower in the operation of its business
as a railroad company including, without limitation, the Transfer of
accounts receivable, provided that the Borrower Transfers such property in
--------
arms-length transactions in exchange for property or cash of substantially
equivalent fair market value usable by the Borrower in the operation of its
business as a railroad company, and provided further that the amount of
-------- -------
property constituting the
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55
excess, if any, of (i) the fair market value of the property Transferred by
the Borrower over (ii) the fair market value of the property received by
the Borrower in exchange therefor (in each case, determined as of the date
of such Transfer) may be transferred pursuant to clause (a) above on and
subject to the terms and conditions of such clause (a); and
(e) property constituting Margin Stock.
SECTION 6.03. Mergers, etc. Merge or consolidate with any person, or
-------------
permit any of its Subsidiaries to merge or consolidate with any person, except
that (a) any Subsidiary may merge or consolidate with any other Subsidiary or
may merge or liquidate into the Borrower (if the Borrower shall be the
continuing or surviving corporation), (b) the Borrower or any Subsidiary may
merge or consolidate with any other corporation if (i) (A) the surviving
corporation shall be the Borrower or a Subsidiary or (B) the surviving
corporation, if not the Borrower or a Subsidiary, shall be a corporation
organized and existing under the laws of the United States or any state thereof
or the District of Columbia and shall expressly assume by a written assignment
executed and delivered to the Administrative Agent, in form and substance
satisfactory to the Administrative Agent, all of the rights and obligations of
the Borrower under this Agreement, and (ii) after giving effect to such merger
or consolidation no Event of Default or Default shall have occurred and be
continuing and (c) the Borrower and any Subsidiary may merge or consolidate as
required by a valid order of the ICC.
SECTION 6.04. Liens. Create or (in the case of clause (b) or (d)
------
below) suffer to exist, or permit its Subsidiaries to create or (in the case of
clause (b) or (d) below) suffer to exist, any Lien securing (a) Debt of the
Borrower or any of its consolidated Subsidiaries, (b) taxes imposed upon the
Borrower or any of its consolidated Subsidiaries, (c) reimbursement obligations
of the Borrower or any of its consolidated Subsidiaries in respect of letters of
credit or (d) liabilities of the Borrower or any of its consolidated
Subsidiaries asserted in any legal or other proceeding arising under the
Comprehensive Environmental, Response, Compensation and Liability Act of 1980,
as amended from time to time, or other similar Federal or state laws,
regulations or decrees relating to environmental protection or the release of
any hazardous or toxic materials into the environment, in each case, upon or
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56
with respect to all or a portion of the cash or accounts receivable of the
Borrower or any of its consolidated Subsidiaries arising from income from
railroad operations generated in the ordinary course of business (and excluding
in any event cash and accounts receivable constituting the proceeds of the sale
or other disposition of property), except, in each case for Liens (A) in respect
------
of taxes, the nonpayment of which would not constitute a default under Section
5.01(b), (B) arising by operation of law in the ordinary course of business, (C)
on cash or other property in any bank's possession arising either in the
ordinary course of business and securing daylight overdrafts and other Debt
incurred in favor of such bank in the ordinary course of the cash management
program of the Borrower and its Subsidiaries, or by operation of law, or
contractually in the ordinary course of establishing and/or maintaining deposit
and other accounts, letters of credit and other banking services (other than the
incurrence of indebtedness for borrowed money), (D) on cash or other property in
any Lender's possession securing (or entitling any Lender to set off against)
amounts owing to any Lender pursuant to this Agreement, (E) securing lessees'
obligations under leases referred to in clause (ii) of the definition of Debt,
and (F) Liens in respect of any liability referred to in clause (d) above which
liability does not have a reasonable probability (taking into account the
exhaustion of all corrective and other appropriate procedures and proceedings
and/or all appeals) of having a Material Adverse Effect; provided, however, that
-------- -------
this Section 6.04 shall not restrict the creation or existence of (1) Existing
Liens and Liens under Existing Mortgages and (2) Liens securing Debt outstanding
from time to time under the Mortgage Indenture.
SECTION 6.05. Sales of Accounts Receivable. Sell any accounts
-----------------------------
receivable other than pursuant to the Borrower's receivables sale facilities and
any extensions, renewals or replacements of any thereof, provided that the
--------
aggregate amount of accounts receivable sold pursuant to this Section 6.05 shall
in no event exceed $300,000,000.
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57
ARTICLE VII. EVENTS OF DEFAULT
In case of the happening (and during the continuance) of any of the
following events ("Events of Default"):
(a) The Borrower shall (i) fail to pay any principal of any Loan or
(ii) fail to pay any interest on any Loan or any other amount payable
hereunder or pursuant hereto, in each case referred to in this clause (ii)
within two Business Days after the same shall be due;
(b) Any representation or warranty made by the Borrower herein or by
the Borrower (or any of its officers) in connection with this Agreement
shall prove to have been incorrect in any material respect when made or
deemed made;
(c) The Borrower shall (i) fail to perform or observe any term,
covenant or agreement contained in Sections 5.04, 6.01, 6.02 or 6.03 of
this Agreement or (ii) fail to perform or observe any other term, covenant
or agreement contained in this Agreement on its part to be performed or
observed and any such failure referred to in this clause (ii) shall remain
unremedied for 30 days after written notice thereof shall have been given
to the Borrower by the Administrative Agent or by any Lender with a copy to
the Administrative Agent;
(d) The Borrower or any Subsidiary shall (i) fail to pay any Debt
(excluding Debt hereunder) of the Borrower or any Subsidiary (as the case
may be) in an aggregate principal amount of $50,000,000 or more, or any
installment of principal thereof or interest or premium thereon, when due
(whether by scheduled maturity, required prepayment, acceleration, demand
or otherwise) and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to such
Debt; (ii) default under any agreement or instrument relating to any Debt
(excluding Debt hereunder) in an aggregate principal amount of $25,000,000
or more, or any other event shall occur and shall continue after the
applicable grace period, if any, specified in such agreement or instrument,
if the effect of such default or event is to accelerate the maturity of
such Debt; or
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58
(iii) default under any agreement or instrument relating to any Debt
(excluding Debt hereunder) in an aggregate principal amount of $101,000,000
or more, or any other event shall occur and shall continue after the
applicable grace period, if any, specified in such agreement or instrument,
if the effect of such default or event is to permit the acceleration of the
maturity of such Debt, provided that, notwithstanding any provision
--------
contained in this paragraph (d) to the contrary, to the extent that
pursuant to the terms of any agreement or instrument relating to any Debt
referred to in this paragraph (d), any sale, pledge or disposal of Margin
Stock, or utilization of the proceeds thereof would result in a breach of
any covenant contained therein or otherwise give rise to a default or event
of default thereunder and/or acceleration of the maturity of the Debt
extended pursuant thereto and as a result of such terms or of such sale,
pledge, disposal, utilization, breach, default, event of default or
acceleration, or the provisions hereof relating thereto, this Agreement or
any Loan hereunder would otherwise be subject to the margin requirements or
any other restriction under Regulation U, then such breach, default, event
of default or acceleration shall not constitute a Default or Event of
Default under this paragraph (d);
(e) (i) The Borrower or any Subsidiary shall (A) generally not pay
its debts as such debts become due; or (B) admit in writing its inability
to pay its debts generally; or (C) make a general assignment for the
benefit of creditors; (ii) any proceeding shall be instituted or consented
to by the Borrower or any Subsidiary seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any
law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of
a receiver, trustee, or other similar official for it or for any
substantial part of its property; (iii) any such proceeding shall have been
instituted against the Borrower or any Subsidiary and either (A) such
relief shall have been granted or (B) such proceeding shall have been
pending undismissed for a period of 60 consecutive days; or (iv) the
Borrower or any Subsidiary shall take any
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<PAGE>
59
corporate action to authorize any of the actions set forth above in this
paragraph (e);
(f) (i) One or more final and non-appealable judgments or orders for
the payment of money in excess of $50,000,000 in the aggregate shall be
rendered against the Borrower and/or one or more Subsidiaries and
enforcement proceedings shall have been commenced by creditors upon such
judgments or orders; or (ii) one or more judgments or orders for the
payment of money in excess of $100,000,000 shall be rendered against the
Borrower and/or one or more Subsidiaries and either (x) enforcement
proceedings shall have been commenced by creditors upon such judgments or
orders or (y) there shall be any period of 20 consecutive days during which
a stay of enforcement of such judgments or orders, by reason of a pending
appeal or otherwise, shall not be in effect;
(g) Any Termination Event with respect to a Material Plan shall have
occurred and, 30 days after notice thereof shall have been given to the
Borrower by the Administrative Agent, (i) such Termination Event shall
still exist and (ii) the sum (determined as of the date of occurrence of
such Termination Event) of the Insufficiency of such Plan and the
Insufficiency of any and all other Plans with respect to which a
Termination Event shall have occurred and then exist (or in the case of a
Plan with respect to which a Termination Event described in clause (ii) of
the definition of Termination Event shall have occurred and then exist, the
liability related thereto), in each case in respect of which the Borrower
or any ERISA Affiliate has liability, is equal to or greater than
$50,000,000;
(h) The Borrower or any ERISA Affiliate shall have been notified by
the sponsor of a Multiemployer Plan that it has incurred Withdrawal
Liability to such Multiemployer Plan in an amount which, when aggregated
with all other amounts required to be paid to Multiemployer Plans in
connection with Withdrawal Liabilities (determined as of the date of such
notification), exceeds $50,000,000;
(i) The Borrower or any ERISA Affiliate shall have been notified by
the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization
[6700-070(X)RAF/A08B.WPF/30D/4674W]
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60
or is being terminated, within the meaning of Title IV of ERISA, if as a
result of such reorganization or termination the aggregate annual
contributions of the Borrower and its ERISA Affiliates to all Multiemployer
Plans which are then in reorganization or being terminated have been or
will be increased over the amounts contributed to such Multiemployer Plans
for the respective plan years which include the date hereof by an amount
exceeding $50,000,000; or
(j) There shall have occurred a Change in Control;
then, and in any such event, the Administrative Agent shall, at the request, or
may with the consent, of the Required Lenders, by notice to the Borrower, (i)
declare the Commitment of each Lender to make Loans to be terminated, whereupon
the same shall forthwith terminate, and (ii) declare the Loans, all interest
thereon and all other amounts payable under this Agreement to be forthwith due
and payable, whereupon the Loans, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Borrower; provided, however, that if an Event of Default under paragraph (e) of
-------- -------
this Article VII (except under clause (i)(A) thereof) shall occur, (A) the
Commitment of each Lender to make Loans shall automatically be terminated and
(B) the Loans, all interest thereon and all other amounts payable under this
Agreement shall automatically become and be forthwith due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower.
ARTICLE VIII. THE AGENTS
In order to expedite the transactions contemplated by this Agreement,
Texas Commerce Bank National Association and Chemical Bank Agency Services
Corporation are hereby appointed to act as Administrative Agent and CAF Agent,
respectively, on behalf of the Lenders. Each of the Lenders hereby irrevocably
authorizes the Agents to take such actions on behalf of such Lender and to
exercise such powers as are specifically delegated to the Agents by the terms
and provisions hereof and of the other Loan Documents, together with such
actions and powers as are reasonably incidental thereto. The Administrative
Agent is hereby expressly
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61
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 Borrower of any Event of
Default specified in this Agreement of which the Administrative Agent 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 Borrower pursuant to this Agreement as received by
the Administrative Agent.
Neither the Agents nor any of their directors, officers, employees or
agents shall be liable as such for any action taken or omitted by any of them
except for its, his or her own gross negligence or wilful misconduct, or be
responsible for any 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 Borrower of any
of the terms, conditions, covenants or agreements contained in any Loan Document
other than those expressly provided for herein. The Agents shall not be
responsible to the Lenders for the due execution, genuineness, validity,
enforceability or effectiveness (other than against the Agents) of this
Agreement or any other Loan Documents or other instruments or agreements. The
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. Each
Agent 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 the Agents nor any of their directors, officers, employees or agents
shall have any responsibility to the Borrower 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 Borrower of any of their respective obligations
hereunder or under any other Loan Document or in connection herewith or
therewith. The Agents may execute any and all duties hereunder by or through
agents or
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62
employees and shall be entitled to rely upon the advice of legal counsel
reasonably 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 it in
accordance with the advice of such counsel.
The Lenders hereby acknowledge that the Agents shall be under no duty
to take any discretionary action permitted to be taken by it pursuant to the
provisions of this Agreement unless it shall be requested in writing to do so by
the Required Lenders.
Subject to the appointment and acceptance of a successor Agent as
provided below, any Agent may resign at any time by notifying the Lenders and
the Borrower. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor. If no successor shall have been so appointed by
the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Agent gives notice of its resignation, then the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent which shall be a
bank with an office in the United States, having a combined capital and surplus
of at least $50,000,000 or an Affiliate of any such bank. Upon the acceptance
of any appointment as 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 Agent and the retiring Agent shall be discharged from its
duties and obligations hereunder. After any Agent's resignation hereunder, the
provisions of this Article and Section 9.05 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 Agent.
With respect to the Loans made by them hereunder, the Agents in their
individual capacity and not as Agents shall have the same rights and powers as
any other Lender and may exercise the same as though they were not the Agents,
and the Agents and their Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any Subsidiary or
other Affiliate thereof as if they were not the Agents.
Each Lender agrees (i) to reimburse the Agents, on demand, in the
amount of its pro rata share (based on its Commitment hereunder) of any
reasonable expenses incurred for the benefit of the Lenders by the Agents,
including counsel fees and compensation of agents and employees paid
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63
for services rendered on behalf of the Lenders, which shall not have been
reimbursed by the Borrower and (ii) to indemnify and hold harmless the Agents
and any of its 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 them in their capacity as the Agents or any
of them in any way relating to or arising out of this Agreement or any other
Loan Document or any action taken or omitted by it or any of them under this
Agreement or any other Loan Document, to the extent the same shall not have been
reimbursed by the Borrower; provided that no Lender shall be liable to the
--------
Agents for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the gross negligence or wilful misconduct of the Agents or any of their
directors, officers, employees or agents. Each Lender agrees that any
reasonable allocation of expenses or other amounts referred to in this paragraph
between this Agreement and the Facility A Credit Agreement shall be conclusive
and binding for all purposes.
Each Lender acknowledges that it has, independently and without
reliance upon the Agents 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 the Agents 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 other Loan Document, any related
agreement or any document furnished hereunder or thereunder.
ARTICLE IX. MISCELLANEOUS
SECTION 9.01. Notices. Notices and other communications provided for
--------
herein shall be in writing and shall
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64
be delivered by hand or overnight courier service, mailed or sent by telecopy by
the sending party, as follows:
(a) if to the Borrower, to it at 3200 Continental Plaza, 777 Main
Street, Fort Worth, Texas 76102, Attention of Treasurer (Telecopy No. 817-
333-7484);
(b) if to the Administrative Agent, to it at 712 Main Street, Houston,
Texas 77002, Attention of Syndications Department (Telecopy No. 713-546-
2339); with a copy to Texas Commerce Bank National Association, 201 Main
Street, 3rd Floor, Fort Worth, Texas 76102, Attention of Corporate Banking
(Telecopy No. 817-878-7591);
(c) if to the CAF Agent, to it at 140 East 45th Street, 29th Floor,
New York, NY 10017-3162, Attention of: M. Terri Reilly; and
(d) if to a Lender, to it at its address (or telecopy number) set
forth in Schedule 2.01 or in the Assignment and Acceptance pursuant to
which such Lender shall have become a party hereto.
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, or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 9.01.
SECTION 9.02. Survival of Agreement. All covenants, agreements,
----------------------
representations and warranties made by the Borrower herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document 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 or any other Loan Document is outstanding and unpaid and so long
as the Commitments have not been terminated.
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SECTION 9.03. Binding Effect. This Agreement shall become effective
---------------
when it shall have been executed by the Borrower and the Agents and when the
Administrative Agent shall have received copies hereof which, when taken
together, bear the signatures of each Lender, and thereafter shall be binding
upon and inure to the benefit of the Borrower, the Agents and each Lender and
their respective successors and assigns, except that the Borrower shall not have
the right to assign its rights hereunder or any interest herein without the
prior consent of all the Lenders.
SECTION 9.04. Successors and Assigns. (a) Whenever in this
-----------------------
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and permitted assigns of such party; and all
covenants, promises and agreements by or on behalf of the Borrower, the Agents
or the Lenders that are contained in this Agreement shall bind and inure to the
benefit of their respective successors and permitted 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 (i) except in the case of an assignment to a Lender or an
- - -------
Affiliate of such Lender, the Borrower and the Administrative Agent must give
their prior written consent to such assignment (which consent shall not be
unreasonably withheld, taking into account such factors as the financial
responsibility and reputation of a proposed assignee), (ii) each such assignment
shall be of a constant, and not a varying, percentage of all the assigning
Lender's rights and obligations under this Agreement, (iii) 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 the Administrative Agent) shall not be less than $10,000,000 (and
integral multiples of $1,000,000) or, if less, the entire amount of the
assigning Lender's Commitment, (iv) the parties to each such assignment shall
execute and deliver to the Administrative Agent an Assignment and Acceptance,
and the assigning Lender shall deliver together therewith a processing and
recordation fee of $2,500 and (v) the assignee, if it shall not be a Lender,
shall deliver to the Administrative Agent and the CAF Agent an Administrative
Questionnaire. Upon acceptance and recording pursuant to paragraph (e) of this
Section 9.04, from and after the effective date specified in each
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Assignment and Acceptance, which effective date shall be at least five Business
Days after the execution thereof, (A) 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,
(B) 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 2.14, 2.16, 2.20 and 9.05,
as well as to any Fees accrued for its account hereunder and not yet paid)) and
(C) Schedule 2.01 shall be deemed amended to give affect to such assignment.
Not-withstanding 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 and that
its Commitment, and the outstanding balances of its Standby Loans and
Competitive Loans, in each case without giving effect to assignments thereof
which have not become effective, are as set forth in such Assignment and
Acceptance; (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 any other any instrument or document furnished pursuant hereto, or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement, any other Loan Document or any other instrument or
document furnished pursuant hereto or the financial condition of the Borrower or
any Subsidiary or the performance or observance by the Borrower or any
Subsidiary of any of its obligations under this Agreement, any other Loan
Document or any other instrument or document furnished pursuant hereto; (iii)
such assignee represents
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67
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 5.03 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 the 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 Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement as are delegated to the
Administrative Agent 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) The Administrative Agent shall maintain at one of its offices in
The City of Houston 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 principal amount of the Loans owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive in the absence of demonstrable error and the
Borrower, the 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. The Register shall be available for inspection
by the Borrower and any Lender, 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, 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 Borrower and the
Administrative Agent to such assignment, the Administrative Agent shall (i)
accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Lenders.
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
68
(f) Each Lender may without the consent of the Borrower or the Agents
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 for the
performance of such obligations, (iii) the participating banks or other entities
shall be entitled to the benefit of the cost protection provisions contained in
Sections 2.14, 2.16 and 2.20 to the same extent as if they were Lenders and (iv)
the Borrower, the Agents and the other Lenders shall continue to deal solely and
directly with such 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 Borrower 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
the amount of principal of or the rate at which interest is payable on the
Loans, extending any scheduled principal payment date or date fixed for the
payment of interest on the Loans or changing 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 9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower furnished to such Lender by
or on behalf of the Borrower; provided that, prior to any such disclosure of
--------
information designated by the Borrower as confidential, each such assignee or
participant or proposed assignee or participant shall execute an agreement
whereby such assignee or participant shall agree (subject to customary
exceptions) to preserve the confidentiality of such confidential information.
It is understood that confidential information relating to the Borrower would
not ordinarily be provided in connection with assignments or participations of
Competitive Loans.
(h) Any Lender may at any time assign all or any portion of its
rights under this Agreement to a Federal Reserve Bank; provided that no such
--------
assignment shall release a Lender from any of its obligations hereunder. In
order to facilitate such an assignment to a Federal Reserve Bank, the Borrower
shall, to the extent permissible without
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
69
registration under applicable regulations of the ICC, at the request of the
assigning Lender, duly execute and deliver to the assigning Lender a promissory
note or notes evidencing the Loans made to the Borrower by the assigning Lender
hereunder.
(i) The Borrower shall not assign or delegate any of its rights or
duties hereunder without the prior written consent of the Lenders.
SECTION 9.05. Expenses; Indemnity. (a) The Borrower agrees to pay
--------------------
all out-of-pocket expenses incurred by the Agents in connection with the
preparation of this Agreement and the other Loan Documents or in connection with
any amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions hereby contemplated shall be consummated) or
incurred by the Agents or any Lender in connection with the enforcement or
protection of their rights in connection with this Agreement and the other Loan
Documents or in connection with the Loans made hereunder, including the
reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel
for the Agents, and, in connection with any such amendment, modification or
waiver or any such enforcement or protection, the reasonable fees, charges and
disbursements of any other counsel for the Agents or any Lender. The Borrower
further agrees that it shall indemnify the Lenders from and hold them harmless
against any documentary taxes, assessments or charges made by any Governmental
Authority by reason of the execution and delivery of this Agreement or any of
the other Loan Documents.
(b) The Borrower agrees to indemnify the Agents, each Lender and each
of their respective directors, officers, employees and agents (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, charges and disbursements, incurred by or
asserted against any Indemnitee arising out of, in any way connected with, or as
a result of (i) the execution or delivery of this Agreement or any other Loan
Document or any agreement or instrument contemplated thereby, the performance by
the parties thereto of their respective obligations thereunder or the
consummation of the transactions contemplated thereby, (ii) the use of the
proceeds of the Loans or (iii) any claim, litigation, investigation or
proceeding relating to any of the foregoing to which such Indemnitee reasonably
believes that it may
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
70
become a party, whether or not any Indemnitee is a party thereto; provided that
--------
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 court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or wilful misconduct of such Indemnitee.
(c) The provisions of this Section 9.05 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 other Loan Document, or any investigation
made by or on behalf of the Agents or any Lender. All amounts due under this
Section 9.05 shall be payable on written demand therefor.
SECTION 9.06. 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 the account of the Borrower against any of and all the
obligations of the Borrower now or hereafter existing under this Agreement and
other Loan Documents held by such Lender, irrespective of whether or not such
Lender shall have made any demand under this Agreement or such other Loan
Document and although such obligations may be unmatured. Each Lender agrees
promptly to notify the Borrower after any such setoff and application made by
such Lender, provided that 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 other rights of
setoff) which such Lender may have.
SECTION 9.07. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN
---------------
DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.
SECTION 9.08. Waivers; Amendment. (a) No failure or delay of the
-------------------
Agents 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
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
71
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 Agents and the Lenders hereunder and under the other Loan Documents 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 any other Loan
Document or consent to any departure by the Borrower 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 Borrower in any
case shall entitle the Borrower 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 Borrower 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, without the prior written
consent of each Lender affected thereby, (ii) change or extend the Commitment 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 2.17, the
provisions of this Section, any provision of this agreement which by its terms
requires the consent or approval of all Lenders or the definition of "Required
Lenders", without the prior written consent of each Lender; provided further
----------------
that no such agreement shall amend, modify or otherwise affect the rights or
duties of the Agents hereunder without the prior written consent of the Agents.
SECTION 9.09. Interest Rate Limitation. Notwithstanding anything
-------------------------
herein to the contrary, if at any time the applicable interest rate, together
with all fees and charges which are treated as interest under applicable law
(collectively the "Charges"), as provided for herein or in any other document
executed in connection herewith, or otherwise contracted for, charged, received,
taken or reserved by any Lender, shall exceed the maximum lawful rate (the
"Maximum Rate") which may be contracted for, charged, taken, received or
reserved by such Lender in accordance with applicable law, the rate of interest
payable on the Loans of such
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
72
Lender, together with all Charges payable to such Lender, shall be limited to
the Maximum Rate.
SECTION 9.10. Entire Agreement. This Agreement and the other Loan
-----------------
Documents constitute the entire contract between 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 and the other Loan
Documents. Nothing in this Agreement or in the other Loan Documents, expressed
or implied, is intended to confer upon any party other than the parties hereto
and thereto any rights, remedies, obligations or liabilities under or by reason
of this Agreement or the other Loan Documents.
SECTION 9.11. Severability. In the event any one or more of the
-------------
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby. The parties shall
endeavor in good-faith negotiations 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 9.12. 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 9.03.
SECTION 9.13. 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 9.14. Jurisdiction; Consent to Service of Process. (a) The
----------------------------------- --------
Borrower 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 the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
73
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. Nothing in this Agreement shall affect any
right that any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against the Borrower or
its properties in the courts of any jurisdiction.
(b) The Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this agreement or the other Loan
Documents in any New York State or Federal court sitting in New York City. 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 9.01. Nothing in this
Agreement will
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.
IN WITNESS WHEREOF, the Borrower, the Lenders, the Administrative
Agent and the CAF Agent have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.
BURLINGTON NORTHERN RAILROAD
COMPANY,
by
Robert F. McKenney
-------------------------------------
Name: Robert F. McKenney
Title: Senior Vice President
and Treasurer
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, individually and as
Administrative Agent,
by
Loren K. Jensen
-------------------------------------
Name: Loren K. Jensen
Title: Senior Vice President
CHEMICAL BANK AGENCY SERVICES
CORPORATION, as CAF Agent,
by
Janet M. Belden
-------------------------------------
Name: Janet M. Belden
Title: Vice President
ABN-AMRO BANK N.V.,
by by
Lila J. Donehoo Ronald A. Mahle
---------------------- ------------------------------------
Name: Lila J. Donehoo Name: Roanld A. Mahle
Title: Vice President Title: Vice President
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
THE BOATMEN'S NATIONAL BANK OF ST.
LOUIS,
by
Dwight D. Erdbruegger
-------------------------------------
Name: Dwight D. Erdbruegger
Title: Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
by
Wayne H. Riess
-------------------------------------
Name: Wayne H. Riess
Title: Vice President
THE BANK OF NEW YORK,
by
Julie E. Brennan
-------------------------------------
Name: Julie E. Brennan
Title: Vice President
THE BANK OF NOVA SCOTIA,
by
A. S. Norsworthy
-------------------------------------
Name: A. S. Norsworthy
Title: Assistant Agent
THE BANK OF TOKYO, LTD., Dallas
Agency,
by
J. Beckwith
-------------------------------------
Name: J. Beckwith
Title: Vice President
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
CAISSE NATIONALE DE CREDIT AGRICOLE,
by
David Bouhl
-------------------------------------
Name: David Bouhl
Title: First Vice President
THE CHASE MANHATTAN BANK, N.A.,
by
Francis M. Cox, III
-------------------------------------
Name: Francis M. Cox, III
Title: Vice President
CIBC, INC.,
by
J. D. Westland
--------------------------------------
Name: J. D. Westland
Title: Vice President
CITIBANK, N.A.,
by
Barbara A. Cohen
-------------------------------------
Name: Barbara A. Cohen
Title: Vice President
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", New York Branch
by
Anita Vogel
-------------------------------------
Name: Anita Vogel
Title: Vice President
by
Ian Reece
------------------------------------
Name: Ian Reece
Title: Vice President and Manager
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
CREDIT LYONNAIS New York Branch
by
Alain Papiasse
------------------------------------
Name: Alain Papiasse
Title: Senior Vice President,
Deputy General Manger
CREDIT LYONNAIS Cayman Island Branch
by
Alain Papiasse
-------------------------------------
Name: Alain Papiasse
Title: Authorized Signature
THE DAI-ICHI KANGYO BANK, LIMITED,
Los Angeles Agency,
by
Tomohiro Nozaki
-------------------------------------
Name: Tomohiro Nozaki
Title: Senior Vice President
and Joint General
Manager
FIRST BANK NATIONAL ASSOCIATION,
by
Megan G. Mourning
-------------------------------------
Name: Megan G. Mourning
Title: Vice President
FIRST INTERSTATE BANK OF TEXAS N.A.,
by
Todd Robichaux
-------------------------------------
Name: Todd Robichaux
Title: Assistant Vice President
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON,
by
Dexter Freeman
-------------------------------------
Name: Dexter Freeman
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
by
Michael J. Kolosowsky
-------------------------------------
Name: Michael J. Kolosowsky
Title: Assistant Vice President
THE FUJI BANK, LIMITED, Houston Agency,
by
David Kelley
-------------------------------------
Name: David Kelley
Title: Vice President and
Senior Manager
MELLON BANK, N.A.,
by
V. Charles Jackson
-------------------------------------
Name: V. Charles Jackson
Title: Senior Vice President
MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION,
by
Edward A. Cheney
-------------------------------------
Name: Edward A. Cheney
Title: Vice President
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
THE MITSUBISHI BANK, LIMITED, New
York Branch,
by
Paula Mueller
-------------------------------------
Name: Paula Mueller
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF NEW
YORK,
by
Michael C. Mauer
-------------------------------------
Name: Michael C. Mauer
Title: Vice President
NBD BANK, N.A.,
by
D. Andrew Bateman
-------------------------------------
Name: D. Andrew Bateman
Title: First Vice President
THE NORTHERN TRUST COMPANY,
by
Martin G. Alston
-------------------------------------
Name: Martin G. Alston
Title: Vice President
PNC BANK, National Association,
by
Jeffrey S. Nurkiewicz
-------------------------------------
Name: Jeffrey S. Nurkiewicz
Title: Commercial Banking
Officer
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
THE SANWA BANK, LIMITED,
by
Blake Wright
-------------------------------------
Name: Blake Wright
Title: Assistant Vice President
SOCIETE GENERALE, Southwest Agency,
by
Louis P. LaVille, III
-------------------------------------
Name: Louis P. LaVille
Title: Vice President
THE SUMITOMO BANK, LIMITED,
by
Hiroshi Amano
-------------------------------------
Name: Hiroshi Amano
Title: General Manager
THE TOKAI BANK, LIMITED,
by
Hitoshi Ozawa
-------------------------------------
Name: Hitoshi Ozawa
Title: Assistant General
Manager
THE TORONTO-DOMINION BANK,
by
Lisa Allison
-------------------------------------
Name: Lisa Allison
Title: Manager, Credit
Administration
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
UNION BANK OF SWITZERLAND, Houston Agency,
by
Jan Buettgen
-------------------------------------
Name: Jan Buettgen
Title: Assistant Vice President
by
Evans Swann
-------------------------------------
Name: Evans Swann
Title: Vice President
WACHOVIA BANK OF GEORGIA, N.A.,
by
Terry L. Akins
-------------------------------------
Name: Terry L. Akins
Title: Senior Vice President
[6700-070(X)RAF/A08B.WPF/30D/4674W]
<PAGE>
EXHIBIT 10.3
[LETTERHEAD OF BURLINGTON NORTHERN RAILROAD APPEARS HERE]
April 22, 1994
PERSONAL AND CONFIDENTIAL
- - -------------------------
Mr. Ronald A. Rittenmeyer
4569 Turnberry Court
Plano, Texas 75024
Dear Ron:
This letter will confirm the results of our discussions and represents the
formal offer to you and agreement with you (the "Agreement") for the position of
Executive Vice President Merchandise Business Group with Burlington Northern
Railroad Company (the "Company").
1. Employment and Term. The Company agrees to your employment, and you agree
-------------------
to act as its Executive Vice President Merchandise Business Group during the
period commencing May 29, 1994 (the "Employment Date") and ending May 29,
1996 (the second anniversary of the Employment Date), unless sooner
terminated by death, disability or agreement of the parties. In the event
that your employment hereunder is terminated because of your death or
disability, or by your voluntary resignation, or is terminated by the
Company for your breach of this Agreement, the salary provided for in this
Agreement will be paid to and including the end of the month in which such
termination of employment occurs. If the Agreement is terminated by the
Company for any other reason, the Company will pay you on the date of
termination a sum of money equal to your then current monthly salary times
the number of months remaining until May 29, 1996, (the second anniversary
of the Employment Date).
2. Compensation. Commencing with the date of your employment by the Company,
------------
your minimum salary shall be $250,000 per annum. Your minimum salary shall
remain at $250,000 per annum from and after your Employment Date for the
remainder of the term of the Agreement except to the extent that your
minimum salary is increased from time to time by the Board of Directors of
the Company in connection with its annual review of executive compensation.
In February 1995, the Company will pay you a one-time lump sum bonus payment
of a minimum of $160,000 (gross earnings prior to tax). Effective January 1,
1995, you will become a regular participant in the Company's Senior
Executive Performance Incentive Plan and will be eligible for a bonus
payable in January 1996, and in later years if bonuses are granted, in
accordance with the Plan.
<PAGE>
Mr. Ron Rittenmeyer
April 22, 1994
Page -2-
3. Restricted Stock. The Company will grant to you an initial award of 7,800
----------------
shares of Restricted Stock under the Company's Restricted Stock Incentive
Plan, as determined under the Plan, effective on your Employment Date.
4. Stock Options. The Company will grant you an initial award of 11,700 stock
-------------
options under the Company's Stock Option Incentive Plan, as determined under
the Plan, effective on your Employment Date.
5. Pension Benefits. You shall be designated as a participant under the
----------------
Company's Pension Plan as of the Employment Date and shall accrue credited
service for pension benefits while employed by the Company.
Your retirement benefits will be determined by adding your years of service
with the Company to your years of service with Frito-Lay if: (1) you do not
voluntarily resign and you continue to be employed with the Company through
the fifth anniversary of your Employment Date; or (2) you die or become
permanently disabled after your Employment Date but prior to the fifth
anniversary of your Employment Date; or (3) you are not employed with the
Company through the fifth anniversary of your Employment Date because you
were terminated without cause.
Should you terminate your employment voluntarily after completing the fifth
anniversary of your Employment Date but prior to your 55th birthday, your
pension benefit will be calculated and paid in the form of a vested,
terminated benefit. Should you remain employed until your 55th birthday, you
will be eligible to make elections to commence retirement under the Pension
Plan in accordance with the terms of the plan in effect at that time.
Assuming you meet the eligibility requirements for the retirement benefits
in the preceding paragraph, the payment of such retirement benefits to your
surviving spouse or you will be made from the regular Pension Plan and a
Supplemental Pension Plan as appropriate. Payments will be subject to offset
by any benefits you may receive or will receive under any pension or similar
retirement plan from Frito-Lay.
6. Relocation Expense. The Company will reimburse you for all reasonable and
------------------
necessary expenses you incur in selling your residence and moving from
Plano, Texas to the Fort Worth, Texas, metropolitan area. The details of the
coverage are contained in the Company's relocation guide. It is further
provided that you have until ____________________ to exercise this benefit.
Payment of your lump sum relocation allowance (10% of annual salary grossed
up for income taxes) will be based upon your initial salary of $250,000.
<PAGE>
Mr. Ron Rittenmeyer
April 22, 1994
Page -3-
7. Automobile Allowance. The Company will provide you with an automobile
--------------------
allowance consistent with its policy for current grade E executives. This amount
is presently $1,200 per month. You are eligible to have the automobile of your
choice as long as it is suitable for business use.
8. Medical Coverage. Should you lose medical coverage under your present
----------------
employer's plan prior to your coverage under the Company's plan becoming
effective, the Company will reimburse you for any expenses you incur for
obtaining continuation of your present employer's plan under the COBRA
provisions.
9. Other Benefits. You will be eligible for all benefits and perquisites of
--------------
office, including a change in control agreement, available to senior officers of
the Company in accordance with the summary of total compensation -- Grade E
Schedule accompanying this letter.
This offer of employment is contingent upon your passing a physical examination,
which includes a drug screen.
In consideration of this compensation package, you agree to devote your full
time and effort to the Company, to perform in a capacity of an Executive Vice
President Merchandise Business Group and to perform to a standard suitable for
such position and compensation and to abide by all standards to which Company
employees are subject including those set forth in the Company Code of Ethics, a
copy of which is attached.
If the offer of employment set forth in this letter is acceptable to you, please
execute both originals and return one to me for our records.
Ron, I hope this is the beginning of a long and challenging career with
Burlington Northern. We all look forward to working with you.
Sincerely,
/s/JIM DAGNON
James B. Dagnon
Attachments
Accepted this 1st day of May, 1994.
/s/ RONALD A. RITTENMEYER
<PAGE>
EXHIBIT 10.4
[LETTERHEAD OF BURLINGTON NORTHERN RAILROAD APPEARS HERE]
April 18, 1994
PERSONAL AND CONFIDENTIAL
- - -------------------------
Mr. Greg Swienton
Rue Colonel Bourg #125
Brussels, Belgium 1140
Dear Greg:
This letter will confirm the agreement for your employment as Executive Vice
President Intermodal Business Group of Burlington Northern Railroad (the
"Company").
1. Employment and Term. The Company agrees to your employment, and you agree to
-------------------
act as its Executive Vice President Intermodal Business Group commencing
June 11, 1994 ("Date of Employment").
2. Basic Compensation. Commencing with your Date of Employment, your base
------------------
salary shall be $230,000 per annum or such rate as may be fixed from time to
time by the Board of Directors of the Company in connection with its annual
review of executive compensation.
3. Incentive Bonus. You will be paid an incentive bonus the minimum amount of
---------------
which will be equal to the designated percentage of the market rate of a
grade E for a level III Company performance for the year 1994. This amount
will be prorated based on your actual service during 1994 commencing with
your Date of Employment. This payment will be made in January 1995. You will
be a regular participant in the Senior Executive Performance Incentive
Compensation Plan commencing January 1, 1995, in accordance with the plan.
4. Restricted Stock. You will be granted an initial award under the Burlington
----------------
Northern Inc. Restricted Stock Incentive Plan of 2,800 shares effective on
your Date of Employment.
5. Stock Options. You will be granted an initial award under the Burlington
-------------
Northern Inc. Stock Option Incentive Plan of 11,700 Basic Options effective
on your Date of Employment.
<PAGE>
Mr. Greg Swienton
April 14, 1994
Page -2-
6. Stock Options, Restricted Stock, Disability and Other Benefits. You will
--------------------------------------------------------------
participate with other senior executives of the Company in plans from time
to time in effect for Stock Options, Limited Stock Appreciation Rights,
Restricted Stock, short-term and long-term disability benefits, change in
control protection and perquisites, including those available under the
employee benefit plans of the Company. See attachment.
7. Relocation Benefits. The Company will be responsible for any normal and
-------------------
reasonable costs associated with your relocation to the Fort Worth, Texas
area, not covered by your present employer, in accordance with our standard
policy for exempt employees. This benefit will include the relocation
allowance equal to $23,000 on a net after-tax basis.
8. Automobile Allowance. The Company will provide you with an automobile
--------------------
allowance consistent with its policy for current grade E executives. This
amount is presently $1,200 per month. You are eligible to have the
automobile of your choice as long as it is suitable for business use.
This Agreement is contingent upon your passing a physical examination, which
includes a drug screen.
In consideration of this compensation package, you agree to devote your full
time and effort to the Company, to perform in a capacity of an Executive Vice
President Intermodal Business Group and to perform to a standard suitable for
such position and compensation and to abide by all standards to which Company
employees are subject including those set forth in the Company Code of Ethics, a
copy of which is attached.
If this correctly sets forth our agreement, please sign the original and return
it to me, and keep the copy for your file.
Greg, we are looking forward to your joining the Burlington Northern team!
Sincerely,
BURLINGTON NORTHERN RAILROAD
By: /s/ James B. Dagnon
-------------------------------------------
James B. Dagnon
Executive Vice President Employee Relations
Accepted this 22nd day of April, 1994
/s/ Gregory T. Swienton
- - -----------------------------------------------
<PAGE>
[LETTERHEAD OF BURLINGTON NORTHERN RAILROAD APPEARS HERE]
June 11, 1994
PERSONAL & CONFIDENTIAL
- - -----------------------
Mr. Gregory T. Swienton
c/o 3700 Continental Plaza
777 Main Street
Fort Worth, Texas 76102-5384
Dear Greg:
This letter will confirm our discussions and will serve as a supplement to and
is hereby made a part of your employment offer and agreement dated April 18,
1994.
Paragraph 1 is replaced in its entirety with the following:
1. Employment and Term. The Company agrees to your employment, and you agree
-------------------
to act as its Executive Vice President Intermodal Business Group during
the period commencing June 11, 1994 (the "Employment Date") and ending
June 11, 1996 (the second anniversary of the Employment Date), unless
sooner terminated by death, disability or agreement of the parties. In the
event that your employment hereunder is terminated because of your death
or disability, or by your voluntary resignation, or is terminated by the
Company for your breach of this Agreement, the salary provided for in this
Agreement will be paid to and including the end of the month in which such
termination of employment occurs. If the Agreement is terminated by the
Company for any other reason, the Company will pay you on the date of
termination a sum of money equal to your then current monthly salary times
the number of months remaining until June 11, 1996, (the second
anniversary of the Employment Date).
<PAGE>
June 11, 1994
Page -2-
If you agree that this correctly sets forth our agreement, please sign the
original and return it to me, and keep the copy for your file.
Sincerely,
BURLINGTON NORTHERN RAILROAD COMPANY
By: /s/ James B. Dagnon
-----------------------------------
James B. Dagnon
Executive Vice President Employee Relations
Accepted and agreed to this 15th day of July, 1994
---- ----
/s/ Gregory T. Swienton
----------------------------------
Gregory T. Swienton
