<PAGE> 1
FORM 10-Q
----------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
MARCH 31, 1997
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 1-5667
CABOT CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 04-2271897
(State of Incorporation) (I.R.S. Employer Identification No.)
75 STATE STREET 02109-1806
BOSTON, MASSACHUSETTS (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (617) 345-0100
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, 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.
AS OF MARCH 31, 1997, THE COMPANY HAD 69,847,236 SHARES OF COMMON
STOCK, PAR VALUE $1 PER SHARE, OUTSTANDING.
-1-
<PAGE> 2
CABOT CORPORATION
INDEX
Part I. Financial Information Page No.
--------
Item 1. Financial Statements
Consolidated Statements of Income
Three Months Ended March 31, 1997 and 1996 3
Consolidated Statements of Income
Six Months Ended March 31, 1997 and 1996 4
Consolidated Balance Sheets
March 31, 1997 and September 30, 1996 5
Consolidated Statements of Cash Flows
Six Months Ended March 31, 1997 and 1996 7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 14
-2-
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1.
- ------
CABOT CORPORATION
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31, 1997 and 1996
(Dollars in thousands)
UNAUDITED
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Revenues:
Net sales and other operating revenues $431,964 $491,272
Interest and dividend income 1,613 2,254
-------- --------
Total revenues 433,577 493,526
-------- --------
Costs and expenses:
Cost of sales 305,627 345,298
Selling and administrative expenses 53,126 53,722
Research and technical service 22,518 17,302
Interest expense 10,590 11,213
Other charges, net 1,782 3,494
-------- --------
Total costs and expenses 393,643 431,029
-------- --------
Income before income taxes 39,934 62,497
Provision for income taxes (14,376) (23,124)
Equity in net income of affiliated companies 3,905 4,933
Minority interest (83) (1,389)
-------- --------
Net income 29,380 42,917
Dividends on preferred stock, net of tax
benefit of $522 and $475, respectively (817) (881)
-------- --------
Income applicable to primary common shares $ 28,563 $ 42,036
======== ========
Weighted average common shares outstanding (000):
Primary 70,949 72,799
Fully diluted (Note A) 76,998 78,937
Income per common share:
Primary $ 0.40 $ 0.58
======== ========
Fully diluted (Note A) $ 0.38 $ 0.54
======== ========
Dividends per common share $ 0.10 $ 0.09
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE> 4
CABOT CORPORATION
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
Six Months Ended March 31, 1997 and 1996
(Dollars in thousands)
UNAUDITED
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Revenues:
Net sales and other operating revenues $ 830,789 $ 934,303
Interest and dividend income 3,292 4,715
--------- ---------
Total revenues 834,081 939,018
--------- ---------
Costs and expenses:
Cost of sales 585,310 650,432
Selling and administrative expenses 106,786 100,353
Research and technical service 43,444 31,579
Interest expense 20,260 20,634
Other charges, net 3,603 8,766
--------- ---------
Total costs and expenses 759,403 811,764
--------- ---------
Income before income taxes 74,678 127,254
Provision for income taxes (26,884) (47,084)
Equity in net income of affiliated companies 7,879 8,656
Minority Interest (1,181) (2,558)
--------- ---------
Net income 54,492 86,268
Dividends on preferred stock, net of tax
benefit of $1,047 and $950, respectively (1,637) (1,764)
--------- ---------
Income applicable to primary common shares $ 52,855 $ 84,504
========= =========
Weighted average common shares outstanding (000):
Primary 71,464 73,861
Fully diluted (Note A) 77,513 80,050
Income per common share:
Primary $ 0.74 $ 1.14
========= =========
Fully diluted (Note A) $ 0.69 $ 1.06
========= =========
Dividends per common share $ 0.20 $ 0.18
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE> 5
CABOT CORPORATION
CONSOLIDATED BALANCE SHEETS
March 31, 1997 and September 30, 1996
(Dollars in thousands)
<TABLE>
ASSETS
<CAPTION>
March 31 September 30
1997 1996
(Unaudited)
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 48,680 $ 58,148
Accounts and notes receivable
(net of reserve for doubtful
accounts of $4,665 and $5,267) 309,376 363,763
Inventories:
Raw materials 71,303 71,061
Work in process 68,567 72,914
Finished goods 68,377 72,163
Other 42,696 44,292
----------- -----------
Total inventories 250,943 260,430
Prepaid expenses 23,353 17,408
Deferred income taxes 10,383 10,034
----------- -----------
Total current assets 642,735 709,783
----------- -----------
Investments:
Equity 81,559 79,372
Other 113,892 95,680
----------- -----------
Total investments 195,451 175,052
----------- -----------
Property, plant and equipment, at cost 1,744,671 1,712,045
Accumulated depreciation (812,115) (809,053)
----------- -----------
Net property, plant and equipment 932,556 902,992
----------- -----------
Other assets:
Intangible assets, net of amortization 40,547 42,735
Deferred income taxes 2,485 2,402
Other assets 24,272 24,617
----------- -----------
Total other assets 67,304 69,754
----------- -----------
Total assets $ 1,838,046 $ 1,857,581
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE> 6
CABOT CORPORATION
CONSOLIDATED BALANCE SHEETS
March 31, 1997 and September 30, 1996
(Dollars in thousands)
<TABLE>
LIABILITIES & STOCKHOLDERS' EQUITY
March 31 September 30
1997 1996
(Unaudited)
----------- ------------
<S> <C> <C>
Current liabilities:
Notes payable to banks $ 200,002 $ 233,779
Current portion of long-term debt 115,393 16,175
Accounts payable and accrued liabilities 218,547 250,749
U.S. and foreign income taxes payable 22,285 26,083
Deferred income taxes 949 918
----------- -----------
Total current liabilities 557,176 527,704
----------- -----------
Long-term debt 296,449 321,497
Deferred income taxes 91,382 88,320
Other liabilities 145,848 147,991
Commitments and contingencies (Note B)
Minority interest 25,767 27,138
Stockholders' Equity (Note C):
Preferred Stock:
Authorized: 2,000,000 shares of $1 par value
Series A Junior Participating Preferred Stock
Issued and outstanding: none
Series B ESOP Convertible Preferred Stock 7.75% Cumulative
Issued: 75,336 shares (aggregate redemption value
of $70,231 and $71,193) 75,336 75,336
Less cost of shares of preferred treasury stock (7,577) (6,565)
Common stock:
Authorized: 200,000,000 shares of $1 par value
Issued: 135,549,936 shares 135,550 135,550
Additional paid-in capital 24,219 23,618
Retained earnings 1,215,461 1,176,708
Less cost of common treasury stock
(including unearned amounts of $11,082 and $16,611) (690,761) (650,981)
Deferred employee benefits (63,419) (64,283)
Unrealized gain on marketable securities 33,388 29,874
Foreign currency translation adjustments (773) 25,674
----------- -----------
Total stockholders' equity 721,424 744,931
----------- -----------
Total liabilities and stockholders' equity $ 1,838,046 $ 1,857,581
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-6-
<PAGE> 7
CABOT CORPORATION
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended March 31, 1997 and 1996
(Dollars in thousands)
UNAUDITED
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 54,492 $ 86,268
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 53,214 47,683
Deferred tax provision 1,345 87
Equity in net income of affiliated companies,
net of dividends received (1,628) (2,831)
Other, net 4,084 1,342
Changes in assets and liabilities, net of consolidation
affiliates
(Increase)/decrease in accounts receivable (39,017) (30,185)
Decrease/(increase) in inventory 6,892 (16,590)
Decrease in accounts payable and accruals (28,180) (20,940)
(Increase)/decrease in prepayments and intangible assets (5,936) 652
Decrease in income taxes payable (2,321) (33,855)
Other, net (1,196) (3,828)
--------- ---------
Cash provided by operating activities 41,749 27,803
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to plant, property and equipment (101,461) (77,747)
Proceeds from sale of business 35,000
Investments and acquisitions (16,347) (49,315)
Cash from consolidation of equity affiliates 9,306
Other, net 409 3,009
--------- ---------
Cash used by investing activities (82,399) (114,747)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 90,000 8,759
Repayments of long-term debt (13,893) (11,637)
Increase in short-term debt 15,800 146,962
Purchases of treasury stock (47,628) (96,446)
Sales and issuances of treasury stock 2,737 6,932
Cash dividends paid to stockholders (15,739) (16,601)
--------- ---------
Cash provided by financing activities 31,277 37,969
--------- ---------
Effects of exchange rate changes on cash (95) (839)
--------- ---------
Decrease in cash and cash equivalents (9,468) (49,814)
Cash and cash equivalents at beginning of period 58,148 90,792
--------- ---------
Cash and cash equivalents at end of period $ 48,680 $ 40,978
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-7-
<PAGE> 8
CABOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1997
A. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Cabot
Corporation and majority-owned and controlled domestic and foreign
subsidiaries. Investments in majority-owned affiliates where control does
not exist and investments in 20 percent to 50 percent-owned affiliates are
accounted for on the equity method. Intercompany transactions have been
eliminated.
The financial statements have been prepared in accordance with the
requirements of Form 10-Q and consequently do not include all disclosures
required by Form 10-K. Additional information may be obtained by referring
to the Company's Form 10-K for the year ended September 30, 1996.
The financial information submitted herewith is unaudited and reflects all
adjustments which are, in the opinion of management, necessary to provide a
fair statement of the results for the interim periods ended March 31, 1997
and 1996. All such adjustments are of a normal recurring nature. The
results for interim periods are not necessarily indicative of the results
to be expected for the fiscal year.
Earnings Per Share
The computation of fully diluted earnings per share considers the
conversion of the Company's Series B ESOP Convertible Preferred Stock held
by the Company's Employee Stock Ownership Plan, and also includes the
potentially dilutive effects of the Company's Equity Incentive Plan adopted
in 1989 and the 1996 Equity Incentive Plan.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, Earnings per Share (SFAS 128)
which is effective for periods ending after December 15, 1997, including
interim periods. This statement attempts to simplify current standards used
in the United States for computing earnings per share and make them more
comparable with international standards.
SFAS 128 replaces APB Opinion 15 and related interpretations (APB 15). SFAS
128 simplifies the computation of EPS by replacing the presentation of
primary earnings per share with a presentation of basic EPS. Basic EPS
includes no dilution and is computed by dividing income available to common
stockholders by the weighted-average number of common shares outstanding
for the period. Diluted EPS reflects the potential dilution of securities
that could share in the earnings of an entity, similar to fully diluted EPS
under APB 15. The company has not calculated the impact of the new standard
and does not expect the effects to be material.
Reclassification
Certain amounts in fiscal 1996 have been reclassified to conform to the
fiscal 1997 presentation.
B. COMMITMENTS AND CONTINGENCIES
The Company has various lawsuits, claims and contingent liabilities. In the
opinion of the Company, although final disposition of all of its suits and
claims may impact the Company's financial statements in a particular
period, they should not, in the aggregate, have a material adverse effect
on the Company's financial position.
-8-
<PAGE> 9
CABOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
March 31, 1997
UNAUDITED
C. STOCKHOLDERS' EQUITY
<TABLE>
The following table summarizes the changes in stockholders' equity for the
six months ended March 31, 1997.
(Dollars in thousands)
<CAPTION>
Preferred Stock Preferred Common Stock
--------------- Treasury Stock ------------ Additional
Shares -------------- Shares Paid-in Retained
Issued Value Shares Cost Issued Value Capital Earnings
------ ----- ------ ---- ------ ----- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1996 75,336 $75,336 5,744 $(6,565) 135,549,936 $135,550 $23,618 $1,176,708
Net income 54,492
Common stock dividends paid (14,102)
Issuance of treasury stock under
employee compensation plans (448)
Purchase of treasury stock -
common
Purchase of treasury stock -
preferred 433 (1,012)
Sale of treasury stock to
Cabot Retirement Incentive
Savings Plan 1,049
Preferred stock dividends paid
to Employee Stock Ownership Plan,
net of tax (1,637)
Principal payment by Employee
Stock Ownership Plan under
guaranteed loan
Amortization of unearned
compensation
Unrealized gain, net of
deferred tax
Foreign currency translation
adjustments
------ ------- ----- ------- ----------- -------- ------- ----------
Balance at March 31, 1997 75,336 $75,336 6,177 (7,577) 135,549,936 $135,550 $24,219 $1,215,461
====== ======= ===== ======= =========== ======== ======= ==========
</TABLE>
<TABLE>
<CAPTION>
Common Unrealized Foreign
Treasury Stock Deferred Gain/(Loss) Currency Total
-------------- Unearned Employee Marketable Translation Stockholders'
Shares Cost Compensation Benefits Securities Adjustments Equity
------ ---- ------------ -------- ---------- ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1996 63,960,725 $(634,370) $(16,611) $(64,283) $29,874 $25,674 $744,931
Net income 54,492
Common stock dividends paid (14,102)
Issuance of treasury stock under
employee compensation plans (61,082) 566 829 947
Purchase of treasury stock -
common 1,875,941 (46,616) (46,616)
Purchase of treasury stock -
preferred (1,012)
Sale of treasury stock to
Cabot Retirement Incentive
Savings Plan (72,884) 741 1,790
Preferred stock dividends paid
to Employee Stock Ownership Plan,
net of tax (1,637)
Principal payment by Employee
Stock Ownership Plan under
guaranteed loan 864 864
Amortization of unearned
compensation 4,700 4,700
Unrealized gain, net of
deferred tax 3,514 3,514
Foreign currency translation
adjustments (26,447) (26,447)
---------- --------- -------- -------- ------- ------- --------
Balance at March 31, 1997 65,702,700 $(679,679) $(11,082) $(63,419) $33,388 $ (773) $721,424
========== ========= ======== ======== ======= ======= ========
</TABLE>
-9-
<PAGE> 10
CABOT CORPORATION
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
I. RESULTS OF OPERATIONS
Sales and operating profit by industry segment are shown in the accompanying
table on page 13.
THREE MONTHS ENDED MARCH 31, 1997 VERSUS
THREE MONTHS ENDED MARCH 31, 1996
Net income for the second quarter of fiscal year 1997 was $29.4 million ($0.38
per common share, fully diluted), compared to $40.7 million ($0.51 per common
share, fully diluted), excluding divested businesses, in the same quarter a year
ago. Net sales and other operating revenues increased 3% to $432.0 million from
last year's $420.5 million on the same basis. Operating profit was $57.6 million
for the quarter compared to $77.8 million in the same quarter a year ago. To
form a comparative basis, net income, net sales and operating profit presented
above for 1996 is exclusive of the results of TUCO INC., the Company's former
coal handling subsidiary, which was divested in September 1996. For the three
months ended March 31, 1996, TUCO revenues and operating profit were $70.8
million and $3.5 million, respectively ($0.03 per fully diluted common share).
The Company's net income, as reported in 1996, was $42.9 million ($0.54 per
common share, fully diluted).
In the Specialty Chemicals and Materials Group, sales for the three month period
ended March 31, 1997 declined 3% to $359.2 million from $370.3 million last
year, on 1% greater volumes. The decline in sales was primarily due to the
effect of price declines in the Company's European and Pacific Asia carbon black
markets and reductions in volume in the Company's North American carbon black
and the tantalum business. Lower carbon black prices in Europe and Asia were
marginally offset by favorable prices in North America and South America.
The Group reported operating profit of $48.8 million for the second quarter,
compared to $72.4 million for the second quarter of 1996. A significant portion
of the decrease in operating profit was primarily the result of a decline in the
financial performance of the Company's European carbon black business. Carbon
black selling prices were 5% lower year-to-year as feedstock costs were higher
year-to-year due to a stronger US dollar. Pacific Asia also experienced price
reductions and the effect of currency fluctuations on feedstock costs. In North
America, feedstock costs compared favorably to a year ago and prices were higher
but were offset by an 8% reduction in volume.
The Company's Performance Materials Division (CPM), which manufactures high
grade tantalum products, experienced a 25% volume decline in the second quarter
compared to the same quarter a year ago. CPM continued to experience unfavorable
volume declines primarily from the lingering effects of a 1996 U.S. electronics
market slowdown and related inventory adjustments by it's customers.
The Cab-O-Sil fumed silica business achieved higher revenues for the second
quarter of 1997 versus the second quarter of 1996 primarily due to a 12%
increase in volumes. The earnings effect of the revenue increase was offset by
additional spending on research and development.
Research and development spending increased $5.2 million in the second quarter
from the second quarter a year ago. The Company's continued pursuit of several
new business opportunities and market development initiatives has shown results.
-10-
<PAGE> 11
CABOT CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations
THREE MONTHS ENDED MARCH 31, 1997 VERSUS
THREE MONTHS ENDED MARCH 31, 1996 (CONTINUED)
In the Energy Group, sales increased 45% from $50.2 million to $72.8 million.
Operating profit was $8.8 million compared with $5.4 million in the second
quarter of 1996. As stated here, performance in 1996 is exclusive of the coal
handling business's results. The improvement in operating revenue and profits is
mainly due to increased LNG supply, resulting in increased firm commitments and
allowed the sale of interruptible amounts at higher prices compared with last
year.
SIX MONTHS ENDED MARCH 31, 1997 VERSUS
SIX MONTHS ENDED MARCH 31, 1996
For the six months ended March 31, 1997, net income was $54.5 million ($0.69 per
common share, fully diluted) compared to net income, of $80.2 million ($1.01 per
common share, fully diluted), exclusive of divested businesses, in the same
period a year ago. Net sales increased 4% to $830.8 million from $797.8 million
last year. To form a comparative basis, results for the six months ended March
31, 1996, as stated above, exclude $136.5 million of revenues and $6.4 million
of operating profit related to TUCO and a $3.3 gain associated with the
reduction of the Company's ownership position in the Trinidad joint venture. The
Company's net income, as reported in 1996, was $86.3 million ($1.06 per common
share, fully diluted).
In the Specialty Chemicals and Materials Group, sales for the six month period
ended March 31, 1997 decreased 2% to $699.4 million from $714.3 million in the
same period a year ago. The reduction in sales was primarily attributable to a
reduction in carbon black selling prices in Europe and Pacific Asia. Operating
profit for the Group decreased 34% to $94.8 million from $144.1 million last
year. Price concessions made during the year and higher year-to-year feedstock
costs (in local currency terms), which the Company did not recover from its
customers, resulted in lower margins in our European and Pacific carbon black
businesses. Higher year-to-year feedstock costs also affected North America in
the first quarter. North America carbon black volume declines in the second
quarter were only partially offset by higher selling prices. Additionally, the
Company's tantalum business experienced 21% lower volumes compared to the first
six months of fiscal 1996.
New product revenues accounted for 8% of Specialty Chemicals and Materials Group
revenues during the second quarter. A new product as referred to here is a
product first sold in commercial quantities within the last five years. As a
group these products are not expected to make a profit contribution in 1997,
however, it is expected that these products will begin to make a significant
profit contribution during fiscal 1998. As expected, increased research and
development and marketing costs associated with new product development, new
business and market development initiatives accounted for approximately $14
million of the year-to-year operating profit decrease.
In the Energy Group, sales increased 57% to $131.4 million from $83.5 million
and operating profit grew 75% to $13.3 million from $7.6 million in the same
period a year ago. Results in 1996 were exclusive of $136.5 million and $6.4
million of revenue and operating profit respectively, and a $3.3 million gain on
the sale of the Company's ownership interest in the Trinidad joint venture.
Operating results improved largely due to higher gas prices and greater
availability of liquefied natural gas.
The Company's effective tax rate was 36% compared to 37% for the same period a
year ago.
-11-
<PAGE> 12
CABOT CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
II. CASH FLOWS AND LIQUIDITY
During the first six months of the year the Company's operations provided $41.7
million of cash compared to $27.8 million last year. The change year-to-year is
primarily due to timing of tax payments and a decrease in inventory. Effective
September 30, 1996, the Company sold its TUCO INC. subsidiary for $77 million.
Accordingly, during the first quarter of fiscal 1997, the Company received $35
million in cash, which included $8 million of working capital adjustments, and
$50 million in the form of a debt repayment on the Company's behalf from the
buyer.
Capital spending for the first six months of the year was $117.8 million. The
Company plans to make approximately $210 million of capital expenditures during
the current fiscal year. The major components of the 1997 capital program
include new carbon black capacity to support the contracts with U.S. tire
manufacturers, Clean Air Act compliance, differentiated product manufacturing
capabilities, new business expansion spending and normal plant maintenance
spending. In light of softened demand in certain markets the Company will
proceed cautiously with planned expansions and may delay one or more projects
depending on how market forecasts develop over the balance of the fiscal year.
During the first six months of the year, the Company purchased approximately
1,876,000 shares of it's common stock. These purchases were primarily funded
with the proceeds from the sale of its TUCO INC. subsidiary and short-term
borrowings. At March 31, 1997, approximately 1,400,000 shares remained under the
May 1996 repurchase authorization for 4,000,000 shares. On May 9, 1997, the
Company's Board of Directors authorized the repurchase of 4,000,000 shares of
it's common stock and revoked the May 1996 repurchase authorization with
respect to shares not already purchased pursuant to such authorization.
The Company's ratio of total debt (including short-term debt net of cash) to
capital increased from 40% at September 30, 1996 to 44% at the end of the second
quarter.
On February 6, 1997, the Company issued $90 million of medium-term notes
maturing from 2004 to 2011 with a weighted average interest rate of
approximately 7%. The proceeds from the issuance were used to repay short-term
debt.
During the period, the Company renegotiated its line of credit agreement. The
facility was increased to $300 million from $250 million and was extended to
January 3, 2002. Management expects cash from operations and present financing
arrangements, including the Company's unused line of credit of $300 million, to
be sufficient to meet the Company's cash requirements for the foreseeable
future.
-12-
<PAGE> 13
CABOT CORPORATION
<TABLE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
(Dollars in millions, except per share amounts)
<CAPTION>
UNAUDITED
Three Months Ended Six Months Ended
------------------ ----------------
3/31/97 3/31/96 3/31/97 3/31/96
------- ------- ------- -------
<S> <C> <C> <C> <C>
Industry Segment Data
- ---------------------
Sales:
Specialty Chemicals and Materials $ 359.2 $370.3 $ 699.4 $714.3
Energy 72.8 121.0 131.4 220.0
------- ------ ------- ------
Net sales $ 432.0 $491.3 $ 830.8 $934.3
======= ====== ======= ======
Operating profit:
Specialty Chemicals and Materials $ 48.8 $ 72.4 $ 94.8 $144.1
Energy 8.8 8.9 13.3 17.3
------- ------ ------- ------
Total operating profit 57.6 81.3 108.1 161.4
Interest expense (10.6) (11.2) (20.3) (20.6)
General corporate/other expenses (7.0) (7.6) (13.1) (13.5)
------- ------ ------- ------
Income before income taxes 40.0 62.5 74.7 127.3
Provision for income taxes (14.4) (23.1) (26.9) (47.1)
Equity in net income of affiliated companies 3.9 4.9 7.9 8.7
Minority interest (0.1) (1.4) (1.2) (2.6)
------- ------ ------- ------
Net income 29.4 42.9 54.5 86.3
Dividends on preferred stock (0.8) (0.9) (1.6) (1.8)
------- ------ ------- ------
Income applicable to primary common shares $ 28.6 $ 42.0 $ 52.9 $ 84.5
======= ====== ======= ======
Income per common share:
Primary $ 0.40 $ 0.58 $ 0.74 $ 1.14
======= ====== ======= ======
Fully diluted $ 0.38 $ 0.54 $ 0.69 $ 1.06
======= ====== ======= ======
</TABLE>
-13-
<PAGE> 14
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
The Annual Meeting of Stockholders of Cabot Corporation was held on March 13,
1997. An election of Directors was held at which Ms. Lydia W. Thomas and Messrs.
Arnold S. Hiatt, David V. Ragone, Morris Tanenbaum and Mark S. Wrighton were
nominated and elected to the class of Directors whose terms expire in 2000. The
following votes were cast for or withheld with respect to each of the nominees:
Director In Favor Of Withheld
-------- ----------- --------
Arnold S. Hiatt 68,379,533 1,153,491
David V. Ragone 68,482,994 1,050,030
Morris Tanenbaum 68,583,061 949,963
Lydia W. Thomas 68,403,572 1,129,452
Mark S. Wrighton 68,381,098 1,151,926
Other Directors whose terms of office as Directors continued after the meeting
are:
Director Term of Office Expires
-------- ----------------------
Samuel W. Bodman 1999
Jane C. Bradley 1999
Kennett F. Burnes 1998
John G.L. Cabot 1998
Arthur L. Goldstein 1999
Robert P. Henderson 1998
John H. McArthur 1999
John F. O'Brien 1998
Charles P. Siess, Jr. 1998
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits
--------
The exhibit numbers in the following list correspond to the number assigned
to such exhibits in the Exhibit Table of Item 601 of Regulation S-K:
Exhibit
Number Description
------ -----------
10 Credit Agreement, dated as of January 3, 1997,
among Cabot Corporation, the Banks listed therein
and Morgan Guaranty Trust Company of New York,
as Agent, filed herewith.
11 Statement Regarding Computation of Per Share Earnings,
filed herewith.
12 Statement Regarding Computation of Ratio of Earnings to
Fixed Charges, filed herewith.
27 Financial Data Schedule, filed herewith. (Not
included with printed copy of the Form 10-Q.)
-14-
<PAGE> 15
PART II. OTHER INFORMATION (CONTINUED)
Item 6. Exhibits and Reports on Form 8-K (continued)
- -----------------------------------------------------
(b) Reports on Form 8-K
-------------------
No report on Form 8-K was filed by the Company during the three months
ended March 31, 1997.
-15-
<PAGE> 16
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.
CABOT CORPORATION
Date: May 14, 1997 /s/ Robert L. Culver
--------------------
Robert L. Culver
Executive Vice President and
Chief Financial Officer
Date: May 14, 1997 /s/ William T. Anderson
----------------------
William T. Anderson
Acting Controller
(Chief Accounting Officer)
-16-
<PAGE> 1
[CONFORMED COPY]
$300,000,000
CREDIT AGREEMENT
dated as of
January 3, 1997
among
Cabot Corporation,
The Banks Listed Herein
and
Morgan Guaranty Trust Company of New York,
as Agent
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS* Page
----
ARTICLE I
DEFINITIONS
<S> <C> <C>
SECTION 1.01. Definitions ........................................... 1
SECTION 1.02. Accounting Terms and Determinations ................... 14
SECTION 1.03. Types of Borrowings ................................... 15
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend During Revolving Credit Period..... 15
SECTION 2.02. Notice of Committed Borrowings ........................ 15
SECTION 2.03. Money Market Borrowings ............................... 16
SECTION 2.04. Notice to Banks; Funding of Loans ..................... 20
SECTION 2.05. Notes ................................................. 21
SECTION 2.06. Maturity of Loans ..................................... 22
SECTION 2.07. Interest Rates ........................................ 22
SECTION 2.08. Fees .................................................. 26
SECTION 2.09. Optional Termination or Reduction of Commitments ...... 27
SECTION 2.10. Mandatory Termination of Commitments .................. 27
SECTION 2.11. Optional Prepayments .................................. 27
SECTION 2.12. General Provisions as to Payments ..................... 28
SECTION 2.13. Funding Losses ........................................ 29
SECTION 2.14. Computation of Interest and Fees ...................... 29
SECTION 2.15. Taxes ................................................. 30
SECTION 2.16. Regulation D Compensation ............................. 32
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness ......................................... 33
SECTION 3.02. Borrowings ............................................ 34
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power ......................... 35
</TABLE>
- --------
*The Table of Contents is not part of this Agreement.
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 4.02. Corporate and Governmental Authorization;
No Contravention .................................... 35
SECTION 4.03. Binding Effect ........................................ 35
SECTION 4.04. Financial Information ................................. 35
SECTION 4.05. Litigation ............................................ 36
SECTION 4.06. Compliance with ERISA ................................. 36
SECTION 4.07. Environmental Matters ................................. 36
SECTION 4.08. Taxes ................................................. 37
SECTION 4.09. Subsidiaries .......................................... 37
SECTION 4.10. Not an Investment Company ............................. 38
SECTION 4.11. Full Disclosure ....................................... 38
ARTICLE V
COVENANTS
SECTION 5.01. Information ........................................... 38
SECTION 5.02. Payment of Obligations ................................ 41
SECTION 5.03. Maintenance of Property; Insurance .................... 42
SECTION 5.04. Conduct of Business and Maintenance of Existence ...... 42
SECTION 5.05. Compliance with Laws .................................. 43
SECTION 5.06. Inspection of Property, Books and Records ............. 43
SECTION 5.07. Debt .................................................. 43
SECTION 5.08. Operating Cash Flow ................................... 44
SECTION 5.09. Investments ........................................... 44
SECTION 5.10. Negative Pledge ....................................... 44
SECTION 5.11. Consolidations and Mergers ............................ 46
SECTION 5.12. Sales of Assets ....................................... 46
SECTION 5.13. Use of Proceeds ....................................... 46
SECTION 5.14. Transactions with Affiliates .......................... 47
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default ..................................... 47
SECTION 6.02. Notice of Default ..................................... 50
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization ......................... 50
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 7.02. Agent and Affiliates .................................. 50
SECTION 7.03. Action by Agent ....................................... 50
SECTION 7.04. Consultation with Experts ............................. 50
SECTION 7.05. Liability of Agent .................................... 50
SECTION 7.06. Indemnification ....................................... 51
SECTION 7.07. Credit Decision ....................................... 51
SECTION 7.08. Successor Agent ....................................... 51
SECTION 7.09. Agent's Fee ........................................... 52
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate
or Unfair ........................................... 52
SECTION 8.02. Illegality ............................................ 53
SECTION 8.03. Increased Cost and Reduced Return ..................... 53
SECTION 8.04. Base Rate Loans Substituted for Affected
Fixed Rate Loans .................................... 55
SECTION 8.05. Substitution of Bank .................................. 56
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices ............................................... 56
SECTION 9.02. No Waivers ............................................ 56
SECTION 9.03. Expenses; Documentary Taxes; Indemnification .......... 57
SECTION 9.04. Sharing of Set-Offs ................................... 57
SECTION 9.05. Amendments and Waivers ................................ 58
SECTION 9.06. Successors and Assigns ................................ 58
SECTION 9.07. Collateral ............................................ 60
SECTION 9.08. Governing Law; Submission to Jurisdiction ............. 60
SECTION 9.09. Counterparts; Integration ............................. 60
SECTION 9.10. WAIVER OF JURY TRIAL .................................. 60
</TABLE>
Exhibit A - Note
Exhibit B - Money Market Quote Request
Exhibit C - Invitation for Money Market Quotes
Exhibit D - Money Market Quote
iii
<PAGE> 5
Exhibit E - Opinion of General Counsel of the Borrower
Exhibit F - Opinion of Special Counsel for the Agent
Exhibit G - Assignment and Assumption Agreement
iv
<PAGE> 6
CREDIT AGREEMENT
AGREEMENT dated as of January 3, 1997 among CABOT CORPORATION, the
BANKS listed on the signature pages hereof and MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein, have
the following meanings:
"Absolute Rate Auction" means a solicitation of Money Market Quotes
setting forth Money Market Absolute Rates pursuant to Section 2.03.
"Adjusted CD Rate" has the meaning set forth in Section 2.07(b).
"Administrative Questionnaire" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Agent and submitted to
the Agent (with a copy to the Borrower) duly completed by such Bank.
"Affiliate" means (i) any Person that directly, or indirectly through
one or more intermediaries, controls the Borrower (a "Controlling Person") or
(ii) any Person (other than the Borrower, a Consolidated Subsidiary or an Equity
Affiliate) which is controlled by or is under common control with a Controlling
Person. As used herein, the term "control" means possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Agent" means Morgan Guaranty Trust Company of New York in its capacity
as agent for the Banks hereunder, and its permitted successors in such capacity.
"Applicable Lending Office" means, with respect to any Bank, (i) in the
case of its Domestic Loans, its Domestic Lending Office, (ii) in the case of its
Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case of its
Money Market Loans, its Money Market Lending Office.
<PAGE> 7
"Assessment Rate" has the meaning set forth in Section 2.07(b).
"Assignee" has the meaning set forth in Section 9.06(c).
"Bank" means each bank listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to Section 9.06(c), and their respective
successors.
"Base Rate" means, for any day, a rate per annum equal to the higher of
(i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal
Funds Rate for such day.
"Base Rate Borrowing" has the meaning set forth in Section 1.03.
"Base Rate Loan" means a Committed Loan to be made by a Bank as a Base
Rate Loan in accordance with the applicable Notice of Committed Borrowing or
pursuant to Article VIII.
"Borrower" means Cabot Corporation, a Delaware corporation, and its
successors.
"Borrower's 1996 Form 10-K" means the Borrower's annual report on Form
10-K for its 1996 fiscal year, as filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934.
"Borrowing" has the meaning set forth in Section 1.03.
"CD Base Rate" has the meaning set forth in Section 2.07(b).
"CD Borrowing" has the meaning set forth in Section 1.03.
"CD Loan" means a Committed Loan to be made by a Bank as a CD Loan in
accordance with the applicable Notice of Committed Borrowing.
2
<PAGE> 8
"CD Margin" has the meaning set forth in Section 2.07(b).
"CD Reference Banks" means The First National Bank of Boston, Citibank,
N.A. and Morgan Guaranty Trust Company of New York, or any successor CD
Reference Bank appointed as such pursuant to Section 2.07(h).
"Committed Borrowing" has the meaning set forth in Section 1.03.
"Commitment" means, with respect to each Bank, the amount set forth
opposite the name of such Bank on the signature pages hereof, as such amount may
be reduced from time to time pursuant to Sections 2.09 and 2.10.
"Committed Loan" means a loan made by a Bank pursuant to Section 2.01.
"Consolidated Debt" means at any date the Debt of the Borrower and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which are consolidated with those of the Borrower in its
consolidated financial statements prepared as of such date.
"Consolidated Tangible Net Worth" means at any date (i) the
consolidated stockholders' equity of the Borrower as of such date, calculated
excluding the effect of any foreign currency translation adjustments after
September 30, 1996, minus (ii) to the extent reflected in determining such
consolidated stockholders' equity at such date, the amount of consolidated
Intangible Assets of the Borrower and its Consolidated Subsidiaries booked for
the first time after September 30, 1996.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, promissory notes or other similar
instruments, (iii) all obligations of such Person to pay the deferred purchase
price of property or services, except trade accounts payable arising in the
ordinary course of business, (iv) all obligations of such Person as lessee
3
<PAGE> 9
which are capitalized in accordance with generally accepted accounting
principles, (v) all Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person, and (vi) all Debt of
others Guaranteed by such Person.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City or Boston, Massachusetts
are authorized by law to close.
"Domestic Lending Office" means, as to each Bank, its office located at
its address set forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to the Borrower and the Agent; provided that any Bank may so designate
separate Domestic Lending Offices for its Base Rate Loans, on the one hand, and
its CD Loans, on the other hand, in which case all references herein to the
Domestic Lending Office of such Bank shall be deemed to refer to either or both
of such offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate Loans or both.
"Domestic Reserve Percentage" has the meaning set forth in Section
2.07(b).
"Effective Date" means the date this Agreement becomes effective in
accordance with Section 3.01.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws (including case law), regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements or other governmental restrictions relating to
the environment or to emissions, discharges or releases of pollutants,
contaminants, Hazardous Substances or wastes into the environment
4
<PAGE> 10
including, without limitation, ambient air, surface water, ground water, or
land, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants,
Hazardous Substances or wastes or the clean-up or other remediation thereof.
"Equity Affiliate" means at any date any corporation or other entity
(which may be a Subsidiary but not a Consolidated Subsidiary) of which
securities or other ownership interests are at the time directly or indirectly
owned by the Borrower and accounted for under the equity method of accounting.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means the Borrower and all members of a controlled group
of corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414 of the Internal Revenue Code.
"Euro-Dollar Borrowing" has the meaning set forth in Section 1.03.
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its office, branch
or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Borrower and the Agent.
"Euro-Dollar Loan" means a Committed Loan to be made by a Bank as a
Euro-Dollar Loan in accordance with the applicable Notice of Committed
Borrowing.
"Euro-Dollar Margin" has the meaning set forth in Section 2.07(c).
5
<PAGE> 11
"Euro-Dollar Reference Banks" means the principal London offices of The
First National Bank of Boston, Citibank, N.A. and Morgan Guaranty Trust Company
of New York, or any successor Euro-Dollar Reference Bank appointed as such
pursuant to Section 2.07(h).
"Euro-Dollar Reserve Percentage" means for any day for any Bank that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the effective reserve requirement for such Bank as
determined in good faith by such Bank in respect of "Eurocurrency liabilities"
(or in respect of any other category of liabilities which includes deposits by
reference to which the interest rate on Euro-Dollar Loans is determined or any
category of extensions of credit or other assets which includes loans by a
non-United States office of any Bank to United States residents).
"Event of Default" has the meaning set forth in Section 6.01.
"Existing Credit Agreement" means the Credit Agreement dated as of
January 13, 1994, as amended, among Cabot Corporation, the banks listed therein
and Morgan Guaranty Trust Company of New York, as Agent.
"Facility Fee Rate" means (i) .075 of 1% per annum for any day on which
Investment Level I Status exists, (ii) .08 of 1% per annum for any day on which
Investment Level II Status exists, (iii) .10 of 1% per annum for any day on
which Investment Level III Status exists, (iv) .125 of 1% per annum for any day
on which Investment Level IV Status exists, and (v) .175 of 1% per annum for any
day on which Investment Level V Status exists.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate
6
<PAGE> 12
on such transactions on the next preceding Domestic Business Day as so published
on the next succeeding Domestic Business Day, and (ii) if no such rate is so
published on such next succeeding Domestic Business Day, the Federal Funds Rate
for such day shall be the average rate quoted to Morgan Guaranty Trust Company
of New York on such day on such transactions as determined by the Agent.
"Fixed Rate Borrowing" has the meaning set forth in Section 1.03.
"Fixed Rate Loans" means CD Loans or Euro-Dollar Loans or Money Market
Loans (excluding Money Market LIBOR Loans bearing interest at the Base Rate
pursuant to Section 8.01 and, except as provided in Section 2.02, CD Loans
bearing interest at the Base Rate pursuant to Section 2.07(b)) or any
combination of the foregoing.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt (whether arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to take-or-pay, or
to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Debt of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part), provided that the term Guarantee shall not include (v)
obligations to purchase assets as a part of the purchase of businesses or
product lines, (w) endorsements for collection or deposit in the ordinary course
of business, (x) take-or-pay contracts entered into for the business purposes of
the Borrower or any of its Consolidated Subsidiaries or Equity Affiliates and
not for the purpose of being assigned to an obligee of another Person's Debt,
(y) letters or other undertakings which state that the Borrower or a
Consolidated Subsidiary will maintain its ownership of another Person but which
do not include any obligation related to the financial condition of such other
Person and (z) project completion assurances given in connection with projects
undertaken by the Borrower or any of its Consolidated Subsidiaries or
7
<PAGE> 13
Equity Affiliates in furtherance of their businesses. The term "Guarantee" used
as a verb has a corresponding meaning.
"Hazardous Substances" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives, by-products
and other hydrocarbons, or any substance having any constituent elements
displaying any of the foregoing characteristics.
"Intangible Assets" means the amount of (i) all write-ups of assets
(other than write-ups of assets of a going concern business made within twelve
months after the acquisition of such business); (ii) all Investments in Persons
other than (x) Consolidated Subsidiaries and (y) Equity Affiliates (A) in which
the Borrower directly or indirectly owns equity securities or other comparable
ownership interests of not less than 30% and (B) which are engaged in the same
general business as the Borrower or any of its Subsidiaries or engaged in a
business incidental or related thereto; and (iii) all unamortized debt discount
and expense, unamortized deferred charges, goodwill, patents, trademarks,
service marks, trade names, anticipated future benefit of tax loss
carry-forwards, copyrights, organization or developmental expenses and other
assets treated as intangible assets under generally accepted accounting
principles.
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such Borrowing and ending one,
two, three or six months thereafter, as the Borrower may elect in the applicable
Notice of Borrowing; provided that:
(a) any Interest Period which would otherwise end on a day which is not
a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
8
<PAGE> 14
Period) shall end on the last Euro-Dollar Business Day of a calendar month;
and
(c) any Interest Period which would otherwise end after the date
determined pursuant to clause (y) of the definition of Termination Date shall
end on the date so determined.
(2) with respect to each CD Borrowing, the period commencing on the date of such
Borrowing and ending 30, 60, 90 or 180 days thereafter, as the Borrower may
elect in the applicable Notice of Borrowing; provided that:
(a) any Interest Period which would otherwise end on a day which is not
a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the date
determined pursuant to clause (y) of the definition of Termination Date shall
end on the date so determined.
(3) with respect to each Base Rate Borrowing, the period commencing on the date
of such Borrowing and ending 30 days thereafter; provided that:
(a) any Interest Period which would otherwise end on a day which is not
a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the date
determined pursuant to clause (y) of the definition of Termination Date shall
end on the date so determined.
(4) with respect to each Money Market LIBOR Borrowing, the period commencing on
the date of such Borrowing and ending such whole number of months thereafter
(but not less than one month) as the Borrower may elect in accordance with
Section 2.03; provided that:
(a) any Interest Period which would otherwise end on a day which is not
a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business
9
<PAGE> 15
Day unless such Euro-Dollar Business Day falls in another calendar month,
in which case such Interest Period shall end on the next preceding
Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clause (c) below, end on the last Euro-Dollar Business Day
of a calendar month; and
(c) any Interest Period which would otherwise end after the date
determined pursuant to clause (y) of the definition of Termination Date shall
end on the date so determined.
(5) with respect to each Money Market Absolute Rate Borrowing, the period
commencing on the date of such Borrowing and ending such number of days
thereafter (but not less than 30 days) as the Borrower may elect in accordance
with Section 2.03; provided that:
(a) any Interest Period which would otherwise end on a day which is not
a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the date
determined pursuant to clause (y) of the definition of Termination Date shall
end on the date so determined.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Investment" means any investment in any Person, whether by means of
share purchase, capital contribution, loan, demand or time deposit or otherwise.
"Investment Level I Status" exists at any date if, at such date, (x)
the Borrower's outstanding senior unsecured long term debt securities are (i)
rated A or better by S&P or (ii) rated A2 or better by Moody's.
10
<PAGE> 16
"Investment Level II Status" exists at any date if, at such date, (x)
the Borrower's outstanding senior unsecured long-term debt securities are (i)
rated A- or better by S&P or (ii) rated A3 or better by Moody's and (y)
Investment Level I Status does not exist.
"Investment Level III Status" exists at any date if, at such date, (x)
the Borrower's outstanding senior unsecured long-term debt securities are (i)
rated BBB+ or better by S&P or (ii) rated Baa1 or better by Moody's and (y)
neither Investment Level I Status nor Investment Level II Status exists.
"Investment Level IV Status" exists at any date, if at such date (x)
the Borrower's outstanding senior unsecured long-term debt securities are (i)
rated BBB (without a minus sign) or better by S&P or (ii) rated Baa2 or better
by Moody's and (y) none of Investment Level I Status, Investment Level II Status
and Investment Level III Status exists.
"Investment Level V Status" exists at any date if, at such date, none
of Level I Status, Level II Status, Level III Status and Level IV Status exists.
"LIBOR Auction" means a solicitation of Money Market Quotes setting
forth Money Market Margins based on the London Interbank Offered Rate pursuant
to Section 2.03.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge or security interest in respect of such asset. For the purposes of this
Agreement, the Borrower or any Subsidiary shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease (but not
operating lease) or other title retention agreement relating to such asset.
"Loan" means a Domestic Loan or a Euro-Dollar Loan or a Money Market
Loan and "Loans" means Domestic Loans or Euro-Dollar Loans or Money Market Loans
or any combination of the foregoing.
"London Interbank Offered Rate" has the meaning set forth in Section
2.07(c).
11
<PAGE> 17
"Margin Stock" means margin stock within the meaning of Regulation U.
"Material Debt" means (x) Debt (other than the Notes) of the Borrower
and/or one or more of its Subsidiaries, arising in one or more related or
unrelated transactions, in an aggregate principal amount exceeding $50,000,000
or (y) Debt of the Borrower (other than the Notes) and/or one or more of its
Consolidated Subsidiaries, arising in one or more related or unrelated
transactions, in an aggregate principal amount exceeding $20,000,000.
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities at such time in excess of $20,000,000.
"Money Market Absolute Rate" has the meaning set forth in Section
2.03(d).
"Money Market Absolute Rate Borrowing" has the meaning set forth in
Section 1.03.
"Money Market Absolute Rate Loan" means a loan to be made by a Bank
pursuant to an Absolute Rate Auction.
"Money Market Borrowing" has the meaning set forth in Section 1.03.
"Money Market Lending Office" means, as to each Bank, its Domestic
Lending Office or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Money Market Lending Office by notice to the Borrower
and the Agent; provided that any Bank may from time to time by notice to the
Borrower and the Agent designate separate Money Market Lending Offices for its
Money Market LIBOR Loans, on the one hand, and its Money Market Absolute Rate
Loans, on the other hand, in which case all references herein to the Money
Market Lending Office of such Bank shall be deemed to refer to either or both of
such offices, as the context may require.
"Money Market LIBOR Borrowing" has the meaning set forth in Section
1.03.
12
<PAGE> 18
"Money Market LIBOR Loan" means a loan to be made by a Bank pursuant to
a LIBOR Auction (including such a loan bearing interest at the Base Rate
pursuant to Section 8.01).
"Money Market Loan" means a Money Market LIBOR Loan or a Money Market
Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in Section 2.03(d).
"Money Market Quote" means an offer by a Bank to make a Money Market
Loan in accordance with Section 2.03.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five year period.
"Notes" means promissory notes of the Borrower, substantially in the
form of Exhibit A hereto, evidencing the obligation of the Borrower to repay the
Loans, and "Note" means any one of such promissory notes issued hereunder.
"Notice of Borrowing" means a Notice of Committed Borrowing (as defined
in Section 2.02) or a Notice of Money Market Borrowing (as defined in Section
2.03(f)).
"Operating Cash Flow" shall mean, for any period, the sum (without
duplication), determined on a consolidated basis for the Borrower and its
Subsidiaries, of (a) net income for such period plus (b) to the extent deducted
in determining net income for such period, the sum of depreciation, amortization
and other non-cash charges.
"Parent" means, with respect to any Bank, any Person controlling such
Bank.
"Participant" has the meaning set forth in Section 9.06(b).
13
<PAGE> 19
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Prime Rate" means the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York in New York City from time to time as its
prime rate.
"Reference Banks" means the CD Reference Banks or the Euro-Dollar
Reference Banks, as the context may require, and "Reference Bank" means any one
of such Reference Banks.
"Refunding Borrowing" means a Committed Borrowing which, after
application of the proceeds thereof, results in no net increase in the
outstanding principal amount of Committed Loans made by any Bank.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Required Banks" means at any time Banks having more than 50% of the
aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding Notes evidencing more than 50% of the aggregate unpaid
principal amount of the Loans.
14
<PAGE> 20
"Revolving Credit Period" means the period from and including the
Effective Date to and including the Termination Date.
"S&P" means Standard & Poor's, a division of the McGraw-Hill Companies,
Inc.
"Subsidiary" means any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by the Borrower.
"Temporary Cash Investment" means any Investment in (i) securities of
the U.S. Treasury; (ii) securities of agencies of the U.S. Government; (iii)
commercial paper, with a rating in the United States of A-1 by S&P and a rating
in the United States of P-1 by Moody's or better; or in the case of a foreign
issuer, an equivalent rating by another recognized credit rating service; (iv)
bankers' acceptances, certificates of deposit, and time deposits issued by any
Bank or by a bank having capital in excess of $1,000,000,000; (v) repurchase
agreements with a "primary" dealer of the Federal Reserve or a bank described in
clause (iv) of this definition which is collateralized by obligations of the
U.S. Government or federal agencies with a value not to be below 102% of the
face value of the repurchase agreement; (vi) municipal obligations with a rating
of MIG-1 by S&P and a rating of SP-1 by Moody's or better, (vii) preferred stock
which is rated A by S&P or A2 by Moody's or better and whose dividend rate is
set no longer than every 49 days through a Dutch auction process and (viii)
money market funds substantially all of whose investments listed in the relevant
prospectus are of the types listed in the foregoing items (i) through (vii).
"Termination Date" means the earlier of (x) the date on which the
Commitments are terminated pursuant to Section 2.09(i) hereof and (y) January 3,
2002, or, if January 3, 2002 is not a Euro-Dollar Business Day, the next
preceding Euro-Dollar Business Day.
"Total Capitalization" means, at any date, Consolidated Debt plus the
consolidated stockholders' equity of the Borrower, calculated without regard to
changes in foreign currency translation adjustments subsequent to
15
<PAGE> 21
September 30, 1996, all as would be presented according to generally accepted
accounting principles in a consolidated balance sheet of the Borrower as of such
date.
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the present value of all accrued benefits under
such Plan exceeds (ii) the fair market value of all Plan assets allocable to
such benefits (excluding any accrued but unpaid contributions), all determined
as of the then most recent valuation date for such Plan, but only to the extent
that such excess represents a potential liability of a member of the ERISA Group
to the PBGC or any other Person under Title IV of ERISA.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time to time, applied
on a basis consistent (except for changes concurred in by the Borrower's
independent public accountants) with the most recent audited consolidated
financial statements of the Borrower and its Consolidated Subsidiaries delivered
to the Banks.
SECTION 1.03. Types of Borrowings. The term "Borrowing" denotes the
aggregation of Loans of one or more Banks to be made to the Borrower pursuant to
Article II on a single date and for a single Interest Period. Borrowings are
classified for purposes of this Agreement either by reference to the pricing of
Loans comprising such Borrowing (i.e., a "Euro-Dollar Borrowing" is a Borrowing
comprised of Euro-Dollar Loans, a "CD Borrowing" is a Borrowing comprised of CD
Loans, a "Base Rate Borrowing" is a Borrowing comprised of Base Rate Loans, a
"Money Market LIBOR Borrowing" is a Borrowing comprised of Money Market LIBOR
Loans, a "Money Market Absolute Rate Borrowing" is a Borrowing comprised of
Money Market Absolute Rate Loans and a "Fixed Rate Borrowing" is a Borrowing
comprised of Fixed Rate Loans) or by reference to the provisions of Article II
under which participation therein is determined (i.e., a "Committed Borrowing"
is a Borrowing under Section 2.01 in which all Banks participate in proportion
to their
16
<PAGE> 22
Commitments, while a "Money Market Borrowing" is a Borrowing under
Section 2.03 in which the Bank participants are determined on the basis of their
bids in accordance therewith).
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend During Revolving Credit Period.
During the Revolving Credit Period each Bank severally agrees, on the terms and
conditions set forth in this Agreement, to make loans to the Borrower pursuant
to this Section from time to time in amounts such that the aggregate principal
amount of Committed Loans by such Bank at any one time outstanding shall not
exceed the amount of its Commitment. Each Borrowing under this Section shall be
in an aggregate principal amount of $10,000,000 or any larger integral multiple
of $1,000,000 (except that any such Borrowing may be in the aggregate amount
available in accordance with Section 3.02(b)) and shall be made from the several
Banks ratably in proportion to their respective Commitments. Within the
foregoing limits, the Borrower may borrow under this Section , repay, or to the
extent permitted by Section 2.11, prepay Loans and reborrow at any time during
the Revolving Credit Period under this Section.
SECTION 2.02. Notice of Committed Borrowings. The Borrower shall give
the Agent notice (a "Notice of Committed Borrowing") not later than 10:00 A.M.
(New York City time) on the date of each Base Rate Borrowing and not later than
11:00 A.M. (New York City time) on (x) the second Domestic Business Day before
each CD Borrowing and (y) the third Euro-Dollar Business Day before each
Euro-Dollar Borrowing, specifying:
(a) the date of such Borrowing, which shall be a Domestic Business Day
in the case of a Domestic Borrowing or a Euro-Dollar Business Day in the case
of a Euro-Dollar Borrowing,
(b) the aggregate amount of such Borrowing,
17
<PAGE> 23
(c) whether the Loans comprising such Borrowing are to be CD Loans,
Base Rate Loans or Euro-Dollar Loans, and
(d) in the case of a Fixed Rate Borrowing (including, for this purpose,
a Borrowing of CD Loans bearing interest at the Base Rate pursuant to Section
2.07(b)), the duration of the Interest Period applicable thereto, subject to
the provisions of the definition of Interest Period.
SECTION 2.03. Money Market Borrowings.
(a) The Money Market Option. In addition to Committed Borrowings
pursuant to Section 2.01, the Borrower may, as set forth in this Section ,
request the Banks during the Revolving Credit Period to make offers to make
Money Market Loans to the Borrower. The Banks may, but shall have no obligation
to, make such offers and the Borrower may, but shall have no obligation to,
accept any such offers in the manner set forth in this Section.
(b) Money Market Quote Request. When the Borrower wishes to request
offers to make Money Market Loans under this Section, it shall transmit to the
Agent by telex or facsimile transmission a Money Market Quote Request
substantially in the form of Exhibit B hereto so as to be received no later than
10:00 A.M. (New York City time) on (x) the fifth Euro-Dollar Business Day prior
to the date of Borrowing proposed therein, in the case of a LIBOR Auction or (y)
the Domestic Business Day next preceding the date of Borrowing proposed therein,
in the case of an Absolute Rate Auction (or, in either case, such other time or
date as the Borrower and the Agent shall have mutually agreed and shall have
notified to the Banks not later than the date of the Money Market Quote Request
for the first LIBOR Auction or Absolute Rate Auction for which such change is to
be effective) specifying:
(i) the proposed date of Borrowing, which shall be a Euro-Dollar
Business Day in the case of a LIBOR Auction or a Domestic Business Day in the
case of an Absolute Rate Auction,
18
<PAGE> 24
(ii) the aggregate amount of such Borrowing, which shall be $10,000,000
or a larger integral multiple of $1,000,000,
(iii) the duration of the Interest Period applicable thereto, subject
to the provisions of the definition of Interest Period, and
(iv) whether the Money Market Quotes requested are to set forth a Money
Market Margin or a Money Market Absolute Rate.
The Borrower may request offers to make Money Market Loans for more than one
Interest Period in a single Money Market Quote Request. No Money Market Quote
Request shall be given within five Euro-Dollar Business Days (or such other
number of days as the Borrower and the Agent may agree) of any other Money
Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly upon receipt of a
Money Market Quote Request, the Agent shall send to the Banks by telex or
facsimile transmission an Invitation for Money Market Quotes substantially in
the form of Exhibit C hereto, which shall constitute an invitation by the
Borrower to each Bank to submit Money Market Quotes offering to make the Money
Market Loans to which such Money Market Quote Request relates in accordance with
this Section.
(d) Submission and Contents of Money Market Quotes. (i) Each Bank may
submit a Money Market Quote containing an offer or offers to make Money Market
Loans in response to any Invitation for Money Market Quotes. Each Money Market
Quote must comply with the requirements of this subsection (d) and must be
submitted to the Agent by telex or facsimile transmission at its offices
specified in or pursuant to Section 9.01 not later than (x) 2:00 P.M. (New York
City time) on the fourth Euro-Dollar Business Day prior to the proposed date of
Borrowing, in the case of a LIBOR Auction or (y) 9:15 A.M. (New York City time)
on the proposed date of Borrowing, in the case of an Absolute Rate Auction (or,
in either case, such other time or date as the Borrower and the Agent shall have
mutually agreed and shall have notified to the Banks not later than the date of
the Money Market Quote Request for the first LIBOR Auction or
19
<PAGE> 25
Absolute Rate Auction for which such change is to be effective); provided that
Money Market Quotes submitted by the Agent (or any affiliate of the Agent) in
the capacity of a Bank may be submitted, and may only be submitted, if the Agent
or such affiliate notifies the Borrower of the terms of the offer or offers
contained therein not later than (x) one hour prior to the deadline for the
other Banks, in the case of a LIBOR Auction or (y) 15 minutes prior to the
deadline for the other Banks, in the case of an Absolute Rate Auction. Subject
to Articles III and VI, any Money Market Quote so made shall be irrevocable
except with the written consent of the Agent given on the instructions of the
Borrower.
(ii) Each Money Market Quote shall be in substantially the form of
Exhibit D hereto and shall in any case specify:
(A) the proposed date of Borrowing,
(B) the principal amount of the Money Market Loan for which each such
offer is being made, which principal amount (w) may be greater than or less
than the Commitment of the quoting Bank, (x) must be $5,000,000 or a larger
integral multiple of $1,000,000, (y) may not exceed the principal amount of
Money Market Loans for which offers were requested and (z) may be subject to
an aggregate limitation as to the principal amount of Money Market Loans for
which offers being made by such quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin above or below the
applicable London Interbank Offered Rate (the "Money Market Margin") offered
for each such Money Market Loan, expressed as a percentage (specified to the
nearest 1/10,000th of 1%) to be added to or subtracted from such base rate,
(D) in the case of an Absolute Rate Auction, the rate of interest per
annum (specified to the nearest 1/10,000th of 1%) (the "Money Market Absolute
Rate") offered for each such Money Market Loan, and
(E) the identity of the quoting Bank.
20
<PAGE> 26
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit D hereto or does
not specify all of the information required by subsection (d)(ii);
(B) contains qualifying, conditional or similar language;
(C) proposes terms other than or in addition to those set forth in the
applicable Invitation for Money Market Quotes; or
(D) arrives after the time set forth in subsection (d)(i).
(e) Notice to Borrower. The Agent shall promptly notify the Borrower of
the terms (x) of any Money Market Quote submitted by a Bank that is in
accordance with subsection (d) and (y) of any Money Market Quote that amends,
modifies or is otherwise inconsistent with a previous Money Market Quote
submitted by such Bank with respect to the same Money Market Quote Request. Any
such subsequent Money Market Quote shall be disregarded by the Agent unless such
subsequent Money Market Quote is submitted solely to correct a manifest error in
such former Money Market Quote. The Agent's notice to the Borrower shall specify
(A) the aggregate principal amount of Money Market Loans for which offers have
been received for each Interest Period specified in the related Money Market
Quote Request, (B) the respective principal amounts and Money Market Margins or
Money Market Absolute Rates, as the case may be, so offered and (C) if
applicable, limitations on the aggregate principal amount of Money Market Loans
for which offers in any single Money Market Quote may be accepted.
(f) Acceptance and Notice by Borrower. Not later than (x) 10:00 A.M.
(New York City time) on the third Euro-Dollar Business Day prior to the proposed
date of Borrowing, in the case of a LIBOR Auction or (y) 10:15 A.M.
21
<PAGE> 27
(New York City time) or 30 minutes after the receipt of the Money Market Quote
from the Agent on the proposed date of Borrowing, in the case of an Absolute
Rate Auction (or, in either case, such other time or date as the Borrower and
the Agent shall have mutually agreed and shall have notified to the Banks not
later than the date of the Money Market Quote Request for the first LIBOR
Auction or Absolute Rate Auction for which such change is to be effective), the
Borrower shall notify the Agent of its acceptance or non-acceptance of the
offers so notified to it pursuant to subsection (e). In the case of acceptance,
such notice (a "Notice of Money Market Borrowing") shall specify the aggregate
principal amount of offers for each Interest Period that are accepted. The
Borrower may accept any Money Market Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money Market Borrowing may
not exceed the applicable amount set forth in the related Money Market Quote
Request,
(ii) the principal amount of each Money Market Borrowing must be
$10,000,000 or a larger multiple of $1,000,000,
(iii) acceptance of offers may only be made on the basis of ascending
Money Market Margins or Money Market Absolute Rates, as the case may be, and
(iv) the Borrower may not accept any offer that is described in
subsection (d)(iii) or that otherwise fails to comply with the requirements
of this Agreement.
(g) Allocation by Agent. If offers are made by two or more Banks with
the same Money Market Margins or Money Market Absolute Rates, as the case may
be, for a greater aggregate principal amount than the amount in respect of which
such offers are accepted for the related Interest Period, the principal amount
of Money Market Loans in respect of which such offers are accepted shall be
allocated by the Agent among such Banks as nearly as possible (in integral
multiples of $1,000,000, as the Agent may deem appropriate) in proportion to the
aggregate principal amounts of such offers. Determinations by the Agent of the
amounts of Money Market Loans shall be conclusive in the absence of manifest
error.
22
<PAGE> 28
SECTION 2.04. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the Agent shall promptly
notify each Bank of the contents thereof and of such Bank's share (if any) of
such Borrowing and such Notice of Borrowing shall not thereafter be revocable by
the Borrower.
(b) Not later than 12:00 Noon (New York City time) on the date of each
Borrowing, each Bank participating therein shall (except as provided in
subsection (c) of this Section ) make available its share of such Borrowing, in
Federal or other funds immediately available in New York City, to the Agent at
its address specified in or pursuant to Section 9.01. Unless the Agent
determines that any applicable condition specified in Article III has not been
satisfied, the Agent will make the funds so received from the Banks available to
the Borrower at the Agent's aforesaid address.
(c) If any Bank makes a new Loan hereunder on a day on which the
Borrower is to repay all or any part of an outstanding Loan from such Bank, such
Bank shall apply the proceeds of its new Loan to make such repayment and only an
amount equal to the difference (if any) between the amount being borrowed and
the amount being repaid shall be made available by such Bank to the Agent as
provided in subsection (b), or remitted by the Borrower to the Agent as provided
in Section 2.12, as the case may be.
(d) Unless the Agent shall have received notice from a Bank prior to
the date of any Borrowing that such Bank will not make available to the Agent
such Bank's share of such Borrowing, the Agent may assume that such Bank has
made such share available to the Agent on the date of such Borrowing in
accordance with subsections (b) and (c) of this Section 2.04 and the 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 Bank shall not have so made
such share available to the Agent, such Bank and the Borrower severally agree to
repay to the 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 Agent, at (i) in the
case of the
23
<PAGE> 29
Borrower, a rate per annum equal to the higher of the Federal Funds Rate and the
interest rate applicable thereto pursuant to Section 2.07 and (ii) in the case
of such Bank, the Federal Funds Rate. If such Bank shall repay to the Agent such
corresponding amount, such amount so repaid shall constitute such Bank's Loan
included in such Borrowing for purposes of this Agreement.
SECTION 2.05. Notes. (a) The Loans of each Bank shall be evidenced by a
single Note payable to the order of such Bank for the account of its Applicable
Lending Office in an amount equal to the aggregate unpaid principal amount of
such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and the Agent, request
that its Loans of a particular type be evidenced by a separate Note in an amount
equal to the aggregate unpaid principal amount of such Loans. Each such Note
shall be in substantially the form of Exhibit A hereto with appropriate
modifications to reflect the fact that it evidences solely Loans of the relevant
type. Each reference in this Agreement to the "Note" of such Bank shall be
deemed to refer to and include any or all of such Notes, as the context may
require.
(c) Upon receipt of each Bank's Note pursuant to Section 3.01(d), the
Agent shall forward such Note to such Bank. Each Bank shall record the date,
amount, type and maturity of each Loan made by it and the date and amount of
each payment of principal made by the Borrower with respect thereto, and may, if
such Bank so elects in connection with any transfer or enforcement of its Note,
endorse on the schedule forming a part thereof appropriate notations to evidence
the foregoing information with respect to each such Loan then outstanding;
provided that the failure of any Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or under
the Notes. Each Bank is hereby irrevocably authorized by the Borrower so to
endorse its Note and to attach to and make a part of its Note a continuation of
any such schedule as and when required.
SECTION 2.06. Maturity of Loans. Each Loan included in any Borrowing
shall mature, and the principal amount thereof shall be due and payable, on the
last day of the Interest Period applicable to such Borrowing.
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<PAGE> 30
SECTION 2.07. Interest Rates. (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from the date
such Loan is made until it becomes due, at a rate per annum equal to the Base
Rate for such day. Such interest shall be payable for each Interest Period on
the last day thereof. Any overdue principal of or interest on any Base Rate Loan
shall bear interest, payable on demand, for each day until paid at a rate per
annum equal to the sum of 2% plus the rate otherwise applicable to Base Rate
Loans for such day.
(b) Each CD Loan shall bear interest on the outstanding principal
amount thereof, for the Interest Period applicable thereto, at a rate per annum
equal to the sum of the CD Margin plus the applicable Adjusted CD Rate; provided
that if any CD Loan or any portion thereof shall, as a result of clause (2)(b)
of the definition of Interest Period, have an Interest Period of less than 30
days, such portion shall bear interest during such Interest Period at the rate
applicable to Base Rate Loans during such period. Such interest shall be payable
for each Interest Period on the last day thereof and, if such Interest Period is
longer than 90 days, at intervals of 90 days after the first day thereof. Any
overdue principal of or interest on any CD Loan shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to the sum of 2% plus
the higher of (i) the sum of the CD Margin plus the Adjusted CD Rate applicable
to such Loan and (ii) the rate applicable to Base Rate Loans for such day
(excluding the application of the last sentence in Section 2.07(a)).
"CD Margin" means, for any day, the percentage per annum equal to the
applicable CD Margin set forth in the table below.
<TABLE>
<CAPTION>
If the Investment The CD
Level Status is: Margin is:
---------------- ----------
<S> <C>
Investment Level Status I .275 of 1%
Investment Level Status II .295 of 1%
Investment Level Status III .325 of 1%
Investment Level Status IV .375 of 1%
Investment Level Status V .550 of 1%
</TABLE>
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<PAGE> 31
The "Adjusted CD Rate" applicable to any Interest Period means a rate
per annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
----------
* The amount in brackets being rounded upward, if necessary, to the next
higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest Period is the rate of
interest determined by the Agent to be the average (rounded upward, if
necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum bid
at 10:00 A.M. (New York City time) (or as soon thereafter as practicable) on the
first day of such Interest Period by two or more New York certificate of deposit
dealers of recognized standing for the purchase at face value from each CD
Reference Bank of its certificates of deposit in an amount comparable to the
principal amount of the CD Loan of such CD Reference Bank to which such Interest
Period applies and having a maturity comparable to such Interest Period.
"Domestic Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including without limitation any
basic, supplemental or emergency reserves) for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of new non-personal time deposits in dollars in New York City having a
maturity comparable to the related Interest Period and in an amount of $100,000
or more. The Adjusted CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Domestic Reserve Percentage.
26
<PAGE> 32
"Assessment Rate" means for any day the annual assessment rate in
effect on such day which is payable by a member of the Bank Insurance Fund
classified as adequately capitalized and within supervisory subgroup "A" (or a
comparable successor assessment risk classification) within the meaning of 12
C.F.R. X 327.3(d) (or any successor provision) to the Federal Deposit Insurance
Corporation (or any successor) for such Corporation's (or such successor's)
insuring time deposits at offices of such institution in the United States. The
Adjusted CD Rate shall be adjusted automatically on and as of the effective date
of any change in the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable thereto, at a rate
per annum equal to the sum of the Euro-Dollar Margin plus the applicable London
Interbank Offered Rate. Such interest shall be payable for each Interest Period
on the last day thereof and, if such Interest Period is longer than three
months, at intervals of three months after the first day thereof.
"Euro-Dollar Margin" means, for any day, the percentage per annum equal
to the applicable Euro-Dollar Margin set forth in the table below.
<TABLE>
<CAPTION>
If the Investment The Euro-Dollar
Level Status is: Margin is:
---------------- ----------
<S> <C>
Investment Level Status I .15 of 1%
Investment Level Status II .17 of 1%
Investment Level Status III .20 of 1%
Investment Level Status IV .25 of 1%
Investment Level Status V .425 of 1%
</TABLE>
The "London Interbank Offered Rate" applicable to any Interest Period
means the average (rounded upward, if necessary, to the next higher 1/16 of 1%)
of the respective rates per annum at which deposits in dollars are offered to
each of the Euro-Dollar Reference Banks in the London interbank market at
approximately 11:00 A.M. (London time) two Euro-Dollar Business Days before the
first day of such Interest Period in an amount approximately equal to the
principal amount of the Euro-Dollar Loan of such Euro-Dollar
27
<PAGE> 33
Reference Bank to which such Interest Period is to apply and for a period of
time comparable to such Interest Period.
(d) Any overdue principal of or interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day from and including the date
payment thereof was due to but excluding the date of actual payment, at a rate
per annum equal to the sum of 2% plus the higher of (i) the sum of the
Euro-Dollar Margin plus the London Interbank Offered Rate applicable to such
Loan and (ii) the Euro-Dollar Margin plus the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the respective rates per annum at
which one day (or, if such amount due remains unpaid more than three Euro-Dollar
Business Days, then for such other period of time not longer than three months
as the Agent may select) deposits in dollars in an amount approximately equal to
such overdue payment due to each of the Euro-Dollar Reference Banks are offered
to such Euro-Dollar Reference Bank in the London interbank market for the
applicable period determined as provided above (or, if the circumstances
described in clause (a) or (b) of Section 8.01 shall exist, at a rate per annum
equal to the sum of 2% plus the rate applicable to Base Rate Loans for such day
(excluding the application of the last sentence in Section 2.07(a)).
(e) Subject to Section 8.01, each Money Market LIBOR Loan shall bear
interest on the outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of the London Interbank
Offered Rate for such Interest Period (determined in accordance with Section
2.07(c) as if the related Money Market LIBOR Borrowing were a Committed
Euro-Dollar Borrowing) plus (or minus) the Money Market Margin quoted by the
Bank making such Loan in accordance with Section 2.03. Each Money Market
Absolute Rate Loan shall bear interest on the outstanding principal amount
thereof, for the Interest Period applicable thereto, at a rate per annum equal
to the Money Market Absolute Rate quoted by the Bank making such Loan in
accordance with Section 2.03. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is longer than three
months, at intervals of three months after the first day thereof. Any overdue
principal of or interest on any Money Market Loan shall bear interest, payable
on demand, for each day until
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paid at a rate per annum equal to the sum of 2% plus the Base Rate for such day.
(f) The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall give prompt notice to the Borrower and the
participating Banks by telex or cable of each rate of interest so determined,
and its determination thereof shall be conclusive in the absence of manifest
error; provided that the Borrower shall, for a period of 60 days after such
notice is given, have the right to demonstrate that the rate of interest so
determined was not calculated in accordance with the terms of this Agreement;
provided further that until the fact that the rate of interest was not
calculated in accordance with the terms of this Agreement is demonstrated to the
satisfaction of the Agent (which must act reasonably and in good faith), the
Borrower shall continue to pay interest in accordance with the notice given.
(g) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Agent as contemplated by this Section . If any Reference Bank
does not furnish a timely quotation, the Agent shall determine the relevant
interest rate on the basis of the quotation or quotations furnished by the
remaining Reference Bank or Banks or, if none of such quotations is available on
a timely basis, the provisions of Section 8.01 shall apply.
(h) If for any reason any CD Reference Bank or Euro-Dollar Reference
Bank, as the case may be, ceases to be a Bank, the Agent with the written
consent of the Borrower, which consent shall not be unreasonably withheld, shall
appoint a successor CD Reference Bank or Euro-Dollar Reference Bank, as the case
may be, which shall be one of the Banks.
SECTION 2.08. Fees.
(a) Facility Fee. The Borrower shall pay to the Agent for the account
of the Banks ratably a facility fee at the Facility Fee Rate per annum. Such
facility fee shall accrue for each day (i) from and including the Effective Date
to but excluding the Termination Date, on the aggregate amount of the
Commitments (whether used or unused) for such day and (ii) from and including
the Termination Date to but excluding the date the Loans shall be repaid in
their
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entirety, on the daily average aggregate outstanding principal amount of
the Loans on such day.
(b) Payments. Accrued fees under this Section shall be payable
quarterly in arrears on each March 31, June 30, September 30 and December 31 and
upon the date of termination of the Commitments in their entirety (and, if
later, the date the Loans shall be repaid in their entirety).
SECTION 2.09. Optional Termination or Reduction of Commitments. During
the Revolving Credit Period, the Borrower may, upon at least one Domestic
Business Day's notice to the Agent, (i) terminate the Commitments at any time,
if no Loans are outstanding at such time or (ii) ratably reduce from time to
time by an aggregate amount of $25,000,000 or any larger integral multiple
thereof, the aggregate amount of the Commitments in excess of the aggregate
outstanding principal amount of the Loans. If the Commitments are reduced or
terminated pursuant to this Section , such Commitments may not be increased or
reinstated thereafter.
SECTION 2.10. Mandatory Termination of Commitments. The Commitments
shall terminate on the Termination Date, and any Loans then outstanding
(together with accrued interest thereon) shall be due and payable on such date.
SECTION 2.11. Optional Prepayments. (a) The Borrower may, upon same day
notice (no later than 10:00 A.M. New York City time) to the Agent, prepay any
Base Rate Borrowing (or any Money Market LIBOR Borrowing bearing interest at the
Base Rate pursuant to Section 8.01(a)) in whole at any time, or from time to
time in part in amounts aggregating $10,000,000 or any larger integral multiple
of $1,000,000, by paying the principal amount to be prepaid together with
accrued interest thereon to the date of prepayment. Each such optional
prepayment shall be applied to prepay ratably the Loans of the several Banks
included in such Borrowing.
(b) The Borrower may, upon at least three Domestic Business Days'
notice to the Agent, in the case of a CD Borrowing or a Money Market Absolute
Rate Borrowing, or upon at least three Euro-Dollar Business Days' notice to the
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Agent, in the case of a Euro-Dollar Borrowing or a Money Market LIBOR Borrowing
(other than a Money Market LIBOR Borrowing bearing interest at the Base Rate
pursuant to Section 8.01(a)), subject to the provisions of Section 2.13, prepay
any such Borrowing in whole or in part in amounts aggregating $10,000,000 or any
larger integral multiple of $1,000,000, on any Domestic Business Day, in the
case of a CD Borrowing or a Money Market Absolute Rate Borrowing, or any
Euro-Dollar Business Day, in the case of a Euro-Dollar Borrowing or a Money
Market LIBOR Borrowing, by paying the principal amount to be prepaid together
with accrued interest thereon to the date of prepayment. Each such prepayment
shall be applied to prepay ratably the outstanding CD Loans, Euro-Dollar Loans
or Money Market Loans of the several Banks included in such Borrowing, subject
to Article VIII.
(c) Upon receipt of a notice of prepayment pursuant to this Section ,
the Agent shall promptly notify each Bank of the contents thereof and of such
Bank's ratable share (if any) of such prepayment and such notice shall not
thereafter be revocable by the Borrower.
SECTION 2.12. General Provisions as to Payments. (a) The Borrower shall
make each payment of principal of, and interest on, the Loans and of fees
hereunder, not later than 12:00 Noon (New York City time) on the date when due,
in Federal or other funds immediately available in New York City, to the Agent
at its address referred to in Section 9.01. The Agent will promptly distribute
to each Bank its ratable share of each such payment received by the Agent for
the account of the Banks. Whenever any payment of principal of, or interest on,
the Domestic Loans or of fees shall be due on a day which is not a Domestic
Business Day, the date for payment thereof shall be extended to the next
succeeding Domestic Business Day. Whenever any payment of principal of, or
interest on, the Euro-Dollar Loans or the Money Market LIBOR Loans shall be due
on a day which is not a Euro-Dollar Business Day, the date for payment thereof
shall be extended to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case the date
for payment thereof shall be the next preceding Euro-Dollar Business Day.
Whenever any payment of principal of, or interest on, the Money Market Absolute
Rate Loans shall be due on a day which is not a Euro-Dollar Business Day, the
date for payment
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thereof shall be extended to the next succeeding Euro-Dollar Business Day. If
the date for any payment of principal is extended by operation of law or
otherwise, interest thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from the Borrower prior
to the date on which any payment is due to the Banks hereunder that the Borrower
will not make such payment in full, the Agent may assume that the Borrower has
made such payment in full to the Agent on such date and the Agent may, in
reliance upon such assumption, cause to be distributed to each Bank on such due
date an amount equal to the amount then due such Bank. If and to the extent that
the Borrower shall not have so made such payment, each Bank shall repay to the
Agent forthwith on demand such amount distributed to such Bank together with
interest thereon, for each day from the date such amount is distributed to such
Bank until the date such Bank repays such amount to the Agent, at the Federal
Funds Rate.
SECTION 2.13. Funding Losses. If the Borrower makes any payment of
principal with respect to any Fixed Rate Loan (pursuant to Section 2.11(b),
Article VI or VIII or otherwise) on any day other than the last day of the
Interest Period applicable thereto, or the end of an applicable period fixed
pursuant to Section 2.07(d), or if the Borrower fails to borrow any Fixed Rate
Loans after notice has been given to any Bank in accordance with Section
2.04(a), the Borrower shall reimburse each Bank within 15 days after demand for
any resulting loss or expense incurred by it (or by an existing or prospective
Participant in the related Loan), including (without limitation) any loss
incurred in obtaining, liquidating or employing deposits from third parties, but
excluding loss of margin for the period after any such payment or failure to
borrow, provided that such Bank shall have delivered to the Borrower a
certificate as to the amount of such loss or expense, which certificate shall be
conclusive in the absence of manifest error, provided that the Borrower shall
have the right, within 60 days of receipt of such certificate, to demonstrate
that the amount set forth in such certificate is incorrect and request an
adjustment of the amount to be, or theretofore, paid.
SECTION 2.14. Computation of Interest and Fees. Interest based on the
Prime Rate hereunder shall be computed
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on the basis of a year of 365 days (or 366 days in a leap year) and paid for the
actual number of days elapsed (including the first day but excluding the last
day). All other interest and fees shall be computed on the basis of a year of
360 days and paid for the actual number of days elapsed (including the first day
but excluding the last day).
SECTION 2.15. Taxes. (a) Any and all payments by the Borrower to or for
the account of any Bank or the Agent hereunder or under any Note shall be made
free and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, (1) in the case of each Bank and
the Agent, taxes imposed on its income, and franchise or similar taxes imposed
on it, by the jurisdiction under the laws of which such Bank or the Agent (as
the case may be) is organized, (2) in the case of each Bank, taxes imposed on
its income, and franchise or similar taxes imposed on it, by the jurisdiction of
such Bank's Applicable Lending Office and (3) in the case of each Bank, taxes
imposed on its net income and franchise taxes which such Bank or Agent is
subject to at the time the Bank first becomes a party to this Agreement, at
whatever rates may be in effect for such taxes from time to time (all such
non-excluded taxes, duties, 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 or under any Note to any Bank or the Agent, (i) the sum payable shall
be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.15) such Bank or the Agent (as the case may be) receives an amount equal to
the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions, (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law and (iv) the Borrower shall furnish to the Agent,
at its address referred to in Section 9.01, the original or a certified copy of
a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any present or future stamp
or documentary taxes and any other excise or property taxes, or charges or
similar levies which
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arise solely from any payment made hereunder or under any Note or from the
execution or delivery of, or otherwise with respect to, this Agreement or any
Note (hereinafter referred to as "Other Taxes").
(c) The Borrower agrees to indemnify each Bank and the Agent for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section
2.15) paid by such Bank or the Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto. This indemnification shall be made within 15 days from the date such
Bank or the Agent (as the case may be) makes demand therefor; provided, however,
that (1) after the Borrower has made a payment pursuant to this provision, the
Borrower shall not be obligated to pay any further penalties, interest or
expenses accrued thereafter imposed by a jurisdiction with respect to such Taxes
or Other Taxes to which the payment is related and (2) if the Bank knows or has
reason to know of the imposition of any Taxes or Other Taxes for which the
Borrower is required to indemnify such Bank under this Section 2.15 and fails to
promptly notify the Borrower of such imposition, the Borrower shall not be
obligated to pay any penalties, interest or expenses accrued with respect to
such Taxes or Other Taxes after the Bank has such knowledge and before the
Borrower has received such notification.
(d) Each Bank organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on the signature pages hereof and on
or prior to the date on which it becomes a Bank in the case of each other Bank,
and from time to time thereafter if requested in writing by the Borrower (but
only so long as such Bank remains lawfully able to do so), shall provide the
Borrower with Internal Revenue Service form 1001 or 4224, as appropriate, or any
successor form prescribed by the Internal Revenue Service, certifying that such
Bank is entitled to benefits under an income tax treaty to which the United
States is a party which reduces the rate of withholding tax on payments of
interest or certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the United
States. If the form provided by a
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Bank at the time such Bank first becomes a party to this Agreement indicates a
United States interest withholding tax rate in excess of zero, withholding tax
at such rate shall be considered excluded from "Taxes" as defined in Section
2.15(a).
(e) For any period with respect to which a Bank has failed to provide
the Borrower with the appropriate form pursuant to Section 2.15(d) (unless such
failure is due to a change in treaty, law or regulation occurring subsequent to
the date on which a form originally was required to be provided), such Bank
shall not be entitled to indemnification under Section 2.15(a) with respect to
Taxes imposed by the United States; provided, however, that should a Bank, which
is otherwise exempt from or subject to a reduced rate of withholding tax, become
subject to Taxes because of its failure to deliver a form required hereunder,
the Borrower shall take such steps as such Bank shall reasonably request to
assist such Bank to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for the
account of any Bank pursuant to this Section 2.15, then such Bank will change
the jurisdiction of its Applicable Lending Office so as to eliminate or reduce
any such additional payment which may thereafter accrue if such change, in the
judgment of such Bank, is not otherwise disadvantageous to such Bank.
(g) Upon a reasonable request of the Borrower, a Bank shall, at the
expense of the Borrower, seek the refund for any Taxes or Other Taxes for which
the Borrower has indemnified the Bank under this Section 2.15, provided that
such Bank, in its sole discretion, determines that the application of such
refund will not be detrimental to such Bank.
SECTION 2.16. Regulation D Compensation. Each Bank may require the
Borrower to pay, contemporaneously with each payment of interest on the related
Euro-Dollar Loans, additional interest on the related Euro-Dollar Loans of such
Bank at a rate per annum determined by such Bank up to but not exceeding the
excess of (i) (A) the applicable London Interbank Offered Rate divided by (B)
one minus the Euro-Dollar Reserve Percentage over (ii) the applicable London
Interbank Offered Rate. Any Bank wishing to require
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payment of such additional interest (x) shall so notify the Borrower and the
Agent in writing no later than two Euro-Dollar Business Days before the making
of any Euro-Dollar Loans hereunder, in which case such additional interest on
the Euro-Dollar Loans of such Bank shall be payable to such Bank at the place
indicated in such notice with respect to each Interest Period commencing at
least three Euro-Dollar Business Days after the giving of such notice and (y)
shall notify the Borrower at least five Euro-Dollar Business Days prior to each
date on which interest is payable on the Euro-Dollar Loans of the amount then
due it under this Section.
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness. This Agreement shall become effective on
the date that each of the following conditions shall have been satisfied (or
waived in accordance with Section 9.05):
(a) receipt by the Agent of counterparts hereof signed by each of the
parties hereto (or, in the case of any party as to which an executed
counterpart shall not have been received, receipt by the Agent in form
satisfactory to it of telegraphic, telex, facsimile transmission or other
written confirmation from such party of execution of a counterpart hereof by
such party);
(b) receipt by the Agent of certified copies of the corporate charter
and by-laws of the Borrower and of all corporate action taken by the Borrower
authorizing the execution, delivery and performance of this Agreement
(including, without limitation, a certificate of the Borrower setting forth
the resolutions of the Board of Directors or the Executive Committee of the
Board of Directors authorizing the transactions contemplated thereby and a
certified copy of the by-laws provision of the Borrower authorizing the
Executive Committee so to act;
(c) receipt by the Agent of a certificate from the Borrower in respect
of the name and signature of
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each of the officers (i) who is authorized to sign on its behalf and (ii) who
will, until replaced by another officer or officers duly authorized for that
purpose, act as its representative for the purposes of signing documents and
giving notices and other communications in connection with this Agreement;
(d) receipt by the Agent for the account of each Bank of a duly
executed Note dated on or before the Effective Date complying with the
provisions of Section 2.05;
(e) receipt by the Agent of an opinion of Robert Rothberg, General
Counsel of the Borrower, substantially in the form of Exhibit E hereto and
covering such additional matters relating to the transactions contemplated
hereby as the Required Banks may reasonably request;
(f) receipt by the Agent of an opinion of Davis Polk & Wardwell,
special counsel for the Agent, substantially in the form of Exhibit F hereto
and covering such additional matters relating to the transactions
contemplated hereby as the Required Banks may reasonably request;
(g) termination of the commitments and payment by the Borrower of all
amounts due under the Existing Credit Agreement; and
(h) receipt by the Agent of all documents it may reasonably request
relating to the existence of the Borrower, the corporate authority for and
the validity of this Agreement and the Notes, and any other matters relevant
hereto, all in form and substance satisfactory to the Agent;
provided that this Agreement shall not become effective or be binding on any
party hereto unless all of the foregoing conditions are satisfied not later than
January 31, 1997. The Agent shall promptly notify the Borrower and the Banks of
the Effective Date, and such notice shall be conclusive and binding on all
parties hereto. The Banks that are parties to the Existing Credit Agreement,
comprising the "Required Banks" as defined therein, and the Borrower agree that
the commitments under the Existing Credit Agreement
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shall terminate in their entirety simultaneously with and subject to the
effectiveness of this Agreement and that the Borrower shall be obligated to pay
the accrued facility fees thereunder to but excluding the date of such
effectiveness.
SECTION 3.02. Borrowings. The obligation of any Bank to make a Loan on
the occasion of any Borrowing is subject to the satisfaction of the following
conditions:
(a) receipt by the Agent of a Notice of Borrowing as required by
Section 2.02 or 2.03, as the case may be;
(b) the fact that, immediately after such Borrowing, the aggregate
outstanding principal amount of the Loans will not exceed the aggregate
amount of the Commitments;
(c) the fact that, immediately before and after such Borrowing, no
Default (or, in the case of a Refunding Borrowing, no Event of Default by
reason of failure to comply with Section 5.07 or 5.08) shall have occurred
and be continuing; and
(d) the fact that the representations and warranties of the Borrower
contained in this Agreement (except, in the case of a Refunding Borrowing,
the Borrower need not make the representations and warranties set forth in
Sections 4.04(b), 4.05, 4.06 and 4.07) shall be true on and as of the date of
such Borrowing.
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Borrowing as to the facts specified in clauses
(b), (c) and (d) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The Borrower is a
corporation duly incorporated, validly
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existing and in good standing under the laws of Delaware, and has all corporate
powers and all material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of this
Agreement and the Notes are within the Borrower's corporate powers, have been
duly authorized by all necessary corporate action, require no action by or in
respect of, or filing with, any governmental body, agency or official (other
than regular informational filings with the Securities and Exchange Commission)
and do not contravene, or constitute a default under, any provision of
applicable law or regulation or of the certificate of incorporation or by-laws
of the Borrower or of any judgment, injunction, order, decree or material
agreement or instrument binding upon the Borrower or any of its Consolidated
Subsidiaries or result in the creation or imposition of any Lien on any asset of
the Borrower or any of its Consolidated Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Borrower and the Notes, when executed and delivered in
accordance with this Agreement, will constitute valid and binding obligations of
the Borrower.
SECTION 4.04. Financial Information.
(a) The consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of September 30, 1996, and the related consolidated statements
of income, cash flows and stockholders' equity for the fiscal year then ended,
reported on by Coopers & Lybrand and set forth in the Borrower's 1996 Form 10-K,
a copy of which has been delivered to each of the Banks, fairly present, in
conformity with generally accepted accounting principles, the consolidated
financial position of the Borrower and its Consolidated Subsidiaries as of such
date and their consolidated results of operations and cash flows for such fiscal
year.
(b) Since September 30, 1996, there has been no material adverse change
in the business, financial position,
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results of operations or prospects of the Borrower and its Consolidated
Subsidiaries, considered as a whole.
SECTION 4.05. Litigation. Except as described in the Borrower's 1996
Form 10-K, there is no action, suit or proceeding pending against, or to the
knowledge of the Borrower threatened against or affecting, the Borrower or any
of its Consolidated Subsidiaries before any court or arbitrator or any
governmental body, agency or official which poses a material risk of being
adversely determined and, if so determined, might reasonably be expected to
materially adversely affect the business, consolidated financial position or
consolidated results of operations of the Borrower and its Consolidated
Subsidiaries considered as a whole or which in any manner draws into question
the validity of this Agreement or the Notes.
SECTION 4.06. Compliance with ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and is in compliance in all
respects material to the Borrower and its Consolidated Subsidiaries considered
as a whole with the presently applicable provisions of ERISA and the Internal
Revenue Code with respect to each Plan. No member of the ERISA Group has within
the past five years (i) sought a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code in respect of any Plan, (ii) failed to
make any contribution or payment to any Plan or Multiemployer Plan, or made any
amendment to any Plan which has resulted or could reasonably be expected to
result in the imposition of a Lien under Section 302(f) of ERISA, Section 412(n)
of the Internal Revenue Code or any successor provision thereto or the posting
of a bond or other security under Section 307 of ERISA, Section 401(a)(29) of
the Internal Revenue Code or any successor provision thereto in excess of
$20,000,000 or (iii) incurred any liability in excess of $10,000,000 under Title
IV of ERISA other than a liability to the PBGC for premiums under Section 4007
of ERISA.
SECTION 4.07. Environmental Matters. In the ordinary course of its
business, the Borrower conducts an ongoing review of the effect of Environmental
Laws on the business, operations and properties of the Borrower and its
Consolidated Subsidiaries, in the course of which, taking into account the
requirements of such Environmental Laws, it
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makes a reasonable effort to identify and evaluate known and potential
associated liabilities and costs (including, without limitation, any capital or
operating expenditures required for clean-up or closure of properties presently
or previously owned, any capital or operating expenditures required to achieve
or maintain compliance with Environmental Laws or as a condition of any license,
permit or contract held or entered into by the Borrower or any Consolidated
Subsidiary, any related constraints on operating activities, including any
periodic or permanent shutdown of any facility or reduction in the level of or
change in the nature of operations conducted thereat and any actual or potential
material liabilities to third parties, including employees of the Borrower and
its Consolidated Subsidiaries and any related costs and expenses). On the basis
of this review, the Borrower has reasonably concluded that such liabilities and
costs, including the cost of compliance with and liabilities arising under
Environmental Laws, are unlikely to have a material adverse effect on the
business, financial condition, results of operations or prospects of the
Borrower and its Consolidated Subsidiaries, considered as a whole.
SECTION 4.08. Taxes. United States Federal income tax returns of the
Borrower and its Consolidated Subsidiaries have been examined and closed through
the fiscal year ended September 30, 1991. The Borrower and its Consolidated
Subsidiaries have filed all United States Federal income tax returns and all
other material tax returns which are required to be filed by them and have paid
all taxes due pursuant to such returns or pursuant to any assessment received by
the Borrower or any Subsidiary, except such taxes or assessments, if any, as are
being contested in good faith by appropriate proceedings or where the failure to
do so does not materially adversely affect the Borrower and its Consolidated
Subsidiaries, considered as a whole. The charges, accruals and reserves on the
books of the Borrower and its Consolidated Subsidiaries in respect of taxes or
other governmental charges are, in the opinion of the Borrower, adequate.
SECTION 4.09. Subsidiaries. Each of the Borrower's Subsidiaries which
is organized as a corporation is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and has all corporate powers and all material
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governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
SECTION 4.10. Not an Investment Company. The Borrower is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.11. Full Disclosure. All information heretofore furnished by
the Borrower to the Agent or any Bank for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all such information
hereafter furnished by the Borrower to the Agent or any Bank will be, true and
accurate in all material respects on the date as of which such information is
stated or certified. The Borrower has disclosed to the Banks in writing any and
all facts known to the Borrower's management which materially and adversely
affect or may affect (to the extent the Borrower's management can now reasonably
foresee), the business, operations or financial condition of the Borrower and
its Consolidated Subsidiaries, taken as a whole, or the ability of the Borrower
to perform its obligations under this Agreement.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Note remains unpaid:
SECTION 5.01. Information. The Borrower will deliver to each of the
Banks:
(a) as soon as available and in any event within 95 days after the end
of each fiscal year of the Borrower, a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of such fiscal year
and the related consolidated statements of income, cash flow and
stockholders' equity for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, all reported on in
a manner acceptable to the Securities and Exchange Commission by Coopers &
Lybrand or other
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independent accountants of nationally recognized standing;
(b) as soon as available and in any event within 50 days after the end
of each of the first three quarters of each fiscal year of the Borrower, a
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries
as of the end of such quarter and the related consolidated statements of
income, cash flow and stockholders' equity for such quarter and for the
portion of the Borrower's fiscal year ended at the end of such quarter,
setting forth in each case in comparative form the figures for the
corresponding quarter and the corresponding portion of the Borrower's
previous fiscal year, all certified (subject to normal year-end adjustments)
as to fairness of presentation, generally accepted accounting principles and
consistency by the chief financial officer or the chief accounting officer of
the Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the
chief financial officer or the chief accounting officer of the Borrower (i)
setting forth in reasonable detail the calculations required to establish
whether the Borrower was in compliance with the requirements of Sections 5.07
to 5.14, inclusive, on the date of such financial statements and (ii) stating
whether any Default exists on the date of such certificate and, if any
Default then exists, setting forth the details thereof and the action which
the Borrower is taking or proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent accountants which reported on such statements whether anything
has come to their attention to cause them to believe that any Default existed
on the date of such statements;
(e) within five Domestic Business Days after any officer of the
Borrower obtains knowledge of any Default, if such Default is then
continuing, a certificate of the chief financial officer or the chief
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accounting officer of the Borrower setting forth the details thereof and the
action which the Borrower is taking or proposes to take with respect thereto;
(f) promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements
on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or
their equivalents) which the Borrower shall have filed with the Securities
and Exchange Commission;
(h) if and when any member of the ERISA Group (i) gives or is required
to give notice to the PBGC of any "reportable event" (as defined in Section
4043 of ERISA) with respect to any Plan which might constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA with respect to a Multiemployer
Plan or notice that any Multiemployer Plan is in reorganization, is insolvent
or has been terminated, a copy of such notice; (iii) receives notice from the
PBGC under Title IV of ERISA of an intent to terminate, impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or
appoint a trustee to administer any Plan which is a defined benefit pension
plan, a copy of such notice; (iv) applies for a waiver of the minimum funding
standard under Section 412 of the Internal Revenue Code, a copy of such
application; (v) gives notice of intent to terminate any Plan under Section
4041(c) of ERISA, a copy of such notice and other information filed with the
PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section 4063
of ERISA, a copy of such notice; or (vii) fails to make any payment or
contribution to any Plan or Multiemployer Plan or makes any amendment to any
Plan which has resulted or could reasonably be expected to
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result in the imposition of a Lien under Section 302(f) of ERISA or Section
412(n) of the Internal Revenue Code or any successor provision thereto or the
posting of a bond or other security under Section 307 of ERISA or Section
401(a)(29) of the Internal Revenue Code or any successor provision thereto, a
certificate of the chief financial officer or the chief accounting officer of
the Borrower setting forth details as to such occurrence and action, if any,
which the Borrower or applicable member of the ERISA Group is required or
proposes to take;
(i) if and when any officer of the Borrower obtains knowledge of any
actual or pending change in the rating of the Borrower's outstanding senior
unsecured long-term debt securities or commercial paper by Moody's or S&P, a
certificate of the chief financial officer or the chief accounting officer of
the Borrower setting forth the details thereof;
(j) if and when any officer of the Borrower obtains knowledge of any
reason why the Agent and each Bank may not conclusively rely on the
certificate from the Borrower in respect of the names and signatures of
authorized officers delivered pursuant to Section 3.01(c) of this Agreement,
a notice in writing from the Borrower setting forth the details thereof; and
(k) from time to time such additional information regarding the
financial position or business of the Borrower and its Subsidiaries as the
Agent, at the request of any Bank, may reasonably request.
The Banks and the Agent understand that some of the information furnished
to them pursuant to this Section 5.01 may be received by them prior to the time
such information shall have been made public, and the Banks and the Agent agree
that upon written notice from the Borrower that any such written information has
not been made public they will keep such information furnished to them pursuant
to this Section 5.01 confidential and will make no use of such information or
disclosure of such information to other Persons who have not been furnished such
information until it shall have become public through no fault of any of the
Banks, except to the extent that such use or disclosure (i) is in connection
with matters involving this Agreement, any
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assignment and assumption agreement with Assignees or participation agreements
with Participants or (ii) is made in accordance with obligations under law or
regulations or in response to requests from governmental agencies or authorities
pursuant to subpoenas or other process to make information available to
governmental agencies and examiners or to others. Notwithstanding the foregoing,
the Banks may make information furnished to them pursuant to this Section 5.01
available to their Assignees or Participants or proposed Assignees or
Participants, provided that such Persons have agreed in writing to be bound by
the confidentiality provisions set forth in this Section.
SECTION 5.02. Payment of Obligations. The Borrower will pay and
discharge, and will cause each Consolidated Subsidiary to pay and discharge, at
or before maturity, all their respective material obligations and liabilities,
including, without limitation, tax liabilities, except where the same may be
contested in good faith by appropriate proceedings, and will maintain, and will
cause each Subsidiary to maintain, in accordance with generally accepted
accounting principles, appropriate reserves for the accrual of any of the same.
SECTION 5.03. Maintenance of Property; Insurance. (a) The Borrower will
keep, and will cause each Consolidated Subsidiary to keep, all of its properties
used or useful in the conduct of its business or the business of such Subsidiary
to be maintained and kept in good condition, repair and working order and
supplied with all necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
the judgment of the Borrower may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, that nothing in this clause (a) shall prevent the Borrower or any of
its Consolidated Subsidiaries from discontinuing the operations and maintenance
of any of its properties or those of its Consolidated Subsidiaries if such
discontinuance is, in the judgment of the Borrower or such Subsidiary, desirable
in the conduct of its or their business and which do not in the aggregate
materially adversely affect the business of the Borrower and its Consolidated
Subsidiaries considered as a whole.
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(b) The Borrower will, and will cause each of its Consolidated
Subsidiaries to, maintain (either in the name of the Borrower or in such
Subsidiary's own name) with financially sound and reputable insurance companies,
insurance on such of their respective properties in at least such amounts and
against at least such risks (and with such risk retention) as are usually
insured against in the same general area by companies of established repute
engaged in the same or similar business; and will furnish to the Banks, upon
request from the Agent, information presented in reasonable detail (but not
including the actual insurance policy) as to the insurance so carried.
SECTION 5.04. Conduct of Business and Maintenance of Existence. The
Company will do or cause to be done, and will cause each of its Consolidated
Subsidiaries to do or cause to be done, all things necessary to preserve and
keep in full force and effect its existence and good standing under the laws of
its jurisdiction of incorporation, maintain its qualification to do business in
each state in which the failure to do so would have a material adverse effect on
the condition, financial or otherwise, of the Borrower and its Consolidated
Subsidiaries considered as a whole, and maintain all of the rights and
franchises reasonably necessary to the conduct of the business of the Borrower
and its Consolidated Subsidiaries considered as a whole; provided that nothing
in this Section 5.04 shall prohibit mergers or consolidations or sales of assets
not prohibited by Sections 5.11 and 5.12 hereof or prevent the Borrower from
liquidating or selling any of its Consolidated Subsidiaries.
SECTION 5.05. Compliance with Laws. The Borrower will comply, and cause
each Consolidated Subsidiary to comply, in all material respects with all
material applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including, without limitation, Environmental Laws and
ERISA and the rules and regulations thereunder) except where the necessity of
compliance therewith is contested in good faith by appropriate proceedings.
SECTION 5.06. Inspection of Property, Books and Records. The Borrower
will keep, and will cause each Consolidated Subsidiary to keep, proper books of
record and account in which full, true and correct entries shall be
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made of all dealings and transactions in relation to its business and
activities; and will permit, and will cause each Consolidated Subsidiary to
permit, representatives of any Bank at such Bank's expense to visit and inspect
any of their respective properties, and, for the purposes of verifying
compliance with this Agreement or the accuracy of the financial information
provided hereunder, to examine and make abstracts from any of their respective
books and records and to discuss their respective affairs, finances and accounts
with their respective officers, employees and independent public accountants,
all at such reasonable times and as often as may reasonably be desired.
SECTION 5.07. Debt. Consolidated Debt minus the lesser of (x)
$30,000,000 and (y) the amount of Temporary Cash Investments (at book value)
then held in the Borrower's corporate cash management system will not exceed 56%
of Total Capitalization at any time. Total Debt of all Consolidated Subsidiaries
(excluding Debt of a Consolidated Subsidiary to the Borrower or to another
Consolidated Subsidiary) will at no time exceed 25% of Total Capitalization. For
purposes of this Section any preferred stock of a Consolidated Subsidiary held
by a Person other than the Borrower or a Consolidated Subsidiary shall be
included, at the higher of its voluntary or involuntary liquidation value, in
"Consolidated Debt" and in the "Debt" of such Consolidated Subsidiary.
SECTION 5.08. Operating Cash Flow. The ratio at each fiscal quarter-end
of (a) Operating Cash Flow for the four fiscal quarters then ended to (b)
Consolidated Debt at such fiscal quarter-end will at no time be less than .25 to
1.0.
SECTION 5.09. Investments. Neither the Borrower nor any Consolidated
Subsidiary will make, acquire or hold any Investment in any Person other than:
(a) Investments in Subsidiaries and Equity Affiliates (including
investments in entities which, as a result of such Investment, become
Subsidiaries or Equity Affiliates) and Investments in KN Energy, Inc.,
Atlantic LNG Company of Trinidad and Tobago, and Aearo Corporation
(collectively, the "Designated Companies") or any successor to any of such
entities, provided that the Borrower and its Consolidated Subsidiaries may
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continue to hold Investments in any entity which was, or is the successor (by
merger, acquisition or otherwise) to a Subsidiary or Equity Affiliate whether
or not such entity remains a Subsidiary or Equity Affiliate and may take and
hold Investments in any affiliate of such a successor received in connection
with any such merger, acquisition or similar transaction.
(b) Temporary Cash Investments;
(c) Investments consisting of Margin Stock, provided that the aggregate
book value of all Investments in Margin Stock held at any time under this
Section 5.09 does not exceed $20,000,000 (excluding the stock of the
Designated Companies and the Borrower), and provided further that the making,
acquisition or holding of such Investments does not cause or result in any
violation of the provisions of Regulation U;
(d) Investments in the Borrower by any Consolidated Subsidiary; and
(e) any Investment not otherwise permitted by the foregoing clauses of
this Section if, immediately after such Investment is made or acquired, the
aggregate net book value of all Investments permitted by this clause (e) does
not exceed 10% of Consolidated Tangible Net Worth.
SECTION 5.10. Negative Pledge. Neither the Borrower nor any
Consolidated Subsidiary will create, assume or suffer to exist any Lien on any
asset now owned or hereafter acquired by it, except:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement in an aggregate principal amount
not exceeding $40,000,000;
(b) any Lien existing on any asset of any corporation at the time such
corporation becomes a Consolidated Subsidiary;
(c) any Lien on any asset securing Debt incurred or assumed for the
purpose of financing all or any part
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of the cost of acquiring such asset (including an asset to be held pursuant
to a capital lease), provided that such Lien attaches to such asset
concurrently with or within 90 days after the acquisition thereof;
(d) any Lien on any asset of any corporation existing at the time such
corporation is merged or consolidated with or into the Borrower or a
Consolidated Subsidiary;
(e) any Lien existing on any asset prior to the acquisition thereof by
the Borrower or a Consolidated Subsidiary and not created in contemplation of
such acquisition;
(f) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
clauses of this Section, provided that such Debt is not increased and is not
secured by any additional assets;
(g) Liens arising in the ordinary course of its business which (i) do
not secure Debt, (ii) do not secure any single obligation in an amount
exceeding $75,000,000 and (iii) do not in the aggregate materially detract
from the value of its assets or materially impair the use thereof in the
operation of its business;
(h) any purchase money mortgages and Liens created in respect of
property acquired pursuant to Investments made after the date of this
Agreement in specialty chemical businesses located outside North America and
Western Europe, provided that (i) no such mortgage or Lien shall extend to or
cover any other property of the Borrower or any Consolidated Subsidiary and
(ii) the aggregate principal amount of all liabilities secured by all
mortgages and Liens in respect of such property (whether or not the Borrower
or any Consolidated Subsidiary assumes or becomes liable for such
liabilities) shall not at any time exceed 100% of the purchase price of such
property; and
(i) any Lien on Margin Stock;
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(j) any Lien on the shares of Atlantic LNG Company of Trinidad and
Tobago ("Atlantic LNG") or on the shares of any holding company whose only
assets are shares of Atlantic LNG or shares of such a holding company,
securing the guaranty obligations of the Borrower or a Consolidated
Subsidiary of the Borrower in connection with the financing (or refinancing,
provided that, as a result of such refinancing, such guaranty obligations are
not increased and are not secured by any additional assets or shares) of
Atlantic LNG's liquified natural gas facilities in Trinidad; and
(k) Liens not otherwise permitted by the foregoing clauses of this
Section securing Debt in an aggregate principal amount at any time
outstanding not to exceed 10% of Consolidated Tangible Net Worth.
SECTION 5.11. Consolidations and Mergers. The Borrower will not (i)
consolidate or merge with or into any other Person unless upon completion of
such merger or consolidation the surviving entity is the Borrower or (ii) sell,
lease or otherwise transfer, directly or indirectly, in any one transaction or
series of related transactions, all or substantially all of the assets of the
Borrower and its Consolidated Subsidiaries, taken as a whole, to any other
Person.
SECTION 5.12. Sales of Assets. Except as provided in Section 5.03, the
Borrower shall maintain direct ownership of substantially all of the tangible
and intangible assets employed in connection with (x) the Borrower's United
States domestic carbon black business and (y) the Borrower's United States
domestic fumed silica business, and shall conduct such businesses generally in
the same manner and to the same extent as conducted by the Borrower on September
30, 1996 and as described in the Borrower's 1996 Form 10-K.
SECTION 5.13. Use of Proceeds. The proceeds of the Loans made under
this Agreement will be used by the Borrower for general corporate purposes,
provided that no more than $20,000,000 of principal amount of Loans outstanding
at any time shall be Loans the proceeds of which have been used, directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
buying or carrying Margin Stock (other than stock of the Borrower),
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and provided further that in no event shall such proceeds be used in any manner
which would result in a violation of Regulation U or any other applicable law or
regulation.
SECTION 5.14. Transactions with Affiliates. Neither the Borrower nor
any Consolidated Subsidiary will directly or indirectly engage in any
transaction (including, without limitation, the purchase, sale or exchange of
assets or the rendering of any service) with any Affiliate, except upon terms
that are no less favorable to the Borrower or such Consolidated Subsidiary than
those which might be obtained in an arm's-length transaction at the time with
Persons which are not Affiliates.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the following events
("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of any Loan,
or shall fail to pay within five days of the due date thereof any interest,
fees or any other amount payable hereunder;
(b) the Borrower shall fail to observe or perform any covenant
contained in Sections 5.07 to 5.14, inclusive;
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause (a)
or (b) above) for 30 days after written notice thereof has been given to the
Borrower by the Agent at the request of any Bank;
(d) any representation, warranty, certification or statement made by
the Borrower in this Agreement or in any certificate, financial statement or
other document delivered pursuant to this Agreement shall prove to have been
incorrect in any material respect when made (or deemed made);
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(e) the Borrower or any Subsidiary shall fail to make any payment in
respect of any Material Debt when due, taking into account any applicable
grace period;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or enables the holder of
such Debt or any Person acting on such holder's behalf to accelerate the
maturity thereof;
(g) the Borrower or any Subsidiary or Subsidiaries in which the
Borrower's aggregate direct and indirect Investment is at least $20,000,000
shall commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or themselves or its or
their debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or them or any
substantial part of its or their property, or shall consent to any such
relief or to the appointment of or taking possession by any such official in
an involuntary case or other proceeding commenced against it or them, or
shall make a general assignment for the benefit of creditors, or shall fail
generally to pay its or their debts as they become due, or shall take any
corporate action to authorize any of the foregoing;
(h) an involuntary case or other proceeding shall be commenced against
the Borrower or any Subsidiary or Subsidiaries in which the Borrower's
aggregate direct and indirect Investment is at least $20,000,000 seeking
liquidation, reorganization or other relief with respect to it or them or its
or their debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or them or any
substantial part of its or their property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60 days; or
an order for relief shall be entered against the Borrower or any Subsidiary
or Subsidiaries in which the Borrower's aggregate direct and indirect
Investment is at least $20,000,000 under
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the federal bankruptcy laws as now or hereafter in effect;
(i) any member of the ERISA Group shall fail to pay when due an amount
or amounts aggregating in excess of $20,000,000 which it shall have become
liable to pay under Title IV of ERISA and such amount shall continue to be
unpaid and unstayed for a period of 10 days; or notice of intent to terminate
a Material Plan in a distress termination shall be filed under Title IV of
ERISA by any member of the ERISA Group, any plan administrator of any such
Material Plan or any combination of the foregoing; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate, to impose
liability (other than for premiums under Section 4007 of ERISA) in respect
of, or to cause a trustee to be appointed to administer any Material Plan; or
a condition specified in ERISA Section 4042(a) (other than the condition
specified in ERISA Section 4042(a)(4)) shall exist by reason of which the
PBGC would be entitled to obtain a decree adjudicating that any Material Plan
must be terminated; or there shall occur a complete or partial withdrawal
from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with
respect to, one or more Multiemployer Plans which could cause one or more
members of the ERISA Group to incur a current payment obligation in excess of
$25,000,000;
(j) a judgment or order for the payment of money in excess of
$20,000,000 shall be rendered against the Borrower or any Subsidiary and such
judgment or order shall continue unsatisfied and unstayed for a period of 10
days; or
(k) any person or group of persons (within the meaning of Section 13 of
the Securities Exchange Act of 1934, as amended), other than members of the
Cabot family or Persons holding securities for the benefit of members of the
Cabot family, shall have acquired beneficial ownership (within the meaning of
Rule 13d-3 promulgated by the Securities and Exchange Commission under said
Act) of 25% or more of the outstanding shares of common stock of the
Borrower; or, during any period of 24 consecutive calendar months,
individuals who were directors of the Borrower on the first day of
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such period shall cease to constitute a majority of the board of directors of
the Borrower;
then, and in every such event, the Agent shall (i) if requested by Banks having
more than 50% in aggregate amount of the Commitments, by notice to the Borrower
terminate the Commitments and they shall thereupon terminate, and (ii) if
requested by Banks holding Notes evidencing more than 50% in aggregate principal
amount of the Loans, by notice to the Borrower declare the Notes (together with
accrued interest thereon) to be, and the Notes shall thereupon become,
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower; provided that in
the case of any of the Events of Default specified in clause (g) or (h) above
with respect to the Borrower, without any notice to the Borrower or any other
act by the Agent or the Banks, the Commitments shall thereupon terminate and the
Notes (together with accrued interest thereon) shall become immediately due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower.
SECTION 6.02. Notice of Default. The Agent shall give notice to the
Borrower under Section 6.01(c) promptly upon being requested to do so by any
Bank and shall thereupon notify all the Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement and the Notes as are delegated to
the Agent by the terms hereof or thereof, together with all such powers as are
reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Morgan Guaranty Trust Company of
New York shall have the same rights and powers under this Agreement as any other
Bank and may exercise or refrain from exercising the same as though it were not
the Agent, and Morgan Guaranty Trust Company of New York and its affiliates may
accept deposits from, lend
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money to, and generally engage in any kind of business with the Borrower or any
Subsidiary or affiliate of the Borrower as if it were not the Agent hereunder.
SECTION 7.03. Action by Agent. The obligations of the Agent hereunder
are only those expressly set forth herein. Without limiting the generality of
the foregoing, the Agent shall not be required to take any action with respect
to any Default, except as expressly provided in Article VI.
SECTION 7.04. Consultation with Experts. The Agent may consult with
legal counsel (who may be counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Agent. Neither the Agent nor any of its
affiliates nor any of their respective directors, officers, agents or employees
shall be liable for any action taken or not taken by it in connection herewith
(i) with the consent or at the request of the Required Banks or (ii) in the
absence of its own gross negligence or willful misconduct. Neither the Agent nor
any of its affiliates nor any of their respective directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into
or verify (i) any statement, warranty or representation made in connection with
this Agreement or any borrowing hereunder; (ii) the performance or observance of
any of the covenants or agreements of the Borrower; (iii) the satisfaction of
any condition specified in Article III, except receipt of items required to be
delivered to the Agent; or (iv) the validity, effectiveness or genuineness of
this Agreement, the Notes or any other instrument or writing furnished in
connection herewith. The Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, statement, or other writing
(which may be a bank wire, telex or similar writing) believed by it to be
genuine or to be signed by the proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall, ratably in accordance
with its Commitment, indemnify the Agent, its affiliates and their respective
directors,
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officers, agents and employees (to the extent not reimbursed by the Borrower)
against any cost, expense (including counsel fees and disbursements), claim,
demand, action, loss or liability (except such as result from such indemnitees'
gross negligence or willful misconduct) that such indemnitees may suffer or
incur in connection with this Agreement or any action taken or omitted by such
indemnitees hereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank, 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 Bank also
acknowledges that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
SECTION 7.08. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Banks and the Borrower. Upon any such
resignation, the Required Banks with the written consent of the Borrower, which
consent shall not be unreasonably withheld, shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Required Banks, and shall have accepted such appointment, within 30 days after
the retiring Agent gives notice of resignation, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent, which shall be a commercial bank
organized or licensed under the laws of the United States of America or of any
State thereof and having a combined capital and surplus of at least $50,000,000.
Upon the acceptance of its appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
rights and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent.
SECTION 7.09. Agent's Fee. The Borrower shall pay to the Agent for its
own account fees in the amounts and
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at the times previously agreed upon between the Borrower and the Agent.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair.
If on or prior to the first day of any Interest Period for any Fixed Rate
Borrowing:
(a) the Agent is advised by the Reference Banks that deposits in
dollars (in the applicable amounts) are not being offered to the Reference
Banks in the relevant market for such Interest Period, or
(b) in the case of a Committed Borrowing, Banks having 50% or more of
the aggregate amount of the Commitments advise the Agent that the Adjusted CD
Rate or the London Interbank Offered Rate, as the case may be, as determined
by the Agent will not adequately and fairly reflect the cost to such Banks of
funding their CD Loans or Euro-Dollar Loans, as the case may be, for such
Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and the Banks,
whereupon until the Agent notifies the Borrower that the circumstances giving
rise to such suspension no longer exist, the obligations of the Banks to make CD
Loans or Euro-Dollar Loans, as the case may be, shall be suspended. Unless the
Borrower notifies the Agent at least two Domestic Business Days before the date
of any Fixed Rate Borrowing for which a Notice of Borrowing has previously been
given that it elects not to borrow on such date, (i) if such Fixed Rate
Borrowing is a Committed Borrowing, such Borrowing shall instead be made as a
Base Rate Borrowing and (ii) if such Fixed Rate Borrowing is a Money Market
LIBOR Borrowing, the Money Market LIBOR Loans comprising such Borrowing shall
bear interest for each day from and including the first day to but excluding the
last day of the Interest Period applicable thereto at the Base Rate for such
day.
SECTION 8.02. Illegality. If, on or after the date of this Agreement,
the adoption of any applicable law,
58
<PAGE> 64
rule or regulation, or any change therein, or any change in the interpretation
or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Bank (or its Euro-Dollar Lending Office) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency shall make it unlawful or impossible for any
Bank (or its Euro-Dollar Lending Office) to make, maintain or fund its
Euro-Dollar Loans and such Bank shall so notify the Agent, the Agent shall
forthwith give notice thereof to the other Banks and the Borrower, whereupon
until such Bank notifies the Borrower and the Agent that the circumstances
giving rise to such suspension no longer exist, the obligation of such Bank to
make Euro-Dollar Loans shall be suspended. Before giving any notice to the Agent
pursuant to this Section, such Bank shall designate a different Euro-Dollar
Lending Office if such designation will avoid the need for giving such notice
and will not, in the judgment of such Bank, be otherwise disadvantageous to such
Bank. If such Bank shall determine that it may not lawfully continue to maintain
and fund any of its outstanding Euro-Dollar Loans to maturity and shall so
specify in such notice, the Borrower shall immediately prepay in full the then
outstanding principal amount of each such Euro-Dollar Loan, together with
accrued interest thereon. Concurrently with prepaying each such Euro-Dollar
Loan, the Borrower shall borrow a Base Rate Loan in an equal principal amount
from such Bank (on which interest and principal shall be payable
contemporaneously with the related Euro-Dollar Loans of the other Banks), and
such Bank shall make such a Base Rate Loan.
SECTION 8.03. Increased Cost and Reduced Return. (a) If on or after (x)
the date hereof, in the case of any Committed Loan or any obligation to make
Committed Loans or (y) the date of the related Money Market Quote, in the case
of any Money Market Loan, the adoption of any applicable law, rule or
regulation, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Bank (or its Applicable Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency shall impose, modify or deem
59
<PAGE> 65
applicable any reserve (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System, but excluding
(i) with respect to any CD Loan any such requirement included in an applicable
Domestic Reserve Percentage and (ii) with respect to any Euro-Dollar Loan any
such requirement with respect to which such Bank is entitled to compensation
during the relevant Interest Period under Section 2.16), special deposit,
insurance assessment (excluding, with respect to any CD Loan, any such
requirement reflected in an applicable Assessment Rate) or similar requirement
against assets of, deposits with or for the account of, or credit extended by,
any Bank (or its Applicable Lending Office) or shall impose on any Bank (or its
Applicable Lending Office) or on the United States market for certificates of
deposit or the London interbank market any other condition affecting its Fixed
Rate Loans, its Note or its obligation to make Fixed Rate Loans and the result
of any of the foregoing is to increase the cost to such Bank (or its Applicable
Lending Office) of making or maintaining any Fixed Rate Loan, or to reduce the
amount of any sum received or receivable by such Bank (or its Applicable Lending
Office) under this Agreement or under its Note with respect thereto, by an
amount deemed by such Bank to be material, then, within 15 days after demand by
such Bank (with a copy to the Agent), the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank for such increased
cost or reduction. The Borrower's obligation under this Section 8.03(a) shall be
limited to paying any costs which the Bank incurs after or within 45 days prior
to receipt by the Borrower of the notice provided for under Section 8.03(c).
(b) If any Bank shall have determined that, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or 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 capital of such Bank (or its Parent) as a
consequence of such Bank's obligations hereunder to a level below that which
such Bank (or its Parent) could have achieved but for such adoption, change,
request or directive
60
<PAGE> 66
(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time, within 15
days after demand by such Bank (with a copy to the Agent), the Borrower shall
pay to such Bank such additional amount or amounts as will compensate such Bank
(or its Parent) for such reduction. The Borrower's obligation under this Section
8.03(b) shall be limited to paying any costs which the Bank incurs after or
within 90 days prior to receipt by the Borrower of the notice provided for under
Section 8.03(c).
(c) Each Bank will promptly notify the Borrower and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section and will designate a
different Applicable Lending Office if such designation will avoid the need for,
or reduce the amount of, such compensation and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section and setting forth the calculation in
reasonable detail of the additional amount or amounts to be paid to it hereunder
shall be conclusive in the absence of manifest error, provided that the Borrower
shall have the right, within 60 days of receipt of such certificate, to
demonstrate that the amount set forth in such certificate is incorrect and
request an adjustment of the amount to be, or therefore, paid. In determining
such amount, such Bank may use any reasonable averaging and attribution methods.
SECTION 8.04. Base Rate Loans Substituted for Affected Fixed Rate
Loans. If (i) the obligation of any Bank to make Euro-Dollar Loans has been
suspended pursuant to Section 8.02 or (ii) any Bank has demanded compensation
under Section 8.03(a) and the Borrower shall, by at least five Euro-Dollar
Business Days' prior notice to such Bank through the Agent, have elected that
the provisions of this Section shall apply to such Bank, then, unless and until
such Bank notifies the Borrower that the circumstances giving rise to such
suspension or demand for compensation no longer apply:
(a) all Loans which would otherwise be made by such Bank as CD Loans or
Euro-Dollar Loans, as the case may be, shall be made instead as Base Rate
Loans (on which interest and principal shall be payable
61
<PAGE> 67
contemporaneously with the related Fixed Rate Loans of the other Banks), and
(b) after each of its CD Loans or Euro-Dollar Loans, as the case may
be, has been repaid, all payments of principal which would otherwise be
applied to repay such Fixed Rate Loans shall be applied to repay its Base
Rate Loans instead.
SECTION 8.05. Substitution of Bank. If (i) any Bank has required the
Borrower to pay additional amounts to or for the account of any Bank pursuant to
Section 2.15, (ii) the obligation of any Bank to make Euro-Dollar Loans has been
suspended pursuant to Section 8.02 or (iii) any Bank has demanded compensation
under Section 8.03, the Borrower shall, upon at least three Euro-Dollar Business
Days' notice to the Agent, have the right, with the assistance of the Agent, to
seek a mutually satisfactory substitute bank or banks (which may be one or more
of the Banks) to purchase the Note and assume the Commitment of such Bank.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, facsimile
transmission or similar writing) and shall be given to such party: (x) in the
case of the Borrower or the Agent, at its address set forth on the signature
pages hereof, (y) in the case of any Bank, at its address or facsimile number
set forth in its Administrative Questionnaire or (z) in the case of any party,
such other address as such party may hereafter specify for the purpose by notice
to the Agent and the Borrower. Each such notice, request or other communication
shall be effective (i) if given by mail, when delivered or (ii) if given by any
other means, when delivered at the address specified in this Section ; provided
that notices to the Agent under Article II or Article VIII shall not be
effective until received.
SECTION 9.02. No Waivers. No failure or delay by the Agent or any Bank
in exercising any right, power or
62
<PAGE> 68
privilege hereunder or under any Note shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
SECTION 9.03. Expenses; Documentary Taxes; Indemnification. (a) The
Borrower shall pay (i) all out-of-pocket expenses of the Agent, including fees
and disbursements of special counsel for the Agent, in connection with the
preparation of this Agreement, any waiver or consent hereunder or any amendment
hereof or any Default or alleged Default hereunder and (ii) if an Event of
Default occurs, all out-of-pocket expenses incurred by the Agent and each Bank,
including fees and disbursements of counsel, in connection with such Event of
Default and collection, bankruptcy, insolvency and other enforcement proceedings
resulting therefrom. The Borrower shall indemnify each Bank against any transfer
taxes (except in the case of any voluntary transfer by a Bank to an Assignee or
Participant hereunder), documentary taxes, assessments or charges made by any
governmental authority by reason of the execution and delivery of this Agreement
or the Notes.
(b) The Borrower agrees to indemnify each Bank and hold each Bank
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel, which may be incurred by any Bank (or by the Agent in
connection with its actions as Agent hereunder) in connection with any
investigative, administrative or judicial proceeding (whether or not such Bank
shall be designated a party thereto) relating to or arising out of this
Agreement or any actual or proposed use of proceeds of Loans hereunder; provided
that no Bank shall have the right to be indemnified hereunder for its own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction.
SECTION 9.04. Sharing of Set-Offs. Each Bank agrees that if it shall,
by exercising any right of set-off or counterclaim or otherwise, receive payment
of a proportion of the aggregate amount of principal and interest due with
respect to any Note held by it which is greater than the proportion received by
any other Bank in respect of
63
<PAGE> 69
the aggregate amount of principal and interest due with respect to any Note held
by such other Bank, the Bank receiving such proportionately greater payment
shall purchase such participations in the Notes held by the other Banks, and
such other adjustments shall be made, as may be required so that all such
payments of principal and interest with respect to the Notes held by the Banks
shall be shared by the Banks pro rata; provided that nothing in this Section
shall impair the right of any Bank to exercise any right of set-off or
counterclaim it may have and to apply the amount subject to such exercise to the
payment of indebtedness of the Borrower other than its indebtedness under the
Notes. The Borrower agrees, to the fullest extent it may effectively do so under
applicable law, that any holder of a participation in a Note, whether or not
acquired pursuant to the foregoing arrangements, may exercise rights of set-off
or counterclaim and other rights with respect to such participation as fully as
if such holder of a participation were a direct creditor of the Borrower in the
amount of such participation.
SECTION 9.05. Amendments and Waivers. Any provision of this Agreement
or the Notes may be amended or waived if, but only if, such amendment or waiver
is in writing and is signed by the Borrower and the Required Banks (and, if the
rights or duties of the Agent are affected thereby, by the Agent); provided that
no such amendment or waiver shall, unless signed by all the Banks, (i) increase
or decrease the Commitment of any Bank (except for a ratable decrease in the
Commitments of all Banks) or subject any Bank to any additional obligation, (ii)
reduce the principal of or rate of interest on any Loan or any fees hereunder,
(iii) postpone the date fixed for any payment of principal of or interest on any
Loan or any fees hereunder or for any reduction or termination of any Commitment
or (iv) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Notes, or the number of Banks, which shall be required
for the Banks or any of them to take any action under this Section or any other
provision of this Agreement.
SECTION 9.06. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that the Borrower may not
64
<PAGE> 70
assign or otherwise transfer any of its rights under this Agreement without the
prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment or
any or all of its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon notice to the
Borrower and the Agent, such Bank shall remain responsible for the performance
of its obligations hereunder, and the Borrower and the Agent shall continue to
deal solely and directly with such Bank in connection with such Bank's rights
and obligations under this Agreement. Any agreement pursuant to which any Bank
may grant such a participating interest shall provide that such Bank shall
retain the sole right and responsibility to enforce the obligations of the
Borrower hereunder including, without limitation, the right to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such participation agreement may provide that such Bank will not agree to
any modification, amendment or waiver of this Agreement described in clause (i),
(ii) or (iii) of Section 9.05 which would directly affect the Participant
without the consent of the Participant. The Borrower agrees that each
Participant shall, to the extent provided in its participation agreement, be
entitled to the benefits of Article VIII with respect to its participating
interest. An assignment or other transfer which is not permitted by subsection
(c) or (d) below shall be given effect for purposes of this Agreement only to
the extent of a participating interest granted in accordance with this
subsection (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part of all, of its
rights and obligations under this Agreement and the Notes (provided that any
such assignment shall be of an amount not less than $10,000,000), and such
Assignee shall assume such rights and obligations, pursuant to an Assignment and
Assumption Agreement in substantially the form of Exhibit G hereto executed by
such Assignee and such transferor Bank, with (and subject to) the subscribed
consent of the Borrower and the Agent; provided that if an Assignee is another
Bank or is an affiliate of such transferor Bank, no such consent shall be
required; and provided further that such assignment
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<PAGE> 71
may, but need not, include rights of the transferor Bank in respect of
outstanding Money Market Loans. Upon execution and delivery of such instrument
and payment by such Assignee to such transferor Bank of an amount equal to the
purchase price agreed between such transferor Bank and such Assignee, such
Assignee shall be a Bank party to this Agreement and shall have all the rights
and obligations of a Bank with a Commitment as set forth in such instrument of
assumption, and the transferor Bank shall be released from its obligations
hereunder to a corresponding extent, and no further consent or action by any
party shall be required. Upon the consummation of any assignment pursuant to
this subsection (c), the transferor Bank, the Agent and the Borrower shall make
appropriate arrangements so that, if required, a new Note is issued to the
Assignee. In connection with any such assignment, the transferor Bank shall pay
to the Agent an administrative fee for processing such assignment in the amount
of $2,000. If the Assignee is not incorporated under the laws of the United
States of America or a state thereof, it shall deliver to the Borrower and the
Agent certification as to exemption from deduction or withholding of any United
States federal income taxes in accordance with Section 2.15.
(d) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Note to a Federal Reserve Bank. No such assignment
shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 2.15 or 8.03 than
such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Borrower's prior written
consent or by reason of the provisions of Section 2.15, 8.02 or 8.03 requiring
such Bank to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
SECTION 9.07. Collateral. Each of the Banks represents to the Agent and
each of the other Banks that it in good faith is not relying upon any Margin
Stock as collateral in the extension or maintenance of the credit provided for
in this Agreement.
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<PAGE> 72
SECTION 9.08. Governing Law; Submission to Jurisdiction. This Agreement
and each Note shall be governed by and construed in accordance with the laws of
the State of New York. The Borrower hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York State court sitting in New York City for purposes
of all legal proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. The Borrower irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum.
SECTION 9.09. Counterparts; Integration. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement constitutes the entire agreement and understanding among the
parties hereto and supersedes any and all prior agreements and understandings,
oral or written, relating to the subject matter hereof.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE AGENT AND
THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
CABOT CORPORATION
By /s/ Margaret J. Hanratty
----------------------------------
Title: Vice President & Treasurer
Telecopy number: (617) 342-6103
67
<PAGE> 73
<TABLE>
<CAPTION>
Commitments
- -----------
<S> <C>
$ 40,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Robert L. Barrett, Jr.
--------------------------------------
Title: Vice President
$ 40,000,000 THE FIRST NATIONAL BANK
OF BOSTON
By /s/ Harvey A. Thayer, Jr.
--------------------------------------
Title: Director
$ 35,000,000 CITIBANK, N.A.
By /s/ James N. Simpson
--------------------------------------
Title: Attorney-in-fact
$ 30,000,000 THE CHASE MANHATTAN BANK
By /s/ Scott S. Ward
--------------------------------------
Title: Vice President
</TABLE>
68
<PAGE> 74
<TABLE>
<CAPTION>
Commitments
- -----------
<S> <C>
$ 25,000,000 ABN AMRO BANK N.V.
By /s/ Carol A. Levine
--------------------------------------
Title: Senior Vice President and
Managing Director
By /s/ Charles J. Wahle
--------------------------------------
Title: Vice President
$ 25,000,000 MIDLAND BANK PLC, NEW YORK
BRANCH
By /s/ Mark J. Rakov
--------------------------------------
Title: Authorized Signatory
$ 25,000,000 THE INDUSTRIAL BANK OF JAPAN
TRUST COMPANY
By /s/ Robert W. Ramage, Jr.
--------------------------------------
Title: Senior Vice President
$ 25,000,000 BANK OF AMERICA ILLINOIS
By /s/ George Poon
--------------------------------------
Title: Authorized Officer
$ 25,000,000 SOCIETE GENERALE, NEW YORK BRANCH
By /s/ Michelle Martin
--------------------------------------
Title: Assistant Vice President
</TABLE>
69
<PAGE> 75
<TABLE>
<CAPTION>
Commitments
- -----------
<S> <C>
$ 25,000,000 WACHOVIA BANK OF GEORGIA, N.A.
By /s/ Elizabeth Colt
--------------------------------------
Title: Vice President
$ 5,000,000 per pro BROWN BROTHERS HARRIMAN & CO.
By /s/ William J. Whelan, Jr.
--------------------------------------
Title: Senior Manager
- -----------------
Total Commitments
$300,000,000
=================
</TABLE>
70
<PAGE> 76
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By /s/ Robert L. Barrett, Jr.
--------------------------------------
Title: Vice President
60 Wall Street
New York, New York 10260
Attention: Robert Barret
Telecopy number: (212) 648-5108
71
<PAGE> 77
EXHIBIT A
NOTE
New York, New York
January 3, 1997
For value received, Cabot Corporation (the "Borrower"), a Delaware
corporation (the "Borrower"), promises to pay to the order of (the "Bank"), for
the account of its Applicable Lending Office, the unpaid principal amount of
each Loan made by the Bank to the Borrower pursuant to the Credit Agreement
referred to below on the last day of the Interest Period relating to such Loan.
The Borrower promises to pay interest on the unpaid principal amount of each
such Loan on the dates and at the rate or rates provided for in the Credit
Agreement. All such payments of principal and interest shall be made in lawful
money of the United States in Federal or other immediately available funds at
the office of Morgan Guaranty Trust Company of New York, 60 Wall Street, New
York, New York.
All Loans made by the Bank, the respective types and maturities thereof
and all repayments of the principal thereof shall be recorded by the Bank and,
if the Bank so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to each
such Loan then outstanding may be endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or under
the Credit Agreement.
This note is one of the Notes referred to in the Credit Agreement dated
as of January 3, 1997 among the Borrower, the banks listed on the signature
pages thereof and Morgan Guaranty Trust Company of New York, as Agent (as the
same may be amended from time to time, the "Credit Agreement"). Terms defined in
the Credit Agreement are used herein with the same meanings. Reference is made
to the Credit Agreement for provisions for the prepayment hereof and the
acceleration of the maturity hereof.
<PAGE> 78
CABOT CORPORATION
By ________________________
Title:
2
<PAGE> 79
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Amount of
Amount of Type of Principal Maturity Notation
Date Loan Loan Repaid Date Made By
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 80
EXHIBIT B
Form of Money Market Quote Request
[Date]
To: Morgan Guaranty Trust Company of New York
(the "Agent")
From: Cabot Corporation (the "Borrower")
Re: Credit Agreement (the "Credit Agreement") dated as
of January 3, 1997 among the Borrower, the Banks
listed on the signature pages thereof and the Agent
We hereby give notice pursuant to Section 2.03 of the Credit Agreement
that we request Money Market Quotes for the following proposed Money Market
Borrowing(s):
Date of Borrowing: __________________
<TABLE>
<CAPTION>
Principal Amount** Interest Period***
- ------------------ ------------------
<S> <C>
$
</TABLE>
Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the London Interbank Offered Rate.]
Terms used herein have the meanings assigned to them in the Credit
Agreement.
[NAME OF BORROWER]
By________________________
Title:
- --------
** Amount must be $10,000,000 or a larger integral multiple of $1,000,000.
***Not less than one month (LIBOR Auction) or not less than 30 days (Absolute
Rate Auction), subject to the provisions of the definition of Interest Period.
<PAGE> 81
EXHIBIT C
Form of Invitation for Money Market Quotes
To: [Name of Bank]
Re: Invitation for Money Market Quotes
to Cabot Corporation (the "Borrower")
Pursuant to Section 2.03 of the Credit Agreement dated as of January
3, 1997 among the Borrower, the Banks parties thereto and the undersigned, as
Agent, we are pleased on behalf of the Borrower to invite you to submit Money
Market Quotes to the Borrower for the following proposed Money Market
Borrowing(s):
Date of Borrowing: __________________
<TABLE>
<CAPTION>
Principal Amount Interest Period
- ---------------- ---------------
<S> <C>
$
</TABLE>
Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the London Interbank Offered Rate.]
Please respond to this invitation by no later than [2:00 P.M.] [9:15
A.M.] (New York City time) on [date].
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By______________________
Authorized Officer
<PAGE> 82
EXHIBIT D
Form of Money Market Quote
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
60 Wall Street
New York, New York 10260
Attention:
Re: Money Market Quote to
Cabot Corporation (the "Borrower")
In response to your invitation on behalf of the Borrower dated
_____________, 19__, we hereby make the following Money Market Quote on the
following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank: _____________________
3. Date of Borrowing: ____________________****
4. We hereby offer to make Money Market Loan(s) in the following principal
amounts, for the following Interest Periods and at the following rates:
Principal Interest Money Market
Amount***** Period****** [Margin*******] [Absolute Rate********]
- --------
****As specified in the related Invitation.
*****Principal amount bid for each Interest Period may not exceed
principal amount requested. Specify aggregate limitation if the sum of the
individual offers exceeds the amount the Bank is willing to lend. Bids must be
made for $5,000,000 or a larger integral multiple of $1,000,000.
******Not less than one month or not less than 30 days, as specified in
the related Invitation. No more than five bids are permitted for each Interest
Period.
*******Margin over or under the London Interbank Offered Rate
determined for the applicable Interest Period. Specify percentage (to the
nearest 1/10,000 of 1%) and specify whether "PLUS" or "MINUS".
<PAGE> 83
$
$
[Provided, that the aggregate principal amount of Money Market Loans for which
the above offers may be accepted shall not exceed $____________.]**
We understand and agree that the offer(s) set forth above, subject to
the satisfaction of the applicable conditions set forth in the Credit Agreement
dated as of January 3, 1997 among the Borrower, the Banks listed on the
signature pages thereof and yourselves, as Agent, irrevocably obligates us to
make the Money Market Loan(s) for which any offer(s) are accepted, in whole or
in part.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:__________________________
Authorized Officer
********Specify rate of interest per annum (to the nearest 1/10,000th
of 1%).
2
<PAGE> 84
EXHIBIT E
OPINION OF GENERAL
COUNSEL OF THE BORROWER
January 3, 1997
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
This opinion is rendered to you pursuant to Section 3.01(e) of the
Credit Agreement dated as of January 3, 1997 (the "Credit Agreement") among
Cabot Corporation, a Delaware corporation (the "Borrower"), the banks listed on
the signature pages thereof (the "Banks") and Morgan Guaranty Trust Company, as
Agent (the "Agent"). Terms defined in the Credit Agreement and not otherwise
defined herein are used herein with the meanings so defined.
I am the Borrower's General Counsel, and I have examined the original
or copies, certified or otherwise identified to my satisfaction, of such
documents, corporate records, certificates of public officials and other
instruments, and have conducted such other investigations of fact and law, as I
have deemed necessary or advisable for purposes of rendering the opinions set
forth herein.
In my examination I have assumed the genuineness of all signatures
(except the signature of the Borrower on the Credit Agreement and the Notes),
the legal capacity of natural persons, the authenticity of all documents
submitted to me as originals, the conformity to original documents of all
documents submitted to me as certified or other copies, and the authenticity of
the originals of such copies. I have also assumed the due authorization,
execution and delivery of the Credit Agreement by all parties thereto other than
the Borrower. In rendering this opinion I have assumed that no party will
exercise any right or remedy except in a commercially reasonable manner and in
good faith.
My opinions herein are limited to the effects of the laws of the United
States of America and The
<PAGE> 85
Commonwealth of Massachusetts, and the Delaware General Corporation Law. I note
that the Credit Agreement and Notes purport to be governed by the laws of New
York. I have, with your permission, assumed for the purposes of this opinion
that the laws of New York, insofar as they relate to the Credit Agreement, the
Notes and related transactions, are the same as those of Massachusetts; and I
express no opinion regarding the reasonableness of such assumption.
My opinions herein to the extent they relate to the enforceability of
the Credit Agreement and Notes are subject to the following qualifications: (a)
enforceability may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer, bulk transfer or other similar laws now or
hereafter in effect relating to creditors' rights generally, and (ii) the
application of principles of equity, including without limitation the principle
that equitable remedies, such as the remedy of specific performance, are subject
to the discretion of the court before which any proceeding therefor may be
brought; (b) I express no opinion as to the enforceability of any provision
purporting to (i) waive the right to trial by jury or any other rights under the
constitution or laws of the United States of America or any state, (ii) give the
Agent or the Banks the sole and absolute discretion to decide matters affecting
the Borrower, or (iii) indemnify or exculpate any party for conduct which is
negligent or in bad faith; and (c) I express no opinion as to the effect of any
law of any jurisdiction (other than Massachusetts) which limits the rate of
interest that any Bank may charge or collect. I also wish to point out that the
holder of a Note may, under certain circumstances, be called upon to prove the
outstanding amount of the loans evidenced thereby.
My opinion in paragraph 6 below, to the extent it relates to the laws
of jurisdictions other than Delaware, is based solely upon the opinions of
Slaughter and May, in the case of England, and of Trenite Van Doorne, in the
case of the Netherlands, copies of which are attached hereto.
Based upon and subject to the foregoing, I am of the opinion that:
1. The Borrower is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware with corporate
powers adequate for the execution, delivery and performance of the
2
<PAGE> 86
Credit Agreement and the Notes, and for the carrying on of the business now
conducted by it. No government license, authorization, consent or approval is
required to be obtained by the Borrower in order to enable it to execute,
deliver and perform the Credit Agreement and the Notes.
2. The execution, delivery and performance by the Borrower of the
Credit Agreement and each Note and the making of the borrowings contemplated by
the Credit Agreement have been duly authorized by the Borrower.
3. The Credit Agreement and each Note have been duly executed and
delivered by the Borrower, and each is the legal, valid, binding and enforceable
obligation of the Borrower.
4. Neither the execution or delivery of the Credit Agreement or any
Note by the Borrower, nor the making of the borrowings under the Credit
Agreement by the Borrower, nor compliance by the Borrower with the terms and
provisions of the Credit Agreement or any Note, each as in effect on the date
hereof, will contravene, result in a breach or violation of or constitute a
default or result in the creation of a Lien under: (i) the charter or by-laws of
the Borrower; (ii) any existing federal or Massachusetts law or government
regulation applicable to the Borrower; or (iii) any injunction, judgment, order
or decree or material agreement or instrument to which the Borrower is a party
or by which it is bound and of which I have knowledge.
5. Except as described in the Borrower's 1996 Form 10-K, to the best of
my knowledge after diligent inquiry, there is no action, suit or proceeding
pending against or threatened against or affecting, the Borrower or any of its
Consolidated Subsidiaries before any court or arbitrator or any governmental
body, agency or official which poses a material risk of being adversely
determined and, if so determined, might reasonably be expected to materially
adversely affect the business, consolidated financial position or consolidated
results of operations of the Borrower and its Consolidated Subsidiaries
considered as whole or which in any manner draws into question the validity of
the Credit Agreement or the Notes.
6. Each of Cabot Carbon Limited, Cabot G.B. Limited, Cabot B.V. and
Cabot International Capital Corporation ("CICC") (being all of the current
subsidiaries of the Borrower which were listed as significant
3
<PAGE> 87
subsidiaries in Borrower's 1996 Form 10-K) is a corporation duly incorporated,
validly existing and the case of CICC, in good standing under the laws of the
jurisdiction of its incorporation.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by or furnished to any other person without my prior written
consent.
Very truly yours,
Robert Rothberg
4
<PAGE> 88
EXHIBIT F
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENT
January 3, 1997
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the Credit Agreement (the
"Credit Agreement") dated as of January 3, 1997 among Cabot Corporation, a
Delaware corporation (the "Borrower"), the banks listed on the signature pages
thereof (the "Banks") and Morgan Guaranty Trust Company of New York, as Agent
(the "Agent"), and have acted as special counsel for the Agent for the purpose
of rendering this opinion pursuant to Section 3.01(f) of the Credit Agreement.
Terms defined in the Credit Agreement are used herein as therein defined.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The execution, delivery and performance by the Borrower of the
Credit Agreement and the Notes are within the Borrower's corporate powers and
have been duly authorized by all necessary corporate action.
2. The Credit Agreement constitutes a valid and binding agreement of
the Borrower and the Notes constitute valid and binding obligations of the
Borrower, in each case enforceable against the Borrower, subject to bankruptcy,
insolvency, reorganization, moratorium and other similar
<PAGE> 89
laws of general application affecting the rights and remedies of creditors and
to general principles of equity (regardless of whether considered in a
proceeding at law or in equity).
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York, the federal laws of the
United States of America and the General Corporation Law of the State of
Delaware. In giving the foregoing opinion, we express no opinion as to the
effect (if any) of any law of any jurisdiction (except the State of New York) in
which any Bank is located which limits the rate of interest that such Bank may
charge or collect.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by or furnished to any other person without our prior written
consent.
Very truly yours,
2
<PAGE> 90
EXHIBIT G
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of ___________, 19__ among [ASSIGNOR] (the
"Assignor"), [ASSIGNEE] (the "Assignee"), CABOT CORPORATION (the "Borrower") and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the "Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the "Agreement")
relates to the Credit Agreement dated as of January 3, 1997 among the Borrower,
the Assignor and the other Banks party thereto, as Banks, and the Agent (the
"Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has a
Commitment to make Loans to the Borrower in an aggregate principal amount at any
time outstanding not to exceed $__________;
WHEREAS, Committed Loans made to the Borrower by the Assignor under the
Credit Agreement in the aggregate principal amount of $__________ are
outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of the
rights of the Assignor under the Credit Agreement in respect of a portion of its
Commitment thereunder in an amount equal to $__________ (the "Assigned Amount"),
together with a corresponding portion of its outstanding Committed Loans, and
the Assignee proposes to accept assignment of such rights and assume the
corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise defined
herein shall have the respective meanings set forth in the Credit Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and sells to the
Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the Assigned Amount, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the
<PAGE> 91
obligations of the Assignor under the Credit Agreement to the extent of the
Assigned Amount, including the purchase from the Assignor of the corresponding
portion of the principal amount of the Committed Loans made by the Assignor
outstanding at the date hereof. Upon the execution and delivery hereof by the
Assignor, the Assignee, the Borrower and the Agent and the payment of the
amounts specified in Section 3 required to be paid on the date hereof (i) the
Assignee shall, as of the date hereof, succeed to the rights and be obligated to
perform the obligations of a Bank under the Credit Agreement with a Commitment
in an amount equal to the Assigned Amount, and (ii) the Commitment of the
Assignor shall, as of the date hereof, be reduced by a like amount and the
Assignor released from its obligations under the Credit Agreement to the extent
such obligations have been assumed by the Assignee. The assignment provided for
herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds the amount heretofore agreed between them. It is
understood that commitment and/or facility fees accrued to the date hereof are
for the account of the Assignor and such fees accruing from and including the
date hereof are for the account of the Assignee. Each of the Assignor and the
Assignee hereby agrees that if it receives any amount under the Credit Agreement
which is for the account of the other party hereto, it shall receive the same
for the account of such other party to the extent of such other party's interest
therein and shall promptly pay the same to such other party.
SECTION 4. Consent of the Borrower. This Agreement is conditioned upon
the consent of the Borrower and the Agent pursuant to Section 9.06(c) of the
Credit Agreement. The execution of this Agreement by the Borrower and the Agent
is evidence of this consent. Pursuant to Section 9.06(c) the Borrower agrees to
execute and deliver a Note payable to the order of the Assignee to evidence the
assignment and assumption provided for herein upon the surrender and
cancellation of the Note held by the Assignor.
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition, or statements of the
Borrower, or the validity and enforceability of the
2
<PAGE> 92
obligations of the Borrower in respect of the Credit Agreement or any Note. The
Assignee acknowledges that it has, independently and without reliance on the
Assignor, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement and will continue to be responsible for making its own independent
appraisal of the business, affairs and financial condition of the Borrower.
SECTION 6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[ASSIGNOR]
By_________________________
Title:
[ASSIGNEE]
By__________________________
Title:
CABOT CORPORATION
By__________________________
Title:
3
<PAGE> 93
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By__________________________
Title:
4
<PAGE> 1
EXHIBIT 11
CABOT CORPORATION AND CONSOLIDATED SUBSIDIARIES
<TABLE>
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
For the three month period ended March 31, 1997
(In thousands, except per share amounts)
<CAPTION>
Primary Fully Diluted
------- -------------
<S> <C> <C>
Shares of common stock outstanding at January 1, 1997,
less treasury stock 70,149 70,149
Plus net weighted shares of treasury stock purchased (223) (223)
Plus common stock equivalents:
Effect of convertible preferred stock conversion 6,049
Effect of equity incentive awards 1,023 1,023
-------- --------
Weighted average shares outstanding 70,949 76,998
======== ========
Income applicable to common shares $ 28,563 $ 28,563
Dividends on preferred stock 817
Preferred stock conversion compensation shortfall (449)
-------- --------
Earnings applicable to common shares $ 28,563 $ 28,931
======== ========
Earnings per common share $ 0.40 $ 0.38
======== ========
</TABLE>
-17-
<PAGE> 2
EXHIBIT 11
CABOT CORPORATION AND CONSOLIDATED SUBSIDIARIES
<TABLE>
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
For the six month period ended March 31, 1997
(In thousands, except per share amounts)
<CAPTION>
Primary Fully Diluted
------- -------------
<S> <C> <C>
Shares of common stock outstanding at October 1, 1996
less treasury stock 71,589 71,589
Plus net weighted shares of treasury stock purchased (1,172) (1,172)
Plus common stock equivalents:
Effect of convertible preferred stock conversion 6,049
Effect of equity incentive awards 1,047 1,047
-------- --------
Weighted average shares outstanding 71,464 77,513
======== ========
Income applicable to common shares $ 52,855 $ 52,855
Dividends on preferred stock 1,637
Preferred stock conversion compensation shortfall (899)
-------- --------
Earnings applicable to common shares $ 52,855 $ 53,593
======== ========
Earnings per common share $ 0.74 $ 0.69
======== ========
</TABLE>
-18-
<PAGE> 1
EXHIBIT 12
CABOT CORPORATION AND CONSOLIDATED SUBSIDIARIES
<TABLE>
STATEMENT REGARDING COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in thousands)
<CAPTION>
Six Months Years ended September 30
ended -------------------------------------------------------
March 31, 1997 1996 1995 1994 1993 1992
-------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Earnings:
Pre-tax income from continuing $ 74,678 $279,834 $256,029 $118,325 $ 67,900 $116,599
operations
Distributed income of affiliated
companies 6,251 11,173 11,699 5,638 5,988 5,766
Add fixed charges:
Interest on indebtedness 20,260 41,718 35,639 41,668 44,043 41,714
Portion of rents representative of
the interest factor 2,418 4,837 5,515 5,879 4,838 4,933
-------- -------- -------- -------- -------- --------
Income as adjusted $103,607 $337,562 $308,882 $171,510 $122,769 $169,012
Fixed charges:
Interest on indebtedness $ 20,260 $ 41,718 $ 35,639 $ 41,668 $ 44,043 $ 41,714
Capitalized interest 3,963
Portion of rents representative of
the interest factor 2,418 4,837 5,515 5,879 4,838 4,933
-------- -------- -------- -------- -------- --------
Total fixed charges $ 22,678 $ 46,555 $ 41,154 $ 47,547 $ 48,881 $ 50,610
Ratio of earnings to fixed charges 4.57 7.25 7.51 3.61 2.51 3.34
======== ======== ======== ======== ======== ========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 48,680
<SECURITIES> 0
<RECEIVABLES> 314,041
<ALLOWANCES> 4,665
<INVENTORY> 250,943
<CURRENT-ASSETS> 642,735
<PP&E> 1,744,671
<DEPRECIATION> 812,115
<TOTAL-ASSETS> 1,838,046
<CURRENT-LIABILITIES> 557,176
<BONDS> 296,449
0
75,336
<COMMON> 135,550
<OTHER-SE> 1,239,680
<TOTAL-LIABILITY-AND-EQUITY> 1,838,046
<SALES> 431,964
<TOTAL-REVENUES> 433,577
<CGS> 305,627
<TOTAL-COSTS> 305,627
<OTHER-EXPENSES> 24,300
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,590
<INCOME-PRETAX> 39,934
<INCOME-TAX> 14,376
<INCOME-CONTINUING> 29,380
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,380
<EPS-PRIMARY> .40
<EPS-DILUTED> .38
</TABLE>
