UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20541
FORM 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarter ended September 30, 1995
( ) Transition Report Pursuant to Section 13 or 15 (d) of the Securities Act
of 1934
For the transition period from to
Commission File Number 1-5910
CARTER-WALLACE, INC.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(Exact name of registrant as specified in its charter)
Delaware 13-4986583
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1345 Avenue of the Americas
New York, New York 10105
(Address of principal executive
offices)
Registrant's telephone number, including area code: 212-339-5000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
The number of shares of the registrant's Common Stock and Class B common
stock outstanding at September 30, 1995 were 33,624,900 and 12,488,400,
respectively.
CARTER-WALLACE, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
SEPTEMBER 30, 1995
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Condensed Consolidated Statements of Earnings for the
three and six months ended September 30, 1995 and 1994 1
Condensed Consolidated Balance Sheets at
September 30, 1995 and March 31, 1995 2
Condensed Consolidated Statements of Cash Flows
for the six months ended September 30, 1995 and 1994 3
Notes to Condensed Consolidated Financial Statements 4
Report by KPMG Peat Marwick LLP on their Limited Review 7
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 15
Item 4 - Submission of Matters to a Vote
of Security Holders 15
Item 6 - Exhibits and Reports on Form 8-K 15
Signatures 16
<TABLE>
PART I - FINANCIAL INFORMATION
CARTER-WALLACE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
1995 1994 1995 1994
Revenues:
<S> <C> <C> <C> <C>
Net sales $154,810,000 $168,111,000 $331,847,000 $351,415,000
Other revenues 1,948,000 1,460,000 4,290,000 2,828,000
156,758,000 169,571,000 336,137,000 354,243,000
Cost and expenses:
Cost of goods sold 59,712,000 63,710,000 122,104,000 125,993,000
Advertising, marketing
& other selling
expenses 59,966,000 61,697,000 124,583,000 130,907,000
Research & development
expenses 6,536,000 12,527,000 13,357,000 25,725,000
General, administrative
& other expenses 20,778,000 22,881,000 43,958,000 44,333,000
Provision for
restructuring 16,500,000 49,000,000 16,500,000 49,000,000
Provision for loss on
Felbatol - 36,640,000 - 36,640,000
Provision for condom
plant closing - - 20,100,000 -
Provision for loss on
discontinuance of the
Organidin (iodinated
glycerol) product line - - - 17,500,000
Interest expense 935,000 478,000 1,744,000 868,000
164,427,000 246,933,000 342,346,000 430,966,000
Earnings (loss) before
taxes on income (7,669,000) (77,362,000) (6,209,000) (76,723,000)
Provision (benefit) for
taxes on income (3,145,000) (30,120,000) (2,546,000) (29,922,000)
Net (loss) $ (4,524,000)$(47,242,000)$ (3,663,000)$(46,801,000)
Net earnings (loss) per
average share of common
stock outstanding $(.10) $(1.03) $(.08) $(1.02)
Cash dividends per share $ .04 $ .0833 $ .08 $ .1666
Average shares of common
stock outstanding 46,113,000 46,059,000 46,132,000 46,064,000
</TABLE>
<TABLE>
CARTER-WALLACE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
September 30, March 31,
1995 1995
Assets (Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 36,242,000 $ 40,098,000
Short-term investments 24,007,000 18,188,000
Accounts and other receivables
less allowances of $6,970,000
at September 30, 1995 and
$6,344,000 at March 31, 1995 125,934,000 123,805,000
Inventories:
Finished goods 51,222,000 55,499,000
Work in process 15,573,000 12,359,000
Raw materials and supplies 25,259,000 21,359,000
92,054,000 89,217,000
Deferred taxes, prepaid expenses
and other current assets 41,893,000 32,009,000
Total Current Assets 320,130,000 303,317,000
Property, plant and equipment, at cost 245,515,000 252,226,000
Less: accumulated depreciation and
amortization 112,601,000 114,618,000
132,914,000 137,608,000
Intangible assets 126,607,000 129,852,000
Deferred taxes and other assets 108,868,000 109,447,000
Total Assets $688,519,000 $680,224,000
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 32,405,000 $ 31,318,000
Accrued expenses 164,326,000 165,987,000
Notes payable 16,323,000 5,416,000
Total Current Liabilities 213,054,000 202,721,000
Long-Term Liabilities:
Long-term debt 19,835,000 23,115,000
Deferred compensation 13,986,000 10,216,000
Accrued postretirement benefit obligation 70,268,000 68,969,000
Other long-term liabilities 49,466,000 48,064,000
Total Long-Term Liabilities 153,555,000 150,364,000
Stockholders' Equity:
Common stock 34,563,000 34,528,000
Class B common stock 12,642,000 12,677,000
Capital in excess of par value 2,401,000 2,184,000
Retained earnings 303,052,000 310,407,000
Less: Foreign currency translation adj. 16,680,000 18,949,000
Treasury stock, at cost 14,068,000 13,708,000
Total Stockholders' Equity 321,910,000 327,139,000
Total Liabilities and Stockholders' Equity $688,519,000 $680,224,000
</TABLE>
<TABLE>
CARTER-WALLACE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Unaudited)
<CAPTION>
1995 1994
<S> <C> <C>
Cash flows from operations:
Net (loss) $ (3,663,000) $(46,801,000)
Current period one-time charges 36,600,000 103,140,000
Cash payments for current and
prior year one-time charges (15,537,000) (1,970,000)
Changes in assets and liabilities (13,580,000) (37,168,000)
Depreciation and Amortization 12,753,000 14,303,000
16,573,000 31,504,000
Cash flows used in investing activities:
Additions to property, plant and
equipment (16,684,000) (10,256,000)
Payments for international acquisitions,
net of cash received:
The Sante Beaute line in France - (19,807,000)
Technogenetics in Italy - (4,878,000)
The Curash line in Australia - (3,660,000)
(Increase) decrease in short-term
investments (5,117,000) 471,000
Other investing activities 276,000 (193,000)
(21,525,000) (38,323,000)
Cash flows used in financing activities:
Dividends paid (3,692,000) (7,674,000)
Increase in borrowings 9,401,000 16,042,000
Payments of debt (2,137,000) (4,093,000)
Purchase of treasury stock (2,815,000) (189,000)
757,000 4,086,000
Effect of exchange rate changes on
cash and cash equivalents 339,000 740,000
(Decrease) in cash and cash equivalents $ (3,856,000) $ (1,993,000)
</TABLE>
CARTER-WALLACE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995 AND 1994
Note 1: Interim Reports
The results of the interim periods are not necessarily indicative of results
expected for a full year's operations. In the opinion of management, all
adjustments necessary for a fair statement of results of these interim
periods have been reflected in these financial statements and, except as
separately disclosed herein, are of a normal recurring nature.
Note 2: Review of Independent Auditors
The financial information included in this report has been reviewed by KPMG
Peat Marwick LLP, independent auditors, in accordance with standards and
procedures established by the American Institute of Certified Public
Accountants. A copy of their report on this limited review is included in
this Form.
Note 3: Restructuring of Operations and Facilities
(a) As part of its restructuring program, the Company decided in September,
1995 to consolidate its two Canadian operations in order to reduce costs
and increase efficiencies. In this regard, the Company incurred a one-
time pre-tax charge of $6,300,000 ($3,720,000 after taxes or $.08 per
share) in the quarter ended September 30, 1995 consisting primarily of
employee termination costs ($3,900,000), pension and other benefit costs
($1,300,000) and plant closing costs including equipment write-offs
($700,000).
Also included in the quarter ended September 30, 1995 is a one-time pre-
tax charge of $8,400,000 ($4,960,000 after taxes or $.11 per share)
representing an increase to the restructuring charge recorded in the
prior year. The increase relates primarily to lower than anticipated
sub-rental income associated with the planned subleasing of office space
on which the Company holds a long-term lease.
In addition, as previously announced, the Company incurred a one-time
pre-tax charge of $1,800,000 ($1,060,000 after taxes or $.02 per share)
in the quarter ending September 30, 1995 related to the relocation of one
of the Company's divisions to its Cranbury, New Jersey facility.
(b) In connection with its restructuring program from inception in fiscal
year 1995 through September 30, 1995, the Company has incurred one-time
pre-tax charges of $90,560,000 consisting primarily of employee
termination costs ($31,700,000), net plant closing costs including
equipment write-offs ($23,800,000) and costs associated with the planned
subleasing of office space on which the Company holds a long-term lease
($27,800,000).
The total anticipated reduction in the number of worldwide employees will
be approximately 1,030 including 120 vacancies that will not be filled.
Through September 30, 1995, 550 employees have been terminated with
employee termination costs of $14,900,000 applied against the
restructuring liability. In addition, approximately 40 positions have
been eliminated as a result of voluntary resignations.
(Continued)
CARTER-WALLACE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995 AND 1994
(Continued)
Note 3: Restructuring of Operations and Facilities (Continued)
Net plant closing costs of $7,600,000 have been applied against the
restructuring liability.
Approximately $65,500,000 of the $90,560,000 provision for restructuring
charges remains to be utilized in future periods. Of the $65,500,000,
approximately $45,000,000 represents expected cash payments over a period of
years.
Note 4: Closure of the Trenton Condom Manufacturing Facility
As previously announced, the Company decided in mid-May, 1995 to close its
condom manufacturing plant in Trenton, New Jersey over a projected period of
eighteen to twenty-four months. The condom production currently performed at
Trenton will be transferred to the Company's recently acquired facility in
Colonial Heights, VA. The decision to close the Trenton plant resulted in a
one-time charge to pre-tax earnings in the quarter ended June 30, 1995 of
$20,100,000 ($11,860,000 after taxes or $.26 per share), consisting of plant
closing costs including equipment write-offs ($14,800,000) and employee
termination costs ($5,300,000). Additional pre-tax charges of approximately
$2,000,000 related to the Trenton closing are expected to be incurred in
fiscal year 1997.
Note 5: Discontinuance of the Organidin (Iodinated Glycerol) Product Line
As previously announced, in June, 1994 the Company and the Food and Drug
Administration reached an agreement to discontinue the manufacture and
shipment of the Company's Organidin (iodinated glycerol) line of products.
As a result of this agreement, the Company incurred in the quarter ended June
30, 1994 a one-time charge to pre-tax earnings of $17,500,000 primarily
related to a provision for any product returns ($8,500,000) and for inventory
write-offs ($3,600,000).
Note 6: Felbatol
As previously reported, in the quarter ended September 30, 1994 the Company
incurred a one-time charge to pre-tax earnings of $36,640,000 related to use
restrictions for Felbatol. This charge was adjusted by $1,140,000 to
$37,780,000 in the quarter ended March 31, 1995. Depending on future sales
levels, additional inventory write-offs may be required. If for any reason
the product at some future date should no longer be available in the market,
the Company will incur an additional one-time charge that would have a
material adverse effect on the Company's results of operations and possibly
on its financial condition. Should the product no longer be available, the
Company currently estimates that the additional one-time charge, consisting
primarily of inventory write-offs and anticipated returns of product
currently in the market, will be in the range of $25,000,000 to $30,000,000
on a pre-tax basis.
(Continued)
CARTER-WALLACE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995 AND 1994
(Continued)
Note 7: Litigation
Information regarding Legal Proceedings involving the Company is presented in
Note 19 "Litigation Including Environmental Matters" of the Notes to the
Consolidated Financial Statements on pages 30 to 32 of the Company's 1995
Annual Report to Stockholders incorporated by reference in the Company's Form
10-K for the year ended March 31, 1995 and is herein expressly incorporated
by reference.
In addition to the legal proceedings outlined in the Company's 1995 Annual
Report to Stockholders, twelve additional individual product liability
actions related to Felbatol have been filed against the Company. Damages are
specified in five of those actions, where the complaints seek compensatory
and punitive damages aggregating $54,250,000. In the other actions, the
damages sought are unspecified.
The Company continues to believe, based upon opinion of counsel, it has good
defenses to all of the above actions and should prevail.
Note 8: Acquisitions
In August, 1994, the Company acquired the Sante Beaute line of products in
France for approximately $21,200,000. This business consists of the Email
Diamant oral hygiene products, Lineance body care products and other skin and
bath products.
In August, 1994, the Company acquired Technogenetics S.r.l., a subsidiary of
Recordati S.p.A. for approximately $5,900,000 in Italy. Technogenetics
manufactures and sells diagnostic test kits used by clinical laboratories for
the diagnosis of human diseases.
In July, 1994, the Company acquired for approximately $3,700,000 the Curash
line of baby care and other consumer products in Australia.
These acquisitions are being accounted for by the purchase method and
accordingly, the results of operations for these lines are included in the
Company's results of operations from the acquisition date. Pro forma results
of operations are not presented since the effect would not be material.
Note 9: Recent Accounting Pronouncement
Effective April 1, 1995 the Company adopted Statement of Position 93-7,
"Reporting on Advertising Costs" issued by the American Institute of
Certified Public Accountants. Adoption of this statement had no material
impact on the Company's financial statements.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Carter-Wallace, Inc.:
We have reviewed the condensed consolidated balance sheet of Carter-Wallace,
Inc. and subsidiaries as of September 30, 1995, and the related condensed
consolidated statements of earnings for the three-month and six month periods
ended September 30, 1995 and 1994 and the condensed consolidated statements
of cash flows for the six-month periods ended September 30, 1995 and 1994 in
accordance with standards established by the American Institute of Certified
Public Accountants. These condensed consolidated financial statements are
the responsibility of the Company's management.
A review of interim financial information consists principally of applying
analytical review procedures to financial data, and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with
generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred to
above for them to be in conformity with generally accepted accounting
principles. The contingencies discussed in the explanatory paragraphs of our
unqualified opinion, included in our report dated May 3, 1995, on the March
31, 1995 consolidated financial statements still exist.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Carter-Wallace, Inc. and
subsidiaries as of March 31, 1995, and the related consolidated statements of
earnings and retained earnings, and cash flows for the year then ended (not
presented herein); and in our report dated May 3, 1995, we expressed an
unqualified opinion on those consolidated financial statements. This opinion
included explanatory paragraphs related to the Felbatol and litigation
matters discussed in footnote 17 and 19, respectively, to those consolidated
financial statements. In our opinion, the information set forth in the
accompanying condensed consolidated balance sheet as of March 31, 1995 is
fairly stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
KPMG Peat Marwick LLP
October 24, 1995
New York, New York
</AUDIT-REPORT>
CARTER-WALLACE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations - Three months ended September 30, 1995 compared to
three months ended September 30, 1994
Consolidated earnings after taxes in the three months ended September 30,
1995 ("fiscal 1996 period") before the one-time charges for the Canadian
facilities integration and other restructuring costs were approximately
$5,200,000 or $.11 per share. This compares to net earnings after taxes in
the three months ended September 30, 1994 ("fiscal 1995 period"), before the
one-time charges for restructuring and the provision for loss on Felbatol, of
$4,700,000 or $.10 per share.
Net sales decreased $13,300,000 (7.9%) in the fiscal 1996 period as compared
to net sales in the fiscal 1995 period. The lower sales level was primarily
attributable to reduced unit volume in the Health Care segment as a result of
lower sales of pharmaceutical products. As previously announced, Felbatol
sales were adversely affected by use restrictions beginning in August, 1994.
Sales of pharmaceutical products in the Health Care segment continue to be
adversely impacted by generic erosion. Health Care sales were favorably
impacted by unit volume gains from the Technogenetics line of diagnostic
products in Italy acquired during the second quarter of fiscal 1995. Sales
were lower in the Consumer Products segment predominately due to reduced
sales of anti-perspirants and deodorants, offset in part by unit volume gains
from the Sante Beaute product line in France acquired during the second
quarter of fiscal 1995.
Selling price increases in both business segments had a positive effect on
sales in comparison with the prior year period. Lower foreign exchange rates
in comparison with the prior year had the effect of decreasing sales in the
fiscal 1996 period by $1,400,000, primarily Mexico. The effect of changes in
foreign exchange rates on results of operations in the fiscal 1996 period
compared to the prior year period was not significant.
Other revenues increased $488,000 or 33.4% due principally to higher interest
income.
Cost of goods sold as a percentage of net sales increased from 37.9% in the
fiscal 1995 period to 38.6% in the 1996 period primarily due to changes in
product mix and cost increases.
Advertising, marketing and other selling expenses decreased by $1,731,000 or
2.8% primarily due to reduced spending levels in the Health Care segment.
The Company substantially reduced its pharmaceutical sales force and
marketing support staff in October, 1994. Spending in the Consumer Products
segment also declined slightly versus the prior year.
(Continued)
CARTER-WALLACE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Results of Operations - Three months ended September 30, 1995 compared to
three months ended September 30, 1994 (Continued)
Research and development expenses decreased by $5,991,000 or 47.8%, primarily
due to lower spending in the Health Care segment. This decline was due to
the termination of Organidin and Felbatol clinical activities coupled with a
reduction in Astelin clinical activities. In October, 1994 the Company
virtually eliminated its Wallace Laboratories Division internal research and
development capability. However, the Company has continued its research and
development of Astelin (azelastine) for rhinitis, and taurolidine, an
antitoxin for the treatment of sepsis, and to the extent such work exceeds
the Company's remaining internal research and development resources, such
work is being done through independent research facilities.
General, administrative and other expenses decreased $2,103,000 or 9.2%
primarily due to reduced rent expense, as well as non-recurring prior year
costs for a foreign patent claim provision and a trade receivable reserve
related to the bankruptcy of a pharmaceutical wholesaler.
Interest expense increased in fiscal 1996 over the prior year as a result of
financing costs related to international acquisitions.
The estimated annual effective tax rate benefit applied in the fiscal 1996
period was 41%, compared to the fiscal 1995 annual net tax rate benefit of
35.3%. The tax rate benefit applied in the quarter ended September 30, 1994
was 39%. The tax rates in the fiscal 1996 period and future years are and
will be adversely affected by the absence of tax savings resulting from the
cessation of Puerto Rico operations and the absence of research and
development tax credits.
(Continued)
CARTER-WALLACE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations - Six months ended September 30, 1995 compared to six
months ended September 30, 1994
Consolidated earnings after taxes in the six months ended September 30, 1995
("fiscal 1996 period") before the one-time charge for the condom
manufacturing integration, the Canadian facilities integration and other
restructuring charges were approximately $17,900,000 or $.39 per share. This
compares to net earnings after taxes in the six months ended September 30,
1994 ("fiscal 1995 period"), before restructuring and other one-time charges,
of $15,840,000 or $.34 per share. The one-time charges in the current year
period resulted in pre-tax charges of $36,600,000 ($21,600,000 after taxes or
$.47 per share). The one-time charges in the prior year period were
$103,140,000 on a pre-tax basis ($62,600,000 after taxes or $1.36 per share).
Net sales decreased $19,568,000 (5.6%) in the fiscal 1996 period as compared
to net sales in the fiscal 1995 period. The lower sales level was
attributable to reduced unit volume in the Health Care segment as a result of
the absence of sales of Organidin I.G., which in the prior year period
amounted to approximately $21,000,000, largely offset by sales of Organidin
NR, a reformulated version of Organidin, and reduced sales of Felbatol. The
Company continues to maintain the $8,000,000 provision established in the
prior year for possible Organidin NR returns. As previously announced, sales
of Organidin I.G. were discontinued in June, 1994 and Felbatol sales were
adversely affected by use restrictions beginning in August, 1994. Sales of
pharmaceutical products in the Health Care segment continue to be adversely
impacted by generic erosion. Health Care sales were favorably impacted by
unit volume gains from the Technogenetics line of diagnostic products in
Italy acquired during the second quarter of fiscal 1995. Sales were higher
in the Consumer Products segment predominately due to unit volume gains from
the Sante Beaute product line in France acquired in the second quarter of
fiscal 1995. Sales of anti-perspirants and deodorants, also included in the
Consumer Products segment, were lower than the prior year period.
Selling price increases in both business segments had a positive effect on
sales in comparison with the prior year period. Lower foreign exchange rates
in comparison with the prior year had the effect of decreasing sales in the
fiscal 1996 period by $1,370,000, primarily Mexico. The effect of changes in
foreign exchange rates on results of operations in the fiscal 1995 period
compared to the prior year period was not significant.
Other revenues increased $1,462,000 or 51.7% due principally to higher
interest income.
Cost of goods sold as a percentage of net sales increased from 35.9% in the
fiscal 1995 period to 36.8% in the 1996 period primarily due to changes in
product mix and cost increases.
(Continued)
CARTER-WALLACE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Results of Operations - Six months ended September 30, 1995 compared to six
months ended September 30, 1994 (Continued)
Advertising, marketing and other selling expenses decreased by $6,324,000 or
4.8% primarily due to reduced spending levels in the Health Care segment for
Felbatol and Organidin I.G. The Company substantially reduced its
pharmaceutical sales force and marketing support staff in October, 1994.
Spending in the Consumer Products segment increased over the prior year
primarily related to the Sante Beaute line of products in France acquired in
the second quarter of fiscal 1995.
Research and development expenses decreased by $12,368,000 or 48.1%,
primarily due to lower spending in the Health Care segment. This decline was
due to the termination of Organidin and Felbatol clinical activities coupled
with a reduction in Astelin clinical activities. In October, 1994 the
Company virtually eliminated its Wallace Laboratories Division internal
research and development capability. However, the Company has continued its
research and development of Astelin (azelastine) for rhinitis, and
taurolidine, an antitoxin for the treatment of sepsis, and to the extent such
work exceeds the Company's remaining internal research and development
resources, such work is being done through independent research facilities.
General, administrative and other expenses decreased $375,000 or 0.8% due
primarily to prior year costs for a foreign patent claim provision and a
trade receivable reserve related to the bankruptcy of a pharmaceutical
wholesaler.
Interest expense increased in fiscal 1996 over the prior year as a result of
financing costs related to international acquisitions.
The estimated annual effective tax rate benefit applied in the fiscal 1996
period was 41%, compared to the fiscal 1995 annual net tax rate benefit of
35.3%. The tax rate benefit applied in the six months ended September 30,
1994 was 39%. The tax rates in the fiscal 1996 period and future years are
and will be adversely affected by the absence of tax savings resulting from
the cessation of Puerto Rico operations and the absence of research and
development tax credits.
(Continued)
CARTER-WALLACE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Restructuring of Operations and Facilities
(a) As part of its restructuring program, the Company decided in September,
1995 to consolidate its two Canadian operations in order to reduce costs
and increase efficiencies. In this regard, the Company incurred a one-
time pre-tax charge of $6,300,000 ($3,720,000 after taxes or $.08 per
share) in the quarter ended September 30, 1995 consisting primarily of
employee termination costs ($3,900,000), pension and other benefit costs
($1,300,000) and plant closing costs including equipment write-offs
($700,000).
Also included in the quarter ended September 30, 1995 is a one-time pre-
tax charge of $8,400,000 ($4,960,000 after taxes or $.11 per share)
representing an increase to the restructuring charge recorded in the
prior year. The increase relates primarily to lower than anticipated
sub-rental income associated with the planned subleasing of office space
on which the Company holds a long-term lease.
In addition, as previously announced, the Company incurred a one-time
pre-tax charge of $1,800,000 ($1,060,000 after taxes or $.02 per share)
in the quarter ending September 30, 1995 related to the relocation of
one of the Company's divisions to its Cranbury, New Jersey facility.
(b) In connection with its restructuring program from inception in fiscal
year 1995 through September 30, 1995, the Company has incurred one-time
pre-tax charges of $90,560,000 consisting primarily of employee
termination costs ($31,700,000), net plant closing costs including
equipment write-offs ($23,800,000) and costs associated with the planned
subleasing of office space on which the Company holds a long-term lease
($27,800,000).
The total anticipated reduction in the number of worldwide employees
will be approximately 1,030 including 120 vacancies that will not be
filled. Through September 30, 1995, 550 employees have been terminated
with employee termination costs of $14,900,000 applied against the
restructuring liability. In addition, approximately 40 positions have
been eliminated as a result of voluntary resignations.
Net plant closing costs of $7,600,000 have been applied against the
restructuring liability.
Approximately $65,500,000 of the $90,560,000 provision for restructuring
charges remains to be utilized in future periods. Of the $65,500,000,
approximately $45,000,000 represents expected cash payments over a
period of years.
(Continued)
CARTER-WALLACE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Closure of the Trenton Condom Manufacturing Facility
As previously announced, the Company decided in mid-May, 1995 to close its
condom manufacturing plant in Trenton, New Jersey over a projected period of
eighteen to twenty-four months. The condom production currently performed at
Trenton will be transferred to the Company's recently acquired facility in
Colonial Heights, VA. The decision to close the Trenton plant resulted in a
one-time charge to pre-tax earnings in the quarter ended June 30, 1995 of
$20,100,000 ($11,860,000 after taxes or $.26 per share), consisting of plant
closing costs including equipment write-offs ($14,800,000) and employee
termination costs ($5,300,000). Additional pre-tax charges of approximately
$2,000,000 related to the Trenton closing are expected to be incurred in
fiscal year 1997.
Discontinuance of the Organidin (Iodinated Glycerol) Product Line
As previously announced, in June, 1994 the Company and the Food and Drug
Administration reached an agreement to discontinue the manufacture and
shipment of the Company's Organidin (iodinated glycerol) line of products.
As a result of this agreement, the Company incurred in the quarter ended June
30, 1994 a one-time charge to pre-tax earnings of $17,500,000 primarily
related to a provision for any product returns ($8,500,000) and for inventory
write-offs ($3,600,000).
Felbatol
As previously reported, in the quarter ended September 30, 1994 the Company
incurred a one-time charge to pre-tax earnings of $36,640,000 related to use
restrictions for Felbatol. This charge was adjusted by $1,140,000 to
$37,780,000 in the quarter ended March 31, 1995. Depending on future sales
levels, additional inventory write-offs may be required. If for any reason
the product at some future date should no longer be available in the market,
the Company will incur an additional one-time charge that would have a
material adverse effect on the Company's results of operations and possibly
on its financial condition. Should the product no longer be available, the
Company currently estimates that the additional one-time charge, consisting
primarily of inventory write-offs and anticipated returns of product
currently in the market, will be in the range of $25,000,000 to $30,000,000
on a pre-tax basis.
(Continued)
CARTER-WALLACE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Astelin
The three Astelin (azelastine) New Drug Applications ("NDA") are pending at
the FDA. Answers to all outstanding questions for the Astelin Nasal Spray
non-approvable letter were submitted to the FDA in June, 1995 and remaining
chemistry work was completed and submitted to the FDA in August, 1995. A
meeting has been scheduled with the FDA Pulmonary/Allergy Drug Advisory
Committee in November, 1995 to review the Astelin nasal spray NDA for
rhinitis. Additional formulation work will be required on the NDA for the
Astelin tablet for rhinitis which will remain pending during fiscal year
1996. The Company is unable at this time to determine when and if the
Astelin rhinitis NDAs will be approved.
Liquidity and Capital Resources
Funds provided from operations are used for capital expenditures,
acquisitions, the purchase of treasury stock, the payment of dividends and
working capital requirements. External borrowings are incurred as needed to
satisfy cash requirements relating to seasonal business fluctuations, to
finance major facility expansion programs and to finance major acquisitions.
In the Statements of Cash Flows the change in assets and liabilities in the
current year period is lower than that in the prior year period due primarily
to a smaller increase in deferred taxes.
The Company amended its revolving credit agreement with a group of banks to
increase the credit line from $75,000,000 to $150,000,000. The amended
revolving credit line is for a five year period beginning in October, 1995.
Cash outlays in the six months ended September 30, 1995 relating to both
current and prior year one-time charges amount to approximately $15,540,000.
The cash requirements for the one-time charges of $36,600,000 recorded in the
six months ended September 30, 1995 are estimated to be $23,000,000 of which
approximately $6,500,000 is expected to be incurred in the fiscal year ending
March 31, 1996, $11,300,000 in the fiscal year ending March 31, 1997 and the
remainder over a period of years. After taking into account estimated tax
benefits of $15,000,000 to be received over a period of years, the one-time
charges taken in the six months ended September 30, 1995 are expected
ultimately to result in a net cash outlay of approximately $8,000,000.
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
Please refer to Note 7 "Litigation" of Notes to Condensed Consolidated
Financial Statements for information regarding legal proceedings.
Item 4 - Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Stockholders of Carter-Wallace, Inc. was held
on July 18, 1995.
(b) At the Annual Meeting the following proposal was submitted to a vote
of security holders:
(1) On the resolution relating to certain attributes of individuals
to be directors of the Company, the number of votes cast in
favor of this proposal was 9,678,327 and the number of votes
cast against this proposal was 137,943,623.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibit - Amendment to revolving credit agreement dated
as of October 1, 1995
(b) Reports on Form 8-K - No reports on Form 8-K have been filed
during the quarter ended September 30, 1995
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.
Carter-Wallace, Inc.
(Registrant)
Date: October 24, 1995 s/Daniel J. Black
Daniel J. Black
President & Chief
Operating Officer
Date: October 24, 1995 s/Paul A. Veteri
Paul A. Veteri
Vice President, Finance
& Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1995
<CASH> 36,242,000
<SECURITIES> 24,007,000
<RECEIVABLES> 132,904,000
<ALLOWANCES> 6,970,000
<INVENTORY> 92,054,000
<CURRENT-ASSETS> 320,130,000
<PP&E> 245,515,000
<DEPRECIATION> 112,601,000
<TOTAL-ASSETS> 688,519,000
<CURRENT-LIABILITIES> 213,054,000
<BONDS> 36,158,000
<COMMON> 47,205,000
0
0
<OTHER-SE> 274,705,000
<TOTAL-LIABILITY-AND-EQUITY> 688,519,000
<SALES> 331,847,000
<TOTAL-REVENUES> 336,137,000
<CGS> 122,104,000
<TOTAL-COSTS> 342,346,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,744,000
<INCOME-PRETAX> (6,209,000)
<INCOME-TAX> (2,546,000)
<INCOME-CONTINUING> (3,663,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,663,000)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> 0
</TABLE>
ANNEX A
========================================================
========================================================
AMENDED AND RESTATED CREDIT AGREEMENT
by and among
CARTER-WALLACE, INC.
THE LENDERS PARTY HERETO,
THE BANK OF NEW YORK,
AS AGENT AND AS SWING LINE LENDER
________________
$150,000,000
________________
Dated as of October 1, 1995
==========================================================
==========================================================
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of October 1,
1995, among CARTER-WALLACE, INC., a Delaware corporation (the
"Company"), the Lenders party hereto (each a "Lender" and, col-
lectively, the "Lenders"), and THE BANK OF NEW YORK, as agent for the
Lenders hereunder (in such capacity, the "Agent") and as swing line
lender (in such capacity, the "Swing Line Lender") and THE CHASE
MANHATTAN BANK, N.A., as co-agent (in such capacity, the "Co-Agent").
R E C I T A L S
I. Reference is made to the Credit Agreement, dated as of
October 1, 1991, by and among the Company, the Agent and the Lenders
party thereto, as amended by Amendment No. 1, dated as of October 1,
1993 and Amendment No. 2, dated as of October 1, 1994 (the "Existing
Credit Agreement").
II. The Company, the Agent and the Existing Lenders desire to
amend and restate the Existing Credit Agreement in its entirety, to,
among other things, (i) substitute The Bank of Nova Scotia for Banco
Popular as a Lender, (ii) increase the Aggregate Commitments and the
Revolving Credit Commitment of each Lender after giving effect to such
substitution, (ii) extend the Termination Date, (iv) add a swing line
sublimit, (v) add a competitive bid borrowing option, and (vi) change
certain covenants and definitions thereunder.
III. For convenience, this Agreement is dated as of October 1,
1995, and references to certain matters relating to the period prior
to the date hereof have been deleted.
1. DEFINITIONS
1.1 Defined Terms.
As used in this Agreement, terms defined in the preamble
and the recitals have the meanings therein indicated, and the follow-
ing terms have the following meanings:
"Accountants": KPMG Peat Marwick, LLP, or any successor thereto,
or such other firm of certified public accountants of recognized
national standing as shall be selected by the Company and (unless such
other firm shall be one of the so-called "Big Six" accounting firms)
as shall be satisfactory to the Required Lenders.
"Affected Loan": as defined in paragraph 3.8.
"Affiliate": as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common
control with, such Person. For purposes of this definition, control
of a Person shall mean the power, direct or indirect, (i) to vote 25%
or more of the securities having ordinary voting power for the
election of directors of such Person or (ii) to direct or cause
direction of the management and policies of such Person whether by
contract or otherwise.
"Aggregate Commitment Amount": at any time, the sum of the
Revolving Credit Commitments of the Lenders at such time.
"Aggregate Credit Exposure": at any time, the sum at such time
of (a) the aggregate Committed Credit Exposure of the Lenders at such
time and (b) the aggregate outstanding principal balance of all
Competitive Bid Loans at such time.
"Aggregate Commitments": the sum of the Revolving Credit
Commitments set forth in Exhibit A, as the same may be reduced
pursuant to paragraph 2.6.
"Agreement": this Amended and Restated Credit Agreement, as the
same may be amended, supplemented or otherwise modified from time to
time.
"Alternate Base Rate": on any date, a rate of interest per annum
equal to the higher of (i) the BNY Rate in effect on such date or (ii)
the Federal Funds Rate in effect on such date plus 1/2 of 1%.
"Alternate Base Rate Loans": Revolving Credit Loans (or any
portions thereof) at such time as they (or such portions) are made or
are being maintained at a rate of interest based upon the Alternate
Base Rate.
"Applicable Margin": at all times during the applicable periods
set forth below with respect to the unpaid principal balance of the
LIBOR Loans, the applicable percentage set forth below next to such
period:
Applicable
Period Margin
at any time when
the Interest Coverage
Ratio is greater than
or equal to 3.0:1.0, .25%
at all other times .50%
Changes in the Applicable Margin resulting from changes in the
Interest Coverage Ratio shall become effective upon the delivery by
the Company to the Agent of a certificate pursuant to paragraph
7.1(b)(ii)(2) or 7.1(c), as the case may be, evidencing a change in
the Interest Coverage Ratio, provided that any change in the Interest
Coverage Ratio evidenced by a certificate delivered pursuant to
paragraph 7.1(c) after the end of any fiscal year which results in an
increase in the Applicable Margin shall be effective as of the 60th
day after the end of such fiscal year. If the Company shall fail to
deliver such a certificate within 60 days after the end of any fiscal
quarter or within 105 days after the end of any fiscal year end as
required by paragraphs 7.1(b)(ii)(2) and 7.1(c), as the case may be,
any change in the Applicable Margin resulting from a change in the
Interest Coverage Ratio evidenced by such certificate shall (subject
to the proviso to the preceding sentence) be effective as of the date
such certificate was required to be delivered pursuant to paragraph
7.1(b)(ii)(2) or 7.1(c) (whichever shall be applicable).
"Assignment Fee": as defined in paragraph 11.7(b).
"Authorized Signatory": in respect of a Person, the chairman of
the board, the president, any vice president, any assistant secretary,
any assistant treasurer or any other duly authorized officer
(acceptable to the Agent) of such Person.
"Benefited Lender": as defined in paragraph 11.18(a).
"BNY": The Bank of New York.
"BNY Rate": a rate of interest per annum equal to the rate of
interest publicly announced in New York City by BNY from time to time
as its prime commercial lending rate, such rate to be adjusted
automatically (without notice) on the effective date of any change in
such publicly announced rate.
"Borrowing Date": any date on which the Lenders make Revolving
Credit Loans or the Swing Line Lender makes a Swing Line Loan, each
in accordance with a Borrowing Request, or a Lender makes a
Competitive Bid Loan pursuant to a Competitive Bid accepted by the
Company.
"Borrowing Request": as defined in paragraph 2.3.
"Business Day": for all purposes other than as set forth in
clause (ii) below, (i) any day other than a Saturday, Sunday or other
day on which commercial banks located in New York City are authorized
or required by law or other governmental action to close and (ii) with
respect to all notices and determinations in connection with, and pay-
ments of principal and interest on, LIBOR Loans, any day which is a
Business Day described in clause (i) above and which is also a day on
which dealings in foreign currency and exchange and LIBOR funding
between banks may be carried on in London, England.
"CERCLA": as defined in paragraph 4.17.
"Code": the Internal Revenue Code of 1986, as the same may be
amended from time to time, or any successor thereto, and the rules and
regulations issued thereunder, as from time to time in effect.
"Commitment Percentage": as to any Lender, the percentage set
forth opposite the name of such Lender in Exhibit A under the heading
"Commitment Percentage".
"Commitment Period": the period from the Effective Date to, but
excluding, the Termination Date.
"Committed Credit Exposure": with respect to any Lender at any
time, the sum at such time of (a) the outstanding principal balance
of such Lender's Revolving Credit Loans and (b) the Swing Line
Exposure of such Lender.
"Commonly Controlled Entity": a Person, whether or not
incorporated, which is under common control with the Company within
the meaning of Section 414(b) or 414(c) of the Code.
"Compensatory Interest Payment": as defined in paragraph 3.4(c).
"Competitive Bid": an offer by a Lender, in the form of Exhibit
D-3, to make one or more Competitive Bid Loans.
"Competitive Bid Accept/Reject Letter": a notification, in the
form of Exhibit D-4, of the acceptance and/or rejection of Competitive
Bids given by the Company to the Agent pursuant to paragraph 2.4(d)
.
"Competitive Bid Loan": each Loan by a Lender to the Company
pursuant to paragraph 2.4.
"Competitive Bid Rejection/Confirmation": a notification by the
Agent to a Lender pursuant to paragraph 2.4(e) of either (i) the
rejection by the Company of a Competitive Bid (or a portion thereof)
made by such Lender, or (ii) confirmation by the Agent to a Lender
pursuant to paragraph 2.4(e) of the acceptance by the Company of a
Competitive Bid (or portion thereof) made by such Lender, each,
substantially in the form of the applicable portion of Exhibit D-5.
"Competitive Bid Note" and "Competitive Bid Notes": as defined
in paragraph 2.4(i).
"Competitive Bid Rate": (i) with respect to any Competitive Bid,
the interest rate or rates at which a Lender offers to make one or
more Competitive Bid Loans and (ii) with respect to each Competitive
Bid Loan, the rate of interest accepted by the Company, pursuant to
paragraph 2.4(d) as the interest rate such Competitive Bid Loan shall
bear.
"Competitive Bid Request": a request by the Company, in the form
of Exhibit D-1, for Competitive Bids.
"Competitive Interest Period": as to any Competitive Bid Loan,
the period commencing on the date of such Competitive Bid Loan and
ending on the date requested in the Competitive Bid Request with
respect to such Competitive Bid Loan, which date shall not be earlier
than 7 days after the date of such Competitive Bid Loan or later than
180 days after the date of such Competitive Bid Loan; provided,
however, that if any Competitive Interest Period would end on a day
other than a Business Day, such Interest Period shall be extended to
the next succeeding Business Day, unless such next succeeding Business
Day would be a date on or after the Termination Date, in which case
such Competitive Interest Period shall end on the next preceding
Business Day, and provided further that no Competitive Interest Period
shall end after the Business Day immediately preceding the Termination
Date. Interest shall accrue from and including the first day of a
Competitive Interest Period to but excluding the last day of such
Competitive Interest Period.
"Consolidated": the Company and its Subsidiaries which are
consolidated for financial reporting purposes in accordance with GAAP.
"Contingent Obligation": as to any Person, any obligation of
such Person guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends or other obligations ("primary obligations") of any
other Person (the "primary obligor") in any manner, whether directly
or indirectly, including, without limitation, any obligation of such
Person, whether or not contingent, (i) to purchase any such primary
obligation or any Property constituting direct or indirect security
therefor, (ii) to advance or supply funds (a) for the purchase or
payment of any such primary obligation or (b) to maintain working
capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (iii) to
purchase Property, securities or services primarily for the purpose
of assuring the beneficiary of any such primary obligation of the
ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the
beneficiary of such primary obligation against loss in respect
thereof; provided, however, that the term Contingent Obligation shall
not include the indorsement of instruments for deposit or collection
in the ordinary course of business. The term Contingent Obligation
shall also include the liability of a general partner in respect of
the liabilities of a partnership in which it is a general partner. The
amount of any Contingent Obligation of a Person shall be deemed to be
an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made or,
if not stated or determinable, the maximum reasonably anticipated li-
ability in respect thereof as determined by such Person in good faith.
"Control Person": as defined in paragraph 3.6.
"Conversion Date": the date on which a LIBOR Loan is Converted
to an Alternate Base Rate Loan, or the date on which an Alternate Base
Rate Loan is Converted to a LIBOR Loan, or the date on which a LIBOR
Loan is Converted to a new LIBOR Loan, all in accordance with
paragraph 3.3.
"Convert", "Conversion" and "Converted": each, a reference to a
conversion pursuant to paragraph 3.3.
"Default": any of the events specified in paragraphs 9.1(a)
through 9.1(k), whether or not any requirement for the giving of
notice, the lapse of time, or both, has been satisfied.
"Dollars" and "$": lawful currency of the United States of
America.
"Domestic Lending Office": in respect of any Lender, initially,
the office of such Lender designated as such in Exhibit B; thereafter,
such other office or offices of such Lender, if any, which shall be
making or maintaining Alternate Base Rate Loans, as reported by such
Lender to the Agent.
"EBIT": for any period, earnings from continuing operations of
the Company and its Subsidiaries on a Consolidated basis before taxes,
Interest Expense and extraordinary items in respect of such period.
"Effective Date": the date on which executed counterparts of
this Agreement have been delivered to the Agent by the Company and
each Lender.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations issued
thereunder, as from time to time in effect.
"Event of Default": any of the events specified in paragraphs
9.1(a) through 9.1(k), provided that any requirement for the giving
of notice, the lapse of time, or both, has been satisfied.
"Facility Fee": as defined in paragraph 3.11.
"Federal Funds Rate": for any day, the rate per annum equal to
the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day,
provided that (i) if the day for which such rate is to be determined
is not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Business Day as
published on the next succeeding Business Day and (ii) if such rate
is not so published for any day, the Federal Funds Rate for such day
shall be the average of the quotations for such day on such
transactions received by BNY from three Federal funds brokers of
recognized standing selected by BNY as determined by BNY and reported
to the Agent.
"Financial Statements": as defined in paragraph 4.16.
"GAAP": generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board,
consistently applied.
"Governmental Body": any nation or government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government and any court or arbitrator.
"Highest Lawful Rate": the maximum rate of interest, if any,
that at any time or from time to time may be contracted for, taken,
charged or received on the Notes or which may be owing to the Swing
Line Lender or any Lender pursuant to this Agreement under the laws
applicable to such Lender and this transaction.
"Indebtedness": without duplication, (i) all obligations in
respect of borrowed money or for the deferred purchase or acquisition
price of Property or services (excluding trade accounts payable and
accrued liabilities which arise in the ordinary course of business)
which are, in accordance with GAAP, includable as a liability on a
Consolidated balance sheet of the Company, (ii) all amounts
representing the capitalization in accordance with GAAP of rentals
payable by the Company or a Subsidiary (other than pursuant to a lease
under which the Company or a Subsidiary is the lessor) and (iii) all
Contingent Obligations with respect to the foregoing.
"Indemnified Liabilities": as defined in paragraph 11.5.
"Indemnified Taxes": as defined in paragraph 3.10.
"Interest Coverage Ratio": for any period, the ratio of (i) EBIT
for such period to (ii) Interest Expense for such period, provided,
however, that in computing EBIT there shall not be deducted from the
earnings from continuing operations of the Company the charges, up to
the amounts and taken at the time or times referred to in the proviso
contained in the definitions of "Material Adverse Change" and
"Material Adverse Effect".
"Interest Expense": for any period, the sum of all interest
(adjusted to give effect to all interest rate swap, cap or other
interest rate hedging arrangements and fees and expenses in connection
with the same, all as determined in accordance with GAAP), paid or
accrued in respect of all Indebtedness for such period by the Company,
as determined in accordance with GAAP.
"Interest Payment Date": (i) as to any Alternate Base Rate Loan,
the last day of each March, June, September and December, commencing
on the first of such days to occur after such Alternate Base Rate Loan
is made or any LIBOR Loan is converted to an Alternate Base Rate
Loan, (ii) as to any Swing Line Loan, the Swing Line Maturity Date
with respect thereto, (iii) as to any LIBOR Loan in respect of which
the Company has selected a LIBOR Interest Period of one, two or three
months, the last day of such Interest Period, (iv) as to any Competi-
tive Bid Loan in respect of which the Company has selected a Com-
petitive Interest Period of or 90 days or less, the last day of such
Interest Period and (v) as to any LIBOR Loan or Competitive Bid Loan
in respect of which the Company has selected an Interest Period
greater than three months or 90 days, the last day of the third month
or the 90th day of such Interest Period and the last day of such
Interest Period.
"Interest Period": a LIBOR Interest Period or a Competitive
Interest Period, as the context may require.
"Invitation to Bid": an invitation by the Agent to the Lenders
to make Competitive Bids, in the form of Exhibit D-2.
"Lending Office": with respect to any Lender, (a) initially, its
office designated as either its Domestic Lending Office or its LIBOR
Lending Office in Exhibit B, and (b) thereafter, such other office of
such Lender or any of its affiliates or subsidiaries as it may
designate as the office at which any of the Lender's Loans will
thereafter be maintained and for the account of which payments of
principal of, and interest on, such Loans will thereafter be made.
"LIBOR Interest Period": with respect to any LIBOR Loan
requested by the Company:
(a) initially, the period commencing on the Borrowing
Date or Conversion Date with respect to such LIBOR Loan and
ending one, two, three or six months thereafter, as selected by
the Company in its irrevocable notice of borrowing given
pursuant to paragraph 2.3 or its irrevocable notice of Conver-
sion as given pursuant to paragraph 3.3; and
(b) thereafter, each period commencing on the last day of
the immediately preceding LIBOR Interest Period applicable to
such LIBOR Loan and ending one, two, three or six months
thereafter, as selected by the Company in its irrevocable notice
of Conversion given pursuant to paragraph 3.3;
provided, however, that all of the foregoing provisions relating to
LIBOR Interest Periods are subject to the following:
(i) if any LIBOR Interest Period would otherwise
end on a day which is not a Business Day, such LIBOR
Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be
to carry such LIBOR Interest Period into another calendar
month, in which event such Interest Period shall end on
the immediately preceding Business Day;
(ii) any LIBOR Interest Period that begins on the
last 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 LIBOR Interest Period)
shall end on the last Business Day of a calendar month;
(iii) no LIBOR Interest Period selected in respect of
any Loan shall end after the Termination Date; and
(iv) the Company shall select LIBOR Interest Periods
so as not to have more than five different LIBOR Interest
Periods outstanding at any one time.
"LIBOR Lending Office": in respect of any Lender, initially, the
office of such Lender designated as such in Exhibit B (or, if no such
office is specified, its Domestic Lending Office); thereafter, such
other office, if any, of such Lender which shall be making or main-
taining LIBOR Loans, as reported by such Lender to the Agent.
"LIBOR Loans": collectively, Loans hereunder (or any portions
thereof) at such time as they (or such portions) are made or being
maintained at a rate of interest based upon the LIBOR Rate plus the
Applicable Margin.
"LIBOR Rate": with respect to any Interest Period applicable to
any LIBOR Loan, the arithmetic average of the rates of interest per
annum, rounded to the nearest 1/1000 of 1% or, if there is no nearest
1/1000 of 1%, then to the next higher 1/1000 of 1%, equal to the rate,
as reported by each of the Reference Banks to the Agent, quoted by
such Reference Bank to leading banks in the interbank eurodollar
market as the rate at which such Reference Bank is offering Dollar
deposits in an amount equal approximately to the LIBOR Loan of such
Reference Bank to which such Interest Period shall apply for a period
equal to such Interest Period, as quoted at approximately 11:00 A.M.
two Business Days prior to the first day of such Interest Period. If
any Reference Bank does not provide its quotation to the Agent, the
LIBOR Rate shall be determined on the basis of the quotations reported
by the remaining Reference Banks. The Company acknowledges that the
LIBOR Rate is not adjusted for reserves with respect to Eurocurrency
liabilities under Regulation D of the Board of Governors of the
Federal Reserve System and agrees to pay to each Lender any additional
costs with respect thereto to the extent set forth in paragraph
3.6(b).
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or other security
agreement or security interest of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title
retention agreement and any financing lease having substantially the
same economic effect as any of the foregoing.
"Loan" and "Loans": each, a Revolving Credit Loan, a Swing Line
Loan or a Competitive Bid Loan and, collectively, the Revolving Credit
Loans, Swing Line Loans and Competitive Bid Loans.
"Loan Documents": collectively, this Agreement and the Notes.
"Mandatory Borrowing": as defined in paragraph 2.2(c).
"Margin Stock": any "margin stock" as such term is defined in
Regulation U of the Board of Governors of the Federal Reserve System,
as the same may be amended or supplemented from time to time.
"Material Adverse Change": a material adverse change in the
business, Property, operations or condition (financial or otherwise)
of the Company and its Subsidiaries taken as a whole, provided,
however, that solely for the purposes of paragraphs 6.1(ii), 6.1(iii)
and 9.1(f), (but without prejudice to any of the rights and remedies
of the Agent, the Swing Line Lender and the Lenders arising out of any
other provisions of this Agreement, including, without limitation,
paragraphs 4.6, 7.11 and 7.12 and 9.1(j)), (i) the charge taken by the
Company in the fiscal quarter ending June 30, 1995 relating to the
closing of the Trenton, New Jersey condom manufacturing facility and
(ii) the reduction in sales of, and the possible discontinuance by the
Company of the manufacture and sale of, Felbatol and the charges, not
in excess of $35,000,000, to be taken by the Company from time to time
in connection therewith, shall not be deemed to constitute Material
Adverse Changes.
"Material Adverse Effect": a material adverse effect on the
business, Property, operations or condition (financial or otherwise)
of the Company and its Subsidiaries taken as a whole, provided,
however, that solely for the purposes of paragraphs 6.1(ii), 6.1(iii)
and 9.1(f), (but without prejudice to any of the rights and remedies
of the Agent, the Swing Line Lender and the Lenders arising out of any
other provisions of this Agreement, including, without limitation,
paragraphs 4.6, 7.11 and 7.12 and 9.1(j)), (i) the charge taken by the
Company in the fiscal quarter ending June 30, 1995 relating to the
closing of the Trenton, New Jersey condom manufacturing facility and
(ii) the reduction in sales of, and the possible discontinuance by the
Company of the manufacture and sale of, Felbatol and the charges, not
in excess of $35,000,000, to be taken by the Company from time to time
in connection therewith, shall not be deemed to have a Material
Adverse Effect.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Negotiated Rate": with respect to each Swing Line Loan, the
rate per annum agreed to in writing by the Company and the Swing Line
Lender as the interest rate which such Swing Line Loan shall bear.
"Net Worth": at any date, the sum of the capital Stock and paid
in surplus, plus retained earnings (or minus accumulated deficit) of
the Company on a Consolidated basis.
"Note" and "Notes": a Revolving Credit Note, the Swing Line Note
or a Competitive Bid Note and, collectively, the Revolving Credit
Notes, the Swing Line Note and the Competitive Bid Notes.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA, or any Governmental Body
succeeding to the functions thereof.
"Permitted Liens":
(i) Liens on Property of the Company and its Subsidiaries
existing on the date hereof as set forth in Exhibit H;
(ii) Liens for Taxes, assessments or similar charges
incurred in the ordinary course of business which are not delinquent
or which are being contested in good faith in accordance with
paragraph 7.4;
(iii) statutory Liens of landlords and Liens securing claims
of contractors, subcontractors, suppliers of goods, materials,
equipment or services, or laborers or other like Liens arising in the
ordinary course of business for amounts not yet due or which are
being contested in good faith in accordance with paragraph 7.6;
(iv) Liens (other than any Lien imposed by ERISA) incurred
in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social
security;
(v) deposits or pledges to secure tenders, statutory
obligations, surety bonds, appeal and release bonds, bids, leases,
contracts, performance and return-of-money bonds and other similar
obligations arising in the ordinary course of business (in all cases
exclusive of obligations for the payment of Indebtedness);
(vi) easements, rights-of-way, restrictions and other
similar charges or encumbrances affecting real Property which do not
adversely affect the financial condition of the Company or any of its
Significant Subsidiaries or interfere with the ordinary conduct of
the business of the Company or any of its Significant Subsidiaries;
(vii) Liens on any Property purchased or constructed
by the Company or any Subsidiary after the date hereof ("Acquired
Property") to secure the deferred purchase or construction price
thereof, or Liens on any Acquired Property created to secure
Indebtedness incurred for the purpose of financing the purchase or
construction thereof if such Liens are created at the time of or
within 120 days after such purchase or the completion of such
construction, as the case may be, or Liens existing on Acquired
Property at the time of acquisition thereof by the Company or a
Subsidiary and not created in contemplation of such acquisition, or,
in the case of any Person which at any time hereafter becomes a
Subsidiary, Liens in respect of such Person's Property existing at
such time and not created in contemplation of such event; provided
that, (A) no such Lien referred to in this clause (vii) shall at any
time extend to or cover any Property of the Company or any Subsidiary
other than the Property on which it was originally imposed,
improvements to and proceeds of such Property and, if such Lien shall
be imposed on Acquired Property hereafter constructed by the Company
or any Subsidiary, theretofore unimproved real property on which such
Acquired Property shall be constructed, and (B) the Indebtedness
secured by any such Lien referred to in this clause (vii) shall be
permitted by paragraph 8.1;
(viii) any other Liens, up to an amount not to exceed 10% of
the Consolidated assets of the Company; and
(ix) extensions, renewals or replacements of any Lien
referred to in clauses (i) through (viii) above, but only to the
extent that (a) the principal amount of the Indebtedness or obliga-
tion secured thereby is not increased and (b) any such extension,
renewal or replacement is limited to the Property originally
encumbered thereby.
"Person": an individual, a partnership, a limited liability
company, a corporation, a business trust, a joint stock company, a
trust, an unincorporated association, a joint venture, a Governmental
Body or any other entity of whatever nature.
"Plan": any pension plan which is covered by Title IV of ERISA
and which is maintained by or to which contributions are made by the
Company, a Subsidiary of the Company or a Commonly Controlled Entity
or in respect of which the Company, a Subsidiary of the Company or a
Commonly Controlled Entity has or may have any liability.
"Property": all types of real, personal, tangible, intangible or
mixed property.
"Reference Banks": BNY, The Chase Manhattan Bank, N.A. and
Mellon Bank, N.A.
"Regulatory Change": (a) the introduction of any law, rule or
regulation after the date hereof, (b) the issuance or promulgation
after the date hereof of any directive, guideline or request from any
central bank or United States or foreign Governmental Body (whether
having the force of law), or (c) any change after the date hereof in
the interpretation of any existing law, rule, regulation, directive,
guideline or request by any central bank or United States or foreign
Governmental Body charged with the administration thereof.
"Replacement Lender": as defined in paragraph 3.10(c).
"Reportable Event": any event described in Section 4043(c) of
ERISA, other than an event (excluding an event described in Section
4043(c)(i) relating to tax disqualification) with respect to which the
30-day notice requirement has been waived.
"Required Lenders": (i) at any time when no Loans are
outstanding, Lenders having Commitments or, if no Commitments then
exist, Lenders having Commitments on the last day on which Commitments
did exist, equal to at least 51% of the Aggregate Commitments, and
(ii) at any time when Loans are outstanding (x) if the Commitments
then exist, Lenders having Commitments equal to at least 51% of the
Aggregate Commitments, and (y) if the Commitments have been terminated
or otherwise no longer exist, Lenders having Committed Credit
Exposures equal to at least 51% of the Aggregate Credit Exposure.
"Responsible Officer" any officer of the Company who shall at
the time in question be charged with responsibility for administering
this Agreement or monitoring the Company's compliance with its
obligations hereunder or under the relevant portions hereof.
"Revolving Credit Commitment": as to any Lender, the amount set
forth next to the name of such Lender in Exhibit A under the heading
"Revolving Credit Commitment," as such Revolving Credit Commitment may
be reduced from time to time pursuant to paragraph 2.6.
"Securities Exchange Act": the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
"Selling Lender": as defined in paragraph 3.10(c).
"Significant Subsidiary": a Significant Subsidiary as defined in
Regulation S-X as promulgated by the Securities and Exchange
Commission.
"Single Employer Plan": any Plan which is not a Multiemployer
Plan.
"Special Counsel": Emmet, Marvin & Martin, L.L.P.
"Stock": any and all outstanding shares, interests,
participations, warrants or other equivalents (however designated) of
capital stock.
"Subsidiary": as to any Person, any corporation, association,
partnership, joint venture or other business entity of which such
Person, directly or indirectly, either (i) in respect of a
corporation, owns or controls more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of
directors or similar managing body, irrespective of whether or not a
class or classes shall or might have voting power by reason of the
happening of any contingency or (ii) in respect of an association,
partnership, joint venture or other business entity, is entitled to
share in more than 50% of the profits and losses, however determined.
"Swing Line Commitment": the commitment of the Swing Line Lender
to make Swing Line Loans in accordance with the terms hereof, in an
aggregate outstanding principal amount not exceeding $15,000,000 at
any time, as the same may be reduced pursuant to paragraph 2.6.
"Swing Line Commitment Period": the period from the Effective
Date to, but excluding, the Swing Line Termination Date.
"Swing Line Exposure": at any time, in respect of any Lender, an
amount equal to the aggregate principal balance of the Swing Line
Loans at such time multiplied by such Lender's Commitment Percentage
at such time.
"Swing Line Interest Period": as to any Swing Line Loan, the
period commencing on the date of such Swing Line Loan and ending on
the date set forth by the Borrower in the Borrowing Request with
respect to such Swing Line Loan; provided that the last day of any
Swing Line Interest Period shall not be earlier than one day after the
date of such Swing Line Loan or later than 7 days after the date of
such Swing Line Loan and in no event later than the Swing Line
Termination Date; and provided further that if any Swing Line Interest
Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day.
"Swing Line Lender": BNY.
"Swing Line Loan" and "Swing Line Loans": as defined in
paragraph 2.2(a).
"Swing Line Maturity Date": as defined in paragraph 2.2(a).
"Swing Line Note": as defined in paragraph 2.2(b).
"Swing Line Participation Amount": as defined in paragraph
2.2(d).
"Swing Line Termination Date": the date which is seven Business
Days prior to the Termination Date.
"Tax" or "Taxes": any present or future income, stamp, excise or
other taxes, levies, imposts, duties, fees, assessments, deductions,
withholding, or other similar charges of whatever nature, now or
hereafter imposed, levied, collected, withheld, or assessed by any
Governmental Body.
"Tax Law Change": as defined in paragraph 3.10.
"Termination Date": October 1, 2000.
"Total Capitalization": at any date, the sum of the Company's
Consolidated Indebtedness and shareholders' equity, as determined in
accordance with GAAP.
"Unqualified Amount": as defined in paragraph 3.4(c).
1.2 Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the
meanings given such terms herein when used in the Loan Documents or
any certificate or other document made or delivered pursuant hereto
or thereto, unless otherwise defined therein.
(b) As used herein, in the other Loan Documents and in
any certificate or other document made or delivered pursuant hereto
or thereto, accounting terms relating to the Company not defined in
paragraph 1.1 shall have the respective meanings given to them under
GAAP.
(c) The words "hereof", "herein", "hereto" and "here-
under" and similar words when used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision of this
Agreement, and paragraph and exhibit references contained herein shall
refer to paragraphs hereof or exhibits hereto unless otherwise
expressly provided herein.
(d) The word "or" shall not be exclusive; "may not" is
prohibitive and not permissive; and the singular includes the plural
and the plural includes the singular, unless the context requires
otherwise.
(e) All references herein to a time of day shall mean the
then applicable time in New York, New York, unless otherwise expressly
provided herein.
2. AMOUNT AND TERMS OF LOANS
2.1 Revolving Credit Loans
(a) Subject to the terms and conditions hereof, each
Lender severally (and not jointly) agrees to make loans (each a
"Revolving Credit Loan" and, collectively with each other Revolving
Credit Loan of such Lender and/or with each Revolving Credit Loan of
each other Lender, the "Revolving Credit Loans") to the Company from
time to time during the Commitment Period. Immediately after making
each Revolving Credit Loan and after giving effect to all Swing Line
Loans and Competitive Bid Loans repaid on the same date the Aggregate
Credit Exposure will not exceed the Aggregate Commitment Amount. With
respect to each Lender, at the time of the making of any Revolving
Credit Loan, the sum of (I) the principal amount of such Lender's
Revolving Credit Loan constituting a part of the Revolving Credit
Loans to be made, (II) the aggregate principal balance of all other
Revolving Credit Loans (exclusive of Revolving Credit Loans which are
repaid with the proceeds of, and simultaneously with the incurrence
of, the Revolving Credit Loans to be made) then outstanding from such
Lender and (III) the product of (A) such Lender's Commitment
Percentage and (B) the aggregate principal balance of all Swing Line
Loans (exclusive of Swing Line Loans which are repaid with the pro-
ceeds of, and simultaneously with the incurrence of, the respective
Revolving Credit Loans) then outstanding, will not exceed the
Revolving Credit Commitment of such Lender at such time. During the
Commitment Period, the Company may borrow, prepay in whole or in part
and reborrow Revolving Credit Loans under the Revolving Credit
Commitments, all in accordance with the terms and conditions hereof.
At the option of the Company, as indicated in a Borrowing Request, Re-
volving Credit Loans may be made as Alternate Base Rate Loans or LIBOR
Loans.
(b) Revolving Credit Loans made by each Lender shall be
evidenced by a promissory note of the Company, substantially in the
form of Exhibit C-1 (each, as indorsed or modified from time to time,
a "Revolving Credit Note"), payable to the order of such Lender, dated
the first Borrowing Date, in the maximum stated principal amount equal
to such Lender's Revolving Credit Commitment, and evidencing the
obligation of the Company to pay the amount of such Revolving Credit
Commitment or, if less, the aggregate unpaid principal amount of the
Revolving Credit Loans made by such Lender, together with interest
thereon as provided for in this Agreement.
(c) The aggregate outstanding principal balance of the
Revolving Credit Loans shall be due and payable on the earliest of the
Termination Date, the date upon which all of the Revolving Credit
Commitments shall have been voluntarily terminated by the Company in
accordance with paragraph 2.6 and the date on which the Loans shall
become due and payable pursuant to the provisions hereof, whether by
acceleration or otherwise.
2.2 Swing Line Loans
(a) Subject to the terms and conditions hereof, the Swing
Line Lender agrees to make loans (each a "Swing Line Loan" and, col-
lectively, the "Swing Line Loans") to the Company from time to time
during the Swing Line Commitment Period. Swing Line Loans (i) may be
repaid and reborrowed in accordance with the provisions hereof, (ii)
shall not, immediately after giving effect thereto, result in the Ag-
gregate Credit Exposure exceeding the Aggregate Commitment Amount, and
(iii) shall not, immediately after giving effect thereto, result in
the aggregate outstanding principal balance of all Swing Line Loans
exceeding the Swing Line Commitment. The Swing Line Lender shall not
be obligated to make any Swing Line Loan at a time when any Lender
shall be in default of its obligations under this Agreement. The Swing
Line Lender will not make a Swing Line Loan if the Agent or Required
Lenders, by notice to the Swing Line Lender and the Company no later
than one Business Day prior to the Borrowing Date with respect to such
Swing Line Loan, shall have determined that the conditions set forth
in paragraph 6 (and if no Loan shall have been previously made
hereunder) paragraph 5 have not been satisfied and such conditions
remain unsatisfied as of the requested time of the making such Loan.
Each Swing Line Loan shall be due and payable on the day (the "Swing
Line Maturity Date") being the earliest of: the last day of the Swing
Line Interest Period applicable thereto, the Swing Line Termination
Date, the date upon which the Swing Line Commitment shall have been
voluntarily terminated by the Company in accordance with paragraph 2.6
and the date on which the Loans shall become due and payable pursuant
to the provisions hereof, whether by acceleration or otherwise. Swing
Line Loans shall bear interest at the Negotiated Rate applicable
thereto. The Swing Line Lender shall disburse the proceeds of Swing
Line Loans at its office designated in paragraph 11.2 by crediting
such proceeds to an account of the Company maintained with the Swing
Line Lender.
(b) Swing Line Loans shall be evidenced by a promissory
note of the Company, substantially in the form of Exhibit C-2 (as in-
dorsed or modified from time to time, the "Swing Line Note"), payable
to the order of the Swing Line Lender, dated the first Borrowing Date,
in the maximum stated principal amount equal to the Swing Line
Commitment, and evidencing the obligation of the Company to pay the
amount of such Swing Line Commitment or, if less, the aggregate unpaid
principal amount of the Swing Line Loans made by the Swing Line Lender
which shall not have been funded with a Mandatory Borrowing pursuant
to paragraph 2.2(c), together with interest thereon as provided for
in this Agreement.
(c) On any Business Day on which a Swing Line Loan shall
be due and payable and shall remain unpaid, the Swing Line Lender may,
in its sole discretion, give notice to the Lenders and the Company
that such outstanding Swing Line Loan shall be funded with a borrowing
of Revolving Credit Loans (provided that such notice shall be deemed
to have been automatically given upon the occurrence of an Event of
Default under paragraph 9.1(h) or (i)), in which case a borrowing of
Revolving Credit Loans made as Alternate Base Rate Loans (each such
borrowing, a "Mandatory Borrowing"), shall be made by all Lenders pro
rata based on each such Lender's Commitment Percentage on the Business
Day immediately succeeding such notice. The proceeds of each Mandatory
Borrowing shall be remitted directly to the Swing Line Lender to repay
such outstanding Swing Line Loan. Each Lender irrevocably agrees to
make Revolving Credit Loans pursuant to each Mandatory Borrowing in
the amount and in the manner specified in the preceding sentence and
on the date specified in writing by the Swing Line Lender not-
withstanding: (i) the amount of such Mandatory Borrowing may not
comply with the minimum amount for Loans otherwise required hereunder,
(ii) whether any condition specified in paragraph 6 is then
unsatisfied, (iii) whether a Default or an Event of Default then
exists, (iv) the Borrowing Date of such Mandatory Borrowing, (v) the
aggregate principal amount of all Loans then outstanding, (vi) the Ag-
gregate Credit Exposure at such time and (vii) the Aggregate
Commitment Amount or the respective amounts of the Revolving Credit
Commitments at such time.
(d) Upon each receipt by a Lender of notice of an Event of
Default from the Agent pursuant to paragraph 10.5, such Lender shall
purchase unconditionally, irrevocably, and severally (and not jointly)
from the Swing Line Lender a participation in the outstanding Swing
Line Loans (including accrued interest thereon) in an amount equal to
the product of its Commitment Percentage and the outstanding balance
of the Swing Line Loans (each, a "Swing Line Participation Amount").
Each Lender shall also be liable for an amount equal to the product
of its Commitment Percentage and any amounts paid by the Company pur-
suant to paragraph 2.2(a) that are subsequently rescinded or avoided,
or must otherwise be restored or returned. Such liabilities shall be
unconditional and without regard to the occurrence of any Default or
Event of Default or the compliance by the Company with any of its
obligations under the Loan Documents.
(e) In furtherance of paragraph 2.2(d), upon each receipt
by a Lender of notice of an Event of Default from the Agent pursuant
to paragraph 10.5, such Lender shall promptly make available to the
Agent for the account of the Swing Line Lender its Swing Line
Participation Amount specified by the Agent with such notice at the
office of the Agent specified in paragraph 11.2, in lawful money of
the United States and in immediately available funds. The Agent shall
deliver the payments made by each Lender pursuant to the immediately
preceding sentence to the Swing Line Lender promptly upon receipt
thereof in like funds as received. Each Lender hereby indemnifies and
agrees to hold harmless the Agent and the Swing Line Lender from and
against any and all losses, liabilities (including liabilities for
penalties), actions, suits, judgments, demands, costs and expenses
resulting from any failure on the part of such Lender to pay, or from
any delay in paying, the Agent any amount such Lender is required by
notice from the Agent to pay in accordance with this paragraph upon
receipt of notice of an Event of Default from the Agent pursuant to
paragraph 10.5 (except in respect of losses, liabilities or other
obligations suffered by the Agent or the Swing Line Lender, as the
case may be, resulting from the gross negligence or willful misconduct
of the Agent or the Swing Line Lender, as the case may be), and such
Lender shall pay interest to the Agent for the account of the Swing
Line Lender from the date such amount was due until paid in full, on
the unpaid portion thereof, at a rate of interest per annum, whether
before or after judgment, equal to (i) from the date such amount was
due until the third day therefrom, the Federal Funds Rate, and (ii)
thereafter, the Alternate Base Rate plus 2%, payable upon demand by
the Swing Line Lender. The Agent shall distribute such interest pay-
ments to the Swing Line Lender upon receipt thereof in like funds as
received.
(f) Whenever the Agent is reimbursed by the Company for
the account of the Swing Line Lender for any payment in connection
with Swing Line Loans and such payment relates to an amount previously
paid by a Lender pursuant to this paragraph, the Agent will promptly
remit such payment to such Lender.
2.3 Notice of Borrowing-Revolving Credit Loans and Swing Line
Loans
The Company agrees to notify the Agent (and with respect
to a Swing Line Loan, the Swing Line Lender), which notification shall
be irrevocable, no later than: (a) 2:00 P.M. on the same Business Day
as the proposed Borrowing Date, in the case of Swing Line Loans, (b)
10:30 A.M. on the same Business Day as the proposed Borrowing Date,
in the case of Revolving Credit Loans to consist of Alternate Base
Rate Loans, and (c) 10:30 A.M. at least three Business Days prior to
the proposed Borrowing Date, in the case of Revolving Credit Loans to
consist of LIBOR Loans. Each such notice shall specify (i) the ag-
gregate amount requested to be borrowed under the Revolving Credit
Commitments or the Swing Line Commitment, (ii) the proposed Borrowing
Date, (iii) whether, in the case of a Revolving Credit Loan, the
borrowing is to be of Alternate Base Rate Loans, LIBOR Loans or a
Swing Line Loan, and the amount of each thereof, (iv) the Interest
Periods for such LIBOR Loans and (v) the Swing Line Interest Period
for each Swing Line Loan. Each such notice shall be promptly confirmed
by delivery to the Agent (and, with respect to a Swing Line Loan, the
Swing Line Lender) of a borrowing request in the form of Exhibit I,
(each a "Borrowing Request"). Each LIBOR Loan to be made on a Borrow-
ing Date, when aggregated with all amounts to be Converted to LIBOR
Loans on such date and having the same Interest Period as such LIBOR
Loan, shall equal no less than $5,000,000, or an integral multiple of
$1,000,000 in excess thereof, (ii) each Alternate Base Rate Loan and
each Swing Line Loan made on each Borrowing Date shall equal no less
than $5,000,000 or an integral multiple of $1,000,000 in excess
thereof. The Agent shall promptly notify each Lender (by telephone or
otherwise, such notification to be confirmed by fax or other writing)
of each such Borrowing Request. Subject to its receipt of each such
notice from the Agent and subject to the terms and conditions hereof,
(A) each Lender shall make immediately available funds available to
the Agent at the address therefor set forth in paragraph 11.2 not
later than 1:00 P.M. on each Borrowing Date in an amount equal to such
Lender's Commitment Percentage of the Revolving Credit Loans requested
by the Company on such Borrowing Date and/or (B) the Swing Line Lender
shall make immediately available funds available to the Company on
such Borrowing Date in an amount equal to the Swing Line Loan re-
quested by the Company.
2.4 Competitive Bid Loans and Procedure
(a) Subject to the terms and conditions hereof, the
Company may request Competitive Bid Loans during the Commitment
Period. In order to request Competitive Bids, the Company shall
deliver by hand or fax to the Agent a duly completed Competitive Bid
Request not later than 3:00 P.M., one Business Day before the proposed
Borrowing Date therefor. A Competitive Bid Request that does not con-
form substantially to the format of Exhibit D-1 may be rejected by the
Agent in the Agent's sole discretion, and the Agent shall promptly no-
tify the Company of such rejection by fax. Each Competitive Bid Re-
quest shall specify (x) the proposed Borrowing Date (which shall be
a Business Day) for the Competitive Bid Loans being requested and the
aggregate principal amount thereof and (y) the Competitive Interest
Period or Interest Periods (which shall not exceed four different In-
terest Periods in a single Competitive Bid Request), with respect
thereto. Promptly after its receipt of each Competitive Bid Request
that is not rejected as aforesaid, the Agent shall fax an Invitation
to Bid to each Lender.
(b) Each Lender, in its sole and absolute discretion, may
make one or more Competitive Bids to the Company responsive to a
Competitive Bid Request. Each Competitive Bid by a Lender must be
received by the Agent not later than 10:00 A.M. on the proposed
Borrowing Date for the relevant Competitive Bid Loan. Multiple bids
will be accepted by the Agent. Competitive Bids that do not conform
substantially to the format of Exhibit D-3 may be rejected by the
Agent after conferring with, and upon the instruction of, the Company,
and the Agent shall notify the Lender making such nonconforming bid
of such rejection as soon as practicable. Each Competitive Bid shall
be irrevocable and shall specify (x) the principal amount (which (1)
shall be in a minimum principal amount of $2,500,000 or an integral
multiple of $500,000 in excess thereof, and (2) may equal the entire
principal amount requested by the Company) of the Competitive Bid Loan
or Competitive Bid Loans that the Lender is willing to make to the
Company, (y) the Competitive Bid Rate or Rates at which the Lender is
prepared to make such Competitive Bid Loan or Competitive Bid Loans,
and (z) the Competitive Interest Period with respect to each such Com-
petitive Bid Loan and the last day thereof. If any Lender shall elect
not to make a Competitive Bid, such Lender shall so notify the Agent
by fax not later than 10:00 A.M. on the proposed Borrowing Date
therefor, provided that the failure by any Lender to give any such
notice shall not obligate such Lender to make any Competitive Bid Loan
in connection with the relevant Competitive Bid Request.
(c) With respect to each Competitive Bid Request, the
Agent shall (i) notify the Company by fax by 11:00 A.M. on the
proposed Borrowing Date with respect thereto of each Competitive Bid
made, the Competitive Bid Rate applicable thereto and the identity of
the Lender that made such Competitive Bid, and (ii) send a list of all
Competitive Bids to the Company for its records as soon as practicable
after completion of the bidding process. Each notice and list sent by
the Agent pursuant to this paragraph 2.4(c) shall list the Competitive
Bids in ascending yield order.
(d) The Company may in its sole and absolute discretion,
subject only to the provisions of this paragraph 2.4(d), accept or
reject any Competitive Bid made in accordance with the procedures set
forth in this paragraph 2.4, and the Company shall notify the Agent
by telephone, confirmed by fax in the form of a Competitive Bid
Accept/Reject Letter, whether and to what extent it has decided to
accept or reject any or all of such Competitive Bids not later than
11:30 A.M. on the proposed Borrowing Date therefor (it being
understood that, subject as aforesaid to the further provisions of
this paragraph, the Company may accept any Competitive Bid in whole
or in part), provided that the failure by the Company to give such
notice shall be deemed to be a rejection of all such Competitive Bids.
In connection with each acceptance of one or more Competitive Bids by
the Company:
(1) the Company shall not accept a Competitive Bid made at
a particular Competitive Bid Rate if the Company has decided
(other than as required pursuant to the operation of the
following clauses (2) through (5)) to reject a Competitive Bid
made at a lower Competitive Bid Rate,
(2) the aggregate amount of the Competitive Bids ac-
cepted by the Company shall not exceed the principal
amount specified in the Competitive Bid Request therefor,
(3) if the Company shall desire to accept a Competitive Bid
made at a particular Competitive Bid Rate, it must accept all
other Competitive Bids at such Competitive Bid Rate, provided
that if the acceptance of all such other Competitive Bids would
cause the aggregate amount of all such accepted Competitive Bids
to exceed the amount requested, then such acceptance shall be
made approximately pro rata in accordance with the amount of
each such Competitive Bid at such Competitive Bid Rate,
(4) except pursuant to clause (3) above, no Competitive Bid
shall be accepted unless the Competitive Bid Loan with respect
thereto shall be in a minimum principal amount of $2,500,000 or
an integral multiple of $500,000 in excess thereof, and
(5) no Competitive Bid shall be accepted and no
Competitive Bid Loan shall be made, if immediately after giving
effect thereto, the Aggregate Credit Exposure would exceed the
Aggregate Commitment Amount;
provided that, notwithstanding the foregoing clauses (1) and (3), if
(x) the aggregate principal amount of the Competitive Bid Loans
requested in a Competitive Bid Request shall exceed the aggregate
amount of the Competitive Bids made in response to such Competitive
Bid Request at one or more lower Competitive Bid Rates and (y) the
amount of such excess shall be less than $2,500,000, the Company may
reject any such Competitive Bid (or, on a pro rata basis, Competitive
Bids, if more than one) made at a particular lower Competitive Bid
Rate, to the extent necessary to enable the Company to accept a
Competitive Bid or Competitive Bids made in response to such
Competitive Bid Request at the next higher Competitive Bid Rate in the
minimum amount the same may be accepted in compliance with the
foregoing clause (4).
(e) The Agent shall promptly fax to each bidding Lender
(with a copy to the Company) a Competitive Bid Rejection/Confirmation
advising such Lender whether its Competitive Bid has been rejected or
accepted (and if accepted, in what amount and at what Competitive Bid
Rate), and each successful bidder so notified will thereupon become
bound, subject to the other applicable conditions hereof, to make each
Competitive Bid Loan in respect of which its Competitive Bid has been
accepted by making immediately available funds available to the Agent
at the address therefor set forth in paragraph 11.2 not later than
1:00 P.M. on the Borrowing Date for such Competitive Bid Loan in the
amount thereof.
(f) A Competitive Bid Request shall not be made within
five Business Days after the date of any previous Competitive Bid
Request, unless the Company has accepted one or more Competitive Bids
pursuant to a Competitive Bid Request made within such five Business
Days; provided that, for purposes of this paragraph 2.4(f), a
Competitive Bid Request pursuant to which the Company shall not have
accepted any Competitive Bids shall be disregarded, if by 11:00 A.M.
on the Borrowing Date specified in such Competitive Bid Request, the
Company shall not have received fax notice of such Competitive Bids
pursuant to paragraph 2.4(c).
(g) If the Agent shall elect to submit a Competitive Bid
in its capacity as a Lender, it shall submit such bid directly to the
Company not later than 9:30 A.M. on the relevant proposed Borrowing
Date.
(h) All notices required by this paragraph shall be given
in accordance with paragraph 11.2.
(i) The Competitive Bid Loans made by each Lender shall
be evidenced by a promissory note of the Company, substantially in the
form of Exhibit C-3 (each, as indorsed or modified from time to time,
a "Competitive Bid Note"), payable to the order of such Lender, dated
the first Borrowing Date, evidencing the obligation of the Company to
pay the aggregate unpaid principal balance of all Competitive Bid
Loans made by such Lender to the Company, together with interest
thereon as provided for in this Agreement. Each Competitive Bid Loan
shall be due and payable on the last day of the Interest Period
applicable thereto or on such earlier date upon which the Loans shall
become due and payable pursuant to the provisions hereof, whether by
acceleration or otherwise.
2.5 Use of Proceeds
The Company agrees that the proceeds of the Loans shall be
used solely for its general corporate purposes (subject in any event
to the provisions of the next sentence). Notwithstanding anything to
the contrary contained in any Loan Document, the Company further
agrees that no part of the proceeds of any Loan will be used, directly
or indirectly, for a purpose which violates any applicable law, rule
or regulation of any Governmental Body, including the provisions of
Regulations G, U or X of the Board of Governors of the Federal Reserve
System, as amended.
2.6 Voluntary Termination or Reductions of Commitments
At the Company's option and upon at least three Business
Days' prior irrevocable notice to the Agent, the Company may (i)
terminate the Revolving Credit Commitments and the Swing Line
Commitment, at any time, or (ii) permanently reduce the Aggregate
Commitment Amount or the Swing Line Commitment, in part at any time
and from time to time, provided that (1) each such partial reduction
shall be in an amount equal to at least (i) in the case of the
Aggregate Commitment Amount, $5,000,000 and (ii) in the case of the
Swing Line Commitment, $2,500,000, or in each case an integral mul-
tiple of $500,000 in excess thereof and (2) immediately after giving
effect to each such reduction, (i) the Aggregate Commitment Amount
shall equal or exceed the sum of the aggregate outstanding principal
balance of all Loans and (ii) the Swing Line Commitment shall equal
or exceed the aggregate outstanding principal balance of all Swing
Line Loans. Each reduction of the Aggregate Commitment Amount shall
be made by reducing each Lender's Revolving Credit Commitment by a sum
equal to such Lender's Commitment Percentage of the amount of such
reduction.
2.7 Voluntary Prepayments of Loans
(a) Prepayments. The Company may prepay Revolving Credit
Loans, Competitive Bid Loans and Swing Line Loans, in whole or in
part, without premium or penalty, but subject to paragraph 3.5, at any
time and from time to time, by notifying the Agent, which notification
shall be irrevocable, at least three Business Days, in the case of
a prepayment of LIBOR Loans or Competitive Bid Loans, or one Business
Day, in the case of a prepayment of Alternate Base Rate Loans or Swing
Line Loans, prior to the proposed prepayment date specifying (i) the
Loans to be prepaid, (ii) the amount to be prepaid, and (iii) the date
of prepayment. Upon receipt of each such notice, the Agent shall
promptly notify each Lender thereof. Each such notice given by the
Company pursuant to this paragraph shall be irrevocable. Each partial
prepayment under this paragraph shall be in a minimum amount of
$1,000,000 or an integral multiple of $500,000 in excess thereof.
(b) Interest. Simultaneously with each prepayment
hereunder, the Company shall prepay all accrued interest on the amount
prepaid through the date of prepayment.
3. PROCEEDS, PAYMENTS, CONVERSIONS, INTEREST, YIELD PROTECTION AND
FEES
3.1 Disbursement of the Proceeds of the Loans
The Agent shall disburse the proceeds of the Loans (other
than the Swing Line Loans) at its office specified in paragraph 11.2
by crediting to the Company's general deposit account with the Agent
the funds received from each Lender. Unless the Agent shall have re-
ceived prior notice from a Lender (by telephone or otherwise, such
notice to be confirmed by fax or other writing) that such Lender will
not make available to the Agent such Lender's Commitment Percentage
of the Revolving Credit Loans, or the amount of any Competitive Bid
Loan, to be made by it on a Borrowing Date, the Agent may assume that
such Lender has made such amount available to the Agent on such Bor-
rowing Date in accordance with paragraph 2.3 or 2.4, as the case may
be, provided that, in the case of a Revolving Credit Loan, such Lender
received notice thereof from the Agent in accordance with the terms
hereof, and the Agent may, in reliance upon such assumption, make
available to the Company on such Borrowing Date a corresponding
amount. If and to the extent such Lender shall not have so made such
amount available to the Agent, such Lender and the Company severally
agree to pay to the Agent, forthwith on demand, first, from such
Lender, and, if not promptly paid, from the Company, such correspond-
ing amount (to the extent not previously paid by the other), together
with interest thereon for each day from the date such amount is made
available to the Company until the date such amount is paid to the
Agent, at a rate per annum equal to, in the case of the Company, the
applicable interest rate set forth in paragraph 3.4(a) and, in the
case of such Lender, the Federal Funds Rate from the date such payment
is due until the third day after such date and, thereafter, at the
Alternate Base Rate plus 2%. Any such payment by the Company shall be
without prejudice to its rights against such Lender. If such Lender
shall pay to the Agent such corresponding amount, such amount so paid
shall constitute such Lender's Loan as part of such Loans for purposes
of this Agreement, which Loan shall be deemed to have been made by
such Lender on the Borrowing Date applicable to such Loans.
3.2 Pro Rata Treatment and Application of Payments
(a) Each borrowing of Revolving Credit Loans by the
Company from the Lenders, any Conversion of Revolving Credit Loans
from one interest rate to another, and any reduction of the Revolving
Credit Commitments shall be made pro rata according to the Commitment
Percentage of each Lender. Each payment, including each prepayment,
of principal and interest on the Loans and of the Facility Fee and of
all of the other amounts to be paid to the Agent and the Lenders in
connection with the Loan Documents shall be made by the Company to the
Agent at its office specified in paragraph 11.2 in lawful money of the
United States of America and in funds immediately available in New
York by 1:00 P.M. on the due date for such payment. The failure of the
Company to make any such payment by such time shall not constitute a
default hereunder, provided that such payment is made on such due
date, but any such payment made after 1:00 P.M. on such due date shall
be deemed to have been made on the next Business Day for the purpose
of calculating interest on amounts outstanding on the Loans. Promptly
upon receipt thereof by the Agent, each payment of principal and
interest on the: (i) Revolving Credit Loans shall be remitted by the
Agent in like funds as received to each Lender (a) first, pro rata
according to the amount of interest which is then due and payable to
the Lenders, and (b) second, pro rata according to the amount of
principal which is then due and payable to the Lenders, (ii)
Competitive Bid Loans shall be remitted by the Agent in like funds as
received to each applicable Lender and (iii) Swing Line Loans shall
be remitted by the Agent in like funds as received to the Swing Line
Lender. Each payment of the Facility Fee shall be promptly transmitted
by the Agent in like funds as received to each Lender pro rata ac-
cording to such Lender's Revolving Credit Commitment or, if the
Revolving Credit Commitments shall have terminated or been terminated,
according to the outstanding principal amount of such Lender's Re-
volving Credit Loans.
(b) If any payment hereunder or under the Loans shall be
due and payable on a day which is not a Business Day the due date
thereof (except as otherwise provided in the definition of LIBOR
Interest Period or Competitive Interest Period) shall be extended to
the next Business Day and (except with respect to payments in respect
of the Facility Fee) interest shall be payable at the applicable rate
specified herein during such extension.
3.3 Conversions; Other Matters
(a) The Company may elect at any time and from time to
time to Convert one or more LIBOR Loans to an Alternate Base Rate Loan
by giving the Agent at least one Business Day's prior irrevocable
notice of such election, specifying the Loans and the amount to be so
Converted, provided that any such Conversion shall only be made on the
last day of the Interest Period applicable to each such LIBOR Loan.
In addition, the Company may elect from time to time to Convert an
Alternate Base Rate Loan to any one or more new LIBOR Loans or to
Convert any one or more existing LIBOR Loans to any one or more new
LIBOR Loans by giving the Agent at least three Business Days' prior
irrevocable notice, of such election, specifying the amount to be so
Converted and the initial Interest Period relating thereto, provided
that (i) any Conversion of an Alternate Base Rate Loan to LIBOR Loans
shall only be made on a Business Day and (ii) any Conversion of LIBOR
Loans shall only be made on the last day of the Interest Period ap-
plicable thereto. The Agent shall promptly provide the Lenders with
notice of each such election. Alternate Base Rate Loans and LIBOR
Loans may be Converted pursuant to this paragraph in whole or in part,
provided that the amount to be Converted to each LIBOR Loan, when ag-
gregated with any LIBOR Loan to be made on such date in accordance
with paragraph 2.1 and having the same Interest Period as such first
LIBOR Loan, shall equal no less than $5,000,000 or an integral
multiple of $1,000,000 in excess thereof.
(b) Notwithstanding anything in this Agreement to the
contrary, upon the occurrence and during the continuance of a Default
or an Event of Default, the Company shall have no right to elect to
Convert any existing Alternate Base Rate Loan to a new LIBOR Loan or
to Convert any existing LIBOR Loan to a new LIBOR Loan. In such event,
such Alternate Base Rate Loan shall be automatically continued as an
Alternate Base Rate Loan or such LIBOR Loan shall be automatically
Converted to an Alternate Base Rate Loan on the last day of the
Interest Period applicable to such LIBOR Loan.
(c) Each Conversion shall be effected by each Lender by
applying the proceeds of each new Alternate Base Rate Loan or LIBOR
Loan, as the case may be, to the existing Loan (or portion thereof)
being Converted (it being understood that such Conversion shall not
constitute a borrowing for purposes of paragraphs 4,5 or 6).
(d) Notwithstanding any other provision of any Loan
Document:
(i) if the Company shall have failed to elect a LIBOR
Loan under paragraph 2.3 or this paragraph 3.3, as the case may
be, in connection with any borrowing of new Revolving Credit
Loans or expiration of an Interest Period with respect to any
existing LIBOR Loan, the amount of the Revolving Credit Loans
subject to such borrowing or such existing LIBOR Loan shall
thereafter be an Alternate Base Rate Loan until such time, if
any, as the Company shall elect a new LIBOR Loan pursuant to
this paragraph 3.3,
(ii) the Company shall not be permitted to select a
LIBOR Loan the Interest Period in respect of which ends later
than the Termination Date or such earlier date upon which all of
the Revolving Credit Commitments shall have been voluntarily
terminated by the Company in accordance with paragraph 2.6, and
(iii) the
Company shall not be permitted to have more than ten LIBOR Loans
and Competitive Bid Loans, in the aggregate, outstanding at any
one time.
3.4 Interest Rates and Payment Dates
(a) Prior to Maturity. Except as otherwise provided in
paragraphs 3.4(b) and 3.4(c), the Loans shall bear interest on the
unpaid principal balance thereof at the applicable interest rate or
rates per annum set forth below:
<PAGE>
LOANS RATE
Revolving Credit Loans made as Alternate Base Rate applicable
Alternate Base Rate Loans thereto.
Revolving Credit Loans made as LIBOR Rate applicable thereto
plus
LIBOR Loans the Applicable Margin.
Competitive Bid The rate of interest ap-
Loans plicable thereto accepted by
the Company pursuant to
paragraph 2.4(d).
Swing Line Loans Negotiated Rate applicable
thereto as provided in
paragraph 2.2(a).
(b) After Maturity, Late Payment Rate. After maturity,
whether by acceleration, notice of intention to prepay or otherwise,
the outstanding principal balance of the Loans shall bear interest at
the Alternate Base Rate plus 2% per annum until paid (whether before
or after the entry of any judgment thereon). If any interest or the
Facility Fee is not paid on the date when due and payable the same
shall bear interest at the Alternate Base Rate plus 2% per annum from
the due date thereof until the date such payment is made (whether
before or after the entry of any judgment thereon).
(c) Highest Lawful Rate. Notwithstanding anything to the
contrary contained in this Agreement, at no time shall the interest
rates (or any thereof) payable on the Loans, together with the
Facility Fee and all other amounts payable hereunder to the extent the
same constitute or are deemed to constitute interest, exceed the
Highest Lawful Rate. If in respect of any period during the term of
this Agreement, any amount paid hereunder, to the extent the same
shall (but for the provisions of this paragraph 3.4) constitute or be
deemed to constitute interest, would exceed the maximum amount of
interest permitted by the Highest Lawful Rate during such period (such
amount being hereinafter referred to as an "Unqualified Amount"), then
(i) such Unqualified Amount shall be applied as a prepayment of the
Loans, and (ii) if, in any subsequent period during the term of this
Agreement, all amounts payable hereunder in respect of such period
which constitute or shall be deemed to constitute interest shall be
less than the maximum amount of interest permitted by the Highest
Lawful Rate during such period, then the Company shall pay to the
Lenders in respect of such period an amount (each a "Compensatory In-
terest Payment") equal to the lesser of (x) a sum which, when added
to all such amounts, would equal the maximum amount of interest
permitted by the Highest Lawful Rate during such period, and (y) an
amount equal to the aggregate sum of all Unqualified Amounts less all
other Compensatory Interest Payments.
(d) General. Interest shall be payable in arrears on each
Interest Payment Date and, to the extent provided in paragraph 2.7(b),
upon each payment (including each prepayment) of the Loans. Any change
in the interest rate on a Loan resulting from a change in the
Alternate Base Rate or any reserve requirement shall become effective
as of the opening of business on the day on which such change shall
become effective. The Agent shall, as soon as practicable, notify the
Company and the Lenders of the effective date and the amount of each
change in the BNY Rate, but any failure to so notify shall not in any
manner affect the obligation of the Company to pay interest on the
Loans in the amounts and on the dates set forth herein. Each determi-
nation by the Agent of the Alternate Base Rate, the LIBOR Rate and the
Competitive Rate pursuant to this Agreement shall be conclusive and
binding on the Company absent manifest error. The Company acknowledges
that, to the extent interest payable on the Loans is based on the Al-
ternate Base Rate, such rate is only one of the bases for computing
interest on loans made by the Lenders, and by basing interest payable
on Alternate Base Rate Loans on the Alternate Base Rate, the Lenders
have not committed to charge, and the Company has not in any way bar-
gained for, interest based on a lower or the lowest rate at which the
Lenders may now or in the future make extensions of credit to other
Persons. All interest (other than interest calculated with reference
to the BNY Rate) shall be calculated on the basis of a 360-day year
for the actual number of days elapsed, and all interest calculated
with reference to the BNY Rate shall be made on the basis of a
365/366-day year for the actual number of days elapsed.
3.5 Indemnification for Loss
Notwithstanding anything contained herein to the contrary,
if the Company shall fail to borrow a LIBOR Loan or if the Company
shall fail to Convert to a LIBOR Loan after it shall have given notice
to do so in which it shall have requested a LIBOR Loan pursuant to
paragraph 2.3 or 3.3 (other than any such failure to borrow or Convert
solely by reason of the failure by the Agent or a Lender or Lenders
to comply with its or their obligations hereunder with respect to the
relevant LIBOR Loan), as the case may be, or if the Company shall fail
to borrow a Competitive Bid Loan after it shall have accepted any
offer with respect thereto in accordance with paragraph 2.4 or a Swing
Line Loan after it shall have agreed to a Negotiated Rate with respect
thereto pursuant to paragraph 2.2(a), or if a LIBOR Loan, Competitive
Bid Loan or Swing Line Loan shall be terminated for any reason prior
to the last day of the Interest Period applicable thereto, or if any
repayment or prepayment of the principal amount of a LIBOR Loan, a
Competitive Bid Loan or a Swing Line Loan is made for any reason on
a date which is prior to the last day of the Interest Period appli-
cable thereto, the Company agrees to indemnify each Lender (or the
Swing Line Lender, as applicable) against, and to pay on demand di-
rectly to such Lender the amount (calculated by such Lender using any
commercially reasonable method chosen by such Lender which is
customarily used by such Lender for such purpose) equal to any loss
or expense suffered by such Lender as a result of such failure to
borrow or Convert, or such termination, repayment or prepayment,
including any loss, cost or expense suffered by such Lender in liqui-
dating or employing deposits acquired to fund or maintain the funding
of such LIBOR Loan, Competitive Bid Loan or Swing Line Loan, as the
case may be, or redeploying funds prepaid or repaid, in amounts which
correspond to such LIBOR Loan, Competitive Bid Loan or Swing Line
Loan, as the case may be, and any internal processing charge
customarily charged by such Lender in connection therewith.
3.6 Reimbursement for Costs, Etc.
(a) If at any time or from time to time there shall occur
a Regulatory Change and any Lender shall have reasonably determined
that such Regulatory Change (i) shall have had or will thereafter have
the effect of reducing (A) the rate of return on such Lender's capital
or the capital of any Person directly or indirectly owning or
controlling such Lender (each a "Control Person"), or (B) the asset
value (for capital purposes) to such Lender or such Control Person,
as applicable, of the Loans, or any participation therein, in any case
to a level below that which such Lender or such Control Person could
have achieved or would thereafter be able to achieve but for such
Regulatory Change (after taking into account such Lender's or such
Control Person's policies regarding capital), (ii) will impose, modify
or deem applicable any reserve, asset, special deposit or special as-
sessment requirements on deposits obtained in the interbank eurodollar
market in connection with the making or maintaining of LIBOR Loans
under the Loan Documents (excluding, with respect to any LIBOR Loan,
any such requirement which is included in the determination of the
rate applicable thereto or in respect of which such Lender is entitled
to payment under clause (b) of this paragraph 3.6), (iii) will subject
such Lender or such Control Person, as applicable, to any Tax
(documentary, stamp or otherwise, but not including any Indemnified
Tax or any income Tax, whether payable by way of withholding or
otherwise, or capital or franchise Taxes on, based on, or measured by
the overall net income of such Lender or any change in the rate of any
such Tax) with respect to this Agreement or any Note, or (iv) will
change the basis of taxation of payments to such Lender or such Con-
trol Person, as applicable, of principal, interest or fees payable
under the Loan Documents (except for any Indemnified Tax or any income
Tax, whether payable by way of withholding or otherwise, or capital
or franchise Taxes on, based on, or measured by the overall net income
of such Lender or any change in the rate of any such Tax) then, in
each such case, within ten days after demand by such Lender, the
Company shall pay to such Lender or such Control Person, as the case
may be, such additional amount or amounts as shall be sufficient to
compensate such Lender or such Control Person, as the case may be, for
(1) any such reduction referred to in clause (a) (i) of this paragraph
3.6, and (2) any Taxes described in clauses (iii) and (iv) above,
losses, costs or expenses (excluding general administrative and over-
head costs) attributable to such Lender's or such Control Person's
compliance during the term hereof with such Regulatory Change;
provided that, in any such event, such Lender shall, as promptly as
practicable and in any event within 30 days after obtaining actual
knowledge of any such Regulatory Change or reasonably determining (a
"Loss Determination") that such Regulatory Change shall or may have
an effect described in any of the foregoing clauses (i) through (iv),
give the Company and the Agent written notice thereof. Without
affecting its rights under this paragraph or any other provision of
this Agreement, each Lender agrees that in the event of any such
reduction or any such Taxes, losses, costs or expenses with respect
to which the Company would be obligated to compensate such Lender
pursuant to this paragraph, such Lender shall use reasonable efforts
to select an alternative Lending Office if such action would be
effective to avoid or mitigate any such reductions, Taxes, losses,
costs or expenses; provided that, no Lender shall be obligated to
select an alternative Lending Office if such Lender shall determine
that such selection would adversely affect such Lender or any Loan
made by it. Notwithstanding the foregoing provisions of this
paragraph, the Company shall not be obligated to compensate any Lender
under this paragraph for any such reductions, or any such Taxes,
losses, costs or expenses, to which such Lender shall have become
subject or which it shall have incurred (x) if such Lender shall have
failed to give written notice thereof to the Company within 90 days
after the officer of such Lender having responsibility for
administering this Agreement having obtained actual knowledge of such
Regulatory Change or making any Loss Determination, more than 90 days
prior to the date such Lender actually gives such notice or (y) in any
event, more than 90 days prior to the date such Lender shall give such
notice to the Company.
(b) Without limiting the effect of the foregoing, the
Company agrees to pay to each Lender on the last day of each Interest
Period for a LIBOR Loan so long as such Lender is maintaining reserves
(including, without limitation, marginal, emergency, supplemental and
special reserves) in respect of eurocurrency funding (currently
referred to as "Eurocurrency liabilities" under Regulation D of the
Board of Governors of the Federal Reserve System), or, unless the
provisions of paragraph (a) above are applicable, so long as such
Lender is, by reason of any Regulatory Change, maintaining reserves
against any other category of liabilities which includes deposits by
reference to which the interest rate on LIBOR Loans is determined as
provided in this Agreement or against any category of extensions of
credit or other assets of such Lender which includes any LIBOR Loans,
an additional amount (determined by such Lender and notified to the
Company through the Agent) equal to the product of the following for
each LIBOR Loan for each day during such Interest Period:
(i) the principal balance of such LIBOR Loan outstanding
on such day; and
(ii) the difference between (x) a fraction the numerator
of which is the LIBOR Rate (expressed as a decimal) applicable
to such LIBOR Loan for such Interest Period as provided in this
Agreement and the denominator of which is one minus the
effective rate (expressed as a decimal) at which such reserve
requirements are imposed on such Lender by the Board of
Governors of the Federal Reserve System on such day minus (y)
such numerator; and
(iii) 1/360.
3.7 Illegality of Funding
Notwithstanding any other provision hereof, if any Lender
shall reasonably determine that any law, regulation, treaty or
directive, or any change therein or in the interpretation or
application thereof, shall make it unlawful for such Lender to make
or maintain any LIBOR Loan as contemplated by this Agreement, such
Lender shall promptly notify the Company and the Agent thereof, and
(a) the commitment of such Lender to make such LIBOR Loans or Convert
Alternate Base Rate Loans to such LIBOR Loans shall forthwith be sus-
pended, (b) such Lender's Loans then outstanding as such LIBOR Loans,
if any, shall be Converted automatically to an Alternate Base Rate
Loan on the last day of the then current Interest Period applicable
thereto or at such earlier time as may be required under applicable
law or regulations and (c) such Lender shall fund its portion of each
requested LIBOR Loan as an Alternate Base Rate Loan. If the commitment
of any Lender with respect to LIBOR Loans is suspended pursuant to
this paragraph and such Lender shall have obtained actual knowledge
that it is once again legal for such Lender to make or maintain LIBOR
Loans, such Lender shall promptly notify the Agent and the Company
thereof and, upon receipt of such notice by each of the Agent and the
Company, such Lender's commitment to make or maintain LIBOR Loans
shall be reinstated.
3.8 Option to Fund; Substituted Interest Rate
(a) The Swing Line Lender and each Lender has indicated
that, if the Company requests a Swing Line Loan, a LIBOR Loan or a
Competitive Bid Loan, such Lender may wish to purchase one or more
deposits in order to fund or maintain its funding of such Swing Line
Loan or of its Commitment Percentage of such LIBOR Loan or of such
Competitive Bid Loan during the Interest Period with respect thereto;
it being understood that the provisions of this Agreement relating to
such funding are included only for the purpose of determining the rate
of interest to be paid in respect of such Swing Line Loan, LIBOR Loan
or Competitive Bid Loan and any amounts owing under paragraphs 3.5 and
3.6. The Swing Line Lender and each Lender shall be entitled to fund
and maintain its funding of all or any part of each Swing Line Loan,
LIBOR Loan and Competitive Bid Loan in any manner it sees fit, but all
such determinations hereunder shall be made as if such Lender had
actually funded and maintained its Swing Line Loan or its Commitment
Percentage of each LIBOR Loan and each Competitive Bid Loan during the
applicable Interest Period through the purchase of deposits in an
amount equal to the amount of such Swing Line Loan, LIBOR Loan or
Competitive Bid Loan, and having a maturity corresponding to such In-
terest Period. The Swing Line Lender, with respect to Swing Line Loans
and any Lender with respect to its Commitment Percentage of each LIBOR
Loan and each Competitive Bid Loan may fund any such Loan from or for
the account of any branch or office of such Lender as such Lender may
choose from time to time.
(b) In the event that (i) the Agent shall have determined
(which determination shall be conclusive and binding upon the Company)
that by reason of circumstances affecting the interbank eurodollar
market either adequate and reasonable means do not exist for
ascertaining the LIBOR Rate applicable pursuant to paragraph 2.3 or
paragraph 3.3, or (ii) the Required Lenders shall have notified the
Agent that they have determined (which determination shall be conclu-
sive and binding on the Company) that the applicable LIBOR Rate will
not adequately and fairly reflect the cost to such Lenders of main-
taining or funding loans bearing interest based on such LIBOR Rate,
with respect to any portion of the Loans that the Company has
requested be made as LIBOR Loans or any LIBOR Loan that will result
from the requested Conversion of any portion of the Loans into LIBOR
Loans (each, an "Affected Loan"), the Agent shall promptly notify the
Company and the Lenders (by telephone or otherwise, to be promptly
confirmed in writing) of such determination on or, to the extent prac-
ticable, prior to the requested Borrowing Date or Conversion date for
such Affected Loans. If the Agent shall give such notice, (A) any Af-
fected Loans shall be made as Alternate Base Rate Loans, (B) the Loans
(or any portion thereof) that were to have been Converted to Affected
Loans shall be Converted to or continued as Alternate Base Rate Loans,
and (C) any outstanding Affected Loans shall be Converted, on the last
day of the then current Interest Period with respect thereto, to
Alternate Base Rate Loans. Until any notice under clauses (i) or (ii),
as the case may be, of this paragraph has been withdrawn by the Agent
(by notice to the Company) promptly upon either (x) the Agent having
determined that such circumstances affecting the relevant market no
longer exist and that adequate and reasonable means do exist for de-
termining the LIBOR Rate pursuant to paragraph 2.3 or paragraph 3.3,
or (y) the Agent having been notified by such Required Lenders that
circumstances no longer render the Loans (or any portion thereof)
Affected Loans, no further LIBOR Loans shall be required to be made
by the Lenders nor shall the Company have the right to Convert all or
any portion of the Loans to LIBOR Loans; provided that, periodically
(and at least once a month) during any period that any Loans shall
continue to constitute Affected Loans, the Agent or the Lenders, as
the case may be, shall make a good faith assessment as to whether the
determination referred to in clause (x) may be made or the notice
referred to in clause (y) may be given, whichever shall be applicable;
and if such determination shall be made or such notice shall be given,
the Agent shall forthwith withdraw such notice under clause (i) or
(ii), as the case may be, of this paragraph.
3.9 Certificates of Payment and Reimbursement
Each Lender agrees, in connection with any request by it
for payment or reimbursement pursuant to paragraph 3.5 or 3.6, to
provide the Company with a certificate, signed by an officer of such
Lender setting forth a description in reasonable detail of any such
payment or reimbursement. Each determination by each Lender of such
payment or reimbursement shall be conclusive absent manifest error.
3.10 Taxes; Net Payments
(a) If, as a result of any change occurring after the date
hereof in any treaty, law or regulation of the United States or any
political subdivision or taxing authority thereof or therein or in the
official interpretation of any thereof (a "Tax Law Change"), any
amount payable by the Company under the Loan Documents to any Lender
which is not a "United States person" (as defined in Section
7701(a)(30) of the Code) becomes subject to the imposition of, or any
deduction or withholding for or on account of, any Taxes imposed by
the United States or any political subdivision or taxing authority
thereof or therein (other than any such Taxes, or any deduction or
withholding for or on account thereof, which are imposed by any taxing
authority in any jurisdiction in which such Lender maintains a Lending
Office or is otherwise subject to such Tax by reason of transactions
or activities other than those contemplated by this Agreement), or
there is an increase in the rate of any such Taxes or in the amount
of the deduction or withholding for or on account thereof as in effect
immediately prior to such Tax Law Change (all such non-excluded Taxes,
deductions or withholdings being referred to herein as "Indemnified
Taxes"), then the Company shall, to the extent legally permissible,
make all payments under the Loan Documents free and clear of, and
without deduction or withholding for or on account of, any such
Indemnified Taxes. In the event the Company is required by law to
make any deduction or withholding for or on account of any such
Indemnified Taxes from any such payment, then the Company shall (i)
increase the amount of such payment so that the relevant Lender will
receive a net amount (after deduction of all such Indemnified Taxes
and all additional Indemnified Taxes as may be imposed by reason of
such increased payment) equal to the amount which would have been
received had no such deduction or withholding been required, (ii) file
such returns or reports as may be required with respect to such
Indemnified Taxes with, and make payment thereof to, the appropriate
taxing authority within the time prescribed therefor by law, and (iii)
promptly following a request therefor by the Agent or the relevant
Lender, provide a copy of a receipt or other satisfactory documentary
evidence of the payment of such Indemnified Taxes; provided, however,
that the Company shall have no liability under this paragraph for (x)
any Taxes which are imposed by reason of a failure of a relevant
Lender to comply with its obligations under paragraph 3.10(b) or (y)
an amount of Taxes greater than the amount the Company would have been
obligated to pay under this paragraph with respect to Taxes of the
transferring Lender had there not been a transfer by such Lender of
an interest (including, without limitation, a participation interest)
in the Loan Documents prior to a Tax Law Change, but the Company shall
have liability for any Tax for which the acquiror of such interest
becomes liable after the transfer thereof and following a Tax Law
Change (other than any such transfer which is made in connection with
an exercise of remedies following an Event of Default). In the event
that any such deduction or withholding can be reduced or nullified as
a result of the application of any relevant double taxation con-
vention, the Lenders and the Agent will, at the expense of the
Company, cooperate with the Company in making application to the rel-
evant taxing authorities seeking to obtain such reduction or
nullification, provided that the Lenders and the Agent shall have no
obligation to (i) engage in litigation with respect thereto or (ii)
disclose any tax return or other confidential information. If any
payment to any Lender under any Loan Document is or becomes subject
to any Indemnified Taxes, such Lender shall (unless otherwise required
by a Governmental Body or as a result of any law, rule, regulation,
order or similar directive applicable to such Lender) designate a dif-
ferent Lending Office from that initially selected thereby, if such
designation would avoid such Indemnified Taxes and would not be oth-
erwise disadvantageous to such Lender in any material respect. In the
event that any Lender determines that it received a refund or credit
for Indemnified Taxes paid by the Company under this paragraph , such
Lender shall promptly notify the Agent and the Company of such fact
and shall remit to the Company the amount of such refund or credit
applicable to the payments made by the Company to or in respect of
such Lender under this paragraph.
(b) Each Lender which is not a "United States person" (as
defined in Section 7701(a)(30) of the Code) shall deliver to the
Company such certificates, documents, or other evidence as the Company
may reasonably require from time to time as are necessary to establish
that such Lender is not subject to withholding under the Code (or is
entitled to a reduced rate of withholding) or as may be necessary to
establish, under any law imposing upon the Company, hereafter, an
obligation to withhold any portion of the payments made by the Company
under the Loan Documents, that payments to the Agent on behalf of such
Lender are not subject to withholding (or qualify for a reduced rate
of withholding). Notwithstanding any provision herein to the contrary,
the Company shall have no obligation to pay to any Lender any amount
which the Company is liable to withhold due to the failure of such
Lender to file any certificates, documents, or other evidence from
time to time required in order to secure an exemption from, or reduced
rate of, any withholding Tax imposed under any applicable law or
treaty.
(c) In the event that the Company shall become liable to
make any payments under this paragraph to or on behalf of any Lender,
the Company may, within 60 days of the demand by such Lender for such
payments, request one or more of the Lenders (each, a "Replacement
Lender") to elect to increase its Commitment by an amount up to the
amount of the Commitment of such Lender (a "Selling Lender") or
designate another lender or lenders (any such lender, also a
"Replacement Lender") reasonably acceptable to the Agent and willing
to assume the Commitment of any such Selling Lender. Upon the
Commitment of such Selling Lender being taken up by a Replacement
Lender, such Replacement Lender shall assume the Commitment of such
Selling Lender by purchasing such Selling Lender's Note which shall
be sold by such Selling Lender without recourse or warranty (except
as to the amount due thereon, its title to such Note and its right to
sell the same) at a price in immediately available funds equal to the
outstanding principal balance of such Selling Lender's Notes, together
with accrued and unpaid interest thereon to the date of such payment,
any accrued and unpaid Facility Fee due to such Selling Lender and any
other amounts due to such Selling Lender under the Loan Documents.
Effective upon such sale, each Replacement Lender shall be deemed to
be a "Lender" for purposes of this Agreement, and such Selling Lender
shall cease to be a "Lender" for all purposes of this Agreement (ex-
cept with respect to its rights hereunder to be reimbursed for costs
and expenses, and to indemnification with respect to, matters at-
tributable to events, acts or conditions occurring prior to such
assumption and purchase) and shall no longer have any obligations
hereunder. The Company shall execute and deliver to such Replacement
Lender a Note or Notes in an aggregate principal amount equal to the
Loans assigned to, and the Commitment assumed by, such Replacement
Lender in exchange for the Note or Notes of the applicable Selling
Lender.
3.11 Facility Fee.
The Company agrees to pay to the Agent for the account of
the Lenders in accordance with each Lender's Commitment Percentage,
a fee (the "Facility Fee"), for the period from and including the Ef-
fective Date to but excluding the date of the expiration or other
termination of the Revolving Credit Commitments, equal to .15% per
annum on the average daily amount of the Aggregate Commitments, pay-
able quarterly in arrears on the last day of each March, June,
September and December of each year and on the date of the expiration
or other termination of the Revolving Credit Commitments. The Facility
Fee shall be calculated on the basis of a 360-day year for the actual
number of days elapsed.
4. REPRESENTATIONS AND WARRANTIES
In order to induce the Agent, the Swing Line Lender and the
Lenders to enter into this Agreement and to make the Loans, the
Company hereby makes the following representations and warranties to
the Agent and to each Lender:
4.1 Significant Subsidiaries.
The Company has only the Significant Subsidiaries set forth
in Exhibit E (as such Exhibit may be updated from time to time by the
Company). The shares of each Significant Subsidiary of the Company are
duly authorized, validly issued, fully paid and nonassessable and are
owned free and clear of any Liens, except Permitted Liens.
4.2 Corporate Existence and Power.
The Company and each of its Significant Subsidiaries is a
corporation which is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has
all requisite corporate power and authority to own its Property and
to carry on its business as now conducted, and is in good standing and
authorized to do business in each jurisdiction in which the failure
to be so authorized would reasonably be expected to have a Material
Adverse Effect.
4.3 Corporate Authority.
The Company has full corporate power and authority to enter
into, execute, deliver and carry out the terms of this Agreement, to
make the borrowings contemplated hereby, to execute, deliver and carry
out the terms of the Notes and to incur the obligations provided for
herein and therein, all of which have been duly authorized by all
proper and necessary corporate action and are not in violation of the
Company's Certificate of Incorporation and By-Laws.
4.4 Governmental Body Approvals.
No consent, authorization or approval of, filing with,
notice to, or exemption by, the Company's stockholders, any
Governmental Body or any other Person (except for those which have
been obtained, made or given) is required to authorize, or is required
in connection with, the execution and delivery by the Company of, and
the performance by the Company of its obligations under, the Loan
Documents or is required as a condition to the validity or
enforceability of the Loan Documents with respect to or against the
Company. No provision of any applicable statute, law (including,
without limitation, any applicable usury or similar law), rule or
regulation of any Governmental Body will prevent the execution and
delivery by the Company of, or performance by the Company of its
obligations under, or affect the validity with respect to or against
the Company of, the Loan Documents.
4.5 Binding Agreement.
This Agreement constitutes, and the Notes, when issued and
delivered pursuant hereto for value received will constitute, the
valid and legally binding obligations of the Company enforceable in
accordance with their respective terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally
or by general principles of equity.
4.6 Litigation.
Except as set forth in Exhibit F and except for any
litigation relating to Felbatol which has been previously disclosed
to the Lenders, including securities litigation relating thereto,
there are no actions, suits, arbitration proceedings or claims pending
or, to the knowledge of the Company, threatened against the Company
or any of its Subsidiaries, or maintained by the Company or any of its
Subsidiaries, at law or in equity, before any Governmental Body which,
if determined adversely to the Company or such Subsidiary, would
reasonably be expected to have a Material Adverse Effect. There are
no proceedings pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries which call into ques-
tion the validity or enforceability of any of the Loan Documents.
4.7 No Conflicting Agreements.
Neither the Company nor any of its Subsidiaries is in
default under any mortgage, indenture, contract, agreement, judgment,
decree or order to which it is a party or by which it or any of its
Property is bound, which defaults, taken as a whole, would reasonably
be expected to have a Material Adverse Effect. The execution, delivery
or carrying out of the terms of the Loan Documents will not constitute
a default under, conflict with, require any consent under (other than
consents which have been obtained), or result in the creation or
imposition of, or obligation to create, any Lien upon the Property of
the Company or any Subsidiary of the Company pursuant to the terms of
any such mortgage, indenture, contract, agreement, judgment, decree
or order, which defaults, conflicts and consents, if not obtained,
would reasonably be expected to have a Material Adverse Effect.
4.8 Taxes.
Except as set forth in Exhibit G, the Company and each of
its Subsidiaries has filed or caused to be filed all tax returns
required to be filed and has paid, or has made adequate provision for
the payment of, all Taxes shown to be due and payable on said returns
or in any assessments made against it which if not so filed or paid
would reasonably be expected to result in a Material Adverse Effect,
and no tax Liens that are not Permitted Liens have been filed. The
charges, accruals and reserves on the books of the Company and each
of its Subsidiaries with respect to all federal, state, local and
other Taxes are, in the judgment of the Company, adequate, and the
Company knows of no unpaid assessment which is due and payable against
it or any of its Subsidiaries or any claims being asserted which would
reasonably be expected to have a Material Adverse Effect, except such
thereof as are being contested in good faith and by appropriate pro-
ceedings diligently conducted, and for which reserves, which in the
judgment of the Company are adequate, have been set aside in
accordance with GAAP.
4.9 Compliance with Applicable Laws.
Neither the Company nor any of its Subsidiaries is in
default with respect to any judgment, order, writ, injunction, decree
or decision of any Governmental Body which default would reasonably
be expected to have a Material Adverse Effect. The Company and each
of its Significant Subsidiaries is complying in all material respects
with all applicable statutes and regulations, including ERISA, of all
Governmental Bodies, a violation of which would reasonably be expected
to have a Material Adverse Effect.
4.10 Governmental Regulations.
Neither the Company nor any of its Subsidiaries is subject
to (i) regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act or the Investment Company Act of 1940 or
(ii) any statute or regulation which prohibits or restricts the
incurrence of Indebtedness under the Loan Documents, including,
without limitation, statutes or regulations relative to common or
contract carriers or to the sale of electricity, gas, steam, water,
telephone, telegraph or other public utility services.
4.11 Property.
The Company and each of its Significant Subsidiaries has
good and marketable title to all of its respective Property
constituting real estate and good title to its respective other
Property, with respect to which the absence of such marketable title,
or title, as the case may be, would reasonably be expected to result
in a Material Adverse Effect, subject to no Liens, except Permitted
Liens.
4.12 Federal Reserve Regulations; Use of Loan Proceeds.
Neither the Company nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying any
Margin Stock. No part of the proceeds of the Loans will be used,
directly or indirectly, to purchase or carry any Margin Stock or for
a purpose which violates any law, rule or regulation of any
Governmental Body, including, without limitation, the provisions of
Regulations G, T, U or X of the Board of Governors of the Federal
Reserve System, as amended.
4.13 No Misrepresentation.
No representation or warranty made by the Company contained
herein, and no certificate or report furnished or to be furnished by
the Company in connection with the transactions contemplated hereby,
contains or will contain a misstatement of material fact, or, to the
best knowledge of the Company, omits or will omit to state a material
fact required to be stated in order to make the statements herein or
therein contained, taken as a whole, not misleading in the light of
the circumstances under which made.
4.14 Burdensome Obligations.
Neither the Company nor any of its Significant Subsidiaries
is a party to or bound by any franchise, agreement, deed, lease or
other instrument, or is subject to any corporate restriction which,
in the opinion of the management of the Company, is so unusual or
burdensome, in the context of the Company's or such Significant Sub-
sidiary's business, as in the foreseeable future would reasonably be
expected to result in a Material Adverse Effect on the ability of the
Company to perform its obligations under the Loan Documents. The
Company does not presently anticipate that future expenditures needed
to meet the provisions of federal or state statutes, orders, rules or
regulations will be so burdensome as to have a Material Adverse
Effect.
4.15 Plans.
Each Single Employer Plan and, to the best knowledge of the
Company, each Multiemployer Plan is in compliance, in all material
respects, with the applicable provisions of ERISA and the Code, and
the Company and each of its Subsidiaries have filed all reports
required to be filed by them under ERISA and the Code with respect to
each such Plan, the failure of which to file would reasonably be
expected to result in a Material Adverse Effect. The Company and each
of its Subsidiaries have met all requirements imposed by ERISA and the
Code with respect to the funding of all Single Employer Plans, and,
to the best knowledge of the Company, Multiemployer Plans, the failure
of which to meet would reasonably be expected to result in a Material
Adverse Effect. To the best knowledge of the Company, since the
effective date of ERISA, no events or conditions have existed which
would cause the lien provided under Section 4068 of ERISA to attach
to the Property of the Company or any of its Subsidiaries. No
Reportable Event currently exists which may constitute grounds for the
termination of any Single Employer Plan or, to the best knowledge of
the Company, any Multiemployer Plan under Title IV of ERISA and no
Single Employer Plan or Multiemployer Plan has been terminated in
whole or in part, except as disclosed in Exhibit N.
4.16 Financial Statements.
The Company has heretofore delivered to the Lenders copies
of its audited Consolidated Balance Sheet as of March 31, 1995, and
the related Consolidated Statements of Income, Cash Flows and
Shareholders' Equity for the fiscal year then ended, as well as its
Form 10Q for the quarter ending June 30, 1995 containing its unaudited
Consolidated Balance Sheet as of June 30, 1995 and the related
Consolidated Statements of Income, Cash Flows and Shareholders's
Equity for the fiscal quarter then ended (with the related notes and
schedules, the "Financial Statements"). The Financial Statements
fairly present, in all material respects, the Consolidated financial
condition and results of the operations of the Company as of the
respective dates and for the respective periods indicated therein and
have been prepared in conformity with GAAP. Neither the Company nor
any of its Subsidiaries has any obligation or liability of any kind
(whether fixed, accrued, contingent, unmatured or otherwise) which,
in accordance with GAAP, should have been disclosed in the Financial
Statements and was not. Since March 31, 1995, there has been no Mate-
rial Adverse Change.
4.17 Environmental Matters.
Except as set forth in Exhibit M, neither the Company nor
any of its Subsidiaries (i) has received written notice of any claim,
demand, action, event, condition, report or investigation indicating
or concerning any potential or actual liability which individually or
in the aggregate would reasonably be expected to have a Material
Adverse Effect, arising in connection with (a) any non-compliance with
or violation of the requirements of any applicable federal, state or
local environmental health and safety statutes and regulations or
(b) the release or threatened release of any toxic or hazardous waste,
substance or constituent into the environment, (ii) to the best
knowledge of the Company, has any liability in connection with the
release or threatened release of any toxic or hazardous waste,
substance or constituent into the environment which individually or
in the aggregate would reasonably be expected to have a Material
Adverse Effect, (iii) has received written notice of any federal or
state investigation evaluating whether any remedial action is needed
to respond to a release or threatened release of any toxic or
hazardous waste, substance or constituent into the environment for
which the Company or any of its Subsidiaries is or may be liable which
individually or in the aggregate would reasonably be expected to have
a Material Adverse Effect or (iv) has received written notice that the
Company or any of its Subsidiaries is or may be liable to any Person
under the Comprehensive Environmental Response, Compensation and Li-
ability Act, as amended, 42 U.S.C. Section 9601 et seq. ("CERCLA") or
any analogous state law which individually or in the aggregate would
reasonably be expected to have a Material Adverse Effect. The Company
and each of its Subsidiaries is in compliance in all material respects
with the financial responsibility requirements of federal and state
environmental laws to the extent applicable, including, without
limitation, those contained in 40 C.F.R., parts 264 and 265, subpart
H, and any analogous state law.
5. CONDITIONS TO LENDING - FIRST LOAN
In addition to the conditions precedent set forth in paragraph
6, the obligation of any Lender to make a Loan and of the Swing Line
Lender to make the first Swing Line Loan are subject to the satis-
faction of the following conditions precedent:
5.1 Evidence of Corporate Action.
The Agent shall have received a certificate, dated the
first Borrowing Date, of the Secretary or an Assistant Secretary of
the Company (i) attaching a true and complete copy of the resolutions
of its Board of Directors and of all documents evidencing other
necessary corporate action (in form and substance satisfactory to the
Agent and to Special Counsel) taken by it to authorize the Loan
Documents and the transactions contemplated thereby, (ii) attaching
a true and complete copy of its Certificate of Incorporation and By-Laws
and (iii) setting forth the incumbency of its officer or officers
who may sign the Loan Documents, including therein a signature
specimen of such officer or officers.
5.2 Good Standing Certificates.
The Agent shall have received a certificate of good
standing of the Secretary of State of the State of Delaware.
5.3 Notes.
The Agent shall have received the Notes duly executed by
an Authorized Signatory of the Company.
5.4 No Material Adverse Change.
There shall have occurred no Material Adverse Change since
March 31, 1995, and the Agent shall have received a certificate of an
Authorized Signatory of the Company to such effect.
5.5 Opinions of Counsel to the Company.
The Agent shall have received an opinion of Ralph Levine,
general counsel to the Company, and an opinion of Whitman Breed Abbott
& Morgan, special counsel to the Company, addressed to the Agent, the
Swing Line Lender and the Lenders, dated the first Borrowing Date,
substantially in the forms of Exhibit J-1 and J-2, respectively.
5.6 Opinion of Special Counsel.
The Agent shall have received an opinion of Special
Counsel, dated the first Borrowing Date, substantially in the form of
Exhibit J-3.
5.7 Other Documents.
The Agent shall have received such other documents and
assurances as the Agent or Special Counsel shall reasonably require.
6. CONDITIONS OF LENDING.
The obligations of: each Lender to make each Revolving Credit
Loan, of the Swing Line Lender to make each Swing Line Loan and of any
Lender to make a Competitive Bid Loan on the Borrowing Date with
respect to such Loan are subject to the satisfaction of the following
conditions precedent:
6.1 Compliance.
On each Borrowing Date and after giving effect to the Loans
to be made thereon, (i) there shall exist no Default or Event of De-
fault, (ii) the representations and warranties contained in the Loan
Documents shall be true and correct with the same effect as though
such representations and warranties had been made on such Borrowing
Date, except as the context otherwise requires and except for those
representations and warranties which by their terms or by necessary
implication are expressly limited to a state of facts existing prior
to the Effective Date and (iii) there shall have occurred no Material
Adverse Change since March 31, 1995. Each borrowing by the Company
shall constitute a certification by the Company as of the date of such
borrowing that each of the foregoing matters is true and correct in
all respects.
6.2 Borrowing Request; Competitive Bid Request.
With respect to any request for Revolving Credit Loans or
Swing Line Loans, the Agent shall have received a Borrowing Request,
and with respect to any request for a Competitive Bid Loans, the Agent
shall have received a Competitive Bid Request, in each case duly exe-
cuted by an Authorized Signatory of the Company.
6.3 Loan Closings.
All documents required by the provisions of this Agreement
to be executed or delivered to the Agent on or before the applicable
Borrowing Date shall have been executed and shall have been delivered
at the office of the Agent set forth in or pursuant to paragraph 11.2
on or before such Borrowing Date.
7. AFFIRMATIVE COVENANTS
The Company hereby agrees that so long as this Agreement is in
effect, any Loan remains outstanding and unpaid, or any other amount
is owing under any of the Loan Documents to any Lender or the Agent,
the Company shall:
7.1 Financial Statements.
Maintain, and cause each of its Subsidiaries to maintain,
a system of financial reporting in accordance with GAAP, and furnish
or cause to be furnished to the Agent and each Lender:
(a) As soon as available, but in any event within 105
days after the end of each fiscal year of the Company, a copy of its
Consolidated Balance Sheet as at the end of such fiscal year, together
with the related Consolidated Statements of Income, Cash Flows and
Shareholders' Equity as of and through the end of such fiscal year,
setting forth in each case in comparative form the figures for the
preceding fiscal year. The Consolidated Balance Sheet and Statements
of Income, Cash Flows and Shareholders' Equity shall be audited by the
Accountants who shall issue their report thereon which shall (i) state
that the examination by such Accountants in connection with such Con-
solidated financial statements has been made in accordance with gener-
ally accepted auditing standards and, accordingly, included such tests
of the accounting records and such other auditing procedures as were
considered necessary in the circumstances and (ii) include the opinion
of such Accountants that such Consolidated financial statements have
been prepared in accordance with GAAP without qualification.
(b) As soon as available, but in any event not later than
60 days after the end of each of the first three quarterly accounting
periods in fiscal year of the Company, (i) a copy of the Consolidated
Balance Sheet as at the end of each such quarterly period, and the
Consolidated Statements of Income, Cash Flows and Shareholders'
Equity, for such period and for the elapsed portion of the fiscal year
through such date, setting forth in each case in comparative form the
figures for the corresponding periods of the preceding fiscal year,
certified by the Vice President-Finance or the Vice President-Treasurer of the
Company (or such other officer acceptable to the Agent) as having been
prepared in accordance with GAAP and as presenting fairly, in all material
respects, the Consolidated financial condition and the Consolidated results of
operations of the Company and its Subsidiaries and (ii) a certificate of
the Vice President-Finance or the Vice President-Treasurer of the Company
(or such other officer as shall be acceptable to the Agent) in detail
reasonably satisfactory to the Agent (1) stating that there exists no
violation of any of the terms or provisions of the Loan Documents or
occurrence of any condition or event which would constitute a Default or
Event of Default, or, if any such violation, condition or event exists or has
occurred, specifying in such certificate all such violations,
conditions and events, and the nature and status thereof and (2)
containing computations showing compliance with the provisions of
paragraphs 7.11, 7.12 and 8.1.
(c) As soon as available, but in any event not later than
105 days after the end of the last quarterly accounting period in each
fiscal year of the Company, the same certificate as is required by
clause (b) (ii) above.
7.2 Certificates; Other Information.
Furnish to the Agent and each Lender:
(a) Prompt written notice if (i) any Indebtedness or
Contingent Obligation of the Company or any of its Subsidiaries in
excess of $10,000,000 is declared or shall become due and payable
prior to its stated maturity, or is called and not paid when due, (ii)
a default shall have occurred under any note (other than the Notes)
or the holder of any such note, or other evidence of Indebtedness,
certificate or security evidencing any such Indebtedness or any
obligee with respect to any other Indebtedness of the Company or any
of its Subsidiaries has the right to declare any Indebtedness in
excess of $10,000,000 due and payable prior to its stated maturity as
a result of such default or (iii) there shall have occurred and be
continuing a Default or an Event of Default;
(b) Prompt written notice of (i) any citation, summons,
subpoena, order to show cause or other order naming the Company or any
of its Subsidiaries a party to any proceeding before any Governmental
Body (including, without limitation, proceedings relating to any
alleged non-compliance with or alleged violation of the requirements
of any federal, state or local environmental health and safety
statutes and regulations or the release or the threatened release of
any toxic or hazardous waste, substance or other constituent into the
environment) which could reasonably be expected to have a Material
Adverse Effect or which calls into question the validity or enforce-
ability of any of the Loan Documents, and include with such notice a
copy of such citation, summons, subpoena, order to show cause or other
order, (ii) any lapse or other termination of any material license,
permit, franchise or other authorization issued to the Company or any
of its Subsidiaries by any Governmental Body, the lapse or termination
of which could reasonably be expected to result in a Material Adverse
Effect, (iii) any refusal by any Governmental Body or any other Person
to renew or extend any such material license, permit, franchise or
other authorization with respect to which such refusal could
reasonably be expected to result in a Material Adverse Effect and (iv)
any dispute between the Company or any of its Subsidiaries and any
Person, which dispute could reasonably be expected to have a Material
Adverse Effect;
(c) Promptly upon becoming available, copies of all (i)
financial statements, reports and proxy statements ( except for
registration statements on Form S-8 or a successor form relating to
the registration of securities pursuant to an employee benefit plan)
which the Company may have sent to its stockholders generally and
copies of all registration statements and regular, periodic or special
reports, schedules and other material which the Company may now or
hereafter be required to file with or deliver to any securities
exchange or the Securities and Exchange Commission, or any other
Governmental Body succeeding to the functions thereof, and with any
national securities exchange and (ii) material news releases and an-
nual reports relating to the Company or any of its Subsidiaries; and
(d) With reasonable promptness, such other information
and financial data as the Agent or the Lenders may reasonably request.
7.3 Legal Existence.
Except as permitted by paragraph 8.3, maintain, and cause
each of its Subsidiaries to maintain, its corporate existence in good
standing in the jurisdiction of its incorporation or formation and in
each other jurisdiction in which the failure so to do could reasonably
be expected to have a Material Adverse Effect.
7.4 Taxes.
Pay and discharge when due, and cause each of its
Subsidiaries so to do, all Taxes upon or with respect to the Company
or such Subsidiary and upon the income, profits and Property of the
Company and its Subsidiaries, which, if unpaid, could reasonably be
expected to have a Material Adverse Effect or become a Lien on the
Property of the Company or such Subsidiary, other than Permitted
Liens, unless and to the extent only that such Taxes shall be
contested in good faith and by appropriate proceedings diligently
conducted by the Company or such Subsidiary and provided that any such
contested Taxes, shall not constitute, or create, a Lien on any
Property of the Company or such Subsidiary other than a Permitted
Lien, and provided further that the Company shall give the Agent
prompt notice of such contest and such reserve or other appropriate
provision as shall be required by the Accountants in accordance with
GAAP shall have been made therefor.
7.5 Insurance.
Maintain, and cause each of its Significant Subsidiaries
to maintain, insurance on its Property against such risks and in such
amounts as is customarily maintained by Persons engaged in similar
businesses, including, without limitation, product liability, public
liability and workers' compensation insurance. The Company shall
promptly file with the Agent such information concerning its insurance
program and that of its Subsidiaries as the Agent may reasonably
request.
7.6 Payment of Indebtedness and Performance of Obligations.
Pay and discharge, and cause each of its Subsidiaries to
pay and discharge, when due all lawful Indebtedness, obligations and
claims for labor, materials and supplies or otherwise which, if
unpaid, could reasonably be expected to (i) have a Material Adverse
Effect or (ii) become a Lien upon Property of the Company or such
Subsidiary other than a Permitted Lien, unless and to the extent only
that the validity of such Indebtedness, obligation or claim shall be
contested in good faith and by appropriate proceedings diligently
conducted by the Company or such Subsidiary, and provided further that
the Company shall give the Agent prompt notice of any such contest and
that such reserve or other appropriate provision as shall be required
by the Accountants in accordance with GAAP shall have been made
therefor.
7.7 Condition of Property.
At all times, maintain, protect and keep in good repair,
working order and condition (ordinary wear and tear excepted), and
cause each of its Subsidiaries so to do, all Property reasonably
necessary to the operation of the business of the Company and its
Subsidiaries, where the failure so to do would reasonably be expected
to result in a Material Adverse Effect.
7.8 Observance of Legal Requirements; ERISA.
Observe and comply in all material respects, and cause each
of its Subsidiaries so to do, with all laws (including ERISA),
ordinances, orders, judgments, rules, regulations, certifications,
franchises, permits, licenses, directions and requirements of all
Governmental Bodies, which may then be applicable to the Company and
its Subsidiaries, a violation of which could reasonably be expected
to have a Material Adverse Effect, except such thereof as shall be
contested in good faith and by appropriate proceedings diligently
conducted by the Company or such Subsidiary, provided that the Company
shall give the Agent prompt notice of such contest and that such
reserve or other appropriate provision as shall be required by the
Accountants in accordance with GAAP shall have been made therefor.
7.9 Inspection of Property; Books and Records; Discussions.
Keep proper books of record and account in which complete,
true and correct entries in conformity with GAAP and all requirements
of law shall be made of all material dealings and transactions in
relation to its business and activities; and upon reasonable notice,
permit representatives of the Agent and each Lender to visit the of-
fices of the Company and its Subsidiaries, to inspect any of its
Property and examine or make copies or abstracts from any of its books
and records at any reasonable time during business hours and as often
as may reasonably be desired, and to discuss the business, operations,
prospects, licenses, Property and financial condition of the Company
and its Subsidiaries with the officers thereof and with the
Accountants.
7.10 Licenses, Etc.
Maintain and cause each of its Subsidiaries to maintain,
in full force and effect, all material licenses, copyrights, patents,
permits, applications, reports, authorizations and other rights as are
reasonably necessary for the conduct of its business and the failure
to maintain which could reasonably be expected to have a Material
Adverse Effect.
7.11 Net Worth.
Maintain at all times Net Worth in an amount equal to not
less than the sum of (i) $300,000,000 and (ii) 40% of the Company's
Consolidated net income (if positive) for each fiscal year commencing
with and including the fiscal year ending March 31, 1996, determined
on a cumulative basis.
7.12 Interest Coverage Ratio.
At the end of each fiscal quarter of the Company, maintain
an Interest Coverage Ratio of at least 2.0:1.0 for the four fiscal
quarters ending with the end of such fiscal quarter, provided,
however, that the Company's Interest Coverage Ratio: (i) for the
fiscal quarter ending June 30, 1995 shall be measured for that fiscal
quarter only, (ii) for the fiscal quarter ending September 30, 1995
shall be measured for the two fiscal quarters ending on such date, and
(ii) for the fiscal quarter ending December 31, 1995 shall be measured
for the three fiscal quarters ending on such date.
8. NEGATIVE COVENANTS
The Company hereby agrees that, so long as this Agreement is in
effect, any Loan remains outstanding and unpaid, or any other amount
is owing under any Loan Document to any Lender or the Agent, the
Company shall not, directly or indirectly:
8.1 Ratio of Indebtedness to Total Capitalization.
Create, incur or assume any liability for Indebtedness, or
permit any of its Subsidiaries so to do, if, after giving effect
thereto, the Company's ratio of Consolidated Indebtedness to Total
Capitalization would exceed 0.5:1.0. Indebtedness of the Company and
its Subsidiaries existing on the date hereof is as set forth in
Exhibit L.
8.2 Liens.
Create, incur, assume or suffer to exist any Lien upon any
of its Property or assets, whether now owned or hereafter acquired,
or permit any of its Subsidiaries so to do, except Permitted Liens.
8.3 Merger and Acquisition or Sale of Property.
Merge or consolidate with any Person, or acquire by
purchase or otherwise all or substantially all of the assets of any
Person, or permit any of its Subsidiaries so to do, except that (i)
any of its Subsidiaries may be merged into or consolidated with any
other Subsidiary of the Company or a Person which, after giving effect
to such merger or consolidation, shall be a Subsidiary of the Company,
(ii) any of its Subsidiaries or any other Person may be merged into
or consolidated with the Company, provided that the Company shall be
the surviving corporation of such merger or consolidation and (iii)
the Company or any of its Subsidiaries may acquire by purchase or
otherwise all or substantially all of the assets of any Person
provided that, with respect to all of the foregoing, immediately
before and after giving effect thereto, no Default or Event of Default
shall exist.
8.4 Sale of Property.
Except for sales of assets in the ordinary course of
business, sell, assign, exchange, lease, transfer or otherwise dispose
of any of its Property, or permit any of its Subsidiaries so to do,
to any Person other than (i) a wholly-owned Subsidiary of the Company
(in the case of the Company) or (ii) the Company or any other wholly-owned
Subsidiary of the Company (in the case of a Subsidiary of the
Company), in each case in an aggregate amount, on and after the
Effective Date, in excess of 15% of its Consolidated assets
(determined in accordance with GAAP), such Property to be valued at
book value.
8.5 Compliance with ERISA.
Engage in any "prohibited transaction", as such term is
defined in Section 4975 of the Code or Section 406 of ERISA, with
respect to any Plan; or incur any "accumulated funding deficiency",
as such term is defined in Section 412 of the Code or Section 302 of
ERISA; or terminate, or permit any of its Subsidiaries or any Commonly
Controlled Entity to terminate, any Plan which would result in any li-
ability of the Company, any of its Subsidiaries or a Commonly
Controlled Entity to the PBGC; or permit the occurrence of any
Reportable Event or any other event or condition which presents a risk
of such a termination by the PBGC of any Plan; or withdraw or effect
a partial withdrawal from a Multiemployer Plan; or permit any of its
Subsidiaries a Commonly Controlled Entity which is an employer under
such a Multiemployer Plan so to do; which, in the case of any of the
foregoing, could reasonably be expected to result in a Material
Adverse Effect.
8.6 Transactions with Affiliates.
Become, or permit any of its Subsidiaries to become, a
party to any transaction with an Affiliate of the Company or of any
of its Subsidiaries (which Affiliate is not also a wholly-owned
Subsidiary of the Company) unless the terms and conditions relating
to such transaction are as favorable to the Company or such Subsidiary
as those which would be obtainable at that time in a comparable
arms-length transaction with a Person other than an Affiliate.
8.7 Certificate of Incorporation and By-laws; Fiscal Year;
Business Changes.
Amend or otherwise modify its Certificate of Incorporation
or By-Laws, or change its fiscal year for financial reporting
purposes, or materially change the nature of the business as conducted
by the Company and its Subsidiaries taken as a whole on the date
hereof, or permit any of its Subsidiaries to do any of the foregoing,
in each case referred to in this paragraph 8.7 in any way which could
reasonably be expected to adversely affect the interests of the
Lenders or the obligations of the Company under any of the Loan
Documents.
8.8 Sale and Leaseback.
Enter into any arrangement with any Person, or permit any
of its Subsidiaries so to do, providing for the leasing by the Company
(or such Subsidiary) of Property which has been or is to be sold or
transferred by the Company (or such Subsidiary) to such Person or to
any other Person to whom funds have been or are to be advanced by such
Person on the security of such Property or rental obligations of the
Company (or such Subsidiary) in an aggregate amount on and after the
Effective Date which, when added to the aggregate amount of Property
sold, assigned, exchanged, leased, transferred or otherwise disposed
of in accordance with paragraph 8.4, is in excess of 15% of the
Consolidated assets (determined in accordance with GAAP) of the
Company and its Subsidiaries, such Property to be valued at book
value.
9. DEFAULT
9.1 Events of Default.
The following shall each constitute an "Event of Default"
hereunder:
(a) the failure of the Company to make any payment of
principal on any Note on the date when due and payable; or
(b) the failure of the Company to make any payment of
interest hereunder or under any other Loan Document for three or more
Business Days after the same shall be due and payable, or the failure
of the Company to make any payment of any fees or expenses payable
hereunder or under any other Loan Document for five or more Business
Days after the same shall be due and payable; or
(c) the use by the Company of the proceeds of any Loan in
a manner inconsistent with or in violation of paragraph 2.5; or
(d) the failure of the Company to observe or perform any
covenant or agreement contained in paragraphs 7.11, 7.12 or paragraph
8; or
(e) the failure of the Company to observe or perform any
other term, covenant, or agreement contained in this Agreement and
such failure shall have continued unremedied for a period of 30 days
after the earlier of (i) a Responsible Officer having obtained know-
ledge thereof or (ii) the Company having received written notice
thereof from the Agent; or
(f) any representation or warranty of the Company (or of
any officer of the Company on its behalf) made in this Agreement or
any other Loan Document or in any certificate, report or other
document delivered or to be delivered pursuant to this Agreement or
any other Loan Document, shall prove to have been incorrect or mis-
leading (whether because of misstatement or omission) in any material
respect when made; or
(g) any obligation of the Company or any of its
Subsidiaries, whether as principal, guarantor, surety or other obli-
gor, for the payment of Indebtedness or Contingent Obligations, in an
aggregate amount in excess of $20,000,000, shall become or shall be
declared to be due and payable prior to the expressed maturity or
expiration thereof, or shall not be paid when due or within any grace
period for the payment thereof, or the holder thereof shall have the
right to declare such obligation due and payable prior to the
expressed maturity thereof; or
(h) the Company or any of its Subsidiaries (not including
any Subsidiary which does not, taken together with the assets of other
Subsidiaries engaging in any transactions described in this clause
(h), in the aggregate, have assets equal to more than 3.5% of the
assets of the Company and its Subsidiaries on a Consolidated basis)
shall (i) suspend or discontinue all or substantially all of its
business (except, with respect to any Subsidiary of the Company, as
permitted by paragraphs 8.3 and 8.4), or (ii) make an assignment for
the benefit of creditors, or (iii) generally not be paying its debts
as such debts become due, or (iv) admit in writing its inability to
pay its debts as they become due, or (v) file a voluntary petition in
bankruptcy, or (vi) or (vi) file any petition or answer seeking for
itself any reorganization, arrangement, composition, readjustment of
debt, liquidation or dissolution or similar relief under any present
or future statute, law or regulation of any jurisdiction, or (vii)
petition or apply to any tribunal for any receiver, custodian or any
trustee for any substantial part of its Property, or (viii) be the
subject of any such proceeding filed against it which remains undis-
missed for a period of 90 days, or (ix) file any answer admitting or
not contesting the material allegations of any such petition filed
against it or any order, judgment or decree approving such petition
in any such proceeding, or (x) seek, approve, consent to, or acquiesce
in any such proceeding, or in the appointment of any trustee,
receiver, custodian, liquidator, or fiscal agent for it, or any
substantial part of its Property, or an order is entered appointing
any such trustee, receiver, custodian, liquidator or fiscal agent and
such order remains in effect for 90 days, or (xi) take any formal
action for the purpose of effecting any of the foregoing or looking
to the liquidation or dissolution of the Company or such Subsidiary;
or
(i) an order for relief is entered under the United States
bankruptcy laws or any other decree or order is entered by a court
having jurisdiction (i) adjudging the Company or any of its
Subsidiaries a bankrupt or insolvent, or (ii) approving as properly
filed a petition seeking reorganization, liquidation, arrangement,
adjustment or composition of or in respect of the Company or any of
its Subsidiaries under the United States bankruptcy laws or any other
applicable Federal or state law, or (iii) appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator, fiscal agent
(or other similar official) of the Company or any of its Subsidiaries
or of any substantial part of the Property thereof, or (iv) ordering
the winding up or liquidation of the affairs of the Company or any of
its Subsidiaries, and any such decree or order continues unstayed and
in effect for a period of 90 days; or
(j) any judgment or decree against the Company or any of
its Subsidiaries aggregating in excess of $20,000,000 shall remain
unpaid, undischarged or undismissed for a period of 60 days, unless
such judgment or decree shall be stayed on appeal or bonded on or
before the 60th day of such period; provided, however, there shall not
be an Event of Default under this clause (j) with respect to any such
judgment or decree which remains unstayed on appeal and unbonded in
any foreign jurisdiction which requires a plaintiff to post a bond,
in cash and in the full amount of such judgment or decree, in order
to execute upon such judgment or decree; or
(k) any of the Loan Documents shall cease, for any reason,
to be in full force and effect, or the Company shall so assert in
writing.
Upon the occurrence of an Event of Default or at any time
thereafter during the continuance thereof, (1) if such event is an
Event of Default specified in clauses (h) or (i) above, the Revolving
Credit Commitments shall immediately and automatically terminate and
the Loans and all accrued and unpaid interest on any thereof and all
other amounts owing under the Loan Documents shall immediately become
due and payable, and the Agent may, and upon the direction of the
Required Lenders shall, exercise any and all remedies and other rights
provided pursuant to the Loan Documents, and (2) if such event is any
other Event of Default, any or all of the following actions may be
taken: (x) with the consent of the Required Lenders, the Agent may,
and upon the direction of the Required Lenders shall, by notice to the
Company, declare the Revolving Credit Commitments to be terminated
forthwith, whereupon the Revolving Credit Commitments shall im-
mediately terminate and (y) with the consent of the Required Lenders,
the Agent may, and upon the direction of the Required Lenders shall,
by written notice of default to the Company, declare the Loans, all
accrued and unpaid interest thereon and all other amounts owing under
the Loan Documents to be due and payable forthwith, whereupon the same
shall immediately become due and payable, and in all cases the Agent
may, and upon the direction of the Required Lenders shall, exercise
any and all remedies and other rights provided pursuant to the Loan
Documents or by law. Except as otherwise provided in this paragraph
9.1, presentment, demand, protest and all other notices of any kind
are hereby expressly waived. The Company hereby further expressly
waives and covenants not to assert any appraisement, valuation, stay,
extension, redemption or similar laws, now or at any time hereafter
in force, which might delay, prevent or otherwise impede the perfor-
mance or enforcement of any of the Loan Documents.
In the event that the Revolving Credit Commitments shall have
been terminated or the Notes shall have been declared due and payable
pursuant to the provisions of this paragraph 9.1, any funds received
by the Agent, the Swing Line Lender and the Lenders from or on behalf
of the Company shall be applied by the Agent, the Swing Line Lender
and the Lenders in liquidation of the Loans and the obligations of the
Company hereunder and under the Notes in the following manner and
order: (i) first, to reimburse the Agent, the Swing Line Lender and
the Lenders for any expenses due pursuant to the provisions of
paragraph 11.5; (ii) second, to the payment of accrued and unpaid
Agent's Fees, Facility Fees and all other fees, expenses and amounts
due hereunder (other than principal and interest on the Notes); (iii)
third, to the payment of interest due on the Notes (pro rata according
to the aggregate outstanding principal balance of each category
thereof); (iv) fourth, to the payment of principal outstanding on the
Notes (pro rata according to the aggregate outstanding principal
balance of each category thereof); and (v) fifth, to the payment of
any other amounts owing to the Agent, the Swing Line Lender and the
Lenders under any of the Loan Documents. Any funds remaining after the
foregoing applications shall be paid over to the Company or as a court
may otherwise direct.
10. THE AGENT
10.1 Appointment.
Each Lender and the Swing Line Lender hereby irrevocably
designates and appoints BNY as the Agent of such Lender and the Swing
Line Lender under the Loan Documents and each such Lender and the
Swing Line Lender hereby irrevocably authorizes BNY, as the Agent for
such Lender and the Swing Line Lender, to take such action on its
behalf under the provisions of the Loan Documents and to exercise such
powers and perform such duties as are expressly delegated to the Agent
by the terms of the Loan Documents, together with such other powers
as are reasonably incidental thereto. Notwithstanding any provision
to the contrary elsewhere in this Agreement or any of the other Loan
Documents, the Agent shall not have any duties or responsibilities,
except those expressly set forth herein or therein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read
into the Loan Documents or otherwise exist against the Agent.
10.2 Delegation of Duties.
The Agent may execute any of its duties under the Loan
Documents by or through agents or attorneys-in-fact and shall be
entitled to rely upon the advice of counsel concerning all matters
pertaining to such duties.
10.3 Exculpatory Provisions.
Neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates shall be (i) liable
for any action lawfully taken or omitted to be taken by it, in its
capacity as Agent, or such Person at the direction of the Agent under
or in connection with the Loan Documents (except the Agent for its own
gross negligence or willful misconduct) or (ii) responsible in any
manner to any of the Lenders or the Swing Line Lender for any recit-
als, statements, representations or warranties made by the Company or
any officer thereof contained in the Loan Documents or in any
certificate, report, statement or other document referred to or
provided for in, or received by the Agent under or in connection with,
the Loan Documents or for the value, validity, effectiveness, genuine-
ness, enforceability or sufficiency of any of the Loan Documents or
for any failure of any party thereto, or any other Person to perform
its obligations hereunder or thereunder. The Agent shall not be under
any obligation to any Lender or the Swing Line Lender to ascertain or
to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, the Loan Documents, or to
inspect the properties, books or records of the Company or any of its
Subsidiaries. The Agent shall not be under any liability or re-
sponsibility whatsoever, as Agent, to the Company or any other Person
as a consequence of any failure or delay in performance, or any
breach, by any Lender or the Swing Line Lender of any of its obliga-
tions under any of the Loan Documents.
10.4 Reliance by Agent.
The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, opinion, letter, telegram, fax, telex or tele-
type message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent
or made by the proper Person or Persons and upon advice and statements
of legal counsel (including, without limitation, counsel to the
Company), independent accountants and other experts selected by the
Agent. The Agent may treat each Lender, or the Person designated in
the last notice filed with it under this paragraph, as the holder of
all of the interests of such Lender in its Loans and in its Note until
written notice of transfer, signed by such Lender (or the Person
designated in the last notice filed with the Agent) and by the Person
designated in such written notice of transfer, in form and substance
satisfactory to the Agent, shall have been filed with the Agent. The
Agent shall not be under any duty to examine or pass upon the
validity, effectiveness or genuineness of the Loan Documents or any
instrument, document or communication furnished pursuant thereto or
in connection therewith, and the Agent shall be entitled to assume
that the same are valid, effective and genuine, have been signed or
sent by the proper parties and are what they purport to be. The Agent
shall be fully justified in failing or refusing to take any action
under the Loan Documents unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate. The Agent
shall in all cases be fully protected in acting, or in refraining from
acting, under the Loan Documents in accordance with a request of the
Required Lenders, and such request and any action taken or failure to
act pursuant thereto shall be binding upon all the Lenders, the Swing
Line Lender and all future holders of the Notes.
10.5 Notice of Default.
The Agent shall not be deemed to have knowledge or notice
of the occurrence of any Default or Event of Default hereunder unless
the Agent has received written notice thereof from a Lender, the Swing
Line Lender or the Company. In the event that the Agent receives such
a notice, the Agent shall promptly give notice thereof to the Lenders
and the Swing Line Lender. The Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders; provided, however, that unless and
until the Agent shall have received such directions, the Agent may
(but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default
as it shall deem to be in the best interests of the Lenders.
10.6 Non-Reliance on Agent and Other Lenders.
Each Lender and the Swing Line Lender expressly
acknowledges that neither the Agent nor any of its respective
officers, directors, employees, agents, attorneys-in-fact or
Affiliates has made any representations or warranties to it and that
no act by the Agent hereafter, including any review of the affairs of
the Company or any Subsidiaries thereof, shall be deemed to
constitute any representation or warranty by the Agent to any Lender
or the Swing Line Lender. Each Lender and the Swing Line Lender repre-
sents to the Agent that it has, independently and without reliance
upon the Agent or any other Lender or the Swing Line Lender, and based
on such documents and information as it has deemed appropriate, made
its own evaluation of and investigation into the business, operations,
Property, financial and other condition and creditworthiness of the
Company and its Subsidiaries and made its own decision to enter into
this Agreement. Each Lender and the Swing Line Lender also represents
that it will, independently and without reliance upon the Agent or any
other Lender or the Swing Line Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make
its own credit analysis, evaluations and decisions in taking or not
taking action under this Agreement or any of the Loan Documents, and
to make such investigation as it deems necessary to inform itself as
to the business, operations, Property, financial and other condition
and creditworthiness of the Company and its Subsidiaries. Each Lender
and the Swing Line Lender acknowledges that a copy of this Agreement
and all exhibits and schedules hereto has been made available to it
and its individual legal counsel for review, and each Lender and the
Swing Line Lender acknowledges that it is satisfied with the form and
substance of this Agreement and the exhibits and schedules hereto.
Except for notices, reports and other documents expressly required to
be furnished to the Lenders and the Swing Line Lender by the Agent
hereunder, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the
business, operations, Property, financial and other condition or
creditworthiness of the Company or its Subsidiaries which may come
into the possession of the Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.
10.7 Indemnification.
Each Lender agrees to indemnify the Agent in its capacity
as such (to the extent not promptly reimbursed by the Company and
without limiting the obligation of the Company to do so), ratably
according to its Commitment Percentage from and against any and all
liabilities, obligations, claims, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind
whatsoever, including, without limitation, any amounts paid to the
Lenders or the Swing Line Lender (through the Agent) by the Company
pursuant to the terms hereof, that are subsequently rescinded or
avoided, or must otherwise be restored or returned which may at any
time (including, without limitation, at any time following the payment
of the Notes) be imposed on, incurred by or asserted against the Agent
in any way relating to or arising out of this Agreement, the other
Loan Documents or any other documents contemplated by or referred to
herein or the transactions contemplated hereby or any action taken or
omitted to be taken by the Agent under or in connection with any of
the foregoing; provided, however, that no Lender shall be liable for
the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or dis-
bursements to the extent resulting from the gross negligence or will-
ful misconduct of the Agent. The agreements in this paragraph shall
survive the payment of the Notes and all other amounts payable
hereunder.
10.8 Agent in Its Individual Capacity.
BNY and its respective Affiliates may make loans to, accept
deposits from, issue letters of credit for the account of and gener-
ally engage in any kind of business with, the Company and its
Subsidiaries as though BNY was not Agent hereunder. With respect to
the Commitment made or renewed by BNY and any Note issued to BNY, BNY
shall have the same rights and powers under this Agreement as any
Lender and may exercise the same as though it was not the Agent and
the Swing Line Lender, and the terms "Lender" and "Lenders" shall in
each case include BNY.
10.9 Successor Agent.
If at any time the Agent deems it advisable, in its sole
discretion, it may submit to each of the Lenders and the Swing Line
Lender a written notification of its resignation as Agent under the
Loan Documents, such resignation to be effective on the forty-third
day after the date of such notice. Upon any such resignation, the
Required Lenders shall have the right, with the prior written consent
of the Company (which consent shall not be unreasonably withheld), if
at such time no Default or Event of Default exists, to appoint from
among the Lenders a successor Agent. If no successor Agent shall have
been so appointed by the Required Lenders and accepted such ap-
pointment within 33 days after the retiring Agent's giving of notice
of resignation, then the Company may, if at such time no Default or
Event of Default exists, on behalf of the Lenders, appoint a successor
Agent, which appointment shall be conclusive and binding provided that
such successor Agent 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 $500,000,000.
Upon the acceptance of any appointment as Agent hereunder by a suc-
cessor Agent, such successor Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent's rights, powers,
privileges and duties as Agent under the Loan Documents shall be
terminated. The Company, the Swing Line Lender and the Lenders shall
execute such documents as shall be reasonably necessary to effect such
appointment. After any retiring Agent's resignation or removal
hereunder as Agent, the provisions of this paragraph 10.9 shall inure
to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under the Loan Documents. If, notwithstanding the
foregoing, at any time there shall not be a duly appointed and acting
Agent hereunder, the Company agrees to make each payment due under the
Loan Documents directly to the Lenders and the Swing Line Lender
entitled thereto during such time.
11. OTHER PROVISIONS.
11.1 Amendments and Waivers.
With the written consent of the Required Lenders, the Agent and
the Company may from time to time enter into written amendments,
supplements or modifications hereof and, with the consent of the
Required Lenders, the Agent on behalf of the Lenders and the Swing
Line Lender may execute and deliver to any such parties a written
instrument waiving or consenting to the departure from, on such terms
and conditions as the Agent may specify in such instrument, any of the
requirements of the Loan Documents or any Default or Event of Default
and its consequences, or releasing or discharging any guarantor from
its obligations under a guarantee; provided, however, that no such
amendment, supplement, modification, waiver or consent shall (i) in-
crease the Revolving Credit Commitment of any Lender, (ii) change the
maturity date of any Note or extend the Termination Date, (iii) reduce
the rate of interest of, extend the time or manner of payment of, or
increase or forgive the principal amount of any Note, (iv) decrease
the Facility Fee or extend the time of payment thereof, or (v) change
the provisions of this paragraph 11.1 without the consent of all of
the Lenders; and provided further that no such amendment, supplement,
modification, waiver or consent shall amend, modify or waive any
provision of (A) paragraph 10 or otherwise change any of the rights
or obligations of the Agent under the Loan Documents without the writ-
ten consent of the Agent or (B) paragraph 2.2 or 2.3 or otherwise
change any of the rights or obligations of the Swing Line Lender under
the Loan Documents without the written consent of the Swing Line
Lender. Any such amendment, supplement, modification, waiver or
consent shall apply equally to each of the Lenders and shall be
binding upon the Company, the Lenders, the Agent and all future hold-
ers of the Notes. In the case of any waiver, the Company, the Lenders
and the Agent shall be restored to their former position and rights
hereunder and under the Notes and the other Loan Documents, and any
Default or Event of Default waived shall not extend to any subsequent
or other Default or Event of Default, or impair any right consequent
thereon.
11.2 Notices.
All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing and, unless
otherwise expressly provided herein, shall be deemed to have been duly
given or made when delivered by hand, or when deposited in the mail,
first-class postage prepaid, or, in the case of telecopier notice,
when sent, addressed as follows in the case of the Company and the
Agent, and as set forth in Exhibit B in the case of each of the
Lenders, or to such other addresses as to which the Agent may be
hereafter notified by the respective parties hereto or any future
holders of the Notes in accordance with the provisions of this
paragraph 11.2:
The Company:
CARTER-WALLACE, INC.
1345 Avenue of the Americas
New York, New York 10105
Attention: Ralph Levine, Esq.
Vice President, General Counsel &
Secretary
and
James. L. Wagar,
Vice President & Treasurer
Telephone: (212) 339-5000
Fax: (212) 339-5200
The Agent or the Swing Line Lender:
THE BANK OF NEW YORK
New York Corporate Division
One Wall Street
New York, New York 10286
Attention: William A. Kerr,
Vice President
Telephone: (212) 635-1301
Fax: (212) 635-1480,
with a copy to:
THE BANK OF NEW YORK
Agency Function Administration
One Wall Street
New York, New York 10286
Attention: Carolyn Surles,
Assistant Treasurer
Telephone: (212) 635-4695
Fax: (212) 635-6365(6 or 7),
except that any notice, request or demand by the Company to or upon
the Agent or the Lenders pursuant to paragraphs 2.3, 2.4, 2.6, 2.7 or
3.3 shall not be effective until received.
11.3 No Waiver; Cumulative Remedies.
No failure to exercise and no delay in exercising, on the
part of the Agent, the Swing Line Lender or any Lender, any right,
remedy, power or privilege under any Loan Document shall operate as
a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege under any Loan Document preclude any
other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and
privileges under the Loan Documents are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
11.4 Survival of Representations and Warranties.
All representations and warranties made hereunder and in
any document, certificate or statement delivered pursuant hereto or
in connection herewith shall survive the execution and delivery of
this Agreement, the Notes and any other Loan Document.
11.5 Payment of Expenses and Taxes; Indemnified Liabilities.
The Company agrees, promptly upon presentation of a
statement or invoice therefor, and whether or not any Loan is made,
(i) to pay or reimburse the Agent for all reasonable out-of-pocket
costs and expenses incurred in connection with the development,
preparation and execution of, and any amendment, supplement or modif-
ication to, or waiver or consent under the Loan Documents, any
documents prepared in connection therewith and the consummation of the
transactions contemplated thereby, including, without limitation, the
reasonable fees and disbursements of counsel, (ii) to pay or reimburse
the Agent, the Swing Line Lender and each Lender for its costs and
expenses incurred in connection with the enforcement of any rights
under the Agreement, the Notes and any such other documents,
including, without limitation, reasonable fees and disbursements of
their respective counsel, (iii) to pay, indemnify, and hold the Swing
Line Lender, each Lender and the Agent harmless from, any and all
recording and filing fees and any and all liabilities with respect to,
or resulting from any delay in paying Taxes, if any, which may be
payable or determined to be payable in connection with the execution
and delivery of, or consummation of any of the transactions con-
templated by, or any amendment, supplement or modification of, or any
waiver or consent under or in respect of, the Loan Documents and any
such other documents, exclusive, however, of such Taxes payable in
connection with the transfer of any Loan Document or Loan or any
participation or other interest therein and (iv) to pay, indemnify and
hold the Swing Line Lender, each Lender and the Agent and each of
their respective officers, directors and employees harmless from and
against any and all other liabilities, obligations, claims, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be or becomes
payable to any third party (including, without limitation, reasonable
counsel fees and disbursements) with respect to the execution,
delivery, enforcement and performance of the Loan Documents or the use
of the proceeds of the Loans (all the foregoing, collectively, the
"Indemnified Liabilities") and, if and to the extent that the forego-
ing indemnity may be unenforceable for any reason, the Company agrees
to make the maximum payment permitted under applicable law; provided,
however, that the Company shall have no obligation hereunder to pay
Indemnified Liabilities to the Agent, the Swing Line Lender or any
Lender arising from the gross negligence or willful misconduct of the
Agent, the Swing Line Lender or such Lender. The agreements in this
paragraph shall survive the termination of the Revolving Credit
Commitments and the payment of the Notes, and all other amounts
payable hereunder.
11.6 Lending Offices.
Each Lender and the Swing Line Lender shall have the right
at any time and from time to time to transfer any Loan to a different
office, provided that such Lender shall promptly notify the Agent and
the Company of any such change of office. Such office shall thereupon
become such Lender's Domestic Lending Office or LIBOR Lending Office,
as the case may be, as designated in such notice.
11.7 Successors and Assigns.
(a) This Agreement and the Notes shall be binding upon
and inure to the benefit of the Company, the Lenders, the Swing Line
Lender and the Agent, all future holders of the Notes and their
respective successors and assigns, except that the Company may not as-
sign, delegate or transfer any of its rights or obligations under the
Loan Documents without the prior written consent of the Agent, the
Swing Line Lender and each Lender.
(b) Each Lender shall have the right at any time, upon
written notice to the Agent and the Company of its intent to do so,
to sell, assign, transfer or negotiate all or any part of such
Lender's rights (but not its obligations) with respect to its Loans,
its Revolving Credit Commitment and its Notes to one or more of its
Affiliates or, with the prior written consent of the Company and the
Swing Line Lender (which consent shall not be unreasonably withheld
or, with respect to the Company, required during the continuance of
an Event of Default), to sell, assign, transfer or negotiate all or
any part of such Lender's rights and obligations with respect to its
Loans, its Commitment and its Notes to one or more of the other Lend-
ers (or to Affiliates of such Lender or such other Lenders) or to any
other bank, insurance company or financial institution, provided that
(i) each such sale, assignment, transfer or negotiation (other than
sales, assignments, transfers or negotiations to Affiliates of such
Lender) shall be in a minimum amount of $10,000,000 and (ii) there
shall be paid to the Agent by the assignor Lender an assignment fee
(the "Assignment Fee") of $3,000. For each assignment, the parties to
such assignment shall execute and deliver to the Agent for its
acceptance and recording an Assignment and Acceptance Agreement in the
form of Exhibit K. Upon such execution, delivery, acceptance and
recording by the Agent, from and after the effective date specified
in such Assignment and Acceptance Agreement and agreed to by the
Agent, the assignee thereunder shall be a Lender for all purposes
hereunder and, to the extent provided in such Assignment and
Acceptance Agreement, the assignor Lender thereunder shall be
released from its obligations under this Agreement. The Company agrees
upon written request of the Agent to execute and deliver (1) to such
assignee, a Note, dated the effective date of such Assignment and Ac-
ceptance Agreement, in an aggregate principal amount equal to the
Loans assigned to, and Commitment assumed by, such assignee and (2)
to such assignor Lender, a Note, dated the effective date of such
Assignment and Acceptance Agreement, in an aggregate principal amount
equal to the balance of such assignor Lender's Loans and Commitment,
if any, and each assignor Lender shall cancel and return to the
Company its existing Note. Upon any such sale, assignment or other
transfer, the Revolving Credit Commitments and Commitment Percentages
set forth in Exhibit A shall be adjusted accordingly.
(c) Each Lender may grant participations in all or any
part of its Loans, its Notes or its Revolving Credit Commitment to the
parent, any Affiliate, Subsidiary or branch of such Lender or to one
or more banks, insurance companies, financial institutions, pension
funds, mutual funds or any other Person, provided that (i) such
Lender's obligations under this Agreement shall remain unchanged, (ii)
such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) the Company, the
Agent, the Swing Line Lender and the other Lenders shall continue to
deal directly with such Lender in connection with such Lender's rights
and obligations under this Agreement and (iv) the rights of any holder
of any such participation shall be limited to the right to consent to
any action taken or omitted to be taken by such Lender under this
Agreement which would (1) increase the Aggregate Commitments, (2)
reduce the Facility Fee or the interest rate payable on, or increase
or forgive the principal amount of the Revolving Credit Notes or (3)
extend the maturity date of the Notes or extend the Termination Date,
or postpone the payment or scheduled due dates for payments of prin-
cipal, interest and Facility Fees; provided that, if such Lender shall
consent to any such action which would have an effect or effects
described in any of the foregoing subclauses (1), (2) and (3), the
Company may conclusively assume that all holders of any such
participations have likewise consented thereto; and if such consent
is given by such Lender without the consent of a holder of such a
participation, the Company shall have no liability to such holder (it
being understood that the rights of such holder against such Lender
shall be determined solely pursuant to the agreement pursuant to which
it acquired such participation). The Company hereby acknowledges and
agrees that any such participant shall for purposes of paragraphs 3.5,
3.6, 3.10 and 11.5, be deemed to be a "Lender", provided that in no
event shall the Company be liable for any amounts under said
paragraphs in excess of the amounts for which it would be liable but
for such participation.
(d) No Lender shall, as between and among the Company,
the Agent, the Swing Line Lender and such Lender, be relieved of any
of its obligations hereunder as a result of any sale, assignment,
transfer or negotiation of, or granting of participations in, all or
any part of its Loans, its Revolving Credit Commitment or its Notes,
except that a Lender shall be relieved of its obligations to the
extent of any sale, assignment, transfer, or negotiation of all or any
part of its Loans, its Revolving Credit Commitment or its Notes pursu-
ant to paragraph (b) above.
(e) Notwithstanding anything to the contrary contained in
this paragraph 11.7, any Lender may at any time or from time to time
assign all or any portion of its rights under this Agreement with
respect to its Loans, its Revolving Credit Commitment and its Notes
to a Federal Reserve Bank. No such assignment shall release the
assignor Lender from its obligations hereunder.
(f) Except as otherwise expressly provided herein, the
Company shall not be responsible for any fees, costs or expenses
incurred by the Agent or any Lender in connection with effecting any
participation described in paragraph 11.7(c).
11.8 Counterparts.
This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts and
all of said counterparts taken together shall be deemed to constitute
one and the same instrument. It shall not be necessary in making
proof of this Agreement to produce or account for more than one
counterpart signed by the party to be charged.
11.9 Lenders' Representations.
Each Lender represents to the Agent and the Company that,
in acquiring its Notes hereunder, it is acquiring the same for its own
account for the purpose of investment and not with a view to selling
the same in connection with any distribution thereof, provided that
the disposition of each Lender's own Property shall at all times be
and remain within its control.
11.10 Governing Law.
This Agreement and the Notes and the rights and
obligations of the parties hereunder and thereunder shall be governed
by, and construed and interpreted in accordance with, the internal
laws of the State of New York, without regard to principles of
conflict of laws.
11.11 Headings, Plurals.
Paragraph headings have been inserted herein for
convenience only and shall not be construed to be a part hereof or
thereof.
11.12 Severability.
Every provision of the Loan Documents is intended to be
severable, and if any term or provision thereof shall be invalid, il-
legal or unenforceable for any reason, the validity, legality and
enforceability of the remaining provisions thereof shall not be
affected or impaired thereby, and any invalidity, illegality or
unenforceability in any jurisdiction shall not affect the validity,
legality or enforceability of any such term or provision in any other
jurisdiction.
11.13 Integration.
This Agreement and the Notes embody the entire agreement
and understanding among the Company, the Agent, the Swing Line Lender
and the Lenders with respect to the subject matter hereof and thereof
and supersede all prior agreements and understandings among the
Company, the Agent, the Swing Line Lender and the Lenders with respect
to the subject matter hereof and thereof.
11.14 Consent to Jurisdiction.
The Company hereby irrevocably submits to the
jurisdiction of any New York State or Federal Court sitting in the
City of New York over any suit, action or proceeding arising out of
or relating to the Loan Documents. The Company hereby 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
suit, action or proceeding brought in such a court and any claim that
any such suit, action or proceeding brought in such a court has been
brought in an inconvenient forum. The Company hereby agrees that a
final judgment in any such suit, action or proceeding brought in such
a court, after all appropriate appeals, shall be conclusive and
binding upon it.
11.15 Service of Process.
The Company hereby waives personal service upon it of any
process and hereby irrevocably appoints Corporation Trust Company as
its agent for the purpose of accepting service of process. Process may
be served in any suit, action, counterclaim or proceeding of the
nature referred to in paragraph 11.14 by mailing copies thereof by
registered or certified mail, postage prepaid, return receipt
requested, to the addresses of the Company set forth in or pursuant
to paragraph 11.2. The Company hereby agrees that such service (i)
shall be deemed in every respect effective service of process upon it
in any such suit, action, counterclaim or proceeding and (ii) shall
to the fullest extent enforceable by law, be taken and held to be
valid personal service upon and personal delivery to it.
11.16 No Limitation on Service or Suit.
Nothing in the Loan Documents or any modification,
waiver, consent or amendment thereto shall affect the right of the
Agent, the Swing Line Lender or any Lender to serve process in any
manner permitted by law or limit the right of the Agent, the Swing
Line Lender or any Lender to bring proceedings against the Company in
the courts of any jurisdiction or jurisdictions.
11.17 WAIVER OF TRIAL BY JURY.
THE AGENT, THE SWING LINE LENDER, THE LENDERS AND THE
COMPANY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY
RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
ARISING OUT OF, UNDER OR IN CONNECTION WITH THE LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREIN. FURTHER, THE COMPANY HEREBY
CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE AGENT, THE SWING LINE
LENDER OR THE LENDERS, OR COUNSEL TO THE AGENT, THE SWING LINE LENDER
OR THE LENDERS, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE
AGENT, THE SWING LINE LENDER OR THE LENDERS WOULD NOT, IN THE EVENT
OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL
PROVISION. THE COMPANY ACKNOWLEDGES THAT THE AGENT, THE SWING LINE
LENDER AND THE LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, INTER ALIA, THE PROVISIONS OF THIS PARAGRAPH.
11.18 Adjustments; Set-off.
(a) If any Lender or the Swing Line Lender (a
"Benefited Lender") shall at any time receive any payment of all or
any part of its Loans, or interest thereon, or receive any collateral
in respect thereof (whether voluntarily or involuntarily, by set-off,
pursuant to events or proceedings of the nature referred to in
paragraphs 9.1 (h) or (i), or otherwise) in a greater proportion than
any such payment to and collateral received by any other Lender, if
any, in respect of such other Lender's Loans, or interest thereon,
such Benefited Lender shall purchase for cash from the other Lenders
such portion of each such other Lender's Loans, or shall provide such
other Lenders with the benefits of any such collateral, or the pro-
ceeds thereof, as shall be necessary to cause such Benefited Lender
to share the excess payment or benefits of such collateral or proceeds
ratably with each of the Lenders; provided, however, that if all or
any portion of such excess payment or benefits is thereafter recovered
from such Benefited Lender, such purchase shall be rescinded, and the
purchase price and benefits returned, to the extent of such recovery,
but without interest. The Company agrees that each Lender so
purchasing a portion of another Lender's Loans may exercise all rights
of payment (including, without limitation, rights of set-off) with
respect to such portion as fully as if such Lender were the direct
holder of such portion.
(b) In addition to any rights and remedies of the
Lenders provided by law, upon the occurrence of an Event of Default
and acceleration of the obligations owing in connection with the Loan
Documents, or at any time upon the occurrence and during the
continuance of an Event of Default under paragraphs 9.1(a) or 9.1(b),
each Lender shall have the right, without prior notice to the Company,
any such notice being expressly waived by the Company, to set off and
apply against any obligation owing to such Lender under this Agreement
(including obligations owing after giving effect to any sharing of
payments pursuant to paragraph 11.18(a)), whether matured or
unmatured, of the Company to such Lender, any amount owing from such
Lender to the Company at, or at any time after, the happening of any
of the above-mentioned events. To the extent permitted by applicable
law, the aforesaid right of set-off may be exercised by such Lender
against the Company, or against any trustee in bankruptcy, custodian,
debtor in possession, assignee for the benefit of creditors, receiver,
or execution, judgment or attachment creditor of the Company or
against anyone else claiming through or against the Company or such
trustee in bankruptcy, custodian, debtor in possession, assignee for
the benefit of creditors, receiver, or execution, judgment or
attachment creditor, notwithstanding the fact that such right of set-off
shall not have been exercised by such Lender prior to the making,
filing or issuance of, or service upon such Lender of, or notice of,
any such petition, assignment for the benefit of creditors,
appointment or application for the appointment of a receiver, or
issuance of execution, subpoena, order or warrant. Each Lender agrees
promptly to notify the Company and the Agent after any such set-off
and application made by such Lender, provided that the failure to give
such notice shall not affect the validity of such set-off and ap-
plication.
11.19 Change in Control.
The Company agrees to give the Agent prompt written
notice if at any time (i) any Person or two or more Persons acting in
concert shall have acquired beneficial ownership (within the meaning
of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act) of a "controlling interest" (as defined
below) of the outstanding shares of voting Stock of the Company
pursuant to one or more transactions not approved by at least a
majority of the individuals, in their capacities as directors, who
served as directors of the Company on the date one year prior to the
date of the first acquisition of voting Stock leading to such
acquisition, provided, however, that a director who was not a director
at the beginning of such period shall be deemed to have satisfied such
one-year requirement if such director was elected by, or on the recom-
mendation of, at least a majority of the directors who were directors
at the beginning of such period (either actually or by prior operation
of this provision), or (ii) a change in the majority of the board of
directors of the Company occurs and the election of such majority was
not supported by a majority of the incumbent board of directors. At
any time not less than 30 days after receipt of such notice by the
Agent, which notice shall specifically refer to this paragraph 11.19,
or the Agent having received knowledge of such event, no notice having
been given, the Agent may, pursuant to the direction of the Required
Lenders, notify the Company that the Revolving Credit Commitments have
been terminated and that the Notes and the Loans and all other
obligations payable hereunder are to be paid in full within 10 days
after the date of such notice from the Agent, whereupon the Notes and
the Loans and all such other obligations under the Loan Documents
shall become immediately due and payable. For purposes of this
paragraph, a "controlling interest" shall mean either (a) a majority
of the outstanding shares of voting Stock of the Company or (b) such
lesser amount of shares of voting Stock that, in practice, enables
such Person or Persons to replace a majority of the board of directors
of the Company during any 12 month period.
11.20 Confidentiality.
Each Lender, the Swing Line Lender and the Agent (each,
a "Recipient") agrees, on behalf of itself and each of its affiliates,
directors, officers, employees and representatives, to use reasonable
precautions to keep confidential, in accordance with sound banking
practice and its customary procedures for safeguarding confidential
information of third parties delivered to it, any non-public
information furnished or made available to it by the Company (either
directly or through the Agent) pursuant to this Agreement and which
is identified by the Company as being confidential at the time it is
so furnished or made available; provided that, nothing herein shall
limit the disclosure of any such information by any Recipient (i) to
the extent required by statute, rule, regulation or judicial process,
(ii) to counsel for any Recipient to the extent such disclosure
reasonably relates to the administration of Loans made hereunder,
(iii) to bank examiners, auditors or accountants, (iv) to any other
Recipient, (v) to the extent that, subsequent to such information
being so furnished or made available, it shall become publicly known
other than by reason of an act or omission of such Recipient, (vi) in
connection with any litigation to which any one or more Recipients is
a party, or (vii) to any assignee or participant (or prospective
assignee or participant) permitted hereunder so long as such assignee
or participant (actual or prospective) first agrees in writing for the
benefit of the Company to be bound by the provisions of this paragraph
11.20 in respect of all such information disclosed to it, but provided
further that, unless specifically prohibited by applicable law or
court order, each Recipient shall, prior to disclosure thereof, use
its reasonable efforts to notify the Company of any request for
disclosure of any such non-public confidential information (x) by any
Governmental Body (other than any such request in connection with an
examination of the financial condition of such Recipient by such
Governmental Body) or (y) pursuant to legal process.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly
authorized officers as of the day and year first above written.
CARTER-WALLACE, INC.
By: s/Henry H. Hoyt, Jr.
Title: Chairman & Chief Executive
Officer
THE BANK OF NEW YORK,
Individually and as Agent
By: s/William A. Kerr
Title: Vice President
THE CHASE MANHATTAN BANK, N.A.
By: s/Joan F. Garvin
Title: Vice President
CREDIT LYONNAIS
NEW YORK BRANCH
By: s/Mark A. Campellone
Title: Vice President & Manager
CREDIT LYONNAIS
CAYMAN ISLAND BRANCH
By: s/Mark A. Campellone
Title: Vice President & Manager
MELLON BANK, N.A.
By: s/John Paul Marotta
Title: Assistant Vice President
THE BANK OF NOVA SCOTIA
By: s/Stephen Lockhart
Title: Vice President
