UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
CUMMINS ENGINE COMPANY, INC.
____________________________
For the Quarter Ended June 30, 1996 Commission File Number 1-4949
_____________ ______
Indiana 35-0257090
_______ __________
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
500 Jackson Street, Box 3005,
_____________________________
Columbus, Indiana 47202-3005
_________________ __________
(Address of Principal Executive Offices) (Zip Code)
812-377-5000
____________
(Registrant's Telephone Number)
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 proceeding 12 months and (2) has been
subject to such filing requirements for the past 90 days:
Yes [x]
No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date:
As of June 30, 1996, the number of shares outstanding of the
registrant's only class of common stock was 39.7 million.
<PAGE>
TABLE OF CONTENTS
_________________
Page No.
________
PART I. FINANCIAL INFORMATION
______________________________
Item 1. Financial Statements
Consolidated Statement of Earnings for the Second 3
Quarter and First Half Ended June 30, 1996 and
July 2, 1995
Consolidated Statement of Financial Position at 4
June 30, 1996 and December 31, 1995
Consolidated Statement of Cash Flows for the First 5
Half Ended June 30, 1996 and July 2, 1995
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Results of 7
Operations and Financial Condition
PART II. OTHER INFORMATION
___________________________
Item 1. Legal Proceedings 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Index to Exhibits 13
<PAGE>
CUMMINS ENGINE COMPANY, INC.
CONSOLIDATED STATEMENT OF EARNINGS
FOR THE SECOND QUARTER AND FIRST HALF
ENDED JUNE 30, 1996 AND JULY 2, 1995
Unaudited
_____________________________________
Second Quarter First Half
________________ ________________
Millions, Except per Share Amounts 1996 1995 1996 1995
__________________________________ ______ ______ ______ ______
Net sales $1,316 $1,361 $2,632 $2,695
Cost of goods sold 1,016 1,021 2,016 2,012
______ ______ ______ ______
Gross profit 300 340 616 683
Selling & administrative expenses 180 181 360 364
Research & engineering expenses 66 67 128 133
Expense (income) from joint ventures
and alliances 3 (1) 5 (2)
Interest expense 4 3 8 7
Other (income) expense, net (15) - (18) 4
_______ ______ ______ ______
Earnings before income taxes 62 90 133 177
Provision for income taxes 18 21 40 41
______ ______ ______ ______
Net earnings $ 44 $ 69 $ 93 $ 136
______ ______ ______ ______
______ ______ ______ ______
Earnings per share $ 1.10 $ 1.69 $ 2.31 $ 3.32
Cash dividends declared per share .25 .25 .50 .50
<PAGE>
CUMMINS ENGINE COMPANY, INC.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited
____________________________________________
Millions, Except per Share Amounts 6/30/96 12/31/95
__________________________________ _______ ________
Assets
Current assets:
Cash and cash equivalents $ 169 $ 60
Receivables 699 597
Inventories 575 513
Other current assets 214 218
______ ______
1,657 1,388
Investments and other assets 272 326
Property, plant & equipment less accumulated
depreciation of $1,347 and $1,327 1,138 1,148
Intangibles, deferred taxes and deferred charges 203 194
______ _____
Total assets $3,270 $3,056
______ ______
______ ______
Liabilities and shareholders' investment
Current liabilities:
Loans payable $ 16 $ 60
Current maturities of long-term debt 49 42
Accounts payable 414 376
Other current liabilities 566 575
______ ______
1,045 1,053
______ ______
Long-term debt 262 117
______ ______
Other liabilities 736 703
______ ______
Shareholders' investment:
Common stock, $2.50 par value, 43.9 shares issued 110 110
Additional contributed capital 925 926
Retained earnings 478 406
Common stock in treasury, at cost, 4.2 and 3.7
shares (157) (135)
Unearned compensation ( 46) (51)
Cumulative translation adjustments ( 83) (73)
______ ______
1,227 1,183
______ ______
Total liabilities and shareholders' investment $3,270 $3,056
______ ______
______ ______
<PAGE>
CUMMINS ENGINE COMPANY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited
____________________________________
First Half Ended
_____________________
Millions 6/30/96 7/2/95
________ _______ ______
Cash flows from operating activities:
Net earnings $ 93 $136
____ ____
Adjustments to reconcile net earnings
to net cash from operating activities:
Depreciation and amortization 76 70
Restructuring actions ( 23) -
Accounts receivable (111) (110)
Inventories ( 64) ( 60)
Accounts payable and accrued expenses 62 101
Income taxes payable 21 8
Other ( 2) 19
____ ____
Total adjustments (41) 28
____ ____
Net cash provided by operating activities 52 164
____ ____
Cash flows from investing activities:
Property, plant and equipment:
Additions (84) (84)
Disposals 18 2
Investments in and advances from (to)
joint ventures and alliances 40 (45)
Disposition of business activities 11 -
Other 7 ( 1)
_____ _____
Net cash used in investing activities ( 8) (128)
_____ _____
Net cash flows from operating & investing
activities 44 36
____ ____
Cash flows from financing activities:
Proceeds from borrowings 160 -
Payments on borrowings ( 8) ( 3)
Net payments under credit agreements ( 44) (16)
Payments of dividends ( 20) (20)
Repurchases of common stock ( 21) (53)
Other ( 2) 1
_____ ____
Net cash provided from (used for) financing
activities 65 (91)
_____ ____
Effect of exchange rate changes on cash - 1
____ ___
Net change in cash and cash equivalents 109 (54)
Cash & cash equivalents at beginning of year 60 147
____ ____
Cash & cash equivalents at end of first half $169 $ 93
____ ____
____ ____
<PAGE>
CUMMINS ENGINE COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
__________________________________________
Note 1. Accounting Policies: The Consolidated Financial Statements
for the interim periods ended June 30, 1996 and July 2, 1995 have been
prepared in accordance with the accounting policies described in the
Company's Annual Report to Shareholders and Form 10-K. Management
believes the statements include all adjustments of a normal recurring
nature necessary to present fairly the results of operations for the
interim periods. Inventory values at interim reporting dates are based
upon estimates of the annual adjustments for taking physical inventory
and for the change in cost of LIFO inventories.
Note 2. Income Taxes: Income tax expense is reported during the
interim reporting periods on the basis of the estimated annual
effective tax rate for the taxable jurisdictions in which the Company
operates. In the first half of 1995, the Company recognized
approximately $21 million related to a reduction in its valuation
allowance for tax benefit carryforwards.
Note 3. Long-term Debt: The Company maintains a revolving credit
agreement, under which there were no outstanding borrowings at June 30,
1996. In the second quarter of 1996, the agreement was amended,
increasing the available amount to $400 million and extending the term
to 2001. The revolving credit agreement supported commercial paper
borrowings of $50 million at June 30, 1996. The commercial paper
borrowings were issued as replacement financing for an arrangement
whereby the Company sold up to $110 million receivables without
recourse. The agreement for the sale of receivables expired in the
second quarter of 1996 and was not renewed by the Company. In the
first quarter of 1996, a subsidiary of the Company issued 8.2 percent
notes, which resulted in net proceeds of $100 million.
Note 4. Common Stock Repurchase Program: In October 1994, the Board of
Directors authorized repurchase by the Company of up to 2,500,000
shares of its common stock. During the first half of 1996, the Company
repurchased on the open market 492,100 shares at an aggregate purchase
price of $21 million, or average price of $43.49 per share. The
Company repurchased 1,575,400 shares at an aggregate purchase price of
$69 million, or average price of $43.57 per share in 1995 and 103,100
shares at an aggregate purchase price of $4 million, or average price
of $42.47 per share, in 1994.
NOTE 5. Earnings per Share: Earnings per share of common stock are
computed by dividing net earnings by the weighted-average number of
common shares outstanding during the period. The weighted-average
number of shares, which includes the exercise of certain stock options
granted to employees, was 40.1 million in the second quarter of 1996
and 40.2 million shares in the first half of 1996. The weighted-
average number of shares was 40.8 million shares in the second quarter
of 1995 and 41.0 million shares in the first half of 1995.
<PAGE>
CUMMINS ENGINE COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
_____________________________________________
OVERVIEW
________
Sales of $1.3 billion in the second quarter of 1996 were 3 percent
below the Company's record second-quarter 1995 sales of $1.4 billion,
reflecting the decrease in market size for heavy-duty truck engines in
both North America and Europe. The decline in heavy-duty truck markets
was partially offset by strong demand in international markets for
power generation, whose sales of $310 million were a quarterly record.
In the first half of 1996, the Company's net sales were $2.6 billion, 2
percent below the first half of 1995.
The Company shipped 174,500 engines in the first half of 1996, which
was 3 percent lower than first-half 1995.
Second Quarter First Half
_______________ ________________
Engine Shipments 1996 1995 1996 1995
________________ ______ ______ _______ _______
Midrange engines 61,100 60,400 123,600 118,500
Heavy-duty engines 21,900 28,900 46,400 57,300
High-horsepower engines 2,400 2,400 4,500 4,800
______ ______ _______ _______
Total 85,400 91,700 174,500 180,600
______ ______ _______ _______
______ ______ _______ _______
Net earnings were $44 million, or $1.10 per share, in the second
quarter of 1996, compared to $69 million, or $1.69 per share, in the
second quarter of 1995. For the first half of 1996, net earnings were
$93 million, or $2.31 per share, compared to $136 million, or $3.32 per
share, in the first half of 1995.
RESULTS OF OPERATIONS
_____________________
The percentage relationships between net sales and other elements of
the Company's Consolidated Statement of Earnings for the comparative
reporting periods were:
Second Quarter First Half
______________ _____________
Percent of Net Sales 1996 1995 1996 1995
____________________ ______ _____ _____ _____
Net sales 100.0 100.0 100.0 100.0
Cost of goods sold 77.2 75.0 76.6 74.7
_____ _____ _____ _____
Gross profit 22.8 25.0 23.4 25.3
Selling and administrative expenses 13.7 13.3 13.7 13.5
Research and engineering expenses 5.0 4.9 4.9 4.9
Expense (income) from joint ventures
and alliances .2 - .2 -
Interest expense .3 .2 .3 .3
Other (income) expense, net (1.1) - (.8) .1
______ ______ _____ _____
Earnings before income taxes 4.7 6.6 5.1 6.5
Provision for income taxes 1.4 1.5 1.6 1.5
_____ _____ _____ _____
Net earnings 3.3 5.1 3.5 5.0
_____ _____ _____ _____
_____ _____ _____ _____
Net Sales
_________
Sales for each of the Company's markets for the comparative reporting
periods were:
Second Quarter First Half
______________ ______________
Dollars in Millions 1996 1995 1996 1995
___________________ ______ ______ ______ ______
Heavy-duty truck $ 309 $ 398 $ 655 $ 794
Midrange truck 151 159 314 303
Bus and light commercial vehicles 194 180 396 363
Power generation 310 278 570 555
Industrial products 183 181 357 350
Marine 30 25 62 46
Fleetguard and Holset 139 140 278 284
______ ______ ______ ______
Net sales $1,316 $1,361 $2,632 $2,695
______ ______ ______ ______
______ ______ ______ ______
Heavy-duty truck engine sales of $309 million in the second quarter and
$655 million in the first half of 1996 were 22 percent and 18 percent
lower than the respective periods of 1995. The decline in sales in
1996 was due primarily to a declining market size in North America.
International engine shipments for heavy-duty trucks were also lower in
1996, due primarily to softer demand in Europe.
Sales of $151 million in the second quarter of 1996 for the midrange
truck market were 5 percent lower than the second quarter of 1995, due
to a decrease in demand for medium-duty trucks. In the first half of
1996, sales of $314 million for this market were 4 percent higher than
the first half of 1995. Midrange truck engines for international
markets in the second quarter and first half of 1996 were slightly
higher than the comparative periods of 1995.
In the bus and light commercial vehicles market, the Company's sales of
$194 million in the second quarter and $396 million in the first half
of 1996 were almost 10 percent higher than the respective periods of
1995. The increase in sales was due to engines for Chrysler. Engine
shipments for bus markets in 1996 have been approximately 5 percent
lower than the prior year's levels.
The Company expects sales of heavy-duty and midrange truck engines to
decline further in the second half of 1996. It also expects some
instability in the third quarter as truck manufacturers adjust build
rates due to the decline in the heavy-duty truck order backlog. In
addition, sales of light-duty truck engines in the third quarter of
1996 are expected to be lower than the second quarter of 1996, due to
seasonal plant shutdowns.
Sales to the power generation market represented 24 percent of the
Company's net sales in the second quarter of 1996. Sales of $310
million were $32 million higher, a 12-percent increase compared to the
second quarter of 1995. In the first half of 1996, power generation
sales were $570 million, 3 percent higher than the first half of 1995.
The increase in 1996 was all in international markets. Power
generation, however, has been affected by increasing price competition
in its international markets and a shift in sales to lower margin
products.
Sales of $183 million to industrial markets in the second quarter and
$357 million in the first half of 1996 were slightly higher than second-
quarter and first-half 1995 levels due to strong sales for construction
equipment in international markets, which offset lower demand in
agricultural markets in North America.
Sales of filtration products and turbochargers in the second quarter
and first half of 1996 were slightly lower than the prior year's
levels, due primarily to the softer demand in North American and
European heavy-duty markets.
Gross Profit
____________
In the second quarter of 1996, the Company's gross profit percentage
was 22.8 percent of net sales, compared to 25.0 percent in the second
quarter of 1995. In the first half of 1996, the gross profit
percentage was 23.4 percent of net sales, compared to 25.3 percent in
the first half of 1995. The reduction in gross profit was due to
several factors, the most significant of which was the decline in heavy-
duty production that resulted in lower fixed cost absorption.
Gross profit in 1996 also was affected by higher sales of lower margin
power generation products, costs of new product introductions and
expenses associated with restructuring actions. While the
restructuring and reduction of non-core businesses are proceeding, as
reflected by capital gains in "other income", expenses associated with
implementation of certain of these actions adversely affected 1996
gross profit. Depreciation expense has been higher in 1996, reflecting
capital spending levels over the last two years to fund new products
and fuel systems. In the second quarter and first half of 1996,
product coverage expense was 2.9 percent and 2.7 percent of net sales,
respectively, compared to 2.5 percent in both periods of 1995.
Operating Expenses
__________________
Selling and administrative expenses of $180 million in the second
quarter and $360 million in the first half of 1996 were essentially
level with the respective periods of 1995. In 1996, expenditures
associated with the restructuring actions to relocate and consolidate
operations and advertising programs offset a decrease in administrative
expenses.
In the second quarter and first half of 1996, research and engineering
expenses of $66 million and $128 million, respectively, were slightly
lower than the prior year's levels, reflecting a reduction in the
number of employees and lower costs in 1996.
Expense of $3 million in the second quarter and $5 million in the first
half of 1996 from joint ventures and alliances was associated with
product development and start-up costs of the joint venture with
Wartsila. The Company formed this joint venture in the second quarter
of 1995.
Interest and Other Income and Expense
_____________________________________
Interest expense in the second quarter and first half of 1996 was
slightly higher than the comparable periods of 1995 due to the increase
in long-term debt.
Other income and expense includes a variety of items, such as foreign
currency gains and losses, royalties, interest income, and gains and
losses associated with fixed asset dispositions. In the first half of
1996, other income of $18 million was generated primarily from capital
gains associated with various asset disposals.
Provision for Income Taxes
__________________________
The estimated effective tax rate for 1996 is 30 percent. This is lower
than the US federal statutory rate of 35 percent, primarily because of
export sales and lower taxes on foreign subsidiaries. In the first
half of 1995, the Company recognized approximately $21 million related
to a reduction in its valuation allowance for tax benefit
carryforwards.
CASH FLOW AND FINANCIAL CONDITION
_________________________________
Key elements of the Consolidated Statement of Cash Flows were:
First Half
________________
Dollars in Millions 1996 1995
___________________ ____ ____
Net cash provided by operating activities $ 52 $164
Net cash used for investing activities (8) (128)
_____ _____
Net cash flows from operating and
investing activities 44 36
Net cash provided from (used for)
financing activities 65 (91)
Effect of exchange rate changes on cash - 1
_____ _____
Net change in cash and cash equivalents $109 $(54)
_____ _____
_____ _____
During the first half of 1996, the Company generated cash flows from
operating activities of $52 million. In the second quarter of 1996, an
agreement for the sale of up to $110 million of accounts receivable was
not renewed by the Company, which resulted in an increase in
receivables and the lower level of net cash flows provided by operating
activities. Investing activities required net cash resources of $8
million in the first half of 1996.
Net cash provided from financing activities was $65 million in the
first half of 1996. Total indebtedness was $327 million at June 30,
1996, compared to $219 million at December 31, 1995. As disclosed more
fully in Note 3 to the Consolidated Financial Statements, the Company
amended its revolving credit agreement in the second quarter of 1996 to
increase the available amount to $400 million and extend the term to
2001. There were no outstanding borrowings under the agreement at June
30, 1996. Commercial paper borrowings of $50 million were outstanding
at June 30, 1996. In the first quarter of 1996, a subsidiary of the
Company issued 8.2 percent notes, which resulted in net proceeds of
$100 million.
As disclosed more fully in Note 4 to the Consolidated Financial
Statements, the Company repurchased on the open market 492,100 shares
of its common stock at an average price of $43.49 per share in the
first half of 1996.
PART II. OTHER INFORMATION
___________________________
Item 1. Legal Proceedings:
___________________________
On July 8, 1996, the United States District Court for the Southern
District of Indiana entered an order approving the settlement of Warkel
v. Cummins Engine Company, et. al.
Item 5. Other Information:
___________________________
Certain information contained in this Form 10-Q is forward-looking and
involves risks and uncertainties, including general economic and
competitive conditions that could significantly affect expected results.
Item 6. Exhibits and Reports on Form 8-K:
__________________________________________
(a) See the Index to Exhibits on Page 13 for a list of exhibits filed
herewith.
(b) The Company was not required to file a Form 8-K during the second
quarter of 1996.
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.
CUMMINS ENGINE COMPANY, INC.
By: /s/John McLachlan
_________________
John McLachlan
Vice President - Corporate Controller
(Chief Accounting Officer) July 19, 1996
<PAGE>
CUMMINS ENGINE COMPANY, INC.
____________________________
INDEX TO EXHIBITS
_________________
4(a) Amended and Restated Credit Agreement (filed herewith)
10(y) Guarantees of Perpetual Loan Facility of Cummins Finance
Limited dated January 31, 1996 with the Toronto Dominion
Bank, The Bank of New York and Societe Generale (filed
herewith)
11 Schedule of Computation of Per Share Earnings for the Second
Quarter and First Half Ended June 30, 1996 and July 2, 1995
(filed herewith)
27 Financial Data Schedule (filed herewith)
$400,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
among
CUMMINS ENGINE COMPANY, INC.,
THE BANKS NAMED HEREIN,
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Agent
Dated as of June 25, 1996
J.P. MORGAN SECURITIES INC.
Arranger
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS 1
ARTICLE II. LOANS 15
SECTION 2.1. Commitments 15
SECTION 2.2. Competitive Bid Procedure 16
SECTION 2.3. Standby Borrowing Procedure 18
SECTION 2.4. Refinancings 19
SECTION 2.5. Fees 19
SECTION 2.6. Termination and Reduction of Commitments 20
SECTION 2.7. Loans 20
SECTION 2.8. Notes 21
SECTION 2.9. Interest on Loans 21
SECTION 2.10. Interest on Overdue Amounts 22
SECTION 2.11. Alternate Rate of Interest 23
SECTION 2.12 Prepayment of Loans 23
SECTION 2.13 Reserve Requirements; Change in Circumstances 24
SECTION 2.14 Change in Legality 26
SECTION 2.15 Indemnity 27
SECTION 2.16 Pro Rata Treatment 27
SECTION 2.17 Sharing of Setoffs 27
SECTION 2.18 Payments 28
SECTION 2.19 Payments on Business Days 28
SECTION 2.20 Taxes 28
SECTION 2.21 Tax Reports 30
ARTICLE III REPRESENTATIONS AND WARRANTIES 31
SECTION 3.1. Organization; Powers 31
SECTION 3.2. Authorization 31
SECTION 3.3. Enforceability 32
SECTION 3.4. Governmental Approvals 32
SECTION 3.5. Financial Statements 32
SECTION 3.6. Environmental Matters 32
SECTION 3.7. Title to Properties; Possession Under Leases 33
SECTION 3.8. Subsidiaries 33
SECTION 3.9. Litigation; Compliance with Laws 33
SECTION 3.10 Agreements 33
SECTION 3.11 Federal Reserve Regulations 34
SECTION 3.12 Investment Company Act; Public Utility
Holding Company Act 34
SECTION 3.13 Tax Returns 34
SECTION 3.14. Employee Benefit Plans 34
SECTION 3.15 No Material Misstatements 35
ARTICLE IV. CONDITIONS OF LENDING 35
SECTION 4.1. Conditions to Initial Loans 35
SECTION 4.2. Conditions to Each Loan 36
ARTICLE V. AFFIRMATIVE COVENANTS 36
SECTION 5.1. Existence; Businesses and Properties 37
SECTION 5.2. Insurance. 37
SECTION 5.3. Obligations and Taxes 37
SECTION 5.4. Financial Statements, Reports, etc. 37
SECTION 5.5. Litigation and Other Notices 39
SECTION 5.6. ERISA 39
SECTION 5.7. Maintaining Records; Access to Properties
and Inspections 40
SECTION 5.8. Use of Proceeds 40
SECTION 5.9. Compliance with Laws 40
ARTICLE VI. NEGATIVE COVENANTS 40
SECTION 6.1. Negative Pledge 41
SECTION 6.2. Sale and Lease-Back Transactions 42
SECTION 6.3. Mergers, Consolidations, and Sales of Assets 42
SECTION 6.4. Indebtedness of Subsidiaries 43
SECTION 6.5. Amendments of Certain Agreements 43
SECTION 6.6. Tangible Net Worth 43
SECTION 6.7. Leverage 43
SECTION 6.8. Ownership of Significant Subsidiaries 43
ARTICLE VII. EVENTS OF DEFAULT 43
ARTICLE VIII. THE AGENT 47
ARTICLE IX. MISCELLANEOUS 49
SECTION 9.1. Notices 49
SECTION 9.2. Survival of Agreement 50
SECTION 9.3. Binding Effect 50
SECTION 9.4. Successors and Assigns; Participations 50
SECTION 9.5. Expenses; Indemnity 53
SECTION 9.6. Right of Setoff 54
SECTION 9.7. Applicable Law 54
SECTION 9.8 Waivers; Amendments 54
SECTION 9.9. Waiver of Jury Trial, etc. 55
SECTION 9.10. Jurisdiction; Consent to Service of Process 56
SECTION 9.11. Confidentiality. 56
SECTION 9.12. Entire Agreement 57
SECTION 9.13. Severability 57
SECTION 9.14. Counterparts 57
SECTION 9.15. Headings 57
SCHEDULES
PRICING SCHEDULE
SCHEDULE I Commitments of the Banks
SCHEDULE 3.8 Subsidiaries
SCHEDULE 3.10 Certain Agreements
EXHIBITS
EXHIBIT A-1 Form of Competitive Bid Request
EXHIBIT A-2 Form of Standby Borrowing Request
EXHIBIT B Form of Notice of Competitive Bid Request
EXHIBIT C Form of Competitive Bid
EXHIBIT D-1 Form of Competitive Note
EXHIBIT D-2 Form of Standby Note
EXHIBIT E Form of Secretary's Certificate
EXHIBIT F Form of Assignment and Acceptance
EXHIBIT G Form of Legal Opinions of the General Counsel
to the Company and Cravath, Swaine & Moore
EXHIBIT H Form of Legal Opinion of Davis Polk & Wardwell
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 25,
1996, among CUMMINS ENGINE COMPANY, INC., an Indiana corporation (the
"Company"), the banks and other financial institutions listed in
Schedule I hereto (the "Banks") and MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, a New York banking corporation ("Morgan"), as administrative
agent for the Banks (in such capacity, the "Agent").
W I T N E S S E T H :
WHEREAS, the Company, the Banks listed as Existing Banks on
Schedule I hereto (the "Existing Banks") and the Agent are parties to
an Amended and Restated Credit Agreement, dated as of September 16,
1994 (as amended, supplemented or otherwise modified to the Effective
Date (as defined below), the "Existing Credit Agreement"); and
WHEREAS, the Company has requested the Banks to amend and
restate the Existing Credit Agreement (i) to extend the maturity of
the Existing Credit Agreement, (ii) to provide for the Banks to
continue to extend credit to the Company in order to enable it to
borrow revolving credit loans and (iii) to continue to provide a
procedure pursuant to which the Company may invite the Banks to bid on
an uncommitted basis on short-term borrowings by the Company scheduled
to mature within 180 days or six months of borrowing and in any event
on or prior to the Maturity Date; and
WHEREAS, the Banks are willing to amend and restate the
Existing Credit Agreement, to continue to extend the credit and
continue to provide the procedure for uncommitted short-term
borrowings requested by the Company on the terms and conditions herein
set forth;
NOW, THEREFORE, the Company, the Agent and the Banks amend
and restate the Existing Credit Agreement, effective as of the
Effective Date, as follows:
DEFINITIONS
As used in this Agreement, the following terms shall have
the meanings specified below:
"Acquiring Person" shall mean any person who is or becomes
the beneficial owner, directly or indirectly, of 10% or more of
the outstanding common stock of the Company.
"Adjusted CD Rate" shall mean, with respect to any
Certificate of Deposit Loan, an interest rate per annum (rounded
upwards, if not already a whole multiple of 1/16 of 1%, to the
next higher 1/16 of 1%) equal to the sum of (a) a rate per annum
equal to the product of (i) the Fixed Certificate of Deposit Rate
in effect for the Interest Period applicable to such Loan and
(ii) Statutory Reserves, plus (b) the Assessment Rate. For
purposes hereof, the term "Fixed Certificate of Deposit Rate"
shall mean the arithmetic average (rounded upwards, if not
already a whole multiple of 1/16 of 1%, to the next higher 1/16
of 1%) of the respective rates notified to the Agent by each of
the Reference Banks as the average rate bid at or about 10:00
a.m., New York City time, on the first Business Day of the
Interest Period applicable to such Certificate of Deposit Loan by
three New York City negotiable certificate of deposit dealers of
recognized standing selected by such Reference Bank for the
purchase at face value of negotiable certificates of deposit of
major United States money center banks in a principal amount
approximately equal to such Reference Bank's portion of the
principal amount of the Standby Borrowing of which such
Certificate of Deposit Loan forms a part and with a maturity
comparable to such Interest Period.
"Affiliate" shall mean, when used with respect to a
specified person, another person that directly, or indirectly
through one or more intermediaries, controls or is controlled by
or is under common control with the person specified. For
purposes of the foregoing, the term "control" (including the
terms "controlling", "controlled by" and "under common control
with") shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or
policies of a person, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" shall mean this Amended and Restated Credit
Agreement, as amended, supplemented or otherwise modified from
time to time.
"Alternate Base Loan" shall mean any Loan with respect to
which the Company shall have selected an interest rate based on
the Alternate Base Rate in accordance with the provisions of
Article II.
"Alternate Base Rate" shall mean for any day, an interest
rate per annum (rounded upwards, if not already a whole multiple
of 1/16 of 1%, to the next higher 1/16 of 1%) equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the
Base CD Rate in effect on such day plus 1% and (c) the Federal
Funds Effective Rate in effect for such day plus 1/2 of 1%. For
purposes hereof, the term "Prime Rate" shall mean the rate of
interest per annum publicly announced by Morgan from time to time
as its prime rate in effect at its principal office in New York
City; each change in the Prime Rate shall be effective on the
date such change is announced as effective. "Base CD Rate" shall
mean the sum of (x) the product of (i) the Three-Month Secondary
CD Rate and (ii) Statutory Reserves and (y) the Assessment Rate.
"Three-Month Secondary CD Rate" shall mean, for any day, the
secondary market rate for three-month certificates of deposit
reported as being in effect on such day (or, if such day is not a
Business Day, the next preceding Business Day) by the Board
through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under current
practices of the Board, be published in Federal Reserve
Statistical Release H.15(519) during the week following such
day), or, if such rate shall not be so reported on such day or
such next proceeding Business Day, the average of the secondary
market quotations for three month certificates of deposit of
major money center banks in New York City received at 10:00 a.m.,
New York City time, on such day (or, if such day shall not be a
Business Day, on the next preceding Business Day) by Morgan from
three New York City negotiable certificate of deposit dealers of
recognized standing selected by it. "Federal Funds Effective
Rate" shall mean, for any day the weighted average of the rates
on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Agent
from three Federal funds brokers of recognized standing selected
by it. For purposes of this Agreement, any change in the
Alternate Base Rate due to a change in the Prime Rate, the Base
CD Rate or the Federal Funds Effective Rate shall be effective on
the effective date of such change in the Prime Rate, the Base CD
Rate or the Federal Funds Effective Rate, respectively. If for
any reason the Agent shall have determined (which determination
shall be conclusive absent manifest error) that it is unable to
ascertain the Base CD Rate or the Federal Funds Effective Rate,
or both, for any reason, including the inability or failure of
the Agent to obtain sufficient quotations in accordance with the
terms hereof, the Alternate Base Rate shall be determined without
regard to clause (b) or (c), or both, of the first sentence of
this definition, as appropriate, until the circumstances giving
rise to such inability no longer exist.
"Applicable Margin" shall mean for each day and each type of
Standby Loan, the rate per annum for the relevant type of Standby
Loan determined in accordance with the Pricing Schedule.
"Approval Period" shall mean the period prior to and until
21 calendar days after the date on which a Change of Control
shall have occurred.
"Assessment Rate" shall mean for any date the annual rate
(rounded upwards, if not already a whole multiple of 1/16 of 1%,
to the next higher 1/16 of 1%) most recently estimated by the
Agent as the then current net annual assessment rate that will be
employed in determining amounts payable by Morgan to the Federal
Deposit Insurance Corporation ("FDIC") (or any successor) for
insurance by the FDIC (or such successor) of time deposits made
in dollars at its domestic offices.
"Attributable Value" of any Sale and Lease-Back Transaction
shall mean, at any time, an amount equal to the product of (i)
the greater of (A) the net proceeds of the sale of the property
subject thereto and (B) the fair market value of such property at
the time of such sale (as determined by the Board of Directors of
the Company or by an independent appraiser) and (ii) a fraction
the numerator of which equals the number of full years in the
term of the relevant lease remaining at such time and the
denominator of which equals the number of full years in the term
of such lease at such time, in each case computed without regard
to any renewal or extension options (other than those at the
option of the lessor) contained in such lease.
"Board" shall mean the Board of Governors of the Federal
Reserve System of the United States.
"Borrowing" shall mean a Competitive Borrowing or a Standby
Borrowing.
"Business Day" shall mean any day (other than a day which
is a Saturday, Sunday or legal holiday in the State of New York
or the State of Indiana) on which banks and the Federal Reserve
Bank of New York are open for business in New York City;
provided, however, that when used in connection with a LIBOR
Loan, the term "Business Day" shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London
Interbank Market.
"Capital Lease Obligations" of any person shall mean the
obligations of such person to pay rent or other amounts under any
lease of (or other arrangement conveying the right to use) real
or personal property, or a combination thereof, which obligations
are required to be classified and accounted for as capital leases
on a balance sheet of such person under GAAP and, for the
purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time
determined in accordance with GAAP.
"CDC" shall mean Consolidated Diesel Company, a North
Carolina general partnership.
"CDI" shall mean Consolidated Diesel, Inc., a Delaware
corporation and wholly owned subsidiary of CDC.
"CDNC" shall mean Consolidated Diesel of North Carolina,
Inc., a North Carolina corporation and wholly owned subsidiary of
CDI.
"CEHC" shall mean Cummins Engine Holding Company, Inc., an
Indiana corporation and wholly owned subsidiary of the Company
whose only purpose is and hereafter shall be to own and hold a
partnership interest in CDC.
"Certificate of Deposit Loan" shall mean any Standby Loan
with respect to which the Company shall have selected an interest
rate based on the Adjusted CD Rate in accordance with the
provisions of Article II.
"Change in Control" shall mean (i) any person or group of
persons within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, becomes the beneficial owner, directly or
indirectly, of 30% or more of the outstanding common stock of the
Company or (ii) individuals who constitute the Continuing
Directors cease for any reason to constitute at least a majority
of the Board of Directors of the Company (which, for the purpose
of this definition, shall not be deemed to mean any committee of
the Board of Directors of the Company); provided, however, that
in the case of either (i) or (ii) a Change of Control shall not
be deemed to have occurred if the event set forth in such (i) or
(ii) shall have been approved during the Approval Period by a
majority of the Continuing Directors.
"Closing Date" shall mean June 25, 1996.
"Code" shall mean the Internal Revenue Code of 1986, as the
same may be amended from time to time.
"Commitment" shall mean, with respect to each Bank, the
commitment of such Bank hereunder as set forth in Schedule I
hereto, as such Bank's commitment may be permanently terminated
or reduced from time to time pursuant to Section 2.6. The
Commitments shall automatically and permanently terminate on the
Maturity Date.
"Competitive Bid" shall mean an offer by a Bank to make a
Competitive Loan pursuant to Section 2.2.
"Competitive Bid Rate" shall mean, as to any Competitive Bid
made by a Bank pursuant to Section 2.2(b), either the Competitive
Fixed Rate or the Competitive LIBO Rate, as the case may be,
offered by the Bank making such Competitive Bid.
"Competitive Bid Request" shall mean a request made pursuant
to Section 2.2 in the form of Exhibit A-1.
"Competitive Borrowing" shall mean a borrowing consisting of
concurrent Competitive Loans from each of the Banks whose
Competitive Bid as a part of such borrowing has been accepted by
the Company under the bidding procedure described in Section 2.2.
"Competitive Fixed Rate" shall mean, as to any Competitive
Bid made by a Bank pursuant to Section 2.2(b), the fixed rate of
interest offered by the Bank making such Competitive Bid.
"Competitive Fixed Rate Loan" shall mean any Competitive
Loan with respect to which the Company shall have selected a
Competitive Fixed Rate in accordance with the provisions of
Article II.
"Competitive LIBO Rate" shall mean, as to any Competitive
Bid made by a Bank pursuant to Section 2.2(b), the sum of (i) the
LIBO Rate determined for such Competitive Bid plus (or minus)
(ii) the margin above or (below) the LIBO Rate offered by the
Bank making such Competitive Bid.
"Competitive LIBO Rate Loan" shall mean any Competitive Loan
with respect to which the Company shall have selected an interest
rate based on the Competitive LIBO Rate in accordance with the
provisions of Article II.
"Competitive Loan" shall mean a Loan from a Bank to the
Company pursuant to the bidding procedure described in Section
2.2, the interest rate applicable to which shall be either a
Competitive Fixed Rate or a Competitive LIBO Rate, as the case
may be, offered by such Bank, and accepted by the Company.
"Competitive Note" shall mean a promissory note of the
Company in the form of Exhibit D-1, executed and delivered as
provided in Section 2.8.
"Consolidated" shall mean, as applied to any financial or
accounting term with respect to any person, such term determined
on a consolidated basis in accordance with GAAP for such person
and all consolidated subsidiaries thereof.
"Consolidated Indebtedness" shall mean the Indebtedness of
the Company and its Subsidiaries, computed and Consolidated in
accordance with GAAP; provided, however, that the term
"Consolidated Indebtedness" shall in any event (i) exclude
Indebtedness of CDC and its subsidiaries to the extent that the
portion thereof attributable to the Company (through the
Company's interest in CDC) is less than $100,000,000 and (ii)
include Indebtedness of CDC and its subsidiaries to the extent
that the portion thereof attributable to the Company (through the
Company's interest in CDC) is in excess of $100,000,000 and (iii)
exclude Guarantees of the Company outstanding from time to time
in an aggregate amount not to exceed $85,000,000.
"Consolidated Net Income" for any period shall mean the net
earnings (loss) of the Company and its Subsidiaries for such
period, computed and Consolidated in accordance with GAAP, as set
forth in the Consolidated statement of earnings for such period
delivered by the Company pursuant to Section 5.4.
"Continuing Director" shall mean any member of the Board of
Directors of the Company who is not affiliated with an Acquiring
Person and who was a member of the Board of Directors of the
Company immediately prior to the time that the Acquiring Person
became an Acquiring Person and any successor to a Continuing
Director who is not affiliated with the Acquiring Person and is
recommended to succeed a Continuing Director by a majority of
Continuing Directors who are then members of the Board of
Directors of the Company.
"Default" shall have the meaning assigned to such term in
Section 4.2(c).
"dollars" and the symbol "$" shall mean the lawful currency
of the United States of America.
"Eligible Assignee" shall have the meaning assigned to such
term in Section 9.4(c).
"Effective Date" shall mean the date on which the conditions
set forth in Section 4.1 are satisfied, which, unless otherwise
agreed by the parties hereto, shall be a date on or before July
5, 1996.
"Environmental Laws": any and all foreign, Federal, state,
local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, duly authorized, written requirements
of any Governmental Authority or other requirements of law
(including common law) regulating, relating to or imposing
liability or standards of conduct concerning protection of human
health or the environment, as now or may at any time hereafter be
in effect.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether
or not incorporated) that is a member of a group of which the
Company is a member and which is treated as a single employer
under Section 414 of the Code.
"Events of Default" shall have the meaning assigned to such
term in Article VII.
"Facility Fee" shall have the meaning assigned to such term
in Section 2.5(a).
"Facility Fee Rate" shall mean for each day, the rate per
annum determined in accordance with the Pricing Schedule.
"Financial Officer" of any person shall mean its chief
financial officer, principal accounting officer, treasurer or any
assistant treasurer.
"GAAP" shall mean generally accepted accounting principles
as described in the last paragraph of this Article I.
"Governmental Authority" shall mean any Federal, state,
local or foreign court or governmental agency, authority,
instrumentality or regulatory body.
"Guarantee" of or by any person shall mean any obligation,
contingent or otherwise, of such person guaranteeing or having
the economic effect of guaranteeing any Indebtedness of any other
person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of such person, direct
or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase
(or to advance or supply funds for the purchase of) any security
for the payment of such Indebtedness, (b) to purchase property,
securities or services for the purpose of assuring the owner of
such Indebtedness of the payment of such Indebtedness or (c) to
maintain working capital, equity capital or other financial
statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness; provided,
however, that, in the case of the Company and its Subsidiaries,
the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business.
"Indebtedness" of any person shall mean, without
duplication, (a) all obligations of such person for borrowed
money or with respect to deposits or advances of any kind, (b)
all obligations of such person evidenced by bonds, debentures,
notes or similar instruments, (c) all obligations of such person
under conditional sale or other title retention agreements
relating to property or assets purchased by such person, (d) all
obligations of such person issued or assumed as the deferred
purchase price of property or services, (e) all Indebtedness of
others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by)
any Lien on property owned or acquired by such person, whether or
not the obligations secured thereby have been assumed, (f) all
Guarantees by such person of Indebtedness of others, (g) all
Capital Lease Obligations of such person, (h) any minimum pension
liability required to be reflected on such person's statement of
financial position pursuant to Statement of Financial Accounting
Standards No. 87, and (i) all obligations of such person as an
account party in respect of letters of credit and bankers'
acceptances. The Indebtedness of any person shall also include
the Indebtedness of any partnership in which such person is a
general partner, except to the extent that recourse against such
general partner (as a general partner) has been contractually
waived or limited. Notwithstanding the foregoing, the term
"Indebtedness", in respect of the Company and its Subsidiaries
shall not include (i) deferred compensation for officers and
employees of the Company or any of its Subsidiaries and (ii)
trade payables incurred in the ordinary course of business.
"Interest Payment Date" shall mean (i) with respect to any
LIBOR Loan, Certificate of Deposit Loan or Alternate Base Loan,
the last day of the Interest Period applicable thereto and, in
the case of a LIBOR Loan or a Certificate of Deposit Loan with an
Interest Period of 6 months or 180 days, respectively, the day
that would have been the Interest Payment Date for such Loan had
an Interest Period of 3 months or 90 days, respectively, been
applicable to such Loan and (ii) in the case of a Competitive
Loan, the last day of the Interest Period applicable thereto and;
if such Competitive Loan bears interest at the Competitive LIBO
Rate with an Interest Period of 6 months, the day that would have
been the Interest Payment Date for such Competitive Loan had an
Interest Period of 3 months been applicable to such Competitive
Loan.
"Interest Period" shall mean (i) as to any LIBOR Loan, the
period commencing on the date of such Loan and ending on the
numerically corresponding day (or if there is no corresponding
day, the last day) in the calendar month that is 1, 2, 3 or 6
months thereafter, as the Company may elect, (ii) as to any
Certificate of Deposit Loan, a period of 30, 60, 90 or 180 days'
duration, as the Company may elect, commencing on the date of
such Loan, (iii) as to any Alternate Base Loan, the period
commencing on the date of such Loan and ending 30 days later or,
if earlier, on the Maturity Date or the date of prepayment of
such Loan and (iv) as to any Competitive Loan, the period
commencing on the date of such Loan and ending on the date
specified in the Competitive Bid in which the offer to make the
Competitive Loan was extended, which shall not be (x) in the case
of a Competitive Fixed Rate Loan, earlier than 7 days after the
date of such Loan or later than 180 days after the date of such
Loan or (y) in the case of a Competitive LIBO Rate Loan earlier
than one month after the date of such Loan (or, in either case,
such other period as the Company may request and the Agent
approve); provided, however, that (x) if any Interest Period
would end on a day which shall not be a Business Day, such
Interest Period shall be extended to the next succeeding Business
Day unless, with respect to LIBOR Loans and Competitive LIBO Rate
Loans only, such next succeeding Business Day would fall in the
next calendar month, in which case such Interest Period shall end
on the next preceding Business Day, and (y) no Interest Period
may be selected that ends later than the Maturity Date. Interest
shall accrue from and including the first day of an Interest
Period to but excluding the last day of such Interest Period.
"LIBO Rate" shall mean the average (rounded upwards, if not
already a whole multiple 1/16 of 1%, to the next higher 1/16 of
1%) of the respective rates notified to the Agent by each of the
Reference Banks equal to the rate at which dollar deposits
approximately equal in principal amount to (i) such Reference
Bank's portion of the Standby Borrowing of which such LIBOR Loan
forms a part or (ii) in the case of a Competitive LIBO Rate Loan,
$5,000,000, as the case may be, and with a maturity equal to the
applicable Interest Period are offered to the London Branch of
such Reference Bank in immediately available funds in the London
Interbank Market for Eurodollars at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such
Interest Period.
"LIBOR Loan" shall mean any Standby Loan with respect to
which the Company shall have selected an interest rate based on
the LIBO Rate in accordance with the provisions of Article II.
"Lien" shall mean, with respect to any asset, (a) any
mortgage, deed of trust, lien, pledge, encumbrance, charge or
security interest in or on such asset, (b) the interest of a
vendor or a lessor under any conditional sale agreement, capital
lease or title retention agreement relating to such asset and (c)
in the case of securities, any purchase option, call or similar
right of a third party with respect to such securities.
"Loan" shall mean a Competitive Loan (which Competitive Loan
may be made as a Competitive Fixed Rate Loan or a Competitive
LIBO Rate Loan, as permitted hereby) or a Standby Loan (which
Standby Loan may be made as a LIBOR Loan, a Certificate of
Deposit Loan or an Alternate Base Loan, as permitted hereby).
"Loan Documents" shall mean this Agreement, the Notes and
any other document or agreement entered into in connection
herewith.
"Material Adverse Effect" shall mean (a) a material adverse
effect on the business, assets, operations, prospects or
condition, financial or otherwise, of the Company and the
Subsidiaries taken as a whole, (b) a material impairment of the
ability of the Company to perform any of its obligations under
any Loan Document or (c) a material impairment of the rights or
benefits of the Banks under any Loan Document.
"Maturity Date" shall mean June 25, 2001.
"Multiemployer Plan" shall mean a multiemployer plan as
defined in Section 4001(a)(3) of ERISA to which the Company or
any ERISA Affiliate (other than one considered an ERISA Affiliate
only pursuant to subsection (m) or (o) of Code Section 414) is
making or accruing an obligation to make contributions, or has
within any of the preceding five plan years made or accrued an
obligation to make contributions.
"Note" shall mean a Competitive Note or a Standby Note of
the Company, executed and delivered as provided in Section 2.8.
"Other Taxes" shall have the meaning assigned to such term
in Section 2.20(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA.
"person" shall mean any natural person, corporation, trust,
association, company, partnership, joint venture or government,
or any agency or political subdivision thereof.
"Plan" shall mean any pension plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of
ERISA or Section 412 of the Code and which is maintained for
employees of the Company or any ERISA Affiliate.
"Pricing Schedule" means the Schedule attached hereto
identified as such.
"Priority Indebtedness" shall mean, at any time, without
duplication, (i) the aggregate principal amount of all
Indebtedness of the Company and all the Subsidiaries then
outstanding which Indebtedness is secured by Liens on property
and assets of the Company or any Subsidiary (other than
Indebtedness described in clauses (b) through (k) of Section
6.1), (ii) the Attributable Value at such time of all Sale and
Lease-Back Transactions which are subject to Section 6.2 and
(iii) the aggregate principal amount of all Indebtedness of all
the Subsidiaries then outstanding (other than Indebtedness of
Subsidiaries payable to the Company or any wholly owned
Subsidiary).
"Reference Banks" shall mean Morgan, The Chase Manhattan
Bank, N.A. and Bank of America National Trust and Savings
Association.
"Register" shall have the meaning given such term in Section
9.4(e).
"Regulation D" shall mean Regulation D of the Board, as the
same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Regulation G" shall mean Regulation G of the Board, as the
same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board, as from
time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board, as from
time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Reportable Event" shall mean any reportable event as
defined in Section 4043(b) of ERISA or the regulations issued
thereunder with respect to a Plan (other than a Plan maintained
by an ERISA Affiliate which is considered an ERISA Affiliate only
pursuant to subsection (m) or (o) of Code Section 414).
"Required Banks" shall mean, at any time, Banks having
Commitments representing at least 66-2/3% of the Total
Commitment; provided, however, that for purposes of the last
paragraph of Article VII, or if the Commitments shall have been
terminated, "Required Banks" shall mean Banks holding Loans
representing at least 66-2/3% of the aggregate principal amount
of the Loans outstanding (in each case only if there are Loans
then outstanding).
"Responsible Officer" of any corporation shall mean any
executive officer or financial officer of such corporation and
any other officer or similar official thereof responsible for the
administration of the obligations of such corporation in respect
of this Agreement.
"Sale and Lease-Back Transaction" shall have the meaning
assigned to such term in Section 6.2.
"Significant Subsidiary" shall mean any Subsidiary,
including its subsidiaries, which meets any of the following
conditions:
(i) the Company's and the other Subsidiaries' investments in and
advances to such Subsidiary exceed 10% of the Consolidated
total assets of the Company as of the end of the most
recently completed fiscal year of the Company for which
financial statements have been delivered pursuant to Section
5.4(a);
(ii) the total assets (after intercompany eliminations) of such
Subsidiary exceed 10% of the Consolidated total assets of
the Company as of the end of the most recently completed
fiscal year of the Company for which financial statements
have been delivered pursuant to Section 5.4(a);
(iii) the net sales of such Subsidiary exceed 10% of the
Consolidated net sales of the Company for the most recently
completed fiscal year of the Company for which financial
statements have been delivered pursuant to Section 5.4(a);
or
such Subsidiary is deemed to be a Significant Subsidiary
pursuant to Section 6.3(b)(i).
"Standby Borrowing" shall mean a borrowing consisting of
simultaneous Standby Loans from each of the Banks distributed
ratably among the Banks in accordance with their respective
Commitments.
"Standby Borrowing Request" shall mean a request made
pursuant to Section 2.3 in the form of Exhibit A-2.
"Standby Loan" shall have the meaning given such term in
Section 2.1.
"Standby Note" shall mean a promissory note of the Company
in the form of Exhibit D-2, executed and delivered as provided in
Section 2.8.
"Statutory Reserves" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the
denominator of which is the number one minus the aggregate of the
maximum reserve percentages (including without limitation any
marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board and any other banking
authority to which any of the Banks is subject (a) with respect
to the LIBO Rate, for Eurocurrency Liabilities (as defined in
Regulation D), and (b) with respect to the Adjusted CD Rate or
the Base CD Rate (as such term is used in the definition of
"Alternate Base Rate"), for new negotiable non-personal time
deposits in dollars of over $100,000 with maturities
approximately equal to the applicable Interest Period. Such
reserve percentages shall include, without limitation, those
imposed under Regulation D. LIBOR Loans and Competitive LIBO
Rate Loans shall be deemed to constitute Eurocurrency Liabilities
and as such shall be deemed to be subject to such reserve
requirements without benefit of or credit for proration,
exceptions or offsets which may be available from time to time to
any Bank under Regulation D. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in
any reserve percentage.
"subsidiary" shall mean, with respect to any person (herein
referred to as the "parent"), any corporation, association or
other business entity (i) of which securities or other ownership
interests representing more than 50% of the ordinary voting power
are, at the time any determination is being made, owned,
controlled or held by the parent or one or more subsidiaries of
the parent or (ii) which is, at the time any determination is
made, otherwise controlled (by contract or agreement or
otherwise) by the parent or one or more subsidiaries of the
parent.
"Subsidiary" shall mean any subsidiary of the Company;
provided, however, that neither CDC nor any foreign joint venture
in which the Company has the right to designate the general
manager of the joint venture shall be deemed to be a subsidiary
of the Company by reason solely of meeting the requirements of
clause (ii) in the definition of the term "subsidiary" if at the
time of any such determination, such entity is not included as a
subsidiary in the Consolidated financial statements of the
Company and its Consolidated subsidiaries.
"Tangible Net Worth" shall mean, at any date, (i) the sum of
the Company's and its Consolidated Subsidiaries' capital stock,
additional contributed capital, earnings retained in the business
and any other account (less treasury stock) which, in accordance
with GAAP, constitutes Consolidated shareholders' investment
(which does not include minority interests of persons other than
the Company and the Subsidiaries in Subsidiaries); less (ii)(x)
to the extent included in the determination of consolidated total
assets of the Company, goodwill, research and development
expenses, trademarks, trade names, copyrights, patents, patent
applications and rights in any thereof, other similar
intangibles, deferred charges and any other items which are
treated as intangibles in accordance with GAAP (other than any
intangible assets reflected on the Company's statement of
financial position pursuant to paragraph 37 of Statement of
Financial Accounting Standards No. 87), (y) all write-ups
subsequent to March 31, 1996, in the book value of any asset
owned by the Company or its Subsidiaries (other than purchase
accounting adjustments in connection with assets acquired after
March 31, 1996); and (z) cash held in a sinking or other
analogous fund, established for the purpose of redeeming,
retiring or prepaying any capital stock; provided, however, that
in determining Tangible Net Worth the effect of any foreign
currency translation adjustments shall be excluded.
"Taxes" shall have the meaning assigned to such term in
Section 2.20(a).
"Total Commitment" shall mean at any time the aggregate
amount of the Banks' Commitments as in effect at such time.
"Transactions" shall have the meaning assigned to such term
in Section 3.2.
"type", when used in respect of any Loan or Borrowing, shall
refer to the Rate by reference to which interest on such Loan or
on the Loans comprising such Borrowing is determined. For
purposes hereof, "Rate" shall mean the Competitive Fixed Rate,
the Competitive LIBO Rate, the LIBO Rate, the Adjusted CD Rate
and the Alternate Base Rate.
"Withdrawal Liability" shall mean liability to a
Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.
Except as otherwise expressly provided herein, all terms of
an accounting or financial nature shall be construed in accordance
with GAAP as in effect from time to time (provided, however, that, for
purposes of determining compliance with any covenant set forth in
Article VI, such terms shall be construed in accordance with GAAP as
in effect on the date of this Agreement applied on a basis consistent
with the application used in the Company's audited financial
statements referred to in Section 3.5 but with such changes therein as
shall be approved or concurred in by the Company's independent public
accountants) and all financial data submitted pursuant to this
Agreement shall be prepared in accordance with such principles and
practices, except as otherwise expressed herein. The definitions in
this Article I shall apply equally to both the singular and plural
forms of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter
forms. The words "include", "includes" and "including" as used in
this Agreement shall be deemed in each case to be followed by the
phrase "without limitation". The word "or" shall not be deemed to be
exclusive. Section, Schedule and Exhibit references are references to
Sections of, and Schedules and Exhibits to, this Agreement, unless
otherwise specified herein.
LOANS
Commitments. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each
Bank, severally and not jointly, agrees to make standby revolving
credit loans ("Standby Loans") to the Company, at any time and from
time to time on and after the Closing Date and until the earlier of
the Maturity Date and the termination of the Commitment of such Bank
in accordance with the terms hereof, subject, however, to the
conditions that (i) at no time shall (A) the sum of (x) the
outstanding aggregate principal amount of all Standby Loans made by
all Banks plus (y) the outstanding aggregate principal amount of all
Competitive Loans made by all Banks exceed (B) the Total Commitment
and (ii) at all times the outstanding aggregate principal amount of
all Standby Loans made by a Bank shall equal the product of (x) the
percentage which its Commitment represents of the Total Commitment
times (y) the outstanding aggregate principal amount of all Standby
Loans made by all Banks. Each Bank's Commitment is set forth opposite
its name in Schedule I. Such Commitments may be terminated or reduced
from time to time pursuant to Section 2.6.
Within the foregoing limits, the Company may borrow, repay,
prepay and reborrow hereunder, on and after the Closing Date and prior
to the Maturity Date, subject to the terms, provisions and limitations
set forth herein.
Competitive Bid Procedure. (a) In order to request
Competitive Bids, the Company shall hand deliver or telecopy to the
Agent a duly completed Competitive Bid Request in the form of Exhibit
A-1, to be received by the Agent not later than 10:00 a.m., New York
City time, five Business Days before a proposed Competitive Borrowing
with respect to that portion of such Competitive Bid Request which is
for Competitive LIBO Rate Loans or one Business Day before a proposed
Competitive Borrowing with respect to that portion of such Competitive
Bid Request which is for Competitive Fixed Rate Loans. A Competitive
Bid Request that does not conform substantially to the format of
Exhibit A-1 may be rejected in the Agent's sole discretion, and the
Agent shall promptly notify the Company of such rejection by
telecopier. Such request shall in each case refer to this Agreement
and specify (i) the date of the requested Competitive Borrowing (which
shall be a Business Day) and the aggregate principal amount thereof
(which shall not be less than $10,000,000 or greater than the Total
Commitment and shall be an integral multiple of $1,000,000), (ii) the
Interest Period with respect thereto (which may not end after the
Maturity Date) and (iii) the type of the requested Competitive
Borrowing. Promptly after its receipt of a Competitive Bid Request
that is not rejected as aforesaid, the Agent shall invite by
telecopier (in the form set forth in Exhibit B) the Banks to bid, on
the terms and conditions of this Agreement, to make Competitive Loans
pursuant to such Competitive Bid Request.
(a) Each Bank may, in its sole discretion, make a
Competitive Bid to the Company responsive to the Competitive Bid
Request. Each Competitive Bid by a Bank must be received by the Agent
via telecopier, in the form of Exhibit C hereto, not later than 10:00
a.m., New York City time, three Business Days prior to the Business
Day of a proposed Competitive Borrowing with respect to that portion
of the Competitive Bid which is for Competitive LIBO Rate Loans or on
the Business Day of a proposed Competitive Borrowing with respect to
that portion of the Competitive Bid which is for Competitive Fixed
Rate Loans. Competitive Bids that do not conform substantially to the
format of Exhibit C may be rejected by the Agent after conferring
with, and upon the instruction of, the Company, and the Agent shall
notify the Bank making such nonconforming bid of such rejection as
soon as practicable. Each Competitive Bid shall refer to this
Agreement and specify (i) the principal amount (which shall be in a
minimum principal amount of $5,000,000 and in an integral multiple of
$1,000,000 and which may equal (but not exceed) the entire principal
amount of the Competitive Borrowing requested by the Company) of the
Competitive Loan of the applicable type that the Bank is willing to
make to the Company and (ii) the Competitive Bid Rate (to the nearest
1/10,000 of 1%) at which the Bank is prepared to make the Competitive
Loan. A Competitive Bid submitted by a Bank pursuant to this
paragraph (b) shall be irrevocable.
(b) The Agent shall promptly notify the Company by
telecopier of all the Competitive Bids made, the Competitive Bid Rate
and the principal amount of each Competitive Loan in respect of which
a Competitive Bid was made and the identity of the Bank that made each
bid. The Agent shall send a copy of all Competitive Bids to the
Company for its records as soon as practicable after completion of the
bidding process set forth in this Section 2.2.
(c The Company may in its sole and absolute
discretion, subject only to the provisions of this paragraph (d),
accept or reject any Competitive Bid referred to in paragraph (c)
above. The Company shall notify the Agent by telecopier whether and
to what extent it has decided to accept or reject any of or all the
bids referred to in paragraph (c) above, not later than 11:00 a.m.,
New York City time, on the Business Day on which such Competitive Bids
were due in accordance with Section 2.2(b); provided, however, that
(i) the failure by the Company to give such notice shall be deemed to
be a rejection of all the bids referred to in paragraph (c) above,
(ii) the Company shall not accept a bid made at a particular
Competitive Bid Rate if the Company has decided to reject a bid made
at a lower Competitive Bid Rate, (iii) the aggregate amount of the
Competitive Bids accepted by the Company shall not exceed the
principal amount specified in the Competitive Bid Request for
Competitive Loans of the applicable type, (iv) if the Company shall
accept a bid or bids made at a particular Competitive Bid Rate but the
amount of such bid or bids shall cause the total amount of bids to be
accepted by the Company to exceed the amount specified in the
Competitive Bid Request for Competitive Loans of the applicable type,
then the Company shall (notwithstanding the minimum bid acceptance
amount required by clause (vi) below) accept a portion of such bid or
bids in an aggregate amount equal to the amount specified in the
Competitive Bid Request for Competitive Loans of the applicable type;
(v) if the Company shall accept bids made at a particular Competitive
Bid Rate but shall be restricted by other conditions hereof from
borrowing the principal amount of Competitive Loans specified in the
Competitive Bid Request in respect of which bids at such Competitive
Bid Rate have been made or if the Company shall accept bids made at a
particular Competitive Bid Rate but the aggregate amount of bids made
at such rate shall exceed the amount specified in the Competitive Bid
Request for Competitive Loans of the applicable type, then the Company
shall accept a pro rata portion of each bid made at such Competitive
Bid Rate aggregating the portion of Competitive Loans with respect to
which bids at such rate have been received; provided, however, that if
the available principal amount of Competitive Loans to be so allocated
is not sufficient to enable Competitive Loans to be so allocated to
each such Bank in a minimum principal amount of $5,000,000 and in
integral multiples of $1,000,000, the Company shall select the Banks
to be allocated such Competitive Loans in a principal amount of
$5,000,000, but may round allocations up to the next higher multiple
of $1,000,000 if necessary; and (vi) except as provided in clauses
(iv) and (v) above, no bid shall be accepted for a Competitive Loan
unless such Competitive Loan is in a minimum principal amount of
$5,000,000 and an integral multiple of $1,000,000 and is part of a
Competitive Borrowing in a minimum principal amount of $10,000,000. A
notice given by the Company pursuant to this paragraph (d) shall be
irrevocable.
(d The Agent shall promptly notify each bidding
Bank whether or not its Competitive Bid has been accepted (and if so,
in what amount and at what Competitive Bid Rate) by telecopier sent by
the Agent, and each successful bidder will thereupon become bound,
subject to the other applicable conditions hereof, to make the
Competitive Loan in respect of which its bid has been accepted.
(e) A Competitive Bid Request shall not be made within five
Business Days of the date of any other Competitive Bid Request, unless
the Company and the Agent shall mutually agree otherwise.
(f) If the Agent shall elect to submit a Competitive Bid in
its capacity as a Bank, it shall submit such bid directly to the
Company one quarter of an hour earlier than the latest time at which
the other Banks are required to submit their bids to the Agent
pursuant to paragraph (b) above.
(g) All notices required by this Section 2.2 and by Section
2.3 shall be given in accordance with Section 9.1.
Standby Borrowing Procedure. In order to effect a Standby
Borrowing, the Company shall give the Agent written or telecopier
notice, in the form of Exhibit A-2 hereto, (x) in the case of LIBOR
Loans, not later than 11:00 a.m., New York City time, three Business
Days before a proposed Standby Borrowing, (y) in the case of
Certificate of Deposit Loans, not later than 11:00 a.m., New York City
time, two Business Days before a proposed Standby Borrowing and (z) in
the case of Alternate Base Loans, not later than 11:00 a.m., New York
City time, on the Business Day of a proposed Standby Borrowing. Such
notice shall be irrevocable and shall in each case refer to this
Agreement and specify (a) whether the Standby Loans then being
requested are to be LIBOR Loans, Certificate of Deposit Loans or
Alternate Base Loans, (b) the date of such Standby Loans (which shall
be a Business Day) and the aggregate amount thereof (which shall not
be less than $10,000,000 and shall be an integral multiple of
$1,000,000) and (c) the Interest Period with respect thereto (which
shall not end later than the Maturity Date). If no Interest Period
with respect to any LIBOR Loan or Certificate of Deposit Loan is
specified in any such notice, then (i) in the case of a LIBOR Loan,
the Company shall be deemed to have selected an Interest Period of one
month's duration and (ii) in the case of a Certificate of Deposit
Loan, the Company shall be deemed to have selected an Interest Period
of 30 days' duration. If the type of Standby Loan is not specified in
such notice, the Company shall be deemed to have selected an Alternate
Base Loan. The Agent shall promptly advise the other Banks of any
notice given pursuant to this Section 2.3 and of each Bank's portion
of the requested Standby Borrowing by telecopier. Each Standby
Borrowing shall consist of Standby Loans of the same type made to the
Company as of the same day and having the same Interest Period.
Refinancings. The Company may refinance all or any part of any
Loan with a Loan of the same or a different type made pursuant to
Section 2.2 or Section 2.3, subject to the conditions and limitations
set forth in this Agreement, including refinancings of Competitive
Loans with Standby Loans and Standby Loans with Competitive Loans.
Any Loan or part thereof so refinanced shall be deemed to be repaid in
accordance with Section 2.8 with the proceeds of a new borrowing
hereunder and the proceeds of the new Loan, to the extent they do not
exceed the principal amount of the Loan being refinanced, shall not be
paid by the Banks to the Agent or by the Agent to the Company pursuant
to Section 2.7(c); provided, however, that (i) if the principal amount
extended by a Bank in a refinancing is greater than the principal
amount extended by such Bank in the Borrowing being refinanced, then
such Bank shall pay such difference to the Agent for distribution to
the Banks described in (ii) below, (ii) if the principal amount
extended by a Bank in the Borrowing being refinanced is greater than
the principal amount being extended by such Bank in the refinancing,
the Agent shall return the difference to such Bank out of amounts
received pursuant to (i) above and (iii) to the extent any Bank fails
to pay the Agent amounts due from it pursuant to (i) above, any Loan
or portion thereof being refinanced shall not be deemed repaid in
accordance with Section 2.8 to the extent of such failure and the
Company shall pay such amount to the Agent pursuant to Section 2.8.
Fees. (a) The Company agrees to pay to each Bank, through the
Agent, on each March 31, June 30, September 30 and December 31 and on
the Maturity Date, in immediately available funds, a facility fee (a
"Facility Fee"), calculated at a rate per annum equal to the Facility
Fee Rate in effect from time to time on the average daily amount of
the Commitment of such Bank, whether used or unused, during the
preceding quarter (or shorter period commencing with the Effective
Date or ending with the Maturity Date or any other date on which the
Commitment of such Bank shall be terminated). All Facility Fees shall
be computed on the basis of the actual number of days elapsed in a
year of 360 days. The Facility Fee due to each Bank shall commence to
accrue on the Effective Date and shall cease to accrue on the earlier
of the Maturity Date and the termination of the Commitment of such
Bank as provided herein.
(a) The Company agrees to pay to J.P. Morgan Securities Inc.
("JPMSI"), as arranger, for its own account, on the Effective Date the
arrangement fees in the amounts previously agreed to by the Company
and JPMSI in writing.
(b) The Company agrees to pay to the Agent for its own
account the administrative fees and competitive auction fees in the
amounts and on the dates previously agreed to by the Company and the
Agent in writing.
Termination and Reduction of Commitments. (a) Subject to
Section 2.12(b), the Company may permanently terminate, or from time
to time in part permanently reduce, the Total Commitment, in each case
upon at least five Business Days' prior written or telecopier notice
to the Agent; provided, however, the Company may not terminate or
partially reduce the Total Commitment at any time to an amount less
than the sum of all Loans then currently outstanding (after giving
effect to any prepayment of Standby Loans on such date). Such notice
shall specify the date and the amount of the termination or reduction
of the Total Commitment. Each partial reduction of the Total
Commitment shall be in a minimum aggregate principal amount of
$10,000,000 and in an integral multiple of $5,000,000. Each reduction
in the Commitments pursuant to this paragraph shall be made ratably
among the Banks in accordance with their respective Commitments.
(a) Simultaneously with any termination or reduction of
Commitments pursuant to this Section 2.6, the Company shall pay to the
Agent for the accounts of the Banks the Facility Fees on the amount of
the Total Commitment so terminated or reduced accrued through the date
of such termination or reduction.
Loans. (a) Each Borrowing made by the Company on any date shall
be (i) in the case of Competitive Loans, in an integral multiple of
$1,000,000 and in a minimum aggregate principal amount of $10,000,000
and (ii) in the case of Standby Loans, in an integral multiple of
$1,000,000 and in a minimum aggregate principal amount of $10,000,000.
Competitive Loans shall be made by the Banks in accordance with
Section 2.2(d), and Standby Loans shall be made by the Banks ratably
in accordance with their respective Commitments on the date of the
Standby Borrowing; provided, however, that the failure of any Bank to
make any Loan shall not relieve any other Bank of its obligation to
lend hereunder.
(a) Each Standby Loan shall be a LIBOR Loan, a Certificate of
Deposit Loan or an Alternate Base Loan, as the Company may request
subject to and in accordance with Section 2.3. Each Bank may at its
option make any LIBOR Loan by causing a foreign branch or affiliate of
such Bank to make such Loan; provided, however, that any exercise of
such option shall not affect the obligation of the Company to repay
such Loan in accordance with the terms of the applicable Note and this
Agreement. Loans of more than one type may be outstanding at the same
time; provided, however, that the Company shall not be entitled to
request any Loan which, if made, would result in an aggregate of more
than six separate Standby Loans of any Bank or more than six separate
Competitive Loans of any Bank being outstanding hereunder at any one
time. For purposes of the foregoing, Loans having different Interest
Periods, regardless of whether they commence on the same date, shall
be considered separate Loans.
(b) Subject to Section 2.4, each Bank shall make its portion
of each Borrowing on the proposed date thereof by paying the amount
required to the Agent in New York, New York in immediately available
funds not later than 1:00 p.m., New York City time, and the Agent
shall by 3:00 p.m., New York City time, credit the amounts so received
to the general deposit account of the Company with the Agent or, if
Loans are not made on such date because any condition precedent to a
Borrowing herein specified shall not have been met, return the amounts
so received to the respective Banks as soon as practicable.
Notes. The Competitive Loans made to the Company by each Bank
shall be evidenced by a single Competitive Note duly executed on
behalf of the Company, dated the Effective Date, in substantially the
form attached hereto as Exhibit D-1, with the blanks appropriately
filled, payable to the order of such Bank in a principal amount equal
to the Total Commitment. The Standby Loans made to the Company by
each Bank shall be evidenced by a single Standby Note duly executed on
behalf of the Company, dated the Effective Date, in substantially the
form attached hereto as Exhibit D-2, with the blanks appropriately
filled, payable to the order of such Bank in a principal amount equal
to the Commitment of such Bank. The outstanding principal balance of
each Competitive Loan and Standby Loan, as evidenced by the relevant
Note, shall be payable on the last day of the Interest Period
applicable to such Loan. Each Note shall bear interest from the date
thereof on the outstanding principal balance thereof as set forth in
Section 2.9. Each Bank shall, and is hereby authorized by the Company
to, endorse on the schedule attached to the relevant Note held by such
Bank or on a continuation thereof or otherwise record in its internal
records an appropriate notation evidencing the date and amount of each
Competitive Loan or Standby Loan, as applicable, of such Bank, each
payment or prepayment of principal of any Competitive Loan or Standby
Loan, as applicable, and the other information provided for on such
schedule; provided, however, that the failure of any Bank to make such
a notation or any error therein shall not in any manner affect the
obligation of the Company to repay the Competitive Loans or Standby
Loans, as applicable, made by such Bank in accordance with the terms
of the relevant Note and this Agreement.
Interest on Loans. (a) Subject to the provisions of Section
2.10, each LIBOR Loan shall bear interest at a rate per annum
(computed on the basis of the actual number of days elapsed over a
year of 360 days) equal to the LIBO Rate for the Interest Period in
effect for such Loan, plus the Applicable Margin. Interest on each
LIBOR Loan shall be payable on each Interest Payment Date applicable
thereto. The applicable LIBO Rate for each Interest Period shall be
determined by the Agent, and such determination shall be conclusive
absent manifest error.
(a) Subject to the provisions of Section 2.10, each
Certificate of Deposit Loan shall bear interest at a rate per annum
(computed on the basis of the actual number of days elapsed over a
year of 360 days) equal to the Adjusted CD Rate for the Interest
Period in effect for such Loan, plus the Applicable Margin. Interest
on each Certificate of Deposit Loan shall be payable on each Interest
Payment Date applicable thereto. The applicable Adjusted CD Rate for
each Interest Period shall be determined by the Agent, and such
determination shall be conclusive absent manifest error.
Subject to the provisions of Section 2.10, each Alternate Base
Loan shall bear interest at a rate per annum (if the Alternate Base
Rate is based on the Prime Rate, computed on the basis of the actual
number of days elapsed over a year of 365 or 366 days, as the case may
be, or, if the Alternate Base Rate is based on the Base CD Rate or the
Federal Funds Effective Rate, computed on the basis of the actual
number of days elapsed over a year of 360 days) equal to the Alternate
Base Rate, plus the Applicable Margin, if any. Interest on each Alter
nate Base Loan shall be payable on each Interest Payment Date
applicable thereto. The applicable Alternate Base Rate during each
Interest Period shall be determined by the Agent, and such
determination shall be conclusive absent manifest error.
(c) Subject to the provisions of Section 2.10, each
Competitive Loan shall bear interest at a rate per annum (computed on
the basis of the actual number of days elapsed over a year of 360
days) equal to the Competitive Fixed Rate or Competitive LIBO Rate
offered by the Bank making such Competitive Loan and accepted by the
Company pursuant to Section 2.2. Interest on each Competitive Loan
shall be payable on each Interest Payment Date applicable thereto.
(d) If any Reference Bank shall for any reason no longer have
a Commitment or any Loans, such Reference Bank shall thereupon cease
to be a Reference Bank, and if, as a result, there shall only be one
Reference Bank remaining, the Agent (after consultation with the Banks
and with the approval of the Company) shall, by notice to the Company
and the Banks, designate another Bank as a Reference Bank so that
there shall at all times be at least two Reference Banks.
(e) Each Reference Bank shall use its reasonable best efforts
to furnish quotations of rates to the Agent as contemplated hereby.
If any of the Reference Banks shall be unable or shall otherwise fail
to supply such rates to the Agent upon its request, the rate of
interest shall, subject to the provisions of Section 2.11, be
determined on the basis of the quotations of the remaining Reference
Banks or Reference Bank.
Interest on Overdue Amounts. If the Company shall default in the
payment of the principal of or interest on any Loan or any other
amount becoming due hereunder, the Company shall on demand from time
to time pay interest, to the extent permitted by law, on such
defaulted amount from the date of such default (i) until the last day
of the then-current Interest Period, if any, with respect thereto at a
rate per annum equal to the higher of 2% above the rate that would
otherwise be applicable thereto and 2% above the Alternate Base Rate
and (ii) thereafter up to (but not including) the date of actual
payment (after as well as before judgment) at a rate per annum (if the
Alternate Base Rate is based on the Prime Rate, computed on the basis
of the actual number of days elapsed over a year of 365 or 366 days,
as the case may be, or, if the Alternate Base Rate is based on the
Base CD Rate or the Federal Funds Effective Rate, computed on the
basis of the actual number of days elapsed over a year of 360 days)
equal to the Alternate Base Rate plus 2% per annum.
Alternate Rate of Interest. (a) In the event, and on each
occasion, that on the day two Business Days prior to the commencement
of any Interest Period for a LIBOR Loan or a Competitive LIBO Rate
Loan, the Agent shall have determined that (i) deposits in the amount
of the requested principal amount of such LIBOR Loan or Competitive
LIBO Rate Loan are not generally available in the London Interbank
Market, (ii) the rate at which such deposits are being offered will
not adequately and fairly reflect the cost to any Bank of making or
maintaining such LIBOR Loan or Competitive LIBO Rate Loan during such
Interest Period, or (iii) reasonable means do not exist for
ascertaining the LIBO Rate, then the Agent, as soon as practicable
thereafter, shall give written or telecopier notice of such
determination to the Company and the Banks. In the event of any such
determination, any request by the Company for a LIBOR Loan or
Competitive LIBO Rate Loan shall be deemed to be a request for an
Alternate Base Loan until the circumstances giving rise to such notice
no longer exist. Each determination by the Agent under this Section
2.11(a) shall be conclusive absent manifest error.
(a) In the event, and on each occasion, that on or before the date
on which the Adjusted CD Rate for a Certificate of Deposit Loan is to
be determined, the Agent shall have determined that (i) such Adjusted
CD Rate cannot be determined for any reason, including the inability
of the Reference Banks to obtain sufficient bids in accordance with
the terms of the definition of Fixed Certificate of Deposit Rate, or
(ii) that the Adjusted CD Rate for such Certificate of Deposit Loan
will not adequately and fairly reflect the cost to any Bank of making
or maintaining such Certificate of Deposit Loan during such Interest
Period, then the Agent, as soon as practicable thereafter, shall give
written or telecopier notice of such determination to the Company and
the Banks. In the event of any such determination, any request by the
Company for a Certificate of Deposit Loan shall be deemed to be a
request for an Alternate Base Loan until the circumstances giving rise
to such notice no longer exist. Each determination by the Agent under
this Section 2.11(b) shall be conclusive absent manifest error.
Prepayment of Loans. (a) Prior to the Maturity Date, the
Company shall have the right at any time to prepay any Standby
Borrowing, in whole or in part, subject to the requirements of
Sections 2.15 and 2.16 but otherwise without premium or penalty, upon
at least three (or, if such prepayment is solely of Alternate Base
Rate Loans, one) Business Days' prior written or telecopier notice to
the Agent; provided, however, that each such partial prepayment shall
be in an integral multiple of $1,000,000 and in a minimum aggregate
principal amount of $5,000,000. The Company shall not have the right
to prepay any Competitive Loan without the consent of the Bank which
has made such Competitive Loan.
On the date of any termination or reduction of the Total
Commitment pursuant to Section 2.6, the Company shall pay or prepay so
much of the Standby Loans as shall be necessary in order that the
aggregate principal amount of the Loans outstanding will not exceed
the Total Commitment following such termination or reduction. Any
such payment or prepayment shall be applied to such Borrowing or
Borrowings which are Standby Loans as the Company shall select. All
prepayments under this paragraph shall be subject to Sections 2.15 and
2.16.
(b) Each notice of prepayment shall specify the prepayment date
and the aggregate principal amount of each Borrowing or portion
thereof to be prepaid, shall be irrevocable and shall commit the
Company to prepay such Borrowing by the amount stated therein. All
prepayments under this Section 2.12 shall be accompanied by accrued
interest on the principal amount being prepaid to the date of
prepayment.
Reserve Requirements; Change in Circumstances. (a) It is
understood that the cost to each Bank of making or maintaining any of
the Loans may fluctuate as a result of the applicability of, or
changes in, reserve requirements imposed by the Board, including
reserve requirements under Regulation D in connection with
Eurocurrency Liabilities (as defined in Regulation D) at the ratios
provided for in Regulation D from time to time. The Company agrees to
pay to each Bank from time to time, as provided in paragraph (d)
below, such amounts as shall be necessary to compensate such Bank for
the portion of the cost of making or maintaining LIBOR Loans and
Competitive LIBO Rate Loans resulting from any such reserve
requirements, it being understood that the rates of interest
applicable to LIBOR Loans and Competitive LIBO Rate Loans have been
determined on the assumption that no such reserve requirements exist
or will exist and that such rates do not reflect costs imposed on the
Banks in connection with such reserve requirements. It is agreed
that, for purposes of this paragraph (a), the LIBOR Loans and
Competitive LIBO Rate Loans made hereunder shall be deemed to
constitute Eurocurrency Liabilities (as defined in Regulation D) and
to be subject to the reserve requirements of Regulation D without
benefit of or credit for proration, exemptions or offsets which might
otherwise be available to the Banks from time to time under Regulation
D.
(a) Notwithstanding any other provision herein, if after the date
of this Agreement any change in applicable law or regulation or in the
interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof (whether or
not having the force of law) (i) shall change the basis of taxation of
payments to any Bank of the principal of or interest on any LIBOR
Loan, Certificate of Deposit Loan or Competitive Loan made by such
Bank or any fees or other amounts payable hereunder (other than (x)
taxes imposed on the overall net income of such Bank by the
jurisdiction in which such Bank has its principal office or under the
laws of which such Bank is organized or by any political subdivision
or taxing authority therein (or any tax which is enacted or adopted by
such jurisdiction, political subdivision or taxing authority as a
direct substitute for any such taxes) or (y) any tax, assessment, or
other governmental charge that would not have been imposed but for the
failure of such Bank to comply with any certification, information,
documentation or other reporting requirement which such Bank would
have been capable of complying with), (ii) shall impose, modify or
deem applicable any reserve, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by such Bank (except any reserve requirement reflected in the
Adjusted CD Rate), or (iii) shall impose on such Bank or the London
Interbank Market any other condition affecting this Agreement or any
LIBOR Loan, Certificate of Deposit Loan or Competitive Loan made by
such Bank, and the result of any of the foregoing shall be to increase
the cost to such Bank of making or maintaining any LIBOR Loan,
Certificate of Deposit Loan or Competitive Loan or to reduce the
amount of any sum received or receivable by such Bank hereunder
(whether of principal, interest or otherwise) in respect thereof by an
amount deemed in good faith by such Bank to be material, then the
Company shall pay such additional amount or amounts as will compensate
such Bank for such additional costs incurred or reduction to such Bank
upon demand by such Bank.
(b) If, after the date hereof, any Bank shall have determined that
the applicability of any law, rule, regulation or guideline adopted
pursuant to or arising out of the July 1988 report of the Basel
Committee on Banking Regulations and Supervisory Practices entitled
"International Convergence of Capital Measurement and Capital
Standards", or the adoption after the date hereof of any other law,
rule, regulation or guideline regarding capital adequacy, or any
change in any of the foregoing or in the interpretation or
administration of any of the foregoing by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or any lending
office of such Bank) or any Bank's holding company with any request or
directive regarding capital adequacy (whether or not having the force
of law) of any such authority, central bank or comparable agency, has
or would have the effect of reducing the rate of return on such Bank's
capital or on the capital of such Bank's holding company, if any, as a
consequence of its obligations hereunder (including its Commitment) to
a level below that which such Bank or such Bank's holding company
could have achieved but for such adoption, change or compliance
(taking into consideration such Bank's policies and the policies of
such Bank's holding company with respect to capital adequacy) by an
amount deemed by such Bank to be material, then the Company shall pay
to such Bank such additional amount or amounts as will compensate such
Bank or such Bank's holding company for any such reduction suffered.
(c) A certificate of a Bank setting forth in reasonable detail (i)
such amount or amounts as shall be necessary to compensate such Bank
(or participating banks or other entities pursuant to Section 9.4) as
specified in paragraph (a), (b) or (c) above, as the case may be, and
(ii) the calculation of such amount or amounts under clause (i) shall
be delivered to the Company and shall be conclusive absent manifest
error. The Company shall pay such Bank the amount shown as due on any
such certificate within 10 days after its receipt of the same.
(d) Failure on the part of any Bank to demand compensation for any
increased costs or reduction in amounts received or receivable or
reduction in return on capital with respect to any period shall not
constitute a waiver of such Bank's rights to demand compensation for
any increased costs or reduction in amounts received or receivable or
reduction in return on capital with respect to such period or any
other period. The protection of this Section 2.13 shall be available
to each Bank regardless of any possible contention of invalidity or
inapplicability of the law, rule, regulation, guideline or other
change or condition which shall have occurred or been imposed.
Change in Legality. (a) Notwithstanding anything to the
contrary herein contained, if any change in any law or regulation or
in the interpretation thereof by any governmental authority charged
with the administration or interpretation thereof shall make it
unlawful for any Bank to make or maintain any LIBOR Loan or
Competitive LIBO Rate Loan or to give effect to its obligations with
respect to LIBOR Loans or Competitive LIBO Rate Loans as contemplated
hereby, then, by written notice to the Company and to the Agent, such
Bank may:
(i) declare that LIBOR Loans will not thereafter be made by such
Bank hereunder, whereupon any subsequent request for a LIBOR Loan
shall, as to such Bank only, be deemed a request for an Alternate
Base Loan unless such declaration is subsequently withdrawn; and
(ii) require that all outstanding LIBOR Loans and Competitive LIBO
Rate Loans made by it be converted to Alternate Base Loans, in
which event (A) all such LIBOR Loans and Competitive LIBO Rate
Loans shall be automatically converted to Alternate Base Loans as
of the last day of the Interest Period then applicable thereto
or, if so required by law, as of the effective date of such
notice as provided in paragraph (b) below and (B) all payments
and prepayments of principal which would otherwise have been
applied to repay the converted LIBOR Loans and Competitive LIBO
Rate Loans shall instead be applied to repay the Alternate Base
Loans resulting from the conversion of such LIBOR Loans and
Competitive LIBO Rate Loans.
(b) For purposes of this Section 2.14, a notice to the Company by
any Bank pursuant to paragraph (a) above shall be effective on the
date of receipt thereof by the Company.
Indemnity. The Company shall indemnify each Bank against any
loss or reasonable expense which such Bank may sustain or incur as a
consequence of (v) any failure by the Company to fulfill on the date
of any borrowing hereunder the applicable conditions set forth in
Article IV, (w) any failure by the Company to borrow hereunder after a
notice of borrowing pursuant to Article II has been given or after
bids have been accepted, (x) any payment, prepayment or conversion of
a LIBOR Loan, Certificate of Deposit Loan or Competitive Loan required
by any other provision of this Agreement or otherwise made on a date
other than the last day of the applicable Interest Period, (y) any
default in the payment or prepayment of the principal amount of any
Loan or any part thereof or interest accrued thereon, as and when due
and payable (at the due date thereof, by notice of prepayment or
otherwise), and (z) the occurrence of any Event of Default, including
any loss or reasonable expense sustained or incurred or to be
sustained or incurred in liquidating or employing deposits from third
parties acquired to effect or maintain such Loan or any part thereof
as a LIBOR Loan, Certificate of Deposit Loan or Competitive Loan.
Such loss or reasonable expense shall include an amount equal to the
excess, if any, as reasonably determined by each Bank of (i) its cost
of obtaining the funds for the Loan being paid, prepaid or converted
or not borrowed (based on the LIBO Rate or the Adjusted CD Rate or, in
the case of a Competitive Fixed Rate Loan, the fixed rate of interest
applicable thereto) for the period from the date of such payment,
prepayment or conversion or failure to borrow to the last day of the
Interest Period for such Loan (or, in the case of a failure to borrow,
the Interest Period for the Loan which would have commenced on the
date of such failure to borrow) over (ii) the amount of interest (as
reasonably determined by such Bank) that would be capitalized by such
Bank in reemploying the funds so paid, prepaid or converted or not
borrowed for such period or Interest Period, as the case may be. A
certificate of each Bank setting forth any amount or amounts which
such Bank is entitled to receive pursuant to this Section 2.15 shall
be delivered to the Company and shall be conclusive, if made in good
faith, absent manifest error. The Company shall pay the relevant Bank
the amount shown as due on the relevant certificate within 10 days
after its receipt of the same.
Pro Rata Treatment. Except as permitted under Section 2.13(c)
and Section 2.14 with respect to interest, (i) each payment or
prepayment of principal and each payment of interest with respect to a
Competitive Borrowing (at a particular Competitive Bid Rate) or a
Standby Borrowing shall be made pro rata among the Banks in accordance
with the respective principal amounts of the Loans extended by each
Bank, if any, with respect to such Competitive Borrowing or Standby
Borrowing, and (ii) Standby Loans shall be made pro rata among the
Banks in accordance with their respective Commitments.
Sharing of Setoffs. Each Bank agrees that if it shall, through
the exercise of a right of banker's lien, setoff or counterclaim
against the Company, or pursuant to a secured claim under Section 506
of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Bank
under any applicable bankruptcy, insolvency or other similar law or
otherwise, or by any other means obtain payment (voluntary or
involuntary) in respect of the Notes held by it as a result of which
the unpaid principal portion of the Notes held by it shall be
proportionately less than the unpaid principal portion of the Notes
held by any other Bank, it shall be deemed to have simultaneously
purchased from such other Bank at face value a participation in the
Notes held by such other Bank, so that the aggregate unpaid principal
amount of the Notes and participations in Notes held by each Bank
shall be in the same proportion to the aggregate unpaid principal
amount of all Notes then outstanding as the principal amount of the
Notes held by it prior to such exercise of banker's lien, setoff or
counterclaim or other event was to the principal amount of all Notes
outstanding prior to such exercise of banker's lien, setoff or
counterclaim; provided, however, that if any such purchase or
purchases or adjustments shall be made pursuant to this section 2.17
and the payment giving rise thereto shall thereafter be recovered,
such purchase or purchases or adjustments shall be rescinded to the
extent of such recovery and the purchase price or prices or adjustment
restored without interest. The Company expressly consents to the
foregoing arrangements and agrees that any Bank holding a
participation in a Note deemed to have been so purchased may exercise
any and all rights of banker's lien, setoff or counterclaim with
respect to any and all moneys owing by the Company to such Bank as
fully as if such Bank had made a Loan directly to the Company in the
amount of such participation.
Payments. The Company shall make each payment hereunder and
under the Notes not later than 12:00 noon (New York City time) on the
day when due in lawful money of the United States (in freely
transferable dollars) to the Agent at its offices at 60 Wall Street,
New York, New York 10260 for the account of the Banks, in immediately
available funds.
Payments on Business Days. Except as set forth in the definition
of "Interest Period" as applied to LIBOR Loans and Competitive LIBO
Rate Loans, if any payment to be made hereunder or under any Note
becomes due and payable on a day other than a Business Day, such
payment may be made on the next succeeding Business Day and such
extension of time shall in such case be included in computing
interest, if any, in connection with such payment.
Taxes. (a) Any and all payments by the Company hereunder
and under the other Loan Documents shall be made, in accordance with
Sections 2.18 and 2.19, free and clear of and without deduction for
any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto,
excluding (i) taxes imposed on the Agent's or any Bank's income and
franchise taxes imposed on the Agent or any Bank by the United States
or any jurisdiction in which the Agent or such Bank has its principal
office or under the laws of which the Agent or such Bank is organized
or any political subdivision or taxing authority and (ii) United
States withholding taxes payable with respect to payments hereunder or
under the other Loan Documents under laws (including any statute,
treaty, ruling, determination or regulation) in effect on the Closing
Date or, with respect to any Eligible Assignee that becomes entitled
to the rights of a Bank hereunder, the date of the Assignment and
Acceptance pursuant to which it becomes so entitled (all such non-
excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Company
shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder to the Banks or the Agent (x) the sum payable
shall be increased by the amount necessary so that after making all
required deductions (including deductions applicable to additional
sums payable under this Section 2.20) such Bank or the Agent (as the
case may be) shall receive an amount equal to the sum it would have
received had no such deductions been made, (y) the Company shall make
such deductions and (z) the Company shall pay the full amount deducted
to the relevant taxing authority or other Governmental Authority in
accordance with applicable law. The Company shall not be required to
pay any amounts pursuant to clause (x) of the preceding sentence to
any Bank or Agent organized under the laws of a jurisdiction outside
the United States unless such Bank or the Agent has provided to the
Company, promptly upon receipt of written request from the Company, a
complete and valid Internal Revenue Service Form 1001 or 4224 or other
applicable certificate, form or document prescribed by the United
States Internal Revenue Service certifying as to such Bank's or the
Agent's entitlement to an exemption from, or reduction of, United
States withholding on payments to be made hereunder or under the other
Loan Documents.
(a) In addition, the Company agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes,
charges or similar levies which arise from any payment made hereunder
or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement (hereinafter referred to as "Other Taxes").
(b) The Company shall indemnify each Bank and the Agent for the
full amount of Taxes and Other Taxes (including any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under this
Section 2.20) paid by such Bank or the Agent, as the case may be, and
any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted. Such indemnification shall
be made within 30 days after the date any Bank or the Agent, as the
case may be, makes written demand therefor. If a Bank or the Agent
shall become aware that it is entitled to receive a refund in respect
of Taxes or Other Taxes, or in respect of interest or penalties, it
shall promptly notify the Company of the availability of such refund
and shall, within 30 days after receipt of a request by the Company,
apply for such refund at the Company's expense. If any Bank or the
Agent receives a refund in respect of any Taxes or Other Taxes, or in
respect of interest or penalties, for which such Bank or the Agent has
received payment from the Company hereunder, it shall promptly notify
the Company of such refund and shall, within 30 days after receipt of
a request by the Company (or promptly upon receipt, if the Company has
requested application for such refund pursuant hereto), repay such
refund to the Company without interest (other than interest received
from the taxing authority); provided, however, that the Company, upon
the request of such Bank or the Agent, agrees to return such refund
(plus penalties, interest or other charges) to such Bank or the Agent
in the event such Bank or the Agent is required to repay such refund.
Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by the Company in respect of any payment to any Bank or
the Agent, the Company will furnish to the Agent, at its address
referred to in Section 10.1, the original or a certified copy of a
receipt evidencing payment thereof.
(d) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this
Section 2.20 shall survive the payment in full of principal and
interest hereunder and the termination of this Agreement.
(e) Any Bank claiming any additional amounts payable pursuant to
this Section 2.20 shall use its best efforts (consistent with legal
and regulatory restrictions) to file any certificate or document
requested by the Company or to change the jurisdiction of its
applicable lending office if the making of such a filing or change
would avoid the need for or reduce the amount of any such additional
amounts which may thereafter accrue and would not, in the sole
determination of such Bank, be otherwise disadvantageous to such Bank.
Tax Reports. (a) With respect to each Bank which is organized
under the laws of a jurisdiction outside the United States, on the
Closing Date or, with respect to each Eligible Assignee that becomes
entitled to the rights of a Bank hereunder, the date of the Assignment
and Acceptance pursuant to which it becomes so entitled, and from time
to time thereafter if requested by the Company or the Agent or
required by the Internal Revenue Service of the United States, each
such Bank shall provide the Agent and the Company with the forms
prescribed by the Internal Revenue Service of the United States
certifying as to its status for purposes of determining the
applicability of any exemption from United States withholding taxes
with respect to all payments to be made hereunder to such Bank or
other documents satisfactory to the Company and the Agent indicating
that all payments to be made hereunder to such Bank are subject to
such tax at a rate reduced by an applicable tax treaty. Unless the
Company and the Agent have received such forms or such documents
validly indicating that payments hereunder are not subject to United
States withholding tax or are subject to such tax at a rate reduced by
an applicable tax treaty, the Company or the Agent shall withhold
taxes from such payments at the applicable statutory rate in the case
of payments to or for any Bank organized under the laws of a
jurisdiction outside the United States.
(a) Any Bank that sells any participation pursuant to Section
9.4(b) shall give the Company and the Agent immediate notice of such
participation, setting forth the names of each of the participants,
the amounts of such participations and indicating the country of
residence of each of the participants. Notwithstanding any other
provision contained herein to the contrary, the Company and the Agent
shall be entitled to deduct and withhold United States withholding
taxes with respect to all payments to be made hereunder to or for such
Bank as may be required by United States law due to such
participations and neither the Company nor the Agent shall be required
to indemnify such Bank with respect to such deductions or withholdings
and such Bank shall indemnify and hold harmless the Company and the
Agent from and against any tax, interest, penalty or other expense
that the Company and the Agent may incur as a consequence of any
failure to withhold United States taxes applicable because of any
participation arrangement that is not fully disclosed to them as
required hereunder.
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Agent and to each of
the Banks that:
Organization; Powers. The Company and each Subsidiary (a) is a
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, (b) has all
requisite power and authority to own its property and assets and to
carry on its business as now conducted and as proposed to be
conducted, (c) is qualified to do business in every jurisdiction where
such qualification is required, except where the failure so to qualify
would not result in a Material Adverse Effect, and (d) has the
corporate power and authority to execute, deliver and perform its
obligations under each of the Loan Documents and each other agreement
or instrument contemplated thereby to which it is or will be a party
and to borrow hereunder.
Authorization. The execution, delivery and performance by the
Company of each of the Loan Documents and the borrowings hereunder
(collectively, the "Transactions") (a) have been duly authorized by
all requisite corporate and, if required, stockholder action and (b)
will not (i) violate (A) any provision of law, statute, rule or
regulation, or of the certificate or articles of incorporation or
other constitutive documents or by-laws of the Company or any
Subsidiary, (B) any order of any Governmental Authority or (C) any
provision of any indenture, agreement or other instrument to which the
Company or any Subsidiary is a party or by which any of them or any of
their property is or may be bound, (ii) be in conflict with, result in
a breach of or constitute (alone or with notice or lapse of time or
both) a default under any such indenture, agreement or other
instrument or (iii) result in the creation or imposition of any Lien
upon any property or assets of the Company or any Subsidiary.
Enforceability. This Agreement and the Notes and each other Loan
Document to which it is a party have been duly executed and delivered
by the Company and constitute legal, valid and binding obligations of
the Company enforceable against the Company in accordance with their
respective terms. The Loans and all other obligations or liabilities
of the Company hereunder shall not be subordinated in right of payment
or in any other respect to any other Indebtedness of the Company.
Governmental Approvals. No action, consent or approval of,
registration or filing with or any other action by any Governmental
Authority is or will be required in connection with the Transactions,
except such as have been made or obtained and are in full force and
effect.
Financial Statements. (a) The Company has heretofore furnished to
the Banks its Consolidated statements of financial position and
statements of earnings and cash flows (i) as of and for the fiscal
year ended December 31, 1995, audited by and accompanied by the
opinion of Arthur Andersen & Co., independent public accountants, and
(ii) as of and for the fiscal quarter ended March 31, 1996, certified
by its chief financial officer. Such financial statements present
fairly the financial condition and results of operations of the
Company and its Consolidated Subsidiaries as of such dates and for
such periods. Such statements of financial position and the notes
thereto disclose all material liabilities, direct or contingent, of
the Company and its Consolidated Subsidiaries as of the dates thereof.
Such financial statements were prepared in accordance with GAAP
applied on a consistent basis.
(b) As of the Effective Date, there has been no material adverse
change in the financial condition or in the operations of the Company
and its Subsidiaries taken as a whole since March 31, 1996.
Environmental Matters. As of the Effective Date, there are no
chemical substances, pollutants, contaminants or hazardous or toxic
substances, materials or wastes, whether solid, gaseous or liquid in
nature, at any premises owned, operated, controlled or used by the
Company or any of its Subsidiaries where the presence of such
substances has resulted or could result in a Material Adverse Effect
and neither the Company nor any of its Subsidiaries nor any of their
respective predecessors in interest have manufactured, processed,
distributed, used, treated, stored, disposed, transported or handled
any such substances, where such actions have resulted or could result
in a Material Adverse Effect. As of the Effective Date, there is no
ambient air, surface water, groundwater or land contamination within,
under or relating to any real property of the Company or any of its
Subsidiaries or other location geologically or hydrologically
connected to such properties and none of such properties has been used
for the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of any substance described in
the preceding sentence where such uses or contaminations have resulted
or could result in a Material Adverse Effect.
Title to Properties; Possession Under Leases. (a) The Company
and each of the Subsidiaries has good and marketable title to, or
valid leasehold interests in, all its material properties and assets,
except for minor defects in title that do not interfere with its
ability to conduct its business as currently conducted or to utilize
such properties and assets for their intended purposes. All such
material properties and assets are free and clear of Liens, other than
Liens expressly permitted by Section 6.1.
(a) The Company and each of the Subsidiaries has complied with all
obligations under all material leases to which it is a party and all
such leases are in full force and effect. The Company and each of the
Subsidiaries enjoys peaceful and undisturbed possession under all such
material leases.
Subsidiaries. Schedule 3.8 sets forth as of the Effective Date
a list of all Subsidiaries of the Company and the percentage ownership
interest of the Company therein.
Litigation; Compliance with Laws.
(a) As of the Effective Date, there are not any actions, suits or
proceedings at law or in equity or by or before any Governmental
Authority now pending or, to the knowledge of the Company, threatened
against or affecting the Company or any Subsidiary or any business,
property or rights of any such person (i) which involve any Loan
Document or the Transactions or (ii) as to which there is a reasonable
possibility of an adverse determination and which, if adversely
determined, could, individually or in the aggregate, result in a
Material Adverse Effect.
(b) Neither the Company nor any of the Subsidiaries is in
violation of any law, rule or regulation, or in default with respect
to any judgment, writ, injunction or decree of any Governmental
Authority, where such violation or default could result in a Material
Adverse Effect.
Agreements. (a) As of the Effective Date, neither the Company
nor any of the Subsidiaries is a party to any agreement or instrument
or subject to any corporate restriction that has resulted or could
result in a Material Adverse Effect.
(a) Neither the Company nor any of the Subsidiaries is in default
in any manner under any provision of any indenture or other agreement
or instrument evidencing Indebtedness, or any other material agreement
or instrument to which it is a party or by which it or any of its
properties or assets are or may be bound, where such default could
result in a Material Adverse Effect.
(b) Except as set forth in Schedule 3.10, neither the Company nor
any Subsidiary is a party to or is bound by the terms of (i) any
indenture or other agreement or instrument evidencing Indebtedness or
(ii) any certificate of designation or other certificate, agreement or
instrument relating to any capital stock, in either case which
contains a provision granting the holders thereof the right to require
the Company or any Subsidiary to buy all or any part of such
Indebtedness or capital stock (or any other provision having
substantially the same effect) other than sinking fund and conversion
provisions and provisions requiring repayment upon default.
Federal Reserve Regulations. The making of the Loans hereunder
and the use of the proceeds thereof as contemplated hereby will not
violate or be inconsistent with Regulation G, U or X.
Investment Company Act; Public Utility Holding Company Act.
Neither the Company nor any Subsidiary is (a) an "investment company"
as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (b) a "holding company" as defined in, or subject to
regulation under, the Public Utility Holding Company Act of 1935.
Tax Returns. The Company and each Subsidiary has filed or
caused to be filed all Federal, state and local tax returns required
to have been filed by it and has paid or caused to be paid all taxes
shown to be due and payable on such returns or on any assessments
received by it, except taxes that are being contested in accordance
with Section 5.3.
Employee Benefit Plans. The Company and each of its ERISA
Affiliates is in compliance in all material respects with the
applicable provisions of ERISA and the regulations and published
interpretations thereunder. No Reportable Event has occurred as to
which the Company or any ERISA Affiliate was required to file a
report with the PBGC, and the present value of all benefit
liabilities under each Plan (based on those assumptions used to fund
such Plan) did not, as of the last annual valuation date applicable
thereto, exceed by a material amount the value of the assets of such
Plan. Neither the Company nor any ERISA Affiliate has incurred any
Withdrawal Liability that materially adversely affects the financial
condition of the Company and its ERISA Affiliates taken as a whole.
Neither the Company nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization or has
been terminated, within the meaning of Title IV of ERISA, and no
Multiemployer Plan is reasonably expected to be in reorganization or
to be terminated, where such reorganization has resulted or can
reasonably be expected to result in an increase in the contributions
required to be made to such Plan that would materially and adversely
affect the financial condition of the Company and its ERISA
Affiliates taken as a whole.
No Material Misstatements. No information, report, financial
statement, exhibit or schedule furnished by or on behalf of the
Company to the Agent or any Bank in connection with the negotiation
of any Loan Document or included therein or delivered pursuant
thereto contained, contains or will contain any material misstatement
of fact or omitted, omits or will omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were, are or will be made, not
misleading.
CONDITIONS OF LENDING
Conditions to Initial Loans. The effectiveness of this Agreement
and the obligation of each Bank to make its initial Loan hereunder is
subject to the satisfaction of the following conditions precedent:
(a) The Agent shall have received one or more counterparts of
this Agreement, executed by a duly authorized officer of each
party hereto.
(b) The Agent shall have received for the account of each Bank
a Standby Note and a Competitive Note (which, in the case of
each Existing Bank, shall be delivered in exchange for such
Existing Bank's Notes issued under the Existing Credit
Agreement) conforming to the requirements hereof and executed by
a duly authorized officer of the Company, and the Agent shall
promptly forward such new Notes to the appropriate Banks and
return the old Notes to the Company.
(c) The Agent shall have received, with a counterpart for each
Bank, a certificate of the Secretary or Assistant Secretary of
the Company dated the Effective Date, substantially in the form
of Exhibit E with appropriate insertions and attachments.
(d) The Agent shall have received, with a copy for each Bank,
an opinion of the General Counsel to the Company with respect to
paragraphs 1 through 3 and 5 through 9 of Exhibit G and of
Cravath, Swaine & Moore with respect to paragraph 4 of Exhibit
G, each dated the Effective Date and addressed to the Agent and
the Banks, covering the matters set forth in Exhibit G. Such
opinion of the General Counsel to the Company shall also cover
such other matters incident to the transactions contemplated by
this Agreement as the Agent shall reasonably require.
(e) The Agent shall have received an opinion of Davis Polk &
Wardwell, special counsel to the Agent, substantially in the
form of Exhibit H hereto and covering such other matters
incident to the transactions contemplated by this Agreement as
the Agent shall reasonably require.
(f) The Agent shall have received all fees, if any, owing
pursuant to Section 2.5.
The Agent shall have received evidence satisfactory to it that
the commitments under the Existing Credit Agreement have
terminated, all loans thereunder have been repaid in full and
all accrued interest and fees and other amounts payable
thereunder have been paid in full.
(h) All other documents and legal matters in connection with the
transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Agent and its counsel.
Conditions to Each Loan. The obligations of each of the Banks
to make Loans on the date of each Borrowing hereunder, including the
initial Loans and each refinancing of any Loan with a new Loan as
contemplated by Section 2.4, shall be subject to the following
conditions precedent:
(a) The Agent shall have received a notice of such Borrowing as
required by Section 2.2 or Section 2.3, as applicable.
(b) The representations and warranties set forth in Article III
shall be true and correct in all material respects on and as of
the date of such Borrowing with the same effect as if made on
and as of such date, except to the extent that such
representations and warranties expressly relate to an earlier
date.
(c) The Company shall be in compliance with all the terms and
provisions set forth herein on its part to be observed or
performed, and immediately before and after such borrowing no
Event of Default or event which upon notice or lapse of time or
both would constitute an Event of Default (a "Default") shall
have occurred and be continuing.
The occurrence of the Effective Date and each Borrowing hereunder
shall be deemed to be a representation and warranty by the Company on
the date of such Borrowing as to the matters specified in paragraphs
(b) and (c) of this Section 4.2.
AFFIRMATIVE COVENANTS
The Company covenants and agrees with the Agent and each Bank
that so long as this Agreement shall remain in effect or the
principal of or interest on any Loan, any fees or any other expenses
or amounts payable under any Loan Document shall be unpaid, unless
the Required Banks shall otherwise consent in writing, the Company
will, and will cause each of the Subsidiaries to:
Existence; Businesses and Properties. (a) Do or cause to be done
all things necessary to preserve, renew and keep in full force and
effect its legal existence, except as otherwise expressly permitted
under Section 6.3.
(a) Do or cause to be done all things necessary to obtain,
preserve, renew, extend and keep in full force and effect the rights,
licenses, permits, franchises, authorizations, patents, copyrights,
trademarks and trade names material to the conduct of its business;
maintain and operate such business in substantially the manner in
which it is presently conducted and operated; comply in all material
respects with all applicable laws, rules, regulations and orders of
any Governmental Authority, whether now in effect or hereafter
enacted; and at all times maintain and preserve all property material
to the conduct of such business and keep such property in good
repair, working order and condition and from time to time make, or
cause to be made, all needful and proper repairs, renewals, addi
tions, improvements and replacements thereto necessary in order that
the business carried on in connection therewith may be properly
conducted at all times.
Insurance. Keep its insurable properties adequately insured at all
times by financially sound and reputable insurers; maintain such
other insurance, to such extent and against such risks, including
fire and other risks insured against by extended coverage, as is
customary with companies in the same or similar businesses, including
public liability insurance against claims for personal injury or
death or property damage occurring upon, in, about or in connection
with the use of any properties owned, occupied or controlled by it;
and maintain such other insurance as may be required by law.
Obligations and Taxes. Pay its Indebtedness and other obligations
promptly and in accordance with their terms and pay and discharge
promptly all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its
property, before the same shall become delinquent or in default, as
well as all lawful claims for labor, materials and supplies or
otherwise which, if unpaid, might give rise to a Lien upon such
properties or any part thereof; provided, however, that such payment
and discharge shall not be required with respect to any such tax,
assessment, charge, levy or claim so long as the validity or amount
thereof shall be contested in good faith by appropriate proceedings
and the Company or such Subsidiary shall, to the extent required by
GAAP applied on a consistent basis, set aside on its books adequate
reserves with respect thereto.
V.4. Financial Statements, Reports, etc. In the case of the
Company, furnish to the Agent and each Bank:
(a) within 90 days after the end of each fiscal year, its
Consolidated statements of financial position and related
statements of earnings and cash flows, showing the financial
condition of the Company and its Consolidated Subsidiaries as of
the close of such fiscal year and the results of its operations
and the operations of such Subsidiaries during such year, all
audited by Arthur Andersen & Co. or other independent public
accountants of recognized national standing acceptable to the
Required Banks and accompanied by an opinion of such accountants
(which shall not be qualified in any material respect except
with the consent of the Required Banks) to the effect that such
Consolidated financial statements fairly present the financial
condition and results of operations of the Company on a
Consolidated basis in accordance with GAAP consistently applied;
(b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, its Consolidated statements
of financial position and related statements of earnings and
cash flows, showing the financial condition of the Company and
its Consolidated Subsidiaries as of the close of such fiscal
quarter and the results of its operations and the operations of
such Subsidiaries during such fiscal quarter and the then
elapsed portion of the fiscal year, all certified by one of its
Financial Officers as fairly presenting the financial condition
and results of operations of the Company on a Consolidated basis
in accordance with GAAP consistently applied, subject to normal
year-end audit adjustments;
(c) concurrently with any delivery of financial statements
under paragraph (a) or (b) above, a certificate of the
accounting firm or Financial Officer opining on or certifying
such statements (which certificate, when furnished by an
accounting firm, may be limited to accounting matters and
disclaim responsibility for legal interpretations) (i)
certifying that no Event of Default or Default has occurred or,
if such an Event of Default or Default has occurred, specifying
the nature and extent thereof and any corrective action taken or
proposed to be taken with respect thereto and (ii) setting forth
computations in reasonable detail satisfactory to the Agent
demonstrating compliance with the covenants contained in Sec
tions 6.6 and 6.7;
(d) promptly after the occurrence of any event or condition
which makes the information thereon inaccurate, incomplete or
untrue, an update to Schedule 3.8;
(e) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other
materials filed by it with the Securities and Exchange
Commission, or any governmental authority succeeding to any of
or all the functions of such Commission, or with any national
securities exchange, or distributed to its shareholders, as the
case may be; and
(f) promptly, from time to time, such other information
regarding the operations, business affairs and financial
condition of the Company or any Subsidiary, or compliance with
the terms of any Loan Document, as the Agent may reasonably
request.
Litigation and Other Notices. Furnish to the Agent and each Bank
prompt written notice of the following:
(a) any Default or Event of Default, specifying the nature and
extent thereof and the corrective action (if any) proposed to be
taken with respect thereto;
(b) the filing or commencement of, or any threat or notice of
intention of any person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any
Governmental Authority, against the Company or any Affiliate
thereof which, if adversely determined, could result in a
Material Adverse Effect; and
(c) any development that has resulted in, or could reasonably be
anticipated to result in, a Material Adverse Effect.
ERISA. (a) Comply in all material respects with the applicable
provisions of ERISA and (b) furnish to the Agent (i) as soon as
possible, and in any event within 30 days after any Responsible
Officer of the Company or any ERISA Affiliate knows or has reason to
know that any Reportable Event has occurred that alone or together
with any other Reportable Event could reasonably be expected to
result in liability of the Company to the PBGC in an aggregate amount
exceeding $1,500,000, a statement of a Financial Officer of the
Company setting forth details as to such Reportable Event and the
action that the Company proposes to take with respect thereto,
together with a copy of the notice of such Reportable Event, if any,
given to the PBGC, (ii) promptly after receipt thereof, a copy of any
notice the Company or any ERISA Affiliate may receive from the PBGC
relating to the intention of the PBGC to terminate any Plan or Plans
(other than a Plan maintained by an ERISA Affiliate which is
considered an ERISA Affiliate only pursuant to subsection (m) or (o)
of Code Section 414) or to appoint a trustee to administer any such
Plan, (iii) within 10 days after a filing with the PBGC pursuant to
Section 412(n) of the Code of a notice of failure to make a required
installment or other payment with respect to a Plan, a statement of a
Financial Officer of the Company setting forth details as to such
failure and the action that the Company proposed to take with respect
thereto, together with a copy of such notice given to the PBGC and
(iv) promptly and in any event within 30 days after receipt thereof
by the Company or any ERISA Affiliate from the sponsor of a
Multiemployer Plan, a copy of each notice received by the Company or
any ERISA Affiliate concerning (A) the imposition of Withdrawal
Liability by a Multiemployer Plan in an amount exceeding $7,500,000
or (B) a determination that a Multiemployer Plan is, or is expected
to be, terminated or in reorganization, both within the meaning of
Title IV of ERISA, and which, in each case, is expected to result in
an increase in annual contributions of the Company or an ERISA
Affiliate to such Multiemployer Plan in an amount exceeding
$1,500,000.
Maintaining Records; Access to Properties and Inspections. Maintain
all financial records in accordance with GAAP and permit any
representatives designated by the Agent or any Bank to visit and
inspect the financial records and the properties of the Company or
any Subsidiary at reasonable times and as often as requested and to
make extracts from and copies of such financial records, and permit
any representatives designated by any Agent or any Bank to discuss
the affairs, finances and condition of the Company or any Subsidiary
with the officers thereof and independent accountants therefor.
Use of Proceeds. Use the proceeds of the Loans for its general
corporate purposes.
Compliance with Laws. (a) Comply with all applicable laws,
statutes, rules and regulations (including, without limitation, all
applicable Environmental Laws) and obtain and comply in all material
respects with and maintain any and all licenses, approvals,
notifications, registrations or permits required by applicable laws,
statutes, rules and regulations (including, without limitation, all
applicable Environmental Laws) except to the extent that failure to
do so could not be reasonably expected to have a Material Adverse
Effect.
(b) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions, if any,
required under applicable Environmental Laws and promptly comply in
all material respects with all lawful orders and directives of all
Governmental Authorities regarding, in any such case, Environmental
Laws except to the extent that, in any such case, the same are being
contested in good faith by appropriate proceedings and the pendency
of such proceedings could not be reasonably expected to have a
Material Adverse Effect.
NEGATIVE COVENANTS
The Company covenants and agrees with the Agent and each Bank
that, so long as this Agreement shall remain in effect or the
principal of or interest on any Loan, any fees or any other expenses
or amounts payable under any Loan Document shall be unpaid, unless
the Required Banks shall otherwise consent in writing, the Company
will not, and will not cause or permit any of the Subsidiaries to:
Negative Pledge. Create, incur, assume or permit to exist any Lien
on any property or assets (including stock or other securities of
Subsidiaries) now owned or hereafter acquired by it or on any income
or rights in respect of any thereof, except:
(a) Liens securing Indebtedness (other than Indebtedness
described in clauses (b) through (k) below) to the extent and
only to the extent that the aggregate amount of Priority
Indebtedness shall not exceed $200,000,000 at any time;
(b) Liens (including deposits) in connection with or to secure
performance of bids, tenders, contracts (other than contracts
creating or evidencing or executed in connection with the
incurrence of Indebtedness) or leases (other than Capital Lease
Obligations) or to secure statutory obligations, surety or
appeal bonds or indemnity, performance or similar bonds;
(c) any Lien existing on any property or asset prior to the
acquisition thereof by the Company or any Subsidiary; provided,
however, that (i) such Lien is not created in contemplation of
or in connection with such acquisition and (ii) such Lien does
not apply to any other property or assets of the Company or any
subsidiary;
(d) Liens for taxes not yet due or which are being contested in
compliance with Section 5.3;
(e) carriers', warehousemen's, mechanic's, materialmen's,
repairmen's or other like Liens arising in the ordinary course
of business and securing obligations which are not due or which
are being contested in compliance with Section 5.3;
(f) pledges and deposits and other liens made in the ordinary
course of business in compliance with workmen's compensation,
unemployment insurance and other social security laws or
regulations;
(g) zoning restrictions, easements, rights-of-way restrictions
on use of real property and other similar encumbrances incurred
in the ordinary course of business which, in the aggregate, are
not substantial in amount and do not materially detract from the
value of the real property subject thereto or interfere with the
ordinary conduct of the business of the Company or any of the
Subsidiaries;
(h) Liens (including deposits) in connection with
self-insurance;
(i) judgment or other similar Liens in connection with legal
proceedings in an aggregate principal amount (net of amounts for
which relevant insurance providers have delivered written
acknowledgements of coverage) not to exceed $125,000,000,
provided that the execution or other enforcement of such liens
is effectively stayed and the claims secured thereby are being
actively contested in good faith by appropriate proceedings;
(j) Liens arising in connection with advances or progress
payments under government contracts; and
(k) Liens on assets of Subsidiaries securing Indebtedness
payable to the Company or any wholly owned Subsidiary.
Sale and Lease-Back Transactions. Enter into any arrangement,
directly or indirectly, with any person whereby it shall sell or
transfer any property, real or personal, used or useful in its
business, whether now owned or hereafter acquired, and thereafter
rent or lease such property or other property which it intends to use
for substantially the same purpose or purposes as the property being
sold or transferred (a "Sale and Lease-Back Transaction"), unless,
after giving effect to such Sale and Lease-Back Transaction, the
aggregate amount of Priority Indebtedness shall not exceed
$200,000,000, except that the Company or any Subsidiary may enter
into Sale and Lease-Back Transactions without restriction if the
equipment subject to such Sale and Lease-Back Transaction was
purchased by the Company or any Subsidiary within six months of the
date of such Sale and Leaseback Transaction; provided, however, that
an agreement characterized by the parties thereto as a lease solely
for income tax purposes and as to which such parties have elected to
have the provisions of the former Section 168(f)(8) of the Internal
Revenue Code of 1954 apply shall not be considered a Sale and
Lease-Back Transaction.
Mergers, Consolidations, and Sales of Assets. In the case of the
Company and any Significant Subsidiary, merge with or into or
consolidate with any other person, or sell, transfer, lease or
otherwise dispose of (in one transaction or in a series of
transactions) all or any substantial part of its assets (whether now
owned or hereafter acquired), except that (a) the Company and any
Significant Subsidiary may sell inventory or receivables in the
ordinary course of business and (b) if at the time thereof and
immediately after giving effect thereto no Event of Default or
Default has occurred and is continuing (i) any Significant Subsidiary
may merge with or into, or sell, transfer, lease or otherwise dispose
of all or any substantial part of its assets to the Company or a
wholly owned Subsidiary; provided, however, that such wholly owned
Subsidiary shall thereafter be deemed a Significant Subsidiary
hereunder and (ii) the Company or any Significant Subsidiary may
merge with or into or consolidate with any other person if the
surviving corporation in such merger or consolidation shall be the
Company or such Significant Subsidiary; provided, however, that in
each case under clause (b) above the Company shall have delivered to
the Banks a certificate of a Responsible Officer of the Company and
an opinion of counsel for the Company, each stating that such
consolidation, merger, sale, transfer, lease or other disposition
complies with this Section 6.3 and that all conditions precedent
herein provided for relating to such transaction have been complied
with.
Indebtedness if after giving effect thereto, Priority
Indebtedness would exceed $200,000,000.
Amendments of Certain Agreements. In any material respect, amend,
modify, supplement or waive any of the provisions of any instrument
evidencing or relating to any subordinated Indebtedness unless such
amendment, modification, supplement or waiver is approved in writing
by the Required Banks.
Tangible Net Worth. In the case of the Company, permit Tangible
Net Worth to be at any time less than the sum of (a) $775,000,000
plus (b) an amount equal to 25% of the sum of the amounts of
Consolidated Net Income for each of the fiscal quarters commencing
with and including the quarter ended June 30, 1996 to and including
the most recent fiscal quarter ended prior to the date on which the
calculation of Tangible Net Worth is made (without including any
fiscal quarter in which such Consolidated Net Income is a negative
number).
Leverage. In the case of the Company, permit the ratio of its
Consolidated Indebtedness to the sum of its Consolidated Indebtedness
and Tangible Net Worth to be at any time equal to or greater than
0.55 to 1.0.
Ownership of Significant Subsidiaries. Cease to maintain at any
time direct or indirect ownership of securities or other ownership
interests representing not less than the greater of (x) a majority of
the ordinary voting power of each Significant Subsidiary and (y) such
voting power as provides effective control of the policy and
direction of each Significant Subsidiary.
EVENTS OF DEFAULT
In case of the happening of any of the following events (herein
called "Events of Default"):
(a) any representation or warranty made, or deemed made, in or
in connection with any Loan Document or the borrowings
hereunder, or any representation, warranty, statement or
information contained in any report, certificate, financial
statement or other instrument furnished in connection with or
pursuant to any Loan Document, shall prove to have been false or
misleading in any material respect when so made, deemed made or
furnished;
(b) default shall be made in the payment of any principal of
any Loan when and as the same shall become due and payable,
whether at the due date thereof or at a date fixed for
prepayment thereof or by acceleration thereof or otherwise;
(c) default shall be made in the payment of any interest on any
Loan or any fee or any other amount (other than an amount
referred to in (b) above) due under any Loan Document, when and
as the same shall become due and payable, and such default shall
continue unremedied for a period of five Business Days;
(d) default shall be made in the due observance or performance
by the Company or any Subsidiary of any covenant, condition or
agreement contained in Section 5.5(a) or (b), Section 5.8 or
Article VI and such default shall continue unremedied for a
period of five Business Days after the earlier of (i) a Respon
sible Officer of the Company becoming aware thereof and (ii)
notice thereof from the Agent or any Bank to the Company;
(e) default shall be made in the due observance or performance
by the Company or any Subsidiary of any covenant, condition or
agreement contained in any Loan Document (other than those
specified in (b), (c) or (d) above) and such default shall
continue unremedied for a period of ten Business Days after
notice thereof from the Agent or any Bank to the Company;
(f) the Company or any Subsidiary shall (i) fail to pay any of
its Indebtedness in excess of $10,000,000 in the aggregate when
due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure shall
continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such Indebtedness, or
(ii) fail to observe or perform any term, covenant or condition
on its part to be observed or performed under any agreement or
instrument relating to any such Indebtedness, when required to
be observed or performed, and such failure shall continue after
the applicable grace period, if any, specified in such agreement
or instrument, if the effect of such failure is to accelerate,
or permit the acceleration of, the maturity of such Indebtedness
or such Indebtedness has been accelerated and such acceleration
has not been rescinded; or any amount of Indebtedness in excess
of $10,000,000 shall be required to be prepaid, defeased,
purchased or otherwise acquired by the Company or any Subsidiary
(other than by a regularly scheduled required prepayment), prior
to the stated maturity thereof;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of the Company or any
Subsidiary, or of a substantial part of the property or assets
of the Company or any Subsidiary, under Title 11 of the United
States Code, as now constituted or hereafter amended, or any
other Federal or state bankruptcy, insolvency, receivership or
similar law, (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the
Company or any Subsidiary, or for a substantial part of the
property or assets of the Company or a Subsidiary, or (iii) the
winding-up or liquidation of the Company or any Subsidiary; and
such proceeding or petition shall continue undismissed for 60
days, or an order or decree approving or ordering any of the
foregoing shall be entered;
(h) the Company or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief
under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other Federal or state bankruptcy,
insolvency, receivership or similar law, (ii) consent to the
institution of, or fail to contest in a timely and appropriate
manner, any proceeding or the filing of any petition described
in (g) above, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or
similar official for the Company or any Subsidiary, or for a
substantial part of the property or assets of the Company or any
subsidiary, (iv) file an answer admitting the material allega
tions of a petition filed against it in any such proceeding, (v)
make a general assignment for the benefit of creditors, (vi)
become unable, admit in writing its inability or fail generally
to pay its debts as they become due or (vii) take any action for
the purpose of effecting any of the foregoing;
(i) one or more judgments for the payment of money in an
aggregate amount in excess of $10,000,000 shall be rendered
against the Company, any Subsidiary or any combination thereof
and the same shall remain undischarged for a period of 30
consecutive days during which execution shall not be effectively
stayed;
(j) a Reportable Event or Reportable Events, or a failure to
make a required payment (within the meaning of Section
412(n)(1)(A) of the Code) shall have occurred with respect to any
Plan or Plans that reasonably could be expected to result in
liability of the Company to the PBGC or to a Plan in an aggregate
amount exceeding $7,500,000 and, within 30 days after the
reporting of any such Reportable Event to the Agent or after the
receipt by the Agent of the statement required pursuant to Sec
tion 5.6(b)(iii), the Agent shall have notified the Company in
writing that (i) the Required Banks have made a determination
that, on the basis of such Reportable Event or Reportable Events
or the failure to make a required payment, there are reasonable
grounds (A) for the termination of such Plan or Plans by the
PBGC, (B) for the appointment by the appropriate United States
District Court of a trustee to administer such Plan or Plans or
(C) for the imposition of a lien in favor of a Plan and (ii) as a
result thereof an Event of Default exists hereunder; or a trustee
shall be appointed by a United States District Court to
administer any such Plan or Plans; or the PBGC shall institute
proceedings to terminate any such Plan or Plans;
(k) the Company or any ERISA Affiliate shall have been notified by
the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan, (ii) the Company
or such ERISA Affiliate does not have reasonable grounds for
contesting such Withdrawal Liability and is not in fact
contesting such Withdrawal Liability in a timely and appropriate
manner, and (iii) the amount of such Withdrawal Liability
specified in such notice, when aggregated with all other amounts
required to be paid to Multiemployer Plans in connection with
Withdrawal Liabilities (determined as of the date or dates of
such notification), exceeds $7,500,000 or requires payments
exceeding $1,500,000 in any year;
(l) the Company or any ERISA Affiliate shall have been notified
by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the
meaning of Title IV of ERISA, if solely as a result of such
reorganization or termination the aggregate annual contributions
of the Company and its ERISA Affiliates to all Multiemployer
Plans that are then in reorganization or have been or are being
terminated have been or will be increased over the amounts
required to be contributed to such Multiemployer Plans for their
most recently completed plan years by an amount exceeding
$1,500,000; or
(m) a Change in Control shall occur; or a change in control
allowing the holders of debt securities of the Company to have
the right to cause the repurchase by the Company of their debt
securities (as described in any Prospectus Supplement related to
debt securities of the Company issued pursuant to the
Registration Statement filed with the Securities and Exchange
Commission on September 15, 1989) shall occur;
then, and in every such event (other than an event referred to in
paragraph (m) above or an event with respect to the Company described
in paragraph (g) or (h) above), and at any time thereafter during the
continuance of such event, the Agent may, and at the request of the
Required Banks shall, by notice to the Company, take either or both,
of the following actions, at the same or different times: (i)
terminate forthwith the Commitments and (ii) declare the Loans then
outstanding to be forthwith due and payable, whereupon the principal
of the Loans, together with accrued interest thereon and any unpaid
accrued fees and all other liabilities of the Company accrued
hereunder and under any other Loan Document, shall become forthwith
due and payable, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived by the
Company, anything contained herein or in any other Loan Document to
the contrary notwithstanding; and in any event referred to in
paragraph (m) above or any event with respect to the Company described
in paragraph (g) or (h) above, the Commitments shall automatically
terminate and the principal of the Loans then outstanding, together
with accrued interest thereon and any unpaid accrued fees and all
other liabilities of the Company accrued hereunder and under any other
Loan Document, shall automatically become due and payable, without
presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived by the Company, anything contained
herein or in any other Loan Document to the contrary notwithstanding.
THE AGENT
In order to expedite the transactions contemplated by this
Agreement, Morgan Guaranty Trust Company of New York is hereby
appointed to act as Agent on behalf of the Banks. Each of the Banks
and each holder of any Note by its acceptance thereof hereby
irrevocably authorizes the Agent to take such actions on behalf of
such Bank or holder and to exercise such powers as are specifically
delegated to the Agent by the terms and provisions hereof, together
with such actions and powers as are reasonably incidental thereto.
The Agent is hereby expressly authorized by the Banks, without hereby
limiting any implied authority, (a) to receive on behalf of the Banks
all payments of principal of and interest on the Loans and all other
amounts due to the Banks hereunder and promptly to distribute to each
Bank its proper share of each payment so received; (b) to give notice
on behalf of each of the Banks to the Company of any Event of Default
of which the Agent has actual knowledge acquired in connection with
its agency hereunder; and (c) to distribute to each Bank copies of all
notices, financial statements and other materials delivered by the
Company pursuant to this Agreement as received by the Agent.
Neither the Agent nor any of its directors, officers, employees
or agents shall be liable as such for any action taken or omitted by
any of them except for its or his own gross negligence or wilful
misconduct, or be responsible for any statement, warranty or
representation herein or the contents of any document delivered in
connection herewith, or be required to ascertain or to make any
inquiry concerning the performance or observance by the Company of any
of the terms, conditions, covenants or agreements contained in any
Loan Document. The Agent shall not be responsible to the Banks or the
holders of the Notes for the due execution, genuineness, validity,
enforceability or effectiveness of this Agreement, the Notes or any
other Loan Documents or other instruments or agreements. The Agent
may deem and treat the payee of any Note as the owner thereof for all
purposes hereof until it shall have received from the payee of such
Note notice, given as provided herein, of the transfer thereof. The
Agent shall in all cases be fully protected in acting, or refraining
from acting, in accordance with written instructions signed by the
Required Banks and, except as otherwise specifically provided herein,
such instructions and any action or inaction pursuant thereto shall be
binding on all the Banks and each subsequent holder of any Note. The
Agent shall, in the absence of knowledge to the contrary, be entitled
to rely on any instrument or document believed by it in good faith to
be genuine and correct and to have been signed or sent by the proper
person or persons. Neither the Agent nor any of its directors,
officers, employees or agents shall have any responsibility to the
Company on account of the failure of or delay in performance or breach
by any Bank of any of its obligations hereunder or to any Bank on
account of the failure of or delay in performance or breach by any
other Bank or the Company of any of their respective obligations
hereunder or under any other Loan Document or in connection herewith
or therewith. The Agent may execute any and all duties hereunder by
or through agents or employees and shall be entitled to rely upon the
advice of legal counsel selected by it with respect to all matters
arising hereunder and shall not be liable for any action taken or
suffered in good faith by it in accordance with the advice of such
counsel.
The Banks hereby acknowledge that the Agent shall be under no
duty to take any discretionary action permitted to be taken by it
pursuant to the provisions of this Agreement unless it shall be
requested in writing to do so by the Required Banks.
Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by notifying the
Banks and the Company. Upon any such resignation, the Required Banks
shall have the right to appoint a successor. Upon the acceptance of
any appointment as the Agent hereunder by a successor agent, such
successor shall succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent and the retiring
Agent shall be discharged from its duties and obligations hereunder.
After an Agent's resignation hereunder, the provisions of this Article
and Section 9.5 shall continue in effect for its benefit in respect of
any actions taken or omitted to be taken by it while it was acting as
Agent.
With respect to the Loans made by it hereunder and the Notes
issued to it, the Agent in its individual capacity and not as Agent
shall have the same rights and powers as any other Bank and may
exercise the same as though it were not the Agent, and the Agent and
its Affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Company or any Subsidiary or
other Affiliate thereof as if it were not the Agent.
Each Bank agrees (i) to reimburse the Agent, on demand, in the
amount of its pro rata share (based on its Commitment hereunder at the
time of the event giving rise to such reimbursement, or if at such
time the Commitments have been terminated, based on its then
outstanding Loans) of any expenses incurred for the benefit of the
Banks by the Agent, including counsel fees and compensation of agents
and employees paid for services rendered on behalf of the Banks, which
shall not have been reimbursed by the Company and (ii) to indemnify
and hold harmless the Agent and any of its directors, officers,
employees or agents, on demand, in the amount of such pro rata share,
from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against it in its capacity as Agent or any
of them in any way relating to or arising out of this Agreement or any
other Loan Document or any action taken or omitted by it or any of
them under this Agreement or any other Loan Document, to the extent
the same shall not have been reimbursed by the Company; provided,
however, that no Bank shall be liable to the Agent for any portion of
such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the
gross negligence or wilful misconduct of the Agent or any of its
directors, officers, employees or agents.
Each Bank acknowledges that it has, independently and without
reliance upon the Agent or any other Bank and based on such documents
and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon the
Agent or any other Bank and based on such documents and information as
it shall from time to time deem appropriate, continue to make its own
decisions in taking or not taking action under or based upon this
Agreement or any other Loan Document, any related agreement or any
document furnished hereunder or thereunder.
MISCELLANEOUS
Notices. Notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight
courier service, mailed or sent by telecopy, graphic scanning or other
telegraphic communications equipment of the sending party, as follows:
(a) if to the Company, to it at Cummins Engine Company, Inc.,
500 Jackson Street, Box 3005, Columbus, Indiana 47202-3005,
Attention: Vice President-Treasurer (Telephone No. (812) 377-
3275; Telecopy No. (812) 377-1087);
(b) if to the Agent, to it at Morgan Guaranty Trust Company, 60
Wall Street, New York, New York 10260, Attention of Doug
Cruikshank (Telephone No. (212) 648-3887; Telecopy No. (212) 648-
5336); and
(c) if to a Bank, to it at its address (or telecopy number) set
forth in Schedule I.
All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to
have been given on the date of receipt if delivered by hand or
overnight courier service or if sent by telecopier, graphic scanning
or other telegraphic communications equipment of the sender, or on the
date five Business Days after dispatch by certified or registered mail
if mailed, in each case delivered, sent or mailed (properly addressed)
to such party as provided in this Section 9.1 or in accordance with
the latest unrevoked direction from such party given in accordance
with this Section 9.1.
Survival of Agreement. All covenants, agreements, representations
and warranties made by the Company herein and in the certificates or
other instruments prepared or delivered in connection with or pursuant
to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Agent and the Banks and shall survive the
making by the Banks of the Loans and the execution and delivery to the
Banks of the Notes evidencing such Loans, regardless of any
investigation made by the Agent or the Banks or on their behalf, and
shall continue in full force and effect as long as the principal of or
any accrued interest on any Loan or any fee or any other amount
payable under this Agreement or any other Loan Document is outstanding
and unpaid and so long as the Commitments have not been terminated.
Binding Effect. This Agreement shall become effective as of the
Effective Date when it shall have been executed by the Company and the
Agent and when the Agent shall have received copies hereof which, when
taken together, bear the signatures of each Bank, and thereafter shall
be binding upon and inure to the benefit of the Company, the Agent and
each Bank and their respective successors and permitted assigns.
Successors and Assigns; Participations. (a) Whenever in this
Agreement any of the parties hereto is referred to, such reference
shall be deemed to include the successors and permitted assigns of
such party; and all covenants, promises and agreements by or on behalf
of the Company or the Banks that are contained in this Agreement shall
bind and inure to the benefit of their respective successors and
permitted assigns. The Company may not assign or transfer any of its
rights or obligations hereunder without the prior written consent of
all the Banks, except that the Company may assign its rights and
obligations hereunder to the surviving corporation in a transaction
permitted under Section 6.3(b)(ii) without the prior written consent
of all the Banks.
(a) Each Bank may without the consent of the Company sell
participations to one or more banks or other entities in all or a
portion of its rights and obligations under this Agreement (including
all or a portion of its Commitment and the same portion of the Loans
owing to it and the Note or Notes held by it); provided, however, that
(i) such Bank's obligations under this Agreement shall remain
unchanged, (ii) such Bank shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) the
participating banks or other entities shall be entitled to the cost
protection provisions contained in Section 2.13 and Section 2.15 and
(iv) the Company, the Agent and the other Banks shall continue to deal
solely and directly with such Bank in connection with such Bank's
rights and obligations under this Agreement; provided, however, that
each Bank shall retain the sole right and responsibility to enforce
the obligations of the Company relating to the Loans, including the
right to approve any amendment, modification or waiver of any provi
sion of this Agreement other than amendments, modifications or waivers
with respect to any fees payable hereunder or the amount of principal
or the rate of interest payable on, or the dates fixed for any payment
of principal of or interest on, the Loans.
(b) Each Bank may without the consent of the Company assign to
an Affiliate of such Bank and, with the consent of the Company to
another Bank or one or more additional banks or financial institutions
(each, an "Eligible Assignee"), all or a portion of its interests,
rights and obligations under this Agreement (including all or a
portion of its Commitment and the same portion of the Loans at the
time owing to it and the Note or Notes held by it); provided, however,
that (i) each such assignment shall be of a constant, and not a
varying, percentage of all the assigning Bank's rights and obligations
under this Agreement, (ii) in the case of a partial assignment, unless
otherwise agreed to by the Company, the amount of the Commitment of
the assigning Bank after giving effect to such assignment (determined
as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Agent) shall be in a minimum principal
amount of $10,000,000 and an integral multiple of $1,000,000, (iii)
unless otherwise agreed to by the Company, the amount of the Commit
ment assigned to the assignee Bank shall be in a minimum principal
amount of $10,000,000 and an integral multiple of $1,000,000 and (iv)
the parties to each such assignment shall execute and deliver to the
Agent, for its acceptance and recording in the Register, an Assignment
and Acceptance in the form of Exhibit F, together with any Standby
Note or Standby Notes subject to such assignment and the assigning
Bank shall deliver a processing and recordation fee of $2,500 to the
Agent in connection therewith; provided, further, that if the Company
has reduced the Total Commitment pursuant to Section 2.6 hereof, the
minimum principal amount described in each of clause (ii) and (iii)
above shall also be reduced to an amount equal to 3-1/3% of the Total
Commitment at the time of any such assignment, rounded to the nearest
integral multiple of $1,000,000. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at
least five Business Days after the execution thereof (unless otherwise
agreed to by the Agent, the assignor Bank and the assignee Bank), (x)
the Eligible Assignee thereunder shall be a party hereto and, to the
extent provided in such Assignment and Acceptance, have the rights and
obligations of a Bank hereunder and (y) the assignor Bank thereunder
shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case
of an Assignment and Acceptance covering all or the remaining portion
of an assigning Bank's rights and obligations under this Agreement,
such assigning Bank shall cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance,
the Bank assignor thereunder and the Eligible Assignee confirm to and
agree with each other and the other parties hereto as follows: (i)
other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned thereby free and clear
of any adverse claim, such Bank assignor makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other
instrument or document furnished pursuant hereto; (ii) such Bank
assignor makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Company
or the performance or observance of its obligation under this
Agreement or any other instrument or document furnished pursuant
hereto or thereto; (iii) such Eligible Assignee confirms that it has
received a copy of this Agreement together with copies of the most
recent financial statements delivered pursuant to Section 3.5 or 5.4
and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such Eligible Assignee will,
independently and without reliance upon the Agent, such Bank assignor
or any other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement; (v)
such Eligible Assignee appoints and authorizes the Agent to take such
action as the Agent on its behalf and to exercise such powers under
this Agreement as are delegated to the Agent by the terms hereof,
together with such powers as are reasonably incidental thereto; (vi)
such Eligible Assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Bank and (vii) such
Eligible Assignee confirms that it is an Eligible Assignee as defined
above.
(d) The Agent shall maintain at its offices in New York City a
copy of each Assignment and Acceptance delivered to it and a register
for the recordation of the names and addresses of the Banks and the
Commitment of, and principal amount of the Loans owing to, each Bank
from time to time (the "Register"). The entries in the Register shall
be conclusive, in the absence of manifest error, and the Company, the
Agent and the Banks may treat each person whose name is recorded in
the Register as a Bank hereunder for all purposes of this Agreement.
The Register shall be available for inspection by the Company or any
Bank at any reasonable time and from time to time upon reasonable
prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by
an assigning Bank and an Eligible Assignee together with any Standby
Note or Standby Notes subject to such assignment, the written consent
of the Company to such assignment (if required hereby) and the fee
referred to in paragraph (c) above, the Agent shall, if such
Assignment and Acceptance has been completed and is precisely in the
form of Exhibit F hereto, (i) accept such Assignment and Acceptance,
(ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Banks and the Company. Within
five Business Days after receipt of such notice, the Company, at its
own expense, shall execute and deliver to the Agent in exchange for
the surrendered Standby Note or Standby Notes (x) a new Competitive
Note to the order of such Eligible Assignee in an amount equal to the
Total Commitment, and a new Standby Note or Standby Notes to the order
of such Eligible Assignee in an amount equal to its portion of the
Commitment assumed by it pursuant to such Assignment and Acceptance
and (y), if the assigning Bank has retained any Commitment hereunder,
a new Standby Note or Standby Notes to the order of the assigning Bank
in an amount equal to the Commitment retained by it hereunder. Such
new Standby Note or Standby Notes shall be in an aggregate principal
amount equal to the aggregate principal amount of such surrendered
Standby Note or Standby Notes and such new Standby Notes and
Competitive Note shall be dated the effective date of such Assignment
and Acceptance and shall otherwise be in substantially the form of
Exhibit D-1 or D-2, as applicable, hereto. Canceled Standby Notes
shall be returned to the Company.
(f) Subject to Section 9.11 hereof, any Bank may, in connection
with any assignment or participation or proposed assignment or
participation pursuant to this Section 9.4, disclose to the assignee
or participant or proposed assignee or participant, any information
relating to the Company or the Subsidiaries furnished to such Bank by
or on behalf of the Company; provided, however, that prior to any such
disclosure, each such assignee or participant or proposed assignee or
participant shall agree to preserve the confidentiality of any
confidential information relating to the Company or the Subsidiaries
received from such Bank.
(g) Nothing herein shall prohibit any Bank from pledging or
assigning any Note to any Federal Reserve Bank in accordance with
applicable law.
Expenses; Indemnity. (a) The Company agrees to pay all
out-of-pocket expenses incurred by the Agent in connection with the
preparation of this Agreement and the other Loan Documents or in
connection with any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions hereby
contemplated shall be consummated) or incurred by the Agent or any
Bank in connection with the enforcement or protection of their rights
in connection with this Agreement and the other Loan Documents or in
connection with the Loans made or the Notes issued hereunder,
including the reasonable fees and disbursements of Davis Polk &
Wardwell, counsel for the Agent, and, in connection with any such
amendment, modification or waiver or any such enforcement or
protection, the fees and disbursements of any other counsel for the
Agent or any Bank. The Company further agrees that it shall indemnify
the Agent and the Banks from and hold them harmless against any
documentary taxes, assessments or charges made by any Governmental
Authority by reason of the execution and delivery of this Agreement or
any of the other Loan Documents.
(a) The Company agrees to indemnify each Agent, each Bank
and its directors, officers, employees and agents (each such person
being called an "indemnitee") against, and to hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and
related expenses, including reasonable counsel fees and expenses,
incurred by or asserted against any Indemnitee arising out of, in any
way connected with, or as a result of (i) the execution or delivery of
this Agreement or any other Loan Document or any agreement or
instrument contemplated thereby, the performance by the parties
thereto of their respective obligations thereunder or the consummation
of the transactions contemplated thereby, including, without
limitation, any of the foregoing losses relating to the violation of,
noncompliance with or liability under, any Environmental Law
applicable to the operations of the Company or any of its
Subsidiaries, (ii) the use of the proceeds of the Loans or (iii) any
claim, litigation, investigation or proceeding relating to any of the
foregoing, whether or not any Indemnitee is a party thereto; provided,
however, that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities
or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or wilful misconduct of such Indemnitee.
(b) The provisions of this Section 9.5 shall remain operative
and in full force and effect regardless of the expiration of the term
of this Agreement, the consummation of the transactions contemplated
hereby, the repayment of any of the Loans, the invalidity or
unenforceability of any term or provision of this Agreement or any
other Loan Document or any investigation made by or on behalf of the
Agent or any Bank. All amounts due under this Section 9.5 shall be
payable on written demand therefor.
Right of Setoff. If an Event of Default shall have occurred and
be continuing and any Bank shall have requested the Agent to declare
the Loans immediately due and payable pursuant to Article VII, each
Bank, and each bank which is an Affiliate of such Bank, is hereby
authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Bank or Affiliate to or
for the credit or the account of the Company against any of and all
the obligations of the Company now or hereafter existing under this
Agreement and other Loan Documents held by such Bank, irrespective of
whether or not such Bank shall have made any demand under this
Agreement or such other Loan Document and although such obligations
may be unmatured. The rights of each Bank under this Section 9.6 are
in addition to other rights and remedies (including other rights of
setoff) which such Bank may have.
Applicable Law. THIS AGREEMENT, THE NOTES AND THE OTHER LOAN
DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK.
Waivers; Amendments. (a) No failure or delay of the Agent or any
Bank in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such
right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and
remedies of the Agent and the Banks hereunder and under the other Loan
Documents are cumulative and exclusive of any rights or remedies which
they would otherwise have. No waiver of any provision of this Agree
ment or any other Loan Document or consent to any departure by the
Company therefrom shall in any event be effective unless the same
shall be permitted by paragraph (b) below, and then such waiver or
consent shall be effective only in the specific instance and for the
purpose for which given. No notice or demand on the Company in any
case shall entitle the Company to any other or further notice or
demand in similar or other circumstances. Each holder of any of the
Notes shall be bound by any amendment, modification, waiver or consent
authorized as provided herein, whether or not such Note shall have
been marked to indicate such amendment, modification, waiver or
consent.
(a) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or
agreements in writing entered into by the Company and the Required
Banks; provided, however, that no such agreement shall (i) change the
principal amount of, or extend or advance the maturity of or any date
for the payment of any principal of or interest on, any Loan, or waive
or excuse any such payment or any part thereof, or change the rate of
interest on any Loan, without the prior written consent of each holder
of a Note affected thereby, (ii) change the Commitment of any Bank or
the Facility Fees of any Bank without the prior written consent of
such Bank, (iii) amend or modify the provisions of Section 2.16, the
provisions of this Section 9.8 or the definition of the "Required
Banks", or (iv) waive any of the conditions specified in Section 4.1
or 4.2, without the prior written consent of each Bank; provided
further, however, that no such agreement shall amend, modify or
otherwise affect the rights or duties of the Agent hereunder without
the prior written consent of the Agent. Each Bank and each holder of
a Note shall be bound by any modification or amendment authorized by
this Section 9.8 regardless of whether its Note shall have been marked
to make reference thereto, and any consent by any Bank or holder of a
Note pursuant to this Section 9.8 shall bind any person subsequently
acquiring a Note from it, whether or not such Note shall have been so
marked.
Waiver of Jury Trial, etc. (a) Except as prohibited by law, each
party hereto hereby waives any right it may have to a trial by jury in
respect of any litigation directly or indirectly arising out of, under
or in connection with this Agreement, any document or agreement
entered into in connection herewith and any of the transactions
contemplated hereby or thereby.
Except as prohibited by law, each party hereto hereby waives any
right it may have to claim or recover in any litigation referred to in
paragraph (a) of this Section 9.9 any special, indirect, exemplary,
punitive or consequential damages or any damages other than, or in
addition to, actual damages.
(b) Each party hereto (i) certifies that no representative,
agent or attorney of any other party has represented to it, expressly
or otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waivers and (ii)
acknowledges that it and the other parties hereto have been induced to
enter into this Agreement and the other Loan Documents, as applicable,
by, among other things, the mutual waivers and certifications in this
Section 9.9.
Jurisdiction; Consent to Service of Process. (a) The Company hereby
irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court sitting in New
York City or Federal court of the United States of America sitting in New
York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents, or for recognition or enforcement of any judgment, and each of
the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement shall affect any right
that any Agent or Bank may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against the Company
or its properties in the courts of any jurisdiction.
(a) The Company hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents in any New York State or Federal court. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law,
the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(b) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.1. Nothing in this
Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
Confidentiality. Unless otherwise required by applicable law, rule or
regulation, order of any court or administrative agency, or otherwise by
any governmental or regulatory authority, each of the Banks and the Agent
agrees to maintain the confidentiality, in its communications with third
parties and otherwise, of any information regarding the Company or its
Subsidiaries obtained in connection with this Agreement which has been
identified by the Company to the Banks and the Agent as confidential in
nature (the "Confidential Material"); provided, however, that the
Confidential Material may be disclosed to third parties to the extent such
disclosure is (i) to a rating agency, (ii) required in connection with the
exercise of any remedy hereunder or under any related documents,
instruments and agreements, or (iii) to any actual or proposed participant
or assignee of all or part of its rights hereunder, in each case which has
agreed in writing to be bound by the provisions of this Section; provided
further, however, that the Agreement may be disclosed to each Bank's and
the Agent's directors, officers, legal counsel and independent auditors;
and provided further, however, that neither the Banks nor the Agent shall
have any obligation of confidentiality in respect of any information which
may be generally available to the public or becomes available to the public
through no fault of such Bank or Agent. Notwithstanding the foregoing,
without the prior written consent of the Company, no Bank may disclose to
participants or potential participants information which has been
designated in writing by the Company to such Bank as information which is
(A) non-financial information which is not necessary for participants and
potential participants to receive for purposes of initial and ongoing
analysis of the creditworthiness of the Company and its subsidiaries and of
the ability of the Company to perform its obligations under this Agreement
and the Notes and (B) product, design, pricing, marketing, business
strategy and similar information the disclosure of which to competitors of
the Company could have a material adverse effect on the competitive
position of the Company or its subsidiaries. The Company agrees to be
reasonable in its consideration of requests of Banks to transmit to
participants sensitive information covered by the preceding sentence and in
determining what information to designate as sensitive information covered
by the preceding sentence.
Entire Agreement. This Agreement and the other Loan Documents constitute
the entire contract between the parties relative to the subject matter
hereof. Any previous agreement among the parties with respect to the
subject matter hereof is superseded by this Agreement and the other Loan
Documents. Nothing in this Agreement or in the other Loan Documents,
expressed or implied, is intended to confer upon any party other than the
parties hereto any rights, remedies, obligations or liabilities under or by
reason of this Agreement or the other Loan Documents.
Severability. In the event any one or more of the provisions contained
in this Agreement or in any other Loan Document should be held invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby. The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
IX.13.
Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract, and shall become
effective as provided in Section 9.3.
Headings. Article and Section headings and the Table of Contents used
herein are for convenience of reference only, are not part of this Agree
ment and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
IN WITNESS WHEREOF, the Company, the Agent and the Banks have caused this
Agreement to be duly executed by their respective authorized officers as of
the day and year first above written.
CUMMINS ENGINE COMPANY, INC
By: /s/ Robert L. Fealy
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as a Bank and as
Agent,
By: /s/ Douglas A. Cruikshank
Title: Vice President
THE CHASE MANHATTAN BANK, N.A.
By: /s/ George Hansen
Title: Vice President
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. Ashby
Title: Senior Manager
Loan Operations
THE NORTHERN TRUST COMPANY
By: /s/ S. Biff Bowman
Title: Vice President
THE BANK OF NEW YORK
By: /s/ David C. Siegel
Title: Assistant Vice President
NBD BANK, N.A.
By: /s/ Scot C. Morrison
Title: Vice President
CITICORP USA, INC.
By: /s/ Robert J. Harrity, Jr.
Title: Vice President
Attorney-In-Fact
BANK OF AMERICA ILLINOIS
By: /s/ Patricia DelGrande
Title: Managing Director
SOCIETE GENERALE
By: /s/ May I. Mallouh
Title: Vice President
TORONTO DOMINION (TEXAS), INC.
By: /s/ Diane Bailey
Title: Vice President
PRICING SCHEDULE
Each of "LIBOR Margin", "Alternate Base Rate Margin", "CD
Margin" and "Facility Fee Rate" means, for any date, the rate set
forth below in the row opposite such term and in the column
corresponding to the "Pricing Level" that applies at such date:
Leve Leve Level Level Leve Level Level
l I l II III IV l V VI VII
LIBOR 0.15 .165 0.20% 0.25% 0.33 0.50% 0.75%
Margin % % 5%
0% 0% 0% 0% 0% 0% 0%
Alternate
Base Rate
Margin
CD .275 0.29 0.325 0.375 0.46 0.625 0.875%
Margin % % % % % %
Facility .075 0.08 0.10% 0.125 0.16 0.25% 0.375%
Fee Rate % 5% % 5%
For purposes of this Schedule, the following terms have the
following meanings, subject to the concluding paragraph of this
Schedule:
"Level I Pricing" applies at any date if, at such date, the
Company's senior unsecured long-term debt is rated A or higher by
S&P or A2 or higher by Moody's.
"Level II Pricing" applies at any date if, at such date, the
Company's senior unsecured long-term debt is rated A- or higher
by S&P or A3 or higher by Moody's and Level I Pricing does not
apply.
"Level III Pricing" applies at any date if, at such date,
the Company's senior unsecured long-term debt is rated BBB+ or
higher by S&P or Baa1 or higher by Moody's and neither Level I
nor II Pricing applies.
"Level IV Pricing" applies at any date if, at such date, the
Company's senior unsecured long-term debt is rated BBB or higher
by S&P or Baa2 or higher by Moody's and none of Level I, II and
III Pricing applies.
"Level V Pricing" applies at any date if, at such date, the
Company's senior unsecured long-term debt is rated BBB- or higher
by S&P or Baa3 or higher by Moody's and none of Level I, II, III
and IV Pricing applies.
"Level VI Pricing" applies at any date if, at such date, the
Company's senior unsecured long-term debt is rated BB+ or higher
by S&P or Ba1 or higher by Moody's and none of Level I, II, III,
IV and V Pricing applies.
"Level VII Pricing" applies at any date, if at such date, no
other Pricing Level applies.
"Moody's" means Moody's Investors Service, Inc. and its
successors
"Pricing Level" refers to the determination of which of
Level I, Level II, Level III, Level IV, Level V, Level VI or
Level VII Pricing applies at any date.
"S&P" means Standard & Poor's Rating Services and its
successors.
The credit ratings to be utilized for purposes of this Schedule
are those assigned by S&P or Moody's to the senior unsecured long-
term debt securities of the Company without third-party credit
enhancement, and any rating assigned to any other debt security
of the Company shall be disregarded. The rating in effect at any
date is that in effect at the close of business on such date. If
the Company is split-rated and the ratings differential is one
level, the higher of the two ratings will apply (e.g. A-/Baa1
results in Level II Pricing and BBB/Baa3 results in Level IV
Pricing). If the Company is split-rated and the ratings
differential is more than one level, the average of the two
ratings (or the higher of the two intermediate ratings) shall be
used (e.g. A-/Baa3 results in Level III Pricing and BBB+/Baa3
results in Level IV Pricing). Notwithstanding the definition of
Level VII Pricing above, if the rating system of Moody's or S&P
shall change, or if either such rating agency shall cease to be
in the business of rating corporate debt obligations, the Company
and the Agent shall negotiate in good faith to amend this
Pricing Schedule to reflect such changed rating system or the
nonavailability of ratings from such rating agency and, pending
the effectiveness of any such amendment, the Pricing Level shall
be determined by reference to the rating most recently in effect
prior to such change or cessation.
SCHEDULE I
Percentage
of Total
CommitmentCommitment
Morgan Guaranty Trust Company $58,000,000 14.50%
of New York*
60 Wall Street
New York, N.Y. 10260
Telecopy: (212) 648-5336
Confirm: (212) 648-3887
Attention of: Doug Cruikshank
Vice President
The Chase Manhattan Bank, N.A.* $42,000,000 10.50%
270 Park Avenue, 10th Floor
New York, N.Y. 10017
Telecopy: (212) 270-5120
Confirm: (212) 270-5723
Attention of: George Hansen
Vice President
Citicorp USA, Inc.* $42,000,000 10.50%
c/o Citicorp Securities, Inc.
399 Park Avenue
8th Floor, Zone 12
New York, New York 10043
Telecopy: (212)
Confirm: (212) 559-6482
Attention of: Robert J. Harrity, Jr.
Vice President
The Bank of Nova Scotia* $42,000,000 10.50%
Atlanta Agency
Suite 2700
600 Peachtree Street, N.E.
Atlanta, GA 30308
Telecopy: (404) 888-8998
Confirm: (404) 877-1558
Attention of: Ed Moussa,
Administrative Agent
Bank of America Illinois* $42,000,000 10.50%
231 South LaSalle Street
Chicago, IL 60697
Telecopy: (312) 987-1276
Confirm: (312) 828-3122
Attention of: Patricia DelGrande,
Managing Director
The Bank of New York* $42,000,000 10.50%
One Wall Street
New York, N.Y. 10286
Telecopy: (212) 635-1208
Confirm: (212) 635-1166
Attention of: Bruce C. Miller,
Vice President
NBD Bank, N.A.* $42,000,000 10.50%
One Indiana Square
Suite 312
Indianapolis, Indiana 46266
Telecopy: (317) 266-6042
Confirm: (317) 266-7351
Attention of: Scott C. Morrison,
Vice President
The Northern Trust Company* $30,000,000 7.50%
50 South LaSalle Street
Chicago, IL 60675
Telecopy: (312) 444-3508
Confirm: (312) 630-7946
Attention of: Biff Bowman,
Second Vice President
Societe Generale $30,000,000 7.50%
181 West Madison Street
Suite 3400
Chicago, Illinois 60602
Telecopy: (312) 578-5099
Confirm: (312) 578-5166
Attention of: Donna Benson,
Loan Administrator
Toronto Dominion (Texas), Inc. $30,000,000 7.50%
909 Fannin Street, Suite 1700
Houston, Texas 77010
Telecopy: (713) 951-9921
Confirm: (713) 653-8250
Attention of: Darlene Riedel,
Manager, Credit Administration
Total $400,000,000 100%
SCHEDULE 3.8
CUMMINS ENGINE COMPANY, INC. - SUBSIDIARIES
Subsidiary/Joint Venture Percentage of Ownership
A. F. Shane Company 100% by Onan Corporation
Aggregatebau GmbH 100% by Power Group International Limited
Agreba Aggregatebau GmbH & Co. KG 100% by Aggregatebau GmbH
Agreba Beteilligungas BmbH 100% by PGI (Overseas Holdings) B.V.
Atlas Crankshaft Corporation d/b/a/ 100% by 14-15 Corporation
Atlas, Inc.
Auto Diesels Power Plant Limited 100% by PGI Manufacturing Limited
Cadec Systems, Inc. 100% by Cummins Engine Company, Inc.
Cal Disposition, Inc. 100% by Cummins Engine Company, Inc.
C. E. Sonora S.A. de C.V. 100% by Cummins Engine Company, Inc.
Consolidated Diesel, Inc. 100% by Consolidated Diesel Company
Consolidated Diesel of North 100% by Consolidated Diesel, Inc.
Carolina, Inc.
Cummins Americas, Inc. 100% by Cummins Engine Company, Inc.
Cummins Australia Pty. Limited 100% by Cummins Engine Company, Inc.
Cummins Brasil, Ltda. 99% by Cummins International Finance
Corporation
Cummins British Columbia 90% by No. 379 Taurus Ventures, Ltd.
Cummins Corporation 100% by Cummins Engine Company, Inc.
Cummins de Colombia S.A. 100% by Cummins Engine Company, Inc.
Cummins Diesel Deutschland, GmbH 100% by Cummins Diesel Sales Corporation
Cummins Diesel Export Limited 100% by Cummins Engine Company, Inc.
Cummins Diesel of Canada Limited 100% by Cummins Engine Company, Inc.
Cummins Diesel International 100% by Cummins International Finance Corp.
Limited
Cummins Diesel Italia S.P.A. 100% by Cummins Diesel Sales Corporation
Cummins Diesel (Japan) Ltd. 100% by Cummins Engine Company, Inc.
Cummins Diesel Limited 100% by No. 379 Taurus Ventures, Ltd.
Cummins Diesel N.V. 100% by Cummins Diesel Sales Corporation
Cummins Diesel Sales Corporation 100% by Cummins Engine Company, Inc.
Cummins Engine (Beijing) Co., Ltd. 100% by Cummins Engine Company, Inc.
Cummins Engine Company Limited 100% by Cummins Australia Pty. Ltd.
Cummins Engine Company Limited 100% by Cummins U.K. Limited
Cummins Engine H.K. Limited 100% by Cummins Engine Company, Inc.
Cummins Engine Holding Company, 100% by Cummins Engine Company, Inc.
Inc.
Cummins Engine (Singapore) PTE LTD. 100% by Cummins Diesel Sales Corporation
Cummins Engine Venture Corporation 100% by Cummins Engine Company, Inc.
Cummins Financial, Inc. 100% by Cummins Engine Company, Inc.
Cummins France SARL 100% by Cummins International Finance Corp.
Cummins Funding Corporation 100% by Cummins Engine Company, Inc.
Cummins Great Lakes, Inc. 100% by Cummins Engine Company, Inc.
Cummins India Holdings Limited 100% by Cummins Engine Company, Inc.
Cummins International Finance 100% by Cummins Engine Company, Inc.
Corporation
Cummins KH-12, Inc. 100% by Cummins Engine Company, Inc.
Cummins Komatsu Engine Company 50% by Cummins Engine Venture Corporation
Cummins Korea, Ltd. 100% by Cummins International Finance Corp.
Cummins Mexicana, S.A. de C.V. 100% by Cummins Engine Company, Inc.
Cummins Military Systems Company 100% by Cummins Engine Company, Inc.
Cummins Natural Gas Engines, Inc. 100% by Cummins Engine Company, Inc.
Cummins Power Generation, Inc. 100% by Cummins Engine Company, Inc.
Cummins Professional Training 100% by Cummins Engine Company, Inc.
Center, Inc.
Cummins Research Limited 100% by Cummins Engine Company, Inc.
Partnership
Cummins U.K. Limited 88% by Cummins International Finance Corp.
12% by Onan Foreign Holdings Ltd.
Cummins Venture Corporation 100% by Cummins Engine Company, Inc.
Cummins Zimbabwe Pvt. Ltd. 51% by Cummins Engine Company, Inc.
Dampers Iberica, S.A. 100% by Holset Engineering Company Limited
Dampers, S.A. 100% by Holset Engineering Company Limited
Diesel ReCon Industria e Comercio 96.1% by Industria e Comercio Cummins Ltda.
Ltda. 3.9% by Cummins Brasil, Ltda.
Diesel ReCon de Mexico, S.A. de 100% by Cummins Engine Company, Inc.
C.V.
Fleetguard Commercial S.A. de C.V. 100% by Fleetguard, Inc.
Fleetguard GmbH 100% by Cummins International Finance Corp.
Fleetguard, Inc. 100% by Cummins Engine Company, Inc.
Fleetguard International 100% by Fleetguard, Inc.
Corporation
Fleetguard Korea Ltd. 100% by Fleetguard, Inc.
Fleetguard Mexico S.A. de C.V. 100% by Fleetguard, Inc.
Fleetguard SNC 100% by Cummins France SARL
Holset Brasil Equipamentos 99% by Cummins Brasil, Ltda.
Automotivos Ltda.
Holset Engineering Company, Inc. 100% by Cummins Engine Company, Inc.
Holset Engineering Company Limited 100% by Cummins U.K. Limited
Holset Korea Ltd. 51% by Holset Engineering Company Limited
Holset SNC 100% by Dampers, S.A.
HPI Company 100% by Cummins Engine Company, Inc.
Industria e Comercio Cummins Ltda. 50% by Cummins Brasil, Ltda.; 50% by
Cummins International Finance Corporation
Kompressorenban Bannewitz GmbH 100% by Holset Engineering Company Limited
Kuss Corporation 100% by Fleetguard, Inc.
Kuss SNC 100% by Cummins France SARL
Logstrup Modular Systems PTE 100% by Petbow Far East PTE, Limited
Limited
Lubricant Consultants, Inc. 75% by Fleetguard, Inc.
Markon Engineering Company Limited 99% by Newage International Limited
MHTC Corporation 100% by Cummins Engine Company, Inc.
Motores Cummins Diesel do Brazil, 100% by Cummins Diesel International
Ltda. Limited
Muench Works Ltd. 100% by No. 379 Taurus Ventures, Ltd.
NAP Accoustics South East Asia PTE 100% by Petbow Far East PTE Limited
Limited
Newage Engineers Pty Ltd. 99% by Newage International Limited
Newage Equipment Ltd. 100% by Newage International Limited
Newage (Far East) Pte Ltd. 100% by Newage International Limited
Newage GmbH 100% by Newage International Limited
Newage International Limited 99% by Cummins U.K. Limited
Newage Italia S.R.L. 99% by Newage International Limited
Newage Ltd. 99% by Newage International Limited
Newage Ltd. 100% by Newage International Limited
Newage Machine Tools Limited 99.5% by Newage International Limited
Newage Norge 100% by Newage International Limited
No. 379 Taurus Ventures Ltd. 100% by Cummins International Finance
Corporation
Northwest Dieselguard Limited 100% by Cummins Diesel Limited
Nu-Plant Service Limited 100% by Petbow Welding Products Limited
Ona Corporation 100% by Onan Corporation
Onan Australia Pty. Limited 100% by Onan Foreign Holdings Limited
Onan Canada Limited 100% by Onan Corporation
Onan Corporation 100% by Cummins Engine Company, Inc.
Onan Foreign Holdings, Inc. 100% by Onan Corporation
Onan International Limited 100% by Onan Corporation
Petbow Custom Generators Limited 100% by PGI Manufacturing Limited
Petbow Far East PTE Limited 100% by PGI (Overseas Holdings) B.V.
Petbow Limited 100% by PGI (UK Holdings) Limited
Petbow Pacific Limited 100% by Petbow Far East PTE Limited
Petbow Power Projects Limited 100% by PGI Manufacturing Limited
Petbow S.A. 100% by PGI (UK Holdings) Limited
Petbow Welding Products Limited 100% by PGI Manufacturing Limited
PGI Manufacturing Limited 100% by Power Group International Limited
PGI (Overseas Holdings) B.V. 100% by Power Group International
(Overseas Holdings) Limited
PGI (UK Holdings) Limited 100% by Power Group International Limited
Power Group International Limited 100% by Cummins U.K. Limited
Power Group International (Overseas 100% by Power Group International Limited
Holdings) Limited
PT Newage Engineers Indonesia 77% by Newage International Limited
Stamford Iberica 100% by Newage International Limited
Techniparts S.A. 100% by Holset Engineering Company Limited
Turbo Europa, B.V. 100% by Holset Engineering Company Limited
Wuxi Holset Engineering Company 55% by Holset Engineering Company Limited
Limited
Wuxi Newage Alternators Limited 70% by Newage International;
30% by Wuxi Electrical Machinery Group
14-15 Corporation 100% by Cummins Engine Company, Inc.
Schedule 3.10
Certain Agreements
1. Medium-term Notes, Series A
EXHIBIT A-1
FORM OF COMPETITIVE BID REQUEST
Morgan Guaranty Trust Company of New York,
as Agent for
the Banks referred to below,
60 Wall Street
New York, N.Y. 10260
Attention: [Date]
Dear Sirs:
The undersigned, Cummins Engine Company, Inc. (the "Company"),
refers to the Amended and Restated Credit Agreement dated as of
________ __, 1996 (as amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"), among the Company, the Banks
named therein and Morgan Guaranty Trust Company of New York, as Agent.
Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Credit Agreement. The
Company hereby gives you notice pursuant to Section 2.2(a) of the
Credit Agreement that it requests a Competitive Borrowing under the
Credit Agreement, and, in that connection, sets forth below the terms
on which such Competitive Borrowing is requested to be made:
(A) Date of Competitive Borrowing
(which is a Business Day) _______________________
(B) Principal Amount of
Competitive Borrowing */ _______________________
(C) Interest Period and the last
day thereof // _______________________
(D) Type of Borrowing //
_______________________
Upon acceptance of any or all of the Loans offered by the Banks
in response to this request, the Company shall be deemed to have
represented and warranted that the conditions to lending specified in
Section 4.2(b) and (c) of the Credit Agreement have been satisfied.
Very truly yours,
CUMMINS ENGINE COMPANY, INC.,
by
_____________________________
Title: [Responsible Officer]
EXHIBIT A-2
FORM OF STANDBY BORROWING REQUEST
Morgan Guaranty Trust Company of New York,
as Agent for the Banks
referred to below,
60 Wall Street
New York, N.Y. 10260
Attention: [Date]
Dear Sirs:
The undersigned, Cummins Engine Company, Inc. (the "Company"),
refers to the Amended and Restated Credit Agreement dated as of
____ __, 1996 (as amended, supplemented or otherwise modified from
time to time the "Credit Agreement"), among the Company, the Banks
named therein and Morgan Guaranty Trust Company of New York, as Agent.
Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Credit Agreement. The
Company hereby gives you notice pursuant to Section 2.3 of the Credit
Agreement that it requests a Standby Borrowing under the Credit
Agreement, and, in that connection, sets forth below the terms on
which such Standby Borrowing is requested to be made:
(A) Date of Standby Borrowing
(which is a Business Day) __________________________
(B) Principal amount of
Standby Borrowing// __________________________
(C) Interest rate basis// __________________________
(D) Interest Period and the last
day thereof// __________________________
Upon acceptance of any or all of the Standby Loans offered by the
Banks in response to this request, the Company shall be deemed to have
represented and warranted that the conditions to lending specified in
Section 4.2(b) and (c) of the Credit Agreement have been satisfied.
Very truly yours,
CUMMINS ENGINE COMPANY, INC.,
by________________________
Title: [Responsible Officer]
EXHIBIT B
FORM OF NOTICE OF COMPETITIVE BID REQUEST
[Name of Bank]
[Address]
New York, New York
Attention: [Date]
Dear Sirs:
Reference is made to the Amended and Restated Credit Agreement
dated as of ____ __, 1996 (as amended, supplemented or otherwise
modified from time to time the "Credit Agreement"), among Cummins
Engine Company, Inc. (the "Company"), the Banks named therein and
Morgan Guaranty Trust Company of New York, as Agent. Capitalized
terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement. The Company
made a Competitive Bid Request on __________, 19__ pursuant to Section
2.2(a) of the Credit Agreement, and in that connection you are invited
to submit a Competitive Bid by [Date]/[Time].// Your Competitive Bid
must comply with Section 2.2(b) of the Credit Agreement and the terms
set forth below on which the Competitive Bid Request was made:
(A) Date of Competitive Borrowing _________________________
(which is a Business Day)
(B) Principal amount of
Competitive Borrowing// _________________________
(C) Interest Period and the last
day thereof// _________________________
(D) Type of requested competitive
Borrowing// _________________________
Very truly yours,
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By_______________________
Title:
EXHIBIT C
FORM OF COMPETITIVE BID
Morgan Guaranty Trust Company of New York,
as Agent for the Banks
referred to below,
60 Wall Street
New York, New York 10260
Attention: [Date]
Dear Sirs:
The undersigned, [Name of Bank], refers to the Amended and
Restated Credit Agreement dated as of ____ __, 1996 (as amended,
supplemented or otherwise modified from time to time, the "Credit
Agreement"), among Cummins Engine Company, Inc. (the "Company"), the
Banks named therein and Morgan Guaranty Trust Company of New York, as
Agent. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Credit
Agreement. The undersigned hereby makes a Competitive Bid pursuant to
Section 2.2(b) of the Credit Agreement, in response to the Competitive
Bid Request made by the Company on _____________, 19__, and in that
connection sets forth below the terms on which such Competitive Bid is
made:
(A) Principal amount // _________________________
(B Competitive Bid Rate // _________________________
(C) Interest Period
and last day thereof _________________________
The undersigned hereby confirms that it is prepared to extend
credit to the Company upon acceptance by the Company of this bid in
accordance with Section 2.2(d) of the Credit Agreement.
Very truly yours,
[NAME OF BANK],
by
________________________
Title:
EXHIBIT D-1
FORM OF COMPETITIVE NOTE
$400,000,000 New York, New York
June 25, 1996
FOR VALUE RECEIVED, the undersigned, CUMMINS ENGINE COMPANY,
INC., an Indiana corporation (the "Company"), hereby promises to pay
to the order of ______________ (the "Bank"), at the office of Morgan
Guaranty Trust Company of New York (the "Agent"), at 60 Wall Street,
New York, New York 10260, on (i) the last day of each Interest Period
as defined in the Amended and Restated Credit Agreement dated as of
June 25, 1996, among the Company, the Banks named therein and Morgan
Guaranty Trust Company of New York, as Agent (as the same may be
further amended, modified, extended or restated from time to time, the
"Credit Agreement"), the aggregate unpaid principal amount of all
Competitive Loans made by the Bank to the Company pursuant to Sections
2.1 and 2.2 of the Credit Agreement to which such Interest Period
applies and (ii) on the Maturity Date (as defined in the Credit
Agreement), the lesser of the principal sum of Four Hundred Million
Dollars ($400,000,000) and the aggregate unpaid principal amount of
all Competitive Loans made by the Bank to the Company pursuant to
Sections 2.1 and 2.2 of the Credit Agreement, in lawful money of the
United States of America in same day funds, and to pay interest from
the date hereof on such principal amount from time to time
outstanding, in like funds, at said office, at a rate or rates per
annum and payable on such dates as determined pursuant to the Credit
Agreement.
The Company promises to pay interest, on demand, on any overdue
principal and, to the extent permitted by law, overdue interest from
their due dates at a rate or rates determined as set forth in the
Credit Agreement.
The Company hereby waives diligence, presentment, demand, protest
and notice of any kind whatsoever. The non-exercise by the holder of
any of its rights hereunder in any particular instance shall not
constitute a waiver thereof in that or any subsequent instance.
All borrowings evidenced by this Competitive Note and all
payments and prepayments of the principal hereof and interest hereon
and the respective dates thereof shall be endorsed by the holder
hereof on the schedule attached hereto and made a part hereof, or on a
continuation thereof which shall be attached hereto and made a part
hereof, or otherwise recorded by such holder in its internal records;
provided, however, that any failure of the holder hereof to make such
a notation or any error in such notation shall not in any manner
affect the obligation of the Company to make payments of principal and
interest in accordance with the terms of this Competitive Note and the
Credit Agreement.
This Competitive Note is one of the Competitive Notes referred to
in the Credit Agreement which, among other things, contains provisions
for the acceleration of the maturity hereof upon the happening of
certain events, for optional prepayment of the principal hereof prior
to the maturity thereof and for the amendment or waiver of certain
provisions of the Credit Agreement, all upon the terms and conditions
therein specified.
THIS COMPETITIVE NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
CUMMINS ENGINE COMPANY, INC.
by _________________________
Title:
Loans and Payments
Unpaid Name of
Amount Payments Principal Person
and Type Maturity Balance Making
of Loan Date of Note Notation
Principal Interest
EXHIBIT D-2
FORM OF STANDBY NOTE
$[Amount of Bank's Commitment] New York, New York
June 25, 1996
FOR VALUE RECEIVED, the undersigned, CUMMINS ENGINE COMPANY, INC., an
Indiana corporation (the "Company"), hereby promises to pay to the order of
_____________________ (the "Bank"), at the office of Morgan Guaranty Trust
Company of New York (the "Agent"), at 60 Wall Street, New York, New York 10260,
on (i) the last day of each Interest Period as defined in the Amended and
Restated Credit Agreement dated as of June 25, 1996, among the Company, the
Banks named therein and Morgan Guaranty Trust Company of New York as Agent (as
the same may be further modified, amended, extended or restated from time to
time, the "Credit Agreement"), the aggregate unpaid principal amount of all
Standby Loans made by the Bank to the Company pursuant to Sections 2.1 and 2.3
of the Credit Agreement to which such Interest Period applies and (ii) on the
Maturity Date (as defined in the Credit Agreement), the lesser of the principal
sum of [amount of Bank's Commitment] Dollars ($ ) and the aggregate
unpaid principal amount of all Standby Loans made by the Bank to the Company
pursuant to Sections 2.1 and 2.3 of the Credit Agreement, in lawful money of the
United States of America in same day funds, and to pay interest from the date
hereof on such principal amount from time to time outstanding, in like funds, at
said office, at a rate or rates per annum and payable on such dates as
determined pursuant to the Credit Agreement.
The Company promises to pay interest, on demand, on any overdue principal
and, to the extent permitted by law, overdue interest from their due dates at a
rate or rates determined as set forth in the Credit Agreement.
The Company hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever. The non-exercise by the holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
All borrowings evidenced by this Standby Note and all payments and
prepayments of the principal hereof and interest hereon and the respective dates
thereof shall be endorsed by the holder hereof on the schedule attached hereto
and made a part hereof, or on a continuation thereof which shall be attached
hereto and made a part hereof, or otherwise recorded by such holder in its
internal records; provided, however, that any failure of the holder hereof to
make such a notation or any error in such notation shall not in any manner
affect the obligation of the Company to make payments of principal and interest
in accordance with the terms of this Standby Note and the Credit Agreement.
This Standby Note is one of the Standby Notes referred to in the Credit
Agreement which, among other things, contains provisions for the acceleration of
the maturity hereof upon the happening of certain events, for optional
prepayment of the principal hereof prior to the maturity thereof and for the
amendment or waiver of certain provisions of the Credit Agreement, all upon the
terms and conditions therein specified.
THIS STANDBY NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK.
CUMMINS ENGINE COMPANY, INC.
by _________________________
Title:
Loans and Payments
Unpaid Name of
Amount Payments Principal Person
and Type Maturity Balance Making
of Loan Date of Note Notation
Principal Interest
EXHIBIT E
CUMMINS ENGINE COMPANY, INC.
Secretary's Certificate
I, _______________, Secretary of Cummins Engine Company, Inc., an
Indiana corporation (the "Company"), hereby certify that:
IX.16. Attached hereto as Exhibit A is a true and complete copy
of the By-Laws of the Company, and there have been no changes in, or
amendments to, such By-Laws since __________ __, 19__.
IX.17. Attached hereto as Exhibit B is a true and complete copy
of a unanimous written consent duly adopted by the Executive Committee
of the Board of Directors of the Company on __________ __, 19__; such
consent has not been amended, rescinded or modified and has been in
full force and effect since its adoption to and including the date
hereof and is now in full force and effect; and the resolutions
included in such consent are the only resolutions adopted by this
Company's Board of Directors or any Committee thereof or the
shareholders of the Company, relating to the matters referred to
therein.
IX.18. There have been no changes in or amendments to the
Restated Articles of Incorporation of the Company since __________ __,
19__, and no other document relating to or affecting the Restated
Articles of Incorporation of the Company has been filed in the office
of the Secretary of State of the State of Indiana.
IX.19. The following persons are now duly elected and qualified
officers of the Company, holding the offices indicated next to their
names below, and such officers have held such offices with the Company
at all times since __________ __, 19__, to and including the date
hereof, and the signatures appearing opposite their names below are
the true and genuine signatures of such officers:
Name Title Signature
___________________ _________________ ___________________
___________________ _________________ ___________________
IN WITNESS WHEREOF, I have hereunto signed my name and caused the
seal of the Company to be hereunto affixed as of the ____ day of June,
1996.
______________________________
Secretary
I, _______________, _______________ of Cummins Engine Company,
Inc., do hereby certify that _______________ is the duly elected and
qualified Secretary of Cummins Engine Company, Inc., and the signature
set forth immediately preceding this certification is his true and
genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name and caused the
seal of the company to be hereunto affixed as of the ____ day of June,
1996.
______________________________
(Seal)
EXHIBIT F
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated ___________, 19__
Reference is made to the Amended and Restated Credit Agreement
dated as of ____ __, 1996 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among Cummins
Engine Company, Inc., an Indiana corporation (the "Company"), the
Banks (as defined in the Credit Agreement) named therein and Morgan
Guaranty Trust Company of New York, as Agent. Capitalized terms used
herein and not otherwise defined shall have the meanings assigned to
such terms in the Credit Agreement.
____________ (the "Assignor") and _______________ (the
"Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, a __%
interest in and to all the Assignor's rights and obligations under the
Credit Agreement as of the Transfer Date (as defined below)
(including, without limitation, such percentage interest in the
Commitment of the Assignor on the Transfer Date and such percentage
interest in the Standby Loans [and Competitive Loans] owing to the
Assignor outstanding on the Transfer Date together with such
percentage interest in all unpaid interest with respect to such
Standby Loans [and Competitive Loans] and Facility Fees accrued to the
Transfer Date and such percentage interest in the Standby Note [and
the Competitive Note] held by the Assignor [excluding, however, any
interest in the Competitive Loans owing to the Assignor outstanding on
the Effective Date or in the unpaid interest with respect to such
Competitive Loans or in the Competitive Note held by the Assignor]).
2. The Assignor (i) represents that as of the date hereof, its
Commitment (without giving effect to assignments thereof which have
not yet become effective) is $______ and the outstanding balance of
its Standby Loans (unreduced by any assignments thereof which have not
yet become effective) is $_________ [and the outstanding balance of
its Competitive Loans (unreduced by any assignments thereof which have
not yet become effective) is $_________]; (ii) makes no representation
or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection
with the Credit Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant
thereto, other than that it is the legal and beneficial owner of the
interest being assigned by it hereunder and that such interest is free
and clear of any adverse claim; (iii) makes no representation or
warranty and assumes no responsibility with respect to the financial
condition of the Company or the performance or observance by the
Company of any of its obligations under the Credit Agreement or any
other instrument or document furnished pursuant thereto and (iv)
attaches the Standby Note [and the Competitive Note] held by it and
requests that the Agent exchange such Note[s] for a new Standby Note
[and a new Competitive Note] payable to the Assignee in a principal
amount equal to [and respectively] [, and a new Standby
Note payable to the Assignor in a principal amount equal to
___________].
3. The Assignee (i) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (ii) confirms
that it has received a copy of the Credit Agreement, together with
copies of the most recent financial statements delivered pursuant to
Section 3.5 or 5.4 thereof and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision
to enter into this Assignment and Acceptance; (iii) agrees that it
will, independently and without reliance upon the Agent, the Assignor
or any other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Credit Agreement;
(iv) confirms that it is an Eligible Assignee; (v) appoints and
authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under the Credit Agreement as are delegated to
the Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; (vi) agrees that it will perform in
accordance with their terms all the obligations which by the terms of
the Credit Agreement are required to be performed by it as a Bank; and
(vii) agrees that it will keep confidential all information with
respect to the Company furnished to it by the Company or the Assignor
(other than information generally available to the public or otherwise
available to the Assignor on a nonconfidential basis) [; and (viii)
attaches the forms prescribed by the Internal Revenue Service of the
United States certifying as to the Assignee's exemption from United
States withholding taxes with respect to all payments to be made to
the Assignee under the Credit Agreement or such other documents as are
necessary to indicate that all such payments are subject to such tax
at a rate reduced by an applicable tax treaty].//
4. The effective date for this Assignment and Acceptance shall
be (the "Transfer Date").// Following the execution of this
Assignment and Acceptance, it will be delivered to the Agent for accep
tance by it and the Company and recording by the Agent pursuant to
Section 9.4(c) of the Credit Agreement.
5. Upon such acceptance and recording, from and after the
Transfer Date, (i) the Assignee shall be a party to the Credit
Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Bank thereunder and
(ii) the Assignor shall, to the extent provided in this Assignment and
Acceptance, relinquish its rights and be released from its obligations
under the Credit Agreement.
6. Upon such acceptance and recording, from and after the
Transfer Date, the Agent shall make all payments in respect of the
interest assigned hereby (including payments of principal, interest,
fees and other amounts) to the Assignee. The Assignor and Assignee
shall make all appropriate adjustments in payments for periods prior
to the Transfer Date by the Agent or with respect to the making of
this assignment directly between themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.
[NAME OF ASSIGNOR],
by___________________
Title:
[NAME OF ASSIGNEE],
by___________________
Title:
Accepted this day
of , 19
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Agent,
by______________________
Title:
CONSENTED TO
CUMMINS ENGINE COMPANY, INC.
by______________________
Title:
[Consent necessary if Assignee is
not an Affiliate of Assignor]
EXHIBIT G
IX.20. The Company is a corporation duly organized, validly
existing and in good standing under the laws of its state of
incorporation; the Company is duly qualified as a foreign
corporation and in good standing in every other jurisdiction
in which the failure to qualify would adversely affect the
businesses, assets, operations, prospects or conditions
(financial or otherwise) of the Company or would impair the
validity or enforceability of or the ability of the Company
to perform its obligations under the Credit Agreement and
the Notes.
IX.21. Each of the Company and each Subsidiary has all requisite
power and authority to own its property and assets and to
carry on its business as now conducted and as proposed to be
conducted, and in the case of the Company, to execute,
deliver and perform the Credit Agreement and all
transactions contemplated thereby, to execute and deliver
the Notes and make the contemplated borrowings thereunder.
IX.22. The making and performance by the Company of the Credit
Agreement and the borrowings by the Company contemplated by
the Notes, have been duly authorized by all necessary
corporate action (including any necessary stockholder
action) on the part of the Company and each Subsidiary and
will not (a) violate any provision of any law, rule or
regulation applicable to the Company or any Subsidiary, or
(b) to the best of such counsel's knowledge, violate any
order, writ, judgment, decree, determination or award having
applicability to the Company or any Subsidiary, or (c)
violate any provision of the Certificate or Articles of
Incorporation or By-Laws of the Company or of any
Subsidiary, or (d) to the best of such counsel's knowledge,
constitute a default under any indenture or loan or credit
agreement, or any other agreement or instrument, to which
the Company or any Subsidiary is a party or by which any of
them or their properties may be bound or affected, or (e)
result in, or require, the creation or imposition of any
Lien of any nature upon it with respect to any of the
properties now owned or hereafter acquired by the Company or
any Subsidiary. To the best of such counsel's knowledge,
neither the Company nor any Subsidiary is in default under
or in violation of its Certificate or Articles of
Incorporation or other organizing document or its By-Laws or
any such law, rule, or regulation, order, writ, judgment,
decree, determination, award, indenture, agreement
pertaining to borrowed money or similar instrument.
The Credit Agreement and the Notes each constitute a legal, valid and
binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws relating to or
affecting creditors' rights generally from time to time in
effect and to general principles of equity (including,
without limitation, concepts of materiality, reasonableness,
good faith and fair dealing), regardless of whether
considered in a proceeding in equity or at law.
IX.24. No authorization, consent, approval, license or exemption
from, nor any filing, declaration or registration with, any
court, governmental agency or regulatory authority (Federal,
state or local), including, without limitation, the
Securities and Exchange Commission (other than routine
disclosure) or any public utility regulatory agency, or with
any securities exchange, is or will be required in
connection with the making and performance by the Company of
the Credit Agreement or the making of the Notes or the
contemplated borrowings thereunder.
IX.25. There are no actions, suits or proceedings pending or, to
the best of such counsel's knowledge, threatened, against or
affecting the Company or any Subsidiary or any of their
respective assets in any court or before any arbitrator,
commission, board, bureau or other administrative agency
which if, in any such case, adversely determined, would be
likely to have a material adverse effect on the businesses,
assets, operations, prospects or condition (financial or
otherwise) of the Company or of any Subsidiary or would
impair the validity or enforceability of or the ability of
the Company to perform its obligations under the Credit
Agreement or any of the Notes.
IX.26. Neither the Company nor any Subsidiary is an "investment
company" within the meaning of the Investment Company Act of
1940, as amended, or a "holding company" within the meaning
of the Public Utility Holding Company Act of 1935, as
amended.
IX.27. The making of the Loans under the Credit Agreement and the
use of the proceeds thereof as contemplated by the Credit
Agreement will not violate or be inconsistent with any of
the provisions of Regulation U, Regulation G or Regulation X
of the Board.
IX.28. The indebtedness of the Company under the Credit Agreement
and the Notes constitutes "Senior Indebtedness" within the
meaning of such terms or any similar term as used in
subordination provisions of any subordinated Indebtedness of
the Company.
EXHIBIT H
FORM OF LEGAL OPINION OF
DAVIS POLK & WARDWELL
________________, 199_
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the Amended and
Restated Credit Agreement (the "Credit Agreement") dated as of June
25, 1996 among Cummins Engine Company, Inc., an Indiana corporation
(the "Borrower"), the banks listed on the signature pages thereof (the
"Banks"), and Morgan Guaranty Trust Company of New York, as Agent (the
"Agent"), and have acted as special counsel for the Agent for the
purpose of rendering this opinion pursuant to Section 4.1(e) of the
Credit Agreement. Terms defined in the Credit Agreement are used
herein as therein defined.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have
conducted such other investigations of fact and law as we have deemed
necessary or advisable for purposes of this opinion. For purposes of
this opinion we have assumed (i) that the Borrower is a corporation
validly existing and in good standing under the laws of the state of
its incorporation and has all requisite corporate power and authority
to execute, deliver and perform all of its obligations under the
Credit Agreement and the Notes and (ii) that the execution, delivery
and performance by the Borrower of the Credit Agreement and the Notes
have been duly authorized by all necessary corporate action and that
the Credit Agreement and the Notes have been duly executed and
delivered by the Borrower.
Upon the basis of the foregoing, we are of the opinion that the
Credit Agreement constitutes a valid and binding agreement of the
Borrower and each Note constitutes a valid and binding obligation of
the Borrower, in each case enforceable in accordance with its terms
except as the same may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and by general principles
of equity.
We are members of the Bar of the State of New York and the
foregoing opinion is limited to the laws of the State of New York and
the federal laws of the United States of America. In giving the
foregoing opinion, we express no opinion as to the effect (if any) of
any law of any jurisdiction (except the State of New York) in which
any Bank is located which limits the rate of interest that such Bank
may charge or collect.
This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any
other purpose or relied upon by any other person without our prior
written consent.
Very truly yours,
_______________________________
* Existing Bank
* Existing Bank
* Existing Bank
// Not less than $10,000,000 or greater than the Total
Commitment and in integral multiples of $1,000,000.
// Which shall end not later than the Maturity Date.
// Indicate if Borrowing is to be of Competitive Fixed Rate
Loans or Competitive LIBO Rate Loans.
// Not less than $10,000,000 and in integral multiples of
$1,000,000.
// LIBOR Loan, Certificate of Deposit Loan or Alternate Base
Loan.
// Which shall be subject to the definition of "Interest
Period" and end not later than the Maturity Date.
// The Competitive Bid must be received by the Administrative
Agent not later than 10:00 a.m., New York City time, three
Business Days prior to a proposed Competitive LIBO Rate
Borrowing or on the Business Day of a proposed Competitive
Fixed Rate Borrowing, as the case may be.
// Not less than $10,000,000 and in integral multiples of
$1,000,000.
// Which shall be subject to the definition of "Interest
Period" and end no later than the Maturity Date
// Indicate if Borrowing is to be of Competitive Fixed Rate
Loans or Competitive LIBO Rate Loans.
// Not less than $5,000,000 or greater than the available Total
Commitment and in integral multiples of $1,000,000.
Multiple bids will be accepted by the Administrative Agent.
// To the nearest 1/10,000 of 1%.
// If the Assignee is organized under the laws of a
jurisdiction outside the United States.
// See Section 9.4(c). Such date shall be at least five
Business Days after the execution of this Assignment and
Acceptance and delivery thereof to the Administrative Agent
unless otherwise agreed to by the parties hereto.
EXHIBIT 10(y)
DATED 31st January, 1996
CUMMINS ENGINE COMPANY, INC.(1)
and
THE TORONTO-DOMINION BANK(2)
__________________________
GUARANTEE
__________________________
Norton Rose
London
<PAGE>
CONTENTS
Clause Heading Page
1 Interpretation 1
(a) Defined expressions 1
(b) Definitions 1
(c) Headings 2
(d) Construction of certain terms 2
2 Guarantee 3
(a) Covenant to pay 3
(b) Guarantor as principal debtor; indemnity 3
(c) Statements of account conclusive 3
(d) No security taken by Guarantor 4
(e) Interest 4
(f) Continuing security and other matters 4
(g) New accounts 4
(h) Liability unconditional 5
(i) Collateral Instruments 5
(j) Waiver of Guarantor's rights 5
(k) Suspense accounts 6
(l) Settlements conditional 6
(m) Guarantor to deliver up certain property 6
(n) Retention of this Guarantee 7
(o) Total amount recoverable 7
3 Payments and Taxes 7
(a) No set-off or counterclaim; distribution to the Bank 7
(b) Grossing-up for Taxes 7
(c) Claw-back of Tax benefit 8
(d) Currency indemnity 8
4 Set-off 9
5 Benefit of this Guarantee 9
(a) Benefit and burden 9
(b) Changes in constitution or reorganisations of Bank 9
(c) No assignment by Guarantor 9
(d) Disclosure of information 10
6 Notices and other matters 10
(a) Notice 10
(b) No implied waivers, remedies cumulative 11
(c) Expenses 11
7 Governing Law and jurisdiction 11
(a) Law 11
(b) Submission to jurisdiction 11
(c) Inconvenient forum 12
(d) Service of process on the Guarantor 12
(e) Waiver of jury trial, etc. 12
THIS GUARANTEE is dated 31st January, 1996 and made BETWEEN:
(1) CUMMINS ENGINE COMPANY, INC., a corporation duly organised and
existing under the laws of the State of Indiana, with its
principal office at 500 Jackson Street, Box 3005, Columbus,
Indiana 47202-3005, as Guarantor; and
(2) THE TORONTO-DOMINION BANK of Triton Court, 14/18 Finsbury Square,
London EC2A 1DB as Bank.
WHEREAS:
(A) By an agreement (the "Agreement") dated 31st January, 1996 and
made between Cummins Finance Limited (1), the Guarantor (2) and
the Bank (3), the Bank has agreed, upon and subject to the terms
and conditions of the Agreement, to make available to the
Borrower a perpetual loan facility of UK
sterling .
(B) The execution and delivery of this Guarantee is one of the
conditions precedent to the Bank making its Commitment available
under the Agreement.
IT IS AGREED as follows:
1Interpretation
(a) Defined expressions
In this Guarantee, unless the context otherwise requires or
unless otherwise defined in this Guarantee, words and expressions
defined in the Agreement and used in this Guarantee shall have
the same meaning where used in this Guarantee.
(b) Definitions
In this Guarantee, unless the context otherwise requires:
"Collateral Instruments" means notes, bills of exchange,
certificates of deposit and other negotiable and non-negotiable
instruments, guarantees, and any other documents or instruments
which contain or evidence an obligation (with or without
security) to pay, discharge or be responsible directly or
indirectly for, any indebtedness or liabilities of the Borrower
or any other person liable and includes Security Documents;
"Guarantee" includes each separate or independent stipulation or
agreement by the Guarantor contained in this Guarantee;
"Guaranteed Liabilities" means all moneys, obligations and
liabilities expressed to be guaranteed by the Guarantor in
clause 2(a);
"Incapacity" means in relation to a person the death, bankruptcy,
unsoundness of mind, insolvency, liquidation, dissolution,
winding-up, administration, receivership, amalgamation,
reconstruction or other incapacity of that person whatsoever
(and, in the case of a partnership, includes the termination or
change in the composition of the partnership);
"Security Documents" means documents or instruments creating or
evidencing a mortgage, charge (whether fixed or floating),
pledge, lien, hypothecation, assignment, trust arrangement or
security interest of any kind.
(c) Headings
Clause headings are inserted for convenience of reference only
and shall be ignored in the interpretation of this Guarantee.
(d) Construction of certain terms
In this Guarantee, unless the context otherwise requires:
(i) references to clauses are to be construed as references to the clauses
of this Guarantee;
(ii) references to (or to any specified provision of) this Guarantee or any
other document shall be construed as references to this Guarantee, that
provision or that document as in force for the time being and as amended
from time to time in accordance with the terms thereof, or, as the case may
be, with the agreement of the relevant parties and (where such consent is,
by the terms of this Guarantee or the relevant document, required to be
obtained as a condition to such amendment being permitted) the prior written
consent of the Bank;
(iii) references to a "regulation" include any present or future
regulation, rule, directive, requirement, request, code of practice or
guideline (whether or not having the force of law, but if not having the
force of law compliance with which is customary by persons to whom the same
would normally relate) of any Governmental Authority;
(iv) words importing the plural shall include the singular and vice versa;
(v) references to a time of day are to London time;
(vi) references to a person shall be construed as including references to an
individual, firm, company, corporation, unincorporated body of persons or
any State or any agency thereof;
(vii) references to a "guarantee" include references to an indemnity or
other assurance against financial loss including, without limitation, an
obligation to purchase assets or services as a consequence of a default by
any other person to pay any Indebtedness and "guaranteed" shall be construed
accordingly; and
(viii) references to any enactment shall be deemed to include references
to such enactment as re-enacted, amended or extended.
2Guarantee
(a) Covenant to pay
In consideration of the Bank making the Loan available to the
Borrower pursuant to the Agreement the Guarantor hereby
guarantees to pay to the Bank, on demand by the Bank all moneys
and discharge all obligations and liabilities now or hereafter
due, owing or incurred by the Borrower to the Bank under or
pursuant to the Agreement and/or the Note prior to and including
the fourteenth Interest Payment Date when the same become due for
payment or discharge whether by acceleration or otherwise.
Notwithstanding any other provision of this Guarantee, the
Guarantor shall have no obligations hereunder following the
fourteenth Interest Payment Date save in respect of the
Guaranteed Liabilities then due and payable or obligations which
fall to be performed prior to such date but which remain to be
discharged in full.
(b) Guarantor as principal debtor; indemnity
As a separate and independent stipulation, the Guarantor agrees
that if any purported obligation or liability of the Borrower
which would have been the subject of this Guarantee had it been
valid and enforceable is not or ceases to be valid or enforceable
against the Borrower on any ground whatsoever whether or not
known to the Bank (including, without limitation, any irregular
exercise or absence of any corporate power or lack of authority
of, or breach of duty by, any person purporting to act on behalf
of the Borrower or any legal or other limitation, whether under
the Limitation Acts or otherwise or any disability or Incapacity
or any change in the constitution of the Borrower) the Guarantor
shall nevertheless be liable to the Bank in respect of that
purported obligation or liability as if the same were fully valid
and enforceable and the Guarantor were the principal debtor in
respect thereof. The Guarantor hereby agrees to keep the Bank
fully indemnified on demand against all damages, losses, costs
and expenses arising from any failure of the Borrower to perform
or discharge any such purported obligation or liability.
(c) Statements of account conclusive
Any statement of account of the Borrower, signed as correct by an
officer of the Bank, showing the amount of the Guaranteed
Liabilities shall be prima facie evidence as to that account.
(d) No security taken by Guarantor
The Guarantor warrants that it has not taken or received, and
undertakes that until all the Guaranteed Liabilities of the
Borrower have been paid or discharged in full, it will not take
or receive, the benefit of any security from the Borrower or any
other person in respect of its obligations under this Guarantee.
(e) Interest
The Guarantor agrees to pay interest on each amount demanded of
it under this Guarantee from the date of such demand until
payment (as well after as before judgment) at the rate one per
cent per annum above the aggregate of LIBOR and the Additional
Cost calculated on a day to day basis. Such interest shall be
compounded at the end of each period determined for this purpose
by the Bank in the event of it not being paid when demanded but
without prejudice to the Bank's right to require payment of such
interest provided that, to the extent that the Bank recovers from
the Borrower or the Guarantor interest at the rate referred to in
clause 6.2 of the Agreement on any unpaid sum under the Agreement
in respect of which demand is made on the Guarantor under this
Guarantee in relation to the period from the date of such demand
until payment, it shall not be entitled to recover under this
clause 2(e) interest on such unpaid sum so demanded.
(f) Continuing security and other matters
This Guarantee shall:
(i) secure the ultimate balance from time to time owing to the Bank by the
Borrower and shall be a continuing security, notwithstanding any settlement
of account or other matter whatsoever;
(ii) be in addition to any present or future Collateral Instrument, right or
remedy held by or available to the Bank; and
(iii) not be in any way prejudiced or affected by the existence of any
such Collateral Instrument, rights or remedies or by the same becoming
wholly or in part void, voidable or unenforceable on any ground whatsoever
or by the Bank dealing with, exchanging, varying or failing to perfect or
enforce any of the same or giving time for payment or indulgence or
compounding with any other person liable.
(g) New accounts
If this Guarantee ceases to be continuing for any reason
whatsoever the Bank may nevertheless continue any account of the
Borrower or open one or more new accounts and the liability of
the Guarantor under this Guarantee shall not in any manner be
reduced or affected by any subsequent transactions or receipts or
payments into or out of any such account.
(h) Liability unconditional
The liability of the Guarantor shall not be affected nor shall
this Guarantee be discharged or reduced by reason of:
(i) the Incapacity or any change in the name, style or constitution of the
Borrower or any other person liable;
(ii) the Bank granting any time, indulgence or concession to, or compounding
with, discharging, releasing or varying the liability of, the Borrower or
any other person liable or renewing, determining, varying or increasing any
accommodation, facility or transaction or otherwise dealing with the same in
any manner whatsoever or concurring in, accepting or varying any compromise,
arrangement or settlement or omitting to claim or enforce payment from the
Borrower or any other person liable; or
(iii) any act or omission which would not have discharged or affected
the liability of the Guarantor had it been a principal debtor instead of a
guarantor or by anything done or omitted which but for this provision might
operate to exonerate the Guarantor.
(i) Collateral Instruments
The Bank shall not be obliged to make any claim or demand on the
Borrower or to resort to any Collateral Instrument or other means
of payment now or hereafter held by or available to them or it
before enforcing this Guarantee and no action taken or omitted by
the Bank in connection with any such Collateral Instrument or
other means of payment shall discharge, reduce, prejudice or
affect the liability of the Guarantor under this Guarantee nor
shall the Bank be obliged to apply any money or other property
received or recovered in consequence of any enforcement or
realisation of any such Collateral Instrument or other means of
payment in reduction of the Guaranteed Liabilities.
(j) Waiver of Guarantor's rights
Until all the Guaranteed Liabilities have been paid, discharged
or satisfied in full (and notwithstanding payment of a dividend
in any liquidation or under any compromise or arrangement) the
Guarantor agrees that, without the prior written consent of the
Bank, it will not:
(i) exercise its rights of subrogation, reimbursement and indemnity against
the Borrower or any other person liable;
(ii) demand or accept repayment in whole or in part of any indebtedness now
or hereafter due to the Guarantor from the Borrower or from any other person
liable or demand or accept any Collateral Instrument in respect of the same
or dispose of the same;
(iii) take any step to enforce any right against the Borrower or any
other person liable in respect of any Guaranteed Liabilities; or
(iv) claim any set-off or counterclaim against the Borrower or any other
person liable or claim or prove in competition with the Bank in the
liquidation of the Borrower or any other person liable or have the benefit
of, or share in, any payment from or composition with, the Borrower or any
other person liable or any other Collateral Instrument now or hereafter held
by the Bank for any Guaranteed Liabilities or for the obligations or
liabilities of any other person liable but so that, if so directed by the
Bank, it will prove for the whole or any part of its claim in the
liquidation of the Borrower on terms that the benefit of such proof and of
all money received by it in respect thereof shall be held on trust for the
Bank and applied in or towards discharge of the Guaranteed Liabilities in
such manner as the Bank shall deem appropriate.
(k) Suspense accounts
Any money received in connection with this Guarantee (whether
before or after any Incapacity of the Borrower or the Guarantor)
which do not fully discharge the Guarantor's obligations under
this Guarantee in respect of any Guaranteed Liabilities (actual
or contingent, present or future) may be placed to the credit of
a suspense account with a view to preserving the rights of the
Bank to prove for the whole of its claims against the Borrower or
any other person liable or may be applied in or towards
satisfaction of such of the Guaranteed Liabilities as the Bank
may from time to time conclusively determine in its absolute
discretion.
(l) Settlements conditional
Any release, discharge or settlement between the Guarantor and
the Bank shall be conditional upon no security, disposition or
payment to the Bank by the Borrower or any other person liable
being void, set aside or ordered to be refunded pursuant to any
enactment or law relating to bankruptcy, liquidation,
administration or insolvency or for any other reason whatsoever
and if such condition shall not be fulfilled the Bank shall be
entitled to enforce this Guarantee subsequently as if such
release, discharge or settlement had not occurred and any such
payment had not been made.
(m) Guarantor to deliver up certain property
If, contrary to clauses 2(d) or 2(j), the Guarantor takes or
receives the benefit of any security or receives or recovers any
money or other property, such security, money or other property
shall be held on trust for the Bank and shall be delivered to the
Bank on demand.
(n) Retention of this Guarantee
The Bank shall be entitled to retain this Guarantee after as well
as before the payment or discharge of all the Guaranteed
Liabilities for such period as the Bank may determine.
(o) Total amount recoverable
The total amount recoverable from the Guarantor under clauses
2(a) and (b) of this Guarantee shall not exceed an amount equal
to the principal sum of UK sterling payable pursuant to the
Agreement and/or the Note together with an amount equal to all
interest and all other sums payable pursuant to the Agreement
and/or the Note provided that such limit on recovery shall
automatically cease to have effect on the Bank confirming to the
Guarantor that the Borrower has complied with the undertaking set
out in clause 3.4(a) of the Agreement.
3Payments and Taxes
(a) No set-off or counterclaim; distribution to the Bank
The Guarantor acknowledges that, in performing its obligations
under the Agreement, the Bank will be incurring liabilities to
third parties in relation to the funding of amounts advanced to
the Borrower, such liabilities matching the liabilities of the
Borrower to the Bank, and that it is reasonable for the Banks to
be entitled to receive payments from the Borrower gross on the
due date in order that the Bank is put in a position to perform
their matching obligations to the relevant third parties.
Accordingly all payments to be made by the Guarantor under this
Guarantee shall be made in full, without any set-off or
counterclaim whatsoever unless a winding-up order or
administration order or an analogous order in the jurisdiction of
the Bank's incorporation or principal place of business has been
made in respect of the Bank and, subject as provided in
clause 3(b), free and clear of any deductions or withholdings, in
Sterling (except for costs, charges and expenses which shall be
payable in the currency in which they are incurred) on the due
date to the account of the Bank at such bank as the Bank may from
time to time specify for this purpose.
(b) Grossing-up for Taxes
If at any time the Guarantor is required to make any deduction or
withholding in respect of Taxes from any payment due under this
Guarantee for the account of the Bank (or if the Bank is required
to make any such deduction or withholding from a payment to a
Bank), the sum due from the Guarantor in respect of such payment
shall be increased to the extent necessary to ensure that, after
the making of such deduction or withholding, the Bank receives on
the due date for such payment (and retains, free from any
liability in respect of such deduction or withholding) a net sum
equal to the sum which it would have received had no such
deduction or withholding been required to be made and the
Guarantor shall indemnify the Bank against any losses or costs
incurred by any of them by reason of any failure of the Guarantor
to make any such deduction or withholding or by reason of any
increased payment not being made on the due date for such
payment. The Guarantor shall promptly deliver to the Bank any
receipts, certificates or other proof evidencing the amounts (if
any) paid or payable in respect of any deduction or withholding
as aforesaid.
(c) Claw-back of Tax benefit
If following any such deduction or withholding as is referred to
in clause 3(b) from any payment by the Guarantor, the Bank shall
receive or be granted a credit against or remission for any Taxes
payable by it, the Bank shall, subject to the Guarantor having
made any increased payment in accordance with clause 3(b) and to
the extent that the Bank can do so without prejudicing the
retention of the amount of such credit or remission and without
prejudice to the right of the Bank to obtain any other relief or
allowance which may be available to it, reimburse the Guarantor
with such amount as the Bank shall in its absolute discretion
certify to be the proportion of such credit or remission as will
leave the Bank (after such reimbursement) in no worse position
than it would have been in had there been no such deduction or
withholding from the payment by the Guarantor as aforesaid. Such
reimbursement shall be made forthwith upon the Bank certifying
that the amount of such credit or remission has been received by
it. Nothing contained in this Guarantee shall oblige the Bank to
rearrange its tax affairs or to disclose any information
regarding its tax affairs and computations. Without prejudice to
the generality of the foregoing, the Guarantor shall not, by
virtue of this clause 3(c), be entitled to enquire about the
Bank's tax affairs.
(d) Currency indemnity
(i) making or filing a claim or proof against the Guarantor, (ii) obtaining
an order or judgment in any court or other tribunal or (iii) enforcing any
order or judgment given or made in relation to this Guarantee, the Guarantor
shall indemnify and hold harmless the Bank from and against any loss
suffered as a result of any difference between (A) the rate of exchange used
for such purpose to convert the sum in question from the first currency into
the second currency and (B) the rate or rates of exchange at which the Bank
may in the ordinary course of business purchase the first currency with the
second currency upon receipt of a sum paid to it in satisfaction, in whole
or in part, of any such order, judgment, claim or proof. Any amount due
from the Guarantor under this clause 3(d) shall be due as a separate debt
and shall not be affected by judgment being obtained for any other sums due
under or in respect of this Guarantee and the term "rate of exchange"
includes any premium and costs of exchange payable in connection with the
purchase of the first currency with the second currency.
4Set-off
If an Event of Default shall have occurred and be continuing and
the Bank shall have declared the Loan, or the Loan shall have
become automatically, immediately due and payable pursuant to
clause 12.2 of the Agreement, the Bank and each bank which is an
Affiliate of the Bank are hereby authorised at any time and from
time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other
Indebtedness at any time owing by the Bank or any of its
Affiliates to or for the credit or account of the Guarantor
against any of and all the obligations of the Guarantor now or
hereafter existing under this Guarantee and the other Loan
Documents, irrespective of whether or not the Bank shall have
made demand under this Guarantee or such other Loan Document and
although such obligations may be unmatured. The rights of the
Bank under this clause 4 are in addition to such other rights and
remedies (including other rights of set-off) as the Bank may
have.
5Benefit of this Guarantee
(a) Benefit and burden
This Guarantee shall be binding upon the Guarantor and its
successors in title and shall ensure for the benefit of the Bank
and its successors in title and its Assignees. The Guarantor
expressly acknowledges and accepts the provisions of clause 16 of
the Agreement and agrees that any person in favour of whom an
assignment or a transfer is made in accordance with such clause
shall be entitled to the benefit of this Guarantee.
(b) Changes in constitution or reorganisations of Bank
For the avoidance of doubt and without prejudice to the
provisions of clause 5(a), this Guarantee shall remain binding on
the Guarantor notwithstanding any change in the constitution of
the Bank or its absorption in, or amalgamation with, or the
acquisition of all or part of its undertaking or assets by, any
other person, or any reconstruction or reorganisation of any
kind, to the intent that this Guarantee shall remain valid and
effective in all respects in favour of any assignee, transferee
or other successor in title of the Bank in the same manner as if
such assignee, transferee or other successor in title had been
named in this Guarantee as a party instead of, or in addition to,
the Bank.
(c) No assignment by Guarantor
The Guarantor may not assign or transfer any of its rights or
obligations under this Guarantee.
(d) Disclosure of information
The Bank may disclose to a prospective assignee or to any person
who may otherwise enter into contractual relations with the Bank
in relation to the Agreement or the Note (who is, in any such
case, permitted pursuant to clause 16.3 of the Agreement) such
information about the Guarantor as the Bank shall consider
appropriate, subject to such potential assignee or person having
first entered into a confidentiality undertaking in terms similar
to those of clause 16.9 of the Agreement.
6Notices and other matters
(a) Notice
Every notice, request, demand or other communication under this
Guarantee shall:
(i) be in writing delivered personally or by first-class prepaid letter
(airmail if available) or telefax;
(ii) be deemed to have been received, subject as otherwise provided in this
Guarantee, in the case of a letter when delivered personally or 3 days after
it has been put into the post, in the case of a telefax, when a complete and
legible copy is received by the addressee (provided that if the date of
despatch is not a business day in the country of the addressee or if the
time of despatch of any telefax is after the close of business in the
country of the addressee it shall be deemed to have been received at the
opening of business on the next such business day); and
(iii) be sent:
(A) to the Guarantor at:
500 Jackson Street,
Box 3005,
Columbus,
Indiana
47202-3005
Mail Code: 60903
Telefax: 00 1 812 377 3265
Attention: Assistant Treasurer
(B) to the Bank at:
Triton Court,
14/18 Finsbury Square,
London EC2A 1DB
Telefax: 0171-638 2551
Attention: Manager, Corporate Services
or to such other address or telefax number as is notified by
the Guarantor or the Bank to the other party to this
Guarantee provided that not less than two Banking Days'
notice shall have been given of such change failing which
such change shall be ineffective.
(b) No implied waivers, remedies cumulative
No failure or delay on the part of the Bank to exercise any
power, right or remedy under this Guarantee shall operate as a
waiver thereof, nor shall any single or partial exercise by the
Bank of any power, right or remedy preclude any other or further
exercise thereof or the exercise of any other power, right or
remedy. The remedies provided in this Guarantee are cumulative
and are not exclusive of any remedies provided by law.
(c) Expenses
The Guarantor agrees to reimburse the Bank on demand for all
legal and other costs, charges and expenses on a full and
unqualified indemnity basis which may be incurred by the Bank in
relation to the enforcement of this Guarantee against the
Guarantor.
7Governing Law and jurisdiction
(a) Law
This Guarantee is governed by and shall be construed in
accordance with English law.
(b) Submission to jurisdiction
The Guarantor agrees for the benefit of the Bank that any legal
action or proceedings arising out of or in connection with this
Guarantee against the Guarantor or any of its assets may be
brought in the English courts and the courts of the United States
of America, the State of New York, the State of Indiana and any
other Relevant Jurisdiction, irrevocably and unconditionally
submits to the jurisdiction of such courts and irrevocably
designates, appoints and empowers (i) Cummins Engine Company
Limited (No. 573951), attention: Gavin Sinclair (Assistant
General Counsel) at present of 46-50 Coombe Road, New Malden,
Surrey KT3 4QL to receive for it and on its behalf, service of
process issued out of the English courts in any such legal action
or proceedings and (ii) CT Corporation at present of 1633
Broadway, NY 10019, New York, United States of America to receive
for it and on its behalf, service of process issued out of the
State Courts of and the Federal Courts in, the State of New York
in any such legal action or proceedings. The submission to such
jurisdiction shall not (and shall not be construed so as to)
limit the right of the Bank to take proceedings against the
Guarantor in the courts of any other competent jurisdiction, nor
shall the taking of proceedings in any one or more jurisdictions
preclude the taking of proceedings in any other jurisdiction,
whether concurrently or not. The parties further agree that only
the courts of England and not those of any other place shall have
jurisdiction to determine any claim which the Guarantor may have
against the Bank arising out of or in connection with this
Guarantee.
(c) Inconvenient forum
The Guarantor irrevocably waives (and irrevocably agrees not to
raise) any objection which it may have now or hereafter to the
laying of the venue of any action or any claim that any such
action or proceedings has been brought in an inconvenient forum
and further irrevocably agrees that a judgment brought in any
court referred to in clause 7(b) shall be conclusive and binding
upon the Guarantor and may be enforced in the courts of any other
jurisdiction.
(d) Service of process on the Guarantor
If either agent referred to in clause 7(b) (or any replacement
agent appointed pursuant to this clause 7(d)) at any time ceases
for any reason to act as such, the Guarantor shall appoint either
a body corporate incorporated in England with an office in
England or a firm of solicitors with an office in England or a
body corporate with a place of business in the State of New York
or a firm of lawyers with an office in the State of New York (as
the case may be) as replacement agent to accept service of
process on behalf of the Guarantor and shall notify the Bank of
the name and address of the replacement agent together with its
declaration or acceptance; failing such appointment and
notification, the Bank shall be entitled by notice to the
Guarantor to appoint such a replacement agent to act on the
Guarantor's behalf.
(e) Waiver of jury trial, etc.
(i) Except as prohibited by law, each party hereto hereby waives
any right it may have to a trial by jury in the United
States of America or any state thereof in respect of any
litigation directly or indirectly arising out of, under or
in connection with this Guarantee, any document or agreement
entered into in connection herewith and any of the
transactions contemplated hereby or thereby.
(ii) Except as prohibited by law, each party hereto hereby waives
any right it may have to claim or recover in any litigation
referred to in clause 7(e)(i) any special, indirect,
exemplary, punitive or consequential damages or any damages
other than, or in addition to, actual damages.
(iii) Each party hereto (A) certifies that no
representative, agent or attorney of any other party has
represented to it, expressly or otherwise, that such other
party would not, in the event of litigation, seek to enforce
the foregoing waivers and (B) acknowledges that it and the
other parties hereto have been induced to enter into this
Guarantee by, among other things, the mutual waivers and
certifications in this clause 7(e).
IN WITNESS whereof the parties to this Guarantee have caused this
Guarantee to be duly executed on the date first above written.
SIGNED for and )
on behalf of) )
CUMMINS ENGINE COMPANY, INC. )
by )
SIGNED for and )
on behalf of )
THE TORONTO-DOMINION BANK )
by )
<PAGE>
DATED 31st January, 1996
CUMMINS ENGINE COMPANY, INC. (1)
and
THE BANK OF NEW YORK(2)
____________________________
GUARANTEE
____________________________
Norton Rose
London
<PAGE>
CONTENTS
Clause Heading Page
1 Interpretation 1
(a) Defined expressions 1
(b) Definitions 1
(c) Headings 2
(d) Construction of certain terms 2
2 Guarantee 3
(a) Covenant to pay 3
(b) Guarantor as principal debtor; indemnity 3
(c) Statements of account conclusive 3
(d) No security taken by Guarantor 4
(e) Interest 4
(f) Continuing security and other matters 4
(g) New accounts 4
(h) Liability unconditional 5
(i) Collateral Instruments 5
(j) Waiver of Guarantor's rights 5
(k) Suspense accounts 6
(l) Settlements conditional 6
(m) Guarantor to deliver up certain property 6
(n) Retention of this Guarantee 7
3 Payments and Taxes 7
a) No set-off or counterclaim; distribution to the Bank 7
(b) Grossing-up for Taxes 7
(c) Claw-back of Tax benefit 7
(d) Currency indemnity 8
4 Set-off 8
5 Benefit of this Guarantee 9
(a) Benefit and burden 9
(b) Changes in constitution or reorganisations of Bank 9
(c) No assignment by Guarantor 9
(d) Disclosure of information 9
6 Notices and other matters 10
(a) Notice 10
(b) No implied waivers, remedies cumulative 11
(c) Expenses 11
7 Governing Law and jurisdiction 11
(a) Law 11
(b) Submission to jurisdiction 11
(c) Inconvenient forum 11
(d) Service of process on the Guarantor 12
(e) Waiver of jury trial, etc. 12
THIS GUARANTEE is dated 31st January, 1996 and made BETWEEN:
(1) CUMMINS ENGINE COMPANY, INC., a corporation duly organised and
existing under the laws of the State of Indiana, with its
principal office at 500 Jackson Street, Box 3005, Columbus,
Indiana 47202-3005, as Guarantor; and
(2) THE BANK OF NEW YORK of 46 Berkeley Street, London W1X 6AA as
Bank.
WHEREAS:
(A) By an agreement (the "Agreement") dated 31st January, 1996 and
made between Cummins Finance Limited (1), the Guarantor (2) and
the Bank (3), the Bank has agreed, upon and subject to the terms
and conditions of the Agreement, to make available to the
Borrower a perpetual loan facility of UK sterling.
(B) The execution and delivery of this Guarantee is one of the
conditions precedent to the Bank making its Commitment available
under the Agreement.
IT IS AGREED as follows:
1Interpretation
(a) Defined expressions
In this Guarantee, unless the context otherwise requires or
unless otherwise defined in this Guarantee, words and expressions
defined in the Agreement and used in this Guarantee shall have
the same meaning where used in this Guarantee.
(b) Definitions
In this Guarantee, unless the context otherwise requires:
"Collateral Instruments" means notes, bills of exchange,
certificates of deposit and other negotiable and non-negotiable
instruments, guarantees, and any other documents or instruments
which contain or evidence an obligation (with or without
security) to pay, discharge or be responsible directly or
indirectly for, any indebtedness or liabilities of the Borrower
or any other person liable and includes Security Documents;
"Guarantee" includes each separate or independent stipulation or
agreement by the Guarantor contained in this Guarantee;
"Guaranteed Liabilities" means all moneys, obligations and
liabilities expressed to be guaranteed by the Guarantor in
clause 2(a);
"Incapacity" means in relation to a person the death, bankruptcy,
unsoundness of mind, insolvency, liquidation, dissolution,
winding-up, administration, receivership, amalgamation,
reconstruction or other incapacity of that person whatsoever
(and, in the case of a partnership, includes the termination or
change in the composition of the partnership);
"Security Documents" means documents or instruments creating or
evidencing a mortgage, charge (whether fixed or floating),
pledge, lien, hypothecation, assignment, trust arrangement or
security interest of any kind.
(c) Headings
Clause headings are inserted for convenience of reference only
and shall be ignored in the interpretation of this Guarantee.
(d) Construction of certain terms
In this Guarantee, unless the context otherwise requires:
(i) references to clauses are to be construed as references to the clauses
of this Guarantee;
(ii) references to (or to any specified provision of) this Guarantee or any
other document shall be construed as references to this Guarantee, that
provision or that document as in force for the time being and as amended
from time to time in accordance with the terms thereof, or, as the case may
be, with the agreement of the relevant parties and (where such consent is,
by the terms of this Guarantee or the relevant document, required to be
obtained as a condition to such amendment being permitted) the prior written
consent of the Bank;
(iii) references to a "regulation" include any present or future
regulation, rule, directive, requirement, request, code of practice or
guideline (whether or not having the force of law, but if not having the
force of law compliance with which is customary by persons to whom the same
would normally relate) of any Governmental Authority;
(iv) words importing the plural shall include the singular and vice versa;
(v) references to a time of day are to London time;
(vi) references to a person shall be construed as including references to an
individual, firm, company, corporation, unincorporated body of persons or
any State or any agency thereof;
(vii) references to a "guarantee" include references to an indemnity or
other assurance against financial loss including, without limitation, an
obligation to purchase assets or services as a consequence of a default by
any other person to pay any Indebtedness and "guaranteed" shall be construed
accordingly; and
(viii) references to any enactment shall be deemed to include references
to such enactment as re-enacted, amended or extended.
2Guarantee
(a) Covenant to pay
In consideration of the Bank making the Loan available to the
Borrower pursuant to the Agreement the Guarantor hereby
guarantees to pay to the Bank, on demand by the Bank all moneys
and discharge all obligations and liabilities now or hereafter
due, owing or incurred by the Borrower to the Bank under or
pursuant to the Agreement and/or the Note prior to and including
the fourteenth Interest Payment Date when the same become due for
payment or discharge whether by acceleration or otherwise.
Notwithstanding any other provision of this Guarantee, the
Guarantor shall have no obligations hereunder following the
fourteenth Interest Payment Date save in respect of the
Guaranteed Liabilities then due and payable or obligations which
fall to be performed prior to such date but which remain to be
discharged in full.
(b) Guarantor as principal debtor; indemnity
As a separate and independent stipulation, the Guarantor agrees
that if any purported obligation or liability of the Borrower
which would have been the subject of this Guarantee had it been
valid and enforceable is not or ceases to be valid or enforceable
against the Borrower on any ground whatsoever whether or not
known to the Bank (including, without limitation, any irregular
exercise or absence of any corporate power or lack of authority
of, or breach of duty by, any person purporting to act on behalf
of the Borrower or any legal or other limitation, whether under
the Limitation Acts or otherwise or any disability or Incapacity
or any change in the constitution of the Borrower) the Guarantor
shall nevertheless be liable to the Bank in respect of that
purported obligation or liability as if the same were fully valid
and enforceable and the Guarantor were the principal debtor in
respect thereof. The Guarantor hereby agrees to keep the Bank
fully indemnified on demand against all damages, losses, costs
and expenses arising from any failure of the Borrower to perform
or discharge any such purported obligation or liability.
(c) Statements of account conclusive
Any statement of account of the Borrower, signed as correct by an
officer of the Bank, showing the amount of the Guaranteed
Liabilities shall be prima facie evidence as to that account.
(d) No security taken by Guarantor
The Guarantor warrants that it has not taken or received, and
undertakes that until all the Guaranteed Liabilities of the
Borrower have been paid or discharged in full, it will not take
or receive, the benefit of any security from the Borrower or any
other person in respect of its obligations under this Guarantee.
(e) Interest
The Guarantor agrees to pay interest on each amount demanded of
it under this Guarantee from the date of such demand until
payment (as well after as before judgment) at the rate one per
cent per annum above the aggregate of LIBOR and the Additional
Cost calculated on a day to day basis. Such interest shall be
compounded at the end of each period determined for this purpose
by the Bank in the event of it not being paid when demanded but
without prejudice to the Bank's right to require payment of such
interest provided that, to the extent that the Bank recovers from
the Borrower or the Guarantor interest at the rate referred to in
clause 6.2 of the Agreement on any unpaid sum under the Agreement
in respect of which demand is made on the Guarantor under this
Guarantee in relation to the period from the date of such demand
until payment, it shall not be entitled to recover under this
clause 2(e) interest on such unpaid sum so demanded.
(f) Continuing security and other matters
This Guarantee shall:
(i) secure the ultimate balance from time to time owing to the Bank by the
Borrower and shall be a continuing security, notwithstanding any settlement
of account or other matter whatsoever;
(ii) be in addition to any present or future Collateral Instrument, right or
remedy held by or available to the Bank; and
(iii) not be in any way prejudiced or affected by the existence of any
such Collateral Instrument, rights or remedies or by the same becoming
wholly or in part void, voidable or unenforceable on any ground whatsoever
or by the Bank dealing with, exchanging, varying or failing to perfect or
enforce any of the same or giving time for payment or indulgence or
compounding with any other person liable.
(g) New accounts
If this Guarantee ceases to be continuing for any reason
whatsoever the Bank may nevertheless continue any account of the
Borrower or open one or more new accounts and the liability of
the Guarantor under this Guarantee shall not in any manner be
reduced or affected by any subsequent transactions or receipts or
payments into or out of any such account.
(h) Liability unconditional
The liability of the Guarantor shall not be affected nor shall
this Guarantee be discharged or reduced by reason of:
(i) the Incapacity or any change in the name, style or constitution of the
Borrower or any other person liable;
(ii) the Bank granting any time, indulgence or concession to, or compounding
with, discharging, releasing or varying the liability of, the Borrower or
any other person liable or renewing, determining, varying or increasing any
accommodation, facility or transaction or otherwise dealing with the same in
any manner whatsoever or concurring in, accepting or varying any compromise,
arrangement or settlement or omitting to claim or enforce payment from the
Borrower or any other person liable; or
(iii) any act or omission which would not have discharged or affected
the liability of the Guarantor had it been a principal debtor instead of a
guarantor or by anything done or omitted which but for this provision might
operate to exonerate the Guarantor.
(i) Collateral Instruments
The Bank shall not be obliged to make any claim or demand on the
Borrower or to resort to any Collateral Instrument or other means
of payment now or hereafter held by or available to them or it
before enforcing this Guarantee and no action taken or omitted by
the Bank in connection with any such Collateral Instrument or
other means of payment shall discharge, reduce, prejudice or
affect the liability of the Guarantor under this Guarantee nor
shall the Bank be obliged to apply any money or other property
received or recovered in consequence of any enforcement or
realisation of any such Collateral Instrument or other means of
payment in reduction of the Guaranteed Liabilities.
(j) Waiver of Guarantor's rights
Until all the Guaranteed Liabilities have been paid, discharged
or satisfied in full (and notwithstanding payment of a dividend
in any liquidation or under any compromise or arrangement) the
Guarantor agrees that, without the prior written consent of the
Bank, it will not:
(i) exercise its rights of subrogation, reimbursement and indemnity against
the Borrower or any other person liable;
(ii) demand or accept repayment in whole or in part of any indebtedness now
or hereafter due to the Guarantor from the Borrower or from any other person
liable or demand or accept any Collateral Instrument in respect of the same
or dispose of the same;
(iii) take any step to enforce any right against the Borrower or any
other person liable in respect of any Guaranteed Liabilities; or
(iv) claim any set-off or counterclaim against the Borrower or any other
person liable or claim or prove in competition with the Bank in the
liquidation of the Borrower or any other person liable or have the benefit
of, or share in, any payment from or composition with, the Borrower or any
other person liable or any other Collateral Instrument now or hereafter held
by the Bank for any Guaranteed Liabilities or for the obligations or
liabilities of any other person liable but so that, if so directed by the
Bank, it will prove for the whole or any part of its claim in the
liquidation of the Borrower on terms that the benefit of such proof and of
all money received by it in respect thereof shall be held on trust for the
Bank and applied in or towards discharge of the Guaranteed Liabilities in
such manner as the Bank shall deem appropriate.
(k) Suspense accounts
Any money received in connection with this Guarantee (whether
before or after any Incapacity of the Borrower or the Guarantor)
which do not fully discharge the Guarantor's obligations under
this Guarantee in respect of any Guaranteed Liabilities (actual
or contingent, present or future) may be placed to the credit of
a suspense account with a view to preserving the rights of the
Bank to prove for the whole of its claims against the Borrower or
any other person liable or may be applied in or towards
satisfaction of such of the Guaranteed Liabilities as the Bank
may from time to time conclusively determine in its absolute
discretion.
(l) Settlements conditional
Any release, discharge or settlement between the Guarantor and
the Bank shall be conditional upon no security, disposition or
payment to the Bank by the Borrower or any other person liable
being void, set aside or ordered to be refunded pursuant to any
enactment or law relating to bankruptcy, liquidation,
administration or insolvency or for any other reason whatsoever
and if such condition shall not be fulfilled the Bank shall be
entitled to enforce this Guarantee subsequently as if such
release, discharge or settlement had not occurred and any such
payment had not been made.
(m) Guarantor to deliver up certain property
If, contrary to clauses 2(d) or 2(j), the Guarantor takes or
receives the benefit of any security or receives or recovers any
money or other property, such security, money or other property
shall be held on trust for the Bank and shall be delivered to the
Bank on demand.
(n) Retention of this Guarantee
The Bank shall be entitled to retain this Guarantee after as well
as before the payment or discharge of all the Guaranteed
Liabilities for such period as the Bank may determine.
3Payments and Taxes
(a) No set-off or counterclaim; distribution to the Bank
The Guarantor acknowledges that, in performing its obligations
under the Agreement, the Bank will be incurring liabilities to
third parties in relation to the funding of amounts advanced to
the Borrower, such liabilities matching the liabilities of the
Borrower to the Bank, and that it is reasonable for the Banks to
be entitled to receive payments from the Borrower gross on the
due date in order that the Bank is put in a position to perform
their matching obligations to the relevant third parties.
Accordingly all payments to be made by the Guarantor under this
Guarantee shall be made in full, without any set-off or
counterclaim whatsoever unless a winding-up order or
administration order or an analogous order in the jurisdiction of
the Bank's incorporation or principal place of business has been
made in respect of the Bank and, subject as provided in
clause 3(b), free and clear of any deductions or withholdings, in
Sterling (except for costs, charges and expenses which shall be
payable in the currency in which they are incurred) on the due
date to the account of the Bank at such bank as the Bank may from
time to time specify for this purpose.
(b) Grossing-up for Taxes
If at any time the Guarantor is required to make any deduction or
withholding in respect of Taxes from any payment due under this
Guarantee for the account of the Bank (or if the Bank is required
to make any such deduction or withholding from a payment to a
Bank), the sum due from the Guarantor in respect of such payment
shall be increased to the extent necessary to ensure that, after
the making of such deduction or withholding, the Bank receives on
the due date for such payment (and retains, free from any
liability in respect of such deduction or withholding) a net sum
equal to the sum which it would have received had no such
deduction or withholding been required to be made and the
Guarantor shall indemnify the Bank against any losses or costs
incurred by any of them by reason of any failure of the Guarantor
to make any such deduction or withholding or by reason of any
increased payment not being made on the due date for such
payment. The Guarantor shall promptly deliver to the Bank any
receipts, certificates or other proof evidencing the amounts (if
any) paid or payable in respect of any deduction or withholding
as aforesaid.
(c) Claw-back of Tax benefit
If following any such deduction or withholding as is referred to
in clause 3(b) from any payment by the Guarantor, the Bank shall
receive or be granted a credit against or remission for any Taxes
payable by it, the Bank shall, subject to the Guarantor having
made any increased payment in accordance with clause 3(b) and to
the extent that the Bank can do so without prejudicing the
retention of the amount of such credit or remission and without
prejudice to the right of the Bank to obtain any other relief or
allowance which may be available to it, reimburse the Guarantor
with such amount as the Bank shall in its absolute discretion
certify to be the proportion of such credit or remission as will
leave the Bank (after such reimbursement) in no worse position
than it would have been in had there been no such deduction or
withholding from the payment by the Guarantor as aforesaid. Such
reimbursement shall be made forthwith upon the Bank certifying
that the amount of such credit or remission has been received by
it. Nothing contained in this Guarantee shall oblige the Bank to
rearrange its tax affairs or to disclose any information
regarding its tax affairs and computations. Without prejudice to
the generality of the foregoing, the Guarantor shall not, by
virtue of this clause 3(c), be entitled to enquire about the
Bank's tax affairs.
(d) Currency indemnity
(i) making or filing a claim or proof against the Guarantor, (ii) obtaining
an order or judgment in any court or other tribunal or (iii) enforcing any
order or judgment given or made in relation to this Guarantee, the Guarantor
shall indemnify and hold harmless the Bank from and against any loss
suffered as a result of any difference between (A) the rate of exchange used
for such purpose to convert the sum in question from the first currency into
the second currency and (B) the rate or rates of exchange at which the Bank
may in the ordinary course of business purchase the first currency with the
second currency upon receipt of a sum paid to it in satisfaction, in whole
or in part, of any such order, judgment, claim or proof. Any amount due
from the Guarantor under this clause 3(d) shall be due as a separate debt
and shall not be affected by judgment being obtained for any other sums due
under or in respect of this Guarantee and the term "rate of exchange"
includes any premium and costs of exchange payable in connection with the
purchase of the first currency with the second currency.
4Set-off
If an Event of Default shall have occurred and be continuing and
the Bank shall have declared the Loan, or the Loan shall have
become automatically, immediately due and payable pursuant to
clause 12.2 of the Agreement, the Bank and each bank which is an
Affiliate of the Bank are hereby authorised at any time and from
time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other
Indebtedness at any time owing by the Bank or any of its
Affiliates to or for the credit or account of the Guarantor
against any of and all the obligations of the Guarantor now or
hereafter existing under this Guarantee and the other Loan
Documents, irrespective of whether or not the Bank shall have
made demand under this Guarantee or such other Loan Document and
although such obligations may be unmatured. The rights of the
Bank under this clause 4 are in addition to such other rights and
remedies (including other rights of set-off) as the Bank may
have.
5Benefit of this Guarantee
(a) Benefit and burden
This Guarantee shall be binding upon the Guarantor and its
successors in title and shall ensure for the benefit of the Bank
and its successors in title and its Assignees. The Guarantor
expressly acknowledges and accepts the provisions of clause 16 of
the Agreement and agrees that any person in favour of whom an
assignment or a transfer is made in accordance with such clause
shall be entitled to the benefit of this Guarantee.
(b) Changes in constitution or reorganisations of Bank
For the avoidance of doubt and without prejudice to the
provisions of clause 5(a), this Guarantee shall remain binding on
the Guarantor notwithstanding any change in the constitution of
the Bank or its absorption in, or amalgamation with, or the
acquisition of all or part of its undertaking or assets by, any
other person, or any reconstruction or reorganisation of any
kind, to the intent that this Guarantee shall remain valid and
effective in all respects in favour of any assignee, transferee
or other successor in title of the Bank in the same manner as if
such assignee, transferee or other successor in title had been
named in this Guarantee as a party instead of, or in addition to,
the Bank.
(c) No assignment by Guarantor
The Guarantor may not assign or transfer any of its rights or
obligations under this Guarantee.
(d) Disclosure of information
The Bank may disclose to a prospective assignee or to any person
who may otherwise enter into contractual relations with the Bank
in relation to the Agreement or the Note (who is, in any such
case, permitted pursuant to clause 16.3 of the Agreement) such
information about the Guarantor as the Bank shall consider
appropriate, subject to such potential assignee or person having
first entered into a confidentiality undertaking in terms similar
to those of clause 16.9 of the Agreement.
6Notices and other matters
(a) Notice
Every notice, request, demand or other communication under this
Guarantee shall:
(i) be in writing delivered personally or by first-class prepaid letter
(airmail if available) or telefax;
(ii) be deemed to have been received, subject as otherwise provided in this
Guarantee, in the case of a letter when delivered personally or 3 days after
it has been put into the post, in the case of a telefax, when a complete and
legible copy is received by the addressee (provided that if the date of
despatch is not a business day in the country of the addressee or if the
time of despatch of any telefax is after the close of business in the
country of the addressee it shall be deemed to have been received at the
opening of business on the next such business day); and
(iii) be sent:
(A) to the Guarantor at:
500 Jackson Street,
Box 3005,
Columbus,
Indiana
47202-3005
Mail Code: 60903
Telefax: 00 1 812 377 3265
Attention: Assistant Treasurer
(A) to the Bank at:
46 Berkeley Street,
London W1X 6AA
Telefax: 0171-322 6032/6421
Attention: Manager, Loans Administration
or to such other address or telefax number as is notified by
the Guarantor or the Bank to the other party to this
Guarantee provided that not less than two Banking Days'
notice shall have been given of such change failing which
such change shall be ineffective.
(b) No implied waivers, remedies cumulative
No failure or delay on the part of the Bank to exercise any
power, right or remedy under this Guarantee shall operate as a
waiver thereof, nor shall any single or partial exercise by the
Bank of any power, right or remedy preclude any other or further
exercise thereof or the exercise of any other power, right or
remedy. The remedies provided in this Guarantee are cumulative
and are not exclusive of any remedies provided by law.
(c) Expenses
The Guarantor agrees to reimburse the Bank on demand for all
legal and other costs, charges and expenses on a full and
unqualified indemnity basis which may be incurred by the Bank in
relation to the enforcement of this Guarantee against the
Guarantor.
7Governing Law and jurisdiction
(a) Law
This Guarantee is governed by and shall be construed in
accordance with English law.
(b) Submission to jurisdiction
The Guarantor agrees for the benefit of the Bank that any legal
action or proceedings arising out of or in connection with this
Guarantee against the Guarantor or any of its assets may be
brought in the English courts and the courts of the United States
of America, the State of New York, the State of Indiana and any
other Relevant Jurisdiction, irrevocably and unconditionally
submits to the jurisdiction of such courts and irrevocably
designates, appoints and empowers (i) Cummins Engine Company
Limited (No. 573951), attention: Gavin Sinclair (Assistant
General Counsel) at present of 46-50 Coombe Road, New Malden,
Surrey KT3 4QL to receive for it and on its behalf, service of
process issued out of the English courts in any such legal action
or proceedings and (ii) CT Corporation at present of 1633
Broadway, NY 10019, New York, United States of America to receive
for it and on its behalf, service of process issued out of the
State Courts of and the Federal Courts in, the State of New York
in any such legal action or proceedings. The submission to such
jurisdiction shall not (and shall not be construed so as to)
limit the right of the Bank to take proceedings against the
Guarantor in the courts of any other competent jurisdiction, nor
shall the taking of proceedings in any one or more jurisdictions
preclude the taking of proceedings in any other jurisdiction,
whether concurrently or not. The parties further agree that only
the courts of England and not those of any other place shall have
jurisdiction to determine any claim which the Guarantor may have
against the Bank arising out of or in connection with this
Guarantee.
(c) Inconvenient forum
The Guarantor irrevocably waives (and irrevocably agrees not to
raise) any objection which it may have now or hereafter to the
laying of the venue of any action or any claim that any such
action or proceedings has been brought in an inconvenient forum
and further irrevocably agrees that a judgment brought in any
court referred to in clause 7(b) shall be conclusive and binding
upon the Guarantor and may be enforced in the courts of any other
jurisdiction.
(d) Service of process on the Guarantor
If either agent referred to in clause 7(b) (or any replacement
agent appointed pursuant to this clause 7(d)) at any time ceases
for any reason to act as such, the Guarantor shall appoint either
a body corporate incorporated in England with an office in
England or a firm of solicitors with an office in England or a
body corporate with a place of business in the State of New York
or a firm of lawyers with an office in the State of New York (as
the case may be) as replacement agent to accept service of
process on behalf of the Guarantor and shall notify the Bank of
the name and address of the replacement agent together with its
declaration or acceptance; failing such appointment and
notification, the Bank shall be entitled by notice to the
Guarantor to appoint such a replacement agent to act on the
Guarantor's behalf.
(e) Waiver of jury trial, etc.
(i) Except as prohibited by law, each party hereto hereby waives
any right it may have to a trial by jury in the United
States of America or any state thereof in respect of any
litigation directly or indirectly arising out of, under or
in connection with this Guarantee, any document or agreement
entered into in connection herewith and any of the
transactions contemplated hereby or thereby.
(ii) Except as prohibited by law, each party hereto hereby waives
any right it may have to claim or recover in any litigation
referred to in clause 7(e)(i) any special, indirect,
exemplary, punitive or consequential damages or any damages
other than, or in addition to, actual damages.
(iii) Each party hereto (A) certifies that no representative,
gent or attorney of any other party has represented to it,
expressly or otherwise, that such other party would not, in
the event of litigation, seek to enforce the foregoing
waivers and (B) acknowledges that it and the other parties
hereto have been induced to enter into this Guarantee by,
among other things, the mutual waivers and certifications in
this clause 7(e).
IN WITNESS whereof the parties to this Guarantee have caused this
Guarantee to be duly executed on the date first above written.
SIGNED for and )
on behalf of )
CUMMINS ENGINE COMPANY, INC.)
by )
SIGNED for and )
on behalf of )
THE BANK OF NEW YORK )
by )
<PAGE>
DATED 31st January, 1996
CUMMINS ENGINE COMPANY, INC.(1)
and
SOCIETE GENERALE (2)
___________________________
GUARANTEE
___________________________
Norton Rose
London
<PAGE>
CONTENTS
Clause Heading Page
1 Interpretation 1
(a) Defined expressions 1
(b) Definitions 2
(c) Headings 2
(d) Construction of certain terms 2
2 Guarantee 3
(a) Covenant to pay 3
(b) Guarantor as principal debtor; indemnity 3
(c) Statements of account conclusive 3
(d) No security taken by Guarantor 4
(e) Interest 4
(f) Continuing security and other matters 4
(g) New accounts 4
(h) Liability unconditional 5
(i) Collateral Instruments 5
(j) Waiver of Guarantor's rights 5
(k) Suspense accounts 6
(l) Settlements conditional 6
(m) Guarantor to deliver up certain property 6
(n) Retention of this Guarantee 7
3 Payments and Taxes 7
(a) No set-off or counterclaim; distribution to the Bank 7
(b) Grossing-up for Taxes 7
(c) Claw-back of Tax benefit 7
(d) Currency indemnity 8
4 Set-off 8
5 Benefit of this Guarantee 9
(a) Benefit and burden 9
(b) Changes in constitution or reorganisations of Bank 9
(c) Assignment by Guarantor 9
(d) Disclosure of information 9
6 Notices and other matters 10
(a) Notice 10
(b) No implied waivers, remedies cumulative 10
(c) Expenses 11
7 Governing Law and jurisdiction 11
(a) Law 11
(b) Submission to jurisdiction 11
(c) Inconvenient forum 11
(d) Service of process on the Guarantor 12
(e) Waiver of jury trial, etc. 12
THIS GUARANTEE is dated 31st January, 1996 and made BETWEEN:
(1) CUMMINS ENGINE COMPANY, INC., a corporation duly organised and
existing under the laws of the State of Indiana, with its
principal office at 500 Jackson Street, Box 3005, Columbus,
Indiana 47202-3005, as Guarantor; and
(2) SOCIETE GENERALE of Exchange House, Primrose Street, London EC2A
2HT as Bank.
WHEREAS:
(A) By an agreement (the "Agreement") dated 31st January, 1996 and
made between Cummins Finance Limited (1), the Guarantor (2) and
the Bank (3), the Bank has agreed, upon and subject to the terms
and conditions of the Agreement, to make available to the
Borrower a perpetual loan facility of UK sterling.
(B) The execution and delivery of this Guarantee is one of the
conditions precedent to the Bank making its Commitment available
under the Agreement.
IT IS AGREED as follows:
1Interpretation
(a) Defined expressions
In this Guarantee, unless the context otherwise requires or
unless otherwise defined in this Guarantee, words and expressions
defined in the Agreement and used in this Guarantee shall have
the same meaning where used in this Guarantee.
(b) Definitions
In this Guarantee, unless the context otherwise requires:
"Collateral Instruments" means notes, bills of exchange,
certificates of deposit and other negotiable and non-negotiable
instruments, guarantees, and any other documents or instruments
which contain or evidence an obligation (with or without
security) to pay, discharge or be responsible directly or
indirectly for, any indebtedness or liabilities of the Borrower
or any other person liable and includes Security Documents;
"Guarantee" includes each separate or independent stipulation or
agreement by the Guarantor contained in this Guarantee;
"Guaranteed Liabilities" means all moneys, obligations and
liabilities expressed to be guaranteed by the Guarantor in
clause 2(a);
"Incapacity" means in relation to a person the death, bankruptcy,
unsoundness of mind, insolvency, liquidation, dissolution,
winding-up, administration, receivership, amalgamation,
reconstruction or other incapacity of that person whatsoever
(and, in the case of a partnership, includes the termination or
change in the composition of the partnership);
"Security Documents" means documents or instruments creating or
evidencing a mortgage, charge (whether fixed or floating),
pledge, lien, hypothecation, assignment, trust arrangement or
security interest of any kind.
(c) Headings
Clause headings are inserted for convenience of reference only
and shall be ignored in the interpretation of this Guarantee.
(d) Construction of certain terms
In this Guarantee, unless the context otherwise requires:
(i) references to clauses are to be construed as references to the clauses
of this Guarantee;
(ii) references to (or to any specified provision of) this Guarantee or any
other document shall be construed as references to this Guarantee, that
provision or that document as in force for the time being and as amended
from time to time in accordance with the terms thereof, or, as the case may
be, with the agreement of the relevant parties and (where such consent is,
by the terms of this Guarantee or the relevant document, required to be
obtained as a condition to such amendment being permitted) the prior written
consent of the Bank;
(iii) references to a "regulation" include any present or future
regulation, rule, directive, requirement, request, code of practice or
guideline (whether or not having the force of law, but if not having the
force of law compliance with which is customary by persons to whom the same
would normally relate) of any Governmental Authority;
(v) references to a time of day are to London time;
(vi) references to a person shall be construed as including references to an
individual, firm, company, corporation, unincorporated body of persons or
any State or any agency thereof;
(vii) references to a "guarantee" include references to an indemnity or
other assurance against financial loss including, without limitation, an
obligation to purchase assets or services as a consequence of a default by
any other person to pay any Indebtedness and "guaranteed" shall be construed
accordingly; and
(viii) references to any enactment shall be deemed to include references
to such enactment as re-enacted, amended or extended.
2Guarantee
(a) Covenant to pay
In consideration of the Bank making the Loan available to the
Borrower pursuant to the Agreement the Guarantor hereby
guarantees to pay to the Bank, on demand by the Bank all moneys
and discharge all obligations and liabilities now or hereafter
due, owing or incurred by the Borrower to the Bank under or
pursuant to the Agreement and/or the Note prior to and including
the fourteenth Interest Payment Date when the same become due for
payment or discharge whether by acceleration or otherwise.
Notwithstanding any other provision of this Guarantee, the
Guarantor shall have no obligations hereunder following the
fourteenth Interest Payment Date save in respect of the
Guaranteed Liabilities then due and payable or obligations which
fall to be performed prior to such date but which remain to be
discharged in full.
(b) Guarantor as principal debtor; indemnity
As a separate and independent stipulation, the Guarantor agrees
that if any purported obligation or liability of the Borrower
which would have been the subject of this Guarantee had it been
valid and enforceable is not or ceases to be valid or enforceable
against the Borrower on any ground whatsoever whether or not
known to the Bank (including, without limitation, any irregular
exercise or absence of any corporate power or lack of authority
of, or breach of duty by, any person purporting to act on behalf
of the Borrower or any legal or other limitation, whether under
the Limitation Acts or otherwise or any disability or Incapacity
or any change in the constitution of the Borrower) the Guarantor
shall nevertheless be liable to the Bank in respect of that
purported obligation or liability as if the same were fully valid
and enforceable and the Guarantor were the principal debtor in
respect thereof. The Guarantor hereby agrees to keep the Bank
fully indemnified on demand against all damages, losses, costs
and expenses arising from any failure of the Borrower to perform
or discharge any such purported obligation or liability.
(c) Statements of account conclusive
Any statement of account of the Borrower, signed as correct by an
officer of the Bank, showing the amount of the Guaranteed
Liabilities shall be prima facie evidence as to that account.
(d) No security taken by Guarantor
The Guarantor warrants that it has not taken or received, and
undertakes that until all the Guaranteed Liabilities of the
Borrower have been paid or discharged in full, it will not take
or receive, the benefit of any security from the Borrower or any
other person in respect of its obligations under this Guarantee.
(e) Interest
The Guarantor agrees to pay interest on each amount demanded of
it under this Guarantee from the date of such demand until
payment (as well after as before judgment) at the rate one per
cent per annum above the aggregate of LIBOR and the Additional
Cost calculated on a day to day basis. Such interest shall be
compounded at the end of each period determined for this purpose
by the Bank in the event of it not being paid when demanded but
without prejudice to the Bank's right to require payment of such
interest provided that, to the extent that the Bank recovers from
the Borrower or the Guarantor interest at the rate referred to in
clause 6.2 of the Agreement on any unpaid sum under the Agreement
in respect of which demand is made on the Guarantor under this
Guarantee in relation to the period from the date of such demand
until payment, it shall not be entitled to recover under this
clause 2(e) interest on such unpaid sum so demanded.
(f) Continuing security and other matters
This Guarantee shall:
(i) secure the ultimate balance from time to time owing to the Bank by the
Borrower and shall be a continuing security, notwithstanding any settlement
of account or other matter whatsoever;
(ii) be in addition to any present or future Collateral Instrument, right or
remedy held by or available to the Bank; and
(iii) not be in any way prejudiced or affected by the existence of any
such Collateral Instrument, rights or remedies or by the same becoming
wholly or in part void, voidable or unenforceable on any ground whatsoever
or by the Bank dealing with, exchanging, varying or failing to perfect or
enforce any of the same or giving time for payment or indulgence or
compounding with any other person liable.
(g) New accounts
If this Guarantee ceases to be continuing for any reason
whatsoever the Bank may nevertheless continue any account of the
Borrower or open one or more new accounts and the liability of
the Guarantor under this Guarantee shall not in any manner be
reduced or affected by any subsequent transactions or receipts or
payments into or out of any such account.
(h) Liability unconditional
The liability of the Guarantor shall not be affected nor shall
this Guarantee be discharged or reduced by reason of:
(i) the Incapacity or any change in the name, style or constitution of the
Borrower or any other person liable;
(ii) the Bank granting any time, indulgence or concession to, or compounding
with, discharging, releasing or varying the liability of, the Borrower or
any other person liable or renewing, determining, varying or increasing any
accommodation, facility or transaction or otherwise dealing with the same in
any manner whatsoever or concurring in, accepting or varying any compromise,
arrangement or settlement or omitting to claim or enforce payment from the
Borrower or any other person liable; or
(iii) any act or omission which would not have discharged or affected
the liability of the Guarantor had it been a principal debtor instead of a
guarantor or by anything done or omitted which but for this provision might
operate to exonerate the Guarantor.
(i) Collateral Instruments
The Bank shall not be obliged to make any claim or demand on the
Borrower or to resort to any Collateral Instrument or other means
of payment now or hereafter held by or available to them or it
before enforcing this Guarantee and no action taken or omitted by
the Bank in connection with any such Collateral Instrument or
other means of payment shall discharge, reduce, prejudice or
affect the liability of the Guarantor under this Guarantee nor
shall the Bank be obliged to apply any money or other property
received or recovered in consequence of any enforcement or
realisation of any such Collateral Instrument or other means of
payment in reduction of the Guaranteed Liabilities.
(j) Waiver of Guarantor's rights
Until all the Guaranteed Liabilities have been paid, discharged
or satisfied in full (and notwithstanding payment of a dividend
in any liquidation or under any compromise or arrangement) the
Guarantor agrees that, without the prior written consent of the
Bank, it will not:
(i) exercise its rights of subrogation, reimbursement and indemnity against
the Borrower or any other person liable;
(ii) demand or accept repayment in whole or in part of any indebtedness now
or hereafter due to the Guarantor from the Borrower or from any other person
liable or demand or accept any Collateral Instrument in respect of the same
or dispose of the same;
(iii) take any step to enforce any right against the Borrower or any
other person liable in respect of any Guaranteed Liabilities; or
(iv) claim any set-off or counterclaim against the Borrower or any other
person liable or claim or prove in competition with the Bank in the
liquidation of the Borrower or any other person liable or have the benefit
of, or share in, any payment from or composition with, the Borrower or any
other person liable or any other Collateral Instrument now or hereafter held
by the Bank for any Guaranteed Liabilities or for the obligations or
liabilities of any other person liable but so that, if so directed by the
Bank, it will prove for the whole or any part of its claim in the
liquidation of the Borrower on terms that the benefit of such proof and of
all money received by it in respect thereof shall be held on trust for the
Bank and applied in or towards discharge of the Guaranteed Liabilities in
such manner as the Bank shall deem appropriate.
(k) Suspense accounts
Any money received in connection with this Guarantee (whether
before or after any Incapacity of the Borrower or the Guarantor)
which do not fully discharge the Guarantor's obligations under
this Guarantee in respect of any Guaranteed Liabilities (actual
or contingent, present or future) may be placed to the credit of
a suspense account with a view to preserving the rights of the
Bank to prove for the whole of its claims against the Borrower or
any other person liable or may be applied in or towards
satisfaction of such of the Guaranteed Liabilities as the Bank
may from time to time conclusively determine in its absolute
discretion.
(l) Settlements conditional
Any release, discharge or settlement between the Guarantor and
the Bank shall be conditional upon no security, disposition or
payment to the Bank by the Borrower or any other person liable
being void, set aside or ordered to be refunded pursuant to any
enactment or law relating to bankruptcy, liquidation,
administration or insolvency or for any other reason whatsoever
and if such condition shall not be fulfilled the Bank shall be
entitled to enforce this Guarantee subsequently as if such
release, discharge or settlement had not occurred and any such
payment had not been made.
(m) Guarantor to deliver up certain property
If, contrary to clauses 2(d) or 2(j), the Guarantor takes or
receives the benefit of any security or receives or recovers any
money or other property, such security, money or other property
shall be held on trust for the Bank and shall be delivered to the
Bank on demand.
(n) Retention of this Guarantee
The Bank shall be entitled to retain this Guarantee after as well
as before the payment or discharge of all the Guaranteed
Liabilities for such period as the Bank may determine.
3Payments and Taxes
(a) No set-off or counterclaim; distribution to the Bank
The Guarantor acknowledges that, in performing its obligations
under the Agreement, the Bank will be incurring liabilities to
third parties in relation to the funding of amounts advanced to
the Borrower, such liabilities matching the liabilities of the
Borrower to the Bank, and that it is reasonable for the Banks to
be entitled to receive payments from the Borrower gross on the
due date in order that the Bank is put in a position to perform
their matching obligations to the relevant third parties.
Accordingly all payments to be made by the Guarantor under this
Guarantee shall be made in full, without any set-off or
counterclaim whatsoever unless a winding-up order or
administration order or an analogous order in the jurisdiction of
the Bank's incorporation or principal place of business has been
made in respect of the Bank and, subject as provided in
clause 3(b), free and clear of any deductions or withholdings, in
Sterling (except for costs, charges and expenses which shall be
payable in the currency in which they are incurred) on the due
date to the account of the Bank at such bank as the Bank may from
time to time specify for this purpose.
(b) Grossing-up for Taxes
If at any time the Guarantor is required to make any deduction or
withholding in respect of Taxes from any payment due under this
Guarantee for the account of the Bank (or if the Bank is required
to make any such deduction or withholding from a payment to a
Bank), the sum due from the Guarantor in respect of such payment
shall be increased to the extent necessary to ensure that, after
the making of such deduction or withholding, the Bank receives on
the due date for such payment (and retains, free from any
liability in respect of such deduction or withholding) a net sum
equal to the sum which it would have received had no such
deduction or withholding been required to be made and the
Guarantor shall indemnify the Bank against any losses or costs
incurred by any of them by reason of any failure of the Guarantor
to make any such deduction or withholding or by reason of any
increased payment not being made on the due date for such
payment. The Guarantor shall promptly deliver to the Bank any
receipts, certificates or other proof evidencing the amounts (if
any) paid or payable in respect of any deduction or withholding
as aforesaid.
(c) Claw-back of Tax benefit
If following any such deduction or withholding as is referred to
in clause 3(b) from any payment by the Guarantor, the Bank shall
receive or be granted a credit against or remission for any Taxes
payable by it, the Bank shall, subject to the Guarantor having
made any increased payment in accordance with clause 3(b) and to
the extent that the Bank can do so without prejudicing the
retention of the amount of such credit or remission and without
prejudice to the right of the Bank to obtain any other relief or
allowance which may be available to it, reimburse the Guarantor
with such amount as the Bank shall in its absolute discretion
certify to be the proportion of such credit or remission as will
leave the Bank (after such reimbursement) in no worse position
than it would have been in had there been no such deduction or
withholding from the payment by the Guarantor as aforesaid. Such
reimbursement shall be made forthwith upon the Bank certifying
that the amount of such credit or remission has been received by
it. Nothing contained in this Guarantee shall oblige the Bank to
rearrange its tax affairs or to disclose any information
regarding its tax affairs and computations. Without prejudice to
the generality of the foregoing, the Guarantor shall not, by
virtue of this clause 3(c), be entitled to enquire about the
Bank's tax affairs.
(d) Currency indemnity
(i) making or filing a claim or proof against the Guarantor, (ii) obtaining
an order or judgment in any court or other tribunal or (iii) enforcing any
order or judgment given or made in relation to this Guarantee, the Guarantor
shall indemnify and hold harmless the Bank from and against any loss
suffered as a result of any difference between (A) the rate of exchange used
for such purpose to convert the sum in question from the first currency into
the second currency and (B) the rate or rates of exchange at which the Bank
may in the ordinary course of business purchase the first currency with the
second currency upon receipt of a sum paid to it in satisfaction, in whole
or in part, of any such order, judgment, claim or proof. Any amount due
from the Guarantor under this clause 3(d) shall be due as a separate debt
and shall not be affected by judgment being obtained for any other sums due
under or in respect of this Guarantee and the term "rate of exchange"
includes any premium and costs of exchange payable in connection with the
purchase of the first currency with the second currency.
4Set-off
If an Event of Default shall have occurred and be continuing and
the Bank shall have declared the Loan, or the Loan shall have
become automatically, immediately due and payable pursuant to
clause 12.2 of the Agreement, the Bank and each bank which is an
Affiliate of the Bank are hereby authorised at any time and from
time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other
Indebtedness at any time owing by the Bank or any of its
Affiliates to or for the credit or account of the Guarantor
against any of and all the obligations of the Guarantor now or
hereafter existing under this Guarantee and the other Loan
Documents, irrespective of whether or not the Bank shall have
made demand under this Guarantee or such other Loan Document and
although such obligations may be unmatured. The rights of the
Bank under this clause 4 are in addition to such other rights and
remedies (including other rights of set-off) as the Bank may
have.
5Benefit of this Guarantee
(a) Benefit and burden
This Guarantee shall be binding upon the Guarantor and its
successors in title and shall ensure for the benefit of the Bank
and its successors in title and its Assignees. The Guarantor
expressly acknowledges and accepts the provisions of clause 16 of
the Agreement and agrees that any person in favour of whom an
assignment or a transfer is made in accordance with such clause
shall be entitled to the benefit of this Guarantee.
(b) Changes in constitution or reorganisations of Bank
For the avoidance of doubt and without prejudice to the
provisions of clause 5(a), this Guarantee shall remain binding on
the Guarantor notwithstanding any change in the constitution of
the Bank or its absorption in, or amalgamation with, or the
acquisition of all or part of its undertaking or assets by, any
other person, or any reconstruction or reorganisation of any
kind, to the intent that this Guarantee shall remain valid and
effective in all respects in favour of any assignee, transferee
or other successor in title of the Bank in the same manner as if
such assignee, transferee or other successor in title had been
named in this Guarantee as a party instead of, or in addition to,
the Bank.
(c) No assignment by Guarantor
The Guarantor may not assign or transfer any of its rights or
obligations under this Guarantee.
(d) Disclosure of information
The Bank may disclose to a prospective assignee or to any person
who may otherwise enter into contractual relations with the Bank
in relation to the Agreement or the Note (who is, in any such
case, permitted pursuant to clause 16.3 of the Agreement) such
information about the Guarantor as the Bank shall consider
appropriate, subject to such potential assignee or person having
first entered into a confidentiality undertaking in terms similar
to those of clause 16.9 of the Agreement.
6Notices and other matters
(a) Notice
Every notice, request, demand or other communication under this
Guarantee shall:
(i) be in writing delivered personally or by first-class prepaid letter
(airmail if available) or telefax;
(ii) be deemed to have been received, subject as otherwise provided in this
Guarantee, in the case of a letter when delivered personally or 3 days after
it has been put into the post, in the case of a telefax, when a complete and
legible copy is received by the addressee (provided that if the date of
despatch is not a business day in the country of the addressee or if the
time of despatch of any telefax is after the close of business in the
country of the addressee it shall be deemed to have been received at the
opening of business on the next such business day); and
(iii) be sent:
(A) to the Guarantor at:
500 Jackson Street,
Box 3005,
Columbus,
Indiana
47202-3005
Mail Code: 60903
Telefax: 00 1 812 377 3265
Attention: Assistant Treasurer
(B) to the Bank at:
Exchange House,
Primrose Street,
London EC2A 2HT
Telefax: 0171-638 6504
Attention: Cathy Byrne, Loans Administration Department
or to such other address or telefax number as is notified by
the Guarantor or the Bank to the other party to this
Guarantee provided that not less than two Banking Days'
notice shall have been given of such change failing which
such change shall be ineffective.
(b) No implied waivers, remedies cumulative
No failure or delay on the part of the Bank to exercise any
power, right or remedy under this Guarantee shall operate as a
waiver thereof, nor shall any single or partial exercise by the
Bank of any power, right or remedy preclude any other or further
exercise thereof or the exercise of any other power, right or
remedy. The remedies provided in this Guarantee are cumulative
and are not exclusive of any remedies provided by law.
(c) Expenses
The Guarantor agrees to reimburse the Bank on demand for all
legal and other costs, charges and expenses on a full and
unqualified indemnity basis which may be incurred by the Bank in
relation to the enforcement of this Guarantee against the
Guarantor.
7Governing Law and jurisdiction
(a) Law
This Guarantee is governed by and shall be construed in
accordance with English law.
(b) Submission to jurisdiction
The Guarantor agrees for the benefit of the Bank that any legal
action or proceedings arising out of or in connection with this
Guarantee against the Guarantor or any of its assets may be
brought in the English courts and the courts of the United States
of America, the State of New York, the State of Indiana and any
other Relevant Jurisdiction, irrevocably and unconditionally
submits to the jurisdiction of such courts and irrevocably
designates, appoints and empowers (i) Cummins Engine Company
Limited (No. 573951), attention: Gavin Sinclair (Assistant
General Counsel) at present of 46-50 Coombe Road, New Malden,
Surrey KT3 4QL to receive for it and on its behalf, service of
process issued out of the English courts in any such legal action
or proceedings and (ii) CT Corporation at present of 1633
Broadway, NY 10019, New York, United States of America to receive
for it and on its behalf, service of process issued out of the
State Courts of and the Federal Courts in, the State of New York
in any such legal action or proceedings. The submission to such
jurisdiction shall not (and shall not be construed so as to)
limit the right of the Bank to take proceedings against the
Guarantor in the courts of any other competent jurisdiction, nor
shall the taking of proceedings in any one or more jurisdictions
preclude the taking of proceedings in any other jurisdiction,
whether concurrently or not. The parties further agree that only
the courts of England and not those of any other place shall have
jurisdiction to determine any claim which the Guarantor may have
against the Bank arising out of or in connection with this
Guarantee.
(c) Inconvenient forum
The Guarantor irrevocably waives (and irrevocably agrees not to
raise) any objection which it may have now or hereafter to the
laying of the venue of any action or any claim that any such
action or proceedings has been brought in an inconvenient forum
and further irrevocably agrees that a judgment brought in any
court referred to in clause 7(b) shall be conclusive and binding
upon the Guarantor and may be enforced in the courts of any other
jurisdiction.
(d) Service of process on the Guarantor
If either agent referred to in clause 7(b) (or any replacement
agent appointed pursuant to this clause 7(d)) at any time ceases
for any reason to act as such, the Guarantor shall appoint either
a body corporate incorporated in England with an office in
England or a firm of solicitors with an office in England or a
body corporate with a place of business in the State of New York
or a firm of lawyers with an office in the State of New York (as
the case may be) as replacement agent to accept service of
process on behalf of the Guarantor and shall notify the Bank of
the name and address of the replacement agent together with its
declaration or acceptance; failing such appointment and
notification, the Bank shall be entitled by notice to the
Guarantor to appoint such a replacement agent to act on the
Guarantor's behalf.
(e) Waiver of jury trial, etc.
(i) Except as prohibited by law, each party hereto hereby waives
any right it may have to a trial by jury in the United
States of America or any state thereof in respect of any
litigation directly or indirectly arising out of, under or
in connection with this Guarantee, any document or agreement
entered into in connection herewith and any of the
transactions contemplated hereby or thereby.
(ii) Except as prohibited by law, each party hereto hereby waives
any right it may have to claim or recover in any litigation
referred to in clause 7(e)(i) any special, indirect,
exemplary, punitive or consequential damages or any damages
other than, or in addition to, actual damages.
(iii) Each party hereto (A) certifies that no representative,
agent or attorney of any other party has represented to it,
expressly or otherwise, that such other party would not, in
the event of litigation, seek to enforce the foregoing
waivers and (B) acknowledges that it and the other parties
hereto have been induced to enter into this Guarantee by,
among other things, the mutual waivers and certifications in
this clause 7(e).
IN WITNESS whereof the parties to this Guarantee have caused this
Guarantee to be duly executed on the date first above written.
SIGNED for and )
on behalf of )
CUMMINS ENGINE COMPANY, INC. )
by )
SIGNED for and )
on behalf of )
SOCIETE GENERALE )
by )
CUMMINS ENGINE COMPANY, INC.
EXHIBIT 11
SCHEDULE OF COMPUTATION OF PER SHARE EARNINGS
FOR THE SECOND QUARTER AND FIRST HALF
ENDED JUNE 30, 1996 & JULY 2, 1995
_____________________________________________
Second Quarter First Half
_________________ _________________
Weighted Weighted
Average Net Average Net
Millions, Except per Share Amounts Shares Earnings Shares Earnings
__________________________________ _______ ________ _______ ________
1996
____
Net earnings 40.0 $ 44 40.1 $ 93
Options .1 - .1 -
____ ____ ____ ____
Used in the determination of
earnings per share 40.1 $ 44 40.2 $ 93
____ ____ ____ ____
____ ____ ____ ____
Primary and fully diluted
earnings per share $1.10 $2.31
_____ _____
_____ _____
1995
____
Net earnings 40.7 $ 69 41.0 $ 136
Options .1 - - -
____ ____ ____ ____
Used in the determination of
earnings per share 40.8 $ 69 41.0 $136
____ ____ ____ ____
____ ____ ____ ____
Primary and fully diluted
earnings per share $1.69 $3.32
_____ _____
_____ _____
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 169
<SECURITIES> 0
<RECEIVABLES> 699
<ALLOWANCES> 0
<INVENTORY> 575
<CURRENT-ASSETS> 1,657
<PP&E> 2,485
<DEPRECIATION> 1,347
<TOTAL-ASSETS> 3,270
<CURRENT-LIABILITIES> 1,045
<BONDS> 262
0
0
<COMMON> 110
<OTHER-SE> 1,117
<TOTAL-LIABILITY-AND-EQUITY> 3,270
<SALES> 2,632
<TOTAL-REVENUES> 2,632
<CGS> 2,016
<TOTAL-COSTS> 488
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8
<INCOME-PRETAX> 133
<INCOME-TAX> 40
<INCOME-CONTINUING> 93
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 93
<EPS-PRIMARY> 2.31
<EPS-DILUTED> 2.31
</TABLE>
