UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 March 29, 1998 Commission File Number 1-4949
______________ ______
Indiana 35-0257090
_______ __________
(State or Other Jurisdiction of (I.R.S. 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 March 29, 1998, the number of shares outstanding of the
registrant's only class of common stock was 42.1 million.
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TABLE OF CONTENTS
_________________
Page No.
________
PART I. FINANCIAL INFORMATION
______________________________
Item 1. Financial Statements
Consolidated Statement of Earnings for the First 3
Quarter Ended March 29, 1998 and March 30, 1997
Consolidated Statement of Financial Position at 4
March 29, 1998 and December 31, 1997
Consolidated Statement of Cash Flows for the First 5
Quarter Ended March 29, 1998 and March 30, 1997
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Results of 8
Operations, Cash Flow and Financial Condition
PART II. OTHER INFORMATION
___________________________
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 12
Index to Exhibits 13
<PAGE>
CUMMINS ENGINE COMPANY, INC.
CONSOLIDATED STATEMENT OF EARNINGS
Unaudited
__________________________________
First Quarter Ended
Millions, except per share amounts 3/29/98 3/30/97
__________________________________ _______ _______
Net sales $1,500 $1,304
Cost of goods sold 1,160 1,018
Special charge 43 -
______ ______
Gross profit 297 286
Selling & administrative expenses 202 178
Research & engineering expenses 67 61
Net expense (income) from joint ventures
and alliances 4 (7)
Interest expense 17 5
Other income, net (7) (7)
______ ______
Earnings before income taxes 14 56
Provision for income taxes 4 15
Minority interest 3 -
______ ______
Net earnings $ 7 $ 41
______ ______
Basic earnings per share $ .18 $ 1.07
Diluted earnings per share .18 1.06
Cash dividends declared per share .275 .25
<PAGE>
CUMMINS ENGINE COMPANY, INC.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited
____________________________________________
Millions, except per share amounts 3/29/98 12/31/97
__________________________________ _______ ________
Assets
Current assets:
Cash and cash equivalents $ 48 $ 49
Receivables 926 771
Inventories 781 677
Other current assets 197 213
______ ______
1,952 1,710
Investments and other assets 351 346
Property, plant & equipment less accumulated
depreciation of $1,515 and $1,434 1,635 1,532
Intangibles, deferred taxes & deferred charges 558 177
______ ______
Total assets $4,496 $3,765
______ ______
Liabilities and shareholders' investment
Current liabilities:
Loans payable $ 32 $ 90
Current maturities of long-term debt 37 42
Accounts payable 458 386
Other current liabilities 582 537
______ ______
1,109 1,055
______ ______
Long-term debt 1,181 522
______ ______
Other liabilities 742 713
______ ______
Minority interest 55 53
______ ______
Shareholders' investment:
Common stock, $2.50 par value, 47.9 and 48.1
shares issued 120 120
Additional contributed capital 1,106 1,119
Retained earnings 708 713
Common stock in treasury, at cost, 5.8 & 6.0 shares (226) (245)
Common stock held in trust for employee benefit
plans, 3.6 and 3.7 shares (174) (175)
Unearned compensation (ESOP) ( 38) ( 42)
Cumulative translation adjustments ( 87) ( 68)
______ _______
1,409 1,422
______ ______
Total liabilities & shareholders' investment $4,496 $3,765
______ ______
<PAGE>
CUMMINS ENGINE COMPANY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited
____________________________________
First Quarter Ended
Millions 3/29/98 3/30/97
________ _______ _______
Cash flows from operating activities:
Net earnings $ 7 $ 41
_____ _____
Adjustments to reconcile net earnings
to net cash from operating activities:
Depreciation and amortization 47 39
Restructuring actions ( 6) ( 4)
Accounts receivable (113) ( 71)
Inventories ( 54) ( 31)
Accounts payable and accrued expenses 120 44
Income taxes payable ( 7) 4
Other 27 8
_____ ______
Total adjustments 14 ( 11)
_____ _____
Net cash provided by operating activities 21 30
_____ _____
Cash flows from investing activities:
Property, plant and equipment:
Additions ( 83) (104)
Disposals 2 7
Investments in joint ventures and alliances ( 20) 3
Acquisition of businesses (453) ( 3)
Other - 1
______ ____
Net cash used in investing activities (554) ( 96)
______ _____
Net cash flows used for operating and
investing activities (533) ( 66)
______ _____
Cash flows from financing activities:
Proceeds from borrowings 710 189
Payments on borrowings (103) ( 9)
Net payments under credit agreements ( 62) ( 70)
Repurchase of common stock - ( 58)
Dividend payments ( 12) ( 10)
Other ( 1) ( 2)
______ ______
Net cash provided from financing activities
532 40
_____ ______
Effect of exchange rate changes on cash - ( 1)
_____ ______
Net change in cash and cash equivalents ( 1) ( 27)
Cash & cash equivalents at beginning of the year 49 108
_____ _____
Cash & cash equivalents at the end of the quarter $ 48 $ 81
_____ _____
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CUMMINS ENGINE COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
______________________________________________
Note 1. Accounting Policies: The Consolidated Financial Statements
for the interim periods ended March 29, 1998 and March 30, 1997 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. Acquisition: In January 1998, Cummins completed the
acquisition of the stock of Nelson Industries, Inc., for $453 million.
Nelson, a filtration and exhaust systems manufacturer, was consolidated
from the date of its acquisition. The purchase price in excess of net
assets will be amortized over 40 years. In the first quarter of 1998,
no valuation adjustments were made to Nelson's assets and liabilities.
Note 3. Special Charge: In the first quarter of 1998, the Company
recorded a one-time charge for product coverage expense primarily
attributable to the recent experience of higher-than-anticipated costs
to repair certain automotive engines manufactured in previous years.
The Company believes it is necessary to make a one-time charge of $43
million pre-tax to accrue for such product coverage costs expected to
be incurred in the future on these engines currently in the field.
Note 4. 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.
Note 5. Long-term Debt: In January 1998, the Company's revolving
credit agreement was amended, forming two $500 million agreements
maturing in 1999 and 2003. In February 1998, the Company issued $765
million face amount of notes and debentures. Net proceeds were used to
finance the acquisition of Nelson and pay down other indebtedness
outstanding at December 31, 1997. The $500 million revolving credit
agreement maturing in 1999 was terminated in March 1998, with the
financing need being replaced by the debt issue.
Note 6. Earnings per Share: Basic earnings per share of common stock
are computed by dividing net earnings by the weighted-average number of
common shares outstanding during the period. Diluted earnings per
share are computed by dividing net earnings by the weighted-average
number of shares, assuming the exercise of stock options. Shares of
stock held by the employee benefits trust are not included in
outstanding shares for EPS until distributed from the trust.
Weighted Per-
Net Average Share
Millions, except per share amounts Earnings Shares Amount
__________________________________ ________ ________ ______
1998
____
Basic $ 7 38.5 $ .18
Options - .4
___ ____
Diluted $ 7 38.9 $ .18
1997
____
Basic $41 38.2 $1.07
Options - .3
___ ____
Diluted $41 38.5 $1.06
Note 7. Comprehensive Income: Effective January 1, 1998, Cummins
adopted SFAS No. 130, a new accounting rule on reporting comprehensive
income. The new rule requires reporting of comprehensive income, which
includes net income and all other nonowner changes in equity during a
period.
First Quarter Ended
Millions March 29, 1998 March 30, 1997
________ ______________ ______________
Net income $ 7 $ 41
Minimum liability for pensions - -
Translation loss (19) (20)
_____ _____
Comprehensive income $(12) $ 21
_____ ____
Note 8. Contingency: The Environmental Protection Agency, the U. S.
Department of Justice and the California Air Resources Board
(collectively the government agencies) have raised concerns with diesel
engine manufacturers, including Cummins, about the level of Nitrogen
Oxide (NOx) emissions from diesel engines under certain driving
conditions. The government agencies also have raised concerns about
the strategies that diesel manufacturers have employed to maximize fuel
economy and lessen other pollutants, while also meeting Clean Air Act
standards for NOx emissions. The government agencies have indicated
that they may conclude that diesel manufacturers have been in violation
of the Clean Air Act and have, therefore, issued conditional
certificates of conformity on the 1998 heavy-duty, on highway diesel
engine models. Cummins believes that it is in full compliance with all
laws and regulations regarding emissions. The government agencies have
not made any final determinations or allegations. The industry and
Cummins are engaged in confidential discussions regarding these
emissions, the technical challenges confronted if new emissions
standards are imposed, the commercial impact of the government's policy
and legal positions and related issues. Both the industry and the
government agencies are taking these concerns and discussions very
seriously and are working diligently toward an amicable resolution. It
is premature to predict the outcome of the discussions or whether the
outcome will have a material effect on Cummins.
<PAGE>
CUMMINS ENGINE COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS,
CASH FLOW AND FINANCIAL CONDITION
_____________________________________________________________
Overview
________
Earnings before interest and taxes in the first quarter of 1998 were
$74 million, excluding the effect of a one-time pre-tax charge of $43
million for product coverage costs related to previously produced
engines. This was 21 percent higher than the first quarter of 1997 on
a 15-percent increase in sales. However, after the higher interest
expense for the acquisition of Nelson, income taxes and minority
interest, the Company's net earnings before the one-time charge were
$37 million or 96 cents per share. Including the charge, net earnings
were $7 million or 18 cents per share. Net earnings in the first
quarter of 1997 were $41 million or $1.06 per share.
Results of Operations
_____________________
Net Sales
_________
Revenues from sales of engines were 55 percent of the Company's net sales
in the first quarter of 1998, with engine revenues 12 percent higher than
first-quarter 1997 and unit shipments 9 percent higher. This positive
variance reflected a mix shift from midrange to heavy-duty engines
in the first quarter of 1998:
First Quarter
Unit Shipments 1998 1997
________________ ______ ______
Midrange Engines 65,000 63,100
Heavy-duty Engines 26,900 20,800
High-horsepower Engines 2,200 2,300
______ ______
94,100 86,200
______ ______
Revenues from non-engine products, which were 45 percent of net sales
in the first quarter of 1998, were 18 percent higher than the first
quarter of 1997. The major changes within non-engine revenues were in
filtration, with the sales of Nelson included from the date of
acquisition by Cummins, and PowerCare (which includes sales of new
parts and remanufactured parts and engines).
The Company's sales for each of its key markets during the comparative
first quarters were:
First Quarter
$ Millions 1998 1997
__________ ______ ______
Automotive $ 684 $ 598
Power Generation 291 275
Industrial 269 257
Filtration and Other 256 174
______ ______
$1,500 $1,304
______ ______
Sales of $684 million in the first quarter of 1998 for automotive
markets were 14 percent higher than the first quarter of 1997. Heavy-
duty truck engine revenues were 39 percent higher than the first
quarter of 1997 on a 40-percent increase in units. The higher level of
sales was due to both the strong market and the Company's higher market
share in North America, as well as continued strong demand in Mexico
and the recovery in European automotive markets.
Revenues from the sales of engines for medium-duty trucks in the first
quarter of 1998 were 18 percent lower than the prior year's quarter on
an 18-percent decrease in units. In North America, the Company was
affected by a shutdown at Ford to relocate production. The effect of
this shutdown was partially offset by higher demand in international
markets, for which unit shipments were 28 percent higher than the year
ago level.
Engine revenues of the bus and light commercial vehicle market were 10
percent higher than the first quarter of 1997 on a 6-percent increase
in unit shipments, with the difference due primarily to pricing on new
engine models. In January, Cummins jointly announced with Chrysler a
new, fully electronic engine -- the ISB -- for the Dodge Ram pickup.
In the first quarter, Cummins shipped 22,200 engines to Chrysler, 8
percent higher than the first-quarter 1997 level, all while ramping up
production for the new engine.
In the first quarter of 1998, the Company's power generation markets
benefited from the consolidation of Cummins India Limited. Without
this, power generation revenues would have been down 3 percent compared
to first quarter 1997. Sales of the Company's generator sets continued
to reflect growth in North America, Latin America and Europe, which
offset declines in demand for generator sets in Southeast Asia, China
and Korea. However, engine sales to generator set assemblers were down
39 percent due to lower demand in Southeast Asia, China, Korea and
markets served from the Company's operations in the United Kingdom.
Sales of all other power generation products were at higher levels than
in the first quarter of 1997.
Sales to industrial markets were 5 percent higher than the first
quarter of 1997, primarily due to strong demand in North American and
European construction markets. Agricultural markets in North America
and Latin America also remained strong.
Filtration and other sales were $82 million higher than the first
quarter of 1997. In January, the Company completed the acquisition of
Nelson whose sales were $76 million in the first quarter.
In total, international markets represented 47 percent of the Company's
revenues in the first quarter of 1998. The Company continued to
benefit from recovery in European automotive markets and increased
industrial business in the first quarter, with Europe and the CIS
representing 13 percent of sales. Business in Mexico, Brazil and Latin
America also continued to be strong. Asian and Australian markets, in
total, represented 13 percent of the Company's sales in the first
quarter. In Australia, sales are primarily for automotive, power
generation and mining markets. In Indonesia, Malaysia, Thailand and
Korea, the Company's business is primarily power generation, industrial
and parts. Business fell in this area in the first quarter, with
revenues almost 60 percent lower than the first quarter of 1997. The
economy in India and portions of China also has slowed.
Gross Margin:
_____________
The Company's gross margin percentage before the special charge for
product coverage costs was 22.7 percent in the first quarter of 1998,
compared to 21.9 percent in the prior year's quarter. The Company's
gross margin percentage benefited from volume in the first quarter of
1998 ($25 million dollars, or 30-percent leverage). In addition, the
acquisition of Nelson and consolidation of Cummins India Limited added
$35 million. Gross margin percentage after the special charge was 19.8
percent in the first quarter of 1998.
Operating Expenses:
___________________
Selling and administrative expenses were 13.4 percent of sales in the
first quarter of 1998, compared to 13.7 percent in the first quarter of
1997. Excluding Nelson and Cummins India Limited, selling and
administrative expenses were $11 million higher than the first quarter
of 1997, due equally to costs of new products, information systems and
Year 2000 projects. Research and engineering expenses were 4.5 percent
of sales in the first quarter of 1998, compared to 4.7 percent in the
prior year's quarter.
The Company's losses from joint ventures and alliances were $4 million
in the first quarter of 1998, compared to income of $7 million in the
first quarter of 1997. The $11 million difference was primarily caused
by the consolidation of Cummins India Limited and higher start-up costs
at the Company's joint venture with Wartsila.
Other:
______
Interest expense was $17 million in the first quarter of 1998. The
increase over the prior year's quarter was due to the increased level
of borrowings to support working capital on the higher sales level and
to complete the acquisition of Nelson. Other income of $7 million was
equal to the first quarter of 1997.
Provision for Income Taxes:
___________________________
The Company's income tax provision in the first quarter of 1998 was $4
million, reflecting an effective tax rate of 29 percent for the year.
Cash Flow and Financial Condition
_________________________________
Key elements of cash flows were:
First Quarter
$ Millions 1998 1997
__________ ______ ______
Net cash used for operating and investing activities $(533) $ (66)
Net cash from financing activities 532 40
Effect of exchange rate changes on cash - ( 1)
______ ______
Net change in cash and cash equivalents $ ( 1) $ (27)
______ ______
In the first quarter of 1998, net cash used for operating and investing
activities was $533 million. This high level of net cash requirements
was due primarily to the acquisition of Nelson and planned capital
expenditures of $83 million. In the first quarter of 1998, the Company
issued $765 million face amount of notes and debentures to support
working capital and to complete the acquisition of Nelson.
As disclosed in Note 8, diesel engine manufacturers, including Cummins,
are involved in discussions with the Environmental Protection Agency,
the US Department of Justice and the California Air Resources Board
regarding diesel engine emissions.
FORWARD-LOOKING STATEMENTS
__________________________
The Company has included certain forward-looking statements in this
Management's Discussion and Analysis of Results of Operations, Cash
Flow and Financial Condition. These statements are based on current
expectations, estimates and projections about the industries in which
the Company operates, management's beliefs and various assumptions made
by management which are difficult to predict. Among the factors that
could affect the outcome of the statements are general industry and
market conditions and growth rates. Therefore, actual outcomes and
their impact on the Company may differ materially from what is
expressed or forecasted. The Company undertakes no obligation to
update publicly any forward-looking statements, whether as a result of
new information, future events or otherwise.
PART II. OTHER INFORMATION
___________________________
Item 4. Submission of Matters to a Vote of Security Holders
____________________________________________________________
The Company held its annual meeting of security holders on April 7,
1998 at which security holders elected 13 directors of the Company for
the ensuing year and ratified the appointment of Arthur Andersen LLP as
auditors for the year 1998.
Results of the voting in connection with each of the items were as
follows:
Voting on Directors:
____________________
For Withheld
__________ ________
H. Brown 32,040,765 826,548
R. Darnall 32,410,308 457,005
J. M. Deutch 32,403,211 464,102
W. Y. Elisha 32,406,962 460,351
H. H. Gray 32,396,085 471,228
J. A. Henderson 32,389,013 478,300
W. I. Miller 32,407,082 460,231
D. S. Perkins 32,394,111 473,202
W. D. Ruckelshaus 32,409,063 458,250
H. B. Schacht 32,401,593 465,720
T. M. Solso 32,356,038 511,275
F. A. Thomas 32,409,662 457,651
J. L. Wilson 32,411,817 455,496
Ratify Appointment of Auditors:
_______________________________
For Against Abstain
__________ _______ _______
35,794,688 302,328 59,879
With regard to the election of directors, votes were cast in favor of
or withheld from each nominee; votes that were withheld were excluded
entirely from the vote and had no effect. Abstentions on the
ratification of the appointment of Arthur Andersen LLP were counted as
present for purposes of determining the existence of a quorum. Under
the rules of the New York Stock Exchange, brokers who held shares in
street names had the authority to vote on certain items when they did
not receive instructions from beneficial owners. Brokers who did not
receive instructions were entitled to vote on the election of
directors. Under applicable Indiana law, a broker non-vote had no
effect on the outcome of the election of directors.
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) On February 19, 1998, the Company filed a Form 8-K Other Event to
report the merger of Safari Inc., a wholly owned subsidiary of the
Company, with and into Nelson Industries, Inc. pursuant to an
Agreement and Plan of Merger dated as of December 3, 1997 among
the Company, Safari Inc. and Nelson Industries, Inc.
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/Rick J. Mills May 1, 1998
________________
Rick J. Mills
Vice President - Corporate Controller
(Chief Accounting Officer)
<PAGE>
CUMMINS ENGINE COMPANY, INC.
____________________________
INDEX TO EXHIBITS
_________________
4(a) Amended and Restated Credit Agreement (filed herewith)
4(b) Credit Agreement (filed herewith)
27 Financial Data Schedule (filed herewith)
CONFORMED COPY
FIVE-YEAR
$500,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
among
CUMMINS ENGINE COMPANY, INC.,
THE BANKS PARTY HERETO,
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Agent
Dated as of January 8, 1998
J.P. MORGAN SECURITIES INC.
Arranger
<PAGE>
TABLE OF CONTENTS
ARTICLE 1Definitions
ARTICLE 2Loans
Section 2.01. Commitments 6
Section 2.02. Competitive Bid Procedure 17
Section 2.03. Standby Borrowing Procedure 19
Section 2.04. Refinancings 20
Section 2.05. Fees 21
Section 2.06. Termination and Reduction of Commitments 21
Section 2.07. Loans 22
Section 2.08. Notes 22
Section 2.09. Interest on Loans 23
Section 2.10. Interest on Overdue Amounts 24
Section 2.11. Alternate Rate of Interest 24
Section 2.12. Prepayment of Loans 25
Section 2.13. Reserve Requirements; Change in Circumstances 26
Section 2.14. Change in Legality 28
Section 2.15. Indemnity 29
Section 2.16. Pro Rata Treatment 29
Section 2.17. Sharing of Setoffs 30
Section 2.18. Payments 30
Section 2.19. Payments on Business Days 30
Section 2.20. Taxes 31
Section 2.21. Tax Reports 32
ARTICLE 3Representations and Warranties
Section 3.01. Organization; Powers 33
Section 3.02. Authorization 34
Section 3.03. Enforceability 34
Section 3.04. Governmental Approvals 34
Section 3.05. Financial Statements 34
Section 3.06. Environmental Matters 35
Section 3.07. Title to Properties; Possession Under Leases 35
Section 3.08. Subsidiaries 36
Section 3.09. Litigation; Compliance with Laws 36
Section 3.10. Non-Existence of Certain Types of Agreements 36
Section 3.11. Federal Reserve Regulations 37
Section 3.12. No Regulatory Restrictions on Borrowing 37
Section 3.13. Tax Returns 37
Section 3.14. Employee Benefit Plans 37
Section 3.15. No Material Misstatements 37
Section 3.16. Merger Agreement 38
ARTICLE 4Conditions
Section 4.01. Conditions to Effectiveness 38
Section 4.02. Conditions to Each Loan 40
ARTICLE 5Affirmative Covenants
Section 5.01. Existence; Businesses and Properties 41
Section 5.02. Insurance 41
Section 5.03. Obligations and Taxes 41
Section 5.04. Financial Statements, Reports, Etc 42
Section 5.05. Litigation and Other Notices 43
Section 5.06. ERISA 43
Section 5.07. Maintaining Records; Access to Properties
and Inspections 44
Section 5.08. Use of Proceeds 44
Section 5.09. Compliance with Laws 44
ARTICLE 6Negative Covenants
Section 6.01. Negative Pledge 45
Section 6.02. Sale and Lease-back Transactions 46
Section 6.03. Mergers, Consolidations, and Sales of Assets 47
Section 6.04. Indebtedness of Subsidiaries 47
Section 6.05. Amendments of Certain Agreements 47
Section 6.06. Net Worth 48
Section 6.07. Leverage 48
Section 6.08. Ownership of Significant Subsidiaries 48
ARTICLE 7Events of Default
ARTICLE 8The Agent
ARTICLE 9Miscellaneous
Section 9.01. Notices 55
Section 9.02. Survival of Agreement 55
Section 9.03. Binding Effect 56
Section 9.04. Successors and Assigns; Participations 56
Section 9.05. Expenses; Indemnity 59
Section 9.06. Right of Setoff 60
Section 9.07. Applicable Law 60
Section 9.08. Waivers; Amendments 60
Section 9.09. Waiver of Jury Trial, Etc 61
Section 9.10. Jurisdiction; Consent to Service of Process 62
Section 9.11. Confidentiality 63
Section 9.12. Entire Agreement 63
Section 9.13. Severability 64
Section 9.14. Counterparts 64
Section 9.15. Headings 64
Schedules
Pricing Schedule
Schedule I Commitments of the Banks
Schedule 3.08 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 January 8,
1998 , among CUMMINS ENGINE COMPANY, INC., an Indiana corporation (the
"Company"), the banks and other financial institutions from time to
time party 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 June 25, 1996
(as amended, supplemented or otherwise modified prior to the Effective
Date (as defined below), the "Existing Credit Agreement"); and
WHEREAS, the Company has requested the Existing Banks to amend
and restate the Existing Credit Agreement as provided herein (i) to
extend the maturity of the Existing Credit Agreement, (ii) to add the
banks listed as New Banks on Schedule I (the "New Banks") as parties
hereto, (iii) to provide for all the Banks to extend credit to the
Company in order to enable it to borrow revolving credit loans and
(iv) 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 Existing Banks are willing so to amend and restate
the Existing Credit Agreement, the New Banks are willing to become
parties thereto and all the Banks are willing to extend the credit and
provide the procedure for uncommitted short-term borrowings requested
by the Company on the terms and conditions herein set forth; and
WHEREAS, on the Effective Date the Existing Agreement will be
amended and restated to read as set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
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.
"Acquisition" shall mean the merger of Safari with and into
Nelson (with Nelson continuing as the surviving corporation and the
separate corporate existence of Safari ceasing).
"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.
"Administrative Questionnaire" shall mean, with respect to each
Bank, an administrative questionnaire in the form prepared by the
Agent, completed by such Bank and returned to the Agent (with a copy
to the Company).
"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 2.
"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 preceding Business Day, the average of the secondary
market quotations for three month certificates of deposit of major
money center banks in New York City received at 10:00 a.m., New York
City time, on such day (or, if such day shall not be a Business Day,
on the next preceding Business Day) by the Agent from three New York
City negotiable certificate of deposit dealers of recognized standing
selected by it. "Federal Funds Effective Rate" shall mean, for any
day, the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the 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 (except Alternate Base Loans), the rate per annum for the
relevant type of Standby Loan determined for such day 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 Morgan's 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 2.
"Change in Control" shall mean that (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.
"Code" shall mean the Internal Revenue Code of 1986, as the same
may be amended from time to time.
"Commitment" shall mean (i) with respect to each Bank listed on
Schedule I, the amount set forth opposite such Bank's name on Schedule
I and (ii) with respect to any Eligible Assignee which becomes a Bank
pursuant to Section 9.04(c), the amount of the transferor Bank's
Commitment assigned to it pursuant to Section 9.04(c), in each case as
such amount may be changed from time to time pursuant to Section 2.06
or 9.04(c); provided that, if the context so requires, the term
"Commitment" means the obligation of a Bank to extend credit up to
such amount to the Company hereunder. 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 2.02.
"Competitive Bid Rate" shall mean, as to any Competitive Bid made
by a Bank pursuant to Section 2.02(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 2.02 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 2.02.
"Competitive Fixed Rate" shall mean, as to any Competitive Bid
made by a Bank pursuant to Section 2.02(b) for Competitive Fixed Rate
Loans, 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 2.
"Competitive LIBO Rate" shall mean, as to any Competitive Bid
made by a Bank pursuant to Section 2.02(b) for Competitive LIBO Rate
Loans, 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 2.
"Competitive Loan" shall mean a Loan from a Bank to the Company
pursuant to the bidding procedure described in Section 2.02, 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
2.08.
"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, except to the extent that the portion thereof
attributable to the Company (through the Company's interest in CDC)
exceeds $100,000,000 and (ii) exclude Guarantees of the Company
outstanding from time to time in an aggregate amount not to exceed
$85,000,000.
"Consolidated Net Income" for any period shall mean the net
earnings (loss) of the Company and its Subsidiaries for such period,
computed and Consolidated in accordance with GAAP, as set forth in the
Consolidated statement of earnings for such period delivered by the
Company pursuant to Section 5.04.
"Continuing Director" shall mean any member of the Board of
Directors of the Company who is not affiliated with an Acquiring
Person and who was a member of the Board of Directors of the Company
immediately prior to the time that the Acquiring Person became an
Acquiring Person and any successor to a Continuing Director who is not
affiliated with the Acquiring Person and is recommended to succeed a
Continuing Director by a majority of Continuing Directors who are then
members of the Board of Directors of the Company.
"Default" shall have the meaning assigned to such term in Section
4.02(c).
"dollars" and the symbol "$" shall mean the lawful currency of
the United States of America.
"Effective Date" shall mean the date on which the conditions set
forth in Section 4.01 are satisfied, which, unless otherwise agreed by
the parties hereto, shall be a date on or before January 23, 1998.
"Eligible Assignee" shall have the meaning assigned to such term
in Section 9.04(c).
"Environmental Laws" shall mean 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 or
any Subsidiary is a member and which is treated as a single employer
under Section 414 of the Code.
"Euro-Dollar Business Day" shall mean any Business Day on which
commercial banks are open for dealings in dollar deposits in the
London Interbank Market.
"Events of Default" shall have the meaning assigned to such term
in Article 7.
"Facility Fee" shall have the meaning assigned to such term in
Section 2.05(a).
"Facility Fee Rate" shall mean, for each day, the rate per annum
determined for such day 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 1.
"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.
"Information Memorandum" shall mean the Information Memorandum
dated December 1997, furnished by JPMSI to a limited number of banks
invited to participate in this Agreement.
"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) with
respect to any Competitive Loan, the last day of the Interest Period
applicable thereto and, if such Competitive Loan bears interest at a
Competitive LIBO Rate with an Interest Period of more than 3 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.
"JPMSI" shall mean J.P. Morgan Securities, Inc.
"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,
are offered to the London Branch of such Reference Bank for a period
of time comparable to the applicable Interest Period 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 2.
"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 January 8, 2003, or, if such day is
not a Euro-Dollar Business Day, the next preceding Euro-Dollar
Business Day.
"Merger Agreement" shall mean the Agreement and Plan of Merger
dated December 3, 1997 among the Company, Safari and Nelson.
"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.
"Nelson" shall mean Nelson Industries, Inc., a Wisconsin
corporation.
"Net Worth" shall mean, at any date, (i) the sum of the Company's
Consolidated 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)
all write-ups subsequent to September 28, 1997, 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 September 28, 1997) and (y) 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
Net Worth the effect of any foreign currency translation adjustments
shall be excluded.
"New Bank" shall mean each Bank listed on Schedule I which is not
an Existing Bank.
"Note" shall mean a Competitive Note or a Standby Note of the
Company, executed and delivered as provided in Section 2.08.
"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" shall mean 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 6.01), (ii) the Attributable Value at such time
of all Sale and Lease-Back Transactions which are restricted by
Section 6.02 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 and
Bank of America National Trust and Savings Association.
"Register" shall have the meaning given such term in Section
9.04(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(c) 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
7, 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.
"Safari" shall mean Safari Inc., a Wisconsin corporation and
direct wholly-owned Subsidiary of the Company formed for purposes of
the Acquisition.
"Sale and Lease-Back Transaction" shall have the meaning assigned
to such term in Section 6.02.
"Significant Subsidiary" shall mean any Subsidiary (which term,
as used in this definition, includes such Subsidiary's 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 5.04(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 5.04(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 5.04(a); or
(iv) such Subsidiary is deemed to be a Significant
Subsidiary pursuant to Section 6.03(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 2.03 in the form of Exhibit A-2.
"Standby Loan" shall have the meaning given such term in Section
2.01.
"Standby Note" shall mean a promissory note of the Company in the
form of Exhibit D-2, executed and delivered as provided in Section
2.08.
"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.
"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 3.02.
"type", when used in respect of any Loan or Borrowing, shall
refer to the Rate by reference to which interest on such Loan or on
the Loans comprising such Borrowing is determined. For purposes
hereof, "Rate" shall 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.
Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all accounting determinations hereunder
shall be made, and all financial statements required to be delivered
hereunder shall be prepared in accordance with GAAP; provided that, if
the Company notifies the Agent that the Company wishes to amend any
provision hereof to eliminate the effect of any change in GAAP (or if
the Agent notifies the Company that the Required Banks wish to amend
any provision hereof for such purpose), then such provision shall be
applied on the basis of GAAP in effect immediately before the relevant
change in GAAP became effective, until either such notice is withdrawn
or such provision is amended in a manner satisfactory to the Company
and the Required Banks. The definitions in this Article 1 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.
ARTICLE 2
Loans
Section 2.1. 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 Effective 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 as of the Effective
Date is set forth opposite its name in Schedule I. Such Commitments
may be terminated or reduced from time to time pursuant to Section
2.06.
Within the foregoing limits, the Company may borrow, repay,
prepay and reborrow hereunder, on and after the Effective Date and
prior to the Maturity Date, subject to the terms, provisions and
limitations set forth herein.
Section 2.2. 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.
(b) 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 such Competitive
Loan. A Competitive Bid submitted by a Bank pursuant to this
paragraph (b) shall be irrevocable.
(c) 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 2.02.
(d) 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 2.02(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.
(e) 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.
(f) 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.
(g) 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
at least 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.
(h) All notices required by this Section 2.02 and by Section
2.03 shall be given in accordance with Section 9.01.
Section 2.3. 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 2.03 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 on the same day and having the same Interest Period.
Section 2.4. 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 2.02 or Section 2.03, 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 2.08 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 2.07(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 2.08 to the extent of such
failure and the Company shall pay such amount to the Agent pursuant to
Section 2.08.
Section 2.5. 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.
(b) The Company agrees to pay to 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.
(c) The Company agrees to pay to the Agent (i) on the Effective
Date, for the account of the Banks, the participation fees described
in a memorandum dated 12/05/97 from JPMSI to potential lenders under
this Agreement and (ii) 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.
Section 2.6. 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, that 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 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.
(b) Simultaneously with any termination or reduction of
Commitments pursuant to this Section 2.06, 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.
Section 2.7. Loans. (a) Each Borrowing made by the Company on
any date shall be 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 2.02(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.
(b) 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 2.03. 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.
(c) Subject to Section 2.04, 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.
Section 2.8. 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 aggregate outstanding principal amount of all
Competitive Loans made by such Bank to the Company. 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 aggregate outstanding
principal amount of all Standby Loans made by such Bank to the
Company. 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 2.09. 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 such 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.
Section 2.9. 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.
(b) 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.
(c) 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. Interest on each Alternate 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.
(d) 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 2.02. Interest on each Competitive Loan shall be payable
on each Interest Payment Date applicable thereto.
(e) 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.
(f) 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.
Section 2.10. 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.
Section 2.11. Alternate Rate of Interest. (a) In the event,
and on each occasion, that on the day two Business Days prior to the
commencement of any Interest Period for a 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.
(b) 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) 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.
Section 2.12. 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
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.
(b) On the date of any termination or reduction of the Total
Commitment pursuant to Section 2.06, 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 Standby Borrowing
or Standby Borrowings as the Company shall select. All prepayments
under this paragraph shall be subject to Sections 2.15 and 2.16.
(c 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.
Section 2.13. Reserve Requirements; Change in Circumstances.
(avi 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.
(b 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.
(cvi If any Bank shall have determined that the adoption after
the date hereof of any law, rule, regulation or guideline regarding
capital adequacy, or any change after the date hereof in any law,
rule, regulation or guideline regarding capital adequacy 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) made after the date hereof by
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.
(dvi 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
9.04) 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.
(evi 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.
Section 2.14. Change in Legality. (avi Notwithstanding
anything to the contrary herein contained, if any change after the
date hereof 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:
(vii 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
(viii 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.
Section 2.15. 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 4, (w) any failure by the Company to borrow hereunder
after a notice of borrowing pursuant to Article 2 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
received by such Bank (net of any applicable margin) 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.
Section 2.16. 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.
Section 2.17. 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 then due and payable to it
shall be proportionately less than the unpaid principal portion of the
Notes then due and payable to any other Bank, it shall simultaneously
purchase from such other Bank at face value a participation in the
Notes held by such other Bank, and such other adjustments shall be
made, so that all such payments shall be shared by the Banks ratably
in proportion to the amounts then due and payable to them; 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.
Section 2.18. 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 (except
as otherwise specified herein), in immediately available funds.
Section 2.19. 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.
Section 2.20. 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 net
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
date hereof 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. For any period with respect to which a
Bank has failed to provide the Company or the Agent with the
appropriate form referred to in Section 2.21 (unless such failure is
due to a change in treaty, law or regulation occurring after the date
on which such form originally was required to be provided), such Bank
shall not be entitled to indemnification pursuant to clause (x) of the
preceding sentence with respect to Taxes imposed by the United States;
provided that if a Bank, that is otherwise exempt from or subject to a
reduced rate of withholding tax, becomes subject to Taxes because of
its failure to deliver a form required hereunder, the Company shall
take such steps as such Bank shall reasonably request to assist such
Bank to recover such Taxes.
(b 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").
(c 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.
(d 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 9.01, the original or a certified copy
of a receipt evidencing payment thereof.
(e Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this
Section 2.20 shall survive the payment in full of principal and
interest hereunder and the termination of this Agreement.
(f 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.
Section 2.21. Tax Reports. (a Each Bank which is organized
under the laws of a jurisdiction outside the United States 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. Such forms shall be provided to the Agent and
the Company (i) on the Effective Date, if such Bank is a party hereto
on such date, or (ii) if such Bank becomes a Bank hereunder pursuant
to an Assignment and Acceptance, on the date of such Assignment and
Acceptance, and (iii) in either case from time to time thereafter (but
only so long as such Bank remains legally able to do so) if requested
by the Company or the Agent or required by the Internal Revenue
Service of the United States. 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.
(b Any Bank that sells any participation pursuant to Section
9.04(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.
ARTICLE 3
Representations and Warranties
The Company represents and warrants to the Agent and to each of
the Banks that:
Section 3.1. 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.
Section 3.2. Authorization. The execution, delivery and
performance by the Company of each of the Loan Documents and the
borrowings hereunder and the consummation of the Acquisition
(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.
Section 3.3. 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.
Section 3.4. Governmental Approvals. No action, consent or
approval of, registration or filing with or other action by any
Governmental Authority is or will be required in connection with the
Transactions, except such as will have been made or obtained on or
before the Effective Date and thereafter will be in full force and
effect.
Section 3.5. Financial Statements. (a The Company has
heretofore furnished to the Banks (i) its Consolidated statement of
financial position and related Consolidated statements of earnings,
cash flows and shareholders' investment as of and for the fiscal year
ended December 31, 1996, audited by and accompanied by the opinion of
Arthur Andersen LLP, independent public accountants, and (ii) its
Consolidated statement of financial position and related Consolidated
statements of earnings and cash flows as of and for the fiscal quarter
ended September 28, 1997, certified by its chief financial officer.
Such financial statements present fairly the financial position of the
Company and its Consolidated Subsidiaries as of such dates and their
results of operations and cash flows 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 position or in the operations of the Company
and its Subsidiaries taken as a whole since September 28, 1997.
Section 3.6. 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.
Section 3.7. 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 6.01.
(b 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.
Section 3.8. Subsidiaries. Schedule 3.08 sets forth as of the
Effective Date a list of all Subsidiaries of the Company and the
percentage ownership interest of the Company therein.
Section 3.9. 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.
Section 3.10. Non-Existence of Certain Types of 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.
(b 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.
(c 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.
Section 3.11. 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.
Section 3.12. No Regulatory Restrictions on Borrowing. The
Company is not (a) an "investment company" as defined in, or subject
to regulation under, the Investment Company Act of 1940, as amended,
(b) a "holding company" or a "subsidiary company" of a holding company
as defined in, or subject to regulation under, the Public Utility
Holding Company Act of 1935 or (iii) subject to any other applicable
regulatory scheme which restricts its ability to incur the
indebtedness to be incurred hereunder.
Section 3.13. 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 5.03.
Section 3.14. 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 position 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 position
of the Company and its ERISA Affiliates taken as a whole.
Section 3.15. No Material Misstatements. (a) As of the
Effective Date, neither the Information Memorandum (other than the
information contained therein concerning Nelson) nor, to the knowledge
of the Company, the information contained in the Information
Memorandum concerning Nelson contains any material misstatement of
fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they
are made, not misleading, and (b) no other 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.
Section 3.16. Merger Agreement. The copy of the Merger
Agreement heretofore delivered to the Agent is a correct and complete
copy thereof.
ARTICLE 4
Conditions
Section 4.1. Conditions to Effectiveness. 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 conforming to the
requirements hereof and executed by a duly authorized officer of
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 to the
effect set forth in Exhibit G (excluding paragraph 4 thereof)
and of Cravath, Swaine & Moore to the effect set forth in
paragraph 4 of Exhibit G, each dated the Effective Date and
addressed to the Agent and the Banks. 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 and covering such other matters incident to the
transactions contemplated by this Agreement as the Agent shall
reasonably require.
(f The Agent and JPMSI shall have received all fees payable
to them on the Effective Date pursuant to Section 2.05.
(g The Company shall have paid in full (or made
arrangements satisfactory to the Agent for payment in full of)
all loans outstanding under the Existing Credit Agreement, all
interest and fees accrued thereunder to the Effective Date and
all other amounts (if any) then due and payable thereunder.
(h The Agent shall have received evidence satisfactory to
it that (i) except for filing the Articles of Merger (as defined
in the Merger Agreement) with the Department of Financial
Institutions of the State of Wisconsin (the "Department of
Financial Institutions"), all of the conditions to the
obligations of the parties thereto to effect the Acquisition
specified in Sections 7.1, 7.2 and 7.3 of the Merger Agreement,
have been fulfilled (without any waiver thereof by the Company),
(ii) the Articles of Merger have been precleared with the
Department of Financial Institutions and (iii) the Articles of
Merger will be filed with the Department of Financial
Institutions and the Acquisition will be consummated on the
Effective Date on terms not less favorable to the Company, in any
material respect, than the terms described in the Information
Memorandum.
(i) 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.
On the Effective Date the Existing Credit Agreement will be
automatically amended and restated in its entirety to read as set
forth herein. On and after the Effective Date the rights and
obligations of the parties hereto shall be governed by this Agreement;
provided that rights and obligations of the parties to the Existing
Credit Agreement with respect to the period prior to the Effective
Date shall continue to be governed by the provisions of the Existing
Credit Agreement. On the Effective Date, each Bank listed on Schedule
I which is not an Existing Bank shall become a Bank party to this
Agreement and the Commitment of each Bank shall become the amount set
forth opposite the name of such Bank on Schedule I. All references to
"the date hereof" or "the date of this Agreement" contained in this
Agreement refer to January 8, 1998. Any Existing Bank not listed on
Schedule I shall upon the Effective Date cease to be a Bank party to
this Agreement; provided that the provisions of Sections 2.13, 2.15,
2.20 and 9.05 thereof shall continue to inure to the benefit of each
such Bank. The Agent shall promptly notify the Company and the Banks
of the Effective Date, and such notice shall be conclusive and binding
on all parties hereto. Promptly after the Effective Date the Agent
will forward to each Bank the Notes received for its account pursuant
to paragraph (b) above and each Existing Bank will cancel the
promissory notes of the Company delivered to it pursuant to the
Existing Credit Agreement.
Section 4.2. 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 2.04, shall be subject to the
following conditions precedent:
(a The Agent shall have received a notice of such Borrowing
as required by Section 2.02 or Section 2.03, as applicable.
(b The representations and warranties set forth in Article
3 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 (after giving effect to the Acquisition if such
Borrowing occurs on the Effective 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 4.02; provided that any such
representation and warranty deemed to be made on the Effective Date
shall, insofar as it relates to Nelson and its subsidiaries, be deemed
to be made to the Company's knowledge.
ARTICLE 5
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:
Section 5.1. 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 6.03.
(b) 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, additions,
improvements and replacements thereto necessary in order that the
business carried on in connection therewith may be properly conducted
at all times.
Section 5.2. 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.
Section 5.3. 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.
Section 5.4. 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 statement of financial position and related
Consolidated statements of earnings, cash flows and shareholders'
investment, showing the financial position of the Company and its
Consolidated Subsidiaries as of the close of such fiscal year and
their results of operations and cash flows for such year, all
audited by Arthur Andersen LLP 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
position, results of operations and cash flows 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 statement
of financial position and related Consolidated statements of
earnings and cash flows showing the financial position of the
Company and its Consolidated Subsidiaries as of the close of such
fiscal quarter and their results of operations for such fiscal
quarter and the then elapsed portion of the fiscal year and their
cash flows for the then elapsed portion of the fiscal year, all
certified by one of its Financial Officers as fairly presenting
the financial position, results of operations and cash flows 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 Sections 6.06 and
6.07;
(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.
Section 5.5. 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.
Section 5.6. 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.
Section 5.7. 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.
Section 5.8. Use of Proceeds. Use the proceeds of the Loans to
finance the Acquisition and for its general corporate purposes.
Section 5.9. 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.
ARTICLE 6
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:
Section 6.1. 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 5.03;
(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 5.03;
(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.
Section 6.2. 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.
Section 6.3. 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 6.03 and that
all conditions precedent herein provided for relating to such
transaction have been complied with.
Section 6.4. Indebtedness of Subsidiaries. In the case of the
Subsidiaries, incur, create, assume or permit to exist any
Indebtedness if, after giving effect thereto, Priority Indebtedness
would exceed $200,000,000.
Section 6.5. 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.
Section 6.6. Net Worth. In the case of the Company, permit Net
Worth to be at any time less than the sum of (a) $1,050,000,000 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 ending March 31, 1998 to and including the most
recent fiscal quarter ended prior to the date on which the calculation
of Net Worth is made (without including any fiscal quarter in which
such Consolidated Net Income is a negative number).
Section 6.7. Leverage. In the case of the Company, permit the
ratio of Consolidated Indebtedness to the sum of Consolidated
Indebtedness and Net Worth to be at any time equal to or greater than
0.55 to 1.0.
Section 6.8. 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.
ARTICLE 7
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 pursuant to any provision of this Agreement 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 5.05(a) or (b),
Section 5.08 or Article 6 and such default shall continue
unremedied for a period of five Business Days after the earlier
of (i) a Responsible 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 any 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
allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of
creditors, (vi) become unable, admit in writing its inability or
fail generally to pay its debts as they become due or (vii) take
any action for the purpose of effecting any of the foregoing;
(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
Section 5.06(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) (i) 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 or 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.
ARTICLE 8
The Agent
In order to facilitate 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 9.05 shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was acting
as Agent.
With respect to the Loans made by 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.
ARTICLE 9
Miscellaneous
Section 9.1. Notices. Notices and other communications provided
for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed or sent by telecopy, 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-
8889; Telecopy No. (812) 377-3347);
(b) if to the Agent, to it at Morgan Guaranty Trust
Company, 60 Wall Street, New York, New York 10260, Attention of
Charles H. King (Telephone No. (212) 648-7138; Telecopy No. (212)
648-5336);
(c) if to a Bank, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire;
or, in the case of any party, at such other address or telecopy
number as such party may hereafter specify by notice to the Agent and
the Company.
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 9.01 or in accordance with
the latest unrevoked direction from such party given in accordance
with this Section 9.01.
Section 9.2. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Company herein and in the
certificates or other instruments prepared or delivered in connection
with or pursuant to this Agreement 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.
Section 9.3. Binding Effect. This Agreement shall become
effective on the Effective Date 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.
Section 9.4. 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 6.03(b)(ii) without the prior
written consent of all the Banks.
(b) 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 Standby
Loans owing to it and the Standby Note 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
provision 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.
(c) Each Bank may without the consent of the Company assign to
an Affiliate of such Bank or with the consent of the Company assign 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; provided, however, that
(i) each such assignment (except an assignment relating only to one or
more outstanding Competitive Loans) shall be of a constant, and not a
varying, percentage of all the assigning Bank's rights and obligations
under this Agreement, other than its rights in respect of outstanding
Competitive Loans which may, but need not, be included in such
assignment, (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
Commitment 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, 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 2.06, 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).
(d) 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 obligations 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 3.05 or 5.04
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.
(e) 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.
(f) Upon its receipt of an Assignment and Acceptance executed by
an assigning Bank and an Eligible Assignee, 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. If such Eligible
Assignee is not a Bank that already has Notes, then within five
Business Days after receipt of such notice, the Company, at its own
expense, shall execute and deliver to the Agent a new Competitive Note
to the order of such Eligible Assignee in an amount equal to the
aggregate outstanding principal amount of all Competitive Loans made
by such Eligible Assignee to the Company and a new Standby Note to the
order of such Eligible Assignee in an amount equal to the aggregate
outstanding principal amount of all Standby Loans made by such
Eligible Assignee to the Company. Such new Competitive Note and
Standby 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. If the assigning Bank has not
retained any Commitment hereunder, the assigning Bank shall cancel its
Standby Note and return it to the Company.
(g) 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 9.04, 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.
(h) Nothing herein shall prohibit any Bank from pledging or
assigning any Note to any Federal Reserve Bank in accordance with
applicable law.
Section 9.5. 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, special 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.
(b) 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 or proposed 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.
(c) The provisions of this Section 9.05 shall remain operative
and in full force and effect regardless of the expiration of the term
of this Agreement, the consummation of the transactions contemplated
hereby, the repayment of any of the Loans, the invalidity or
unenforceability of any term or provision of this Agreement or any
other Loan Document or any investigation made by or on behalf of the
Agent or any Bank. All amounts due under this Section 9.05 shall be
payable on written demand therefor.
Section 9.6. 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
7, 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 9.06 are in addition to other rights and remedies (including
other rights of setoff) which such Bank may have.
Section 9.7. 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.
Section 9.8. 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 Agreement 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.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or
agreements in writing entered into by the Company and the Required
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 9.08 or the definition of the "Required
Banks", or (iv) waive any of the conditions specified in Section 4.01
or 4.02, 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 9.08 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 9.08 shall bind any person
subsequently acquiring a Note from it, whether or not such Note shall
have been so marked.
Section 9.9. 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.
(b) 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 9.09 any special, indirect,
exemplary, punitive or consequential damages or any damages other
than, or in addition to, actual damages.
(c) 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 9.09.
Section 9.10. 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 any 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 the Agent or any 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.
(b) 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.
(c) Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 9.01.
Nothing in this Agreement will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
Section 9.11. Confidentiality. Unless otherwise required by
applicable law, rule or regulation, legal process, 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
Confidential Material may be disclosed by any Bank to its bank
examiners or by any Bank or the Agent to its directors, officers,
legal counsel and independent auditors to the extent reasonably
related to the performance of their duties; 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.
Section 9.12. 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.
Section 9.13. Severability. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document
should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as
close as possible to that of the invalid, illegal or unenforceable
provisions.
Section 9.14. 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 4.01.
Section 9.15. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only,
are not part of this Agreement and are not to affect the construction
of, or to be taken into consideration in interpreting, this Agreement.
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/ Donald W. Trapp
Title: Vice President-Treasurer
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as a Bank and as Agent
By /s/ Charles H. King
Title: Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By /s/ Raju Patel
Title: Vice President
CITICORP USA, INC.
By /s/ James J. Sheridan
Title: Vice President
CREDIT SUISSE FIRST BOSTON
By /s/ David W. Kratovil
Title: Director
By /s/ Lynn Allegaert
Title: Vice President
NBD BANK, N.A.
By /s/ Scott Morrison
Title: Vice President
THE BANK OF NEW YORK
By /s/ John R. Cuilla
Title: Assistant Vice President
THE BANK OF NOVA SCOTIA
By /s/ F.C.H. Ashby
Title: Senior Manager Loan Operations
THE CHASE MANHATTAN BANK
By /s/ Andris Kalnins
Title: Vice President
NATIONAL WESTMINSTER BANK PLC
By /s/ John Kasperek
Title: Senior Corporate Manager
SOCIETE GENERALE
By /s/ Editha N. Paras
Title: Vice President
THE NORTHERN TRUST COMPANY
By /s/ Maureen Carey
Title: Vice President
BANCA COMMERCIALE ITALIANA
By /s/ Julian M. Teodori
Title: Senior Vice President & Branch Manager
By /s/ Diana R. Lamb
Title: Vice President
COMMERZBANK AKTIENGESELLSCHAFT,
Chicago Branch
By /s/ Marie Cualoping
Title: Assistant Treasurer
By /s/ J. Timothy Shortly
Title: Senior Vice President
THE BANK OF TOKYO-MITSUBISHI, LTD.,
Chicago Branch
By /s/ Hajime Watanabe
Title: Deputy General Manager
THE DAI-ICHI KANGYO BANK, LTD.,
Chicago Branch
By /s/ Seiichiro Ino
Title: Vice President
PRICING SCHEDULE
Each of "LIBOR 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:
Level Level Level Level Level Level
I II III IV V VI
LIBOR Margin 0.135% 0.155% 0.185% 0.215% 0.275% 0.40%
CD Margin 0.26% 0.28% 0.31% 0.34% 0.40% 0.525%
Facility Fee 0.065% 0.070% 0.090% 0.110% 0.150% 0.250%
Rate
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, 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 or Level VI Pricing applies at
any date.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
If on the Effective Date either Moody's or S&P has placed the
long-term debt of the Company on a credit watch, then the Pricing
Level applicable to this facility shall be Level IV until neither
Moody's nor S&P has such debt on a credit watch.
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
VI 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
Commitment Commitment
Morgan Guaranty Trust Company $ 47,500,000 9.5%
of New York
Bank of America National Trust and 37,500,000 7.5%
Savings Association
Citicorp USA, Inc. 37,500,000 7.5%
Credit Suisse First Boston 37,500,000 7.5%
NBD Bank, N.A. 37,500,000 7.5%
The Bank of New York 37,500,000 7.5%
The Bank of Nova Scotia 37,500,000 7.5%
The Chase Manhattan Bank 37,500,000 7.5%
National Westminster Bank Plc 30,000,000 6.0%
Societe Generale 30,000,000 6.0%
The Northern Trust Company 30,000,000 6.0%
Banca Commerciale Italiana 25,000,000 5.0%
Commerzbank Aktiengesellschaft, 25,000,000 5.0%
Chicago Branch
The Bank of Tokyo-Mitsubishi, Ltd., 25,000,000 5.0%
Chicago Branch
The Dai-Ichi Kangyo Bank, Ltd., 25,000,000 5.0%
Chicago Branch
Total $500,000,000 100%
SCHEDULE 3.08
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 & 100% by Aggregatebau GmbH
Co. KG
Agreba Beteilligungs GmbH 100% by PGI (Overseas
Holdings) B.V.
Air Components Engineering 100% by Cummins Engine Company
Ltd. Limited
Atlas Crankshaft 100% by 14-15 Corporation
Corporation d/b/a/ Atlas,
Inc.
Auto Diesels Power Plant 100% by PGI Manufacturing
Limited Limited
Cadec Systems, Inc. 100% by Cummins Engine
Company, Inc.
Cal Disposition, Inc. 100% by Cummins Engine
Company, Inc.
Combustion Technologies, 100% by Cummins Engine
Inc. Company, Inc.
Consolidated Diesel, Inc. 100% by Consolidated Diesel
Company
Consolidated Diesel of 100% by Consolidated Diesel,
North Carolina, Inc. Inc.
Cummins Americas, Inc. 100% by Cummins Engine
Company, Inc.
Cummins Australia Pty. 100% by Cummins Engine
Limited Company, Inc.
Cummins Brasil, Ltda. 99% by Cummins International
Finance Corporation
Cummins British Columbia 90% by No. 379 Taurus
Ventures, Ltd.
Cummins Comercializadora S. 100% by Empresas Cummins S.A.
de R.L. de C.V. de C.V.
Cummins Corporation 100% by Cummins Engine
Company, Inc.
Cummins de Colombia S.A. 100% by Cummins Engine
Company, Inc.
Cummins Diesel Deutschland, 100% by Cummins Diesel Sales
GmbH Corporation
Cummins Diesel Export 100% by Cummins Engine
Limited Company, Inc.
Cummins Diesel of Canada 100% by Cummins Engine
Limited Company, Inc.
Cummins Diesel 100% by Cummins International
International Limited Finance Corp.
Cummins Diesel Italia 100% by Cummins Diesel Sales
S.P.A. 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 100% by Cummins Engine
Corporation Company, Inc.
Cummins Diesel Sales & 100% by Cummins India Ltd.
Service Ltd.
Cummins Engine (Beijing) 100% by Cummins Engine
Co., Ltd. Company, Inc.
Cummins Engine China 100% by Cummins Engine
Investment Company, Inc.
Cummins Engine Company 100% by Cummins Australia Pty.
Limited Ltd.
Cummins Engine Company 100% by Cummins U.K. Limited
Limited
Cummins Engine H.K. Limited 100% by Cummins Engine
Company, Inc.
Cummins Engine Holding 100% by Cummins Engine
Company, Inc. Company, Inc.
Cummins Engine (Singapore) 100% by Cummins Diesel Sales
PTE LTD. Corporation
Cummins Engine Venture 100% by Cummins Engine
Corporation Company, Inc.
Cummins Finance Ltd. 100% by Cummins UK Limited
Cummins Financial, Inc. 100% by Cummins Engine
Company, Inc.
Cummins France SARL 100% by Fleetguard
International Corp.
Cummins Funding Corporation 100% by Cummins Engine
Company, Inc.
Cummins Great Lakes, Inc. 100% by Cummins Engine
Company, Inc.
Cummins India Holdings 100% by Cummins Engine
Limited Company, Inc.
Cummins India Ltd. 51% by Cummins Engine Company,
Inc.
Cummins International 100% by Cummins Engine
Finance Corporation Company, Inc.
Cummins KH-12, Inc. 100% by Cummins Engine
Company, Inc.
Cummins Komatsu Engine 50% by Cummins Engine Venture
Company Corporation
Cummins Korea, Ltd. 100% by Cummins International
Finance Corp.
Cummins Mexicana, S.A. de 100% by Cummins Engine
C.V. Company, Inc.
Cummins Military Systems 100% by Cummins Engine
Company Company, Inc.
Cummins Natural Gas 100% by Cummins Engine
Engines, Inc. Company, Inc.
Cummins Power Generation, 100% by Cummins Engine
Inc. Company, Inc.
Cummins Professional 100% by Cummins Engine
Training Center, Inc. Company, Inc.
Cummins Research Limited 100% by Cummins Engine
Partnership Company, Inc.
Cummins S. de R.L. de C.V. 100% by Empresas Cummins S.A.
de C.V.
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.
C.V. Units Ltd. 100% by Cummins Engine Company
Limited
Diesel ReCon Industria e 96.1% by Industria e Comercio
Comercio Ltda. Cummins Ltda.;
3.9% by Cummins Brasil, Ltda.
Diesel ReCon de Mexico, 100% by Cummins Engine
S.A. de C.V. Company, Inc.
Empresas Cummins S.A. de 100% by Cummins Engine
C.V. Company, Inc.
Fleetguard Commercial S.A. 100% by Fleetguard, Inc.
de C.V.
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 100% by Fleetguard, Inc.
C.V.
Fleetguard SNC 100% by Cummins France SARL
Holset Brasil Equipamentos 99% by Cummins Brasil, Ltda.
Automotivos Ltda.
Holset Engineering Company, 100% by Cummins Engine
Inc. Company, Inc.
Holset Engineering Company 100% by Cummins U.K. Limited
Limited
Holset Engineering 100% by Holset Engineering
Deutschland GmbH Company Limited
Holset SNC 100% by Dampers, S.A.
HPI Company 100% by Cummins Engine
Company, Inc.
Industria e Comercio 50% by Cummins Brasil, Ltda.;
Cummins Ltda. 50% by
Cummins International Finance
Corporation
J.L. Holdings Ltd. 100% by Cummins UK Limited
John Longden Ltd. 100% by Cummins Engine Company
Limited
Kuss Corporation 100% by Fleetguard, Inc.
Kuss SNC 100% by Cummins France SARL
Logstrup Modular Systems 100% by Petbow Far East PTE,
PTE Limited Limited
Lubricant Consultants, Inc. 75% by Fleetguard, Inc.
Markon Engineering Company 99% by Newage International
Limited Limited
MHTC Corporation 100% by Cummins Engine
Company, Inc.
Motores Cummins Diesel do 100% by Cummins Diesel
Brazil, Ltda. International Limited
Muench Works Ltd. 100% by No. 379 Taurus
Ventures, Ltd.
NAP Accoustics South East 100% by Petbow Far East PTE
Asia PTE Limited Limited
Newage Engineers Pty Ltd. 99% by Newage International
Limited
Newage (Far East) Pte Ltd. 100% by Newage International
Limited
Newage GmbH 100% by Newage International
Limited
Newage International 99% by Cummins U.K. Limited
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 99.5% by Newage International
Limited Limited
Newage Norge 100% by Newage International
Limited
No. 379 Taurus Ventures 100% by Cummins International
Ltd. Finance Corporation
Northwest Dieselguard 100% by Cummins Diesel Limited
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 100% by PGI Manufacturing
Limited 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 100% by PGI Manufacturing
Limited Limited
Petbow S.A. 100% by PGI (UK Holdings)
Limited
Petbow Welding Products 100% by PGI Manufacturing
Limited Limited
PGI Manufacturing Limited 100% by Power Group
International Limited
PGI (Overseas Holdings) 100% by Power Group
B.V. International (Overseas
Holdings) Limited
PGI (UK Holdings) Limited 100% by Power Group
International Limited
Power Group International 100% by Cummins U.K. Limited
Limited
Power Group International 100% by Power Group
(Overseas Holdings) Limited International Limited
PT Newage Engineers 77% by Newage International
Indonesia Limited
Stamford Iberica 100% by Newage International
Limited
Turbo Europa, B.V. 100% by Holset Engineering
Company Limited
Turbo International Ltd. 100% by Cummins Engine Company
Limited
Wuxi Holset Engineering 55% by Holset Engineering
Company Limited Company Limited
Wuxi Newage Alternators 70% by Newage International;
Limited 30% by Wuxi Electrical
Machinery Group
14-15 Corporation 100% by Cummins Engine
Company, Inc.
NELSON INDUSTRIES, INC. AND ITS SUBSIDIARIES
Subsidiary/Joint Venture Percentage of Ownership
Nelson Industries, Inc. 100% by Cummins Engine
Company, Inc.
Professional Data 100% by Nelson Industries,
Processing, Inc. Inc.
Digisonix, LLC 100% by Nelson Industries,
Inc.
Nelson Muffler Canada, Inc. 100% by Nelson Industries,
Inc.
Nelson-Burgess, Limited 100% by Nelson Industries,
Inc.
Nelson Industries Limited 100% by Nelson-Burgess,
Limited
Nelson Industries Europe 100% by Nelson Industries,
GmbH Inc.
Nelson Industries Mexico, 40% by Nelson Industries,
S.A. de C.V. Inc.; 41.3% by a trust for the
benefit of Nelson Industries,
Inc.
Digisonix, Limited 100% by Digisonix, LLC
Burgess Industrial 100% by Nelson Industries,
Silencing, Ltd. Inc.
Nelson Companies 100% by Nelson Industries,
Incorporated Inc.
Nelson Export Sales 100% by Nelson Industries,
Corporation 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 5-Year Amended and Restated Credit Agreement dated as of
January 8, 1998 (as amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"), among the Company, the Banks
party thereto 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 2.02(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 Borrowing1 _______________________
(C) Interest Period and the last
day thereof2 _______________________
(D) Type of Borrowing3 _______________________
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 4.02(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 5-Year Amended and Restated Credit Agreement dated as of
January 8, 1998 (as amended, supplemented or otherwise modified from
time to time the "Credit Agreement"), among the Company, the Banks
party thereto 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 2.03 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 Borrowing1 __________________________
(C) Interest rate basis2 __________________________
(D) Interest Period and the last
day thereof3 ___________________________
Upon receipt of any or all of the Standby Loans requested hereby,
the Company shall be deemed to have represented and warranted that the
conditions to lending specified in Section 4.02(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 5-Year Amended and Restated Credit
Agreement dated as of January 8, 1998 (as amended, supplemented or
otherwise modified from time to time the "Credit Agreement"), among
Cummins Engine Company, Inc. (the "Company"), the Banks party thereto
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
2.02(a) of the Credit Agreement, and in that connection you are
invited to submit a Competitive Bid by [Date]/[Time].1 Your
Competitive Bid must comply with Section 2.02(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 Borrowing2 _________________________
(C) Interest Period and the last
day thereof3 _________________________
(D) Type of requested Competitive
Borrowing4 _________________________
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 5-Year Amended and
Restated Credit Agreement dated as of January 8, 1998 (as amended,
supplemented or otherwise modified from time to time, the "Credit
Agreement"), among Cummins Engine Company, Inc. (the "Company"), the
Banks party thereto 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 2.02(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 amount1 _________________________
(B) Competitive Bid Rate2 _________________________
(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 2.02(d) of the Credit Agreement.
Very truly yours,
[NAME OF BANK],
By
Title:
EXHIBIT D-1
FORM OF COMPETITIVE NOTE
New York, New York
January 9, 1998
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 5-Year Amended and Restated Credit Agreement dated
as of January 8, 1998, among the Company, the Banks party thereto 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 Section
2.02 of the Credit Agreement to which such Interest Period applies and
(ii) on the Maturity Date (as defined in the Credit Agreement), the
aggregate unpaid principal amount of all Competitive Loans made by the
Bank to the Company pursuant to Section 2.02 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:
Competitive Loans and Payments
______________________________
Unpaid Name of
Amount Principal Person
and Type Maturity Payments Balance Making
of Loan Date Principal Interest of Note Notation
________ _________ _________ ________ _________ ________
EXHIBIT D-2
FORM OF STANDBY NOTE
New York, New York
January 9, 1998
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 5-Year Amended and Restated Credit Agreement
dated as of January 8, 1998, among the Company, the Banks party
thereto 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 2.01 and 2.03 of the Credit Agreement to which such
Interest Period applies and (ii) on the Maturity Date (as defined in
the Credit Agreement), the aggregate unpaid principal amount of all
Standby Loans made by the Bank to the Company pursuant to Sections
2.01 and 2.03 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:
Standby Loans and Payments
__________________________
Unpaid Name of
Amount Principal Person
and Type Maturity Payments Balance Making
of Loan Date Principal Interest of Note Notation
________ _________ _________ ________ _________ ________
EXHIBIT E
CUMMINS ENGINE COMPANY, INC.
Secretary's Certificate
I, _______________, Secretary of Cummins Engine Company, Inc., an
Indiana corporation (the "Company"), hereby certify that:
1. 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__.
2. 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.
3. 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.
4. 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 as of the ____
day of ____, 1998.
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 as of the ____
day of ____, 1998.
EXHIBIT F
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated ___________, 19__
Reference is made to the 5-Year Amended and Restated Credit
Agreement dated as of January 8, 1998 (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 party thereto 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)
requests that the Agent obtain from the Company a new Competitive Note
to the order of the Assignee in an amount equal to the aggregate
outstanding principal amount of all Competitive Loans made by such
Assignee to the Company and a new Standby Note to the order of the
Assignee in an amount equal to the aggregate outstanding principal
amount of all Standby Loans made by such Assignee to the Company.1]
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 3.05 or 5.04 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].2
4. The effective date for this Assignment and Acceptance shall
be (the "Transfer Date").3 Following the execution of this Assignment
and Acceptance, it will be delivered to the Agent for acceptance by it
and the Company and recording by the Agent pursuant to Section 9.04(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
1. 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 5-
Year Amended and Restated Credit Agreement (the "Credit
Agreement") and the Notes.
2. 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.
3. The making and performance by the Company of the Credit Agreement
and the borrowings by the Company contemplated by the Notes and
the consummation of the Acquisition 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, or agreement pertaining to borrowed money or
similar instrument.
4. 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.
5. 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.
6. 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.
7. The Company is not (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940,
as amended, (b) a "holding company" or a "subsidiary company" of
a holding company as defined in, or subject to regulation under,
the Public Utility Holding Company Act of 1935 or (iii) subject
to any other applicable regulatory scheme which restricts its
ability to incur the indebtedness to be incurred under the Credit
Agreement and the Notes.
8. 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.
9. 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
________________, 1998
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 5-Year Amended and
Restated Credit Agreement (the "Credit Agreement") dated as of January
8, 1998 among Cummins Engine Company, Inc., an Indiana corporation
(the "Company"), the banks party thereto (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 4.01(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 Company 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 Company 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 Company.
Upon the basis of the foregoing, we are of the opinion that the
Credit Agreement constitutes a valid and binding agreement of the
Company and each Note constitutes a valid and binding obligation of
the Company, in each case 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.
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,
CONFORMED COPY
364-DAY
$500,000,000
CREDIT AGREEMENT
among
CUMMINS ENGINE COMPANY, INC.,
THE BANKS PARTY HERETO,
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Agent
Dated as of January 8, 1998
J.P. MORGAN SECURITIES INC.
Arranger
<PAGE>
TABLE OF CONTENTS
ARTICLE 1Definitions
ARTICLE 2Loans
Section 2.01. Commitments 16
Section 2.02. Competitive Bid Procedure 16
Section 2.03. Standby Borrowing Procedure 19
Section 2.04. Refinancings 19
Section 2.05. Fees 20
Section 2.06. Termination and Reduction of Commitments 20
Section 2.07. Loans 21
Section 2.08. Notes 22
Section 2.09. Interest on Loans 22
Section 2.10. Interest on Overdue Amounts 23
Section 2.11. Alternate Rate of Interest 24
Section 2.12. Prepayment of Loans 24
Section 2.13. Reserve Requirements; Change in Circumstances 25
Section 2.14. Change in Legality 27
Section 2.15. Indemnity 28
Section 2.16. Pro Rata Treatment 29
Section 2.17. Sharing of Setoffs 29
Section 2.18. Payments 29
Section 2.19. Payments on Business Days 30
Section 2.20. Taxes 30
Section 2.21. Tax Reports 32
ARTICLE 3Representations and Warranties
Section 3.01. Organization; Powers 33
Section 3.02. Authorization 33
Section 3.03. Enforceability 33
Section 3.04. Governmental Approvals 33
Section 3.05. Financial Statements 34
Section 3.06. Environmental Matters 34
Section 3.07. Title to Properties; Possession Under Leases 34
Section 3.08. Subsidiaries 35
Section 3.09. Litigation; Compliance with Laws 35
Section 3.10. Non-Existence of Certain Types of Agreements 35
Section 3.11. Federal Reserve Regulations 36
Section 3.12. No Regulatory Restrictions on Borrowing 36
Section 3.13. Tax Returns 36
Section 3.14. Employee Benefit Plans 36
Section 3.15. No Material Misstatements 37
Section 3.16. Merger Agreement 37
ARTICLE 4Conditions
Section 4.01. Conditions to Effectiveness 37
Section 4.02. Conditions to Each Loan 38
ARTICLE 5Affirmative Covenants
Section 5.01. Existence; Businesses and Properties 39
Section 5.02. Insurance 40
Section 5.03. Obligations and Taxes 40
Section 5.04. Financial Statements, Reports, Etc 40
Section 5.05. Litigation and Other Notices 41
Section 5.06. ERISA 42
Section 5.07. Maintaining Records; Access to Properties
and Inspections 43
Section 5.08. Use of Proceeds 43
Section 5.09. Compliance with Laws 43
ARTICLE 6Negative Covenants
Section 6.01. Negative Pledge 44
Section 6.02. Sale and Lease-back Transactions 45
Section 6.03. Mergers, Consolidations, and Sales of Assets 45
Section 6.04. Indebtedness of Subsidiaries 46
Section 6.05. Amendments of Certain Agreements 46
Section 6.06. Net Worth 46
Section 6.07. Leverage 46
Section 6.08. Ownership of Significant Subsidiaries 46
ARTICLE 7Events of Default
ARTICLE 8The Agent
ARTICLE 9Miscellaneous
Section 9.01. Notices 53
Section 9.02. Survival of Agreement 54
Section 9.03. Binding Effect 54
Section 9.04. Successors and Assigns; Participations 54
Section 9.05. Expenses; Indemnity 58
Section 9.06. Right of Setoff 59
Section 9.07. Applicable Law 59
Section 9.08. Waivers; Amendments 59
Section 9.09. Waiver of Jury Trial, Etc 60
Section 9.10. Jurisdiction; Consent to Service of Process 60
Section 9.11. Confidentiality 61
Section 9.12. Entire Agreement 62
Section 9.13. Severability 62
Section 9.14. Counterparts 62
Section 9.15. Headings 62
<PAGE>
Schedules
Pricing Schedule
Schedule I Commitments of the Banks
Schedule 3.08 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
<PAGE>
CREDIT AGREEMENT, dated as of January 8, 1998 , among CUMMINS
ENGINE COMPANY, INC., an Indiana corporation (the "Company"), the
banks and other financial institutions from time to time party 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").
The parties hereto agree as follows:
ARTICLE 1
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.
"Acquisition" shall mean the merger of Safari with and into
Nelson (with Nelson continuing as the surviving corporation and the
separate corporate existence of Safari ceasing).
"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.
"Administrative Questionnaire" shall mean, with respect to each
Bank, an administrative questionnaire in the form prepared by the
Agent, completed by such Bank and returned to the Agent (with a copy
to the Company).
"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 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 2.
"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 preceding Business Day, the average of the secondary
market quotations for three month certificates of deposit of major
money center banks in New York City received at 10:00 a.m., New York
City time, on such day (or, if such day shall not be a Business Day,
on the next preceding Business Day) by the Agent from three New York
City negotiable certificate of deposit dealers of recognized standing
selected by it. "Federal Funds Effective Rate" shall mean, for any
day, the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the 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 (except Alternate Base Loans), the rate per annum for the
relevant type of Standby Loan determined for such day 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 Morgan's 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 2.
"Change in Control" shall mean that (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.
"Code" shall mean the Internal Revenue Code of 1986, as the same
may be amended from time to time.
"Commitment" shall mean (i) with respect to each Bank listed on
Schedule I, the amount set forth opposite such Bank's name on Schedule
I and (ii) with respect to any Eligible Assignee which becomes a Bank
pursuant to Section 9.04(c), the amount of the transferor Bank's
Commitment assigned to it pursuant to Section 9.04(c), in each case as
such amount may be changed from time to time pursuant to Section 2.06
or 9.04(c); provided that, if the context so requires, the term
"Commitment" means the obligation of a Bank to extend credit up to
such amount to the Company hereunder. 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 2.02.
"Competitive Bid Rate" shall mean, as to any Competitive Bid made
by a Bank pursuant to Section 2.02(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 2.02 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 2.02.
"Competitive Fixed Rate" shall mean, as to any Competitive Bid
made by a Bank pursuant to Section 2.02(b) for Competitive Fixed Rate
Loans, 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 2.
"Competitive LIBO Rate" shall mean, as to any Competitive Bid
made by a Bank pursuant to Section 2.02(b) for Competitive LIBO Rate
Loans, 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 2.
"Competitive Loan" shall mean a Loan from a Bank to the Company
pursuant to the bidding procedure described in Section 2.02, 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
2.08.
"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, except to the extent that the portion thereof
attributable to the Company (through the Company's interest in CDC)
exceeds $100,000,000 and (ii) exclude Guarantees of the Company
outstanding from time to time in an aggregate amount not to exceed
$85,000,000.
"Consolidated Net Income" for any period shall mean the net
earnings (loss) of the Company and its Subsidiaries for such period,
computed and Consolidated in accordance with GAAP, as set forth in the
Consolidated statement of earnings for such period delivered by the
Company pursuant to Section 5.04.
"Continuing Director" shall mean any member of the Board of
Directors of the Company who is not affiliated with an Acquiring
Person and who was a member of the Board of Directors of the Company
immediately prior to the time that the Acquiring Person became an
Acquiring Person and any successor to a Continuing Director who is not
affiliated with the Acquiring Person and is recommended to succeed a
Continuing Director by a majority of Continuing Directors who are then
members of the Board of Directors of the Company.
"Default" shall have the meaning assigned to such term in Section
4.02(c).
"dollars" and the symbol "$" shall mean the lawful currency of
the United States of America.
"Effective Date" shall mean the date on which the conditions set
forth in Section 4.01 are satisfied, which, unless otherwise agreed by
the parties hereto, shall be a date on or before January 23, 1998.
"Eligible Assignee" shall have the meaning assigned to such term
in Section 9.04(c).
"Environmental Laws" shall mean 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 or
any Subsidiary is a member and which is treated as a single employer
under Section 414 of the Code.
"Euro-Dollar Business Day" shall mean any Business Day on which
commercial banks are open for dealings in dollar deposits in the
London Interbank Market.
"Events of Default" shall have the meaning assigned to such term
in Article 7.
"Facility Fee" shall have the meaning assigned to such term in
Section 2.05(a).
"Facility Fee Rate" shall mean, for each day, the rate per annum
determined for such day 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 1.
"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.
"Information Memorandum" shall mean the Information Memorandum
dated December 1997, furnished by JPMSI to a limited number of banks
invited to participate in this Agreement.
"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) with
respect to any Competitive Loan, the last day of the Interest Period
applicable thereto and, if such Competitive Loan bears interest at a
Competitive LIBO Rate with an Interest Period of more than 3 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.
"JPMSI" shall mean J.P. Morgan Securities, Inc.
"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,
are offered to the London Branch of such Reference Bank for a period
of time comparable to the applicable Interest Period 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 2.
"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 January 7, 1999, or, if such day is
not a Euro-Dollar Business Day, the next preceding Euro-Dollar
Business Day.
"Merger Agreement" shall mean the Agreement and Plan of Merger
dated December 3, 1997 among the Company, Safari and Nelson.
"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.
"Nelson" shall mean Nelson Industries, Inc., a Wisconsin
corporation.
"Net Worth" shall mean, at any date, (i) the sum of the Company's
Consolidated 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)
all write-ups subsequent to September 28, 1997, 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 September 28, 1997) and (y) 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
Net Worth the effect of any foreign currency translation adjustments
shall be excluded.
"Note" shall mean a Competitive Note or a Standby Note of the
Company, executed and delivered as provided in Section 2.08.
"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" shall mean 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 6.01), (ii) the Attributable Value at such time
of all Sale and Lease-Back Transactions which are restricted by
Section 6.02 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 and
Bank of America National Trust and Savings Association.
"Register" shall have the meaning given such term in Section
9.04(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(c) 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
7, 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.
"Safari" shall mean Safari Inc., a Wisconsin corporation and
direct wholly-owned Subsidiary of the Company formed for purposes of
the Acquisition.
"Sale and Lease-Back Transaction" shall have the meaning assigned
to such term in Section 6.02.
"Significant Subsidiary" shall mean any Subsidiary (which term,
as used in this definition, includes such Subsidiary's 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 5.04(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 5.04(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 5.04(a); or
(iv) such Subsidiary is deemed to be a Significant
Subsidiary pursuant to Section 6.03(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 2.03 in the form of Exhibit A-2.
"Standby Loan" shall have the meaning given such term in Section
2.01.
"Standby Note" shall mean a promissory note of the Company in the
form of Exhibit D-2, executed and delivered as provided in Section
2.08.
"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.
"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 3.02.
"type", when used in respect of any Loan or Borrowing, shall
refer to the Rate by reference to which interest on such Loan or on
the Loans comprising such Borrowing is determined. For purposes
hereof, "Rate" shall 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.
Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all accounting determinations hereunder
shall be made, and all financial statements required to be delivered
hereunder shall be prepared in accordance with GAAP; provided that, if
the Company notifies the Agent that the Company wishes to amend any
provision hereof to eliminate the effect of any change in GAAP (or if
the Agent notifies the Company that the Required Banks wish to amend
any provision hereof for such purpose), then such provision shall be
applied on the basis of GAAP in effect immediately before the relevant
change in GAAP became effective, until either such notice is withdrawn
or such provision is amended in a manner satisfactory to the Company
and the Required Banks. The definitions in this Article 1 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.
ARTICLE 2
Loans
Section 2.1. 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 Effective 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 as of the Effective
Date is set forth opposite its name in Schedule I. Such Commitments
may be terminated or reduced from time to time pursuant to Section
2.06.
Within the foregoing limits, the Company may borrow, repay,
prepay and reborrow hereunder, on and after the Effective Date and
prior to the Maturity Date, subject to the terms, provisions and
limitations set forth herein.
Section 2.2. 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.
(b) 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 such Competitive
Loan. A Competitive Bid submitted by a Bank pursuant to this
paragraph (b) shall be irrevocable.
(c) 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 2.02.
(d) 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 2.02(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.
(e) 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.
(f) 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.
(g) 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
at least 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.
(h) All notices required by this Section 2.02 and by Section
2.03 shall be given in accordance with Section 9.01.
Section 2.3. 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 2.03 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 on the same day and having the same Interest Period.
Section 2.4. 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 2.02 or Section 2.03, 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 2.08 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 2.07(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 2.08 to the extent of such
failure and the Company shall pay such amount to the Agent pursuant to
Section 2.08.
Section 2.5. 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.
(b) The Company agrees to pay to 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.
(c) The Company agrees to pay to the Agent (i) on the Effective
Date, for the account of the Banks, the participation fees described
in a memorandum dated 12/05/97 from JPMSI to potential lenders under
this Agreement and (ii) 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.
Section 2.6. 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, that 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 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.
(b) Simultaneously with any termination or reduction of
Commitments pursuant to this Section 2.06, 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.
Section 2.7. Loans. (a) Each Borrowing made by the Company on
any date shall be 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 2.02(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.
(b) 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 2.03. 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.
(c) Subject to Section 2.04, 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.
Section 2.8. 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 aggregate outstanding principal amount of all
Competitive Loans made by such Bank to the Company. 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 aggregate outstanding
principal amount of all Standby Loans made by such Bank to the
Company. 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 2.09. 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 such 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.
Section 2.9. 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.
(b) 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.
(c) 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. Interest on each Alternate 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.
(d) 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 2.02. Interest on each Competitive Loan shall be payable
on each Interest Payment Date applicable thereto.
(e) 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.
(f) 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.
Section 2.10. 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.
Section 2.11. Alternate Rate of Interest. (a) In the event,
and on each occasion, that on the day two Business Days prior to the
commencement of any Interest Period for a 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.
(b) 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) 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.
Section 2.12. 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
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.
(b) On the date of any termination or reduction of the Total
Commitment pursuant to Section 2.06, 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 Standby Borrowing
or Standby Borrowings as the Company shall select. All prepayments
under this paragraph shall be subject to Sections 2.15 and 2.16.
(c) 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.
Section 2.13. 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.
(b 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.
(c If any Bank shall have determined that the adoption after
the date hereof of any law, rule, regulation or guideline regarding
capital adequacy, or any change after the date hereof in any law,
rule, regulation or guideline regarding capital adequacy 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) made after the date hereof by
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.
(d 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
9.04) 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.
(e 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.
Section 2.14. Change in Legality. (a Notwithstanding anything
to the contrary herein contained, if any change after the date hereof
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.
Section 2.15. 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 4, (w) any failure by the Company to borrow hereunder
after a notice of borrowing pursuant to Article 2 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
received by such Bank (net of any applicable margin) 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.
Section 2.16. 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.
Section 2.17. 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 then due and payable to it
shall be proportionately less than the unpaid principal portion of the
Notes then due and payable to any other Bank, it shall simultaneously
purchase from such other Bank at face value a participation in the
Notes held by such other Bank, and such other adjustments shall be
made, so that all such payments shall be shared by the Banks ratably
in proportion to the amounts then due and payable to them; 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.
Section 2.18. 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 (except
as otherwise specified herein), in immediately available funds.
Section 2.19. 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.
Section 2.20. 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 net
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
date hereof 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. For any period with respect to which a
Bank has failed to provide the Company or the Agent with the
appropriate form referred to in Section 2.21 (unless such failure is
due to a change in treaty, law or regulation occurring after the date
on which such form originally was required to be provided), such Bank
shall not be entitled to indemnification pursuant to clause (x) of the
preceding sentence with respect to Taxes imposed by the United States;
provided that if a Bank, that is otherwise exempt from or subject to a
reduced rate of withholding tax, becomes subject to Taxes because of
its failure to deliver a form required hereunder, the Company shall
take such steps as such Bank shall reasonably request to assist such
Bank to recover such Taxes.
(b 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").
(c 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.
(d 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 9.01, the original or a certified copy
of a receipt evidencing payment thereof.
(e Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this
Section 2.20 shall survive the payment in full of principal and
interest hereunder and the termination of this Agreement.
(f 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.
Section 2.21. Tax Reports. (a Each Bank which is organized
under the laws of a jurisdiction outside the United States 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. Such forms shall be provided to the Agent and
the Company (i) on the Effective Date, if such Bank is a party hereto
on such date, or (ii) if such Bank becomes a Bank hereunder pursuant
to an Assignment and Acceptance, on the date of such Assignment and
Acceptance, and (iii) in either case from time to time thereafter (but
only so long as such Bank remains legally able to do so) if requested
by the Company or the Agent or required by the Internal Revenue
Service of the United States. 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.
(b Any Bank that sells any participation pursuant to Section
9.04(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.
ARTICLE 3
Representations and Warranties
The Company represents and warrants to the Agent and to each of
the Banks that:
Section 3.1. 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.
Section 3.2. Authorization. The execution, delivery and
performance by the Company of each of the Loan Documents and the
borrowings hereunder and the consummation of the Acquisition
(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.
Section 3.3. 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.
Section 3.4. Governmental Approvals. No action, consent or
approval of, registration or filing with or other action by any
Governmental Authority is or will be required in connection with the
Transactions, except such as will have been made or obtained on or
before the Effective Date and thereafter will be in full force and
effect.
Section 3.5. Financial Statements. (a The Company has
heretofore furnished to the Banks (i) its Consolidated statement of
financial position and related Consolidated statements of earnings,
cash flows and shareholders' investment as of and for the fiscal year
ended December 31, 1996, audited by and accompanied by the opinion of
Arthur Andersen LLP, independent public accountants, and (ii) its
Consolidated statement of financial position and related Consolidated
statements of earnings and cash flows as of and for the fiscal quarter
ended September 28, 1997, certified by its chief financial officer.
Such financial statements present fairly the financial position of the
Company and its Consolidated Subsidiaries as of such dates and their
results of operations and cash flows 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 position or in the operations of the Company
and its Subsidiaries taken as a whole since September 28, 1997.
Section 3.6. 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.
Section 3.7. 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 6.01.
(b 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.
Section 3.8. Subsidiaries. Schedule 3.08 sets forth as of the
Effective Date a list of all Subsidiaries of the Company and the
percentage ownership interest of the Company therein.
Section 3.9. 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.
Section 3.10. Non-Existence of Certain Types of 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.
(b 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.
(c 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.
Section 3.11. 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.
Section 3.12. No Regulatory Restrictions on Borrowing. The
Company is not (a) an "investment company" as defined in, or subject
to regulation under, the Investment Company Act of 1940, as amended,
(b) a "holding company" or a "subsidiary company" of a holding company
as defined in, or subject to regulation under, the Public Utility
Holding Company Act of 1935 or (iii) subject to any other applicable
regulatory scheme which restricts its ability to incur the
indebtedness to be incurred hereunder.
Section 3.13. 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 5.03.
Section 3.14. 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 position 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 position
of the Company and its ERISA Affiliates taken as a whole.
Section 3.15. No Material Misstatements. (a) As of the
Effective Date, neither the Information Memorandum (other than the
information contained therein concerning Nelson) nor, to the knowledge
of the Company, the information contained in the Information
Memorandum concerning Nelson contains any material misstatement of
fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they
are made, not misleading, and (b) no other 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.
Section 3.16. Merger Agreement. The copy of the Merger
Agreement heretofore delivered to the Agent is a correct and complete
copy thereof.
ARTICLE 4
Conditions
Section 4.1. Conditions to Effectiveness. 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 conforming to the
requirements hereof and executed by a duly authorized officer of
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 to the
effect set forth in Exhibit G (excluding paragraph 4 thereof)
and of Cravath, Swaine & Moore to the effect set forth in
paragraph 4 of Exhibit G, each dated the Effective Date and
addressed to the Agent and the Banks. 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 and covering such other matters incident to the
transactions contemplated by this Agreement as the Agent shall
reasonably require.
(f The Agent and JPMSI shall have received all fees payable
to them on the Effective Date pursuant to Section 2.05.
(g) The Agent shall have received evidence satisfactory to
it that (i) except for filing the Articles of Merger (as defined
in the Merger Agreement) with the Department of Financial
Institutions of the State of Wisconsin (the "Department of
Financial Institutions"), all of the conditions to the
obligations of the parties thereto to effect the Acquisition
specified in Sections 7.1, 7.2 and 7.3 of the Merger Agreement,
have been fulfilled (without any waiver thereof by the Company),
(ii) the Articles of Merger have been precleared with the
Department of Financial Institutions and (iii) the Articles of
Merger will be filed with the Department of Financial
Institutions and the Acquisition will be consummated on the
Effective Date on terms not less favorable to the Company, in any
material respect, than the terms described in the Information
Memorandum.
(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.
Section 4.2. 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 2.04, shall be subject to the
following conditions precedent:
(a The Agent shall have received a notice of such Borrowing
as required by Section 2.02 or Section 2.03, as applicable.
(b The representations and warranties set forth in Article
3 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 (after giving effect to the Acquisition if such
Borrowing occurs on the Effective 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 4.02; provided that any such
representation and warranty deemed to be made on the Effective Date
shall, insofar as it relates to Nelson and its subsidiaries, be deemed
to be made to the Company's knowledge.
ARTICLE 5
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:
Section 5.1. 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 6.03.
(b 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, additions,
improvements and replacements thereto necessary in order that the
business carried on in connection therewith may be properly conducted
at all times.
Section 5.2. 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.
Section 5.3. 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.
Section 5.4. 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 statement of financial position and related
Consolidated statements of earnings, cash flows and shareholders'
investment, showing the financial position of the Company and its
Consolidated Subsidiaries as of the close of such fiscal year and
their results of operations and cash flows for such year, all
audited by Arthur Andersen LLP 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
position, results of operations and cash flows 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 statement
of financial position and related Consolidated statements of
earnings and cash flows showing the financial position of the
Company and its Consolidated Subsidiaries as of the close of such
fiscal quarter and their results of operations for such fiscal
quarter and the then elapsed portion of the fiscal year and their
cash flows for the then elapsed portion of the fiscal year, all
certified by one of its Financial Officers as fairly presenting
the financial position, results of operations and cash flows 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 Sections 6.06 and
6.07;
(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.
Section 5.5. 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.
Section 5.6. 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.
Section 5.7. 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.
Section 5.8. Use of Proceeds. Use the proceeds of the Loans to
finance the Acquisition and for its general corporate purposes.
Section 5.9. 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.
ARTICLE 6
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:
Section 6.1. 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 5.03;
(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 5.03;
(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.
Section 6.2. 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.
Section 6.3. 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 6.03 and that
all conditions precedent herein provided for relating to such
transaction have been complied with.
Section 6.4. Indebtedness of Subsidiaries. In the case of the
Subsidiaries, incur, create, assume or permit to exist any
Indebtedness if, after giving effect thereto, Priority Indebtedness
would exceed $200,000,000.
Section 6.5. 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.
Section 6.6. Net Worth. In the case of the Company, permit Net
Worth to be at any time less than the sum of (a) $1,050,000,000 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 ending March 31, 1998 to and including the most
recent fiscal quarter ended prior to the date on which the calculation
of Net Worth is made (without including any fiscal quarter in which
such Consolidated Net Income is a negative number).
Section 6.7. Leverage. In the case of the Company, permit the
ratio of Consolidated Indebtedness to the sum of Consolidated
Indebtedness and Net Worth to be at any time equal to or greater than
0.55 to 1.0.
Section 6.8. 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.
ARTICLE 7
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 pursuant to any provision of this Agreement 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 5.05(a) or (b),
Section 5.08 or Article 6 and such default shall continue
unremedied for a period of five Business Days after the earlier
of (i) a Responsible 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 any 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
allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of
creditors, (vi) become unable, admit in writing its inability or
fail generally to pay its debts as they become due or (vii) take
any action for the purpose of effecting any of the foregoing;
(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
Section 5.06(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) (i) 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 or 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.
ARTICLE 8
The Agent
In order to facilitate 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 9.05 shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was acting
as Agent.
With respect to the Loans made by 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.
ARTICLE 9
Miscellaneous
Section 9.1. Notices. Notices and other communications provided
for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed or sent by telecopy, 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-
8889; Telecopy No. (812) 377-3347);
(b) if to the Agent, to it at Morgan Guaranty Trust
Company, 60 Wall Street, New York, New York 10260, Attention of
Charles H. King (Telephone No. (212) 648-7138; Telecopy No. (212)
648-5336);
(c) if to a Bank, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire;
or, in the case of any party, at such other address or telecopy
number as such party may hereafter specify by notice to the Agent and
the Company.
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 9.01 or in accordance with
the latest unrevoked direction from such party given in accordance
with this Section 9.01.
Section 9.2. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Company herein and in the
certificates or other instruments prepared or delivered in connection
with or pursuant to this Agreement 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.
Section 9.3. Binding Effect. This Agreement shall become
effective on the Effective Date 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.
Section 9.4. 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 6.03(b)(ii) without the prior
written consent of all the Banks.
(b) 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 Standby
Loans owing to it and the Standby Note 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
provision 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.
(c) Each Bank may without the consent of the Company assign to
an Affiliate of such Bank or with the consent of the Company assign 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; provided, however, that
(i) each such assignment (except an assignment relating only to one or
more outstanding Competitive Loans) shall be of a constant, and not a
varying, percentage of all the assigning Bank's rights and obligations
under this Agreement, other than its rights in respect of outstanding
Competitive Loans which may, but need not, be included in such
assignment, (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
Commitment 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, 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 2.06, 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).
(d) 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 obligations 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 3.05 or 5.04
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.
(e) 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.
(f) Upon its receipt of an Assignment and Acceptance executed by
an assigning Bank and an Eligible Assignee, 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. If such Eligible
Assignee is not a Bank that already has Notes, then within five
Business Days after receipt of such notice, the Company, at its own
expense, shall execute and deliver to the Agent a new Competitive Note
to the order of such Eligible Assignee in an amount equal to the
aggregate outstanding principal amount of all Competitive Loans made
by such Eligible Assignee to the Company and a new Standby Note to the
order of such Eligible Assignee in an amount equal to the aggregate
outstanding principal amount of all Standby Loans made by such
Eligible Assignee to the Company. Such new Competitive Note and
Standby 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. If the assigning Bank has not
retained any Commitment hereunder, the assigning Bank shall cancel its
Standby Note and return it to the Company.
(g) 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 9.04, 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.
(h) Nothing herein shall prohibit any Bank from pledging or
assigning any Note to any Federal Reserve Bank in accordance with
applicable law.
Section 9.5. 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, special 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.
(b) 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 or proposed 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.
(c) The provisions of this Section 9.05 shall remain operative
and in full force and effect regardless of the expiration of the term
of this Agreement, the consummation of the transactions contemplated
hereby, the repayment of any of the Loans, the invalidity or
unenforceability of any term or provision of this Agreement or any
other Loan Document or any investigation made by or on behalf of the
Agent or any Bank. All amounts due under this Section 9.05 shall be
payable on written demand therefor.
Section 9.6. 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
7, 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 9.06 are in addition to other rights and remedies (including
other rights of setoff) which such Bank may have.
Section 9.7. 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.
Section 9.8. 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 Agreement 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.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or
agreements in writing entered into by the Company and the Required
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 9.08 or the definition of the "Required
Banks", or (iv) waive any of the conditions specified in Section 4.01
or 4.02, 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 9.08 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 9.08 shall bind any person
subsequently acquiring a Note from it, whether or not such Note shall
have been so marked.
Section 9.9. 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.
(b) 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 9.09 any special, indirect,
exemplary, punitive or consequential damages or any damages other
than, or in addition to, actual damages.
(c) 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 9.09.
Section 9.10. 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 any 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 the Agent or any 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.
(b) 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.
(c) Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 9.01.
Nothing in this Agreement will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
Section 9.11. Confidentiality. Unless otherwise required by
applicable law, rule or regulation, legal process, 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
Confidential Material may be disclosed by any Bank to its bank
examiners or by any Bank or the Agent to its directors, officers,
legal counsel and independent auditors to the extent reasonably
related to the performance of their duties; 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.
Section 9.12. 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.
Section 9.13. Severability. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document
should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as
close as possible to that of the invalid, illegal or unenforceable
provisions.
Section 9.14. 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 4.01.
Section 9.15. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only,
are not part of this Agreement and are not to affect the construction
of, or to be taken into consideration in interpreting, this Agreement.
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/ Donald W. Trapp
Title: Vice President-Treasurer
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as a Bank and as Agent
By /s/ Charles H. King
Title: Vice President
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION
By /s/ Raju Patel
Title: Vice President
CITICORP USA, INC.
By /s/ James J. Sheridan
Title: Vice President
CREDIT SUISSE FIRST BOSTON
By /s/ David W. Kratovil
Title: Director
By /s/ Lynn Allegaert
Title: Vice President
NBD BANK, N.A.
By /s/ Scott Morrison
Title: Vice President
THE BANK OF NEW YORK
By /s/ John R. Cuilla
Title: Assistant Vice President
THE BANK OF NOVA SCOTIA
By /s/ F.C.H. Ashby
Title: Senior Manager Loan Operations
THE CHASE MANHATTAN BANK
By /s/ Andris Kalnins
Title: Vice President
NATIONAL WESTMINSTER BANK PLC
By /s/ John Kasperek
Title: Senior Corporate Manager
SOCIETE GENERALE
By /s/ Editha N. Paras
Title: Vice President
THE NORTHERN TRUST COMPANY
By /s/ Maureen Carey
Title: Vice President
BANCA COMMERCIALE ITALIANA
By /s/ Julian M. Teodori
Title: Senior Vice President & Branch Manager
By /s/ Diana R. Lamb
Title: Vice President
COMMERZBANK AKTIENGESELLSCHAFT,
Chicago Branch
By /s/ Marie Cualoping
Title: Assistant Treasurer
By /s/ J. Timothy Shortly
Title: Senior Vice President
THE BANK OF TOKYO-MITSUBISHI, LTD.,
Chicago Branch
By /s/ Hajime Watanabe
Title: Deputy General Manager
THE DAI-ICHI KANGYO BANK, LTD.,
Chicago Branch
By /s/ Seiichiro Ino
Title: Vice President
PRICING SCHEDULE
Each of "LIBOR 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:
Level Level Level Level Level Level
I II III IV V VI
LIBOR Margin 0.155% 0.175% 0.210% 0.245% 0.325% 0.50%
CD Margin 0.28 % 0.30 % 0.335% 0.37 % 0.45 % 0.625%
Facility 0.045% 0.050% 0.065% 0.080% 0.105 0.15%
Fee Rate
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, 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 or Level VI Pricing applies at
any date.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
If on the Effective Date either Moody's or S&P has placed the
long-term debt of the Company on a credit watch, then the Pricing
Level applicable to this facility shall be Level IV until neither
Moody's nor S&P has such debt on a credit watch.
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
VI 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
Commitment Commitment
Morgan Guaranty Trust Company $ 47,500,000 9.5%
of New York
Bank of America National Trust 37,500,000 7.5%
and Savings Association
Citicorp USA, Inc. 37,500,000 7.5%
Credit Suisse First Boston 37,500,000 7.5%
NBD Bank, N.A. 37,500,000 7.5%
The Bank of New York 37,500,000 7.5%
The Bank of Nova Scotia 37,500,000 7.5%
The Chase Manhattan Bank 37,500,000 7.5%
National Westminster Bank Plc 30,000,000 6.0%
Societe Generale 30,000,000 6.0%
The Northern Trust Company 30,000,000 6.0%
Banca Commerciale Italiana 25,000,000 5.0%
Commerzbank Aktiengesellschaft, 25,000,000 5.0%
Chicago Branch
The Bank of Tokyo-Mitsubishi, Ltd., 25,000,000 5.0%
Chicago Branch
The Dai-Ichi Kangyo Bank, Ltd., 25,000,000 5.0%
Chicago Branch __________ _____
Total $500,000,000 100%
SCHEDULE 3.08
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 Beteilligungs GmbH 100% by PGI (Overseas Holdings) B.V.
Air Components Engineering Ltd. 100% by Cummins Engine Company
Limited
Atlas Crankshaft Corporation 100% by 14-15 Corporation
d/b/a/ 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.
Combustion Technologies, Inc. 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 Comercializadora S. de 100% by Empresas Cummins S.A. de C.V.
R.L. de C.V.
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 Limited 100% by Cummins International
Finance Corp.
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 Diesel Sales & Service Ltd. 100% by Cummins India Ltd.
Cummins Engine (Beijing) Co., Ltd. 100% by Cummins Engine Company, Inc.
Cummins Engine China Investment 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, Inc. 100% by Cummins Engine Company, Inc.
Cummins Engine (Singapore) PTE LTD. 100% by Cummins Diesel Sales
Corporation
Cummins Engine Venture Corporation 100% by Cummins Engine Company, Inc.
Cummins Finance Ltd. 100% by Cummins UK Limited
Cummins Financial, Inc. 100% by Cummins Engine Company, Inc.
Cummins France SARL 100% by Fleetguard International
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 India Ltd. 51% 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 S. de R.L. de C.V. 100% by Empresas Cummins S.A. de C.V.
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.
C.V. Units Ltd. 100% by Cummins Engine Company
Limited
Diesel ReCon Industria e Comercio 96.1% by Industria e Comercio
Ltda. Cummins Ltda.;
3.9% by Cummins Brasil, Ltda.
Diesel ReCon de Mexico, S.A. de C.V. 100% by Cummins Engine Company, Inc.
Empresas Cummins S.A. de C.V. 100% by Cummins Engine Company, Inc.
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 Corporation 100% by Fleetguard, Inc.
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 Engineering Deutschland GmbH 100% 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
J.L. Holdings Ltd. 100% by Cummins UK Limited
John Longden Ltd. 100% by Cummins Engine Company
Limited
Kuss Corporation 100% by Fleetguard, Inc.
Kuss SNC 100% by Cummins France SARL
Logstrup Modular Systems PTE Limited 100% by Petbow Far East PTE, 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 100% by Petbow Far East PTE Limited
PTE Limited
Newage Engineers Pty Ltd. 99% 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
Holdings) Limited Limited
PT Newage Engineers Indonesia 77% by Newage International Limited
Stamford Iberica 100% by Newage International Limited
Turbo Europa, B.V. 100% by Holset Engineering Company
Limited
Turbo International Ltd. 100% by Cummins Engine 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.
NELSON INDUSTRIES, INC. AND ITS SUBSIDIARIES
Subsidiary/Joint Venture Percentage of Ownership
Nelson Industries, Inc. 100% by Cummins Engine Company,
Inc.
Professional Data Processing, 100% by Nelson Industries, Inc.
Inc.
Digisonix, LLC 100% by Nelson Industries, Inc.
Nelson Muffler Canada, Inc. 100% by Nelson Industries, Inc.
Nelson-Burgess, Limited 100% by Nelson Industries, Inc.
Nelson Industries Limited 100% by Nelson-Burgess, Limited
Nelson Industries Europe GmbH 100% by Nelson Industries, Inc.
Nelson Industries Mexico, S.A. 40% by Nelson Industries, Inc.;
de C.V. 41.3% by a trust for the
benefit of Nelson Industries,
Inc.
Digisonix, Limited 100% by Digisonix, LLC
Burgess Industrial Silencing, 100% by Nelson Industries, Inc.
Ltd.
Nelson Companies Incorporated 100% by Nelson Industries, Inc.
Nelson Export Sales Corporation 100% by Nelson Industries, 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 364-Day Credit Agreement dated as of January 8, 1998 (as
amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Company, the Banks party thereto 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 2.02(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 Borrowing1 _______________________
(C) Interest Period and the last
day thereof2 _______________________
(D) Type of Borrowing3 _______________________
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 4.02(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 364-Day Credit Agreement dated as of January 8, 1998 (as
amended, supplemented or otherwise modified from time to time the
"Credit Agreement"), among the Company, the Banks party thereto 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 2.03 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 Borrowing1 _________________________
(C) Interest rate basis2 _________________________
(D) Interest Period and the last
day thereof3 _________________________
Upon receipt of any or all of the Standby Loans requested hereby,
the Company shall be deemed to have represented and warranted that the
conditions to lending specified in Section 4.02(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 364-Day Credit Agreement dated as of
January8, 1998 (as amended, supplemented or otherwise modified from
time to time the "Credit Agreement"), among Cummins Engine Company,
Inc. (the "Company"), the Banks party thereto 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 2.02(a) of the
Credit Agreement, and in that connection you are invited to submit a
Competitive Bid by [Date]/[Time].1 Your Competitive Bid must comply
with Section 2.02(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 Borrowing2 _________________________
(C) Interest Period and the last
day thereof3 ________________________
(D) Type of requested Competitive
Borrowing4 _________________________
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 364-Day Credit
Agreement dated as of January 8, 1998 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"), among
Cummins Engine Company, Inc. (the "Company"), the Banks party thereto
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 2.02(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 amount1 _________________________
(B) Competitive Bid Rate2 _________________________
(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 2.02(d) of the Credit Agreement.
Very truly yours,
[NAME OF BANK],
By
Title:
EXHIBIT D-1
FORM OF COMPETITIVE NOTE
New York, New York
January 9, 1998
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 364-Day Credit Agreement dated as of January 8,
1998, among the Company, the Banks party thereto 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 Section 2.02 of the
Credit Agreement to which such Interest Period applies and (ii) on the
Maturity Date (as defined in the Credit Agreement), the aggregate
unpaid principal amount of all Competitive Loans made by the Bank to
the Company pursuant to Section 2.02 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:
Competitive Loans and Payments
______________________________
Unpaid Name of
Amount Principal Person
and Type Maturity Payments Balance Making
of Loan Date Principal Interest of Note Notation
________ ________ _________ ________ _________ ________
<PAGE>
EXHIBIT D-2
FORM OF STANDBY NOTE
New York, New York
January 9, 1998
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 364-Day Credit Agreement dated as of January
8, 1998, among the Company, the Banks party thereto 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
2.01 and 2.03 of the Credit Agreement to which such Interest Period
applies and (ii) on the Maturity Date (as defined in the Credit
Agreement), the aggregate unpaid principal amount of all Standby
Loans made by the Bank to the Company pursuant to Sections 2.01 and
2.03 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:
Standby Loans and Payments
__________________________
Unpaid Name of
Amount Principal Person
and Type Maturity Payments Balance Making
of Loan Date Principal Interest of Note Notation
________ ________ _________ ________ _________ ________
<PAGE>
EXHIBIT E
CUMMINS ENGINE COMPANY, INC.
Secretary's Certificate
I, _______________, Secretary of Cummins Engine Company, Inc., an
Indiana corporation (the "Company"), hereby certify that:
1. 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__.
2. 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.
3. 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.
4. 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 as of the ____
day of ____, 1998.
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 as of the ____
day of ____, 1998.
EXHIBIT F
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated ___________, 19__
Reference is made to the 364-Day Credit Agreement dated as of
January 8, 1998 (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 party thereto
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)
requests that the Agent obtain from the Company a new Competitive Note
to the order of the Assignee in an amount equal to the aggregate
outstanding principal amount of all Competitive Loans made by such
Assignee to the Company and a new Standby Note to the order of the
Assignee in an amount equal to the aggregate outstanding principal
amount of all Standby Loans made by such Assignee to the Company.1]
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 3.05 or 5.04 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].1
4. The effective date for this Assignment and Acceptance shall
be (the "Transfer Date").2 Following the execution of this Assignment
and Acceptance, it will be delivered to the Agent for acceptance by it
and the Company and recording by the Agent pursuant to Section 9.04(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
1. 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
364-Day Credit Agreement (the "Credit Agreement") and the Notes.
2. 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.
3. The making and performance by the Company of the Credit Agreement
and the borrowings by the Company contemplated by the Notes and
the consummation of the Acquisition 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, or agreement pertaining to borrowed money or
similar instrument.
4. 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.
5. 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.
6. 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.
7. The Company is not (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940,
as amended, (b) a "holding company" or a "subsidiary company" of
a holding company as defined in, or subject to regulation under,
the Public Utility Holding Company Act of 1935 or (iii) subject
to any other applicable regulatory scheme which restricts its
ability to incur the indebtedness to be incurred under the Credit
Agreement and the Notes.
8. 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.
9. 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
________________, 1998
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 364-Day Credit
Agreement (the "Credit Agreement") dated as of January 8, 1998 among
Cummins Engine Company, Inc., an Indiana corporation (the "Company"),
the banks party thereto (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 4.01(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 Company 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 Company 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 Company.
Upon the basis of the foregoing, we are of the opinion that the
Credit Agreement constitutes a valid and binding agreement of the
Company and each Note constitutes a valid and binding obligation of
the Company, in each case 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.
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,
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