<PAGE> 1
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended Commission File Number
June 30, 1998 2-54754
-----------------
GENERAL AMERICAN TRANSPORTATION CORPORATION
Incorporated in the IRS Employer Identification No.
State of New York 36-2827991
500 West Monroe Street
Chicago, Illinois 60661-3676
(312) 621-6200
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
Registrant had 1,000 shares of common stock outstanding (all owned by GATX
Corporation) as of July 31, 1998.
=============================================================================
<PAGE> 2
PART I--FINANCIAL INFORMATION
GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
IN MILLIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------- ------------------
1998 1997 1998 1997
--------- --------- -------- --------
<S> <C> <C> <C> <C>
Gross income ............................... $ 206.5 $ 201.4 $ 409.1 $ 395.4
Costs and expenses
Operating expenses ....................... 89.1 86.8 177.8 170.9
Interest ................................. 28.9 30.2 57.2 59.5
Provision for depreciation
and amortization ...................... 35.5 37.7 70.7 75.7
Selling, general and administrative ...... 19.2 18.8 38.0 37.4
--------- --------- -------- --------
172.7 173.5 343.7 343.5
--------- --------- -------- --------
Income before income taxes and equity
in net earnings of affiliated
companies ................................ 33.8 27.9 65.4 51.9
Income taxes ............................... 13.0 10.3 24.9 20.0
--------- --------- -------- --------
Income before equity in net earnings
of affiliated companies .................. 20.8 17.6 40.5 31.9
Equity in net earnings
of affiliated companies .................. 3.6 3.4 7.6 5.7
--------- --------- -------- --------
Net income ................................. $ 24.4 $ 21.0 $ 48.1 $ 37.6
========= ========= ======== ========
</TABLE>
- ---------------
Note - The consolidated balance sheet at December 31, 1997 has been derived
from the audited financial statements at that date. All other consolidated
financial statements are unaudited but include all adjustments, consisting
only of normal recurring items, which management considers necessary for a
fair statement of the consolidated results of operations and financial
position for the respective periods. Operating results for the six months
ended June 30, 1998 are not necessarily indicative of the results that may
be achieved for the entire year ending December 31, 1998.
1
<PAGE> 3
GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
IN MILLIONS
<TABLE>
<CAPTION>
ASSETS
JUNE 30 DECEMBER 31
1998 1997
---------- -----------
(UNAUDITED)
<S> <C> <C>
Cash and cash equivalents ............... $ 18.3 $ 14.0
Trade receivables - net ................. 54.6 52.7
Operating lease assets and facilities
Railcars and support facilities ....... 2,656.6 2,480.5
Tank storage terminals and pipelines .. 1,141.3 1,128.9
--------- ---------
3,797.9 3,609.4
Less - Allowance for depreciation ..... (1,652.3) (1,593.8)
--------- ---------
2,145.6 2,015.6
Due from GATX Corporation ............... 398.3 392.1
Investments in affiliated companies ..... 201.8 200.1
Other assets ............................ 150.9 153.7
--------- ---------
TOTAL ASSETS ............................ $ 2,969.5 $ 2,828.2
========= =========
</TABLE>
2
<PAGE> 4
LIABILITIES, DEFERRED ITEMS AND SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1998 1997
----------- -----------
(UNAUDITED)
<S> <C> <C>
Accounts payable ............................ $ 138.3 $ 140.5
Accrued expenses ............................ 46.6 44.7
Debt
Short-term debt ............................ 327.0 190.5
Long-term debt ............................. 1,114.7 1,120.5
Capital lease obligations .................. 94.7 100.2
-------- --------
1,536.4 1,411.2
Deferred income taxes ....................... 333.1 315.7
Other deferred items ........................ 236.1 251.4
-------- --------
Total liabilities and deferred items ..... 2,290.5 2,163.5
Shareholder's equity
Common Stock - par value $1 per share;
1,000 shares authorized, issued and
outstanding (owned by GATX Corporation) .. - -
Additional capital ......................... 335.0 335.0
Reinvested earnings ........................ 370.5 347.2
Accumulated other comprehensive income ..... (26.5) (17.5)
-------- --------
Total shareholder's equity ............... 679.0 664.7
-------- --------
TOTAL LIABILITIES, DEFERRED ITEMS
AND SHAREHOLDER'S EQUITY .................... $2,969.5 $2,828.2
======== ========
</TABLE>
3
<PAGE> 5
GENERAL AMERICAN TRANSPORTATION CORPORATION
AND SUBSIDIARIES
STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
SIX MONTHS ENDED JUNE 30, 1998
IN MILLIONS
<TABLE>
<CAPTION>
Accumulated
Other
Common Additional Reinvested Comprehensive
Stock Capital Earnings Income (a) Total
----- ------- -------- ---------- -----
<S> <C> <C> <C> <C> <C>
Beginning Balance 1/1/98 $ - $335.0 $347.2 $(17.5) $664.7
Comprehensive Income:
Net income 48.1 48.1
Other comprehensive income
Foreign currency translation
ajustment (9.0) (9.0)
------
Comprehensive income 39.1
------
Dividends declared (24.8) (24.8)
------ ------ ------ ------ ------
Ending Balance 6/30/98 $ - $335.0 $370.5 $(26.5) $679.0
====== ====== ====== ====== ======
</TABLE>
STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
SIX MONTHS ENDED JUNE 30, 1997
IN MILLIONS
<TABLE>
<S> <C> <C> <C> <C> <C>
Beginning Balance 1/1/97 $ - $335.0 $431.4 $ 7.9 $774.3
Comprehensive Income:
Net income 37.6 37.6
Other comprehensive income
Foreign currency translation
adjustment (3.2) (3.2)
------
Comprehensive income 34.4
------
Dividends declared (20.8) (20.8)
------ ------ ------ ------ ------
Ending Balance 6/30/97 $ - $335.0 $448.2 $ 4.7 $787.9
====== ====== ====== ====== ======
</TABLE>
(a) The beginning balance of accumulated other comprehensive income consists
solely of foreign currency translation adjustment for both years.
4
<PAGE> 6
GENERAL AMERICAN TRANSPORTATION CORPORATION
AND SUBSIDIARIES
STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
THREE MONTHS ENDED JUNE 30, 1998
IN MILLIONS
<TABLE>
<CAPTION>
Accumulated
Other
Common Additional Reinvested Comprehensive
Stock Capital Earnings Income (a) Total
----- ------- -------- ---------- -----
<S> <C> <C> <C> <C> <C>
Beginning Balance 4/1/98 $ - $335.0 $358.6 $(17.9) $675.7
Comprehensive Income:
Net income 24.4 24.4
Other comprehensive income
Foreign currency translation
adjustment (8.6) (8.6)
------
Comprehensive income 15.8
------
Dividends declared (12.5) (12.5)
------ ------ ------ ------ ------
Ending Balance 6/30/98 $ - $335.0 $370.5 $(26.5) $679.0
====== ====== ====== ====== ======
</TABLE>
STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
THREE MONTHS ENDED JUNE 30, 1997
IN MILLIONS
<TABLE>
<S> <C> <C> <C> <C> <C>
Beginning Balance 4/1/97 $ - $335.0 $438.0 $ 3.5 $776.5
Comprehensive Income:
Net income 21.0 21.0
Other comprehensive income
Foreign currency translation
adjustment 1.2 1.2
------
Comprehensive income 22.2
------
Dividends declared (10.8) (10.8)
------ ------ ------ ------ ------
Ending Balance 6/30/97 $ - $335.0 $448.2 $ 4.7 $787.9
====== ====== ====== ====== ======
</TABLE>
(a) The beginning balance of accumulated other comprehensive income
consists solely of foreign currency translation adjustment for both years.
5
<PAGE> 7
GENERAL AMERICAN TRANSPORTATION CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
IN MILLIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
--------------------- -------------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
- --------------------
Net income $ 24.4 $ 21.0 $ 48.1 $ 37.6
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for depreciation and amortization 35.5 37.7 70.7 75.7
Deferred income taxes 6.6 7.2 12.9 8.2
Other (includes working capital) (3.1) (20.3) (12.3) (15.0)
------- ------- ------- -------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 63.4 45.6 119.4 106.5
INVESTING ACTIVITIES
- --------------------
Additions to operating lease assets and facilities:
Railcars and support facilities (99.7) (60.6) (199.8) (143.2)
Tank storage terminals and pipelines (18.0) (19.8) (26.3) (30.5)
Investments in affiliated companies and other - (1.6) - (.9)
------- ------- ------- -------
Capital additions (117.7) (82.0) (226.1) (174.6)
Proceeds from asset dispositions 10.2 3.6 15.2 5.3
------- ------- ------- -------
NET CASH USED IN INVESTING ACTIVITIES (107.5) (78.4) (210.9) (169.3)
FINANCING ACTIVITIES
- --------------------
Repayment of long-term debt (8.0) (26.8) (27.0) (75.2)
Net increase in short-term debt 68.1 64.6 159.1 162.2
Repayment of capital lease obligations - (.7) (5.3) (4.8)
Cash dividends paid to GATX Corporation (12.5) (10.9) (24.8) (20.9)
Net (increase) decrease in amount due from
GATX Corporation (2.6) 1.1 (6.2) (6.5)
------- ------- ------- -------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 45.0 27.3 95.8 54.8
------- ------- ------- -------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $ .9 $ (5.5) $ 4.3 $ (8.0)
======= ======= ======= =======
</TABLE>
6
<PAGE> 8
MANAGEMENT'S DISCUSSION OF OPERATIONS
COMPARISON OF FIRST SIX MONTHS OF 1998 TO FIRST SIX MONTHS OF 1997
GENERAL
General American Transportation Corporation's ("GATC") net income for the first
six months of 1998 was $48 million compared to $38 million for the first six
months of 1997. Results at Terminals increased $8 million due to favorable
petroleum market conditions and higher equity earnings from affiliates, and the
restructuring undertaken in the fourth quarter of 1997. Transportation
benefitted from more railcars on lease and higher rental rates.
Net cash provided by operating activities for the first six months of 1998 was
$119 million, a $13 million increase from last year's comparable period, due
primarily to the earnings increase.
Capital additions for the six month period totaled $226 million, an increase of
$51 million from the comparable 1997 period. Transportation invested $200
million in its railcar fleet and facilities, an increase of $56 million from the
first six months of 1997; the number of new and existing railcars acquired thus
far was 3,100 compared to 2,100 last year. Terminals' capital additions of $26
million were $5 million less than the prior year. Full year capital spending is
expected to be about $400 million, similar to last year's levels. It is expected
that capital additions will be funded by internally generated cash flow and
GATC's external recourse and nonrecourse financing sources.
At June 30, 1998, GATC had unused committed lines of credit of $242 million and
C$52 million. No recourse medium-term notes were issued during the first six
months as financing needs were met by cash flow from operations and short-term
debt. In May, GATC closed a new $350 million revolving credit facility
replacing the former $300 million agreement. GATC has a $650 million shelf
registration, under which $100 million of notes and $106 million of pass-through
certificates have previously been issued.
Management's discussion includes statements which may constitute forward-looking
statements made pursuant to the safe harbor provision of the Private Securities
Litigation Reform Act of 1995. This information may involve risks and
uncertainties that could cause actual results to differ materially from the
forward-looking statements. Although the company believes that the expectations
reflected in such forward-looking statements are based on reasonable
assumptions, such statements are subject to risks and uncertainties that could
cause actual results to differ materially from those projected. These risks and
uncertainties include, but are not limited to, unanticipated changes in the
markets served by GATC such as the petroleum and chemical industries.
7
<PAGE> 9
RESULTS OF OPERATIONS
Following is a discussion of the operating results of GATC's business segments:
RAILCAR LEASING AND MANAGEMENT (TRANSPORTATION)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Six Months Ended
(In Millions) June 30
------------------
1998 1997 Change
------------------ ----------
<S> <C> <C> <C> <C>
Gross Income $253.8 $234.9 $18.9 8%
Net Income $ 39.5 $ 36.5 $ 3.0 8%
- -----------------------------------------------------------------------------
</TABLE>
Transportation's gross income for the first six months of 1998 increased 8% from
the comparable prior year attributable to a larger active fleet and higher
overall lease rates. Approximately 79,700 tank and freight cars were on lease
throughout North America at June 30, 1998, compared to 74,300 railcars a year
ago. With a total North American fleet of 83,000 railcars, utilization ended
the period at 96%, up from 94% a year ago.
Net income increased 8% from the first half of 1997 primarily due to the same
reasons that revenues increased. Net income approximated 16% of gross income, a
slight improvement over the prior year. While all major cost areas rose, as a
percentage of revenue asset ownership and SG&A were generally consistent with
the prior year while repair costs were slightly higher. Because most of the
recent years' U.S. railcar additions have been financed using sale-leasebacks,
those asset ownership costs are included as operating lease expense (a component
of operating expenses), whereas Canadian railcars are financed with debt and,
therefore, those asset ownership costs are recorded as depreciation and interest
expense.
8
<PAGE> 10
TERMINALS AND PIPELINES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Six Months Ended
(In Millions) June 30
------------------
1998 1997 Change
------------------ ----------
<S> <C> <C> <C> <C>
Gross Income $141.4 $146.2 $(4.8) (3)%
Net Income $ 8.6 $ 1.1 $ 7.5 n/m
- -----------------------------------------------------------------------------
</TABLE>
Terminals' gross income for the first six months of 1998 is 3% lower than the
prior year due to nonrecurring 1997 revenue from subsequently sold facilities.
Excluding these items, gross income increased by 4% from 1997 primarily due to
improved petroleum activity. In the petroleum market, an inventory build-up
provided some opportunities for Terminals' storage services. Throughput of
petroleum and chemical products, adjusted for facilities that are being shut
down or sold as a result of the 1997 restructuring plan, was approximately 280
million barrels for the first six months of 1998, up approximately 3% from last
year. Capacity utilization, on the same basis as throughput, was 94% at June
30, 1998, versus 93% a year ago.
Terminals' net income for the first six months of 1998 of $9 million, an
increase of $8 million from last year, was due to improved operating conditions,
one-time transformation costs incurred during the prior year, and the impact of
the restructuring program implemented in the fourth quarter of 1997. Equity
earnings were $6.5 million for the first six months of 1998, up $1.0 million
from the prior year. The increase is primarily due to high repair and
maintenance costs incurred by a domestic affiliate in early 1997 and favorable
European results in the current year.
9
<PAGE> 11
COMPARISON OF SECOND QUARTER 1998 TO
SECOND QUARTER 1997
GROSS INCOME
- ------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
(In Millions) Three Months Ended
June 30
--------------------
Business Segment 1998 1997 Change
- ------------------------------ --------- --------- -----------
<S> <C> <C> <C> <C>
Railcar Leasing and Management $ 128.1 $ 118.7 $ 9.4 8%
Terminals and Pipelines 71.4 75.7 (4.3) (6)%
- -----------------------------------------------------------------------------
</TABLE>
NET INCOME
- ----------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
(In Millions) Three Months Ended
June 30
--------------------
Business Segment 1998 1997 Change
- ------------------------------ --------- --------- -----------
<S> <C> <C> <C> <C>
Railcar Leasing and Management $ 20.1 $ 18.5 $ 1.6 9%
Terminals and Pipelines 4.3 2.5 1.8 72%
- -----------------------------------------------------------------------------
</TABLE>
Increases and decreases in gross income and net income between these quarters
for both segments were principally due to the same reasons discussed previously
in relation to the six-month periods.
10
<PAGE> 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
General American Transportation Corporation ("GATC") and GATX Terminals
Corporation ("Terminals"), each subsidiaries of GATX Corporation, are two of
nine defendants in the matter of In re New Orleans Train Car Leakage Fire
Litigation (No. 87-16374, Civil District Court for the Parish of Orleans), a
class action lawsuit arising out of a September 1987 tank car fire in the City
of New Orleans. GATC had previously reported that the Louisiana Supreme Court
had granted a writ vacating a September 21, 1997 judgment which awarded (i)
compensatory damages against all nine defendants and in favor of twenty named
plaintiffs and (ii) punitive damages against four defendants, including
Terminals, and in favor of the class of approximately 8,000 claimants. The
Supreme Court held that at least with respect to punitive damages, a judgment
could not be entered until all liability issues relating to all 8,000 class
members had been adjudicated.
Once the judgment was vacated, there was no procedural mechanism by which the
trial court or an appellate court could review the jury's finding of liability
for punitive and compensatory damages. Accordingly, the defendants filed a
motion asking that the trial court enter a judgment only on liability, and
without reference to the amount of damages. Such a judgment would permit the
defendants to seek review of the compensatory and punitive liability findings,
but not the amount of damages.
On June 18, 1998, the trial court entered a judgment (a) finding each of the
defendants liable for compensatory damages to the members of the plaintiff class
in the percentages specified in the jury verdict, including twenty percent as to
GATC and ten percent as to Terminals, and (b) finding five of the defendants,
including Terminals, liable for punitive damages. Both findings were without
quantification of damages. The trial court designated the judgment to be final
and appealable. On June 25, 1998, the defendants filed post judgment motions
seeking a new trial or alternatively seeking entry of judgment notwithstanding
the verdict in favor of defendants on the issue of punitive liability.
Pursuant to a motion filed on behalf of the plaintiffs, the trial court also
ordered the commencement of trials of the claims of the other members of the
class, and ordered the appointment of a statistician to assist the court in the
selection of the next twenty plaintiffs, for the first of such trials. It is
not clear from the court's order when such trials are to commence, the manner in
which they are to proceed, or what issues are to be tried.
GATC believes that the compensatory damages awarded to the twenty plaintiffs are
excessive, and intends to pursue post-judgment review of the awards, and, if
necessary, appeals of any final judgment. GATC also believes that the punitive
liability judgment against Terminals is unsupported by law and evidence.
Accordingly, Terminals intends to pursue appeals of the punitive damages
liability judgment if it survives post-judgement review. In addition, GATC
believes that the punitive damages awards by the jury are clearly excessive. If
a judgment on the award against Terminals is entered by the trial court,
Terminals will pursue post-judgment review in the trial court, and if necessary,
will appeal that judgment as well.
Although more than 8,000 claims have been made, GATC believes that the damages,
if any, that are awarded to the remaining plaintiffs, whether by the trial or
appellate courts, will, on average, be substantially less than the damages
awarded to the twenty plaintiffs whose cases have been tried.
11
<PAGE> 13
On May 13, 1997, the New Jersey Department of Environmental Protection (NJDEP)
served Terminals with a Notice of Violation alleging that during 1994 and 1995
marine vapor recovery units produced emissions of carbon monoxide in excess of
limits allowed by operating permits for those units. On May 20, 1998, Terminals
met with the DEP to explain that a substantial number of the reported
exceedances were not actual exceedances but false reports or exceedances made
worse by a defect in the software designed to operate with the monitoring unit.
The Company and NJDEP have entered into negotiations in an attempt to reach
settlement on the fines proposed by the NJDEP with respect to the exceedances.
GATC and its subsidiaries are engaged in various matters of litigation including
but not limited to those matters described above, and have a number of
unresolved claims pending, including proceedings under governmental laws and
regulations related to environmental matters. While the amounts claimed are
substantial and the ultimate liability with respect to such litigation and
claims cannot be determined at this time, it is the opinion of management that
damages, if any, required to be paid by GATC and its subsidiaries in the
discharge of such liability are not likely to be material to GATC's consolidated
financial position or results of operations.
<TABLE>
<CAPTION>
Item 6. Exhibits and Reports on Form 8-K Page
- ----------------------------------------- ----
<S> <C>
(a) 10 $350,000,000 Credit Agreement dated as of May 14, 1998 among General
American Transportation Corporation, the banks listed therein, The
First National Bank of Chicago as Administrative Agent and Morgan
Guaranty Trust Company of New York as Documentation Agent submitted
to the SEC along with the electronic submission of this Quarterly
Report on Form 10-Q.
12 Statement regarding computation of ratios of earnings to
fixed charges. 14
27 Financial Data Schedule for General American Transportation
Corporation for the quarter ended June 30, 1998. Submitted to
the SEC along with the electronic submission of this Quarterly
Report on Form 10-Q.
Any instrument defining the rights of security holders with respect
to nonregistered long-term debt not being filed on the basis that the
amount of securities authorized does not exceed 10 percent of the
total assets of the company and subsidiaries on a consolidated basis
will be furnished to the Commission upon request.
(b) No reports on Form 8-K were filed during the reporting period.
</TABLE>
12
<PAGE> 14
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.
GENERAL AMERICAN TRANSPORTATION CORPORATION
(Registrant)
/s/D. Ward Fuller
----------------------------------------------------
D. Ward Fuller
President, Chief Executive Officer and Director
(Duly Authorized Officer)
/s/Donald J. Schaffer
----------------------------------------------------
Donald J. Schaffer
Vice President, Finance and Chief Financial Officer
Date: August 14, 1998
13
<PAGE> 15
EXHIBIT 12
GENERAL AMERICAN TRANSPORTATION CORPORATION
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(UNAUDITED)
(IN MILLIONS, EXCEPT FOR RATIOS)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
---------------------- ----------------------
1998 1997 1998 1997
---------------------- ----------------------
<S> <C> <C> <C> <C>
Earnings available for fixed charges:
Net income .................................... $24.4 $21.0 $48.1 $37.6
Add (deduct):
Income taxes ................................ 13.0 10.3 24.9 20.0
Equity in net earnings of affiliated
companies, net of distributions received .. (2.6) (2.6) (6.6) (4.1)
Interest on indebtedness and amortization
of debt discount and expense .............. 28.9 30.2 57.2 59.5
Amortization of capitalized interest ........ .3 .3 .6 .6
Portion of rents representative of interest
factor (deemed to be one-third) ........... 7.8 6.8 15.5 13.6
---------- ---------- ---------- ----------
Total earnings available for fixed charges .... $71.8 $66.0 $139.7 $127.2
========== ========== ========== ==========
Fixed Charges:
Interest on indebtedness and amortization
of debt discount and expense ................ $28.9 $30.2 $57.2 $59.5
Capitalized interest .......................... .2 .2 .5 .4
Portion of rents representative of interest
factor (deemed to be one-third) ............. 7.8 6.8 15.5 13.6
---------- ---------- ---------- ----------
Total fixed charges ........................... $36.9 $37.2 $73.2 $73.5
========== ========== ========== ==========
Ratio of earnings to fixed charges(A) ............ 1.95x 1.77x 1.91x 1.73x
</TABLE>
(A) The ratios of earnings to fixed charges represents the number of times
"fixed charges" are covered by "earnings." "Fixed charges" consist of interest
on outstanding debt and capitalized interest, one-third (the proportion deemed
representative of the interest factor) of rentals, and amortization of debt
discount and expense. "Earnings" consist of consolidated net income before
income taxes and fixed charges, less equity in net earnings of affiliated
companies, net of distributions received.
14
<PAGE> 1
Exhibit 10
$350,000,000
CREDIT AGREEMENT
dated as of
May 14, 1998
among
General American Transportation Corporation,
The Banks Listed Herein,
The First National Bank of Chicago,
as Administrative Agent,
and
Morgan Guaranty Trust Company of New York,
as Documentation Agent
<PAGE> 2
TABLE OF CONTENTS
---------------
<TABLE>
<CAPTION>
PAGE
----
ARTICLE 1
DEFINITIONS
<S> <C> <C>
SECTION 1.01. Definitions....................................................... 1
SECTION 1.02. Accounting Terms and Determinations............................... 12
SECTION 1.03. Types of Borrowings............................................... 12
ARTICLE 2
THE CREDITS
SECTION 2.01. Commitments to Lend................................................ 13
SECTION 2.02. Notice of Committed Borrowing; Notice of Interest Rate
Election................................................................... 13
SECTION 2.03. Money Market Borrowings............................................ 16
SECTION 2.04. Notice to Banks; Funding of Loans.................................. 20
SECTION 2.05. Registry........................................................... 20
SECTION 2.06. Maturity of Loans.................................................. 21
SECTION 2.07. Interest Rates..................................................... 21
SECTION 2.08. Fees............................................................... 23
SECTION 2.09. Optional Termination or Reduction of Commitments................... 23
SECTION 2.10. Mandatory Termination of Commitments............................... 23
SECTION 2.11. Optional Prepayments............................................... 23
SECTION 2.12. General Provisions as to Payments.................................. 24
SECTION 2.13. Funding Losses..................................................... 25
SECTION 2.14. Computation of Interest and Fees................................... 25
SECTION 2.15. Regulation D Compensation.......................................... 25
SECTION 2.16. Optional Increase in Commitments................................... 26
SECTION 2.17. Mandatory Prepayment in the Event of a Change in
Control.................................................................... 27
ARTICLE 3
CONDITIONS
SECTION 3.01. Effectiveness...................................................... 27
SECTION 3.02. Borrowings......................................................... 28
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
<S> <C> <C>
SECTION 4.01. Corporate Existence............................................... 29
SECTION 4.02. Authorization of Agreement; No Violation.......................... 29
SECTION 4.03. Governmental Approvals............................................ 29
SECTION 4.04. Binding Effect.................................................... 30
SECTION 4.05. Financial Information............................................. 30
SECTION 4.06. Litigation........................................................ 30
SECTION 4.07. Employee Benefit Plans............................................ 30
SECTION 4.08. Taxes............................................................. 31
SECTION 4.09. Subsidiaries...................................................... 31
SECTION 4.10. Full Disclosure................................................... 31
SECTION 4.11. Compliance with Laws.............................................. 32
SECTION 4.12. Environmental Matters............................................. 32
ARTICLE 5
COVENANTS
SECTION 5.01. Maintenance of Existence.......................................... 32
SECTION 5.02. Compliance with Laws, Etc......................................... 33
SECTION 5.03. Payment of Taxes and Claims, Etc.................................. 33
SECTION 5.04. Keeping of Books.................................................. 33
SECTION 5.05. Visitation, Inspection, Etc....................................... 33
SECTION 5.06. Insurance......................................................... 33
SECTION 5.07. Reporting Covenants............................................... 33
SECTION 5.08. Financial Test Covenants.......................................... 36
SECTION 5.09. Mergers, Etc...................................................... 37
SECTION 5.10. Negative Pledge................................................... 37
SECTION 5.11. Use of Proceeds................................................... 38
SECTION 5.12. Certain Transfers to Subsidiaries of the Borrower................. 38
SECTION 5.13. Transactions with Affiliates...................................... 39
ARTICLE 6
DEFAULTS
SECTION 6.01. Payments.......................................................... 39
SECTION 6.02. Covenants Without Notice.......................................... 39
SECTION 6.03. Other Covenants................................................... 39
SECTION 6.04. Representations................................................... 40
SECTION 6.05. Non-payments of Other Indebtedness................................ 40
</TABLE>
ii
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<TABLE>
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SECTION 6.06. Defaults under Other Agreements............................. 40
SECTION 6.07. Failure to Pay, Etc......................................... 40
SECTION 6.08. Bankruptcy.................................................. 40
SECTION 6.09. ERISA....................................................... 41
SECTION 6.10. Judgments................................................... 41
SECTION 6.11. Change of Control of the Borrower........................... 41
ARTICLE 7
THE AGENTS
SECTION 7.01. Appointment and Authorization............................... 42
SECTION 7.02. Agents and Affiliates....................................... 42
SECTION 7.03. Action by Agents............................................ 42
SECTION 7.04. Employment of Agents and Experts............................ 43
SECTION 7.05. Liability of Agents......................................... 43
SECTION 7.06. Indemnification............................................. 44
SECTION 7.07. Credit Decision............................................. 44
SECTION 7.08. Successor Administrative Agent.............................. 44
SECTION 7.09. Agents' Fees................................................ 45
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair.... 45
SECTION 8.02. Illegality.................................................. 46
SECTION 8.03. Increased Cost and Reduced Return........................... 46
SECTION 8.04. Taxes....................................................... 48
SECTION 8.05. Base Rate Loans Substituted for Affected EuroDollar
Loans............................................................... 49
SECTION 8.06. Replacement of Bank......................................... 50
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices..................................................... 51
SECTION 9.02. No Waivers.................................................. 51
SECTION 9.03. Expenses; Indemnification................................... 51
SECTION 9.04. Sharing of Set-offs......................................... 52
SECTION 9.05. Amendments and Waivers...................................... 52
SECTION 9.06. Successors and Assigns...................................... 53
SECTION 9.07. Collateral.................................................. 54
</TABLE>
iii
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<TABLE>
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SECTION 9.08. Governing Law; Submission to Jurisdiction....................... 54
SECTION 9.09. Counterparts; Integration....................................... 55
SECTION 9.10. WAIVER OF JURY TRIAL............................................ 55
SECTION 9.11. Confidentiality................................................. 55
PRICING SCHEDULE
Schedule 5.10
EXHIBIT A - Note
EXHIBIT B - Money Market Quote Request
EXHIBIT C - Invitation for Money Market Quotes
EXHIBIT D - Money Market Quote
EXHIBIT E - Opinion of Counsel for the Borrower
EXHIBIT F - Opinion of Special Counsel for the Agents
EXHIBIT G - Assignment and Assumption Agreement
</TABLE>
iv
<PAGE> 6
AGREEMENT dated as of May 14, 1998 among GENERAL AMERICAN TRANSPORTATION
CORPORATION, the BANKS listed on the signature pages hereof, THE FIRST NATIONAL
BANK OF CHICAGO, as Administrative Agent, and MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Documentation Agent.
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein, have the
following meanings:
"ABSOLUTE RATE AUCTION" means a solicitation of Money Market Quotes
setting forth Money Market Absolute Rates pursuant to Section 2.03.
"ADMINISTRATIVE AGENT" means The First National Bank of Chicago in its
capacity as administrative agent for the Banks hereunder, and its successors in
such capacity.
"ADMINISTRATIVE QUESTIONNAIRE" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Administrative Agent
and submitted to the Administrative Agent (with a copy to the Borrower) duly
completed by such Bank.
"AFFILIATE" means (i) any Person that directly, or indirectly through one
or more intermediaries, controls the Borrower (a "CONTROLLING PERSON") or (ii)
any Person (other than the Borrower or a Subsidiary) which is controlled by or
is under common control with a Controlling Person. As used herein, the term
"CONTROL" means possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"AGENTS" means the Administrative Agent and the Documentation Agent.
"APPLICABLE LENDING OFFICE" means, with respect to any Bank, (i) in the
case of its Base Rate Loans, its Domestic Lending Office, (ii) in the case of
its Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case of
its Money Market Loans, its Money Market Lending Office.
<PAGE> 7
"ASSIGNEE" has the meaning set forth in Section 9.06(c).
"AUTHORIZED OFFICER" means any of the Chairman of the Board of Directors,
President, Chief Financial Officer, Treasurer or Assistant Treasurer of the
Borrower, acting singly.
"BANK" means each bank listed on the signature pages hereof, each Person
which becomes a Bank pursuant to Section 2.16 or 8.06 and each Assignee which
becomes a Bank pursuant to Section 9.06(c), and their respective successors.
"BANKRUPTCY CODE" is defined in Section 6.08.
"BASE RATE" means, for any day, a rate per annum equal to the higher of
(i) the Corporate Base Rate for such day and (ii) the sum of 1/2 of 1% plus
the Federal Funds Effective Rate for such day.
"BASE RATE LOAN" means (i) a Committed Loan which bears interest at the
Base Rate pursuant to the applicable Notice of Committed Borrowing or Notice of
Interest Rate Election or the provisions of Article 8 or (ii) an overdue amount
which was a Base Rate Loan immediately before it became overdue.
"BORROWER" means General American Transportation Corporation, a New York
corporation, and its successors.
"BORROWING" has the meaning set forth in Section 1.03.
"CHANGE IN CONTROL" means (i) the acquisition by any Person, or two or
more Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 50% or more of the outstanding shares of voting stock
of GATX, or (ii) Continuing Directors shall cease to constitute a majority of
the board of directors of GATX.
"CHANGE IN CONTROL NOTICE" is defined in Section 2.17.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COMMITMENT" means (i) with respect to each Bank listed on the signature
pages hereof, the amount set forth opposite its name on the signature pages
hereof and (ii) with respect to each Assignee or other Person which becomes a
Bank pursuant to Section 9.06(c), 2.16 or 8.06, the amount of the Commitment
thereby assumed by it, in each case as such amount may be reduced from time to
time
2
<PAGE> 8
pursuant to Sections 2.09 and 9.06(c) or increased from time to time pursuant to
Sections 2.16, 8.06 and 9.06(c).
"COMMITTED LOAN" means a loan made by a Bank pursuant to Section 2.01;
provided that, if any such loan or loans (or portions thereof) are combined or
subdivided pursuant to a Notice of Interest Rate Election, the term "Committed
Loan" shall refer to the combined principal amount resulting from such
combination or to each of the separate principal amounts resulting from such
subdivision, as the case may be.
"CONSOLIDATED ADJUSTED EBIT" means, for any period, the sum of
Consolidated Net Income for such period plus, to the extent deducted in
determining such Consolidated Net Income, Consolidated Interest Expense,
provisions for income tax and fifty percent (50%) of Consolidated Railcar Lease
Expense for such period minus, to the extent included in such Consolidated Net
Income, all income of the Borrower and its Subsidiaries derived from
Investments in GATX or any Subsidiary of GATX (other than the Borrower or a
Subsidiary of the Borrower).
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the interest
expense of the Borrower and its Subsidiaries, determined on a consolidated
basis for such period.
"CONSOLIDATED NET INCOME" means, for any period, the net after-tax income
of the Borrower and its Subsidiaries for such period, determined on a
consolidated basis.
"CONSOLIDATED NET WORTH" means, at any date, the consolidated
stockholders' equity of Borrower and its Subsidiaries as at such date.
"CONSOLIDATED RAILCAR LEASE EXPENSE" means, for any fiscal period of the
Borrower, the consolidated railcar operating lease expense of the Borrower and
its Subsidiaries for such fiscal period.
"CONSOLIDATED TANGIBLE NET WORTH" means, at any date, Consolidated Net
Worth at such date minus, to the extent reflected therein, intangible assets,
including, without limitation, franchises, patents and patent applications,
trademarks and service marks, goodwill, research and development expenses,
unamortized debt discount and expense, and all write-ups in the book value of
any asset (excluding write-ups of assets resulting from the application of
principles of purchase accounting).
3
<PAGE> 9
"CONTINUING DIRECTOR" means (i) any director of GATX on the date of this
Agreement and (ii) any director of GATX elected to the board to replace a
Continuing Director who shall have died, or who shall have retired or resigned
from the board in the ordinary course, and whose election or nomination was
approved by a majority of the Continuing Directors then in office.
"CORPORATE BASE RATE" means a rate per annum equal to the corporate base
rate of interest announced by First Chicago from time to time, changing when
and as said corporate base rate changes.
"DEFAULT" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"DOCUMENTATION AGENT" means Morgan Guaranty Trust Company of New York in
its capacity as documentation agent for the Banks hereunder.
"DOMESTIC BUSINESS DAY" means any day except a Saturday, Sunday or other
day on which commercial banks in New York City or Chicago are authorized by law
to close.
"DOMESTIC LENDING OFFICE" means, as to each Bank, its office located at
its address set forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to the Borrower and the Administrative Agent.
"EFFECTIVE DATE" means the date this Agreement becomes effective in
accordance with Section 3.01.
"ENVIRONMENTAL LAWS" means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, plans, injunctions and other governmental restrictions
applicable to the Borrower or a Subsidiary and relating to (i) the protection
of the environment, (ii) the effect of the environment on human health, (iii)
emissions, discharges or releases of pollutants, contaminants, hazardous
substances or wastes into surface water, ground water or land, or (iv) the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, hazardous substances or
wastes or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of l974, as
amended from time to time, and any rule or regulation issued thereunder.
4
<PAGE> 10
"ERISA AFFILIATE" means each trade or business (whether or not
incorporated) which together with the Borrower or a Subsidiary of the Borrower
would be under "common control" within the meaning of Section 4001 of ERISA.
"ERISA TERMINATION EVENT" means (i) a "reportable event" described in
Section 4043 of ERISA and the regulations issued thereunder, other than a
"reportable event" with respect to which the provision for thirty (30) day
notice to the PBGC has been waived or contingently waived under such
regulations, or (ii) the withdrawal of the Borrower or any Subsidiary of the
Borrower or any ERISA Affiliate from a Plan during a plan year in which it was
a "substantial employer" as defined in Section 4001(a)(2)of ERISA, or (iii)
the filing of a notice of intent to terminate a Plan with respect to which
there are insufficient assets to pay benefits as they become due or the
treatment of an amendment of such a Plan as a termination under Section 4041 of
ERISA, or (iv) the institution of proceedings to terminate a Plan by the PBGC
or (v) any other event or condition which might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee
to administer, any Plan; provided, that no event or occurrence of the type
described in clauses (i) through (v) above shall constitute an ERISA
Termination Event unless there shall result from such event or occurrence
either a liability or a material risk of incurring a liability to the PBGC or a
Plan, which will have a Material Adverse Effect.
"EURO-DOLLAR BUSINESS DAY" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"EURO-DOLLAR LENDING OFFICE" means, as to each Bank, its office, branch or
affiliate located at its address set forth in its Administrative Questionnaire
(or identified in its Administrative Questionnaire as its Euro-Dollar Lending
Office) or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Euro-Dollar Lending Office by notice to the Borrower
and the Administrative Agent.
"EURO-DOLLAR LOAN" means (i) a Committed Loan which bears interest at a
Euro-Dollar Rate pursuant to the applicable Notice of Committed Borrowing or
Notice of Interest Rate Election or (ii) an overdue amount which was a
Euro-Dollar Loan immediately before it became overdue.
"EURO-DOLLAR MARGIN" means a rate per annum determined daily in accordance
with the Pricing Schedule.
"EURO-DOLLAR RATE" means a rate of interest determined pursuant to Section
2.07(b) on the basis of a London Interbank Offered Rate.
5
<PAGE> 11
"EURO-DOLLAR RESERVE PERCENTAGE" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor), for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "EUROCURRENCY LIABILITIES" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or
other assets which includes loans by a non-United States office of any Bank to
United States residents).
"EVENT OF DEFAULT" has the meaning set forth in Article 6.
"EXISTING CREDIT AGREEMENT" means the $300,000,000 Credit Agreement dated
as of May 9, 1996, among the Borrower, the banks parties thereto, First
Chicago, as administrative agent, and Morgan, as documentation agent, as
amended to the Effective Date.
"FACILITY FEE RATE" means a rate per annum determined daily in accordance
with the Pricing Schedule.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Domestic Business Day, for the immediately preceding Domestic Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Domestic Business Day, the average of the quotations at
approximately 10:00 A.M. (Chicago time) on such day on such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by the Administrative Agent in its sole
discretion.
"FIRST CHICAGO" means The First National Bank of Chicago in its individual
capacity, and its successors.
"FIXED RATE LOANS" means Euro-Dollar Loans or Money Market Loans
(excluding Money Market LIBOR Loans bearing interest at the Base Rate pursuant
to Section 8.01) or both.
"GATX" means GATX Corporation, a New York corporation, and its successors.
6
<PAGE> 12
"GROUP OF LOANS" means at any time a group of Loans consisting of (i) all
Committed Loans which are Base Rate Loans at such time and (ii) all Euro-Dollar
Loans having the same Interest Period at such time; provided that, if a
Committed Loan of any particular Bank is converted to or made as a Base Rate
Loan pursuant to Article 8, such Loan shall be included in the same Group or
Groups of Loans from time to time as it would have been in if it had not been
so converted or made.
"INDEBTEDNESS" of any Person means (without duplication):
(a) all obligations of such Person for borrowed money or for the deferred
purchase price of property or services, and all obligations evidenced by bonds,
debentures, notes or other similar instruments (but excluding in each case
those accounts payable and accruals that were incurred or created in the normal
course of business and have original maturities of one year or less);
(b) all rental obligations under leases required to be capitalized under,
and as valued in accordance with, generally accepted accounting principles;
(c) all guaranties (direct or indirect), all contingent reimbursement
obligations under undrawn letters of credit and other contingent obligations of
such person in respect of, or obligations to purchase or otherwise acquire or
to assure payment of, Indebtedness of others; and
(d) all obligations of such person under, in connection with or related to
(A) any preferred stock or any instrument of a similar character issued by such
Person which has or may potentially have characteristics of Indebtedness under
generally accepted accounting principles (including, without limitation,
support provided by a letter or letters of credit), or (B) any financing
instrument or arrangement issued or undertaken by such Person (w) that has a
stated maturity date, (x) under which any default does or may result in any
payment obligation or acceleration of any payment Obligation, (y) that is
subject to a redemption obligation that either is mandatory or may be imposed
at the option of the holder or obligee thereof or (z) that is convertible or
exchangeable into any other instrument of Indebtedness.
"INDEMNITEE" has the meaning set forth in Section 9.03(b).
"INTEREST PERIOD" means: (a) with respect to each Euro-Dollar Loan, the
period commencing on the date of borrowing specified in the applicable Notice
of Borrowing or on the date specified in the applicable Notice of Interest Rate
Election and ending one, two, three or six months (or, if corresponding funding
is available to each Bank, nine or twelve months) thereafter, as the Borrower
may elect in the applicable notice; provided that:
7
<PAGE> 13
(i) any Interest Period which would otherwise end on a day which is
not a Euro-Dollar Business day shall, subject to clause (c) below, be
extended to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Euro-Dollar Business Day;
(ii) any interest period which begins on the last Euro-Dollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clause (c) below, end on the last Euro-Dollar Business
Day of a calendar month; and
(iii) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(b) with respect to each Money Market LIBOR Borrowing, the period
commencing on the date of such Borrowing and ending such whole number of
months thereafter as the Borrower may elect in accordance with section 2.03;
provided that:
(i) any Interest Period which would otherwise end on a day which is
not a Euro-Dollar Business Day shall, subject to clause (c) below, be
extended to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Euro-Dollar Business Day;
(ii) any Interest Period which begins on the last Euro-Dollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clause (c) below, end on the last Euro-Dollar Business Day
of a calendar month; and
(iii) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(c) with respect to each Money Market Absolute Rate Borrowing, the period
commencing on the date of such Borrowing and ending such number of days
thereafter (but not less than 7 days) as the Borrower may elect in accordance
with Section 2.03; provided that:
8
<PAGE> 14
(i) any Interest Period which would otherwise end on a day which is
not a Domestic Business Day shall, subject to clause (b) below, be extended
to the next succeeding Domestic Business Day; and
(ii) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
"INVESTMENT" of a Person means any loan, advance, extension of credit or
contribution of capital by such Person; stocks, bonds, mutual funds,
partnership interests, notes, debentures or other securities owned by such
Person; any deposit accounts and certificates of deposit owned by such Person;
and structured notes, derivative financial instruments and other similar
instruments or contracts owned by such Person.
"LIBOR AUCTION" means a solicitation of Money Market Quotes setting forth
Money Market Margins based on the London Interbank Offered Rate pursuant to
Section 2.03.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien,
charge or deposit arrangement or other arrangement having the practical effect
of any of the foregoing and shall include the interest of a vendor or lessor
under any conditional sale agreement, capitalized lease or other title
retention agreement.
"LOAN" means a Base Rate Loan, a Euro-Dollar Loan or a Money Market Loan
and "LOANS" means Base Rate Loans, Euro-Dollar Loans or Money Market Loans or
any combination of the foregoing.
"LONDON INTERBANK OFFERED RATE" has the meaning set forth in Section
2.07(b).
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business, property, condition (financial or otherwise) or results of operations
of the Borrower and its Subsidiaries taken as a whole, (ii) the ability of the
Borrower to perform its obligations under this Agreement and any Notes, or
(iii) the validity or enforceability of this Agreement or any Note or the
rights or remedies of the Agents or the Banks hereunder and thereunder.
"MATERIAL INDEBTEDNESS" means Indebtedness (other than the Indebtedness
incurred hereunder) of the Borrower and/or one or more of its Subsidiaries,
arising in one or more related or unrelated transactions, in an aggregate
principal or face amount exceeding $25,000,000.
9
<PAGE> 15
"MONEY MARKET ABSOLUTE RATE" has the meaning set forth in Section
2.03(d)(ii)(D).
"MONEY MARKET ABSOLUTE RATE LOAN" means a loan to be made by a Bank
pursuant to an Absolute Rate Auction.
"MONEY MARKET LENDING OFFICE" means, as to each Bank, its Domestic Lending
Office or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Money Market Lending Office by notice to the
Borrower and the Administrative Agent; provided that any Bank may from time to
time by notice to the Borrower and the Administrative Agent designate separate
Money Market Lending Offices for its Money Market LIBOR Loans, on the one hand,
and its Money Market Absolute Rate Loans, on the other hand, in which case all
references herein to the Money Market Lending Office of such Bank shall be
deemed to refer to either or both of such offices, as the context may require.
"MONEY MARKET LIBOR LOAN" means a loan to be made by a Bank pursuant to a
LIBOR Auction (including such a loan bearing interest at the Base Rate pursuant
to Section 8.01).
"MONEY MARKET LOAN" means a Money Market LIBOR Loan or a Money Market
Absolute Rate Loan.
"MONEY MARKET MARGIN" has the meaning set forth in Section 2.03(d)(ii)(C).
"MONEY MARKET QUOTE" means an offer by a Bank to make a Money Market Loan
in accordance with Section 2.03.
"MORGAN" means Morgan Guaranty Trust Company of New York, in its
individual capacity, and its successors.
"NOTE" means any promissory note of the Borrower issued pursuant to
Section 2.05(b).
"NOTICE OF BORROWING" means a Notice of Committed Borrowing (as defined in
Section 2.02(a) or a Notice of Money Market Borrowing (as defined in Section
2.03(f).
"NOTICE OF INTEREST RATE ELECTION" has the meaning set forth in Section
2.02(b).
10
<PAGE> 16
"PARENT" means, with respect to any Bank, any Person controlling such
Bank.
"PARTICIPANT" has the meaning set forth in Section 9.06(b).
"PAYMENT DATE" means the last day of each January, April, July and October
unless such day is not a Domestic Business Day, in which case "PAYMENT DATE"
shall mean the next succeeding Domestic Business Day.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"PENSION PLAN" means any Plan which is a multiemployer plan or single
employer plan, as defined in Section 4001 and subject to Title IV of ERISA.
"PERSON" means an individual, a corporation, a limited liability company,
a partnership, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"PLAN" means any employee benefit plan, as defined in Section 3(3) of
ERISA, which is or, at any time during the five (5) calendar years preceding
the date of this Agreement, was maintained for employees of the Borrower or a
Subsidiary of the Borrower or an ERISA Affiliate.
"PRICING SCHEDULE" means the Schedule attached hereto identified as such.
"REFERENCE BANKS" means First Chicago, Morgan and Citibank, N.A., and
"REFERENCE BANK" means any one of such Reference Banks.
"REGULATION U" means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
"REQUIRED BANKS" means at any time Banks having at least 51% of the
aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding at least 51% of the aggregate unpaid principal amount of
the Loans.
"RESTRICTED PAYMENT" means (i) any dividend or other distribution on any
shares of the Borrower's capital stock (except dividends payable solely in
shares of its capital stock) or (ii) any payment on account of the purchase,
redemption, retirement or acquisition of (a) any shares of the Borrower's
capital stock or (b) any option, warrant or other right to acquire shares of
the Borrower's capital stock
11
<PAGE> 17
(but not including payments of principal, premium (if any) or interest made
pursuant to the terms of convertible debt securities prior to conversion).
"REVOLVING CREDIT PERIOD" means the period from and including the
Effective Date to but not including the Termination Date.
"SUBSIDIARY" of any Person means a corporation of which a majority of the
outstanding shares of stock of each class having ordinary voting power is owned
by such Person, by one or more Subsidiaries of such Person, or by such Person
and one or more of its Subsidiaries.
"TERMINATION DATE" means May 14, 2003, or, if such day is not a
Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day.
"UNITED STATES" means the United States of America, including the States
and the District of Columbia, but excluding its territories and possessions.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time to time, applied
on a basis consistent (except for changes concurred in by the Borrower's
independent public accountants) with the most recent audited consolidated
financial statements of the Borrower and its Subsidiaries delivered to the
Banks; provided that, if the Borrower notifies the Administrative Agent that the
Borrower wishes to amend any covenant in Article 5 to eliminate the effect of
any change in generally accepted accounting principles on the operation of such
covenant (or if the Administrative Agent notifies the Borrower that the Required
Banks wish to amend Article 5 for such purpose), then the Borrower's compliance
with such covenant shall be determined on the basis of generally accepted
accounting principles in effect immediately before the relevant change in
generally accepted accounting principles became effective, until either such
notice is withdrawn or such covenant is amended in a manner satisfactory to the
Borrower and the Required Banks.
SECTION 1.03. Types of Borrowings. The term "BORROWING" denotes the
aggregation of Loans of one or more Banks to be made to the Borrower pursuant to
Article 2 on the same date, all of which Loans are of the same type (subject to
Article 8) and, except in the case of Base Rate Loans, have the same initial
Interest Period. Borrowings are classified for purposes of this Agreement
either by reference to (i) the pricing of Loans comprising such Borrowing (e.g.,
a "FIXED RATE BORROWING" is a Euro-Dollar Borrowing or a Money Market Borrowing
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(excluding any such Borrowing consisting of Money Market LIBOR Loans bearing
interest at the Base Rate pursuant to Section 8.01), and a "EURO-DOLLAR
BORROWING" is a Borrowing comprised of Euro-Dollar Loans) or (ii) the provisions
of Article 2 under which participation therein is determined (i.e., a "COMMITTED
BORROWING" is a Borrowing under Section 2.01 in which all Banks participate in
proportion to their Commitments, while a "MONEY MARKET BORROWING" is a Borrowing
under Section 2.03 in which the Bank participants are determined on the basis of
their bids in accordance therewith).
ARTICLE 2
THE CREDITS
SECTIONS 2.01. Commitments to Lend. During the Revolving Credit Period,
each Bank severally agrees, on the terms and conditions set forth in this
Agreement, to make loans to the Borrower pursuant to this Section from time to
time in amounts such that the aggregate principal amount of Committed Loans by
such Bank at any one time outstanding shall not exceed the amount of its
Commitment. Each Euro-Dollar Borrowing under this Section shall be in an
aggregate principal amount of $10,000,000 or any larger multiple of $1,000,000
and each Base Rate Borrowing under this Section shall be in an aggregate
principal amount of $5,000,000 or any larger multiple of $1,000,000 (except that
any such Borrowing may be in the aggregate amount available in accordance with
Section 3.02(b))and shall be made from the several Banks ratably in proportion
to their respective Commitments. Within the foregoing limits, the Borrower may
borrow under this Section, repay, or to the extent permitted by Section 2.11,
prepay Loans and reborrow at any time during the Revolving Credit Period under
this Section.
SECTION 2.02. Notice of Committed Borrowing; Notice of Interest Rate
Election. (a) The Borrower shall give the Administrative Agent notice (a "NOTICE
OF COMMITTED BORROWING") not later than 10:30 A.M. (Chicago time) on (x) the
date of each Base Rate Borrowing and (y) the third (or fifth, in case a nine- or
twelve-month Interest Period is elected) Euro-Dollar Business Day before each
Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic Business Day
in the case of a Base Rate Borrowing or a Euro-Dollar Business Day in the
case of a Euro-Dollar Borrowing;
(ii) the aggregate amount of such Borrowing;
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(iii) whether the Loans comprising such Borrowing are to be Base Rate
Loans or Euro-Dollar Loans; and
(iv) in the case of a Euro-Dollar Borrowing, the duration of the
initial Interest Period applicable thereto, subject to the provisions of
the definition of Interest Period.
(b) The Loans included in each Committed Borrowing shall bear interest
initially at the type of rate specified by the Borrower in the applicable
Notice of Committed Borrowing. Thereafter, the Borrower may from time to time
elect to change or continue the type of interest rate borne by each Group of
Loans (subject in each case to the provisions of Article 8), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect to
convert such Loans to Euro-Dollar Loans as of any Euro-Dollar Business Day;
and
(ii) if such Loans are Euro-Dollar Loans, the Borrower may elect to
convert such Loans to Base Rate Loans or elect to continue such Loans as
Euro-Dollar Loans for an additional Interest Period, in each case effective
on the last day of the then current Interest Period applicable to such
Loans.
Each such election shall be made by delivering a notice (a "NOTICE OF INTEREST
RATE ELECTION") to the Administrative Agent not later than 10:30 A.M. (Chicago
time) on the third (or fifth, in case a nine- or twelve-month Interest Period
is elected) Euro-Dollar Business Day before the conversion or continuation
selected in such notice is to be effective. A Notice of Interest Rate Election
may, if it so specifies, apply to only a portion of the aggregate principal
amount of the relevant Group of Loans; provided that (i) such portion is
allocated ratably among the Loans comprising such Group and (ii) the portion to
which such Notice applies, and the remaining portion to which it does not
apply, are each $10,000,000 or any larger multiple of $1,000,000. If no such
notice is timely received before the end of an Interest Period for any Group of
Euro-Dollar Loans, the Borrower shall be deemed to have elected that such Group
of Loans be converted to Base Rate Loans at the end of such Interest Period.
(c) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such notice
applies;
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(ii) the date on which the conversion or continuation selected in such
notice is to be effective, which shall comply with the applicable clause of
subsection (b) above;
(iii) if the Loans comprising such Group are to be converted to
Euro-Dollar Loans, the duration of the next succeeding Interest Period
applicable thereto; and
(iv) if such Loans are to be continued as Euro-Dollar Loans for an
additional Interest Period, the duration of such additional Interest
Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(d) The Borrower shall not be entitled to elect to convert any Committed
Loans to, or continue any Committed Loans for an additional Interest Period as,
Euro-Dollar Loans if a Default shall have occurred and be continuing when the
Borrower delivers notice of such election to the Administrative Agent.
(e) If the Borrower specifies a nine- or twelve-month Interest Period (an
"EXTENDED INTEREST PERIOD") in any Notice of Borrowing or Notice of Interest
Rate Election and the Administrative Agent shall not have received from any
Bank notice that deposits are not available to it in the relevant market with a
maturity corresponding to such Extended Interest Period within two Euro-Dollar
Business Days after receipt by the Administrative Agent of such notice, then
such Bank shall be deemed to have available to it such corresponding deposits
for such Extended Interest Period. If any Bank timely notifies the
Administrative Agent of the unavailability of such corresponding deposits for
an Extended Interest Period, then the Administrative Agent shall promptly
notify the Borrower and the Borrower shall deliver a new Notice of Borrowing or
Notice of Interest Rate Election (which may be included as an alternative
election in the original notice) specifying a different election within the
applicable time periods specified in the definition of Interest Period. If the
Borrower fails to so timely deliver such a new notice, then (i) in the case of
a Notice of Borrowing, the related Borrowing shall be made as a Base Rate
Borrowing and (ii) in the case of a Notice of Interest Rate Election, the Loans
covered thereby shall be continued as or converted into Base Rate Loans on the
effective date of such notice.
SECTION 2.03. Money Market Borrowings The Money Market Option. In addition
to Committed Borrowings pursuant to Section 2.01, the Borrower may, as set forth
in this Section, request the Banks during the Revolving Credit Period to make
offers to make Money Market Loans to the Borrower. The Banks may, but shall
have no obligation to, make such offers and the Borrower
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may, but shall have no obligation to, accept any such offers in the manner set
forth in this Section.
(b) Money Market Quote Request. When the Borrower wishes to request offers
to make Money Market Loans under this Section, it shall transmit to the
Administrative Agent by telex or facsimile transmission a Money Market Quote
Request substantially in the form of Exhibit B hereto so as to be received not
later than 10:30 A.M. (Chicago time) on (x) the fifth Euro-Dollar Business Day
prior to the date of Borrowing proposed therein, in the case of a LIBOR Auction
or (y) the Domestic Business Day next preceding the date of Borrowing proposed
therein, in the case of an Absolute Rate Auction (or, in either case, such other
time or date as the Borrower and the Administrative Agent shall have mutually
agreed and shall have notified to the Banks not later than the date of the Money
Market Quote Request for the first LIBOR Auction or Absolute Rate Auction for
which such change is to be effective) specifying:
(i) the proposed date of Borrowing, which shall be a Euro-Dollar
Business Day in the case of a LIBOR Auction or a Domestic Business Day in
the case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which shall be $5,000,000
or a larger multiple of $1,000,000,
(iii) the duration of the Interest Period applicable thereto, subject
to the provisions of the definition of Interest Period, and
(iv) whether the Money Market Quotes requested are to set forth a
Money Market Margin or a Money Market Absolute Rate.
The Borrower may request offers to make Money Market Loans for more than one
Interest Period in a single Money Market Quote Request. No Money Market Quote
Request shall be given within five Euro-Dollar Business Days (or such other
number of days as the Borrower and the Administrative Agent may agree) of any
other Money Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly upon receipt of a Money
Market Quote Request, the Administrative Agent shall send to the Banks by telex
or facsimile transmission an Invitation for Money Market Quotes substantially
in the form of Exhibit C hereto, which shall constitute an invitation by the
Borrower to each Bank to submit Money Market Quotes offering to make the Money
Market Loans to which such Money Market Quote Request relates in accordance
with this Section.
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(d) Submission and Contents of Money Market Quotes. (i) Each Bank may
submit a Money Market Quote containing an offer or offers to make Money Market
Loans in response to any Invitation for Money Market Quotes. Each Money Market
Quote must comply with the requirements of this subsection (d) and must be
submitted to the Administrative Agent by telex or facsimile transmission at its
offices specified in or pursuant to Section 9.01 not later than (x) 2:00 P.M.
(Chicago time) on the fourth Euro-Dollar Business Day prior to the proposed
date of Borrowing, in the case of a LIBOR Auction or (y) 9:30 A.M. (Chicago
time) on the proposed date of Borrowing, in the case of an Absolute Rate
Auction (or, in either case, such other time or date as the Borrower and the
Administrative Agent shall have mutually agreed and shall have notified to the
Banks not later than the date of the Money Market Quote Request for the first
LIBOR Auction or Absolute Rate Auction for which such change is to be
effective); provided that Money Market Quotes submitted by the Administrative
Agent (or any affiliate of the Administrative Agent) in the capacity of a Bank
may be submitted, and may only be submitted, if the Administrative Agent or
such affiliate notifies the Borrower of the terms of the offer or offers
contained therein not later than (x) one hour prior to the deadline for the
other Banks, in the case of a LIBOR Auction or (y) 15 minutes prior to the
deadline for the other Banks, in the case of an Absolute Rate Auction. Subject
to Articles 3 and 6, any Money Market Quote so made shall be irrevocable except
with the written consent of the Administrative Agent given on the instructions
of the Borrower.
(ii) Each Money Market Quote shall be in substantially the form of
Exhibit D hereto and shall in any case specify:
(A) the proposed date of Borrowing,
(B) the principal amount of the Money Market Loan for which
each such offer is being made, which principal amount (w) may be
greater than or less than the Commitment of the quoting Bank, (x)
must be $5,000,000 or a larger multiple of $1,000,000, (y) may not
exceed the principal amount of Money Market Loans for which offers
were requested and (z) may be subject to an aggregate limitation
as to the principal amount of Money Market Loans for which offers
being made by such quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin above or below
the applicable London Interbank Offered Rate (the "MONEY MARKET
MARGIN") offered for each such Money Market Loan, expressed as a
percentage (specified to the nearest 1/10,000th of 1%) to be added
to or subtracted from such base rate,
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(D) in the case of an Absolute Rate Auction, the rate of
interest per annum (specified to the nearest 1/10,000th of 1%)
(the "MONEY MARKET ABSOLUTE RATE") offered for each such Money
Market Loan, and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit D hereto
or does not specify all of the information required by subsection
2.03(D)(ii) above;
(B) contains qualifying, conditional or similar language;
(C) proposes terms other than or in addition to those set
forth in the applicable Invitation for Money Market Quotes; or
(D) arrives after the time set forth in subsection
2.03(D)(i).
(e) Notice to Borrower. The Administrative Agent shall promptly notify
the Borrower of the terms (x) of any Money Market Quote submitted by a Bank
that is in accordance with subsection (d) and (y) of any Money Market Quote
that amends, modifies or is otherwise inconsistent with a previous Money Market
Quote submitted by such Bank with respect to the same Money Market Quote
Request. Any such subsequent Money Market Quote shall be disregarded by the
Administrative Agent unless such subsequent Money Market Quote is submitted
solely to correct a manifest error in such former Money Market Quote. The
Administrative Agent's notice to the Borrower shall specify (i) the aggregate
principal amount of Money Market Loans for which offers have been received for
each Interest Period specified in the related Money Market Quote Request, (ii)
the respective principal amounts and Money Market Margins or Money Market
Absolute Rates, as the case may be, so offered and (iii) if applicable,
limitations on the aggregate principal amount of Money Market Loans for which
offers in any single Money Market Quote may be accepted.
(f) Acceptance and Notice by Borrower. Not later than 10:30 A.M. (Chicago
time) on (x) the third Euro-Dollar Business Day prior to the proposed
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date of Borrowing, in the case of a LIBOR Auction or (y) the proposed date of
Borrowing, in the case of an Absolute Rate Auction (or, in either case, such
other time or date as the Borrower and the Administrative Agent shall have
mutually agreed and shall have notified to the Banks not later than the date of
the Money Market Quote Request for the first LIBOR Auction or Absolute Rate
Auction for which such change is to be effective), the Borrower shall notify
the Administrative Agent of its acceptance or non-acceptance of the offers so
notified to it pursuant to subsection 2.03(e). In the case of acceptance, such
notice (a "NOTICE OF MONEY MARKET BORROWING") shall specify the aggregate
principal amount of offers for each Interest Period that are accepted. The
Borrower may accept any Money Market Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money Market Borrowing
may not exceed the applicable amount set forth in the related Money
Market Quote Request;
(ii) the principal amount of each Money Market Borrowing must be
$5,000,000 or a larger multiple of $1,000,000;
(iii) acceptance of offers may only be made on the basis of
ascending Money Market Margins or Money Market Absolute Rates, as the
case may be; and
(iv) the Borrower may not accept any offer that is described in
subsection 2.03(d)(iii) or that otherwise fails to comply with the
requirements of this Agreement.
(g) Allocation by Administrative Agent. If offers are made by two or more
Banks with the same Money Market Margins or Money Market Absolute Rates, as the
case may be, for a greater aggregate principal amount than the amount in
respect of which such offers are accepted for the related Interest Period, the
principal amount of Money Market Loans in respect of which such offers are
accepted shall be allocated by the Administrative Agent among such Banks as
nearly as possible (in multiples of $1,000,000, as the Administrative Agent may
deem appropriate) in proportion to the aggregate principal amounts of such
offers. Determinations by the Administrative Agent of the amounts of Money
Market Loans shall be conclusive in the absence of manifest error.
SECTION 2.04. Notice to Banks; Funding of Loans. (a) Upon receipt of a
Notice of Borrowing or Notice of Interest Rate Election, the Administrative
Agent shall promptly notify each Bank of the contents thereof and (in the case
of a Notice of Borrowing) of such Bank's share (if any) of such Borrowing and
such notice shall not thereafter be revocable by the Borrower.
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(b) Not later than 12:00 Noon (Chicago time) on the date of each
Borrowing, each Bank participating therein shall make available its share of
such Borrowing, in Federal or other funds immediately available in Chicago, to
the Administrative Agent at its address referred to in Section 9.01. Unless
the Administrative Agent determines that any applicable condition specified in
Article 3 has not been satisfied, the Administrative Agent will promptly make
the funds so received from the Banks available to the Borrower at the
Administrative Agent's aforesaid address.
(c) Unless the Administrative Agent shall have received notice from a
Bank prior to the date of any Borrowing (or, in the case of any Base Rate
Borrowing, prior to 12:00 Noon (Chicago time) on the date of such Borrowing)
that such Bank will not make available to the Administrative Agent such Bank's
share of such Borrowing, the Administrative Agent may assume that such Bank has
made such share available to the Administrative Agent on the date of such
Borrowing in accordance with subsection (b) of this Section and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower on such date a corresponding amount. If and to the extent that
such Bank shall not have so made such share available to the Administrative
Agent, such Bank and the Borrower severally agree to repay to the
Administrative Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such amount is made available
to the Borrower until the date such amount is repaid to the Administrative
Agent, at (i) in the case of the Borrower, a rate per annum equal to the
interest rate applicable thereto pursuant to Section 2.07 and (ii) in the case
of such Bank, the Federal Funds Effective Rate. If such Bank shall repay to
the Administrative Agent such corresponding amount, such amount so repaid shall
constitute such Bank's Loan included in such Borrowing for purposes of this
Agreement.
SECTION 2.05. Registry. (a) The Administrative Agent shall maintain a
register (the "REGISTER") on which it will record the Commitment of each Bank,
each Loan made by such Bank and each repayment of any Loan made by such Bank.
Any such recordation by the Administrative Agent on the Register shall be
conclusive, absent manifest error. Each Bank shall record on its internal
records (including computerized systems) the foregoing information as to its
own Commitment and Loans. Failure to make any such recordation, or any error
in such recordation, shall not affect the Borrower's obligations hereunder in
respect of the Loans.
(b) The Borrower hereby agrees that, upon the request of the
Administrative Agent by any Bank at any time, such Bank's Loans shall be
evidenced by a promissory note of the Borrower (a "NOTE"), substantially in the
form of Exhibit A hereto, payable to the order of such Bank and representing
the
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obligation of the Borrower to pay the unpaid principal amount of the Loans made
by such Bank, with interest as provided herein on the unpaid principal amount
from time to time outstanding.
SECTION 2.06. Maturity of Loans. (a) Each Committed Loan shall mature,
and the principal amount thereof shall be due and payable, together with
accrued interest thereon, on the Termination Date.
(b) Each Money Market Loan included in any Money Market Borrowing shall
mature, and the principal amount thereof shall be due and payable, together
with accrued interest thereon, on the last day of the Interest Period
applicable to such Borrowing.
SECTION 2.07. Interest Rates. (a) Each Base Rate Loan shall bear interest
on the outstanding principal amount thereof, for each day from the date such
Loan is made until it becomes due, at a rate per annum equal to the Base Rate
for such day. Such interest shall be payable quarterly in arrears on each
Payment Date and, with respect to the principal amount of any Base Rate Loan
converted to a Euro-Dollar Loan, on each date a Base Rate Loan is so converted.
Any overdue principal of or interest on any Base Rate Loan shall bear
interest, payable on demand, for each day until paid at a rate per annum equal
to the sum of 2% plus the rate otherwise applicable to Base Rate Loans for such
day.
(b) Each Euro-Dollar Loan shall bear interest on the outstanding principal
amount thereof, for each day during each Interest Period applicable thereto, at
a rate per annum equal to the sum of the Euro-Dollar Margin for such day plus
the London Interbank Offered Rate applicable to such Interest Period. Such
interest shall be payable for each Interest Period on the last day thereof and,
if such Interest Period is longer than three months, at intervals of three
months after the first day thereof.
The "LONDON INTERBANK OFFERED RATE" applicable to any Interest Period
means the average (rounded upward, if necessary, to the next higher 1/16 of 1%)
of the respective rates per annum at which deposits in dollars are offered to
each of the Reference Banks in the London interbank market at approximately
11:00 A.M. (London time) two Euro-Dollar Business Days before the first day of
such Interest Period in an amount approximately equal to the principal amount
of the Euro-Dollar Loan of such Reference Bank to which such Interest Period is
to apply and for a period of time comparable to such Interest Period.
(c) Any overdue principal of or interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day until paid at a rate per annum
equal to the higher of (i) the sum of 2% plus the Euro-Dollar Margin for such
day plus
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the London Interbank Offered Rate applicable to such Loan at the date such
payment was due and (ii) the sum of 2% plus the Euro-Dollar Margin for such day
plus the average (rounded upward, if necessary, to the next higher 1/16 of 1%)
of the respective rates per annum at which one day (or, if such amount due
remains unpaid more than three Euro-Dollar Business Days, then for such other
period of time not longer than three months as the Administrative Agent may
select) deposits in dollars in an amount approximately equal to such overdue
payment due to each of the Reference Banks are offered to such Reference Bank
in the London interbank market for the applicable period determined as provided
above (or, if the circumstances described in clause 8.01(a) or 8.01(b) of
Section 8.01 shall exist, at a rate per annum equal to the sum of 2% plus the
rate applicable to Base Rate Loans for such day).
(d) Subject to Section 8.01, each Money Market LIBOR Loan shall bear
interest on the outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of the London
Interbank Offered Rate for such Interest Period (determined in accordance with
Section 2.07(b)) as if the related Money Market LIBOR Borrowing were a
Committed Euro-Dollar Borrowing) plus (or minus) the Money Market Margin quoted
by the Bank making such Loan in accordance with Section 2.03. Each Money
Market Absolute Rate Loan shall bear interest on the outstanding principal
amount thereof, for the Interest Period applicable thereto, at a rate per annum
equal to the Money Market Absolute Rate quoted by the Bank making such Loan in
accordance with Section 2.03. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is longer than
three months, at intervals of three months after the first day thereof. Any
overdue principal of or interest on any Money Market Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the sum
of 2% plus the Base Rate for such day.
(e) The Administrative Agent shall determine each interest rate applicable
to the Loans hereunder. The Administrative Agent shall give prompt notice to
the Borrower and the participating Banks of each rate of interest so
determined, and its determination thereof shall be conclusive in the absence of
manifest error.
(f) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Administrative Agent as contemplated by this Section. If any
Reference Bank does not furnish a timely quotation, the Administrative Agent
shall determine the relevant interest rate on the basis of the quotation or
quotations furnished by the remaining Reference Bank or Banks or, if none of
such quotations is available on a timely basis, the provisions of Section 8.01
shall apply.
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SECTION 2.08. Fees. (a) The Borrower shall pay to the Administrative
Agent for the account of the Banks ratably a facility fee at the Facility Fee
Rate. Such facility fee shall accrue (i) from and including the Effective Date
to but excluding the date of termination of the Commitments in their entirety,
on the daily aggregate amount of the Commitments (whether used or unused) and
(ii) from and including such date of termination to but excluding the date the
Loans shall be repaid in their entirety, on the daily aggregate outstanding
principal amount of the Loans.
(b) Accrued fees under this Section shall be payable quarterly in arrears
on each Payment Date and on the date of termination of the Commitments in their
entirety (and, if later, the date the Loans shall be repaid in their entirety).
SECTION 2.09. Optional Termination or Reduction of Commitments. During
the Revolving Credit Period, the Borrower may, upon at least two Domestic
Business Days' notice to the Administrative Agent, (i) terminate the
Commitments at any time, if no Loans are outstanding at such time or (ii)
ratably reduce from time to time by an aggregate amount of $10,000,000 or a
larger multiple of $1,000,000, the aggregate amount of the Commitments in
excess of the aggregate outstanding principal amount of the Loans.
SECTION 2.10. Mandatory Termination of Commitments. The Commitments shall
terminate on the Termination Date and any Loans then outstanding (together with
accrued interest thereon) shall be due and payable on such date.
SECTION 2.11. Optional Prepayments. (a) The Borrower may, upon
notification to the Administrative Agent not later than 10:00 A.M. (Chicago
time) on the date of such payment, prepay any Group of Base Rate Loans (or any
Money Market Borrowing bearing interest at the Base Rate pursuant to Section
8.01) or upon at least three Euro-Dollar Business Days' notice to the
Administrative Agent, prepay any Group of Euro-Dollar Loans, in each case in
whole at any time, or from time to time in part in amounts aggregating
$5,000,000 or any larger multiple of $1,000,000, by paying the principal amount
to be prepaid together with accrued interest thereon to the date of prepayment
and any amounts owed pursuant to Section 2.13. Each such optional prepayment
shall be applied to prepay ratably the Loans of the several Banks included in
such Group (or Borrowing).
(b) Except as provided in subsection 2.11(a) above the Borrower may not
prepay all or any portion of the principal amount of any Money Market Loan
prior to the maturity thereof.
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(c) Upon receipt of a notice of prepayment pursuant to this Section, the
Administrative Agent shall promptly notify each Bank of the contents thereof
and of such Bank's ratable share (if any) of such prepayment and such notice
shall not thereafter be revocable by the Borrower.
SECTION 2.12. General Provisions as to Payments. (a) The Borrower shall
make each payment of principal of, and interest on, the Loans and of fees
hereunder, without setoff, counterclaim or other deductions, not later than
12:00 Noon (Chicago time) on the date when due, in Federal or other funds
immediately available in Chicago, to the Administrative Agent at its address
referred to in Section 9.01. The Administrative Agent will promptly distribute
to each Bank its ratable share of each such payment received by the
Administrative Agent for the account of the Banks. Whenever any payment of
principal of, or interest on, the Base Rate Loans or Money Market Absolute Rate
Loans or of fees shall be due on a day which is not a Domestic Business Day,
the date for payment thereof shall be extended to the next succeeding Domestic
Business Day. Whenever any payment of principal of, or interest on, any
Euro-Dollar Loan or Money Market LIBOR Loan shall be due on a day which is not
a Euro-Dollar Business Day, the date for payment thereof shall be extended to
the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business Day. If the date for any
payment of principal is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
(b) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Banks hereunder
that the Borrower will not make such payment in full, the Administrative Agent
may assume that the Borrower has made such payment in full to the
Administrative Agent on such date and the Administrative Agent may, in reliance
upon such assumption, cause to be distributed to each Bank on such due date an
amount equal to the amount then due such Bank. If and to the extent that the
Borrower shall not have so made such payment, each Bank shall repay to the
Administrative Agent forthwith on demand such amount distributed to such Bank
together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Administrative Agent, at the Federal Funds Effective Rate.
SECTION 2.13. Funding Losses. If the Borrower makes any payment of
principal with respect to any Fixed Rate Loan or any Fixed Rate Loan is
converted (pursuant to Article 2, 6 or 8 or otherwise) on any day other than
the last day of the Interest Period applicable thereto, or the last day of an
applicable period fixed pursuant to Section 2.07(c), or if the Borrower fails
to borrow, prepay, convert or continue any Fixed Rate Loans after notice has
been given to any Bank in
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accordance with Section 2.04(a) or 2.11, the Borrower shall reimburse each Bank
within 15 days after demand for any resulting loss or expense incurred by it
(or by an existing or prospective Participant in the related Loan), including
(without limitation) any loss incurred in obtaining, liquidating or employing
deposits from third parties, but excluding loss of margin for the period after
any such payment or failure to borrow, prepay, convert or continue; provided
that such Bank shall have delivered to the Borrower a certificate as to the
amount of such loss or expense, which certificate shall be conclusive in the
absence of manifest error.
SECTION 2.14. Computation of Interest and Fees. Interest based on the
Corporate Base Rate hereunder shall be computed on the basis of a year of 365
days (or 366 days in a leap year) and paid for the actual number of days
elapsed (including the first day but excluding the last day). All other
interest and fees shall be computed on the basis of a year of 360 days and paid
for the actual number of days elapsed (including the first day but excluding
the last day).
SECTION 2.15. Regulation D Compensation. Each Bank may require the
Borrower to pay, contemporaneously with each payment of interest on the
Euro-Dollar Loans, additional interest on the related Euro-Dollar Loan of such
Bank at a rate per annum determined by such Bank up to but not exceeding the
excess of (i) (A) the applicable London Interbank Offered Rate (or other rate
determined pursuant to Section 2.07(c)) divided by (B) one minus the
Euro-Dollar Reserve Percentage over (ii) the applicable London Interbank
Offered Rate (or other rate determined pursuant to Section 2.07(c)). Any Bank
wishing to require payment of such additional interest (x) shall so notify the
Borrower and the Administrative Agent, in which case such additional interest
on the Euro-Dollar Loans of such Bank shall be payable to such Bank at the
place indicated in such notice with respect to each Interest Period and each
period determined pursuant to Section 2.07(c) commencing at least three
Euro-Dollar Business Days after the giving of such notice and (y) shall notify
the Borrower at least five Euro-Dollar Business Days prior to each date on
which interest is payable on the Euro-Dollar Loans of the amount then due it
under this Section.
SECTION 2.16. Optional Increase in Commitments. (a) At any time, if no
Default shall have occurred and be continuing, the Borrower may, upon at least
30 days' notice to the Administrative Agent (which shall promptly provide a
copy of such notice to the Banks), propose to increase the aggregate amount of
the Commitments by an amount not greater than $87,500,000 (the amount of any
such increase, the "INCREASED COMMITMENTS"). Each Bank party to this Agreement
at such time shall have the right (but no obligation), for a period of 15 days
following receipt of such notice to elect by notice to the Borrower and the
Administrative Agent to increase its Commitment by a principal amount which
bears the same ratio to the Increased Commitments as its then Commitment bears
to the aggregate
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Commitments then existing. Any Bank not responding within 15 days of receipt
of such notice shall be deemed to have declined to increase its Commitment.
(b) If any Bank party to this Agreement shall not elect to increase its
Commitment pursuant to subsection (a) of this Section, the Borrower may, within
10 days of the Banks' response, designate one or more of the existing Banks or
other financial institutions acceptable to the Administrative Agent and the
Borrower (which consent of the Administrative Agent shall not be unreasonably
withheld) which at the time agree to (i) in the case of any such Person that is
an existing Bank, increase its Commitment and (ii) in the case of any other
such Person (an "ADDITIONAL BANK"), become a party to this Agreement. The sum
of the increases in the Commitments of the existing Banks pursuant to this
subsection (b) plus the Commitments of the Additional Banks shall not in the
aggregate exceed the unsubscribed amount of the Increased Commitments.
(c) An increase in the aggregate amount of the Commitments pursuant to
this Section 2.16 shall become effective upon the receipt by the Administrative
Agent of (i) an agreement in form and substance satisfactory to the
Administrative Agent signed by the Borrower, by each Additional Bank and by
each other Bank whose Commitment is to be increased, setting forth the new
Commitments of such Banks and setting forth the agreement of each Additional
Bank to become a party to this Agreement and to be bound by all the terms and
provisions hereof and (ii) such evidence of appropriate corporate authorization
on the part of the Borrower with respect to the Increased Commitments and such
opinions of counsel for the Borrower with respect to the Increased Commitments
as the Administrative Agent may reasonably request.
(d) Upon any increase in the aggregate amount of the Commitments pursuant
to this Section 2.16, within five Domestic Business Days, in the case of any
Group of Base Rate Loans then outstanding, and at the end of the then current
Interest Period with respect thereto, in the case of any Group of Euro-Dollar
Loans then outstanding, the Borrower shall prepay such Group in its entirety
and, to the extent the Borrower elects to do so and subject to the conditions
specified in Article 3, the Borrower shall reborrow Committed Loans from the
Banks in proportion to their respective Commitments after giving effect to such
increase, until such time as all outstanding Committed Loans are held by the
Banks in such proportion.
SECTION 2.17. Mandatory Prepayment in the Event of a Change in Control.
Not less than five Domestic Business Days prior to the consummation of any
transaction which would cause a Change in Control (but not before public
announcement of such transaction), the Borrower shall notify (a "CHANGE IN
CONTROL NOTICE") the Administrative Agent and each Bank of such expected
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transaction, including within such Change in Control Notice the expected
closing date of such transaction. Within 15 days of receipt of such Change in
Control Notice by any Bank (or, if the Borrower shall have failed to give a
timely Change in Control Notice to such Bank, within 15 days of the later of
(x) such Change in Control or (y) such Bank's learning thereof), such Bank may,
at its option, give notice to the Administrative Agent and the Borrower that
such Bank elects to terminate its Commitment hereunder. On a date agreed upon
between the Borrower, the Administrative Agent and the terminating Bank (which
date shall in no event occur later than 15 days after receipt by the
Administrative Agent and the Borrower of the notice delivered pursuant to the
preceding sentence), such Bank's Commitment shall terminate and the Borrower
shall repay at such time all of such Bank's outstanding Loans, together with
accrued interest thereon, any accrued fees with respect to such Bank's
Commitment, any costs, losses or expenses incurred by such Bank in connection
with such prepayment payable by the Borrower pursuant to Section 2.13 and any
other obligations of the Borrower to such Bank hereunder.
ARTICLE 3
CONDITIONS
SECTION 3.01. Effectiveness. This Agreement shall become effective on the
date that each of the following conditions shall have been satisfied (or waived
in accordance with Section 9.05):
(a) receipt by the Documentation Agent of counterparts hereof signed
by each of the parties hereto (or, in the case of any party as to which
an executed counterpart shall not have been received, receipt by the
Documentation Agent in form satisfactory to it of telegraphic, telex,
telecopy or other written confirmation from such party of execution of a
counterpart hereof by such party);
(b) receipt by the Documentation Agent of an opinion of counsel for
the Borrower, substantially in the form of Exhibit E hereto and covering
such additional matters relating to the transactions contemplated hereby
as the Required Banks may reasonably request;
(c) receipt by the Documentation Agent of an opinion of Davis Polk &
Wardwell, special counsel for the Agents, substantially in the form of
Exhibit F hereto and covering such additional matters relating to the
transactions contemplated hereby as the Required Banks may reasonably
request;
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(d) receipt by the Documentation Agent of all documents the
Documentation Agent may reasonably request relating to the existence of
the Borrower, the corporate authority for and the validity of this
Agreement and the Debt incurred hereunder, and any other matters relevant
hereto, all in form and substance satisfactory to the Documentation
Agent; and
(e) receipt by the Documentation Agent of evidence satisfactory to
it of the payment of all principal of and interest on any loans
outstanding under, and of all other amounts payable under, the Existing
Credit Agreement;
provided that this Agreement shall not become effective or be binding on any
party hereto unless all of the foregoing conditions are satisfied not later
than May 21, 1998. The Documentation Agent shall promptly notify the Borrower
and the Banks of the Effective Date, and such notice shall be conclusive and
binding on all parties hereto. The Banks that are parties to the Existing
Credit Agreement, comprising the "REQUIRED BANKS" as defined therein, and the
Borrower agree that the commitments under the Existing Credit Agreement shall
terminate in their entirety simultaneously with and subject to the
effectiveness of this Agreement and that the Borrower shall be obligated to pay
the accrued facility fees thereunder to but excluding the date of such
effectiveness.
SECTION 3.02. Borrowings. The obligation of any Bank to make a Loan on
the occasion of any Borrowing is subject to the satisfaction of the following
conditions:
(a) receipt by the Administrative Agent of a Notice of Borrowing as
required by Section 2.02 or 2.03, as the case may be;
(b) the fact that, immediately after such Borrowing, the aggregate
outstanding principal amount of the Loans will not exceed the aggregate
amount of the Commitments;
(c) the fact that, immediately before and after such Borrowing, no
Default shall have occurred and be continuing; and
(d) the fact that the representations and warranties of the Borrower
contained in this Agreement (except in the case of a Borrowing taking
place after the Effective Date, the representation and warranty set forth
in Section 4.05(b)) shall be true on and as of the date of such
Borrowing.
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Each Borrowing hereunder shall be deemed to be a representation and
warranty by the Borrower on the date of such Borrowing as to the facts
specified in clauses 3.02(b), 3.02(c) and 3.02(d) of this Section.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Banks that:
SECTION 4.01. Corporate Existence. The Borrower is a corporation
duly organized, validly existing and in good standing under the laws of
the State of New York and has duly qualified and is in good standing as a
foreign corporation under the laws of each jurisdiction where the failure
to so qualify or be in good standing, as the case may be, would have a
Material Adverse Effect.
SECTION 4.02. Authorization of Agreement; No Violation. The
execution, delivery and performance by the Borrower of this Agreement (a)
are within the corporate powers of the Borrower, (b) have been duly
authorized by all necessary corporate action, and (c) do not violate or
create a default under law, or the Certificate of Incorporation or
By-laws of the Borrower, or any contractual provision binding on or
affecting the Borrower or its property, and each such representation will
be true upon the execution, delivery and performance by the Borrower of
any Note made by it.
SECTION 4.03. Governmental Approvals. No authorization or approval
or other action by, and no notice to or filing or registration with, any
governmental authority or regulatory body is required in connection with
the execution, delivery and performance by the Borrower of this Agreement
or will be required in connection with the execution, delivery and
performance by the Borrower of any Note made by it.
SECTION 4.04. Binding Effect. This Agreement constitutes, and any
Notes to be made by the Borrower will constitute, the legal, valid and
binding obligations of the Borrower, enforceable against the Borrower in
accordance with their respective terms, except as enforcement thereof may
be subject to (a) the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights
generally, and (b) general principles of equity (regardless of whether
such enforcement is sought in a proceeding in equity or at law).
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SECTION 4.05. Financial Information. (a) The consolidated balance
sheet of the Borrower and its Subsidiaries as at December 31, 1997 and
the related consolidated statements of income, retained earnings and
changes in cash flow for the twelve (12) month period then ended,
including in each case the related schedules and footnotes, reported on
by Ernst & Young, true copies of which have been previously delivered to
each of the Banks, fairly present the consolidated financial condition of
the Borrower and its Subsidiaries as at the date thereof and the
consolidated results of operations and changes in financial position for
such period, in accordance with generally accepted accounting principles
applied on a consistent basis.
(b) Since December 31, 1997, there has been no material adverse
change in the business, financial condition or results of operations of
the Borrower and its Subsidiaries taken as a whole.
SECTION 4.06. Litigation. Except as disclosed in the Borrower's
periodic reports filed with the Securities and Exchange Commission, there
is no action, suit or proceeding, or any governmental investigation or
any arbitration, in each case pending or, to the knowledge of the
Borrower, threatened against the Borrower or any of its Subsidiaries or
any material property of any thereof before any court or arbitrator or
any governmental or administrative body, agency or official (a) which
challenges the validity of this Agreement or any Note upon its issuance
or (b) which could reasonably be expected to have a Material Adverse
Effect.
SECTION 4.07. Employee Benefit Plans. Each Plan is in substantial
compliance with the applicable provisions of ERISA and the Code. No
Pension Plan has an accumulated funding deficiency or (solely with
respect to conditions on the date hereof) a waived funding deficiency, in
either case within the meaning of Section 412 or Section 418B of the
Code, and no proceedings have been instituted by the PBGC to terminate
any Pension Plan, in any such case involving an amount which will have a
Material Adverse Effect. Neither the Borrower nor any Subsidiary thereof
nor any ERISA Affiliate has incurred any material liability to or on
account of a Plan, and no condition exists which presents a material risk
to the Borrower, when taken as a whole together with its Subsidiaries, of
such a liability. No Plan which is a welfare plan (as defined in Section
3(1) of ERISA) covering any participant or beneficiary of any participant
after the participant's termination of employment (other than
continuation coverage under Section 4980B of the Code) provides for
benefits in an amount which would reasonably be expected to have a
Material Adverse Effect.
SECTION 4.08. Taxes. The Borrower and its Subsidiaries have filed
all United States Federal tax returns and all other tax returns which are
required to be filed and have paid all taxes due pursuant to said returns
or pursuant to any
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assessment received by the Borrower or any of its Subsidiaries, except
such taxes, if any, as are being contested in good faith and as to which
adequate reserves have been provided in accordance with generally
accepted accounting principles and as to which no Lien exists. The
United States income tax returns of the Borrower and its Subsidiaries
have been audited by the Internal Revenue Service through the fiscal year
ended December 31, 1991. No tax liens have been filed and no claims are
being asserted with respect to any such taxes. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of
any taxes or other governmental charges are adequate.
SECTION 4.09. Subsidiaries. Each of the Borrower's Subsidiaries is
an organization duly formed, validly existing and in good standing under
the laws of its jurisdiction of organization, and has all corporate,
partnership or other entity powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted, except for such licenses, authorizations,
consents and approvals whose lack could not reasonably be expected to
have a Material Adverse Effect.
SECTION 4.10. Full Disclosure. All factual information heretofore
or contemporaneously furnished by or on behalf of the Borrower or any of
its Subsidiaries to any Agent or Bank for purposes of or in connection
with this Agreement or any transaction contemplated hereby is, and all
other such factual information hereafter furnished by or on behalf of the
Borrower or any of its Subsidiaries to any Agent or Bank will be, true
and accurate (taken as a whole) on the date as of which such information
is dated or certified and not incomplete by omitting to state any
material fact necessary to make such information (taken as a whole) not
misleading at such time. The Borrower has disclosed to the Banks in
writing any and all facts which could reasonably be expected to have a
Material Adverse Effect.
SECTION 4.11. Compliance with Laws. The Borrower and its
Subsidiaries have complied in all material respects with all applicable
statutes, rules, regulations, orders and restrictions of any domestic or
foreign government or any instrumentality or agency thereof, having
jurisdiction over the conduct of their respective businesses or the
ownership of their respective property where failure to comply with such
statutes, rules, regulations, orders and restrictions could reasonably be
expected to have a Material Adverse Effect.
SECTION 4.12. Environmental Matters. In the ordinary course of its
business, the officers of the Borrower consider the effect of
Environmental Laws on the business of the Borrower and its Subsidiaries,
in the course of which they identify and evaluate potential risks and
liabilities accruing to the Borrower due to Environmental Laws. On the
basis of this consideration, the Borrower has
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reasonably concluded that its compliance with Environmental Laws is not
reasonably anticipated to have a Material Adverse Effect. Neither the
Borrower nor any Subsidiary has received any notice from any governmental
agency or authority to the effect that its operations are not in material
compliance with any of the requirements of applicable Environmental Laws
or are the subject of any federal or state investigation evaluating
whether any remedial action is needed to respond to a release of any
toxic or hazardous waste or substance into the environment, which
non-compliance or remedial action could reasonably be expected to have a
Material Adverse Effect.
ARTICLE 5
COVENANTS
The Borrower agrees that so long as any Bank has any Commitment
hereunder or any amount payable hereunder shall remain unpaid:
SECTION 5.01. Maintenance of Existence. The Borrower will preserve
and maintain, and cause each of its Subsidiaries to preserve and
maintain, its corporate existence, and all rights and franchises
necessary for the conduct of any material business in the normal course;
provided, however, that the corporate existence of any Subsidiary may be
terminated if such termination is not disadvantageous to the holders of
any Indebtedness hereunder or the holders of any Notes.
SECTION 5.02. Compliance with Laws, Etc. The Borrower will comply,
and cause each of its Subsidiaries to comply, in all material respects,
with all applicable laws, rules, regulations and orders.
SECTION 5.03. Payment of Taxes and Claims, Etc. The Borrower will
pay, and cause each of its Subsidiaries to pay, (i) all taxes,
assessments and governmental charges imposed upon it or upon its
property, and (ii) all claims (including, without limitation, claims for
labor, materials, supplies or services) which might, if unpaid, become a
Lien upon its property, unless, in each case, the validity or amount
thereof is being contested in good faith by appropriate proceedings and
the Borrower has maintained adequate reserves in accordance with
generally accepted accounting principles with respect thereto.
SECTION 5.04. Keeping of Books. The Borrower will keep, and cause
each of its Subsidiaries to keep, necessary and proper books of record
and account, containing complete and accurate entries in all material
respects of all
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financial and business transactions of the Borrower and each Subsidiary
thereof in accordance with sound accounting practices.
SECTION 5.05. Visitation, Inspection, Etc. The Borrower will
permit any representative of any Bank, upon reasonable prior notice and
at such Bank's expense, to visit the principal offices of its business
where financial and legal records are maintained, to examine its books
and financial records, and to discuss its affairs, finances and accounts
with its officers, all at such reasonable times and as often as such Bank
may reasonably request.
SECTION 5.06. Insurance. The Borrower will maintain or cause to be
maintained with financially sound and reputable insurers, insurance with
respect to its properties and business, and the properties and business
of its Subsidiaries, against loss or damage of the kinds insured against
by reputable companies in the same or similar businesses, such insurance
to be of types and in amounts (with deductible amounts) consistent with
then prudent industry standards of companies engaged in the same or
similar kinds of businesses as the Borrower and, as applicable, its
Subsidiaries.
SECTION 5.07. Reporting Covenants. The Borrower will deliver to
each of the Banks:
(a) as soon as available and in any event within one hundred five
(105) days after the end of each fiscal year of the Borrower copies of
the Annual Report on Form 10-K filed by the Borrower for such fiscal year
with the Securities and Exchange Commission pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended, or, with
respect to any fiscal year of the Borrower for which the Borrower does
not make such a filing during such period, all information for such
fiscal year that would be required to be supplied for an Annual Report on
Form 10-K for such fiscal year were the Borrower to have filed such an
Annual Report for such fiscal year;
(b) as soon as available and in any event within one hundred five
(105) days after the end of each fiscal year of the Borrower
consolidating balance sheets of the Borrower and its Subsidiaries and the
related statements of income of the Borrower and its Subsidiaries for
such fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail and
certified by an Authorized Officer of the Borrower that (A) they were the
consolidating reports that were used in connection with the preparation
of the consolidated audited financial statements as of the end of such
year as reported by the Borrower in its Annual Report on Form 10-K, or as
otherwise delivered pursuant to
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Section 5.07(a), and (b) such consolidating balance sheets and statements
of income reflect the financial condition and results of operations of
the Borrower or Subsidiaries for which each was prepared, in each case at
the end of and for such fiscal year in accordance with generally accepted
accounting principles;
(c) as soon as available and in any event within fifty-five (55)
days after the end of each of the first three fiscal quarters of each
fiscal year of the Borrower the Quarterly Report of the Borrower on Form
10-Q filed by the Borrower for such fiscal quarter with the Securities
and Exchange Commission pursuant to Section 13 or 15(d) of the Securities
and Exchange Act of 1934, as amended, or, with respect to any fiscal
quarter of the Borrower for which the Borrower does not make such a
filing during such period, all information for such fiscal quarter that
would be required to be supplied for a Quarterly Report of the Borrower
on Form 10-Q for such fiscal quarter were the Borrower to have filed such
a Quarterly Report for such fiscal quarter;
(d) as soon as available and in any event within fifty-five (55)
days after the end of each fiscal quarter of the Borrower consolidating
balance sheets of the Borrower and its Subsidiaries as at the end of the
corresponding quarter and the related consolidating statements of income
of the Borrower and its Subsidiaries for such fiscal quarter and for the
portion of the Borrower's fiscal year ended at the end of such quarter,
in each case in comparative form for the figures for the corresponding
quarter, and (with respect to such statements of income), the
corresponding portion of the Borrower's previous fiscal year, all in
reasonable detail and certified by an Authorized Officer of the Borrower
that (A) such consolidating financial statements represent the underlying
detail of the consolidated unaudited financial statements as of the end
of such fiscal quarter as reported, or as would have been reported, by
the Borrower in its Quarterly Report on Form 10-Q as filed, or as would
have been filed, with the Securities and Exchange Commission, and (B)
such consolidating balance sheets and statements of income reflect the
financial condition and results of operations of the Borrower or the
Subsidiaries for which each was prepared, in each case at the end of or
for such quarter and (where applicable) for such portion of such fiscal
year, on a basis and prepared in a manner consistent with those employed
for the annual statements referred to in Section 5.07(b) (subject to
normal, year-end adjustments);
(e) concurrently with the delivery of the financial statements
referred to in Sections 5.07(a), 5.07(b), 5.07(c) and 5.07(d), a
certificate
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of an Authorized Officer of the Borrower: (a) setting forth
calculations establishing that the Borrower is in compliance with the
financial covenants set forth in Section 5.08, 5.10(j) or 5.12 of this
Agreement, as the case may be, and (b) stating that, to the best of his
knowledge after due inquiry, no Default has occurred and is continuing
during such period (or, if the same has occurred and is continuing, a
description thereof);
(f) together with the financial statements required pursuant to
Section 5.07(a), a certificate (addressed to the Banks) of the
accountants who reported on the financial statements included in the
Annual Report referred to therein, to the effect that, based upon their
audit and any additional review, nothing came to their attention that
would indicate that there exists a Default under this Agreement or if any
such Default exists, specifying the nature thereof;
(g) promptly after receiving knowledge of a Default, a certificate
of an Authorized Officer of the Borrower specifying the nature thereof
and the Borrower's proposed response thereto;
(h) promptly upon the mailing or filing thereof, copies of all
financial statements, reports and proxy statements mailed to the
Borrower's security-holders, and copies of all material registration
statements, periodic reports and other documents filed with the
Securities and Exchange Commission (or any successor thereto) or any
national securities exchange which are normally distributed to the
Borrower's security-holders;
(i) promptly after actual knowledge thereof, (i) notice that an
ERISA Termination Event or a "PROHIBITED TRANSACTION", as such term is
defined in Section 4975 of the Code, with respect to any Pension Plan has
occurred, which notice shall specify the nature thereof and the
Borrower's proposed response thereto, and (ii) copies of any notice of
the PBGC's intention to terminate or to have a trustee appointed to
administer any Pension Plan; and
(j) with reasonable promptness, such other information regarding the
business, financial condition or results of operations of the Borrower or
its Subsidiaries as any Bank may reasonably request from time to time
including, without limitation, any public filings and/or public
disclosure documentation not required to be delivered pursuant to Section
5.07(h).
SECTION 5.08. Financial Test Covenants. The Borrower will:
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(a) maintain a ratio of: (a) Consolidated Adjusted EBIT to (b) the
sum of Consolidated Interest Expense and fifty per cent (50%) of
Consolidated Railcar Lease Expense, in each case as of the end of each
fiscal quarter of the Borrower with respect to the four fiscal quarters
then ended taken as a single accounting period, in excess of 1.45 to 1.0;
(b) maintain at all times Consolidated Tangible Net Worth greater
than the sum of: (a) $570,000,000; plus (b) effective as of the end of
each fiscal quarter subsequent to December 31, 1995 for which
Consolidated Net Income is a positive amount, twenty-five per cent (25%)
of Consolidated Net Income for such fiscal quarter, such increases
pursuant to this clause (b) to be fully cumulative for all such fiscal
quarters and not to be reduced on account of a negative amount of
Consolidated Net Income in any other fiscal quarter or quarters; and
(c) not allow as at any date the aggregate amount of investments by
the Borrower in, net advances by the Borrower to, or receivables due to
the Borrower from, GATX and its Subsidiaries (other than the Borrower and
Subsidiaries of the Borrower) to exceed sixty-five per cent (65.0%) of
Consolidated Tangible Net Worth.
For the purposes of this Section 5.08, Consolidated Tangible Net Worth at any
date during a fiscal quarter will be deemed to be the Consolidated Tangible Net
Worth calculated as at the end of the most recently ended fiscal quarter,
except that such calculation will be adjusted to reflect (x) write-offs and
similar special charges publicly announced by the Borrower during such fiscal
quarter and (y) any Restricted Payments made during such fiscal quarter. In
determining Borrower's compliance with this Section 5.08, the effect thereon of
the one-time restructuring charge in the amount of $123,800,000 (after tax),
as disclosed in GATX's 1997 Annual Report, shall be excluded.
SECTION 5.09. Mergers, Etc. The Borrower will not (i) consolidate or
merge with or into any other Person or (ii) sell, lease or otherwise transfer,
directly or indirectly, all or substantially all of the assets of the Borrower
and its Subsidiaries, taken as a whole, to any other Person, provided that the
Borrower may merge with another Person if (x) the Borrower is the corporation
surviving such merger and (y) immediately after giving effect to such merger,
no Default shall have occurred and be continuing.
SECTION 5.10. Negative Pledge. The Borrower will not, nor will it permit
any Subsidiary to, create, assume or suffer to exist any Lien in, of or on the
property of the Borrower or any of its Subsidiaries, except:
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(a) Liens existing on the date of this Agreement and set forth on
Schedule 5.10 securing Indebtedness outstanding on the date of this
Agreement;
(b) any Lien existing on any asset of any Person at the time such
Person becomes a Subsidiary and not created in contemplation of such
event;
(c) any Lien on any asset securing Indebtedness incurred or assumed
for the purpose of financing all or any part of the cost of acquiring
such asset; provided that such Lien attaches to such asset concurrently
with or within 18 months after the acquisition thereof;
(d) any Lien on any asset of any Person existing at the time such
Person is merged or consolidated with or into the Borrower or a
Subsidiary and not created in contemplation of such event;
(e) any Lien existing on any asset prior to the acquisition thereof
by the Borrower or a Subsidiary and not created in contemplation of such
acquisition;
(f) any Lien arising out of the refinancing, extension, renewal or
refunding or any Indebtedness secured by any Lien permitted by any of the
foregoing clauses of this Section; provided that such Indebtedness is not
increased and is not secured by any additional assets;
(g) Liens securing judgments in an aggregate amount at any date not
to exceed $150,000,000; provided, however, that an additional amount not
to exceed $100,000,000 may be incurred in relation to liens securing
judgments relating to the class action law suit brought for the Parish of
Orleans, LA, that is referred to in Item 3 of Part I of the Borrower's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997;
(h) Liens arising in the ordinary course of its business (including,
without limitation, Liens for taxes, assessments or government charges;
statutory and contractual landlords' liens under leases; Liens in favor
of customs and revenue authorities arising as a matter of law to secure
the payment of customs duties; and Liens arising out of claims under any
Environmental Law provided such Liens are being contested in good faith
and that enforcement of such Liens has been stayed or not commenced)
which (i) do not secure Indebtedness and (ii) do not in the aggregate
materially detract from the value or materially impair the use of the
assets of the Borrower and its Subsidiaries, taken as a whole;
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(i) Liens on assets related to railcar operating leases (including,
but not limited to, car service contracts and cash collateral accounts
funded with revenues under such leases) securing obligations of the
Borrower or a Subsidiary under such leases; and
(j) Liens not otherwise permitted by the foregoing clauses of this
Section securing Indebtedness in an aggregate principal or face amount at
any date not to exceed 50% of Consolidated Net Worth.
SECTION 5.11. Use of Proceeds. The proceeds of the Loans constituting
any Borrowing may be used as a back-up for the Borrower's commercial paper
program and for working capital and general corporate purposes. None of such
proceeds will be used in violation of Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
SECTION 5.12. Certain Transfers to Subsidiaries of the Borrower.
Notwithstanding any other provision hereof, the Borrower will not sell, convey
or otherwise transfer any interest in any assets of the type identified on any
balance sheet of the Borrower as property, plant or equipment, which assets
were owned by the Borrower on March 31, 1996, to any of its Subsidiaries,
whether by contribution to capital or any other means, direct or indirect, if
the book value of such assets on the date of such sale, conveyance or transfer,
combined with the book value of all such assets subject to any previous or
concurrent such sales, conveyances or transfers is in excess of ten per cent
(10%) of the aggregate book value of all such assets owned by the Borrower on
March 31, 1996.
SECTION 5.13. Transactions with Affiliates. The Borrower will not, and
will not permit any Subsidiary to directly or indirectly, pay any funds to or
for the account of, make any Investment in, lease, sell, transfer or otherwise
dispose of any assets, tangible or intangible, to, or participate in, or
effect, any transaction with, any Affiliate except on an arm's-length basis on
terms no less favorable to the Borrower or such Subsidiary than could have been
obtained from a third party who was not an Affiliate; provided that the
foregoing provisions of this Section shall not prohibit (i) any such Person
from declaring or paying any lawful dividend so long as, after giving effect
thereto, no Default shall have occurred and be continuing or (ii) any such
transactions which in the aggregate could not have a Material Adverse Effect.
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ARTICLE 6
DEFAULTS
Upon the occurrence and during the continuance of any of the following
specified events (each an "EVENT OF DEFAULT"):
SECTION 6.01. Payments. The Borrower shall fail to pay when due
(including, without limitation, by mandatory prepayment) any principal of the
Loans made to the Borrower; the Borrower shall fail to pay any interest on the
Loans made to the Borrower within five (5) Domestic Business Days of the date
when due (including interest due with respect to any mandatory prepayment of
principal); or the Borrower shall fail to pay within five (5) Domestic Business
Days after the due date thereof any fee or any other amount payable hereunder,
unless (solely in the case of any such other amount payable) contested in good
faith in appropriate proceedings; or
SECTION 6.02. Covenants Without Notice. The Borrower shall fail to
observe or perform any covenant or agreement contained in Section 5.08, 5.09,
5.10, 5.11 or 5.12; or
SECTION 6.03. Other Covenants. The Borrower shall fail to observe or
perform any covenant or agreement, other than those referred to in Sections
6.01 and 6.02; provided, that if such failure is capable of being remedied,
such failure shall not constitute a Default until thirty (30) days after the
earlier of (i) the Borrower's obtaining actual knowledge thereof, or (ii)
written notice thereof having been given to the Borrower by any Bank or the
Administrative Agent; or
SECTION 6.04. Representations. Any representation, warranty or statement
made herein or otherwise in writing or deemed (pursuant to Section 3.02) to be
made by the Borrower or any of its officers under or in connection with this
Agreement shall have been or shall be incorrect in any material respect when
made or deemed to be made; or
SECTION 6.05. Non-payments of Other Indebtedness. The Borrower or any of
its Subsidiaries shall fail to make any payment of principal of or interest on
any Material Indebtedness of the Borrower (other than any Indebtedness under
this Agreement) or such Subsidiary within three (3) Domestic Business Days of
the date when due (whether at stated maturity, on demand or otherwise) after
giving effect to any applicable grace period; or
SECTION 6.06. Defaults under Other Agreements. The Borrower or any of
its Subsidiaries shall fail to observe or perform any financial covenant
contained in any agreement or instrument relating to any of its Material
Indebtedness within
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any applicable grace period, if the effect of such failure is to accelerate, or
to permit the holder of such Indebtedness or any other Person to accelerate,
the maturity of such Indebtedness; or any such Indebtedness shall be required
to be prepaid (other than by a regularly scheduled required prepayment and
other than in connection with events of the type described in Article 8) in
whole or in part, by acceleration or otherwise, prior to its stated maturity;
or
SECTION 6.07. Failure to Pay, Etc. The Borrower or any of its
Subsidiaries shall fail to pay, or shall state in writing or by authorized
public announcement that it shall not or is unable to pay, its debts generally
as they become due; or
SECTION 6.08. Bankruptcy. The Borrower or any of its Subsidiaries shall
commence a voluntary case concerning itself under Title 11 of the United States
Code entitled "BANKRUPTCY" as now or hereafter in effect, or any successor
thereto (the "BANKRUPTCY CODE"); or an involuntary case is commenced against
the Borrower or any of its Subsidiaries and the petition is not controverted
within twenty (20) days, or is not dismissed within sixty (60) days, after
commencement of the case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or any substantial part of the property
of the Borrower or any of its Subsidiaries; or the Borrower or any of its
Subsidiaries commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to the Borrower or such Subsidiary or there is commenced
against the Borrower or any of its Subsidiaries any such proceeding which
remains undismissed for a period of sixty (60) days; or the Borrower or any of
its Subsidiaries is adjudicated insolvent or bankrupt; or any order of relief
or other order approving any such case or proceeding is entered; or the
Borrower or any of its Subsidiaries suffers any appointment of any custodian or
the like for it or any substantial part of its property to continue
undischarged or unstayed for a period of sixty (60) days; or the Borrower or
any of its Subsidiaries makes a general assignment for the benefit of
creditors; or the Borrower or any of its Subsidiaries shall by any act or
conduct indicate its consent to, approval of or acquiescence in any of the
foregoing; or any corporate action is taken by the Borrower or any of its
Subsidiaries for the purpose of effecting any of the foregoing; or
SECTION 6.09. ERISA. A Pension Plan shall fail to maintain the minimum
funding standard required by Section 412 of the Code for any plan year, or a
Pension Plan is, shall have been or is likely to be, involuntarily terminated
or the subject of involuntary termination proceedings under ERISA, or the
Borrower, any Subsidiary of the Borrower or an ERISA Affiliate has incurred or
is likely to incur a liability to or on account of a Plan, and there shall
result from any such event or
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events either a liability or a material risk of incurring a liability which
will have a Material Adverse Effect; or
SECTION 6.10. Judgments. A judgment or order for the payment of money in
excess of $25,000,000 or that otherwise could reasonably be expected to have a
Material Adverse Effect shall be rendered against the Borrower or any of its
Subsidiaries and such judgment or order shall continue unsatisfied (in the case
of a money judgment), uncovered by insurance adequate in amount in the judgment
of the Required Banks to cover the portion of such judgment in excess of
$25,000,000, and in effect for a period of thirty (30) days during which
execution shall not be effectively stayed or deferred (whether by action of a
court, by agreement or otherwise); or
SECTION 6.11. Change of Control of the Borrower. GATX shall sell, lease
or otherwise dispose of or encumber any of the shares of any class of the
capital stock of the Borrower;
then, and in any such event, and at any time thereafter, if such event shall
then be continuing, the Administrative Agent, upon the written or telex request
of the Required Banks, shall, by written notice to the Borrower, take any or
all of the following actions, without prejudice to the rights of the
Administrative Agent, any Bank or the holder of any Note to enforce its claims
against the Borrower: (i) declare the Commitments terminated, whereupon the
Commitment of each Bank shall terminate immediately and any facility fee shall
forthwith become due and payable without any other notice of any kind; or (ii)
declare the principal of and any accrued interest on the Loans, and all other
amounts owing hereunder, to be, whereupon the same shall become, forthwith due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; provided, that, if an Event of
Default specified in Section 6.08 shall occur with respect to the Borrower, the
result which would occur upon the giving of written notice by the
Administrative Agent to the Borrower, as specified in clauses (i) and (ii)
above, shall occur automatically without the giving of any such notice.
ARTICLE 7
THE AGENTS
SECTION 7.01. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes, and each holder of any Note by the acceptance of such
Note shall be deemed irrevocably to appoint and authorize, each Agent to take
such action as agent on its behalf and to exercise such powers under this
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Agreement as are delegated to such Agent by the terms hereof or thereof,
together with all such powers as are reasonably incidental thereto.
Notwithstanding the use of the defined terms "ADMINISTRATIVE AGENT" or
"DOCUMENTATION AGENT", it is expressly understood and agreed that none of the
Agents shall have any fiduciary responsibilities to any Bank by reason of this
Agreement, and that the Agents are merely acting as representatives of the
Banks with only those duties as are expressly set forth in this Agreement. In
their capacity as the Banks' contractual representatives, the Agents (i) do not
hereby assume any fiduciary duties to any of the Banks and (ii) are acting as
independent contractors, the rights and duties of which are limited to those
expressly set forth in this Agreement.
SECTION 7.02. Agents and Affiliates. Each of First Chicago and Morgan
shall have the same rights and powers under this Agreement as any other Bank
and may exercise or refrain from exercising the same as though it were not an
Agent, and each of First Chicago and Morgan and their affiliates may accept
deposits from, lend money to, and generally engage in any kind of business with
the Borrower or any Subsidiary or affiliate of the Borrower as if it were not
an Agent.
SECTION 7.03. Action by Agents. The obligations of each Agent hereunder
are only those expressly set forth herein. Each Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder in
accordance with written instructions signed by the Required Banks (or, when
expressly required hereby, all the Banks), and such instructions and any action
taken or failure to act pursuant thereto shall be binding on all of the Banks
and on any holder of a Note. The Banks hereby acknowledge that none of the
Agents shall be under any duty to take any discretionary action permitted to be
taken by it pursuant to the provisions of this Agreement unless such Agent
shall be requested in writing to do so by the Required Banks. Each of the
Agents shall be fully justified in failing or refusing to take any action
hereunder unless such Agent shall first be indemnified to its satisfaction by
the Banks pro rata in proportion to their Commitments (or, after termination of
the Commitments, in proportion to their outstanding Loans) against any and all
liability, cost and expense that such Agent may incur by reason of taking or
continuing to take any such action. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of a Default unless the
Administrative Agent has received written notice from a Bank or the Borrower
referring to this Agreement, describing such Default and stating that such
notice is a "NOTICE OF DEFAULT". In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give prompt notice
thereof to the Banks. Without limiting the generality of the foregoing, the
Administrative Agent shall not be required to take any action with respect to
any Default, except as expressly provided in the preceding sentence or Article
6.
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SECTION 7.04. Employment of Agents and Experts. Each of the Agents may
execute any of its duties hereunder by or through employees, agents, and
attorneys-in-fact and shall not be answerable to the Banks, except as to money
or securities received by it or its authorized agents, for the default or
misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care. Each Agent may consult with legal counsel (who may be counsel
for the Borrower), independent public accountants and other experts selected by
it and shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the advice of such counsel, accountants or
experts. Each of the Agents shall be entitled to rely upon any Note, notice,
consent, certificate, affidavit, letter, telegram, statement, paper or document
(which may be a telex, facsimile transmission or similar writing) believed by
it to be genuine and correct and to have been signed or sent by the proper
Person or Persons.
SECTION 7.05. Liability of Agents. Neither of the Agents nor any of
their affiliates nor any of their respective directors, officers, agents or
employees shall be liable for any action taken or not taken by it in connection
herewith (i) with the consent or at the request of the Required Banks (or, when
expressly required hereby, all the Banks) or (ii) in the absence of its own
gross negligence or willful misconduct. Neither of the Agents nor any of their
affiliates nor any of their respective directors, officers, agents or employees
shall be responsible for or have any duty to ascertain, inquire into or verify
(i) any statement, warranty or representation made in connection with this
Agreement or any borrowing hereunder; (ii) the performance or observance of any
of the covenants or agreements of the Borrower; (iii) the satisfaction of any
condition specified in Article 3, except receipt of items required to be
delivered to such Agent; or (iv) the validity, effectiveness or genuineness of
this Agreement or any Notes or other instrument or writing furnished in
connection herewith.
SECTION 7.06. Indemnification. Each Bank shall, ratably in accordance
with its Commitment (or, after termination of the Commitments, in accordance
with its outstanding Loans), indemnify each of the Agents, their affiliates and
their respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrower) against any cost, reasonable expense (including
reasonable counsel fees and disbursements), claim, demand, action, loss or
liability that such indemnitees may suffer or incur in connection with this
Agreement or any action taken or omitted by such indemnitees hereunder;
provided that no Bank shall be liable to any indemnitee for any of the
foregoing to the extent it arises from the gross negligence or willful
misconduct of such indemnitee.
SECTION 7.07. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon any Agent or other Bank, and based on
such documents and information as it has deemed appropriate, made its own
credit
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analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon any Agent or
other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
SECTION 7.08. Successor Administrative Agent. The Administrative Agent
may resign at any time by giving notice thereof to the Banks and the Borrower.
Upon any such resignation, the Required Banks shall have the right to appoint a
successor Administrative Agent. If no successor Administrative Agent shall
have been so appointed by the Required Banks, and shall have accepted such
appointment, within 30 days after the retiring Administrative Agent gives
notice of resignation, then the retiring Administrative Agent may, on behalf of
the Banks, appoint a successor Administrative Agent, which shall be a
commercial bank organized or licensed under the laws of the United States of
America or of any State thereof and having a combined capital and surplus of at
least $50,000,000. Upon the acceptance of its appointment as Administrative
Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Article shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was
Administrative Agent.
SECTION 7.09. Agents' Fees. The Borrower shall pay to each Agent for its
own account auction, administrative and other fees in the amounts and at the
times previously agreed upon between the Borrower and such Agent.
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair.
If on or prior to the first day of any Interest Period for any Euro-Dollar Loan
or Money Market LIBOR Loan:
(a) the Administrative Agent is advised by the Reference Banks that
deposits in dollars (in the applicable amounts) are not being offered to
the Reference Banks in the London interbank market for such Interest
Period, or
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(b) in the case of a Euro-Dollar Borrowing, Banks having 50% or more
of the aggregate amount of the Commitments advise the Administrative
Agent that the London Interbank Offered Rate as determined by the
Administrative Agent will not adequately and fairly reflect the cost to
such Banks of funding their Euro-Dollar Loans for such Interest Period,
the Administrative Agent shall forthwith give notice thereof to the Borrower
and the Banks, whereupon until the Administrative Agent notifies the Borrower
that the circumstances giving rise to such suspension no longer exist, (i) the
obligations of the Banks to make Euro-Dollar Loans or to continue or convert
outstanding Loans as or into Euro-Dollar Loans shall be suspended and (ii) each
outstanding Euro-Dollar Loan shall be converted into a Base Rate Loan on the
last day of the then current Interest Period applicable thereto. Unless the
Borrower notifies the Administrative Agent at least two Domestic Business Days
before the date of any Fixed Rate Borrowing for which a Notice of Borrowing has
previously been given that it elects not to borrow on such date, (i) if such
Fixed Rate Borrowing is a Euro-Dollar Borrowing, such Borrowing shall instead
be made as a Base Rate Borrowing and (ii) if such Fixed Rate Borrowing is a
Money Market LIBOR Borrowing, the Money Market LIBOR Loans comprising such
Borrowing shall bear interest for each day from and including the first day to
but excluding the last day of the Interest Period applicable thereto at the
Base Rate for such day.
SECTION 8.02. Illegality. If, on or after the date of this Agreement,
the adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Bank (or its Euro-Dollar Lending Office) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency shall make it unlawful or impossible for any
Bank (or its Euro-Dollar Lending Office) to make, maintain or fund its
Euro-Dollar Loans and such Bank shall so notify the Administrative Agent, the
Administrative Agent shall forthwith give notice thereof to the other Banks and
the Borrower, whereupon until such Bank notifies the Borrower and the
Administrative Agent that the circumstances giving rise to such suspension no
longer exist, the obligation of such Bank to make Euro-Dollar Loans, or to
convert outstanding Loans into Euro-Dollar Loans, shall be suspended. Before
giving any notice to the Administrative Agent pursuant to this Section, such
Bank shall designate a different Euro-Dollar Lending Office if such designation
will avoid the need for giving such notice and will not, in the judgment of
such Bank, be otherwise disadvantageous to such Bank. If such notice is given,
each Euro-Dollar Loan of such Bank then outstanding shall be converted to a
Base Rate Loan either (a) on the last day of the then current Interest Period
applicable
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to such Euro-Dollar Loan if such Bank may lawfully continue to maintain and
fund such Loan to such day or (b) immediately if such Bank shall determine that
it may not lawfully continue to maintain and fund such Loan to such day.
SECTION 8.03. Increased Cost and Reduced Return. (a) If on or after (x)
the date hereof, in the case of any Committed Loan or any obligation to make
Committed Loans or (y) the date of the related Money Market Quote, in the case
of any Money Market Loan, the adoption of any applicable law, rule or
regulation, or any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall impose, modify
or deem applicable any reserve (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System,
but excluding any such requirement with respect to which such Bank is entitled
to compensation during the relevant Interest Period under Section 2.15),
special deposit, insurance assessment or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Bank (or its
Applicable Lending Office) or shall impose on any Bank (or its Applicable
Lending Office) or the London interbank market any other condition affecting
its Fixed Rate Loans, its Note (where applicable) or its obligation to make
Fixed Rate Loans and the result of any of the foregoing is to increase the cost
to such Bank (or its Applicable Lending Office) of making or maintaining any
Fixed Rate Loan, or to reduce the amount of any sum received or receivable by
such Bank (or its Applicable Lending Office) under this Agreement or under its
Note (where applicable) with respect thereto, by an amount deemed by such Bank
to be material, then, within 15 days after demand by such Bank (with a copy to
the Administrative Agent), the Borrower shall pay to such Bank such additional
amount or amounts as will compensate such Bank for such increased cost or
reduction.
(b) If any Bank shall have determined that, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change in any such law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on capital
of such Bank (or its Parent) as a consequence of such Bank's obligations
hereunder to a level below that which such Bank (or its Parent) could have
achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to
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capital adequacy) by an amount deemed by such Bank to be material, then from
time to time, within 15 days after demand by such Bank (with a copy to the
Administrative Agent), the Borrower shall pay to such Bank such additional
amount or amounts as will compensate such Bank (or its Parent) for such
reduction.
(c) Each Bank will promptly notify the Borrower and the Administrative
Agent of any event of which it has knowledge, occurring after the date hereof,
which will entitle such Bank to compensation pursuant to this Section and will
designate a different Lending Office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the judgment
of such Bank, be otherwise disadvantageous to such Bank. A certificate of any
Bank (together with such further information as the Borrower may reasonably
request) claiming compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive in
the absence of manifest error. In determining such amount, such Bank may use
any reasonable averaging and attribution methods.
SECTION 8.04. Taxes. (a) For the purposes of this Section 8.4, the
following terms have the following meanings:
"TAXES" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings with respect to any payment by the
Borrower pursuant to this Agreement or under any Note, and all liabilities with
respect thereto, excluding (i) in the case of each Bank and Agent, taxes
imposed on its income, and franchise or similar taxes imposed on it, by a
jurisdiction under the laws of which such Bank or Agent (as the case may be) is
organized or in which its principal executive office is located or, in the case
of each Bank, in which its Applicable Lending Office is located and (ii) in the
case of each Bank, any United States withholding tax imposed on such payments
but only to the extent that such Bank is subject to United States withholding
tax at the time such Bank first becomes a party to this Agreement.
"OTHER TAXES" means any present or future stamp or documentary taxes and
any other excise or property taxes, or similar charges or levies, which arise
from any payment made pursuant to this Agreement or under any Note or from the
execution or delivery of, or otherwise with respect to, this Agreement or any
Note.
(b) Any and all payments by the Borrower to or for the account of any Bank
or Agent hereunder or under any Note shall be made without deduction for any
Taxes or Other Taxes; provided that, if the Borrower shall be required by law
to deduct any Taxes or Other Taxes from any such payments, (i) the sum payable
shall be increased as necessary so that after making all required deductions
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(including deductions applicable to additional sums payable under this Section)
such Bank or Agent (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Borrower shall
make such deductions, (iii) the Borrower shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with
applicable law and (iv) the Borrower shall furnish to the Administrative Agent,
at its address referred to in Section 9.01, the original or a certified copy of
a receipt evidencing payment thereof.
(c) The Borrower agrees to indemnify each Bank and Agent for the full
amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section) paid by such Bank or Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto. This indemnification shall be paid within 15 days after such Bank or
Agent (as the case may be) makes demand therefor.
(d) Each Bank organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on the signature pages hereof and on
or prior to the date on which it becomes a Bank in the case of each other Bank,
and from time to time thereafter if requested in writing by the Borrower (but
only so long as such Bank remains lawfully able to do so), shall provide the
Borrower and the Administrative Agent with Internal Revenue Service form 1001
or 4224, as appropriate, or any successor form prescribed by the Internal
Revenue Service, certifying that such Bank is entitled to benefits under an
income tax treaty to which the United States is a party which exempts the Bank
from United States withholding tax or reduces the rate of withholding tax on
payments of interest for the account of such Bank or certifying that the income
receivable pursuant to this Agreement is effectively connected with the conduct
of a trade or business in the United States.
(e) For any period with respect to which a Bank has failed to provide the
Borrower or the Administrative Agent with the appropriate form pursuant to
Section 8.04(d) (unless such failure is due to a change in treaty, law or
regulation occurring subsequent to the date on which such form originally was
required to be provided), such Bank shall not be entitled to indemnification
under Section 8.04(b) or 8.04(c) with respect to Taxes imposed by the United
States; provided that if a Bank, which 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 Borrower shall take such
steps as such Bank shall reasonably request to assist such Bank to recover such
Taxes.
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(f) If the Borrower is required to pay additional amounts to or for the
account of any Bank pursuant to this Section, then such Bank will change the
jurisdiction of its Applicable Lending Office if, in the reasonable judgment of
such Bank, such change (i) will eliminate or reduce any such additional payment
which may thereafter accrue and (ii) is not otherwise disadvantageous to such
Bank.
SECTION 8.05. Base Rate Loans Substituted for Affected Euro-Dollar Loans.
If (i) the obligation of any Bank to make, or to convert outstanding Loans
to, Euro-Dollar Loans has been suspended pursuant to Section 8.02 or (ii) any
Bank has demanded compensation under Section 8.03(a) with respect to its
Euro-Dollar Loans and the Borrower shall, by at least five Euro-Dollar Business
Days' prior notice to such Bank through the Administrative Agent, have elected
that the provisions of this Section shall apply to such Bank, then, unless and
until such Bank notifies the Borrower that the circumstances giving rise to
such suspension or demand for compensation no longer exist:
(a) all Loans which would otherwise be made by such Bank as (or
continued as or converted into) Euro-Dollar Loans shall instead be Base
Rate Loans (on which interest and principal shall be payable
contemporaneously with the related Euro-Dollar Loans of the other Banks);
and
(b) after each of its Euro-Dollar Loans has been repaid (or
converted to a Base Rate Loan), all payments of principal which would
otherwise be applied to repay such Euro-Dollar Loans shall be applied to
repay its Base Rate Loans instead.
If such Bank notifies the Borrower that the circumstances giving rise to such
notice no longer apply, the principal amount of each such Base Rate Loan shall
be converted into a Euro-Dollar Loan on the first day of the next succeeding
Interest Period applicable to the related Euro-Dollar Loans of the other Banks.
SECTION 8.06. Replacement of Bank. (a) If (i) the obligation of any Bank
to make Euro-Dollar Loans has been suspended pursuant to Section 8.02 or (ii)
any Bank has demanded compensation under Section 8.03 or 8.04, the Borrower may
with the prior written consent of the Administrative Agent (such consent not to
be unreasonably withheld) obtain the agreement of a bank or banks (which may be
one or more of the Banks) to assume the Commitment of and purchase any Loans
made by such Bank.
(b) If any Bank (an "ACQUIROR BANK") acquires more than fifty per cent
(50.0%) of the shares of any class of the capital stock of, or otherwise
acquires control of, another Bank (an "ACQUIREE BANK"), whether by merger,
consolidation
49
<PAGE> 55
or otherwise, then the Borrower may with the prior written consent of the
Administrative Agent (such consent not to be unreasonably withheld) obtain the
agreement of a bank or banks (which may be one or more of the Banks) to assume
the Commitment of and purchase any Loans made by the Acquiror Bank or Acquiree
Bank.
(c) Each purchase made pursuant to this Section 8.06 shall be at a
purchase price equal to the principal amount of all of the non-continuing
Bank's outstanding Loans plus any accrued but unpaid interest thereon and the
accrued but unpaid facility fees in respect of such Bank's Commitment hereunder
plus such amount, if any, as would be payable pursuant to Section 2.13 if the
outstanding Loans of such Bank were prepaid in their entirety on the date of
consummation of the purchase plus any other amount then payable to or for the
account of such Bank hereunder.
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, telex, facsimile
transmission or similar writing) and shall be given to such party: (a) in the
case of the Borrower or any Agent, at its address, facsimile number or telex
number set forth on the signature pages hereof, (b) in the case of any Bank, at
its address, facsimile number or telex number set forth in its Administrative
Questionnaire or (c) in the case of any party, such other address, facsimile
number or telex number as such party may hereafter specify for the purpose by
notice to the Administrative Agent and the Borrower. Each such notice, request
or other communication shall be effective (i) if given by telex, when such
telex is transmitted to the telex number specified in this Section and the
appropriate answerback is received, (ii) if given by facsimile transmission,
when transmitted to the facsimile number specified in this Section and
confirmation of receipt is received, (iii) if given by mail, 72 hours after
such communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iv) if given by any other means, when delivered at
the address specified in this Section; provided that notices to the
Administrative Agent under Article 2 or Article 8 shall not be effective until
received.
SECTION 9.02. No Waivers. No failure or delay by any Agent or Bank in
exercising any right, power or privilege hereunder or under any Note shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or
50
<PAGE> 56
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 9.03. Expenses; Indemnification. (a) The Borrower shall pay (i)
all out-of-pocket expenses of the Agents (including the fees and expenses of
Davis Polk & Wardwell, special counsel for the Agents) in connection with the
preparation and administration of this Agreement, any waiver or consent
hereunder or any amendment hereof or any Default or alleged Default hereunder
and (ii) if an Event of Default occurs, all out-of-pocket expenses incurred by
each Agent and Bank, including (without duplication) the fees and disbursements
of outside counsel and the allocated cost of inside counsel, in connection with
such Event of Default and collection, bankruptcy, insolvency and other
enforcement proceedings resulting therefrom.
(b) The Borrower agrees to indemnify each Agent and Bank, their respective
affiliates and the respective directors, officers, agents and employees of the
foregoing (each an "INDEMNITEE") and hold each Indemnitee harmless from and
against any and all liabilities, losses, damages, costs and expenses of any
kind, including, without limitation, the reasonable fees and disbursements of
counsel, which may be incurred by such Indemnitee in connection with any
investigative, administrative or judicial proceeding (whether or not such
Indemnitee shall be designated a party thereto) brought or threatened relating
to or arising out of this Agreement or any actual or proposed use of proceeds
of Loans hereunder; provided that no Indemnitee shall have the right to be
indemnified hereunder for such Indemnitee's own gross negligence or willful
misconduct as determined by a court of competent jurisdiction.
SECTION 9.04. Sharing of Set-offs. Each Bank agrees that if it shall, by
exercising any right of set-off or counterclaim or otherwise, receive payment
of a proportion of the aggregate amount of principal and interest then due and
payable with respect to any Loan which is greater than the proportion received
by any other Bank in respect of the aggregate amount of principal and interest
then due and payable to such other Bank with respect to such Loan, the Bank
receiving such proportionately greater payment shall purchase such
participations in the Loans held by the other Banks, and such other adjustments
shall be made, as may be required so that all such payments of principal and
interest with respect to the Loans held by the Banks shall be shared by the
Banks pro rata; provided that nothing in this Section shall impair the right of
any Bank to exercise any right of set-off or counterclaim it may have and to
apply the amount subject to such exercise to the payment of indebtedness of the
Borrower other than its indebtedness hereunder. The Borrower agrees, to the
fullest extent it may effectively do so under applicable law, that any holder
of a participation in a Loan, whether or not acquired pursuant to the foregoing
arrangements, may exercise
51
<PAGE> 57
rights of set-off or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation were a direct
creditor of the Borrower in the amount of such participation.
SECTION 9.05. Amendments and Waivers. Any provision of this Agreement
may be amended or waived if, but only if, such amendment or waiver is in
writing and is signed by the Borrower and the Required Banks (and, if the
rights or duties of any Agent are affected thereby, by such Agent); provided
that no such amendment or waiver shall, unless signed by all the Banks, except
as contemplated by Section 2.16 or 8.06, increase or decrease the Commitment of
any Bank (except for a ratable decrease in the Commitments of all Banks) or
subject any Bank to any additional obligation, reduce the principal of or rate
of interest on any Loan or any fees hereunder, postpone the date fixed for any
payment of principal of or interest on any Loan or any fees hereunder or for
the scheduled termination of any Commitment or change any provision of this
Section 9.05 or the percentage of the Commitments or of the aggregate unpaid
principal amount of the Loans, or the number of Banks, which shall be required
for the Banks or any of them to take any action under this Section or any other
provision of this Agreement.
SECTION 9.06. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that the Borrower may not
assign or otherwise transfer any of its rights under this Agreement without the
prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "PARTICIPANT") participating interests in its Commitment
or any or all of its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon notice to the
Borrower and the Administrative Agent, such Bank shall remain responsible for
the performance of its obligations hereunder, and the Borrower and the
Administrative Agent shall continue to deal solely and directly with such Bank
in connection with such Bank's rights and obligations under this Agreement.
Any agreement pursuant to which any Bank may grant such a participating
interest shall provide that such Bank shall retain the sole right and
responsibility to enforce the obligations of the Borrower hereunder including,
without limitation, the right to approve any amendment, modification or waiver
of any provision of this Agreement; provided that such participation agreement
may provide that such Bank will not agree to any modification, amendment or
waiver of this Agreement described in clause (i), (ii), or (iii) of Section
9.05 without the consent of the Participant. The Borrower agrees that each
Participant shall, to the extent provided in its participation agreement, be
entitled to the benefits of Article 8 with respect to its participating
interest. An assignment or other transfer which is not permitted by subsection
(c)
52
<PAGE> 58
or (d) below shall be given effect for purposes of this Agreement only to the
extent of a participating interest granted in accordance with this subsection
(b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "ASSIGNEE") all, or a proportionate part (equivalent to
an initial Commitment of not less than $10,000,000) of all, of its rights and
obligations under this Agreement, and such Assignee shall assume such rights
and obligations, pursuant to an Assignment and Assumption Agreement in
substantially the form of Exhibit G hereto executed by such Assignee and such
transferor Bank, with (and subject to) the subscribed consent of the Borrower
and the Administrative Agent, which consents shall not be unreasonably
withheld; provided that if an Assignee is an affiliate of such transferor Bank
or was a Bank immediately prior to such assignment, no such consent shall be
required; and provided further that such assignment may, but need not, include
rights of the transferor Bank in respect of outstanding Money Market Loans.
Upon execution and delivery of such instrument and payment by such Assignee to
such transferor Bank of an amount equal to the purchase price agreed between
such transferor Bank and such Assignee, such Assignee shall be a Bank party to
this Agreement and shall have all the rights and obligations of a Bank with a
Commitment as set forth in such instrument of assumption, and the transferor
Bank shall be released from its obligations hereunder to a corresponding
extent, and no further consent or action by any party shall be required. Upon
the consummation of any assignment pursuant to this subsection (c), the
transferor Bank, the Administrative Agent and the Borrower shall make
appropriate arrangements so that, if requested by the Assignee, a Note is
issued to the Assignee. In connection with any such assignment, the transferor
Bank shall pay to the Administrative Agent an administrative fee for processing
such assignment in the amount of $2,500. If the Assignee is not incorporated
under the laws of the United States of America or a state thereof, it shall
deliver to the Borrower and the Administrative Agent certification as to
exemption from deduction or withholding of any United States federal income
taxes in accordance with Section 8.04.
(d) Any Bank may at any time assign all or any portion of its rights under
this Agreement or in any Note to a Federal Reserve Bank. No such assignment
shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 8.03 or 8.04
than such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Borrower's prior written
consent or by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring
such Bank to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
53
<PAGE> 59
SECTION 9.07. Collateral. Each of the Banks represents to the
Administrative Agent and each of the other Banks that it in good faith is not
relying upon any "MARGIN STOCK" (as defined in Regulation U) as collateral in
the extension or maintenance of the credit provided for in this Agreement.
SECTION 9.08. Governing Law; Submission to Jurisdiction. This Agreement
and any Note issued hereunder shall be governed by and construed in accordance
with the laws of the State of New York. The Borrower hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York City
for purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. The Borrower irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.
SECTION 9.09. Counterparts; Integration. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement constitutes the entire agreement and understanding among the
parties hereto and supersedes any and all prior agreements and understandings,
oral or written, relating to the subject matter thereof.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE AGENTS AND
THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 9.11. Confidentiality. Each Bank agrees to hold any confidential
information which it may receive from the Borrower pursuant to this Agreement
in confidence, except for disclosure (i) to its affiliates and to other Banks
and their respective affiliates, (ii) to its subsidiaries, (iii) to legal
counsel, accountants and other professional advisors to such Bank, (iv) to
regulatory officials, (v) to any Person as requested pursuant to or as required
by law, regulation or legal process, (vi) to any Person in connection with any
legal proceeding to which such Bank is a party and (vii) to any actual or
proposed Assignee or Participant of all or part of its rights hereunder which
has agreed in writing to be bound by the provisions of this Section 9.11.
54
<PAGE> 60
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
GENERAL AMERICAN TRANSPORTATION
CORPORATION
By ___________________________
Name:
Title:
Address: 500 West Monroe Street
Chicago, IL 60661
Facsimile: (312) 621-6645
<PAGE> 61
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as
Documentation Agent
By ___________________________
Name:
Title:
Address: 60 Wall Street
New York, NY 10260
Telex: 177615 MGT UT
Facsimile: (212) 648-5336
THE FIRST NATIONAL BANK OF
CHICAGO, as Administrative Agent
By ____________________________
Name:
Title:
Address: One First National Plaza
Chicago, IL 60670
Telex: 190201
Facsimile: (312) 732-3246
<PAGE> 62
Commitment
<TABLE>
<S> <C>
$35,000,000 MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By ____________________________
Name:
Title:
$35,000,000 THE FIRST NATIONAL BANK
OF CHICAGO
By ____________________________
Name:
Title:
$30,000,000 BANK OF MONTREAL
By ____________________________
Name:
Title:
$30,000,000 THE BANK OF NEW YORK
By ____________________________
Name:
Title:
</TABLE>
<PAGE> 63
<TABLE>
<S> <C>
$30,000,000 BANKERS TRUST COMPANY
By ____________________________
Name:
Title:
$30,000,000 THE CHASE MANHATTAN BANK
By ____________________________
Name:
Title:
$30,000,000 CITIBANK, N.A.
By ____________________________
Name:
Title:
$30,000,000 MELLON BANK, N.A.
By ____________________________
Name:
Title:
</TABLE>
<PAGE> 64
<TABLE>
<S> <C>
$30,000,000 NATIONSBANK, N.A.
By ____________________________
Name:
Title:
$20,000,000 THE INDUSTRIAL BANK OF JAPAN,
LIMITED, CHICAGO BRANCH
By ____________________________
Name:
Title:
$20,000,000 WESTDEUTSCHE LANDESBANK GIROZENTRALE
By ____________________________
Name:
Title:
By ____________________________
Name:
Title:
</TABLE>
<PAGE> 65
<TABLE>
<S> <C>
$15,000,000 THE NORTHERN TRUST COMPANY
By ____________________________
Name:
Title:
$15,000,000 ROYAL BANK OF CANADA
By ____________________________
Name:
Title:
</TABLE>
Total Commitments
================
$350,000,000
<PAGE> 66
PRICING SCHEDULE
The "Euro-Dollar Margin" or "Facility Fee Rate" for any date is the rate
set forth below in the row opposite such term and in the column corresponding
to the "Status" that applies at such date:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------
Level I Level II Level III Level IV Level V Level VI
- -------------------------------------------------------------------------------
Euro-Dollar
Margin 0.1450% 0.160% 0.200% 0.250% 0.3750% 0.500%
- -------------------------------------------------------------------------------
Facility Fee
Rate 0.080% 0.090% 0.100% 0.1250% 0.1750% 0.250%
- -------------------------------------------------------------------------------
</TABLE>
For purposes of this Schedule and the Agreement, the following terms have
the following meanings, subject to the concluding paragraph of this Schedule:
"LEVEL I STATUS" applies on any date if on such date the Borrower's
long-term debt is rated A or higher by S&P or A2 or higher by Moody's.
"LEVEL II STATUS" applies on any date if on such date (i) Level I Status
does not apply and (ii) the Borrower's long-term debt is rated A- or higher by
S&P or A3 or higher by Moody's.
"LEVEL III STATUS" applies on any date if on such date (i) neither Level I
Status nor Level II Status applies and (ii) the Borrower's long-term debt is
rated BBB+ or higher by S&P or Baa1 or higher by Moody's.
"LEVEL IV STATUS" applies on any date if on such date (i) none of Level I
Status, Level II Status or Level III Status applies and (ii) the Borrower's
long-term debt is rated BBB or higher by S&P or Baa2 or higher by Moody's.
"LEVEL V STATUS" applies on any date if on such date (i) none of Level I
Status through Level IV Status applies and (ii) the Borrower's long-term debt
is rated BBB- or higher by S&P and Baa3 or higher by Moody's.
"LEVEL VI STATUS" applies on any date if on such date none of Level I
Status through Level V Status applies.
"MOODY'S" means Moody's Investors Service Inc.
<PAGE> 67
"STATUS" refers to the determination of which of Level I Status, Level II
Status, Level III Status, Level IV Status, Level V Status or Level VI Status
exists at any date.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
The credit ratings to be utilized for purposes of this Schedule are those
assigned to the long-term senior unsecured debt of the Borrower without
third-party credit enhancement, and any rating assigned to any other debt of
the Borrower shall be disregarded. The rating in effect at any date is that in
effect at the close of business on such date.
If the Borrower is split-rated and the ratings differential is one level,
the higher of the two ratings will apply (e.g., A/A3 results in Level I Status
and BBB+/Baa2 results in Level III Status). If the Borrower is split-rated and
the ratings differential is more than one level, the average of the two ratings
(or the higher of two intermediate ratings) shall be used (e.g., A/Baa2 results
in Level II Status and A-/Baa2 results in Level III Status). If, however, at
any date, the Borrower's long-term debt is not rated by both S&P and Moody's,
or is rated below BBB- by S&P or below Baa3 by Moody's, then Level VI shall
apply.
2
<PAGE> 68
SCHEDULE 5.10
Liens
<PAGE> 69
EXHIBIT A - NOTE
NOTE
New York, New York
___________ __, ____
For value received, GENERAL AMERICAN TRANSPORTATION CORPORATION, a New
York corporation (the "BORROWER"), promises to pay to the order of
______________________ (the "BANK"), for the account of its Applicable Lending
Office, the unpaid principal amount of each Loan made by the Bank to the
Borrower pursuant to the Credit Agreement referred to below on the maturity
date provided for in the Credit Agreement. The Borrower promises to pay
interest on the unpaid principal amount of each such Loan on the dates and at
the rate or rates provided for in the Credit Agreement. All such payments of
principal and interest shall be made in lawful money of the United States in
Federal or other immediately available funds at the principal office of The
First National Bank of Chicago in Chicago, Illinois.
All Loans made by the Bank, the respective types thereof and all
repayments of the principal thereof shall be recorded by the Bank and, if the
Bank so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to
each such Loan then outstanding may be endorsed by the Bank on the schedule
attached hereto, or on a continuation of such schedule attached to and made a
part hereof; provided that the failure of the Bank to make any such recordation
or endorsement shall not affect the obligations of the Borrower hereunder or
under the Credit Agreement.
This note is one of the Notes referred to in the Credit Agreement dated as
of May __, 1998 among General American Transportation Corporation, the Banks
parties thereto, The First National Bank of Chicago, as Administrative Agent,
and Morgan Guaranty Trust Company of New York, as Documentation Agent (as the
same may be amended from time to time, the "CREDIT AGREEMENT"). Terms defined
in the Credit Agreement are used herein with the same meanings.
<PAGE> 70
Reference is made to the Credit Agreement for provisions for the prepayment
hereof and the acceleration of the maturity hereof.
GENERAL AMERICAN TRANSPORTATION
CORPORATION
By ____________________________
Name:
Title:
2
<PAGE> 71
LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
===============================================================================
Amount
of Amount of Notation Made
Date Loan Type of Loan Principal Repaid By
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 72
EXHIBIT B - MONEY MARKET QUOTE REQUEST
FORM OF MONEY MARKET QUOTE REQUEST
[Date]
To: The First National Bank of Chicago, as Administrative Agent (the
"ADMINISTRATIVE AGENT")
From: General American Transportation Corporation
Re: Credit Agreement (as the same may be amended from time to time, the
"CREDIT AGREEMENT") dated as of May __, 1998 among General American
Transportation Corporation, the Banks parties thereto, the
Administrative Agent and Morgan Guaranty Trust Company of New York, as
Documentation Agent
We hereby give notice pursuant to Section 2.03 of the Credit Agreement
that we request Money Market Quotes for the following proposed Money Market
Borrowing(s):
Date of Borrowing: __________________
Principal Amount(1) Interest Period(2)
- -------------------------------- --------------------------------
Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the London Interbank Offered Rate.]
Terms used herein have the meanings assigned to them in the Credit
Agreement.
- ---------------------------
(1)Amount must be $5,000,000 or a larger multiple of $1,000,000.
(2)Not less than one month (LIBOR Auction) or not less than 7 days
(Absolute Rate Auction), subject to the provisions of the definition of
Interest Period.
<PAGE> 73
GENERAL AMERICAN TRANSPORTATION
CORPORATION
By: ____________________________
Name:
Title:
2
<PAGE> 74
EXHIBIT C - INVITATION FOR MONEY MARKET QUOTES
FORM OF INVITATION FOR MONEY MARKET QUOTES
To: [Name of Bank]
Re: Invitation for Money Market Quotes to General American Transportation
Corporation (the "BORROWER")
Pursuant to Section 2.03 of the Credit Agreement dated as of May __, 1998
among General American Transportation Corporation, the Banks parties thereto,
Morgan Guaranty Trust Company of New York, as Documentation Agent, and the
undersigned, as Administrative Agent, we are pleased on behalf of the Borrower
to invite you to submit Money Market Quotes to the Borrower for the following
proposed Money Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount Interest Period
- -------------------------------- --------------------------------
Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the London Interbank Offered Rate.]
Please respond to this invitation by no later than [2:00 P.M.] [9:30 A.M.]
(Chicago time) on [date].
THE FIRST NATIONAL BANK OF
CHICAGO, as Administrative Agent
By: ____________________________
Authorized Officer
<PAGE> 75
EXHIBIT D - MONEY MARKET QUOTE
FORM OF MONEY MARKET QUOTE
To: The First National Bank of Chicago, as Administrative Agent
Re: Money Market Quote to General American Transportation Corporation (the
"BORROWER")
In response to your invitation on behalf of the Borrower dated
_____________, ____, we hereby make the following Money Market Quote on the
following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
_____________________________
3. Date of Borrowing: ____________________(1)
4. We hereby offer to make Money Market Loan(s) in the following principal
amounts, for the following Interest Periods and at the following rates:
- ---------------------
(1) As specified in the related Invitation.
<PAGE> 76
Money Market
<TABLE>
<S> <C> <C> <C>
Principal Interest
Amount(2) Period(3) [Margin(4)] [Absolute Rating(5)]
</TABLE>
[Provided, that the aggregate principal amount of Money Market Loans for
which the above offers may be accepted shall not exceed $____________.]**
We understand and agree that the offer(s) set forth above, subject to the
satisfaction of the applicable conditions set forth in the Credit Agreement
dated as of May __, 1998 among General American Transportation Corporation, the
Banks parties thereto, Morgan Guaranty Trust Company of New York, as
Documentation Agent, and yourselves, as Administrative Agent, irrevocably
obligates us to make the Money Market Loan(s) for which any offer(s) are
accepted, in whole or in part.
Very truly yours,
[NAME OF BANK]
Dated:___________________________ By:__________________________
Authorized Officer
- ---------------
(2 )Principal amount bid for each Interest Period may not exceed
principal amount requested. Specify aggregate limitation if the sum of the
individual offers exceeds the amount the Bank is willing to lend. Bids must be
made for $5,000,000 or a larger multiple of $1,000,000.
(3)Not less than one month or not less than 7 days, as specified in the
related Invitation. No more than five bids are permitted for each Interest
Payment.
(4)Margin over or under the London Interbank Offered Rate determined
for the applicable Interest Period. Specify percentage (to the nearest
1/10,000 of 1%) and specify whether "PLUS" or "MINUS".
(5)Specify rate of interest per annum (to the nearest 1/10,000th of 1%).
2
<PAGE> 77
EXHIBIT E - OPINION OF COUNSEL FOR THE BORROWER
OPINION OF
COUNSEL FOR THE BORROWER
May __, 1998
To the Banks and the Agents
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Documentation Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
This opinion is delivered to you pursuant to Section 3.01(b) of the Credit
Agreement dated as of May __, 1998 (the "CREDIT AGREEMENT") among General
American Transportation Corporation, a New York corporation (the "BORROWER"),
the banks listed on the signature pages thereof (the "BANKS"), The First
National Bank of Chicago, as administrative agent (the "ADMINISTRATIVE AGENT"),
and Morgan Guaranty Trust Company of New York, as documentation agent (the
"DOCUMENTATION AGENT"). I am Assistant Secretary of the Borrower and I have
acted as internal counsel to the Borrower in connection with the preparation,
execution and delivery by the Borrower of the Credit Agreement. Capitalized
terms used herein shall have the meaning given to such terms in the Credit
Agreement.
In my capacity as such internal counsel, I or members of my staff have
examined originals or copies of the Credit Agreement and such records,
documents, agreements and other instruments as in my or their judgment are
necessary or appropriate to enable me to render the opinions expressed below.
In such examination, the genuineness of all signatures other than signatures on
behalf of the Borrower, the authenticity of all documents submitted as
originals and the conformity to originals of all documents submitted as copies
have been assumed.
On the basis of the foregoing and in reliance thereon, I am of the opinion
that as of the date hereof:
a) The Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the State of New York, has the corporate
<PAGE> 78
power and authority to conduct the business in which it is engaged, and is duly
qualified and is in good standing as a foreign corporation under the laws of
each jurisdiction where its failure to so qualify or be in good standing would
have a Material Adverse Effect.
b) The execution, delivery and performance by the Borrower of the Credit
Agreement (i) are within the corporate power of the Borrower, (ii) have been
duly authorized by all necessary corporate action, (iii) do not violate or
create a default under any law, rule or regulation, or the Certificate of
Incorporation or By-laws of the Borrower and (iv) do not violate or create a
default under any contractual provision known to me, after due inquiry, binding
on or affecting the Borrower or its property.
c) No authorization, consent, license, or approval or other action by, and
no notice or declaration to or filing or registration with, any court,
governmental authority, commission, board, regulatory body, bureau or agency is
required in connection with the execution, delivery and performance by the
Borrower of the Credit Agreement.
d) The Credit Agreement has been duly executed and delivered by the
Borrower.
e) The Credit Agreement constitutes a valid and binding agreement of the
Borrower enforceable in accordance with its terms except as the same may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and by general principles of equity.
f) There is no action, suit or proceeding, or any governmental
investigation or any arbitration, in each case pending or, to the best of my
knowledge, threatened against the Borrower, any of its Subsidiaries, or any
material property of any thereof before any court or arbitrator or any
governmental or administrative body, agency or official which, if adversely
determined, could have a Material Adverse Effect.
I am qualified to practice law in the State of Illinois and do not purport
to be an expert on, or express any opinions concerning the laws of any
jurisdiction other than the laws of the State of Illinois, the federal laws of
the United States and the corporation law of the State of New York. Insofar as
the opinion in paragraph (e) above involves other laws of the State of New
York, I have assumed, with your consent, that such laws are the same as the
laws of the State of Illinois.
2
<PAGE> 79
I am furnishing this opinion to you solely for your benefit and this
opinion is not to be used, circulated, quoted or otherwise referred to for any
other purpose without my prior written consent; provided, that this opinion may
be relied upon by any Bank that becomes a Bank after the date hereof in
accordance with the terms and conditions of the Credit Agreement.
Very truly yours,
3
<PAGE> 80
EXHIBIT F - OPINION OF SPECIAL COUNSEL FOR THE AGENTS
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENTS
May __, 1998
To the Banks and the Agents
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Documentation Agent
60 Wall Street
New York, New York 10260
Ladies and Gentleman:
We have participated in the preparation of the Credit Agreement (the
"CREDIT AGREEMENT") dated as of May __, 1998 among General American
Transportation Corporation, a New York corporation (the "BORROWER"), the banks
listed on the signature pages thereof (the "BANKS"), Morgan Guaranty Trust
Company of New York, as Documentation Agent (the "DOCUMENTATION AGENT"), and
The First National Bank of Chicago, as Administrative Agent (the
"ADMINISTRATIVE AGENT") and have acted as special counsel for the Agents for
the purpose of rendering this opinion pursuant to Section 3.01(c) of the Credit
Agreement. Terms defined in the Credit Agreement are used herein as therein
defined.
We have examined originals or copies, certified or otherwise identified to
our satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as we have deemed necessary or advisable for purposes of this
opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The execution, delivery and performance by the Borrower of the Credit
Agreement are within the Borrower's corporate powers and have been duly
authorized by all necessary corporate action.
<PAGE> 81
2. The Credit Agreement constitutes a valid and binding agreement of the
Borrower enforceable in accordance with its terms except as the same may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and by general principles of equity.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York and the federal laws of
the United States of America. In giving the foregoing opinion, we express no
opinion as to the effect (if any) of any law of any jurisdiction (except the
State of New York) in which any Bank is located which limits the rate of
interest that such Bank may charge or collect.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by any other Person without our prior written consent.
Very truly yours,
2
<PAGE> 82
EXHIBIT G - ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, ____ among <NAME OF ASSIGNOR> (the
"ASSIGNOR"), <NAME OF ASSIGNEE> (the "ASSIGNEE"), [GENERAL AMERICAN
TRANSPORTATION CORPORATION (the "BORROWER") and THE FIRST NATIONAL BANK OF
CHICAGO, as Administrative Agent (the "AGENT")].
WHEREAS, this Assignment and Assumption Agreement (the "AGREEMENT")
relates to the Credit Agreement dated as of May __, 1998 among the Borrower,
the Assignor and the other Banks party thereto, as Banks, Morgan Guaranty Trust
Company of New York, as Documentation Agent, and the Agent (as heretofore
amended or otherwise modified, the "CREDIT AGREEMENT");
WHEREAS, as provided under the Credit Agreement, the Assignor has a
Commitment to make Committed Loans to the Borrower in an aggregate principal
amount at any time outstanding not to exceed $__________;
WHEREAS, Committed Loans made to the Borrower by the Assignor under the
Credit Agreement in the aggregate principal amount of $__________ [and Money
Market Loans in the aggregate principal amount of $_______] are outstanding at
the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of the rights
of the Assignor under the Credit Agreement in respect of a portion of its
Commitment thereunder in an amount equal to $__________ (the "ASSIGNED
AMOUNT"), together with a corresponding portion of its outstanding Committed
Loans [and Money Market Loans], and the Assignee proposes to accept assignment
of such rights and assume the corresponding obligations from the Assignor on
such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise defined
herein shall have the respective meanings set forth in the Credit Agreement.
<PAGE> 83
SECTION 2. Assignment. The Assignor hereby assigns and sells to the
Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the Assigned Amount, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the obligations of the Assignor under the
Credit Agreement to the extent of the Assigned Amount, including the purchase
from the Assignor of the corresponding portion of the principal amount of the
Committed Loans [and Money Market Loans] made by the Assignor outstanding at
the date hereof. Upon the execution and delivery hereof by the Assignor, the
Assignee, [the Borrower and the Agent] and the payment of the amounts specified
in Section 3 required to be paid on the date hereof (i) the Assignee shall, as
of the date hereof, succeed to the rights and be obligated to perform the
obligations of a Bank under the Credit Agreement with a Commitment in an amount
equal to the Assigned Amount, [and] outstanding Committed Loans in the
aggregate principal amount of $______ [and outstanding Money Market Loans in
the aggregate principal amount of $______] and (ii) the Commitment of the
Assignor shall, as of the date hereof, be reduced by a like amount and the
Assignor released from its obligations under the Credit Agreement to the extent
such obligations have been assumed by the Assignee. The assignment provided
for herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds the amount heretofore agreed between them.1 It is
understood that facility fees accrued to the date hereof are for the account of
the Assignor and such fees accruing from and including the date hereof with
respect to the Assigned Amount are for the account of the Assignee. Each of
the Assignor and the Assignee hereby agrees that if it receives any amount
under the Credit Agreement which is for the account of the other party hereto,
it shall receive the same for the account of such other party to the extent of
such other party's interest therein and shall promptly pay the same to such
other party. The Assignee hereby advises the Administrative Agent that notice
and payment instructions are set forth in the attached Administrative
Questionnaire.
[SECTION 4. Consent of the Borrower and the Agent. This Agreement is
conditioned upon the consent of the Borrower and the Agent pursuant to Section
9.6(c) of the Credit Agreement. The execution of this Agreement by the
Borrower and the Agent is evidence of this consent.]
- ------------------------
(1)Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any portion
of any upfront fee to be paid by the Assignor to the Assignee. It may be
preferable in an appropriate case to specify these amounts generically or by
formula rather than as a fixed sum.
2
<PAGE> 84
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition, or statements of the
Borrower, or the validity and enforceability of the obligations of the Borrower
in respect of the Credit Agreement or any Note. The Assignee acknowledges that
it has, independently and without reliance on the Assignor, and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and will continue to be
responsible for making its own independent appraisal of the business, affairs
and financial condition of the Borrower.
SECTION 6. Representations and Warranties. The Assignee hereby
represents and warrants that none of the funds, monies, assets or other
consideration being used to make the purchase pursuant to this Agreement are
"plan assets" as defined under ERISA and that its rights, benefits and
interests in and under the Credit Agreement will not be "plan assets" under
ERISA.
SECTION 7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 8. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their duly authorized officers as of the date first above
written.
<NAME OF ASSIGNOR>
By:_________________________
Name:
Title:
<NAME OF ASSIGNEE>
By:__________________________
Name:
Title:
3
<PAGE> 85
GENERAL AMERICAN
TRANSPORTATION CORPORATION
By:__________________________
Name:
Title:
THE FIRST NATIONAL BANK OF
CHICAGO, as Administrative Agent
By:__________________________
Name:
Title:
4
<PAGE> 86
SCHEDULE 5.10
[Borrower to update]
SALE/LEASEBACK CAPITAL LEASES
DECEMBER 31, 1995
<TABLE>
<CAPTION>
NET
DEAL NUMBER BOOK EXPIRATION
NUMBER OF CARS COST RESERVE VALUE OBLIGATION DATE
- ------- --------- --------- --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
1 53 1,926,372 1,271,406 654,967 871,530 6-2004
2 0 0 0 0 0
3 167 7,480,202 4,641,400 2,838,802 4,300,059 12-2004
4 123 5,521,068 3,767,676 1,753,392 2,624,310 12-2002
5 171 7,777,827 5,300,987 2,467,840 3,830,110 12-2002
6 171 8,196,955 4,754,238 3,442,718 5,352,858 6-2006
7 178 10,137,934 6,105,800 4,032,134 6,775,856 9-2004
83-1 132 9,958,091 6,138,899 3,819,193 7,313,387 12-2003
83-2 107 5,536,060 3,413,904 2,122,156 4,034,723 12-2003
83-3 94 5,069,206 3,126,014 1,943,192 3,670,625 12-2003
84-1 501 22,715,639 10,889,480 11,826,159 19,282,390 12-2008
85-1 248 11,314,167 4,946,487 6,367,681 7,148,895 12-2008
85-2 210 10,549,482 4,585,254 5,964,228 7,315,353 6-2009
86-COMB 621 26,197,640 10,366,425 15,831,214 20,638,041 12-2010
87-1 436 20,437,691 7,184,682 13,253,009 18,463,306 1-2011
--------- --------- --------- --------- ------------ ------------
3,212 152,818,335 76,492,651 76,325,684 111,621,443
</TABLE>
SALE/LEASEBACK OPERATING LEASES
AS OF 4/30/96
<TABLE>
<CAPTION>
NUMBER REMAINING EXPIRATION
DEAL OF CARS COST DEBT DATE
- ----- --------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
90-1 688 35,052,163 56,369,402 9-2010
G90-2 1,299 65,112,862 107,568,406 12-2010
91-1 1,339 75,029,641 131,861,265 3-2014
92-1 1,279 74,845,019 125,859,302 8-2014
93-1 2,322 137,895,220 218,960,064 7-2015
94-1 2,312 130,000,125 228,931,372 1-2017
95-1 2,606 150,016,903 238,082,774 5-2017
95-2 1,668 100,019,539 167,596,632 7-2019
--------- ----------- -------------
TOTAL 13,513 767,971,472 1,275,229,223
</TABLE>
NOTE: These cars are considered off balance sheet debt and are part of GATC's
operating fleet, but are not part of our owned fleet.
<PAGE> 87
CROSS-REFERENCE TARGET LIST
NOTE: DUE TO THE NUMBER OF TARGETS SOME TARGET NAMES MAY NOT
APPEAR IN THE TARGET PULL-DOWN LIST.
(This list is for the use of the wordprocessor only, is not a part
of this document and may be discarded.)
<TABLE>
<CAPTION>
ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME
=============== =========== =============== =========== =============== ===========
<S> <C> <C> <C> <C> <C>
1.01.......................definitions ?.....................total.commitment 6.10.........................judgments
1.02..................acct.terms.deter ?.........................amt.increase 6.11.............. change.control.borr
1.03..................types.borrowings 2.17........mand.prepay.change.control 7.01.........appointment.authorization
2.01.......................commit.lend 3.01.....................effectiveness 7.02.................agents.affiliates
2.02.............notice.comm.borrowing 3.01(a)...................counterparts 7.03.....................action.agents
2.02(a)..............not.commit.borrow 3.01(b)................opinion.counsel 7.04.............employ.agents.experts
2.02(a)(i)........................date 3.01(c)....................opinion.dpw 7.05..................liability.agents
2.02(a)(ii).....................amount 3.01(d)......................documents 7.06...................indemnification
2.02(a)(iii)..................... kind 3.01(e)...................sat.evidence 7.07...................credit.decision
2.02(a)(iv)...................duration 3.02........................borrowings 7.08.............successor.admin.agent
2.02(b)............loans.bear.interest 3.02(a)...............not.of.borrowing 7.09.......................agents.fees
2.02(e)................. ex.int.period 3.02(b)..........................equal 8.01.....basis.deter.int.rate.fairness
2.03..................money.mar.borrow 3.02(c).....................no.default 8.01(a)................dollar.deposits
2.03(a)...............money.mar.option 3.02(d)............rep.warranties.true 8.01(b)............cost.reflection.off
2.03(b)............... money.mar.quote 4.01....................corp.existence 8.02........................illegality
2.03(b)(i).......................2date 4.02.................auth.agree.no.vio 8.03........increa.cost.reduced.return
2.03(b)(ii)....................2amount 4.03....................govt.approvals 8.03(a).......................reserves
2.03(b)(iii)................ 2duration 4.04....................binding.effect 8.03(b).........reduced.rate.of.return
2.03(b)(iv)...................... type 4.05....................financial.info 8.03(c).......prompt.bank.notification
2.03(c)..........invit.mon.mark.quotes 4.05(a)..............con.balance.sheet 8.04..........................taxes(2)
2.03(d).....................submission 4.05(b).............no.material.change 8.04(a)...................define.taxes
2.03(d)(i)...................each.bank 4.06........................litigation 8.04(b)................no.deduct.taxes
2.03(d)(ii).................each.quote 4.07.................employee.benefits 8.04(c)................indemnify.taxes
2.03(d)(ii)(a)...................3date 4.08.............................taxes 8.04(d)..................IRS1001or4224
2.03(d)(ii)(b).................3amount 4.09..................... subsidiaries 8.04(e).......failure.these.provisions
2.03(d)(ii)(c)..................margin 4.10...................full.disclosure 8.04(f)............change.jurisdiction
2.03(d)(ii)(d)................int.rate 4.11..................compliance.w.law 8.05..............base.rate.loans.sub.
2.03(d)(ii)(e).......... identity.bank 4.12...................environ.matters 8.05(a)........prior.euro-dollar.loans
2.03(d)(iii)..........disregard.mmq.if 5.01.................maintenance.exist 8.05(b)...........then.repay.base.rate
2.03(d)(iii)(a).........not.in.conform 5.02...............compliance.laws.etc 8.06..................replacement.bank
2.03(d)(iii)(b)...........qualify.lang 5.03..................pay.taxes.claims 8.06(a)................agree.to.assume
2.03(d)(iii)(c).........proposed.terms 5.04.....................keeping.books 8.06(b).......................50%share
2.03(d)(iii)(d)...........late.arrival 5.05................visitation.inspect 8.06(c)...........................cost
2.03(e)............ notice.to.borrower 5.06........................ insurance 9.01...........................notices
2.03(f)...........accept.notice.borrow 5.07...............reporting.covenants 9.02........................no.waivers
2.03(f)(i).............. not.exceed 5.07(a)..................annual.report 9.03..........expenses.indemnification
2.03(f)(ii)........... min.&.multiples 5.07(b)..............income.statements 9.03(a).........out-of-pocket.expenses
2.03(f)(iii)............ accept.offers 5.07(c)....................10-Q.filing 9.03(b)...........indemnitees.harmless
2.03(f)(iv).............may.not.accept 5.07(d)........borr.con.balance.sheets 9.04..................sharing.set-offs
2.03(g).....................allocation 5.07(e)...............borr.certificate 9.05................amendments.waivers
2.04...............not.bank.fund.loans 5.07(f)............account.certificate 9.06................successors.assigns
2.04(a)................. notification 5.07(g).............cert.after.default 9.06(a).............binding.successors
2.04(b).........................12noon 5.07(h)................copies.mailings 9.06(b).............bank-to-bank.grant
?.............................new.loan ?.............notice.lawsuit.investiga 9.06(c)............bank-to-bank.assign
2.04(c)............notice.availability 5.07(j)...........other.requested.info 9.06(d)............assign.fed.res.bank
2.05..........................registry 5.08..............finan.test.covenants 9.06(e).............no.greater.payment
2.05(a).......................register 5.08(a)..........................ratio 9.07........................collateral
2.05(b)...........................note 5.08(b).......................sum.plus 9.08........................govern.law
2.06............... maturity.of.loans 5.08(c).........65%.con.tang.net.worth 9.09..........counterparts.integration
2.07....................interest.rates 5.09.......................mergers.etc 9.10.................waiver.jury.trial
2.07(a).................base.rate.loan 5.10...................negative.pledge 9.11...................confidentiality
2.07(b)...............euro-dollar.loan 5.10(a).................liens.existing 8..................change.circumstance
2.07(c)............euro.dollar.overdue 5.10(b).............already.subsidiary 6.............................defaults
2.07(d)...............mmlibor.int.rate 5.10(c)................asset.financing 5......................art.5.covenants
2.07(e)....................admin.agent 5.10(d..................personal.liens 2........................art.2.credits
2.07(f).......................ref.bank 5.10(e).....................asset.lien 3.....................art.3.conditions
2.08..............................fees 5.10(f)...................refinan.lien
2.08(a)...................facility.fee 5.10(g).............securing.judgments
2.08(b)............ quarterly.payments 5.10(h).................Ordinary.liens
2.09.............Opt.term.reduc.commit 5.10(j)..................less.than.50%
2.10..................mand.term.commit 5.11......................use.proceeds
2.11.................. optional.prepay 5.12.................certain.transfers
2.11(a)............... aa.notification 5.13................trans.w.affiliates
2.11(b).....................not.prepay 6.............................defaults
2.11(c)..................notice.prepay 6.01..........................payments
2.12...................gen.pro.payment 6.02..............covenants.w/o.notice
2. 12(a).................prin.due.date 6.03...................other.covenants
2.12(b).................pay.assumption 6.04...................representations
2.13....................funding.losses 6.05...............non-pay.other.agree
2.14..................computa.int.fees 6.06..............defaults.other.agree
2.15................reg.d.compensation 6.07....................failure.to.pay
2.16...............opt.increase.commit 6.08........................bankruptcy
?........................prompt.notice 6.09.............................erisa
</TABLE>
<PAGE> 88
<TABLE>
<CAPTION>
ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME
- --------------- ----------- --------------- ----------- --------------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
2
<PAGE> 1
EXHIBIT 12
GENERAL AMERICAN TRANSPORTATION CORPORATION
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(UNAUDITED)
(IN MILLIONS, EXCEPT FOR RATIOS)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
---------------------- ----------------------
1998 1997 1998 1997
---------------------- ----------------------
<S> <C> <C> <C> <C>
Earnings available for fixed charges:
Net income .................................... $24.4 $21.0 $48.1 $37.6
Add (deduct):
Income taxes ................................ 13.0 10.3 24.9 20.0
Equity in net earnings of affiliated
companies, net of distributions received .. (2.6) (2.6) (6.6) (4.1)
Interest on indebtedness and amortization
of debt discount and expense .............. 28.9 30.2 57.2 59.5
Amortization of capitalized interest ........ .3 .3 .6 .6
Portion of rents representative of interest
factor (deemed to be one-third) ........... 7.8 6.8 15.5 13.6
---------- ---------- ---------- ----------
Total earnings available for fixed charges .... $71.8 $66.0 $139.7 $127.2
========== ========== ========== ==========
Fixed Charges:
Interest on indebtedness and amortization
of debt discount and expense ................ $28.9 $30.2 $57.2 $59.5
Capitalized interest .......................... .2 .2 .5 .4
Portion of rents representative of interest
factor (deemed to be one-third) ............. 7.8 6.8 15.5 13.6
---------- ---------- ---------- ----------
Total fixed charges ........................... $36.9 $37.2 $73.2 $73.5
========== ========== ========== ==========
Ratio of earnings to fixed charges(A) ............ 1.95x 1.77x 1.91x 1.73x
</TABLE>
(A) The ratios of earnings to fixed charges represents the number of times
"fixed charges" are covered by "earnings." "Fixed charges" consist of interest
on outstanding debt and capitalized interest, one-third (the proportion deemed
representative of the interest factor) of rentals, and amortization of debt
discount and expense. "Earnings" consist of consolidated net income before
income taxes and fixed charges, less equity in net earnings of affiliated
companies, net of distributions received.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet and Consolidated Income Statement of GATC and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 18
<SECURITIES> 0
<RECEIVABLES> 60
<ALLOWANCES> 5
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 3798
<DEPRECIATION> 1652
<TOTAL-ASSETS> 2970
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 1209<F2>
0
0
<COMMON> 0
<OTHER-SE> 679
<TOTAL-LIABILITY-AND-EQUITY> 2970
<SALES> 0
<TOTAL-REVENUES> 409
<CGS> 0
<TOTAL-COSTS> 178<F3>
<OTHER-EXPENSES> 71<F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 57
<INCOME-PRETAX> 65<F5>
<INCOME-TAX> 25
<INCOME-CONTINUING> 48
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 48
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Not applicable because GATC has an unclassified balance sheet.
<F2>This value consists of two components: Long-term Debt of 1,114 million and
Capital Lease Obligations of 95 million. Short-term Debt is not included.
<F3>This value represents Operating Expenses on the Consolidated Income Statement.
<F4>This value consists of the Provision for Depreciation and Amortization on the
Consolidated Income Statement.
<F5>This value represents Income Before Taxes and Equity in Net Earnings of
Affiliates.
</FN>
</TABLE>
