<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 14, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED APRIL 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-3998
LITTON INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 95-1775499
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
21240 BURBANK BOULEVARD, 91367-6675
WOODLAND HILLS, CALIFORNIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (818) 598-5000
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
On May 28, 1999 there were 45,425,177 shares of Common Stock outstanding.
Page 1 of 13
Exhibit Index appears on Page 12.
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<PAGE> 2
LITTON INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
INDEX
REPORT ON FORM 10-Q
FOR QUARTER ENDED APRIL 30, 1999
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Operations
Nine months ended April 30, 1999 and 1998................. 3
Consolidated Statements of Operations
Three months ended April 30, 1999 and 1998................ 4
Consolidated Balance Sheets
April 30, 1999 and July 31, 1998.......................... 5
Consolidated Statements of Cash Flows
Nine months ended April 30, 1999 and 1998................. 6
Notes to Consolidated Financial Statements.................. 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 9
Item 3. Quantitative and Qualitative Disclosures About Market
Risk...................................................... 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................................... 12
Item 6. Exhibits and Reports on Form 8-K............................ 12
Signature............................................................... 13
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LITTON INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
APRIL 30,
------------------------
1999 1998
---------- ----------
<S> <C> <C>
Sales and Service Revenues.................................. $3,593,967 $3,155,887
---------- ----------
Costs and Expenses
Cost of sales............................................. 2,797,157 2,426,367
Selling, general and administrative....................... 390,934 367,830
Depreciation and amortization............................. 119,638 107,823
Interest -- net........................................... 49,448 35,729
---------- ----------
Total............................................. 3,357,177 2,937,749
---------- ----------
Earnings before Taxes on Income............................. 236,790 218,138
Taxes on Income............................................. (94,716) (87,255)
---------- ----------
Net Earnings................................................ $ 142,074 $ 130,883
========== ==========
Earnings per Share:
Basic..................................................... $ 3.11 $ 2.82
========== ==========
Diluted................................................... $ 3.05 $ 2.75
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
LITTON INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
APRIL 30,
------------------------
1999 1998
---------- ----------
<S> <C> <C>
Sales and Service Revenues.................................. $1,255,507 $1,143,037
---------- ----------
Costs and Expenses
Cost of sales............................................. 967,574 885,143
Selling, general and administrative....................... 146,508 127,171
Depreciation and amortization............................. 39,704 38,264
Interest -- net........................................... 16,939 14,430
---------- ----------
Total............................................. 1,170,725 1,065,008
---------- ----------
Earnings before Taxes on Income............................. 84,782 78,029
Taxes on Income............................................. (33,913) (31,211)
---------- ----------
Net Earnings................................................ $ 50,869 $ 46,818
========== ==========
Earnings per Share:
Basic..................................................... $ 1.12 $ 1.01
========== ==========
Diluted................................................... $ 1.10 $ 0.98
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
LITTON INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
APRIL 30, JULY 31,
1999 1998
---------- ----------
<S> <C> <C>
ASSETS
Current Assets
Cash and marketable securities............................ $ 104,726 $ 31,925
Accounts receivable, net.................................. 888,694 820,624
Inventories less progress payments........................ 657,834 635,942
Deferred tax assets....................................... 385,343 417,719
Prepaid expenses.......................................... 29,469 27,770
---------- ----------
Total Current Assets.............................. 2,066,066 1,933,980
---------- ----------
Property, Plant and Equipment -- at cost.................... 1,560,438 1,543,041
Less accumulated depreciation............................. (947,393) (929,527)
---------- ----------
Property, Plant and Equipment, Net.......................... 613,045 613,514
---------- ----------
Goodwill and Other Intangibles, Net......................... 1,084,314 1,075,299
---------- ----------
Other Assets and Long-term Investments...................... 480,233 427,022
---------- ----------
Total Assets...................................... $4,243,658 $4,049,815
========== ==========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities
Accounts payable.......................................... $ 781,115 $ 876,850
Payrolls and related expenses............................. 206,105 200,059
Taxes on income........................................... 59,169 74,040
Short-term debt........................................... 463,046 274,178
Contract liabilities and customer deposits................ 328,407 346,270
---------- ----------
Total Current Liabilities......................... 1,837,842 1,771,397
---------- ----------
Long-term Obligations....................................... 771,999 771,321
---------- ----------
Postretirement Benefit Obligations Other than Pensions...... 206,491 206,397
---------- ----------
Deferred Tax and Other Long-term Liabilities................ 110,736 113,461
---------- ----------
Shareholders' Investment
Capital stock
Voting preferred stock -- Series B..................... 2,053 2,053
Common stock........................................... 45,410 45,783
Additional paid-in capital................................ 339,354 316,628
Retained earnings......................................... 977,419 869,359
Accumulated other comprehensive loss --
Cumulative currency translation adjustment............. (47,646) (46,584)
---------- ----------
Total Shareholders' Investment.................... 1,316,590 1,187,239
---------- ----------
Total Liabilities and Shareholders' Investment.... $4,243,658 $4,049,815
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
LITTON INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
APRIL 30,
----------------------
1999 1998
--------- ---------
<S> <C> <C>
Cash and cash equivalents at beginning of period............ $ 16,175 $ 4,144
--------- ---------
Operating Activities
Net earnings.............................................. 142,074 130,883
Adjustments to reconcile net earnings to net cash provided
by operating activities
Depreciation and amortization.......................... 119,638 107,823
Changes in assets and liabilities, net of effects of
acquisitions
Accounts receivable.................................. (55,779) (51,506)
Inventories.......................................... (23,387) 55,930
Prepaid expenses..................................... (863) 6,695
Accounts payable..................................... (105,563) (78,421)
Payrolls and related expenses........................ 3,968 6,961
Deferred and current taxes on income................. 29,374 (44,625)
Contract liabilities and customer deposits........... (17,863) 17,697
Other operating activities............................. (37,346) (25,680)
--------- ---------
Cash provided by operating activities....................... 54,253 125,757
--------- ---------
Investing Activities
Purchase of businesses, net of cash acquired.............. (92,018) (445,483)
Purchase of capital assets................................ (86,741) (72,751)
Proceeds from sale of business............................ 45,990 --
Other investing activities................................ 2,153 (5,933)
--------- ---------
Cash used for investing activities.......................... (130,616) (524,167)
--------- ---------
Financing Activities
Change in short-term debt, net............................ 172,215 149,991
Purchase of Common stock.................................. (38,132) (16,758)
Exercise of stock options................................. 15,232 13,041
Proceeds from issuance of long-term obligations........... -- 296,839
Other financing activities................................ (2,209) (4,617)
--------- ---------
Cash provided by financing activities....................... 147,106 438,496
--------- ---------
Resulting in increase in cash and cash equivalents.......... 70,743 40,086
--------- ---------
Cash and cash equivalents at end of period.................. $ 86,918 $ 44,230
========= =========
Supplemental disclosure of cash flow information
Interest paid............................................. $ 65,150 $ 41,237
Income taxes paid, net.................................... $ 54,068 $ 116,848
Reconciliation to Consolidated Balance Sheets:
Cash and cash equivalents................................. $ 86,918 $ 44,230
Marketable securities..................................... 17,808 15,750
--------- ---------
Total cash and marketable securities.............. $ 104,726 $ 59,980
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE> 7
LITTON INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED APRIL 30, 1999
1. The amounts included in this report are unaudited; however, in the opinion
of management, all adjustments necessary for a fair statement of results for
the stated periods have been included. These adjustments are of a normal
recurring nature. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. Certain
reclassifications of prior period information were made for comparative
purposes. These interim consolidated financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's Annual Report to Shareholders for the fiscal year ended July 31,
1998. The results of operations for the nine months ended April 30, 1999 are
not necessarily indicative of operating results for the entire year.
2. The components of inventory balances are summarized below:
<TABLE>
<CAPTION>
APRIL 30, 1999 JULY 31, 1998
-------------- -------------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Raw materials and work in progress......................... $ 997,716 $1,036,492
Finished goods............................................. 58,150 42,746
---------- ----------
1,055,866 1,079,238
Less progress payments..................................... (398,032) (443,296)
---------- ----------
Net inventories............................................ $ 657,834 $ 635,942
========== ==========
</TABLE>
3. Interest (expense) income is shown below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
APRIL 30, APRIL 30,
------------------- -------------------
1999 1998 1999 1998
-------- -------- -------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Interest expense............................ $(18,958) $(16,292) $(55,363) $(41,047)
Interest income............................. 2,019 1,862 5,915 5,318
-------- -------- -------- --------
Net interest expense........................ $(16,939) $(14,430) $(49,448) $(35,729)
======== ======== ======== ========
</TABLE>
4. The Company computes basic and diluted earnings per share ("EPS") in
accordance with the Statement of Financial Accounting Standards No. 128,
"Earnings per Share" ("SFAS 128"). Basic EPS is calculated based on the
weighted average number of shares outstanding and diluted EPS includes the
effects of dilutive potential common shares.
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
APRIL 30, APRIL 30,
------------------------- -------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Net earnings......................... $ 50,869 $ 46,818 $ 142,074 $ 130,883
Preferred stock dividends............ (206) (206) (616) (616)
----------- ----------- ----------- -----------
Net earnings available to common
shareholders....................... $ 50,663 $ 46,612 $ 141,458 $ 130,267
=========== =========== =========== ===========
Weighted average common shares
outstanding -- used for basic
earnings per share................. 45,419,150 46,278,410 45,479,120 46,132,610
Dilutive effect of stock options..... 847,883 1,204,327 946,352 1,187,053
----------- ----------- ----------- -----------
Number of shares used for diluted
earnings per share................. 46,267,033 47,482,737 46,425,472 47,319,663
=========== =========== =========== ===========
Basic earnings per share............. $ 1.12 $ 1.01 $ 3.11 $ 2.82
=========== =========== =========== ===========
Diluted earnings per share........... $ 1.10 $ 0.98 $ 3.05 $ 2.75
=========== =========== =========== ===========
</TABLE>
7
<PAGE> 8
LITTON INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED APRIL 30, 1999
5. Effective in the first quarter of fiscal year 1999, the Company adopted
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income", which establishes standards for reporting and display
of comprehensive income and its components. Comprehensive income includes
"all changes in equity during a period except those resulting from
investments by owners and distributions to owners."
Comprehensive income and its components are summarized below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
APRIL 30, APRIL 30,
------------------ --------------------
1999 1998 1999 1998
------- ------- -------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Net earnings.............................. $50,869 $46,818 $142,074 $130,883
Currency translation adjustments.......... (5,196) (364) (1,062) (2,405)
------- ------- -------- --------
Total comprehensive income................ $45,673 $46,454 $141,012 $128,478
======= ======= ======== ========
</TABLE>
6. On May 6, 1999, Litton proposed separate transactions to acquire Newport
News Shipbuilding Inc. ("Newport News") and Avondale Industries, Inc.
("Avondale"). Litton proposed a stock-for-stock merger with Newport News
valued at $35.61 per Newport News share of common stock based on the May 6,
1999 closing price of $64.75 for Litton Common stock. At the same time,
Litton also proposed to acquire Avondale for $38.00 per share of its common
stock in cash. Both Newport News and Avondale are engaged in the design,
construction, repair, and overhaul of various types of ocean-going vessels,
primarily for the U.S. Navy.
On June 3, 1999, Litton and Avondale entered into an Agreement and Plan of
Merger (the "Agreement"), filed as Exhibit 2.1 to the Company's Report on
Form 8-K dated June 11, 1999 and incorporated herein by reference,
providing for the acquisition of Avondale common stock at a revised
purchase price of $39.50 per share in cash, for a total value of
approximately $529 million. Litton and Avondale also entered into a Company
Stock Option Agreement, filed as Exhibit 2.2 to Litton's Report on Form 8-K
dated June 11, 1999 and incorporated herein by reference, pursuant to which
Avondale granted Litton the option to purchase up to 9.9% of Avondale
common stock at an exercise price of $39.50 per share upon the termination
of the Agreement subject to certain terms and conditions. This transaction,
which is subject to Avondale shareholders' and regulatory approvals, will
be accounted for under the purchase method of accounting.
The Department of Defense has informally indicated that, as the principal
customer, based upon preliminary data, it was not convinced that the
possible cost savings of the Newport News transaction, unlike the Avondale
transaction, would be sufficient to justify the reduction in competition.
The Company is continuing to explore means of reaching a satisfactory
resolution for these concerns, but is not optimistic at this time. If
consummated, this transaction was expected to be accounted for as a pooling
of interests.
8
<PAGE> 9
PART I. FINANCIAL INFORMATION (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Company reported sales of $1.26 billion and $3.59 billion for the third
quarter and nine months ended April 30, 1999 compared with $1.14 billion and
$3.16 billion for the prior year's periods, respectively. Operating profit
improved to $116.9 million and $331.9 million for the third quarter and nine
months ended April 30, 1999 compared with $106.8 million and $294.9 million for
the corresponding periods of the prior fiscal year. Net earnings rose 8.7% to
$50.9 million for the quarter and 8.6% to $142.1 million for the nine months
ended April 30, 1999. Corresponding amounts for the fiscal year 1998 periods
were $46.8 million and $130.9 million, respectively.
Sales and operating profit for the Advanced Electronics segment were $381.4
million and $32.9 million for the third quarter of fiscal year 1999, compared
with $407.8 million and $29.2 million for the third quarter of the prior year.
Sales and operating profit for the nine months of the current fiscal year were
$1.15 billion and $89.3 million compared with $1.19 billion and $81.3 million
for the nine months of fiscal year 1998. Although sales were affected by the
sale of a division in the first quarter, the shift into the production phase on
certain defense electronics programs and the continued streamlining of operating
and cost structures contributed to improved operating margins. During the
current quarter, the Company completed the acquisition of Denro, Inc. ("Denro")
which manufactures voice and data electronic switching equipment and data
recorders used in air traffic control. Denro reported sales of approximately $35
million for its fiscal year ended November 1998. Backlog for the Advanced
Electronics segment amounted to $1.36 billion at April 30, 1999 compared with
$1.46 billion at July 31, 1998.
The Information Systems segment reported sales and operating profit of
$425.6 million and $13.2 million for the third quarter of fiscal year 1999,
compared with $314.6 million and $16.3 million for the third quarter of the
prior year. For the first nine months of the current fiscal year, sales and
operating profit were $1.22 billion and $53.6 million compared with $829.4
million and $48.8 million for the same period of fiscal year 1998. The
acquisition of TASC, Inc. ("TASC") in April 1998 and higher volume on various
contracts at the Company's PRC Inc. subsidiary ("PRC") generated a significant
improvement in sales. However, costs incurred on several programs in the early
stages of development at the Data Systems division and investments incurred to
develop the commercial information technology services of the Company's Litton
Enterprise Solutions, Inc. subsidiary ("LES") have continued to impact margins
for this segment. The Company is currently reviewing its strategic options
regarding the LES operation. Firm backlog at April 30, 1999 for the Information
Systems segment increased to $1.10 billion from $877.7 million at July 31, 1998.
In addition, TASC and PRC have non-firm, unfunded backlog with potential
contract values of $2.1 billion at April 30, 1999 compared with $1.8 billion at
July 31, 1998.
The Marine Engineering and Production segment reported sales and operating
profit of $302.3 million and $45.2 million for the current quarter, compared
with $279.5 million and $36.6 million for the prior year's third quarter. The
respective amounts for the nine months of fiscal year 1999 were $812.1 million
and $114.4 million compared with $740.9 million and $95.8 million for the nine
months of fiscal year 1998. These increases reflect a higher level of
construction activities on long-term contracts, partially offset by the effects
of the completion and delivery of an Aegis destroyer during the second quarter
of fiscal year 1999 and an Aegis destroyer and a sixth LHD class amphibious
assault ship during the second half of fiscal year 1998. Operating margins
benefited from increased earnings rates on programs maturing in the production
process and continued production efficiencies. Backlog for this segment was
$4.33 billion at April 30, 1999 compared with $3.47 billion at July 31, 1998.
Backlog bookings for the first nine months of the current fiscal year included a
contract signed with American Classic Voyages Co. to build two passenger cruise
ships, with an option for a third vessel, and the exercise of an option by the
U.S. Navy during the second quarter to build two additional destroyers. As
discussed in Note 6 of Notes to Consolidated Financial Statements, subsequent to
the end of the quarter the Company entered into a definitive merger agreement
with Avondale providing for the purchase of its common stock at $39.50 per share
in cash, for a total value of approximately $529 million. As a designer and
builder of military and commercial vessels, Avondale, along with the Company's
Ingalls Shipbuilding division, will strengthen Litton's position as a
world-class shipbuilder.
9
<PAGE> 10
PART I. FINANCIAL INFORMATION (CONTINUED)
The Electronic Components and Materials segment reported sales and
operating profit of $157.8 million and $26.6 million for the third quarter of
the current fiscal year compared with $155.9 million and $26.7 million for the
same period of the prior year. Sales and operating profit for the nine months of
the current fiscal year were $454.0 million and $77.0 million compared with
$442.8 million and $72.4 million for the nine months of fiscal year 1998.
Overall, sales for the segment were substantially comparable to the prior year's
periods, reflecting a leveling of demand for this segment's commercial
electronic products, while operating margins remained strong. During the current
quarter, the Company completed the acquisitions of Tarutin Company, Ltd.
("Tarutin") and Retconn Incorporated ("Retconn"), which have combined estimated
annual revenues of approximately $35 million. Located in Japan, Tarutin
manufactures paste solder and soldering products for the consumer electronics
and automobile industries. Retconn designs and manufactures coaxial connectors,
contacts, and cable harnesses for the wireless communications and computer
markets.
Net interest expense for the third quarter and nine months ended April 30,
1999 amounted to $16.9 million and $49.4 million compared with $14.4 million and
$35.7 million for the prior year's periods, respectively. Interest expense was
higher in the current year primarily as a result of the issuance of $300 million
in long-term notes and debentures along with short-term borrowings in connection
with the acquisition of TASC in April 1998 and a payment of prior years' taxes
during the second quarter of fiscal year 1998.
Cash and marketable securities amounted to $104.7 million at April 30, 1999
compared with $31.9 million at July 31, 1998. Cash flow from operations and
proceeds from the sale of a division, along with short-term borrowings, provided
the funds to meet operating needs, make capital expenditures, finance the
previously discussed acquisitions of Denro, Tarutin and Retconn and repurchase
687,100 shares of Common stock. Management believes that cash flow from
operations, along with borrowing capability, will be sufficient to meet
anticipated needs for the foreseeable future. At April 30, 1999, the Company had
credit commitments totaling $400 million of which approximately $150 million was
available for its general use and the remainder for replacement of existing
debt. The Company also has another revolving credit agreement totaling $400
million that serves as a back-up facility for its commercial paper program under
which $323.8 million was outstanding at April 30, 1999.
EURO CONVERSION
A majority of the European Union member countries converted to a common
currency, the "Euro" on January 1, 1999. The existing national currencies of the
participating countries will continue to be acceptable until January 1, 2002
after which the Euro will be the sole legal tender for the participating
countries. The Company is continuing to evaluate the economic and operational
impact of the Euro, including competition, pricing, contracts, taxation and
foreign currency exchange rate risk, but does not expect the Euro to have a
material effect on its financial condition or results of operations.
YEAR 2000 READINESS DISCLOSURES
The Company is continuing its process to address the potential impact of
the Year 2000 on its business systems, facilities, and products which may
include imbedded software. This program includes an assessment and inventory of
potential Year 2000 issues and detailed implementation plans for the required
modifications. The Company has also continued its process of replacing
manufacturing and business systems with more efficient and technologically up to
date systems that are also Year 2000 compliant. The process and progress is
monitored on a regular basis by a special corporate task group of management,
internal audit, and legal personnel, and reported to management and the Audit
and Compliance Committee of the Board of Directors.
The assessment and inventory phases have been completed and the
implementation of required changes is substantially complete. Testing of the
modifications implemented is currently underway and is expected to be completed
during fiscal year 1999, along with the remainder of the implementation phase.
The Company
10
<PAGE> 11
PART I. FINANCIAL INFORMATION (CONTINUED)
has also been in contact with major suppliers and customers and has received
written confirmation regarding their Year 2000 readiness and has tested certain
situations. Based on the foregoing, the Company does not anticipate significant
third party Year 2000 issues; however, there can be no assurance that
non-compliance by a supplier or other third parties will not occur. The Company
is developing contingency plans both in relation to internal systems,
facilities, and products and third parties to mitigate the impact of potential
non-compliance.
Incremental costs to address and achieve Year 2000 compliance are expensed
as incurred and have totaled approximately $19 million through April 30, 1999 of
which $10 million was expended during the first nine months of fiscal year 1999.
Incremental costs are expected to total approximately $24 million.
Although the Company cannot accurately predict the extent of operational
and financial impact resulting from any non-compliance, including that by a
third party, the Company does not believe there are any material risks related
to Year 2000 issues based on progress and results achieved to date.
SAFE HARBOR CAUTIONARY STATEMENT
This document contains forward-looking statements made in reliance upon the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements reflect management's current assumptions and
estimates of future performance and economic conditions, and are subject to
risks and uncertainties that could, and may well, cause actual results to differ
materially. Important factors that could cause actual results to differ from
those indicated by the forward-looking statements include, but are not limited
to, changes in the defense budgets, effects of industry consolidation,
successful development of technologies, and orders actually issued by the
government against IDIQ (indefinite delivery, indefinite quantity) contracts in
information technology markets different from those projected. The Company does
not undertake any obligation to publicly release any revisions to
forward-looking statements to reflect changes in risk factors, events,
circumstances or changes in management's expectations after the date of this
document.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See Part II, Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations," of the Company's Annual Report on Form
10-K for the fiscal year ended July 31, 1998 for a discussion of its exposure to
market risks. There has been no significant change during the nine months ended
April 30, 1999.
11
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Litton brought suit against Honeywell, Inc. ("Honeywell") for patent
infringement relating to the manufacture of ring laser gyro navigation systems
used in commercial aircraft. In August 1993, the jury rendered a verdict in
favor of Litton which the District Court rejected in January 1995. In July 1996,
the Federal Circuit Court of Appeals reversed the District Court's decision and
reinstated parts of the jury's verdict related to liability in favor of Litton
and ordered a new trial on the amount of damages. In March 1997, the U.S.
Supreme Court vacated the Court of Appeals' ruling and remanded the case to the
Court of Appeals for further consideration. On April 7, 1998, the Court of
Appeals reinstated its finding that the patent was valid, however, it remanded
the case back to the District Court for a determination on both liability and
damages. A new trial date has not been set.
Litton also brought suit against Honeywell for illegal monopolizing of the
market for inertial reference systems for large commercial air transport,
commuter, and business aircraft. In February 1996, a jury rendered a verdict in
favor of Litton. The District Court upheld the jury's verdict on liability, but
declined to enter the jury's damage award on the basis that Litton's damage
study did not disaggregate damages among legal and illegal conduct. A new trial
limited to the amount of damages resulted in a jury verdict on December 9, 1998,
in the amount of $250 million in favor of Litton. On January 27, 1999, U.S.
District Court Judge Mariana R. Pfaelzer entered a final judgment against
Honeywell at the $250 million which, by law, is trebled to $750 million, plus
post judgment interest from the date of entry of the final judgment and costs
and attorneys' fees. On May 20, 1999, the court heard Honeywell's post trial
motions but has not issued a ruling as of this date.
At meetings and discussions in February 1999, the United States Attorney's
Office for the Central District of California ("the Government") advised the
Company that it intended to bring criminal charges against the Company and
potentially against some present and former officers and employees as a result
of a lengthy investigation of the Company's payments to foreign consultants and
the reporting of those payments to the United States Government in connection
with sales to Taiwan, Greece, and possibly South Korea. While the Company
believes it has good and meritorious defenses to the potential charges, the
verdict in any trial cannot be predicted with certainty. The potential
administrative action also must be considered by the Company. These discussions
are continuing, however, the Company cannot at this time project the outcome.
The Company, through counsel, has engaged in discussions with the Government.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<S> <C>
Exhibit 4.1: $400,000,000 Credit Agreement dated March 24, 1999 among
Litton Industries, Inc., a group of banks and Morgan
Guaranty Trust Company of New York, as Agent.
Exhibit 4.2: Amendment No. 5 to the $400,000,000 Amended and Restated
Credit Agreement dated December 22, 1994 among Litton
Industries, Inc., a group of banks and Morgan Guaranty
Trust Company of New York, as Agent, and Wells Fargo
Bank, N.A., as Co-Agent.
Exhibit 27: Financial Data Schedule.
</TABLE>
(b) Reports on Form 8-K: There were no reports on Form 8-K filed during the
third quarter ended April 30, 1999.
12
<PAGE> 13
SIGNATURE
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.
LITTON INDUSTRIES, INC.
(Registrant)
By /s/ CAROL A. WIESNER
------------------------------------
Carol A. Wiesner
Vice President and Controller
(Chief Accounting Officer)
June 14, 1999
13
<PAGE> 1
EXHIBIT 4.1
CONFORMED COPY
$400,000,000
CREDIT AGREEMENT
dated as of
March 24, 1999
among
Litton Industries, Inc.,
The Banks Listed Herein
and
Morgan Guaranty Trust Company of New York,
as Administrative Agent
------------------------------------
J.P. Morgan Securities Inc.,
Arranger
Bank of America National Trust and Savings Association
and
The Chase Manhattan Bank,
Co-Documentation Agents
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions.................................................... 1
SECTION 1.02. Accounting Terms and Determinations............................16
SECTION 1.03. Types of Borrowings............................................17
ARTICLE 2
THE CREDITS
SECTION 2.01. Commitments to Lend............................................17
SECTION 2.02. Notice of Committed Borrowings.................................18
SECTION 2.03. Money Market Borrowings........................................18
SECTION 2.04. Notice to Banks; Funding of Loans..............................22
SECTION 2.05. Registry; Notes................................................23
SECTION 2.06. Maturity of Loans..............................................24
SECTION 2.07. Interest Rates.................................................24
SECTION 2.08. Facility Fee...................................................28
SECTION 2.09. Optional Termination or Reduction of Commitments...............28
SECTION 2.10. Scheduled Termination of Commitments...........................28
SECTION 2.11. Optional Prepayments...........................................28
SECTION 2.12. General Provisions as to Payments..............................29
SECTION 2.13. Funding Losses.................................................29
SECTION 2.14. Computation of Interest and Fees...............................30
SECTION 2.15. Regulation D Compensation......................................30
SECTION 2.16. Method of Electing Interest Rates..............................31
ARTICLE 3
CONDITIONS
SECTION 3.01. Effectiveness..................................................33
SECTION 3.02. Borrowings.....................................................34
ARTICLE 4
REPRESENTATIVES AND WARRANTIES
SECTION 4.01. Corporate Existence and Power..................................34
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention.........................................................35
SECTION 4.03. Binding Effect.................................................35
SECTION 4.04. Financial Information..........................................35
</TABLE>
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<TABLE>
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SECTION 4.05. Litigation.....................................................36
SECTION 4.06. Compliance with ERISA..........................................36
SECTION 4.07. Environmental Matters..........................................36
SECTION 4.08. Taxes..........................................................37
SECTION 4.09. Material Subsidiaries..........................................37
SECTION 4.10. Not an Investment Company......................................37
SECTION 4.11. Use of Proceeds................................................37
SECTION 4.12. Full Disclosure................................................37
SECTION 4.13. Year 2000 Compliance...........................................38
ARTICLE 5
COVENANTS
SECTION 5.01. Information....................................................38
SECTION 5.02. Maintenance of Property; Insurance.............................40
SECTION 5.03. Maintenance of Existence.......................................41
SECTION 5.04. Compliance with Laws...........................................41
SECTION 5.05. Leverage Ratio.................................................41
SECTION 5.06. Minimum Consolidated Net Worth.................................41
SECTION 5.07. Interest Coverage Ratio........................................41
SECTION 5.08. Subsidiary Debt Limitation.....................................41
SECTION 5.09. Negative Pledge................................................41
SECTION 5.10. Consolidations, Mergers and Sales of Assets....................42
SECTION 5.11. Limitation on Affiliate Transactions...........................42
ARTICLE 6
DEFAULTS
SECTION 6.01. Events of Default..............................................43
SECTION 6.02. Notice of Default..............................................45
ARTICLE 7
THE AGENTS
SECTION 7.01. Appointment and Authorization..................................45
SECTION 7.02. Administrative Agent and Affiliates............................45
SECTION 7.03. Action by Administrative Agent.................................46
SECTION 7.04. Consultation with Experts......................................46
SECTION 7.05. Liability of Administrative Agent..............................46
SECTION 7.06. Indemnification................................................46
SECTION 7.07. Credit Decision................................................47
SECTION 7.08. Successor Administrative Agent.................................47
</TABLE>
ii
<PAGE> 4
<TABLE>
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SECTION 7.09. Agents' Fees...................................................47
SECTION 7.10. Co-Documentation Agents........................................47
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair.......48
SECTION 8.02. Illegality.....................................................48
SECTION 8.03. Increased Cost and Reduced Return..............................49
SECTION 8.04. Taxes..........................................................51
SECTION 8.05. Base Rate Loans Substituted for Affected Fixed Rate Loans......52
SECTION 8.06. Substitution of Bank...........................................53
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices........................................................53
SECTION 9.02. No Waivers.....................................................54
SECTION 9.03. Expenses; Indemnification......................................54
SECTION 9.04. Sharing of Set-Offs............................................54
SECTION 9.05. Amendments and Waivers.........................................55
SECTION 9.06. Successors and Assigns.........................................55
SECTION 9.07. Designated Lenders.............................................57
SECTION 9.08. Collateral.....................................................58
SECTION 9.09. Governing Law; Submission to Jurisdiction......................58
SECTION 9.10. Counterparts; Integration......................................58
SECTION 9.11. WAIVER OF JURY TRIAL...........................................59
</TABLE>
Pricing Schedule
Commitment Schedule
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 Administrative Agent
Exhibit G - Assignment and Assumption Agreement
Exhibit H - Designation Agreement
Exhibit I - Extension Agreement
iii
<PAGE> 5
CREDIT AGREEMENT
AGREEMENT dated as of March 24, 1999 among LITTON INDUSTRIES, INC., the
BANKS listed on the signature pages hereof and MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Administrative Agent.
The parties hereto hereby 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.
"ADJUSTED CD RATE" has the meaning set forth in Section 2.07(b).
"ADMINISTRATIVE AGENT" means Morgan Guaranty Trust Company of New York
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 any Person (other than a Subsidiary) directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Borrower. For the purposes of this definition, "CONTROL" when
used with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"CONTROLLING" and "CONTROLLED" have meanings correlative to the foregoing.
"AGENT" means the Administrative Agent or a Co-Documentation Agent, and
"AGENTS" means any two or more of the foregoing.
<PAGE> 6
"APPLICABLE LENDING OFFICE" means, with respect to any Bank, (i) in the
case of its Domestic Loans, its Domestic Lending Office, (ii) in the case of its
Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case of its
Money Market Loans, its Money Market Lending Office.
"ASSESSMENT RATE" has the meaning set forth in Section 2.07(b).
"ASSIGNEE" has the meaning set forth in Section 9.06(c).
"BANK" means each financial institution listed on the signature pages
hereof, each Assignee which becomes a Bank pursuant to Section 9.06(c), and
their respective successors.
"BASE RATE" means, for any day, a rate per annum equal to the higher of
(i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal
Funds Rate for such day.
"BASE RATE LOAN" means 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 Section 2.16(a) or Article 8.
"BENEFIT ARRANGEMENT" means at any time an employee benefit plan within
the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan
and which is maintained or otherwise contributed to by any member of the ERISA
Group.
"BORROWER" means Litton Industries, Inc., a Delaware corporation, and
its successors.
"BORROWER'S 1998 FORM 10-K" means the Borrower's annual report on Form
10-K for the fiscal year ended July 31, 1998, as filed with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934.
"BORROWING" has the meaning set forth in Section 1.03.
"CD BASE RATE" has the meaning set forth in Section 2.07(b).
"CD LOAN" means a Committed Loan which bears interest at a CD Rate
pursuant to the applicable Notice of Committed Borrowing or Notice of Interest
Rate Election.
"CD MARGIN" means a rate per annum determined in accordance with the
Pricing Schedule.
2
<PAGE> 7
"CD RATE" means a rate of interest determined pursuant to Section
2.07(b) on the basis of an Adjusted CD Rate.
"CO-DOCUMENTATION AGENT" means each of Bank of America National Trust
and Savings Association and The Chase Manhattan Bank, in its capacity as a
co-documentation agent in respect of this Agreement, and "CO-DOCUMENTATION
AGENTS" means all of them.
"CD REFERENCE BANKS" means Bank of America National Trust and Savings
Association, The Chase Manhattan Bank and Morgan Guaranty Trust Company of New
York, or such other bank or banks as the Borrower and the Administrative Agent
may from time to time mutually designate.
"CHANGE OF CONTROL" means any of the following:
(a) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "EXCHANGE ACT")) (a "PERSON") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 30% or more of either (i) the then outstanding shares
of common stock of the Borrower (the "OUTSTANDING BORROWER COMMON
STOCK") or (ii) the combined voting power of the then outstanding voting
securities of the Borrower entitled to vote generally in the election of
directors (the "OUTSTANDING BORROWER VOTING SECURITIES"); provided,
however, that for purposes of this subsection (a), the following
acquisitions of stock shall not constitute a Change of Control: (i) any
acquisition by the Borrower, (ii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Borrower
or any corporation controlled by the Borrower or (iii) any acquisition
by any corporation pursuant to a transaction which complies with clauses
(i), (ii) and (iii) of subsection (c) of this definition;
(b) Individuals who, as of the date hereof, constitute the Board
of Directors of the Borrower (the "INCUMBENT BOARD") cease for any
reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the date
hereof whose election, or nomination for election by the Borrower's
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of
3
<PAGE> 8
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board;
(c) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
the Borrower (a "BUSINESS COMBINATION"), in each case, unless, following
such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively,
of the Outstanding Borrower Common Stock and Outstanding Borrower Voting
Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Borrower or
all or substantially all of the Borrower's assets either directly or
through one or more subsidiaries) in substantially the same proportions
as their ownership, immediately prior to such Business Combination of
the Outstanding Borrower Common Stock and Outstanding Borrower Voting
Securities, as the case may be, (ii) no Person (excluding any employee
benefit plan (or related trust) of the Borrower or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 30% or more of, respectively, the then outstanding shares of
common stock of the corporation resulting from such Business Combination
or the combined voting power of the then outstanding voting securities
of such corporation and (iii) at least a majority of the members of the
board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(d) Approval by the shareholders of the Borrower of a complete
liquidation or dissolution of the Borrower.
"COMMITMENT" means (i) with respect to each Bank listed on the
Commitment Schedule, the amount set forth opposite such Bank's name on the
Commitment Schedule and (ii) with respect to any Assignee which becomes a Bank
pursuant to Section 9.06(c), the amount of the transferor Bank's Commitment
assigned to it pursuant to Section 9.06(c), in each case as such amount may be
changed from time to time pursuant to Section 2.09 or 9.06(c); provided that, if
the context so requires, the term "Commitment" means the
4
<PAGE> 9
obligation of a Bank to extend credit up to such amount to the Borrower
hereunder.
"COMMITMENT SCHEDULE" means the Commitment Schedule attached hereto.
"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 EBIT" means, for any period, the sum of Consolidated Net
Income for such period plus, to the extent deducted in the determination of such
Consolidated Net Income, Consolidated Interest Expense for such period and the
provision for income taxes for such period.
"CONSOLIDATED EBITDA" means, for any period, the Consolidated Net Income
of the Borrower and its Consolidated Subsidiaries for such period before
cumulative effect of accounting changes, provision for income tax, interest
expense and depreciation and amortization expense.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the interest
expense of the Borrower and its Consolidated Subsidiaries determined on a
consolidated basis for such period.
"CONSOLIDATED NET INCOME" means, for any period, the net income of the
Borrower and its Consolidated Subsidiaries for such period, determined on a
consolidated basis.
"CONSOLIDATED NET WORTH" means at any date the shareholders' investment
in the Borrower and its Consolidated Subsidiaries determined on a consolidated
basis as of such date.
"CONSOLIDATED SUBSIDIARY" means at any date any Subsidiary or other
entity the accounts of which would be consolidated with those of the Borrower in
its consolidated financial statements if such statements were prepared as of
such date.
"DEBT" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all
5
<PAGE> 10
obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable and deferred employee compensation
obligations arising in the ordinary course of business, (iv) all obligations of
such Person as lessee which are capitalized in accordance with generally
accepted accounting principles, (v) all unpaid reimbursement obligations of such
Person in respect of letters of credit or similar instruments but only to the
extent that either (x) the issuer has honored a drawing thereunder or (y)
payment of such obligation is otherwise due under the terms thereof, (vi) all
Debt secured by a Lien on any asset of such Person, whether or not such Debt is
otherwise an obligation of such Person, and (vii) all Debt of others Guaranteed
by such Person.
"DEFAULT" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"DERIVATIVES OBLIGATIONS" of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
the foregoing transactions) or any combination of the foregoing transactions.
"DESIGNATED LENDER" means, with respect to any Designating Bank, an
Eligible Designee designated by it pursuant to Section 9.07(a) as a Designated
Lender for purposes of this Agreement.
"DESIGNATING BANK" means, with respect to each Designated Lender, the
Bank that designated such Designated Lender pursuant to Section 9.07(a).
"DIVIDEND PAYMENT" means (i) any dividend or other distribution on any
shares of the Borrower's 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.
"DOMESTIC BUSINESS DAY" means any day except a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required 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
6
<PAGE> 11
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; provided that any Bank may
so designate separate Domestic Lending Offices for its Base Rate Loans, on the
one hand, and its CD Loans, on the other hand, in which case all references
herein to the Domestic Lending Office of such Bank shall be deemed to refer to
either or both of such offices, as the context may require.
"DOMESTIC LOANS" means CD Loans or Base Rate Loans or both.
"DOMESTIC RESERVE PERCENTAGE" has the meaning set forth in Section
2.07(b).
"EFFECTIVE DATE" means the date this Agreement becomes effective in
accordance with Section 3.01.
"ELIGIBLE DESIGNEE" means a special purpose corporation that (i) is
organized under the laws of the United States or any state thereof, (ii) is
engaged in making, purchasing or otherwise investing in commercial loans in the
ordinary course of its business and (iii) issues (or the parent of which issues)
commercial paper rated at least A-1 or the equivalent thereof by S&P or P-1 or
the equivalent thereof by Moody's.
"ENVIRONMENTAL LAWS" means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, plans, injunctions, permits, concessions, grants, franchises,
licenses, agreements and other governmental restrictions relating to the
environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
wastes into the environment including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or wastes or the
clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA GROUP" means the Borrower, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
7
<PAGE> 12
"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 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.
"EURO-DOLLAR MARGIN" means a rate per annum determined in accordance
with the Pricing Schedule.
"EURO-DOLLAR RATE" means a rate of interest determined pursuant to
Section 2.07(c) on the basis of a London Interbank Offered Rate.
"EURO-DOLLAR REFERENCE BANKS" means the principal London offices of Bank
of America National Trust and Savings Association, The Chase Manhattan Bank and
Morgan Guaranty Trust Company of New York, or such other bank or banks as the
Borrower and the Administrative Agent may from time to time mutually designate.
"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 Section 6.01.
"FEDERAL FUNDS RATE" means, for any day (the "ACCRUAL DATE"), the rate
per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) equal to
the weighted average of the rates on overnight Federal funds transactions with
8
<PAGE> 13
members of the Federal Reserve System arranged by Federal funds brokers on the
accrual date, as published by the Federal Reserve Bank of New York on the
Domestic Business Day next succeeding such day, provided that (i) if the accrual
date is not a Domestic Business Day, the Federal Funds Rate for the accrual date
shall be such rate on such transactions on the next preceding Domestic Business
Day as so published on the next succeeding Domestic Business Day, and (ii) if no
such rate is so published on such next succeeding Domestic Business Day, the
Federal Funds Rate for the accrual date shall be the average rate quoted to
Morgan Guaranty Trust Company of New York on the accrual date (or next preceding
Domestic Business Day) on such transactions as determined by the Administrative
Agent.
"FIXED RATE LOANS" means CD Loans or Euro-Dollar Loans or Money Market
Loans (excluding Money Market LIBOR Loans bearing interest at the Base Rate
pursuant to Section 8.01(a)) or any combination of the foregoing.
"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, (ii) all Euro-Dollar
Loans having the same Interest Period at such time or (iii) all CD 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.
"GUARANTEE" by any Person means any obligation, contingent or otherwise,
of such Person directly or indirectly guaranteeing any Debt of any other Person
and, without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt (whether
arising by virtue of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the holder of such Debt of the payment
thereof or to protect such holder against loss in respect thereof (in whole or
in part), provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business. The term "GUARANTEE"
used as a verb has a corresponding meaning.
"HAZARDOUS SUBSTANCES" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives, by-products
and other hydrocarbons, or any substance having any constituent elements
displaying any of the foregoing characteristics.
9
<PAGE> 14
"INDEMNITEE" has the meaning set forth in Section 9.03(b).
"INTEREST COVERAGE RATIO" means, for any period, the ratio of
Consolidated EBIT for such period to Consolidated Interest Expense for such
period.
"INTEREST PERIOD" means:
(1) 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 an applicable Notice of Interest Rate Election and ending one, two,
three or six months thereafter, as the Borrower may elect in the applicable
Notice of Borrowing; provided that:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case such Interest Period
shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date;
(2) with respect to each CD Loan, the period commencing on the date of
borrowing specified in the applicable Notice of Borrowing or on the date
specified in an applicable Notice of Interest Rate Election and ending 30, 60,
90 or 180 days thereafter, as the Borrower may elect in the applicable Notice of
Borrowing; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b) below) which would otherwise end on a
day which is not a Euro-Dollar Business Day shall be extended to the
next succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date;
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(3) 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:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case such Interest Period
shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date;
(4) 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 14 days) as the Borrower may elect in accordance
with Section 2.03; provided that:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"LEVERAGE RATIO" means, at any date, the ratio of Total Borrowed Funds
at such date to Consolidated EBITDA for the period of four consecutive fiscal
quarters most recently ended on or prior to such date; provided that if there
shall have been an acquisition or disposition of operations during such period,
Consolidated EBITDA shall be calculated on a pro forma basis giving effect
thereto as if such acquisition or disposition had occurred on the first day of
such period.
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"LIBOR AUCTION" means a solicitation of Money Market Quotes setting
forth Money Market Margins based on the London Interbank Offered Rate pursuant
to Section 2.03.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, the Borrower or any Subsidiary shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset.
"LOAN" means a Committed Loan or a Money Market Loan and "LOANS" means
Committed Loans or Money Market Loans or any combination of the foregoing.
"LONDON INTERBANK OFFERED RATE" has the meaning set forth in Section
2.07(c).
"MATERIAL DEBT" means Debt (other than the Notes) of the Borrower and/or
one or more of its Subsidiaries, arising in one or more related or unrelated
transactions, in an aggregate principal amount exceeding $25,000,000.
"MATERIAL FINANCIAL OBLIGATIONS" means a principal amount of Debt and/or
payment obligations in respect of Derivatives Obligations of the Borrower and/or
one or more of its Subsidiaries, arising in one or more related or unrelated
transactions, exceeding in the aggregate $25,000,000.
"MATERIAL PLAN" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $10,000,000.
"MATERIAL SUBSIDIARY" means a Subsidiary, including its Subsidiaries,
which meets any of the following conditions:
(1) the Borrower's and its other Subsidiaries' investments in
and advances to the Subsidiary exceed 5 percent of the total assets of
the Borrower and its Subsidiaries consolidated as of the end of the most
recently completed fiscal year; or
(2) the Borrower's and its other Subsidiaries' proportionate
share of the total assets (after intercompany eliminations) of the
Subsidiary exceeds 5 percent of the total assets of the Borrower and its
Subsidiaries consolidated as of the end of the most recently completed
fiscal year; or
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(3) the Borrower's and its other Subsidiaries' equity in the
income from continuing operations before income taxes, extraordinary
items and cumulative effect of a change in accounting principle of the
Subsidiary exceeds 5 percent of such income of the Borrower and its
Subsidiaries consolidated for the most recently completed fiscal year.
Computational note: For purposes of making the prescribed income test
the following guidance should be applied:
1. When a loss has been incurred by either the Borrower and its
Subsidiaries consolidated or the tested Subsidiary, but not both, the
equity in the income or loss of the tested Subsidiary should be excluded
from the income of the Borrower and its Subsidiaries consolidated for
purposes of the computation.
2. If income of the Borrower and its Subsidiaries consolidated
for the most recent fiscal year is at least 5 percent lower than the
average of the income for the last five fiscal years, such average
income should be substituted for purposes of the computation. Any loss
years should be omitted for purposes of computing average income.
"MINIMUM COMPLIANCE LEVEL" means, at any date, an amount equal to the
sum of (i) $925,000,000 plus (ii) for each fiscal quarter of the Borrower
commencing after October 31, 1998 and on or prior to such date for which
Consolidated Net Income is a positive number, an amount equal to 50% of
Consolidated Net Income for such fiscal quarter plus (iii) for each issuance
and/or sale subsequent to October 31, 1998 and on or prior to such date by the
Borrower of shares of its capital stock, an amount equal to 100% of the amount
by which Consolidated Net Worth is increased on account of such transaction.
"MONEY MARKET ABSOLUTE RATE" has the meaning set forth in Section
2.03(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
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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(a)).
"MONEY MARKET LOAN" means a Money Market LIBOR Loan or a Money Market
Absolute Rate Loan.
"MONEY MARKET MARGIN" has the meaning set forth in Section 2.03(d).
"MONEY MARKET QUOTE" means an offer by a Bank to make a Money Market
Loan in accordance with Section 2.03.
"MULTIEMPLOYER PLAN" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions in an
amount exceeding $1,000,000 per annum or has within the preceding five plan
years made such contributions, including for these purposes any Person which
ceased to be a member of the ERISA Group during such five year period.
"NOTES" means promissory notes of the Borrower, substantially in the
form of Exhibit A hereto, evidencing the obligation of the Borrower to repay the
Loans, and "NOTE" means any one of such promissory notes issued hereunder.
"NOTICE OF BORROWING" means a Notice of Committed Borrowing (as defined
in Section 2.02) or a Notice of Money Market Borrowing (as defined in Section
2.03(f)).
"NOTICE OF INTEREST RATE ELECTION" has the meaning set forth in Section
2.16.
"PARENT" means, with respect to any Bank, any Person controlling such
Bank.
"PARTICIPANT" has the meaning set forth in Section 9.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
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"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"PLAN" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"PRICING SCHEDULE" means the Schedule attached hereto identified as
such.
"PRIME RATE" means the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York in New York City from time to time as its
Prime Rate.
"QUARTERLY PAYMENT DATES" means each March 31, June 30, September 30 and
December 31.
"REFERENCE BANKS" means the CD Reference Banks or the Euro-Dollar
Reference Banks, as the context may require, and "REFERENCE BANK" means any one
of such Reference Banks.
"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 55% of the
aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding at least 55% of the aggregate unpaid principal amount of the
Loans.
"REVOLVING CREDIT PERIOD" means the period from and including the
Effective Date to but not including the Termination Date.
"SUBSIDIARY" means any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by the Borrower (or, if such term is used with
reference to another Person, by such other Person).
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"TERMINATION DATE" means March 23, 2000 or such later date to which the
Termination Date shall have been extended pursuant to Section 2.01(a), 2.01(b),
or, if such day is not a Euro-Dollar Business Day, the next preceding
Euro-Dollar Business Day.
"TOTAL BORROWED FUNDS" means, at any date, the Debt of the Borrower and
its Consolidated Subsidiaries determined on a consolidated basis as of such
date.
"UNFUNDED LIABILITIES" means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
"UNITED STATES" means the United States of America, including the States
and the District of Columbia, but excluding its territories and possessions.
"WHOLLY-OWNED CONSOLIDATED SUBSIDIARY" means any Consolidated Subsidiary
all of the shares of capital stock or other ownership interests of which (except
directors' qualifying shares) are at the time directly or indirectly owned by
the Borrower.
SECTION 1.02. Accounting Terms and Determinations. Accounting Terms and
Determinations. Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all accounting determinations hereunder shall be
made, and all financial statements required to be delivered hereunder shall be
prepared in accordance with generally accepted accounting principles as in
effect from time to time, applied on a basis consistent (except for changes
concurred in by the Borrower's independent public accountants) with the most
recent audited consolidated financial statements of the Borrower and its
Consolidated Subsidiaries delivered to the Banks; 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
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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 a single date and for a single initial Interest Period. Borrowings
are classified for purposes of this Agreement either by reference to the pricing
of Loans comprising such Borrowing (e.g., a "BASE RATE BORROWING" is a Borrowing
comprised of Base Rate Loans and a "EURO-DOLLAR BORROWING" is a Borrowing
comprised of Euro-Dollar Loans) or by reference to 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
SECTION 2.01. Commitments to Lend. (a) During the Revolving Credit
Period each Bank severally agrees, on the terms and conditions set forth in this
Agreement, to make loans to the Borrower pursuant to this Section from time to
time in amounts such that the aggregate principal amount of Committed Loans by
such Bank at any one time outstanding shall not exceed the amount of its
Commitment. Each Borrowing under this Section shall be in an aggregate principal
amount of $15,000,000 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 2.01.
(b) The Termination Date may be extended in the manner set forth in this
subsection (b) for a period of 364 days from the Termination Date then in
effect. If the Borrower wishes to request an extension of the Termination Date,
it shall give written notice to that effect to the Administrative Agent not less
than 40 nor more than 55 days prior to the Termination Date then in effect,
whereupon the Administrative Agent shall promptly notify each of the Banks of
such request. Each Bank will use its best efforts to respond to such request,
whether
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affirmatively or negatively, as it may elect in its sole discretion, within 20
days of such notice to the Administrative Agent. If less than all Banks respond
affirmatively to such request within such 20 days, then the Borrower may request
the Banks that do not elect to extend the Termination Date to assign their
Commitments in their entirety, no later than 5 days prior to the Termination
Date then in effect, to one or more Assignees pursuant to Section 9.06 which
Assignees will agree to extend the Termination Date. If all Banks (including
such Assignees and excluding their respective transferor Banks) respond
affirmatively, then, subject to receipt by the Administrative Agent of
counterparts of an Extension Agreement in substantially the form of Exhibit I
hereto duly completed and signed by all of the parties thereto, the Termination
Date shall be extended to the date specified above.
SECTION 2.02. Notice of Committed Borrowings. The Borrower shall give
the Administrative Agent notice (a "NOTICE OF COMMITTED BORROWING") not later
than 10:30 A.M. (New York City time) on (x) the date of each Base Rate
Borrowing, (y) the second Domestic Business Day before each CD Borrowing and (z)
the third Euro-Dollar Business Day before each Euro-Dollar Borrowing,
specifying:
(a) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Domestic Borrowing or a Euro-Dollar
Business Day in the case of a Euro-Dollar Borrowing,
(b) the aggregate amount of such Borrowing,
(c) whether the Loans comprising such Borrowing are to bear
interest initially at the Base Rate, a CD Rate or a Euro-Dollar Rate;
and
(d) in the case of a Fixed Rate Borrowing, the duration of the
initial Interest Period applicable thereto, subject to the provisions of
the definition of Interest Period.
SECTION 2.03. Money Market Borrowings. (a) The Money Market Option. In
addition to Committed Borrowings pursuant to Section 2.01, the Borrower may, as
set forth in this Section, request the Banks during the Revolving Credit Period
to make offers to make Money Market Loans to the Borrower. The Banks may, but
shall have no obligation to, make such offers and the Borrower may, but shall
have no obligation to, accept any such offers in the manner set forth in this
Section.
(b) Money Market Quote Request. When the Borrower wishes to request
offers to make Money Market Loans under this Section, it shall transmit to the
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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 no
later than 10:30 A.M. (New York City time) on (x) the fifth Euro-Dollar Business
Day prior to the date of Borrowing proposed therein, in the case of a LIBOR
Auction or (y) the Domestic Business Day next preceding the date of Borrowing
proposed therein, in the case of an Absolute Rate Auction (or, in either case,
such other time or date as the Borrower and the 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
$15,000,000 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.
(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
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the requirements of this subsection 2.03(d)(i) 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. (New York City time) on the fourth Euro-Dollar Business Day prior
to the proposed date of Borrowing, in the case of a LIBOR Auction or (y)
9:30 A.M. (New York City time) on the proposed date of Borrowing, in the
case of an Absolute Rate Auction (or, in either case, such other time or
date as the Borrower and the 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) 1:00 P.M. (New York City time) on
the fourth Euro-Dollar Business Day prior to the proposed date of
Borrowing, in the case of a LIBOR Auction or (y) 9:15 A.M. (New York
City time) on the proposed date of Borrowing, in the case of an Absolute
Rate Auction. Subject to Articles 3 and 4, 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 (d)(ii);
(B) contains qualifying, conditional or similar language
(other than the limitation set forth in clause (ii)(B)(z)
above);
(C) proposes terms other than or in addition to those set
forth in the applicable Invitation for Money Market Quotes; or
(D) arrives after the time set forth in subsection (d)(i).
(e) Notice to Borrower. The 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 (A) the aggregate principal amount of Money
Market Loans for which offers have been received for each Interest Period
specified in the related Money Market Quote Request, (B) the respective
principal amounts and Money Market Margins or Money Market Absolute Rates, as
the case may be, so offered and (C) if applicable, limitations on the aggregate
principal amount of Money Market Loans for which offers in any single Money
Market Quote may be accepted.
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(f) Acceptance and Notice by Borrower. Not later than 10:30 A.M. (New
York City time) on (x) the third Euro-Dollar Business Day prior to the proposed
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 (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
$15,000,000 or a larger multiple of $1,000,000,
(iii) acceptance of offers may only be made on the basis of
ascending Money Market Margins or Money Market Absolute Rates, as the
case may be, and
(iv) the Borrower may not accept any offer that is described in
subsection (d)(iii) or that otherwise fails to comply with the
requirements of this Agreement.
(g) Allocation by 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, the Administrative Agent shall promptly notify each Bank
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of the contents thereof and of such Bank's share (if any) of such Borrowing and
such Notice of Borrowing shall not thereafter be revocable by the Borrower.
(b) Not later than 12:00 Noon (New York City time) on the date of each
Borrowing, each Bank participating therein shall make available its share of
such Borrowing, in Federal or other funds immediately available in New York
City, 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
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 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 2.04 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, if such Bank
shall fail to do so within one Domestic Business Day, 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 the Federal Funds 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; Notes. (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 presumptively correct, absent manifest error. Failure to make any such
recordation, or any error in such recordation, shall not affect the Borrower's
obligations hereunder.
(b) The Borrower hereby agrees that, promptly upon the request of any
Bank at any time, the Borrower shall deliver to such Bank a duly executed Note,
in substantially the form of Exhibit A hereto, payable to the order of such Bank
and representing the obligation of the Borrower to pay the unpaid principal
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amount of the Loans made by such Bank, with interest as provided herein on the
unpaid principal amount from time to time outstanding.
(c) Each Bank shall record the date, amount and maturity of each Loan
made by it and the date and amount of each payment of principal made by the
Borrower with respect thereto, and each Bank receiving a Note pursuant to this
Section, if such Bank so elects in connection with any transfer or enforcement
of any Note, may endorse on the schedule forming a part thereof appropriate
notations to evidence the foregoing information with respect to each such Loan
then outstanding; provided that the failure of such Bank to make any such
recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Notes. Such Bank is hereby irrevocably authorized by the
Borrower so to endorse any Note and to attach to and make a part of any Note a
continuation of any such schedule as and when required.
(d) Each Bank may, by notice to the Borrower and the Administrative
Agent, request that its Loans of a particular type be evidenced by a separate
Note in an amount equal to the aggregate unpaid principal amount of such Loans.
Each such Note shall contain appropriate modifications to reflect the fact that
it evidences solely Loans of the relevant type. Each reference in this Agreement
to the "Note" of such Bank shall be deemed to refer to and include any or all of
such Notes, as the context may require.
SECTION 2.06. Maturity of Loans. (a) Each Committed Loan shall mature,
and the principal amount thereof shall be due and payable (together with
interest accrued 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
interest accrued 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
Quarterly Payment Date and at maturity. Any overdue principal of or interest on
any Base Rate Loan shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the sum of 2% plus the rate otherwise
applicable to Base Rate Loans for such day.
(b) Each CD Loan shall bear interest on the outstanding principal amount
thereof, for each day during each Interest Period applicable thereto, at a
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rate per annum equal to the sum of the CD Margin for such day plus the Adjusted
CD Rate applicable to such Interest Period; provided that if any CD Loan shall,
as a result of clause (2)(b) of the definition of Interest Period, have an
Interest Period of less than 30 days, such CD Loan shall bear interest during
such Interest Period at the rate applicable to Base Rate Loans during such
period. Such interest shall be payable for each Interest Period on the last day
thereof and, if such Interest Period is longer than 90 days, at intervals of 90
days after the first day thereof. Any overdue principal of or interest on any CD
Loan shall bear interest, payable on demand, for each day until paid at a rate
per annum equal to the sum of 2% plus the higher of (i) the sum of the CD Margin
for such day plus the Adjusted CD Rate applicable to such Loan on the day before
such payment was due and (ii) the rate applicable to Base Rate Loans for such
day.
The "ADJUSTED CD RATE" applicable to any Interest Period means a rate
per annum determined pursuant to the following formula:
| CDBR |
ACDR = | -------------- |* + AR
| 1.00 - DRP |
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
The "CD BASE RATE" applicable to any Interest Period is the rate of
interest determined by the Administrative Agent to be the average (rounded
upward, if necessary, to the next higher 1/100 of 1%) of the prevailing rates
per annum bid at 10:00 A.M. (New York City time) (or as soon thereafter as
practicable) on the first day of such Interest Period by two or more New York
certificate of deposit dealers of recognized standing for the purchase at face
value from each CD Reference Bank of its certificates of deposit in an amount
comparable to the principal amount of the CD Loan of such CD Reference Bank to
which such Interest Period applies and having a maturity comparable to such
Interest Period.
"DOMESTIC RESERVE PERCENTAGE" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including without limitation any
- --------
*The amount in brackets being rounded upward, if necessary, to the next
higher 1/100 of 1%
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basic, supplemental or emergency reserves) for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of new non-personal time deposits in dollars in New York City having a
maturity comparable to the related Interest Period and in an amount of $100,000
or more. The Adjusted CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Domestic Reserve Percentage.
"ASSESSMENT RATE" means for any day the annual assessment rate in effect
on such day which is payable by a member of the Bank Insurance Fund classified
as adequately capitalized and within supervisory subgroup "A" (or a comparable
successor assessment risk classification) within the meaning of 12 C.F.R.
Section 327.4(a) (or any successor provision) to the Federal Deposit Insurance
Corporation (or any successor) for such Corporation's (or such successor's)
insuring time deposits at offices of such institution in the United States. The
Adjusted CD Rate shall be adjusted automatically on and as of the effective date
of any change in the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for 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 Euro-Dollar Reference Banks in the London interbank market at
approximately 11:00 A.M. (London time) two Euro-Dollar Business Days before the
first day of such Interest Period in an amount approximately equal to the
principal amount of the Euro-Dollar Loan of such Euro-Dollar Reference Bank to
which such Interest Period is to apply and for a period of time comparable to
such Interest Period.
(d) Any overdue principal of or interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day from and including the date
payment thereof was due to but excluding the date of actual payment, at a rate
per annum equal to the sum of 2% plus the higher of (i) the sum of the
Euro-Dollar Margin for such day plus the London Interbank Offered Rate
applicable to such Loan on the day before such payment was due and (ii) the
Euro-Dollar Margin for such day plus the quotient obtained (rounded upward, if
necessary, to the next higher 1/100 of 1%) by dividing (x) the average (rounded
upward, if necessary, to
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<PAGE> 31
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 Euro-Dollar Reference Banks are
offered to such Euro-Dollar Reference Bank in the London interbank market for
the applicable period determined as provided above by (y) 1.00 minus the
Euro-Dollar Reserve Percentage (or, if the circumstances described in clause (a)
or (b) of Section 8.01 shall exist, at a rate per annum equal to the sum of 2%
plus the rate applicable to Base Rate Loans for such day).
(e) Subject to Section 8.01(a), each Money Market LIBOR Loan shall bear
interest on the outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of the London Interbank
Offered Rate for such Interest Period (determined in accordance with Section
2.07(c) as if the related Money Market LIBOR Borrowing were a 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.
(f) 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.
(g) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Administrative Agent as contemplated by this Section 2.07. 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. Facility Fee. The Borrower shall pay to the Administrative
Agent for the account of the Banks ratably in proportion to their Commitments a
facility fee at the Facility Fee Rate (determined daily in accordance with the
Pricing Schedule). Such facility fee shall accrue (i) from and including the
Effective Date to but excluding the Termination Date (or earlier 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 the
Termination Date or such earlier 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. Accrued fees under this Section shall be payable
quarterly in arrears on each Quarterly Payment Date and upon the date of
termination of the Commitments in their entirety (and, if later, the date the
Loans shall be repaid in their entirety).
SECTION 2.09. Optional Termination or Reduction of Commitments. The
Borrower may, upon at least three 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 any larger multiple thereof, the aggregate
amount of the Commitments in excess of the aggregate outstanding principal
amount of the Loans.
SECTION 2.10. Scheduled 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 (i) upon at
least one Domestic Business Day's notice to the Administrative Agent, prepay any
Base Rate Borrowing (or any Money Market Borrowing bearing interest at the Base
Rate pursuant to Section 8.01(a)), (ii) upon at least three Domestic Business
Days' notice to the Administrative Agent, subject to Section 2.13, prepay any CD
Borrowing and (iii) upon at least three Euro-Dollar Business Days' notice to the
Administrative Agent, subject to Section 2.13, prepay any Euro-Dollar Borrowing,
in whole at any time, or from time to time in part in amounts aggregating
$15,000,000 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.
Each such optional prepayment shall be applied to prepay ratably the Loans of
the several Banks included in such Borrowing.
(b) Except as provided in Section 2.11(a), 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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<PAGE> 33
(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, not later than 12:00 Noon (New York City time) on the date when due,
in Federal or other funds immediately available in New York City, to the
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 Domestic Loans
or of fees shall be due on a day which is not a Domestic Business Day, the date
for payment thereof shall be extended to the next succeeding Domestic Business
Day. Whenever any payment of principal of, or interest on, the Euro-Dollar Loans
shall be due on a day which is not a Euro-Dollar Business Day, the date for
payment thereof shall be extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in another calendar month, in
which case the date for payment thereof shall be the next preceding Euro-Dollar
Business Day. Whenever any payment of principal of, or interest on, the Money
Market Loans shall be due on a day which is not a Euro-Dollar Business Day, the
date for payment thereof shall be extended to the next succeeding Euro-Dollar
Business Day. 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 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 to a different type of Loan (whether such payment or conversion is
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<PAGE> 34
pursuant to Article 2, 6 or 8 or otherwise) on any day other than the last day
of an Interest Period applicable thereto, or the last day of an applicable
period fixed pursuant to Section 2.07(d), or if the Borrower fails to borrow,
prepay, convert or continue any Fixed Rate Loan after notice has been given to
any Bank in accordance with Section 2.04(a), 2.11(c) or 2.16(c), 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 such payment or conversion 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, setting forth
the basis of calculation thereof, which certificate shall be conclusive in the
absence of manifest error.
SECTION 2.14. Computation of Interest and Fees. Interest based on the
Prime 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
facility 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. For so long as any Bank
maintains reserves against "EUROCURRENCY LIABILITIES" (or 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 such Bank to United
States residents), and as a result the cost to such Bank (or its Euro-Dollar
Lending Office) of making or maintaining its Euro-Dollar Loans is increased,
then such Bank may require the Borrower to pay, contemporaneously (or at such
other time or times as the Borrower and such Bank may mutually agree) 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 up to but not exceeding the
excess of (i) (A) the applicable London Interbank Offered Rate divided by (B)
one minus the Euro-Dollar Reserve Percentage over (ii) the applicable London
Interbank Offered Rate. Any Bank wishing to require 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 commencing at least three Euro-Dollar Business Days after the
giving of such notice and (y) shall furnish to the Borrower at least five
Euro-Dollar Business Days prior to each date on which interest is payable on the
Euro-Dollar Loans (or at such other time or times as the Borrower and such Bank
may mutually agree) an officer's certificate setting forth the amount to which
such Bank is then entitled
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<PAGE> 35
under this Section 2.15 (which shall be consistent with such Bank's good faith
estimate of the level at which the related reserves are maintained by it). Each
such certificate shall be accompanied by such information as the Borrower may
reasonably request as to the computation set forth therein.
SECTION 2.16. Method of Electing Interest Rates. (a) 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 to Section 2.16(d)
and the provisions of Article 8), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect to
convert such Loans to CD Loans as of any Domestic Business Day or to
Euro-Dollar Loans as of any Euro-Dollar Business Day;
(ii) if such Loans are CD Loans, the Borrower may elect to
convert such Loans to Base Rate Loans as of any Domestic Business Day or
convert such Loans to Euro-Dollar Loans as of any Euro-Dollar Business
Day or continue such Loans as CD Loans for an additional Interest
Period, subject to Section 2.13 if any such conversion is effective on
any day other than the last day of an Interest Period applicable to such
Loans; and
(iii) if such Loans are Euro-Dollar Loans, the Borrower may
elect to convert such Loans to Base Rate Loans as of any Domestic
Business Day or convert such Loans to CD Loans as of any Euro-Dollar
Business Day or elect to continue such Loans as Euro-Dollar Loans for an
additional Interest Period, subject to Section 2.13 if any such
conversion is effective on any day other than the last day of an
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. (New York City time) on the third Euro-Dollar Business Day
before the conversion or continuation selected in such notice is to be
effective (unless the relevant Loans are to be converted from Domestic
Loans of one type to Domestic Loans of the other type or are CD Loans to
be continued as CD Loans for an additional Interest Period, in which
case such notice shall be delivered to the Administrative Agent not
later than 10:30 A.M. (New York City time) on the second Domestic
Business Day before such conversion or continuation is to be effective).
A Notice of Interest Rate Election may, if it so specifies, apply to
only a portion of the
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<PAGE> 36
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 at least
$15,000,000 (unless such portion is comprised of Base Rate Loans). If no
such notice is timely received before the end of an Interest Period for
any Group of CD Loans or 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.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such notice
applies;
(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 Section 2.16(a) above;
(iii) if the Loans comprising such Group are to be converted,
the new type of Loans and, if the Loans resulting from such conversion
are to be CD Loans or Euro-Dollar Loans, the duration of the next
succeeding Interest Period applicable thereto; and
(iv) if such Loans are to be continued as CD Loans or
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.
(c) Promptly after receiving a Notice of Interest Rate Election from the
Borrower pursuant to Section 2.16(a) above, the Administrative Agent shall
notify each Bank of the contents thereof and such notice shall not thereafter be
revocable by the Borrower.
(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,
CD Loans or Euro-Dollar Loans if (i) the aggregate principal amount of any Group
of CD Loans or Euro-Dollar Loans created or continued as a result of such
election would be less than $15,000,000 or (ii) a Default shall have occurred
and be continuing when the Borrower delivers notice of such election to the
Administrative Agent.
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<PAGE> 37
(e) If any Committed Loan is converted to a different type of Loan, the
Borrower shall pay, on the date of such conversion, the interest accrued to such
date on the principal amount being converted.
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 Administrative 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 Administrative Agent in form satisfactory to it of telegraphic,
telex or other written confirmation from such party of execution of a
counterpart hereof by such party);
(b) receipt by the Administrative Agent of an opinion of the
principal legal officer of the Borrower, substantially in the form of
Exhibit E hereto and covering such additional matters relating to the
transactions contemplated hereby as the Required Banks may reasonably
request;
(c) receipt by the Administrative Agent of an opinion of Davis
Polk & Wardwell, special counsel for the Administrative Agent,
substantially in the form of Exhibit F hereto and covering such
additional matters relating to the transactions contemplated hereby as
the Required Banks may reasonably request;
(d) receipt by the Administrative Agent of all documents it may
reasonably request relating to the existence of the Borrower, the
corporate authority for and the validity of this Agreement and the
Notes, and any other matters relevant hereto, all in form and substance
satisfactory to the Administrative Agent; and
(e) receipt by the Administrative Agent of evidence satisfactory
to it that the participation fees for the account of the Banks in the
respective amounts heretofore mutually agreed shall have been paid in
full.
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<PAGE> 38
provided that this Agreement shall not become effective or binding on any party
hereto unless all of the foregoing conditions are satisfied not later than April
15, 1999. The Administrative Agent shall promptly notify the Borrower and each
Bank of the effectiveness of this Agreement, and such notice shall be conclusive
and binding on all parties hereto.
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 shall be true on and as of the date
of such Borrowing.
Each Borrowing hereunder shall be deemed to be a representation and
warranty by the Borrower on the date of such Borrowing as to the facts specified
in clauses (b), (c) and (d) of this Section.
ARTICLE 4
REPRESENTATIVES AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The Borrower is a
corporation duly incorporated, validly existing and in good standing under the
laws of Delaware, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.
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SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of this
Agreement and the Notes are within the Borrower's corporate powers, have been
duly authorized by all necessary corporate action, require no action by or in
respect of, or filing with, any governmental body, agency or official and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the certificate of incorporation or by-laws of the Borrower or
of any agreement, judgment, injunction, order, decree or other instrument
binding upon the Borrower or result in the creation or imposition of any Lien on
any asset of the Borrower or any of its Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Borrower and each Note, when executed and delivered in
accordance with this Agreement, will constitute a valid and binding obligation
of the Borrower, in each case enforceable in accordance with its terms.
SECTION 4.04. Financial Information. (a) The consolidated balance sheets
of the Borrower and its Consolidated Subsidiaries as of July 31, 1997 and 1998
and the related consolidated statements of operations, shareholders' investment
and cash flows for each of the three years ended July 31, 1998, reported on by
Deloitte & Touche and set forth in the Borrower's 1998 Form 10-K, a copy of
which has been delivered to each of the Banks, fairly present, in conformity
with generally accepted accounting principles, the consolidated financial
position of the Borrower and its Consolidated Subsidiaries as of such dates and
their consolidated results of operations and cash flows for such fiscal years.
(b) The consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of October 31, 1998 and the related consolidated statements of
operations and cash flows for the three months then ended, set forth in the
Borrower's Quarterly Report on Form 10-Q for the quarter then ended, a copy of
which has been delivered to each of the Banks, fairly present, in conformity
with generally accepted accounting principles applied on a basis consistent with
the financial statements referred to in subsection (a) of this Section, the
consolidated financial position of the Borrower and its Consolidated
Subsidiaries as of such date and their consolidated results of operations and
cash flows for such three month period (subject to normal year-end adjustments).
(c) Since October 31, 1998 there has been no material adverse change in
the business, financial position, results of operations or prospects of the
Borrower and its Consolidated Subsidiaries, considered as a whole.
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SECTION 4.05. Litigation. (a) Except for actions, suits or proceedings
(i) described in the Borrower's 1998 Form 10-K or (ii) commenced after the date
of this Agreement and disclosed in writing to the Banks, there is no action,
suit or proceeding pending against, or to the knowledge of the Borrower
threatened against or affecting, the Borrower or any of its Subsidiaries before
any court or arbitrator or any governmental body, agency or official an adverse
decision in which might materially adversely affect the business, consolidated
financial position or consolidated results of operations of the Borrower and its
Consolidated Subsidiaries taken as a whole.
(b) Since the date of the Borrower's 1998 Form 10-K, there has been no
change in the status of the actions, suits and proceedings described therein
which materially and adversely affects the business, financial position, results
of operations or prospects of the Borrower and its Consolidated Subsidiaries,
considered as a whole.
(c) There is no action, suit or proceeding pending against, or to the
knowledge of the Borrower threatened against or affecting, the Borrower or any
of its Subsidiaries before any court or arbitrator or any governmental body,
agency or official which in any manner questions the validity of this Agreement
or the Notes.
SECTION 4.06. Compliance with ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Internal Revenue Code or (iii)
incurred any liability under Title IV of ERISA other than a liability to the
PBGC for premiums under Section 4007 of ERISA.
SECTION 4.07. Environmental Matters. In the ordinary course of its
business, the Borrower conducts an ongoing review of the effect of Environmental
Laws on the business, operations and properties of the Borrower and its
Subsidiaries, in the course of which it identifies and evaluates associated
liabilities and costs (including, without limitation, any capital or operating
expenditures required for clean-up or closure of properties presently or
previously owned, any capital or operating expenditures required to achieve or
maintain
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compliance with environmental protection standards imposed by law or as a
condition of any license, permit or contract, any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat, any costs or liabilities in connection with off-site disposal
of wastes or Hazardous Substances, and any actual or potential liabilities to
third parties, including employees, and any related costs and expenses). On the
basis of this review, and based upon conditions of which the Borrower has
knowledge and upon its estimates of the costs of compliance with and/or
remediation mandated by Environmental Laws, the Borrower has reasonably
concluded that Environmental Laws are unlikely to have a material adverse effect
on the business, financial condition, results of operations or prospects of the
Borrower and its Consolidated Subsidiaries, considered as a whole.
SECTION 4.08. Taxes. The Borrower and its Subsidiaries have filed all
United States Federal income tax returns and all other material tax returns
which are required to be filed by them and have paid all taxes due pursuant to
such returns or pursuant to any assessment received by the Borrower or any
Subsidiary. In the Borrower's opinion, all material tax liabilities were
adequately provided for as of July 31, 1998 and are now so provided for in the
books of the Borrower and its Consolidated Subsidiaries.
SECTION 4.09. Material Subsidiaries. Each of the Borrower's Material
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted.
SECTION 4.10. Not an Investment Company. The Borrower is not an
"INVESTMENT COMPANY" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.11. Use of Proceeds. The proceeds of the loans under this
Agreement will be used for general corporate purposes. None of such proceeds
will be used, directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of buying or carrying any "MARGIN STOCK", within the
meaning of Regulation U.
SECTION 4.12. Full Disclosure. All information heretofore furnished by
the Borrower to any Agent or Bank for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all such information
hereafter furnished by the Borrower to any Agent or Bank will be, true and
accurate in all material respects on the date as of which such information is
stated
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or certified. The Borrower has disclosed to the Banks in writing any and all
facts which materially and adversely affect or may affect (to the extent the
Borrower can now reasonably foresee), the business, operations or financial
condition of the Borrower and its Consolidated Subsidiaries, taken as a whole,
or the ability of the Borrower to perform its obligations under this Agreement.
SECTION 4.13. Year 2000 Compliance. The Borrower has (i) initiated a
review and assessment of all areas within the business and operations of the
Borrower and each of its Subsidiaries (including those areas affected by
suppliers and vendors) that could be adversely affected by the "Year 2000
Problem" (that is, the risk that computer applications used by it or any of its
Subsidiaries (or their respective suppliers and vendors) may be unable to
recognize and perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999), (ii) developed a plan and
timetable for addressing the Year 2000 Problem on a timely basis and (iii) to
date, implemented such plan in accordance with such timetable. The Borrower
reasonably believes that all computer applications that are material to the
business or operations of the Borrower or any of its Subsidiaries will on a
timely basis be able to perform properly date-sensitive functions for all dates
before and from and after January 1, 2000, except to the extent that a failure
to do so could not reasonably be expected to have a material adverse effect on
the business, financial condition, results of operations or prospects of the
Borrower and its Consolidated Subsidiaries, considered as a whole.
ARTICLE 5
COVENANTS
The Borrower agrees that, from and after the Effective Date for so long
as any Bank has any Commitment hereunder or any amount payable hereunder remains
unpaid:
SECTION 5.01. Information. The Borrower will deliver to each of the
Banks:
(a) as soon as available and in any event within 120 days after
the end of each fiscal year of the Borrower, a consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries as of the end of
such fiscal year and the related consolidated financial statements in
the form then required to be filed with the Securities and Exchange
Commission on
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Form 10-K or its then equivalent, all reported on by Deloitte & Touche
or other independent public accountants of nationally recognized
standing;
(b) as soon as available and in any event within 60 days after
the end of each of the first three quarters of each fiscal year of the
Borrower, a consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such quarter and the related
consolidated financial statements in the form then required to be filed
with the Securities and Exchange Commission on Form 10-Q or its then
equivalent, all certified (subject to normal year-end audit adjustments)
by the chief financial officer or the chief accounting officer of the
Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of
the chief financial officer or the chief accounting officer of the
Borrower (i) setting forth in reasonable detail the calculations
required to establish whether the Borrower was in compliance with the
requirements of Sections 5.05 to 5.08, inclusive, on the date of such
financial statements and (ii) stating whether any Default exists on the
date of such certificate and, if any Default then exists, setting forth
the details thereof and the action which the Borrower is taking or
proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements whether
anything has come to their attention to cause them to believe that any
Default existed on the date of such statements;
(e) within five days after any officer of the Borrower obtains
knowledge of any Default, if such Default is then continuing, a
certificate of the chief financial officer or the chief accounting
officer of the Borrower setting forth the details thereof and the action
which the Borrower is taking or proposes to take with respect thereto;
(f) promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and
proxy statements so mailed;
(g) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and reports on Forms 10-K,
10-Q and 8-K (or their equivalents) which the Borrower shall have filed
with the Securities and Exchange Commission;
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(h) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "REPORTABLE EVENT" (as
defined in Section 4043 of ERISA) with respect to any Material Plan
which might constitute grounds for a termination of such Plan under
Title IV of ERISA, or knows that the plan administrator of any Material
Plan has given or is required to give notice of any such reportable
event, a copy of the notice of such reportable event given or required
to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any
Multiemployer Plan is in reorganization, is insolvent or has been
terminated, a copy of such notice; (iii) receives notice from the PBGC
under Title IV of ERISA of an intent to terminate, impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or
appoint a trustee to administer, any Material Plan, a copy of such
notice; (iv) applies for a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code, a copy of such application;
(v) gives notice of intent to terminate any Material Plan under Section
4041(c) of ERISA, a copy of such notice and other information filed with
the PBGC; (vi) gives notice of withdrawal from any Material Plan
pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails
to make any payment or contribution to any Material Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Material Plan or Benefit Arrangement which has resulted
or could result in the imposition of a Lien or the posting of a bond or
other security, a certificate of the chief financial officer or the
chief accounting officer of the Borrower setting forth details as to
such occurrence and action, if any, which the Borrower or applicable
member of the ERISA Group is required or proposes to take;
(i) forthwith, notice of any change of which the Borrower
becomes aware in the rating by any Rating Agency (as defined in the
Pricing Schedule) of the Borrower's long-term debt; and
(j) from time to time such additional information regarding the
financial position or business of the Borrower and its Subsidiaries as
the Administrative Agent, at the request of any Bank, may reasonably
request.
SECTION 5.02. Maintenance of Property; Insurance. (a) The Borrower will
keep, and will cause each Subsidiary to keep, all property useful and necessary
in its business in good working order and condition, ordinary wear and tear
excepted.
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(b) The Borrower will, and will cause each of its Subsidiaries to,
maintain (either in the name of the Borrower or in such Subsidiary's own name)
with financially sound and responsible insurance companies, insurance on all
their respective properties in at least such amounts and against at least such
risks (and with such risk retention) as are usually insured against in the same
general area by companies of established repute engaged in the same or a similar
business; and will furnish to the Banks, upon request from the Administrative
Agent, information presented in reasonable detail as to the insurance so
carried.
SECTION 5.03. Maintenance of Existence. The Borrower will renew and keep
in full force and effect its corporate existence and its rights, privileges and
franchises necessary or desirable in the normal conduct of business.
SECTION 5.04. Compliance with Laws. The Borrower will comply, and cause
each Subsidiary to comply, in all material respects with all applicable laws,
ordinances, rules, regulations, and requirements of governmental authorities
(including, without limitation, Environmental Laws and ERISA and the rules and
regulations thereunder) except where the necessity of compliance therewith is
contested in good faith by appropriate proceedings.
SECTION 5.05. Leverage Ratio. The Leverage Ratio will at no time exceed
250%.
SECTION 5.06. Minimum Consolidated Net Worth. Consolidated Net Worth
will at no time be less than the Minimum Compliance Level.
SECTION 5.07. Interest Coverage Ratio. The Interest Coverage Ratio will
not be less than 350% for any period of four consecutive fiscal quarters.
SECTION 5.08. Subsidiary Debt Limitation. The aggregate outstanding
amount of Debt of Subsidiaries (exclusive of (i) Debt secured by a Lien
permitted by clause (g) of Section 5.09, (ii) Debt owing to the Borrower or
another Subsidiary and (iii) up to $85,000,000 of Debt consisting of obligations
in respect of industrial revenue bonds) will at no time exceed $175,000,000.
SECTION 5.09. Negative Pledge. The Borrower will not, and will not
permit any Consolidated Subsidiary to, create, assume or suffer to exist any
Lien securing Debt or Derivative Obligations on any asset now owned or hereafter
acquired by it, except:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement in an aggregate principal
amount not exceeding $60,000,000;
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(b) any Lien existing on the assets of any Person at the time
such Person becomes a Consolidated Subsidiary;
(c) any Lien on any asset securing Debt incurred or assumed for
the purpose of financing all or any part of the purchase price or cost
of construction of such asset, provided that such Lien attaches to such
asset within 270 days after the acquisition or completion of
construction and commencement of full operations thereof;
(d) any Lien on any asset of any Person existing at the time
such Person is acquired by, merged into or consolidated with the
Borrower or a Consolidated Subsidiary;
(e) any Lien existing on any asset prior to the acquisition
thereof by the Borrower or a Consolidated Subsidiary and not created in
contemplation of such acquisition;
(f) any Lien arising out of the refinancing, extension, renewal
or refunding of any Debt secured by any Lien permitted by any of the
foregoing clauses of this Section, provided that such Debt is not
increased and is not secured by any additional assets;
(g) Liens on real property (and ancillary personalty) not
otherwise permitted by the foregoing clauses of this Section securing
Debt in an aggregate principal amount at any time outstanding not to
exceed $75,000,000; and
(h) Liens on cash and cash equivalents securing Derivatives
Obligations, provided that the aggregate amount of cash and cash
equivalents subject to such Liens may at no time exceed $25,000,000.
SECTION 5.10. Consolidations, Mergers and Sales of Assets. 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 any substantial part
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 the
Borrower is the surviving corporation and, after giving effect thereto, no
Default exists.
SECTION 5.11. Limitation on Affiliate Transactions. The Borrower will
not, and will not permit any of its Subsidiaries to, enter into any material
transaction, including, without limitation, the purchase, sale or exchange of
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property or assets or the rendering of any services, with any Affiliate, except
(i) a transaction in the ordinary course of business which is upon terms no less
favorable to the Borrower or such Subsidiary, as the case may be, than it would
obtain in a comparable transaction on an arm's length basis with a Person not an
Affiliate and (ii) a Dividend Payment permitted by Sections 5.05 and 5.06.
ARTICLE 6
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the following events
("EVENTS OF DEFAULT") shall have occurred and be continuing:
(a) the Borrower (i) shall fail to pay when due any principal of
any Loan or (ii) shall fail to pay any interest on any Loan, any fees or
any other amount payable hereunder within five days after the due date
thereof;
(b) the Borrower shall fail to observe or perform any covenant
contained in Sections 5.05 through 5.11, inclusive;
(c) the Borrower shall fail to observe or perform any covenant
or agreement contained in this Agreement (other than those covered by
clause (a) or (b) above) for 30 days after notice thereof has been given
to the Borrower by the Administrative Agent at the request of any Bank;
(d) any representation, warranty, certification or statement
made (or deemed made) by the Borrower in this Agreement or in any
certificate, financial statement or other document delivered pursuant to
this Agreement shall prove to have been incorrect in any material
respect when made (or deemed made) or delivered;
(e) the Borrower or any Subsidiary shall fail to make any
payment in respect of any Material Financial Obligations when due or
within any applicable grace period (or in the case of any Derivatives
Obligation for which no grace period is otherwise provided, within five
days of the due date);
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or enables (with the
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giving of appropriate notice if required) the holder of such Debt or any
Person acting on such holder's behalf to accelerate the maturity
thereof;
(g) the Borrower or any Material Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation, reorganization
or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator, custodian
or other similar official of it or any substantial part of its property,
or shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as
they become due, or shall take any corporate action to authorize any of
the foregoing;
(h) an involuntary case or other proceeding shall be commenced
against the Borrower or any Material Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator, custodian
or other similar official of it or any substantial part of its property,
and such involuntary case or other proceeding shall remain undismissed
and unstayed for a period of 60 days; or an order for relief shall be
entered against the Borrower or any Material Subsidiary under the
federal bankruptcy laws as now or hereafter in effect;
(i) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $10,000,000 which it shall
have become liable to pay under Title IV of ERISA; or notice of intent
to terminate a Material Plan shall be filed under Title IV of ERISA by
any member of the ERISA Group, any plan administrator or any combination
of the foregoing; or the PBGC shall institute proceedings under Title IV
of ERISA to terminate, to impose liability (other than for premiums
under Section 4007 of ERISA) in respect of, or to cause a trustee to be
appointed to administer, any Material Plan; or a condition shall exist
by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated; or there shall
occur a complete or partial withdrawal from, or a default, within the
meaning of Section 4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more members of the ERISA
Group to incur a current payment obligation in excess of $10,000,000;
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(j) a judgment or order for the payment of money in excess of
$10,000,000 shall be rendered against the Borrower or any Material
Subsidiary and such judgment or order shall continue unsatisfied and
unstayed for a period of 30 days; or
(k) a Change of Control shall occur;
then, and in every such event, the Administrative Agent shall (i) if requested
by Banks having more than 50% in aggregate amount of the Commitments, by notice
to the Borrower terminate the Commitments and they shall thereupon terminate,
and (ii) if requested by Banks holding more than 50% in aggregate principal
amount of the Loans, by notice to the Borrower declare the Loans (together with
accrued interest thereon) to be, and the Loans (together with accrued interest
thereon) shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; provided that in the case of any of the Events of
Default specified in clause (g) or (h) above with respect to the Borrower,
without any notice to the Borrower or any other act by the Administrative Agent
or any Bank, the Commitments shall thereupon terminate and the Loans (together
with accrued interest thereon) shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower.
SECTION 6.02. Notice of Default. The Administrative Agent shall give
notice to the Borrower under Section 6.01(c) promptly upon being requested to do
so by any Bank and shall thereupon notify all the Banks thereof.
ARTICLE 7
THE AGENTS
SECTION 7.01. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes the Administrative Agent to take such action as
Administrative Agent on its behalf and to exercise such powers under this
Agreement and the Notes as are delegated to the Administrative Agent by the
terms hereof or thereof, together with all such powers as are reasonably
incidental thereto.
SECTION 7.02. Administrative Agent and Affiliates. Morgan Guaranty Trust
Company of New York shall have the same rights and powers under this Agreement
as any other Bank and may exercise or refrain from exercising the
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same as though it were not the Administrative Agent, and Morgan Guaranty Trust
Company of New York and its 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 the Administrative Agent
hereunder.
SECTION 7.03. Action by Administrative Agent. The obligations of the
Administrative Agent hereunder are only those expressly set forth herein.
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 Article 4.
SECTION 7.04. Consultation with Experts. The Administrative Agent may
consult with legal counsel (who may be counsel for the Borrower), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken by it in good faith in accordance with
the advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Administrative Agent. Neither the
Administrative Agent nor any of its affiliates nor any of the directors,
officers, agents or employees of the foregoing shall be liable for any action
taken or not taken by it or them in connection herewith (i) with the consent or
at the request of the Required Banks or (ii) in the absence of its or their own
gross negligence or willful misconduct. Neither the Administrative Agent nor any
of its affiliates nor any of the directors, officers, agents or employees of the
foregoing 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 the Administrative Agent; or (iv) the validity, effectiveness or
genuineness of this Agreement, the Notes or any other instrument or writing
furnished in connection herewith. The Administrative Agent shall not incur any
liability by acting in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, telex or similar writing)
believed by it to be genuine or to be signed by the proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall, ratably in accordance
with its Commitment, indemnify the Administrative Agent, its affiliates and
their respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrower) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from such indemnitees' gross negligence or willful misconduct) that such
indemnitees
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may suffer or incur in connection with this Agreement or any action taken or
omitted by such indemnitees hereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon any Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon any Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
SECTION 7.08. Successor 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, subject to the approval of the Borrower. If no
successor Administrative Agent shall have been so appointed by the Required
Banks, with the approval of the Borrower, 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 Bank, if any
Bank is willing to accept such appointment, and in any event 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 fees in
the amounts and at the times previously agreed upon between the Borrower such
Agent.
SECTION 7.10. Co-Documentation Agents. Nothing in this Agreement shall
impose upon any of the Co-Documentation Agents, in such capacity, any duty or
liability whatsoever.
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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 CD Loans,
Euro-Dollar Loans 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 relevant market for such Interest
Period, or
(b) in the case of CD Loans or Euro-Dollar Loans, Banks having
50% or more of the aggregate amount of the Commitments advise the
Administrative Agent that the Adjusted CD Rate or the London Interbank
Offered Rate, as the case may be, as determined by the Administrative
Agent will not adequately and fairly reflect the cost to such Banks of
funding their CD Loans or Euro-Dollar Loans, as the case may be, for
such Interest Period,
the 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 CD Loans or Euro-Dollar Loans, as the case may
be, or to continue or convert outstanding Loans as or into CD Loans or Euro-
Dollar Loans, as the case may be, shall be suspended and (ii) each outstanding
CD Loan or Euro-Dollar Loan, as the case may be, 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 Committed Borrowing, such
Borrowing shall instead be made as a Base Rate Borrowing and (ii) if such Fixed
Rate Borrowing is a Money Market LIBOR Borrowing, the Money Market LIBOR Loans
comprising such Borrowing shall bear interest for each day from and including
the first day to but excluding the last day of the Interest Period applicable
thereto at the Base Rate for such day.
SECTION 8.02. Illegality. If, on or after the date of this Agreement,
the adoption of any applicable law, 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
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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 or continue outstanding Loans as Euro-Dollar Loans,
shall be suspended. Before giving any notice to the Administrative Agent
pursuant to this Section 8.02, 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 (i) on the last day of
the then current Interest Period applicable to such Euro-Dollar Loan if such
Bank may lawfully continue to maintain and fund such Loan as a Euro-Dollar Loan
to such day or (ii) immediately if such Bank shall determine that it may not
lawfully continue to maintain and fund such Loan as a Euro-Dollar Loan to such
day. Interest and principal on any such Base Rate Loan shall be payable on the
same dates as, and on a pro rata basis with, the interest and principal payable
on the related Euro-Dollar Loans of the other Banks.
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 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 (i) with respect to any CD Loan any such requirement
included in an applicable Domestic Reserve Percentage and (ii) with respect to
any Euro-Dollar Loan any such requirement with respect to which such Bank is
entitled to compensation during the relevant Interest Period under Section
2.15), special deposit, insurance
49
<PAGE> 54
assessment (excluding, with respect to any CD Loan, any such requirement
reflected in an applicable Assessment Rate) or similar requirement against
assets of, deposits with or for the account of, or credit extended by, any Bank
(or its Applicable Lending Office) or shall impose on any Bank (or its
Applicable Lending Office) or on the United States market for certificates of
deposit or the London interbank market any other condition affecting its Fixed
Rate Loans, its Note or its obligation to make Fixed Rate Loans and the result
of any of the foregoing is to increase the cost to such Bank (or its Applicable
Lending Office) of making or maintaining any Fixed Rate Loan, or to reduce the
amount of any sum received or receivable by such Bank (or its Applicable Lending
Office) under this Agreement or under its Note with respect thereto, by an
amount deemed by such Bank to be material, then, within 15 days after demand by
such Bank (with a copy to the 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 (including any determination by any such authority, central bank or
comparable agency that, for purposes of capital adequacy requirements, the
Commitments hereunder do not constitute commitments with an original maturity of
one year or less), 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 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; provided that the Borrower shall not be
liable for any such amounts attributable to a period more than three months
prior to the date of notice by such Bank to the Borrower of its intention to
seek compensation under this subsection (b).
(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 Applicable Lending Office if such designation will avoid
the
50
<PAGE> 55
need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate
of any Bank claiming compensation under this Section, setting forth the
additional amount or amounts to be paid to it hereunder and the basis of
calculation thereof, 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) Any and all payments by the Borrower to or for
the account of any Bank or the Administrative Agent hereunder or under any Note
shall be made free and clear of and without deduction for any and all present or
future taxes, duties, levies, imposts, deductions, charges and withholdings, and
all liabilities with respect thereto, excluding, in the case of each Bank and
the Administrative Agent, taxes imposed on its income, and franchise taxes
imposed on it, by the jurisdiction under the laws of which such Bank or the
Administrative Agent (as the case may be) is organized or any political
subdivision thereof and, in the case of each Bank, taxes imposed on its income,
and franchise or similar taxes imposed on it, by the jurisdiction of such Bank's
Applicable Lending Office or any political subdivision thereof (all such
non-excluded taxes, duties, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "TAXES"). If the Borrower shall
be required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Note to any Bank or the Administrative Agent, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 8.04) such Bank or the Administrative 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.
(b) In addition, the Borrower agrees to pay any present or future stamp
or documentary taxes and any other excise or property taxes, or charges or
similar levies which arise from any payment made hereunder or under any Note or
from the execution or delivery of, or otherwise with respect to, this Agreement
or any Note (hereinafter referred to as "OTHER TAXES").
(c) The Borrower agrees to indemnify each Bank and the Administrative
Agent for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes and Other Taxes imposed or asserted by any jurisdiction on
amounts payable under this Section 8.04) paid by such Bank or the Administrative
Agent (as the case may be) and any liability (including penalties, interest and
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<PAGE> 56
expenses) arising therefrom or with respect thereto. This indemnification shall
be made within 15 days from the date such Bank or the Administrative 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 with Internal Revenue Service form 1001 or 4224, as appropriate, or any
successor form prescribed by the Internal Revenue Service, certifying that such
Bank is entitled to benefits under an income tax treaty to which the United
States is a party which reduces the rate of withholding tax on payments of
interest or certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the United
States. If the form provided by a Bank at the time such Bank first becomes a
party to this Agreement indicates a United States interest withholding tax rate
in excess of zero, withholding tax at such rate shall be considered excluded
from "TAXES" as defined in Section 8.04(a).
(e) For any period with respect to which a Bank has failed to provide
the Borrower with the form required pursuant to Section 8.04(d), if any (unless
such failure is due to a change in treaty, law or regulation occurring
subsequent to the date on which a form originally was required to be provided),
such Bank shall not be entitled to indemnification under Section 8.04(a) with
respect to Taxes imposed by the United States; provided, however, that should a
Bank, which is otherwise exempt from or subject to a reduced rate of withholding
tax, become subject to Taxes because of its failure to deliver a form required
hereunder, the Borrower shall take such steps as such Bank shall reasonably
request to assist such Bank to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for the
account of any Bank pursuant to this Section 8.04, then such Bank will change
the jurisdiction of its Applicable Lending Office so as to eliminate or reduce
any such additional payment which may thereafter accrue if such change, in the
judgment of such Bank, is not otherwise disadvantageous to such Bank.
SECTION 8.05. Base Rate Loans Substituted for Affected Fixed Rate Loans.
If (i) the obligation of any Bank to make, or to continue or convert outstanding
Loans as or to, 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 with respect
to its CD Loans or Euro-Dollar Loans, and in any such case the
52
<PAGE> 57
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, all Loans which would otherwise be made by such
Bank as (or continued as or converted to) CD Loans or Euro-Dollar Loans, as the
case may be, shall instead be Base Rate Loans on which interest and principal
shall be payable contemporaneously with the related CD Loans or Euro-Dollar
Loans of the other Banks. If such Bank notifies the Borrower that the
circumstances giving rise to such suspension or demand for compensation no
longer exist, the principal amount of each such Base Rate Loan shall be
converted into a CD Loan or Euro-Dollar Loan, as the case may be, on the first
day of the next succeeding Interest Period applicable to the related CD Loans or
Euro-Dollar Loans of the other Banks.
SECTION 8.06. Substitution of Bank. 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 shall
have the right, with the assistance of the Administrative Agent, to seek a
mutually satisfactory substitute bank or banks (which may be one or more of the
Banks) to purchase the Loans and assume the Commitment of such Bank.
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: (x) in the
case of the Borrower or the Administrative Agent, at its address or facsimile or
telex number set forth on the signature pages hereof, (y) in the case of any
Bank, at its address or facsimile or telex number set forth in its
Administrative Questionnaire or (z) in the case of any party, such other address
or facsimile 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 mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the address specified in this Section; provided that
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<PAGE> 58
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 the Administrative
Agent or any 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 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 Administrative Agent, including fees and
disbursements of special counsel for the Administrative Agent, 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
the Administrative Agent or any Bank, including fees and disbursements of
outside counsel (or, in lieu thereof, the allocated cost of in-house 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.
SECTION 9.04. Sharing of Set-Offs. Each Bank agrees that if it shall, by
exercising any right of set-off or counterclaim or otherwise, receive payment of
a proportion of the aggregate amount of principal and interest due with respect
to the Loans held by it which is greater than the proportion received by any
other Bank in respect of the aggregate amount of principal and interest due with
respect to the Loans held by such other Bank, 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
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<PAGE> 59
shall impair the right of any Bank to exercise any right of set-off or
counterclaim it may have and to apply the amount subject to such exercise to the
payment of indebtedness of the Borrower other than its indebtedness under this
Agreement. 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 rights of
set-off or counterclaim and other rights with respect to such participation as
fully as if such holder of a participation were a direct creditor of the
Borrower in the amount of such participation.
SECTION 9.05. Amendments and Waivers. Any provision of this Agreement or
the Notes may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed by the Borrower and the Required Banks (and, if the
rights or duties of the Administrative Agent are affected thereby, by the
Administrative Agent); provided that no such amendment or waiver shall:
(a) unless signed by all the Banks, (i) increase or decrease the
Commitment of any Bank (except for a ratable decrease in the Commitments
of all the Banks) or subject any Bank to any additional obligation, (ii)
reduce the principal of or rate of interest on any Loan or any fees
hereunder, (iii) postpone the date fixed for any payment of principal of
or interest on any Loan or any fees hereunder or for the termination of
any Commitment or (iv) change 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; or
(b) unless signed by a Designated Lender or its Designating
Bank, subject such Designated Lender to any additional obligation or
affect its rights hereunder (unless the rights of all the Banks
hereunder are similarly affected).
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
in any or all of its Loans. In the event of any such grant by a Bank of a
participating
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<PAGE> 60
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 Section
2.15 and Article 8 with respect to its participating interest. An assignment or
other transfer which is not permitted by subsection (c) or (d) below shall be
given effect for purposes of this Agreement only to the extent of a
participating interest granted in accordance with this subsection (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "ASSIGNEE") all, or a proportionate part (equivalent to a
Commitment of not less than $5,000,000) of all, of its rights and obligations
under this Agreement and the Notes (if any), 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 a Bank or an affiliate of such
transferor Bank, no such consents shall be required; 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 required, a new
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 $3,000. If the Assignee is not
incorporated under the laws of the
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<PAGE> 61
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 and its Note (if any) 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.
SECTION 9.07. Designated Lenders. (a) Subject to the provisions of this
Section 9.07(a), any Bank may from time to time elect to designate an Eligible
Designee to provide all or a portion of the Loans to be made by such Bank
pursuant to this Agreement; provided that such designation shall not be
effective unless the Borrower and the Administrative Agent consent thereto. When
a Bank and its Eligible Designee shall have signed an agreement substantially in
the form of Exhibit H hereto (a "DESIGNATION AGREEMENT") and the Borrower and
the Administrative Agent shall have signed their respective consents thereto,
such Eligible Designee shall become a Designated Lender for purposes of this
Agreement. The Designating Bank shall thereafter have the right to permit such
Designated Lender to provide all or a portion of the Loans to be made by such
Designating Bank pursuant to Section 2.01 or 2.03, and the making of such Loans
or portions thereof shall satisfy the obligation of the Designating Bank to the
same extent, and as if, such Loans or portion thereof were made by the
Designating Bank. As to any Loans or portion thereof made by it, each Designated
Lender shall have all the rights that a Bank making such Loans or portion
thereof would have had under this Agreement and otherwise; provided that (x) its
voting rights under this Agreement shall be exercised solely by Designating Bank
and (y) its Designating Bank shall remain solely responsible to the other
parties hereto for the performance of its obligations under this Agreement,
including its obligations in respect of the Loans or portion thereof made by it.
No additional Note shall be required to evidence Loans or portions thereof made
by a Designated Lender; and the Designating Bank shall be deemed to hold its
Note (if any) as agent for its Designated Lender to the extent of the Loans or
portion thereof funded by such Designated Lender. Each Designating Bank shall
act as administrative agent for its Designated Lender and give and receive
notices and other communications on its behalf. Any payments for the account of
any Designated Lender shall be paid to its Designating Bank as administrative
agent for such Designated Lender and
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<PAGE> 62
neither the Borrower nor the Administrative Agent shall be responsible for any
Designating Bank's application of such payments. In addition, any Designated
Lender may (i) with notice to, but without the prior written consent of the
Borrower or the Administrative Agent, assign all or portions of its interest in
any Loans to its Designating Bank or to any financial institutions consented to
by the Borrower and the Administrative Agent providing liquidity and/or credit
facilities to or for the account of such Designated Lender to support the
funding of Loans or portions thereof made by such Designated Lender and (ii)
disclose on a confidential basis any non-public information relating to its
Loans or portions thereof to any rating agency, commercial paper dealer or
provider of any guarantee, surety, credit or liquidity enhancement to such
Designated Lender.
(b) Each party to this Agreement agrees that it will not institute
against, or join any other person in instituting against, any Designated Lender
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding or other proceeding under any federal or state bankruptcy or similar
law, for one year and a day after all outstanding senior indebtedness of such
Designated Lender is paid in full. The Designating Bank for each Designated
Lender agrees to indemnify, save, and hold harmless each other party hereto for
any loss, cost, damage and expense arising out of its inability to institute any
such proceeding against such Designated Lender. This Section 9.07(b) shall
survive the termination of this Agreement.
SECTION 9.08. Collateral. Each of the Banks represents to each 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 9.09. Governing Law; Submission to Jurisdiction. This Agreement
and each Note shall be governed by and construed in accordance with the laws of
the State of New York. The Borrower hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York State court sitting in New York City for purposes
of all legal proceedings arising out of or relating to this Agreement, the Notes
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 9.10. 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
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Agreement constitutes the entire agreement and understanding among the parties
hereto and supersedes any and all prior agreements and understandings, oral or
written, relating to the subject matter hereof.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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<PAGE> 64
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.
LITTON INDUSTRIES, INC.
By: /s/ Timothy G. Paulson
--------------------------------------
Title: Vice President and Treasurer
Address: 21240 Burbank Blvd.
Woodland Hills, CA 91367
Telecopy: 818-598-3366
<PAGE> 65
COMMITMENTS
$35,000,000 MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By: /s/ Robert Bottamedi
--------------------------------------
Title: Vice President
$35,000,000 BANK OF AMERICA NT & SA
By: /s/ Brad W. DeSpain
--------------------------------------
Title: Senior Vice President
$35,000,000 THE CHASE MANHATTAN BANK
By: /s/ Richard C. Smith
--------------------------------------
Title: Vice President
$32,500,000 THE BANK OF NEW YORK
By: /s/ Jonathan Rollins
--------------------------------------
Title: Vice President
<PAGE> 66
$32,500,000 THE BANK OF NOVA SCOTIA
By: /s/ Maarten Van Otterloo
--------------------------------------
Title: Senior Relationship Manager
$32,500,000 BANQUE NATIONALE DE PARIS
By: /s/ C. Bettles
--------------------------------------
Title: Senior Vice President and Manager
By: /s/ Deborah Y. Gohh
--------------------------------------
Title: Vice President
$32,500,000 CREDIT SUISSE FIRST BOSTON
By: /s/ Thomas G. Muoio
--------------------------------------
Title: Vice President
By: /s/ Robert N. Finney
--------------------------------------
Title: Managing Director
<PAGE> 67
$32,500,000 THE FIRST NATIONAL BANK OF
CHICAGO
By: /s/ Betty Francis-Samilton
--------------------------------------
Title: Customer Service Officer
$30,000,000 WELLS FARGO BANK, N.A.
By: /s/ Frieda Youlios
--------------------------------------
Title: Vice President
By: /s/ Felynn C. Quilo
--------------------------------------
Title: Assistant Vice President
$30,000,000 CITICORP USA, INC.
By: /s/ Hillary Savoie
--------------------------------------
Title: Attorney-in-Fact
<PAGE> 68
$20,000,000 BANCA DI ROMA - SAN FRANCISCO
BRANCH
By: /s/ Augusto Bianchi
--------------------------------------
Title: First Vice President (97911)
By: /s/ Thomas Woodruff
--------------------------------------
Title: Vice President (97969)
$20,000,000 UNICREDITO ITALIANO
By: /s/ Gianfranco Bisagni
--------------------------------------
Title: First Vice President
By: /s/ Saiyed A. Abbas
--------------------------------------
Title: Assistant Vice President
$20,000,000 MELLON BANK, N.A.
By: /s/ Lawrence C. Ivey
--------------------------------------
Title: Vice President
$12,500,000 THE NORTHERN TRUST COMPANY
By: /s/ James F. T. Monhart
--------------------------------------
Title: Senior Vice President
TOTAL COMMITMENTS
$400,000,000
<PAGE> 69
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as
Administrative Agent
By: /s/ Robert Bottamedi
--------------------------------------
Title: Vice President
Address: 60 Wall Street
New York, NY 10260-0060
Attention: Robert Bottamedi
Telex number: 212-648-1349
<PAGE> 70
PRICING SCHEDULE
The "EURO-DOLLAR MARGIN", "CD MARGIN" and "FACILITY FEE RATE" for any
day are the respective percentages set forth below in the applicable row under
the column corresponding to the Status that exists on such day:
<TABLE>
<CAPTION>
STATUS LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
------ ------- -------- --------- -------- -------
<S> <C> <C> <C> <C> <C>
Euro-Dollar Margin
Utilization </ 33 % 0.4300% 0.5250% 0.6250% 0.7250% 1.1750%
Utilization > 33 % 0.5550% 0.6500% 0.7500% 0.8500% 1.3000%
CD Margin
Utilization </ 33 % 0.5550% 0.6500% 0.7500% 0.8500% 1.3000%
Utilization > 33 % 0.6800% 0.7750% 0.8750% 0.9750% 1.4250%
Facility Fee Rate 0.0700% 0.1000% 0.1250% 0.1500% 0.2000%
</TABLE>
For purposes of this Schedule, the following terms have the following
meanings:
"D&P" means Duff & Phelps Credit Rating Co., and its successors.
"LEVEL I STATUS" exists at any date if, at such date, the Borrower's
long-term debt is rated A-/A3 or higher by at least two Rating Agencies.
"LEVEL II STATUS" exists at any date if, at such date, (i) the
Borrower's long-term debt is rated BBB+/Baa1 or higher by at least two Rating
Agencies and (ii) Level I Status does not exist at such date.
"LEVEL III STATUS" exists at any date if, at such date, (i) the
Borrower's long-term debt is rated BBB/Baa2 or higher by at least two Rating
Agencies and (ii) neither Level I Status nor Level II Status exists at such
date.
"LEVEL IV STATUS" exists at any date if, at such date, (i) the
Borrower's long-term debt is rated BBB-/Baa3 or higher by at least two Rating
Agencies and (ii) none of Level I Status, Level II Status or Level III Status
exists at such date.
"LEVEL V STATUS" exists at any date, if at the close of business on such
date, none of Level I Status, Level II Status, Level III Status or Level IV
Status exists.
"MOODY'S" means Moody's Investors Service, Inc., and its successors.
1
<PAGE> 71
"RATING AGENCIES" means D&P, Moody's and S&P.
"S&P" means Standard & Poor's Ratings Group, and its successors.
"STATUS" refers to the determination of which of Level I Status, Level
II Status, Level III Status, Level IV Status or Level V Status exists at any
date.
"UTILIZATION" means at any date the percentage equivalent of a fraction
(i) the numerator of which is the aggregate outstanding principal amount of the
Loans at such date, after giving effect to any borrowing or payment on such
date, and (ii) the denominator of which is the aggregate amount of the
Commitments at such date, after giving effect to any reduction of the
Commitments on such date. For purposes of this Schedule, if for any reason any
Loans remain outstanding after termination of the Commitments, the Utilization
for each date on or after the date of such termination shall be deemed to be
greater than 33%.
The credit ratings to be utilized for purposes of determining a Status
hereunder are those assigned to the senior unsecured long-term debt of the
Borrower without third-party credit enhancement, and any rating assigned to any
other debt of the Borrower shall be disregarded; provided that if at any time
the Borrower's senior unsecured long-term debt is rated by exactly two Rating
Agencies and the ratings assigned to such debt by such two Rating Agencies are
more than one full rating category apart, Status shall be determined based on a
rating one category higher than the lower of such two ratings (e.g., if the S&P
rating is BBB+, the Moody's rating is Baa3 and there is no D&P rating, then
Level III Status shall exist); provided further that if at any time the
Borrower's senior unsecured long-term debt, without third party credit
enhancement, is not rated by at least two Rating Agencies, then Status shall be
level V Status. The rating in effect at any date is that in effect at the close
of business on such date.
2
<PAGE> 72
COMMITMENT SCHEDULE
<TABLE>
<CAPTION>
BANK COMMITMENT
- ---- ------------
<S> <C>
Morgan Guaranty Trust Company of New York $ 35,000,000
Bank of America NT & SA $ 35,000,000
The Chase Manhattan Bank $ 35,000,000
The Bank of New York $ 32,500,000
The Bank of Nova Scotia $ 32,500,000
Banque Nationale de Paris $ 32,500,000
Credit Suisse First Boston $ 32,500,000
The First National Bank of Chicago $ 32,500,000
Wells Fargo Bank, N.A. $ 30,000,000
Citicorp USA, Inc. $ 30,000,000
Banca Di Roma - San Francisco Branch $ 20,000,000
Unicredito Italiano $ 20,000,000
Mellon Bank, N.A. $ 20,000,000
The Northern Trust Company $ 12,500,000
------------
Total $400,000,000
</TABLE>
3
<PAGE> 73
EXHIBIT A
NOTE
New York, New York
[Date]
For value received, Litton Industries, Inc. a Delaware corporation (the
"BORROWER"), promises to pay to the order of (the "BANK"), for the account of
its Applicable Lending Office, the unpaid principal amount of each Loan made by
the Bank to the Borrower pursuant to the Credit Agreement referred to below on
the 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 office of Morgan Guaranty
Trust Company of New York, 60 Wall Street, New York, New York.
All Loans made by the Bank, the respective types and maturities thereof
and all repayments of the principal thereof shall be recorded by the Bank and,
if the Bank so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to each
such Loan then outstanding may be endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or under
the Credit Agreement.
This note is one of the Notes referred to in the Credit Agreement dated
as of March 24, 1999 among the Borrower, the banks parties thereto and Morgan
Guaranty Trust Company of New York, as Administrative Agent (as the same may be
amended from time to time, the "CREDIT AGREEMENT"). Terms defined in the Credit
Agreement are used herein with the same meanings. Reference is made to the
Credit Agreement for provisions for the prepayment hereof and the acceleration
of the maturity hereof.
LITTON INDUSTRIES, INC.
By:
-------------------------------
Name:
Title:
<PAGE> 74
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
AMOUNT OF
AMOUNT OF TYPE PRINCIPAL MATURITY NOTATION
DATE LOAN OF LOAN REPAID DATE MADE BY
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 75
EXHIBIT B
FORM OF MONEY MARKET QUOTE REQUEST
[Date]
To: Morgan Guaranty Trust Company of New York
From: Litton Industries, Inc.
Re: Credit Agreement (as amended from time to time, the "CREDIT
AGREEMENT") dated as of March 24, 1999 among the Borrower, the
Banks parties thereto and Morgan Guaranty Trust Company of
New York, as Administrative 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* Interest Period**
$
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.
LITTON INDUSTRIES, INC.
By:
-------------------------------
Name:
Title:
- --------
*Amount must be $15,000,000 or a larger multiple of $1,000,000.
**Not less than one month (LIBOR Auction) or not less than 14 days
(Absolute Rate Auction), subject to the provisions of the definition of Interest
Period.
<PAGE> 76
EXHIBIT C
FORM OF INVITATION FOR MONEY MARKET QUOTES
To: [Name of Bank]
Re: Invitation for Money Market Quotes to Litton Industries, Inc. (the
"BORROWER")
Pursuant to Section 2.03 of the Credit Agreement (as amended from time
to time, the "CREDIT AGREEMENT") dated as of March 24, 1999 among the Borrower,
the Banks parties thereto 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.] (New York City time) on [date].
Terms used herein have the meanings assigned to them in the Credit
Agreement.
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By:
-------------------------------
Name:
Title: Authorized Officer
<PAGE> 77
EXHIBIT D
FORM OF MONEY MARKET QUOTE
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Administrative Agent
60 Wall Street
New York, New York 10260-0060
Attention:
Re: Money Market Quote to
Litton Industries, Inc. (the "BORROWER")
In response to your invitation on behalf of the Borrower dated
_____________, 19__, we hereby make the following Money Market Quote on the
following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
______________________________
3. Date of Borrowing: ____________________
4. We hereby offer to make Money Market Loan(s) in the following
principal amounts, for the following Interest Periods and at the
following rates:
<TABLE>
<CAPTION>
Principal Interest Money Market Absolute
Amount** Period*** Margin**** Rate*****
- -------- --------- ---------- ---------
<S> <C> <C> <C>
$
$
</TABLE>
[Provided, that the aggregate principal amount of Money Market
Loans for which the above offers may be accepted shall not
exceed $____________.]**
<PAGE> 78
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
(as amended from time to time, the "CREDIT AGREEMENT") dated as of March 24,
1999 among the Borrower, the Banks parties thereto 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.
Terms used herein have the meanings assigned to them in the Credit
Agreement.
Very truly yours,
[NAME OF BANK]
Dated: By:
------------------ -------------------------------
Name:
Title: Authorized Officer
- -----------------------------
** 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.
*** Not less than one month or not less than 14 days, as specified in the
related Invitation. No more than five bids are permitted for each
Interest Period.
**** Margin over or under the London Interbank Offered Rate determined for
the applicable Interest Period. Specify percentage (to the nearest
1/10,000 of 1%) and specify whether "PLUS" or "MINUS".
***** Specify rate of interest per annum (to the nearest 1/10,000th of 1%).
2
<PAGE> 79
EXHIBIT E
OPINION OF
COUNSEL FOR THE BORROWER
[Dated the Effective Date]
To the Banks and the Administrative Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Administrative Agent
60 Wall Street
New York, New York 10260-0060
Dear Sirs:
I am the chief legal officer of Litton Industries, Inc. (the "BORROWER")
and have acted in that capacity in connection with the Credit Agreement (the
"CREDIT AGREEMENT") dated as of March 24, 1999 among the Borrower, the banks
listed on the signature pages thereof and Morgan Guaranty Trust Company of New
York, as Administrative Agent. Terms defined in the Credit Agreement are used
herein as therein defined.
I have examined originals or copies, certified or otherwise identified
to my satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as I have deemed necessary or advisable for purposes of this
opinion.
Upon the basis of the foregoing, I am of the opinion that:
1. The Borrower is a corporation duly incorporated, validly existing and
in good standing under the laws of Delaware and has all corporate powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted.
2. The execution, delivery and performance by the Borrower of the Credit
Agreement and the Notes are within the Borrower's corporate powers, have been
duly authorized by all necessary corporate action, require no action by or in
respect of, or filing with, any governmental body, agency or official and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the certificate of incorporation or by-laws of the Borrower or
of any agreement, judgment, injunction, order, decree or other instrument
binding
<PAGE> 80
upon the Borrower or result in the creation or imposition of any Lien on any
asset of the Borrower or any of its Subsidiaries.
3. The Credit Agreement constitutes a valid and binding agreement of the
Borrower and each Note constitutes a valid and binding obligation of the
Borrower, in each case enforceable in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and by general principles of equity.
4. (a) Except for actions, suits or proceedings described in the
Borrower's 1998 Form 10-K, there is no action, suit or proceeding pending
against, or to the best of my knowledge threatened against or affecting, the
Borrower or any of its Subsidiaries before any court or arbitrator or any
governmental body, agency or official, in which there is a reasonable
possibility of an adverse decision which could materially adversely affect the
business, consolidated financial position or consolidated results of operations
of the Borrower and its Consolidated Subsidiaries, taken as a whole.
(b) There is no action, suit or proceeding pending against, or to the
best of my knowledge threatened against or affecting, the Borrower or any of its
Subsidiaries before any court or arbitrator or any governmental body, agency or
official which in any manner questions the validity of the Credit Agreement or
the Notes.
5. Each of the Borrower's Material Subsidiaries is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
I am a member of the Bar of the State of California, and the foregoing
opinion is limited to the laws of the State of California, the General
Corporation Law of the State of Delaware and the Federal laws of the United
States of America. Inasmuch as the Credit Agreement and the Notes are governed
by the law of the State of New York, I have assumed for purposes of the
foregoing opinion that such law is the same as the law of the State of
California.
Very truly yours,
2
<PAGE> 81
EXHIBIT F
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE ADMINISTRATIVE AGENT
[Dated the Effective Date]
To the Banks and the Administrative Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Administrative Agent
60 Wall Street
New York, New York 10260-0060
Dear Sirs:
We have participated in the preparation of the Credit Agreement (the
"CREDIT AGREEMENT") dated as of March 24, 1999 among Litton Industries, Inc., a
Delaware corporation (the "BORROWER"), the banks listed on the signature pages
thereof (the "BANKS") and Morgan Guaranty Trust Company of New York, as
Administrative Agent (the "ADMINISTRATIVE AGENT"), and have acted as special
counsel for the Administrative Agent 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 and the Notes are within the Borrower's corporate powers and have been
duly authorized by all necessary corporate action.
2. The Credit Agreement constitutes a valid and binding agreement of the
Borrower and each Note constitutes a valid and binding obligation of the
Borrower, in each case enforceable in accordance with its terms, except as the
<PAGE> 82
same may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and by general principles of equity.
3. The documents delivered to the Administrative Agent by the Borrower
pursuant to Section 3.01 of the Credit Agreement are substantially responsive to
the requirements of said Section.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York, the federal laws of the
United States of America and the General Corporation Law of the State of
Delaware. In giving the foregoing opinion, we express no opinion as to the
effect (if any) of any law of any jurisdiction (except the State of New York) in
which any Bank is located which limits the rate of interest that such Bank may
charge or collect.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by any other person without our prior written consent.
Very truly yours,
2
<PAGE> 83
EXHIBIT G
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among [ASSIGNOR] (the "ASSIGNOR"),
[ASSIGNEE] (the "ASSIGNEE"), LITTON INDUSTRIES, INC. (the "BORROWER") and MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent (the "ADMINISTRATIVE
AGENT").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the "AGREEMENT")
relates to the Credit Agreement dated as of March 24, 1999 among the Borrower,
the Assignor and the other Banks party thereto, as Banks, and the Administrative
Agent (as amended from time to time, 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 $__________ are
outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of the
rights of the Assignor under the Credit Agreement in respect of a portion of its
Commitment thereunder in an amount equal to $__________ (the "ASSIGNED AMOUNT"),
together with a corresponding portion of its outstanding Committed Loans, and
the Assignee proposes to accept assignment of such rights and assume the
corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise defined
herein shall have the respective meanings set forth in the Credit Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and sells to the
Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the Assigned Amount, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the 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
<PAGE> 84
Committed Loans made by the Assignor outstanding at the date hereof. Upon the
execution and delivery hereof by the Assignor, the Assignee, the Borrower and
the Administrative Agent and the payment of the amounts specified in Section 3
required to be paid on the date hereof (i) the Assignee shall, as of the date
hereof, succeed to the rights and be obligated to perform the obligations of a
Bank under the Credit Agreement with a Commitment in an amount equal to the
Assigned Amount, and (ii) the Commitment of the Assignor shall, as of the date
hereof, be reduced by a like amount and the Assignor released from its
obligations under the Credit Agreement to the extent such obligations have been
assumed by the Assignee. The assignment provided for herein shall be without
recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds the amount heretofore agreed between them. It is
understood that commitment and/or facility fees accrued to the date hereof are
for the account of the Assignor and such fees accruing from and including the
date hereof in respect of 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.
SECTION 4. Consent of the Borrower and the Administrative Agent. This
Agreement is conditioned upon the consent of the Borrower and the Administrative
Agent, pursuant to Section 9.06(c) of the Credit Agreement. The execution of
this Agreement by the Borrower and the Administrative Agent is evidence of this
consent. Pursuant to Section 9.06(c) the Borrower agrees to execute and deliver
a Note payable to the order of the Assignee to evidence the assignment and
assumption provided for herein.]
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.
2
<PAGE> 85
SECTION 6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[ASSIGNOR]
By:
-------------------------------
Name:
Title:
[ASSIGNEE]
By:
-------------------------------
Name:
Title:
LITTON INDUSTRIES, INC.
By:
-------------------------------
Name:
Title:
3
<PAGE> 86
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By:
-------------------------------
Name:
Title:
4
<PAGE> 87
EXHIBIT H
DESIGNATION AGREEMENT
dated as of ________________, _____
Reference is made to the Credit Agreement dated as of March 24, 1999 (as
amended from time to time, the "CREDIT AGREEMENT") among Litton Industries,
Inc., a Delaware corporation (the "BORROWER"), the banks party thereto (the
"BANKS") and Morgan Guaranty Trust Company of New York, as Administrative Agent
(the "ADMINISTRATIVE AGENT"). Terms defined in the Credit Agreement are used
herein with the same meaning.
_________________ (the "DESIGNATOR") and ________________ (the
"DESIGNEE") agree as follows:
1. The Designator designates the Designee as its Designated Lender under
the Credit Agreement and the Designee accepts such designation.
2. The Designator makes no representations or warranties and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under the
Credit Agreement or any other instrument or document furnished pursuant thereto.
3. The Designee confirms that it is an Eligible Designee; appoints and
authorizes the Designator as its administrative agent and attorney-in-fact and
grants the Designator an irrevocable power of attorney to receive payments made
for the benefit of the Designee under the Credit Agreement and to deliver and
receive all communications and notices under the Credit Agreement, if any, that
the Designee is obligated to deliver or has the right to receive thereunder; and
acknowledges that the Designator retains the sole right and responsibility to
vote under the Credit Agreement, including, without limitation, the right to
approve any amendment or waiver of any provision of the Credit Agreement, and
agrees that the Designee shall be bound by all such votes, approvals, amendments
and waivers and all other agreements of the Designator pursuant to or in
connection with the Credit Agreement, all subject to Section 9.05(b) of the
Credit Agreement.
4. The Designee confirms that it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements referred
to in Article 4 or delivered pursuant to Article 5 thereof and such other
documents and information as it has deemed appropriate to make its own credit
analysis and
<PAGE> 88
decision to enter into this Designation Agreement; agrees that it will,
independently and without reliance upon the Agent, the Designator or any other
Bank and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking any
action it may be permitted to take under the Credit Agreement. The Designee
acknowledges that it is subject to and bound by the confidentiality provisions
of the Credit Agreement (except as provided in Section 9.07(a) thereof).
5. Following the execution of this Designation Agreement by the
Designator and the Designee and the consent hereto by the Borrower, it will be
delivered to the Administrative Agent for its consent. This Designation
Agreement shall become effective when the Administrative Agent consents hereto
or on any later date specified on the signature page hereof.
6. Upon the effectiveness hereof, (a) the Designee shall have the right
to make Loans or portions thereof as a Bank pursuant to Section 2.01 or 2.03 of
the Credit Agreement and the rights of a Bank related thereto and (b) the making
of any such Loans or portions thereof by the Designee shall satisfy the
obligations of the Designator under the Credit Agreement to the same extent, and
as if, such Loans or portions thereof were made by the Designator.
7. This Designation Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties have caused this Designation Agreement
to be executed by their respective officers hereunto duly authorized, as of the
date first above written.
Effective Date*:______ , ____
[NAME OF DESIGNATOR]
By:
-------------------------------
Name:
Title:
- --------
*This date should be no earlier than the date of the Administrative
Agent's consent hereto.
H-2
<PAGE> 89
[NAME OF DESIGNEE]
By:
-------------------------------
Name:
Title:
The undersigned consent to the foregoing designation.
LITTON INDUSTRIES, INC.
By:
-------------------------------
Name:
Title:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as
Administrative Agent
By:
-------------------------------
Name:
Title:
H-3
<PAGE> 1
EXHIBIT 4.2
CONFORMED COPY
AMENDMENT NO. 5 TO CREDIT AGREEMENT
AMENDMENT dated as of March 24,1999 among LITTON INDUSTRIES, INC. (the
"BORROWER"), the BANKS listed on the signature pages hereof (the "BANKS"),
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the "AGENT") and WELLS
FARGO BANK, N.A., as Co-Agent (the "CO-AGENT").
WITNESSETH:
WHEREAS, the parties hereto have heretofore entered into an Amended and
Restated Credit Agreement dated as of December 22, 1994 (as heretofore amended,
the "AGREEMENT") and desire to amend the Agreement as set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise specifically
defined herein, each term used herein which is defined in the Agreement shall
have the meaning assigned to such term in the Agreement. Each reference to
"hereof, "hereunder", "herein" and "hereby" and each other similar reference
and each reference to "this Agreement" and each other similar reference
contained in the Agreement shall from and after the date hereof refer to the
Agreement as amended hereby,
SECTION 2. Definitions. Section 1.01 is amended as follows:
(a) the definition of "Leverage Ratio" is amended to read as follows:
"LEVERAGE RATIO" means at any date, the ratio of Total Borrowed
Funds at such date to Consolidated EBITDA for the period of four
consecutive fiscal quarters most recently ended on or prior to
such date; provided that if there shall have been an acquisition
or disposition of operations during such period, Consolidated
EBITDA shall be calculated on a pro forma basis giving effect
thereto as if such acquisition or disposition had occurred on
the first day of such period.
<PAGE> 2
(b) the definition of "Minimum Compliance Level" is amended as follows:
(i) reference to "$669,000,000" is changed to "925,000,000"; and
(ii) references to "January 31, 1996" are changed to "October
31, 1998".
SECTION 3. Subsidiary Debt Limitation. Section 5.08 is amended to read
as follows:
SECTION 5.08. Subsidiary Debt Limitation. The aggregate
outstanding amount of Debt of Subsidiaries (exclusive of (i)
Debt secured by a Lien permitted by clause (g) of Section
5.09, (ii) Debt owing to the Borrower or another Subsidiary and
(iii) up to $85,000,000 of Debt consisting of obligations in
respect of industrial revenue bonds) will at no time exceed
$175,000,000.
SECTION 4. Year 2000 Compliance. The following Section: 4.13 is added to
read as follows:
SECTION 4.13. Year 2000 Compliance. The Borrower has (i)
initiated a review and assessment of all areas within the
business and operations of the Borrower and each of its
Subsidiaries (including those areas affected by suppliers and
vendors) that could be adversely affected by the "Year 2000
Problem" (that is, the risk that computer applications used by
it or any of its Subsidiaries (or their respective suppliers and
vendors) may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and
any date after December 31, 1999), (ii) developed a plan and
timetable for addressing the Year 2000 Problem on a timely basis
and (iii) to date, implemented such plan in accordance with such
timetable. The Borrower reasonably believes that all computer
applications that are material to the business or operations of
the Borrower or any of its Subsidiaries will on a timely basis
be able to perform properly date-sensitive functions for all
dates before and from and after January 1, 2000, except to the
extent that a failure to do so could not reasonably be expected
to have a material adverse effect on the business, financial
condition, results of operations or
2
<PAGE> 3
prospects of the Borrower and its Consolidated Subsidiaries,
considered as a whole.
SECTION 5. Representations and Warranties. The Borrower hereby
represents and warrants that as of the date hereof and after giving effect
hereto:
(a) no Default under the Agreement has occurred and is continuing; and
(b) each representation and warranty of the Borrower set forth in the
Agreement is true and correct as though made on and as of this date.
SECTION 6. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts; Effectiveness. This Amendment 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 Amendment shall become effective as of the date hereof when the Agent shall
have received duly executed counterparts hereof signed by the Borrower and the
Required Banks (or, in the case of any party as to which an executed counterpart
shall not have been received, the Agent shall have received telegraphic, telex
or other written confirmation from such party of execution of a counterpart
hereof by such party).
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.
LITTON INDUSTRIES, INC.
By: /s/ Timothy G. Paulson
-----------------------------------
Title: Vice President and Treasurer
<PAGE> 5
COMMITMENTS
$45,000,000 MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Bank
and Agent
By: /s/ Robert Bottamedi
-------------------------------
Title: Vice President
$38,000,000 BANK OF AMERICA NT & SA
By: /s/ Brad W. DeSpain
-------------------------------
Title: Senior Vice President
$38,000,000 THE BANK OF NEW YORK
By: /s/ Jonathan Rollins
-------------------------------
Title: Vice President
$38,000,000 THE CHASE MANHATTAN BANK
By: /s/ Richard C. Smith
-------------------------------
Title: Vice President
<PAGE> 6
$33,000,000 UBS AG, STAMFORD BRANCH
By: /s/ Richard T. Conway
-------------------------------
Title: Associate Director,
Loan Portfolio Support, US
By: /s/ Denise M. Clerkin
-------------------------------
Title: Associate Director,
Loan Portfolio Support, US
$33,000,000 WELLS FARGO BANK, N.A., as Bank and
Co-Agent
By: /s/ Frieda Youlios
-------------------------------
Title: Vice President
By: /s/ Felynn C. Quilo
-------------------------------
Title: Assistant Vice President
$25,000,000 MELLON BANK, N.A.
By: /s/ Lawrence C. Ivey
-------------------------------
Title: Vice President
$20,000,000 THE BANK OF NOVA SCOTIA
By: /s/ Maarten Van Otterloo
-------------------------------
Title: Senior Relationship Manager
<PAGE> 7
$20,000,000 CANADIAN IMPERIAL BANK OF COMMERCE
By:
-------------------------------
Title:
$20,000,000 CREDIT SUISSE FIRST BOSTON
By: /s/ Thomas G. Muoio
-------------------------------
Title: Vice President
By: /s/ Robert N. Finney
-------------------------------
Title: Managing Director
$20,000,000 DRESDNER BANK AG
By: /s/ Deborah Slusarczyk
-------------------------------
Title: Vice President
By: /s/ B. Craig Erickson
-------------------------------
Title: Vice President
<PAGE> 8
$20,000,000 THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Betty Francis-Samilton
-------------------------------
Title: Customer Service Officer
$20,000,000 NATIONSBANK, N.A.
By /s/ Brad W. DeSpain
-------------------------------
Title: Senior Vice President
$20,000,000 THE NORTHERN TRUST COMPANY
By: /s/ James F. T. Monhart
-------------------------------
Title: Senior Vice President
$10,000,000 BANK OF HAWAII
By:
-------------------------------
Title:
Total Commitments
$400,000,000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT APRIL 30, 1999 AND THE CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE NINE MONTHS ENDED APRIL 30, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-END> APR-30-1999
<CASH> 86,918
<SECURITIES> 17,808
<RECEIVABLES> 888,694
<ALLOWANCES> 0
<INVENTORY> 657,834
<CURRENT-ASSETS> 2,066,066
<PP&E> 1,560,438
<DEPRECIATION> (947,393)
<TOTAL-ASSETS> 4,243,658
<CURRENT-LIABILITIES> 1,837,842
<BONDS> 771,999
0
2,053
<COMMON> 45,410
<OTHER-SE> 1,269,127
<TOTAL-LIABILITY-AND-EQUITY> 4,243,658
<SALES> 3,593,967
<TOTAL-REVENUES> 3,593,967
<CGS> 2,797,157
<TOTAL-COSTS> 2,797,157
<OTHER-EXPENSES> 119,638
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 55,363
<INCOME-PRETAX> 236,790
<INCOME-TAX> 94,716
<INCOME-CONTINUING> 142,074
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 142,074
<EPS-BASIC> 3.11
<EPS-DILUTED> 3.05
</TABLE>
