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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(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 26, 1998 or
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number 0-6920
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APPLIED MATERIALS, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-1655526
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
3050 Bowers Avenue, Santa Clara, California 95054-3299
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Address of principal executive offices (Zip Code)
Registrant's telephone number, including area code (408) 727-5555
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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 .
Number of shares outstanding of the issuer's common stock as of April 26, 1998:
365,627,382
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
APPLIED MATERIALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
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April 26, April 27, April 26, April 27,
(In thousands, except per share amounts) 1998 1997 1998 1997
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<S> <C> <C> <C> <C>
Net sales $1,176,316 $900,862 $2,484,001 $1,736,638
Cost of products sold 622,027 486,845 1,300,271 950,965
---------- -------- ---------- ----------
Gross margin 554,289 414,017 1,183,730 785,673
Operating expenses:
Research, development and engineering 181,937 131,973 364,266 248,465
Marketing and selling 84,689 74,965 171,078 141,236
General and administrative 76,745 59,617 142,513 119,225
Acquired in-process research and
development -- -- 32,227 59,500
---------- -------- ---------- ----------
Income from operations 210,918 147,462 473,646 217,247
Income from litigation settlement -- -- 80,000 --
Interest expense 11,885 4,935 23,749 10,735
Interest income 18,230 14,598 39,509 28,155
---------- -------- ---------- ----------
Income from consolidated companies
before taxes 217,263 157,125 569,406 234,667
Provision for income taxes 76,042 54,994 199,292 102,959
---------- -------- ---------- ----------
Income from consolidated companies 141,221 102,131 370,114 131,708
Equity in net income/(loss) of joint venture -- -- -- --
---------- -------- ---------- ----------
Net income $ 141,221 $102,131 $ 370,114 $ 131,708
---------- -------- ---------- ----------
Earnings per share:*
Basic $ 0.39 $ 0.28 $ 1.01 $ 0.36
Diluted $ 0.37 $ 0.27 $ 0.98 $ 0.35
Weighted average number of shares:*
Basic 365,936 362,846 366,555 362,134
Diluted 379,247 375,798 379,320 373,524
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</TABLE>
* Amounts for the three and six months ended April 27, 1997 have been
retroactively restated to reflect a two-for-one stock split in the form of a
100 percent stock dividend, effective October 13, 1997.
See accompanying notes to consolidated condensed financial statements.
2
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APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS*
<TABLE>
<CAPTION>
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April 26, October 26,
(In thousands) 1998 1997
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 309,364 $ 448,043
Short-term investments 906,801 1,094,912
Accounts receivable, net 1,225,788 1,110,885
Inventories 714,126 686,451
Deferred income taxes 324,685 324,568
Other current assets 206,112 105,498
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Total current assets 3,686,876 3,770,357
Property, plant and equipment, net 1,229,711 1,066,053
Other assets 223,512 234,356
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Total assets $ 5,140,099 $ 5,070,766
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 31,387 $ 55,943
Current portion of long-term debt 9,600 10,563
Accounts payable and accrued expenses 1,050,097 1,157,808
Income taxes payable 131,698 177,774
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Total current liabilities 1,222,782 1,402,088
Long-term debt 616,495 623,090
Deferred income taxes and other liabilities 110,263 103,417
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Total liabilities 1,949,540 2,128,595
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Stockholders' equity:
Common stock 3,656 3,672
Additional paid-in capital 735,944 850,902
Retained earnings 2,468,152 2,098,038
Cumulative translation adjustments (17,193) (10,441)
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Total stockholders' equity 3,190,559 2,942,171
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Total liabilities and stockholders' equity $ 5,140,099 $ 5,070,766
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</TABLE>
* Amounts as of April 26, 1998 are unaudited. Amounts as of October 26, 1997 are
from the October 26, 1997 audited financial statements.
See accompanying notes to consolidated condensed financial statements.
3
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APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
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Six Months Ended
April 26, April 27,
(In thousands) 1998 1997
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 370,114 $ 131,708
Adjustments required to reconcile net income
to cash provided by operations:
Acquired in-process research and development expense 32,227 59,500
Depreciation and amortization 136,604 105,826
Equity in net income/(loss) of joint venture -- --
Deferred income taxes (932) 4,095
Changes in assets and liabilities, net of amounts acquired:
Accounts receivable (139,716) 16,303
Inventories (32,451) (15,243)
Other current assets (100,728) (7,303)
Other assets (2,563) (317)
Accounts payable and accrued expenses (87,000) 68,807
Income taxes payable (44,311) 106,458
Other liabilities 10,294 5,284
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Cash provided by operations 141,538 475,118
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Cash flows from investing activities:
Capital expenditures, net of retirements (293,605) (76,521)
Cash paid for licensed technology (32,227) --
Cash paid for acquisitions, net of cash acquired -- (246,565)
Proceeds from sales of short-term investments 520,318 244,937
Purchases of short-term investments (332,207) (483,383)
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Cash used for investing (137,721) (561,532)
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Cash flows from financing activities:
Short-term debt activity, net (23,939) (58,318)
Long-term debt activity, net (3,801) (55,807)
Common stock transactions, net (114,974) 771
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Cash used for financing (142,714) (113,354)
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Effect of exchange rate changes on cash 218 (1,460)
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Decrease in cash and cash equivalents (138,679) (201,228)
Cash and cash equivalents - beginning of period 448,043 403,888
--------- ---------
Cash and cash equivalents - end of period $ 309,364 $ 202,660
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</TABLE>
For the six months ended April 26, 1998, cash payments for interest and income
taxes were $22,532 and $237,043, respectively. For the six months ended April
27, 1997, cash payments for interest were $9,908 and net income tax refunds were
$8,190.
See accompanying notes to consolidated condensed financial statements.
4
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APPLIED MATERIALS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
SIX MONTHS ENDED APRIL 26, 1998
1) Basis of Presentation
In the opinion of management, the unaudited consolidated condensed financial
statements of Applied Materials, Inc. (the Company) included herein have
been prepared on a consistent basis with the October 26, 1997 audited
consolidated financial statements and include all material adjustments,
consisting of normal recurring adjustments, necessary to fairly present the
information set forth therein. These interim consolidated financial
statements should be read in conjunction with the October 26, 1997 audited
consolidated financial statements and notes thereto. The Company's results
of operations for the three and six months ended April 26, 1998 are not
necessarily indicative of future operating results.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ materially from those
estimates.
2) Earnings Per Share
The Company adopted Statement of Financial Accounting Standards No. 128
(SFAS 128), "Earnings Per Share," in the first fiscal quarter of 1998. Under
the provisions of SFAS 128, primary earnings per share has been replaced by
basic earnings per share, which does not include the dilutive effect of
stock options in its calculation. In addition, fully diluted earnings per
share has been replaced by diluted earnings per share. All prior period
earnings per share amounts have been restated to reflect the requirements of
SFAS 128. Basic earnings per share has been computed using the weighted
average number of common shares outstanding during the period. Diluted
earnings per share has been computed using the weighted average number of
common shares and equivalents (representing the dilutive effect of stock
options) outstanding during the period. Net income has not been adjusted for
any period presented for purposes of computing basic and diluted earnings
per share.
For purposes of computing diluted earnings per share, weighted average
common share equivalents do not include stock options with an exercise price
that exceeds the average fair market value of the Company's common stock for
the period. For the three months ended April 26, 1998, options to purchase
approximately 1,441,000 shares of common stock at an average price of $43.65
were excluded from the computation, and for the six months ended April 26,
1998, options to purchase approximately 1,714,000 shares of common stock at
an average price of $42.37 were excluded from the computation.
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3) Inventories
Inventories are stated at the lower of cost or market, with cost determined
on a first-in, first-out (FIFO) basis. The components of inventories are as
follows (in thousands):
<TABLE>
<CAPTION>
April 26, 1998 October 26, 1997
-------------- ----------------
<S> <C> <C>
Customer service spares $231,194 $207,938
Raw materials 129,264 106,406
Work-in-process 238,782 256,737
Finished goods 114,886 115,370
-------- --------
$714,126 $686,451
======== ========
</TABLE>
4) Other Assets
The components of other assets are as follows (in thousands):
<TABLE>
<CAPTION>
April 26, 1998 October 26, 1997
-------------- ----------------
<S> <C> <C>
Purchased technology, net $173,373 $186,127
Goodwill, net 12,506 13,438
Other 37,633 34,791
-------- --------
$223,512 $234,356
======== ========
</TABLE>
Purchased technology and goodwill are presented at cost, net of accumulated
amortization, and are being amortized using the straight-line method over
their estimated useful lives of eight years. The Company periodically
analyzes these assets to determine whether an impairment in carrying value
has occurred.
5) Accounts Payable and Accrued Expenses
The components of accounts payable and accrued expenses are as follows (in
thousands):
<TABLE>
<CAPTION>
April 26, 1998 October 26, 1997
-------------- ----------------
<S> <C> <C>
Accounts payable $ 274,870 $ 347,584
Compensation and benefits 195,289 219,384
Installation and warranty 233,351 216,962
Other 346,587 373,878
---------- ----------
$1,050,097 $1,157,808
========== ==========
</TABLE>
6) Licensed Technology and Acquisitions
During the first fiscal quarter of 1998, the Company entered into an
agreement with Trikon Technologies, Inc. for a non-exclusive, worldwide,
perpetual license of MORI(TM) plasma source and Forcefill(TM) deposition
technology. The Company recognized pre-tax acquired in-process research and
development expense of approximately $32.2 million, including transaction
costs, in connection with the execution of this agreement.
6
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During the first fiscal quarter of 1997, the Company acquired Opal, Inc. and
Orbot Instruments, Ltd. in separate transactions for approximately $293
million, consisting primarily of cash. In connection with these
acquisitions, the Company recorded a non-tax deductible charge of $59.5
million for acquired in-process research and development. With the exception
of this item, the Company's results of operations were not materially
affected by these acquisitions for the six months ended April 27, 1997.
7) Litigation Settlement
During the first fiscal quarter of 1998, the Company settled all outstanding
litigation with ASM International N.V. (ASM) and recorded $80 million of
pre-tax non-operating income. As a result of this settlement, ASM is also
required to pay ongoing royalties for certain system shipments subsequent to
the date of the settlement. Ongoing royalties have not been, and are not
expected to be, material.
8) Subsequent Event
On May 26, 1998, the Company announced a Voluntary Separation Plan (VSP) as
part of its continuing efforts to reduce costs. These efforts are in
response to continued cutbacks in capital equipment investment by
semiconductor manufacturers. The VSP will be offered to selected employees
in early June. Employees who choose to leave the Company under the VSP will
receive a package of separation pay and benefits. As a result of this
workforce reduction, the Company will incur a pre-tax restructuring charge
estimated to be $25 million to $30 million, or approximately $0.05 per
diluted share after-tax, during its third fiscal quarter ending July 26,
1998. This charge will primarily cover the cost of employee separation pay
and benefits.
9) New Accounting Pronouncement
In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use" (SOP 98-1). SOP 98-1 provides
guidance regarding the determination of whether computer software is
internal-use software, the capitalization of costs incurred for computer
software developed or obtained for internal use and accounting for the
proceeds of computer software originally developed or obtained for internal
use and then subsequently sold to the public. The Company has not yet
determined the effect, if any, of adopting SOP 98-1, which will be effective
for the Company's fiscal 2000.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
In addition to historical statements, this Report on Form 10-Q contains
forward-looking statements that are subject to certain risks and uncertainties
that could cause actual results to differ materially from those stated. These
forward-looking statements reflect management's opinions only as of the date
hereof, and the Company assumes no obligation to update this information. Risks
and uncertainties include, but are not limited to, those discussed in the
section entitled "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Trends, Risks and Uncertainties." Other risks and
uncertainties are disclosed in the Company's SEC filings, including the
Company's Report on Form 10-K for the fiscal year ended October 26, 1997 and
Report on Form 10-Q for the first fiscal quarter ended January 25, 1998.
RESULTS OF OPERATIONS
Applied Materials, Inc. (the Company) received new orders of $1.0 billion for
the second fiscal quarter of 1998, versus $1.3 billion for the first fiscal
quarter of 1998 and $1.4 billion for the fourth fiscal quarter of 1997. This
trend of declining quarterly new order levels results from reduced demand for
capital equipment as semiconductor manufacturers continue to assess DRAM
overcapacity, the Asian financial crisis and demand shifts in the PC market
resulting from lower priced products. New orders by region were as follows
(dollars in millions):
<TABLE>
<CAPTION>
Three Months Ended
------------------
April 26, 1998 Jan. 25, 1998
($) (%) ($) (%)
----- --- ----- ---
<S> <C> <C> <C> <C>
North America 430 42 402 31
Europe 164 16 237 19
Japan 155 15 169 13
Korea 41 4 82 6
Taiwan 111 11 369 29
Asia-Pacific 126 12 31 2
----- --- ----- ---
Total 1,027 100 1,290 100
===== === ===== ===
</TABLE>
8
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New orders from customers located in North America increased from the prior
quarter as a result of strengthening demand from logic device manufacturers for
0.25 micron technology. New orders in Europe decreased from the prior quarter as
non-European headquartered semiconductor manufacturers reduced their investment
in that region. Japan and Korea orders reflect reduced demand from DRAM
manufacturers and poor economic conditions in those countries. Taiwan orders
decreased as customers began to absorb significant capacity purchases made in
prior quarters. The increase in orders from Asia-Pacific is primarily the result
of significant orders from new customers in China. The Company's backlog at
April 26, 1998 was $1.4 billion, versus $1.6 billion at January 25, 1998 and
$1.7 billion at October 26, 1997.
The Company's results of operations for the second fiscal quarter of 1998 were
negatively affected by the factors discussed above, and the Company expects
further impact on its results of operations for the third and fourth fiscal
quarters of 1998. There is a high degree of uncertainty regarding DRAM capacity
issues, demand shifts in the personal computer industry and the near-term
economic health of Asian countries, particularly Japan and Korea, and their
related effect on the demand for semiconductor capital equipment. For these and
other reasons, the Company's results of operations for the three and six months
ended April 26, 1998 are not necessarily indicative of future operating results.
The Company's net sales for the three and six months ended April 26, 1998
increased 30.6 and 43.0 percent, respectively, from the corresponding periods of
fiscal 1997. During the corresponding periods of fiscal 1997, the Company's
results of operations were negatively affected by a downturn in the
semiconductor industry that began in 1996. Industry conditions improved during
the latter half of the Company's fiscal 1997, and the Company achieved record
new orders for the fourth fiscal quarter of 1997, driven by strengthening demand
for leading-edge capability from logic and microprocessor device manufacturers,
foundry capacity investments by customers located primarily in Taiwan, and
selected strategic investments in 0.25 micron technology by DRAM manufacturers.
This improvement in industry conditions resulted in increased net sales for the
three and six months ended April 26, 1998, when compared to the corresponding
periods of fiscal 1997. Net sales by region were as follows (dollars in
millions):
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<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
April 26, 1998 April 27, 1997 April 26, 1998 April 27, 1997
($) (%) ($) (%) ($) (%) ($) (%)
----- --- --- --- ----- --- ----- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
North America 465 40 352 39 936 38 645 37
Europe 159 13 125 14 355 14 326 19
Japan 204 17 135 15 426 17 260 15
Korea 30 3 102 11 82 3 152 9
Taiwan 273 23 135 15 561 23 244 14
Asia-Pacific 45 4 52 6 124 5 110 6
----- --- --- --- ----- --- ----- ---
1,176 100 901 100 2,484 100 1,737 100
===== === === === ===== === ===== ===
</TABLE>
The Company's gross margin for the three and six months ended April 26, 1998 was
47.1 and 47.7 percent, respectively, compared to 46.0 and 45.2 percent,
respectively, for the corresponding periods of fiscal 1997. During fiscal 1998,
the Company has focused on improving manufacturing efficiencies, reducing cycle
times and lowering material costs. These continuing efforts, combined with
increased business volume, resulted in a higher gross margin for the three and
six months ended April 26, 1998.
During the first fiscal quarter of 1998, the Company entered into an agreement
with Trikon Technologies, Inc. for a non-exclusive, worldwide, perpetual license
of MORI(TM) plasma source and Forcefill(TM) deposition technology. In connection
with this transaction, the Company recognized approximately $32.2 million of
acquired in-process research and development expense, including transaction
costs. During the first fiscal quarter of 1997, the Company acquired two
companies, Opal, Inc. and Orbot Instruments, Ltd. (Orbot), in separate
transactions and recognized $59.5 million of acquired in-process research and
development expense. With the exception of these charges, the transactions did
not have a material effect on the Company's results of operations for the six
months ended April 26, 1998 or April 27, 1997.
Excluding acquired in-process research and development expense, operating
expenses as a percentage of net sales for the three and six months ended April
26, 1998 were 29.2 and 27.3 percent, respectively, versus 29.6 and 29.3 percent,
respectively, for the corresponding periods of fiscal 1997. The decreases are
primarily attributable to increased business volume. Research, development and
engineering expense as a percentage of net sales for the three and six months
ended April 26, 1998 was 15.5 percent and 14.7 percent, respectively, versus
14.6 percent and 14.3 percent, respectively, for the corresponding periods of
fiscal 1997. The increases are primarily the result of investment in the
development of 300mm products and systems for 0.25 micron and below device
production.
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Significant operations of the Company are conducted in foreign currencies,
primarily Japanese yen. Forward exchange and currency option contracts are
purchased to hedge certain existing firm commitments and foreign currency
denominated transactions expected to occur during the next year. Gains and
losses on these contracts are recognized in income when the related transactions
being hedged are recognized. Because the effect of movements in currency
exchange rates on forward exchange and currency option contracts generally
offsets the related effect on the underlying items being hedged, these financial
instruments are not expected to subject the Company to risks that would
otherwise result from changes in currency exchange rates. Net foreign currency
gains and losses did not have a significant effect on the Company's results of
operations for the three and six months ended April 26, 1998 or April 27, 1997.
Interest expense for the three and six months ended April 26, 1998 was $12
million and $24 million, respectively, compared to $5 million and $11 million,
respectively, for the corresponding periods of fiscal year 1997. The increases
are primarily due to interest expense associated with $400 million of debt
issued by the Company during the fourth fiscal quarter of 1997.
Interest income for the three and six months ended April 26, 1998 was $18
million and $40 million, respectively, compared to $15 million and $28 million,
respectively, for the corresponding periods of fiscal 1997. The increases
resulted primarily from higher average cash, cash equivalents and short-term
investment balances.
The Company's effective income tax rate for the three and six months ended April
26, 1998 was 35 percent, consistent with the rate for the three months ended
April 27, 1997. The Company's effective income tax rate for the six months ended
April 27, 1997 was higher than 35 percent due to the non-deductible nature of
the $59.5 million charge for acquired in-process research and development.
Management anticipates that the Company's effective income tax rate will be 35
percent for the remainder of fiscal 1998.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The Company's financial condition remained strong at April 26, 1998, with a
ratio of current assets to current liabilities of 3.0:1, compared to 2.7:1 at
October 26, 1997. The Company ended the quarter with cash, cash equivalents and
short-term investments of $1.2 billion.
The Company generated approximately $142 million of cash from operations in the
first six months of fiscal 1998. The primary source of cash from operations was
net income (plus non-cash charges for depreciation, amortization and acquired
in-process research and development expense) of $539 million, which was
partially offset by increases in accounts receivable, inventories and other
current assets of $140 million, $32 million and $101 million, respectively,
11
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and decreases in accounts payable and accrued expenses and income taxes payable
of $87 million and $44 million, respectively.
Cash used for investing activities in the first six months of fiscal 1998 was
approximately $138 million, consisting primarily of purchases of property, plant
and equipment ($294 million, net) and licensed technology ($32 million), which
were partially offset by $188 million of proceeds from net sales of short-term
investments.
Cash used for financing activities in the first six months of fiscal 1998 was
approximately $143 million, consisting of stock repurchases of $143 million and
net debt repayments of $28 million, which were partially offset by proceeds from
stock issuances of $28 million.
At April 26, 1998, the Company's principal sources of liquidity consisted of
$1.2 billion of cash, cash equivalents and short-term investments and $500
million of available credit facilities. The Company may from time to time raise
additional cash in the debt and equity markets to better balance its capital
structure or support long-term business growth. The Company's liquidity is
affected by many factors, some of which are based on the normal ongoing
operations of the business, and others of which relate to the uncertainties of
the industry and global economies. Although the Company's cash requirements will
fluctuate based on the timing and extent of these factors, management believes
that cash generated from operations, together with the liquidity provided by
existing cash balances and borrowing capability, will be sufficient to satisfy
the Company's liquidity requirements for the next twelve months.
Capital expenditures are expected to be approximately $600 million for fiscal
1998, consisting primarily of investments in manufacturing and research
laboratory facilities.
The Company is authorized to systematically repurchase shares of its common
stock in the open market to reduce the dilution resulting from its stock-based
employee benefit and incentive plans. This authorization is effective until the
March 2001 Annual Meeting of Stockholders. The Company repurchased 4,453,000
shares of its common stock during the six months ended April 26, 1998, for a
total cash outlay of approximately $143 million.
12
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TRENDS, RISKS AND UNCERTAINTIES
INDUSTRY VOLATILITY
The semiconductor industry has historically been cyclical and subject to sudden
and sharp changes in supply and demand. The timing, length and severity of these
cycles are difficult to predict. During periods of reduced and declining demand,
the Company must be able to quickly align its cost structure with the expected
size of its future operating levels, and motivate and retain key employees.
During periods of rapid growth, the Company must be able to acquire and/or
develop sufficient manufacturing capacity to meet customer demand and hire and
assimilate a sufficient number of qualified people.
In response to the current industry cycle, the Company has implemented a number
of programs intended to align its cost structure with prevailing market
conditions. These programs include workforce actions (for example, a Voluntary
Separation Plan, restrictions on new hires and reductions in the number of
temporary workers and contractors), mandatory shutdown days and delayed capital
spending. In connection with the Voluntary Separation Plan, the Company will
incur a pre-tax restructuring charge estimated to be $25 million to $30 million,
or approximately $0.05 per diluted share after-tax, for its third fiscal quarter
ending July 26, 1998. There can be no assurance that these cost reduction
programs will be sufficient, or that the actual restructuring charge will not
differ materially from the current estimate.
ASIAN FINANCIAL CRISIS
Certain Asian countries are experiencing banking and currency difficulties that
have lead to economic slowdowns or recessions in those countries. This, in turn,
has resulted in reduced demand for the Company's products. For instance, the
purchasing power of the Company's Korean customers has declined as a result of,
among other things, difficulties in obtaining credit and the decline in value of
the Korean won. Korean customers have canceled or delayed orders for the
Company's products and may cancel or delay additional orders. Japan's economy is
also weak and does not appear to have responded to recent stimulus efforts. If
Japan's economy remains stagnant or deteriorates further, capital equipment
investment by Japanese customers could decrease and the economies of other
countries could be negatively affected. Net sales to customers located in Korea
and Japan for the second fiscal quarter of 1998 were 3 percent and 17 percent,
respectively, of the Company's total net sales.
13
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DRAM OVERCAPACITY AND DEMAND SHIFTS IN THE PC INDUSTRY
The DRAM market continues to be characterized by excess capacity and low device
prices, which could cause DRAM device manufacturers to further decrease their
capital spending. In the PC market, shifts in demand from more expensive, high
performance products to low cost products may result in reduced profitability
for semiconductor manufacturers, which could delay or decrease their investment
in the Company's products.
GLOBAL BUSINESS
Managing global operations and sites located throughout the world presents
challenges associated with cultural diversities and organizational alignment.
Moreover, each region in the global semiconductor equipment market exhibits
unique characteristics that can cause capital equipment investment patterns to
vary significantly from period to period. Although international markets provide
the Company with significant growth opportunities, periodic economic downturns,
trade balance issues, political instability and fluctuations in interest and
foreign currency exchange rates are all risks that could affect global product
and service demand.
YEAR 2000
Many computer systems used by the Company may not properly recognize a date
using "00" as the year 2000 (Year 2000). This could result in system/program
failures or logic errors that would disrupt normal business activities. The
Company is in the process of identifying and modifying or replacing computer
systems that potentially subject the Company to risk.
In addition, certain software programs used to operate systems manufactured and
sold by the Company may not be Year 2000 compliant. The Company is currently
evaluating such software programs to determine if they are Year 2000 ready, and
has notified its customers that plans are being developed to address this issue.
The Company has initiated communications with suppliers to raise their awareness
of the Year 2000 issue and to determine the extent to which the Company is
vulnerable to their failure to remediate their own Year 2000 issues. The Company
cannot reasonably predict the degree to which its suppliers will be successful
in mitigating the potential negative effects of the Year 2000 date-recognition
problem.
If computer systems used by the Company or its suppliers, or the software
applications used in systems manufactured and sold by the Company, fail or
experience significant difficulties, the Company's results of operations could
be materially affected. At this time, the Company cannot reasonably estimate the
cost of its Year 2000 compliance program.
14
<PAGE> 15
FOREIGN CURRENCY
Significant operations of the Company are conducted in foreign currencies,
primarily Japanese yen. The Company actively manages its exposure to changes in
foreign currency exchange rates, but there can be no assurance that future
changes in foreign currency exchange rates will not have a material effect on
its results of operations or financial condition.
BACKLOG
The Company's backlog was $1.4 billion as of April 26, 1998, compared to $1.6
billion as of January 25, 1998 and $1.7 billion as of October 26, 1997. The
Company schedules production of its systems based upon order backlog and
customer commitments. Backlog includes only orders for which written
authorizations have been accepted and shipment dates within 12 months have been
assigned. Due to possible customer changes in delivery schedules and
cancellation of orders, the Company's backlog at any particular date is not
necessarily indicative of actual sales for any succeeding period.
TECHNOLOGICAL ADVANCES
The Company operates in a highly competitive industry characterized by
increasingly rapid technological changes. The Company's future success is
therefore dependent on its ability to develop new products (including those for
new materials, 300mm technology and 0.25 micron and below production), to
qualify new products with its customers, to successfully introduce new products
to the marketplace on a timely basis, to commence production to meet customer
demands and to develop new markets in the semiconductor industry for its
products and services. If the Company is unable, for whatever reason, to develop
and introduce new products in a timely manner in response to changing market
conditions or customer requirements, its results of operations could be
adversely affected.
LITIGATION
The Company is currently involved in litigation regarding patents and other
intellectual property rights (see Part II, Item 1) and could become involved in
additional litigation in the future. In the normal course of business, the
Company from time to time receives and makes inquiries with regard to possible
patent infringement, and is subject to various other legal proceedings and
claims, either asserted or unasserted. Any such claims, whether with or without
merit, could be time-consuming and expensive to defend and could divert
management's attention and resources. There can be no assurance regarding the
outcome of current or future litigation or patent infringement inquiries.
15
<PAGE> 16
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has performed an analysis to assess the potential effect of
reasonably possible near-term changes in interest and foreign currency exchange
rates. The effect of such rate changes is not expected to be material to the
Company's results of operations, cash flows or financial condition. Net foreign
currency gains and losses were not material for the three or six months ended
April 26, 1998.
16
<PAGE> 17
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In April 1997, the Company filed suit against AST Electronik GmbH and AST
Electronik USA, Inc. (collectively AST), and AG Associates, Inc. (AG) in the
United States District Court for the Northern District of California (case no.
C-97-20375RWM), alleging infringement of several of the Company's patents
relating to rapid thermal processing. In October 1997, AST and AG each brought
counterclaims alleging that the Company infringes patents concerning related
technology. Recently, AG filed additional counterclaims, alleging infringement
of several patents. The Company believes these counterclaims are improper and is
seeking dismissal. Discovery has commenced and trial has been set for March
1999.
As a result of the Company's acquisition of Orbot, the Company is involved in a
lawsuit captioned KLA Instruments Corporation (KLA) v. Orbot (case no.
C93-20886-JW) in the United States District Court for the Northern District of
California. KLA alleges that the Company infringes one patent regarding
equipment for the inspection of masks and reticles, and KLA seeks an injunction,
damages and such other relief as the Court may find appropriate. There has been
discovery, but no trial date has been set. Management believes that it has
meritorious defenses and intends to pursue this matter vigorously.
On June 13, 1997, the Company filed a lawsuit against Varian Associates, Inc.
captioned Applied Materials, Inc. v. Varian Associates, Inc. (Varian) (case no.
C-97-20523-RMW), alleging infringement of several of the Company's patents
concerning physical vapor deposition (PVD) technology. The complaint was later
amended on July 7, 1997 to include Novellus Systems, Inc. (Novellus) as a
defendant as a result of Novellus' acquisition of Varian's thin film PVD
business. The Company seeks damages for past infringement, a permanent
injunction, treble damages for willful infringement, pre-judgment interest and
attorneys fees. Varian answered the complaint by denying all allegations,
counterclaiming for declaratory judgment of invalidity and unenforceability and
alleging conduct in violation of antitrust laws. On June 23, 1997, Novellus
filed a separate lawsuit against the Company captioned Novellus Systems, Inc. v.
Applied Materials, Inc. (case no. C-97-20551-EAI), alleging infringement by the
Company of three patents concerning PVD technology that were formerly owned by
Varian. On July 8, 1997, Varian filed a separate lawsuit against the Company
captioned Varian Associates, Inc. v. Applied Materials, Inc. (case no.
C-97-20597-PVT), alleging a broad range of conduct in violation of federal
antitrust laws and state unfair competition and business practice laws.
Discovery has commenced in these actions. No trial dates have been set.
Management believes that it has meritorious claims and defenses and intends to
pursue these matters vigorously.
17
<PAGE> 18
The Company is subject to various other legal proceedings and claims, either
asserted or unasserted, which arise in the ordinary course of business. Although
the outcome of these claims cannot be predicted with certainty, management does
not believe that the outcome of any of these legal matters will have a material
adverse effect on the Company's results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Stockholders was held on March 17, 1998 in Austin, Texas.
Nine incumbent directors were re-elected without opposition to serve another
one-year term in office. The results of this election were as follows:
<TABLE>
<CAPTION>
Name of Director Votes For Votes Withheld
------------------------------------------------------------------
<S> <C> <C>
James C. Morgan 305,230,427 1,228,145
Dan Maydan 305,241,633 1,216,939
Michael H. Armacost 305,187,821 1,270,751
Deborah A. Coleman 305,001,165 1,457,407
Herbert M. Dwight, Jr. 304,802,286 1,656,286
Philip V. Gerdine 305,258,431 1,200,141
Tsuyoshi Kawanishi 304,785,854 1,672,718
Paul R. Low 305,205,487 1,253,085
Alfred J. Stein 303,400,594 3,057,978
</TABLE>
On a proposal to an increase of 18,000,000 in the number of shares authorized
for issuance under the Company's 1995 Equity Incentive Plan, there were
209,645,930 votes cast in favor, 95,196,284 votes cast against, 1,586,358
abstentions and 30,000 broker non-votes. On a proposal to amend the Company's
Certificate of Incorporation to increase the number of shares of Common Stock
authorized to be issued from 500,000,000 to 1,100,000,000, there were
275,843,223 votes cast in favor, 29,576,798 votes cast against, 1,038,481
abstentions and 70 broker non-votes.
18
<PAGE> 19
ITEM 5. OTHER INFORMATION
The ratio of earnings to fixed charges for the six months ended April 26, 1998
and April 27, 1997, and for each of the last five fiscal years, was as follows:
<TABLE>
<CAPTION>
Six Months Ended
---------------- Fiscal Year
April 26, April 27, ---------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
16.27x 11.73x 18.96x 20.14x 21.25x 13.37x 7.61x
====== ====== ====== ====== ====== ====== =====
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits are numbered in accordance with the Exhibit Table of
Item 601 of Regulation S-K:
<TABLE>
<S> <C>
10.1 $250,000,000 Five Year Credit Agreement and
$250,000,000 364-Day Credit Agreement, each dated
as of March 13, 1998 among Applied Materials, Inc.,
Morgan Guaranty Trust Company of New York, as
Documentation Agent and Administrative Agent, and
Citicorp Securities, Inc., as Syndication Agent.
27.0 Financial Data Schedule: filed electronically
</TABLE>
b) The Company did not file a report on Form 8-K during its second
fiscal quarter of 1998.
19
<PAGE> 20
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.
APPLIED MATERIALS, INC.
June 4, 1998 By: \s\ Joseph R. Bronson
--------------------------------
Joseph R. Bronson
Senior Vice President,
Chief Financial Officer and
Chief Administrative Officer
(Principal Financial Officer)
By: \s\ Michael K. O'Farrell
--------------------------------
Michael K. O'Farrell
Vice President and
Corporate Controller
(Principal Accounting Officer)
20
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
No.
<S> <C>
10.1 $250,000,000 Five Year Credit Agreement and $250,000,000 364-Day
Credit Agreement, each dated as of March 13, 1998 among Applied
Materials, Inc., Morgan Guaranty Trust Company of New York, as
Documentation Agent and Administrative Agent, and Citicorp Securities,
Inc., as Syndication Agent.
27.0 Financial Data Schedule: filed electronically
</TABLE>
<PAGE> 1
Exhibit 10.1
CONFORMED COPY
$250,000,000
FIVE-YEAR CREDIT AGREEMENT
dated as of
March 13, 1998
among
APPLIED MATERIALS, INC.
THE BANKS PARTY HERETO
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Documentation Agent and Administrative Agent
and
CITICORP SECURITIES, INC.,
as Syndication Agent
<PAGE> 2
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS
SECTION 1.01. Definitions.................................................... 1
SECTION 1.02. Types of Borrowings............................................ 18
ARTICLE 2 THE CREDITS
SECTION 2.01. Commitments to Lend............................................ 18
SECTION 2.02. Notice of Committed Borrowing.................................. 19
SECTION 2.03. Money Market Borrowings........................................ 19
SECTION 2.04. Notice to Banks; Funding of Loans.............................. 24
SECTION 2.05. Notes.......................................................... 24
SECTION 2.06. Maturity of Loans.............................................. 25
SECTION 2.07. Interest Rates................................................. 25
SECTION 2.08. Method of Electing Interest Rates.............................. 28
SECTION 2.09. Facility Fees.................................................. 30
SECTION 2.10. Optional Termination or Reduction of Commitments............... 31
SECTION 2.11. Scheduled Termination of Commitments........................... 31
SECTION 2.12. Optional Prepayments........................................... 31
SECTION 2.13. General Provisions as to Payments.............................. 31
SECTION 2.14. Funding Losses................................................. 32
SECTION 2.15. Computation of Interest and Fees............................... 33
SECTION 2.16. Regulation D Compensation...................................... 33
ARTICLE 3 CONDITIONS
SECTION 3.01. Effectiveness.................................................. 33
SECTION 3.02. Borrowings..................................................... 35
ARTICLE 4 REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power.................................. 35
</TABLE>
ii
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention.................................................. 36
SECTION 4.03. Binding Effect................................................. 36
SECTION 4.04. Financial Information.......................................... 36
SECTION 4.05. Litigation..................................................... 37
SECTION 4.06. Compliance with ERISA.......................................... 37
SECTION 4.07. Environmental Matters.......................................... 37
SECTION 4.08. Taxes.......................................................... 37
SECTION 4.09. Subsidiaries................................................... 38
SECTION 4.10. No Regulatory Restrictions on Borrowing........................ 38
SECTION 4.11. Full Disclosure................................................ 38
ARTICLE 5 COVENANTS
SECTION 5.01. Information.................................................... 39
SECTION 5.02. Payment of Obligations......................................... 43
SECTION 5.03. Maintenance of Property; Insurance............................. 44
SECTION 5.04. Conduct of Business and Maintenance of Existence............... 44
SECTION 5.05. Compliance with Laws........................................... 44
SECTION 5.06. Restricted and Unrestricted Subsidiaries....................... 45
SECTION 5.07. Consolidations, Mergers and Sales of Assets.................... 45
SECTION 5.08. Use of Proceeds................................................ 45
SECTION 5.09. Transactions with Affiliates................................... 46
SECTION 5.10. Debt........................................................... 46
SECTION 5.11. Negative Pledge................................................ 46
SECTION 5.12. Consolidated Tangible Net Worth................................ 49
ARTICLE 6 DEFAULTS
SECTION 6.01. Events of Default.............................................. 50
SECTION 6.02. Notice of Default.............................................. 53
ARTICLE 7 THE ADMINISTRATIVE AGENT
SECTION 7.01. Appointment and Authorization.................................. 53
SECTION 7.02. Administrative Agent and Affiliates............................ 53
SECTION 7.03. Action by Administrative Agent................................. 54
SECTION 7.04. Consultation with Experts...................................... 54
</TABLE>
iii
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 7.05. Liability of Administrative Agent.............................. 54
SECTION 7.06. Indemnification................................................ 55
SECTION 7.07. Credit Decision................................................ 55
SECTION 7.08. Successor Administrative Agent................................. 55
SECTION 7.09. Administrative Agent's Fee..................................... 56
SECTION 7.10. Syndication Agent.............................................. 56
ARTICLE 8 CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair....... 56
SECTION 8.02. Illegality..................................................... 57
SECTION 8.03. Increased Cost and Reduced Return.............................. 57
SECTION 8.04. Taxes.......................................................... 59
SECTION 8.05. Limitations on Amounts Due under Section 8.03.................. 61
SECTION 8.06. Base Rate Loans Substituted for Affected Fixed Rate Loans...... 61
SECTION 8.07. Substitution of Bank........................................... 62
ARTICLE 9 MISCELLANEOUS
SECTION 9.01. Notices........................................................ 62
SECTION 9.02. No Waivers..................................................... 63
SECTION 9.03. Expenses; Indemnification...................................... 63
SECTION 9.04. Sharing of Set-Offs............................................ 63
SECTION 9.05. Amendments and Waivers......................................... 64
SECTION 9.06. Successors and Assigns......................................... 64
SECTION 9.07. No Reliance on Margin Stock.................................... 66
SECTION 9.08. Governing Law; Submission to Jurisdiction...................... 66
SECTION 9.09. Counterparts; Integration...................................... 66
SECTION 9.10. Confidentiality................................................ 66
SECTION 9.11. WAIVER OF JURY TRIAL........................................... 67
</TABLE>
Commitment Schedule
Pricing Schedule
Exhibit A - Note
Exhibit B - Money Market Quote Request
Exhibit C - Invitation for Money Market Quote
Exhibit D - Money Market Quote
Exhibit E - Opinion of General Counsel for the Company
Exhibit F - Opinion of Special Counsel for the Company
iv
<PAGE> 5
Exhibit G - Opinion of Special Counsel for the Administrative Agent
Exhibit H - Assignment and Assumption Agreement
Exhibit I - Restricted and Unrestricted Subsidiaries
Exhibit J - Existing Liens
Exhibit K - Special Unencumbered Property
v
<PAGE> 6
FIVE-YEAR CREDIT AGREEMENT
AGREEMENT dated as of March 13, 1998 among APPLIED MATERIALS, INC., the
BANKS party hereto, MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Documentation
Agent and Administrative Agent, and CITICORP SECURITIES, INC., as Syndication
Agent.
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. 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,
completed by such Bank and returned to the Administrative Agent (with a copy to
the Company).
"AFFILIATE" means any Person (other than a Restricted Subsidiary) (i)
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Company, (ii) which
beneficially owns or holds 10% or more of any class of the Voting Stock of the
Company or (iii) 10% or more of the Voting Stock (or in the case of a Person
which is not a corporation, 10% or more of the equity interest) of which is
beneficially owned or held by the Company or a Subsidiary. The term "CONTROL"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of Voting Stock, by contract or otherwise.
<PAGE> 7
"AMJ" means Applied Materials Japan, Inc., a corporation organized under
the laws of Japan.
"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 bank listed on the Commitment Schedule attached
hereto, each Assignee which becomes a Bank pursuant to Section 9.06(c), and
their respective successors; provided that, for purposes of any determination
made with respect to Citicorp USA, Inc. under Section 2.14, 8.01, 8.02 or 8.03,
the term "BANK" shall be deemed to include Citibank, N.A.
"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 2.08(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.
"BORROWING" has the meaning set forth in Section 1.02.
"CAPITALIZED LEASE" means any lease the obligation for Rentals with
respect to which is required to be capitalized on a consolidated balance sheet
of the lessee and its subsidiaries in accordance with GAAP.
"CAPITALIZED RENTALS" of any Person means at any date the amount at
which the aggregate rentals due and to become due under all Capitalized Leases
under which such Person is a lessee would be reflected as a liability on a
consolidated balance sheet of such Person.
"CD BASE RATE" has the meaning set forth in Section 2.07(b).
2
<PAGE> 8
"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.
"CD RATE" means a rate of interest determined pursuant to Section
2.07(b) on the basis of an Adjusted CD Rate.
"CD REFERENCE BANKS" means Banque Nationale de Paris, Citibank N.A. and
Morgan Guaranty Trust Company of New York.
"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 2.10 or 9.06(c); provided that, if
the context so requires, the term "Commitment" means the obligation of a Bank to
extend credit up to such amount to the 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.
"COMPANY" means Applied Materials, Inc., a Delaware corporation, and its
successors.
"COMPANY'S 1997 FORM 10-K" means the Company's annual report on Form
10-K for 1997, as filed with the SEC pursuant to the Exchange Act.
"CONSOLIDATED DEBT" means all Debt of the Company and its Relevant
Subsidiaries, determined in accordance with GAAP on a consolidated basis after
eliminating intercompany items.
3
<PAGE> 9
"CONSOLIDATED NET INCOME" for any period means the net income of the
Company and its Relevant Subsidiaries for such period, determined in accordance
with GAAP on a consolidated basis after eliminating earnings or losses
attributable to outstanding Minority Interests.
"CONSOLIDATED NET TANGIBLE ASSETS" means, at any date, the total amount
of all Tangible Assets of the Company and its Relevant Subsidiaries after
deducting therefrom all liabilities which in accordance with GAAP would be
included on their consolidated balance sheet, except Consolidated Debt.
"CONSOLIDATED SUBSIDIARY" means, at any date, any Subsidiary or other
entity the accounts of which would, in accordance with GAAP, be consolidated
with those of the Company in its consolidated financial statements if such
statements were prepared as of such date.
"CONSOLIDATED TANGIBLE NET WORTH" means, at any date, total
stockholders' equity as indicated in the most recent quarterly or annual
consolidated financial statements of the Company and its Relevant Subsidiaries
less Intangible Assets.
"CONSOLIDATED TOTAL ASSETS" means, at any date, the total assets of the
Company and its Relevant Subsidiaries on a consolidated basis determined in
accordance with GAAP.
"CP BACKSTOP BORROWING" means a Borrowing the proceeds of which are used
solely for the purpose of repaying outstanding commercial paper issued by the
Company.
"CREDIT EXPOSURE" means, with respect to any Bank at any time, (i) the
amount of its Commitment (whether used or unused) at such time or (ii) if the
Commitments have terminated in their entirety, the aggregate outstanding
principal amount of its Loans at such time.
"DEBT" of any Person means at any date:
(i) all Indebtedness of such Person (a) for borrowed money or (b)
evidenced by notes, bonds, debentures or similar evidences of
indebtedness of such Person;
(ii) obligations secured by any Lien upon property or assets
owned by such Person, even though such Person has not assumed or become
liable for the payment of such obligation including, without limitation,
obligations secured by Liens arising from the sale or transfer of
4
<PAGE> 10
notes, accounts receivable or other assets, other than obligations
secured by Liens on notes, accounts receivable or other assets sold or
transferred in a transaction which is accounted for as a true sale under
GAAP;
(iii) obligations created or arising under any conditional sale
or other title retention agreement with respect to property acquired by
such Person, notwithstanding the fact that the rights and remedies of
the seller, lender or lessor under such agreement in the event of
default are limited to repossession or sale of property including,
without limitation, obligations secured by Liens arising from the sale
or transfer of notes or accounts receivable other than precautionary
Liens filed or recorded in connection with any such sale or transfer of
such notes or accounts receivable (a) which is accounted for as a true
sale under GAAP and (b) except for such precautionary Liens filed or
recorded in connection with any such sales or transfers by AMJ, pursuant
to which there is no recourse (other than recourse for breach of
customary representations and warranties) to the seller of such notes or
accounts receivable (as evidenced by there being no accounting reserve
taken or required to be taken in respect of any possible liability
relating to such sale or transfer and, in the event such reserve is
taken or required to be taken, the amount of Debt shall be deemed to be
the amount of such reserve), but, in all events, excluding trade
payables and accrued expenses constituting current liabilities;
(iv) Capitalized Rentals of such Person;
(v) reimbursement obligations of such Person in respect of credit
enhancement instruments which are, in substance, financial guarantees of
the obligations of Persons other than the Company or its Relevant
Subsidiaries;
(vi) reimbursement obligations of such Person in respect of
credit enhancement instruments, which reimbursement obligations are then
due and payable by such Person;
(vii) obligations of such Person representing the deferred and
unpaid purchase price of any property or business or services, excluding
trade payables and accrued expenses constituting current liabilities;
and
(viii) Guarantees by such Person of obligations of others of the
character referred to hereinabove in this definition.
The Company's obligations under operating leases and Off-Balance Sheet Leases
5
<PAGE> 11
shall be excluded from this definition; provided that (i) no such exclusion
shall be made if and to the extent that GAAP would require such obligations to
be classified as debt for borrowed money and (ii) in any event the term "Debt"
shall include the Excess Lease Financed Amount (if any).
"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.
"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
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 Company 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.
"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,
6
<PAGE> 12
agreements and other governmental restrictions relating to the environment or
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.
"EQUITY AFFILIATE" means any Person in which the Company or any of its
Consolidated Subsidiaries holds an equity investment that is accounted for under
the equity method.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA AFFILIATE" means any member of the ERISA Group.
"ERISA GROUP" means the Company, any Restricted 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
Company or any Restricted Subsidiary, are treated as a single employer under
Section 414 of the Internal Revenue Code.
"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 Company 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.
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<PAGE> 13
"EURO-DOLLAR REFERENCE BANKS" means the principal London offices of
Banque Nationale de Paris, Citibank N.A. and Morgan Guaranty Trust Company of
New York.
"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).
"EVENTS OF DEFAULT" has the meaning set forth in Section 6.01.
"EXCESS LEASE FINANCED AMOUNT" means the amount (if any) by which the
Lease Financed Amount exceeds (i) $250,000,000 at any time when the Company does
not have a High Rating or (ii) $500,000,000 at any time when the Company does
have a High Rating.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time.
"EXISTING OFF-BALANCE SHEET LEASE" means the Master Lease dated as of
April 30, 1997 between the Company and Credit Suisse Leasing, 92A, L.P. and the
Operative Documents (as defined therein), as they may be amended or supplemented
from time to time.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Domestic Business Day next
succeeding such day, provided that (i) if such day is not a Domestic Business
Day, the Federal Funds Rate for such day 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 such day
shall be the average rate quoted to Morgan Guaranty Trust Company of New York on
such day on such transactions as determined by the Administrative Agent.
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"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) or any combination of the foregoing.
"GAAP" means at any time generally accepted accounting principles as
then in effect, applied on a basis consistent (except for changes concurred in
by the Company's independent public accountants) with the most recent audited
consolidated financial statements of the Company and its Consolidated
Subsidiaries delivered to the Banks; provided that, if the Company notifies the
Administrative Agent that the Company wishes to amend any covenant in Article 5
or any definition of a term used in any such covenant 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 Company that the Required
Banks wish to amend any such covenant or definition for such purpose), then, for
purposes of such covenant or definition only, "GAAP" shall mean GAAP as in
effect immediately before the relevant change in generally accepted accounting
principles became effective, until either such notice is withdrawn or such
covenant or definition is amended in a manner satisfactory to the Company and
the Required Banks.
"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 (beginning and ending on the same day) at
such time or (iii) all CD Loans having the same Interest Period (beginning and
ending on the same day) 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.
"GUARANTEES" by any Person means all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing, or in effect guaranteeing,
any Indebtedness, dividend or other obligation of any other Person (the "PRIMARY
OBLIGOR") in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement, contingent or
otherwise, by such Person: (i) to purchase such Indebtedness or obligation or
any property or assets constituting security therefor, (ii) to advance or supply
funds (x) for the purchase or payment of such Indebtedness or obligation, (y) to
maintain working capital or other balance sheet condition or otherwise to
advance or make available funds for the purchase or payment of such Indebtedness
or obligation, (iii) to purchase Securities or other property or services
primarily for the purpose of assuring the owner of such Indebtedness or
obligation of the ability of the primary
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<PAGE> 15
obligor to make payment of such Indebtedness or obligation, or (iv) otherwise to
assure the owner of such Indebtedness or obligation of the primary obligor
against loss in respect thereof. For purposes of all computations made under
this Agreement, a Guarantee in respect of any Indebtedness for borrowed money
shall be deemed to be Indebtedness equal to the principal amount of such
Indebtedness for borrowed money to the extent guaranteed, and a Guarantee in
respect of any other obligation or liability or any dividend shall be deemed to
be Indebtedness equal to the maximum aggregate amount of such obligation,
liability or dividend to the extent guaranteed. The Company's obligations under
Off-Balance Sheet Leases shall be excluded from this definition; provided that
no such exclusion shall be made if and to the extent that GAAP would require
such obligations to be classified as a guarantee.
"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.
"HIGH RATING" means a rating of senior long-term unsecured debt
securities of the Company without any third-party credit enhancement as either
(i) BBB+ or higher by S&P or (ii) Baa1 or higher by Moody's Investors Service,
Inc.
"INDEBTEDNESS" of any Person means and includes all obligations of such
Person which in accordance with GAAP should be classified upon a balance sheet
of such Person as liabilities of such Person.
"INDEMNITEE" has the meaning set forth in Section 9.03(b).
"INTANGIBLE ASSETS" means at any date the total amount of all assets of
the Company and its Relevant Subsidiaries that are properly classified as
"INTANGIBLE ASSETS" in accordance with GAAP and, in any event, shall include,
without limitation, goodwill, patents, trade names, trademarks, copyrights,
franchises, experimental expense, organization expense, unamortized debt
discount and expense, and deferred charges other than prepaid insurance, prepaid
leases and prepaid taxes and current deferred taxes which are classified on the
balance sheet of the Company and its Relevant Subsidiaries as a current asset in
accordance with GAAP and in which classification the Company's independent
public accountants concur; provided that the foregoing Intangible Assets shall
be deemed to be in an amount equal to zero at all times during which such
Intangible Assets, in the aggregate, are less than 2% of stockholders' equity of
the Company.
"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
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<PAGE> 16
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 Company may
elect in such notice; 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 Company may elect in such notice; 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;
(3) with respect to each Money Market LIBOR Loan, the period commencing
on the date of borrowing specified in the applicable Notice of Borrowing and
ending such whole number of months thereafter as the Company 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;
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(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;
(3) with respect to each Money Market Absolute Rate Loan, the period
commencing on the date of borrowing specified in the applicable Notice of
Borrowing and ending such number of days thereafter (but not less than 7 days)
as the Company 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.
"LEASE FINANCED AMOUNT" means, with respect to Off-Balance Sheet Leases,
(i) in the case of the Existing Off-Balance Sheet Lease, the sum of the
aggregate outstanding principal amount of the Loans (as defined therein) and the
outstanding Investment Amounts (as defined therein) or (ii) in the case of any
other Off-Balance Sheet Lease, the sum of the comparable amounts as defined
therein.
"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 (subject to the second paragraph of this definition) any
interest in property securing an obligation owed to, or a claim by, a Person
other than the owner of the property, whether such interest is based on the
common law, statute or contract, and including but not limited to the security
interest or other lien arising from a mortgage, encumbrance, pledge, conditional
sale or trust receipt or a lease (other than an operating lease), consignment,
bailment or transfer for security purposes. The term "LIEN" shall include
reservations,
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<PAGE> 18
exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances (including,
with respect to stock, stockholder agreements, voting trust agreements, buy-back
agreements and all similar arrangements) affecting property. For the purposes of
this Agreement, the Company or a Restricted Subsidiary shall be deemed to be the
owner of any property which it has acquired or holds subject to a conditional
sale agreement, Capitalized Lease or other arrangement pursuant to which title
to the property has been retained by or vested in some other Person for security
purposes and such retention or vesting shall constitute a Lien.
Off-Balance Sheet Leases and the arrangements set forth therein shall be
excluded from this definition; provided that:
(i) if any portion of the Lease Financed Amount is included in
Debt under the last sentence of the definition of Debt, then, for
purposes of Section 5.11(j), Off-Balance Sheet Leases and the
arrangements set forth therein shall be deemed to create a Lien securing
the Excess Lease Financed Amount; and
(ii) if Off-Balance Sheet Leases and the arrangements set forth
therein create a lien on any property or assets other than (x) the
property and assets leased pursuant to Off-Balance Sheet Leases, (y)
rights of the Company as sublessor of any portion of such property and
assets and (z) Permitted Lease Collateral, such lien shall not be
excluded from this definition.
"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).
"MARGIN STOCK" means "margin stock" as such term is defined in
Regulation U.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
properties, business, profits or condition (financial or otherwise) of the
Company or of the Company and its Restricted Subsidiaries taken as a whole.
"MATERIAL DEBT" means Debt (other than the Notes) of the Company and/or
one or more of its Restricted Subsidiaries, arising in one or more related or
unrelated transactions, in an aggregate principal or face amount exceeding
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<PAGE> 19
$50,000,000.
"MATERIAL FINANCIAL OBLIGATIONS" means a principal or face amount of
Debt and/or payment obligations (calculated after giving effect to any
applicable netting agreements) in respect of Derivatives Obligations of the
Company and/or one or more of its Restricted Subsidiaries, arising in one or
more related or unrelated transactions, exceeding in the aggregate $50,000,000.
"MATERIAL PLAN" means, at any time, a Plan or Plans having aggregate
Unfunded Liabilities in excess of $50,000,000.
"MINORITY INTERESTS" means any shares of stock of any class of a
Relevant Subsidiary (other than directors' qualifying shares as required by law)
that are not owned by the Company and/or one or more of its Relevant
Subsidiaries.
"MONEY MARKET ABSOLUTE RATE" has the meaning set forth in Section
2.03(d).
"MONEY MARKET ABSOLUTE RATE LOAN" means a loan made or 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 Company
and the Administrative Agent; provided that any Bank may from time to time by
notice to the Company and the Administrative Agent designate separate Money
Market Lending Offices for its Money Market LIBOR Loans, on the one hand, and
its Money Market Absolute Rate Loans, on the other hand, in which case all
references herein to the Money Market Lending Office of such Bank shall be
deemed to refer to either or both of such offices, as the context may require.
"MONEY MARKET LIBOR LOAN" means a loan made or to be made by a Bank
pursuant to a LIBOR Auction (including such a loan bearing interest at the Base
Rate pursuant to Section 8.01).
"MONEY MARKET LOAN" means a Money Market LIBOR Loan or a Money Market
Absolute Rate Loan.
"MONEY MARKET MARGIN" has the meaning set forth in Section 2.03(d).
"MONEY MARKET QUOTE" means an offer by a Bank to make a Money Market
Loan in accordance with Section 2.03.
"MOODY'S" means Moody's Investors Service, Inc.
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"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
or has within the preceding five plan years made 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 Company, substantially in the form
of Exhibit A hereto, evidencing the obligation of the Company 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
2.08.
"OFF-BALANCE SHEET LEASES" means one or more lease agreements and
related agreements entered into by the Company or any of its Subsidiaries from
time to time, in each case in a transaction which the Company or such Subsidiary
intends to be treated as an "operating lease" for financial reporting purposes
but as a loan for one or more of the following purposes: (i) federal, state and
local income or franchise tax, (ii) bankruptcy, (iii) real estate law and (iv)
commercial law (including uniform commercial law). The term "Off-Balance Sheet
Leases" shall include, without limitation, the Existing Off-Balance Sheet Lease.
"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.
"PERMITTED LEASE COLLATERAL" means (i) in the case of the Existing
Off-Balance Sheet Lease, Cash Collateral (as defined therein) or Treasuries (as
defined therein) pledged pursuant to the Pledge Agreement (as defined therein),
in each case securing the obligations of the Company under the Existing
Off-Balance Sheet Lease or (ii) in the case of any other Off-Balance Sheet
Lease, any comparable assets securing obligations of the Company or a Subsidiary
thereunder.
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"PERSON" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"PLAN" means, 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 Pricing Schedule attached hereto.
"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.
"RELEVANT SUBSIDIARIES" means all Consolidated Subsidiaries, provided
that, if at any time the Company is required to deliver consolidated financial
statements of the Company and its Restricted Subsidiaries ("RESTRICTED GROUP
FINANCIALS") to the Banks pursuant to Section 5.01(h), the term "RELEVANT
SUBSIDIARIES" shall mean the Restricted Subsidiaries at all times from and
including the date of such Restricted Group Financials, to but excluding the
first date thereafter as of which the Company is required to deliver financial
statements, but not Restricted Group Financials, pursuant to Section 5.01.
"REPORTABLE EVENT" means any "REPORTABLE EVENT" as defined in section
4043 of ERISA for which the 30-day notice requirement has not been waived under
applicable regulations.
"REQUIRED BANKS" means, at any time, Banks having at least 51% of the
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aggregate amount of the Credit Exposures at such time.
"RESTRICTED SUBSIDIARY" means (i) any Subsidiary designated as a
Restricted Subsidiary in Exhibit I hereto, and (ii) any other Subsidiary
designated as a Restricted Subsidiary pursuant to and in accordance with the
provisions of Section 5.06.
"S&P" means Standard & Poors Ratings Services, a division of The
McGraw-Hill Companies, Inc.
"SEC" means the Securities and Exchange Commission.
"SECURITY" has the meaning set forth in Section 2(1) of the Securities
Act of 1933, as amended.
"SUBSIDIARY" means, as to any Person, 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 such Person; unless
otherwise specified, "SUBSIDIARY" means a Subsidiary of the Company.
"SYNDICATION AGENT" means Citicorp Securities, Inc., in its capacity as
syndication agent for the credit facility provided under this Agreement.
"TANGIBLE ASSETS" means, at any date, Consolidated Total Assets (less
depreciation, depletion and other properly deductible valuation reserves) after
deducting (but without duplication) Intangible Assets.
"TAXES" has the meaning set forth in Section 8.04(a).
"TERMINATION DATE" means March 13, 2003, or, if such day is not a
Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day.
"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.
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"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary designated as an
Unrestricted Subsidiary in Exhibit I hereto and (ii) any other Subsidiary
designated as an Unrestricted Subsidiary pursuant to and in accordance with the
provisions of Section 5.06.
"VOTING STOCK" means Securities of any class or classes, the holders of
which are ordinarily, in the absence of contingencies, entitled to elect a
majority of the corporate directors (or Persons performing similar functions).
"WHOLLY-OWNED RESTRICTED SUBSIDIARY" means any Restricted 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 Company.
SECTION 1.2. Types of Borrowings. The term "BORROWING" denotes (i) the
aggregation of Loans made or to be made to the Company by one or more Banks
pursuant to Article 2, all of which Loans are of the same type (subject to
Article 8) and, except in the case of Base Rate Loans, have the same initial
Interest Period or (ii) if the context so requires, the borrowing of such Loans.
The term "BORROWING" shall not include any conversion or continuation of
outstanding Loans pursuant to Section 2.08. Borrowings are classified for
purposes of this Agreement either (i) by reference to the pricing of Loans
comprising such Borrowing (e.g., a "EURO-DOLLAR BORROWING" is a Borrowing
comprised of Euro-Dollar Loans) or (ii) 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 one or more Banks participate on the basis of their
bids).
ARTICLE 2
THE CREDITS
SECTION 2.1. Commitments to Lend. Each Bank severally agrees, on the
terms and conditions set forth in this Agreement, to make loans to the Company
pursuant to this Section 2.01 from time to time during the period from and
including the Effective Date to but excluding the Termination Date; provided
that, immediately after each such loan is made, (i) the aggregate outstanding
principal amount of Committed Loans by such Bank shall not exceed the amount of
its Commitment and (ii) the aggregate outstanding principal amount of all the
Loans shall not exceed the aggregate amount of the Commitments. Each Borrowing
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under this Section 2.01 shall be in an aggregate principal amount of $5,000,000
or any larger multiple of $1,000,000 (except that any such Borrowing may be in
the aggregate amount available within the limitations in the foregoing proviso)
and shall be made from the several Banks ratably in proportion to their
respective Commitments. Within the foregoing limits, the Company may borrow
under this Section 2.01, repay, or to the extent permitted by Section 2.12,
prepay Loans and reborrow at any time prior to the Termination Date under this
Section 2.01.
SECTION 2.2. Notice of Committed Borrowing. The Company shall give the
Administrative Agent notice (a "NOTICE OF COMMITTED BORROWING") not later than
(x) 12:00 Noon (New York City time) on the date of each Base Rate Borrowing, (y)
1:00 P.M. (New York City time) on the second Domestic Business Day before each
CD Borrowing and (z) 1:00 P.M. (New York City time) on 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 CD Borrowing or a Euro-Dollar Borrowing, the
duration of the initial Interest Period applicable thereto, subject to
the provisions of the definition of Interest Period.
Such notice may be given by facsimile transmission (or by telephone promptly
confirmed by facsimile transmission).
SECTION 2.3. Money Market Borrowings. (a) The Money Market Option. In
addition to Committed Borrowings pursuant to Section 2.01, the Company may, as
set forth in this Section, request the Banks to make offers to make Money Market
Loans to the Company from time to time during the period from and including the
Effective Date to but excluding the Termination Date. The Banks may, but shall
have no obligation to, make such offers and the Company 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 Company wishes to request
offers to make Money Market Loans under this Section, it shall transmit
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to the Administrative Agent by facsimile transmission (or by telephone promptly
confirmed by facsimile transmission) a Money Market Quote Request substantially
in the form of Exhibit B hereto so as to be received no later than (x) 1:00 P.M.
(New York City time) on the fifth Euro-Dollar Business Day prior to the date of
Borrowing proposed therein, in the case of a LIBOR Auction or (y) 11:30 A.M.
(New York City time) on 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 Company and the Administrative Agent
shall have mutually agreed and shall have notified to the Banks not later than
the date of the Money Market Quote Request for the first LIBOR Auction or
Absolute Rate Auction for which such change is to be effective) specifying:
(i) the proposed date of Borrowing, which shall be a Euro-Dollar
Business Day in the case of a LIBOR Auction or a Domestic Business Day
in the case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which shall be
$5,000,000 or a larger multiple of $1,000,000,
(iii) the duration of the Interest Period applicable thereto,
subject to the provisions of the definition of Interest Period, and
(iv) whether the Money Market Quotes requested are to set forth
a Money Market Margin or a Money Market Absolute Rate.
The Company 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 Company 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
Company 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
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Money Market Quote must comply with the requirements of this subsection (d) and
must be submitted to the Administrative Agent by telex or facsimile transmission
at its offices specified in or pursuant to Section 9.01 not later than (x) 2:00
P.M. (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) 10:15 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
Company 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 Company of the terms of the offer or offers contained
therein not later than (x) one hour prior to the deadline for the other Banks,
in the case of a LIBOR Auction or (y) 15 minutes prior to the deadline for the
other Banks, in the case of an Absolute Rate Auction. Subject to Articles 3 and
6, any Money Market Quote so made shall not be revocable except with the written
consent of the Administrative Agent given on the instructions of the Company.
(ii) Each Money Market Quote shall be substantially in 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 1/10,000 of
1%) to be added to or subtracted from such base rate,
(D) in the case of an Absolute Rate Auction, the rate of
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interest per annum (specified to the nearest 1/10,000 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;
(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 Company. The Administrative Agent shall promptly notify
the Company by facsimile transmission (or by telephone promptly confirmed by
facsimile transmission) 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; provided that, in the case of a LIBOR Auction, the Administrative Agent
shall notify the Company of the terms of such Money Market Quotes before 5:00
P.M. (New York City time) on the fourth Euro-Dollar Business Day prior to the
proposed date of Borrowing. 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 Company 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
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accepted.
(f) Acceptance and Notice by Company. Not later than 11:30 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 Company 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 Company shall notify the
Administrative Agent by facsimile transmission (or by telephone promptly
confirmed by facsimile transmission) of its acceptance or non-acceptance of the
offers so notified to it pursuant to subsection (e). If the Company fails to
give such a timely notice to the Administrative Agent, it shall be deemed not to
have accepted such offers. 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 Company may accept any Money
Market Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money Market Borrowing
may not exceed the applicable amount set forth in the related Money
Market Quote Request,
(ii) the principal amount of each Money Market Borrowing must be
$5,000,000 or a larger multiple of $1,000,000,
(iii) acceptance of offers may only be made on the basis of
ascending Money Market Margins or Money Market Absolute Rates, as the
case may be, and
(iv) the Company may not accept any offer that is described in
subsection (d)(iii) or that otherwise fails to comply with the
requirements of this Agreement, and
(v) immediately after such Money Market Borrowing is made, the
aggregate outstanding principal amount of the Loans shall not exceed the
aggregate amount of the Commitments.
(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
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<PAGE> 29
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 2.4. Notice to Banks; Funding of Loans. (a) Upon receipt of a
Notice of Borrowing, the Administrative Agent shall promptly notify each Bank 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 Company.
(b) Not later than (x) 12:00 Noon (New York City time) on the date of
each Borrowing other than a Base Rate Borrowing and (y) 1:00 P.M. (New York City
time) on the date of each Base Rate 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 Company 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
Section 2.04 (b) and the Administrative Agent may, in reliance upon such
assumption, make available to the Company on such date a corresponding amount.
If and to the extent that such Bank shall not have so made such share available
to the Administrative Agent, such Bank and the Company 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 Company until the date such amount is repaid to the
Administrative Agent, at (i) in the case of the Company, a rate per annum equal
to the higher of the Federal Funds Rate and the interest rate applicable
pursuant to Section 2.07 and (ii) in the case of such Bank, 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 2.5. Notes. (a) The Loans of each Bank shall be evidenced by a
single Note payable to the order of such Bank for the account of its Applicable
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Lending Office in an amount equal to the aggregate unpaid principal amount of
such Bank's Loans.
(b) Each Bank may, by notice to the Company 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 be in substantially the form of Exhibit A hereto with
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.
(c) Upon receipt of each Bank's Note pursuant to Section 3.01(b), the
Administrative Agent shall forward such Note to such Bank. Each Bank shall
record the date, amount, type and maturity of each Loan made by it and the date
and amount of each payment of principal made by the Company with respect
thereto, and may, if such Bank so elects in connection with any transfer or
enforcement of its Note, 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 a Bank's failure to make (or any error
in making) any such recordation or endorsement shall not affect the obligations
of the Company hereunder or under the Notes. Each Bank is hereby irrevocably
authorized by the Company so to endorse its Note and to attach to and make a
part of its Note a continuation of any such schedule as and when required.
SECTION 2.6. 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 2.7. 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. 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 Base Rate for such day.
(b) Each CD Loan shall bear interest on the outstanding principal
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amount thereof, for each day during each Interest Period applicable thereto, at
a 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
for each day during such Interest Period at the Base Rate for such day. Such
interest shall be payable for each Interest Period on the last day thereof and,
if such Interest Period is longer than 90 days, 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 Base Rate 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 amount in brackets being rounded upward, if necessary, to the next
higher 1/100 of 1%
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
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<PAGE> 32
determining the maximum reserve requirement (including without limitation any
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, 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 until paid at a rate per annum
equal to the higher of (i) the sum of 2% plus the Euro-Dollar Margin for such
day plus the London Interbank Offered Rate applicable to such Loan on the day
before such payment was due and (ii) the sum of 2% plus the Euro-Dollar Margin
for such day plus a rate per annum equal to the quotient obtained (rounded
upward, if
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<PAGE> 33
necessary, to the next higher 1/100 of 1%) by dividing (x) the average (rounded
upward, if necessary, to the next higher 1/16 of 1%) of the respective rates per
annum at which one day (or, if such amount due remains unpaid more than three
Euro-Dollar Business Days, then for such other period of time not longer than
six 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 Base Rate for such day).
(e) Subject to Section 8.01, each Money Market LIBOR Loan shall bear
interest on the outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of the London Interbank
Offered Rate for such Interest Period (determined in accordance with Section
2.07(c) as if the related Money Market LIBOR Borrowing were a Committed
Euro-Dollar Borrowing) plus (or minus) the Money Market Margin quoted by the
Bank making such Loan in accordance with Section 2.03. Each Money Market
Absolute Rate Loan shall bear interest on the outstanding principal amount
thereof, for the Interest Period applicable thereto, at a rate per annum equal
to the Money Market Absolute Rate quoted by the Bank making such Loan in
accordance with Section 2.03. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is longer than three
months, at intervals of three months after the first day thereof. Any overdue
principal of or interest on any Money Market Loan shall bear interest, payable
on demand, for each day until paid at a rate per annum equal to the sum of 2%
plus the Base Rate for such day.
(f) The Administrative Agent shall determine each interest rate
applicable to the Loans hereunder. The Administrative Agent shall give prompt
notice to the Company 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. 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 2.8. 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 Company in the applicable Notice of Committed Borrowing.
Thereafter, the Company may from time to time elect to change or continue the
type of interest rate borne by each Group of Loans (subject to Section 2.08(d)
and the provisions of Article 8), as follows:
(i) if such Loans are Base Rate Loans, the Company 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 Company 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 2.14 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 Company 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 2.14 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 1:00 P.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 1:00 P.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 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 $5,000,000 in the
aggregate (unless such portion is
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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
Company 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 2.08(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
Company pursuant to Section 2.08(a) above, the Administrative Agent shall notify
each Bank of the contents thereof and such Notice shall not thereafter be
revocable by the Company.
(d) The Company 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 $5,000,000 or (ii) a Default shall have occurred and
be continuing when the Company delivers notice of such election to the
Administrative Agent.
(e) If any Committed Loan is converted to a different type of Loan, the
Company shall pay, on the date of such conversion, any unpaid interest accrued
to such date on the principal amount being converted.
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SECTION 2.9. Facility Fees. The Company shall pay to the Administrative
Agent, for the account of the Banks ratably in proportion to their Credit
Exposures, a facility fee calculated for each day at the Facility Fee Rate for
such day (determined in accordance with the Pricing Schedule) on the aggregate
amount of the Credit Exposures on such day. Such facility fee shall accrue for
each day from and including the Effective Date to but excluding the day on which
the Credit Exposures are reduced to zero, and shall be payable quarterly in
arrears on each Quarterly Payment Date and on the day on which the Credit
Exposures are reduced to zero.
SECTION 2.10. Optional Termination or Reduction of Commitments. The
Company may, upon at least three Domestic Business Days' notice to the
Administrative Agent, (a) terminate the Commitments at any time, if no Loans are
outstanding at such time, or (b) ratably reduce from time to time by an
aggregate amount of $10,000,000 or any larger multiple of $1,000,000, the
aggregate amount of the Commitments in excess of the aggregate outstanding
principal amount of the Loans.
SECTION 2.11. 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 2.12. Optional Prepayments. (a) Subject in the case of CD Loans
and Euro-Dollar Loans to Section 2.14, the Company may (i) upon at least one
Domestic Business Day's notice to the Administrative Agent, prepay the Group of
Base Rate Loans (or any Money Market Borrowing bearing interest as the Base Rate
pursuant to Section 8.01), (ii) upon at least two Domestic Business Days' notice
to the Administrative Agent, prepay any Group of CD Loans and (iii) upon at
least three Euro-Dollar Business Days' notice to the Administrative Agent,
prepay any Group of Euro-Dollar Loans, in each case in whole at any time, or
from time to time in part in amounts aggregating $5,000,000 or any larger
multiple of $1,000,000, by paying the principal amount to be prepaid together
with accrued interest thereon to the date of prepayment. Each such optional
prepayment shall be applied to prepay ratably the Loans of the several Banks
included in such Group of Loans.
(b) Except as provided in Section 2.12(a) above, the Company may not
prepay all or any portion of the principal amount of any Money Market Loan prior
to the maturity thereof.
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(c) Upon receipt of a notice of prepayment pursuant to this Section, the
Administrative Agent shall promptly notify each Bank of the contents thereof and
of such Bank's ratable share of such prepayment and such notice shall not
thereafter be revocable by the Company.
SECTION 2.13. General Provisions as to Payments. (a) The Company shall
make each payment of principal of, and interest on, the Loans and of fees
hereunder, not later than 1:00 P.M. (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 specified in or pursuant to 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
Company prior to the date on which any payment is due to the Banks hereunder
that the Company will not make such payment in full, the Administrative Agent
may assume that the Company 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 Company
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 2.14. Funding Losses. If the Company 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 (pursuant to Article 2, 6 or 8 or
otherwise),
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in either case 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 Company 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), 2.08(c) or 2.12(c), the Company shall reimburse each Bank
within 60 days after demand for any resulting loss or expense (with interest if
appropriate) incurred by it or by an existing or prospective Participant in the
related Loan, including (without limitation) any loss incurred in obtaining,
liquidating or employing deposits from third parties, but excluding loss of
margin for the period after any such payment or failure to borrow, prepay,
convert or continue; provided that such Bank shall have delivered to the Company
a certificate as to the amount of such loss or expense, which certificate shall
show in reasonable detail the basis for calculating such amount and shall be
conclusive in the absence of manifest error.
SECTION 2.15. 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
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 2.16. Regulation D Compensation. If and so long as a reserve
requirement of the type described in the definition of "Euro-Dollar Reserve
Percentage" is prescribed by the Board of Governors of the Federal Reserve
System (or any successor), each Bank subject to such requirement may require the
Company to pay, contemporaneously with each payment of interest on each of such
Bank's Euro-Dollar Loans, additional interest on such Euro-Dollar Loan at a rate
per annum reasonably determined by such Bank 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 Company 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 such Bank gives
such notice and (y) shall notify the Company at least five Euro-Dollar Business
Days before each date on which interest is payable on the Euro-Dollar Loans of
the amount then due it under this Section.
ARTICLE 3
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CONDITIONS
SECTION 3.1. Effectiveness. This Agreement shall become effective upon
receipt by the Administrative Agent of the following:
(a) from each of the parties listed on the signature pages
hereof, a counterpart hereof signed by such party or facsimile or other
written confirmation satisfactory to the Agent confirming that such
party has signed a counterpart hereof;
(b) a duly executed Note for the account of each Bank dated on or
before the Effective Date and complying with the provisions of
Section 2.05;
(c) an opinion of Barry Quan, Managing Director, Legal Affairs
for the Company, dated the Effective Date and 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;
(d) an opinion of Orrick, Herrington & Sutcliffe LLP, special
counsel for the Company, dated the Effective Date and 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;
(e) an opinion of Davis Polk & Wardwell, special counsel for the
Administrative Agent, dated the Effective Date and substantially in the
form of Exhibit G hereto and covering such additional matters relating
to the transactions contemplated hereby as the Required Banks may
reasonably request;
(f) evidence satisfactory to the Administrative Agent that (i)
the commitments of the banks under the $240,000,000 Credit Agreement
dated as of September 8, 1994 among the Company, the banks party thereto
and Morgan Guaranty Trust Company of New York, as Agent, as heretofore
amended, have been terminated and (ii) any loans outstanding thereunder
(together with all interest accrued thereon) and all fees accrued
thereunder have been paid or the Company has made arrangements
satisfactory to the Administrative Agent for the payment thereof on the
Effective Date; and
(g) all documents that the Administrative Agent may reasonably
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request relating to the existence of the Company, 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.
The Administrative Agent shall promptly notify the Company and the Banks of the
Effective Date, and such notice shall be conclusive and binding on all parties
hereto.
SECTION 3.2. 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) the fact that the Effective Date shall have occurred on or
prior to March 13, 1998;
(b) receipt by the Administrative Agent of a Notice of Borrowing
as required by Section 2.02 or 2.03, as the case may be;
(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
Company contained in this Agreement (except, in the case of a CP
Backstop Borrowing, the representations and warranties set forth in
Sections 4.04(b) and 4.05 as to any matter which has theretofore been
disclosed in writing by the Company to the Banks) 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 Company on the date of such Borrowing as to the facts specified in clauses
(c) and (d) of this Section.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants that:
SECTION 4.1. Corporate Existence and Power. The Company and each
Restricted Subsidiary:
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(a) is a corporation duly organized and validly existing under
the laws of its jurisdiction of incorporation;
(b) has all requisite power and authority and all necessary
licenses and permits to own and operate its properties and to carry on
its business as now conducted and as presently proposed to be conducted,
except where failures to have such licenses and permits would not, in
the aggregate, have a Material Adverse Effect; and
(c) is duly licensed or qualified and is in good standing as a
foreign corporation in each jurisdiction wherein the nature of the
business transacted by it or the nature of the property owned or leased
by it makes such licensing or qualification necessary, except where
failures to be so licensed, qualified or in good standing would not, in
the aggregate, have a Material Adverse Effect.
SECTION 4.2. Corporate and Governmental Authorization; No Contravention.
The execution, delivery and performance by the Company of this Agreement and the
Notes are within the Company'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 Company or of any agreement,
judgment, injunction, order, decree or other instrument binding upon the Company
or any of its Subsidiaries or result in the creation or imposition of any Lien
on any asset of the Company or any of its Restricted Subsidiaries.
SECTION 4.3. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Company and each Note, when executed and delivered in
accordance with this Agreement, will constitute a valid and binding obligation
of the Company, in each case enforceable in accordance with its terms, except as
limited by (i) bankruptcy, insolvency or similar laws affecting creditors'
rights generally and (ii) general principles of equity.
SECTION 4.4. Financial Information. (a) The consolidated balance sheet
of the Company and its Consolidated Subsidiaries as of October 26, 1997 and the
related consolidated statements of operations and cash flows for the fiscal year
then ended, reported on by Price Waterhouse LLP and set forth in the Company's
1997 Form 10-K (or an exhibit thereto), a copy of which has been obtained by
each of the Banks, fairly present, in conformity with generally accepted
accounting principles, the consolidated financial position of the Company and
its Consolidated Subsidiaries as of such date and their consolidated results of
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operations and cash flows for such fiscal year.
(b) Except as disclosed in the Company's press release dated February
10, 1998, there has been no material adverse change since October 26, 1997 in
the business, financial position or results of operations of the Company and its
Relevant Subsidiaries, considered as a whole.
SECTION 4.5. Litigation. Except as set forth under the heading "LEGAL
PROCEEDINGS" in the Company's 1997 Form 10-K, there is no action, suit or
proceeding pending against, or to the knowledge of the Company threatened
against or affecting, the Company 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 determination which would have a Material
Adverse Effect, or which in any manner draws into question the validity of this
Agreement or the Notes.
SECTION 4.6. 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 which will
violate Section 5.11 hereof or (iii) incurred any unpaid liability in excess of
$50,000,000 under Title IV of ERISA other than a liability to the PBGC for
premiums under Section 4007 of ERISA.
SECTION 4.7. Environmental Matters. The Company has a process of
conducting periodic internal reviews relating to compliance by the Company and
its Restricted Subsidiaries with Environmental Laws and liabilities thereunder.
On the basis of such reviews, except as set forth in the Company's 1997 Form
10-K, nothing has come to the attention of the Company which would lead it to
believe that costs associated with compliance with Environmental Laws or
liabilities thereunder (including, without limitation, any capital or operating
expenses required for cleanup, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related constraints
on operating activities and any potential liabilities to third parties) would
have a Material Adverse Effect.
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SECTION 4.8. Taxes. All federal and state income tax returns required to
be filed by the Company or any Restricted Subsidiary in any jurisdiction have,
in fact, been filed and all other tax returns required to be filed in any other
jurisdiction have, in fact, been filed, except where the failure to so file in
such jurisdictions (other than in connection with federal or state income tax
returns) would not have a Material Adverse Effect, and all taxes, assessments,
fees and other governmental charges upon the Company or any Restricted
Subsidiary or upon any of their respective properties, income or franchises,
which are shown to be due and payable in such returns have been paid. For all
taxable years ending on or before October 1993, the Federal income tax liability
of the Company and its Restricted Subsidiaries has been satisfied and either the
period of limitations on assessment of additional Federal income tax has expired
or the Company and its Restricted Subsidiaries have entered into an agreement
with the Internal Revenue Service closing conclusively the total tax liability
for the taxable year. The provisions for taxes on the books of the Company and
each Restricted Subsidiary are adequate for all open years, and for its current
fiscal period.
SECTION 4.9. Subsidiaries. Exhibit I hereto sets forth as of the date of
this Agreement, with respect to each Person which is a Subsidiary of the Company
on the date hereof, (i) the name of such Subsidiary, (ii) the jurisdiction of
incorporation of such Subsidiary and (iii) the percentage of Voting Stock of
such Subsidiary owned by the Company and its other Subsidiaries.
SECTION 4.10. No Regulatory Restrictions on Borrowing. The Company is
not (i) an "INVESTMENT COMPANY" within the meaning of the Investment Company Act
of 1940, as amended, (ii) a "HOLDING COMPANY" or a "SUBSIDIARY COMPANY" of a
holding company within the meaning of the Public Utility Holding Company Act of
1935, as amended, or (iii) otherwise subject to any regulatory scheme applicable
to it which restricts its ability to incur debt under this Agreement.
SECTION 4.11. Full Disclosure. All written information heretofore
furnished by the Company to the Administrative Agent or any Bank for purposes of
or in connection with this Agreement or any transaction contemplated hereby does
not, and all such written information hereafter furnished by the Company to the
Administrative Agent or any Bank will not, contain any untrue statement of a
material fact or in the aggregate omit a material fact necessary to make the
statements therein not misleading on the date as of which such information is
stated or certified. There is no fact peculiar to the Company or its
Subsidiaries which the Company has not disclosed to the Banks in writing which
has had or, so far as the Company can now reasonably foresee, will have a
Material Adverse Effect.
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ARTICLE 5
COVENANTS
The Company agrees that, so long as any Bank has any Credit Exposure
hereunder or any interest or fees accrued hereunder remain unpaid:
SECTION 5.1. Information. The Company will deliver to each of the Banks
(except as stated in clause (j) below) or make available electronically:
(a) as soon as available and in any event within 45 days after the end
of each quarterly fiscal period (except the last) of each fiscal year, copies
of:
(1) a consolidated balance sheet of the Company and
its Subsidiaries as of the close of such quarterly fiscal
period, setting forth in comparative form the consolidated
figures as of the close of the fiscal year then most
recently ended,
(2) consolidated statements of operations of the
Company and its Subsidiaries for such quarterly fiscal
period and for the portion of the fiscal year ending with
such quarterly fiscal period, in each case setting forth
in comparative form the consolidated figures for the
corresponding period and portion of the preceding fiscal
year, and
(3) a consolidated statement of cash flows of the
Company and its Subsidiaries for the portion of the fiscal
year ending with such quarterly fiscal period, setting
forth in comparative form the consolidated figures for the
corresponding period of the preceding fiscal year,
it being agreed that (i) delivery of such financial statements shall
be deemed to be a representation by the Company that such financial
statements fairly present, in conformity with GAAP, the consolidated
financial position of the Company and its Consolidated Subsidiaries
as of the close of such quarterly fiscal period and their
consolidated results of operations and cash flows for the portion of
the fiscal year
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ending at the end of such quarterly fiscal period (subject to normal
year-end adjustments) and (ii) the Company may satisfy the
requirements of this Section 5.01(a) by filing its Quarterly Report
on Form 10-Q with the SEC; provided that such Form 10-Q satisfies the
foregoing requirements of this paragraph (a);
(b) as soon as available and in any event within 90 days after
the close of each fiscal year of the Company, copies of:
(1) a consolidated balance sheet of the Company and
its Subsidiaries as of the close of such fiscal year, and
(2) consolidated statements of operations and cash
flows of the Company and its Subsidiaries for such fiscal
year,
in each case setting forth in comparative form the consolidated figures
for the two preceding fiscal years, all in reasonable detail and
accompanied by a report thereon of a firm of independent public
accountants of recognized national standing selected by the Company to
the effect that the consolidated financial statements present fairly, in
all material respects, the consolidated financial position of the
Company and its Consolidated Subsidiaries as of the end of the fiscal
year being reported on and their consolidated results of operations and
cash flows for said year in conformity with GAAP and that the
examination of such accountants in connection with such financial
statements has been conducted in accordance with generally accepted
auditing standards, it being agreed that the Company may satisfy the
requirements of this Section 5.01(b) by filing its Annual Report on Form
10-K with the SEC; provided that such Form 10-K (including the exhibits
filed therewith) satisfies the requirements of this paragraph (b);
(c) promptly upon receipt thereof, one copy of each interim or
special audit made by independent accountants of the books of the
Company or any Restricted Subsidiary and any management letter received
from such accountants, in all cases, material to the financial condition
or operations of the Company or of the Company and its Restricted
Subsidiaries taken as a whole;
(d) promptly upon their becoming available, one copy of each
financial statement, report, notice or proxy statement sent by the
Company to stockholders generally and of each regular or periodic
report, and any
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registration statement or prospectus (other than those on Form S-8)
filed by the Company or any Subsidiary with any securities exchange or
the SEC or any successor agency, and copies of any orders in any
proceedings to which the Company or any of its Subsidiaries is a party,
issued by any governmental agency, Federal or state, having jurisdiction
over the Company or any of its Subsidiaries, which orders are material
to the financial condition or operations of the Company or the Company
and its Restricted Subsidiaries taken as a whole;
(e) promptly upon the occurrence thereof, written notice of (i) a
Reportable Event with respect to any Plan; (ii) the institution of any
steps by the Company, any ERISA Affiliate, the PBGC or any other person
to terminate any Plan if such termination were to result in a liability
of the Company or any Restricted Subsidiary to the PBGC in an amount
which could materially and adversely affect the condition, financial or
otherwise, of the Company or of the Company and its Restricted
Subsidiaries taken as a whole; (iii) the institution of any steps by the
Company or any ERISA Affiliate to withdraw from any Plan or any
Multiemployer Plan if such withdrawal would result in a liability of the
Company or any Restricted Subsidiary in an amount which could materially
and adversely affect the condition, financial or otherwise, of the
Company or of the Company and its Restricted Subsidiaries taken as a
whole; (iv) a "prohibited transaction" within the meaning of Section 406
of ERISA (which has not been exempted under or pursuant to Section 408
of ERISA) in connection with any Plan if such "prohibited transaction"
would result in a liability of the Company or any Restricted Subsidiary
in an amount which could materially and adversely affect the condition,
financial or otherwise, of the Company or of the Company and its
Restricted Subsidiaries taken as a whole; (v) any increase in the
contingent liability of the Company or any Restricted Subsidiary with
respect to any post-retirement welfare liability in an amount that could
have a Material Adverse Effect; or (vi) the taking of any action by, or
the threat in writing of the taking of any action by, the Internal
Revenue Service, the Department of Labor or the PBGC with respect to any
of the foregoing;
(f) within the periods provided in paragraphs (a) and (b) above,
a certificate of an authorized financial officer of the Company stating
that such officer has reviewed the provisions of this Agreement and (i)
setting forth the information and computations (in sufficient detail)
required in order to establish whether the Company was in compliance
with the requirements of Sections 5.10 through 5.12 at the end of the
period covered by the financial statements then being furnished and (ii)
stating
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whether there existed as of the date of such financial statements and
whether, to the best of such officer's knowledge, there exists on the
date of the certificate or existed at any time during the period covered
by such financial statements any Default and, if any such condition or
event exists on the date of the certificate, specifying the nature and
period of existence thereof and the action the Company is taking and
proposes to take with respect thereto;
(g) within the period provided in paragraph (b) above, a
certificate of the accountants who render an opinion with respect to
such financial statements, stating (i) that they have reviewed this
Agreement, and (ii) whether, in making their audit, such accountants
have become aware of any Default under Section 6.01 insofar as any such
terms or provisions pertain to or involve accounting matters or
determinations, and if any such condition or event then exists,
specifying the nature and period of existence thereof;
(h) if the Company's Unrestricted Subsidiaries, taken as a whole,
would have assets in excess of 5% of Consolidated Total Assets at the
date of any financial statements to be delivered pursuant to paragraph
(a) or (b) above or would have net income in excess of 5% of
Consolidated Net Income for any period covered by such financial
statements, the Company will provide, in addition to the financial
statements required by paragraph (a) or (b) above, the financial
statements required by such paragraph (a) or (b) (within the applicable
time period described in such paragraph (a) or (b)) on a consolidated
basis reflecting the financial statements of only the Company and its
Restricted Subsidiaries, certified by a financial officer of the Company
as to fairness of presentation and conformity with GAAP (except for the
exclusion of Unrestricted Subsidiaries) substantially as set forth in
the Company's representation in Section 4.04(a) subject, in the case of
quarterly financial statements required by paragraph (b) above, to
normal year-end adjustments;
(i) within five days after any officer of the Company 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 Company setting forth the details thereof and the action
which the Company is taking and proposes to take with respect thereto;
(j) promptly upon any change in the rating by S&P or Moody's of
the Company's senior unsecured long-term debt securities (without
third-party credit enhancement), a notice reporting such change and
stating
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the date on which such change was publicly announced by the relevant
rating agency, such notice to be delivered by the Company to the
Administrative Agent (which shall promptly advise the Banks thereof if
the Facility Fee Rate, the Euro-Dollar Margin or the CD Margin is
affected by such change in rating); and
(k) from time to time such additional information regarding the
financial position or business of the Company and its Subsidiaries as
the Administrative Agent, at the request of any Bank, may reasonably
request.
Without limiting the foregoing, the Company will permit any Bank (A) to visit
and inspect during normal business hours (at the expense of such Bank unless an
Event of Default has occurred and is continuing), under the Company's guidance
and, so long as no Default shall have occurred and be continuing, upon not less
than three Business Days' prior notice, any of the properties of the Company or
any Restricted Subsidiary, (B) to examine (to the extent material to
ascertaining compliance with the terms and provisions hereof or to the extent
reasonably related to the financial condition or material operations of the
Company or a Restricted Subsidiary) all of their books of account, records,
reports and other papers, and to make copies and extracts therefrom (other than
attorney-client privileged and attorney work-product documents) and (C) to the
extent material to ascertaining compliance with the terms and provisions hereof
or to the extent reasonably related to the financial condition or material
operations of the Company or a Restricted Subsidiary, to discuss their
respective affairs, finances and accounts with their respective officers,
employees (who are managers or officers), and independent public accountants and
by this provision the Company authorizes said accountants to discuss with such
Banks the finances and affairs of the Company and its Restricted Subsidiaries;
provided that such Bank shall have given prior written notice to the Company of
its intention to discuss such finances and affairs with such accountants and
have given the Company the opportunity to participate in such discussions, all
at such reasonable times and as often as may be reasonably requested.
Notwithstanding the above, the Company may, if and to the extent required by
applicable law, deny such access or information to any Bank.
The Company will keep, and will cause each Restricted Subsidiary to
keep, proper books of record and account in which full, true and correct entries
shall be made of all dealings and transactions in relation to its business and
activities, in accordance with GAAP.
Notwithstanding anything to the contrary in the foregoing provisions of
this Section 5.01, neither the Administrative Agent nor any Bank shall have
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access to, nor may they request copies of, any information constituting trade
secrets relating to technology unless the Administrative Agent or such Bank
shall have executed and delivered to the Company a confidentiality agreement
satisfactory to the Company.
SECTION 5.2. Payment of Obligations. The Company will pay and discharge,
and will cause each Restricted Subsidiary to pay and discharge, at or before
maturity, all their respective material obligations and liabilities, including,
without limitation, tax liabilities, except where the same may be contested in
good faith by appropriate proceedings, and will maintain, and will cause each
Restricted Subsidiary to maintain, in accordance with GAAP, appropriate reserves
for the accrual of any of the same.
SECTION 5.3. Maintenance of Property; Insurance. (a) The Company will
keep, and will cause each Restricted Subsidiary to keep, all property useful and
necessary in its business in good working order and condition, ordinary wear and
tear excepted; provided that nothing in this Section 5.03(a) shall prevent the
abandonment of any property if such abandonment does not result in any Default
hereunder and the Company determines, in the exercise of its reasonable business
judgment, that such abandonment is in the interest of the Company.
(b) The Company will maintain, and will cause each Restricted Subsidiary
to maintain, insurance coverage by financially sound and reputable insurers and
in such forms and amounts and against such risks as are customary for
corporations of established reputation engaged in the same or a similar business
and owning and operating similar properties in similar locations.
SECTION 5.4. Conduct of Business and Maintenance of Existence. Neither
the Company nor any Restricted Subsidiary will engage in any business if, as a
result, the primary business, taken on a consolidated basis, which would then be
engaged in by the Company and its Restricted Subsidiaries would be substantially
changed from the business of the manufacture of capital equipment for the
electronics industry. The Company will preserve, renew and keep in full force
and effect, and will cause each Restricted Subsidiary to preserve, renew and
keep in full force and effect, their respective corporate existence and their
respective rights, privileges and franchises, except to the extent that failures
to maintain their respective rights, privileges and franchises could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect ; provided
that nothing in this Section 5.04 shall prohibit (i) the merger of a Restricted
Subsidiary into the Company or the merger or consolidation of a Restricted
Subsidiary with or into another Person if the corporation surviving such
consolidation or merger is a Restricted Subsidiary and if, in each case, after
giving
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effect thereto, no Default shall have occurred and be continuing or (ii) the
termination of the corporate existence of any Restricted Subsidiary if such
termination does not result in any Default hereunder and the Company determines,
in the exercise of its reasonable business judgment, that such termination is in
the interest of the Company.
SECTION 5.5. Compliance with Laws. The Company will comply, and cause
each Restricted 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 (i) where the necessity
of compliance therewith is contested in good faith by appropriate proceedings or
(ii) where the violation of which, individually or in the aggregate, would not
reasonably be expected to (x) result in a Material Adverse Effect or (y) if such
violation is not remedied, result in any Lien not permitted under Section 5.11.
SECTION 5.6. Restricted and Unrestricted Subsidiaries. (a) The Company
may designate each Subsidiary organized or acquired by it after the date hereof
as either a Restricted Subsidiary or an Unrestricted Subsidiary by resolution of
the Board of Directors of the Company. Any such Subsidiary which is not so
designated within 30 days of its organization or acquisition as a Subsidiary
shall be deemed to be an Unrestricted Subsidiary.
(b) The Board of Directors may at any time designate any Restricted
Subsidiary as an Unrestricted Subsidiary if all of the following conditions are
met: (i) such Subsidiary does not own, directly or indirectly, any capital stock
or Indebtedness of the Company or any Restricted Subsidiary; (ii) at any time of
the proposed designation and after giving effect thereto, there shall exist no
Default and (iii) such Restricted Subsidiary has not previously been designated
an Unrestricted Subsidiary pursuant to this Section 5.06(b).
(c) The Board of Directors may at any time designate any Unrestricted
Subsidiary as a Restricted Subsidiary if, at the time of the proposed
designation and after giving effect thereto, there shall exist no Default.
SECTION 5.7. Consolidations, Mergers and Sales of Assets. The Company
will not (i) consolidate or merge with or into any other Person or (ii) sell,
lease or otherwise transfer, directly or indirectly, all or substantially all of
its assets to any other Person; provided that the Company may merge with another
Person if immediately after giving effect to such merger (x) no Default shall
exist and (y) the Company is the surviving entity.
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SECTION 5.8. Use of Proceeds. The proceeds of the Loans made under this
Agreement will be used by the Company to backstop its commercial paper and for
other 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 Margin Stock unless, at all times when any such proceeds are
used to buy or carry Margin Stock, not more than 25% of the value (as determined
by any reasonable method) of the assets (either of the Company only or of the
Company and its Subsidiaries on a consolidated basis) which are subject to any
restriction in Section 5.07 or 5.11 consists of Margin Stock.
SECTION 5.9. Transactions with Affiliates. The Company will not, and
will not permit any Restricted Subsidiary to, enter into or be a party to any
transaction or arrangement with any Affiliate (including, without limitation,
the purchase from, sale to or exchange of property with, or the rendering of any
service by or for, any Affiliate), except in the ordinary course of and pursuant
to the reasonable requirements of the Company's or such Restricted Subsidiary's
(as the case may be) business and upon fair and reasonable terms no less
favorable to the Company or such Restricted Subsidiary than would be obtained in
a comparable arm's-length transaction with a Person other than an Affiliate.
SECTION 5.10. Debt. Consolidated Debt shall at all times be less than
50% of Consolidated Net Tangible Assets; provided that, at any time when the
equity investments (valued at their then current book value) of the Company and
its Relevant Subsidiaries in Equity Affiliates would otherwise exceed 5% of
Consolidated Net Tangible Assets, Consolidated Net Tangible Assets shall be
adjusted for purposes of this Section by deducting such equity investments
(valued at their then current book value).
SECTION 5.11. Negative Pledge. The Company will not, and will not permit
any Restricted Subsidiary to, create or incur, or suffer to be incurred or to
exist, any Lien on its or their property or assets, whether now owned or
hereafter acquired, or upon any income or profits therefrom, or acquire or agree
to acquire, or permit any Restricted Subsidiary to acquire, any property or
assets upon conditional sales agreements or other title retention devices,
except:
(a) Liens for property taxes and assessments or governmental
charges or levies and Liens securing claims or demands of mechanics and
materialmen, provided that payment thereof is not at the time required
by Section 5.02 or 5.05;
(b) any Lien of or resulting from any judgment or award; provided
that either (i) the amount secured thereby does not exceed
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$50,000,000 or (ii) if the amount secured thereby does exceed
$50,000,000, the time for the appeal or petition for rehearing of such
judgment or award shall not have expired, or the Company or a Restricted
Subsidiary shall in good faith be prosecuting an appeal or proceeding
for a review thereof, and execution of such judgment or award shall be
stayed pending such appeal or proceeding for review;
(c) Liens incidental to the conduct of business conducted by the
Company and its Restricted Subsidiaries in the ordinary course of
business or the ownership of properties and assets owned by the Company
and its Restricted Subsidiaries (including Liens in connection with
worker's compensation, unemployment insurance and other like laws,
warehousemen's and attorneys' liens and statutory landlords' liens) and
Liens to secure the performance of bids, tenders or trade contracts, or
to secure statutory obligations, surety or appeal bonds or other Liens
of like general nature incurred in the ordinary course of business of
the Company and its Restricted Subsidiaries and not in connection with
the borrowing of money, provided in each case, the obligation secured is
not overdue or, if overdue, is being contested in good faith by
appropriate actions or proceedings;
(d) survey exceptions or encumbrances, encroachments, easements
or reservations, or rights of others for rights-of-way, utilities and
other similar purposes, zoning restrictions, declarations of covenants,
conditions and restrictions, other title exceptions or other
restrictions as to the use of real properties, which are necessary or
appropriate in the good faith judgment of the Company for the conduct of
the business of the Company and its Restricted Subsidiaries and which,
individually or in the aggregate, do not in any event materially impair
their use in the operation of the business of the Company or of the
Company and its Restricted Subsidiaries taken as a whole;
(e) Liens securing Indebtedness of a Restricted Subsidiary to the
Company or to another Restricted Subsidiary;
(f) Liens existing as of January 25, 1998 and reflected in
Exhibit J hereto, including any renewals, extensions or replacements of
any such Lien, provided that:
(i) no additional property is encumbered in connection
with any such renewal, extension or replacement of any such Lien;
and
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(ii) there is no increase in the aggregate principal amount
of Debt secured by any such Lien from that which was outstanding
or permitted to be outstanding with respect to such Lien as of
January 25, 1998 or the date of such renewal, extension or
replacement, whichever is greater;
(g) Liens incurred after January 25, 1998 given to secure the
payment of the purchase price and/or other direct costs incurred in
connection with the acquisition, construction, improvement or
rehabilitation of assets including Liens incurred by the Company or any
Restricted Subsidiary securing Debt incurred in connection with
industrial development bond and pollution control financings, including
Liens existing on such assets at the time of acquisition thereof or at
the time of acquisition by the Company or a Restricted Subsidiary of any
business entity (including a Restricted Subsidiary) then owning such
assets, whether or not such existing Liens were given to secure the
payment of the purchase price of the assets to which they attach,
provided that (i) except in the case of Liens existing on assets at the
time of acquisition of a Restricted Subsidiary then owning such assets,
the Lien shall be created within twelve (12) months of the later of the
acquisition of, or the completion of the construction or improvement in
respect of, such assets and shall attach solely to the assets acquired,
purchased, or financed, (ii) except in the case of Liens existing on
assets at the time of acquisition of a Restricted Subsidiary then owning
such assets or Liens in connection with industrial development bond or
pollution control financings, at the time of the incurrence of such
Lien, the aggregate amount remaining unpaid on all Debt secured by Liens
on such assets whether or not assumed by the Company or a Restricted
Subsidiary shall not exceed an amount equal to 75% of the lesser of the
total purchase price or fair market value, at the time such Debt is
incurred, of such assets (as determined in good faith by the Board of
Directors of the Company), and (iii) all such Debt shall have been
incurred within the applicable limitation provided in Section 5.10;
(h) Liens arising from the sale or transfer of accounts
receivable and notes receivable of AMJ, provided that (i) AMJ shall
receive adequate consideration therefor and (ii) all Debt, if any,
secured by such Liens is incurred within the applicable limitation of
Section 5.10;
(i) Liens on notes or accounts receivable sold or transferred in
a transaction which is accounted for as a true sale under GAAP;
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(j) Liens securing Debt, to the extent that such Liens are not
otherwise permitted by this Section 5.11, provided that (i) immediately
after giving effect to the incurrence of any such Lien, the sum of the
aggregate principal amount of all outstanding Debt secured by Liens
permitted solely by reason of this Section 5.11(j) shall not exceed 15%
of Consolidated Net Tangible Assets, and (ii) the incurrence of such
Debt is permitted by Section 5.10; and
(k) Liens incurred in connection with any renewals, extensions or
refundings of any Debt secured by Liens described in Section 5.11(g),
(h), (i) or (j), provided that there is no increase in the aggregate
principal amount of Debt secured thereby and no additional property is
encumbered.
In the event that any property of the Company or its Restricted Subsidiaries is
subjected to a lien in violation of this Section 5.11, but no other provision of
this Agreement including, without limitation, Section 5.10 (the Indebtedness
secured by such lien being referred to as "PROHIBITED SECURED INDEBTEDNESS"),
such violation shall not constitute an Event of Default hereunder if the
Company, substantially simultaneously with the incurrence of such lien, makes or
causes to be made a provision whereby the Notes will be secured equally and
ratably with all Prohibited Secured Indebtedness and delivers to the Banks an
opinion to that effect, and, in any case, the Notes shall have the benefit, to
the full extent that, and with such priority as, the Banks may be entitled to
under applicable law, of an equitable lien to secure the Notes on such property
of the Company or its Restricted Subsidiaries that secures Prohibited Secured
Indebtedness. The opinion referred to in the preceding sentence shall be
addressed to each of the Banks, shall contain such qualifications and
limitations as are reasonably acceptable to the Banks and shall be delivered by
counsel of nationally recognized standing selected by the Company and
satisfactory to the Required Banks. Such counsel shall be deemed to be
satisfactory to the Required Banks unless, during the 15 day period after the
Banks have received written notice identifying such counsel, Banks having more
than 40% of the aggregate amount of the Commitments or, if the Commitments shall
have been terminated, holding Notes evidencing more than 40% of the aggregate
unpaid principal amount of the Loans, shall have objected to such selection in
writing to the Company.
Notwithstanding any of the foregoing provisions of this Section 5.11
including, without limitation, the terms and provisions of the preceding
paragraph of this Section 5.11, the Company shall not, and shall not permit any
Restricted Subsidiary to, create or incur, or suffer to be incurred or to exist,
any Lien (other than Liens described in Section 5.11(a) through (d), inclusive)
upon any land, property or buildings (or any interest therein) described as
Special Unencumbered
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Property in Exhibit K hereto.
SECTION 5.12. Consolidated Tangible Net Worth. (a) The Company will at
all times keep and maintain Consolidated Tangible Net Worth (adjusted as
provided in subsections (b) and (c) of this Section, if applicable) at an amount
not less than the amount determined by adding the following:
(i) $1,973,000,000 plus
(ii) 50% of Consolidated Net Income (adjusted as provided in
subsections (b) and (c) of this Section, if applicable) for the period
from October 27, 1997 to and including the date of any calculation
hereunder.
(b) If the Company is required to deliver consolidated financial
statements of the Company and its Restricted Subsidiaries pursuant to Section
5.01(h) as of any date (the "BREAK-OUT DATE"), then the following adjustments
shall be made for purposes of this Section as of the Break-Out Date and at all
times thereafter (unless and until the Company is no longer required to deliver
such financial statements pursuant to Section 5.01(h)):
(i) Consolidated Tangible Net Worth shall be adjusted by
deducting the equity investments (valued at their then current book
value) of the Company and its Restricted Subsidiaries in Unrestricted
Subsidiaries and
(ii) Consolidated Net Income shall be adjusted by excluding the
equity of the Company and its Restricted Subsidiaries in the income (or
loss) of Unrestricted Subsidiaries after October 26, 1997 and including
dividends received by the Company and its Restricted Subsidiaries from
Unrestricted Subsidiaries after October 26, 1997.
(c) At any time when the aggregate book value of the equity investments
of the Company and its Relevant Subsidiaries in Equity Affiliates exceeds 5% of
Consolidated Net Tangible Assets, the following adjustments shall be made for
purposes of this Section:
(i) Consolidated Tangible Net Worth shall be adjusted by
deducting such equity investments (valued at their then current book
value), and
(ii) Consolidated Net Income shall be adjusted by excluding the
equity of the Company and its Relevant Subsidiaries in the income (or
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loss) of Equity Affiliates after October 26, 1997 and including
dividends received by the Company and its Relevant Subsidiaries from
Equity Affiliates after October 26, 1997.
ARTICLE 6
DEFAULTS
SECTION 6.1. Events of Default. If one or more of the following events
("EVENTS OF DEFAULT") shall have occurred and be continuing:
(a) the Company shall fail to pay any principal of any Loan when
due or shall fail to pay any interest, fee or other amount payable
hereunder within five days after it becomes due;
(b) the Company shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by
clause (a) above) for 30 days after written notice thereof has been
given to the Company by the Administrative Agent at the request of any
Bank;
(c) any representation, warranty, certification or statement
made by the Company 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);
(d) the Company or any Restricted Subsidiary shall fail to make
any payment in respect of any Material Financial Obligations when due or
within any applicable grace period;
(e) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or enables (or, with
the giving of notice or lapse of time or both, would enable) the holder
of such Debt or any Person acting on such holder's behalf to accelerate
the maturity thereof;
(f) the Company or any 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
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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; provided that no
event otherwise constituting an Event of Default under this clause (f)
shall be an Event of Default if the total assets of all entities with
respect to which an event has occurred which would otherwise have
constituted an Event of Default under this clause (f) or clause (g) do
not exceed $50,000,000 in the aggregate;
(g) an involuntary case or other proceeding shall be commenced
against the Company or any 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 Company or any Subsidiary under the federal
bankruptcy laws as now or hereafter in effect; provided that no event
otherwise constituting an Event of Default under this clause (g) shall
be an Event of Default if the total assets of all entities with respect
to which an event has occurred which would otherwise have constituted an
Event of Default under clause (f) or this clause (g) do not exceed
$50,000,000 in the aggregate;
(h) any ERISA Affiliate shall fail to pay when due (or in the
case of an ERISA Affiliate acquired by the Company or a Subsidiary after
the due date thereof, within 30 days after such ERISA Affiliate is so
acquired) an amount or amounts aggregating in excess of $50,000,000
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 ERISA Affiliate, 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 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 ERISA Affiliates to
incur a current payment obligation in excess of $50,000,000;
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(i) final judgments or orders for the payment of money in excess
of $50,000,000 in the aggregate (excluding amounts with respect to which
a financially sound and reputable insurer has admitted liability) shall
be rendered against the Company or any Subsidiary and such judgments or
orders shall continue unsatisfied and unstayed for a period of 30
consecutive days; or
(j) either (i) any person or group of persons (within the
meaning of Section 13 or 14 of the Exchange Act) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated by
the SEC under said Act) of 30% or more of the outstanding shares of
Voting Stock of the Company; or (ii) during any period of 12 consecutive
calendar months, commencing before or after the date of this Agreement,
individuals who were directors of the Company on the first day of such
period (the "INITIAL DIRECTORS") shall cease for any reason to
constitute a majority of the board of directors of the Company unless
the Persons replacing such individuals were nominated or elected by a
majority of the directors (x) who were Initial Directors at the time of
such nomination or election and/or (y) who were nominated or elected by
a majority of directors who were Initial Directors at the time of such
nomination or election;
then, and in every such event, the Administrative Agent shall (i) if requested
by Banks having more than 51% in aggregate amount of the Commitments, by notice
to the Company terminate the Commitments and they shall thereupon terminate, and
(ii) if requested by Banks holding Notes evidencing more than 51% in aggregate
principal amount of the Loans, by notice to the Company declare the Notes
(together with accrued interest thereon) to be, and the Notes 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 Company;
provided that in the case of any of the Events of Default specified in clause
(f) or (g) above with respect to the Company, without any notice to the Company
or any other act by the Administrative Agent or the Banks, the Commitments shall
thereupon terminate and the Notes (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 Company.
SECTION 6.2. Notice of Default. The Administrative Agent shall give
notice to the Company under clause (b) of Section 6.01 promptly upon being
requested to do so by the Required Banks and shall thereupon notify all the
Banks thereof.
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ARTICLE 7
THE ADMINISTRATIVE AGENT
SECTION 7.1. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes the Administrative Agent to take such action as 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 7.2. 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 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 Company or any Subsidiary or affiliate
of the Company as if it were not the Administrative Agent hereunder.
SECTION 7.3. 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 6.
SECTION 7.4. Consultation with Experts. The Administrative Agent may
consult with legal counsel (who may be counsel for the Company), 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 7.5. Liability of Administrative Agent. Neither the
Administrative Agent nor any of its affiliates nor any of their respective
directors, officers, agents or employees shall be liable for any action taken or
not taken by it in connection herewith (a) with the consent or at the request of
the Required Banks or (b) in the absence of its own gross negligence or willful
misconduct. Neither the Administrative Agent nor any of its affiliates nor any
of their respective directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into or verify (i) any
statement, warranty or representation made in connection with this Agreement or
any borrowing hereunder; (ii) the performance or observance of any of the
covenants or agreements of the Company; (iii) the satisfaction of any condition
specified in
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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
good faith in reliance upon (A) any notice, consent, certificate, statement, or
other writing (which may be a bank wire, telex, facsimile transmission or
similar writing) believed by it to be genuine or to be signed by the proper
party or parties or (B) any notice given by telephone (pursuant to a specific
provision herein authorizing notice to be given by the Company to the
Administrative Agent by telephone (promptly confirmed by facsimile
transmission)) believed in good faith by it to be given by the proper party.
Without limiting the generality of the foregoing, the use of the term "AGENT" in
this Agreement with reference to the Administrative Agent is not intended to
connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law. Instead, such term is used merely as a
matter of market custom and is intended to create or reflect only an
administrative relationship between independent contracting parties.
SECTION 7.6. Indemnification. The Banks shall, ratably in proportion to
their Credit Exposures, indemnify the Administrative Agent, its affiliates and
their respective directors, officers, agents and employees (to the extent not
reimbursed by the Company) 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 may suffer or incur in connection with this Agreement or any action
taken or omitted by such indemnitees hereunder.
SECTION 7.7. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Administrative Agent, the
Syndication Agent or any other Bank, and based on such documents and information
as it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement. Each Bank also acknowledges that it will, independently and
without reliance upon the Administrative Agent, the Syndication 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 7.8. Successor Administrative Agent. The Administrative Agent
may resign at any time by giving notice thereof to the Banks and the Company.
Upon any such resignation, the Required Banks shall have the right to appoint a
successor Administrative Agent; provided that (a) such successor Administrative
Agent shall have, in its capacity as a Bank, a Commitment of not less than
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$12,500,000 (reduced to reflect any reduction of the Commitments pursuant to
Section 2.10) or, if the Commitments have been terminated, shall hold a
corresponding portion of the Committed Loans then outstanding (if any) and (b)
unless a Default shall have occurred and be continuing, such appointment shall
not be effective without the consent of the Company, such consent not to be
unreasonably withheld. If no successor Administrative Agent shall have been so
appointed by the Required Banks, and shall have accepted such appointment,
within 30 days after the retiring Administrative Agent gives notice of
resignation, then the retiring Administrative Agent may, on behalf of the Banks,
appoint a successor Administrative Agent, which shall be a commercial bank
organized or licensed under the laws of the United States of America or of any
State thereof and having a combined capital and surplus of at least $50,000,000.
Upon the acceptance of its appointment as Administrative Agent hereunder by a
successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Article shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent.
SECTION 7.9. Administrative Agent's Fee. The Company shall pay to the
Administrative Agent for its own account fees in the amounts and at the times
previously agreed upon in writing between the Company and the Administrative
Agent.
SECTION 7.10. Syndication Agent. Nothing in this Agreement shall impose
on the Syndication Agent, in its capacity as such, any duty or responsibility
whatsoever.
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.1. Basis for Determining Interest Rate Inadequate or Unfair.
If on or prior to the first day of any Interest Period for any Fixed Rate
Borrowing:
(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
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(b) in the case of a Committed Borrowing, Banks having 50% or
more of the aggregate amount of the Commitments advise the
Administrative Agent that the CD Rate or the Adjusted 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 Company and
the Banks, whereupon until the Administrative Agent notifies the Company 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 Company notifies the Administrative Agent at
least two Domestic Business Days before the date of any affected Borrowing for
which a Notice of Borrowing has previously been given that it elects not to
borrow on such date, (i) if such affected Borrowing is a CD Borrowing or
Euro-Dollar Borrowing, such Borrowing shall instead be made as a Base Rate
Borrowing and (ii) if such affected 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 8.2. Illegality. If, on or after the date of this Agreement, the
adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Bank (or its Euro-Dollar Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency shall make it unlawful or impossible for any Bank (or its
Euro-Dollar Lending Office) to make, maintain or fund its Euro-Dollar Loans and
such Bank shall so notify the Administrative Agent, the Administrative Agent
shall forthwith give notice thereof to the other Banks and the Company,
whereupon until such Bank notifies the Company 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, such Bank
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shall designate a different Euro-Dollar Lending Office if such designation will
avoid the need for giving such notice and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. If such notice is given, each
Euro-Dollar Loan of such Bank then outstanding shall be converted to a Base Rate
Loan either (a) on the last day of the then current Interest Period applicable
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 (b) 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 8.3. Increased Cost and Reduced Return. (a) If on or after (x)
the date hereof, in the case of any Committed Loan or any obligation to make
Committed Loans or (y) the date of the related Money Market Quote, in the case
of any Money Market Loan, the adoption of any applicable law, rule or
regulation, or any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall impose, modify or
deem applicable any reserve (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System, but excluding
(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 2.16), special deposit,
insurance 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 (excluding Taxes) 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 60 days
after demand by such Bank (with a copy to the Administrative Agent), the Company
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shall pay to such Bank such additional amount or amounts (with interest if
appropriate) as will compensate such Bank (subject to the limit in Section 8.05)
for such increased cost or reduction.
(b) If any Bank shall have determined that, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change in any such law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on capital
of such Bank (or its Parent) as a consequence of such Bank's obligations
hereunder to a level below that which such Bank (or its Parent) could have
achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by such Bank to be material, then from time to time, within 60 days after demand
by such Bank (with a copy to the Administrative Agent), the Company shall pay to
such Bank such additional amount or amounts (with interest if appropriate) as
will compensate such Bank or its Parent (subject to the limit in Section 8.05)
for such reduction.
(c) Each Bank will promptly notify the Company 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 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 and setting forth the
additional amount or amounts to be paid to it hereunder shall show in reasonable
detail the basis for calculating such amount or amounts and shall be conclusive
in the absence of manifest error. In determining such amount, such Bank may use
any reasonable averaging and attribution methods.
SECTION 8.4. Taxes. (a) For purposes of this Section 8.04, the following
terms have the following meanings:
"TAXES" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings with respect to any payment by the
Company pursuant to this Agreement or under any Note, and all liabilities with
respect thereto, excluding (i) in the case of each Bank and the Administrative
Agent, taxes imposed on or measured by its net income (including franchise or
similar taxes) imposed on it, by a jurisdiction (or any political subdivision of
any such
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jurisdiction) under the laws of which such Bank or the Administrative Agent (as
the case may be) is organized or in which its principal executive office is
located or, in the case of each Bank, in which its Applicable Lending Office is
located or in which it is subject to such taxes by reason of an office or other
property of such Bank in such jurisdiction unrelated to the transaction
contemplated by this Agreement and (ii) in the case of each Bank, any United
States withholding tax imposed on such payments, but not excluding any portion
of such tax that exceeds the United States withholding tax which would have been
imposed on such a payment to such Bank under the laws and treaties in effect
when such Bank first becomes a party to this Agreement.
"OTHER TAXES" means any present or future stamp or documentary taxes and
any other excise or property taxes, or similar charges or levies, which arise
from any payment made pursuant to this Agreement or under any Note or from the
execution, delivery, registration or enforcement of, or otherwise with respect
to, this Agreement or any Note.
(b) All payments by the Company to or for the account of any Bank or the
Administrative Agent hereunder or under any Note shall be made without deduction
for any Taxes or Other Taxes; provided that, if the Company shall be required by
law to deduct any Taxes or Other Taxes from any such payments, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (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 Company shall make such deductions, (iii) the
Company shall pay the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law and (iv) the Company shall
furnish to the Administrative Agent, at its address specified in or pursuant to
Section 9.01, the original or a certified copy of a receipt evidencing payment
thereof.
(c) The Company agrees to indemnify each Bank and the Administrative
Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on
amounts payable under this Section 8.04) paid by such Bank or the Administrative
Agent (as the case may be) and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto. This indemnification (with
interest if appropriate) shall be paid within 60 days after 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
60
<PAGE> 66
United States, before it signs and delivers this Agreement in the case of each
Bank listed on the signature pages hereof and before it becomes a Bank in the
case of each other Bank, and from time to time thereafter if requested in
writing by the Company (but only so long as such Bank remains lawfully able to
do so), shall provide the Company and the Administrative Agent with Internal
Revenue Service form 1001 or 4224, as appropriate, or any successor form
prescribed by the Internal Revenue Service, certifying that such Bank is
entitled to benefits under an income tax treaty to which the United States is a
party which exempts such Bank from United States withholding tax or reduces the
rate of withholding tax on payments of interest for the account of such Bank or
certifying that the income receivable by it pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the United
States.
(e) For any period with respect to which a Bank has failed to provide
the Borrower or the Agent with the appropriate form referred to in Section
8.04(d) (unless such failure is due to a change in treaty, law or regulation
occurring after the date on which such form originally was required to be
provided), such Bank shall not be entitled to indemnification under Section
8.04(b) or 8.04(c) with respect to Taxes imposed by the United States; provided,
that if a Bank, which is otherwise exempt from or subject to a reduced rate of
United States withholding tax, becomes subject to such withholding tax because
of its failure to deliver a form required hereunder, the Company shall take such
steps as such Bank shall reasonably request to assist such Bank to recover such
withholding tax unless in the judgment of the Company, such assistance would be
otherwise disadvantageous to the Company.
(f) If the Company is required to pay additional amounts to or for the
account of any Bank pursuant to this Section 8.04, as a result of a change in
law or treaty occurring after such Bank first became a party to this Agreement,
then such Bank will change the jurisdiction of its Applicable Lending Office if,
in the judgment of such Bank, such change (i) will eliminate or reduce any such
additional payment which may thereafter accrue and (ii) is not otherwise
disadvantageous to such Bank.
SECTION 8.5. Limitations on Amounts Due under Section 8.03. If any Bank
fails to give the Company any prompt notice required by Section 8.03(c), the
Company shall not be required to indemnify and compensate such Bank or the
Administrative Agent under Section 8.03 for any amounts attributable to the
event or factual circumstance required to be disclosed in such notice and
arising during or with respect to any period ending more than 90 days before
notice thereof has been delivered to the Company; provided that this Section
shall in no way limit the right of any Bank or the Administrative Agent to
demand or receive
61
<PAGE> 67
compensation to the extent that such compensation relates to any law, rule,
regulation, interpretation, administration, request or directive (or any change
therein) which by its terms has retroactive application if such notice is given
within 90 days after the date of enactment or effectiveness of such retroactive
law, rule, regulation, interpretation, administration, request or directive (or
change therein).
SECTION 8.6. 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 Company 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 Company that
the circumstances giving rise to such suspension or demand for compensation no
longer exist:
(a) all Loans which would otherwise be made by such Bank as (or
continued 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), and
(b) if such Bank notifies the Company 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 8.7. 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 Section 8.04, the Company
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 Note and assume the Commitment of such Bank.
ARTICLE 9
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<PAGE> 68
MISCELLANEOUS
SECTION 9.1. Notices. Except for notices given by telephone pursuant to
a specific provision herein authorizing notice by telephone (promptly confirmed
by facsimile transmission), 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 Company or the Administrative Agent, at its address, facsimile
number or telex number set forth on the signature pages hereof, (y) in the case
of any Bank, at its address, facsimile number or telex number set forth in its
Administrative Questionnaire or (z) in the case of any party, such other
address, facsimile number or telex number as such party may hereafter specify
for the purpose by notice to the Administrative Agent and the Company. Each such
notice, request or other communication shall be effective (i) if given by telex,
when such telex is transmitted to the telex number specified in this Section and
the appropriate answerback is received, (ii) if given by facsimile transmission,
when transmitted to the facsimile number specified in this Section and
confirmation of receipt is received, (iii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iv) if given by any other means, when delivered at
the address specified in this Section; provided that notices to the
Administrative Agent under Article 2 or Article 8 shall not be effective until
received.
SECTION 9.2. 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 9.3. Expenses; Indemnification. (a) The Company shall pay (i)
all out-of-pocket expenses of the Administrative Agent, including reasonable
fees and disbursements of special counsel for the Administrative Agent, in
connection with the preparation of this Agreement (subject to any limits agreed
upon in writing by the Company and the Administrative Agent), 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 and each Bank, including (without
duplication) the reasonable fees and disbursements of outside counsel and the
allocated cost of inside counsel, in connection with such Event of Default and
collection, bankruptcy, insolvency and other enforcement proceedings resulting
therefrom.
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<PAGE> 69
(b) The Company agrees to indemnify the Administrative Agent and each
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 outside counsel and the allocated cost of inside 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 9.4. 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 any Note 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 any Note held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in the Notes
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
Notes held by the Banks shall be shared by the Banks pro rata; provided that
nothing in this Section shall impair the right of any Bank to exercise any right
of set-off or counterclaim it may have and to apply the amount subject to such
exercise to the payment of indebtedness of the Company other than its
indebtedness hereunder.
SECTION 9.5. 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 Company 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, 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 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) amend this Section 9.05 or change the
percentage of the Commitments or of the aggregate unpaid principal amount of the
Notes, 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.
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<PAGE> 70
SECTION 9.6. 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 Company may not
assign or otherwise transfer any of its rights under this Agreement without the
prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "PARTICIPANT") participating interests in its Commitment or
any or all of its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon notice to the
Company and the Administrative Agent, such Bank shall remain responsible for the
performance of its obligations hereunder, and the Company 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 Company 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 Company agrees that each Participant shall, to the extent
provided in its participation agreement, be entitled to the benefits of Article
8 with respect to its participating interest. An assignment or other transfer
which is not permitted by subsection (c) or (d) below shall be given effect for
purposes of this Agreement only to the extent of a participating interest
granted in accordance with this subsection (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "ASSIGNEE") all, or a proportionate part (equivalent to an
initial Commitment of not less than $5,000,000) of all, of its rights and
obligations under this Agreement and the Notes, and such Assignee shall assume
such rights and obligations, pursuant to an Assignment and Assumption Agreement
in substantially the form of Exhibit H hereto executed by such Assignee and such
transferor Bank, with (and subject to) the subscribed consent of the Company,
which shall not be unreasonably withheld, and the Administrative Agent; provided
that if an Assignee is an affiliate of such transferor Bank or was a Bank
immediately prior to such assignment, no such consent shall be required; and
provided further that such assignment may, but need not, include rights of the
transferor Bank in respect of outstanding Money Market Loans. Upon execution and
delivery of such instrument and payment by such Assignee to such transferor Bank
of an amount equal to the purchase price agreed between such transferor Bank and
such Assignee, such Assignee shall be a
65
<PAGE> 71
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 Company 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 $2,500. If the Assignee is not incorporated under the laws of
the United States of America or a state thereof, it shall deliver to the Company
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 (i) directly to a Federal Reserve Bank or (ii)
to an affiliate of such Bank which in turn assigns such rights 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 Company's prior written
consent or by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring
such Bank to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
SECTION 9.7. No Reliance on Margin Stock. Each of the Banks represents
to the Administrative Agent and each of the other Banks that it in good faith is
not relying upon any Margin Stock as collateral in the extension or maintenance
of the credit provided for in this Agreement.
SECTION 9.8. 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 Company hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York State court sitting in New York City for purposes
of all legal proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. The Company irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have
66
<PAGE> 72
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 9.9. Counterparts; Integration. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement constitutes the entire agreement and understanding among the
parties hereto and supersedes any and all prior agreements and understandings,
oral or written, relating to the subject matter hereof (except the written
limits referred to in Section 9.03(a)(i)).
SECTION 9.10. Confidentiality. Each Bank and the Administrative Agent
agrees (on behalf of itself and each of its affiliates, directors, officers,
employees and representatives) to use reasonable precautions to keep
confidential, in accordance with safe and sound banking practices, any
non-public information supplied to it by the Company pursuant to this Agreement
after such information is identified by the Company as being confidential,
provided that nothing herein shall limit the disclosure of any such information
(i) to the extent required by statute, rule, regulation or, judicial process,
provided that the Company is given prompt written notice (to the extent
permitted by law) that such disclosure is required, (ii) to counsel for any of
the Banks or the Administrative Agent, (iii) to bank examiners, auditors or
accountants, (iv) in connection with any litigation to which any one or more of
the Banks is a party, provided that the Company has been given prompt prior
written notice (to the extent permitted by law) of such proposed disclosure or
(v) to any Assignee or Participant (or prospective Assignee or Participant) so
long as such Assignee or Participant (or Prospective Assignee or Participant)
agrees in writing to be bound by the terms of this Section 9.10.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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<PAGE> 73
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.
APPLIED MATERIALS, INC.
By /s/ Nancy H. Handel
-------------------------------
Title: Vice President,
Global Finance and Treasurer
By /s/ Joseph R. Bronson
-------------------------------
Title: Senior Vice President,
Office of the President,
and Chief Financial Officer
3050 Bowers Avenue, M/S 2036
Santa Clara, California 95054
Attention: Robert Friess
Facsimile number: (408) 986-7825
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By /s/ Kathryn Sayko-Yanes
-------------------------------
Title: Vice President
CITICORP USA, INC.
By /s/ Avrum M. Spiegel
-------------------------------
Title: Vice President
68
<PAGE> 74
BANK OF AMERICA NT & SA
By /s/ Roger J. Fleischmann, Jr.
-------------------------------
Title: Vice President
DEUTSCHE BANK AG, NEW YORK
AND/OR CAYMAN ISLANDS BRANCHES
By /s/ Andre Heitbaum
-------------------------------
Title: Associate
By /s/ Belinda J. Wheeler
-------------------------------
Title: Vice President
MELLON BANK, N.A.
By /s/ Edwin H. Wiest
-------------------------------
Title: First Vice President
THE BANK OF NEW YORK
By /s/ Elizabeth T. Ying
-------------------------------
Title: Vice President
BANQUE NATIONALE DE PARIS
By /s/ Rafael C. Lumanlan
-------------------------------
Title: Vice President
69
<PAGE> 75
By /s/ Charles H. Day
-------------------------------
Title: Assistant Vice President
CREDIT SUISSE FIRST BOSTON
By /s/ Robert N. Finney
-------------------------------
Title: Managing Director
By /s/ Thomas G. Muoio
-------------------------------
Title: Vice President
KEYBANK NATIONAL ASSOCIATION
By /s/ Mary K. Young
-------------------------------
Title: Commercial Banking Officer
UNION BANK OF CALIFORNIA, N.A.
By /s/ Glenn Leyrer
-------------------------------
Title: Assistant Vice President
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as
Administrative Agent
By /s/ Kathryn Sayko-Yanes
-------------------------------
Title: Vice President
60 Wall Street
70
<PAGE> 76
New York, New York 10260-0060
Attention: Kathryn Sayko-Yanes
Telex number: 177615
Facsimile number: (212) 648-5014
CITICORP SECURITIES, INC., as
Syndication Agent
By /s/ Steve Victorin
-------------------------------
Title: Managing Director
71
<PAGE> 77
COMMITMENT SCHEDULE
<TABLE>
<CAPTION>
Name of Bank Commitment
- ------------ ----------
<S> <C>
Morgan Guaranty Trust Company $ 32,500,000
of New York
Citicorp USA, Inc. $ 32,500,000
Bank of America NT & SA $ 26,250,000
Deutsche Bank AG, New York $ 26,250,000
and/or Cayman Islands Branches
Mellon Bank, N.A. $ 26,250,000
The Bank of New York $ 21,250,000
Banque Nationale de Paris $ 21,250,000
Credit Suisse First Boston $ 21,250,000
Key Bank National Association $ 21,250,000
Union Bank of California, N.A. $ 21,250,000
------------
Total $250,000,000
============
</TABLE>
72
<PAGE> 78
PRICING SCHEDULE
The "EURO-DOLLAR MARGIN", "CD MARGIN" and "FACILITY FEE RATE" for any
day are the respective rates per annum set forth below in the applicable row in
the column corresponding to the Pricing Level that applies on such day:
<TABLE>
<CAPTION>
PRICING LEVEL LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V LEVEL VI
------- -------- --------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Euro-Dollar Margin .1225% .130% .150% .185% .240% .350%
CD Margin .2475% .255% .275% .310% .365% .475%
Facility Fee Rate .065% .070% .075% .090% .110% .200%
</TABLE>
For purposes of this Pricing Schedule, the following terms have the
following meanings:
"LEVEL I PRICING" applies on any day if, on such day, the Company's
long-term debt is rated A+ or higher by S&P or A1 or higher by Moody's.
"LEVEL II PRICING" applies on any day if on such day, (i) the Company's
long-term debt is rated A by S&P or A2 by Moody's and (ii) Level I Pricing does
not apply.
"LEVEL III PRICING" applies on any day if, on such day, (i) the
Company's long-term debt is rated A- by S&P or A3 by Moody's and (ii) neither
Level I Pricing nor Level II Pricing applies.
"LEVEL IV PRICING" applies on any day if, on such day, (i) the Company's
long-term debt is rated BBB+ by S&P or Baa1 by Moody's and (ii) none of Level I
Pricing, Level II Pricing or Level III Pricing applies.
"LEVEL V PRICING" applies on any day if, on such day, (i) the Company's
long-term debt is rated BBB by S&P or Baa2 by Moody's and (ii) none of Level I
Pricing, Level II Pricing, Level III Pricing or Level IV Pricing applies.
"LEVEL VI PRICING" applies on any day if, on such day, no other Pricing
Level applies.
"PRICING LEVEL" means any one of the six pricing levels represented by
Level I Pricing, Level II Pricing, Level III Pricing, Level IV Pricing, Level V
Pricing and Level VI Pricing.
<PAGE> 79
The ratings to be utilized for purposes of this Pricing Schedule are
those assigned to the senior unsecured long-term debt securities of the Company
without third-party credit enhancement, and any rating assigned to any other
debt security of the Company shall be disregarded. The rating in effect on any
day is the rating in effect at the close of business on such day. In the case of
split ratings from S&P and Moody's, the rating to be used to determine the
applicable Pricing Level is the higher of the two (e.g., A+/A2 results in Level
I Pricing); provided that if the split is more than one full rating category,
the intermediate (or higher of the two intermediate ratings) will be used (e.g.,
A-/Baa2 results in Level IV Pricing and BBB/A2 results in Level III Pricing).
<PAGE> 80
EXHIBIT A
NOTE
(FIVE-YEAR CREDIT AGREEMENT)
New York, New York
March 13, 1998
For value received, Applied Materials, Inc., a Delaware corporation (the
"COMPANY"), 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 Company pursuant to the Credit
Agreement referred to below on the maturity date provided for in the Credit
Agreement. The Company 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 any failure of the Bank to make (or any error in making)
any such recordation or endorsement shall not affect the obligations of the
Company hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the Five-Year Credit
Agreement dated as of March 13, 1998 among the Company, the banks party thereto,
Morgan Guaranty Trust Company of New York, as Documentation Agent and
Administrative Agent, and Citicorp Securities, Inc., as Syndication Agent (as
the same may be amended from time to time, the "CREDIT AGREEMENT"). Terms
defined in the Credit Agreement are used herein with the same meanings.
<PAGE> 81
Reference is made to the Credit Agreement for provisions for the
prepayment hereof and the acceleration of the maturity hereof.
APPLIED MATERIALS, INC.
By
-------------------------------
Title:
By
-------------------------------
Title:
A-2
<PAGE> 82
LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
AMOUNT OF
AMOUNT OF TYPE OF PRINCIPAL MATURITY NOTATION MADE
DATE LOAN LOAN REPAID DATE BY
- ---- ---- ---- ------ ---- --
<S> <C> <C> <C> <C> <C>
</TABLE>
A-3
<PAGE> 83
EXHIBIT B
FORM OF MONEY MARKET QUOTE REQUEST
(FIVE-YEAR CREDIT AGREEMENT)
[Date]
To: Morgan Guaranty Trust Company of New York, as Administrative Agent
From: Applied Materials, Inc. (the "COMPANY")
Re: Credit Agreement (the "CREDIT AGREEMENT") dated as of March 13, 1998
among the Company, the Banks party thereto, Morgan Guaranty Trust
Company of New York, as Documentation Agent and Administrative Agent,
and Citicorp Securities, Inc., as Syndication Agent.
We hereby give notice pursuant to Section 2.03 of the Credit Agreement
that we request Money Market Quotes for the following proposed Money Market
Borrowing(s):
Date of Borrowing:_______________________
PRINCIPAL AMOUNT(1) INTEREST PERIOD(2)
$
Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the London Interbank
- ------------------
(1) Amount must be $5,000,000 or a larger multiple of $1,000,000.
(2) Not less than one month (LIBOR Auction) or not less than 7 days
(Absolute Rate Auction), subject to the provisions of the definition of
Interest Period.
<PAGE> 84
Offered Rate.](1)
Terms used herein have the meanings assigned to them in the Credit
Agreement.
APPLIED MATERIALS, INC.
By
-------------------------------
Title:
By
-------------------------------
Title:
- ------------------
(1) Insert if offers of Money Market Margins are requested.
<PAGE> 85
EXHIBIT C
FORM OF INVITATION FOR MONEY MARKET QUOTES
(FIVE-YEAR CREDIT AGREEMENT)
To: [Name of Bank]
Re: Invitation for Money Market Quotes to Applied Materials, Inc. (the
"COMPANY")
Pursuant to Section 2.03 of the Five-Year Credit Agreement dated as of
March 13, 1998 among the Company, the Banks party thereto, the undersigned, as
Documentation Agent and Administrative Agent, and Citicorp Securities, Inc., as
Syndication Agent, we are pleased on behalf of the Company to invite you to
submit Money Market Quotes to the Company 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.] [10:15
A.M.] (New York City time) on [date].
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Administrative Agent
By
-------------------------------
Authorized Officer
<PAGE> 86
EXHIBIT D
FORM OF MONEY MARKET QUOTE
(FIVE-YEAR CREDIT AGREEMENT)
To: Morgan Guaranty Trust Company of New York, as Administrative Agent
Re: Money Market Quote to Applied Materials, Inc. (the "COMPANY")
In response to your invitation on behalf of the Company dated
_____________, ____, we hereby make the following Money Market Quote on the
following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank: _____________________________
3. Date of Borrowing: ____________________(1)
4. We hereby offer to make Money Market Loan(s) in the following principal
amounts, for the following Interest Periods and at the following rates:
Principal Interest Money Market [Absolute Rate](3)
Amount(2) Period(1) [Margin](2)
- ------------------
(1) As specified in the related Invitation.
(2) Principal amount bid for each Interest Period may not exceed principal
amount requested. Specify aggregate limitation if the sum of the
individual offers exceeds the amount the Bank is willing to lend. Bids
must be made for $5,000,000 or a larger multiple of $1,000,000.
<PAGE> 87
$
$
- ------------------
(1) Not less than one month or not less than 7 days, as specified in the
related Invitation. No more than five bids are permitted for each
Interest Period.
(2) 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".
(3) Specify rate of interest per annum (to the nearest 1/10,000 of 1%).
<PAGE> 88
[Provided, that the aggregate principal amount of Money Market Loans for
which the above offers may be accepted shall not exceed $_________.](1)
We understand and agree that the offer(s) set forth above, subject to
the satisfaction of the applicable conditions set forth in the Five-Year Credit
Agreement dated as of March 13, 1998 among the Company, the Banks party thereto,
yourselves, as Documentation Agent and Administrative Agent, and Citicorp
Securities, Inc., as Syndication Agent, irrevocably obligates us to make the
Money Market Loan(s) for which any offer(s) are accepted, in whole or in part.
Very truly yours,
[NAME OF BANK]
Dated: By
-------------------------------
Authorized Officer
- ------------------
(1) 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.
D-3
<PAGE> 89
EXHIBIT E
OPINION OF MANAGING DIRECTOR,
LEGAL AFFAIRS OF THE COMPANY
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
Ladies and Gentlemen:
Re: Five-Year Credit Agreement
I am the Managing Director, Legal Affairs of Applied Materials, Inc.
(the "COMPANY") and have acted as its counsel in connection with the execution
and delivery of that certain Five-Year Credit Agreement (the "CREDIT Agreement")
dated as of March 13, 1998 among the Company, the Banks signatory thereto,
Morgan Guaranty Trust Company of New York, as Documentation Agent and
Administrative Agent, and Citicorp Securities, Inc., as Syndication Agent.
Except as otherwise defined herein, all terms used herein and defined in the
Credit Agreement or any agreement delivered thereunder shall have the meanings
assigned to them therein.
In connection with this opinion, I have examined executed copies of the
Credit Agreement and the Notes and such other documents, records, agreements and
certificates as I have deemed appropriate. I have also reviewed such matters of
law as I have considered relevant for the purpose of this opinion.
Based upon the foregoing, I am of the opinion that:
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware, and has the corporate
power and authority to own its assets and to transact the business in which it
is now engaged or proposes to be engaged.
2. The execution, delivery and performance by the Company of this
Agreement and the Notes are within the Company'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
E-1
<PAGE> 90
contravene, or constitute a default under, any provision of applicable law or
regulation or of the certificate of incorporation or by-laws of the Company or,
to the best of my knowledge, of (i) any judgment, injunction, order or decree,
or (ii) any material agreement or other material instrument binding upon the
Company, or result in the creation or imposition of any Lien on any asset of the
Company.
3. To the best of my knowledge, except as set forth under the heading
"LEGAL PROCEEDINGS" in the Company's 1997 Form 10-K, there are no pending or
threatened actions, suits or proceedings against or affecting the Company or any
of its Subsidiaries before any court, governmental agency or arbitrator in which
there is a reasonable possibility of an adverse determination which would have a
Material Adverse Effect, or which in any manner draws into question the validity
of the Credit Agreement or the Notes.
CERTAIN ASSUMPTIONS
With your permission I have assumed the following: (a) the authenticity
of original documents and the genuineness of all signatures; (b) the conformity
to the originals of all documents submitted to me as copies and the truth,
accuracy, and completeness of the information, representations and warranties
contained in the records, documents, instruments and certificates I have
reviewed; and (c) the absence of any evidence extrinsic to the provisions of the
written agreements between the parties that the parties intended a meaning
contrary to that expressed by those provisions.
CERTAIN LIMITATIONS AND QUALIFICATIONS
I express no opinion as to laws other than laws of the State of
California, the federal law of the United States of America and the General
Corporation Law of the State of Delaware. I am licensed to practice law only in
the State of California.
The phrase "TO THE BEST OF MY KNOWLEDGE" is intended to indicate that,
during the course of the performance of my duties as Managing Director, Legal
Affairs, of the Company, no information that would give me current actual
knowledge of the inaccuracy of such statement has come to my attention.
USE OF OPINION
This opinion is solely for your benefit (and the benefit of any Assignee
which becomes a Bank pursuant to Section 9.06(c) of the Credit Agreement) in
connection with the transaction covered by the first paragraph of this letter
and may not be relied upon, used, circulated, quoted or referred to, nor may
copies
E-2
<PAGE> 91
hereof be delivered to, any other person without my prior written approval. I
disclaim any obligation to update this opinion for events occurring or coming to
my attention after the date hereof.
Very truly yours,
Barry Quan
Managing Director, Legal Affairs
E-3
<PAGE> 92
EXHIBIT F
OPINION OF ORRICK, HERRINGTON & SUTCLIFFE LLP,
SPECIAL COUNSEL FOR THE COMPANY
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
Ladies and Gentlemen:
Re: Five-Year Credit Agreement
We have acted as counsel to Applied Materials, Inc., a Delaware
corporation (the "COMPANY") in connection with that certain Five-Year Credit
Agreement (the "AGREEMENT") dated as of March 13, 1998 among the Company, the
banks signatory thereto (the "BANKS"), Morgan Guaranty Trust Company of New
York, as Documentation Agent and Administrative Agent, and Citicorp Securities,
Inc., as Syndication Agent. The capitalized terms herein are used as defined in
the Agreement.
In this regard, we have examined executed originals or copies of the
following, copies of which have been delivered to you:
(a) The Agreement; and
(b) The Notes.
Based upon such examination and having regard for legal considerations
which we deem relevant, we are of the opinion that the Agreement is and, when
delivered under the Agreement, each Note will be, the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its respective terms.
With your permission we have assumed the following: (a) authenticity of
original documents and the genuineness of all signatures; (b) the conformity to
the originals of all documents submitted to us as copies; (c) the truth,
accuracy, and completeness of the information, representations and warranties
contained in the records, documents, instruments and certificates we have
reviewed; (d) that the
F-1
<PAGE> 93
documents referred to herein were duly authorized, executed and delivered on
behalf of the respective parties thereto and, other than with respect to the
Company, are legal, valid, and binding obligations of such parties; (e) the
compliance by you with any applicable requirements to file returns and pay taxes
under the California Franchise Tax Law; (f) the Administrative Agent and the
Banks are exempt from the California usury law; (g) the compliance by you with
any state or federal laws or regulations applicable to you in connection with
the transactions described in the Agreement and the Notes; and (h) the absence
of any evidence extrinsic to the provisions of the written agreements between
the parties that the parties intended a meaning contrary to that expressed by
those provisions.
We express no opinion as to (a) matters of law in jurisdictions other
than the State of California and the United States or (b) the enforceability
under California law of a choice of law provision in the documents described
herein. With your permission, we have assumed for the purpose of rendering this
opinion that the laws of the State of California govern the transaction,
notwithstanding that the Agreement and the Notes state that they are to be
governed by New York law.
Our opinion that any document is legal, valid, binding, or enforceable
in accordance with its terms is qualified as to:
(a) limitations imposed by bankruptcy, insolvency,
reorganization, arrangement, fraudulent conveyance, moratorium, or other
laws relating to or affecting the enforcement of creditors' rights
generally;
(b) general principles of equity, including without limitation
concepts of mutuality, reasonableness, good faith and fair dealing, and
the possible unavailability of specific performance or injunctive
relief, regardless of whether such enforceability is considered in a
proceeding in equity or at law;
(c) the possibility that certain covenants and provisions for
the acceleration of the maturity of the Notes may not be enforceable if
enforcement would be unreasonable under the then existing circumstances,
but in our opinion acceleration would be available if an event of
default occurred as a result of a material breach of a material
covenant;
(d) the unenforceability under certain circumstances of
provisions imposing penalties, forfeiture, late payment charges or an
increase in interest rate upon delinquency in payment or the occurrence
of any event of default;
F-2
<PAGE> 94
(e) rights to indemnification and contribution which may be
limited by applicable law and equitable principles; and
(f) the unenforceability under certain circumstances of
provisions expressly or by implication waiving broadly or vaguely stated
rights (including, without limitation, waivers of any objection to venue
and forum non conveniens and the right to a jury trial), the benefits of
statutory constitutional provisions, unknown future rights, and defenses
to obligations or rights granted by law, where such waivers are against
public policy or prohibited by law.
We note that you are receiving of even date herewith the opinion of
Barry Quan, Managing Director, Legal Affairs of the Company, as to certain
matters relating to the Company. We have made no independent examination of such
matters. We note for your information that Donald A. Slichter, the Secretary of
the Company, is a partner in our firm.
This opinion is solely for your benefit (and the benefit of the Banks
which become parties to the Agreement as Assignees under Section 9.06(c) of the
Agreement) in connection with the transaction covered by the first paragraph of
this letter and may not be relied upon, used, circulated, quoted or referred to
by, nor may copies hereof be delivered to, any other person without our prior
written approval. We disclaim any obligation to update this opinion letter for
events occurring or coming to our attention after the date hereof.
Very truly yours,
ORRICK, HERRINGTON & SUTCLIFFE LLP
F-3
<PAGE> 95
EXHIBIT G
OPINION OF DAVIS POLK & WARDWELL,
SPECIAL COUNSEL FOR THE ADMINISTRATIVE AGENT
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
Dear Sirs:
Re: Five-Year Credit Agreement
We have participated in the preparation of the Five-Year Credit
Agreement (the "CREDIT AGREEMENT") dated as of March 13, 1998 among Applied
Materials, Inc., a Delaware corporation (the "COMPANY"), the banks listed on the
signature pages thereof (the "BANKS"), Morgan Guaranty Trust Company of New
York, as Documentation Agent and Administrative Agent, and Citicorp Securities,
Inc., as Syndication Agent, and have acted as special counsel for Morgan
Guaranty Trust Company of New York in its capacity as Administrative Agent (the
"ADMINISTRATIVE AGENT") for the purpose of rendering this opinion pursuant to
Section 3.01(e) of the Credit Agreement. Terms defined in the Credit Agreement
are used herein as therein defined.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The execution, delivery and performance by the Company of the Credit
Agreement and the Notes are within the Company'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
Company and each Note constitutes a valid and binding obligation of the Company,
in each case enforceable in accordance with its terms, except as the
<PAGE> 96
same may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and by general principles of equity.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York, 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,
G-2
<PAGE> 97
EXHIBIT H
ASSIGNMENT AND ASSUMPTION AGREEMENT
(FIVE-YEAR CREDIT AGREEMENT)
AGREEMENT dated as of _________, 19__ among [ASSIGNOR] (the "Assignor"),
and [ASSIGNEE] (the "ASSIGNEE").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the "AGREEMENT")
relates to the Five-Year Credit Agreement dated as of March 13, 1998 among the
Company, the Assignor and the other Banks party thereto, Morgan Guaranty Trust
Company of New York, as Documentation Agent and Administrative Agent, and
Citicorp Securities, Inc., as Syndication Agent (as amended from time to time,
the "CREDIT AGREEMENT");
WHEREAS, as provided under the Credit Agreement, the Assignor has a
Commitment to make Loans to the Company in an aggregate principal amount at any
time outstanding not to exceed $__________;
WHEREAS, Committed Loans made to the Company 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 such assignment and assume the corresponding
obligations from the Assignor under the Credit Agreement;
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 a corresponding portion of each of its
outstanding Committed Loans, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the obligations of the Assignor under the
<PAGE> 98
Credit Agreement to the extent of the Assigned Amount. Upon the execution and
delivery hereof by the Assignor and the Assignee, [and the execution of the
consent attached hereto by the Company and the Administrative Agent](1), 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 acquire the
rights of the Assignor with respect to a corresponding portion of each of its
outstanding Committed Loans, and (ii) the Commitment of the Assignor shall, as
of the date hereof, be reduced by the Assigned Amount and the Assignor shall be
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.(2)
Facility Fees accrued before the date hereof are for the account of the Assignor
and such fees accruing on and after the date hereof 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 Company and the Administrative Agent. This
Agreement is conditioned upon the consent of the Company and the Administrative
Agent pursuant to Section 9.06(c) of the Credit Agreement.](3)
[SECTION 5. Note. Pursuant to Section 9.06(c) of the Credit Agreement
the Company agrees to execute and deliver a Note payable to the order of the
Assignee to evidence the assignment and assumption provided for herein.]
SECTION 6. Non-Reliance on Assignor. The Assignor makes no
- ------------------
(1) Delete if consent is not required.
(2) Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any
portion of any upfront fee to be paid by the Assignor to the Assignee.
It may be preferable in an appropriate case to specify these amounts
generically or by formula rather than as a fixed sum.
(3) Delete if consent is not required.
H-2
<PAGE> 99
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition, or statements of the
Company, or the validity and enforceability of the obligations of the Company 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 Company.
SECTION 7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 8. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[ASSIGNEE]
By
-------------------------------
Title:
[ASSIGNOR]
By
-------------------------------
Title:
H-3
<PAGE> 100
[The undersigned consent to the foregoing assignment.
APPLIED MATERIALS, INC.
By
-------------------------------
Title:
By
-------------------------------
Title:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Administrative Agent
By
-------------------------------
Title:
H-4
<PAGE> 101
EXHIBIT I
RESTRICTED AND UNRESTRICTED SUBSIDIARIES
1. RESTRICTED SUBSIDIARIES:
<TABLE>
<CAPTION>
PERCENTAGE OF VOTING STOCK
JURISDICTION OF OWNED DIRECTLY OR INDIRECTLY
NAME OF SUBSIDIARY INCORPORATION BY THE COMPANY
- ------------------ ------------- --------------
<S> <C> <C>
Applied Materials Japan, Inc........ Japan 100%
Applied Materials Asia-Pacific, Ltd. Delaware 100%
Applied Materials Korea, Ltd........ Korea 100%
Applied Materials Taiwan, Ltd....... Taiwan 100%
Applied Materials Europe BV......... Netherlands 100%
Applied Materials Ltd............... England 100%
Applied Materials France SARL....... France 100%
Applied Materials GmbH.............. Germany 100%
Applied Materials (Holdings)........ California 100%
Applied Implant Technology, Ltd..... California 100%
Applied Materials International BV.. Netherlands 100%
Applied Materials (Israel) Ltd...... Israel 100%
Applied Materials China, Ltd........ Hong Kong 100%
AMAT (Thailand) Limited............. Thailand 100%
Opal, Inc........................... Israel 100%
Opal Technologies Ltd............... Germany 100%
Integrated Circuit Testing GmbH (ICT) Germany 100%
Orbot Instruments, Inc.............. Delaware 100%
Orbot Instruments Pacific, Ltd...... Hong Kong 100%
Applied Materials South East Asia Singapore 100%
Pte. Ltd............................
Applied Materials (AMSEA) Sdn Bhd... Malaysia 100%
Applied Materials China Tianjin Co., PRC 100%
Ltd.................................
</TABLE>
<PAGE> 102
<TABLE>
<CAPTION>
PERCENTAGE OF VOTING STOCK
JURISDICTION OF OWNED DIRECTLY OR INDIRECTLY
NAME OF SUBSIDIARY INCORPORATION BY THE COMPANY
- ------------------ ------------- --------------
<S> <C> <C>
Applied Materials Italy Srl......... Italy 100%
Applied Materials Belgium S.A....... Belgium 100%
Applied Materials Israel Services, Israel 100%
(1994) Ltd..........................
</TABLE>
2. UNRESTRICTED SUBSIDIARIES:
<TABLE>
<CAPTION>
PERCENTAGE OF VOTING STOCK
JURISDICTION OF OWNED DIRECTLY OR INDIRECTLY
NAME OF SUBSIDIARY INCORPORATION BY THE COMPANY
- ------------------ ------------- --------------
<S> <C> <C>
Applied Materials Ireland Ltd....... Ireland 100%
Applied Materials Sweden AB......... Sweden 100%
Applied Acquisition Subsidiary...... California 100%
Applied Materials International, Inc. California 100%
</TABLE>
<PAGE> 103
EXHIBIT J
EXISTING LIENS AS OF JANUARY 25, 1998
<TABLE>
<CAPTION>
AGGREGATE AMOUNT OF DEBT
DESCRIPTION OF LIEN SECURED BY LIEN
- ------------------- ------------------------
<S> <C>
T/C Land and "KOJOZAIDAN" held by Bank of $45,358,846
Tokyo-Mitsubishi, Japan Development Bank, Sanwa
Bank and Nippon Life Insurance Company.
Kojozaidan is a registered lien placed upon the
factory foundation at Narita Technology Center.
The factory foundation is the collection of
land, buildings and machinery capital equipment
as one registered asset.
</TABLE>
<PAGE> 104
EXHIBIT K
SPECIAL UNENCUMBERED PROPERTY
<TABLE>
<CAPTION>
PROPERTY APPROXIMATE PROPERTY/USE DESCRIPTION SQ. Ft
- -------- ------------------------------------ ------
<S> <C> <C>
3050 Bowers Avenue Office, Engineering & R&D use. 84,300
Santa Clara, CA Bldg. #1
3100 Bowers Avenue Two story steel frame H-6 occupancy building used 104,900
Santa Clara, CA for product and technology development.
Bldg. #2
3300 Scott Boulevard Office, Manufacturing and Clean Room. 60,100
Santa Clara, CA
Bldg. #3
3090 Bowers Ave. One story cafeteria with kitchen facility. 15,600
Santa Clara, CA
Cafeteria
3070 Bowers Ave. Two level concrete reinforced 400 car capacity 136,000
Santa Clara, CA parking platform.
Garage
3225 Oakmead Village Three story steel frame B-2 occupancy administrative 96,600
Drive building situated at the intersection of Oakmead Village
Santa Clara, CA Bldg. #12 Parkway and Central Expressway.
Austin Campus Manufacturing, Office, Warehouse and Cafeteria. 168,000
9700 Hwy. 290 E Bldg. #32
Austin, TX
Austin Campus Manufacturing, Office and Shipping Dock 194,000
9700 Hwy. 290 E Bldg. #31
Austin, TX
Austin Campus Manufacturing and Office 204,000
9700 Hwy. 290 E Bldg. #33
Austin. TX
</TABLE>
<PAGE> 105
CROSS-REFERENCE TARGET LIST
NOTE: DUE TO THE NUMBER OF TARGETS SOME TARGET NAMES MAY
NOT APPEAR IN THE TARGET PULL-DOWN LIST.
(This list is for the use of the wordprocessor only,
is not a part of this document and may be discarded.)
<TABLE>
<CAPTION>
ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME
- --------------- ----------- --------------- -----------
<S> <C> <C> <C>
1..........................art.definitions 5.06...................rest.unrest.subsids
1.01...........................definitions 5.06(b)..................bd.desig.rest.sub
1.02.........................types.of.borr 5.07.....................consolids.mergers
5.08.......................use.of.proceeds
2..............................art.credits 5.10..................................debt
2.01........................commit.to.lend 5.11............................neg.pledge
2.02..................notice.of.comm.brwng 5.11(a)......................prop.tx.liens
2.03.......................mon.mark.brwngs 5.11(g)................liens.to.sec.pp.pmt
2.03(d)................subm.mon.mrk.quotes 5.11(h)............liens.sl.trans.acct.rcv
2.03(d)(i)...............each.bank.submits 5.11(j)..................liens.inc.add.dbt
2.03(d)(ii)...............mon.market.quote 5.12...................cons.tang.net.worth
2.03(d)(iii)................any.mon.market
2.03(f).....................accept.by.comp 6.............................art.defaults
2.04.......................notice.to.banks 6.01.....................events.of.default
2.04(a)....................rec.notc.borrow 6.02.....................notice.of.default
2.05.................................notes
2.06........................matur.of.loans 7................................art.agent
2.07........................interest.rates 7.01..........................appoint.auth
2.07(b)...................int.prin.cd.loan 7.02.............................agt.affil
2.07(c)............int.prin.euro.doll.loan 7.04........................consult.exprts
2.07(d)..............int.od.euro.doll.loan 7.05.........................agt.liability
2.08.....................meth.elect.ir.sec 7.06.................................indem
2.08(a)......................incl.comm.bor 7.07.......................credit.decision
2.08(c).......................cont.thereof 7.08..............................succ.agt
2.08(d)......................not.ent.elect 7.09...............................agt.fee
2.09..................................fees
2.10.........................opt.terminate 8...........................art.chg.circum
2.11.......................sched.terminate 8.01..................unfair.basis.det.int
2.12........................... opt.prepay 8.01(a)...................agt.adv.ref.bnks
2.12(a).....................opt.prepaymnts 8.01(b).......................bnks.have.50
2.12(c)....................opt.prepy.recpt 8.02...............................illegal
2.13........................gen.prov:pymts 8.03......................inc.cost.red.rtn
2.14...........................fund.losses 8.03(c)...................bnk.notfy.co.agt
2.15......................compute.interest 8.04.................................taxes
2.16........................reg.d.comp.sec 8.05.........................limit.amt.due
8.06..........................bs.rt.ln.sub
3...........................art.conditions 8.07..............................bank.sub
3.01...............................closing
3.01(b)......................dul.exec.note 9.................................art.misc
3.01(e)...........................dpw.opin 9.01...............................notices
3.02........................... borrowings 9.02..............................no.waive
? agg.out.prin 9.03.............................exp.indem
9.03(a)(i)....................exp.indem.ai
4....................art.reps.and.warrs 9.03(b)...................co.indem.agt.bnk
4.01........................... corp.exist 9.04........................share.set.offs
4.02.........................corp.gov.auth 9.05...........................amend.waive
4.03........................... bind.eff 9.06..........................succs.assgns
4.04........................... finan.info 9.06(b)..................bnk.grnt.part.int
4.04(a).....................cons.bal.sheet 9.06(c).......................bnk.ass.rgts
4.04(b).................unaud.cons.bal.sht 9.07............................collateral
4.05........................... litigation 9.08...............................gov.law
4.06..........................erisa.comply 9.09.................cntrprts.integ.effect
4.07........................."env".matters 9.10..........................confidential
4.08........................rep.warr.taxes 9.11......................waive.jury.trial
4.09...............................subsids
4.10.........................not.invest.co
4.11.........................full.disclose REFS IN EXHIBIT H (PREF 2)
5............................art.covenants 1................................ex.h.defs
5.01..................................info 2.................................ex.h.ass
5.01(a).......................copy.info.to 3................................ex.h.pmts
5.01(b).....................end.of.fisc.yr 4...............................ex.h.cnsnt
5.01(h)...................co.unrest.subsid 6........................ex.h.non.rely.ass
5.02.........................pmt.of.obligs 7.............................ex.h.gov.law
5.03............................maint.prop 8..............................ex.h.ctprts
5.03(a).......................co.keep.prop
5.04.........................cond.business
5.05...........................comply.laws
</TABLE>
<PAGE> 106
<TABLE>
<CAPTION>
ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME
- --------------- ----------- --------------- -----------
<S> <C> <C> <C>
</TABLE>
K-2
<PAGE> 107
CONFORMED COPY
$250,000,000
364-DAY CREDIT AGREEMENT
dated as of
March 13, 1998
among
APPLIED MATERIALS, INC.
THE BANKS PARTY HERETO
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Documentation Agent and Administrative Agent
and
CITICORP SECURITIES, INC.,
as Syndication Agent
<PAGE> 108
<TABLE>
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TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS
SECTION 1.01. Definitions................................................... 1
SECTION 1.02. Types of Borrowings............................................ 18
ARTICLE 2 THE CREDITS
SECTION 2.01. Commitments to Lend............................................ 18
SECTION 2.02. Notice of Committed Borrowing.................................. 19
SECTION 2.03. Money Market Borrowings........................................ 19
SECTION 2.04. Notice to Banks; Funding of Loans.............................. 24
SECTION 2.05. Notes.......................................................... 24
SECTION 2.06. Maturity of Loans.............................................. 25
SECTION 2.07. Interest Rates................................................. 25
SECTION 2.08. Method of Electing Interest Rates.............................. 28
SECTION 2.09. Facility Fees.................................................. 30
SECTION 2.10. Optional Termination or Reduction of Commitments............... 31
SECTION 2.11. Scheduled Termination of Commitments........................... 31
SECTION 2.12. Optional Prepayments........................................... 31
SECTION 2.13. General Provisions as to Payments.............................. 31
SECTION 2.14. Funding Losses................................................. 32
SECTION 2.15. Computation of Interest and Fees............................... 33
SECTION 2.16. Regulation D Compensation...................................... 33
ARTICLE 3 CONDITIONS
SECTION 3.01. Effectiveness.................................................. 33
SECTION 3.02. Borrowings..................................................... 35
ARTICLE 4 REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power.................................. 35
</TABLE>
ii
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<TABLE>
<CAPTION>
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<S> <C>
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention.................................................. 36
SECTION 4.03. Binding Effect................................................. 36
SECTION 4.04. Financial Information.......................................... 36
SECTION 4.05. Litigation..................................................... 36
SECTION 4.06. Compliance with ERISA.......................................... 37
SECTION 4.07. Environmental Matters.......................................... 37
SECTION 4.08. Taxes.......................................................... 37
SECTION 4.09. Subsidiaries................................................... 38
SECTION 4.10. No Regulatory Restrictions on Borrowing........................ 38
SECTION 4.11. Full Disclosure................................................ 38
ARTICLE 5 COVENANTS
SECTION 5.01. Information.................................................... 39
SECTION 5.02. Payment of Obligations......................................... 43
SECTION 5.03. Maintenance of Property; Insurance............................. 44
SECTION 5.04. Conduct of Business and Maintenance of Existence............... 44
SECTION 5.05. Compliance with Laws........................................... 44
SECTION 5.06. Restricted and Unrestricted Subsidiaries....................... 45
SECTION 5.07. Consolidations, Mergers and Sales of Assets.................... 45
SECTION 5.08. Use of Proceeds................................................ 45
SECTION 5.09. Transactions with Affiliates................................... 45
SECTION 5.10. Debt........................................................... 46
SECTION 5.11. Negative Pledge................................................ 46
SECTION 5.12. Consolidated Tangible Net Worth................................ 49
ARTICLE 6 DEFAULTS
SECTION 6.01. Events of Default.............................................. 50
SECTION 6.02. Notice of Default.............................................. 53
ARTICLE 7 THE ADMINISTRATIVE AGENT
SECTION 7.01. Appointment and Authorization.................................. 53
SECTION 7.02. Administrative Agent and Affiliates............................ 53
SECTION 7.03. Action by Administrative Agent................................. 54
SECTION 7.04. Consultation with Experts...................................... 54
</TABLE>
iii
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<TABLE>
<CAPTION>
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<S> <C>
SECTION 7.05. Liability of Administrative Agent.............................. 54
SECTION 7.06. Indemnification................................................ 54
SECTION 7.07. Credit Decision................................................ 55
SECTION 7.08. Successor Administrative Agent................................. 55
SECTION 7.09. Administrative Agent's Fee..................................... 56
SECTION 7.10. Syndication Agent.............................................. 56
ARTICLE 8 CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair....... 56
SECTION 8.02. Illegality..................................................... 57
SECTION 8.03. Increased Cost and Reduced Return.............................. 57
SECTION 8.04. Taxes.......................................................... 59
SECTION 8.05. Limitations on Amounts Due under Section 8.03.................. 61
SECTION 8.06. Base Rate Loans Substituted for Affected Fixed Rate Loans...... 61
SECTION 8.07. Substitution of Bank........................................... 62
ARTICLE 9 MISCELLANEOUS
SECTION 9.01. Notices........................................................ 62
SECTION 9.02. No Waivers..................................................... 63
SECTION 9.03. Expenses; Indemnification...................................... 63
SECTION 9.04. Sharing of Set-Offs............................................ 63
SECTION 9.05. Amendments and Waivers......................................... 64
SECTION 9.06. Successors and Assigns......................................... 64
SECTION 9.07. No Reliance on Margin Stock.................................... 66
SECTION 9.08. Governing Law; Submission to Jurisdiction...................... 66
SECTION 9.09. Counterparts; Integration...................................... 66
SECTION 9.10. Confidentiality................................................ 66
SECTION 9.11. WAIVER OF JURY TRIAL........................................... 67
</TABLE>
Commitment Schedule
Exhibit A - Note
Exhibit B - Money Market Quote Request
Exhibit C - Invitation for Money Market Quote
Exhibit D - Money Market Quote
Exhibit E - Opinion of General Counsel for the Company
Exhibit F - Opinion of Special Counsel for the Company
Exhibit G - Opinion of Special Counsel for the Administrative Agent
iv
<PAGE> 111
Exhibit H - Assignment and Assumption Agreement
Exhibit I - Restricted and Unrestricted Subsidiaries
Exhibit J - Existing Liens
Exhibit K - Special Unencumbered Property
v
<PAGE> 112
364-DAY CREDIT AGREEMENT
AGREEMENT dated as of March 13, 1998 among APPLIED MATERIALS, INC., the
BANKS party hereto, MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Documentation
Agent and Administrative Agent, and CITICORP SECURITIES, INC., as Syndication
Agent.
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. 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,
completed by such Bank and returned to the Administrative Agent (with a copy to
the Company).
"AFFILIATE" means any Person (other than a Restricted Subsidiary) (i)
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Company, (ii) which
beneficially owns or holds 10% or more of any class of the Voting Stock of the
Company or (iii) 10% or more of the Voting Stock (or in the case of a Person
which is not a corporation, 10% or more of the equity interest) of which is
beneficially owned or held by the Company or a Subsidiary. The term "CONTROL"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of Voting Stock, by contract or otherwise.
<PAGE> 113
"AMJ" means Applied Materials Japan, Inc., a corporation organized under
the laws of Japan.
"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 bank listed on the Commitment Schedule attached
hereto, each Assignee which becomes a Bank pursuant to Section 9.06(c), and
their respective successors; provided that, for purposes of any determination
made with respect to Citicorp USA, Inc. under Section 2.14, 8.01, 8.02 or 8.03,
the term "BANK" shall be deemed to include Citibank, N.A.
"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 2.08(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.
"BORROWING" has the meaning set forth in Section 1.02.
"CAPITALIZED LEASE" means any lease the obligation for Rentals with
respect to which is required to be capitalized on a consolidated balance sheet
of the lessee and its subsidiaries in accordance with GAAP.
"CAPITALIZED RENTALS" of any Person means at any date the amount at
which the aggregate rentals due and to become due under all Capitalized Leases
under which such Person is a lessee would be reflected as a liability on a
consolidated balance sheet of such Person.
"CD BASE RATE" has the meaning set forth in Section 2.07(b).
2
<PAGE> 114
"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 0.29% per annum.
"CD RATE" means a rate of interest determined pursuant to Section
2.07(b) on the basis of an Adjusted CD Rate.
"CD REFERENCE BANKS" means Banque Nationale de Paris, Citibank N.A. and
Morgan Guaranty Trust Company of New York.
"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 2.10 or 9.06(c); provided that, if
the context so requires, the term "Commitment" means the obligation of a Bank to
extend credit up to such amount to the 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.
"COMPANY" means Applied Materials, Inc., a Delaware corporation, and its
successors.
"COMPANY'S 1997 FORM 10-K" means the Company's annual report on Form
10-K for 1997, as filed with the SEC pursuant to the Exchange Act.
"CONSOLIDATED DEBT" means all Debt of the Company and its Relevant
Subsidiaries, determined in accordance with GAAP on a consolidated basis after
eliminating intercompany items.
"CONSOLIDATED NET INCOME" for any period means the net income of the
3
<PAGE> 115
Company and its Relevant Subsidiaries for such period, determined in accordance
with GAAP on a consolidated basis after eliminating earnings or losses
attributable to outstanding Minority Interests.
"CONSOLIDATED NET TANGIBLE ASSETS" means, at any date, the total amount
of all Tangible Assets of the Company and its Relevant Subsidiaries after
deducting therefrom all liabilities which in accordance with GAAP would be
included on their consolidated balance sheet, except Consolidated Debt.
"CONSOLIDATED SUBSIDIARY" means, at any date, any Subsidiary or other
entity the accounts of which would, in accordance with GAAP, be consolidated
with those of the Company in its consolidated financial statements if such
statements were prepared as of such date.
"CONSOLIDATED TANGIBLE NET WORTH" means, at any date, total
stockholders' equity as indicated in the most recent quarterly or annual
consolidated financial statements of the Company and its Relevant Subsidiaries
less Intangible Assets.
"CONSOLIDATED TOTAL ASSETS" means, at any date, the total assets of the
Company and its Relevant Subsidiaries on a consolidated basis determined in
accordance with GAAP.
"CP BACKSTOP BORROWING" means a Borrowing the proceeds of which are used
solely for the purpose of repaying outstanding commercial paper issued by the
Company.
"CREDIT EXPOSURE" means, with respect to any Bank at any time, (i) the
amount of its Commitment (whether used or unused) at such time or (ii) if the
Commitments have terminated in their entirety, the aggregate outstanding
principal amount of its Loans at such time.
"DEBT" of any Person means at any date:
(i) all Indebtedness of such Person (a) for borrowed money or
(b) evidenced by notes, bonds, debentures or similar evidences of
indebtedness of such Person;
(ii) obligations secured by any Lien upon property or assets
owned by such Person, even though such Person has not assumed or become
liable for the payment of such obligation including, without limitation,
obligations secured by Liens arising from the sale or transfer of notes,
accounts receivable or other assets, other than obligations secured
4
<PAGE> 116
by Liens on notes, accounts receivable or other assets sold or
transferred in a transaction which is accounted for as a true sale under
GAAP;
(iii) obligations created or arising under any conditional sale
or other title retention agreement with respect to property acquired by
such Person, notwithstanding the fact that the rights and remedies of
the seller, lender or lessor under such agreement in the event of
default are limited to repossession or sale of property including,
without limitation, obligations secured by Liens arising from the sale
or transfer of notes or accounts receivable other than precautionary
Liens filed or recorded in connection with any such sale or transfer of
such notes or accounts receivable (a) which is accounted for as a true
sale under GAAP and (b) except for such precautionary Liens filed or
recorded in connection with any such sales or transfers by AMJ, pursuant
to which there is no recourse (other than recourse for breach of
customary representations and warranties) to the seller of such notes or
accounts receivable (as evidenced by there being no accounting reserve
taken or required to be taken in respect of any possible liability
relating to such sale or transfer and, in the event such reserve is
taken or required to be taken, the amount of Debt shall be deemed to be
the amount of such reserve), but, in all events, excluding trade
payables and accrued expenses constituting current liabilities;
(iv) Capitalized Rentals of such Person;
(v) reimbursement obligations of such Person in respect of
credit enhancement instruments which are, in substance, financial
guarantees of the obligations of Persons other than the Company or its
Relevant Subsidiaries;
(vi) reimbursement obligations of such Person in respect of
credit enhancement instruments, which reimbursement obligations are then
due and payable by such Person;
(vii) obligations of such Person representing the deferred and
unpaid purchase price of any property or business or services, excluding
trade payables and accrued expenses constituting current liabilities;
and
(viii) Guarantees by such Person of obligations of others of the
character referred to hereinabove in this definition.
The Company's obligations under operating leases and Off-Balance Sheet Leases
shall be excluded from this definition; provided that (i) no such exclusion
shall be
5
<PAGE> 117
made if and to the extent that GAAP would require such obligations to be
classified as debt for borrowed money and (ii) in any event the term "Debt"
shall include the Excess Lease Financed Amount (if any).
"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.
"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 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 Company 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.
"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 or the
6
<PAGE> 118
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.
"EQUITY AFFILIATE" means any Person in which the Company or any of its
Consolidated Subsidiaries holds an equity investment that is accounted for under
the equity method.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA AFFILIATE" means any member of the ERISA Group.
"ERISA GROUP" means the Company, any Restricted 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
Company or any Restricted Subsidiary, are treated as a single employer under
Section 414 of the Internal Revenue Code.
"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 Company 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 0.165% per annum.
"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
7
<PAGE> 119
Banque Nationale de Paris, Citibank N.A. and Morgan Guaranty Trust Company of
New York.
"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).
"EVENTS OF DEFAULT" has the meaning set forth in Section 6.01.
"EXCESS LEASE FINANCED AMOUNT" means the amount (if any) by which the
Lease Financed Amount exceeds (i) $250,000,000 at any time when the Company does
not have a High Rating or (ii) $500,000,000 at any time when the Company does
have a High Rating.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time.
"EXISTING OFF-BALANCE SHEET LEASE" means the Master Lease dated as of
April 30, 1997 between the Company and Credit Suisse Leasing, 92A, L.P. and the
Operative Documents (as defined therein), as they may be amended or supplemented
from time to time.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Domestic Business Day next
succeeding such day, provided that (i) if such day is not a Domestic Business
Day, the Federal Funds Rate for such day 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 such day
shall be the average rate quoted to Morgan Guaranty Trust Company of New York on
such day on such transactions as determined by the Administrative Agent.
8
<PAGE> 120
"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) or any combination of the foregoing.
"GAAP" means at any time generally accepted accounting principles as
then in effect, applied on a basis consistent (except for changes concurred in
by the Company's independent public accountants) with the most recent audited
consolidated financial statements of the Company and its Consolidated
Subsidiaries delivered to the Banks; provided that, if the Company notifies the
Administrative Agent that the Company wishes to amend any covenant in Article 5
or any definition of a term used in any such covenant 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 Company that the Required
Banks wish to amend any such covenant or definition for such purpose), then, for
purposes of such covenant or definition only, "GAAP" shall mean GAAP as in
effect immediately before the relevant change in generally accepted accounting
principles became effective, until either such notice is withdrawn or such
covenant or definition is amended in a manner satisfactory to the Company and
the Required Banks.
"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 (beginning and ending on the same day) at
such time or (iii) all CD Loans having the same Interest Period (beginning and
ending on the same day) 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.
"GUARANTEES" by any Person means all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing, or in effect guaranteeing,
any Indebtedness, dividend or other obligation of any other Person (the "PRIMARY
OBLIGOR") in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement, contingent or
otherwise, by such Person: (i) to purchase such Indebtedness or obligation or
any property or assets constituting security therefor, (ii) to advance or supply
funds (x) for the purchase or payment of such Indebtedness or obligation, (y) to
maintain working capital or other balance sheet condition or otherwise to
advance or make available funds for the purchase or payment of such Indebtedness
or obligation, (iii) to purchase Securities or other property or services
primarily for the purpose of assuring the owner of such Indebtedness or
obligation of the ability of the primary
9
<PAGE> 121
obligor to make payment of such Indebtedness or obligation, or (iv) otherwise to
assure the owner of such Indebtedness or obligation of the primary obligor
against loss in respect thereof. For purposes of all computations made under
this Agreement, a Guarantee in respect of any Indebtedness for borrowed money
shall be deemed to be Indebtedness equal to the principal amount of such
Indebtedness for borrowed money to the extent guaranteed, and a Guarantee in
respect of any other obligation or liability or any dividend shall be deemed to
be Indebtedness equal to the maximum aggregate amount of such obligation,
liability or dividend to the extent guaranteed. The Company's obligations under
Off-Balance Sheet Leases shall be excluded from this definition; provided that
no such exclusion shall be made if and to the extent that GAAP would require
such obligations to be classified as a guarantee.
"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.
"HIGH RATING" means a rating of senior long-term unsecured debt
securities of the Company without any third-party credit enhancement as either
(i) BBB+ or higher by S&P or (ii) Baa1 or higher by Moody's Investors Service,
Inc.
"INDEBTEDNESS" of any Person means and includes all obligations of such
Person which in accordance with GAAP should be classified upon a balance sheet
of such Person as liabilities of such Person.
"INDEMNITEE" has the meaning set forth in Section 9.03(b).
"INTANGIBLE ASSETS" means at any date the total amount of all assets of
the Company and its Relevant Subsidiaries that are properly classified as
"INTANGIBLE ASSETS" in accordance with GAAP and, in any event, shall include,
without limitation, goodwill, patents, trade names, trademarks, copyrights,
franchises, experimental expense, organization expense, unamortized debt
discount and expense, and deferred charges other than prepaid insurance, prepaid
leases and prepaid taxes and current deferred taxes which are classified on the
balance sheet of the Company and its Relevant Subsidiaries as a current asset in
accordance with GAAP and in which classification the Company's independent
public accountants concur; provided that the foregoing Intangible Assets shall
be deemed to be in an amount equal to zero at all times during which such
Intangible Assets, in the aggregate, are less than 2% of stockholders' equity of
the Company.
"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
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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 Company may
elect in such notice; 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 Company may elect in such notice; 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;
(3) with respect to each Money Market LIBOR Loan, the period commencing
on the date of borrowing specified in the applicable Notice of Borrowing and
ending such whole number of months thereafter as the Company 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;
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(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;
(3) with respect to each Money Market Absolute Rate Loan, the period
commencing on the date of borrowing specified in the applicable Notice of
Borrowing and ending such number of days thereafter (but not less than 7 days)
as the Company 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.
"LEASE FINANCED AMOUNT" means, with respect to Off-Balance Sheet Leases,
(i) in the case of the Existing Off-Balance Sheet Lease, the sum of the
aggregate outstanding principal amount of the Loans (as defined therein) and the
outstanding Investment Amounts (as defined therein) or (ii) in the case of any
other Off-Balance Sheet Lease, the sum of the comparable amounts as defined
therein.
"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 (subject to the second paragraph of this definition) any
interest in property securing an obligation owed to, or a claim by, a Person
other than the owner of the property, whether such interest is based on the
common law, statute or contract, and including but not limited to the security
interest or other lien arising from a mortgage, encumbrance, pledge, conditional
sale or trust receipt or a lease (other than an operating lease), consignment,
bailment or transfer for security purposes. The term "LIEN" shall include
reservations,
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exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances (including,
with respect to stock, stockholder agreements, voting trust agreements, buy-back
agreements and all similar arrangements) affecting property. For the purposes of
this Agreement, the Company or a Restricted Subsidiary shall be deemed to be the
owner of any property which it has acquired or holds subject to a conditional
sale agreement, Capitalized Lease or other arrangement pursuant to which title
to the property has been retained by or vested in some other Person for security
purposes and such retention or vesting shall constitute a Lien.
Off-Balance Sheet Leases and the arrangements set forth therein shall be
excluded from this definition; provided that:
(i) if any portion of the Lease Financed Amount is included in
Debt under the last sentence of the definition of Debt, then, for
purposes of Section 5.11(j), Off-Balance Sheet Leases and the
arrangements set forth therein shall be deemed to create a Lien securing
the Excess Lease Financed Amount; and
(ii) if Off-Balance Sheet Leases and the arrangements set forth
therein create a lien on any property or assets other than (x) the
property and assets leased pursuant to Off-Balance Sheet Leases, (y)
rights of the Company as sublessor of any portion of such property and
assets and (z) Permitted Lease Collateral, such lien shall not be
excluded from this definition.
"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).
"MARGIN STOCK" means "margin stock" as such term is defined in
Regulation U.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
properties, business, profits or condition (financial or otherwise) of the
Company or of the Company and its Restricted Subsidiaries taken as a whole.
"MATERIAL DEBT" means Debt (other than the Notes) of the Company and/or
one or more of its Restricted Subsidiaries, arising in one or more related or
unrelated transactions, in an aggregate principal or face amount exceeding
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$50,000,000.
"MATERIAL FINANCIAL OBLIGATIONS" means a principal or face amount of
Debt and/or payment obligations (calculated after giving effect to any
applicable netting agreements) in respect of Derivatives Obligations of the
Company and/or one or more of its Restricted Subsidiaries, arising in one or
more related or unrelated transactions, exceeding in the aggregate $50,000,000.
"MATERIAL PLAN" means, at any time, a Plan or Plans having aggregate
Unfunded Liabilities in excess of $50,000,000.
"MINORITY INTERESTS" means any shares of stock of any class of a
Relevant Subsidiary (other than directors' qualifying shares as required by law)
that are not owned by the Company and/or one or more of its Relevant
Subsidiaries.
"MONEY MARKET ABSOLUTE RATE" has the meaning set forth in Section
2.03(d).
"MONEY MARKET ABSOLUTE RATE LOAN" means a loan made or 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 Company
and the Administrative Agent; provided that any Bank may from time to time by
notice to the Company and the Administrative Agent designate separate Money
Market Lending Offices for its Money Market LIBOR Loans, on the one hand, and
its Money Market Absolute Rate Loans, on the other hand, in which case all
references herein to the Money Market Lending Office of such Bank shall be
deemed to refer to either or both of such offices, as the context may require.
"MONEY MARKET LIBOR LOAN" means a loan made or to be made by a Bank
pursuant to a LIBOR Auction (including such a loan bearing interest at the Base
Rate pursuant to Section 8.01).
"MONEY MARKET LOAN" means a Money Market LIBOR Loan or a Money Market
Absolute Rate Loan.
"MONEY MARKET MARGIN" has the meaning set forth in Section 2.03(d).
"MONEY MARKET QUOTE" means an offer by a Bank to make a Money Market
Loan in accordance with Section 2.03.
"MOODY'S" means Moody's Investors Service, Inc.
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"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
or has within the preceding five plan years made 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 Company, substantially in the form
of Exhibit A hereto, evidencing the obligation of the Company 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
2.08.
"OFF-BALANCE SHEET LEASES" means one or more lease agreements and
related agreements entered into by the Company or any of its Subsidiaries from
time to time, in each case in a transaction which the Company or such Subsidiary
intends to be treated as an "operating lease" for financial reporting purposes
but as a loan for one or more of the following purposes: (i) federal, state and
local income or franchise tax, (ii) bankruptcy, (iii) real estate law and (iv)
commercial law (including uniform commercial law). The term "Off-Balance Sheet
Leases" shall include, without limitation, the Existing Off-Balance Sheet Lease.
"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.
"PERMITTED LEASE COLLATERAL" means (i) in the case of the Existing
Off-Balance Sheet Lease, Cash Collateral (as defined therein) or Treasuries (as
defined therein) pledged pursuant to the Pledge Agreement (as defined therein),
in each case securing the obligations of the Company under the Existing
Off-Balance Sheet Lease or (ii) in the case of any other Off-Balance Sheet
Lease, any comparable assets securing obligations of the Company or a Subsidiary
thereunder.
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"PERSON" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"PLAN" means, 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.
"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.
"RELEVANT SUBSIDIARIES" means all Consolidated Subsidiaries, provided
that, if at any time the Company is required to deliver consolidated financial
statements of the Company and its Restricted Subsidiaries ("RESTRICTED GROUP
FINANCIALS") to the Banks pursuant to Section 5.01(h), the term "RELEVANT
SUBSIDIARIES" shall mean the Restricted Subsidiaries at all times from and
including the date of such Restricted Group Financials, to but excluding the
first date thereafter as of which the Company is required to deliver financial
statements, but not Restricted Group Financials, pursuant to Section 5.01.
"REPORTABLE EVENT" means any "REPORTABLE EVENT" as defined in section
4043 of ERISA for which the 30-day notice requirement has not been waived under
applicable regulations.
"REQUIRED BANKS" means, at any time, Banks having at least 51% of the
aggregate amount of the Credit Exposures at such time.
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"RESTRICTED SUBSIDIARY" means (i) any Subsidiary designated as a
Restricted Subsidiary in Exhibit I hereto, and (ii) any other Subsidiary
designated as a Restricted Subsidiary pursuant to and in accordance with the
provisions of Section 5.06.
"S&P" means Standard & Poors Ratings Services, a division of The
McGraw-Hill Companies, Inc.
"SEC" means the Securities and Exchange Commission.
"SECURITY" has the meaning set forth in Section 2(1) of the Securities
Act of 1933, as amended.
"SUBSIDIARY" means, as to any Person, 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 such Person; unless
otherwise specified, "SUBSIDIARY" means a Subsidiary of the Company.
"SYNDICATION AGENT" means Citicorp Securities, Inc., in its capacity as
syndication agent for the credit facility provided under this Agreement.
"TANGIBLE ASSETS" means, at any date, Consolidated Total Assets (less
depreciation, depletion and other properly deductible valuation reserves) after
deducting (but without duplication) Intangible Assets.
"TAXES" has the meaning set forth in Section 8.04(a).
"TERMINATION DATE" means March 12, 1999, or, if such day is not a
Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day.
"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.
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary designated as an
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Unrestricted Subsidiary in Exhibit I hereto and (ii) any other Subsidiary
designated as an Unrestricted Subsidiary pursuant to and in accordance with the
provisions of Section 5.06.
"VOTING STOCK" means Securities of any class or classes, the holders of
which are ordinarily, in the absence of contingencies, entitled to elect a
majority of the corporate directors (or Persons performing similar functions).
"WHOLLY-OWNED RESTRICTED SUBSIDIARY" means any Restricted 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 Company.
SECTION 1.2. Types of Borrowings. The term "BORROWING" denotes (i) the
aggregation of Loans made or to be made to the Company by one or more Banks
pursuant to Article 2, all of which Loans are of the same type (subject to
Article 8) and, except in the case of Base Rate Loans, have the same initial
Interest Period or (ii) if the context so requires, the borrowing of such Loans.
The term "BORROWING" shall not include any conversion or continuation of
outstanding Loans pursuant to Section 2.08. Borrowings are classified for
purposes of this Agreement either (i) by reference to the pricing of Loans
comprising such Borrowing (e.g., a "EURO-DOLLAR BORROWING" is a Borrowing
comprised of Euro-Dollar Loans) or (ii) 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 one or more Banks participate on the basis of their
bids).
ARTICLE 2
THE CREDITS
SECTION 2.1. Commitments to Lend. Each Bank severally agrees, on the
terms and conditions set forth in this Agreement, to make loans to the Company
pursuant to this Section 2.01 from time to time during the period from and
including the Effective Date to but excluding the Termination Date; provided
that, immediately after each such loan is made, (i) the aggregate outstanding
principal amount of Committed Loans by such Bank shall not exceed the amount of
its Commitment and (ii) the aggregate outstanding principal amount of all the
Loans shall not exceed the aggregate amount of the Commitments. Each Borrowing
under this Section 2.01 shall be in an aggregate principal amount of $5,000,000
or
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any larger multiple of $1,000,000 (except that any such Borrowing may be in the
aggregate amount available within the limitations in the foregoing proviso) and
shall be made from the several Banks ratably in proportion to their respective
Commitments. Within the foregoing limits, the Company may borrow under this
Section 2.01, repay, or to the extent permitted by Section 2.12, prepay Loans
and reborrow at any time prior to the Termination Date under this Section 2.01.
SECTION 2.2. Notice of Committed Borrowing. The Company shall give the
Administrative Agent notice (a "NOTICE OF COMMITTED BORROWING") not later than
(x) 12:00 Noon (New York City time) on the date of each Base Rate Borrowing, (y)
1:00 P.M. (New York City time) on the second Domestic Business Day before each
CD Borrowing and (z) 1:00 P.M. (New York City time) on 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 CD Borrowing or a Euro-Dollar Borrowing,
the duration of the initial Interest Period applicable thereto, subject
to the provisions of the definition of Interest Period.
Such notice may be given by facsimile transmission (or by telephone promptly
confirmed by facsimile transmission).
SECTION 2.3. Money Market Borrowings. (a) The Money Market Option. In
addition to Committed Borrowings pursuant to Section 2.01, the Company may, as
set forth in this Section, request the Banks to make offers to make Money Market
Loans to the Company from time to time during the period from and including the
Effective Date to but excluding the Termination Date. The Banks may, but shall
have no obligation to, make such offers and the Company 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 Company wishes to request
offers to make Money Market Loans under this Section, it shall transmit to the
Administrative Agent by facsimile transmission (or by telephone promptly
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confirmed by facsimile transmission) a Money Market Quote Request substantially
in the form of Exhibit B hereto so as to be received no later than (x) 1:00 P.M.
(New York City time) on the fifth Euro-Dollar Business Day prior to the date of
Borrowing proposed therein, in the case of a LIBOR Auction or (y) 11:30 A.M.
(New York City time) on 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 Company and the Administrative Agent
shall have mutually agreed and shall have notified to the Banks not later than
the date of the Money Market Quote Request for the first LIBOR Auction or
Absolute Rate Auction for which such change is to be effective) specifying:
(i) the proposed date of Borrowing, which shall be a Euro-Dollar
Business Day in the case of a LIBOR Auction or a Domestic Business Day
in the case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which shall be
$5,000,000 or a larger multiple of $1,000,000,
(iii) the duration of the Interest Period applicable thereto,
subject to the provisions of the definition of Interest Period, and
(iv) whether the Money Market Quotes requested are to set forth
a Money Market Margin or a Money Market Absolute Rate.
The Company 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 Company 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
Company 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 the requirements of this subsection (d)
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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)
10:15 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
Company 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 Company of the terms of the offer or offers contained
therein not later than (x) one hour prior to the deadline for the other Banks,
in the case of a LIBOR Auction or (y) 15 minutes prior to the deadline for the
other Banks, in the case of an Absolute Rate Auction. Subject to Articles 3 and
6, any Money Market Quote so made shall not be revocable except with the written
consent of the Administrative Agent given on the instructions of the Company.
(ii) Each Money Market Quote shall be substantially in 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 1/10,000 of
1%) to be added to or subtracted from such base rate,
(D) in the case of an Absolute Rate Auction, the rate of
interest per annum (specified to the nearest 1/10,000 of 1%)
(the
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"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;
(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 Company. The Administrative Agent shall promptly notify
the Company by facsimile transmission (or by telephone promptly confirmed by
facsimile transmission) 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; provided that, in the case of a LIBOR Auction, the Administrative Agent
shall notify the Company of the terms of such Money Market Quotes before 5:00
P.M. (New York City time) on the fourth Euro-Dollar Business Day prior to the
proposed date of Borrowing. 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 Company 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 Company. Not later than 11:30 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 Company 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 Company shall notify the
Administrative Agent by facsimile transmission (or by telephone promptly
confirmed by facsimile transmission) of its acceptance or non-acceptance of the
offers so notified to it pursuant to subsection (e). If the Company fails to
give such a timely notice to the Administrative Agent, it shall be deemed not to
have accepted such offers. 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 Company may accept any Money
Market Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money Market
Borrowing may not exceed the applicable amount set forth in the related
Money Market Quote Request,
(ii) the principal amount of each Money Market Borrowing must be
$5,000,000 or a larger multiple of $1,000,000,
(iii) acceptance of offers may only be made on the basis of
ascending Money Market Margins or Money Market Absolute Rates, as the
case may be, and
(iv) the Company may not accept any offer that is described in
subsection (d)(iii) or that otherwise fails to comply with the
requirements of this Agreement, and
(v) immediately after such Money Market Borrowing is made, the
aggregate outstanding principal amount of the Loans shall not exceed the
aggregate amount of the Commitments.
(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
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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 2.4. Notice to Banks; Funding of Loans. (a) Upon receipt of a
Notice of Borrowing, the Administrative Agent shall promptly notify each Bank 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 Company.
(b) Not later than (x) 12:00 Noon (New York City time) on the date of
each Borrowing other than a Base Rate Borrowing and (y) 1:00 P.M. (New York City
time) on the date of each Base Rate 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 Company 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
Section 2.04 (b) and the Administrative Agent may, in reliance upon such
assumption, make available to the Company on such date a corresponding amount.
If and to the extent that such Bank shall not have so made such share available
to the Administrative Agent, such Bank and the Company 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 Company until the date such amount is repaid to the
Administrative Agent, at (i) in the case of the Company, a rate per annum equal
to the higher of the Federal Funds Rate and the interest rate applicable
pursuant to Section 2.07 and (ii) in the case of such Bank, 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 2.5. Notes. (a) The Loans of each Bank shall be evidenced by a
single Note payable to the order of such Bank for the account of its Applicable
Lending Office in an amount equal to the aggregate unpaid principal amount of
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such Bank's Loans.
(b) Each Bank may, by notice to the Company 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 be in substantially the form of Exhibit A hereto with
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.
(c) Upon receipt of each Bank's Note pursuant to Section 3.01(b), the
Administrative Agent shall forward such Note to such Bank. Each Bank shall
record the date, amount, type and maturity of each Loan made by it and the date
and amount of each payment of principal made by the Company with respect
thereto, and may, if such Bank so elects in connection with any transfer or
enforcement of its Note, 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 a Bank's failure to make (or any error
in making) any such recordation or endorsement shall not affect the obligations
of the Company hereunder or under the Notes. Each Bank is hereby irrevocably
authorized by the Company so to endorse its Note and to attach to and make a
part of its Note a continuation of any such schedule as and when required.
SECTION 2.6. 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 2.7. 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. 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 Base Rate 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 for each
day during such Interest Period at the Base Rate for such day. Such interest
shall be payable for each Interest Period on the last day thereof and, if such
Interest Period is longer than 90 days, 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
Base Rate 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 amount in brackets being rounded upward, if necessary, to the next
higher 1/100 of 1%
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
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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, 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 until paid at a rate per annum
equal to the higher of (i) the sum of 2% plus the Euro-Dollar Margin for such
day plus the London Interbank Offered Rate applicable to such Loan on the day
before such payment was due and (ii) the sum of 2% plus the Euro-Dollar Margin
for such day plus a rate per annum equal to the quotient obtained (rounded
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upward, if necessary, to the next higher 1/100 of 1%) by dividing (x) the
average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the
respective rates per annum at which one day (or, if such amount due remains
unpaid more than three Euro-Dollar Business Days, then for such other period of
time not longer than six 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 Base Rate for such day).
(e) Subject to Section 8.01, each Money Market LIBOR Loan shall bear
interest on the outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of the London Interbank
Offered Rate for such Interest Period (determined in accordance with Section
2.07(c) as if the related Money Market LIBOR Borrowing were a Committed
Euro-Dollar Borrowing) plus (or minus) the Money Market Margin quoted by the
Bank making such Loan in accordance with Section 2.03. Each Money Market
Absolute Rate Loan shall bear interest on the outstanding principal amount
thereof, for the Interest Period applicable thereto, at a rate per annum equal
to the Money Market Absolute Rate quoted by the Bank making such Loan in
accordance with Section 2.03. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is longer than three
months, at intervals of three months after the first day thereof. Any overdue
principal of or interest on any Money Market Loan shall bear interest, payable
on demand, for each day until paid at a rate per annum equal to the sum of 2%
plus the Base Rate for such day.
(f) The Administrative Agent shall determine each interest rate
applicable to the Loans hereunder. The Administrative Agent shall give prompt
notice to the Company 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. 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 2.8. 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 Company in the applicable Notice of Committed Borrowing.
Thereafter, the Company may from time to time elect to change or continue the
type of interest rate borne by each Group of Loans (subject to Section 2.08(d)
and the provisions of Article 8), as follows:
(i) if such Loans are Base Rate Loans, the Company 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 Company 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 2.14 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 Company 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 2.14 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 1:00 P.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 1:00 P.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 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 $5,000,000 in the
aggregate (unless such portion is comprised of Base Rate Loans). If no such
Notice is timely received before the
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end of an Interest Period for any Group of CD Loans or Euro-Dollar Loans, the
Company 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 2.08(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
Company pursuant to Section 2.08(a) above, the Administrative Agent shall notify
each Bank of the contents thereof and such Notice shall not thereafter be
revocable by the Company.
(d) The Company 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 $5,000,000 or (ii) a Default shall have occurred and
be continuing when the Company delivers notice of such election to the
Administrative Agent.
(e) If any Committed Loan is converted to a different type of Loan, the
Company shall pay, on the date of such conversion, any unpaid interest accrued
to such date on the principal amount being converted.
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SECTION 2.9. Facility Fees. The Company shall pay to the Administrative
Agent, for the account of the Banks ratably in proportion to their Credit
Exposures, a facility fee calculated for each day at the rate of 0.06% per annum
on the aggregate amount of the Credit Exposures on such day. Such facility fee
shall accrue for each day from and including the Effective Date to but excluding
the day on which the Credit Exposures are reduced to zero, and shall be payable
quarterly in arrears on each Quarterly Payment Date and on the day on which the
Credit Exposures are reduced to zero.
SECTION 2.10. Optional Termination or Reduction of Commitments. The
Company may, upon at least three Domestic Business Days' notice to the
Administrative Agent, (a) terminate the Commitments at any time, if no Loans are
outstanding at such time, or (b) ratably reduce from time to time by an
aggregate amount of $10,000,000 or any larger multiple of $1,000,000, the
aggregate amount of the Commitments in excess of the aggregate outstanding
principal amount of the Loans.
SECTION 2.11. 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 2.12. Optional Prepayments. (a) Subject in the case of CD Loans
and Euro-Dollar Loans to Section 2.14, the Company may (i) upon at least one
Domestic Business Day's notice to the Administrative Agent, prepay the Group of
Base Rate Loans (or any Money Market Borrowing bearing interest as the Base Rate
pursuant to Section 8.01), (ii) upon at least two Domestic Business Days' notice
to the Administrative Agent, prepay any Group of CD Loans and (iii) upon at
least three Euro-Dollar Business Days' notice to the Administrative Agent,
prepay any Group of Euro-Dollar Loans, in each case in whole at any time, or
from time to time in part in amounts aggregating $5,000,000 or any larger
multiple of $1,000,000, by paying the principal amount to be prepaid together
with accrued interest thereon to the date of prepayment. Each such optional
prepayment shall be applied to prepay ratably the Loans of the several Banks
included in such Group of Loans.
(b) Except as provided in Section 2.12(a) above, the Company may not
prepay all or any portion of the principal amount of any Money Market Loan prior
to the maturity thereof.
(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
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of such Bank's ratable share of such prepayment and such notice shall not
thereafter be revocable by the Company.
SECTION 2.13. General Provisions as to Payments. (a) The Company shall
make each payment of principal of, and interest on, the Loans and of fees
hereunder, not later than 1:00 P.M. (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 specified in or pursuant to 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
Company prior to the date on which any payment is due to the Banks hereunder
that the Company will not make such payment in full, the Administrative Agent
may assume that the Company 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 Company
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 2.14. Funding Losses. If the Company 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 (pursuant to Article 2, 6 or 8 or
otherwise), in either case 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
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if the Company 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),
2.08(c) or 2.12(c), the Company shall reimburse each Bank within 60 days after
demand for any resulting loss or expense (with interest if appropriate) incurred
by it or by an existing or prospective Participant in the related Loan,
including (without limitation) any loss incurred in obtaining, liquidating or
employing deposits from third parties, but excluding loss of margin for the
period after any such payment or failure to borrow, prepay, convert or continue;
provided that such Bank shall have delivered to the Company a certificate as to
the amount of such loss or expense, which certificate shall show in reasonable
detail the basis for calculating such amount and shall be conclusive in the
absence of manifest error.
SECTION 2.15. 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
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 2.16. Regulation D Compensation. If and so long as a reserve
requirement of the type described in the definition of "Euro-Dollar Reserve
Percentage" is prescribed by the Board of Governors of the Federal Reserve
System (or any successor), each Bank subject to such requirement may require the
Company to pay, contemporaneously with each payment of interest on each of such
Bank's Euro-Dollar Loans, additional interest on such Euro-Dollar Loan at a rate
per annum reasonably determined by such Bank 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 Company 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 such Bank gives
such notice and (y) shall notify the Company at least five Euro-Dollar Business
Days before each date on which interest is payable on the Euro-Dollar Loans of
the amount then due it under this Section.
ARTICLE 3
CONDITIONS
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SECTION 3.1. Effectiveness. This Agreement shall become effective upon
receipt by the Administrative Agent of the following:
(a) from each of the parties listed on the signature pages
hereof, a counterpart hereof signed by such party or facsimile or other
written confirmation satisfactory to the Agent confirming that such
party has signed a counterpart hereof;
(b) a duly executed Note for the account of each Bank dated on
or before the Effective Date and complying with the provisions of
Section 2.05;
(c) an opinion of Barry Quan, Managing Director, Legal Affairs
for the Company, dated the Effective Date and 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;
(d) an opinion of Orrick, Herrington & Sutcliffe LLP, special
counsel for the Company, dated the Effective Date and 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;
(e) an opinion of Davis Polk & Wardwell, special counsel for the
Administrative Agent, dated the Effective Date and substantially in the
form of Exhibit G hereto and covering such additional matters relating
to the transactions contemplated hereby as the Required Banks may
reasonably request;
(f) evidence satisfactory to the Administrative Agent that (i)
the commitments of the banks under the $240,000,000 Credit Agreement
dated as of September 8, 1994 among the Company, the banks party thereto
and Morgan Guaranty Trust Company of New York, as Agent, as heretofore
amended, have been terminated and (ii) any loans outstanding thereunder
(together with all interest accrued thereon) and all fees accrued
thereunder have been paid or the Company has made arrangements
satisfactory to the Administrative Agent for the payment thereof on the
Effective Date; and
(g) all documents that the Administrative Agent may reasonably
request relating to the existence of the Company, the corporate
authority
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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.
The Administrative Agent shall promptly notify the Company and the Banks of the
Effective Date, and such notice shall be conclusive and binding on all parties
hereto.
SECTION 3.2. 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) the fact that the Effective Date shall have occurred on or
prior to March 13, 1998;
(b) receipt by the Administrative Agent of a Notice of Borrowing
as required by Section 2.02 or 2.03, as the case may be;
(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
Company contained in this Agreement (except, in the case of a CP
Backstop Borrowing, the representations and warranties set forth in
Sections 4.04(b) and 4.05 as to any matter which has theretofore been
disclosed in writing by the Company to the Banks) 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 Company on the date of such Borrowing as to the facts specified in clauses
(c) and (d) of this Section.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants that:
SECTION 4.1. Corporate Existence and Power. The Company and each
Restricted Subsidiary:
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(a) is a corporation duly organized and validly existing under
the laws of its jurisdiction of incorporation;
(b) has all requisite power and authority and all necessary
licenses and permits to own and operate its properties and to carry on
its business as now conducted and as presently proposed to be conducted,
except where failures to have such licenses and permits would not, in
the aggregate, have a Material Adverse Effect; and
(c) is duly licensed or qualified and is in good standing as a
foreign corporation in each jurisdiction wherein the nature of the
business transacted by it or the nature of the property owned or leased
by it makes such licensing or qualification necessary, except where
failures to be so licensed, qualified or in good standing would not, in
the aggregate, have a Material Adverse Effect.
SECTION 4.2. Corporate and Governmental Authorization; No Contravention.
The execution, delivery and performance by the Company of this Agreement and the
Notes are within the Company'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 Company or of any agreement,
judgment, injunction, order, decree or other instrument binding upon the Company
or any of its Subsidiaries or result in the creation or imposition of any Lien
on any asset of the Company or any of its Restricted Subsidiaries.
SECTION 4.3. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Company and each Note, when executed and delivered in
accordance with this Agreement, will constitute a valid and binding obligation
of the Company, in each case enforceable in accordance with its terms, except as
limited by (i) bankruptcy, insolvency or similar laws affecting creditors'
rights generally and (ii) general principles of equity.
SECTION 4.4. Financial Information. (a) The consolidated balance sheet
of the Company and its Consolidated Subsidiaries as of October 26, 1997 and the
related consolidated statements of operations and cash flows for the fiscal year
then ended, reported on by Price Waterhouse LLP and set forth in the Company's
1997 Form 10-K (or an exhibit thereto), a copy of which has been obtained by
each of the Banks, fairly present, in conformity with generally accepted
accounting principles, the consolidated financial position of the Company and
its Consolidated Subsidiaries as of such date and their consolidated results of
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operations and cash flows for such fiscal year.
(b) Except as disclosed in the Company's press release dated February
10, 1998, there has been no material adverse change since October 26, 1997 in
the business, financial position or results of operations of the Company and its
Relevant Subsidiaries, considered as a whole.
SECTION 4.5. Litigation. Except as set forth under the heading "LEGAL
PROCEEDINGS" in the Company's 1997 Form 10-K, there is no action, suit or
proceeding pending against, or to the knowledge of the Company threatened
against or affecting, the Company 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 determination which would have a Material
Adverse Effect, or which in any manner draws into question the validity of this
Agreement or the Notes.
SECTION 4.6. 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 which will
violate Section 5.11 hereof or (iii) incurred any unpaid liability in excess of
$50,000,000 under Title IV of ERISA other than a liability to the PBGC for
premiums under Section 4007 of ERISA.
SECTION 4.7. Environmental Matters. The Company has a process of
conducting periodic internal reviews relating to compliance by the Company and
its Restricted Subsidiaries with Environmental Laws and liabilities thereunder.
On the basis of such reviews, except as set forth in the Company's 1997 Form
10-K, nothing has come to the attention of the Company which would lead it to
believe that costs associated with compliance with Environmental Laws or
liabilities thereunder (including, without limitation, any capital or operating
expenses required for cleanup, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related constraints
on operating activities and any potential liabilities to third parties) would
have a Material Adverse Effect.
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SECTION 4.8. Taxes. All federal and state income tax returns required to
be filed by the Company or any Restricted Subsidiary in any jurisdiction have,
in fact, been filed and all other tax returns required to be filed in any other
jurisdiction have, in fact, been filed, except where the failure to so file in
such jurisdictions (other than in connection with federal or state income tax
returns) would not have a Material Adverse Effect, and all taxes, assessments,
fees and other governmental charges upon the Company or any Restricted
Subsidiary or upon any of their respective properties, income or franchises,
which are shown to be due and payable in such returns have been paid. For all
taxable years ending on or before October 1993, the Federal income tax liability
of the Company and its Restricted Subsidiaries has been satisfied and either the
period of limitations on assessment of additional Federal income tax has expired
or the Company and its Restricted Subsidiaries have entered into an agreement
with the Internal Revenue Service closing conclusively the total tax liability
for the taxable year. The provisions for taxes on the books of the Company and
each Restricted Subsidiary are adequate for all open years, and for its current
fiscal period.
SECTION 4.9. Subsidiaries. Exhibit I hereto sets forth as of the date of
this Agreement, with respect to each Person which is a Subsidiary of the Company
on the date hereof, (i) the name of such Subsidiary, (ii) the jurisdiction of
incorporation of such Subsidiary and (iii) the percentage of Voting Stock of
such Subsidiary owned by the Company and its other Subsidiaries.
SECTION 4.10. No Regulatory Restrictions on Borrowing. The Company is
not (i) an "INVESTMENT COMPANY" within the meaning of the Investment Company Act
of 1940, as amended, (ii) a "HOLDING COMPANY" or a "SUBSIDIARY COMPANY" of a
holding company within the meaning of the Public Utility Holding Company Act of
1935, as amended, or (iii) otherwise subject to any regulatory scheme applicable
to it which restricts its ability to incur debt under this Agreement.
SECTION 4.11. Full Disclosure. All written information heretofore
furnished by the Company to the Administrative Agent or any Bank for purposes of
or in connection with this Agreement or any transaction contemplated hereby does
not, and all such written information hereafter furnished by the Company to the
Administrative Agent or any Bank will not, contain any untrue statement of a
material fact or in the aggregate omit a material fact necessary to make the
statements therein not misleading on the date as of which such information is
stated or certified. There is no fact peculiar to the Company or its
Subsidiaries which the Company has not disclosed to the Banks in writing which
has had or, so far as the Company can now reasonably foresee, will have a
Material Adverse Effect.
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ARTICLE 5
COVENANTS
The Company agrees that, so long as any Bank has any Credit Exposure
hereunder or any interest or fees accrued hereunder remain unpaid:
SECTION 5.1. Information. The Company will deliver to each of the Banks
(except as stated in clause (j) below) or make available electronically:
(a) as soon as available and in any event within 45 days after the end
of each quarterly fiscal period (except the last) of each fiscal year, copies
of:
(1) a consolidated balance sheet of the Company and its
Subsidiaries as of the close of such quarterly fiscal period,
setting forth in comparative form the consolidated figures as of
the close of the fiscal year then most recently ended,
(2) consolidated statements of operations of the Company and
its Subsidiaries for such quarterly fiscal period and for the
portion of the fiscal year ending with such quarterly fiscal
period, in each case setting forth in comparative form the
consolidated figures for the corresponding period and portion of
the preceding fiscal year, and
(3) a consolidated statement of cash flows of the Company
and its Subsidiaries for the portion of the fiscal year ending
with such quarterly fiscal period, setting forth in comparative
form the consolidated figures for the corresponding period of
the preceding fiscal year,
it being agreed that (i) delivery of such financial statements shall be
deemed to be a representation by the Company that such financial
statements fairly present, in conformity with GAAP, the consolidated
financial position of the Company and its Consolidated Subsidiaries as
of the close of such quarterly fiscal period and their consolidated
results of operations and cash flows for the portion of the fiscal year
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ending at the end of such quarterly fiscal period (subject to normal
year-end adjustments) and (ii) the Company may satisfy the requirements
of this Section 5.01(a) by filing its Quarterly Report on Form 10-Q with
the SEC; provided that such Form 10-Q satisfies the foregoing
requirements of this paragraph (a);
(b) as soon as available and in any event within 90 days after
the close of each fiscal year of the Company, copies of:
(1) a consolidated balance sheet of the Company and its
Subsidiaries as of the close of such fiscal year, and
(2) consolidated statements of operations and cash flows of
the Company and its Subsidiaries for such fiscal year,
in each case setting forth in comparative form the consolidated figures
for the two preceding fiscal years, all in reasonable detail and
accompanied by a report thereon of a firm of independent public
accountants of recognized national standing selected by the Company to
the effect that the consolidated financial statements present fairly, in
all material respects, the consolidated financial position of the
Company and its Consolidated Subsidiaries as of the end of the fiscal
year being reported on and their consolidated results of operations and
cash flows for said year in conformity with GAAP and that the
examination of such accountants in connection with such financial
statements has been conducted in accordance with generally accepted
auditing standards, it being agreed that the Company may satisfy the
requirements of this Section 5.01(b) by filing its Annual Report on Form
10-K with the SEC; provided that such Form 10-K (including the exhibits
filed therewith) satisfies the requirements of this paragraph (b);
(c) promptly upon receipt thereof, one copy of each interim or
special audit made by independent accountants of the books of the
Company or any Restricted Subsidiary and any management letter received
from such accountants, in all cases, material to the financial condition
or operations of the Company or of the Company and its Restricted
Subsidiaries taken as a whole;
(d) promptly upon their becoming available, one copy of each
financial statement, report, notice or proxy statement sent by the
Company to stockholders generally and of each regular or periodic
report, and any
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registration statement or prospectus (other than those on Form S-8)
filed by the Company or any Subsidiary with any securities exchange or
the SEC or any successor agency, and copies of any orders in any
proceedings to which the Company or any of its Subsidiaries is a party,
issued by any governmental agency, Federal or state, having jurisdiction
over the Company or any of its Subsidiaries, which orders are material
to the financial condition or operations of the Company or the Company
and its Restricted Subsidiaries taken as a whole;
(e) promptly upon the occurrence thereof, written notice of (i)
a Reportable Event with respect to any Plan; (ii) the institution of any
steps by the Company, any ERISA Affiliate, the PBGC or any other person
to terminate any Plan if such termination were to result in a liability
of the Company or any Restricted Subsidiary to the PBGC in an amount
which could materially and adversely affect the condition, financial or
otherwise, of the Company or of the Company and its Restricted
Subsidiaries taken as a whole; (iii) the institution of any steps by the
Company or any ERISA Affiliate to withdraw from any Plan or any
Multiemployer Plan if such withdrawal would result in a liability of the
Company or any Restricted Subsidiary in an amount which could materially
and adversely affect the condition, financial or otherwise, of the
Company or of the Company and its Restricted Subsidiaries taken as a
whole; (iv) a "prohibited transaction" within the meaning of Section 406
of ERISA (which has not been exempted under or pursuant to Section 408
of ERISA) in connection with any Plan if such "prohibited transaction"
would result in a liability of the Company or any Restricted Subsidiary
in an amount which could materially and adversely affect the condition,
financial or otherwise, of the Company or of the Company and its
Restricted Subsidiaries taken as a whole; (v) any increase in the
contingent liability of the Company or any Restricted Subsidiary with
respect to any post-retirement welfare liability in an amount that could
have a Material Adverse Effect; or (vi) the taking of any action by, or
the threat in writing of the taking of any action by, the Internal
Revenue Service, the Department of Labor or the PBGC with respect to any
of the foregoing;
(f) within the periods provided in paragraphs (a) and (b) above,
a certificate of an authorized financial officer of the Company stating
that such officer has reviewed the provisions of this Agreement and (i)
setting forth the information and computations (in sufficient detail)
required in order to establish whether the Company was in compliance
with the requirements of Sections 5.10 through 5.12 at the end of the
period covered by the financial statements then being furnished and (ii)
stating
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whether there existed as of the date of such financial statements and
whether, to the best of such officer's knowledge, there exists on the
date of the certificate or existed at any time during the period covered
by such financial statements any Default and, if any such condition or
event exists on the date of the certificate, specifying the nature and
period of existence thereof and the action the Company is taking and
proposes to take with respect thereto;
(g) within the period provided in paragraph (b) above, a
certificate of the accountants who render an opinion with respect to
such financial statements, stating (i) that they have reviewed this
Agreement, and (ii) whether, in making their audit, such accountants
have become aware of any Default under Section 6.01 insofar as any such
terms or provisions pertain to or involve accounting matters or
determinations, and if any such condition or event then exists,
specifying the nature and period of existence thereof;
(h) if the Company's Unrestricted Subsidiaries, taken as a
whole, would have assets in excess of 5% of Consolidated Total Assets at
the date of any financial statements to be delivered pursuant to
paragraph (a) or (b) above or would have net income in excess of 5% of
Consolidated Net Income for any period covered by such financial
statements, the Company will provide, in addition to the financial
statements required by paragraph (a) or (b) above, the financial
statements required by such paragraph (a) or (b) (within the applicable
time period described in such paragraph (a) or (b)) on a consolidated
basis reflecting the financial statements of only the Company and its
Restricted Subsidiaries, certified by a financial officer of the Company
as to fairness of presentation and conformity with GAAP (except for the
exclusion of Unrestricted Subsidiaries) substantially as set forth in
the Company's representation in Section 4.04(a) subject, in the case of
quarterly financial statements required by paragraph (b) above, to
normal year-end adjustments;
(i) within five days after any officer of the Company 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 Company setting forth the details thereof and the action
which the Company is taking and proposes to take with respect thereto;
(j) promptly upon any change in the rating by S&P or Moody's of
the Company's senior unsecured long-term debt securities (without
third-party credit enhancement), a notice reporting such change and
stating
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the date on which such change was publicly announced by the relevant
rating agency, such notice to be delivered by the Company to the
Administrative Agent (which shall promptly advise the Banks thereof if
the Facility Fee Rate, the Euro-Dollar Margin or the CD Margin is
affected by such change in rating); and
(k) from time to time such additional information regarding the
financial position or business of the Company and its Subsidiaries as
the Administrative Agent, at the request of any Bank, may reasonably
request.
Without limiting the foregoing, the Company will permit any Bank (A) to visit
and inspect during normal business hours (at the expense of such Bank unless an
Event of Default has occurred and is continuing), under the Company's guidance
and, so long as no Default shall have occurred and be continuing, upon not less
than three Business Days' prior notice, any of the properties of the Company or
any Restricted Subsidiary, (B) to examine (to the extent material to
ascertaining compliance with the terms and provisions hereof or to the extent
reasonably related to the financial condition or material operations of the
Company or a Restricted Subsidiary) all of their books of account, records,
reports and other papers, and to make copies and extracts therefrom (other than
attorney-client privileged and attorney work-product documents) and (C) to the
extent material to ascertaining compliance with the terms and provisions hereof
or to the extent reasonably related to the financial condition or material
operations of the Company or a Restricted Subsidiary, to discuss their
respective affairs, finances and accounts with their respective officers,
employees (who are managers or officers), and independent public accountants and
by this provision the Company authorizes said accountants to discuss with such
Banks the finances and affairs of the Company and its Restricted Subsidiaries;
provided that such Bank shall have given prior written notice to the Company of
its intention to discuss such finances and affairs with such accountants and
have given the Company the opportunity to participate in such discussions, all
at such reasonable times and as often as may be reasonably requested.
Notwithstanding the above, the Company may, if and to the extent required by
applicable law, deny such access or information to any Bank.
The Company will keep, and will cause each Restricted Subsidiary to
keep, proper books of record and account in which full, true and correct entries
shall be made of all dealings and transactions in relation to its business and
activities, in accordance with GAAP.
Notwithstanding anything to the contrary in the foregoing provisions of
this Section 5.01, neither the Administrative Agent nor any Bank shall have
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access to, nor may they request copies of, any information constituting trade
secrets relating to technology unless the Administrative Agent or such Bank
shall have executed and delivered to the Company a confidentiality agreement
satisfactory to the Company.
SECTION 5.2. Payment of Obligations. The Company will pay and discharge,
and will cause each Restricted Subsidiary to pay and discharge, at or before
maturity, all their respective material obligations and liabilities, including,
without limitation, tax liabilities, except where the same may be contested in
good faith by appropriate proceedings, and will maintain, and will cause each
Restricted Subsidiary to maintain, in accordance with GAAP, appropriate reserves
for the accrual of any of the same.
SECTION 5.3. Maintenance of Property; Insurance. (a) The Company will
keep, and will cause each Restricted Subsidiary to keep, all property useful and
necessary in its business in good working order and condition, ordinary wear and
tear excepted; provided that nothing in this Section 5.03(a) shall prevent the
abandonment of any property if such abandonment does not result in any Default
hereunder and the Company determines, in the exercise of its reasonable business
judgment, that such abandonment is in the interest of the Company.
(b) The Company will maintain, and will cause each Restricted Subsidiary
to maintain, insurance coverage by financially sound and reputable insurers and
in such forms and amounts and against such risks as are customary for
corporations of established reputation engaged in the same or a similar business
and owning and operating similar properties in similar locations.
SECTION 5.4. Conduct of Business and Maintenance of Existence. Neither
the Company nor any Restricted Subsidiary will engage in any business if, as a
result, the primary business, taken on a consolidated basis, which would then be
engaged in by the Company and its Restricted Subsidiaries would be substantially
changed from the business of the manufacture of capital equipment for the
electronics industry. The Company will preserve, renew and keep in full force
and effect, and will cause each Restricted Subsidiary to preserve, renew and
keep in full force and effect, their respective corporate existence and their
respective rights, privileges and franchises, except to the extent that failures
to maintain their respective rights, privileges and franchises could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect ; provided
that nothing in this Section 5.04 shall prohibit (i) the merger of a Restricted
Subsidiary into the Company or the merger or consolidation of a Restricted
Subsidiary with or into another Person if the corporation surviving such
consolidation or merger is a Restricted Subsidiary and if, in each case, after
giving
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effect thereto, no Default shall have occurred and be continuing or (ii) the
termination of the corporate existence of any Restricted Subsidiary if such
termination does not result in any Default hereunder and the Company determines,
in the exercise of its reasonable business judgment, that such termination is in
the interest of the Company.
SECTION 5.5. Compliance with Laws. The Company will comply, and cause
each Restricted 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 (i) where the necessity
of compliance therewith is contested in good faith by appropriate proceedings or
(ii) where the violation of which, individually or in the aggregate, would not
reasonably be expected to (x) result in a Material Adverse Effect or (y) if such
violation is not remedied, result in any Lien not permitted under Section 5.11.
SECTION 5.6. Restricted and Unrestricted Subsidiaries. (a) The Company
may designate each Subsidiary organized or acquired by it after the date hereof
as either a Restricted Subsidiary or an Unrestricted Subsidiary by resolution of
the Board of Directors of the Company. Any such Subsidiary which is not so
designated within 30 days of its organization or acquisition as a Subsidiary
shall be deemed to be an Unrestricted Subsidiary.
(b) The Board of Directors may at any time designate any Restricted
Subsidiary as an Unrestricted Subsidiary if all of the following conditions are
met: (i) such Subsidiary does not own, directly or indirectly, any capital stock
or Indebtedness of the Company or any Restricted Subsidiary; (ii) at any time of
the proposed designation and after giving effect thereto, there shall exist no
Default and (iii) such Restricted Subsidiary has not previously been designated
an Unrestricted Subsidiary pursuant to this Section 5.06(b).
(c) The Board of Directors may at any time designate any Unrestricted
Subsidiary as a Restricted Subsidiary if, at the time of the proposed
designation and after giving effect thereto, there shall exist no Default.
SECTION 5.7. Consolidations, Mergers and Sales of Assets. The Company
will not (i) consolidate or merge with or into any other Person or (ii) sell,
lease or otherwise transfer, directly or indirectly, all or substantially all of
its assets to any other Person; provided that the Company may merge with another
Person if immediately after giving effect to such merger (x) no Default shall
exist and (y) the Company is the surviving entity.
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SECTION 5.8. Use of Proceeds. The proceeds of the Loans made under this
Agreement will be used by the Company to backstop its commercial paper and for
other 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 Margin Stock unless, at all times when any such proceeds are
used to buy or carry Margin Stock, not more than 25% of the value (as determined
by any reasonable method) of the assets (either of the Company only or of the
Company and its Subsidiaries on a consolidated basis) which are subject to any
restriction in Section 5.07 or 5.11 consists of Margin Stock.
SECTION 5.9. Transactions with Affiliates. The Company will not, and
will not permit any Restricted Subsidiary to, enter into or be a party to any
transaction or arrangement with any Affiliate (including, without limitation,
the purchase from, sale to or exchange of property with, or the rendering of any
service by or for, any Affiliate), except in the ordinary course of and pursuant
to the reasonable requirements of the Company's or such Restricted Subsidiary's
(as the case may be) business and upon fair and reasonable terms no less
favorable to the Company or such Restricted Subsidiary than would be obtained in
a comparable arm's-length transaction with a Person other than an Affiliate.
SECTION 5.10. Debt. Consolidated Debt shall at all times be less than
50% of Consolidated Net Tangible Assets; provided that, at any time when the
equity investments (valued at their then current book value) of the Company and
its Relevant Subsidiaries in Equity Affiliates would otherwise exceed 5% of
Consolidated Net Tangible Assets, Consolidated Net Tangible Assets shall be
adjusted for purposes of this Section by deducting such equity investments
(valued at their then current book value).
SECTION 5.11. Negative Pledge. The Company will not, and will not permit
any Restricted Subsidiary to, create or incur, or suffer to be incurred or to
exist, any Lien on its or their property or assets, whether now owned or
hereafter acquired, or upon any income or profits therefrom, or acquire or agree
to acquire, or permit any Restricted Subsidiary to acquire, any property or
assets upon conditional sales agreements or other title retention devices,
except:
(a) Liens for property taxes and assessments or governmental
charges or levies and Liens securing claims or demands of mechanics and
materialmen, provided that payment thereof is not at the time required
by Section 5.02 or 5.05;
(b) any Lien of or resulting from any judgment or award;
provided that either (i) the amount secured thereby does not exceed
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$50,000,000 or (ii) if the amount secured thereby does exceed
$50,000,000, the time for the appeal or petition for rehearing of such
judgment or award shall not have expired, or the Company or a Restricted
Subsidiary shall in good faith be prosecuting an appeal or proceeding
for a review thereof, and execution of such judgment or award shall be
stayed pending such appeal or proceeding for review;
(c) Liens incidental to the conduct of business conducted by the
Company and its Restricted Subsidiaries in the ordinary course of
business or the ownership of properties and assets owned by the Company
and its Restricted Subsidiaries (including Liens in connection with
worker's compensation, unemployment insurance and other like laws,
warehousemen's and attorneys' liens and statutory landlords' liens) and
Liens to secure the performance of bids, tenders or trade contracts, or
to secure statutory obligations, surety or appeal bonds or other Liens
of like general nature incurred in the ordinary course of business of
the Company and its Restricted Subsidiaries and not in connection with
the borrowing of money, provided in each case, the obligation secured is
not overdue or, if overdue, is being contested in good faith by
appropriate actions or proceedings;
(d) survey exceptions or encumbrances, encroachments, easements
or reservations, or rights of others for rights-of-way, utilities and
other similar purposes, zoning restrictions, declarations of covenants,
conditions and restrictions, other title exceptions or other
restrictions as to the use of real properties, which are necessary or
appropriate in the good faith judgment of the Company for the conduct of
the business of the Company and its Restricted Subsidiaries and which,
individually or in the aggregate, do not in any event materially impair
their use in the operation of the business of the Company or of the
Company and its Restricted Subsidiaries taken as a whole;
(e) Liens securing Indebtedness of a Restricted Subsidiary to
the Company or to another Restricted Subsidiary;
(f) Liens existing as of January 25, 1998 and reflected in
Exhibit J hereto, including any renewals, extensions or replacements of
any such Lien, provided that:
(i) no additional property is encumbered in connection with
any such renewal, extension or replacement of any such Lien; and
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(ii) there is no increase in the aggregate principal amount
of Debt secured by any such Lien from that which was outstanding
or permitted to be outstanding with respect to such Lien as of
January 25, 1998 or the date of such renewal, extension or
replacement, whichever is greater;
(g) Liens incurred after January 25, 1998 given to secure the
payment of the purchase price and/or other direct costs incurred in
connection with the acquisition, construction, improvement or
rehabilitation of assets including Liens incurred by the Company or any
Restricted Subsidiary securing Debt incurred in connection with
industrial development bond and pollution control financings, including
Liens existing on such assets at the time of acquisition thereof or at
the time of acquisition by the Company or a Restricted Subsidiary of any
business entity (including a Restricted Subsidiary) then owning such
assets, whether or not such existing Liens were given to secure the
payment of the purchase price of the assets to which they attach,
provided that (i) except in the case of Liens existing on assets at the
time of acquisition of a Restricted Subsidiary then owning such assets,
the Lien shall be created within twelve (12) months of the later of the
acquisition of, or the completion of the construction or improvement in
respect of, such assets and shall attach solely to the assets acquired,
purchased, or financed, (ii) except in the case of Liens existing on
assets at the time of acquisition of a Restricted Subsidiary then owning
such assets or Liens in connection with industrial development bond or
pollution control financings, at the time of the incurrence of such
Lien, the aggregate amount remaining unpaid on all Debt secured by Liens
on such assets whether or not assumed by the Company or a Restricted
Subsidiary shall not exceed an amount equal to 75% of the lesser of the
total purchase price or fair market value, at the time such Debt is
incurred, of such assets (as determined in good faith by the Board of
Directors of the Company), and (iii) all such Debt shall have been
incurred within the applicable limitation provided in Section 5.10;
(h) Liens arising from the sale or transfer of accounts
receivable and notes receivable of AMJ, provided that (i) AMJ shall
receive adequate consideration therefor and (ii) all Debt, if any,
secured by such Liens is incurred within the applicable limitation of
Section 5.10;
(i) Liens on notes or accounts receivable sold or transferred in
a transaction which is accounted for as a true sale under GAAP;
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(j) Liens securing Debt, to the extent that such Liens are not
otherwise permitted by this Section 5.11, provided that (i) immediately
after giving effect to the incurrence of any such Lien, the sum of the
aggregate principal amount of all outstanding Debt secured by Liens
permitted solely by reason of this Section 5.11(j) shall not exceed 15%
of Consolidated Net Tangible Assets, and (ii) the incurrence of such
Debt is permitted by Section 5.10; and
(k) Liens incurred in connection with any renewals, extensions
or refundings of any Debt secured by Liens described in Section 5.11(g),
(h), (i) or (j), provided that there is no increase in the aggregate
principal amount of Debt secured thereby and no additional property is
encumbered.
In the event that any property of the Company or its Restricted Subsidiaries is
subjected to a lien in violation of this Section 5.11, but no other provision of
this Agreement including, without limitation, Section 5.10 (the Indebtedness
secured by such lien being referred to as "PROHIBITED SECURED INDEBTEDNESS"),
such violation shall not constitute an Event of Default hereunder if the
Company, substantially simultaneously with the incurrence of such lien, makes or
causes to be made a provision whereby the Notes will be secured equally and
ratably with all Prohibited Secured Indebtedness and delivers to the Banks an
opinion to that effect, and, in any case, the Notes shall have the benefit, to
the full extent that, and with such priority as, the Banks may be entitled to
under applicable law, of an equitable lien to secure the Notes on such property
of the Company or its Restricted Subsidiaries that secures Prohibited Secured
Indebtedness. The opinion referred to in the preceding sentence shall be
addressed to each of the Banks, shall contain such qualifications and
limitations as are reasonably acceptable to the Banks and shall be delivered by
counsel of nationally recognized standing selected by the Company and
satisfactory to the Required Banks. Such counsel shall be deemed to be
satisfactory to the Required Banks unless, during the 15 day period after the
Banks have received written notice identifying such counsel, Banks having more
than 40% of the aggregate amount of the Commitments or, if the Commitments shall
have been terminated, holding Notes evidencing more than 40% of the aggregate
unpaid principal amount of the Loans, shall have objected to such selection in
writing to the Company.
Notwithstanding any of the foregoing provisions of this Section 5.11
including, without limitation, the terms and provisions of the preceding
paragraph of this Section 5.11, the Company shall not, and shall not permit any
Restricted Subsidiary to, create or incur, or suffer to be incurred or to exist,
any Lien (other than Liens described in Section 5.11(a) through (d), inclusive)
upon any land, property or buildings (or any interest therein) described as
Special Unencumbered
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Property in Exhibit K hereto.
SECTION 5.12. Consolidated Tangible Net Worth. (a) The Company will at
all times keep and maintain Consolidated Tangible Net Worth (adjusted as
provided in subsections (b) and (c) of this Section, if applicable) at an amount
not less than the amount determined by adding the following:
(i) $1,973,000,000 plus
(ii) 50% of Consolidated Net Income (adjusted as provided in
subsections (b) and (c) of this Section, if applicable) for the period
from October 27, 1997 to and including the date of any calculation
hereunder.
(b) If the Company is required to deliver consolidated financial
statements of the Company and its Restricted Subsidiaries pursuant to Section
5.01(h) as of any date (the "BREAK-OUT DATE"), then the following adjustments
shall be made for purposes of this Section as of the Break-Out Date and at all
times thereafter (unless and until the Company is no longer required to deliver
such financial statements pursuant to Section 5.01(h)):
(i) Consolidated Tangible Net Worth shall be adjusted by
deducting the equity investments (valued at their then current book
value) of the Company and its Restricted Subsidiaries in Unrestricted
Subsidiaries and
(ii) Consolidated Net Income shall be adjusted by excluding the
equity of the Company and its Restricted Subsidiaries in the income (or
loss) of Unrestricted Subsidiaries after October 26, 1997 and including
dividends received by the Company and its Restricted Subsidiaries from
Unrestricted Subsidiaries after October 26, 1997.
(c) At any time when the aggregate book value of the equity investments
of the Company and its Relevant Subsidiaries in Equity Affiliates exceeds 5% of
Consolidated Net Tangible Assets, the following adjustments shall be made for
purposes of this Section:
(i) Consolidated Tangible Net Worth shall be adjusted by
deducting such equity investments (valued at their then current book
value), and
(ii) Consolidated Net Income shall be adjusted by excluding the
equity of the Company and its Relevant Subsidiaries in the income (or
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loss) of Equity Affiliates after October 26, 1997 and including
dividends received by the Company and its Relevant Subsidiaries from
Equity Affiliates after October 26, 1997.
ARTICLE 6
DEFAULTS
SECTION 6.1. Events of Default. If one or more of the following events
("EVENTS OF DEFAULT") shall have occurred and be continuing:
(a) the Company shall fail to pay any principal of any Loan when
due or shall fail to pay any interest, fee or other amount payable
hereunder within five days after it becomes due;
(b) the Company shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by
clause (a) above) for 30 days after written notice thereof has been
given to the Company by the Administrative Agent at the request of any
Bank;
(c) any representation, warranty, certification or statement
made by the Company 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);
(d) the Company or any Restricted Subsidiary shall fail to make
any payment in respect of any Material Financial Obligations when due or
within any applicable grace period;
(e) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or enables (or, with
the giving of notice or lapse of time or both, would enable) the holder
of such Debt or any Person acting on such holder's behalf to accelerate
the maturity thereof;
(f) the Company or any 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
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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; provided that no
event otherwise constituting an Event of Default under this clause (f)
shall be an Event of Default if the total assets of all entities with
respect to which an event has occurred which would otherwise have
constituted an Event of Default under this clause (f) or clause (g) do
not exceed $50,000,000 in the aggregate;
(g) an involuntary case or other proceeding shall be commenced
against the Company or any 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 Company or any Subsidiary under the federal
bankruptcy laws as now or hereafter in effect; provided that no event
otherwise constituting an Event of Default under this clause (g) shall
be an Event of Default if the total assets of all entities with respect
to which an event has occurred which would otherwise have constituted an
Event of Default under clause (f) or this clause (g) do not exceed
$50,000,000 in the aggregate;
(h) any ERISA Affiliate shall fail to pay when due (or in the
case of an ERISA Affiliate acquired by the Company or a Subsidiary after
the due date thereof, within 30 days after such ERISA Affiliate is so
acquired) an amount or amounts aggregating in excess of $50,000,000
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 ERISA Affiliate, 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 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 ERISA Affiliates to
incur a current payment obligation in excess of $50,000,000;
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(i) final judgments or orders for the payment of money in excess
of $50,000,000 in the aggregate (excluding amounts with respect to which
a financially sound and reputable insurer has admitted liability) shall
be rendered against the Company or any Subsidiary and such judgments or
orders shall continue unsatisfied and unstayed for a period of 30
consecutive days; or
(j) either (i) any person or group of persons (within the
meaning of Section 13 or 14 of the Exchange Act) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated by
the SEC under said Act) of 30% or more of the outstanding shares of
Voting Stock of the Company; or (ii) during any period of 12 consecutive
calendar months, commencing before or after the date of this Agreement,
individuals who were directors of the Company on the first day of such
period (the "INITIAL DIRECTORS") shall cease for any reason to
constitute a majority of the board of directors of the Company unless
the Persons replacing such individuals were nominated or elected by a
majority of the directors (x) who were Initial Directors at the time of
such nomination or election and/or (y) who were nominated or elected by
a majority of directors who were Initial Directors at the time of such
nomination or election;
then, and in every such event, the Administrative Agent shall (i) if requested
by Banks having more than 51% in aggregate amount of the Commitments, by notice
to the Company terminate the Commitments and they shall thereupon terminate, and
(ii) if requested by Banks holding Notes evidencing more than 51% in aggregate
principal amount of the Loans, by notice to the Company declare the Notes
(together with accrued interest thereon) to be, and the Notes 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 Company;
provided that in the case of any of the Events of Default specified in clause
(f) or (g) above with respect to the Company, without any notice to the Company
or any other act by the Administrative Agent or the Banks, the Commitments shall
thereupon terminate and the Notes (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 Company.
SECTION 6.2. Notice of Default. The Administrative Agent shall give
notice to the Company under clause (b) of Section 6.01 promptly upon being
requested to do so by the Required Banks and shall thereupon notify all the
Banks thereof.
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ARTICLE 7
THE ADMINISTRATIVE AGENT
SECTION 7.1. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes the Administrative Agent to take such action as 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 7.2. 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 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 Company or any Subsidiary or affiliate
of the Company as if it were not the Administrative Agent hereunder.
SECTION 7.3. 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 6.
SECTION 7.4. Consultation with Experts. The Administrative Agent may
consult with legal counsel (who may be counsel for the Company), 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 7.5. Liability of Administrative Agent. Neither the
Administrative Agent nor any of its affiliates nor any of their respective
directors, officers, agents or employees shall be liable for any action taken or
not taken by it in connection herewith (a) with the consent or at the request of
the Required Banks or (b) in the absence of its own gross negligence or willful
misconduct. Neither the Administrative Agent nor any of its affiliates nor any
of their respective directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into or verify (i) any
statement, warranty or representation made in connection with this Agreement or
any borrowing hereunder; (ii) the performance or observance of any of the
covenants or agreements of the Company; (iii) the satisfaction of any condition
specified in
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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
good faith in reliance upon (A) any notice, consent, certificate, statement, or
other writing (which may be a bank wire, telex, facsimile transmission or
similar writing) believed by it to be genuine or to be signed by the proper
party or parties or (B) any notice given by telephone (pursuant to a specific
provision herein authorizing notice to be given by the Company to the
Administrative Agent by telephone (promptly confirmed by facsimile
transmission)) believed in good faith by it to be given by the proper party.
Without limiting the generality of the foregoing, the use of the term "AGENT" in
this Agreement with reference to the Administrative Agent is not intended to
connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law. Instead, such term is used merely as a
matter of market custom and is intended to create or reflect only an
administrative relationship between independent contracting parties.
SECTION 7.6. Indemnification. The Banks shall, ratably in proportion to
their Credit Exposures, indemnify the Administrative Agent, its affiliates and
their respective directors, officers, agents and employees (to the extent not
reimbursed by the Company) 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 may suffer or incur in connection with this Agreement or any action
taken or omitted by such indemnitees hereunder.
SECTION 7.7. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Administrative Agent, the
Syndication Agent or any other Bank, and based on such documents and information
as it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement. Each Bank also acknowledges that it will, independently and
without reliance upon the Administrative Agent, the Syndication 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 7.8. Successor Administrative Agent. The Administrative Agent
may resign at any time by giving notice thereof to the Banks and the Company.
Upon any such resignation, the Required Banks shall have the right to appoint a
successor Administrative Agent; provided that (a) such successor Administrative
Agent shall have, in its capacity as a Bank, a Commitment of not less than
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$12,500,000 (reduced to reflect any reduction of the Commitments pursuant to
Section 2.10) or, if the Commitments have been terminated, shall hold a
corresponding portion of the Committed Loans then outstanding (if any) and (b)
unless a Default shall have occurred and be continuing, such appointment shall
not be effective without the consent of the Company, such consent not to be
unreasonably withheld. If no successor Administrative Agent shall have been so
appointed by the Required Banks, and shall have accepted such appointment,
within 30 days after the retiring Administrative Agent gives notice of
resignation, then the retiring Administrative Agent may, on behalf of the Banks,
appoint a successor Administrative Agent, which shall be a commercial bank
organized or licensed under the laws of the United States of America or of any
State thereof and having a combined capital and surplus of at least $50,000,000.
Upon the acceptance of its appointment as Administrative Agent hereunder by a
successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Article shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent.
SECTION 7.9. Administrative Agent's Fee. The Company shall pay to the
Administrative Agent for its own account fees in the amounts and at the times
previously agreed upon in writing between the Company and the Administrative
Agent.
SECTION 7.10. Syndication Agent. Nothing in this Agreement shall impose
on the Syndication Agent, in its capacity as such, any duty or responsibility
whatsoever.
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.1. Basis for Determining Interest Rate Inadequate or Unfair .
If on or prior to the first day of any Interest Period for any Fixed Rate
Borrowing:
(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
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(b) in the case of a Committed Borrowing, Banks having 50% or
more of the aggregate amount of the Commitments advise the
Administrative Agent that the CD Rate or the Adjusted 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 Company and
the Banks, whereupon until the Administrative Agent notifies the Company 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 Company notifies the Administrative Agent at
least two Domestic Business Days before the date of any affected Borrowing for
which a Notice of Borrowing has previously been given that it elects not to
borrow on such date, (i) if such affected Borrowing is a CD Borrowing or
Euro-Dollar Borrowing, such Borrowing shall instead be made as a Base Rate
Borrowing and (ii) if such affected 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 8.2. Illegality. If, on or after the date of this Agreement, the
adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Bank (or its Euro-Dollar Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency shall make it unlawful or impossible for any Bank (or its
Euro-Dollar Lending Office) to make, maintain or fund its Euro-Dollar Loans and
such Bank shall so notify the Administrative Agent, the Administrative Agent
shall forthwith give notice thereof to the other Banks and the Company,
whereupon until such Bank notifies the Company 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, such Bank
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shall designate a different Euro-Dollar Lending Office if such designation will
avoid the need for giving such notice and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. If such notice is given, each
Euro-Dollar Loan of such Bank then outstanding shall be converted to a Base Rate
Loan either (a) on the last day of the then current Interest Period applicable
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 (b) 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 8.3. Increased Cost and Reduced Return. (a) If on or after (x)
the date hereof, in the case of any Committed Loan or any obligation to make
Committed Loans or (y) the date of the related Money Market Quote, in the case
of any Money Market Loan, the adoption of any applicable law, rule or
regulation, or any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall impose, modify or
deem applicable any reserve (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System, but excluding
(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 2.16), special deposit,
insurance 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 (excluding Taxes) 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 60 days
after demand by such Bank (with a copy to the Administrative Agent), the Company
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shall pay to such Bank such additional amount or amounts (with interest if
appropriate) as will compensate such Bank (subject to the limit in Section 8.05)
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 60 days after
demand by such Bank (with a copy to the Administrative Agent), the Company shall
pay to such Bank such additional amount or amounts (with interest if
appropriate) as will compensate such Bank or its Parent (subject to the limit in
Section 8.05) for such reduction.
(c) Each Bank will promptly notify the Company 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 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 and setting forth the
additional amount or amounts to be paid to it hereunder shall show in reasonable
detail the basis for calculating such amount or amounts and shall be conclusive
in the absence of manifest error. In determining such amount, such Bank may use
any reasonable averaging and attribution methods.
SECTION 8.4. Taxes. (a) For purposes of this Section 8.04, the following
terms have the following meanings:
"TAXES" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings with respect to any payment by the
Company pursuant to this Agreement or under any Note, and all liabilities with
respect
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thereto, excluding (i) in the case of each Bank and the Administrative Agent,
taxes imposed on or measured by its net income (including franchise or similar
taxes) imposed on it, by a jurisdiction (or any political subdivision of any
such jurisdiction) under the laws of which such Bank or the Administrative Agent
(as the case may be) is organized or in which its principal executive office is
located or, in the case of each Bank, in which its Applicable Lending Office is
located or in which it is subject to such taxes by reason of an office or other
property of such Bank in such jurisdiction unrelated to the transaction
contemplated by this Agreement and (ii) in the case of each Bank, any United
States withholding tax imposed on such payments, but not excluding any portion
of such tax that exceeds the United States withholding tax which would have been
imposed on such a payment to such Bank under the laws and treaties in effect
when such Bank first becomes a party to this Agreement.
"OTHER TAXES" means any present or future stamp or documentary taxes and
any other excise or property taxes, or similar charges or levies, which arise
from any payment made pursuant to this Agreement or under any Note or from the
execution, delivery, registration or enforcement of, or otherwise with respect
to, this Agreement or any Note.
(b) All payments by the Company to or for the account of any Bank or the
Administrative Agent hereunder or under any Note shall be made without deduction
for any Taxes or Other Taxes; provided that, if the Company shall be required by
law to deduct any Taxes or Other Taxes from any such payments, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (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 Company shall make such deductions, (iii) the
Company shall pay the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law and (iv) the Company shall
furnish to the Administrative Agent, at its address specified in or pursuant to
Section 9.01, the original or a certified copy of a receipt evidencing payment
thereof.
(c) The Company agrees to indemnify each Bank and the Administrative
Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on
amounts payable under this Section 8.04) paid by such Bank or the Administrative
Agent (as the case may be) and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto. This indemnification (with
interest if appropriate) shall be paid within 60 days after such Bank or the
Administrative
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Agent (as the case may be) makes demand therefor.
(d) Each Bank organized under the laws of a jurisdiction outside the
United States, before it signs and delivers this Agreement in the case of each
Bank listed on the signature pages hereof and before it becomes a Bank in the
case of each other Bank, and from time to time thereafter if requested in
writing by the Company (but only so long as such Bank remains lawfully able to
do so), shall provide the Company and the Administrative Agent with Internal
Revenue Service form 1001 or 4224, as appropriate, or any successor form
prescribed by the Internal Revenue Service, certifying that such Bank is
entitled to benefits under an income tax treaty to which the United States is a
party which exempts such Bank from United States withholding tax or reduces the
rate of withholding tax on payments of interest for the account of such Bank or
certifying that the income receivable by it pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the United
States.
(e) For any period with respect to which a Bank has failed to provide
the Borrower or the Agent with the appropriate form referred to in Section
8.04(d) (unless such failure is due to a change in treaty, law or regulation
occurring after the date on which such form originally was required to be
provided), such Bank shall not be entitled to indemnification under Section
8.04(b) or 8.04(c) with respect to Taxes imposed by the United States; provided,
that if a Bank, which is otherwise exempt from or subject to a reduced rate of
United States withholding tax, becomes subject to such withholding tax because
of its failure to deliver a form required hereunder, the Company shall take such
steps as such Bank shall reasonably request to assist such Bank to recover such
withholding tax unless in the judgment of the Company, such assistance would be
otherwise disadvantageous to the Company.
(f) If the Company is required to pay additional amounts to or for the
account of any Bank pursuant to this Section 8.04, as a result of a change in
law or treaty occurring after such Bank first became a party to this Agreement,
then such Bank will change the jurisdiction of its Applicable Lending Office if,
in the judgment of such Bank, such change (i) will eliminate or reduce any such
additional payment which may thereafter accrue and (ii) is not otherwise
disadvantageous to such Bank.
SECTION 8.5. Limitations on Amounts Due under Section 8.03. If any Bank
fails to give the Company any prompt notice required by Section 8.03(c), the
Company shall not be required to indemnify and compensate such Bank or the
Administrative Agent under Section 8.03 for any amounts attributable to the
event or factual circumstance required to be disclosed in such notice and
arising during
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or with respect to any period ending more than 90 days before notice thereof has
been delivered to the Company; provided that this Section shall in no way limit
the right of any Bank or the Administrative Agent to demand or receive
compensation to the extent that such compensation relates to any law, rule,
regulation, interpretation, administration, request or directive (or any change
therein) which by its terms has retroactive application if such notice is given
within 90 days after the date of enactment or effectiveness of such retroactive
law, rule, regulation, interpretation, administration, request or directive (or
change therein).
SECTION 8.6. 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 Company 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 Company that
the circumstances giving rise to such suspension or demand for compensation no
longer exist:
(a) all Loans which would otherwise be made by such Bank as (or
continued 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), and
(b) if such Bank notifies the Company 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 8.7. 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 Section 8.04, the Company
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 Note and assume the Commitment of such Bank.
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ARTICLE 9
MISCELLANEOUS
SECTION 9.1. Notices. Except for notices given by telephone pursuant to
a specific provision herein authorizing notice by telephone (promptly confirmed
by facsimile transmission), 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 Company or the Administrative Agent, at its address, facsimile
number or telex number set forth on the signature pages hereof, (y) in the case
of any Bank, at its address, facsimile number or telex number set forth in its
Administrative Questionnaire or (z) in the case of any party, such other
address, facsimile number or telex number as such party may hereafter specify
for the purpose by notice to the Administrative Agent and the Company. Each such
notice, request or other communication shall be effective (i) if given by telex,
when such telex is transmitted to the telex number specified in this Section and
the appropriate answerback is received, (ii) if given by facsimile transmission,
when transmitted to the facsimile number specified in this Section and
confirmation of receipt is received, (iii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iv) if given by any other means, when delivered at
the address specified in this Section; provided that notices to the
Administrative Agent under Article 2 or Article 8 shall not be effective until
received.
SECTION 9.2. 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 9.3. Expenses; Indemnification. (a) The Company shall pay (i)
all out-of-pocket expenses of the Administrative Agent, including reasonable
fees and disbursements of special counsel for the Administrative Agent, in
connection with the preparation of this Agreement (subject to any limits agreed
upon in writing by the Company and the Administrative Agent), 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 and each Bank, including (without
duplication) the reasonable fees and disbursements of outside counsel and the
allocated cost of inside counsel, in connection with such Event of Default and
collection,
63
<PAGE> 175
bankruptcy, insolvency and other enforcement proceedings resulting therefrom.
(b) The Company agrees to indemnify the Administrative Agent and each
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 outside counsel and the allocated cost of inside 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 9.4. 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 any Note 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 any Note held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in the Notes
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
Notes held by the Banks shall be shared by the Banks pro rata; provided that
nothing in this Section shall impair the right of any Bank to exercise any right
of set-off or counterclaim it may have and to apply the amount subject to such
exercise to the payment of indebtedness of the Company other than its
indebtedness hereunder.
SECTION 9.5. 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 Company 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, 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 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) amend this Section 9.05 or change the
percentage of the Commitments or of the aggregate unpaid principal amount of the
Notes, or the number of Banks, which shall be required
64
<PAGE> 176
for the Banks or any of them to take any action under this Section or any other
provision of this Agreement.
SECTION 9.6. 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 Company may not
assign or otherwise transfer any of its rights under this Agreement without the
prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "PARTICIPANT") participating interests in its Commitment or
any or all of its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon notice to the
Company and the Administrative Agent, such Bank shall remain responsible for the
performance of its obligations hereunder, and the Company 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 Company 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 Company agrees that each Participant shall, to the extent
provided in its participation agreement, be entitled to the benefits of Article
8 with respect to its participating interest. An assignment or other transfer
which is not permitted by subsection (c) or (d) below shall be given effect for
purposes of this Agreement only to the extent of a participating interest
granted in accordance with this subsection (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "ASSIGNEE") all, or a proportionate part (equivalent to an
initial Commitment of not less than $5,000,000) of all, of its rights and
obligations under this Agreement and the Notes, and such Assignee shall assume
such rights and obligations, pursuant to an Assignment and Assumption Agreement
in substantially the form of Exhibit H hereto executed by such Assignee and such
transferor Bank, with (and subject to) the subscribed consent of the Company,
which shall not be unreasonably withheld, and the Administrative Agent; provided
that if an Assignee is an affiliate of such transferor Bank or was a Bank
immediately prior to such assignment, no such consent shall be required; and
provided further that such assignment may, but need not, include rights of the
transferor Bank in respect of outstanding Money
65
<PAGE> 177
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 Company 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 $2,500. If the Assignee is not incorporated under the laws of
the United States of America or a state thereof, it shall deliver to the Company
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 (i) directly to a Federal Reserve Bank or (ii)
to an affiliate of such Bank which in turn assigns such rights 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 Company's prior written
consent or by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring
such Bank to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
SECTION 9.7. No Reliance on Margin Stock. Each of the Banks represents
to the Administrative Agent and each of the other Banks that it in good faith is
not relying upon any Margin Stock as collateral in the extension or maintenance
of the credit provided for in this Agreement.
SECTION 9.8. 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 Company 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
66
<PAGE> 178
for purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. The Company 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 9.9. Counterparts; Integration. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement constitutes the entire agreement and understanding among the
parties hereto and supersedes any and all prior agreements and understandings,
oral or written, relating to the subject matter hereof (except the written
limits referred to in Section 9.03(a)(i)).
SECTION 9.10. Confidentiality. Each Bank and the Administrative Agent
agrees (on behalf of itself and each of its affiliates, directors, officers,
employees and representatives) to use reasonable precautions to keep
confidential, in accordance with safe and sound banking practices, any
non-public information supplied to it by the Company pursuant to this Agreement
after such information is identified by the Company as being confidential,
provided that nothing herein shall limit the disclosure of any such information
(i) to the extent required by statute, rule, regulation or, judicial process,
provided that the Company is given prompt written notice (to the extent
permitted by law) that such disclosure is required, (ii) to counsel for any of
the Banks or the Administrative Agent, (iii) to bank examiners, auditors or
accountants, (iv) in connection with any litigation to which any one or more of
the Banks is a party, provided that the Company has been given prompt prior
written notice (to the extent permitted by law) of such proposed disclosure or
(v) to any Assignee or Participant (or prospective Assignee or Participant) so
long as such Assignee or Participant (or Prospective Assignee or Participant)
agrees in writing to be bound by the terms of this Section 9.10.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
67
<PAGE> 179
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.
APPLIED MATERIALS, INC.
By /s/ Nancy H. Handel
-------------------------------
Title: Vice President,
Global Finance and Treasurer
By /s/ Joseph R. Bronson
-------------------------------
Title: Senior Vice President,
Office of the President,
and Chief Financial Officer
3050 Bowers Avenue, M/S 2036
Santa Clara, California 95054
Attention: Robert Friess
Facsimile number: (408) 986-7825
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By /s/ Kathryn Sayko-Yanes
-------------------------------
Title: Vice President
CITICORP USA, INC.
By /s/ Avrum M. Spiegel
-------------------------------
Title: Vice President
68
<PAGE> 180
BANK OF AMERICA NT & SA
By /s/ Roger J. Fleischmann, Jr.
-------------------------------
Title: Vice President
DEUTSCHE BANK AG, NEW YORK
AND/OR CAYMAN ISLANDS BRANCHES
By /s/ Andre Heitbaum
-------------------------------
Title: Associate
By /s/ Belinda J. Wheeler
-------------------------------
Title: Vice President
MELLON BANK, N.A.
By /s/ Edwin H. Wiest
-------------------------------
Title: First Vice President
THE BANK OF NEW YORK
By /s/ Elizabeth T. Ying
-------------------------------
Title: Vice President
BANQUE NATIONALE DE PARIS
By /s/ Rafael C. Lumanlan
-------------------------------
Title: Vice President
69
<PAGE> 181
By /s/ Charles H. Day
-------------------------------
Title: Assistant Vice President
CREDIT SUISSE FIRST BOSTON
By /s/ Robert N. Finney
-------------------------------
Title: Managing Director
By /s/ Thomas G. Muoio
-------------------------------
Title: Vice President
KEYBANK NATIONAL ASSOCIATION
By /s/ Mary K. Young
-------------------------------
Title: Commercial Banking Officer
UNION BANK OF CALIFORNIA, N.A.
By /s/ Glenn Leyrer
-------------------------------
Title: Assistant Vice President
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as
Administrative Agent
By /s/ Kathryn Sayko-Yanes
-------------------------------
Title: Vice President
60 Wall Street
70
<PAGE> 182
New York, New York 10260-0060
Attention: Kathryn Sayko-Yanes
Telex number: 177615
Facsimile number: (212) 648-5014
CITICORP SECURITIES, INC., as
Syndication Agent
By /s/ Steve Victorin
-------------------------------
Title: Managing Director
71
<PAGE> 183
COMMITMENT SCHEDULE
<TABLE>
<CAPTION>
Name of Bank Commitment
------------
<S> <C>
Morgan Guaranty Trust Company $ 32,500,000
of New York
Citicorp USA, Inc. $ 32,500,000
Bank of America NT & SA $ 26,250,000
Deutsche Bank AG, New York $ 26,250,000
and/or Cayman Islands Branches
Mellon Bank, N.A $ 26,250,000
The Bank of New York $ 21,250,000
Banque Nationale de Paris $ 21,250,000
Credit Suisse First Boston $ 21,250,000
Key Bank National Association $ 21,250,000
Union Bank of California, N.A $ 21,250,000
------------
Total $250,000,000
============
</TABLE>
72
<PAGE> 184
EXHIBIT A
NOTE
(364-DAY CREDIT AGREEMENT)
New York, New York
March 13, 1998
For value received, Applied Materials, Inc., a Delaware corporation (the
"COMPANY"), 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 Company pursuant to the Credit
Agreement referred to below on the maturity date provided for in the Credit
Agreement. The Company 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 any failure of the Bank to make (or any error in making)
any such recordation or endorsement shall not affect the obligations of the
Company hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the 364-Day Credit
Agreement dated as of March 13, 1998 among the Company, the banks party thereto,
Morgan Guaranty Trust Company of New York, as Documentation Agent and
Administrative Agent, and Citicorp Securities, Inc., as Syndication Agent (as
the same may be amended from time to time, the "CREDIT AGREEMENT"). Terms
defined in the Credit Agreement are used herein with the same meanings.
<PAGE> 185
Reference is made to the Credit Agreement for provisions for the prepayment
hereof and the acceleration of the maturity hereof.
APPLIED MATERIALS, INC.
By
-------------------------------
Title:
By
-------------------------------
Title:
A-2
<PAGE> 186
LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
AMOUNT OF
AMOUNT OF TYPE OF PRINCIPAL MATURITY NOTATION MADE
DATE LOAN LOAN REPAID DATE BY
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
A-3
<PAGE> 187
EXHIBIT B
FORM OF MONEY MARKET QUOTE REQUEST
(364-DAY CREDIT AGREEMENT)
[Date]
To: Morgan Guaranty Trust Company of New York, as Administrative Agent
From: Applied Materials, Inc. (the "COMPANY")
Re: 364-Day Credit Agreement (the "CREDIT AGREEMENT") dated as of March
13, 1998 among the Company, the Banks party thereto, Morgan Guaranty
Trust Company of New York, as Documentation Agent and Administrative
Agent, and Citicorp Securities, Inc., as Syndication Agent.
We hereby give notice pursuant to Section 2.03 of the Credit Agreement
that we request Money Market Quotes for the following proposed Money Market
Borrowing(s):
Date of Borrowing:____________________________
PRINCIPAL AMOUNT(1) INTEREST PERIOD(2)
$
Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the London Interbank Offered
- --------
(1) Amount must be $5,000,000 or a larger multiple of $1,000,000.
(2) Not less than one month (LIBOR Auction) or not less than 7 days
(Absolute Rate Auction), subject to the provisions of the definition of
Interest Period.
<PAGE> 188
Rate.](1)
Terms used herein have the meanings assigned to them in the Credit
Agreement.
APPLIED MATERIALS, INC.
By
-------------------------------
Title:
By
-------------------------------
Title:
- --------
(1) Insert if offers of Money Market Margins are requested.
<PAGE> 189
EXHIBIT C
FORM OF INVITATION FOR MONEY MARKET QUOTES
(364-DAY CREDIT AGREEMENT)
To: [Name of Bank]
Re: Invitation for Money Market Quotes to Applied Materials, Inc. (the
"COMPANY")
Pursuant to Section 2.03 of the 364-Day Credit Agreement dated as of
March 13, 1998 among the Company, the Banks party thereto, the undersigned, as
Documentation Agent and Administrative Agent, and Citicorp Securities, Inc., as
Syndication Agent, we are pleased on behalf of the Company to invite you to
submit Money Market Quotes to the Company 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.] [10:15
A.M.] (New York City time) on [date].
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Administrative Agent
By
-------------------------------
Authorized Officer
<PAGE> 190
EXHIBIT D
FORM OF MONEY MARKET QUOTE
(364-DAY CREDIT AGREEMENT)
To: Morgan Guaranty Trust Company of New York, as Administrative Agent
Re: Money Market Quote to Applied Materials, Inc. (the "COMPANY")
In response to your invitation on behalf of the Company dated
_____________, ____, we hereby make the following Money Market Quote on the
following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank: _____________________________
3. Date of Borrowing: ____________________(1)
4. We hereby offer to make Money Market Loan(s) in the following principal
amounts, for the following Interest Periods and at the following rates:
Principal Interest Money Market [Absolute Rate](3)
Amount(2) Period(1) [Margin](2)
- --------
(1) As specified in the related Invitation.
(2) Principal amount bid for each Interest Period may not exceed principal
amount requested. Specify aggregate limitation if the sum of the
individual offers exceeds the amount the Bank is willing to lend. Bids
must be made for $5,000,000 or a larger multiple of $1,000,000.
<PAGE> 191
$
$
- --------
(1) Not less than one month or not less than 7 days, as specified in the
related Invitation. No more than five bids are permitted for each
Interest Period.
(2) 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".
(3) Specify rate of interest per annum (to the nearest 1/10,000 of 1%).
<PAGE> 192
[Provided, that the aggregate principal amount of Money Market Loans for
which the above offers may be accepted shall not exceed $_________.](1)
We understand and agree that the offer(s) set forth above, subject to
the satisfaction of the applicable conditions set forth in the 364-Day Credit
Agreement dated as of March 13, 1998 among the Company, the Banks party thereto,
yourselves, as Documentation Agent and Administrative Agent, and Citicorp
Securities, Inc., as Syndication Agent, irrevocably obligates us to make the
Money Market Loan(s) for which any offer(s) are accepted, in whole or in part.
Very truly yours,
[NAME OF BANK]
Dated: By
-------------------------------
Authorized Officer
- --------
(1) 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.
D-3
<PAGE> 193
EXHIBIT E
OPINION OF MANAGING DIRECTOR,
LEGAL AFFAIRS OF THE COMPANY
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
Ladies and Gentlemen:
Re: 364-Day Credit Agreement
I am the Managing Director, Legal Affairs of Applied Materials, Inc.
(the "COMPANY") and have acted as its counsel in connection with the execution
and delivery of that certain 364-Day Credit Agreement (the "CREDIT AGREEMENT")
dated as of March 13, 1998 among the Company, the Banks signatory thereto,
Morgan Guaranty Trust Company of New York, as Documentation Agent and
Administrative Agent, and Citicorp Securities, Inc., as Syndication Agent.
Except as otherwise defined herein, all terms used herein and defined in the
Credit Agreement or any agreement delivered thereunder shall have the meanings
assigned to them therein.
In connection with this opinion, I have examined executed copies of the
Credit Agreement and the Notes and such other documents, records, agreements and
certificates as I have deemed appropriate. I have also reviewed such matters of
law as I have considered relevant for the purpose of this opinion.
Based upon the foregoing, I am of the opinion that:
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware, and has the corporate
power and authority to own its assets and to transact the business in which it
is now engaged or proposes to be engaged.
2. The execution, delivery and performance by the Company of this
Agreement and the Notes are within the Company'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
<PAGE> 194
contravene, or constitute a default under, any provision of applicable law or
regulation or of the certificate of incorporation or by-laws of the Company or,
to the best of my knowledge, of (i) any judgment, injunction, order or decree,
or (ii) any material agreement or other material instrument binding upon the
Company, or result in the creation or imposition of any Lien on any asset of the
Company.
3. To the best of my knowledge, except as set forth under the heading
"LEGAL PROCEEDINGS" in the Company's 1997 Form 10-K, there are no pending or
threatened actions, suits or proceedings against or affecting the Company or any
of its Subsidiaries before any court, governmental agency or arbitrator in which
there is a reasonable possibility of an adverse determination which would have a
Material Adverse Effect, or which in any manner draws into question the validity
of the Credit Agreement or the Notes.
CERTAIN ASSUMPTIONS
With your permission I have assumed the following: (a) the authenticity
of original documents and the genuineness of all signatures; (b) the conformity
to the originals of all documents submitted to me as copies and the truth,
accuracy, and completeness of the information, representations and warranties
contained in the records, documents, instruments and certificates I have
reviewed; and (c) the absence of any evidence extrinsic to the provisions of the
written agreements between the parties that the parties intended a meaning
contrary to that expressed by those provisions.
CERTAIN LIMITATIONS AND QUALIFICATIONS
I express no opinion as to laws other than laws of the State of
California, the federal law of the United States of America and the General
Corporation Law of the State of Delaware. I am licensed to practice law only in
the State of California.
The phrase "TO THE BEST OF MY KNOWLEDGE" is intended to indicate that,
during the course of the performance of my duties as Managing Director, Legal
Affairs, of the Company, no information that would give me current actual
knowledge of the inaccuracy of such statement has come to my attention.
USE OF OPINION
This opinion is solely for your benefit (and the benefit of any Assignee
which becomes a Bank pursuant to Section 9.06(c) of the Credit Agreement) in
connection with the transaction covered by the first paragraph of this letter
and may not be relied upon, used, circulated, quoted or referred to, nor may
copies
E-2
<PAGE> 195
hereof be delivered to, any other person without my prior written
approval. I disclaim any obligation to update this opinion for events occurring
or coming to my attention after the date hereof.
Very truly yours,
Barry Quan
Managing Director, Legal Affairs
E-3
<PAGE> 196
EXHIBIT F
OPINION OF ORRICK, HERRINGTON & SUTCLIFFE LLP,
SPECIAL COUNSEL FOR THE COMPANY
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
Ladies and Gentlemen:
Re: 364-Day Credit Agreement
We have acted as counsel to Applied Materials, Inc., a Delaware
corporation (the "COMPANY") in connection with that certain 364-Day Credit
Agreement (the "AGREEMENT") dated as of March 13, 1998 among the Company, the
banks signatory thereto (the "BANKS"), Morgan Guaranty Trust Company of New
York, as Documentation Agent and Administrative Agent, and Citicorp Securities,
Inc., as Syndication Agent. The capitalized terms herein are used as defined in
the Agreement.
In this regard, we have examined executed originals or copies of the
following, copies of which have been delivered to you:
(a) The Agreement; and
(b) The Notes.
Based upon such examination and having regard for legal considerations
which we deem relevant, we are of the opinion that the Agreement is and, when
delivered under the Agreement, each Note will be, the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its respective terms.
With your permission we have assumed the following: (a) authenticity of
original documents and the genuineness of all signatures; (b) the conformity to
the originals of all documents submitted to us as copies; (c) the truth,
accuracy, and completeness of the information, representations and warranties
contained in the records, documents, instruments and certificates we have
reviewed; (d) that the
<PAGE> 197
documents referred to herein were duly authorized, executed and delivered on
behalf of the respective parties thereto and, other than with respect to the
Company, are legal, valid, and binding obligations of such parties; (e) the
compliance by you with any applicable requirements to file returns and pay taxes
under the California Franchise Tax Law; (f) the Administrative Agent and the
Banks are exempt from the California usury law; (g) the compliance by you with
any state or federal laws or regulations applicable to you in connection with
the transactions described in the Agreement and the Notes; and (h) the absence
of any evidence extrinsic to the provisions of the written agreements between
the parties that the parties intended a meaning contrary to that expressed by
those provisions.
We express no opinion as to (a) matters of law in jurisdictions other
than the State of California and the United States or (b) the enforceability
under California law of a choice of law provision in the documents described
herein. With your permission, we have assumed for the purpose of rendering this
opinion that the laws of the State of California govern the transaction,
notwithstanding that the Agreement and the Notes state that they are to be
governed by New York law.
Our opinion that any document is legal, valid, binding, or enforceable
in accordance with its terms is qualified as to:
(a) limitations imposed by bankruptcy, insolvency,
reorganization, arrangement, fraudulent conveyance, moratorium, or other
laws relating to or affecting the enforcement of creditors' rights
generally;
(b) general principles of equity, including without limitation
concepts of mutuality, reasonableness, good faith and fair dealing, and
the possible unavailability of specific performance or injunctive
relief, regardless of whether such enforceability is considered in a
proceeding in equity or at law;
(c) the possibility that certain covenants and provisions for
the acceleration of the maturity of the Notes may not be enforceable if
enforcement would be unreasonable under the then existing circumstances,
but in our opinion acceleration would be available if an event of
default occurred as a result of a material breach of a material
covenant;
(d) the unenforceability under certain circumstances of
provisions imposing penalties, forfeiture, late payment charges or an
increase in interest rate upon delinquency in payment or the occurrence
of any event of default;
F-2
<PAGE> 198
(e) rights to indemnification and contribution which may be
limited by applicable law and equitable principles; and
(f) the unenforceability under certain circumstances of
provisions expressly or by implication waiving broadly or vaguely stated
rights (including, without limitation, waivers of any objection to venue
and forum non conveniens and the right to a jury trial), the benefits of
statutory constitutional provisions, unknown future rights, and defenses
to obligations or rights granted by law, where such waivers are against
public policy or prohibited by law.
We note that you are receiving of even date herewith the opinion of
Barry Quan, Managing Director, Legal Affairs of the Company, as to certain
matters relating to the Company. We have made no independent examination of such
matters. We note for your information that Donald A. Slichter, the Secretary of
the Company, is a partner in our firm.
This opinion is solely for your benefit (and the benefit of the Banks
which become parties to the Agreement as Assignees under Section 9.06(c) of the
Agreement) in connection with the transaction covered by the first paragraph of
this letter and may not be relied upon, used, circulated, quoted or referred to
by, nor may copies hereof be delivered to, any other person without our prior
written approval. We disclaim any obligation to update this opinion letter for
events occurring or coming to our attention after the date hereof.
Very truly yours,
ORRICK, HERRINGTON & SUTCLIFFE LLP
F-3
<PAGE> 199
EXHIBIT G
OPINION OF DAVIS POLK & WARDWELL,
SPECIAL COUNSEL FOR THE ADMINISTRATIVE AGENT
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
Dear Sirs:
Re: 364-Day Credit Agreement
We have participated in the preparation of the 364-Day Credit Agreement
(the "CREDIT AGREEMENT") dated as of March 13, 1998 among Applied Materials,
Inc., a Delaware corporation (the "COMPANY"), the banks listed on the signature
pages thereof (the "BANKS"), Morgan Guaranty Trust Company of New York, as
Documentation Agent and Administrative Agent, and Citicorp Securities, Inc., as
Syndication Agent, and have acted as special counsel for Morgan Guaranty Trust
Company of New York in its capacity as Administrative Agent (the "ADMINISTRATIVE
AGENT") for the purpose of rendering this opinion pursuant to Section 3.01(e) of
the Credit Agreement. Terms defined in the Credit Agreement are used herein as
therein defined.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The execution, delivery and performance by the Company of the Credit
Agreement and the Notes are within the Company'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
Company and each Note constitutes a valid and binding obligation of the Company,
in each case enforceable in accordance with its terms, except as the
<PAGE> 200
same may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and by general principles of equity.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York, 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,
G-2
<PAGE> 201
EXHIBIT H
ASSIGNMENT AND ASSUMPTION AGREEMENT
(364-DAY CREDIT AGREEMENT)
AGREEMENT dated as of _________, 19__ among [ASSIGNOR] (the "Assignor"),
and [ASSIGNEE] (the "ASSIGNEE").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the "AGREEMENT")
relates to the 364-Day Credit Agreement dated as of March 13, 1998 among the
Company, the Assignor and the other Banks party thereto, Morgan Guaranty Trust
Company of New York, as Documentation Agent and Administrative Agent, and
Citicorp Securities, Inc., as Syndication Agent (as amended from time to time,
the "CREDIT AGREEMENT");
WHEREAS, as provided under the Credit Agreement, the Assignor has a
Commitment to make Loans to the Company in an aggregate principal amount at any
time outstanding not to exceed $__________;
WHEREAS, Committed Loans made to the Company 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 such assignment and assume the corresponding
obligations from the Assignor under the Credit Agreement;
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 a corresponding portion of each of its
outstanding Committed Loans, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the obligations of the Assignor under the
<PAGE> 202
Credit Agreement to the extent of the Assigned Amount. Upon the execution and
delivery hereof by the Assignor and the Assignee, [and the execution of the
consent attached hereto by the Company and the Administrative Agent](1), 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 acquire the
rights of the Assignor with respect to a corresponding portion of each of its
outstanding Committed Loans, and (ii) the Commitment of the Assignor shall, as
of the date hereof, be reduced by the Assigned Amount and the Assignor shall be
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.(2)
Facility Fees accrued before the date hereof are for the account of the Assignor
and such fees accruing on and after the date hereof 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 Company and the Administrative Agent. This
Agreement is conditioned upon the consent of the Company and the Administrative
Agent pursuant to Section 9.06(c) of the Credit Agreement.](3)
[SECTION 5. Note. Pursuant to Section 9.06(c) of the Credit Agreement
the Company agrees to execute and deliver a Note payable to the order of the
Assignee to evidence the assignment and assumption provided for herein.]
SECTION 6. Non-Reliance on Assignor. The Assignor makes no
- --------
(1) Delete if consent is not required.
(2) Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any
portion of any upfront fee to be paid by the Assignor to the Assignee.
It may be preferable in an appropriate case to specify these amounts
generically or by formula rather than as a fixed sum.
(3) Delete if consent is not required.
H-2
<PAGE> 203
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition, or statements of the
Company, or the validity and enforceability of the obligations of the Company 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 Company.
SECTION 7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 8. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[ASSIGNEE]
By
-------------------------------
Title:
[ASSIGNOR]
By
-------------------------------
Title:
H-3
<PAGE> 204
[The undersigned consent to the foregoing assignment.
APPLIED MATERIALS, INC.
By
-------------------------------
Title:
By
-------------------------------
Title:
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Administrative Agent
By
-------------------------------
Title: ]
H-4
<PAGE> 205
EXHIBIT I
RESTRICTED AND UNRESTRICTED SUBSIDIARIES
1. Restricted Subsidiaries:
<TABLE>
<CAPTION>
PERCENTAGE OF VOTING STOCK
JURISDICTION OF OWNED DIRECTLY OR INDIRECTLY
NAME OF SUBSIDIARY INCORPORATION BY THE COMPANY
- ------------------ ------------- --------------
<S> <C> <C>
Applied Materials Japan, Inc........ Japan 100%
Applied Materials Asia-Pacific, Ltd. Delaware 100%
Applied Materials Korea, Ltd........ Korea 100%
Applied Materials Taiwan, Ltd....... Taiwan 100%
Applied Materials Europe BV......... Netherlands 100%
Applied Materials Ltd............... England 100%
Applied Materials France SARL France 100%
Applied Materials GmbH Germany 100%
Applied Materials (Holdings)........ California 100%
Applied Implant Technology, Ltd..... California 100%
Applied Materials International BV.. Netherlands 100%
Applied Materials (Israel) Ltd...... Israel 100%
Applied Materials China, Ltd........ Hong Kong 100%
AMAT (Thailand) Limited............. Thailand 100%
Opal, Inc........................... Israel 100%
Opal Technologies Ltd............... Germany 100%
Integrated Circuit Testing GmbH (ICT) Germany 100%
Orbot Instruments, Inc.............. Delaware 100%
Orbot Instruments Pacific, Ltd...... Hong Kong 100%
Applied Materials South East Asia Singapore 100%
Pte. Ltd............................
Applied Materials (AMSEA) Sdn Bhd... Malaysia 100%
Applied Materials China Tianjin Co., PRC 100%
Ltd.................................
</TABLE>
<PAGE> 206
<TABLE>
<CAPTION>
PERCENTAGE OF VOTING STOCK
JURISDICTION OF OWNED DIRECTLY OR INDIRECTLY
NAME OF SUBSIDIARY INCORPORATION BY THE COMPANY
- ------------------ ------------- --------------
<S> <C> <C>
Applied Materials Italy Srl......... Italy 100%
Applied Materials Belgium S.A....... Belgium 100%
Applied Materials Israel Services, Israel 100%
(1994) Ltd..........................
</TABLE>
2. UNRESTRICTED SUBSIDIARIES:
<TABLE>
<CAPTION>
PERCENTAGE OF VOTING STOCK
JURISDICTION OF OWNED DIRECTLY OR INDIRECTLY
NAME OF SUBSIDIARY INCORPORATION BY THE COMPANY
- ------------------ ------------- --------------
<S> <C> <C>
Applied Materials Ireland Ltd....... Ireland 100%
Applied Materials Sweden AB......... Sweden 100%
Applied Acquisition Subsidiary...... California 100%
Applied Materials International, Inc. California 100%
</TABLE>
<PAGE> 207
EXHIBIT J
EXISTING LIENS AS OF JANUARY 25, 1998
<TABLE>
<CAPTION>
-------------------
- ------------------- AGGREGATE AMOUNT OF
DESCRIPTION OF LIEN SECURED BY
<S> <C>
T/C Land and "KOJOZAIDAN" held by Bank of $45,358,846
Tokyo-Mitsubishi, Japan Development Bank, Sanwa
Bank and Nippon Life Insurance Company.
Kojozaidan is a registered lien placed upon the
factory foundation at Narita Technology Center.
The factory foundation is the collection of
land, buildings and machinery capital equipment
as one registered asset.
</TABLE>
<PAGE> 208
EXHIBIT K
SPECIAL UNENCUMBERED PROPERTY
<TABLE>
<CAPTION>
- -------- ------------------------------------ ------
PROPERTY APPROXIMATE PROPERTY/USE DESCRIPTION SQ. Ft
<S> <C> <C>
3050 Bowers Avenue Office, Engineering & R&D use. 84,300
Santa Clara, CA Bldg. #1
3100 Bowers Avenue Two story steel frame H-6 occupancy building used 104,900
Santa Clara, CA for product and technology development.
Bldg. #2
3300 Scott Boulevard Office, Manufacturing and Clean Room. 60,100
Santa Clara, CA
Bldg. #3
3090 Bowers Ave. One story cafeteria with kitchen facility. 15,600
Santa Clara, CA
Cafeteria
3070 Bowers Ave. Two level concrete reinforced 400 car capacity 136,000
Santa Clara, CA parking platform.
Garage
3225 Oakmead Village Three story steel frame B-2 occupancy administrative 96,600
Drive building situated at the intersection of Oakmead Village
Santa Clara, CA Bldg. #12 Parkway and Central Expressway.
Austin Campus Manufacturing, Office, Warehouse and Cafeteria. 168,000
9700 Hwy. 290 E Bldg. #32
Austin, TX
Austin Campus Manufacturing, Office and Shipping Dock 194,000
9700 Hwy. 290 E Bldg. #31
Austin, TX
Austin Campus Manufacturing and Office 204,000
9700 Hwy. 290 E Bldg. #33
Austin. TX
</TABLE>
<PAGE> 209
CROSS-REFERENCE TARGET LIST
NOTE: DUE TO THE NUMBER OF TARGETS SOME TARGET NAMES MAY
NOT APPEAR IN THE TARGET PULL-DOWN LIST.
(This list is for the use of the wordprocessor only,
is not a part of this document and may be discarded.)
<TABLE>
<CAPTION>
ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME
=============== =========== =============== ===========
<S> <C> <C> <C>
1 art.definitions 5.06 rest.unrest.subsids
1.01 definitions 5.06(b) bd.desig.rest.sub
1.02 types.of.borr 5.07 consolids.mergers
5.08 use.of.proceeds
2 art.credits 5.10 debt
2.01 commit.to.lend 5.11 neg.pledge
2.02 notice.of.comm.brwng 5.11(a) prop.tx.liens
2.03 mon.mark.brwngs 5.11(g) liens.to.sec.pp.pmt
2.03(d) subm.mon.mrk.quotes 5.11(h) liens.sl.trans.acct.rcv
2.03(d)(i) each.bank.submits 5.11(j) liens.inc.add.dbt
2.03(d)(ii) mon.market.quote 5.12 cons.tang.net.worth
2.03(d)(iii) any.mon.market
2.03(f) accept.by.comp 6 art.defaults
2.04 notice.to.banks 6.01 events.of.default
2.04(a) rec.notc.borrow 6.02 notice.of.default
2.05 notes
2.06 matur.of.loans 7 art.agent
2.07 interest.rates 7.01 appoint.auth
2.07(b) int.prin.cd.loan 7.02 agt.affil
2.07(c) int.prin.euro.doll.loan 7.04 consult.exprts
2.07(d) int.od.euro.doll.loan 7.05 agt.liability
2.08 meth.elect.ir.sec 7.06 indem
2.08(a) incl.comm.bor 7.07 credit.decision
2.08(c) cont.thereof 7.08 succ.agt
2.08(d) not.ent.elect 7.09 agt.fee
2.09 fees
2.10 opt.terminate 8 art.chg.circum
2.11 sched.terminate 8.01 unfair.basis.det.int
2.12 opt.prepay 8.01(a) agt.adv.ref.bnks
2.12(a) opt.prepaymnts 8.01(b) bnks.have.50
2.12(c) opt.prepy.recpt 8.02 illegal
2.13 gen.prov:pymts 8.03 inc.cost.red.rtn
2.14 fund.losses 8.03(c) bnk.notfy.co.agt
2.15 compute.interest 8.04 taxes
2.16 reg.d.comp.sec 8.05 limit.amt.due
8.06 bs.rt.ln.sub
3 art.conditions 8.07 bank.sub
3.01 closing
3.01(b) dul.exec.note 9 art.misc
3.01(e) dpw.opin 9.01 notices
3.02 borrowings 9.02 no.waive
? agg.out.prin 9.03 exp.indem
9.03(a)(i) exp.indem.ai
4 art.reps.and.warrs 9.03(b) co.indem.agt.bnk
4.01 corp.exist 9.04 share.set.offs
4.02 corp.gov.auth 9.05 amend.waive
4.03 bind.eff 9.06 succs.assgns
4.04 finan.info 9.06(b) bnk.grnt.part.int
4.04(a) cons.bal.sheet 9.06(c) bnk.ass.rgts
4.04(b) unaud.cons.bal.sht 9.07 collateral
4.05 litigation 9.08 gov.law
4.06 erisa.comply 9.09 cntrprts.integ.effect
4.07 "env".matters 9.10 confidential
4.08 rep.warr.taxes 9.11 waive.jury.trial
4.09 subsids
4.10 not.invest.co
4.11 full.disclose REFS IN EXHIBIT
H (PREF 2)
5 art.covenants 1 ex.h.defs
5.01 info 2 ex.h.ass
5.01(a) copy.info.to 3 ex.h.pmts
5.01(b) end.of.fisc.yr 4 ex.h.cnsnt
5.01(h) co.unrest.subsid 6 ex.h.non.rely.ass
5.02 pmt.of.obligs 7 ex.h.gov.law
5.03 maint.prop 8 ex.h.ctprts
5.03(a) co.keep.prop
5.04 cond.business
5.05 comply.laws
</TABLE>
<TABLE>
<CAPTION>
ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME
=============== =========== =============== ===========
<S> <C> <C> <C>
</TABLE>
<PAGE> 210
<TABLE>
<CAPTION>
ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME
=============== =========== ================ =========== =============== =========== =============== ===========
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
L-2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED APRIL 26, 1998.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-25-1998
<PERIOD-END> APR-26-1998
<CASH> 309,364
<SECURITIES> 906,801
<RECEIVABLES> 1,230,650
<ALLOWANCES> 4,862
<INVENTORY> 714,126
<CURRENT-ASSETS> 3,686,876
<PP&E> 1,848,572
<DEPRECIATION> 618,861
<TOTAL-ASSETS> 5,140,099
<CURRENT-LIABILITIES> 1,222,782
<BONDS> 616,495
0
0
<COMMON> 3,656
<OTHER-SE> 3,186,903
<TOTAL-LIABILITY-AND-EQUITY> 5,140,099
<SALES> 2,484,001
<TOTAL-REVENUES> 2,484,001
<CGS> 1,300,271
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 364,266
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,749
<INCOME-PRETAX> 569,406
<INCOME-TAX> 199,292
<INCOME-CONTINUING> 370,114
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 370,114
<EPS-PRIMARY> 1.01
<EPS-DILUTED> 0.98
</TABLE>
