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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
----------------------
Commission File No. 1-8461
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GULFSTREAM AEROSPACE CORPORATION
P. O. Box 2206
500 Gulfstream Road
Savannah, Georgia 31402-2206
Telephone: (912) 965-3000
State of incorporation: Delaware
IRS identification number: 13-3554834
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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[_]
As of April 30, 1999, there 71,607,043 shares of Gulfstream Aerospace
Corporation Common Stock outstanding.
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<PAGE>
GULFSTREAM AEROSPACE CORPORATION AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Page No.
----------
Item 1. Consolidated Financial Statements:
Consolidated Statements of Income
Three months ended March 31, 1999 and
1998...............................................3
Consolidated Balance Sheets
March 31, 1999 and December 31,
1998...............................................4
Consolidated Statement of Stockholders' Equity
Three months ended March 31,
1999...............................................5
Consolidated Statements of Cash Flows
Three months ended March 31, 1999 and
1998...............................................6
Notes to Consolidated Financial
Statements...................................... 7-10
Item 2. Management's Discussion and Analysis of Financial 11-15
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.....................................16
Item 2. Changes in Securities.................................16
Item 3. Defaults upon Senior Securities.......................16
Item 4. Submission of Matters to a Vote of Security
Holders............................................16
Item 5. Other Information.....................................16
Item 6. Exhibits and Reports on Form 8-K......................16
Signature.............................................17
<PAGE>
GULFSTREAM AEROSPACE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
Three months ended
March 31,
-------------------------
1999 1998
---------- -----------
Net revenues $ 625,072 $ 503,407
Cost and expenses
Cost of sales 490,406 404,069
Selling and administrative 30,915 25,942
Stock option compensation expense 52 329
Research and development 3,268 1,945
Amortization of intangibles and deferred
charges 3,147 1,876
------------------------
Total costs and expenses 527,788 434,161
------------------------
Income from operations 97,284 69,246
Interest income 823 2,522
Interest expense (5,982) (6,999)
------------------------
Income before income taxes 92,125 64,769
Income tax expense 33,626 24,288
-------------------------
Net income $ 58,499 $ 40,481
=========================
Earnings per share:
Basic $ .81 $ .56
Diluted $ .79 $ .54
=========================
See Notes to Consolidated Financial Statements.
<PAGE>
GULFSTREAM AEROSPACE CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
March 31, December
1999 31,
1998
------------- ------------
ASSETS
Cash and cash equivalents $ 75,159 $ 38,149
Accounts receivable (less allowance for
doubtful accounts: $2,426 and $2,525) 330,358 263,959
Inventories 752,907 729,874
Deferred income taxes 4,582 17,132
Prepaids and other assets 8,104 6,494
---------------------------
Total current assets 1,171,110 1,055,608
Property and equipment, net 165,706 166,777
Tooling, net of accumulated amortization:
$17,040 and $15,220 34,601 36,415
Goodwill, net of accumulated amortization:
$12,670 and $11,268 211,658 213,906
Other intangible assets, net 44,146 45,414
Deferred income taxes 21,236 22,011
Other assets and deferred charges 74,406 74,003
---------------------------
Total Assets $ 1,722,863 $ 1,614,134
===========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt 76,047 $ 75,262
Accounts payable 209,978 182,040
Accrued liabilities 177,294 170,681
Customer deposits 565,881 488,218
---------------------------
Total current liabilities 1,029,200 916,201
Long-term debt 266,203 285,738
Accrued postretirement benefit cost 117,778 115,154
Customer deposits -- long-term 87,815 94,445
Other long-term liabilities 6,661 6,916
Stockholders' equity
Common stock; $.01 par value; 300,000,000
shares authorized; shares issued:
89,819,274 and 89,818,774 900 898
Additional paid-in capital 449,607 444,301
Retained earnings (deficit) 57,827 (672)
Accumulated other comprehensive income (2,441) (2,441)
Unamortized stock plan expense - (52)
Less: Treasury stock: 18,012,856 (290,687) (246,354)
and 17,244,581 shares ---------------------------
Total stockholders' equity 215,206 195,680
---------------------------
Total Liabilities and Stockholders' Equity $ 1,722,863 $ 1,614,134
===========================
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
GULFSTREAM AEROSPACE CORPORATION AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
(In thousands)
(Unaudited)
Accumulated
Additional Retained Other Unamortized Total
Common Paid-In Earnings Comprehensive Stock Plan Treasury Stockholders'
Stock Capital (Deficit) Income Expense Stock Equity
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance as of January 1, 1999 $ 898 $ 444,301 $ (672) $ (2,441) $ (52) $ (246,354) $ 195,680
Net income 58,499 58,499
Other comprehensive income adjustment -
------------
Total comprehensive income 58,499
------------
Amortization of stock plan expense 52 52
Exercise of common stock options 2 5,306 583 5,891
Purchase of treasury stock (44,916) (44,916)
--------------------------------------------------------------------------------------
$ 900 $ 449,607 $ 57,827 $ (2,441) $ - $ (290,687) $ 215,206
Balance as of March 31, 1999 ======================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
GULFSTREAM AEROSPACE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three months ended
March 31,
-----------------------
1999 1998
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 58,499 $ 40,481
Adjustments to reconcile net income to net
cash provided by operating activities:
Acquisition related non-cash items 415 -
Depreciation and amortization 9,657 8,292
Postretirement benefit cost 2,624 1,480
Non-cash stock option compensation expense 52 329
Deferred income taxes 13,325 23,662
Other, net 75 86
Change in assets and liabilities:
Accounts receivable (66,474) 35,697
Inventories (23,448) (78,669)
Prepaids, other assets, and deferred charges (1,742) 3,543
Accounts payable and accrued liabilities 34,551 14,888
Customer deposits 71,033 (77,109)
Other long-term liabilities (255) (747)
----------------------
Net Cash Provided by (Used in) Operating Activities 98,312 (28,067)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in unconsolidated affiliate (750) -
Expenditures for property and equipment (3,618) (3,729)
Expenditures for tooling (6) (108)
Other investing activities 847 -
----------------------
Net Cash Used in Investing Activities (3,527) (3,837)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of common stock options 5,891 1,996
Principal payments on long-term debt (18,750) (18,750)
Purchase of treasury stock (44,916) (74,579)
----------------------
Net Cash Used in Financing Activities (57,775) (91,333)
CASH AND CASH EQUIVALENTS
----------------------
Net increase (decrease) during the period 37,010 (123,237)
Cash and cash equivalents, beginning of period 38,149 306,451
======================
Cash and Cash Equivalents, End of Period $ 75,159 $183,214
======================
See Notes to Consolidated Financial Statements.
<PAGE>
GULFSTREAM AEROSPACE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared by the Company pursuant to the rules of the Securities and
Exchange Commission ("SEC") and, in the opinion of the Company, include all
adjustments, consisting only of normal recurring adjustments, necessary for
a fair presentation of financial position, results of operations and cash
flows. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to SEC rules.
The operating results for the three months ended March 31, 1999 are not
necessarily indicative of the results to be expected for the entire year
ended December 31, 1999. These financial statements should be read in
conjunction with the Consolidated Financial Statements and Notes thereto
for the year ended December 31, 1998 included in the Company's 1998 Annual
Report to Stockholders.
NOTE 2. EARNINGS PER SHARE
Basic earnings per share ("EPS") is computed based on net income
divided by the weighted average common shares outstanding. Diluted EPS is
computed by dividing net income by the weighted average common shares
outstanding plus the incremental shares that would have been outstanding
under stock option plans.
The following table sets forth the reconciliation of per share data as
of:
Three months ended March
31,
---------------------------
1999 1998
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(In thousands)
Net Income $ 58,499 $ 40,481
============ ============
BASIC EPS
Weighted average common shares outstanding 72,450 72,533
------------ ------------
DILUTED EPS
Incremental shares from stock options 1,464 2,818
------------ ------------
Weighted average common and common
equivalent shares outstanding 73,914 75,351
============ ============
EARNINGS PER SHARE:
Basic $ .81 $ .56
============ ============
Diluted $ .79 $ .54
============ ============
<PAGE>
GULFSTREAM AEROSPACE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. INVENTORIES
Inventories consisted of the following at:
March 31, December
1999 31,
1998
------------ -----------
(In thousands)
Work in process $ 387,391 $ 359,212
Raw materials 204,679 190,890
Vendor progress payments 82,070 85,605
Pre-owned aircraft 78,767 94,167
------------ ----------
$ 752,907 $ 729,874
============ ==========
NOTE 4. COMMITMENTS AND CONTINGENCIES
In the normal course of business, lawsuits, claims and proceedings
have been or may be instituted or asserted against the Company relating to
various matters, including products liability. Although the outcome of
litigation cannot be predicted with certainty and some lawsuits, claims or
proceedings may be disposed of unfavorably to the Company, management has
made provision for all known probable losses related to lawsuits and claims
and believes that the disposition of all matters which are pending or
asserted will not have a material adverse effect on the financial
statements of the Company.
The Company is involved in tax audits by the Internal Revenue Service
covering the years 1990 through 1994. The revenue agent's reports include
several proposed adjustments involving the deductibility of certain
compensation expense, items relating to the initial capitalization of the
Company, the allocation of the original purchase price for the acquisition
by the Company of the Gulfstream business, including the treatment of
advance payments with respect to the cost of aircraft that were in backlog
at the time of the acquisition, and the amortization of amounts allocated
to intangible assets. The Company believes that the ultimate resolution of
these issues will not have a material adverse effect on its financial
statements because the financial statements already reflect what the
Company currently believes is the expected loss of benefit arising from the
resolution of these issues.
The Company is currently engaged in the monitoring and cleanup of
certain groundwater at its Savannah facility under the oversight of the
Georgia Department of Natural Resources. Expenses incurred for cleanup have
not been significant. Liabilities are recorded when environmental
assessments and/or remedial efforts are probable and the costs can be
reasonably estimated. The Company believes the remainder of the Savannah
facility, as well as other Gulfstream properties, are being carefully
monitored and are in substantial compliance with current federal, state and
local environmental regulations. The Company believes the liabilities, if
any, that will result from the above environmental matters will not have a
material adverse effect on its financial statements.
NOTE 5. COMMON STOCK REPURCHASES
During March 1999, the Company established a program to repurchase up
to an additional $200 million of its common stock. The purchases have been,
and will be made from time to time in the open market or through negotiated
transactions as market conditions warrant. At March 31, 1999, the Company
had repurchased 960,000 shares, at an average price of $46.79 per share,
for an aggregate amount of $44.9 million.
<PAGE>
NOTE 6. BUSINESS SEGMENTS AND RELATED INFORMATION
The Company operates in three reportable segments: New Aircraft,
Aircraft Services and Pre-Owned Aircraft. New Aircraft is comprised of the
design, development, production (including customized interiors and
optional avionics) and sale of large business aircraft to customers on a
worldwide basis. Aircraft Services provides aftermarket maintenance
services, spare parts, engine and auxiliary power unit service and overhaul
for both Gulfstream and other business aircraft. The Company's Pre-Owned
Aircraft segment consists of the sale of pre-owned Gulfstream aircraft and
other business aircraft acquired as trade-ins against the sale of new
aircraft to a worldwide market. The accounting policies used to develop
segment information correspond to those described in the summary of
significant accounting policies in Note 1 to the Consolidated Financial
Statements for the year ended December 31, 1998 included in the Company's
1998 Annual Report to Stockholders. Intersegment sales and transfers are
not significant. The Company has no significant assets domiciled outside of
the United States and assets are not allocated to reportable segments.
Gulfstream evaluates each segment's performance based on gross profit
margins (net revenues less cost of sales) excluding inventory step-charges.
Summarized financial information concerning the Company's reportable
segments are shown in the following tables. Unallocated expenses represent
expenses not directly related to the reportable segments.
Three months ended
March 31,
------------------------
1999 1998
------------------------
(In millions)
NET REVENUES
New Aircraft $ 489.4 $ 386.8
Aircraft Services 83.1 49.9
Pre-Owned Aircraft 52.6 66.7
----------- ----------
Total Net Revenues $ 625.1 $ 503.4
=========== ==========
Three months ended
March 31,
------------------------
1999 1998
------------------------
(In millions)
SEGMENT GROSS MARGIN
New Aircraft $ 120.8 $ 87.4
Aircraft Services 15.8 9.9
Pre-Owned Aircraft (1.6) 2.7
------------ ----------
Total Segment Gross Margin 135.0 100.0
Unallocated expenses (37.7) (30.8)
------------ ----------
Income from operations 97.3 69.2
Interest income .8 2.6
Interest expense (6.0) (7.0)
------------ ----------
Income before income taxes $ 92.1 $ 64.8
============ ==========
<PAGE>
NOTE 7. SUBSEQUENT EVENTS
On April 15, 1999, the Company entered into a new $200 million term
loan facility (the "1999 Term Loan"). The 1999 Term Loan may be drawn upon
at any time during the first year, and is repayable in consecutive
quarterly installments with a final maturity on March 31, 2003, in
aggregate amounts for each of the following years as follows, assuming the
entire $200 million is drawn: 2000 - $25 million; 2001 - $70.9 million;
2002 - $83.3 million; 2003 - $20.8 million. Amounts are reduced ratably if
less than the full amount is drawn. The Company is required to pay
commitment fees of .35% per annum on the average daily unutilized portion
of the term loan facility for the first year. The Company may choose either
an Adjusted Base Rate interest option, which is based on the greater of the
prime rate or the federal funds rate, or LIBOR, in each case, plus an
applied margin. Interest rates are subject to change based on the Company's
performance with respect to certain financial covenants set forth in the
term loan agreement.
The 1999 Term Loan contains the same financial and operating covenants
as the 1996 Credit Agreement and shares ratably in the pledge of stock of
subsidiaries under the 1996 Credit Agreement.
On May 16, 1999, the Company entered into a definitive merger
agreement with General Dynamics Corporation ("GD"). The agreement provides
for a business combination between the Company and GD in which the Company
will become a subsidiary of GD. Under the terms of the agreement, the
holders of the Company's common stock will be issued one share of GD common
stock in exchange for each share of the Company's common stock, in a
transaction intended to qualify as a pooling of interests for accounting
purposes and as a tax-free reorganization for federal income tax purposes.
On May 14, 1999, the last trading day prior to the public announcement of
the merger, the closing price on the New York Stock Exchange Composite Tape
of a share of GD's common stock was $71.44. The proposed acquisition is
subject to approval by both companies' shareholders, as well as regulatory
approval and customary closing conditions. The agreement also provides that
either party may terminate the agreement if the average trading price of a
share of GD common stock for the fifteen trading days ending on the fifth
trading day prior to the meeting of the Company's stockholders to vote on
the agreement is less than $63 per share. The proposed acquisition is
expected to be completed in the third quarter of 1999.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RECENT DEVELOPMENT
On May 16, 1999, the Company entered into a definitive merger
agreement with General Dynamics Corporation ("GD"). The agreement provides
for a business combination between the Company and GD in which the Company
will become a subsidiary of GD. Under the terms of the agreement, the
holders of the Company's common stock will be issued one share of GD common
stock in exchange for each share of the Company's common stock, in a
transaction intended to qualify as a pooling of interests for accounting
purposes and as a tax-free reorganization for federal income tax purposes.
On May 14, 1999, the last trading day prior to the public announcement of
the merger, the closing price on the New York Stock Exchange Composite Tape
of a share of GD's common stock was $71.44. The proposed acquisition is
subject to approval by both companies' shareholders, as well as regulatory
approval and customary closing conditions. The agreement also provides that
either party may terminate the agreement if the average trading price of a
share of GD common stock for the fifteen trading days ending on the fifth
trading day prior to the meeting of the Company's stockholders to vote on
the agreement is less than $63 per share. The proposed acquisition is
expected to be completed in the third quarter of 1999.
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Notes
to Consolidated Financial Statements beginning on page 7 and with
Management's Discussion and Analysis of Financial Condition and Results of
Operations (MD&A) and the audited Consolidated Financial Statements and
Notes to Consolidated Financial Statements appearing in the Company's 1998
Annual Report to Stockholders.
TOTAL COMPANY REVENUES AND GROSS MARGIN
Total net revenues increased by $121.7 million, or 24.2%, to $625.1
million in the first quarter of 1999 from $503.4 million in the first
quarter of 1998. The increase in revenues is principally attributable to
the increase in new aircraft deliveries. The Company delivered 17 new
aircraft in the 1999 first quarter, versus 13 new aircraft in the first
quarter of 1998. As a percentage of revenues, first quarter gross margin,
excluding pre-owned aircraft, was 23.9%, versus 22.1% in the first quarter
of March 31, 1998.
The following table displays net revenues and segment gross margin for
the Company's reportable segments, for the quarter ended March 31, 1999 and
1998, respectively.
Three months ended March
31,
--------------------------
1999 1998
-------------------------
(In millions)
NET REVENUES
New Aircraft $ 489.4 $ 386.8
Aircraft Services 83.1 49.9
Pre-Owned Aircraft 52.6 66.7
============ ===========
Total Net Revenues $ 625.1 $ 503.4
============ ===========
Three months ended March
31,
--------------------------
1999 1998
-------------------------
(In millions)
SEGMENT GROSS MARGIN
New Aircraft $ 120.8 $ 87.4
Aircraft Services 15.8 9.9
Pre-Owned Aircraft (1.6) 2.7
------------ -----------
Total Segment Gross Margin $ 135.0 $ 100.0
============ ===========
NEW AIRCRAFT
The Company's New Aircraft segment increased its revenues $102.6
million, or 26.5% to $489.4 million in the first quarter of 1999 from
$386.8 million in the first quarter of 1998. As described above, this
increase is attributable to new aircraft deliveries resulting from the
Company's increasing level of production to meet expanded product demand.
See also "Financial Contract Backlog."
The gross margins for New Aircraft were $120.8 million in the first
quarter of 1999 versus $87.4 million in the first quarter of 1998. The
increase in gross margin percentages to 24.7% in the 1999 quarter from
22.6% in the 1998 quarter is primarily attributable to continued reductions
in new aircraft production costs.
AIRCRAFT SERVICES
Revenues for Aircraft Services increased 66.5% to $83.1 million in the
first quarter of 1999 from $49.9 million in the first quarter of 1998. The
increase in revenues is attributable to the August 1998 acquisition of K-C
Aviation, as well as the Company's success in increasing market share.
Gross margin percentages for Aircraft Services were 19.0% for the
first quarter of 1999, relatively unchanged from 19.8% in the first quarter
of 1998. The decrease in gross margin percentage results principally from
lower levels of gross margins realized on revenues from the acquired K-C
Aviation business.
PRE-OWNED AIRCRAFT
The Company's Pre-Owned Aircraft segment had revenues of $52.6 million
in the first quarter of 1999 compared with revenues of $66.7 million for
the first quarter of 1998. The decrease in revenue is a function of the
volume of units delivered and the mix of aircraft sold (i.e., Gulfstream
IIs, IIIs, and IVs, etc.).
Gross margins for the Pre-Owned Aircraft segment can vary from period
to period depending on the mix of aircraft sold and current market
conditions. Generally, gross margins on pre-owned aircraft sales have been
at or near break-even.
SELLING AND ADMINISTRATIVE EXPENSE. Selling and administrative expense
increased by $5.0 million, or 19.2%, to $30.9 million in the first quarter
of 1999 from $25.9 million in the first quarter of 1998, but as a
percentage of net revenues decreased to 4.9% in the first quarter of 1999
from 5.2% in the first quarter of 1998. The principal drivers for the
increase are additional sales and marketing expenses associated with the
increased sales activity, the acquisition of K-C Aviation, and the business
systems which are being implemented in 1999 to support the production
increases described elsewhere herein.
RESEARCH AND DEVELOPMENT EXPENSE. Research and development expense was
$3.3 million in the first quarter of 1999, as compared to $1.9 million in
the first quarter of 1998. Research and development expenditures in 1999
and the near-term future are expected to stem principally from product
improvements and enhancements, rather than new aircraft development.
AMORTIZATION OF INTANGIBLES AND DEFERRED CHARGES. This non-cash
expense includes amortization of goodwill and other intangible assets
consisting of aftermarket service and aftermarket product support, as well
as deferred financing charges related to the Company's pre-existing and new
bank credit facilities. Amortization of intangibles and deferred charges
were $3.1 million for the first quarter of 1999 versus $1.9 million for the
first quarter of 1998. The increase in 1999 was a result of additional
goodwill amortization directly attributable to the acquisition of K-C
Aviation.
INTEREST INCOME AND EXPENSE. Interest income decreased by $1.7 million
to $0.8 million in the first quarter of 1999 from $2.5 million in the first
quarter of 1998 as a result of lower average cash balances the Company had
invested during the first quarter of 1999 compared to the same period of
1998. Interest expense decreased by $1.0 million to $6.0 million for the
first quarter of 1999 over the comparable period in 1998. This decrease is
attributable to both a decrease in average borrowings and lower weighted
average interest rates.
INCOME TAXES. In the quarter ended March 31,1999, the Company recorded
an income tax provision of $33.6 million based on an estimated effective
tax rate of 36.5% compared with an income tax provision of $24.3 million
based on an estimated effective tax rate of 37.5% in the quarter ended
March 31, 1998.
EARNINGS PER SHARE. The Company reported diluted earnings per share of
$0.79 for the first quarter of 1999, a 46.3% increase over the first
quarter of 1998 diluted earnings per share of $0.54.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity needs arise principally from working capital
requirements, capital expenditures, principal and interest payments on
long-term debt (including the revolving credit facility), and the Company's
share repurchase program described below. During the first quarter of 1999,
the Company relied on its available cash balances and its revolving credit
facility to fund these needs.
During March 1999, the Company established a program to repurchase up
to an additional $200 million of its common stock. The purchases have been,
and will be made from time to time in the open market or through negotiated
transactions as market conditions warrant. At March 31, 1999, the Company
had repurchased 960,000 shares, at an average price of $46.79 per share,
for an aggregate amount of $44.9 million.
The Company had cash and cash equivalents totaling $75.2 million at
March 31, 1999 up from $38.1 million at December 31, 1998. During the three
months ended March 31, 1999, net cash provided by operating activities was
$98.3 million compared with the three months ended March 31, 1998 when the
Company used $28.1 million in cash from operations. The increase in cash
flow from operations between periods is principally a result of the
increased level of initial deposits and progress payments received during
the first quarter of 1999 for new aircraft orders.
During the quarter ended March 31, 1999, additions to property and
equipment amounted to $3.6 million. At March 31, 1999, the Company was not
committed to the purchase of any significant amount of property and
equipment. As a result of both continued production level increases and the
acquisition of K-C Aviation, the Company plans to spend approximately $30.0
million for property and equipment in 1999. The Company continually
monitors its capital spending in relation to current and anticipated
business needs. As circumstances dictate, facilities are added,
consolidated or modernized.
At March 31, 1999, borrowings under the 1996 Credit Agreement were
$286.3 million. Scheduled repayments remaining are $56.3 million in 1999
and $75.0 million in each of the years 2000 through 2001, and $80.0 million
in 2002. The 1996 Credit Agreement contains customary affirmative and
negative covenants including restrictions on the ability of the Company and
its subsidiaries to pay cash dividends, as well as financial covenants
under which the Company must operate. As of March 31, 1999, the Company was
in compliance with the covenants of its Credit Agreement.
On November 30, 1998, the Company issued notes totaling $56 million
secured by three pre-owned aircraft used as core fleet in the Gulfstream
Shares Program. The notes underlying the agreement have substantially
identical terms and are repayable in consecutive monthly installments of
principal commencing December 31, 1999, with a final maturity on November
30, 2008; aggregate principal payments for each of the following years are
as follows: 1999 - $0.3 million; 2000 through 2007 - $3.1 million; 2008 -
$30.6 million.
On April 15, 1999, the Company entered into a new $200 million term
loan facility (the "1999 Term Loan"). The 1999 Term Loan may be drawn upon
at any time during the first year, and is repayable in consecutive
quarterly installments with a final maturity on March 31, 2003, in
aggregate amounts for each of the following years as follows, assuming the
entire $200 million is drawn: 2000 - $25 million; 2001 - $70.9 million;
2002 - $83.3 million; 2003 - $20.8 million. Amounts are reduced ratably if
less than the full amount is drawn. The Company is required to pay
commitment fees of .35% per annum on the average daily unutilized portion
of the term loan facility for the first year. The Company may choose either
an Adjusted Base Rate interest option, which is based on the greater of the
prime rate or the federal funds rate, or LIBOR, in each case, plus an
applied margin. Interest rates are subject to change based on the Company's
performance with respect to certain financial covenants set forth in the
term loan agreement.
The 1999 Term Loan contains the same financial and operating covenants
as the 1996 Credit Agreement and shares ratably in the pledge of stock of
subsidiaries under the 1996 Credit Agreement.
<PAGE>
The Company's principal source of liquidity both on a short-term and
long-term basis is cash flow provided from operations, including customer
progress payments and deposits on new aircraft orders. However, the Company
may borrow against the 1996 Credit Agreement, the 1999 Term Loan, or
through other available borrowing vehicles to supplement cash flow from
operations. The Company believes, based upon its analysis of its
consolidated financial position, its cash flow during the past 12 months
and its expected results of operations in the future, that operating cash
flow and available borrowings under the 1996 Credit Agreement, the 1999
Term Loan and other available borrowing vehicles will be adequate to fund
operations, capital expenditures, debt service, and the Company's share
repurchase program for at least the next 12 months. The Company intends to
repay its remaining indebtedness primarily with cash flow from operations.
There can be no assurance, however, that future industry-specific
developments or general economic trends will not adversely affect the
Company's operations or its ability to meet its cash requirements.
As of March 31, 1999, in connection with orders for 17 Gulfstream V
aircraft in the backlog, the Company has offered customers trade-in options
(which may or may not be exercised by the customer) under which the Company
will accept trade-in aircraft (primarily Gulfstream IVs and IV-SPs) at a
guaranteed minimum trade-in price. Additionally, in connection with
recorded sales of new aircraft, the Company has agreed to accept pre-owned
aircraft totaling $282.4 million as of March 31, 1999. Management believes
that the fair market value of all such aircraft exceeds the specified
trade-in value.
The Company is party to an agreement with the Pension Benefit Guaranty
Corporation (the "PBGC") concerning funding of the Company's defined
benefit pension plans. Pursuant to this agreement, the Company contributed
$6.25 million in the first quarter 1999, and has agreed to contribute a
total of $25.0 million annually (to be paid quarterly in equal
installments) for 1999 and 2000 to its pension plans, which payments are
expected to result in such plans being fully funded. The payments to be
made under this agreement were already part of the Company's overall
financial planning, and therefore, are not expected to have a material
adverse effect on the Company's financial statements. The funding required
under this agreement will not result in any increase in the Company's
annual pension expense.
FINANCIAL CONTRACT BACKLOG
At March 31, 1999, the Company had a financial contract backlog of
approximately $3.2 billion, representing a total of 47 contracts for
Gulfstream IV-SPs, and 54 contracts for Gulfstream Vs. Including the 10
undelivered aircraft in the Middle East Shares contract, which have been
excluded from the Company's financial contract backlog, the Company had a
total of 111 aircraft, valued at approximately $3.4 billion of potential
future revenues, under contract at March 31, 1999. This excludes 18 options
valued at $0.7 billion.
During the first quarter of 1998, the Company signed a $335 million
contract for 12 Gulfstream IV-SPs to expand its highly successful
Gulfstream Shares fractional ownership program to the Middle East region.
In 1993, the Company established very stringent deposit requirements for
recording aircraft into its backlog. The contract for the Middle East
Shares expansion includes modestly different deposit requirements early in
the program. The Company has decided for the initial phase of the program
to record these orders into backlog when the aircraft are delivered. The
first green aircraft delivery for this Program occurred during the third
quarter of 1998 and the second delivery occurred in the first quarter of
1999. The remaining 10 undelivered aircraft are not included in the
Company's financial contract backlog.
As of March 31, 1999, the Company had contracted to deliver to
Executive Jet 44 Gulfstream IV-SPs and 12 Gulfstream Vs in connection with
the North American Gulfstream Shares program plus options for additional 12
Gulfstream Vs. Of these, 19 Gulfstream IV-SPs are in service, with the
remaining 49 Gulfstream IV-SPs and Gulfstream Vs to be delivered through
2007.
The Company includes an order in financial contract backlog only if
the Company has entered into a purchase contract (with no contingencies)
with the customer and has received a significant (generally non-refundable)
deposit from the customer.
The Company continually monitors the condition of its backlog and
believes, based on the nature of its customers and its historical
experience, that there will not be a significant number of cancellations.
However, to the extent that there is a lengthy period of time between a
customer's aircraft order and its delivery date, there may be increased
uncertainty as to changes in business and economic conditions which may
affect customer cancellations.
OUTLOOK
Based on its strong backlog and continued product demand, the Company
has increased production to 65 new aircraft in 1999. With this increased
production and continuing margin improvements, the Company expects at least
25% growth in 1999 diluted earnings per share to $3.75. The Company also
expects diluted EPS in 2000 to increase by at least 15% over 1999.
YEAR 2000 READINESS
As part of the Company's initiatives, begun in 1996, to increase
production rates and co-produce the Gulfstream IV-SP and Gulfstream V, the
Company has, and continues to, upgrade and replace business systems and
facility infrastructure. These initiatives help to reduce the potential
impact of the Year 2000 issue on the Company's operations.
In addition, the Company has implemented a Year 2000 Compliance Plan
designed to ensure that all other hardware, software, systems, and products
with microprocessors relevant to the Company's business are not adversely
affected by the Year 2000 issue. The Company has established a formal
program office under the leadership of a senior level executive to manage
the assessment and implementation of the Plan objectives. The program is
reviewed regularly with executive management.
Gulfstream has reviewed all current production components and systems
installed in the Gulfstream IV-SP and Gulfstream V aircraft and has found
no issues. Older aircraft which are no longer under warranty have also been
reviewed and some require minor component modifications. This information
has been made available to Gulfstream operators. Gulfstream has completed
approximately 90% of its Year 2000 program plan for products and
infrastructure. Confirmation of Year 2000 plans for all significant
suppliers has also been completed. Supplier Year 2000 compliance monitoring
will continue through year-end 1999 and into the Year 2000.
The Company currently estimates the total costs of these efforts
incurred during the years 1997 through 1999 to be approximately $3.5
million. In addition, some non-compliant systems will be eliminated as the
Company installs Year 2000 compliant software in connection with its
ongoing integrated resource planning project. The cost of this effort has
been included in the Company's capital projections discussed above under
the caption "Liquidity and Capital Resources".
The Company does not believe that the implementation of this Year 2000
Compliance Plan will have a material effect on the Company's business
operations, financial condition, liquidity or capital resources. Management
of the Company believes it has an effective program in place to address the
Year 2000 issue in a timely manner. As a component of the Year 2000
Compliance Plan, the Company is developing contingency plans to mitigate
the effects of potential problems experienced by it or its key suppliers or
governmental agencies in the timely implementation of its Year 2000
Compliance Plan. Nevertheless, since it is not possible to anticipate all
future outcomes, especially when third parties are involved, there could be
circumstances in which the Company's operations would be adversely
affected.
The statements in this section constitute a "Year 2000 Readiness
Disclosure" under the Year 2000 Information and Readiness Disclosure Act to
the extent provided therein.
<PAGE>
FORWARD-LOOKING INFORMATION IS SUBJECT TO RISK AND UNCERTAINTY
Certain statements contained in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations," including the
statements under the heading "Outlook," as well as other statements
elsewhere in this Form 10-Q, contain forward-looking information. These
forward-looking statements are subject to risks and uncertainties. Actual
results might differ materially from those projected in the forward-looking
statements. Additional information concerning factors that could cause
actual results to materially differ from those in the forward-looking
statements is contained in Exhibit 99.1 to the Company's Securities and
Exchange Commission filings.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable.
ITEM 2. CHANGES IN SECURITIES
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Certain statements contained in or incorporated by reference
in this Form 10-Q contain forward-looking information. These
forward-looking statements are subject to risks and
uncertainties. Actual results might differ materially from
those projected in the forward-looking statements. Additional
information concerning factors that could cause actual
results to materially differ from those contained in the
forward-looking statements is contained in Exhibit 99,
Cautionary Statement for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act of
1995.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 2.2 Agreement and Plan of Merger among
General Dynamics Corporation, Tara
Acquisition Corporation and Gulfstream
Aerospace Corporation dated May 16,
1999.
Exhibit 10.51 Term Loan Agreement dated April 15, 1999
among Gulfstream Delaware Corporation,
Certain Lenders, and The Chase Manhattan
Bank, as Administrative Agent.
Exhibit 10.52 Amendment No. 6 dated April 15, 1999 to
Credit Agreement dated October 6, 1996
among Gulfstream Delaware Corporation,
The Chase Manhattan Bank, and the banks
and other financial institutions parties
thereto.
Exhibit 27.1 Financial Data Schedule.
Exhibit 99.2 Press Release dated May 17, 1999.
(b) Report on Form 8-K
None
<PAGE>
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.
Dated: May 17, 1999
GULFSTREAM AEROSPACE CORPORATION
/s/ Chris A. Davis
-------------------------------------------
Chris A. Davis
Executive Vice President &
Chief Financial & Administrative Officer
and Secretary
(Principal Financial and Accounting
Officer)
<PAGE>
EXHIBIT INDEX
Exhibits
Exhibit 2.2 Agreement and Plan of Merger among
General Dynamics Corporation, Tara
Acquisition Corporation and Gulfstream
Aerospace Corporation dated May 16,
1999.
Exhibit 10.51 Term Loan Agreement dated April 15, 1999
among Gulfstream Delaware Corporation,
Certain Lenders, and The Chase Manhattan
Bank, as Administrative Agent.
Exhibit 10.52 Amendment No. 6 dated April 15, 1999 to
Credit Agreement dated October 6, 1996
among Gulfstream Delaware Corporation,
The Chase Manhattan Bank, and the banks
and other financial institutions parties
thereto.
Exhibit 27.1 Financial Data Schedule.
Exhibit 99.2 Press Release dated May 17, 1999.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27.1
Financial Data Schedule
For Period Ended March 31, 1999
GULFSTREAM AEROSPACE CORPORATION AND SUBSIDIARIES
(Unaudited)
(In millions, except per share data)
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE PERIOD ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-END> Mar-31-1999
<CASH> 75
<SECURITIES> 0
<RECEIVABLES> 330<F1>
<ALLOWANCES> 2<F1>
<INVENTORY> 753
<CURRENT-ASSETS> 1,171
<PP&E> 166<F2>
<DEPRECIATION> 128<F2>
<TOTAL-ASSETS> 1,723
<CURRENT-LIABILITIES> 1,029
<BONDS> 266
0
0
<COMMON> 1
<OTHER-SE> 214
<TOTAL-LIABILITY-AND-EQUITY> 1,723
<SALES> 625
<TOTAL-REVENUES> 630
<CGS> 490
<TOTAL-COSTS> 528
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5
<INCOME-PRETAX> 92
<INCOME-TAX> 34
<INCOME-CONTINUING> 58
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 58
<EPS-PRIMARY> .81
<EPS-DILUTED> .79
<FN>
Amounts inapplicable or not disclosed as a separate line on the Statement
of Financial Position or Results of Operations are reported as 0 herein.
<F1> Notes and accounts receivable - trade are reported net of allowances for
doubtful accounts in the Consolidated Balance Sheet.
<F2> Property, plant and equipment are reported net of accumulated
depreciation in the Consolidated Balance Sheet.
</FN>
</TABLE>
EXHIBIT 2.2
EXECUTION COPY
-----------------------------------
AGREEMENT AND PLAN OF MERGER
AMONG
GENERAL DYNAMICS CORPORATION,
TARA ACQUISITION CORPORATION
AND
GULFSTREAM AEROSPACE CORPORATION
-----------------------------------
MAY 16, 1999
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1 THE MERGER................................................1
Section 1.1 The Merger...........................................1
Section 1.2 The Closing..........................................1
Section 1.3 Effective Time.......................................2
Section 1.4 Effects of the Merger................................2
Section 1.5 Certificate of Incorporation and Bylaws..............2
Section 1.6 Directors............................................2
Section 1.7 Officers.............................................2
Section 1.8 Conversion of Company Common Stock...................2
Section 1.9 Stock Options........................................3
Section 1.10 Conversion of Acquisition Corporation Common Stock...5
ARTICLE 2 STOCKHOLDER APPROVAL......................................5
Section 2.1 Company Actions......................................5
Section 2.2 Parent Corporation Actions...........................6
Section 2.3 Cooperation..........................................6
ARTICLE 3 EXCHANGE OF CERTIFICATES..................................7
Section 3.1 Exchange of Certificates.............................7
Section 3.2 Exchange Agent; Exchange Procedures..................7
Section 3.3 Transfer Books.......................................8
Section 3.4 Termination of Exchange Fund.........................8
Section 3.5 Lost Certificates....................................8
Section 3.6 No Rights as Stockholder.............................8
Section 3.7 Withholding..........................................9
Section 3.8 Escheat..............................................9
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............9
Section 4.1 Organization.........................................9
Section 4.2 Authorization of Transaction; Enforceability.........9
Section 4.3 Noncontravention; Consents..........................10
Section 4.4 Capitalization......................................11
Section 4.5 Company Reports; Joint Proxy Statement..............11
Section 4.6 No Undisclosed Liabilities..........................12
Section 4.7 Absence of Material Adverse Change..................12
Section 4.8 Litigation and Legal Compliance.....................13
Section 4.9 Contract Matters....................................13
<PAGE>
Section 4.10 Tax Matters.........................................13
Section 4.11 Employee Benefit Matters............................14
Section 4.12 Environmental Matters...............................17
Section 4.13 Title...............................................18
Section 4.14 Intellectual Property Matters.......................19
Section 4.15 Year 2000 Compliance Matters........................19
Section 4.16 Labor Matters.......................................20
Section 4.17 State Takeover Laws.................................20
Section 4.18 Parent Common Stock Ownership.......................20
Section 4.19 Accounting and Tax Matters..........................20
Section 4.20 Brokers' Fees.......................................20
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE
PARENT CORPORATION.......................................21
Section 5.1 Organization........................................21
Section 5.2 Authorization of Transaction; Enforceability........21
Section 5.3 Noncontravention; Consents..........................22
Section 5.4 Capitalization......................................22
Section 5.5 Parent Corporation Reports; Joint Proxy
and Registration Statements.........................23
Section 5.6 No Undisclosed Liabilities..........................24
Section 5.7 Absence of Material Adverse Change..................25
Section 5.8 Litigation and Legal Compliance.....................25
Section 5.9 Contract Matters....................................25
Section 5.10 Tax Matters.........................................25
Section 5.11 Employee Benefit Matters............................26
Section 5.12 Environmental Matters...............................29
Section 5.13 Title...............................................29
Section 5.14 Intellectual Property Matters.......................29
Section 5.15 Year 2000 Compliance Matters........................30
Section 5.16 Labor Matters.......................................30
Section 5.17 Company Common Stock Ownership......................30
Section 5.18 Accounting and Tax Matters..........................31
ARTICLE 6 COVENANTS................................................31
Section 6.1 General.............................................31
Section 6.2 Notices and Consents................................31
Section 6.3 Interim Conduct of the Company......................31
Section 6.4 Interim Conduct of the Parent Corporation...........33
Section 6.5 Preservation of Organization........................33
Section 6.6 Full Access.........................................34
Section 6.7 Notice of Developments..............................34
Section 6.8 Acquisition Proposals...............................34
Section 6.9 Indemnification.....................................36
<PAGE>
Section 6.10 Public Announcements................................38
Section 6.11 Preservation of Programs and Agreements............38
Section 6.12 Actions Regarding Antitakeover Statutes.............38
Section 6.13 Standstill Provisions...............................39
Section 6.14 Defense of Orders and Injunctions...................39
Section 6.15 Affiliate Letters...................................39
Section 6.16 Preservation of Accounting and Tax Treatment........39
Section 6.17 Accountant's Comfort Letters........................39
Section 6.18 Registration Agreement..............................40
Section 6.19 New York Stock Exchange Quotation...................40
Section 6.20 Publishing Financial Results........................40
Section 6.21 Employee Benefit Matters............................40
Section 6.22 Directors of the Surviving Corporation..............41
ARTICLE 7 CONDITIONS TO THE CONSUMMATION OF THE MERGER.............41
Section 7.1 Conditions to the Obligations of Each Party.........41
Section 7.2 Conditions to the Obligation of the Company.........42
Section 7.3 Conditions to the Obligation of the Parent
Corporation and the Acquisition Corporation......43
ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER........................44
Section 8.1 Termination.........................................44
Section 8.2 Effect of Termination...............................45
Section 8.3 Termination Fee.....................................45
ARTICLE 9 MISCELLANEOUS............................................46
Section 9.1 Nonsurvival of Representations......................46
Section 9.2 Remedies............................................47
Section 9.3 Successors and Assigns..............................47
Section 9.4 Amendment...........................................47
Section 9.5 Extension and Waiver................................47
Section 9.6 Severability........................................47
Section 9.7 Counterparts........................................47
Section 9.8 Descriptive Headings................................47
Section 9.9 Notices.............................................47
Section 9.10 No Third Party Beneficiaries........................49
Section 9.11 Entire Agreement....................................49
Section 9.12 Construction........................................49
Section 9.13 Submission to Jurisdiction..........................49
Section 9.14 Governing Law.......................................49
<PAGE>
Exhibits
- --------
Exhibit A-1 - Form of Company Affiliate Letter
Exhibit A-2 - Form of Parent Corporation Affiliate Letter
Exhibit B-1 - Form of Company Tax Representations
Exhibit B-2 - Form of Parent Corporation Tax Representations
<PAGE>
TABLE OF DEFINED TERMS
Acquisition Corporation Preamble
Acquisition Proposal Section 6.8(g)
Applicable Period Section 6.8(b)
Average Stock Price Section 8.1(f)
Certificate Section 3.1(a)
Charter Amendment Section 2.2(a)
Closing Section 1.2
Closing Date Section 1.2
Code Section 4.10(f)
Company Preamble
Company Common Stock Section 1.8(a)
Company Disclosure Letter Section 4
Company Form 10-Q Section 4
Company Material Adverse Effect Section 4.1
Company Plans Section 4.11(a)
Company SEC Documents Section 4.5(a)
Company Stockholder Approval Section 2.1(a)
Company Stockholders Meeting Section 2.1(a)
Confidentiality Agreement Section 6.6
Continuing Employees Section 6.21(a)
Daily Per Share Price Section 8.1(f)
Delaware Act Section 1.1
Effective Time Section 1.3
Employee Pension Benefit Plan Section 4.11(a)
Employee Welfare Benefit Plan Section 4.11(a)
Environmental Law Section 4.12(b)
ERISA Section 4.11(a)
Exchange Agent Section 3.1
Exchange Fund Section 3.2(a)
Hazardous Materials Section 4.12(c)
HSR Act Section 4.3
Indemnified Parties Section 6.9(a)
Intellectual Property Section 4.14(b)
Joint Proxy Statement Section 2.1(b)
Lien Section 4.3
Merger Section 1.1
Merger Consideration Section 1.8(c)
Multiemployer Plan Section 4.11(a)
Parent Common Stock Section 1.8(a)
Parent Corporation Preamble
<PAGE>
Parent Corporation Disclosure Letter Section 5
Parent Corporation Form 10-Q Section 5
Parent Corporation Material Adverse Effect Section 5.1
Parent Corporation Plans Section 5.11(a)
Parent Corporation Stockholder Approval Section 2.2(a)
Parent Corporation Stockholders Meeting Section 2.2(a)
Permitted Liens Section 4.13
Registration Statement Section 2.2(b)
SEC Section 2.1(b)
Securities Act Section 2.1(b)
Securities Exchange Act Section 1.9(d)
Standstill Provisions Section 6.8(e)
Stock Options Section 1.9(a)
Stock Plans Section 1.9(a)
Subsidiary Section 1.8(d)
Superior Acquisition Proposal Section 6.8(h)
Surviving Corporation Section 1.1
Taxes Section 4.10(a)
Tax Returns Section 4.10(a)
Termination Fee Section 8.3(a)
Third Party Acquisition Section 8.3(b)
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of May 16, 1999 among
General Dynamics Corporation, a Delaware corporation (the "Parent
Corporation"), Tara Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of the Parent Corporation (the "Acquisition
Corporation"), and Gulfstream Aerospace Corporation, a Delaware corporation
(the "Company").
The Boards of Directors of the Parent Corporation and the Company
have each determined that a business combination between the Parent
Corporation and the Company is desirable and in the best interests of the
Parent Corporation and the Company and their respective stockholders. The
Boards of Directors of the Parent Corporation and the Company accordingly
have each duly adopted resolutions approving this Agreement and the
transactions contemplated hereby.
It is intended that the merger provided for in this Agreement
will qualify as a reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended, and that for financial
accounting purposes the merger will be accounted for as a pooling of
interests.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein and for other good and valuable consideration, the value,
receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE 1
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, at the Effective Time (as defined
in Section 1.3) the Acquisition Corporation will be merged (the "Merger")
with and into the Company in accordance with the provisions of the Delaware
General Corporation Law (the "Delaware Act"). Following the Merger, the
Company will continue as the surviving corporation (the "Surviving
Corporation") and the separate corporate existence of the Acquisition
Corporation will cease.
Section 1.2 The Closing. Upon the terms and subject to the
conditions set forth in this Agreement, the consummation of the Merger and
the other transactions contemplated by this Agreement (the "Closing") will
take place at the offices of Jenner & Block, 601 13th Street, N.W.,
Washington, D.C. 20005, at 10:00 a.m., local time, on the first business
day following the satisfaction or waiver of the conditions set forth in
Article 7 (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the satisfaction or, where
permitted, waiver of those conditions), or at such other date, time or
place as the Parent Corporation and the Company may agree. The date upon
which the Closing occurs is referred to in this Agreement as the "Closing
Date."
Section 1.3 Effective Time. The Merger will be consummated by the
filing of a certificate of merger with the Secretary of State of the State
of Delaware in accordance with Section 251(c) of the Delaware Act. The time
the Merger becomes effective in accordance with Sections 103 and 251 of the
Delaware Act is referred to in this Agreement as the "Effective Time."
Section 1.4 Effects of the Merger. The Merger will have the
effects set forth in the Delaware Act. Without limiting the generality of
the foregoing, as of the Effective Time, all properties, rights,
privileges, powers and franchises of the Company and the Acquisition
Corporation will vest in the Surviving Corporation and all debts,
liabilities and duties of the Company and the Acquisition Corporation will
become debts, liabilities and duties of the Surviving Corporation.
Section 1.5 Certificate of Incorporation and Bylaws. At the
Effective Time, the Certificate of Incorporation and Bylaws of the
Acquisition Corporation in the respective forms delivered by the Parent
Corporation to the Company prior to the date of this Agreement will be
amended and restated to change the name of the Acquisition Corporation to
"Gulfstream Aerospace Corporation" or such other name as the Parent
Corporation may determine. The Certificate of Incorporation and Bylaws of
the Acquisition Corporation, as so amended and restated, will be the
Certificate of Incorporation and Bylaws of the Surviving Corporation.
Section 1.6 Directors. Subject to the provisions of Section 6.22,
the directors of the Acquisition Corporation at the Effective Time will be
the initial directors of the Surviving Corporation and will hold office
from the Effective Time until their respective successors are duly elected
or appointed and qualified in the manner provided in the Certificate of
Incorporation and Bylaws of the Surviving Corporation or as otherwise
provided by law.
Section 1.7 Officers. The officers of the Company at the
Effective Time will be the initial officers of the Surviving Corporation
and will hold office from the Effective Time until their respective
successors are duly elected or appointed and qualified in the manner
provided in the Certificate of Incorporation and Bylaws of the Surviving
Corporation or as otherwise provided by law.
Section 1.8 Conversion of Company Common Stock.
(a) Subject to the provisions of Section 1.8(b), each share
of the Company's Common Stock, par value $.01 per share (the "Company
Common Stock"), issued and outstanding immediately prior to the
Effective Time (other than shares of Company Common Stock held in the
treasury of the Company, held by any Subsidiary (as defined in Section
1.8(d)) of the Company or held by the Parent Corporation or any
Subsidiary of the Parent Corporation) will, by virtue of the Merger
and without any action on the part of the holder thereof, be canceled
and converted into the right to receive, upon the surrender of the
certificate formerly representing such share, one share of the Parent
Corporation's Common Stock, par value $1.00 per share (the "Parent
Common Stock"). In the event that, subsequent to the date of this
Agreement but prior to the Effective Time, the outstanding shares of
Parent Common Stock or Company Common Stock are changed into a
different number of shares or a different class as a result of a stock
split, reverse stock split, stock dividend, subdivision,
reclassification, combination, exchange, recapitalization or similar
transaction, the number of shares of Parent Common Stock into which
each share of Company Common Stock will be converted as a result of
the Merger will be adjusted appropriately and provisions will be made
for appropriate payments of cash in lieu of the issuance of fractional
shares of Parent Common Stock.
(b) Each share of Company Common Stock held in the treasury
of the Company, held by any Subsidiary of the Company or held by the
Parent Corporation or any Subsidiary of the Parent Corporation
immediately prior to the Effective Time will, by virtue of the Merger
and without any action on the part of the holder thereof, be canceled
and retired and will cease to exist. For purposes of this Section
1.8(b), shares of Company Common Stock owned beneficially or held of
record by any plan, program or arrangement sponsored or maintained for
the benefit of any current or former employee of the Company, the
Parent Corporation or any of their respective Subsidiaries will not be
deemed to be held by the Company, the Parent Corporation or any such
Subsidiary, regardless of whether the Company, the Parent Corporation
or any such Subsidiary has the power, directly or indirectly, to vote
or control the disposition of such shares.
(c) The shares of Parent Common Stock to be issued upon the
conversion of shares of Company Common Stock pursuant to Section
1.8(a) and any cash to be paid in lieu of fractional shares of Parent
Common Stock pursuant to Section 1.8(a) are referred to in this
Agreement collectively as the "Merger Consideration."
(d) The term "Subsidiary" as used in this Agreement means
any corporation, partnership, limited liability company or other
business entity 50 percent or more of the outstanding voting equity
securities of which are owned, directly or indirectly, by the Company
or the Parent Corporation, as applicable.
Section 1.9 Stock Options.
(a) The Parent Corporation and the Company will take all
necessary actions to cause each option to purchase shares of
Company Common Stock (a "Stock Option") granted under any stock
option plan, program, agreement or arrangement of the Company or
any of its Subsidiaries (collectively, the "Stock Plans") which
is outstanding and unexercised immediately prior to the Effective
Time to be converted at the Effective Time into an option to
purchase the same number of shares of Parent Common Stock that
could have been obtained upon the exercise of such Stock Option
immediately prior to the Effective Time and the conversion and
exchange of the shares of Company Common Stock issued upon such
exercise for shares of Parent Common Stock as provided in Section
1.8(a). The exercise price per share applicable to each such
converted stock option will be the same as was applicable to such
Stock Option immediately prior to the Effective Time (subject to
adjustment pursuant to the last sentence of Section 1.8(a)). Upon
and following the conversion of the Stock Options pursuant to
this Section 1.9(a), each converted stock option will be subject
to the same terms and conditions as in effect immediately prior
to the Effective Time; provided that (i) if a form of agreement
evidencing the Stock Option provides for acceleration of vesting
of the Stock Option upon the Merger, the converted stock option
will be so vested following the Merger and (ii) consistent with
the forms of stockholder's agreements in use by the Company prior
to the date hereof, upon exercise of any converted stock option,
there will be no obligation that the holder thereof execute a
stockholder's agreement.
(b) The Company and the Parent Corporation acknowledge that,
consistent with the terms of such stockholder's agreements, any
stockholder's agreement entered into prior to the Effective Time
by reason of the exercise of a Stock Option or otherwise will
cease to be of any force or effect upon and following the
Effective Time.
(c) The Parent Corporation will take all corporate action
necessary to reserve for issuance a sufficient number of shares
of Parent Common Stock for delivery upon exercise of all of the
Stock Options converted into options to purchase Parent Common
Stock pursuant to Section 1.9(a). Not later than one day
following the Effective Time, the Parent Corporation will file a
registration statement on Form S-8 (or any successor or other
appropriate form) with respect to the shares of Parent Common
Stock subject to the converted stock options and will deliver
prospectuses to the holders of such stock options. Following the
Effective Time, the Parent Corporation will use all reasonable
efforts to maintain the effectiveness of the foregoing
registration statement (and maintain the current status of the
prospectus or prospectuses contained therein) for so long as any
of the converted stock options remain outstanding and
unexercised.
(d) At the Effective Time, the Parent Corporation will
assume the obligations of the Company under the Stock Plans as in
effect at the Effective Time. No additional Stock Options will be
granted pursuant to the Stock Plans after the Effective Time.
(e) The Board of Directors or Compensation Committee of the
Company and the Parent Corporation will each grant all approvals
and take all other actions required pursuant to Rules 16b-3(d)
and 16b-3(e) under the Securities Exchange Act of 1934, as
amended (together with the rules and regulations of the SEC
thereunder, the "Securities Exchange Act"), to cause the
disposition in the Merger of Company Common Stock and Stock
Options and the acquisition in the Merger of Parent Common Stock
and options to acquire Parent Common Stock to be exempt from the
provisions of Section 16(b) of the Securities Exchange Act.
Section 1.10 Conversion of Acquisition Corporation Common Stock.
Each share of the Common Stock, par value $1.00 per share, of the
Acquisition Corporation issued and outstanding immediately prior to the
Effective Time will, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into one share of the Common
Stock, par value $1.00 per share, of the Surviving Corporation.
ARTICLE 2
STOCKHOLDER APPROVAL
Section 2.1 Company Actions. The Company, acting through its
Board of Directors, in accordance with applicable law, its Certificate of
Incorporation and Bylaws and the rules of the New York Stock Exchange,
will:
(a) duly call, give notice of, convene and hold a special
meeting of its stockholders (the "Company Stockholders Meeting"),
to be held as soon as practicable after the date of this
Agreement, for the purpose of submitting this Agreement for
adoption and approval by the holders of a majority of the
outstanding shares of Company Common Stock (the "Company
Stockholder Approval");
(b) cooperate with the Parent Corporation in preparing and
filing with the Securities and Exchange Commission (the "SEC") as
promptly as practicable after the date of this Agreement a Joint
Proxy Statement/Prospectus and related materials (the "Joint
Proxy Statement") with respect to the Company Stockholders
Meeting satisfying the requirements of the Securities Act of
1933, as amended (together with the rules and regulations of the
SEC thereunder, the "Securities Act"), and the Securities
Exchange Act, respond promptly to any comments raised by the SEC
with respect to the preliminary version of the Joint Proxy
Statement, and cause the definitive version of the Joint Proxy
Statement to be mailed to its stockholders as soon as it is
legally permitted to do so;
(c) subject to the provisions of Section 6.8, include in the
Joint Proxy Statement (i) the recommendation of the Board of
Directors of the Company that the stockholders of the Company
vote in favor of the adoption and approval of this Agreement and
the transactions contemplated hereby and (ii) the written opinion
dated as of the date of this Agreement of Merrill Lynch & Co.,
financial advisor to the Board of Directors of the Company, to
the effect that as of the date of this Agreement the Merger
Consideration is fair to the stockholders of the Company, other
than the Parent Corporation and its affiliates, from a financial
point of view; and
(d) provide the Parent Corporation with the information
concerning the Company required to be included in the Joint Proxy
Statement and the Registration Statement (as defined in Section
2.2(b)).
Section 2.2 Parent Corporation Actions. The Parent Corporation,
acting through its Board of Directors, in accordance with applicable law,
its Certificate of Incorporation and Bylaws and the rules of the New York
Stock Exchange, will:
(a) duly call, give notice of, convene and hold a special
meeting of its stockholders (the "Parent Corporation Stockholders
Meeting"), to be held as soon as practicable after the date of
this Agreement, for the purpose of submitting for the approval of
the holders of a majority of the outstanding shares of Parent
Common Stock (the "Parent Corporation Stockholder Approval") the
proposals adopted by the Board of Directors of the Parent
Corporation to (i) amend and restate the Certificate of
Incorporation of the Parent Corporation to increase the number of
shares of Parent Common Stock the Parent Corporation is
authorized to issue to 300,000,000 shares (the "Charter
Amendment") and (ii) issue shares of Parent Common Stock pursuant
to the Merger;
(b) file with the SEC as promptly as practicable after the
date of this Agreement a Registration Statement on Form S-4
(which will include the Joint Proxy Statement) complying in all
material respects with the Securities Act and the Securities
Exchange Act registering the issuance of the Parent Common Stock
proposed to be issued by the Parent Corporation pursuant to the
Merger (the "Registration Statement"), respond promptly to any
comments raised by the SEC with respect to the preliminary
version of the Joint Proxy Statement or the Registration
Statement, use its best efforts to cause the Registration
Statement to be declared effective by the SEC as promptly as
practicable and cause the definitive version of the Joint Proxy
Statement to be mailed to its stockholders as soon as it is
legally permitted to do so;
(c) provide the Company with the information concerning the
Parent Corporation and the Acquisition Corporation required to be
included in the Joint Proxy Statement; and
(d) include in the Joint Proxy Statement (i) the
recommendation of the Board of Directors of the Parent
Corporation that the stockholders of the Parent Corporation vote
in favor of the Charter Amendment and the issuance of shares of
Parent Common Stock pursuant to the Merger and (ii) the written
opinion dated as of May 13, 1999 of Bear Stearns & Co., financial
advisor to the Board of Directors of the Parent Corporation, to
the effect that the Merger is fair, from a financial point of
view, to the Parent Corporation and its stockholders.
Section 2.3 Cooperation. Each party will promptly advise the
other of its receipt of, and will promptly furnish the other party with
copies of, all comments received from the SEC with respect to the
Registration Statement and the Joint Proxy Statement and will consult with
the other party in responding to such comments.
ARTICLE 3
EXCHANGE OF CERTIFICATES
Section 3.1 Exchange of Certificates. From and after the
Effective Time, each holder of a certificate that immediately prior to the
Effective Time represented outstanding shares of Company Common Stock (a
"Certificate") will be entitled to receive in exchange therefor, upon
surrender thereof to an exchange agent to be designated by the parties (the
"Exchange Agent"), the Merger Consideration into which the shares of
Company Common Stock evidenced by such Certificate were converted pursuant
to the Merger. No interest will be payable on the Merger Consideration to
be paid to any holder of a Certificate irrespective of the time at which
such Certificate is surrendered for exchange. Certificates surrendered for
exchange by any holder that is an "affiliate" of the Company for purposes
of Rule 145(c) under the Securities Act will not be exchanged until the
Parent Corporation has received a letter from such holder as provided in
Section 6.15.
Section 3.2 Exchange Agent; Exchange Procedures.
(a) As soon as reasonably practicable following the
Effective Time, the Parent Corporation will deposit, or cause to
be deposited, with the Exchange Agent, in trust for the benefit
of holders of Certificates, certificates representing the Merger
Consideration and the amount of any dividends or distributions
payable in accordance with the provisions of Section 3.2(b) (the
"Exchange Fund").
(b) As soon as reasonably practicable after the Effective
Time, the Parent Corporation will instruct the Exchange Agent to
mail to each record holder of a Certificate (i) a letter of
transmittal (which will specify that delivery will be effected,
and risk of loss and title to such Certificates will pass, only
upon delivery of the Certificate to the Exchange Agent and will
be in such form and have such other provisions as the Parent
Corporation will reasonably specify) and (ii) instructions for
use in effecting the surrender of Certificates for certificates
representing shares of Parent Common Stock. Commencing
immediately after the Effective Time, upon the surrender to the
Exchange Agent of such Certificate or Certificates, together with
a duly executed and completed letter of transmittal and all other
documents and other materials required by the Exchange Agent to
be delivered in connection therewith, the holder will be entitled
to receive a certificate or certificates representing the number
of shares of Parent Common Stock into which the Certificate or
Certificates so surrendered have been converted in accordance
with the provisions of Section 1.8. Unless and until any
Certificate or Certificates are so surrendered, no dividend or
other distribution, if any, payable to the holders of record of
shares of Parent Common Stock as of any date subsequent to the
Effective Time will be paid to the holders of such Certificate or
Certificates in respect of the shares of Parent Common Stock into
which such Certificates are convertible. Upon the surrender of
any Certificate or Certificates, the record holder of the
certificate or certificates representing shares of Parent Common
Stock issued in exchange therefor will be entitled to receive (i)
at the time of surrender, the amount of any dividends or other
distributions (net of any applicable tax withholdings) having a
record date after the Effective Time and a payment date prior to
the surrender date, payable in respect of such shares of Parent
Common Stock and (ii) at the appropriate payment date, the amount
of dividends or other distributions (net of any applicable tax
withholdings) having a record date after the Effective Time and a
payment date subsequent to the date of such surrender, payable in
respect of such shares of Parent Common Stock.
Section 3.3 Transfer Books. The stock transfer books of the
Company will be closed at the Effective Time and no transfer of any shares
of Company Common Stock will thereafter be recorded on any of the stock
transfer books. In the event of a transfer of ownership of any Company
Common Stock prior to the Effective Time that is not registered in the
stock transfer records of the Company at the Effective Time, a certificate
or certificates representing the number of shares of Parent Common Stock
into which such Company Common Stock has been converted in the Merger will
be issued to the transferee together with a cash payment in respect of
dividends and distributions, if any, in accordance with the provisions of
Section 3.2(b), only if the Certificate is surrendered as provided in
Section 3.1, accompanied by all documents required to evidence and effect
such transfer and by evidence of payment of any applicable stock transfer
taxes.
Section 3.4 Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed one year after the Effective Time
will be delivered to the Parent Corporation upon demand, and each holder of
Company Common Stock who has not theretofore surrendered Certificates in
accordance with the provisions of this Article 3 will thereafter look only
to the Parent Corporation for satisfaction of such holder's claims for
shares of Parent Common Stock and any dividends or distributions payable in
accordance with the provisions of Section 3.2(b).
Section 3.5 Lost Certificates. If any Certificate has been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond
in such reasonable amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect to
such Certificate, the Exchange Agent will deliver in exchange for such
lost, stolen or destroyed certificate the shares of Parent Common Stock
issuable pursuant to Section 1.8, and unpaid dividends and distributions,
if any, on shares of Parent Common Stock deliverable in respect thereof,
pursuant to this Agreement.
Section 3.6 No Rights as Stockholder. From and after the
Effective Time, the holders of Certificates will cease to have any rights
as a stockholder of the Surviving Corporation except as otherwise provided
in this Agreement or by applicable law and the Parent Corporation will be
entitled to treat each Certificate that has not yet been surrendered for
exchange solely as evidence of the right to receive the Merger
Consideration into which the shares of Company Common Stock evidenced by
such Certificate have been converted pursuant to the Merger and the right
to receive dividends and distributions, if any, in accordance with the
provisions of Section 3.2(b).
Section 3.7 Withholding. The Parent Corporation will be entitled
to deduct and withhold from the Merger Consideration otherwise payable to
any former holder of Company Common Stock all amounts required by law to be
deducted or withheld therefrom.
Section 3.8 Escheat. Neither the Parent Corporation, the
Acquisition Corporation nor the Company will be liable to any former holder
of Company Common Stock for any portion of the Merger Consideration
delivered to any public official pursuant to any applicable abandoned
property, escheat or similar law. In the event any Certificate has not been
surrendered for exchange prior to the sixth anniversary of the Closing
Date, or prior to such earlier date as of which such Certificate or the
Merger Consideration payable upon the surrender thereof would otherwise
escheat to or become the property of any governmental entity, then the
Merger Consideration otherwise payable upon the surrender of such
Certificate will, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all rights,
interests and adverse claims of any person.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Parent Corporation and
the Acquisition Corporation that except as disclosed in the reports,
schedules, forms, statements and other documents filed by the Company with
the SEC and publicly available prior to the date of this Agreement, as
disclosed in the draft of the Quarterly Statement on Form 10-Q for the
Company's fiscal quarter ended March 31, 1999 (the "Company Form 10-Q")
delivered to the Parent Corporation prior to the date of this Agreement or
as disclosed in the letter dated as of the date of this Agreement from the
Company to the Parent Corporation (the "Company Disclosure Letter"):
Section 4.1 Organization. The Company and each of its
Subsidiaries is a corporation duly organized and validly existing under the
laws of the jurisdiction of its incorporation and has all requisite power
and authority to own, lease and operate its properties and to carry on its
business as presently being conducted. The Company and each of its
Subsidiaries is in good standing under the laws of the jurisdiction of its
incorporation and is duly qualified to conduct business as a foreign
corporation in each other jurisdiction where such qualification is
required, except where the failure to be so qualified and in good standing
would not have a material adverse effect on the business, financial
condition, operations or results of operations of the Company and its
Subsidiaries taken as a whole or the ability of the Company to consummate
the Merger and to perform its obligations under this Agreement (a "Company
Material Adverse Effect"). The Company has delivered to the Parent
Corporation correct and complete copies of its charter and bylaws, as
presently in effect, and will make available to the Parent Corporation
after the date of this Agreement correct and complete copies of the charter
and bylaws, as presently in effect, of each of its Subsidiaries.
Section 4.2 Authorization of Transaction; Enforceability. Subject
to obtaining the Company Stockholder Approval, the Company has full
corporate power and authority and has taken all requisite corporate action
to enable it to execute and deliver this Agreement, to consummate the
Merger and the other transactions contemplated hereby and to perform its
obligations hereunder. The Board of Directors of the Company, at a meeting
thereof duly called and held, has duly adopted resolutions by the requisite
majority vote approving this Agreement, the Merger and the other
transactions contemplated hereby, determining that the terms and conditions
of this Agreement, the Merger and the other transactions contemplated
hereby are fair to and in the best interests of the Company and its
stockholders and recommending that the Company's stockholders adopt and
approve this Agreement. The foregoing resolutions of the Board of Directors
of the Company have not been modified, supplemented or rescinded and remain
in full force and effect as of the date of this Agreement. In connection
with its adoption of the foregoing resolutions, the Board of Directors of
the Company received the written opinion of Merrill Lynch & Co., financial
advisor to the Board of Directors of the Company, dated as of the date of
this Agreement to the effect that, as of such date, the Merger
Consideration is fair to the stockholders of the Company, other than the
Parent Corporation and its affiliates, from a financial point of view. The
foregoing opinion has not been modified, supplemented or rescinded prior to
the date of this Agreement. The Company will deliver to the Parent
Corporation promptly after the date of this Agreement correct and complete
copies of the foregoing resolutions and opinion. This Agreement constitutes
the valid and legally binding obligation of the Company, enforceable
against the Company in accordance with its terms and conditions.
Section 4.3 Noncontravention; Consents. Except for (a) certain
filings and approvals necessary to comply with the applicable requirements
of the Securities Act, the Securities Exchange Act and the "blue sky" laws
and regulations of various states, (b) certain filings and approvals
necessary to comply with the requirements of the New York Stock Exchange
with respect to the delisting of the Company Common Stock, (c) the filing
of a Notification and Report Form and related material with the Federal
Trade Commission and the Antitrust Division of the United States Department
of Justice under the Hart-Scott-Rodino Act of 1976, as amended (the "HSR
Act"), (d) certain filings and approvals which may be necessary to comply
with the rules and regulations of the Federal Aviation Administration and
(e) the filing of a certificate of merger pursuant to the Delaware Act,
neither the execution and delivery of this Agreement by the Company, nor
the consummation by the Company of the transactions contemplated hereby,
will constitute a violation of, be in conflict with, constitute or create
(with or without notice or lapse of time or both) a default under, give
rise to any right of termination, cancellation, amendment or acceleration
with respect to, or result in the creation or imposition of any lien,
encumbrance, security interest or other claim (a "Lien") upon any property
of the Company or any of its Subsidiaries pursuant to (i) the charter or
bylaws of the Company or any of its Subsidiaries, (ii) any constitutional
provision, law, rule, regulation, permit, order, writ, injunction, judgment
or decree to which the Company or any of its Subsidiaries is subject or
(iii) any agreement or commitment to which the Company or any of its
Subsidiaries is a party or by which the Company, any of its Subsidiaries or
any of their respective properties is bound or subject, except, in the case
of clauses (ii) and (iii) above, for such matters which, individually or in
the aggregate, would not have a Company Material Adverse Effect.
Section 4.4 Capitalization.
(a) As of the date of this Agreement, the authorized capital
stock of the Company consists of 300,000,000 shares of Company
Common Stock. As of May 2, 1999, 71,607,043 shares of Company
Common Stock were issued and outstanding, 18,212,231 shares were
held by the Company as treasury shares and 4,715,946 shares were
reserved for issuance upon the exercise of outstanding Stock
Options. All of the issued and outstanding shares of capital
stock of the Company have been duly authorized and are validly
issued, fully paid and nonassessable.
(b) Other than Stock Options to acquire an aggregate of
4,715,946 shares of Company Common Stock granted by the Company
to current and former directors, officers, employees and advisors
of the Company and its Subsidiaries pursuant to the Stock Plans,
there are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange
rights or other contracts or commitments that could require the
Company or any of its Subsidiaries to issue, sell or otherwise
cause to become outstanding any of its capital stock. There are
no outstanding stock appreciation, phantom stock, profit
participation or similar rights with respect to the Company or
any of its Subsidiaries.
(c) Neither the Company nor any of its Subsidiaries is a
party to any voting trust, proxy or other agreement or
understanding with respect to the voting of any capital stock of
the Company or any of its Subsidiaries.
(d) The Board of Directors of the Company has not declared
any dividend or distribution with respect to the Company Common
Stock the record or payment date for which is on or after the
date of this Agreement.
(e) All of the outstanding shares of the capital stock of
each of the Company's Subsidiaries have been validly issued, are
fully paid and nonassessable and are owned by the Company or one
of its Subsidiaries, free and clear of any Lien. Except for its
Subsidiaries set forth in the Company Disclosure Letter, the
Company does not control directly or indirectly or have any
direct or indirect equity participation in any corporation,
partnership, limited liability company, joint venture or other
entity.
Section 4.5 Company Reports; Joint Proxy Statement.
(a) The Company has since October 9, 1996 filed all reports,
forms, statements and other documents (collectively, together
with all financial statements included or incorporated by
reference therein and the Company Form 10-Q, the "Company SEC
Documents") required to be filed by the Company with the SEC
pursuant to the provisions of the Securities Act or the
Securities Exchange Act. Each of the Company SEC Documents, as of
its filing date, complied in all material respects with the
applicable requirements of the Securities Act and the Securities
Exchange Act. None of the Company SEC Documents, as of their
respective filing dates, contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading. No Subsidiary of the Company is required to
file any reports, forms, statements or other documents pursuant
to the Securities Act or the Securities Exchange Act.
(b) Each of the consolidated financial statements (including
related notes) included in the Company SEC Documents presented
fairly in all material respects the consolidated financial
condition, cash flows and results of operations of the Company
and its Subsidiaries for the respective periods or as of the
respective dates set forth therein. Each of the financial
statements (including related notes) included in the Company SEC
Documents has been prepared in accordance with United States
generally accepted accounting principles, consistently applied
during the periods involved, except (i) as noted therein, (ii) to
the extent required by changes in United States generally
accepted accounting principles or (iii) in the case of unaudited
interim financial statements, normal recurring year-end audit
adjustments.
(c) The Company has delivered to the Parent Corporation
correct and complete copies of any proposed or contemplated
amendments or modifications to the Company SEC Documents
(including any exhibit documents included therein) that have not
yet been filed by the Company with the SEC. The Company has
delivered to the Parent Corporation a correct and complete copy
of the most recent draft of the Company Form 10-Q.
(d) The Joint Proxy Statement will comply in all material
respects with the applicable requirements of the Securities
Exchange Act and will not, at the time the definitive Joint Proxy
Statement is filed with the SEC and mailed to the stockholders of
the Company, contain any untrue statement of material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. No
representation or warranty is made herein by the Company with
respect to any information supplied by the Parent Corporation for
inclusion in the Joint Proxy Statement. For purposes of this
Section 4.5(d), all information included in the Joint Proxy
Statement concerning or related to the Parent Corporation and its
Subsidiaries, including the Acquisition Corporation, will be
deemed to have been supplied by the Parent Corporation.
Section 4.6 No Undisclosed Liabilities. The Company and its
Subsidiaries have no liabilities or obligations (whether absolute or
contingent, liquidated or unliquidated, or due or to become due) except for
(a) liabilities and obligations reflected in the Company SEC Documents and
(b) other liabilities and obligations which, individually or in the
aggregate, would not have a Company Material Adverse Effect.
Section 4.7 Absence of Material Adverse Change. Since December
31, 1998, there has not occurred any event, change, effect or development
which, individually or in the aggregate, would have a Company Material
Adverse Effect.
Section 4.8 Litigation and Legal Compliance.
(a) The Company Disclosure Letter sets forth each instance
in which the Company or any of its Subsidiaries is (i) subject to
any material unsatisfied judgment order, decree, stipulation,
injunction or charge or (ii) a party to or, to the Company's
knowledge, threatened to be made a party to any material charge,
complaint, action, suit, proceeding, hearing or, to the Company's
knowledge, investigation of or in any court or quasi-judicial or
administrative agency of any federal, state, local or foreign
jurisdiction, except for judgments, orders, decrees,
stipulations, injunctions, charges, complaints, actions, suits,
proceedings, hearings and investigations which, individually or
in the aggregate, would not have a Company Material Adverse
Effect. There are no judicial or administrative actions,
proceedings or, to the Company's knowledge, investigations
pending or, to the Company's knowledge, threatened that question
the validity of this Agreement or any action taken or to be taken
by the Company in connection with this Agreement which would have
a Company Material Adverse Effect.
(b) Except for instances of noncompliance which,
individually or in the aggregate, would not have a Company
Material Adverse Effect, the Company and its Subsidiaries have
complied with each constitutional provision, law, rule,
regulation, permit, order, writ, injunction, judgment or decree
to which the Company or any of its Subsidiaries is subject.
Section 4.9 Contract Matters.
(a) Neither the Company nor any of its Subsidiaries is in
default or violation of (and no event has occurred which with
notice or the lapse of time or both would constitute a default or
violation) of any term, condition or provision of any note,
mortgage, indenture, loan agreement, other evidence of
indebtedness, guarantee, license, lease, agreement or other
contract, instrument or contractual obligation to which the
Company or any of its Subsidiaries is a party or by which any of
their respective assets is bound or subject, except for defaults
and violations which, individually or in the aggregate, would not
have a Company Material Adverse Effect.
Section 4.10 Tax Matters.
(a) The Company and each of its Subsidiaries have timely
filed all required returns, declarations, reports, claims for
refund or information returns and statements, including any
schedule or attachment thereto (collectively "Tax Returns"),
relating to any federal, state, local or foreign net income,
gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall profits, customs, duties
or other tax, fee, assessment or charge, including any interest,
penalty or addition thereto and including any liability for the
taxes of any other person or entity under Treasury Regulation
Section 1.1502-6 (or any similar state, local or foreign law,
rule or regulation), and any liability in respect of any tax as a
transferee or successor, by law, contract or otherwise
(collectively "Taxes"), and all such Tax Returns are accurate and
complete in all respects, except to the extent any such failure
to file or any such inaccuracy in any filed Tax Return,
individually or in the aggregate, would not have a Company
Material Adverse Effect. All Taxes owed by the Company or any of
its Subsidiaries (whether or not shown on any Tax Return) have
been paid or adequately reserved for in accordance with generally
accepted accounting principles in the financial statements of the
Company, except to the extent any such failure to pay or reserve,
individually or in the aggregate, would not have a Company
Material Adverse Effect.
(b) The most recent financial statements contained in the
Company SEC Documents reflect adequate reserves in accordance
with generally accepted accounting principles for all Taxes
payable by the Company and its Subsidiaries for all Tax periods
and portions thereof through the date of such financial
statements, except to the extent that any failure to so reserve,
individually or in the aggregate, would not have a Company
Material Adverse Effect. No deficiency with respect to Taxes has
been proposed, asserted or assessed against the Company or any of
its Subsidiaries and no requests for waivers of the time to
assess any such Taxes are pending, except to the extent any such
deficiency or request for waiver, individually or in the
aggregate, would not have a Company Material Adverse Effect.
(c) None of the federal income Tax Returns of the Company or
any of its Subsidiaries consolidated in such Tax Returns have
been examined by and settled with the Internal Revenue Service.
(d) Except for Liens for current Taxes not yet due and
payable or which are being contested in good faith, there is no
Lien affecting any of the assets or properties of the Company or
any of its Subsidiaries that arose in connection with any failure
or alleged failure to pay any Tax, except for Liens which,
individually or in the aggregate, would not have a Company
Material Adverse Effect.
(e) Neither the Company nor any of its Subsidiaries is a
party to any Tax allocation or Tax sharing agreement.
(f) Neither the Company nor any of its Subsidiaries has made
any payments, is obligated to make any payments or is a party to
any agreement that under any circumstances could obligate it to
make any payments that will not be fully deductible under
Sections 280G or 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"). -----
Section 4.11 Employee Benefit Matters.
(a) The Company Disclosure Letter lists each plan, program
or arrangement constituting a material employee welfare benefit
plan (an "Employee Welfare Benefit Plan") as defined in Section
3(1) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or a material employee pension benefit plan
(an "Employee Pension Benefit Plan") as defined in Section 3(2)
of ERISA, and each other material employee benefit plan, program
or arrangement or employment practice maintained by the Company
or any of its Subsidiaries with respect to any of its current or
former employees or to which the Company or any of the Company
Subsidiaries contributes or is required to contribute with
respect to any of its current or former employees (collectively,
the "Company Plans"). With respect to each Company Plan:
(i) such Company Plan (and each related trust,
insurance contract or fund) has been administered in a
manner consistent in all respects with its written terms and
complies in form and operation with the applicable
requirements of ERISA, the Code and other applicable laws,
except for failures of administration or compliance that
would not have a Company Material Adverse Effect;
(ii) all required reports and descriptions (including
Form 5500 Annual Reports, Summary Annual Reports, PBGC-1's
and Summary Plan Descriptions) have been filed or
distributed appropriately with respect to such Company Plan,
except for failures of filing or distribution that would not
have a Company Material Adverse Effect;
(iii) the requirements of Part 6 of Subtitle B of
Title I of ERISA and Section 4980B of the Code have been met
with respect to each such Company Plan which is an Employee
Welfare Benefit Plan, except for failures that would not
have a Company Material Adverse Effect;
(iv) all material contributions, premiums or other
payments (including all employer contributions and employee
salary reduction contributions) that are due have been paid
to each such Company Plan;
(v) each such Company Plan which is an Employee
Pension Benefit Plan intended to be a "qualified plan" under
Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service and
no event has occurred which could reasonably be expected to
cause the loss or denial of such qualification under Section
401(a) of the Code;
(vi) the Company has made available or prior to the
Closing Date will make available to the Parent Corporation,
upon its request, correct and complete copies of the plan
documents and summary plan descriptions, the most recent
determination letter received from the Internal Revenue
Service, the most recent Form 5500 Annual Report, the most
recent actuarial report, the most recent audited financial
statements, and all related trust agreements, insurance
contracts and other funding agreements that implement such
Company Plan (but excluding the failure to make available
any such document which is not material). The valuation
summaries provided by the Company to the Parent Corporation
reasonably represent the assets and liabilities attributable
to Company Plans calculated in accordance with the Company's
past practices, but excluding any failure that would not
have a Company Material Adverse Effect;
(vii) no Company Plan which is an Employee Pension
Benefit Plan has been amended in any manner which would
require the posting of security under Section 401(a)(29) of
the Code or Section 307 of ERISA; and
(viii) neither the Company nor any of its Subsidiaries
has communicated to any employee (excluding internal
memoranda to management) any plan or commitment, whether or
not legally binding, to create any additional material
employee benefit plan or to materially modify or change any
Company Plan affecting any employee or terminated employee
of the Company or any of its Subsidiaries, but excluding any
such action that does not materially increase the liability
of the Company or its Subsidiaries.
(b) With respect to each Employee Welfare Benefit Plan or
Employee Pension Benefit Plan that the Company or any of its
Subsidiaries maintains or ever has maintained, or to which any of
them contributes, ever has contributed or ever has been required
to contribute:
(i) no such Employee Pension Benefit Plan (other than
any Multiemployer Plan) has been completely or partially
terminated (other than any termination that would not have a
Company Material Adverse Effect), no reportable event (as
defined in Section 4043 of ERISA) as to which notices would
be required to be filed with the Pension Benefit Guaranty
Corporation has occurred but has not yet been so reported
(but excluding any failure to report which would not have a
Company Material Adverse Effect), and no proceeding by the
Pension Benefit Guaranty Corporation to terminate such
Employee Pension Benefit Plan (other than any Multiemployer
Plan) has been instituted; and
(ii) there have been no non-exempt prohibited
transactions (as defined in Section 406 of ERISA and Section
4975 of the Code) with respect to such plan, no fiduciary
has any liability for breach of fiduciary duty or any other
failure to act or comply in connection with the
administration or investment of the assets of such plan, and
no action, suit, proceeding, hearing or, to the Company's
knowledge, investigation with respect to the administration
or the investment of the assets of such plan (other than
routine claims for benefits) is pending or, to the Company's
knowledge, threatened, but excluding, from each of the
foregoing, events or circumstances that would not have a
Company Material Adverse Effect.
(c) Neither the Company nor any of its Subsidiaries
contributes to or has any liability (including withdrawal
liability) under any Multiemployer Plan, which liability would
have a Company Material Adverse Effect. None of the transactions
contemplated by this Agreement will trigger any withdrawal or
termination liability under any Multiemployer Plan set forth in
the Company Disclosure Letter, which liability would have a
Company Material Adverse Effect.
(d) Other than pursuant to a Company Plan, neither the
Company nor any of its Subsidiaries has any obligation to provide
medical, health, life insurance or other welfare benefits for
current or future retired or terminated employees, their spouses
or their dependents (other than in accordance with Section 4980B
of the Code), except for obligations that would not have a
Company Material Adverse Effect.
(e) No Company Plan contains any provision that would
prohibit the transactions contemplated by this Agreement, would
give rise to any severance, termination or other payments as a
result of the transactions contemplated by this Agreement (alone
or together with the occurrence of any other event), or would
cause any payment, acceleration or increase in benefits provided
by any Company Plan as a result of the transactions contemplated
by this Agreement (alone or together with the occurrence of any
other event), but excluding from this paragraph (e) any payment,
acceleration or increase which is not material.
(f) Any individual who is classified as a non-employee for
purposes of receiving benefits (such as an independent
contractor, leased employee, consultant or special consultant)
regardless of treatment for other purposes, is not
unintentionally eligible to participate in any Company Plan,
except where such treatment would not have a Company Material
Adverse Effect.
Section 4.12 Environmental Matters.
(a) With respect to the current and former operations and
properties of the Company and its Subsidiaries, and in each case
except for matters which, individually or in the aggregate, would
not have a Company Material Adverse Effect, (i) the Company and
its Subsidiaries have complied in all respects with all
Environmental Laws (as defined in Section 4.12(b)) in connection
with the ownership, use, maintenance and operation of all real
property owned or leased by them and otherwise in connection with
their operations, (ii) neither the Company nor any of its
Subsidiaries has any liability, whether contingent or otherwise,
under any Environmental Law, (iii) no notices of any violation or
alleged violation of, non-compliance or alleged noncompliance
with or any liability under, any Environmental Law have been
received by the Company or any of its Subsidiaries since January
1, 1994, (iv) there are no administrative, civil or criminal
writs, injunctions, decrees, orders or judgments outstanding or
any administrative, civil or criminal actions, suits, claims,
proceedings or, to the Company's knowledge, investigations
pending or, to the Company's knowledge, threatened, relating to
compliance with or liability under any Environmental Law
affecting the Company or any of its Subsidiaries and (v) to the
knowledge of the Company, no material changes or alterations in
the practices or operations of the Company or any of its
Subsidiaries as presently conducted are anticipated to be
required in the future in order to permit the Company and its
Subsidiaries to continue to comply in all material respects with
all applicable Environmental Laws.
(b) The term "Environmental Law" as used in this Agreement
means any law, rule, regulation, permit, order, writ, injunction,
judgment or decree with respect to the preservation of the
environment or the promotion of worker health and safety,
including any law, rule, regulation, permit, order, writ,
injunction, judgment or decree relating to Hazardous Materials
(as defined in Section 4.12(c)), drinking water, surface water,
groundwater, wetlands, landfills, open dumps, storage tanks,
underground storage tanks, solid waste, waste water, storm water
run-off, noises, odors, air emissions, waste emissions or wells.
Without limiting the generality of the foregoing, the term will
encompass each of the following statutes and the regulations
promulgated thereunder, and any similar applicable state, local
or foreign law, rule or regulation, each as amended (i) the
Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, (ii) the Solid Waste Disposal Act, (iii) the
Hazardous Materials Transportation Act, (iv) the Toxic Substances
Control Act, (v) the Clean Water Act, (vi) the Clean Air Act,
(vii) the Safe Drinking Water Act, (viii) the National
Environmental Policy Act of 1969, (ix) the Superfund Amendments
and Reauthorization Act of 1986, (x) Title III of the Superfund
Amendments and Reauthorization Act, (xi) the Federal Insecticide,
Fungicide and Rodenticide Act and (xii) the provisions of the
Occupational Safety and Health Act of 1970 relating to the
handling of and exposure to Hazardous Materials and similar
substances.
(c) The term "Hazardous Materials" as used in this Agreement
means each and every element, compound, chemical mixture,
contaminant, pollutant, material, waste or other substance that
is defined, determined or identified as hazardous or toxic under
any Environmental Law or the spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, storing, escaping,
leaching, dumping, discarding, burying, abandoning or disposing
into the environment of which is prohibited under any
Environmental Law. Without limiting the generality of the
foregoing, the term will include (i) "hazardous substances" as
defined in the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, the Superfund Amendments
and Reauthorization Act of 1986, or Title III of the Superfund
Amendments and Reauthorization Act and regulations promulgated
thereunder, each as amended, (ii) "hazardous waste" as defined in
the Solid Waste Disposal Act and regulations promulgated
thereunder, each as amended, (iii) "hazardous materials" as
defined in the Hazardous Materials Transportation Act and the
regulations promulgated thereunder, each as amended, (iv)
"chemical substance or mixture" as defined in the Toxic
Substances Control Act and regulation promulgated thereunder,
each as amended, (v) petroleum and petroleum products and
byproducts and (vi) asbestos.
Section 4.13 Title. The Company and its Subsidiaries now
have and at the Effective Time will have good and, in the case of real
property, marketable title to all the properties and assets purported to
be owned by them, free and clear of all Liens except (a) Liens for
current Taxes or assessments not delinquent, (b) builder, mechanic,
warehousemen, materialmen, contractor, workmen, repairmen, carrier or
other similar Liens arising and continuing in the ordinary course of
business for obligations that are not delinquent, (c) the rights, if
any, of vendors having possession of tooling of the Company and its
Subsidiaries, (d) liens arising from the receipt by the Company and its
Subsidiaries of progress payments by the United States government, (e)
Liens securing rental payments under capital lease arrangements and (f)
other Liens which, individually or in the aggregate, would not have a
Company Material Adverse Effect (collectively, "Permitted Liens").
Section 4.14 Intellectual Property Matters.
(a) The Company and its Subsidiaries own or have the right
to use pursuant to valid license, sublicense, agreement or
permission all items of Intellectual Property (as defined in
Section 4.14(b)) necessary for their operations as presently
conducted and as presently proposed to be conducted, except where
the failure to have such rights, individually or in the
aggregate, would not have a Company Material Adverse Effect.
Neither the Company nor any of its Subsidiaries has received any
charge, complaint, claim, demand or notice alleging any
interference, infringement, misappropriation or violation of the
Intellectual Property rights of any third party, except for
interferences, infringements, misappropriations and violations
which, individually or in the aggregate, would not have a Company
Material Adverse Effect. To the Company's knowledge, no third
party has interfered with, infringed upon, misappropriated or
otherwise come into conflict with any Intellectual Property
rights of the Company or any of its Subsidiaries, except for
misappropriations and violations which, individually or in the
aggregate, would not have a Company Material Adverse Effect.
(b) The term "Intellectual Property" as used in this
Agreement means, collectively, patents, patent disclosures,
trademarks, service marks, trade dress, logos, trade names,
copyrights and mask works, and all registrations, applications,
reissuances, continuations, continuations-in-part, revisions,
extensions, reexaminations and associated good will with respect
to each of the foregoing, computer software (including source and
object codes), computer programs, computer data bases and related
documentation and materials, data, documentation, trade secrets,
confidential business information (including ideas, formulas,
compositions, inventions, know-how, manufacturing and production
processes and techniques, research and development information,
drawings, designs, plans, proposals and technical data,
financial, marketing and business data and pricing and cost
information) and other intellectual property rights (in whatever
form or medium).
Section 4.15 Year 2000 Compliance Matters. Except for
matters which, individually and in the aggregate, would not have a
Company Material Adverse Effect, all computer systems and computer
software used by the Company and its Subsidiaries and all computer
systems and computer software incorporated in products manufactured by
the Company and its Subsidiaries (a) recognize, or are being adapted so
that, prior to December 31, 1999, they will recognize, the advent of the
year 2000 without any material adverse change in operation associated
with such recognition, (b) can correctly recognize and manipulate, or
are being adapted so that, prior to December 31, 1999, they can
recognize and manipulate, date information relating to dates prior to,
on and after January 1, 2000 and (c) to the Company's knowledge, can
suitably interact with other year 2000 compliant computer systems and
computer software in a way that does not compromise their ability to
correctly recognize the advent of the year 2000 or to recognize and
manipulate date information relating to dates prior to, on or after
January 1, 2000. The costs of the adaptations to computer systems and
computer software being made by the Company and its Subsidiaries in
order to achieve year 2000 compliance are not presently expected to have
a Company Material Adverse Effect.
Section 4.16 Labor Matters. There are no controversies
pending or, to the Company's knowledge, threatened between the Company
or any of its Subsidiaries and any of their current or former employees
or any labor or other collective bargaining unit representing any such
employee that could reasonably be expected to result in a material labor
strike, dispute, slow-down or work stoppage or otherwise which,
individually or in the aggregate, would have a Company Material Adverse
Effect. The Company is not aware of any organizational effort presently
being made or threatened by or on behalf of any labor union with respect
to employees of the Company or any of its Subsidiaries. To the Company's
knowledge, as of the date of this Agreement no executive, key employee
or group of employees of the Company or any of its Subsidiaries has any
plan to terminate employment with the Company and its Subsidiaries,
which termination would have a Company Material Adverse Effect.
Section 4.17 State Takeover Laws. The resolutions adopted by
the Board of Directors of the Company approving this Agreement are
sufficient to cause the provisions of Section 203 of the Delaware Act to
be inapplicable to this Agreement, the Merger and the other transactions
contemplated hereby. To the Company's knowledge, no other fair price,
moratorium, control share acquisition or other form of antitakeover
statute, rule or regulation of any state or jurisdiction applies or
purports to apply to this Agreement, the Merger or the other
transactions contemplated hereby.
Section 4.18 Parent Common Stock Ownership. Neither the
Company nor any of its Subsidiaries owns any shares of Parent Common
Stock or any securities exercisable or exchangeable for or convertible
into shares of Parent Common Stock.
Section 4.19 Accounting and Tax Matters. Neither the Company
nor any of its Subsidiaries has taken or agreed to take any action that
would prevent accounting for the Merger in accordance with the pooling
of interests method of accounting under the requirements of APB No. 16
or prevent the Merger from constituting a reorganization within the
meaning of Section 368(a) of the Code.
Section 4.20 Brokers' Fees. Except for the fees and expenses
payable by the Company to Merrill Lynch & Co. and Goldman Sachs & Co.,
neither the Company nor any of its Subsidiaries has any liability or
obligation to pay any fees or commissions to any financial advisor,
broker, finder or agent with respect to the transactions contemplated by
this Agreement. The Company has delivered to the Parent Corporation a
correct and complete copy of the engagement letter between the Company
and Merrill Lynch & Co. relating to the transactions contemplated by
this Agreement. The Company Disclosure Letter sets forth the fees
payable to Merrill Lynch & Co. and Goldman Sachs & Co. in connection
with this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PARENT CORPORATION
The Parent Corporation represents and warrants to the
Company that except as disclosed in the reports, schedules, forms,
statements and other documents filed by the Parent Corporation with the
SEC and publicly available prior to the date of this Agreement, as
disclosed in the draft of the Quarterly Statement on Form 10-Q for the
Parent Corporation's fiscal quarter ended March 31, 1999 (the "Parent
Corporation Form 10-Q") delivered to the Parent Corporation prior to the
date of this Agreement or as disclosed in the letter dated as of the
date of this Agreement from the Parent Corporation to the Company (the
"Parent Corporation Disclosure Letter"):
Section 5.1 Organization. The Parent Corporation and each of
its Subsidiaries is a corporation duly organized and validly existing
under the laws of the jurisdiction of its incorporation and has all
requisite power and authority to own, lease and operate its properties
and to carry on its business as presently being conducted. The Parent
Corporation and each of its Subsidiaries is in good standing under the
laws of the jurisdiction of its incorporation and is duly qualified to
conduct business as a foreign corporation in each other jurisdiction
where such qualification is required, except where the failure to be so
qualified and in good standing would not have a material adverse effect
on the business, financial condition, operations or results of
operations of the Parent Corporation and its Subsidiaries taken as a
whole or the ability of the Parent Corporation to consummate the Merger
and to perform its obligations under this Agreement (a "Parent
Corporation Material Adverse Effect"). The Parent Corporation has
delivered to the Company correct and complete copies of its charter and
bylaws, as presently in effect, and will make available to the Company
after the date of this Agreement correct and complete copies of the
charter and bylaws, as presently in effect, of each of its Subsidiaries.
Section 5.2 Authorization of Transaction; Enforceability.
Subject to obtaining the Parent Corporation Stockholder Approval, each
of the Parent Corporation and the Acquisition Corporation has full
corporate power and authority and has taken all requisite corporate
action to enable it to execute and deliver this Agreement, to consummate
the Merger and the other transactions contemplated hereby and to perform
its obligations hereunder. The Parent Corporation has executed a written
consent in lieu of a special meeting of the sole stockholder of the
Acquisition Corporation in accordance with Section 228 of the Delaware
Act adopting and approving this Agreement. The Board of Directors of the
Parent Corporation, at a meeting thereof duly called and held, has duly
adopted resolutions by the requisite majority vote approving this
Agreement, the Merger and the other transactions contemplated hereby,
determining that the terms and conditions of this Agreement, the Merger
and the other transactions contemplated hereby are fair to and in the
best interests of the Parent Corporation and its stockholders, approving
and setting forth the Charter Amendment and declaring its advisability,
and recommending that the Parent Corporation's stockholders approve and
adopt the Charter Amendment and the issuance of the Parent Common Stock
in the Merger. The foregoing resolutions of the Board of Directors of
the Company have not been modified, supplemented or rescinded and remain
in full force and effect as of the date of this Agreement. In connection
with its adoption of the foregoing resolutions, the Board of Directors
of the Parent Corporation received the written opinion of Bear Stearns &
Co. Inc., financial advisor to the Board of Directors of the Parent
Corporation, that the Merger is fair, from a financial point of view, to
the Parent Corporation and its stockholders. The foregoing opinion has
not been modified, supplemented or rescinded prior to the date of this
Agreement. The Parent Corporation will deliver to the Company promptly
after the date of this Agreement correct and complete copies of the
foregoing resolutions and opinion. This Agreement constitutes the valid
and legally binding obligation of each of the Parent Corporation and the
Acquisition Corporation, enforceable against the Parent Corporation and
the Acquisition Corporation in accordance with its terms and conditions.
Section 5.3 Noncontravention; Consents. Except for (a)
certain filings and approvals necessary to comply with the applicable
requirements of the Securities Act, the Securities Exchange Act and the
"blue sky" laws and regulations of various states, (b) the approval by
the New York Stock Exchange of the listing, upon official notice of
issuance, of the shares of Parent Common Stock proposed to be issued
pursuant to the Merger, (c) the filing of a Notification and Report Form
and related material with the Federal Trade Commission and the Antitrust
Division of the United States Department of Justice under the HSR Act,
(d) certain filings and approvals which may be necessary to comply with
the rules and regulations of the Federal Aviation Administration and (e)
the filing of a certificate of merger pursuant to the Delaware Act,
neither the execution and delivery of this Agreement by the Parent
Corporation or the Acquisition Corporation, nor the consummation by the
Parent Corporation or the Acquisition Corporation of the transactions
contemplated hereby, will constitute a violation of, be in conflict
with, constitute or create (with or without notice or lapse of time or
both) a default under, give rise to any right of termination,
cancellation, amendment or acceleration with respect to, or result in
the creation or imposition of any Lien upon any property of the Parent
Corporation or any of its Subsidiaries pursuant to (i) the charter or
bylaws of the Parent Corporation or any of its Subsidiaries, (ii) any
constitutional provision, law, rule, regulation, permit, order, writ,
injunction, judgment or decree to which the Parent Corporation or any of
its Subsidiaries is subject or (iii) any agreement or commitment to
which the Parent Corporation or any of its Subsidiaries is a party or by
which the Parent Corporation, any of its Subsidiaries or any of their
respective properties is bound or subject, except, in the case of
clauses (ii) and (iii) above, for such matters which, individually or in
the aggregate, would not have a Parent Corporation Material Adverse
Effect.
Section 5.4 Capitalization.
(a) As of the date of this Agreement, the authorized capital
stock of the Parent Corporation consists of 250,000,000 shares
divided into 200,000,000 shares of Parent Common Stock and
50,000,000 shares of Preferred Stock, par value $1.00 per share.
As of May 11, 1999, 127,569,456 shares of Parent Common Stock
were issued and outstanding, 41,205,216 shares were held by the
Parent Corporation as treasury shares and 4,926,641 shares were
reserved for issuance upon the exercise of options or other
rights to purchase or otherwise acquire shares of Parent Common
Stock granted by the Parent Corporation to current and former
directors, officers and employees of the Parent Corporation and
its Subsidiaries. No shares of the Parent Corporation's Preferred
Stock are issued or outstanding. All of the issued and
outstanding shares of capital stock of the Parent Corporation
have been duly authorized and are validly issued, fully paid and
nonassessable.
(b) Other than options and other rights to purchase or
otherwise acquire an aggregate of 4,926,641 shares of Parent
Common Stock granted by the Parent Corporation to current and
former directors, officers and employees of the Parent
Corporation and its Subsidiaries pursuant to various stock
option, restricted stock and similar plans, programs and
arrangements of the Parent Corporation and its Subsidiaries,
there are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange
rights or other contracts or commitments that could require the
Parent Corporation or any of its Subsidiaries to issue, sell or
otherwise cause to become outstanding any of its capital stock.
There are no outstanding stock appreciation, phantom stock,
profit participation or similar rights with respect to the Parent
Corporation or any of its Subsidiaries.
(c) Neither the Parent Corporation nor any of its
Subsidiaries is a party to any voting trust, proxy or other
agreement or understanding with respect to the voting of any
capital stock of the Parent Corporation or any of its
Subsidiaries.
(d) All of the outstanding shares of the capital stock of
each of the Parent Corporation's Subsidiaries have been validly
issued, are fully paid and nonassessable and are owned by the
Parent Corporation or one of its Subsidiaries, free and clear of
any Lien. Except for its Subsidiaries set forth in the Parent
Corporation Disclosure Letter, the Company does not control
directly or indirectly or have any direct or indirect equity
participation in any corporation, partnership, limited liability
company, joint venture or other entity. The Acquisition
Corporation has been formed solely for purposes of the
transactions contemplated by this Agreement and has not conducted
any business or engaged in any activities prior to the date of
this Agreement.
Section 5.5 Parent Corporation Reports; Joint Proxy and
Registration Statements.
(a) The Parent Corporation has since January 1, 1994 filed
all reports, forms, statements and other documents (collectively,
together with all financial statements included or incorporated
by reference therein and the Parent Corporation Form 10-Q, the
"Parent Corporation SEC Documents") required to be filed by the
Parent Corporation with the SEC pursuant to the provisions of the
Securities Act or the Securities Exchange Act. Each of the Parent
Corporation SEC Documents, as of its filing date, complied in all
material respects with the applicable requirements of the
Securities Act and the Securities Exchange Act. None of the
Parent Corporation SEC Documents, as of their respective filing
dates, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. No
Subsidiary of the Parent Corporation is required to file any
reports, forms, statements or other documents pursuant to the
Securities Act of the Securities Exchange Act.
(b) Each of the consolidated financial statements (including
related notes) included in the Parent Corporation SEC Documents
presented fairly in all material respects the consolidated
financial condition, cash flows and results of operations of the
Parent Corporation and its Subsidiaries for the respective
periods or as of the respective dates set forth therein. Each of
the financial statements (including related notes) included in
the Parent Corporation SEC Documents has been prepared in
accordance with United States generally accepted accounting
principles, consistently applied during the periods involved,
except (i) as noted therein, (ii) to the extent required by
changes in United States generally accepted accounting principles
or (iii) in the case of unaudited interim financial statements,
normal recurring year-end audit adjustments.
(c) The Parent Corporation has delivered to the Company
correct and complete copies of any proposed or contemplated
amendments or modifications to the Parent Corporation SEC
Documents (including any exhibit documents included therein) that
have not yet been filed by the Parent Corporation with the SEC.
The Parent Corporation has delivered to the Company a correct and
complete copy of the most recent draft of the Parent Corporation
Form 10-Q.
(d) The Joint Proxy Statement and the Registration Statement
will comply in all material respects with the applicable
requirements of the Securities Act and the Securities Exchange
Act and will not, at the time the definitive Joint Proxy
Statement is filed with the SEC and mailed to the stockholders of
the Parent Corporation and at the time the Registration Statement
is declared effective by the SEC, contain any untrue statement of
material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading. No representation or warranty is made
herein by the Parent Corporation with respect to any information
supplied by the Company for inclusion in the Joint Proxy
Statement or the Registration Statement. For purposes of this
Section 5.5(d), all information included in the Joint Proxy
Statement and the Registration Statement concerning or related to
the Company and its Subsidiaries will be deemed to have been
supplied by the Company.
Section 5.6 No Undisclosed Liabilities. The Parent
Corporation and its Subsidiaries have no liabilities or obligations
(whether absolute or contingent, liquidated or unliquidated, or due or
to become due) except for (a) liabilities and obligations reflected in
the Parent Corporation SEC Documents and (b)other liabilities and
obligations which, individually or in the aggregate, would not have a
Parent Corporation Material Adverse Effect.
Section 5.7 Absence of Material Adverse Change. Since
December 31, 1998, there has not occurred any event, change, effect or
development which, individually or in the aggregate, would have a Parent
Corporation Material Adverse Effect.
Section 5.8 Litigation and Legal Compliance.
(a) The Parent Corporation Disclosure Letter sets forth each
instance in which the Parent Corporation or any of its
Subsidiaries is (i) subject to any material unsatisfied judgment
order, decree, stipulation, injunction or charge or (ii) a party
to or, to the Parent Corporation's knowledge, threatened to be
made a party to any material charge, complaint, action, suit,
proceeding, hearing or, to the Parent Corporation's knowledge,
investigation of or in any court or quasi-judicial or
administrative agency of any federal, state, local or foreign
jurisdiction, except for judgments, orders, decrees,
stipulations, injunctions, charges, complaints, actions, suits,
proceedings, hearings and investigations which, individually or
in the aggregate, would not have a Parent Corporation Material
Adverse Effect. There are no judicial or administrative actions,
proceedings or, to the Parent Corporation's knowledge,
investigations pending or, to the Parent Corporation's knowledge,
threatened that question the validity of this Agreement or any
action taken or to be taken by the Parent Corporation in
connection with this Agreement which would have a Parent
Corporation Material Adverse Effect.
(b) Except for instances of noncompliance which,
individually or in the aggregate, would not have a Parent
Corporation Material Adverse Effect, the Parent Corporation and
its Subsidiaries have complied with each constitutional
provision, law, rule, regulation, permit, order, writ,
injunction, judgment or decree to which the Parent Corporation or
any of its Subsidiaries is subject.
Section 5.9 Contract Matters.
(a) Neither the Parent Corporation nor any of its
Subsidiaries is in default or violation of (and no event has
occurred which with notice or the lapse of time or both would
constitute a default or violation) of any term, condition or
provision of any note, mortgage, indenture, loan agreement, other
evidence of indebtedness, guarantee, license, lease, agreement or
other contract, instrument or contractual obligation to which the
Parent Corporation or any of its Subsidiaries is a party or by
which any of their respective assets is bound or subject, except
for defaults and violations which, individually or in the
aggregate, would not have a Parent Corporation Material Adverse
Effect.
Section 5.10 Tax Matters.
(a) The Parent Corporation and each of its Subsidiaries have
timely filed all required Tax Returns and all such Tax Returns
are accurate and complete in all respects, except to the extent
any such failure to file or any such inaccuracy in any filed Tax
Return, individually or in the aggregate, would not have a Parent
Corporation Material Adverse Effect. All Taxes owed by the Parent
Corporation or any of its Subsidiaries (whether or not shown on
any Tax Return) have been paid or adequately reserved for in
accordance with generally accepted accounting principles in the
financial statements of the Parent Corporation, except to the
extent any such failure to pay or reserve, individually or in the
aggregate, would not have a Parent Corporation Material Adverse
Effect.
(b) The most recent financial statements contained in the
Parent Corporation SEC Documents reflect adequate reserves in
accordance with generally accepted accounting principles for all
Taxes payable by the Parent Corporation and its Subsidiaries for
all Tax periods and portions thereof through the date of such
financial statements, except to the extent that any failure to so
reserve, individually or in the aggregate, would not have a
Parent Corporation Material Adverse Effect. No deficiency with
respect to Taxes has been proposed, asserted or assessed against
the Parent Corporation or any of its Subsidiaries and no requests
for waivers of the time to assess any such Taxes are pending,
except to the extent any such deficiency or request for waiver,
individually or in the aggregate, would not have a Parent
Corporation Material Adverse Effect.
(c) The federal income Tax Returns of the Parent Corporation
and each of its Subsidiaries consolidated in such Tax Returns
have been examined by and settled with the Internal Revenue
Service for all Tax years through 1989.
(d) Except for Liens for current Taxes not yet due and
payable or which are being contested in good faith, there is no
Lien affecting any of the assets or properties of the Parent
Corporation or any of its Subsidiaries that arose in connection
with any failure or alleged failure to pay any Tax, except for
Liens which, individually or in the aggregate, would not have a
Parent Corporation Material Adverse Effect.
(e) Neither the Parent Corporation nor any of its
Subsidiaries is a party to any Tax allocation or Tax sharing
agreement.
Section 5.11 Employee Benefit Matters.
(a) The Parent Corporation Disclosure Letter lists each
plan, program or arrangement constituting a material Employee
Welfare Benefit Plan or a material Employee Pension Benefit Plan
and each other material employee benefit plan, program or
arrangement or employment practice maintained by the Parent
Corporation or any of its Subsidiaries with respect to any of its
current or former employees or to which the Parent Corporation or
any of the Parent Corporation Subsidiaries contributes or is
required to contribute with respect to any of its current or
former employees (collectively, the "Parent Corporation Plans").
With respect to each Parent Corporation Plan:
(i) such Parent Corporation Plan (and each related
trust, insurance contract or fund) has been administered in
a manner consistent in all respects with its written terms
and complies in form and operation with the applicable
requirements of ERISA, the Code and other applicable laws,
except for failures of administration or compliance that
would not have a Parent Corporation Material Adverse Effect;
(ii) all required reports and descriptions (including
Form 5500 Annual Reports, Summary Annual Reports, PBGC-1's
and Summary Plan Descriptions) have been filed or
distributed appropriately with respect to such Parent
Corporation Plan, except for failures of filing or
distribution that would not have a Parent Corporation
Material Adverse Effect;
(iii) the requirements of Part 6 of Subtitle B of Title
I of ERISA and Section 4980B of the Code have been met with
respect to each such Parent Corporation Plan which is an
Employee Welfare Benefit Plan, except for failures that
would not have a Parent Corporation Material Adverse Effect;
(iv) all material contributions, premiums or other
payments (including all employer contributions and employee
salary reduction contributions) that are due have been paid
to each such Parent Corporation Plan;
(v) each such Parent Corporation Plan which is an
Employee Pension Benefit Plan intended to be a "qualified
plan" under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue
Service and no event has occurred which could reasonably be
expected to cause the loss or denial of such qualification
under Section 401(a) of the Code;
(vi) the Parent Corporation has made available or prior
to the Closing Date will make available to the Company, upon
its request, correct and complete copies of the plan
documents and summary plan descriptions, the most recent
determination letter received from the Internal Revenue
Service, the most recent Form 5500 Annual Report, the most
recent actuarial report, the most recent audited financial
statements, and all related trust agreements, insurance
contracts and other funding agreements that implement such
Parent Corporation Plan (but excluding the failure to make
available any such document which is not material). The
valuation summaries provided by the Parent Corporation to
the Company reasonably represent the assets and liabilities
attributable to the Parent Corporation Plans calculated in
accordance with the Parent Corporation's past practices, but
excluding any failure that would not have a Parent
Corporation Material Adverse Effect;
(vii) no Parent Corporation Plan which is an Employee
Pension Benefit Plan has been amended in any manner which
would require the posting of security under Section
401(a)(29) of the Code or Section 307 of ERISA; and
(viii) neither the Parent Corporation nor any of its
Subsidiaries has communicated to any employee (excluding
internal memoranda to management) any plan or commitment,
whether or not legally binding, to create any additional
material employee benefit plan or to materially modify or
change any Parent Corporation Plan affecting any employee or
terminated employee of the Parent Corporation or any of its
Subsidiaries, but excluding any such action that does not
materially increase the liability of the Parent Corporation
or its Subsidiaries.
(b) With respect to each Employee Welfare Benefit Plan or
Employee Pension Benefit Plan that the Parent Corporation or any
of its Subsidiaries maintains or ever has maintained, or to which
any of them contributes, ever has contributed or ever has been
required to contribute:
(i) no such Employee Pension Benefit Plan (other
than any Multiemployer Plan) has been completely or
partially terminated (other than any termination that
would not have a Parent Corporation Material Adverse
Effect, no reportable event (as defined in Section 4043
of ERISA) as to which notices would be required to be
filed with the Pension Benefit Guaranty Corporation has
occurred but has not yet been so reported (excluding
any such failure to report which would not have a
Parent Corporation Material Adverse Effect), and no
proceeding by the Pension Benefit Guaranty Corporation
to terminate such Employee Pension Benefit Plan (other
than any Multiemployer Plan) has been instituted; and
(ii) there have been no non-exempt prohibited
transactions (as defined in Section 406 of ERISA and
Section 4975 of the Code) with respect to such plan, no
fiduciary has any liability for breach of fiduciary
duty or any other failure to act or comply in
connection with the administration or investment of the
assets of such plan, and no action, suit, proceeding,
hearing or, to the Parent Corporation's knowledge,
investigation with respect to the administration or the
investment of the assets of such plan (other than
routine claims for benefits) is pending or, to the
Parent Corporation's knowledge, threatened, but
excluding, from each of the foregoing, events or
circumstances that would not have a Parent Corporation
Material Adverse Effect.
(c) None of the transactions contemplated by this Agreement
will trigger any withdrawal or termination liability under any
Multiemployer Plan set forth in the Parent Corporation Disclosure
Letter, which liability would have a Parent Corporation Material
Adverse Effect.
(d) Other than pursuant to a Parent Corporation Plan,
neither the Parent Corporation nor any of its Subsidiaries has
any obligation to provide medical, health, life insurance or
other welfare benefits for current or future retired or
terminated employees, their spouses or their dependents (other
than in accordance with Section 4980B of the Code), except for
obligations that would not have a Parent Corporation Material
Adverse Effect.
(e) No Parent Corporation Plan contains any provision that
would prohibit the transactions contemplated by this Agreement,
would give rise to any severance, termination or other payments
as a result of the transactions contemplated by this Agreement
(alone or together with the occurrence of any other event), or
would cause any payment, acceleration or increase in benefits
provided by any Parent Corporation Plan as a result of the
transactions contemplated by this Agreement (alone or together
with the occurrence of any other event), but excluding from this
paragraph (e) any payment, acceleration or increase which is not
material.
(f) Any individual who is classified as a non-employee for
purposes of receiving benefits (such as an independent
contractor, leased employee, consultant or special consultant)
regardless of treatment for other purposes, is not
unintentionally eligible to participate in any Parent Corporation
Plan, except where such treatment would not have a Parent
Corporation Material Adverse Effect.
Section 5.12 Environmental Matters. With respect to the
current and former operations and properties of the Parent Corporation
and its Subsidiaries, and in each case except for matters which,
individually or in the aggregate, would not have a Parent Corporation
Material Adverse Effect, (a) the Parent Corporation and its Subsidiaries
have complied in all respects with all Environmental Laws in connection
with the ownership, use, maintenance and operation of all real property
owned or leased by them and otherwise in connection with their
operations, (b) neither the Parent Corporation nor any of its
Subsidiaries has any liability, whether contingent or otherwise, under
any Environmental Law, (c) no notices of any violation or alleged
violation of, non-compliance or alleged noncompliance with or any
liability under, any Environmental Law have been received by the Parent
Corporation or any of its Subsidiaries since January 1, 1994, (d) there
are no administrative, civil or criminal writs, injunctions, decrees,
orders or judgments outstanding or any administrative, civil or criminal
actions, suits, claims, proceedings or, to the Parent Corporation's
knowledge, investigations pending or, to the Parent Corporation's
knowledge, threatened, relating to compliance with or liability under
any Environmental Law affecting the Parent Corporation or any of its
Subsidiaries and (e) to the knowledge of the Parent Corporation, no
material changes or alterations in the practices or operations of the
Parent Corporation or any of its Subsidiaries as presently conducted are
anticipated to be required in the future in order to permit the Parent
Corporation and its Subsidiaries to continue to comply in all material
respects with all applicable Environmental Laws.
Section 5.13 Title. The Parent Corporation and its
Subsidiaries now have and at the Effective Time will have good and, in
the case of real property, marketable title to all the properties and
assets purported to be owned by them, free and clear of all Liens except
Permitted Liens.
Section 5.14 Intellectual Property Matters. The Parent
Corporation and its Subsidiaries own or have the right to use pursuant
to valid license, sublicense, agreement or permission all items of
Intellectual Property necessary for their operations as presently
conducted and as presently proposed to be conducted, except where the
failure to have such rights, individually or in the aggregate, would not
have a Parent Corporation Material Adverse Effect. Neither the Parent
Corporation nor any of its Subsidiaries has received any charge,
complaint, claim, demand or notice alleging any interference,
infringement, misappropriation or violation of the Intellectual Property
rights of any third party, except for interferences, infringements,
misappropriations and violations which, individually or in the
aggregate, would not have a Parent Corporation Material Adverse Effect.
To the Parent Corporation's knowledge, no third party has interfered
with, infringed upon, misappropriated or otherwise come into conflict
with any Intellectual Property rights of the Parent Corporation or any
of its Subsidiaries, except for misappropriations and violations which,
individually or in the aggregate, would not have a Parent Corporation
Material Adverse Effect..
Section 5.15 Year 2000 Compliance Matters. Except for
matters which, individually and in the aggregate, would not have a
Parent Corporation Material Adverse Effect, all computer systems and
computer software used by the Parent Corporation and its Subsidiaries
and all computer systems and computer software incorporated in products
manufactured by the Parent Corporation and its Subsidiaries (a)
recognize, or are being adapted so that, prior to December 31, 1999,
they will recognize, the advent of the year 2000 without any material
adverse change in operation associated with such recognition, (b) can
correctly recognize and manipulate, or are being adapted so that, prior
to December 31, 1999, they can recognize and manipulate, date
information relating to dates prior to, on and after January 1, 2000 and
(c) to the Parent Corporation's knowledge, can suitably interact with
other year 2000 compliant computer systems and computer software in a
way that does not compromise their ability to correctly recognize the
advent of the year 2000 or to recognize and manipulate date information
relating to dates prior to, on or after January 1, 2000. The costs of
the adaptations to computer systems and computer software being made by
the Parent Corporation and its Subsidiaries in order to achieve year
2000 compliance are not presently expected to have a Parent Corporation
Material Adverse Effect.
Section 5.16 Labor Matters. There are no controversies
pending or, to the Parent Corporation's knowledge, threatened between
the Parent Corporation or any of its Subsidiaries and any of their
current or former employees or any labor or other collective bargaining
unit representing any such employee that could reasonably be expected to
result in a material labor strike, dispute, slow-down or work stoppage
or otherwise which, individually or in the aggregate, would have a
Parent Corporation Material Adverse Effect. The Parent Corporation is
not aware of any organizational effort presently being made or
threatened by or on behalf of any labor union with respect to employees
of the Parent Corporation or any of its Subsidiaries. To the Parent
Corporation's knowledge, as of the date of this Agreement no executive,
key employee or group of employees of the Parent Corporation or any of
its Subsidiaries has any plan to terminate employment with the Parent
Corporation and its Subsidiaries, which termination would have a Parent
Corporation Material Adverse Effect.
Section 5.17 Company Common Stock Ownership. Neither the
Parent Corporation nor any of its Subsidiaries owns any shares of
Company Common Stock or any securities exercisable or exchangeable for
or convertible into shares of Company Common Stock.
Section 5.18 Accounting and Tax Matters. Neither the Parent
Corporation nor any of its Subsidiaries has taken or agreed to take any
action that would prevent accounting for the Merger in accordance with
the pooling of interests method of accounting under the requirements of
APB No. 16 or prevent the Merger from constituting a reorganization
within the meaning of Section 368(a) of the Code.
ARTICLE 6
COVENANTS
Section 6.1 General. Each of the parties will use its
respective best efforts to take all action and to do all things
necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement.
Section 6.2 Notices and Consents. Each of the parties prior
to the Closing Date will give all notices to third parties and
governmental entities and will use its respective best efforts to obtain
all third party and governmental consents and approvals that are
required in connection with the transactions contemplated by this
Agreement. Within five business days following the execution and
delivery of this Agreement, each of the parties will file a Notification
and Report Form and related material with the Federal Trade Commission
and the Antitrust Division of the United States Department of Justice
under the HSR Act, will use its respective best efforts to obtain early
termination of the applicable waiting period and will make all further
filings pursuant thereto that may be necessary, proper or advisable. The
foregoing will not be deemed to require the Parent Corporation to enter
into any agreement, consent decree or other commitment requiring the
Parent Corporation or any of its Subsidiaries to divest or hold separate
any assets (including any assets of the Company or any of its
Subsidiaries) or to take any other action that would have a Parent
Corporation Material Adverse Effect.
Section 6.3 Interim Conduct of the Company. Except as
expressly contemplated by this Agreement, as set forth in the Company
Disclosure Letter, as required by law or by the terms of any contract in
effect on the date of this Agreement or as the Parent Corporation may
approve, which approval will not be unreasonably withheld, from and
after the date of this Agreement through the Closing Date, the Company
will, and will cause each of its Subsidiaries to, conduct its operations
in accordance with its ordinary course of business, consistent with past
practice, and in accordance with such covenant will not, and will not
cause or permit any of its Subsidiaries to:
(a) amend its charter or bylaws or file any certificate of
designation or similar instrument with respect to any shares of
its authorized but unissued capital stock;
(b) authorize or effect any stock split or combination or
reclassification of shares of its capital stock;
(c) declare or pay any dividend or distribution with respect
to its capital stock (other than dividends payable by a
Subsidiary of the Company to the Company or another Subsidiary),
issue or authorize the issuance of any shares of its capital
stock (other than in connection with the exercise of currently
outstanding Stock Options and any other Stock Options issued in
accordance with this Agreement) or any other securities
exercisable or exchangeable for or convertible into shares of its
capital stock, or repurchase, redeem or otherwise acquire for
value any shares of its capital stock or any other securities
exercisable or exchangeable for or convertible into shares of its
capital stock;
(d) merge or consolidate with any entity;
(e) sell, lease or otherwise dispose of any of its capital
assets, including any shares of the capital stock of any of its
Subsidiaries, other than sales, leases or other dispositions of
machinery, equipment, tools, vehicles and other operating assets
no longer required in its operations made in the ordinary course
of business, consistent with past practice;
(f) liquidate, dissolve or effect any recapitalization or
reorganization in any form;
(g) acquire any interest in any business (whether by
purchase of assets, purchase of stock, merger or otherwise) or
enter into any joint venture;
(h) create, incur, assume or suffer to exist any
indebtedness for borrowed money (including capital lease
obligations), other than indebtedness existing as of the date of
this Agreement, borrowings under existing credit lines in the
ordinary course of business, consistent with past practice, and
intercompany indebtedness among the Company and its Subsidiaries
arising in the ordinary course of business, consistent with past
practice;
(i) create, incur, assume or suffer to exist any Lien (other
than Permitted Liens) affecting any of its material assets or
properties;
(j) except as required as the result of changes in United
States generally accepted accounting principles, change any of
the accounting principles or practices used by it or revalue in
any material respect any of its assets or properties, other than
write-downs of inventory or accounts receivable in the ordinary
course of business, consistent with past practice;
(k) except as required under the terms of any collective
bargaining agreement in effect as of the date of this Agreement,
grant any general or uniform increase in the rates of pay of its
employees or grant any general or uniform increase in the
benefits under any bonus or pension plan or other contract or
commitment;
(l) except for any increase required under the terms of any
collective bargaining agreement or consulting or employment
agreement in effect on the date of this Agreement, increase the
compensation payable or to become payable to officers and
salaried employees with a base salary in excess of $75,000 per
year or increase any bonus, insurance, pension or other benefit
plan, payment or arrangement made to, for or with any such
officers or salaried employees;
(m) enter into any material contract or commitment or engage
in any material transaction with any affiliated person or entity
(other than the Company or its Subsidiaries) or enter into any
material contract or commitment or engage in any material
transaction with any unaffiliated person or entity which, to the
Company's knowledge, is reasonably likely to result in a material
financial loss to the Company and its Subsidiaries taken as a
whole;
(n) make any material Tax election or settle or compromise
any material Tax liability;
(o) pay, discharge or satisfy any claims, liabilities or
obligations other than the payment, discharge and satisfaction in
the ordinary course of business of liabilities reflected or
reserved for in the consolidated financial statements of the
Company or otherwise incurred in the ordinary course of business,
consistent with past practice;
(p) settle or compromise any material pending or threatened
suit, action or proceeding; or
(q) commit to do any of the foregoing.
Section 6.4 Interim Conduct of the Parent Corporation.
Except as the Company may approve, which approval will not be
unreasonably withheld, from and after the date of this Agreement through
the Closing Date, the Parent Corporation will not declare or pay any
dividend or distribution with respect to its capital stock (other than
the declaration and payment of regular quarterly cash dividends in
amounts consistent with past practice).
Section 6.5 Preservation of Organization. Subject to
compliance with the provisions of Section 6.3, the Company will, and
will cause each of its Subsidiaries to, use its best efforts to preserve
its business organization intact in all material respects, to keep
available to the Company and its Subsidiaries after the Closing Date the
present officers and employees of the Company and its Subsidiaries as a
group and to preserve the present relationships of the Company and its
Subsidiaries with suppliers and customers and others having business
relations with the Company and its Subsidiaries, in each case so that
there will not be a Company Material Adverse Effect.
Section 6.6 Full Access. Each party will, and will cause its
Subsidiaries and its and their representatives to, afford the other
party and the representatives of the other party reasonable access, upon
reasonable notice at all reasonable times to all premises, properties,
books, records, contracts and documents of or pertaining to such party
and its Subsidiaries. Without limiting the generality of the foregoing,
the Company acknowledges and agrees that the Parent Corporation and its
representatives and agents may, with prior notice to the Company and
subject to the prior approval of the Company (which will not be
unreasonably withheld or delayed), conduct customary environmental
assessments of the real property and facilities owned or leased by the
Company and its Subsidiaries. Notwithstanding the foregoing, neither
party will be required to provide access or to disclose information
where such access or disclosure would contravene any law or contract or
would result in the waiver of any legal privilege or work-product
protection. Any information disclosed will be subject to the provisions
of the Confidentiality Agreement between the Company and the Parent
Corporation (the "Confidentiality Agreement").
Section 6.7 Notice of Developments. Each party will give
prompt written notice to the other party of any material development
affecting such party or any of its Subsidiaries. Each party will give
prompt written notice to the other of any material development affecting
the ability of the parties to consummate the transactions contemplated
by this Agreement. No such written notice of a material development will
be deemed to have amended any of the disclosures set forth in the
Company Disclosure Letter or the Parent Disclosure Letter, to have
qualified the representations and warranties contained herein and to
have cured any misrepresentation or breach of warranty that otherwise
might have existed hereunder by reason of such material development.
Section 6.8 Acquisition Proposals.
(a) The Company and each of its Subsidiaries, and each of
their respective directors, officers, employees, agents and
representatives, will immediately cease any discussions or
negotiations presently being conducted with respect to any
Acquisition Proposal (as defined in Section 6.8(g)). The Company
and its Subsidiaries will not and will use their best efforts to
cause their respective directors, officers, employees, agents and
representatives not to (i) initiate or solicit, directly or
indirectly, any inquiries with respect to, or the making of, any
Acquisition Proposal or (ii) except as expressly permitted in
accordance with Section 6.8(b), engage in any negotiations or
discussions with, furnish any information or data to or enter
into any letter of intent, agreement in principle, acquisition
agreement or similar agreement with any party relating to any
Acquisition Proposal. The Company will be responsible for any
breach of the provisions of this Section 6.8 by any director,
officer, employee, agent or representative of the Company or any
of its Subsidiaries.
(b) Notwithstanding the provisions of Section 6.8(a) but
subject to the other provisions of this Section 6.8, the Company
may engage in discussions or negotiations with, furnish
information and data to, withdraw, modify or amend its
recommendation and approval of the Merger and enter into a letter
of intent, agreement in principle, acquisition agreement or
similar agreement with any party that submits an Acquisition
Proposal to the Company after the date of this Agreement and on
or prior to June 30, 1999 (the "Applicable Period") which the
Board of Directors of the Company by majority vote determines in
its good faith judgment could reasonably be expected to result in
a Superior Acquisition Proposal (as defined in Section 6.8(h)).
(c) Nothing in this Section 6.8 will prevent the Board of
Directors of the Company from taking, and disclosing to the
Company's stockholders, a position contemplated by Rules 14d-9
and 14e-2 promulgated under the Securities Exchange Act with
respect to any publicly announced unsolicited tender offer or
otherwise from making any disclosure to its stockholders if, in
its good faith judgment based on the opinion of outside legal
counsel, failure to so disclose would be inconsistent with its
obligations under applicable law; provided that the Board of
Directors will not recommend that the stockholders of the Company
tender their shares of Company Common Stock in connection with
any such tender offer unless (i) such tender offer is determined
to be a Superior Acquisition Proposal in accordance with the
provisions of Section 6.8(h) and (ii) the Company has provided
the Parent Corporation with not less than five business days
prior written notice of any such action.
(d) The Company will within 24 hours after its receipt of
any Acquisition Proposal provide the Parent Corporation with a
copy of such Acquisition Proposal or, in connection with any
non-written Acquisition Proposal, a written statement setting
forth in reasonable detail the terms and conditions of such
Acquisition Proposal, including the identity of the acquiring
party. The Company will promptly inform the Parent Corporation of
the status and content of any discussions or negotiations
involving any Acquisition Proposal. In connection with any
determination by the Board of Directors of the Company that an
Acquisition Proposal is a Superior Acquisition Proposal, the
Company will within 24 hours after the making of such
determination provide the Parent Corporation with a written
summary in reasonable detail of the reasons for such
determination.
(e) In no event will the Company provide any non-public
information regarding the Company or any of its Subsidiaries to
any party making an Acquisition Proposal unless such party enters
into a written confidentiality agreement containing
confidentiality provisions substantially similar to those
contained in the Confidentiality Agreement. In the event the
Company enters into any confidentiality agreement with a party
pursuant to the provisions of this Section 6.8(e) that does not
include terms and conditions that are substantially similar to
those contained in the sixth paragraph of the Confidentiality
Agreement (the "Standstill Provisions"), then the Parent
Corporation and its Subsidiaries will be released from their
obligations under the Standstill Provisions to the same extent as
such party.
(f) The Company will not enter into any letter of intent,
agreement in principle, acquisition agreement or similar
agreement with respect to any Superior Acquisition Proposal
unless (i) the Company has provided the Parent Corporation with
not less than five business days prior written notice of such
action and (ii) such action is taken by the Company concurrently
with or after the termination of this Agreement in accordance
with the provisions of Section 8.1(e).
(g) The term "Acquisition Proposal" as used in this
Agreement means any bona fide proposal, whether or not in
writing, made by a party to acquire beneficial ownership (as
defined under Rule 13(d) promulgated under the Securities
Exchange Act) of all or a material portion of the assets of, or
any material equity interest in, the Company and Subsidiaries
taken as a whole pursuant to a merger, consolidation or other
business combination, sale of shares of capital stock, sale of
assets, tender or exchange offer or similar transaction involving
the Company or any of its Subsidiaries, including any single or
multi-step transaction or series of related transactions that is
structured to permit such party to acquire such beneficial
ownership.
(h) The term "Superior Acquisition Proposal" as used in this
Agreement means an unsolicited written Acquisition Proposal that
the Board of Directors of the Company by majority vote determines
in its good faith judgment after consulting with the Company's
outside financial and legal advisors (i) is reasonably capable of
being completed, taking into account all legal, financial,
regulatory and other aspects of such proposal, and (ii) presents
to the Company and its stockholders more favorable financial and
other terms, taken as a whole, than the Merger.
(i) No action taken in respect of an Acquisition Proposal or
a Superior Acquisition Proposal which is permitted by the
provisions of this Section 6.8, including any withdrawal,
modification or amendment of the recommendation and approval of
the Merger by the Board of Directors of the Company and the
public announcement thereof permitted by the provisions of this
Section 6.8, will constitute a breach of any other provision of
this Agreement.
Section 6.9 Indemnification.
(a) From and after the Closing Date, the Parent Corporation
will cause the Surviving Corporation to indemnify, defend and
hold harmless each person who is now, or has been at any time
prior to the Effective Time, an officer or director of the
Company or any of its present or former Subsidiaries or corporate
parents (collectively, the "Indemnified Parties") from and
against all losses, claims, damages and expenses (including
reasonable attorney's fees and expenses) arising out of or
relating to actions or omissions, or alleged actions or
omissions, occurring at or prior to the Effective Time to the
fullest extent permitted from time to time by the Delaware Act or
any other applicable laws as presently or hereafter in effect.
(b) Any determination required to be made with respect to
whether any Indemnified Party may be entitled to indemnification
will, if requested by such Indemnified Party, be made by
independent legal counsel selected by the Indemnified Party and
reasonably satisfactory to the Surviving Corporation.
(c) For a period of six years after the Closing Date, the
Parent Corporation will cause to be maintained in effect the
policies of directors and officers liability insurance and
fiduciary liability insurance currently maintained by the Company
with respect to claims arising from or relating to actions or
omissions, or alleged actions or omissions, occurring on or prior
to the Closing Date. The Parent Corporation may at its discretion
substitute for such policies currently maintained by the Company
directors and officers liability insurance and fiduciary
liability insurance policies with reputable and financially sound
carriers providing for no less favorable coverage.
Notwithstanding the provisions of this Section 6.9(c), the Parent
Corporation will not be obligated to make annual premium payments
with respect to such policies of insurance to the extent such
premiums exceed 200 percent of the annual premiums paid by the
Company as of the date of this Agreement. If the annual premium
costs necessary to maintain such insurance coverage exceed the
foregoing amount, the Parent Corporation will maintain the most
advantageous policies of directors and officers liability
insurance and fiduciary liability insurance obtainable for an
annual premium equal to the foregoing amount.
(d) To the fullest extent permitted from time to time under
the law of the State of Delaware, the Parent Corporation will
cause the Surviving Corporation to pay on an as-incurred basis
the reasonable fees and expenses of each Indemnified Party
(including reasonable fees and expenses of counsel) in advance of
the final disposition of any action, suit, proceeding or
investigation that is the subject of the right to
indemnification, subject to reimbursement in the event such
Indemnified Party is not entitled to indemnification.
(e) The certificate of incorporation and bylaws of the
Surviving Corporation will contain the same provisions providing
for exculpation of director and officer liability and
indemnification on the same basis as set forth in the certificate
of incorporation and bylaws of the Company in effect on the date
of this Agreement. For a period of six years after the Closing
Date, the Parent Corporation will cause the Surviving Corporation
to maintain in effect such provisions in the certificate of
incorporation and bylaws of the Surviving Corporation providing
for exculpation of director and officer liability and
indemnification to the fullest extent permitted from time to time
under the law of the State of Delaware, which provisions will not
be amended, except as required by applicable law or except to
make changes permitted by applicable law that would enlarge the
scope of the Indemnified Parties' indemnification rights
thereunder. The foregoing will not be deemed to restrict the
right of the Surviving Corporation to modify the provisions of
its certificate of incorporation or bylaws relating to
exculpation of director and officer liability or indemnification
with respect to events or occurrences after the Closing Date so
long as such modifications do not adversely affect the rights of
the Indemnified Parties hereunder.
(f) In the event of any action, suit, investigation or
proceeding, the Indemnified Party will be entitled to control the
defense thereof with counsel of its own choosing reasonably
acceptable to the Parent Corporation, and the Parent Corporation
and the Surviving Corporation will cooperate in the defense
thereof; provided that neither the Parent Corporation nor the
Surviving Corporation will be liable for the fees of more than
one counsel for all Indemnified Parties, other than local
counsel, unless the use of a single counsel would present
conflict of interest issues which would make it impracticable for
all Indemnified Parties to be represented by a single counsel,
and provided further that neither the Parent Corporation nor the
Surviving Corporation will be liable for any settlement effected
without its written consent (which consent will not be
unreasonably withheld).
(g) The rights of each Indemnified Party hereunder will be
in addition to any other rights such Indemnified Party may have
under the certificate of incorporation or bylaws of the Surviving
Corporation or any of their respective Subsidiaries, under the
law of the State of Delaware or otherwise. Notwithstanding
anything to the contrary contained in this Agreement or
otherwise, the provisions of this Section 6.9 will survive the
consummation of the Merger, and each Indemnified Party will, for
all purposes, be a third party beneficiary of the covenants and
agreements contained in this Section 6.9 and, accordingly, will
be treated as a party to this Agreement for purposes of the
rights and remedies relating to enforcement of such covenants and
agreements and will be entitled to enforce any such rights and
exercise any such remedies directly against the Parent
Corporation and the Surviving Corporation. The Parent Corporation
will cause the Surviving Corporation to pay all reasonable
expenses, including reasonable attorneys' fees, that may be
incurred by an Indemnified Party in enforcing the indemnity and
other obligations provided for in this Section 6.9.
Section 6.10 Public Announcements. The initial press release
announcing the transactions contemplated by this Agreement will be a
joint press release. Thereafter, the Parent Corporation and the Company
will consult with one another before issuing any press releases or
otherwise making any public announcements with respect to the
transactions contemplated by this Agreement and, except as may be
required by applicable law or by the rules and regulations of the New
York Stock Exchange, will not issue any such press release or make any
such announcement prior to such consultation.
Section 6.11 Preservation of Programs and Agreements. From
and after the date of this Agreement through the Closing Date, neither
party nor any of its Subsidiaries will enter into any agreement which
such party knows or has reason to know is reasonably likely to cause a
major customer of the other party or any of its Subsidiaries to
terminate any material program or agreement.
Section 6.12 Actions Regarding Antitakeover Statutes. If any
fair price, moratorium, control share acquisition or other form of
antitakeover statute, rule or regulation is or becomes applicable to the
transactions contemplated by this Agreement, the Board of Directors of
the Company will grant such approvals and take such other actions as may
be required so that the transactions contemplated hereby may be
consummated as promptly as practicable on the terms and conditions set
forth in this Agreement.
Section 6.13 Standstill Provisions. The restrictions on the
Parent Corporation and the Acquisition Corporation contained in the
Standstill Provisions are hereby waived by the Company to the extent
reasonably required to permit the Parent Corporation and the Acquisition
Corporation to comply with their obligations or enforce their rights
under this Agreement.
Section 6.14 Defense of Orders and Injunctions. In the event
either party becomes subject to any order or injunction of a court of
competent jurisdiction which prohibits the consummation of the
transactions contemplated by this Agreement, each party will use its
best efforts to overturn or lift such order or injunction. The foregoing
will not be deemed to require the Parent Corporation to enter into any
agreement, consent decree or other commitment requiring the Parent
Corporation or any of its Subsidiaries to divest or hold separate any
assets or to take any other action that would have a Parent Corporation
Material Adverse Effect.
Section 6.15 Affiliate Letters. Promptly following the date
of this Agreement, the Company will deliver to the Parent Corporation a
list of the names and addresses of those persons who were, or will be,
in the Company's reasonable judgment, "affiliates" of the Company within
the meaning of Rule 145(c) under the Securities Act as of the record
date for the Company Stockholders Meeting. The Company will use its best
efforts to deliver to the Parent Corporation a letter, in substantially
the form of Exhibit A-1 attached to this Agreement, from each person
identified in the foregoing list. Promptly following the date of this
Agreement, the Parent Corporation will deliver to the Company a list of
the names and addresses of those persons who were or will be, in the
Parent Corporation's reasonable judgment, "affiliates" of the Parent
Corporation within the meaning of Rule 145(c) under the Securities Act
as of the record date for the Parent Corporation Stockholders Meeting.
The Parent Corporation will use its best efforts to deliver to the
Company a letter, in substantially the form of Exhibit A-2 attached to
this Agreement, from each person identified in the foregoing list. The
Parent Corporation will be entitled to place appropriate legends on the
certificates evidencing the Parent Common Stock held by or issued to
persons delivering such letters and to issue stop transfer instructions
to the transfer agent for the Parent Common Stock consistent with the
terms of such letters.
Section 6.16 Preservation of Accounting and Tax Treatment.
From and after the date of this Agreement (a) the Parent Corporation and
the Company and their respective Subsidiaries will use their best
efforts to cause the Merger to be accounted for as a pooling of
interests in accordance with APB No. 16 and to constitute a
reorganization within the meaning of Section 368(a) of the Code and (b)
neither the Parent Corporation nor the Company, nor any of their
respective Subsidiaries, will knowingly take or omit to take any action
that would prevent the accounting for the Merger in accordance with the
pooling of interests method of accounting under the requirements of APB
No. 16 or prevent the Merger from constituting a reorganization within
the meaning of Section 368(a) of the Code.
Section 6.17 Accountant's Comfort Letters. Each party will
use its best efforts to cause to be delivered to the other party two
letters from its independent public accountants, one dated a date within
two business days before the date on which the Registration Statement
becomes effective and one dated the Closing Date, in form and substance
reasonably satisfactory to the recipient and customary in scope and
substance for comfort letters delivered by independent accountants in
connection with registration statements similar to the Registration
Statement.
Section 6.18 Registration Agreement. On or prior to the
Closing Date, the Parent Corporation will enter into an agreement, in
the form of the Registration Agreement attached to the Company
Disclosure Letter, with certain stockholders of the Company to provide
such stockholders with registration rights with respect to the Parent
Common Stock to be received in the Merger and will have complied with
the provisions thereof referring to actions to be taken prior to the
date of such Registration Agreement.
Section 6.19 New York Stock Exchange Quotation. The Parent
Corporation will use its best efforts to cause the Parent Common Stock
issuable in the Merger or otherwise pursuant to the terms of this
Agreement to be approved for listing on the New York Stock Exchange,
subject to official notice of issuance, as promptly as practicable after
the date of this Agreement and in any event prior to the Closing Date.
Section 6.20 Publishing Financial Results. The Parent
Corporation will prepare and publicly release, as soon as practicable
and in any event within 10 business days following the end of the first
accounting month ending at least 30 days after the Closing Date, a
report filed with the SEC on Form 8-K or any other public filing,
statement or announcement which includes the combined financial results
(including combined sales and net income) of the Parent Corporation and
the Company for a period of at least 30 days of combined operations of
the Parent Corporation and the Company following the Closing Date.
Section 6.21 Employee Benefit Matters.
(a) Subject to the provisions of any collective bargaining
agreement to which the Company or any of its Subsidiaries is a
party as of the date of this Agreement, until (or in respect of
the period ending on) December 31, 2000, the Parent Corporation
will cause to be maintained for the employees of the Company and
its Subsidiaries as of the Closing Date (collectively, the
"Continuing Employees") salary levels not less than the salary
levels provided by the Company and its Subsidiaries as of the
Closing Date and benefits and benefit levels (including cash
incentive compensation benefits and benefit levels) which are
substantially comparable to the benefits and benefit levels
provided by the Company and its Subsidiaries through the Company
Plans as of the Closing Date. The foregoing covenant will not
apply to any equity-based compensation plan or arrangement.
(b) The Continuing Employees will be credited with their
years of service with the Company and its Subsidiaries for
purposes of determining eligibility and vesting (but not benefit
accrual) under any employee benefit plans, programs, arrangements
and employment practices of the Parent Corporation and its
Subsidiaries in which the Continuing Employees participate
following the Closing Date. To the extent that any such employee
benefit plan, program, arrangement or employment practice in
which a Continuing Employee participates following the Closing
Date provides medical, dental, vision or other welfare benefits,
the Parent Corporation will cause all pre-existing condition
exclusions, waiting periods and actively at work requirements
thereunder to be waived for such Continuing Employee and his or
her covered dependents and the Parent Corporation will cause any
eligible expenses incurred by such Continuing Employee on or
before the Closing Date to be taken into account thereunder for
purposes of satisfying any deductible, coinsurance and maximum
out-of-pocket requirements applicable to such Continuing Employee
and his or her covered dependents for the applicable plan year.
(c) The Company agrees that an independent trustee, either a
bank or a trust company, will act with respect to the Merger on
behalf of each Company Plan (and its participants) that holds
Company Common Stock in accordance with the terms and conditions
of such Plan.
Section 6.22 Directors of the Surviving Corporation. Until
at least the first anniversary of the Closing Date, the Parent
Corporation will, and will cause the Surviving Corporation to, take all
actions necessary to cause Theodore J. Forstmann to be elected as a
director and the non-executive Chairman of the Board of Directors of the
Surviving Corporation and to cause Sandra J. Horbach to be elected as a
member of the Board of Directors of the Surviving Corporation effective
as of the Effective Time. Notwithstanding that they will be directors of
the Surviving Corporation and not directors of the Parent Corporation,
the foregoing individuals will be entitled as directors of the Surviving
Corporation after the Effective Time to exculpation, indemnification and
reimbursement of expenses pursuant to terms and conditions identical to
the terms and conditions applicable to the directors of the Parent
Corporation included in the Certificate of Incorporation and Bylaws of
the Parent Corporation and will be entitled to coverage under the
directors and officers liability and fiduciary liability insurance
policies and any indemnification agreements maintained or entered into
by the Parent Corporation on the same terms as applicable to the
directors of the Parent Corporation.
ARTICLE 7
CONDITIONS TO THE CONSUMMATION OF THE MERGER
Section 7.1 Conditions to the Obligations of Each Party. The
respective obligation of each party to effect the Merger is subject to
the satisfaction at or prior to the Closing Date of each of the
following conditions:
(a) the Company will have obtained the Company Stockholder
Approval;
(b) the Parent Corporation will have obtained the Parent
Corporation Stockholder Approval;
(c) the Registration Statement will have been declared
effective in accordance with the provisions of the Securities
Act, and no stop order suspending such effectiveness will have
been issued and remain in effect, and the Parent Corporation will
have received all state securities law authorizations necessary
to issue the Parent Common Stock pursuant to the Merger;
(d) the Parent Common Stock to be issued to the stockholders
of the Company pursuant to the Merger will have been approved for
listing on the New York Stock Exchange, subject only to official
notice of issuance;
(e) all applicable waiting periods under the HSR Act will
have terminated or expired;
(f) all other consents, authorizations, orders and approvals
of or filings with any governmental commission, board or other
regulatory authority (other than in its capacity as a customer of
the Company or its Subsidiaries) required in connection with the
consummation of the transactions contemplated by this Agreement
will have been obtained or made, except where the failure to
obtain or make such consents, authorizations, orders, approvals
or filings would not, from and after the Closing Date,
individually or in the aggregate have a Company Material Adverse
Effect; and
(g) neither party will be subject to any order or injunction
of a court of competent jurisdiction in the United States which
prohibits the consummation of the transactions contemplated by
this Agreement.
Section 7.2 Conditions to the Obligation of the Company. The
obligation of the Company to effect the Merger is subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions:
(a) the representations and warranties of the Parent
Corporation set forth in Section 5 will be true and correct in
all material respects at and as of the Closing Date as though
then made, except as contemplated by this Agreement and except
that any representation or warranty made as of a date other than
the date of this Agreement will continue on the Closing Date to
be true and correct in all material respects as of the specified
date;
(b) each of the Parent Corporation and the Acquisition
Corporation will have in all material respects performed and
complied with all of its obligations under this Agreement
required to be performed by it at or prior to the Closing Date;
(c) the Company will have received a written opinion, dated
as of the Closing Date, from Deloitte & Touche LLP, the Company's
independent public accountants, to the effect that they concur
with the Company's conclusion that no conditions exist that would
preclude the Company's ability to be a party to a business
combination with the Parent Corporation to be accounted for using
the pooling of interests method of accounting in accordance with
the requirements of APB No. 16; and
(d) the Company will have received a written opinion, dated
as of the Closing Date, from Fried, Frank, Harris, Shriver &
Jacobson, counsel to the Company, to the effect that the Merger
will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code.
In rendering the foregoing opinion, counsel will be permitted to
rely upon and assume the accuracy of representations provided by
the parties in substantially the forms attached as Exhibits B-1
and B-2 to this Agreement.
The Parent Corporation and the Acquisition Corporation will
furnish the Company with a customary bring down certificate with respect
to the satisfaction of the conditions set forth in Sections 7.2(a) and
(b).
Section 7.3 Conditions to the Obligation of the Parent
Corporation and the Acquisition Corporation. The obligation of the
Parent Corporation and the Acquisition Corporation to effect the Merger
is subject to the satisfaction at or prior to the Closing Date of each
of the following conditions:
(a) the representations and warranties of the Company set
forth in Section 4 will be true and correct in all material
respects at and as of the Closing Date as though then made,
except as contemplated by this Agreement and except that any
representation or warranty made as of a date other than the date
of this Agreement will continue on the Closing Date to be true
and correct in all material respects as of the specified date;
(b) the Company will have in all material respects performed
and complied with all of its obligations under this Agreement
required to be performed by it at or prior to the Closing Date;
(c) the Parent Corporation will have received a written
opinion, dated as of the Closing Date, from Arthur Andersen LLP,
the Parent Corporation's independent public accountants, to the
effect that the business combination between the Parent
Corporation and the Company contemplated by this Agreement should
be treated as a "pooling of interests" in conformity with
generally accepted accounting principles as described in APB No.
16; and
(d) the Parent Corporation will have received a written
opinion, dated as of the Closing Date, from Jenner & Block,
counsel to the Parent Corporation, to the effect that the Merger
will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code.
In rendering the foregoing opinion, counsel will be permitted to
rely upon and assume the accuracy of representations provided by
the parties in substantially the forms attached as Exhibits B-1
and B-2 to this Agreement.
The Company will furnish the Parent Corporation with a
customary bring down certificate with respect to the satisfaction of the
conditions set forth in Sections 7.3(a) and (b).
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time
(notwithstanding the receipt of the Company Stockholder Approval or the
Parent Corporation Stockholder Approval):
(a) with the written consent of the Parent Corporation and
the Company;
(b) by the Parent Corporation or the Company if any court of
competent jurisdiction or other governmental agency has issued a
final order, decree or ruling or taken any other final action
restraining, enjoining or otherwise prohibiting the consummation
of the Merger, and such order, decree, ruling or other action is
or has become nonappealable;
(c) by the Parent Corporation if (i) the Company has
materially breached any of its representations or warranties set
forth in this Agreement and such breach is not cured within 45
days after the date written notice of such breach is given by the
Parent Corporation to the Company, (ii) the Company has
materially breached any of its covenants or agreements contained
in this Agreement and such breach is not cured within 45 days
after the date written notice of such breach is given by the
Parent Corporation to the Company, (iii) the Board of Directors
of the Company has withdrawn or amended in any manner adverse to
the Parent Corporation and the Acquisition Corporation its
recommendation and approval of the Merger, (iv) the Company
Stockholder Approval has not been obtained at a meeting duly
called for such purpose or (v) the Merger has not been
consummated on or before December 31, 1999 (unless the failure of
the Merger to have been consummated results primarily from the
Parent Corporation or the Acquisition Corporation breaching any
representation, warranty, covenant or agreement contained in this
Agreement);
(d) by the Company if (i) the Parent Corporation has
materially breached any of its representations or warranties set
forth in this Agreement and such breach is not cured within 45
days after the date written notice of such breach is given by the
Company to the Parent Corporation, (ii) the Parent Corporation or
the Acquisition Corporation has materially breached any of its
covenants or agreements contained in this Agreement and such
breach is not cured within 45 days after the date written notice
of such breach is given by the Company to the Parent Corporation,
(iii) the Parent Stockholder Approval has not been obtained at a
meeting duly called for such purpose or (iv) the Merger has not
been consummated on or before December 31, 1999 (unless the
failure of the Merger to have been consummated results primarily
from the Company breaching any representation, warranty, covenant
or agreement contained in this Agreement); or
(e) by the Company if a party has made a Superior
Acquisition Proposal and the Company enters into any letter of
intent, agreement in principle, acquisition agreement or other
agreement with respect to such Superior Acquisition Proposal in
accordance with the provisions of Section 6.8; provided that
termination of this Agreement pursuant to this Section 8.1(e)
will not become effective until the payment by the Company to the
Parent Corporation of the termination fee provided in Section
8.3.
(f) by the Parent Corporation or the Company prior to the
third trading day preceding the Company Stockholders Meeting if
the Average Stock Price of the Parent Common Stock is less than
$63 per share. The "Average Stock Price" means the average of the
Daily Per Share Prices (as hereinafter defined) for the fifteen
consecutive trading days ending on the fifth trading day prior to
the Company Stockholders Meeting. The "Daily Per Share Price" for
any trading day means the weighted average of the per share
selling prices (as reported on the New York Stock Exchange
Composite Transaction Tape) for that day.
Section 8.2 Effect of Termination. In the event of the
termination and abandonment of this Agreement pursuant to Section 8.1,
this Agreement will forthwith become void and will be deemed to have
terminated without liability to any party (except for any liability of
any party then in wilful breach of any covenant or agreement); provided
that the provisions of the Confidentiality Agreement and Section 8.3 of
this Agreement will continue in full force and effect notwithstanding
such termination and abandonment.
Section 8.3 Termination Fee.
(a) If (i) the Parent Corporation terminates this Agreement
pursuant to the provisions of Section 8.1(c)(iii) or Section
8.1(c)(iv) and the Company enters into an agreement with respect
to a Third Party Acquisition (as defined in Section 8.3(b)), or a
Third Party Acquisition occurs within 12 months after the date of
such termination, and such agreement was entered into, or such
Third Party Acquisition was publicly announced, concurrently with
or prior to the date of the termination of this Agreement or (ii)
the Company terminates this Agreement pursuant to the provisions
of Section 8.1(e), then, in each case, the Company will pay to
the Parent Corporation, within one business day following the
occurrence of such event (in the case of a termination under
clause (i) above) or the delivery of notice of such termination
(in the case of a termination under clause (ii) above), a
termination fee equal to $150 million (the "Termination Fee"),
payable by wire transfer of immediately available funds to an
account designated by the Parent Corporation.
(b) The term "Third Party Acquisition" as used in this
Agreement means (i) the acquisition of the Company by merger or
otherwise by any person (including for purposes of this Section
8.3(b) any "person" or "group" as defined in Section 13(d)(3) of
the Securities Exchange Act) or entity other than the Parent
Corporation or the Acquisition Corporation, (ii) the acquisition
by any person or entity other than the Parent Corporation or the
Acquisition Corporation of more than 50 percent of the
consolidated assets (determined based on book or fair market
value) of the Company and its Subsidiaries, (iii) the acquisition
by any person or entity other than the Parent Corporation or the
Acquisition Corporation of more than 50 percent of the
outstanding shares of Company Common Stock, (iv) the adoption by
the Company of any plan of liquidation or the declaration by the
Company of any extraordinary dividend or distribution (including
any distribution of any shares of the capital stock of any
material Subsidiary) of cash or property constituting more than
50 percent of the consolidated assets (determined based on book
or fair market value) of the Company and its Subsidiaries or (v)
the purchase by the Company or any of its Subsidiaries of more
than 50 percent of the outstanding shares of Company Common
Stock.
(c) Except as specifically provided in this Section 8.3,
each party will bear its own expenses incurred in connection with
the transactions contemplated by this Agreement, whether or not
such transactions are consummated.
(d) In the event of any breach of the covenants set forth in
Section 6.8, nothing contained in this Section 8.3 will prevent
the Parent Corporation or the Acquisition Corporation from
challenging, by injunction or otherwise, the termination or
attempted termination of this Agreement pursuant to the
provisions of Section 8.1(e), but acceptance by the Parent
Corporation of the payment of the Termination Fee will constitute
a full and complete waiver by the Parent Corporation of all of
its rights under this Section 8.3(d) or otherwise.
(e) The Company acknowledges that the agreements regarding
the payment of fees contained in this Section 8.3 are an integral
part of the transactions contemplated by this Agreement and that,
in the absence of such agreements, the Parent Corporation and the
Acquisition Subsidiary would not have entered into this
Agreement. The Company accordingly agrees that in the event the
Company fails to pay the Termination Fee promptly, the Company
will in addition to the payment of such amount also pay to the
Parent Corporation all of the reasonable costs and expenses
(including reasonable attorneys' fees and expenses) incurred by
the Parent Corporation in the enforcement of its rights under
this Section 8.3, together with interest on such amount at a rate
of 10 percent per annum from the date upon which such payment was
due, to and including the date of payment. Provided that the
Company was not in breach of the provisions of Section 6.8,
payment of the Termination Fee will constitute full and complete
satisfaction, and will constitute the Parent Corporation's sole
and exclusive remedy for any loss, liability, damage or claim
arising out of or in connection with any such termination of this
Agreement or the facts and circumstances resulting in or related
to this Agreement.
ARTICLE 9
MISCELLANEOUS
Section 9.1 Nonsurvival of Representations. The
representations and warranties contained in this Agreement will not
survive the Merger or the termination of this Agreement.
Section 9.2 Remedies. The parties agree that irreparable
damage would occur in the event that the provisions of this Agreement
were not performed in accordance with their specific terms. It is
accordingly agreed that the parties will be entitled to specific
performance of the terms of this Agreement, without posting a bond or
other security, this being in addition to any other remedy to which they
are entitled at law or in equity.
Section 9.3 Successors and Assigns. No party hereto may
assign or delegate any of such party's rights or obligations under or in
connection with this Agreement without the written consent of the other
party hereto. Except as otherwise expressly provided herein, all
covenants and agreements contained in this Agreement by or on behalf of
any of the parties hereto or thereto will be binding upon and
enforceable against the respective successors and assigns of such party
and will be enforceable by and will inure to the benefit of the
respective successors and permitted assigns of such party.
Section 9.4 Amendment. This Agreement may be amended by the
execution and delivery of an written instrument by or on behalf of the
Parent Corporation, the Acquisition Corporation and the Company at any
time before or after the Company Stockholder Approval and the Parent
Corporation Stockholder Approval; provided that after the date of the
Company Stockholder Approval, no amendment to this Agreement will be
made without the approval of stockholders of the Company to the extent
such approval is required under the Delaware Act.
Section 9.5 Extension and Waiver. At any time prior to the
Effective Time, the parties may extend the time for performance of or
waive compliance with any of the covenants or agreements of the other
parties to this Agreement and may waive any breach of the
representations or warranties of such other parties. No agreement
extending or waiving any provision of this Agreement will be valid or
binding unless it is in writing and is executed and delivered by or on
behalf of the party against which it is sought to be enforced.
Section 9.6 Severability. Whenever possible, each provision
of this Agreement will be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Agreement
is held to be prohibited by or invalid under applicable law, such
provision will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement.
Section 9.7 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need not
contain the signatures of more than one party, but all such counterparts
taken together will constitute one and the same Agreement.
Section 9.8 Descriptive Headings. The descriptive headings
of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
Section 9.9 Notices. All notices, demands or other
communications to be given or delivered under or by reason of the
provisions of this Agreement will be in writing and will be deemed to
have been given when delivered personally to the recipient or when sent
to the recipient by telecopy (receipt confirmed), one business day after
the date when sent to the recipient by reputable express courier service
(charges prepaid) or three business days after the date when mailed to
the recipient by certified or registered mail, return receipt requested
and postage prepaid. Such notices, demands and other communications will
be sent to the Parent Corporation and the Company at the addresses
indicated below:
If to the Parent
Corporation: General Dynamics Corporation
3190 Fairview Park Drive
Falls Church, Virginia 22041-4523
Attention: David A. Savner, Esq.
Senior Vice President and
General Counsel
Facsimile No: (703) 876-3125
With a copy (which
will not constitute
notice) to: Jenner & Block
601 13th Street, N.W.
Washington, D.C. 20005
Attention: Craig A. Roeder, Esq.
Facsimile No: (202) 639-6066
If to the Company: Gulfstream Aerospace Corporation
500 Gulfstream Road
Savannah, Georgia 31402
Attention: Ira Berman, Esq.
Senior Vice President and
General Counsel
Facsimile No: (912) 965-4764
With a copy (which
will not constitute
notice) to: Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Stephen Fraidin, P.C.
Aviva Diamant, Esq.
Facsimile No: (212) 859-4000
or to such other address or to the attention of such other party as the
recipient party has specified by prior written notice to the sending party.
Section 9.10 No Third Party Beneficiaries. This Agreement will
not confer any rights or remedies upon any person or entity other than the
Parent Corporation, the Acquisition Corporation and the Company and their
respective successors and permitted assigns, except that the respective
beneficiaries of the provisions of Sections 1.9, 6.9, 6.18, 6.20 and 6.22
will, for all purposes, be third party beneficiaries of the covenants and
agreements contained therein and, accordingly, will be treated as a party
to this Agreement for purposes of the rights and remedies relating to
enforcement of such covenants and agreements and will be entitled to
enforce any such rights and exercise any such remedies directly against the
Parent Corporation and the Surviving Corporation.
Section 9.11 Entire Agreement. This Agreement (including the
Confidentiality Agreement and the other documents referred to herein)
constitutes the entire agreement among the parties and supersedes any prior
understandings, agreements or representations by or among the parties,
written or oral, that may have related in any way to the subject matter
hereof.
Section 9.12 Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their
mutual intent and no rule of strict construction will be applied against
any party. The use of the word "including" in this Agreement means
"including without limitation" and is intended by the parties to be by way
of example rather than limitation.
Section 9.13 Submission to Jurisdiction. Each of the parties to
this Agreement submits to the jurisdiction of any state or federal court
sitting in Wilmington, Delaware, in any action or proceeding arising out of
or relating to this Agreement, agrees that all claims in respect of the
action or proceeding may be heard and determined in any such court, and
agrees not to bring any action or proceeding arising out of or relating to
this Agreement in any other court. Each of the parties to this Agreement
waives any defense of inconvenient forum to the maintenance of any action
or proceeding so brought and waives any bond, surety or other security that
might be required of any other party with respect thereto.
Section 9.14 GOVERNING LAW. ALL QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT AND THE
SCHEDULES HERETO WILL BE GOVERNED BY THE INTERNAL LAW, AND NOT THE LAW OF
CONFLICTS, OF THE STATE OF DELAWARE.
* * * * *
<PAGE>
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement on the date first written above.
GENERAL DYNAMICS CORPORATION
By/s/ Nicholas D. Chabraja
----------------------------------
Nicholas D. Chabraja
Chairman and Chief Executive
Officer
TARA ACQUISITION CORPORATION
By /s/David A. Savner
----------------------------------
David A. Savner
President
GULFSTREAM AEROSPACE CORPORATION
By /s/Theodore J. Forstmann
----------------------------------
Theodore J. Forstmann
Chairman and Chief Executive
Officer
<PAGE>
EXHIBIT A-1
FORM OF COMPANY AFFILIATE LETTER
--------------------------------
General Dynamics Corporation
3190 Fairview Park Drive
Falls Church, Virginia 22042-4523
Ladies and Gentlemen:
General Dynamics Corporation, a Delaware corporation, Tara
Acquisition Corporation, a Delaware corporation, and Gulfstream Aerospace
Corporation, a Delaware corporation, are parties to an Agreement and Plan
of Merger dated as of May 16, 1999 (the "Merger Agreement"). All
capitalized terms used but not defined in this letter will have the
respective meanings give such terms in the Merger Agreement.
The undersigned, a record holder and beneficial owner of shares
of Company Common Stock, is entitled to receive shares of Parent Common
Stock in connection with the Merger. The undersigned acknowledges that the
undersigned may be deemed an "affiliate" of the Company within the meaning
of Rule 145 ("Rule 145") promulgated under the Securities Act or Accounting
Series Releases 130 and 135, as amended, of the SEC (the "Releases").
Nothing contained in this letter, however, is intended or should be
construed as an admission that the undersigned is an affiliate of the
Company or as a waiver of any rights that the undersigned may have to
object to any claim that the undersigned is such an affiliate on or after
the date of this letter.
If in fact the undersigned were an affiliate of the Company under
the Securities Act, the undersigned's ability to sell, assign or transfer
the Parent Common Stock received by the undersigned pursuant to the Merger
may be restricted unless such transaction is registered under the
Securities Act or an exemption from such registration is available. The
undersigned (i) understands that such exemptions are limited and that,
except as provided for in the Merger Agreement and the registration
agreement referred to in the Merger Agreement, the Parent Corporation is
not under any obligation to effect any such registration and (ii) has
obtained advice of counsel to the extent the undersigned has felt necessary
as to the nature and conditions of such exemptions, including information
with respect to the applicability to the sale of such securities of Rules
144 and 145(d) promulgated under the Securities Act.
The undersigned agrees with the Parent Corporation that the
undersigned will not sell, assign or transfer any shares of Parent Common
Stock received by the undersigned in exchange for shares of Company Common
Stock pursuant to the Merger except (i) pursuant to an effective
registration statement under the Securities Act, (ii) in conformity with
Rule 145 promulgated under the Securities Act or (iii) in a transaction
that, in the opinion of counsel reasonably satisfactory to Parent or as
described in a "no-action" or interpretive letter from the staff of the
SEC, is not required to be registered under the Securities Act.
The undersigned further agrees with Parent Corporation that,
until after such time as a report including results covering at least 30
days of combined operations of the Company and the Parent Corporation has
been published by the Parent Corporation or the Merger Agreement has been
terminated in accordance with its terms, the undersigned will not reduce
its risk (within the meaning of the Releases) with respect to (i) any
shares of Company Common Stock held by it or (ii) any shares of Parent
Common Stock received by it in the Merger. The Parent Corporation will
promptly notify the undersigned when such report has been published by the
Parent Corporation.
The Parent Corporation will prepare and publicly release, as soon
as practicable and in any event within 10 business days following the end
of the first accounting month ending at least 30 days after the Closing
Date, a report filed with the SEC on Form 8-K or any other public filing,
statement or announcement which includes the combined financial results
(including combined sales and net income) of the Parent Corporation and the
Company for a period of at least 30 days of combined operations of the
Parent Corporation and the Company following the Closing Date.
In the event of a sale or other disposition pursuant to Rule 145
of Parent Common Stock received by the undersigned in the Merger, the
undersigned will supply the Parent Corporation with evidence of its
compliance with Rule 145 by delivering to the Parent Corporation a letter
in the form of Annex I hereto. The undersigned understands that the Parent
Corporation may instruct its transfer agent to withhold the transfer of any
Parent Common Stock disposed of by the undersigned, but that upon receipt
of such evidence of compliance the transfer agent will effectuate the
transfer of the Parent Common Stock sold as indicated in the letter.
The undersigned acknowledges and agrees that the Parent Common
Stock issued to the undersigned will all be in certificated form and that
appropriate legends will be placed on certificates representing Parent
Common Stock received by the undersigned in the Merger or held by a
transferee thereof, which legends will be removed by delivery of substitute
certificates upon receipt of an opinion in form and substance reasonably
satisfactory to the Parent Corporation or a "no action" or interpretive
letter from the staff of the SEC to the effect that such legends are no
longer required for purposes of the Securities Act or upon the receipt of
the letters referred to in the preceding paragraph.
The Parent Corporation covenants that for so long and to the
extent necessary to permit the undersigned to sell the shares of Parent
Common Stock pursuant to Rule 145 and, to the extent applicable, Rule 144
under the Securities Act, the Parent Corporation will (i) use its best
efforts to file, on a timely basis, all reports and data required to be
filed by it with the SEC pursuant to Section 13 of the Securities Exchange
Act and to furnish to the undersigned upon request a written statement as
to whether the Parent Corporation has complied with such reporting
requirements during the 12 months preceding any proposed sale of shares of
Parent Common Stock by the undersigned under Rule 145 and (ii) otherwise
take such action as may be reasonably available to permit the sale or other
disposition of the Parent Common Stock by the undersigned under Rule 145 in
accordance with the terms thereof..
The undersigned acknowledges that the undersigned has carefully
read this letter and understands the requirements hereof and the
limitations imposed upon the distribution, sale, transfer or other
disposition of Parent Common Stock and that the receipt by the Parent
Corporation of this letter is a material inducement and a condition to the
Parent Corporation's obligation to consummate the Merger.
Very truly yours,
Dated:
<PAGE>
ANNEX I
TO EXHIBIT A-1
--------------
General Dynamics Corporation
3190 Fairview Park Drive
Falls Church, Virginia 22042-4523
Ladies and Gentlemen:
On ___________, the undersigned sold the shares of the Common
Stock, par value $1.00 per share , of General Dynamics Corporation (the
"Parent Corporation") described below (the "Shares"). The Shares were
received by the undersigned in connection with the merger of Tara
Acquisition Corporation, a subsidiary of the Parent Corporation, with and
into Gulfstream Aerospace Corporation.
Based upon the most recent report or statement filed by the
Parent Corporation with the Securities and Exchange Commission, the Shares
sold by the undersigned were within the prescribed limitations set forth in
Rule 144(e) promulgated under the Securities Act of 1933, as amended (the
"Securities Act").
The undersigned hereby represents that the Shares were sold in
"brokers' transactions" within the meaning of Section 4(4) of the
Securities Act or in transactions directly with a "market maker" as that
term is defined in Section 3(a)(38) of the Securities Exchange Act of 1934,
as amended. The undersigned further represents that the undersigned has not
solicited or arranged for the solicitation of orders to buy the Shares, and
that the undersigned has not made any payment in connection with the offer
or sale of the Shares to any person other than to the broker who executed
the order in respect of such sale.
Very truly yours,
Dated:
<PAGE>
EXHIBIT A-2
FORM OF PARENT CORPORATION AFFILIATE LETTER
Gulfstream Aerospace Corporation
500 Gulfstream Road
Savannah, Georgia 31402-2206
General Dynamics Corporation
3190 Fairview Park Drive
Falls Church, Virginia 22042-4523
Ladies and Gentlemen:
General Dynamics Corporation, a Delaware corporation, Tara
Acquisition Corporation, a Delaware corporation, and Gulfstream Aerospace
Corporation, a Delaware corporation, are parties to an Agreement and Plan
of Merger dated as of May 16 , 1999 (the "Merger Agreement"). All
capitalized terms used but not defined in this letter will have the
respective meanings give such terms in the Merger Agreement.
The undersigned is the record holder and beneficial owner of
shares of Parent Common Stock. The undersigned acknowledges that the
undersigned may be deemed an "affiliate" of the Parent Corporation within
the meaning of Accounting Series Releases 130 and 135, as amended, of the
SEC (the "Releases"). Nothing contained in this letter, however, is
intended or should be construed as an admission that the undersigned is an
affiliate of the Parent Corporation or as a waiver of any rights that the
undersigned may have to object to any claim that the undersigned is such an
affiliate on or after the date of this letter.
The undersigned agrees with Parent Corporation that, until after
such time as a report including results covering at least 30 days of
combined operations of the Company and the Parent Corporation has been
published by the Parent Corporation or the Merger Agreement has been
terminated in accordance with its terms, the undersigned will not reduce
its risk (within the meaning of the Releases) with respect to any shares of
Parent Common Stock held of record or owned beneficially by the
undersigned. The Parent Corporation will promptly notify the undersigned
when such report has been published by the Parent Corporation.
The undersigned acknowledges that the undersigned has carefully
read this letter and understands the requirements hereof and the
limitations imposed upon the distribution, sale, transfer or other
disposition of Parent Common Stock and that the receipt by the Parent
Corporation of this letter is a material inducement and a condition to the
Company's obligation to consummate the Merger.
Very truly yours,
Dated:
EXHIBIT 10.51
===========================================================================
TERM LOAN AGREEMENT
AMONG
GULFSTREAM DELAWARE CORPORATION,
CERTAIN LENDERS,
AND
THE CHASE MANHATTAN BANK,
AS ADMINISTRATIVE AGENT,
DATED AS OF APRIL 15, 1999
===========================================================================
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS...................................................1
1.1 Defined Terms....................................................1
1.2 Other Definitional Provisions...................................16
SECTION 2. TERM LOANS...................................................17
2.1 Term Loans......................................................17
2.2 Repayment of Loans..............................................17
2.3 Proceeds of Loans...............................................17
SECTION 3. [RESERVED]...................................................18
SECTION 4. GENERAL PROVISIONS APPLICABLE TO LOANS.......................18
4.1 Procedure for Borrowing.........................................18
4.2 Repayment of Loans; Evidence of Debt............................18
4.3 Conversion Options..............................................19
4.4 Changes of Commitment Amounts...................................20
4.5 Optional Prepayments............................................20
4.6 Mandatory Prepayments...........................................20
4.7 Interest Rates and Payment Dates................................21
4.8 Computation of Interest and Fees................................22
4.9 Commitment Fee..................................................22
4.10 Certain Fees...................................................22
4.11 [RESERVED].....................................................22
4.12 [RESERVED].....................................................23
4.13 [RESERVED].....................................................23
4.14 [RESERVED].....................................................23
4.15 [RESERVED].....................................................23
4.16 [RESERVED].....................................................23
4.17 Inability to Determine Interest Rate...........................23
4.18 Pro Rata Treatment and Payments................................23
4.19 Illegality.....................................................26
4.20 Requirements of Law............................................27
4.21 Indemnity......................................................28
SECTION 5. REPRESENTATIONS AND WARRANTIES...............................28
5.1 Corporate Existence; Compliance with Law........................29
5.2 Corporate Power; Authorization..................................29
5.3 Enforceable Obligations.........................................29
5.4 No Legal Bar....................................................29
5.5 No Material Litigation..........................................30
5.6 Financial Condition.............................................30
5.7 Investment Company Act..........................................30
5.8 Federal Regulation..............................................30
5.9 No Default......................................................31
5.10 No Burdensome Restrictions.....................................31
5.11 Taxes..........................................................31
5.12 Subsidiaries...................................................31
5.13 Ownership of Property; Liens...................................31
5.14 ERISA..........................................................32
5.15 Year 2000......................................................32
SECTION 6. CONDITIONS PRECEDENT.........................................32
6.1 Conditions to Effectiveness of this Agreement and Loans.........32
6.2 Conditions to All Loans.........................................35
SECTION 7. AFFIRMATIVE COVENANTS........................................35
7.1 Financial Statements............................................36
7.2 Certificates; Other Information.................................37
7.3 Payment of Obligations..........................................38
7.4 Conduct of Business and Maintenance of Existence................38
7.5 Maintenance of Property; Insurance..............................39
7.6 Inspection of Property; Books and Records; Discussions..........39
7.7 Notices.........................................................39
7.8 Additional Subsidiary Guarantors; Stock Pledge..................40
SECTION 8. NEGATIVE COVENANTS...........................................42
8.1 Indebtedness....................................................42
8.2 Limitation on Liens.............................................43
8.3 Limitation on Contingent Obligations............................44
8.4 Prohibition of Fundamental Changes..............................45
8.5 Prohibition on Sale of Assets...................................45
8.6 Limitation on Investments, Loans and Advances...................46
8.7 Limitation on Capital Expenditures..............................48
8.8 Maintenance of Interest Coverage................................48
8.9 [RESERVED]......................................................48
8.10 Maintenance of Leverage Ratio..................................48
8.11 Limitation on Restricted Payments..............................48
8.12 Transactions with Affiliates...................................49
8.13 Foreign Exchange Contracts.....................................50
8.14 Fiscal Year....................................................50
SECTION 9. EVENTS OF DEFAULT............................................50
SECTION 10. THE ADMINISTRATIVE AGENT....................................53
10.1 Appointment....................................................53
10.2 Delegation of Duties...........................................53
10.3 Exculpatory Provisions.........................................53
10.4 Reliance by the Administrative Agent...........................54
10.5 Notice of Default..............................................54
10.6 Non-Reliance on Administrative Agent and Other Lenders.........54
10.7 Indemnification................................................55
10.8 Administrative Agent in its Individual Capacities..............55
10.9 Successor Administrative Agent.................................55
10.10 Collateral Agent..............................................56
SECTION 11. MISCELLANEOUS...............................................56
11.1 Amendments and Waivers.........................................56
11.2 Notices........................................................57
11.3 No Waiver; Cumulative Remedies.................................58
11.4 Survival of Representations and Warranties.....................58
11.5 Payment of Expenses and Taxes..................................58
11.6 Successors and Assigns; Participations; Purchasing Lenders.....59
11.7 Adjustments; Set-off...........................................62
11.8 Counterparts...................................................63
11.9 Integration....................................................63
11.10 GOVERNING LAW; NO THIRD PARTY RIGHTS..........................63
11.11 SUBMISSION TO JURISDICTION; WAIVERS...........................63
11.12 Acknowledgements..............................................64
<PAGE>
SCHEDULES:
Schedule 1.1A Lists of Addresses for Notices; Lending Offices;
Commitment Amounts
Schedule 1.1B Terms of Used Aircraft Inventory Financing
Schedule 5.5 Material Litigation
Schedule 5.6(c) Dividends
Schedule 5.12A Domestic Subsidiaries
Schedule 5.12B Foreign Subsidiaries
Schedule 5.14 ERISA
Schedule 7.5(b) Insurance
Schedule 8.1 Existing Indebtedness
Schedule 8.2 Existing Liens
Schedule 8.3 Existing Contingent Obligations
Schedule 8.13 Existing Foreign Exchange Contracts
EXHIBITS:
Exhibit A Term Note
Exhibit B Company Pledge Agreement
Exhibit C Holdings Guarantee
Exhibit D Holdings Pledge Agreement
Exhibit E Subsidiary Guarantee
Exhibit F Subsidiary Pledge Agreement
Exhibit G Form of Exemption Certificate
Exhibit H-1 Opinion of Fried, Frank, Harris, Shriver & Jacobson
Exhibit H-2 Opinion of Ira P. Berman, Esq.
Exhibit I-1 Holdings Closing Certificate
Exhibit I-2 Company Closing Certificate
Exhibit I-3 Subsidiary Guarantor Closing Certificate
Exhibit J Assignment and Acceptance
<PAGE>
TERM LOAN AGREEMENT, dated as of April 15, 1999, among GULFSTREAM
DELAWARE CORPORATION, a Delaware corporation (the "Company"), the several
lenders from time to time parties hereto (the "Lenders") and THE CHASE
MANHATTAN BANK, a New York banking corporation ("Chase"), as administrative
agent for the Lenders (in such capacity, the "Administrative Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Holdings (as defined below) and the Company have
informed the Administrative Agent and the Lenders that Holdings intends to
proceed with a share repurchase program pursuant to which it would
repurchase its common stock (the "Stock Repurchase Program"); and
WHEREAS, in connection with the Stock Repurchase Program,
Holdings and the Company have requested the Lenders to enter into this
Agreement to make loans to be used to finance the purchase of common stock
of Holdings pursuant to the Stock Repurchase Program, to pay fees and
expenses related to the Stock Repurchase Program and the other transactions
contemplated hereby and to provide financing for the working capital needs
and general corporate purposes of the Company and its Subsidiaries.
NOW, THEREFORE, in consideration of the mutual covenants and
premises contained herein, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
-----------
1.1. Defined Terms. As used in this Agreement, the terms defined
in the preamble hereto shall have the meanings set forth therein, and the
following terms have the following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime
Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall
mean the rate of interest per annum publicly announced from time to time by
Chase as its prime rate in effect at its principal office in New York City
(the Prime Rate not being intended to be the lowest rate of interest
charged by Chase in connection with extensions of credit to debtors); and
"Federal Funds Effective Rate" shall mean, for any day, the weighted
average of the rates on overnight federal funds transactions with members
of the Federal Reserve System arranged by federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for the day of such
transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the
Federal Funds Effective Rate, for any reason, including the inability or
failure of the Administrative Agent to obtain sufficient quotations in
accordance with the terms hereof, the ABR shall be determined without
regard to clause (b), of the first sentence of this definition, as
appropriate, until the circumstances giving rise to such inability no
longer exist. Any change in the ABR due to a change in the Prime Rate or
the Federal Funds Effective Rate shall be effective as of the opening of
business on the effective day of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively.
"ABR Lending Office": initially, the office of each Lender
designated as such in Schedule 1.1A; thereafter, such other office of such
Lender, if any, which shall be making or maintaining ABR Loans as
designated as such from time to time in a notice from such Lender to the
Administrative Agent.
"ABR Loans": Loans whose interest rate is based on the ABR.
"Accountants": as defined in subsection 7.1(a)
"Adjustment Date": the first Business Day following receipt by
the Administrative Agent of both (i) the financial statements required to
be delivered pursuant to subsection 7.1(a) or 7.1(b), as the case may be,
for the most recently completed fiscal period and (ii) the certificate
required to be delivered pursuant to subsection 7.2(b) with respect to such
fiscal period.
"Administrative Agent": as defined in the preamble hereto.
"Affiliate": of any Person (a) any Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with such Person, (b) any Person who is a
director or officer (i) of such Person, (ii) of any Subsidiary of such
Person or (iii) of any Person described in clause (a) above or (c) if such
Person is an investment fund, any other Person which is managed by the same
investment advisor. For purposes of this definition, control of a Person
shall mean the power, direct or indirect, either to (i) vote 10% or more of
the securities having ordinary voting power for the election of directors
of such Person, or (ii) direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
"Agreement": this Term Loan Agreement, as amended, supplemented
or modified from time to time.
"Applicable Margin": (a) with respect to ABR Loans, 0.25%, and
(b) with respect to Eurodollar Loans, 1.25%, provided that (i) from the
Closing Date and until the Reset Date (as defined below), the Applicable
Margin will not be less than 0.25% for ABR Loans and 1.25% for Eurodollar
Loans, (ii) from and after the date (the "Reset Date") which is the first
Business Day following the date which is six months after the Closing Date,
the Applicable Margin for all Loans will be adjusted, if required, to the
Applicable Margin set forth on Annex A hereto opposite the Leverage Ratio
Level of the Company in effect on the Adjustment Date which most recently
preceded the Reset Date, (iii) from and after the Reset Date, the
Applicable Margin for all Loans will be adjusted, if required on each
Adjustment Date, to the Applicable Margin set forth on Annex A hereto
opposite the Leverage Ratio Level of the Company in effect on such
Adjustment Date and (iv) in the event that the financial statements
required to be delivered pursuant to subsection 7.1(a) or 7.1(b), as
applicable, and the related certificate required pursuant to subsection
7.2(b), are not delivered when due, then, during the period from the date
upon which such financial statements were required to be delivered until
one Business Day following the date upon which they actually are delivered,
Leverage Ratio Level I shall be deemed to be in effect for the purposes of
determining Applicable Margins during such period.
"Asset Sale": any sale, sale-leaseback, assignment, conveyance,
transfer or other disposition by the Company or any Subsidiary thereof of
any of its property or assets, including the stock of any Subsidiary of the
Company and any primary issuance of capital stock of any Subsidiary of the
Company other than to the Company or any Subsidiary of the Company (except
sales, sale-leasebacks, assignments, conveyances, transfers and other
dispositions permitted by clauses (a), (b), (c), and (d) of subsection
8.5).
"Assignee": as defined in subsection 11.6(c).
"Assignment and Acceptance": an Assignment and Acceptance
substantially in the form of Exhibit J hereto.
"Available Commitment": as to any Lender at any time, an amount
equal to the excess, if any, of (a) the amount of such Lender's Commitment
over (b) the aggregate principal amount of all Loans made by such Lender.
"Base Amount": as defined in subsection 8.7.
"Benefitted Lender": as defined in subsection 11.7 hereof.
"Board": the Board of Governors of the Federal Reserve System of
the United States or any successor.
"Borrowing Date": any Business Day, or, in the case of Eurodollar
Loans, any Working Day, specified in a notice pursuant to subsection 4.1 as
a date on which the Company requests the Lenders to make Loans hereunder.
"Business Day": a day other than a Saturday, Sunday or other day
on which commercial banks in New York City are authorized or required by
law to close.
"Capital Expenditures": for any period, all amounts (other than
those arising from the acquisition or lease of businesses and assets which
are permitted by subsection 8.6(g)) which are set forth on Holdings' and
its Subsidiaries' consolidated statement of cash flows for such period as
"Additions to property and equipment", in accordance with GAAP, consistent
with Holdings' financial statements for the year ended December 31, 1998
(it being understood that tooling expenditures shall, in any event,
constitute capital expenditures).
"Cash Equivalents": (i) securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof having maturities of not more than six months from
the date of acquisition, (ii) certificates of deposit and eurodollar time
deposits with maturities of six months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case, with any Lender or with any
domestic commercial bank having capital and surplus in excess of
$250,000,000, (iii) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clauses (i)
and (ii) entered into with any financial institution meeting the
qualifications specified in clause (ii) above, and (iv) commercial paper
issued by any Lender, the parent corporation of any Lender or any
Subsidiary of such Lender's parent corporation, and commercial paper rated
A-1 or the equivalent thereof by Standard & Poor's Rating Group or P-1 or
the equivalent thereof by Moody's Investors Service, Inc. and in each case
maturing within six months after the date of acquisition thereof.
"Change in Law": with respect to any Lender, the adoption of any
law, rule, regulation, policy, guideline or directive (whether or not
having the force of law) or any change therein or in the interpretation or
application thereof by any Governmental Authority, including, without
limitation, the issuance of any final rule, regulation or guideline by any
regulatory agency having jurisdiction over such Lender or, in the case of
subsection 4.20(b), any corporation controlling such Lender.
"Chase": as defined in the preamble hereto.
"Closing Date": the date on which each of the conditions
precedent to the effectiveness of this Agreement contained in Section 6.1
has been either satisfied or waived in accordance with the terms and
provisions of Section 6.1.
"Code": the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral Agent": Chase in its capacity as collateral agent
under the Pledge Agreements and any security agreements executed and
delivered pursuant to subsection 7.8.
"Commitment": as to any Lender, its obligations to make Loans to
the Company pursuant to subsection 2.1 in an aggregate amount not to exceed
the amount set forth opposite such Lender's name in Schedule 1.1A under the
heading "Term Loan"; collectively, as to all the Lenders, the
"Commitments".
"Commitment Percentage": as to any Lender, at any time, the
percentage which such Lender's Commitment then constitutes of the aggregate
Commitments (or, at any time after the Commitments shall have expired or
terminated, the percentage which the aggregate principal amount of such
Lender's Loans then outstanding constitutes of the aggregate principal
amount of all Loans then outstanding).
"Commitment Period": the period from and including the date
hereof to but not including the Termination Date or such earlier date on
which the Commitments shall terminate as provided herein.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Company within the
meaning of Section 4001 of ERISA or is part of a group which includes the
Company and which is treated as a single employer under Section 414 of the
Code.
"Company": as defined in the preamble hereto.
"Company Pledge Agreement": the Pledge Agreement, substantially
in the form of Exhibit B hereto, made by the Company in favor of the
Collateral Agent, for the ratable benefit of the Lenders, as the same may
be amended, supplemented or otherwise modified from time to time (it being
understood and agreed that, subject to Section 7.8(c) hereof, the Company
Pledge Agreement shall not require the Company to pledge (x) any of the
stock of any Foreign Subsidiary of the Company or Holdings which is owned
by a Foreign Subsidiary of the Company or Holdings or (y) more than 65% of
the stock of (i) any other Foreign Subsidiary of the Company or Holdings or
(ii) any other Subsidiary of the Company or Holdings if more than 65% of
the assets of such Subsidiary are securities of foreign Persons (such
determination to be made on the basis of fair market value)).
"Consolidated EBITDA": for any period, Consolidated Net Income
((i) including earnings and losses from discontinued operations, (ii)
excluding extraordinary gains, and gains and losses arising from the
proposed or actual disposition of material assets, and (iii) excluding the
non-cash portion of other non-recurring losses) of Holdings and its
Subsidiaries for such period, plus to the extent reflected as a charge in
the statement of consolidated net income for such period, the sum of (a)
interest expense (net of interest income), amortization (including
accelerated amortization) and write offs of debt discount and debt issuance
costs, including such write-offs in connection with the prepayment of debt,
and commissions, discounts and other fees and charges associated with the
1996 Letters of Credit, (b) taxes measured by income, (c) depreciation and
amortization expenses including acceleration thereof and including the
amortization of the increase in inventory resulting from the application of
APB 16 for transactions contemplated by this Agreement including
acquisitions permitted under 8.6(g), (d) non-cash compensation expenses
arising from, or as a consequence of, the sale of stock, the granting of
stock options, the granting of stock appreciation rights and similar
arrangements and (e) the excess of the expense in respect of
post-retirement benefits and post-employment benefits accrued under
Statement of Financial Accounting Standards No. 106 ("FASB 106") and
Statement of Financial Accounting Standards No. 112 ("FASB 112") over the
cash expense in respect of such post-retirement benefits and post-
employment benefits; provided, that Consolidated EBITDA during any period
shall be increased by research and development expense incurred during such
period in respect of the Gulfstream V program (if the amount of such
expense for such period is greater than $0), but only to the extent of
customer deposits received, net of cancellations, during such period.
Notwithstanding the foregoing, in calculating Consolidated EBITDA for
purposes of subsection 8.10 (but not for purposes of calculating the
Applicable Margin), Consolidated EBITDA shall be calculated to give pro
forma effect to each acquisition made pursuant to subsection 8.6(g) or (j)
in the relevant period as if such acquisition had been made on the first
day of such period and the Indebtedness incurred to finance such
acquisition had been incurred on the first day of such period.
"Consolidated Interest Expense": for any period the amount of
interest expense, both expensed and capitalized (excluding amortization and
write offs of debt discount and debt issuance costs) net of interest
income, of Holdings and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP, for such period.
"Consolidated Net Income": for any period, the net income or net
loss of Holdings and its Subsidiaries for such period, determined in
accordance with GAAP on a consolidated basis, as reflected in the financial
statements furnished to the Administrative Agent in accordance with
subsections 7.1(a) and (b) hereof.
"Consolidated Total Debt": at any date of determination, the
principal amount of all indebtedness of Holdings and its consolidated
Subsidiaries outstanding in accordance with GAAP under this Agreement plus
any other amounts, without duplication, included in clause (a) of the
definition of Indebtedness (including any amounts drawn and unreimbursed
under letters of credit) at such date of determination, on a consolidated
basis in accordance with GAAP.
"Contingent Obligation": as to any Person, any obligation of such
Person guaranteeing or in effect guaranteeing any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of such Person, whether or
not contingent (a) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (b) to advance or supply
funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor
or otherwise to maintain the net worth or solvency of the primary obligor,
(c) to purchase property, securities or services primarily for the purpose
of assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or (d) otherwise
to assure or hold harmless the owner of any such primary obligation against
loss in respect thereof; provided, however, that the term Contingent
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or
determinable amount (based on the maximum reasonably anticipated net
liability in respect thereof as determined by the Company in good faith) of
the primary obligation or portion thereof in respect of which such
Contingent Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated net liability in respect thereof (assuming
such Person is required to perform thereunder) as determined by the Company
in good faith.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which it or any of the
property owned by it is bound.
"Credit Documents": the collective reference to this Agreement,
the Notes, the Pledge Agreements, the Guarantees and any security agreement
and guarantee executed and delivered pursuant to the terms of subsection
7.8.
"Credit Parties": the collective reference to Holdings, the
Company and each Subsidiary which is a party, or which at any time becomes
a party, to a Credit Document.
"Default": any of the events specified in Section 9, whether or
not any requirement for the giving of notice, the lapse of time, or both,
has been satisfied.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"Domestic Subsidiary": any Subsidiary of the Company other than a
Foreign Subsidiary.
"Environmental Laws": any and all Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees or requirements of any Governmental Authority regulating, relating
to or imposing liability or standards of conduct concerning environmental
protection matters, including without limitation, Hazardous Materials, as
now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": for any day, as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal) of reserve requirements current on such day
(including, without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board or other Governmental Authority
having jurisdiction with respect thereto), as now and from time to time
hereafter in effect, dealing with reserve requirements prescribed for
Eurocurrency funding (currently referred to as "Eurocurrency liabilities"
in Regulation D of such Board) maintained by a member bank of such System.
As of the Closing Date, there are no Eurocurrency Reserve Requirements in
effect.
"Eurodollar Base Rate": with respect to each day during any
Interest Period for any Eurodollar Loan, the rate per annum equal to the
rate at which Chase is offered Dollar deposits at or about 10:00 a.m., New
York City time, two Working Days prior to the beginning of such Interest
Period in the interbank eurodollar market where the foreign currency and
exchange operations in respect of its Eurodollar Loans then are being
conducted for delivery on the first day of such Interest Period for the
number of days comprised therein and in an amount comparable to the amount
of its Eurodollar Loan to be outstanding during such Interest Period.
"Eurodollar Lending Office": initially, the office of each Lender
designated as such in Schedule 1.1A; thereafter, such other office of such
Lender, if any, which shall be making or maintaining Eurodollar Loans as
designated as such from time to time in a notice from such Lender to the
Administrative Agent.
"Eurodollar Loans": Loans at such time as they are made and/or
being maintained at a rate of interest based upon a Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
Eurodollar Base Rate
--------------------
1.00 - Eurocurrency Reserve Requirement
"Event of Default": any of the events specified in Section 9,
provided that any requirement for the giving of notice, the lapse of time,
or both, has been satisfied.
"Financing Subsidiary": any Affiliate or Subsidiary of the
Company which is a party to the Used Aircraft Inventory Financing.
"FL Affiliate": any of FL & Co., MBO-IV, FLC XXIX, FLC XXXIII,
Gulfstream Partners or Gulfstream Partners II, L.P., the partners of FL &
Co., MBO-IV, FLC XXIX, FLC XXXIII, Gulfstream Partners or Gulfstream
Partners II, L.P. on the Closing Date, any subordinated debt and equity
partnership controlled by FL & Co., MBO-IV, FLC XXIX, FLC XXXIII,
Gulfstream Partners or Gulfstream Partners II, L.P., any equity partnership
controlled by FL & Co., MBO-IV, FLC XXIX, FLC XXXIII, Gulfstream Partners
or Gulfstream Partners II, L.P., any Affiliate of FL & Co., MBO-IV, FLC
XXIX or FLC XXXIII, Gulfstream Partners or Gulfstream Partners II, L.P.,
any directors, executive officers or other employees or other members of
the management of Holdings, the Company or any Subsidiary of any thereof
(or any "associate" (as defined in Rule 405 under the Securities Act of
1933, as amended) of any thereof or employee benefit plan beneficially
owned by any thereof), the Company or any Subsidiary of any thereof on the
Closing Date, or any combination of the foregoing.
"FL & Co.": FLC XXXI Partnership, L.P., a New York limited
partnership, doing business as "Forstmann Little & Co.", the general
partners of which are FLC XXIX Partnership, L.P., a New York limited
partnership ("FLC XXIX"), and FLC XXXIII Partnership, a New York general
partnership ("FLC XXXIII"), and the limited partner of which is FLC XXIX.
"Foreign Subsidiary": any Subsidiary of the Company (or if so
specified, Holdings) (a) which is organized under the laws of any
jurisdiction outside the United States (within the meaning of Section
7701(a)(9) of the Code), or (b) whose principal assets consist of capital
stock or other equity interests of one or more Persons which conduct the
major portion of their business outside the United States (within the
meaning of Section 7701 (a)(9) of the Code).
"GAAP": generally accepted accounting principles in the United
States of America in effect from time to time.
"Governmental Authority": any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantees": the collective reference to the Holdings Guarantee
and the Subsidiary Guarantee.
"Gulfstream V": the type of large cabin business jet aircraft
produced by the Company and designated "Gulfstream V".
"Hazardous Materials": any substance (a) which is or becomes
defined as a "hazardous waste," "hazardous substance," pollutant or
contaminant under any federal, state or local statute, regulation, rule or
ordinance or amendments thereto including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act (42
U.S.C. ss. 9601 et seq.) and/or the Resource Conservation and Recovery Act
(42 U.S.C.ss. 6901 et seq.); and (b) without limitation, which is or
contains petroleum products (including crude oil or any fraction thereof),
PCBs, asbestos, urea formaldehyde foam insulation, radon gas or infectious
or radioactive materials.
"Holdings": Gulfstream Aerospace Corporation, a Delaware
corporation.
"Holdings Dividend Limit": as defined in subsection 8.11(e).
"Holdings Guarantee": the Guarantee, substantially in the form of
Exhibit C hereto, made by Holdings in favor of the Administrative Agent,
for the ratable benefit of the Lenders, as the same may be amended,
supplemented or otherwise modified from time to time.
"Holdings Note": the Note due October 1, 2004 and dated October
16, 1996, in the original principal amount of $100,000,000, made by
Holdings in favor of the Company in connection with the 1996 Refinancing,
as amended to extend the maturity date to October 1, 2004.
"Holdings Pledge Agreement": the Pledge Agreement, substantially
in the form of Exhibit D hereto, made by Holdings in favor of the
Collateral Agent, for the ratable benefit of the Lenders, as the same may
be amended, supplemented or otherwise modified from time to time (it being
understood and agreed that, subject to Section 7.8(c) hereof, the Holdings
Pledge Agreement shall not require Holdings to pledge (x) any of the stock
of any Foreign Subsidiary of the Company or Holdings which is owned by a
Foreign Subsidiary of the Company or Holdings or (y) more than 65% of the
stock of (i) any other Foreign Subsidiary of the Company or Holdings or
(ii) any other Subsidiary of the Company or Holdings if more than 65% of
the assets of such Subsidiary are securities of foreign Persons (such
determination to be made on the basis of fair market value)).
"Indebtedness": of any Person, at any particular date, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current trade payables or
liabilities and deferred payment for services to employees or former
employees incurred in the ordinary course of business and payable in
accordance with customary practices and other deferred compensation
arrangements), (b) the face amount of all letters of credit issued for the
account of such Person and, without duplication, all drafts drawn
thereunder, (c) all liabilities (other than Lease Obligations) secured by
any Lien on any property owned by such Person, to the extent attributable
to such Person's interest in such property, even though such Person has not
assumed or become liable for the payment thereof, (d) lease obligations of
such Person which, in accordance with GAAP, should be capitalized and (e)
all indebtedness of such Person arising under acceptance facilities; but
excluding (y) customer deposits and interest payable thereon in the
ordinary course of business and (z) trade and other accounts and accrued
expenses payable in the ordinary course of business in accordance with
customary trade terms and in the case of both clauses (y) and (z) above,
which are not overdue for a period of more than 90 days or, if overdue for
more than 90 days, as to which a dispute exists and adequate reserves in
conformity with GAAP have been established on the books of such Person.
"Insolvency": with respect to a Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of such term as used in
Section 4245 of ERISA.
"Interest Coverage Ratio": as at the last day of any fiscal
quarter of Holdings, the ratio of (a) Consolidated EBITDA less Capital
Expenditures, in each case for the period of four fiscal quarters ending on
such day to (b) Consolidated Interest Expense for the period of four fiscal
quarters ending on such day.
"Interest Payment Date": (a) as to ABR Loans, the last day of
each March, June, September and December, commencing on the first such day
to occur after any ABR Loans are made or any Eurodollar Loans are converted
to ABR Loans, (b) as to any Eurodollar Loan in respect of which the Company
has selected an Interest Period of one, two or three months, the last day
of such Interest Period, (c) as to any Eurodollar Loan in respect of which
the Company has selected an Interest Period of six months, the day which is
three months after the date on which such Eurodollar Loan is made or an ABR
Loan is converted to such a Eurodollar Loan, and the last day of such
Interest Period, (d) as to any Eurodollar Loan, each day on which principal
of such Eurodollar Loan is payable, and (e) in the case of any Loan, when
such Loan is paid in full.
"Interest Period": with respect to any Eurodollar Loan:
(a) initially, the period commencing on, as the case may be, the
Borrowing Date or conversion date with respect to such Eurodollar Loan
and ending one, two, three or six months thereafter as selected by the
Company in its notice of borrowing as provided in subsection 4.1 or
its notice of conversion as provided in subsection 4.3; and
(b) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan and
ending one, two, three or six months thereafter as selected by the
Company by irrevocable notice to the Administrative Agent not less
than three Working Days prior to the last day of the then current
Interest Period with respect to such Eurodollar Loan;
provided that the foregoing provisions relating to Interest Periods are
subject to the following:
(A) if any Interest Period would otherwise end on a day which is
not a Working Day, that Interest Period shall be extended to the next
succeeding Working Day, unless the result of such extension would be
to carry such Interest Period into another calendar month, in which
event such Interest Period shall end on the immediately preceding
Working Day;
(B) any Interest Period that would otherwise extend beyond the
final scheduled installment date set forth in subsection 2.2 shall end
on such date or, if such Term Installment Payment Date shall not be a
Working Day, on the next preceding Working Day;
(C) if the Company shall fail to give notice as provided above in
clause (b), it shall be deemed to have selected a conversion of a
Eurodollar Loan into an ABR Loan (which conversion shall occur
automatically and without need for compliance with the conditions for
conversion set forth in subsection 4.3);
(D) any Interest Period that begins on the last 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 end on
the last Working Day of a calendar month; and
(E) the Company shall select Interest Periods so as not to
require a prepayment (to the extent practicable) or a scheduled
payment of a Eurodollar Loan during an Interest Period for such
Eurodollar Loan.
"Lease Obligations": of the Company and its Subsidiaries, as of
the date of any determination thereof, the rental commitments of the
Company and its Subsidiaries determined on a consolidated basis, if any,
under leases for real and/or personal property (net of rental commitments
from sub-leases thereof), excluding however, obligations under leases which
are classified as Indebtedness under clause (d) of the definition of
Indebtedness.
"Lenders": as defined in the preamble hereto.
"Leverage Ratio": at any date, the ratio of Consolidated Total
Debt at such date to Consolidated EBITDA for the period of four consecutive
fiscal quarters ending on such date.
"Leverage Ratio Level": the existence of Leverage Ratio Level I,
Leverage Ratio Level II, Leverage Ratio Level III, Leverage Ratio Level IV,
Leverage Ratio Level V, Leverage Ratio Level VI or Leverage Ratio Level
VII, as the case may be.
"Leverage Ratio Level I": shall exist on an Adjustment Date if
the Leverage Ratio for the period of four consecutive fiscal quarters
ending on the last day of the period covered by the financial statements
relating to such Adjustment Date is greater than or equal to 3.50 to 1.00.
"Leverage Ratio Level II": shall exist on an Adjustment Date if
the Leverage Ratio for the period of four consecutive fiscal quarters
ending on the last day of the period covered by the financial statements
relating to such Adjustment Date is less than 3.50 to 1.00 but greater than
or equal to 3.00 to 1.00.
"Leverage Ratio Level III": shall exist on an Adjustment Date if
the Leverage Ratio for the period of four consecutive fiscal quarters
ending on the last day of the period covered by the financial statements
relating to such Adjustment Date is less than 3.00 to 1.00 but greater than
or equal to 2.50 to 1.00.
"Leverage Ratio Level IV": shall exist on an Adjustment Date if
the Leverage Ratio for the period of four consecutive fiscal quarters
ending on the last day of the period covered by the financial statements
relating to such Adjustment Date is less than 2.50 to 1.00 but greater than
or equal to 2.00 to 1.00.
"Leverage Ratio Level V": shall exist on an Adjustment Date if
the Leverage Ratio for the period of four consecutive fiscal quarters
ending on the last day of the period covered by the financial statements
relating to such Adjustment Date is less than 2.00 to 1.00 but greater than
or equal to 1.50 to 1.00.
"Leverage Ratio Level VI": shall exist on an Adjustment Date if
the Leverage Ratio for the period of four consecutive fiscal quarters
ending on the last day of the period covered by the financial statements
relating to such Adjustment Date is less than 1.50 to 1.00 but greater than
or equal to 0.75 to 1.00.
"Leverage Ratio Level VII": shall exist on an Adjustment Date if
the Leverage Ratio for the period of four consecutive fiscal quarters
ending on the last day of the period covered by the financial statements
relating to such Adjustment Date is less than 0.75 to 1.00.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference,
priority or other security agreement or preferential arrangement of any
kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the
filing of any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction in respect of any of the foregoing
except for the filing of financing statements in connection with Lease
Obligations incurred by the Company or its Subsidiaries to the extent that
such financing statements relate to the property subject to such Lease
Obligations).
"Loan" and "Loans": as defined in subsection 2.1.
"Material Adverse Effect": a material adverse effect on the
business, financial condition, assets or results of operations of the
Company and its Subsidiaries taken as a whole.
"Material Subsidiary": any Subsidiary of the Company or Holdings
which at any time has a total asset book value (including the total asset
book values of any Subsidiaries), or for which Holdings, the Company or any
of their respective Subsidiaries shall have paid consideration (including
the assumption of Indebtedness) in connection with the acquisition of the
stock or the assets of such Subsidiary, in excess of $20,000,000.
"MBO-IV": Forstmann Little & Co. Subordinated Debt and Equity
Management Buyout Partnership IV.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Proceeds": the aggregate cash proceeds received by the
Company or any Subsidiary of the Company in respect of any Asset Sale, and
any cash payments received in respect of promissory notes or other non-cash
consideration delivered to the Company or such Subsidiary in respect of an
Asset Sale (subject to the limitations set forth in subsection 8.6(f)), net
of (without duplication) (i) the reasonable expenses (including legal fees
and brokers' and underwriters' commissions paid to third parties which are
not Affiliates or Subsidiaries of the Company) incurred in effecting such
Asset Sale, (ii) any taxes reasonably attributable to such Asset Sale and,
in case of an Asset Sale in a foreign jurisdiction, the repatriation of the
proceeds of such Asset Sale reasonably estimated by the Company or such
Subsidiary to be actually payable, (iii) any amounts payable to a
Governmental Authority triggered as a result of any such Asset Sale, (iv)
any Indebtedness or Contractual Obligation of the Company and its
Subsidiaries (other than the Loans and other Obligations and obligations
under the 1996 Credit Agreement) required to be paid or retained in
connection with such Asset Sale and (v) the aggregate amount of reserves
required in the Company's reasonable judgment to be maintained on the books
of the Company in order to pay contingent liabilities with respect to such
Asset Sale; provided that amounts deducted from aggregate proceeds pursuant
to clause (v) and not actually paid by the Company or any of its
Subsidiaries in liquidation of such contingent liabilities shall be deemed
to be Net Proceeds and shall be prepaid in accordance with subsection 4.6
at such time as such contingent liabilities shall cease to be obligations
of the Company or any of its Subsidiaries.
"1998 10K": Holdings' filing on form 10K with the Securities and
Exchange Commission for Holdings' 1998 fiscal year.
"1996 Credit Agreement": the Credit Agreement dated as of October
16, 1996, among the Company, the lenders party thereto and Chase, as
administrative agent, as the same has been and may be amended, modified and
supplemented from time to time.
"1996 Letters of Credit": the letters of credit and performance
guarantees issued pursuant to the 1996 Credit Agreement.
"1996 Refinancing": the "Refinancing" as defined in the 1996
Credit Agreement as in effect on the Closing Date.
"1996 Term Loans": the Term Loans made under the 1996 Credit
Agreement.
"Non-U.S. Lender": as defined in subsection 4.18(e).
"Note" and "Notes": as defined in subsection 4.2.
"Obligations": the unpaid principal of and interest on the Notes
and all other obligations and liabilities of the Company to the
Administrative Agent or the Lenders (including, without limitation,
interest accruing at the then applicable rate provided in this Agreement
after the maturity of the Loans and interest accruing at the then
applicable rate provided in this Agreement after the filing of any petition
in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Company whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding),
whether direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter incurred, which may arise under, out of, or in
connection with, this Agreement, the Notes, the other Credit Documents, any
agreements between the Company and any Lender relating to interest rate,
currency or similar swap and hedging arrangements or any other document
made, delivered or given in connection therewith, whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses (including, without limitation, all fees and disbursements of
counsel to the Administrative Agent or any Lender) or otherwise.
"Participant": as defined in subsection 11.6(b)
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any successor thereto.
"Permitted Acquisition": as defined in subsection 8.6(j).
"Permitted Acquisition Indebtedness": as defined in subsection
8.6(j).
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, limited liability company,
unincorporated association, joint venture, Governmental Authority or other
entity of whatever nature.
"Plan": any pension plan which is covered by Title IV of ERISA
and in respect of which the Company or a Commonly Controlled Entity is an
"employer" as defined in Section 3(5) of ERISA.
"Pledge Agreements": the collective reference to the Holdings
Pledge Agreement, the Company Pledge Agreement, the Subsidiary Pledge
Agreements and any pledge agreement delivered after the Closing Date
pursuant to subsection 7.8; individually, a "Pledge Agreement".
"Pledged Stock": as defined in the respective Pledge Agreements.
"Prepayment Percentage": at any time, the decimal equivalent of a
fraction, the numerator of which is the aggregate principal amount of Loans
outstanding at such time and the denominator of which is the aggregate
principal amount of Loans and 1996 Term Loans outstanding at such time.
"Properties": each parcel of real property currently or
previously owned or operated by the Company or any Subsidiary of the
Company.
"Regulation U": Regulation U of the Board, as from time to time
in effect.
"Release Lenders": at a particular time, Lenders that hold Loans
in an aggregate principal amount equal to at least 75% of the sum of the
aggregate unpaid principal amount of the Loans at such time.
"Reorganization": with respect to a Multiemployer Plan, the
condition that such Plan is in reorganization as such term is used in
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder.
"Required Lenders": at a particular time, Lenders that hold Loans
in an aggregate principal amount equal to at least 51% of the sum of the
aggregate unpaid principal amount of the Loans outstanding at such time.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation (including, without
limitation, Environmental Laws) or determination of an arbitrator or a
court or other Governmental Authority, in each case applicable to or
binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Responsible Officer": the chief executive officer or the chief
operating officer of the Company or, with respect to financial matters, the
chief financial officer or controller of the Company.
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Sixth Amendment": the Sixth Amendment, dated as of April 7,
1999, to the 1996 Credit Agreement.
"Stock Repurchase Program": as defined in the preamble hereto.
"Subsidiary": as to any Person, any corporation, partnership or
other entity of which shares of stock of each class or other equity
interests having ordinary voting power (other than stock or other equity
interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the time
owned by such Person or by one or more Subsidiaries of such Person or by
such Person and one or more Subsidiaries of such Person. A Subsidiary shall
be deemed wholly-owned by a Person who owns all of the voting shares or
other equity interests of such Subsidiary except for directors' qualifying
or similar shares.
"Subsidiary Guarantee": the Subsidiary Guarantee to be executed
by each Subsidiary Guarantor in favor of the Administrative Agent, for the
ratable benefit of the Lenders, substantially in the form of Exhibit E
hereto, as the same may be amended, supplemented or otherwise modified from
time to time.
"Subsidiary Guarantor": the Material Subsidiaries of Holdings and
such other Subsidiaries as the Company may elect to include as guarantors,
other than Foreign Subsidiaries of Holdings or the Company or other
Subsidiaries of Holdings or the Company if more than 65% of the assets of
such subsidiaries are securities of foreign Persons (such determination to
be made on the basis of fair market value); provided that the term
"Subsidiary Guarantor" shall, in any event, include any Subsidiary which
enters into a Guarantee pursuant to subsection 7.8(b).
"Subsidiary Note": the promissory note made by Gulfstream
Aerospace Corporation, a Georgia corporation and a Subsidiary of the
Company, in favor of the Company and evidencing the intercompany
indebtedness owed from time to time by such Subsidiary to the Company.
"Subsidiary Pledge Agreement": the Subsidiary Pledge Agreement to
be executed by each Subsidiary Pledgor in favor of the Collateral Agent,
for the ratable benefit of the Lenders, substantially in the form of
Exhibit F hereto, as the same may be amended, supplemented or otherwise
modified from time to time (it being understood and agreed that, subject to
Section 7.8(c) hereof, the Subsidiary Pledge Agreement shall not require a
Subsidiary Pledgor to pledge (x) any of the stock of any Foreign Subsidiary
of the Subsidiary Pledgor, the Company or Holdings which is owned by a
Foreign Subsidiary of the Subsidiary Pledgor, the Company or Holdings or
(y) more than 65% of the stock of (i) any other Foreign Subsidiary of the
Subsidiary Pledgor, the Company or Holdings or (ii) any other Subsidiary of
the Subsidiary Pledgor, the Company or Holdings if more than 65% of the
assets of such Subsidiary are securities of foreign Persons (such
determination to be made on the basis of fair market value)).
"Subsidiary Pledgor": any Subsidiary of the Company which, after
the Closing Date, enters into a Pledge Agreement pursuant to subsection
7.8(a).
"Term Installment Payment Date": as defined in subsection 2.2.
"Termination Date": April 15, 2000.
"Type": as to any Loan, its nature as an ABR Loan or a Eurodollar
Loan.
"Used Aircraft Inventory Financing": the collective reference to
each financing arrangement (other than any sale in which there is no
recourse to the Company or any of its Subsidiaries, to the extent that such
a sale might be deemed to be a financing arrangement) between any Financing
Subsidiary and a third party with regard to used aircraft held by the
Company or any of its Subsidiaries in inventory, substantially upon the
terms set forth in Schedule 1.1B; provided, in any event, that all such
arrangements collectively shall be limited to such portion of the used
aircraft inventory of the Company and its Subsidiaries having a fair market
value not in excess of $200,000,000 in the aggregate.
"Working Day": any day on which dealings in foreign currencies
and exchange between banks may be carried on in London, England and in New
York, New York.
"Year 2000 Problem": as defined in subsection 5.15.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined
meanings when used in the Notes, any other Credit Document or any
certificate or other document made or delivered pursuant hereto.
(b) As used herein and in the Notes, any other Credit Document
and any certificate or other document made or delivered pursuant hereto,
accounting terms relating to Holdings, the Company and its Subsidiaries not
defined in subsection 1.1 and accounting terms partly defined in subsection
1.1 to the extent not defined, shall have the respective meanings given to
them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as
a whole and not to any particular provision of this Agreement, and section,
subsection, schedule and exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to the singular and plural forms of such terms.
SECTION 2. TERM LOANS
----------
2.1 Term Loans. Subject to the terms and conditions hereof, each
Lender severally agrees to make term loans in Dollars (individually, a
"Loan"; and collectively, the "Loans") to the Company from time to time
during the Commitment Period in an aggregate principal amount not to exceed
such Lender's Commitment. Any Loans made on the Closing Date shall
initially be ABR Loans.
2.2 Repayment of Loans. The Company shall repay the Loans in 12
consecutive quarterly installments on the last day of each March, June,
September and December (each such day, a "Term Installment Payment Date"),
commencing on June 30, 2000, each of which installments on any such date
shall be the amount set forth opposite such date below (or such earlier
date on which the Loans become due and payable hereunder):
Installment Date Amount
---------------- ------
June 30, 2000 $8,333,333.25
September 30, 2000 $8,333,333.25
December 31, 2000 $8,333,333.25
March 31, 2001 $8,333,333.25
June 30, 2001 $20,833,333.37
September 30, 2001 $20,833,333.37
December 31, 2001 $20,833,333.37
March 31, 2002 $20,833,333.37
June 30, 2002 $20,833,333.38
September 30, 2002 $20,833,333.38
December 31, 2002 $20,833,333.38
March 31, 2003 $20,833,333.38
If the aggregate principal amount of the Loans outstanding on the
Termination Date is less than $200,000,000, each of the amounts set forth
in the table above shall be reduced ratably.
2.3 Proceeds of Loans. The Company shall use the proceeds of the Loans
solely (a) to finance the purchase of shares of common stock of Holdings
pursuant to the Stock Repurchase Program, (b) to pay fees and expenses in
connection with the Stock Repurchase Program, this Agreement and the
transactions contemplated thereby and hereby and (c) for working capital
and general corporate purposes.
SECTION 3. [RESERVED]
SECTION 4. GENERAL PROVISIONS APPLICABLE TO LOANS
--------------------------------------
4.1 Procedure for Borrowing. (a) The Company may borrow under the
Commitments during the Commitment Period on any Working Day, if the
borrowing is of Eurodollar Loans, or on any Business Day, if the borrowing
is of ABR Loans, provided that the Company shall give the Administrative
Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 12:00 Noon, New York City time (i) three
Working Days prior to the requested Borrowing Date if all or any part of
the Loans are to be Eurodollar Loans and (ii) one Business Day prior to the
requested Borrowing Date if the borrowing is to be solely of ABR Loans)
specifying (A) the amount of the borrowing, (B) the requested Borrowing
Date, (C) whether such Loans are initially to be Eurodollar Loans or ABR
Loans, or a combination thereof, and (D) if the borrowing is to be entirely
or partly Eurodollar Loans, the length of the Interest Period for such
Eurodollar Loans. Upon receipt of such notice the Administrative Agent
shall promptly notify each Lender (which notice shall in any event be
delivered to each Lender by 4:00 P.M., New York City time, on such date).
Not later than 12:00 Noon, New York City time, on the Borrowing Date
specified in such notice, each Lender shall make available to the
Administrative Agent at the office of the Administrative Agent specified in
subsection 11.2 (or at such other location as the Administrative Agent may
direct) an amount in immediately available funds equal to the amount of the
Loan to be made by such Lender. Loan proceeds received by the
Administrative Agent hereunder shall promptly be made available to the
Company by the Administrative Agent's crediting the account of the Company,
at the office of the Administrative Agent specified in subsection 11.2,
with the aggregate amount actually received by the Administrative Agent
from the Lenders and in like funds as received by the Administrative Agent.
(b) Any borrowing of Eurodollar Loans hereunder shall be in such
amounts and be made pursuant to such elections so that, after giving effect
thereto, (i) the aggregate principal amount of all Eurodollar Loans having
the same Interest Period shall not be less than $5,000,000, or a whole
multiple of $1,000,000 in excess thereof, and (ii) no more than ten
Interest Periods shall be in effect at any one time.
(c) Eurodollar Loans shall be made by each Lender at its
Eurodollar Lending Office and ABR Loans shall be made by each Lender at its
ABR Lending Office.
4.2. Repayment of Loans; Evidence of Debt. (a) The Company hereby
unconditionally promises to pay to the Administrative Agent for the account
of each Lender the principal amount of the Loan of such Lender, in
accordance with the applicable amortization schedule set forth in
subsection 2.2 (or the then unpaid principal amount of such Loans, on the
date that any or all of the Loans become due and payable pursuant to
Section 9). The Company hereby further agrees to pay interest on the unpaid
principal amount of the Loans from time to time outstanding from the date
hereof until payment in full thereof at the rates per annum, and on the
dates, set forth in subsection 4.7.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Company to
such Lender resulting from each Loan of such Lender from time to time,
including the amounts of principal and interest payable and paid to such
Lender from time to time under this Agreement.
(c) The Administrative Agent shall maintain the Register pursuant
to subsection 11.6(d), and a subaccount therein for each Lender, in which
shall be recorded (i) the amount of each Loan made hereunder, the Type
thereof and each Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Company to each Lender hereunder and (iii) both the amount of any sum
received by the Administrative Agent hereunder from the Company and each
Lender's share thereof.
(d) The entries made in the Register and the accounts of each
Lender maintained pursuant to subsection 4.2(b) shall, to the extent
permitted by applicable law, be prima facie evidence of the existence and
amounts of the obligations of the Company therein recorded; provided,
however, that the failure of any Lender or the Administrative Agent to
maintain the Register or any such account, or any error therein, shall not
in any manner affect the obligation of the Company to repay (with
applicable interest) the Loans made to such Company by such Lender in
accordance with the terms of this Agreement.
(e) The Company agrees that, upon the request to the Company and
the Administrative Agent by any Lender, the Company will execute and
deliver to such Lender a promissory note of the Company evidencing the
Loans of such Lender, substantially in the form of Exhibit A with
appropriate insertions as to date and principal amount (a "Note").
4.3 Conversion Options. The Company may elect from time to time
to convert Eurodollar Loans into ABR Loans by giving the Administrative
Agent irrevocable notice of such election, to be received by the
Administrative Agent prior to 12:00 Noon, New York City time, at least
three Working Days prior to the proposed conversion date, provided that any
such conversion of Eurodollar Loans shall only be made on the last day of
an Interest Period with respect thereto. The Company may elect from time to
time to convert all or a portion of the ABR Loans then outstanding to
Eurodollar Loans by giving the Administrative Agent irrevocable notice of
such election, to be received by the Administrative Agent prior to 12:00
Noon, New York City time, at least three Working Days prior to the proposed
conversion date, specifying the Interest Period selected therefor, and, if
no Default or Event of Default has occurred and is continuing, such
conversion shall be made on the requested conversion date or, if such
requested conversion date is not a Working Day, on the next succeeding
Working Day. Upon receipt of any notice pursuant to this subsection 4.3,
the Administrative Agent shall promptly, but in any event by 4:00 P.M., New
York City time, notify each Lender thereof. All or any part of the
outstanding Loans may be converted as provided herein, provided that
partial conversions of Loans shall be in the aggregate principal amount of
$5,000,000, or a whole multiple of $1,000,000 in excess thereof, and the
aggregate principal amount of the resulting Eurodollar Loans outstanding in
respect of any one Interest Period shall be at least $5,000,000 or a whole
multiple of $1,000,000 in excess thereof.
4.4 Changes of Commitment Amounts. (a) The Company shall have the
right, upon not less than three Business Days' notice to the Administrative
Agent, to terminate or, from time to time, reduce the Commitments subject
to the provisions of this subsection 4.4.
(b) Any partial reduction of the Commitments shall be in an
amount of $2,500,000 or a whole multiple of $1,000,000 in excess thereof,
and shall, in each case, reduce permanently the amount of the Commitments
then in effect.
4.5 Optional Prepayments. (a) The Company may at any time and from
time to time prepay Loans, in whole or in part, without premium or penalty,
upon at least one Business Days' irrevocable notice to the Administrative
Agent in the case of ABR Loans, and three Business Days' irrevocable notice
to the Administrative Agent in the case of Eurodollar Loans, specifying the
date and amount of prepayment, provided that if a Eurodollar Loan is
prepaid on any day other than the last day of the Interest Period
applicable thereto, the Company shall also pay any amounts owing pursuant
to subsection 4.21. Upon receipt of such notice the Administrative Agent
shall promptly notify each Lender thereof. If such notice is given, the
Company shall make such prepayment, and the payment amount specified in
such notice shall be due and payable, on the date specified therein.
Accrued interest on any Notes or on the amount of any Loans paid in full
pursuant to this subsection 4.5 shall be paid on the date of such
prepayment. Accrued interest on the amount of any partial prepayment shall
be paid on the Interest Payment Date next succeeding the date of such
partial prepayment (or in the case of prepayment in full of Loans, on the
date of such payment). Partial prepayments of Loans shall be in an
aggregate principal amount equal to the lesser of (A) $2,500,000 or a whole
multiple of $1,000,000 in excess thereof and (B) the aggregate unpaid
principal amount of the Loans, as the case may be. Except as otherwise may
be agreed by the Company and the Required Lenders, any prepayment of the
Loans pursuant to this subsection 4.5 shall be applied, first, to the
installments of the Loans scheduled to be paid during the next twelve
months after the date of such prepayment and second the balance, if any, to
the remaining installments of the Loans on a pro rata basis. Amounts
prepaid on account of the Loans pursuant to this subsection 4.5 or
otherwise may not be reborrowed.
(b) Optional prepayments of the Loans must be accompanied by a
ratable prepayment of the outstanding principal amount of 1996 Term Loans
and optional prepayments of 1996 Term Loans must be accompanied by a
ratable prepayment of outstanding Loans (based on the respective then
outstanding principal amounts of the Loans and the 1996 Term Loans).
4.6 Mandatory Prepayments. (a) Subject to the provisions of
subsection 8.5 promptly following the consummation of any Asset Sale by the
Company or any of its Subsidiaries, in the case of cash proceeds, and
promptly following receipt of cash proceeds representing payments under
notes or other securities received in connection with any non-cash
consideration obtained in connection with such Asset Sale, the Company
shall, to the extent that the cumulative amount of Net Proceeds received
after the Closing Date exceeds $50,000,000, or to the extent that the
cumulative amount of Net Proceeds received after the Closing Date in excess
of $20,000,000 are not reinvested in the business of the Company within
twelve months, apply an amount equal to the Prepayment Percentage of such
amount first to the installments of the Loans scheduled to be paid during
the next twelve months after the date of such prepayment and second to the
remaining installments of the Loans on a pro rata basis.
(b) Upon receipt by the Administrative Agent of the Net Proceeds
required to be paid to the Lenders hereunder from any Asset Sale (i)
consisting of the sale of all of the shares of stock of any Subsidiary
Guarantor, the obligations of such Subsidiary Guarantor under its Guarantee
shall automatically be discharged and released without any further action
by the Administrative Agent or any Lender, provided that the Administrative
Agent and the Lenders agree, upon the request of the Company, to execute
and deliver any instrument or other document in a form acceptable to the
Administrative Agent which may reasonably be required to evidence such
discharge and release and (ii) in connection with the sale or other
disposition of the capital stock of a Subsidiary of the Company, the
Collateral Agent shall release to the pledgor thereof, without
representation, warranty or recovery, express or implied, the capital stock
of such Subsidiary held by it as Pledged Stock (as defined in the relevant
Pledge Agreement), if any, under the relevant Pledge Agreement.
(c) The Company shall give the Administrative Agent (which shall
promptly notify each Lender) at least one Business Day's notice of each
prepayment pursuant to this subsection 4.6 setting forth the date and
amount thereof. Prepayment of Eurodollar Loans, if not on the last day of
the Interest Period with respect thereto, shall, at the Company's option as
long as no Default or Event of Default has occurred and is continuing, be
prepaid subject to the provisions of subsection 4.21 or such Net Proceeds
(after application to any ABR Loans) shall be deposited with the
Administrative Agent as cash collateral for such Eurodollar Loans on terms
reasonably satisfactory to the Administrative Agent and thereafter shall be
applied to the prepayment of the Loans constituting Eurodollar Loans on the
last day of the respective Interest Periods for such Eurodollar Loans next
ending most closely to the date of receipt of such Net Proceeds. After such
application, unless a Default or an Event of Default shall have occurred
and be continuing, any remaining interest earned on such cash collateral
shall be paid to the Company.
(d) Amounts prepaid on account of the Loans pursuant to this
subsection 4.6 or otherwise may not be reborrowed. Accrued interest on any
Loans prepaid pursuant to this subsection 4.6 shall be paid on the Interest
Payment Date next succeeding the date of any partial prepayment and on the
date of such payment or prepayment in the case of a payment or prepayment
in full of the Loans.
4.7 Interest Rates and Payment Dates. (a) Each Eurodollar Loan
shall bear interest for each day during each Interest Period with respect
thereto on the unpaid principal amount thereof at a rate per annum equal to
the Eurodollar Rate determined for such Interest Period plus the Applicable
Margin.
(b) ABR Loans shall bear interest for the period from and
including the date thereof until maturity thereof on the unpaid principal
amount thereof at a rate per annum equal to the ABR plus the Applicable
Margin.
(c) If all or a portion of (i) the principal amount of any of the
Loans or (ii) any interest payable thereon shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise), such
overdue amount shall, without limiting the rights of the Lenders under
Section 9, bear interest at a rate per annum which is (x) in the case of
overdue principal, 2% above the rate that would otherwise be applicable
thereto pursuant to the foregoing provisions of this subsection or (y) in
the case of overdue interest, 2% above the rate described in paragraph (b)
of this subsection, in each case from the date of such nonpayment until
such amount is paid in full (as well after as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date; provided that interest accruing pursuant to paragraph (c) of this
subsection shall be payable on demand.
4.8 Computation of Interest and Fees. (a) Interest in respect of
ABR Loans at any time the ABR is calculated based on the Prime Rate and all
fees hereunder shall be calculated on the basis of a 365 or 366, as the
case may be, day year for the actual days elapsed. Interest in respect of
Eurodollar Loans and ABR Loans at any time the ABR is not calculated based
on the Prime Rate shall be calculated on the basis of a 360 day year for
the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Company and the Lenders of each determination of a
Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change in the ABR or the Eurocurrency Reserve Requirement shall become
effective as of the opening of business on the day on which such change in
the ABR or the Eurocurrency Reserve Requirement, as the case may be,
becomes effective. The Administrative Agent shall as soon as practicable
notify the Company and the Lenders of the effective date and the amount of
each such change.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Company and the Lenders in the absence of manifest error.
The Administrative Agent shall, at the request of the Company, deliver to
the Company a statement showing the quotations used by the Administrative
Agent in determining the Eurodollar Rate.
4.9 Commitment Fee. The Company agrees to pay to the
Administrative Agent, for the account of each Lender, a commitment fee of
0.35% per annum from and including the Closing Date to but excluding the
Termination Date on the average daily amount of such Lender's Available
Commitment during the period for which payment is made, payable quarterly
in arrears on the last day of each March, June, September and December and
on the Termination Date or such earlier date as the Commitments shall
terminate as provided herein, commencing on the first of such dates to
occur after the date hereof.
4.10 Certain Fees. The parties hereto acknowledge and agree that
the Company has agreed to pay to Chase the fees set forth in the letter
agreement dated as of March 12, 1999 between the Company, Chase and Chase
Securities Inc. The parties hereto acknowledge and agree that the Company's
only obligation is to pay such fees to Chase in accordance with the terms
of such letter agreement and the Company is not liable or otherwise
obligated to the Lenders to pay such fees.
4.11 [RESERVED]
4.12 [RESERVED]
4.13 [RESERVED]
4.14 [RESERVED]
4.15 [RESERVED]
4.16 [RESERVED]
4.17 Inability to Determine Interest Rate. In the event that the
Administrative Agent shall have determined (which determination shall be
conclusive and binding upon the Company) that (a) by reason of
circumstances affecting the interbank eurodollar market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for any
Interest Period with respect to (i) proposed Loans that the Company has
requested be made as Eurodollar Loans, (ii) any Eurodollar Loans that will
result from the requested conversion of all or part of ABR Loans into
Eurodollar Loans or (iii) the continuation of any Eurodollar Loan as such
for an additional Interest Period, or (b) dollar deposits in the relevant
amount and for the relevant period with respect to any such Eurodollar Loan
are not available to any of the Lenders in their respective Eurodollar
Lending Offices' interbank eurodollar market, the Administrative Agent
shall forthwith give notice of such determination, confirmed in writing, to
the Company and the Lenders at least one day prior to, as the case may be,
the requested Borrowing Date, the conversion date or the last day of such
Interest Period. If such notice is given (i) any requested Eurodollar Loans
shall be made as ABR Loans, (ii) any ABR Loans that were to have been
converted to Eurodollar Loans shall be continued as ABR Loans, and (iii)
any outstanding Eurodollar Loans shall be converted, on the last day of the
then current Interest Period applicable thereto, into ABR Loans. Until such
notice has been withdrawn by the Administrative Agent, no further
Eurodollar Loans shall be made.
4.18 Pro Rata Treatment and Payments. (a) Each borrowing of any
Loans by the Company from the Lenders, each payment by the Company on
account of any fee hereunder (other than as set forth in subsection 4.10),
and payments to Lenders in respect of proceeds of collateral and any
reduction of the Commitments hereunder shall be made pro rata according to
the relevant Commitment Percentages of the Lenders. Each payment (including
each prepayment) by the Company on account of principal of and interest on
the Loans (other than as set forth in subsections 4.19, 4.20 and 4.21)
shall be made pro rata according to the relevant Commitment Percentages of
the Lenders. All payments (including prepayments) to be made by the Company
on account of principal, interest and fees shall be made without set-off or
counterclaim and shall be made to the Administrative Agent, for the account
of the Lenders, at the Administrative Agent's office located at 270 Park
Avenue, New York, New York 10017, in lawful money of the United States of
America and in immediately available funds. The Administrative Agent shall
promptly distribute such payments ratably to each Lender in like funds as
received. If any payment hereunder (other than payments on Eurodollar
Loans) becomes due and payable on a day other than a Business Day, such
payment shall be extended to the next succeeding Business Day and, with
respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension. If any payment on a Eurodollar
Loan becomes due and payable on a day other than a Working Day, the
maturity thereof shall be extended to the next succeeding Working Day
unless the result of such extension would be to extend such payment into
another calendar month in which event such payment shall be made on the
immediately preceding Working Day.
(b) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a Borrowing Date that such Lender will not
make the amount which would constitute its relevant Commitment Percentage
of the borrowing on such date available to the Administrative Agent, the
Administrative Agent may assume that such Lender has made such amount
available to the Administrative Agent on such Borrowing Date in accordance
with subsection 4.1 and the Administrative Agent may, in reliance upon such
assumption, make available to the Company a corresponding amount. If such
amount is made available to the Administrative Agent by such Lender on a
date after such Borrowing Date, such Lender shall pay to the Administrative
Agent on demand an amount equal to the product of (i) the daily average
Federal funds rate during such period as quoted by the Administrative
Agent, times (ii) the amount of such Lender's relevant Commitment
Percentage of such borrowing not made available on such Borrowing Date,
times (iii) a fraction the numerator of which is the number of days that
elapse from and including such Borrowing Date to the date on which such
Lender's relevant Commitment Percentage of such borrowing shall have become
immediately available to the Administrative Agent and the denominator of
which is 360. A certificate of the Administrative Agent submitted to any
Lender with respect to any amounts owing under this subsection 4.18(b)
shall be conclusive, absent manifest error. If such Lender's relevant
Commitment Percentage of such borrowing is not in fact made available to
the Administrative Agent by such Lender within three Business Days of such
Borrowing Date, the Administrative Agent shall be entitled to recover such
amount with interest thereon at the rate per annum applicable to ABR Loans
hereunder and on demand, from the Company, without prejudice to any rights
which the Company or the Administrative Agent may have against such Lender
hereunder. Nothing contained in this subsection 4.18(b) shall relieve any
Lender which has failed to make available its ratable portion of any
borrowing hereunder from its obligation to do so in accordance with the
terms hereof.
(c) The failure of any Lender to make the Loan to be made by it
on any Borrowing Date shall not relieve any other Lender of its obligation,
if any, hereunder to make its Loan on such Borrowing Date, but no Lender
shall be responsible for the failure of any other Lender to make the Loan
to be made by such other Lender on such Borrowing Date.
(d) All payments and optional prepayments (other than prepayments
as set forth in subsection 4.20 with respect to increased costs) of
Eurodollar Loans hereunder shall be in such amounts and be made pursuant to
such elections so that, after giving effect thereto, the aggregate
principal amount of all Eurodollar Loans with the same Interest Period
shall not be less than $5,000,000 or a whole multiple of $1,000,000 in
excess thereof.
(e) Each Lender, Assignee and Participant that is not a citizen
or resident of the United States of America, a corporation, partnership or
other entity created or organized in or under the laws of the United States
of America, or any estate or trust that is subject to U.S. federal income
taxation regardless of the source of its income (a "Non-U.S. Lender") shall
deliver to the Company and the Administrative Agent, and if applicable, the
assigning Lender (or, in the case of a Participant, to the Lender from
which the related participation shall have been purchased) on or before the
date on which it becomes a party to this Agreement (or, in the case of a
Participant, on or before the date on which such Participant purchases the
related participation) either:
(A) (x) two duly completed and signed copies of either Internal
Revenue Service Form W-8BEN (relating to such Non-U.S. Lender and
entitling it to a complete exemption from withholding of U.S. Taxes on
all amounts to be received by such Non-U.S. Lender pursuant to this
Agreement and the other Credit Documents) or Form W-8ECI (relating to
all amounts to be received by such Non-U.S. Lender pursuant to this
Agreement and the other Credit Documents), or successor and related
applicable forms, as the case may be, and (y) two duly completed and
signed copies of Internal Revenue Service Form W-8 or W-9, or
successor and related applicable forms, as the case may be (including,
where applicable with respect to both clause (x) and clause (y), any
such forms required to be provided to certify to such exemption on
behalf of all of such Non-U.S. Lender's beneficial owners); or
(B) in the case of a Non-U.S. Lender that is not a "bank" within
the meaning of Section 881(c)(3)(A) of the Code and that does not
comply with the requirements of clause (A) hereof, (x) a statement in
the form of Exhibit G (or such other form of statement as shall be
reasonably requested by the Company from time to time) to the effect
that such Non-U.S. Lender is eligible for a complete exemption from
withholding of U.S. Taxes under Code Section 871(h) or 881(c) (and,
where applicable, such statements to certify to eligibility for such
exemption of all of such Non-U.S. Lender's beneficial owners), and (y)
two duly completed and signed copies of Internal Revenue Service Form
W-8BEN or successor and related applicable form (including, where
applicable, such forms with respect to all of such Non-U.S. Lender's
beneficial owners)(it being understood and agreed that no Participant
and, without the prior written consent of the Company described in
clause (C) of the proviso to the first sentence of subsection 11.6(c),
no Assignee shall be entitled to deliver any forms or statements
pursuant to this clause (B), but rather shall be required to deliver
forms pursuant to clause (A) of this subsection 4.18(e)).
Each Non-U.S. Lender that delivers a statement in the form of Exhibit G (or
such other form of statement as shall have been requested by the Company)
agrees that it shall be the sole beneficial and record owner of Loans or
Notes held by it. Further, each Non-U.S. Lender agrees (i) to deliver to
the Company and the Administrative Agent, and if applicable, the assigning
Lender (or, in the case of a Participant, to the Lender from which the
related participation shall have been purchased) two further duly completed
and signed copies of such Forms W-8BEN, W-8ECI or W-9, as the case may be,
(and, where applicable, such forms relating to all of its beneficial
owners) or successor and related applicable forms, on or before the date
that any such form expires or becomes obsolete and promptly after the
occurrence of any event requiring a change from the most recent form(s)
previously delivered by it to the Company (or, in the case of a
Participant, to the Lender from which the related participation shall have
been purchased) in accordance with applicable U.S. laws and regulations,
(ii) in the case of a Non-U.S. Lender that delivers a statement in the form
of Exhibit G (or such other form of statement as shall have been requested
by the Company), to deliver to the Company and the Administrative Agent,
and if applicable, the assigning Lender, such statement (including, where
applicable, any such statements from its beneficial owners) on an annual
basis on the anniversary of the date on which such Non-U.S. Lender became a
party to this Agreement and to deliver promptly to the Company and the
Administrative Agent, and if applicable, the assigning Lender, such
additional statements and forms as shall be reasonably requested by the
Company from time to time, and (iii) to notify promptly the Company and the
Administrative Agent (or, in the case of a Participant, the Lender from
which the related participation shall have been purchased) if it is no
longer able to deliver, or if it is required to withdrawn or cancel, any
form or statement previously delivered by it pursuant to this subsection
4.18(e). Each Non-U.S. Lender agrees to indemnify and hold harmless the
Company from and against any taxes, penalties, interest or other costs or
losses (including, without limitation, reasonable attorneys' fees and
expenses) incurred or payable by the Company as a result of the failure of
the Company to comply with its obligations to deduct or withhold any U.S.
Taxes from any payments made pursuant to this Agreement to such Non-U.S.
Lender or the Administrative Agent which failure resulted from the
Company's reliance on any form, statement, certificate or other information
provided to it by such Non-U.S. Lender pursuant to clause (B) or clause
(ii) of this subsection 4.18(e). The Company hereby agrees that for so long
as a Non-U.S. Lender complies with this subsection 4.18(e), the Company
shall not withhold any amounts from any payments made pursuant to this
Agreement to such Non-U.S. Lender, unless the Company reasonably determines
that it is required by law to withhold or deduct any amounts from any
payments made to such Non-U.S. Lender pursuant to this Agreement.
Notwithstanding any other provision of this subsection 4.18(e), a Non-U.S.
Lender shall not be required to deliver any form or statement pursuant to
the immediately preceding sentences in this subsection 4.18(e) that such
Non-U.S. Lender is not legally able to deliver (it being understood and
agreed that the Company shall withhold or deduct such amounts from any
payments made to such Non-U.S. Lender that the Company reasonably
determines are required by law). If any Credit Party other than the Company
makes any payment to any Non-U.S. Lender under any Credit Document, the
foregoing provisions of this subsection 4.18(e) shall apply to such
Non-U.S. Lender and such Credit Party as if such Credit Party were the
Company (but a Non-U.S. Lender shall not be required to provide any form or
make any statement to any such Credit Party unless such Non-U.S. Lender has
received a request to do so from such Credit Party and has a reasonable
time to comply with such request).
4.19 Illegality. Notwithstanding any other provisions herein, if
any Requirement of Law or any change therein or in the interpretation or
application thereof occurring after the date that any lender becomes a
Lender party to this Agreement, shall make it unlawful for such Lender to
make or maintain Eurodollar Loans as contemplated by this Agreement, the
commitment of such Lender hereunder to make Eurodollar Loans or to convert
all or a portion of ABR Loans into Eurodollar Loans shall forthwith be
cancelled and such Lender's Loans then outstanding as Eurodollar Loans, if
any, shall, if required by law and if such Lender so requests, be converted
automatically to ABR Loans on the date specified by such Lender in such
request. To the extent that such affected Eurodollar Loans are converted
into ABR Loans, all payments of principal which would otherwise be applied
to such Eurodollar Loans shall be applied instead to such Lender's ABR
Loans. The Company hereby agrees promptly to pay any Lender, upon its
demand, any additional amounts necessary to compensate such Lender for any
costs incurred by such Lender in making any conversion in accordance with
this subsection 4.19 including, but not limited to, any interest or fees
payable by such Lender to lenders of funds obtained by it in order to make
or maintain its Eurodollar Loans hereunder (such Lender's notice of such
costs, as certified to the Company through the Administrative Agent, to be
conclusive absent manifest error).
4.20 Requirements of Law. (a) In the event that, at any time after
the date hereof, any Requirement of Law or any change therein or in the
interpretation or application thereof or compliance by any Lender with any
request or directive (whether or not having the force of law) from any
central bank or other Governmental Authority:
(i) does or shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement, any Note or any Eurodollar
Loans made by it, or change the basis of taxation of payments to such
Lender of principal, commitment fee, interest or any other amount
payable hereunder (except for changes in the rate of tax on the
overall net income of such Lender);
(ii) does or shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for the
account of, advances or loans by, or other credit extended by, or any
other acquisition of funds by, any office of such Lender which are not
otherwise included in the determination of the Eurodollar Rate; or
(iii) does or shall impose on such Lender any other
condition;
and the result of any of the foregoing is to increase the cost to such
Lender of making, converting, renewing or maintaining advances or
extensions of credit or to reduce any amount receivable hereunder, in each
case, in respect of its Eurodollar Loans, then, in any such case, the
Company shall promptly pay such Lender, on demand, any additional amounts
necessary to compensate such Lender for such additional cost or reduced
amount receivable which such Lender deems to be material as determined by
such Lender with respect to such Eurodollar Loans, together with interest
on each such amount from the date demanded until payment in full thereof at
a rate per annum equal to the ABR plus the Applicable Margin for ABR Loans.
(b) In the event that at any time after the date hereof, any
Change in Law with respect to any Lender shall, in the opinion of such
Lender, require that any Commitment of such Lender be treated as an asset
or otherwise be included for purposes of calculating the appropriate amount
of capital to be maintained by such Lender or any corporation controlling
such Lender, and such Change in Law shall have the effect of reducing the
rate of return on such Lender's or such corporation's capital, as the case
may be, as a consequence of such Lender's obligations hereunder to a level
below that which such Lender or such corporation, as the case may be, could
have achieved but for such Change in Law (taking into account such Lender's
or such corporation's policies, as the case may be, with respect to capital
adequacy) by an amount deemed by such Lender to be material, then from time
to time following notice by such Lender to the Company of such Change in
Law as provided in paragraph (c) of this subsection 4.20, within 15 days
after demand by such Lender, the Company shall pay to such Lender such
additional amount or amounts as will compensate such Lender or such
corporation, as the case may be, for such reduction.
(c) If any Lender becomes entitled to claim any additional
amounts pursuant to this subsection 4.20, it shall promptly notify the
Company, through the Administrative Agent, of the event by reason of which
it has become so entitled. If any Lender has notified the Company through
the Administrative Agent of any increased costs pursuant to paragraph (a)
of this subsection 4.20, the Company at any time thereafter may, upon at
least two Working Days' notice to the Administrative Agent (which shall
promptly notify the Lenders thereof), and subject to subsection 4.21,
prepay (or convert into ABR Loans) all (but not a part) of the Eurodollar
Loans then outstanding. Each Lender agrees that, upon the occurrence of any
event giving rise to the operation of paragraph (a) of this subsection 4.20
with respect to such Lender, it will, if requested by the Company and to
the extent permitted by law or by the relevant Governmental Authority,
endeavor in good faith to avoid or minimize the increase in costs or
reduction in payments resulting from such event (including, without
limitation, endeavoring to change its Eurodollar Lending Office); provided,
however, that such avoidance or minimization can be made in such a manner
that such Lender, in its sole determination, suffers no economic, legal or
regulatory disadvantage. If any Lender has notified the Company, through
the Administrative Agent, of any increased costs pursuant to paragraph (b)
of this subsection 4.20, the Company at any time thereafter may, upon at
least three Business Days' notice to the Administrative Agent (which shall
promptly notify the Lenders thereof), and subject to subsection 4.21,
reduce or terminate the Commitments in accordance with subsection 4.4.
(d) A certificate submitted by such Lender, through the
Administrative Agent, to the Company shall be conclusive in the absence of
manifest error. The covenants contained in this subsection 4.20 shall
survive the termination of this Agreement and payment of the outstanding
Notes.
4.21 Indemnity. The Company agrees to indemnify each Lender and
to hold such Lender harmless from any loss or expense which such Lender may
sustain or incur as a consequence of (a) default by the Company in payment
of the principal amount of or interest on any Eurodollar Loans of such
Lender, including, but not limited to, any such loss or expense arising
from interest or fees payable by such Lender to lenders of funds obtained
by it in order to make or maintain its Eurodollar Loans hereunder, (b)
default by the Company in making a borrowing of Eurodollar Loans after the
Company has given a notice in accordance with subsection 4.1 or in making a
conversion of ABR Loans to Eurodollar Loans after the Company has given
notice in accordance with subsection 4.3, (c) default by the Company in
making any prepayment of Eurodollar Loans after the Company has given a
notice in accordance with subsections 4.5 and 4.6 or (d) a payment or
prepayment of a Eurodollar Loan or conversion of any Eurodollar Loan into
an ABR Loan, in either case on a day which is not the last day of an
Interest Period with respect thereto, including, but not limited to, any
such loss or expense arising from interest or fees payable by such Lender
to lenders of funds obtained by it in order to maintain its Eurodollar
Loans hereunder. This covenant shall survive termination of this Agreement
and payment of the outstanding Obligations.
SECTION 5. REPRESENTATIONS AND WARRANTIES
------------------------------
In order to induce the Lenders to enter into this Agreement and
to continue and make the Loans, the Company hereby represents and warrants
to each Lender and the Administrative Agent, on and as of the Closing Date
and on the date of each Loan made, that:
5.1 Corporate Existence; Compliance with Law. Each Credit Party
and each of its Subsidiaries (a) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (b) has the corporate power and authority and the legal
right to own and operate its property, to lease the property it operates
and to conduct the business in which it is currently engaged, except to the
extent that the failure to possess such corporate power and authority and
such legal right would not, in the aggregate, have a Material Adverse
Effect, (c) is duly qualified as a foreign corporation and in good standing
under the laws of each jurisdiction where its ownership, lease or operation
of property or the conduct of its business requires such qualification,
except where the failure to be so qualified would not have Material Adverse
Effect and (d) is in compliance with all Requirements of Law (including,
without limitation, the Comprehensive Environmental Response, Compensation
and Liability Act, any so-called "Superfund" or "Superlien" law, or any
applicable federal, state, local or other statute, law, ordinance, code,
rule, regulation, order or decree regulating, relating to, or imposing
liability or standards of conduct concerning, any Hazardous Materials),
except to the extent that the failure to comply therewith would not, in the
aggregate, have a Material Adverse Effect.
5.2 Corporate Power; Authorization. Each Credit Party has the
corporate power and authority and the legal right to make, deliver and
perform the Credit Documents to which it is a party and to pledge the
Pledged Stock pursuant to the Pledge Agreement to which it is a party, and
the Company has the corporate power and authority and legal right to borrow
hereunder. Each Credit Party has taken all necessary corporate action to
authorize the execution, delivery and performance of the Credit Documents
to which it is a party, the pledge of the Pledged Stock pursuant to the
Pledge Agreement to which it is a party and, in case of the Company, to
authorize the borrowings hereunder. No consent or authorization of, or
filing with, any Person (including, without limitation, any Governmental
Authority) is required in connection with the execution, delivery or
performance by any Credit Party, or the use of proceeds of the Loans on the
Closing Date as contemplated hereby, or the validity or enforceability
against any Credit Party, of any Credit Document, to the extent that it is
a party thereto, or the pledge of the Pledged Stock pursuant to the Pledge
Agreements, or the guarantee of the Obligations pursuant to the Guarantees.
5.3 Enforceable Obligations. Each of the Credit Documents has
been duly executed and delivered on behalf of the Credit Party thereto and
each of such Credit Documents constitutes the legal, valid and binding
obligation of such Credit Party, enforceable against such Credit Party in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or similar
laws affecting creditors' rights generally and by general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law).
5.4 No Legal Bar. The performance of each Credit Document, the
pledge of the Pledged Stock pursuant to the Pledge Agreements, the
guarantee of the Obligations pursuant to the Guarantees and the use of the
proceeds of the Loans will not violate any Requirement of Law or any
Contractual Obligation applicable to or binding upon any Credit Party, any
of its Subsidiaries or any of its properties or assets, which violations,
individually or in the aggregate, would have a material adverse effect on
the ability of such Credit Party to perform its obligations under the
Credit Documents to the extent that it is a party thereto, or which would
give rise to any liability on the part of the Administrative Agent or any
Lender, or which would have a Material Adverse Effect, and will not result
in the creation or imposition of (or the obligation to create or impose)
any Lien (other than liens created pursuant to the Credit Documents) on any
of its or their respective properties or assets pursuant to any Requirement
of Law applicable to it or them, as the case may be, or any of its or their
Contractual Obligations, except for the Liens arising under the Pledge
Agreements.
5.5 No Material Litigation. No litigation or investigation known
to the Company through receipt of written notice or proceeding of or by any
Governmental Authority or any other Person is pending against any Credit
Party or any of its Subsidiaries, including, without limitation, the
investigations, actions, suits and proceedings described in Schedule 5.5,
(a) with respect to the validity, binding effect or enforceability of any
Credit Document or with respect to the Loans made hereunder, the use of
proceeds thereof and the other transactions contemplated hereby or thereby,
or (b) which would have a Material Adverse Effect.
5.6 Financial Condition.
-------------------
(a) The audited consolidated balance sheet of Holdings and its
Subsidiaries at December 31, 1998, and the related consolidated statements
of operations, stockholders' equity and cash flows for the fiscal year
ended on such date, reported on by Deloitte & Touche LLP, copies of each of
which have heretofore been furnished to each Lender, present fairly in
accordance with GAAP in all material respects the consolidated financial
condition of Holdings and its Subsidiaries as at such date, and the
consolidated results of their operations and cash flows for the fiscal
period then ended. All such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the period involved (except as concurred in
by the Accountants (as defined below)). Except as disclosed in the 1998 10K
neither Holdings nor any of its Subsidiaries had, as of the date of such
financial statements, any material obligation, contingent or otherwise,
which was not reflected in the foregoing statements or in the notes thereto
and which would have a Material Adverse Effect.
(b) Except as set forth in the 1998 10K, there have not been any
events or states of fact which individually or in the aggregate would have
a Material Adverse Effect.
(c) Between December 31, 1998 and the Closing Date, except as
disclosed in Schedule 5.6(c) or pursuant to the Stock Repurchase Program,
no dividends or other distributions have been declared, paid or made upon
any shares of capital stock of the Company nor have any shares of capital
stock of the Company been redeemed, retired, purchased or otherwise
acquired by the issuer thereof.
5.7 Investment Company Act. Neither any Credit Party nor any of
its Subsidiaries is an "investment company" or a company "controlled" by an
"investment company" (as each of the quoted terms is defined or used in the
Investment Company Act of 1940, as amended).
5.8 Federal Regulation. No part of the proceeds of any of the
Loans will be used for any purpose which violates, or which would be
inconsistent with, the provisions of Regulation T, U or X of the Board.
Neither the Company nor any of its Subsidiaries is engaged or will engage,
principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" within the respective meanings of each of the quoted terms under
said Regulation U.
5.9 No Default. Neither the Company nor any of its Subsidiaries
is in default in the payment or performance of any of its or their
Contractual Obligations in any respect which would have a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries is in default under
any order, award or decree of any Governmental Authority or arbitrator
binding upon or affecting it or them or by which any of its or their
properties or assets may be bound or affected in any respect which would
have a Material Adverse Effect and no such order, award or decree would
materially adversely affect the ability of the Company and its Subsidiaries
taken as a whole to carry on their businesses as presently conducted or the
ability of any Credit Party to perform its obligations under any Credit
Document to which it is a party.
5.10 No Burdensome Restrictions. Neither the Company nor any of
its Subsidiaries is a party to or is bound by any Contractual Obligation or
subject to any Requirement of Law or other corporate restriction which
would have a Material Adverse Effect.
5.11 Taxes. Each of the Company and its Subsidiaries has filed or
caused to be filed or has timely requested an extension to file or has
received an approved extension to file all tax returns which, to the
knowledge of the Company, are required to have been filed, and has paid all
taxes shown to be due and payable on said returns or extension requests or
on any assessments made against it or any of its property and all other
taxes, fees or other charges imposed on it or any of its property by any
Governmental Authority (other than those the amount or validity of which is
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided in the
books of the Company or its Subsidiaries, as the case may be), except any
such filings or taxes, fees or charges, the making of or the payment of
which, or the failure to make or pay, would not have a Material Adverse
Effect, and, to the knowledge of the Company, no claims are being asserted
with respect to any such taxes, fees or other charges (other than those the
amount or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity
with GAAP have been provided in the books of the Company or its
Subsidiaries, as the case may be), except as to any such taxes, fees or
other charges, the payment of which, or the failure to pay, would not have
a Material Adverse Effect.
5.12 Subsidiaries. As of the Closing Date, the Subsidiaries of
the Company listed on Schedule 5.12A constitute all of the Domestic
Subsidiaries of the Company and the Subsidiaries listed on Schedule 5.12B
constitute all of the Foreign Subsidiaries of the Company.
5.13 Ownership of Property; Liens. Except as set forth in the
1998 10K, the Company and each of its Subsidiaries has good and marketable
title to, or valid and subsisting leasehold interests in, all its
respective material real property, and good title to all its respective
material other property, and none of such property is subject, except as
permitted hereunder, to any Lien (including, without limitation and subject
to subsection 8.2 hereof, Federal, state and other tax liens).
5.14 ERISA. No "prohibited transaction" (as defined in Section
406 of ERISA or Section 4975 of the Code) or "accumulated funding
deficiency" (as defined in Section 302 of ERISA) or Reportable Event (other
than a Reportable Event with respect to which the 30-day notice requirement
under Section 4043 of ERISA has been waived) has occurred during the five
years preceding each date on which this representation is made or deemed
made with respect to any Plan in any case the consequences of which would
have a Material Adverse Effect. Except as disclosed in Schedule 5.14, the
present value of all accrued benefits under each Single Employer Plan
maintained by the Company or a Commonly Controlled Entity (based on those
assumptions used to fund such Plan) did not, as of the most recent annual
valuation date in respect of each such Plan, exceed the fair market value
of the assets of the Plan (including for these purposes accrued but unpaid
contributions) allocable to such benefits by more than $2,000,000, and the
present value of all accrued benefits under all such Single Employer Plans
under which the present value of benefits exceeds the assets allocable
thereto did not, as of such valuation date, exceed the fair market value of
all such Plans (including for these purposes accrued but unpaid
contributions) allocable to such benefits by more than $15,000,000. The
liability to which the Company or any Commonly Controlled Entity would
become subject under ERISA if the Company or any such Commonly Controlled
Entity were to withdraw completely from all Multiemployer Plans as of the
valuation date most closely preceding the date hereof would not have a
Material Adverse Effect. No Multiemployer Plan is either in Reorganization
or Insolvent in any case the consequences of which would have a Material
Adverse Effect.
5.15 Year 2000. The Company reasonably anticipates that it will
on a timely basis successfully resolve the risk that, after December 31,
1999, computer applications used by the Company may be unable to recognize
and properly perform date-sensitive functions involving required dates
prior to and all dates after December 31, 1999 (the "Year 2000 Problem")
for all of the Company's material computer applications. The Company, on
the basis of inquiries made, reasonably believes that each supplier and
vendor of the Company that is of material importance to the financial
well-being of the Company will also successfully resolve on a timely basis
the Year 2000 Problem for all of its material computer applications.
SECTION 6. CONDITIONS PRECEDENT
--------------------
6.1 Conditions to Effectiveness of this Agreement and Loans. The
effectiveness of this Agreement and the obligation of each Lender to make
its Loans on the Borrowing Date are subject to the satisfaction, or waiver
by the Lenders (or, in the case of conditions specified 6.1(g) or (p), by
the Administrative Agent) immediately prior to or concurrently with the
effectiveness of this Agreement or the making of such Loans, as the case
may be, of the following conditions precedent:
(a) Term Loan Agreement. The Administrative Agent shall have
received this Agreement, executed and delivered by a duly authorized
officer of the Company with a counterpart for each Lender.
(b) Pledge Agreements. The Collateral Agent shall have received
the Holdings Pledge Agreement and the Company Pledge Agreement, each
executed and delivered by a duly authorized officer of the Credit
Party party thereto, together with (to the extent not otherwise
previously received by the Administrative Agent) (i) (A) the Holdings
Note, (B) the Subsidiary Note and (C) all stock certificates
representing all of the Pledged Stock (as defined in such Pledge
Agreement) and (ii) undated stock powers for each certificate
representing such Pledged Stock, and undated endorsements to the
Holdings Note and the Subsidiary Note, each duly executed in blank and
delivered by a duly authorized officer of such Credit Party, and in
each case accompanied by the acknowledgement and consent of each
issuer of such Pledged Stock or such note thereunder, as the case may
be, in the form annexed to each such Pledge Agreement.
(c) Guarantees. The Administrative Agent shall have received (i)
the Holdings Guarantee, executed and delivered by a duly authorized
officer of Holdings, and (ii) the Subsidiary Guarantee, executed and
delivered by a duly authorized officer of each Subsidiary Guarantor.
(d) Amendment of 1996 Credit Agreement. The Administrative Agent
shall have received evidence satisfactory to it that the 1996 Credit
Agreement has been amended by the Sixth Amendment.
(e) Amendment of Holdings Note. The Administrative Agent shall
have received evidence reasonably satisfactory to it that the Holdings
Note has been amended to extend the maturity date thereof to October
1, 2004 and to include the Obligations as senior debt thereunder.
(f) [RESERVED]
(g) Legal Opinions. The Administrative Agent shall have received
such legal opinions covering the transactions contemplated by this
Agreement as the Administrative Agent shall reasonably request, dated
the Closing Date and addressed to the Administrative Agent and the
Lenders, including, (i) an opinion of Fried, Frank, Harris, Shriver &
Jacobson, counsel to Holdings and the Company, substantially in the
form of Exhibit H-1 hereto with such changes thereto as may be
approved by and otherwise in form and substance reasonably
satisfactory to the Administrative Agent and its counsel and (ii) an
opinion of General Counsel to the Company, substantially in the form
of Exhibit H-2 hereto with such changes thereto as may be approved by
and otherwise in form and substance reasonably satisfactory to the
Administrative Agent and its counsel. Such opinions shall also cover
such other matters incident to the transactions contemplated by this
Agreement as the Administrative Agent shall reasonably require.
(h) Insurance. The Administrative Agent shall have received a
schedule describing all insurance maintained by the Company and its
Subsidiaries pursuant to subsection 7.5(b), which schedule shall set
forth for each insurance policy the scope of coverage, the policy
limits and deductibles, the insurer and the expiration date.
(i) [RESERVED]
(j) Closing Certificates. The Administrative Agent shall have
received a Closing Certificate of Holdings, the Company and each
Subsidiary Guarantor, dated the Closing Date, substantially in the
form of Exhibits I-1, I-2 and I-3 hereto, respectively, with
appropriate insertions and attachments, satisfactory in form and
substance to the Administrative Agent and its counsel, executed by the
President or any Vice President and the Secretary or any Assistant
Secretary of Holdings, the Company and each Subsidiary Guarantor,
respectively.
(k) Financial Information. The Administrative Agent shall have
received a copy of (i) the financial statements referred to in
subsection 5.6(a) and such financial statements for the year ended
December 31, 1997, (ii) a pro forma balance sheet of the Company as at
December 31, 1998, adjusted to give effect to the Stock Repurchase
Program, the Loans to be made and the use of proceeds thereof and
(iii) the 1998 Form 10K, in each case with a photocopy thereof for
each Lender.
(l) No Legal Constraints. Except as disclosed in the 1998 10K, no
litigation, inquiry, injunction or restraining order shall be pending,
entered or threatened (including any proposed statute, rule or
regulation) which is reasonably likely to have a Material Adverse
Effect or a material adverse effect on (i) the Stock Repurchase
Program and the transactions related thereto, (ii) the ability of the
Credit Parties to perform their obligations under the Credit Documents
or (iii) the rights and remedies of the Administrative Agent and the
Lenders under the Credit Documents.
(m) Absence of Other Developments. Except as disclosed in the
1998 10K, there shall not have occurred any change, or development or
event involving a prospective change, which in either case is
reasonably likely to have a Material Adverse Effect or a material
adverse effect on the rights and remedies of the Administrative Agent
and the Lenders under the Credit Documents.
(n) Events of Default Under Other Agreements. No default or event
of default shall have occurred and be continuing under any capital
stock or material Indebtedness of Holdings, the Company or their
Subsidiaries (either before or after giving effect to the Stock
Repurchase Program), or would occur after giving effect to the
transactions contemplated hereby, except any such defaults or events
of default which (i) have previously been waived or the obligation
with respect to which such default or breach has occurred has been or
will be refinanced and extinguished on or prior to the Closing Date or
(ii) would otherwise not have a Material Adverse Effect (either before
or after giving effect to the Stock Repurchase Program) or a material
adverse effect on the transactions contemplated hereby.
(o) Fees. The Administrative Agent shall have received for the
account of the Lenders, or for its own account, as the case may be,
all fees and expenses payable to the Lenders and the Administrative
Agent on or prior to the Closing Date.
(p) Related Agreements. The Administrative Agent shall have
received each additional document, instrument or piece of information
reasonably requested by the Lenders, including, without limitation, a
copy of any debt instrument, security agreement or other material
contract to which any Credit Party or any of their Subsidiaries is a
party.
(q) Additional Matters. All other documents and legal matters in
connection with the transactions contemplated by this Agreement shall
be satisfactory in form and substance to the Administrative Agent and
its counsel.
6.2 Conditions to All Loans. The obligation of each Lender to
make any Loan is subject to the satisfaction of the following conditions
precedent on the relevant Borrowing Date:
(a) Representations and Warranties. If such Loan is made on the
Closing Date, each of the representations and warranties made in or
pursuant to Section 5 or which are contained in any other Credit
Document or in any certificate, document or financial or other
statement furnished by or on behalf of Holdings, the Company or any
Subsidiary thereof, at any time under or in connection herewith, shall
be true and correct in all material respects on and as of the Closing
Date as if made on and as of the Closing Date (unless stated to relate
to a specific earlier date, in which case such representations and
warranties shall be true and correct in all material respects as of
such earlier date). If such Loan is made subsequent to the Closing
Date, each of the representations and warranties made in or pursuant
to Section 5 or which are contained in any other Credit Document or in
any certificate, document or financial or other statement furnished by
or on behalf of Holdings, the Company or any Subsidiary thereof shall
be true and correct in all material respects on and as of the date of
such Loan as if made on and as of such date (unless stated to relate
to a specific earlier date, in which case such representations and
warranties shall be true and correct in all material respects as of
such earlier date).
(b) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing on such date or after
giving effect to the Loan to be made on such Borrowing Date.
Each borrowing by the Company hereunder shall constitute a
representation and warranty by the Company as of the date of such borrowing
that the conditions in clauses (a) and (b) of this subsection 6.2 have been
satisfied.
SECTION 7. AFFIRMATIVE COVENANTS
---------------------
The Company hereby agrees that, so long as the Commitments remain
in effect, any Loan or Note remains outstanding and unpaid or any other
amount is owing to any Lender or the Administrative Agent hereunder, it
shall, and, in the case of the agreements contained in subsections 7.3,
7.4, 7.5, 7.6 and 7.8 cause each of its Subsidiaries to:
7.1 Financial Statements. Furnish to the Administrative Agent
(with sufficient copies for each Lender):
(a) as soon as available, but in any event within 90 days after
the end of each fiscal year of Holdings, a copy of the consolidated
balance sheet of Holdings and its consolidated Subsidiaries as at the
end of such year and the related consolidated statements of
operations, stockholders' equity and cash flows for such year, setting
forth in each case in comparative form the figures for the previous
year, reported on without a "going concern" or like qualification or
exception, or qualification arising out of the scope of the audit, by
Deloitte & Touche LLP or other independent certified public
accountants of nationally recognized standing not unacceptable to the
Required Lenders (the "Accountants"); provided that if for any reason
whatsoever the consolidated balance sheet of Holdings and its
consolidated Subsidiaries and the related consolidated statements of
operations, stockholders' equity and cash flows for any fiscal year
would be materially different from the consolidated balance sheet of
the Company and its consolidated Subsidiaries and the related
consolidated statements of operations, stockholders' equity and cash
flows for such fiscal year, then the Company shall also provide, as
soon as available, but in any event within 90 days after the end of
each fiscal year of the Company, a copy of the consolidated balance
sheet of the Company and its consolidated Subsidiaries as at the end
of such year and the related consolidated statements of operations,
stockholders' equity and of cash flows for such year, setting forth in
each case in comparative form the figures for the previous year,
reported on without a "going concern" or like qualification or
exception, or qualification arising out of the scope of the audit, by
the Accountants;
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each
fiscal year of Holdings, the unaudited consolidated balance sheet of
Holdings and its consolidated Subsidiaries as at the end of such
quarter and the related unaudited consolidated statements of
operations, stockholders' equity and cash flows of Holdings and its
consolidated Subsidiaries for such quarter and the portion of the
fiscal year through the end of such quarter, setting forth in each
case in comparative form the figures for the previous year, certified
by a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments); provided that
if for any reason whatsoever the unaudited consolidated balance sheet
of Holdings and its consolidated Subsidiaries and the related
unaudited consolidated statements of operations, stockholders' equity
and cash flows for such quarter would be materially different from the
unaudited consolidated balance sheet of the Company and its
consolidated Subsidiaries and the related unaudited consolidated
statements of operations, stockholders' equity and cash flows for such
quarter, then the Company shall also provide, as soon as available,
but in any event not later than 45 days after the end of each of the
first three quarterly periods of each fiscal year of the Company, the
unaudited consolidated balance sheet of the Company and its
consolidated Subsidiaries as at the end of such quarter and the
related unaudited consolidated statements of operations, stockholders'
equity and cash flows of the Company and its consolidated Subsidiaries
for such quarter and the portion of the fiscal year through the end of
such quarter, setting forth in each case in comparative form the
figures for the previous year, certified by a Responsible Officer as
being fairly stated in all material respects (subject to normal
year-end audit adjustments);
(c) as soon as available, but in any event within 60 days after
the beginning of each fiscal year of Holdings to which such budget
relates, an annual operating budget, on a consolidated basis, for
Holdings and its Subsidiaries, as adopted by the Board of Directors of
the Company;
all financial statements shall be prepared in reasonable detail (except
that interim statements may be condensed and may exclude detailed footnote
disclosure to the extent consistent with the rules and regulations of the
Securities and Exchange Commission relating to the presentation of
financial information in Quarterly Reports on Form 10-Q) in all material
respects (subject, in the case of interim statements, to normal year-end
audit adjustments) and in accordance with GAAP applied consistently
throughout the periods reflected therein and with prior periods (except as
concurred in by the Accountants or officer, as the case may be, and
disclosed therein and except that interim financial statements need not be
restated for changes in accounting principles which require retroactive
application, and operations which have been discontinued (as defined in
Accounting Principles Board Opinion No. 30) during the current year need
not be shown in interim financial statements as such either for the current
period or comparable prior period). In the event Holdings changes its
accounting methods because of changes in GAAP, or any change in GAAP occurs
which increases or diminishes the protection and coverage afforded to the
Lenders under current GAAP accounting methods, the Company or the
Administrative Agent, as the case may be, may request of the other parties
to this Agreement an amendment of the financial covenants contained in this
Agreement to reflect such changes in GAAP and to provide the Lenders with
protection and coverage equivalent to that existing prior to such changes
in accounting methods or GAAP, and each of the Company, the Administrative
Agent and the Lenders agree to consider such request in good faith.
7.2 Certificates; Other Information. Furnish to the
Administrative Agent (with sufficient copies for each Lender):
(a) concurrently with the delivery of the consolidated financial
statements referred to in subsection 7.1(a), a letter from the
independent certified public accountants reporting on such financial
statements stating that in making the examination necessary to express
their opinion on such financial statements no knowledge was obtained
of any Default or Event of Default, except as specified in such
letter;
(b) concurrently with the delivery of the financial statements
referred to in subsections 7.1(a) and (b), a certificate of the chief
financial officer of the Company (i) stating that, to the best of such
officer's knowledge, each of Holdings, the Company and their
respective Subsidiaries has observed or performed all of its covenants
and other agreements, and satisfied every condition, contained in this
Agreement, the Notes and the other Credit Documents to be observed,
performed or satisfied by it, and that such officer has obtained no
knowledge of any Default or Event of Default except as specified in
such certificate, (ii) showing in detail as of the end of the related
fiscal period the figures and calculations supporting such statement
in respect of subsections 8.1(d) and (e)(ii), 8.3(c), 8.5(e), 8.7,
8.8, 8.10 and 8.13, and (iii) showing in detail as of the end of the
related fiscal period the Interest Coverage Ratio and the Leverage
Ratio of Holdings and its Subsidiaries and the calculations supporting
such statement and stating the Applicable Margin payable as a result
of such ratios;
(c) promptly upon receipt thereof, copies of all final reports
submitted to Holdings and the Company by independent certified public
accountants in connection with each annual, interim or special audit
of the books of Holdings and the Company made by such accountants,
including, without limitation, any final report pertaining to the
company's internal control systems submitted by such accountants to
management in connection with their annual audit;
(d) promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements sent or
made available generally by Holdings, the Company or any of their
respective Subsidiaries and all regular and periodic reports and all
final registration statements and final prospectuses, if any, filed by
Holdings, the Company or any of their respective Subsidiaries with any
securities exchange or with the Securities and Exchange Commission or
any Governmental Authority succeeding to any of its functions;
(e) concurrently with the delivery of the financial statements
referred to in subsections 7.1(a) and (b), a management summary
describing and analyzing the performance of Holdings, the Company and
their respective Subsidiaries during the periods covered by such
financial statements; and
(f) promptly, such additional financial and other information as
any Lender may from time to time reasonably request.
7.3 Payment of Obligations. Pay, discharge or otherwise satisfy
at or before maturity or before they become delinquent, as the case may be,
all of its obligations and liabilities of whatever nature (including,
without limitation, taxes), except (a) when the amount or validity thereof
is currently being contested in good faith by appropriate proceedings and
reserves in conformity with GAAP with respect thereto have been provided on
the books of the Company or any of its Subsidiaries, as the case may be,
(b) for delinquent obligations which do not have a Material Adverse Effect
and (c) for trade and other accounts payable in the ordinary course of
business in accordance with customary trade terms and which are not overdue
for a period of more than 90 days (or any longer period if longer payment
terms are accepted in the ordinary course of business) or, if overdue for
more than 90 days (or such longer period), as to which a dispute exists and
adequate reserves in conformity with GAAP have been established on the
books of the Company and its Subsidiaries, as the case may be.
7.4 Conduct of Business and Maintenance of Existence. Continue to
engage in business of the same general type as now conducted by it, and
preserve, renew and keep in full force and effect its corporate existence
and take all reasonable action to maintain all rights, privileges and
franchises necessary or desirable in the normal conduct of its business
except for rights, privileges and franchises the loss of which would not in
the aggregate have a Material Adverse Effect, and except as otherwise
permitted by subsections 8.4 and 8.5; and comply with all applicable
Requirements of Law except to the extent that the failure to comply
therewith would not, in the aggregate, have a Material Adverse Effect.
7.5 Maintenance of Property; Insurance. (a) Keep all property
useful and necessary in its business in good working order and condition
(ordinary wear and tear excepted); and
(b) Maintain with financially sound and reputable insurance
companies insurance on all its property in at least such amounts and with
only such deductibles as are usually maintained by, and against at least
such risks (but including, in any event, public liability and product
liability insurance) as are usually insured against in the same general
area, by companies engaged in the same or a similar business; and furnish
to each Lender, (i) annually, a schedule disclosing (in a manner
substantially similar to that used in the schedule provided pursuant to
subsection 6.1(h)) all insurance against aviation and products liability
risk maintained by the Company and its Subsidiaries pursuant to this
subsection 7.5(b) or otherwise and (ii) upon written request of any Lender,
full information as to the insurance carried; provided that the Company may
implement programs of self insurance in the ordinary course of business and
in accordance with industry standards for a company of similar size so long
as reserves are maintained in accordance with GAAP for the liabilities
associated therewith.
7.6 Inspection of Property; Books and Records; Discussions. Keep
proper books of record and account in which full, true and correct entries
are made of all dealings and transactions in relation to its business and
activities which permit financial statements to be prepared in conformity
with GAAP and all Requirements of Law; and permit representatives of any
Lender upon reasonable notice to visit and inspect any of its properties
and examine and make abstracts from any of its books and records at any
reasonable time and as often as may reasonably be desired upon reasonable
notice during normal business hours, and to discuss the business,
operations, properties and financial and other condition of the Company and
its Subsidiaries with officers and employees thereof and with their
independent certified public accountants.
7.7 Notices. Promptly give notice to the Administrative Agent and
each Lender:
(a) of the occurrence of any Default or Event of Default;
(b) of any (i) default or event of default under any instrument
or other agreement, guarantee or collateral document of the Company or
any of its Subsidiaries which default or event of default has not been
waived and would have a Material Adverse Effect, or any other default
or event of default under any such instrument, agreement, guarantee or
other collateral document which, but for the proviso to clause (e) of
Section 9, would have constituted a Default or Event of Default under
this Agreement, or (ii) litigation, investigation or proceeding which
may exist at any time between Holdings, the Company or any of their
respective Subsidiaries and any Governmental Authority, or receipt of
any notice of any environmental claim or assessment against Holdings,
the Company or any of their respective Subsidiaries by any
Governmental Authority, which in any such case would have a Material
Adverse Effect;
(c) of any litigation or proceeding affecting the Company or any
of its Subsidiaries (i) in which more than $5,000,000 of the amount
claimed is not covered by insurance or (ii) in which injunctive or
similar relief is sought which if obtained would have a Material
Adverse Effect;
(d) of the following events, as soon as practicable after, and in
any event within 30 days after, the Company knows thereof: (i) the
occurrence of any Reportable Event with respect to any Single Employer
Plan which Reportable Event could have a Material Adverse Effect, or
(ii) the institution of proceedings or the taking of any other action
by PBGC, the Company or any Commonly Controlled Entity to terminate,
withdraw from or partially withdraw from any Plan and, with respect to
a Multiemployer Plan, the Reorganization or Insolvency of such Plan,
in each of the foregoing cases which could have a Material Adverse
Effect, and in addition to such notice, deliver to the Administrative
Agent and each Lender whichever of the following may be applicable:
(A) a certificate of the chief financial officer of the Company
setting forth details as to such Reportable Event and the action that
the Company or such Commonly Controlled Entity proposes to take with
respect thereto, together with a copy of any notice of such Reportable
Event that may be required to be filed with PBGC, or (B) any notice
delivered by PBGC evidencing its intent to institute such proceedings
or any notice to PBGC that such Plan is to be terminated, as the case
may be;
(e) of a material adverse change known to the Company or any of
its Subsidiaries in the business, financial condition, assets or
results of operations of the Company and its Subsidiaries taken as a
whole.
Each notice pursuant to this subsection 7.7 be accompanied by a statement
of the chief executive officer or the chief financial officer of the
Company setting forth details of the occurrence referred to therein and
stating what action the Company proposes to take with respect thereto.
7.8 Additional Subsidiary Guarantors; Stock Pledge. (a) If any
Subsidiary of the Company or Holdings (whether presently existing or
hereafter created or acquired) shall become a Material Subsidiary, the
Company or Holdings shall cause to be pledged 100% of the issued and
outstanding stock of such Material Subsidiary owned by it pursuant to a
Pledge Agreement substantially in the form of Exhibit B or D, as
appropriate, each of which Pledge Agreements shall be accompanied by such
resolutions, incumbency certificates and legal opinions as are reasonably
requested by the Collateral Agent and its counsel; provided that if (x)(i)
such Material Subsidiary is a Domestic Subsidiary of the Company or
Holdings more than 65% of the assets of which are securities of foreign
Persons (such determination to be made on the basis of fair market value)
or (ii) such Material Subsidiary is a Foreign Subsidiary of the Company or
Holdings, only 65% of the stock of such Material Subsidiary shall be
required to be pledged pursuant to this subsection 7.8(a), or (y) such
Material Subsidiary is a Foreign Subsidiary of the Company or Holdings
which is owned by a Foreign Subsidiary of the Company or Holdings, none of
the stock of such Material Subsidiary shall be required to be pledged
pursuant to this Section 7.8(a).
(b) If any Subsidiary of the Company or Holdings (whether
presently existing or hereafter created or acquired) shall become a
Material Subsidiary, the Company or Holdings shall cause such Material
Subsidiary to promptly thereafter execute and deliver a Guarantee in favor
of the Administrative Agent in substantially the form of Exhibit E, each of
which Guarantees shall be accompanied by such resolutions, incumbency
certificates and legal opinions as are reasonably requested by the
Administrative Agent and its counsel; provided that no Guarantee shall be
required to be delivered under this paragraph (b) by a Foreign Subsidiary
of the Company or Holdings or by a Material Subsidiary if more than 65% of
the assets of such Material Subsidiary are securities of foreign Persons
(such determination to be made on the basis of fair market value).
(c) In the event that there shall be a Change in Law which
eliminates the adverse tax consequences to the Company, Holdings or any of
their Subsidiaries which would have resulted on the date hereof from (A)
the pledge of more than 65% of stock of any Foreign Subsidiary which is a
Material Subsidiary or any Domestic Subsidiary which is a Material
Subsidiary more than 65% of the assets of which are securities of foreign
Persons (such determination to be made on the basis of fair market value)
or (B) the guarantee by a Foreign Subsidiary which is a Material Subsidiary
or such a Domestic Subsidiary which is a Material Subsidiary of the Loans
and the other obligations of the Company hereunder, the Company shall
promptly thereafter (i) pledge and deliver, or shall cause to be pledged
and delivered, to the Collateral Agent such additional stock as can be so
pledged without any adverse tax consequences and (ii) cause any such
Foreign Subsidiary or Domestic Subsidiary which is a Material Subsidiary
and has not previously executed and delivered a Guarantee because of such
adverse tax consequences to deliver a Guarantee to the Administrative Agent
to the extent any such guarantee can be so executed and delivered without
any adverse tax consequences.
(d) In the event that at any time after the date hereof any
Subsidiary, the stock of which is then pledged to the Collateral Agent for
the benefit of the Lenders hereunder, shall undertake a recapitalization
involving the incurrence of debt or the issuance of equity, such debt or
equity shall be evidenced by securities and the Company shall promptly
pledge, or cause to be pledged, such securities to the Collateral Agent,
for the ratable benefit of the Lenders, upon terms and subject to
conditions reasonably satisfactory to the Collateral Agent and, until the
Collateral Agent possesses a perfected security interest in such
securities, the Company shall hold such securities in trust for the
Collateral Agent; provided, however, that, except as set forth in clause
(c) above, if, (x)(i) such Subsidiary is a Domestic Subsidiary more than
65% of the assets of which are securities of foreign companies (such
determination to be made on the basis of fair market value) or (ii) such
Subsidiary is a Foreign Subsidiary, or (y) such Subsidiary is a Foreign
Subsidiary of the Company or Holdings that is owned by a Foreign Subsidiary
of the Company or Holdings the Company shall be required to pledge only
such portion of such securities so that, after giving effect thereto, only
65% of the stock of such Subsidiary in the case of clause (x) or no stock
of a Subsidiary in the case of clause (y) is pledged to the Collateral
Agent, for the ratable benefit of the Lenders, under the relevant Pledge
Agreement. The Collateral Agent and the Lenders agree that, simultaneously
with any such recapitalization, the Collateral Agent shall release
securities of any Subsidiary then held by it and exchange such securities
for those issued in connection with such recapitalization.
(e) Notwithstanding the foregoing provisions of this subsection
7.8, a non-wholly owned Subsidiary acquired in a Permitted Acquisition or
owned directly or indirectly by any Person acquired in a Permitted
Acquisition shall not be required to deliver a Guarantee pursuant to this
Section 7.8 and to the extent that the pledge of any of the issued and
outstanding stock of any non-wholly owned Subsidiary acquired in the
Permitted Acquisition or owned directly or indirectly by any Person
acquired in a Permitted Acquisition would cause a breach or default of or
under any Contractual Obligation binding on the Company or any Subsidiary,
such pledge shall not be required by this subsection 7.8.
SECTION 8. NEGATIVE COVENANTS
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The Company hereby agrees that it shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly so long as the
Commitments remain in effect or any Loan or Note remains outstanding and
unpaid or any other amount is owing to any Lender or the Administrative
Agent hereunder:
8.1 Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness of the Company hereunder;
(b) Indebtedness outstanding on the date hereof and listed on
Schedule 8.1;
(c) Indebtedness in respect of Used Aircraft Inventory Financing
in an aggregate amount outstanding at any time, when added (without
duplication) to the aggregate amount of Contingent Obligations
permitted under subsection 8.3(c) outstanding at such time, not to
exceed $150,000,000;
(d) Indebtedness of the Company and its Subsidiaries incurred for
industrial revenue bonds, for capitalized lease obligations and for
the deferred purchase price of newly acquired property of the Company
and its Subsidiaries, in an amount (based on the remaining balance of
the obligations therefor on the books of the Company and its
Subsidiaries) which shall not exceed in the aggregate at any one time
outstanding $75,000,000;
(e) (i) Indebtedness of the Company to any Subsidiary Guarantor
and of any Subsidiary Guarantor to the Company or any other Subsidiary
Guarantor and (ii) additional Indebtedness of the Company or any
Subsidiary Guarantor to any Subsidiary that is not a Subsidiary
Guarantor and of any Subsidiary that is not a Subsidiary Guarantor to
the Company or any Subsidiary Guarantor, in an aggregate amount for
this clause (ii) not to exceed an aggregate principal amount of
$10,000,000 outstanding at any time;
(f) Indebtedness to the extent arising from or constituted by
foreign currency exchange contracts permitted by subsection 8.13;
(g) Indebtedness in the nature of unsecured standby letters of
credit (other than the Standby Letters of Credit, as defined in the
1996 Credit Agreement as in effect on the Closing Date) issued for the
account of the Company or any Domestic Subsidiary not to exceed an
aggregate face amount of $80,000,000 at any one time outstanding;
(h) other Indebtedness of the Company or any of its Subsidiaries
incurred in the ordinary course of their respective businesses in an
aggregate principal amount not to exceed $10,000,000 outstanding at
any time;
(i) Permitted Acquisition Indebtedness; and
(j) Indebtedness of the Company under the 1996 Credit Agreement.
8.2 Limitation on Liens. Create, incur, assume or suffer to exist
any Lien upon any of its property, assets, income or profits, whether now
owned or hereafter acquired, except:
(a) Liens for taxes, assessments or other governmental charges
not yet due or which are being contested in good faith and by
appropriate proceedings if adequate reserves with respect thereto are
maintained on the books of the Company or such Subsidiary, as the case
may be, in accordance with GAAP;
(b) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other like Liens arising in the ordinary
course of business in respect of obligations which are not yet due or
which are being contested in good faith and by appropriate proceedings
if adequate reserves with respect thereto are maintained on the books
of the Company or such Subsidiary, as the case may be, in accordance
with GAAP;
(c) Liens in existence on the date hereof listed on Schedule 8.2,
provided that no such Lien is spread to cover any additional property
after the Closing Date and that the amount of Indebtedness secured
thereby shall not subsequently be increased;
(d) pledges or deposits in connection with workmen's
compensation, unemployment insurance and other social security
legislation;
(e) Liens or deposits to secure the performance of bids, tenders,
trade or government contracts (other than for borrowed money), leases,
licenses, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the ordinary
course of business;
(f) easements, right-of-way, zoning and similar restrictions and
other similar encumbrances or title defects incurred, or leases or
subleases granted to others, in the ordinary course of business, which
do not interfere with or adversely affect in any material respect the
ordinary conduct of the business of the Company and its Subsidiaries
taken as a whole;
(g) Liens in favor of the Lenders pursuant to the Credit
Documents and bankers' liens arising by operation of law;
(h) Liens on assets of corporations which become Subsidiaries of
the Company after the date hereof, provided that such Liens exist at
the time such corporations become Subsidiaries and are not created in
anticipation thereof;
(i) Liens on documents of title and the property covered thereby
securing Indebtedness in respect of the 1996 Letters of Credit which
are Commercial L/Cs (as defined in the 1996 Credit Agreement as in
effect on the Closing Date);
(j) Liens on property of the Financing Subsidiary created solely
for the purpose of securing Indebtedness permitted by subsection
8.1(c);
(k) Liens created solely for the purpose of securing Indebtedness
permitted by subsection 8.1(d), representing or incurred to finance,
refinance or refund the purchase price of property, provided that no
such Lien shall extend to or cover other property of the Company or
such Subsidiary other than the respective property so acquired, and
the principal amount of Indebtedness secured by any such Lien shall at
no time exceed the original purchase price of such property;
(l) Liens securing any Indebtedness permitted under subsection
8.1(f), provided that no such Lien shall encumber any Collateral (as
defined in any Pledge Agreement) under any of the Pledge Agreements;
(m) Liens securing any Indebtedness permitted under subsection
8.1(h), provided that no such Lien shall encumber any Collateral (as
defined in any Pledge Agreement) under any of the Pledge Agreements;
(n) additional Liens, provided that (i) the maximum aggregate
amount of obligations secured thereby does not exceed $5,000,000 in
the aggregate at any time, and (ii) no such Lien shall encumber any
Collateral (as defined in any Pledge Agreement) under any of the
Pledge Agreements;
(o) Liens securing Permitted Acquisition Indebtedness or
Contingent Obligations permitted by subsection 8.3(g); and
(p) Liens in favor of the lenders and the administrative agent
under the 1996 Credit Agreement pursuant to the Pledge Agreements.
8.3 Limitation on Contingent Obligations. Create, incur, assume
or suffer to exist any Contingent Obligation except:
(a) Contingent Obligations in existence on the date hereof and
listed on Schedule 8.3;
(b) guarantees made in the ordinary course of business of the
Company and its Subsidiaries in connection with employee relocation,
travel and entertainment;
(c) Contingent Obligations in respect of Indebtedness permitted
under subsection 8.1(c) in a maximum aggregate amount outstanding at
any time, when added (without duplication) to the aggregate amount of
Indebtedness permitted under subsection 8.1(c) outstanding at such
time, not to exceed $150,000,000.
(d) Contingent Obligations to the extent arising from or
constituted by foreign currency exchange contracts permitted by
subsection 8.13;
(e) Contingent Obligations pursuant to the Subsidiary Guarantees;
(f) (i) guarantees by the Company or any Subsidiary Guarantor of
Indebtedness permitted under subsection 8.1 (including guarantees by
the Subsidiary Guarantors of obligations under the 1996 Credit
Agreement and credit documents delivered in connection therewith) or
other obligations permitted hereunder of the Company or any Subsidiary
Guarantor and (ii) guarantees by the Company or any Subsidiary
Guarantor of Indebtedness permitted under subsection 8.1 or other
obligations permitted hereunder of any Subsidiary that is not a
Subsidiary Guarantor permitted under subsection 8.1(e) subject to the
limitations set forth in subsection 8.6(g); and
(g) Contingent Obligations arising from, assumed in connection
with or continuing on the part of any Subsidiary acquired directly or
indirectly in the Permitted Acquisition, provided that the aggregate
amount of such Contingent Obligations do not exceed 10% of the
purchase price paid for the Permitted Acquisition.
8.4 Prohibition of Fundamental Changes. Enter into any
transaction of acquisition of, or merger or consolidation or amalgamation
with, any other Person (including any Subsidiary or Affiliate of the
Company or any of its Subsidiaries), or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution), or make any material
change in the present method of conducting business or engage in any type
of business other than of the same general type now conducted by it, except
for the transactions otherwise permitted pursuant to subsections 8.5 and
8.6.
8.5 Prohibition on Sale of Assets. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, tax benefits, receivables and leasehold
interests), whether now owned or hereafter acquired except:
(a) the sale or other disposition of any tangible personal
property that, in the reasonable judgment of the Company, has become
uneconomic, obsolete or worn out, and which is disposed of in the
ordinary course of business;
(b) sales or other dispositions of inventory in each case made in
the ordinary course of business (including all or any portion of the
used aircraft inventory of the Company and its Subsidiaries, other
than in connection with the Used Aircraft Inventory Financing);
(c) the sale, lease, transfer or other disposition of any or all
of its assets (upon voluntary liquidation or otherwise) to the Company
or a wholly-owned Subsidiary and any Subsidiary of the Company may
sell or otherwise dispose of, or part with control of any or all of,
the stock of any Subsidiary to a wholly-owned Subsidiary, provided
that to the extent that any such transaction would result in the
transfer of any assets of, or any stock of, a Subsidiary that is not a
Subsidiary Guarantor, such transfer shall be limited as set forth in
subsection 8.6(g);
(d) asset sales in connection with the Used Aircraft Inventory
Financing; and
(e) for the sale or other disposition by the Company or any of
its Subsidiaries of other assets, provided that (i) such sale or other
disposition shall be made for fair value on an arm's-length basis,
(ii) the aggregate fair market value of all such assets sold or
disposed of under this clause after the Closing Date shall not exceed
$50,000,000 in the aggregate (with Net Proceeds in excess of
$20,000,000 to be reinvested in the business of the Company and its
Subsidiaries within twelve months or applied in accordance with
subsection 4.6), (iii) the Net Proceeds from such sale or other
disposition shall be applied in accordance with the provisions of
subsection 4.6, and (iv) non-cash consideration therefor shall
constitute investments permitted under subsection 8.6(f).
8.6 Limitation on Investments, Loans and Advances. Make any
advance, loan, extension of credit or capital contribution to, or
Contingent Obligation for the benefit of, or purchase, stock, bonds, notes,
debentures or other securities of or any interest in, or make any other
investment in, or acquire assets other than in the ordinary course of
business from, any Person, except:
(a) the Company may make loans or advances to, or investments in,
any Subsidiary Guarantor, and any Subsidiary Guarantor may make loans
or advances to, or investments in, the Company or any other Subsidiary
Guarantor, to the extent the Indebtedness created thereby is permitted
by subsection 8.1(e)(i);
(b) the Company and its Subsidiaries may invest in, acquire and
hold Cash Equivalents;
(c) the Company or any of its Subsidiaries may make travel and
entertainment advances and relocation loans in the ordinary course of
business to officers and employees of the Company or any such
Subsidiary;
(d) the Company or any of its Subsidiaries may make payroll
advances in the ordinary course of business;
(e) the Company or any of its Subsidiaries may acquire and hold
receivables and promissory notes owing to it, if created or acquired
in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms (provided that nothing in this
subsection 8.6 shall prevent the Company or any Subsidiary from
offering such concessionary trade terms, or from receiving such
investments in connection with the bankruptcy or reorganization of
their respective suppliers or customers or the settlement of disputes
with such customers or suppliers arising in the ordinary course of
business, as management deems reasonable in the circumstances);
(f) the Company and its Subsidiaries may make investments
constituting non-cash consideration in connection with Asset Sales
permitted by subsection 8.5; provided that (i) the amount of any such
investment shall not exceed 10% of the aggregate consideration to be
received by the Company and its Subsidiaries in respect of such Asset
Sale and (ii) to the extent that the amount of any such investment
exceeds $20,000,000, the Company shall use its best efforts to (x)
cause each such investment to be made in such a form and on such terms
so that such investment can be pledged to the Collateral Agent, for
the benefit of the Lenders, and (y) pledge such investment to the
Collateral Agent, for the benefit of the Lenders, on terms reasonably
satisfactory to the Administrative Agent;
(g) the Company and its Subsidiaries may make loans or advances
to, incur Contingent Obligations for the benefit of, make acquisitions
from or of, and make investments in, other Persons, including, without
limitation, Indebtedness described in subsection 8.1(e)(ii) and
Contingent Obligations described in subsection 8.1(f); provided that
(i) the aggregate amount of the consideration paid or invested and the
amounts loaned, advanced or guaranteed by the Company and its
Subsidiaries in all such transactions after the Closing Date (net, in
the case of loans, advances or investments, of any repayments or
return of capital in respect thereof actually received in cash by the
Company or such Subsidiary (net of applicable taxes) after the Closing
Date), when added to the amount of any transfers or dispositions of
assets described in the proviso to subsection 8.5(c), does not exceed
an aggregate amount of $50,000,000 in any fiscal year of the Company
and (ii) no Default or Event of Default has occurred or would occur
after giving effect thereto;
(h) the loan made by the Company to Holdings on the 1996 Closing
Date in connection with the 1996 Refinancing, evidenced by the
Holdings Note and in an aggregate principal amount of $100,000,000;
(i) the Company or any of its Subsidiaries may make loans and
advances to, and investments in, a limited liability company formed
with GATX Capital Corporation as the initial majority equity investor
for the purpose of acquiring, leasing and selling airplanes
manufactured by the Company and its Subsidiaries, provided that the
aggregate amount of such loans, advances and investments at any one
time outstanding shall not exceed (after giving effect to repayments,
distributions, dividends and other payments in respect thereof)
$40,000,000; and
(j) to the extent that the Company or any of its Subsidiaries has
not otherwise made an acquisition pursuant to Section 8.6(j) of the
1996 Credit Agreement, the Company or any of its Subsidiaries may
acquire, in one acquisition only, the capital stock or all or
substantially all of the assets of another Person or any business unit
or line of business of another Person, provided that (i) such Person,
business unit or line of business is engaged in a business of the same
general type as the Company and its Subsidiaries are engaged in, or a
business related thereto, (ii) after giving effect to such acquisition
the Company is in compliance on a pro forma basis as at the end of the
most recent fiscal quarter for which financial statements have been
furnished to the Lenders with the requirements of subsections 8.8 and
8.10 and no Default or Event of Default has occurred and is continuing
and (iii) the purchase price of such acquisition (including any
assumed or continuing indebtedness of such Person, business unit or
line of business ("Permitted Acquisition Indebtedness"), but excluding
any portion of such purchase price paid in common stock of Holdings),
is not greater than $300,000,000 (the acquisition under this paragraph
(j), the "Permitted Acquisition").
8.7 Limitation on Capital Expenditures. Make or commit to make
Capital Expenditures, other than Capital Expenditures in any fiscal year of
the Company in the aggregate for the Company and its Subsidiaries not
exceeding $60,000,000 (the "Base Amount"); provided, however, that the Base
Amount for any fiscal year may be increased by carrying over to such fiscal
year any portion of the Base Amount not spent in the immediately preceding
fiscal year (but not in any year prior thereto).
8.8 Maintenance of Interest Coverage. Permit for any period of
four consecutive fiscal quarters the Interest Coverage Ratio for such
period to be less than 3.00:1.00.
8.9 [RESERVED].
8.10 Maintenance of Leverage Ratio. Permit, as at the end of any
fiscal quarter of Holdings, the Leverage Ratio to be more than 3.00:1.00.
8.11 Limitation on Restricted Payments. Declare any dividends on
any shares of any class of stock, or make any payment on account of, or set
apart assets for a sinking or other analogous fund for, the purchase,
redemption, retirement or other acquisition of any shares of any class of
stock, whether now or hereafter outstanding, or make any other distribution
in respect thereof, either directly or indirectly, whether in cash or
property or in obligations of the Company or any of its Subsidiaries,
except that:
(a) Subsidiaries may pay dividends to the Company or to Domestic
Subsidiaries which are directly or indirectly wholly-owned by the
Company;
(b) the Company may pay dividends to Holdings in an amount equal
to the amount required for Holdings to pay franchise taxes, fees and
expenses necessary to maintain its status as a public corporation and
other fees required to maintain its corporate existence (including
fees and expenses in connection with filings to be made by Holdings
under federal and state securities laws);
(c) [RESERVED];
(d) the Company (i) may pay dividends to Holdings from time to
time in amounts equal to the amounts then required for Holdings to pay
interest when due on the Holdings Note, provided that within two days'
after receipt by Holdings of any such amount, Holdings applies such
amount as payment to the Company of such interest on the Holdings Note
and (ii) may reduce or eliminate the Holdings Note if such reduction
or elimination is duly declared and made by the Company as a non-cash
dividend;
(e) so long as no Default or Event of Default has occurred or
would occur after giving effect to such declaration or payment, the
Company may, from time to time, declare and pay cash dividends to
Holdings on the common stock of the Company in an aggregate amount not
to exceed $6,000,000 (the "Holdings Dividend Limit"), provided that
the proceeds of such dividends shall be used within 30 days of the
receipt of such dividends by Holdings to repurchase Holdings stock
from management employees of Holdings or any of its Subsidiaries or to
make payments in respect of outstanding stock appreciation rights
granted to management employees of Holdings or any of its Subsidiaries
and, provided further, the Holdings Dividend Limit shall be increased
by the proceeds of any additional Holdings stock which is issued to
any management employees of Holdings or any of its Subsidiaries after
the Closing Date so long as such proceeds are contributed by Holdings
to the capital of the Company;
(f) so long as no Default or Event of Default has occurred or
would occur after giving effect to such declaration or payment, the
Company may, at any time that (i) the Leverage Ratio in effect is
equal to or less than 1.5:1.0 or (ii) the aggregate principal amount
of Loans then outstanding is less than $200,000,000, declare and pay
cash dividends to Holdings on the common stock of the Company,
provided that the aggregate amount thereof paid in any fiscal year of
the Company pursuant to this paragraph (f) does not exceed an amount
equal to 25% of Consolidated Net Income for such fiscal year less the
amount paid pursuant to the Stock Repurchase Plan during such fiscal
year (provided that the resulting amount shall not be less than zero);
and
(g) so long as no Default or Event of Default has occurred or
would occur after giving effect to such declaration or payment, the
Company may, at any time and from time to time declare and pay cash
dividends to Holdings on the common stock of the Company, in an
aggregate amount of up to $200,000,000, in order to enable Holdings to
repurchase shares of its own common stock for an aggregate purchase
price of $200,000,000 pursuant to the Stock Repurchase Program.
8.12 Transactions with Affiliates. Enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of
property or the rendering of any service, with any Affiliate except (a) for
transactions which are otherwise permitted under this Agreement and which
are in the ordinary course of the Company's or a Subsidiary's business and
which are upon fair and reasonable terms no less favorable to the Company
or such Subsidiary than it would obtain in a hypothetical comparable arm's
length transaction with a Person not an Affiliate, (b) as permitted under
subsections 8.1(e), 8.3(f), 8.6(a), and 8.6(i), or (c) as disclosed in the
1998 10K.
8.13 Foreign Exchange Contracts. Enter into any foreign currency
exchange contracts (other than foreign currency exchange contracts entered
into for the sole purpose of hedging with respect to the purchase or sale
by the Company or its Subsidiaries of inventory to be purchased or sold for
payments in foreign currencies in the ordinary course of their respective
businesses) pursuant to which the Company or its Subsidiaries may incur (i)
obligations in connection with the contracts described on Schedule 8.13 and
(ii) additional obligations in an amount not to exceed the dollar
equivalent of $15,000,000 in the aggregate at any time outstanding.
8.14 Fiscal Year. Permit the fiscal year of the Company to end on
a day other than December 31, unless the Company shall have given at least
45 days prior written notice to the Administrative Agent.
SECTION 9. EVENTS OF DEFAULT
-----------------
Upon the occurrence of any of the following events:
(a) The Company shall fail to (i) pay any principal of any Note
when due in accordance with the terms hereof or thereof or (ii) pay
any interest on any Note or any other amount payable hereunder within
five days after any such interest or other amount becomes due in
accordance with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by any
Credit Party in any Credit Document or which is contained in any
certificate, guarantee, document or financial or other statement
furnished under or in connection with this Agreement shall prove to
have been incorrect in any material respect on or as of the date made
or deemed made; or
(c) The Company shall default in the observance or performance of
any agreement contained in subsection 7.7(a) or Section 8 of this
Agreement or any Credit Party shall default in the observance or
performance of any agreement contained in Section 5 of the Pledge
Agreement to which it is a party or Section 2 of the Guarantee to
which it is a party; or Holdings shall default in the performance or
observance of Section 11 of the Holdings Guarantee; or
(d) The Company or any other Credit Party shall default in the
observance or performance of any other agreement contained in any
Credit Document, and such default shall continue unremedied for a
period of 30 days; or
(e) The Company or any of its Subsidiaries shall (i) default in
any payment of principal of or interest on any Indebtedness (other
than the Notes and any intercompany debt) or in the payment of any
Contingent Obligation, beyond the period of grace, if any, provided in
the instrument or agreement under which such Indebtedness or
Contingent Obligation was created; or (ii) default in the observance
or performance of any other agreement or condition relating to any
such Indebtedness or Contingent Obligation or contained in any
instrument or agreement evidencing, securing or relating thereto, or
any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness or beneficiary or beneficiaries
of such Contingent Obligation (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause, with the
giving of notice if required, such Indebtedness to become due prior to
its stated maturity, any applicable grace period having expired, or
such Contingent Obligation to become payable, any applicable grace
period having expired, provided that the aggregate principal amount of
all such Indebtedness and Contingent Obligations which would then
become due or payable would equal or exceed $10,000,000; or an Event
of Default shall occur and be continuing under the 1996 Credit
Agreement; or
(f) (i) Holdings, the Company or any of their respective
Subsidiaries shall commence any case, proceeding or other action (A)
under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief
of debtors, seeking to have an order for relief entered with respect
to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian or
other similar official for it or for all or any substantial part of
its assets, or Holdings, the Company or any of their respective
Subsidiaries shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against Holdings, the
Company or any of their respective Subsidiaries any case, proceeding
or other action of a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any such adjudication
or appointment or (B) remains undismissed, undischarged or unbonded
for a period of 60 days; or (iii) there shall be commenced against
Holdings, the Company or any of their respective Subsidiaries any
case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order
for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry thereof;
or (iv) Holdings, the Company or any of their respective Subsidiaries
shall take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clause
(i), (ii), or (iii) above; or (v) Holdings, the Company or any of
their respective Subsidiaries shall generally not, or shall be unable
to, or shall admit in writing its inability to, pay its debts as they
become due; or
(g) (i) Any Person shall engage in any "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan, (iii) a Reportable Event (other than a
Reportable Event with respect to which the 30-day notice requirement
under Section 4043 of ERISA has been waived) shall occur with respect
to, or proceedings to have a trustee appointed shall commence with
respect to, or a trustee shall be appointed to administer or to
terminate, any Single Employer Plan, which Reportable Event or
institution of proceedings or appointment of a trustee is, in the
reasonable opinion of the Required Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, and, in
the case of a Reportable Event, such Reportable Event shall continue
unremedied for ten days after notice of such Reportable Event pursuant
to Section 4043(a), (c) or (d) of ERISA is given and, in the case of
the institution of proceedings, such proceedings shall continue for
ten days after commencement thereof or (iv) any Single Employer Plan
shall terminate for purposes of Title IV of ERISA; and in each case in
clauses (i) through (iv) above, such event or condition, together with
all other such events or conditions relating to such Plans, if any,
could subject the Company or any of its Subsidiaries to any tax,
penalty or other liabilities which in the aggregate would have a
Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against the
Company or any of its Subsidiaries involving in the aggregate a
liability (not paid or fully covered by insurance) of $10,000,000 or
more and all such judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within the time required
by the terms of such judgment; or
(i) Any Pledge Agreement or any Guarantee shall cease, for any
reason, to be in full force and effect or any Credit Party shall so
assert in writing, or any Pledge Agreement shall cease to be effective
to grant a perfected Lien on the collateral described therein with the
priority purported to be created thereby (other than as a result of
any action or inaction on the part of the Administrative Agent or the
Lenders); or
(j) (i) Holdings shall cease to own 100% of the issued and
outstanding capital stock of the Company, free and clear of all Liens
(other than the Lien granted to the Collateral Agent pursuant to the
terms of the Holdings Pledge Agreement), (ii) at any time that the FL
Affiliates own beneficially less than a majority, but more than 25% of
the outstanding voting stock of the Company, the occurrence of any
event as a result of which event, any person or group (other than the
FL Affiliates) acquires beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
of a percentage of the outstanding voting stock of the Company or
Holdings greater than that percentage owned beneficially by the FL
Affiliates, (iii) at a time that the FL Affiliates beneficially own
less than 25% of the outstanding voting stock of the Company, the
occurrence of any event, as a result of which event, any person or
group (other than the FL Affiliates) acquires beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange
Commission promulgated under the Exchange Act) of 25% or more of the
outstanding voting stock of the Company or Holdings or (iv) any person
or group of persons (other than the FL Affiliates) at any time has the
right to designate or elect a majority of the board of directors of
the Company or Holdings;
then, and in any such event, (a) if such event is an Event of Default
specified in clause (i) or (ii) of paragraph (f) above, automatically the
Commitments shall immediately terminate and the Loans hereunder (with
accrued interest thereon) and all other amounts owing under this Agreement
and the Notes shall immediately become due and payable, and (b) if such
event is any other Event of Default, so long as any such Event of Default
shall be continuing, either or both of the following actions may be taken:
(i) with the consent of the Required Lenders, the Administrative Agent may,
or upon the request of the Required Lenders, the Administrative Agent
shall, by notice to the Company, declare the Commitments to be terminated
forthwith, whereupon the Commitments shall immediately terminate; and (ii)
with the consent of the Required Lenders, the Administrative Agent may, or
upon the request of the Required Lenders, the Administrative Agent shall,
by notice of default to the Company, declare all or a portion of the Loans
hereunder (with accrued interest thereon) and all other amounts owing under
this Agreement and the Notes to be due and payable forthwith, whereupon the
same shall immediately become due and payable. Except as expressly provided
above in this Section 9, presentment, demand, protest and all other notices
of any kind are hereby expressly waived.
SECTION 10. THE ADMINISTRATIVE AGENT
------------------------
10.1 Appointment. Each Lender hereby irrevocably designates and
appoints Chase as the Administrative Agent under this Agreement and
irrevocably authorizes Chase as Administrative Agent for such Lender to
take such action on its behalf under the provisions of the Credit Documents
and to exercise such powers and perform such duties as are expressly
delegated to the Administrative Agent by the terms of the Credit Documents,
together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement,
the Administrative Agent shall not have any duties or responsibilities,
except those expressly set forth herein, or any fiduciary relationship with
any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into the Credit Documents or
otherwise exist against the Administrative Agent.
10.2 Delegation of Duties. The Administrative Agent may execute
any of its duties under this Agreement and each of the other Credit
Documents by or through agents or attorneys-in-fact and shall be entitled
to advice of counsel concerning all matters pertaining to such duties.
Without limiting the foregoing, the Administrative Agent may appoint Chase
Bank Agency Services Corporation as its agent to perform the functions of
the Administrative Agent hereunder relating to the advancing of funds to
the Company and distribution of funds to the Lenders and to perform such
other related functions of the Administrative Agent hereunder as are
reasonably incidental to such functions. The Administrative Agent shall not
be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care, except as otherwise
provided in subsection 10.3.
10.3 Exculpatory Provisions. Neither the Administrative Agent nor
any of its officers, directors, employees, agents, attorneys-in-fact,
Affiliates or Subsidiaries shall be (i) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection
with the Credit Documents (except for its or such Person's own gross
negligence or willful misconduct), or (ii) responsible in any manner to any
of the Lenders for any recitals, statements, representations or warranties
made by any Credit Party or any officer thereof contained in the Credit
Documents or in any certificate, report, statement or other document
referred to or provided for in, or received by the Administrative Agent
under or in connection with, the Credit Documents or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of the
Credit Documents or for any failure of any Credit Party to perform its
obligations thereunder. The Administrative Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, any
Credit Document, or to inspect the properties, books or records of any
Credit Party.
10.4 Reliance by the Administrative Agent. The Administrative
Agent shall be entitled to rely, and shall be fully protected in relying,
upon any Note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it
to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Company), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation
or transfer thereof shall have been filed with the Administrative Agent.
The Administrative Agent shall be fully justified in failing or refusing to
take any action under any Credit Document unless it shall first receive
such advice or concurrence of the Required Lenders (or, where unanimous
consent of the Lenders is expressly required hereunder, such Lenders) as it
deems appropriate or it shall first be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred
by it by reason of taking or continuing to take any such action. The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under any Credit Document in accordance with a
request of the Required Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and
all future holders of the Notes.
10.5 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or
Event of Default hereunder unless the Administrative Agent has received
written notice from a Lender or the Company referring to this Agreement,
describing such Default or Event of Default and stating that such notice is
a "notice of default". In the event that the Administrative Agent receives
such a notice, the Administrative Agent shall promptly give notice thereof
to the Lenders. The Administrative Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably directed
by the Required Lenders; provided that unless and until the Administrative
Agent shall have received such directions, the Administrative Agent may
(but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
10.6 Non-Reliance on Administrative Agent and Other Lenders. Each
Lender expressly acknowledges that neither the Administrative Agent nor any
of its respective officers, directors, employees, agents,
attorneys-in-fact, Subsidiaries or Affiliates has made any representations
or warranties to it and that no act by the Administrative Agent hereafter
taken, including any review of the affairs of the Credit Parties, shall be
deemed to constitute any representation or warranty by the Administrative
Agent to any Lender. Each Lender represents to the Administrative Agent
that it has, independently and without reliance upon the Administrative
Agent or any other Lender, and based on such documents and information as
it has deemed appropriate, made its own appraisal of and investigation into
the business, operations, property, financial and other condition and
creditworthiness of the Credit Parties and made its own decision to make
its Loans hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking
action under the Credit Documents, and to make such investigation as it
deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Credit Parties.
Except for notices, reports and other documents expressly required to be
furnished to the Lenders by the Administrative Agent hereunder, the
Administrative Agent shall not have any duty or responsibility to provide
any Lender with any credit or other information concerning the business,
financial condition, assets, liabilities, net assets, properties, results
of operations, value, prospects and other condition or creditworthiness of
the Credit Parties which may come into the possession of the Administrative
Agent or any of its officers, directors, employees, agents,
attorneys-in-fact, Affiliates or Subsidiaries.
10.7 Indemnification. The Lenders severally agree to indemnify
the Administrative Agent in its capacity as such (to the extent not
reimbursed by the Credit Parties and without limiting the obligation of the
Credit Parties to do so), ratably according to the respective amounts of
their respective Commitment Percentages in effect on the date on which
indemnification is sought, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including without limitation at any time following the payment of the
Notes) be imposed on, incurred by or asserted against the Administrative
Agent in any way relating to or arising out of the Credit Documents or any
documents contemplated by or referred to herein or the transactions
contemplated hereby or any action taken or omitted by the Administrative
Agent under or in connection with any of the foregoing; provided that no
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from the Administrative Agent's
gross negligence or willful misconduct. The agreements contained in this
subsection 10.7 shall survive the payment of the Notes and all other
amounts payable hereunder.
10.8 Administrative Agent in its Individual Capacities. Each of
the Administrative Agent and its respective Affiliates and Subsidiaries may
make loans to, accept deposits from and generally engage in any kind of
business with the Credit Parties as though the Administrative Agent were
not the Administrative Agent hereunder, as the case may be. With respect to
its Loans made or renewed by it and any Note issued to it, the
Administrative Agent shall have the same rights and powers, duties and
liabilities under the Credit Documents as any Lender and may exercise the
same as though it were not the Administrative Agent and the terms "Lender"
and "Lenders" shall include the Administrative Agent in its individual
capacity. Each Lender acknowledges that Chase is the administrative agent
and a lender under the 1996 Credit Agreement and that Chase and its
affiliates are issuers of letters of credit under the 1996 Credit
Agreement.
10.9 Successor Administrative Agent. The Administrative Agent may
resign as Administrative Agent upon 30 days' notice to the Lenders. If the
Administrative Agent shall resign as Administrative Agent under the Credit
Documents, then the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders which successor agent shall be approved by
the Company (which approval shall not be unreasonably withheld) whereupon
such successor agent shall succeed to the rights, powers and duties of the
Administrative Agent and the term "Administrative Agent" shall mean such
successor agent effective upon its appointment, and the former
Administrative Agent's rights, powers and duties as Administrative Agent
shall be terminated, without any other or further act or deed on the part
of such former Administrative Agent or any of the parties to this Agreement
or any holders of the Notes. After any retiring Administrative Agent's
resignation hereunder as Administrative Agent the provisions of this
Section 10 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent under the Credit
Documents.
10.10 Collateral Agent. Each Lender irrevocably designates and
appoints Chase as the Collateral Agent under the Pledge Agreements and any
security agreements executed and delivered pursuant to subsection 7.8. Each
Lender agrees that the Collateral Agent shall be entitled to the same
rights and indemnities in its capacity as such as is the Administrative
Agent and the provisions of this Section 10 shall apply to the Collateral
Agent to the same extent they apply to the Administrative Agent, mutatis
mutandis.
SECTION 11. MISCELLANEOUS
-------------
11.1 Amendments and Waivers. No Credit Document nor any terms
thereof may be amended, supplemented or modified except in accordance with
the provisions of this subsection 11.1. With the written consent of the
Required Lenders, the Administrative Agent and the respective Credit
Parties may, from time to time, enter into written amendments, supplements
or modifications to any Credit Document for the purpose of adding any
provisions to such Credit Document to which they are parties or changing in
any manner the rights of the Lenders or of any such Credit Party or any
other Person thereunder or waiving, on such terms and conditions as the
Administrative Agent may specify in such instrument, any of the
requirements of any such Credit Document or any Default or Event of Default
and its consequences; provided, however, that:
(a) no such waiver and no such amendment, supplement or
modification shall directly or indirectly release any Guarantor from
all or substantially all of its obligations under the Guarantee to
which it is a party, without the written consent of the Release
Lenders, except as otherwise provided;
(b) no such waiver and no such amendment, supplement or
modification shall extend the scheduled maturity of any Note or
scheduled installment of any Loan, or reduce the rate or extend the
time of payment of interest thereon, or change the method of
calculating interest thereon, or reduce any fee payable to the Lenders
hereunder, or reduce the principal amount thereof, or extend the due
date thereof, or increase the amount of any Lender's Commitments, or
extend the expiry date of any Lender's Commitments, or amend, modify
or waive any provision of this subsection 11.1 or reduce the
percentages specified in the definition of Required Lenders or Release
Lenders, or change the percentage of the Lenders required to waive a
condition precedent under Section 6.2 or consent to the assignment or
transfer by any Credit Party of any of its rights and obligations
under any Credit Document, in each case, without the written consent
of each Lender; and
(c) no such waiver and no such amendment, supplement or
modification shall amend, modify or waive any provision of Section 10
without the written consent of the Administrative Agent.
Any such waiver and any such amendment, supplement or modification
described in this subsection 11.1 shall apply equally to each of the
Lenders and shall be binding upon each Credit Party, the Lenders, the
Administrative Agent and all future holders of the Notes. In the case of
any waiver, the Company, the Lenders and the Administrative Agent shall be
restored to their former position and rights hereunder and under the
outstanding Notes, and any Default or Event of Default waived shall be
deemed to be cured and not continuing; but no such waiver shall extend to
any subsequent or other Default or Event of Default, or impair any right
consequent thereon.
11.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy or telex), and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made when delivered by hand, or three
Business Days after being deposited in the mail, postage prepaid, or, in
the case of telecopy notice, when sent, confirmation of receipt received,
or, in the case of telex notice, when sent, answerback received, addressed
as follows in the case of each Credit Party and the Administrative Agent,
and as set forth in Schedule 1.1A in the case of any Lender, or to such
other address as may be hereafter notified by the respective parties hereto
and any future holders of the Notes:
The Company: Gulfstream Delaware Corporation
500 Gulfstream Road
Savannah, Georgia 31402-2206
Attention: Chris A. Davis
Telecopy: (912) 965-3000
With a copy to: Fried, Frank, Harris,
Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Robert C. Schwenkel, Esq.
Telex: 128173
Telecopy: (212) 859-4000
The Administrative
Agent: The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: William J. Caggiano
Telecopy: (212) 972-0009
provided that any notice, request or demand to or upon the Administrative
Agent or the Lenders pursuant to subsections 4.1, 4.3, 4.4, 4.5 and 4.6
shall not be effective until received and provided further that the failure
to provide the copies of notices to the Company provided for in this
subsection 11.2 shall not result in any liability to the Administrative
Agent or any Lender.
11.3 No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of the Administrative Agent or any
Lender, any right, remedy, power or privilege hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by
law.
11.4 Survival of Representations and Warranties. All
representations and warranties made hereunder and in any document,
certificate or statement delivered pursuant hereto or in connection
herewith shall survive the execution and delivery of this Agreement and the
Notes.
11.5 Payment of Expenses and Taxes. The Company agrees:
(a) to pay or reimburse the Administrative Agent (which term
shall include the Collateral Agent for purposes of this subsection
11.5) for all of its out-of-pocket costs and expenses incurred in
connection with the development, preparation and execution of, and any
amendment, supplement or modification to, the Credit Documents and any
other documents prepared in connection herewith, and the consummation
of the transactions contemplated hereby and thereby, including,
without limitation, the reasonable fees and disbursements of counsel
to the Administrative Agent;
(b) to pay or reimburse each Lender and the Administrative Agent
for all their costs and expenses incurred in connection with, and to
pay, indemnify, and hold the Administrative Agent and each Lender
harmless from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
or disbursements of any kind or nature whatsoever arising out of or in
connection with, the enforcement or preservation of any rights under
any Credit Document and any such other documents, including, without
limitation, reasonable fees and disbursements of counsel to the
Administrative Agent and each Lender incurred in connection with the
foregoing and in connection with advising the Administrative Agent
with respect to its rights and responsibilities under this Agreement
and the documentation relating thereto;
(c) to pay, indemnify, and to hold the Administrative Agent and
each Lender harmless from, any and all recording and filing fees and
any and all liabilities with respect to, or resulting from any delay
in paying, stamp, excise and other similar taxes (other than
withholding taxes), if any, which may be payable or determined to be
payable in connection with the execution and delivery of, or
consummation of any of the transactions contemplated by, or any
amendment, supplement or modification of, or any waiver or consent
under or in respect of, any Credit Document and any such other
documents; and
(d) to pay, indemnify, and hold the Administrative Agent and each
Lender and their respective officers, directors, employees and agents
harmless from and against any and all other liabilities, obligations,
losses, damages (including punitive damages), penalties, fines,
actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever (including, without limitation, reasonable
experts' and consultants' fees and reasonable fees and disbursements
of counsel and third party claims for personal injury or real or
personal property damage) which may be incurred by or asserted against
the Administrative Agent or the Lenders (x) arising out of or in
connection with any investigation, litigation or proceeding related to
this Agreement, the other Credit Documents, the proceeds of the Loans,
or any of the other transactions contemplated hereby, whether or not
the Administrative Agent or any of the Lenders is a party thereto or
(y) with respect to any environmental matters, any actual or alleged
environmental compliance expenses and any actual or alleged
remediation expenses in connection with the presence, suspected
presence, release or suspected release of any Hazardous Materials in
or into the air, soil, groundwater, surface water or improvements at,
on, about, under, or within the Properties, or any portion thereof, or
elsewhere in connection with the transportation of Hazardous Materials
to or from the Properties;
(all the foregoing, collectively, the "indemnified liabilities"), provided
that the Company shall have no obligation hereunder with respect to
indemnified liabilities of the Administrative Agent or any Lender or any of
their respective officers, directors, employees or agents arising from (i)
the gross negligence or willful misconduct of such Administrative Agent or
Lender or their respective directors, officers, employees or agents, (ii)
legal proceedings commenced against the Administrative Agent or any Lender
by any security holder or creditor thereof arising out of and based upon
rights afforded any such security holder or creditor solely in its capacity
as such or (iii) legal proceedings commenced against the Administrative
Agent or any such Lender by any Transferee (as defined in subsection 11.6).
The agreements in this subsection 11.5 shall survive repayment of the Notes
and all other amounts payable hereunder.
11.6 Successors and Assigns; Participations; Purchasing Lenders.
(a) This Agreement shall be binding upon and inure to the benefit of the
Company, the Lenders and the Administrative Agent, all future holders of
the Notes, and their respective successors and assigns, except that the
Company may not assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial
banking or lending business and in accordance with applicable law, at any
time sell to one or more banks or other entities ("Participants")
participating interests in any Loan owing to such Lender, any Note held by
such Lender, any Commitment of such Lender or any other interest of such
Lender hereunder and under the other Credit Documents. In the event of any
such sale by a Lender of participating interests to a Participant, such
Lender's obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Lender shall remain solely
responsible for the performance thereof, such Lender shall remain the
holder of any such Note for all purposes under this Agreement and the other
Credit Documents and the Company and the Administrative Agent shall
continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and the other
Credit Documents. The Company agrees that if amounts outstanding under this
Agreement and the Notes are due and unpaid, or shall have been declared or
shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Agreement
and any Note to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement or any
Note; provided that such Participant shall only be entitled to such right
of setoff if it shall have agreed in the agreement pursuant to which it
shall have acquired its participating interest to share with the Lenders
the proceeds thereof, as provided in subsection 11.7. The Company also
agrees that each Participant shall be entitled to the benefits of
subsections 4.19, 4.20 and 4.21 with respect to its participation in the
Commitments and the Loans outstanding from time to time; provided that no
Participant shall be entitled to receive any greater amount pursuant to
such subsections than the transferor Lender would have been entitled to
receive in respect of the amount of the participation transferred by such
transferor Lender to such Participant had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial
banking or lending business and in accordance with applicable law, at any
time, sell to any Lender or any Affiliate thereof (including any Affiliate
or Subsidiary of such transferor Lender) or, with the consent of the
Company and the Administrative Agent (which in each case shall not be
unreasonably withheld), sell to one or more additional banks or financial
institutions (an "Assignee"), all or any part of its rights and obligations
under this Agreement, the Notes and the other Credit Documents, pursuant to
an Assignment and Acceptance executed by such Assignee, such assigning
Lender and by the Company and the Administrative Agent, and delivered to
the Administrative Agent for its acceptance and recording in the Register
(as defined below); provided that, unless the Company and the
Administrative Agent agree otherwise, (A) each such sale pursuant to this
subsection 11.6(c) of less than all of a Lender's rights and Obligations
(I) to a Person which is not then a Lender or an Affiliate of a Lender
shall be of Commitments and/or Loans of $10,000,000 or more and (II) to a
Person which is then a Lender or an Affiliate of a Lender may be in any
amount, (B) in the event of a sale of less than all of such rights and
obligations, such Lender after such sale shall retain Commitments and/or
Loans (without duplication) aggregating at least $10,000,000 (such amount
to be reduced ratably as the Loans are repaid) and (C) each Assignee which
is a Non-U.S. Lender shall comply with the provisions of clause (A) of
subsection 4.18(e) hereof, or, with the prior written consent of the
Company which may be withheld in its sole discretion, with or without
cause, the provisions of clause (B) of subsection 4.18(e) hereof (and, in
either case, with all of the other provisions of subsection 4.18(e)
hereof); and provided further that the foregoing shall not prohibit a
Lender from selling participating interests in accordance with subsection
11.6(b) in all or any portion of its Commitments and/or Loans (without
duplication). Upon such execution, delivery, acceptance and recording, from
and after the effective date determined pursuant to such Assignment and
Acceptance, (x) the Assignee thereunder shall be a party hereto and, to the
extent provided in such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder with the Commitments as set forth
therein, and (y) the assigning Lender thereunder shall, to the extent of
the interest transferred, as reflected in such Assignment and Acceptance,
be released from its obligations under this Agreement (and, in the case of
an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such
assigning Lender shall cease to be a party hereto). Such Assignment and
Acceptance shall be deemed to amend this Agreement to the extent, and only
to the extent, necessary to reflect the addition of such Assignee and the
resulting adjustment of Commitment Percentages arising from the purchase by
such Assignee of all or a portion of the rights and obligations of such
assigning Lender under this Agreement and the Notes. As soon as practicable
after the effective date determined pursuant to such Assignment and
Acceptance, the Company, at its own expense, shall execute and deliver to
the Administrative Agent, in exchange for the surrendered Note, a new Note
to the order of each such Assignee which requests a new Note in an amount
equal to the Loans purchased by it pursuant to such Assignment and
Acceptance and, if the assigning Lender has retained Loans hereunder, a new
Note to the order of the assigning Lender in an amount equal to the Loans
retained by it hereunder. Such new Notes shall be dated the Closing Date
and shall otherwise be in the form of the Notes replaced thereby. The Notes
surrendered by the assigning Lender shall be returned by the Administrative
Agent to the Company marked "cancelled".
(d) The Administrative Agent shall maintain at its address
referred to in subsection 11.2 a copy of each Assignment and Acceptance
delivered to it and a register (the "Register") for the recordation of the
names and addresses of the Lenders and the registered owners of the Notes
and the Commitments of, and the principal amount of any Loans owing to,
each Lender from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Company, the
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register as the owner of the Loans or the Notes recorded
therein for all purposes of this Agreement. The Register shall be available
for inspection by the Company or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender, an Assignee and by the Company and the Administrative
Agent, together with payment to the Administrative Agent of a registration
and processing fee of $3,500, the Administrative Agent shall (i) promptly
accept such Assignment and Acceptance and (ii) on the effective date
determined pursuant thereto, record the information contained therein in
the Register and give notice of such acceptance and recordation to the
Lenders and the Company.
(f) The Company authorizes each Lender to disclose to any
Participant or Assignee (each, a "Transferee") and any prospective
Transferee any and all financial information in such Lender's possession
concerning Holdings, the Company and their respective Subsidiaries and
Affiliates which has been delivered to such Lender by or on behalf of the
Company pursuant to this Agreement or which has been delivered to such
Lender by or on behalf of the Company in connection with such Lender's
credit evaluation of Holdings, the Company and their respective
Subsidiaries and Affiliates prior to becoming a party to this Agreement.
(g) If, pursuant to this subsection 11.6, any interest in this
Agreement or any Note is transferred to any Transferee which would be a
Non-U.S. Lender upon effectiveness of such transfer the assigning Lender
shall cause such Transferee, concurrently with the effectiveness of such
transfer, (i) to represent to the assigning Lender (for the benefit of the
assigning Lender, the Administrative Agent and the Company) that under
applicable law and treaties no taxes will be required to be withheld by the
Administrative Agent, the Company or the assigning Lender with respect to
any payments to be made to such Transferee in respect of the Loans or L/C
Participating Interests, (ii) to furnish to the assigning Lender (and, in
the case of any Assignee registered in the Register, the Administrative
Agent and the Company) such Internal Revenue Service Forms required to be
furnished pursuant to subsection 4.18(e) and (ii) to agree (for the benefit
of the assigning Lender, the Administrative Agent and the Company) to be
bound by the provisions of subsection 4.18(e).
(h) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this subsection concerning assignments
of Loans and Notes relate only to absolute assignments and that such
provisions do not prohibit assignments creating security interests,
including, without limitation, any pledge or assignment by a Lender of any
Loan or Note to any Federal Reserve Bank in accordance with applicable law;
provided that any transfer of Loans or Notes upon, or in lieu of,
enforcement of or the exercise of remedies under any such pledge shall be
treated as an assignment thereof which shall not be made without compliance
with the requirements of this subsection 11.6.
11.7 Adjustments; Set-off. (a) If any Lender (a "Benefitted
Lender") shall at any time receive any payment of all or part of any of its
Loans, or interest thereon, or receive any collateral in respect thereof
(whether voluntarily or involuntarily, by set-off, pursuant to events or
proceedings of the nature referred to in clause (f) of Section 9, or
otherwise) in a greater proportion than any such payment to and collateral
received by any other Lender, if any, in respect of such other Lender's
Loans, or interest thereon, such benefitted Lender shall purchase for cash
from the other Lenders such portion of each such other Lender's Loans or
shall provide such other Lenders with the benefits of any such collateral,
or the proceeds thereof, as shall be necessary to cause such benefitted
Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders; provided, however, that if all
or any portion of such excess payment or benefits is thereafter recovered
from such benefitted Lender, such purchase shall be rescinded, and the
purchase price and benefits returned, to the extent of such recovery, but
without interest. The Company agrees that each Lender so purchasing a
portion of another Lender's Loans may exercise all rights of payment
(including, without limitation, rights of set-off) with respect to such
portion as fully as if such Lender were the direct holder of such portion.
The Administrative Agent shall promptly give the Company notice of any
set-off, provided that the failure to give such notice shall not affect the
validity of such set-off.
(b) Upon the occurrence of an Event of Default specified in
subsection 9(a) or 9(f), the Administrative Agent and each Lender are
hereby irrevocably authorized at any time and from time to time without
notice to the Company, any such notice being hereby waived by the Company,
to set off and appropriate and apply any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each case
whether direct or indirect, absolute or contingent, matured or unmatured,
at any time held or owing by the Administrative Agent or such Lender to or
for the credit or the account of the Company, or any part thereof in such
amounts as the Administrative Agent or such Lender may elect, on account of
the liabilities of the Company hereunder and under the other Credit
Documents and claims of every nature and description of the Administrative
Agent or such Lender against the Company, in any currency, whether arising
hereunder, under any other Credit Document or otherwise, as the
Administrative Agent or such Lender may elect, whether or not the
Administrative Agent or such Lender has made any demand for payment and
although such liabilities and claims may be contingent or unmatured. The
Administrative Agent and each Lender shall notify the Company promptly of
any such setoff made by it and the application made by it of the proceeds
thereof, provided that the failure to give such notice shall not affect the
validity of such setoff and application. The rights of the Administrative
Agent and each Lender under this paragraph are in addition to other rights
and remedies (including, without limitation, other rights of setoff) which
the Administrative Agent or such Lender may have.
11.8 Counterparts. This Agreement may be executed by one or more
of the parties to this Agreement on any number of separate counterparts and
all of said counterparts taken together shall be deemed to constitute one
and the same instrument. A set of the copies of this Agreement signed by
all the parties shall be lodged with the Company and the Administrative
Agent. This Agreement shall become effective with respect to the Company,
the Administrative Agent and the Lenders when the Administrative Agent
shall have received copies of this Agreement executed by the Company and
the Lenders, or, in the case of any Lender, shall have received telephonic
confirmation from such Lender stating that such Lender has executed
counterparts of this Agreement or the signature pages hereto and sent the
same to the Administrative Agent.
11.9 Integration. This Agreement and the other Credit Documents
represent the entire agreement of the Credit Parties, the Administrative
Agent and the Lenders with respect to the subject matter hereof and
thereof, and there are no promises, undertakings, representations or
warranties by the Administrative Agent or any Lender relative to the
subject matter hereof or thereof not expressly set forth or referred to
herein or in the other Credit Documents.
11.10 GOVERNING LAW; NO THIRD PARTY RIGHTS. THIS AGREEMENT AND
THE NOTES AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. THIS AGREEMENT IS
SOLELY FOR THE BENEFIT OF THE PARTIES HERETO AND THEIR RESPECTIVE
SUCCESSORS AND ASSIGNS, AND, EXCEPT AS SET FORTH IN SUBSECTION 11.6, NO
OTHER PERSONS SHALL HAVE ANY RIGHT, BENEFIT, PRIORITY OR INTEREST UNDER, OR
BECAUSE OF THE EXISTENCE OF, THIS AGREEMENT.
11.11 SUBMISSION TO JURISDICTION; WAIVERS. (a) EACH PARTY TO THIS
AGREEMENT HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(i) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS CREDIT AGREEMENT OR ANY OF THE OTHER
CREDIT DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT
IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS
FROM ANY THEREOF;
(ii) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE
BROUGHT IN SUCH COURTS, AND WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR
CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE
PREPAID, TO SUCH PARTY AT ITS ADDRESS SET FORTH IN SUBSECTION 11.2 OR
AT SUCH OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT SHALL HAVE
BEEN NOTIFIED PURSUANT THERETO; AND
(iv) AGREES THAT NOTHING CONTAINED HEREIN SHALL AFFECT THE
RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.
(b) EACH PARTY HERETO UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING REFERRED TO IN PARAGRAPH (A) ABOVE.
11.12 Acknowledgements. The Company hereby acknowledges that:
(a) none of the Administrative Agent or any Lender has any
fiduciary relationship to any Credit Party, and the relationship
between the Administrative Agent and the Lenders, on the one hand, and
the Credit Parties, on the other hand, is solely that of creditor and
debtor; and
(b) no joint venture exists among the Lenders or among any Credit
Parties and the Lenders.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered in New York, New York by their proper and
duly authorized officers as of the day and year first above written.
GULFSTREAM DELAWARE CORPORATION
By: /s/ Chris A. Davis
--------------------------------------
Title: Executive Vice President &
Chief Financial & Administrative
Officer
THE CHASE MANHATTAN BANK, as Administrative
Agent and as a Lender
By: /s/ William J. Caggiano
--------------------------------------
Title: Managing Director
ARAB BANK PLC
By: /s/ Backer Ali
--------------------------------------
Title: Vice President & Controller
Arab Bank PLC
BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE, INC.
By: /s/ Clifford L. Wells
--------------------------------------
Title: Vice President
By: /s/ William W. Hunter
--------------------------------------
Title: Vice President
THE BANK OF NEW YORK
By: /s/ David C. Siegel
--------------------------------------
Title: Vice President
THE BANK OF NOVA SCOTIA
By: /s/ William E. Zarrett
--------------------------------------
Title: Senior Relationship Manager
BANK OF TOKYO-MITSUBISHI
TRUST COMPANY
By: /s/ Brian S. Dossie
--------------------------------------
Title: Assistant Vice President
BANQUE NATIONALE DE PARIS
By: /s/ John Stacy
--------------------------------------
Title: Vice President
COMERCIA BANK
By: /s/ Kristine L. Andersen
--------------------------------------
Title: Assistant Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Philippe Soustra
--------------------------------------
Title: Senior Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Dave T. McNeela
--------------------------------------
Title: Vice President
FIRST UNION NATIONAL BANK
By: /s/ Jeff Fisher
--------------------------------------
Title: Assistant Vice President
FLEET NATIONAL BANK
By: /s/ Roger C. Boucher
--------------------------------------
Title: Senior Vice President
GULF INTERNATIONAL BANK
By: /s/ Abdel-Fattah Tahoun
--------------------------------------
Title: Senior Vice President
By: /s/ Mireille Khalidi
--------------------------------------
Title: Assistant Vice President
THE INDUSTRIAL BANK OF JAPAN, LTD.
By: /s/ Takuya Honjo
--------------------------------------
Title: Senior Vice President
LANDESBANK SCHLESWIG-HOLSTEIN
GIROZENTRALE
By: /s/ Ulf Sonnabend
--------------------------------------
Title: Vice President
By: /s/ Thomas Grunke
--------------------------------------
Title: Assistant Vice President
MICHIGAN NATIONAL BANK
By: /s/ Draga B. Palincas
--------------------------------------
Title: Relationship Manager
PARIBAS
By: /s/ Larry Robinson
--------------------------------------
Title: Vice President
By: /s/ Rosine K. Matthews
--------------------------------------
Title: Vice President
SOCIETE GENERALE
By: /s/ Paul Dalle Molle
--------------------------------------
Title: Managing Director
Head of Midwest Region
SUMMIT BANK
By: /s/ Robert A. Ewing
--------------------------------------
Title: Vice President
SUN TRUST BANK, ATLANTA
By: /s/ Jenna H. Kelly
--------------------------------------
Title: Vice President
WACHOVIA BANK
By: /s/ Tammie Fabbrini
--------------------------------------
Title: Vice President
<PAGE>
Annex A
-------
Pricing Grid
------------
Eurodollar ABR
Leverage Ratio Level Applicable Margin Applicable Margin
-------------------- ----------------- -----------------
I 2.50% 1.50%
II 2.25% 1.25%
III 2.00% 1.00%
IV 1.75% 0.75%
V 1.50% 0.50%
VI 1.25% 0.25%
VII 1.00% 0.00%
<PAGE>
EXHIBIT A TO
TERM LOAN AGREEMENT
-------------------
FORM OF TERM NOTE
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND
PROVISIONS OF THE TERM LOAN AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS
NOTE MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE
AGENT PURSUANT TO THE TERMS OF SUCH TERM LOAN AGREEMENT.
$_______________ New York, New York
_______ __, 1999
FOR VALUE RECEIVED, the undersigned, GULFSTREAM DELAWARE
CORPORATION, a Delaware corporation (the "Company"), hereby unconditionally
promises to pay to the order of __________ (the "Lender") or its registered
assigns at the office of The Chase Manhattan Bank, located at 270 Park
Avenue, New York, New York 10017, in lawful money of the United States of
America and in immediately available funds, the principal amount of
____________ DOLLARS ($___________), or, if less, the unpaid principal
amount of the Term Loan of the Lender. The principal amount of the Term
Loan of the Lender shall be paid in the amounts and on the dates specified
in subsection 2.2 of the Term Loan Agreement. The Company further agrees to
pay interest in like money at such office on the unpaid principal amount
hereof from time to time outstanding at the rates and on the dates
specified in subsection 4.7 of the Term Loan Agreement.
The holder of this Note is authorized to endorse on the schedules
annexed hereto and made a part hereof or on a continuation thereof which
shall be attached hereto and made a part hereof the date, Type and amount
of the Term Loan extended by the Lender and the date and amount of each
payment or prepayment of principal with respect thereto, the date of each
interest rate conversion pursuant to subsection 4.3 of the Term Loan
Agreement and the principal amount with respect thereto and, in the case of
Eurodollar Loans, the length of each Interest Period and the Eurodollar
Rate with respect thereto. In the absence of manifest error, each such
recordation shall constitute prima facie evidence of the accuracy of the
information recorded, provided that the failure of the Lender to make such
recordation (or any error in such recordation) shall not affect the
obligations of the Company in respect of such Term Loan.
This Note (a) is one of the Term Notes referred to in the Term
Loan Agreement, dated as of April 15, 1999 among the Company, the Lender,
the other banks, financial institutions and other entities from time to
time parties thereto and The Chase Manhattan Bank, as Administrative Agent
(as the same may be amended, supplemented or otherwise modified from time
to time, the "Term Loan Agreement"), (b) is subject to the provisions of
the Term Loan Agreement and (c) is subject to optional and mandatory
prepayment in whole or in part as provided in the Term Loan Agreement. This
Note is guaranteed as provided in the Credit Documents. Reference is hereby
made to the Credit Documents for a description of the nature and extent of
the guarantees, the terms and conditions upon which each guarantee was
granted and the rights of the holder of this Note in respect thereof.
This Note and the Loans evidenced hereby may be transferred in
whole or in part only by registration of such transfer on the register
maintained for such purpose by or on behalf of the Company as provided in
subsection 11.6(d) of the Term Loan Agreement.
Upon the occurrence of any one or more of the Events of Default,
all amounts then remaining unpaid on this Note shall become, or may be
declared to be, immediately due and payable, all as provided in the Term
Loan Agreement.
All parties now and hereafter liable with respect to this Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby
waive presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Term Loan
Agreement and used herein shall have the meanings given to them in the Term
Loan Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
GULFSTREAM DELAWARE CORPORATION
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
<PAGE>
<TABLE>
<CAPTION>
Schedule A
to Term Note
------------
LOANS AND REPAYMENTS OF LOANS
- ---------------- ---------------------- ------------ --------------- ------------------------- --------------------
Amount of
Type of Principal of Unpaid Principal
Date Amount of Loans Loan Loans Repaid Balance of Loans Notation Made By
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</TABLE>
<PAGE>
EXHIBIT B TO
TERM LOAN AGREEMENT
-------------------
FORM OF COMPANY PLEDGE AGREEMENT
COMPANY PLEDGE AGREEMENT dated as of _____ __, 1999 made by
GULFSTREAM DELAWARE CORPORATION, a Delaware corporation (the "Pledgor"), in
favor of THE CHASE MANHATTAN BANK ("Chase"), as collateral agent (in such
capacity, the "Collateral Agent") for (i) the lenders (the "Term Loan
Lenders") parties to the Term Loan Agreement, dated as of April 15, 1999
(as amended, supplemented or otherwise modified from time to time, the
"Term Loan Agreement"), among the Pledgor, the Administrative Agent and the
Lenders and (ii) the lenders (the "1996 Lenders") parties to the Credit
Agreement, dated as of October 16, 1996 (as amended, supplemented or
otherwise modified from time to time, the "1996 Credit Agreement"), among
the Pledgor, Chase, as administrative agent for the 1996 Lenders, and the
1996 Lenders.
W I T N E S S E T H :
WHEREAS, pursuant to the Term Loan Agreement, the Term Loan
Lenders have severally agreed to make loans to the Pledgor upon the terms
and subject to the conditions set forth therein;
WHEREAS, the Pledgor is the legal and beneficial owner of the
shares of Pledged Stock (as hereinafter defined) issued by the Persons
named under the caption "Issuer" on Schedules I and II hereto;
WHEREAS, the Pledgor is the legal and beneficial owner of the
Note Collateral (as defined herein);
WHEREAS, it is a condition precedent to the obligation of the
Term Loan Lenders to make their respective loans to the Pledgor under the
Term Loan Agreement that the Pledgor shall have executed and delivered this
Pledge Agreement to the Collateral Agent for the ratable benefit of the
Lenders;
NOW, THEREFORE, in consideration of the premises and to induce
the Term Loan Lenders to make their respective loans to the Pledgor under
the Term Loan Agreement, the Pledgor hereby agrees with the Collateral
Agent, for the ratable benefit of the Lenders, as follows:
1. Defined Terms. Unless otherwise defined herein, terms that are
defined in the Term Loan Agreement and used herein are so used as so
defined; and the following terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the date hereof are
used herein as so defined: Accounts, Chattel Paper, General Intangibles and
Instruments; and the following terms shall have the following meanings:
"Code": the Uniform Commercial Code from time to time in effect
in the State of New York.
"Collateral": the collective reference to the Pledged Stock, the
Note Collateral and all Proceeds thereof.
"Credit Agreements": the collective reference to the Term Loan
Agreement and the 1996 Credit Agreement.
"Gulfstream Georgia Note": the floating rate note, due October 1,
2003 and dated October 16, 1996 in the principal amount of $400,000,000
made by Gulfstream Aerospace Corporation, a Georgia corporation, in favor
of the Pledgor.
"Holdings Note": the 6.72% note, due October 1, 2004 and dated
October 16, 1996 in the principal amount of $100,000,000 made by Holdings
in favor of the Pledgor in connection with the Refinancing.
"Issuer": with respect to any Pledged Stock, the Issuers from
time to time listed on Schedules I and II hereto as the issuer of such
Pledged Stock.
"Lenders": the collective reference to the Term Loan Lenders and
the 1996 Lenders.
"1996 Obligations": the "Obligations" as defined in the 1996
Credit Agreement.
"Note Collateral": all Pledged Notes and any collateral security
for any Pledged Note which are required to be pledged to the Collateral
Agent under the Credit Agreements.
"Obligations": the collective reference to the Term Loan
Obligations and the 1996 Obligations.
"Pledge Agreement": this Pledge Agreement, as amended,
supplemented or otherwise modified from time to time.
"Pledge Agreement Lenders": at a particular time, the holders of
at least 51% of the sum of (i) the aggregate unpaid principal amount of the
Loans, if any, under the Term Loan Agreement and (ii) the aggregate unpaid
principal amount of the Term Loans (as defined in the 1996 Credit
Agreement) outstanding at such time, if any, and the aggregate Revolving
Credit Commitments (as defined in the 1996 Credit Agreement) at such time.
"Pledged Notes": the Gulfstream Georgia Note and the Holdings
Note.
"Pledged Stock": all of the shares of capital stock of the
Issuers listed on Schedules I and II hereto (but not more than 65% of all
shares of each class of capital stock of the Issuers listed on Schedule II
hereto) now owned or at any time hereafter acquired by the Pledgor or in
which the Pledgor now has or may from time to time acquire any right, title
or interest, together with all stock certificates, options or rights of any
nature whatsoever that may be issued or granted by the Issuer thereof to
the Pledgor while this Pledge Agreement is in effect.
"Proceeds": all "proceeds" as such term is defined in Section
9-306(1) of the Code on the date hereof and, in any event, shall include,
without limitation, all dividends or other income from the Pledged Stock,
all payments and other distributions and income with respect to any Pledged
Notes, and any and all collections on the foregoing or distributions with
respect to the foregoing.
"Term Loan Obligations": the "Obligations" as defined in the Term
Loan Agreement.
2. Pledge; Grant of Security Interest. The Pledgor hereby
delivers to the Collateral Agent, for the ratable benefit of the Lenders,
all of the Pledgor's right, title and interest in the Pledged Stock and the
Pledged Notes and hereby transfers and grants to the Collateral Agent, for
the ratable benefit of the Lenders, a first security interest in all of the
Pledgor's right, title and interest in all of the Collateral, as collateral
security for the prompt and complete payment and performance when due
(whether at the stated maturity, by acceleration or otherwise) of the
Obligations.
3. Stock Powers. (a) Concurrently with the delivery to the
Collateral Agent of each certificate representing one or more shares of
Pledged Stock, the Pledgor shall deliver an undated stock power covering
such certificate, duly executed in blank by the Pledgor.
(b) Concurrently with the delivery to the Collateral Agent of any
Pledged Note, the Pledgor shall deliver an undated endorsement covering the
Pledged Note, duly executed in blank by the Pledgor.
4. Representations and Warranties. The Pledgor represents and
warrants that:
(a) the shares of capital stock of each of the Issuers listed on
Schedules I and II hereto which are identified as Pledged Stock on said
Schedules I and II constitute (i) all of the issued and outstanding shares
of capital stock of the Issuers listed on Schedule I hereto which are owned
by the Pledgor; and (ii) all of the issued and outstanding shares of
capital stock of the Issuers listed on Schedule II hereto which are owned
by the Pledgor (but not in excess of 65% of the issued and outstanding
shares of all classes of the capital stock of such Issuers).
(b) all the shares of Pledged Stock have been duly and validly
issued and are fully paid and nonassessable;
(c) the Pledgor is the record and beneficial owner of, and has
good title to, the Collateral, free of any and all Liens or options in
favor of, or claims of, any other Person, except the Lien created by this
Pledge Agreement; and
(d) upon (i) delivery to the Collateral Agent of the stock
certificates evidencing the Pledged Stock and (ii) delivery to the
Collateral Agent of the Pledged Notes, together with the endorsement
thereof herein provided, the Lien granted pursuant to this Pledge Agreement
will constitute a valid, perfected first priority Lien on the Collateral
(except, with respect to Proceeds, only to the extent permitted by Section
9-306 of the Code), enforceable as such against all creditors of the
Pledgor and any Persons purporting to purchase any Collateral from the
Pledgor except in each case as enforceability may be affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding
in equity or at law) and an implied covenant of good faith and fair
dealing. No security agreement, financing statement or other public notice
with respect to all or any part of the Collateral is on file or of record
in any public office.
(e) The Pledgor's chief executive office and chief place of
business, and the place where the Pledgor keeps its records concerning the
Collateral, is located at: 500 Gulfstream Rd., Savannah, Georgia
31402-2206, or such other location as the Pledgor shall inform the
Collateral Agent in accordance with subsection 6(e).
The Pledgor agrees that the foregoing representations and
warranties shall be deemed to have been made by it on each Borrowing Date
by the Pledgor under the Term Loan Agreement on and as of such Borrowing
Date as though made hereunder on and as of such Borrowing Date.
5. Covenants. The Pledgor covenants and agrees with the
Collateral Agent and the Lenders, that, from and after the date of this
Pledge Agreement until the Obligations are paid in full and the Commitments
are terminated:
(a) If the Pledgor shall, as a result of its ownership of the
Collateral, become entitled to receive or shall receive any stock
certificate (including, without limitation, any certificate representing a
stock dividend or a distribution in connection with any reclassification,
increase or reduction of capital or any certificate issued in connection
with any reorganization), promissory note or other instrument, option or
rights, whether in addition to, in substitution of, as a conversion of, or
in exchange for any of the Collateral, or otherwise in respect thereof, the
Pledgor shall accept the same as the agent of the Collateral Agent and the
Lenders, hold the same in trust for the Collateral Agent and the Lenders
and deliver the same forthwith to the Collateral Agent in the exact form
received, duly indorsed by the Pledgor to the Collateral Agent, if
required, together with an undated stock power or endorsement, as
appropriate, covering such certificate, note or instrument duly executed in
blank by the Pledgor and with, if the Collateral Agent so requests,
signature guarantees, to be held by the Collateral Agent, subject to the
terms hereof, as additional collateral security for the Obligations. Any
sums paid upon or in respect of the Collateral upon the liquidation or
dissolution of any Issuer shall be paid over to the Collateral Agent to be
held by it hereunder as additional collateral security for the Obligations,
and, in case any distribution of capital shall be made on or in respect of
the Collateral or any property shall be distributed upon or with respect to
the Collateral pursuant to the recapitalization or reclassification of the
capital of such Issuer or pursuant to the reorganization thereof, the
property so distributed shall be delivered to the Collateral Agent to be
held by it hereunder as additional collateral security for the Obligations.
If any sums of money or property so paid or distributed in respect of the
Collateral shall be received by the Pledgor, the Pledgor shall, until such
money or property is paid or delivered to the Collateral Agent, hold such
money or property in trust for the Lenders, segregated from other funds of
the Pledgor, as additional collateral security for the Obligations.
(b) Without the prior written consent of the Collateral Agent and
except as permitted by, or not prohibited under, the Credit Agreements, the
Pledgor will not (i) vote to enable, or take any other action to permit,
any Issuer to issue any stock, membership interests or other equity
securities of any nature or to issue any other securities convertible into
or granting the right to purchase or exchange for any stock or other equity
securities of any nature of such Issuer, (ii) sell, assign, transfer,
exchange, or otherwise dispose of, or grant any option with respect to, the
Collateral, or (iii) create, incur or permit to exist any Lien or option in
favor of, or any claim of any Person with respect to, any of the
Collateral, or any interest therein, except for the Lien provided for by
this Pledge Agreement. The Pledgor will defend the right, title and
interest of the Collateral Agent and the Lenders in and to the Collateral
against the claims and demands of all Persons whomsoever.
(c) At any time and from time to time, upon the written request
of the Collateral Agent, and at the sole expense of the Pledgor, the
Pledgor will promptly and duly execute and deliver such further instruments
and documents and take such further actions as the Collateral Agent may
reasonably request for the purposes of obtaining or preserving the full
benefits of this Pledge Agreement and of the rights and powers herein
granted. If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any promissory note, other
Instrument or Chattel Paper, such note, Instrument or Chattel Paper shall
be immediately delivered to the Collateral Agent, duly endorsed in a manner
satisfactory to the Collateral Agent, to be held as Collateral pursuant to
this Pledge Agreement.
(d) The Pledgor agrees to pay, and to hold the Collateral Agent
and the Lenders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or
other similar taxes which may be payable or determined to be payable with
respect to any of the Collateral or in connection with any of the
transactions contemplated by this Pledge Agreement.
(e) The Pledgor will not, unless it shall give 45 days' prior
written notice to such effect to the Collateral Agent, (i) change the
location of its chief executive office or chief place of business from that
specified in Section 5(e) hereof, or remove its books and records from such
location or (ii) change its name, identity or structure to such an extent
that any financing statements filed by the Collateral Agent in connection
with this Agreement would become misleading.
6. Cash Dividends; Interest; Voting Rights. (a) Unless an Event of
Default shall have occurred and be continuing and the Collateral Agent
shall (unless such Event of Default is an Event of Default specified in
subsection 9(f) of the Term Loan Agreement or subsection 9(f) of the 1996
Credit Agreement, in which case no such notice need be given) have given
notice to the Pledgor of the Collateral Agent's intent to exercise its
rights pursuant to paragraph 8 below, the Pledgor shall be (i) permitted to
receive all cash dividends or distributions to the extent permitted in the
Credit Agreements in respect of the Pledged Stock, (ii) entitled to receive
and retain any interest payments or other distributions made in respect of
the Pledged Notes in accordance with the terms of the Credit Agreements and
(iii) permitted to exercise all voting, corporate, limited liability
company and other rights of ownership with respect to the Pledged Stock and
the Pledged Notes, provided, however, that no vote shall be cast or
corporate right exercised or other action taken which, in the Collateral
Agent's reasonable judgment, would impair the Collateral or which would be
inconsistent with or result in any violation of any provision of the Credit
Agreements or any of the other Credit Documents.
(b) If an Event of Default shall have occurred and be continuing
and the Collateral Agent shall (unless such Event of Default is an Event of
Default specified in subsection 9(f) of the Term Loan Agreement or
subsection 9(f) of the 1996 Credit Agreement, in which case no such notice
need be given) have given notice to the Pledgor of its intent to exercise
its rights pursuant to paragraph 8 below, (i) all dividends, interest
payments and other distributions (including cash) paid on or in respect of
the Pledged Stock and Pledged Notes shall be paid to and retained by the
Collateral Agent as Collateral hereunder (or if received by the Pledgor,
shall be held in trust by the Pledgor for the benefit of the Collateral
Agent and the Lenders and shall be forthwith delivered by it, and in the
case of the Pledged Notes, together with an appropriate undated endorsement
duly executed in blank), and (ii) all voting, corporate, limited liability
company and other rights pertaining to the Pledged Stock and the Pledged
Notes, if any, shall be exercised by the Collateral Agent.
8. Rights of the Lenders and the Collateral Agent. (a) If an Event
of Default shall occur and be continuing and the Collateral Agent shall
(unless such Event of Default is an Event of Default specified in
subsection 9(f) of the Term Loan Agreement or subsection 9(f) of the 1996
Credit Agreement, in which case no such notice need be given) give notice
of its intent to exercise its rights hereunder to the Pledgor, (i) the
Collateral Agent shall have the right to receive any and all cash
dividends, distributions and payments or other income paid in respect of
the Collateral and make application thereof to the Obligations in such
order as the Collateral Agent may determine and (ii) all shares of the
Pledged Stock and all rights in the Note Collateral shall be registered in
the name of the Collateral Agent or its nominee, and the Collateral Agent
or its nominee may thereafter exercise (A) all voting, corporate, member,
creditor and other rights, powers and privileges pertaining to such
Collateral at any meeting of shareholders of any Issuer and (B) any and all
rights of conversion, exchange, subscription and any other rights,
privileges or options pertaining to the Collateral as if it were the
absolute owner thereof (including, without limitation, the right to
exchange at its discretion any and all of the Collateral upon the merger,
consolidation, reorganization, recapitalization or other fundamental change
in the structure of any Issuer, or upon the exercise by the Pledgor or the
Collateral Agent of any right, privilege or option pertaining to the
Collateral, and in connection therewith, the right to deposit and deliver
any and all of the Collateral with any committee, depositary, transfer
agent, registrar or other designated agency upon such terms and conditions
as it may determine), all without liability except to account for property
actually received by it and except for its gross negligence or willful
misconduct, but the Collateral Agent shall have no duty to the Pledgor to
exercise any such right, privilege or option and shall not be responsible
for any failure to do so or delay in so doing.
(b) The rights of the Collateral Agent and the Lenders hereunder
shall not be conditioned or contingent upon the pursuit by the Collateral
Agent or any Lender of any right or remedy against any Issuer or the
Pledgor or against any other Person which may be or become liable in
respect of all or any part of the Obligations or against any collateral
security therefor, guarantee therefor or right of set-off with respect
thereto. Neither the Collateral Agent nor any Lender shall be liable for
any failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so, nor shall the Collateral Agent be
under any obligation to sell or otherwise dispose of any Collateral upon
the request of the Pledgor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof.
8. Remedies. In the event that any portion of the Obligations has
been declared or becomes due and payable in accordance with the terms of
the Term Loan Agreement or the 1996 Credit Agreement and such Obligations
have not been paid in full, the Collateral Agent, on behalf of the Lenders,
may exercise, in addition to all other rights and remedies granted in this
Pledge Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a
secured party under the Code. Without limiting the generality of the
foregoing, the Collateral Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except
any notice required by law referred to below) to or upon the Pledgor, any
Issuer, or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or
any part thereof, and/or may forthwith sell, assign, give option or options
to purchase or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, in the over-the-counter market, at any
exchange or broker's board or office of the Collateral Agent or any Lender
or elsewhere upon such terms and conditions as it may deem advisable and at
such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. The Collateral Agent or any
Lender shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of the Collateral so sold, free of any right or
equity of redemption in the Pledgor, which right or equity is hereby waived
or released. The Collateral Agent shall apply any Proceeds from time to
time held by it and the net proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all reasonable
costs and expenses of every kind incurred in respect thereof or incidental
to the care or safekeeping of any of the Collateral or in any way relating
to the Collateral or the rights of the Collateral Agent and the Lenders
hereunder, including, without limitation, reasonable attorneys' fees and
disbursements of counsel to the Collateral Agent, to the payment in whole
or in part of the Obligations, in such order as the Collateral Agent may
elect, and only after such application and after the payment by the
Collateral Agent of any other amount required by any provision of law,
including, without limitation, Section 9-504(1)(c) of the Code, need the
Collateral Agent account for the surplus, if any, to the Pledgor. To the
extent permitted by applicable law, the Pledgor waives all claims, damages
and demands it may acquire against the Collateral Agent or any Lender
arising out of the lawful exercise by them of any rights hereunder. If any
notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given
at least 10 days before such sale or other disposition.
9. Registration Rights; Private Sales. (a) If the Collateral Agent
shall determine to exercise its right to sell any or all of the Collateral
pursuant to paragraph 9 hereof, and if in the opinion of the Collateral
Agent it is necessary or advisable to have the Collateral, or that portion
thereof to be sold, registered under the provisions of the Securities Act
of 1933, as amended (the "Securities Act"), the Pledgor will cause each
Issuer whose stock or note or membership interest, as the case may be, is
to be so registered to (i) execute and deliver, and cause the directors and
officers of such Issuer or the Pledgor, as the case may be, to execute and
deliver, all such instruments and documents, and do or cause to be done all
such other acts as may be, in the opinion of the Collateral Agent,
necessary or advisable to register the Collateral, or that portion thereof
to be sold, under the provisions of the Securities Act, (ii) use its best
efforts to cause the registration statement relating thereto to become
effective and to remain effective for a period of one year from the date of
the first public offering of the Collateral or that portion thereof to be
sold, and (iii) make all amendments thereto and/or to the related
prospectus that, in the opinion of the Collateral Agent, are necessary or
advisable, all in conformity with the requirements of the Securities Act
and the rules and regulations of the Securities and Exchange Commission
applicable thereto. The Pledgor agrees to cause each Issuer to comply with
the provisions of the securities or "Blue Sky" laws of any and all
jurisdictions that the Collateral Agent shall designate and to make
available to its security holders, as soon as practicable, an earnings
statement (which need not be audited) that will satisfy the provisions of
Section 11(a) of the Securities Act.
(b) The Pledgor recognizes that the Collateral Agent may be
unable to effect a public sale of any or all the Collateral by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers that will be
obliged to agree, among other things, to acquire such securities for their
own account for investment and not with a view to the distribution or
resale thereof. The Pledgor acknowledges and agrees that any such private
sale may result in prices and other terms less favorable than if such sale
were a public sale and, notwithstanding such circumstances, agrees that any
such private sale shall be deemed to have been made in a commercially
reasonable manner. The Collateral Agent shall be under no obligation to
delay a sale of any of the Collateral for the period of time necessary to
permit any Issuer to register such securities for public sale under the
Securities Act, or under applicable state securities laws, even if such
Issuer would agree to do so.
(c) The Pledgor further agrees to use its best efforts to do or
cause to be done all such other acts as may be necessary to make such sale
or sales of all or any portion of the Collateral pursuant to this paragraph
9 valid and binding and in compliance with any and all other applicable
Requirements of Law. The Pledgor further agrees that a breach of any of the
covenants contained in this paragraph 10 will cause irreparable injury to
the Collateral Agent and the Lenders, that the Collateral Agent and the
Lenders have no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this paragraph 9
shall be specifically enforceable against the Pledgor, and the Pledgor
hereby waives and agrees not to assert any defenses against an action for
specific performance of such covenants.
10. Limitation on Duties Regarding Collateral. The Collateral
Agent's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of
the Code or otherwise, shall be to deal with it in the same manner as the
Collateral Agent deals with similar securities and property for its own
account. Neither the Collateral Agent nor any Lender nor their respective
directors, officers, employees or agents shall be liable for failure to
demand, collect or realize upon any of the Collateral or for any delay in
doing so (except to the extent the same constitutes gross negligence or
willful misconduct) or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of the Pledgor or otherwise.
11. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable
and powers coupled with an interest.
12. Severability. Any provision of this Pledge Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
13. Paragraph Headings. The paragraph headings used in this
Pledge Agreement are for convenience of reference only and are not to
affect the construction hereof or be taken into consideration in the
interpretation hereof.
14. No Waiver; Cumulative Remedies. Neither the Collateral Agent
nor any Lender shall by any act (except by a written instrument pursuant to
paragraph 15 hereof) be deemed to have waived any right or remedy
hereunder. No failure to exercise, nor any delay in exercising, on the part
of the Collateral Agent or any Lender any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial exercise
of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Collateral Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Collateral Agent or such Lender would otherwise
have on any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive
of any other rights or remedies provided by law.
15. Waivers and Amendments; Successors and Assigns; Governing
Law. None of the terms or provisions of this Pledge Agreement may be
waived, amended, supplemented or otherwise modified except by a written
instrument executed by the Pledgor, the Collateral Agent and the Pledge
Agreement Lenders, provided that no such waiver and no such amendment,
supplement or modification shall alter the equal and ratable treatment
afforded the Obligations without the written consent of each Lender
adversely affected by any such waiver, amendment, supplement or
modification. This Pledge Agreement shall be binding upon the successors
and assigns of the Pledgor and shall inure to the benefit of the Collateral
Agent and the Lenders and their respective successors and assigns. THIS
PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
16. Notices. Notices by the Collateral Agent may be given by
mail, by telex or by facsimile transmission, addressed or transmitted to
the Issuers at their addresses or transmission numbers set forth in
Schedule III hereto and to the Pledgor at the address or transmission
number set forth in subsection 11.2 of the Term Loan Agreement. Such notice
shall be effective (a) in the case of mail, three Business Days after
deposit in the postal system, first class postage pre-paid, and (b) in the
case of telex or facsimile notices, when sent, answerback received,
addressed. The Pledgor and the Issuers may change their respective
addresses and transmission numbers by written notice to the Collateral
Agent.
17. Irrevocable Authorization and Instruction to Issuers. The
Pledgor hereby authorizes and instructs the Issuers to comply with any
instruction received by it from the Collateral Agent in writing that (a)
states that an Event of Default has occurred and is continuing and (b) is
otherwise in accordance with the terms of this Pledge Agreement, without
any other or further instructions from the Pledgor, and the Pledgor agrees
that the Issuers shall be fully protected in so complying.
18. Authority of Collateral Agent. The Pledgor acknowledges that
the rights and responsibilities of the Collateral Agent under this Pledge
Agreement with respect to any action taken by the Collateral Agent or the
exercise or non-exercise by the Collateral Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Pledge Agreement shall, as between the
Collateral Agent and the Lenders, be governed by the Credit Agreements and
by such other agreements with respect thereto as may exist from time to
time among them, but, as between the Collateral Agent and the Pledgor, the
Collateral Agent shall be conclusively presumed to be acting as agent for
the Lenders with full and valid authority so to act or refrain from acting,
and neither the Pledgor nor the Issuers shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.
IN WITNESS WHEREOF, the undersigned has caused this Pledge
Agreement to be duly executed and delivered as of the date first above
written.
GULFSTREAM DELAWARE CORPORATION
By:
----------------------------
Title:
<PAGE>
ACKNOWLEDGEMENT AND CONSENT
The undersigned Issuers referred to in the foregoing Company
Pledge Agreement hereby acknowledge receipt of a copy thereof and agree to
be bound thereby and to comply with the terms thereof insofar as such terms
are applicable to it. The undersigned Issuers agree to notify the
Collateral Agent promptly in writing of the occurrence of any of the events
described in paragraph 5(a) of the Company Pledge Agreement. The
undersigned Issuers further agree that the terms of paragraph 9(c) of the
Company Pledge Agreement shall apply to them, mutatis mutandis, with
respect to all actions that may be required of them under or pursuant to or
arising out of paragraph 9 of the Company Pledge Agreement.
GULFSTREAM AEROSPACE CORPORATION,
a Georgia Corporation
GULFSTREAM AEROSPACE CORPORATION,
a California Corporation
GULFSTREAM AEROSPACE CORPORATION,
D/B/A GULFSTREAM AEROSPACE
TECHNOLOGIES
an Oklahoma Corporation
By:
---------------------------------
Title:
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
to Company
Pledge Agreement
----------------
DESCRIPTION OF PLEDGED STOCK (DOMESTIC SUBSIDIARIES)
----------------------------------------------------
Percentage of
Outstanding
Stock Total No. of Number of Shares Owned
Class of Certificate Outstanding Shares Owned by
Issuer Stock No. Shares by the Pledgor the Pledgor
- ------ -------- ----------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II
To Company
Pledge Agreement
----------------
DESCRIPTION OF PLEDGED STOCK (FOREIGN SUBSIDIARIES)
----------------------------------------------------
Percentage of
Outstanding
Stock Total No. of Number of Shares Owned
Class of Certificate Outstanding Shares Owned by
Issuer Stock No. Shares by the Pledgor the Pledgor
- ------ -------- ----------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
SCHEDULE III
To Company
Pledge Agreement
----------------
ADDRESSES OF ISSUERS
--------------------
<PAGE>
EXHIBIT C TO
TERM LOAN AGREEMENT
-------------------
FORM OF HOLDINGS GUARANTEE
HOLDINGS GUARANTEE, dated as of _____ __, 1999, made by
GULFSTREAM AEROSPACE CORPORATION (this "Guarantee"), a Delaware corporation
(the "Guarantor"), in favor of THE CHASE MANHATTAN BANK, as Administrative
Agent (in such capacity, the "Administrative Agent") for the banks and
other financial institutions (the "Lenders") that are parties to the Term
Loan Agreement described below.
W I T N E S S E T H :
WHEREAS, GULFSTREAM DELAWARE CORPORATION, a Delaware corporation
(the "Company"), is party to the Term Loan Agreement, dated as of the date
hereof among the Company, the Lenders and the Administrative Agent (as
amended, supplemented or otherwise modified from time to time, the "Term
Loan Agreement");
WHEREAS, pursuant to the terms of the Term Loan Agreement and the
other Credit Documents, the Lenders have severally agreed to make loans to
the Company;
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective loans to the Company under the Term Loan
Agreement that the Guarantor shall have executed and delivered this
Guarantee to the Administrative Agent for the ratable benefit of the
Lenders;
NOW, THEREFORE, in consideration of the premises and to induce
the Administrative Agent and the Lenders to enter into the Term Loan
Agreement and to make Loans thereunder, the Guarantor hereby agrees with
and for the benefit of the Administrative Agent and the Lenders as follows:
1. Defined Terms. As used in this Guarantee, terms defined in the
Term Loan Agreement (unless otherwise defined herein) are used herein as
therein defined.
2. Guarantee. The Guarantor hereby unconditionally and
irrevocably guarantees to the Administrative Agent and the Lenders and
their respective successors, indorsees, transferees and assigns, the prompt
and complete payment by the Company when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations, and the
Guarantor further agrees to pay any and all expenses (including, without
limitation, all reasonable fees and disbursements of counsel) which may be
paid or incurred by the Administrative Agent or any Lender in enforcing, or
obtaining advice of counsel in respect of, any rights with respect to, or
collecting, any or all of the Obligations and/or enforcing any rights with
respect to, or collecting against, the Guarantor under this Guarantee. This
Guarantee constitutes a guarantee of payment when due and not of
collection, and the Guarantor specifically agrees that it shall not be
necessary or required that the Administrative Agent or any Lender exercise
any right, assert any claim or demand or enforce any remedy whatsoever
against the Company (or any other Person) before or as a condition to the
obligations of the Guarantor hereunder.
No payment or payments made by the Company, any other guarantor
or any other Person or received or collected by the Administrative Agent or
any Lender from the Company, any other guarantor or any other Person by
virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment
of the Obligations shall be deemed to modify, reduce, release or otherwise
affect the liability of the Guarantor hereunder which shall,
notwithstanding any such payment or payments other than payments made by
the Guarantor in respect of the Obligations or payments received or
collected from the Guarantor in respect of the Obligations, remain liable
for the Obligations until the Obligations are paid in full and the
Commitments are terminated.
The Guarantor agrees that whenever, at any time, or from time to
time, it shall make any payment to the Administrative Agent or any Lender
on account of its liability hereunder, it will notify the Administrative
Agent in writing that such payment is made under this Guarantee for such
purpose.
4. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default specified in the Term Loan Agreement,
the Guarantor hereby irrevocably authorizes each Lender at any time and
from time to time without notice to the Guarantor, any such notice being
expressly waived by the Guarantor, to set-off and appropriate and apply any
and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in
any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender
to or for the credit or the account of the Guarantor, or any part thereof,
in such amounts as such Lender may elect, against and on account of the
obligations and liabilities of the Guarantor to such Lender hereunder and
claims of every nature and description of such Lender against the
Guarantor, in any currency, whether arising hereunder, under the Term Loan
Agreement, the Notes or otherwise under any other Credit Document, as such
Lender may elect, whether or not the Administrative Agent or any Lender has
made any demand for payment and although such obligations, liabilities and
claims may be contingent or unmatured. Each Lender agrees to notify the
Guarantor promptly of any such set-off and the application made by such
Lender, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender under
this paragraph are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which such Lender may have.
5. Subrogation, etc. Notwithstanding any payment or payments made
by the Guarantor hereunder, or any set-off or application of funds of the
Guarantor by any Lender, the Guarantor shall not exercise any of the rights
of the Administrative Agent or any Lender which the Guarantor may acquire
by way of subrogation, by any payment made hereunder, by reason of such
set-off or application of funds or otherwise, against the Company or any
collateral security or guarantee or right of set-off held by any Lender for
the payment of the Obligations, nor shall the Guarantor seek or be entitled
to seek any contribution or reimbursement from the Company or any other
guarantor in respect of payments made by such Guarantor hereunder, until
all amounts owing to the Administrative Agent and the Lenders by the
Company on account of the Obligations are paid in full and the Commitments
are terminated. If any amount shall be paid to the Guarantor on account of
such subrogation rights at any time when all of the Obligations shall not
have been paid in full or the Commitments shall not have been terminated,
such amount shall be held by the Guarantor in trust for the Administrative
Agent and the Lenders, segregated from other funds of the Guarantor, and
shall, forthwith upon receipt by the Guarantor, be turned over to the
Administrative Agent in the exact form received by such Guarantor (duly
indorsed by the Guarantor to the Administrative Agent, if required), to be
applied against the Obligations, whether matured or unmatured, in such
order as required by the applicable Credit Documents.
6. Amendments, etc. with respect to the Obligations; Waiver of
Rights. The Guarantor shall remain obligated hereunder notwithstanding
that, without any reservation of rights against the Guarantor and without
notice to or further assent by the Guarantor, any demand for payment of any
of the Obligations made by the Administrative Agent or any Lender may be
rescinded by such party and any of the Obligations continued, and the
Obligations, or the liability of any other party upon or for any part
thereof, or any collateral security or guarantee therefor or right of
set-off with respect thereto, may, from time to time, in whole or in part,
be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Administrative Agent or any Lender and the
Term Loan Agreement, the Notes, the other Credit Documents and any other
collateral security document or other guarantee or document in connection
therewith may be amended, modified, supplemented or terminated, in whole or
in part, as the Administrative Agent and/or any Lender may deem advisable
from time to time, and any collateral security, guarantee or right of
set-off at any time held by the Administrative Agent or any Lender for the
payment of the Obligations may be sold, exchanged, waived, surrendered or
released. Neither the Administrative Agent nor any Lender shall have any
obligation to protect, secure, perfect or insure any Lien at any time held
by it as security for the Obligations or for this Guarantee or any property
subject thereto.
7. Guarantee Absolute and Unconditional. The Guarantor waives any
and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Administrative Agent
or any Lender upon this Guarantee or acceptance of this Guarantee; the
Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived,
in reliance upon this Guarantee; and all dealings between the Company or
the Guarantor and the Administrative Agent or any Lender shall likewise be
conclusively presumed to have been had or consummated in reliance upon this
Guarantee. The Guarantor waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon the Company or any
of the Guarantors with respect to the Obligations. The Guarantor
understands and agrees that this Guarantee shall be construed as a
continuing, absolute and unconditional guarantee of payment without regard
to (a) the validity, regularity or enforceability of the Term Loan
Agreement, the Notes, any of the other Credit Documents, any of the
Obligations or any other collateral security therefor or guarantee or right
of set-off with respect thereto at any time or from time to time held by
the Administrative Agent or any Lender, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at
any time be available to or be asserted by the Company against the
Administrative Agent or any Lender, or (c) any other circumstance
whatsoever (with or without notice to or knowledge of the Company or the
Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Company for the Obligations, or of the
Guarantor under this Guarantee, in bankruptcy or in any other instance.
When pursuing its rights and remedies hereunder against the Guarantor, the
Administrative Agent and any Lender may, but shall be under no obligation
to, pursue such rights and remedies as it may have against the Company or
any other Person or against any collateral security or guarantee for the
Obligations or any right of set-off with respect thereto, and any failure
by the Administrative Agent or any Lender to pursue such other rights or
remedies or to collect any payments from the Company or any such other
Person or to realize upon any such collateral security or guarantee or to
exercise any such right of set-off, or any release of the Company or any
such other Person or any such collateral security, guarantee or right of
set-off, shall not relieve such Guarantor of any liability hereunder, and
shall not impair or affect the rights and remedies, whether express,
implied or available as a matter of law, of the Administrative Agent or any
Lender against the Guarantor. This Guarantee shall remain in full force and
effect and be binding in accordance with and to the extent of its terms
upon the Guarantor and the successors and assigns thereof, and shall inure
to the benefit of the Administrative Agent and the Lenders, and their
respective successors, indorsees, transferees and assigns, until all the
Obligations and the obligations of the Guarantor under this Guarantee shall
have been satisfied by payment in full and the Commitments shall be
terminated, notwithstanding that from time to time during the term of the
Term Loan Agreement the Company may be free from any Obligations.
8. Reinstatement. This Guarantee shall continue to be effective,
or be reinstated, as the case may be, if at any time payment, or any part
thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by the Administrative Agent or any Lender upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Company or the Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for,
the Company or the Guarantor or any substantial part of its property, or
otherwise, all as though such payments had not been made.
9. Payments. The Guarantor hereby guarantees that payments
hereunder will be paid to the Administrative Agent without set-off or
counterclaim in U.S. Dollars at the office of the Administrative Agent
located at 270 Park Avenue, New York, New York 10017.
10. Representations and Warranties. The Guarantor hereby
represents and warrants that:
(a) the Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and has the corporate power and authority and the legal right to own
and operate its property, to lease the property it operates and to
conduct the business in which it is currently engaged, except to the
extent that the failure to possess such corporate power and authority
and such legal right would not, in the aggregate, have a material
adverse effect on the business, financial condition, assets or results
of operations of the Guarantor and its Subsidiaries taken as a whole
(a "Material Adverse Effect");
(b) the Guarantor has the corporate power and authority and the
legal right to execute and deliver, and to perform its obligations
under, the Credit Documents to which it is a party, and has taken all
necessary corporate action to authorize its execution, delivery and
performance of this Guarantee;
(c) this Guarantee constitutes a legal, valid and binding
obligations of the Guarantor enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity
or at law);
(d) the execution, delivery and performance by the Guarantor of
this Guarantee will not violate any Requirement of Law or any
Contractual Obligation applicable to or binding upon the Guarantor,
which violations, individually or in the aggregate, would have a
material adverse effect on the ability of the Guarantor to perform its
obligations hereunder or which would have a Material Adverse Effect
(not waived by the other parties hereto) and will not result in or
require the creation or imposition of any Lien on any of the
properties or assets of the Guarantor pursuant to any Requirement of
Law applicable to it or any Contractual Obligation of the Guarantor
(other than any Liens created pursuant to the Credit Documents);
(e) no consent or authorization of, filing with, or other act by
or in respect of, any arbitrator or Governmental Authority and no
consent of any other Person (including, without limitation, any
stockholder or creditor of the Guarantor) is required in connection
with the execution, delivery, performance, validity or enforceability
of this Guarantee; and
(f) no litigation or investigation known to the Guarantor or
proceeding of or by any Governmental Authority or other Person is
pending against the Guarantor (i) with respect to any of this
Guarantee (ii) which would have a Material Adverse Effect.
The Guarantor agrees that the foregoing representations and
warranties shall be deemed to have been made by the Guarantor on each
Borrowing Date by the Company under the Term Loan Agreement on and as of
such Borrowing Date as though made hereunder on and as of such Borrowing
Date.
11. Covenants. The Guarantor hereby covenants and agrees with the
Administrative Agent and the Lenders that, from and after the date hereof
and until all amounts owing to the Administrative Agent and the Lenders by
the Company on account of the Obligations are paid in full and the
Commitments are terminated, the Guarantor shall not conduct, transact or
otherwise engage in any business or operations, incur, create, assume or
suffer to exist any Indebtedness, Contingent Obligations or other
liabilities or obligations or Liens, or own, lease, manage or otherwise
operate any properties or assets, other than (i) incident to the ownership
of the capital stock of the Company, and the exercise of rights and
performance of obligations in connection therewith, (ii) the entry into,
and exercise of rights and performance of obligations in respect of this
Guarantee and the Holdings Pledge Agreement, (iii) the issuance of equity
securities and unsecured debt securities provided that the net proceeds of
such issuance are advanced (pursuant to instruments subordinated to the
Obligations in a manner satisfactory to the Administrative Agent) to or
contributed to the capital of, the Company, in each case promptly after the
issuance thereof, (iv) the making of loans to the Company, (v) the conduct
or direct or indirect ownership of other businesses if such other
businesses are related to the business of the Company and such businesses
are effectively contributed to the Company within 90 days of its
acquisition by Parent, (vi) the issuance of guarantees of obligations of
the Company and its Subsidiaries otherwise permitted under the Term Loan
Agreement, (vii) the filing of registration statements, and compliance with
applicable reporting and other obligations, under federal, state or other
securities laws, (viii) the listing of its equity securities and compliance
with applicable reporting and other obligations in connection therewith,
(ix) the retention of transfer agents, private placement agents,
underwriters, counsel, accountants and other advisors and consultants, (x)
the performance of obligations under and in compliance with its certificate
of incorporation and by-laws, or any applicable law, ordinance, regulation,
rule, order, judgment, decree or permit, including, without limitation, as
a result of or in connection with the activities of the Company and its
Subsidiaries, (xi) the issuance of the Holdings Note to the Company and
(xii) the incurrence and payment of any taxes for which it may be liable.
12. Severability. Any provision of this Guarantee which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
13. Paragraph Headings. The paragraph headings used in this
Guarantee are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.
14. No Waiver; Cumulative Remedies. Neither the Administrative
Agent nor any Lender shall by any act (except by a written instrument
pursuant to paragraph 15 hereof), delay, indulgence, omission or otherwise
be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default or in any breach of any of
the terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent or any Lender, any
right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Administrative Agent or any
Lender of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Administrative Agent or
such Lender would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any rights or remedies provided by
law.
15. Integration; Waivers and Amendments; Successors and Assigns;
Governing Law. This Guarantee represents the agreement of the Guarantor
with respect to the subject matter hereof and there are no promises or
representations by the Guarantor, the Administrative Agent or any Lender
relative to the subject matter hereof not reflected herein. None of the
terms or provisions of this Guarantee may be waived, amended or
supplemented or otherwise modified except by a written instrument executed
by the Guarantor and the Administrative Agent, provided that any provision
of this Guarantee may be waived by the Administrative Agent and the Lenders
in a letter or agreement executed by the Administrative Agent or by telex
or facsimile transmission from the Administrative Agent. This Guarantee
shall be binding upon the successors and assigns of the Guarantor and shall
inure to the benefit of the Administrative Agent and the Lenders and their
respective successors and assigns. THIS GUARANTEE SHALL BE GOVERNED BY, AND
BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
16. Notices. All notices, requests and demands to or upon the
Guarantor or the Administrative Agent or any Lender to be effective shall
be in writing or by telecopy or telex and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made when
delivered by hand, or, in the case of mail, three days after deposit in the
postal system, first class postage pre-paid, or, in the case of telecopy
notice, confirmation of receipt received, or, in the case of telex notice,
when sent, answerback received, addressed to a party at the address
provided for such party in subsection 11.2 of the Term Loan Agreement or
Schedule I hereto, as the case may be.
17. Counterparts. This Guarantee may be executed by one or more
of the parties hereto on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the
same instrument.
18. SUBMISSION TO JURISDICTION; WAIVERS. (a) THE GUARANTOR HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
(i) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO ANY CREDIT DOCUMENT, OR FOR RECOGNITION AND
ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE
GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE
COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF
NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(ii) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT
IN SUCH COURTS, AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT
OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT
AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE AFFECTED BY MAILING A COPY THEREOF, BY REGISTERED OR
CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE
PREPAID, TO SUCH GUARANTOR AT ITS ADDRESS SET FORTH ON SCHEDULE I
HERETO OR AT SUCH OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT
SHALL HAVE BEEN NOTIFIED PURSUANT TO SECTION 15 HEREOF;
(iv) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT TO SUE IN ANY OTHER JURISDICTION.
(b) EACH OF THE ADMINISTRATIVE AGENT, EACH LENDER AND THE
GUARANTOR HEREBY UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING REFERRED TO IN PARAGRAPH (a) ABOVE.
20. Authority of Administrative Agent. The Guarantor acknowledges
that the rights and responsibilities of the Administrative Agent under this
Guarantee with respect to any action taken by the Administrative Agent or
the exercise or non-exercise by the Administrative Agent of any option,
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Guarantee shall, as between the
Administrative Agent and the Lenders be governed by the Term Loan Agreement
and by such other agreements with respect thereto as may exist from time to
time among them, but, as between the Administrative Agent and the
Guarantor, the Administrative Agent shall be conclusively presumed to be
acting as agent for the Lenders with full and valid authority so to act or
refrain from acting, and neither the Guarantor, the Company nor any other
guarantor shall be under any obligation, or entitlement, to make any
inquiry respecting such authority.
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee to be duly executed and delivered by its duly authorized officer
as of the day and year first above written.
GULFSTREAM AEROSPACE CORPORATION
a Delaware Corporation
By:
------------------------------------
Title:
<PAGE>
SCHEDULE I
----------
Address of Guarantor
--------------------
500 Gulfstream Road
Savannah, Georgia 31402-2206
<PAGE>
EXHIBIT D TO
TERM LOAN AGREEMENT
-------------------
FORM OF HOLDINGS PLEDGE AGREEMENT
HOLDINGS PLEDGE AGREEMENT dated as of _____ __, 1999 made by
GULFSTREAM AEROSPACE CORPORATION, a Delaware corporation (the "Pledgor"),
in favor of THE CHASE MANHATTAN BANK ("Chase"), as collateral agent (in
such capacity, the "Collateral Agent") for (i) the lenders (the "Term Loan
Lenders") parties to the Term Loan Agreement, dated as of April 15, 1999
(as amended, supplemented or otherwise modified from time to time, the
"Term Loan Agreement"), among GULFSTREAM DELAWARE CORPORATION (the
"Company"), the Administrative Agent and the Lenders and (ii) the lenders
(the "1996 Lenders") parties to the Credit Agreement, dated as of October
16, 1996 (as amended, supplemented or otherwise modified from time to time,
the "1996 Credit Agreement"), among the Company, Chase, as administrative
agent for the 1996 Lenders (in such capacity, the "1996 Administrative
Agent"), and the 1996 Lenders.
W I T N E S S E T H :
WHEREAS, pursuant to the Term Loan Agreement, the Term Loan
Lenders have severally agreed to make loans to the Company upon the terms
and subject to the conditions set forth therein;
WHEREAS, the Pledgor is the legal and beneficial owner of the
shares of Pledged Stock (as hereinafter defined) issued by the Persons
named under the caption "Issuer" on Schedules I and II hereto;
WHEREAS, the Pledgor has executed and delivered the Holdings
Guarantee dated as of the date hereof (as amended, supplemented or
otherwise modified from time to time, the "Holdings Guarantee") pursuant to
which, subject to the terms and conditions thereof, the Pledgor has
guaranteed to the Administrative Agent and the Term Loan Lenders the
punctual payment and performance of all amounts and other obligations owing
by the Issuer pursuant to the Term Loan Agreement;
WHEREAS, the Pledgor has executed and delivered a Holdings
Guarantee dated as of October 16, 1996 (as amended, supplemented or
otherwise modified from time to time, the "1996 Holdings Guarantee")
pursuant to which, subject to the terms and conditions thereof, the Pledgor
has guaranteed to the 1996 Administrative Agent and the 1996 Lenders the
punctual payment and performance of all amounts and other obligations owing
by the Issuer pursuant to the 1996 Credit Agreement;
WHEREAS, it is a condition precedent to the obligation of the
Term Loan Lenders to make their respective loans to the Company under the
Term Loan Agreement that the Pledgor shall have executed and delivered this
Pledge Agreement to the Collateral Agent for the ratable benefit of the
Lenders;
NOW, THEREFORE, in consideration of the premises and to induce
the Term Loan Lenders to make their respective loans to the Company under
the Term Loan Agreement, the Pledgor hereby agrees with the Collateral
Agent, for the ratable benefit of the Lenders, as follows:
1. Defined Terms. Unless otherwise defined herein, terms that are
defined in the Term Loan Agreement and used herein are so used as so
defined; and the following terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the date hereof are
used herein as so defined: Accounts, Chattel Paper, General Intangibles and
Instruments; and the following terms shall have the following meanings:
"Code": the Uniform Commercial Code from time to time in effect
in the State of New York.
"Collateral": the collective reference to the Pledged Stock and
all Proceeds thereof.
"Credit Agreements": the collective reference to the Term Loan
Agreement and the 1996 Credit Agreement.
"Guarantee Obligations": all indebtedness, obligations and
liabilities of the Pledgor under the Holdings Guarantee and the 1996
Holdings Guarantee, including, without limitation, (i) all guarantee
obligations in respect of the unpaid principal of and interest on the Loans
and all other Obligations of the Company to the Administrative Agent and
the Lenders, whether direct or indirect, absolute or contingent, matured or
unmatured, due or to become due, or now existing or hereafter incurred
under the Term Loan Agreement and the other Credit Documents and (ii) all
guarantee obligations in respect of the unpaid principal of and interest on
the 1996 Loans and all other 1996 Obligations of the Company to the 1996
Administrative Agent and the 1996 Lenders, whether direct or indirect,
absolute or contingent, matured or unmatured, due or to become due, or now
existing or hereafter incurred under the 1996 Credit Agreement and the
other 1996 Credit Documents.
"Issuer": with respect to any Pledged Stock, the Issuers from
time to time listed on Schedules I and II hereto as the issuer of such
Pledged Stock.
"Lenders": the collective reference to the Term Loan Lenders and
the 1996 Lenders.
"1996 Credit Documents": the "Credit Documents" as defined in the
1996 Credit Agreement.
"1996 Loans": the "Loans" as defined in the 1996 Credit
Agreement.
"1996 Obligations": the "Obligations" as defined in the 1996
Credit Agreement.
"Pledge Agreement": this Pledge Agreement, as amended,
supplemented or otherwise modified from time to time.
"Pledge Agreement Lenders": at a particular time, the holders of
at least 51% of the sum of (i) the aggregate unpaid principal amount of the
Loans, if any, under the Term Loan Agreement and (ii) the aggregate unpaid
principal amount of the Term Loans (as defined in the 1996 Credit
Agreement) outstanding at such time, if any, and the aggregate Revolving
Credit Commitments (as defined in the 1996 Credit Agreement) at such time.
"Pledged Stock": all of the shares of capital stock of the
Issuers listed on Schedules I and II hereto (but not more than 65% of all
shares of each class of capital stock of the Issuers listed on Schedule II
hereto) now owned or at any time hereafter acquired by the Pledgor or in
which the Pledgor now has or may from time to time acquire any right, title
or interest, together with all stock certificates, options or rights of any
nature whatsoever that may be issued or granted by the Issuer thereof to
the Pledgor while this Pledge Agreement is in effect.
"Proceeds": all "proceeds" as such term is defined in Section
9-306(1) of the Code on the date hereof and, in any event, shall include,
without limitation, all dividends or other income from the Pledged Stock,
and any and all collections on the foregoing or distributions with respect
to the foregoing.
2. Pledge; Grant of Security Interest. The Pledgor hereby
delivers to the Collateral Agent, for the ratable benefit of the Lenders,
all of the Pledgor's right, title and interest in the Pledged Stock, and
hereby transfers and grants to the Collateral Agent, for the ratable
benefit of the Lenders, a first security interest in all of the Pledgor's
right, title and interest in all of the Collateral, as collateral security
for the prompt and complete payment and performance when due (whether at
the stated maturity, by acceleration or otherwise) of the Guarantee
Obligations.
3. Stock Powers. Concurrently with the delivery to the Collateral
Agent of each certificate representing one or more shares of Pledged Stock,
the Pledgor shall deliver an undated stock power covering such certificate,
duly executed in blank by the Pledgor.
4. Representations and Warranties. The Pledgor represents and
warrants that:
(a) the shares of capital stock of each of the Issuers listed on
Schedules I and II hereto which are identified as Pledged Stock on said
Schedules I and II constitute (i) all of the issued and outstanding shares
of capital stock of the Issuers listed on Schedule I hereto which are owned
by the Pledgor; and (ii) all of the issued and outstanding shares of
capital stock of the Issuers listed on Schedule II hereto which are owned
by the Pledgor (but not in excess of 65% of the issued and outstanding
shares of all classes of the capital stock of such Issuers).
(b) all the shares of Pledged Stock have been duly and validly
issued and are fully paid and nonassessable;
(c) the Pledgor is the record and beneficial owner of, and has
good title to, the Collateral, free of any and all Liens or options in
favor of, or claims of, any other Person, except the Lien created by this
Pledge Agreement; and
(d) upon delivery to the Collateral Agent of the stock
certificates evidencing the Pledged Stock, the Lien granted pursuant to
this Pledge Agreement will constitute a valid, perfected first priority
Lien on the Collateral (except, with respect to Proceeds, only to the
extent permitted by Section 9-306 of the Code), enforceable as such against
all creditors of the Pledgor and any Persons purporting to purchase any
Collateral from the Pledgor except in each case as enforceability may be
affected by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and
fair dealing.
(e) The Pledgor's chief executive office and chief place of
business, and the place where the Pledgor keeps its records concerning the
Collateral, is located at: 500 Gulfstream Rd., Savannah, Georgia
31402-2206, or such other location as the Pledgor shall inform the
Collateral Agent in accordance with subsection 6(e).
The Pledgor agrees that the foregoing representations and
warranties shall be deemed to have been made by it on each Borrowing Date
by the Pledgor under the Term Loan Agreement on and as of such Borrowing
Date as though made hereunder on and as of such Borrowing Date.
5. Covenants. The Pledgor covenants and agrees with the
Collateral Agent and the Lenders, that, from and after the date of this
Pledge Agreement until the Guarantee Obligations are paid in full and the
Commitments are terminated:
(a) If the Pledgor shall, as a result of its ownership of the
Collateral, become entitled to receive or shall receive any stock
certificate (including, without limitation, any certificate representing a
stock dividend or a distribution in connection with any reclassification,
increase or reduction of capital or any certificate issued in connection
with any reorganization), promissory note or other instrument, option or
rights, whether in addition to, in substitution of, as a conversion of, or
in exchange for any of the Collateral, or otherwise in respect thereof, the
Pledgor shall accept the same as the agent of the Collateral Agent and the
Lenders, hold the same in trust for the Collateral Agent and the Lenders
and deliver the same forthwith to the Collateral Agent in the exact form
received, duly indorsed by the Pledgor to the Collateral Agent, if
required, together with an undated stock power or endorsement, as
appropriate, covering such certificate, note or instrument duly executed in
blank by the Pledgor and with, if the Collateral Agent so requests,
signature guarantees, to be held by the Collateral Agent, subject to the
terms hereof, as additional collateral security for the Guarantee
Obligations. Any sums paid upon or in respect of the Collateral upon the
liquidation or dissolution of any Issuer shall be paid over to the
Collateral Agent to be held by it hereunder as additional collateral
security for the Guarantee Obligations, and, in case any distribution of
capital shall be made on or in respect of the Collateral or any property
shall be distributed upon or with respect to the Collateral pursuant to the
recapitalization or reclassification of the capital of such Issuer or
pursuant to the reorganization thereof, the property so distributed shall
be delivered to the Collateral Agent to be held by it hereunder as
additional collateral security for the Guarantee Obligations. If any sums
of money or property so paid or distributed in respect of the Collateral
shall be received by the Pledgor, the Pledgor shall, until such money or
property is paid or delivered to the Collateral Agent, hold such money or
property in trust for the Lenders, segregated from other funds of the
Pledgor, as additional collateral security for the Guarantee Obligations.
(b) Without the prior written consent of the Collateral Agent and
except as permitted by, or not prohibited under, the Credit Agreements, the
Pledgor will not (i) vote to enable, or take any other action to permit,
any Issuer to issue any stock, membership interests or other equity
securities of any nature or to issue any other securities convertible into
or granting the right to purchase or exchange for any stock or other equity
securities of any nature of such Issuer, (ii) sell, assign, transfer,
exchange, or otherwise dispose of, or grant any option with respect to, the
Collateral, or (iii) create, incur or permit to exist any Lien or option in
favor of, or any claim of any Person with respect to, any of the
Collateral, or any interest therein, except for the Lien provided for by
this Pledge Agreement. The Pledgor will defend the right, title and
interest of the Collateral Agent and the Lenders in and to the Collateral
against the claims and demands of all Persons whomsoever.
(c) At any time and from time to time, upon the written request
of the Collateral Agent, and at the sole expense of the Pledgor, the
Pledgor will promptly and duly execute and deliver such further instruments
and documents and take such further actions as the Collateral Agent may
reasonably request for the purposes of obtaining or preserving the full
benefits of this Pledge Agreement and of the rights and powers herein
granted. If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any promissory note, other
Instrument or Chattel Paper, such note, Instrument or Chattel Paper shall
be immediately delivered to the Collateral Agent, duly endorsed in a manner
satisfactory to the Collateral Agent, to be held as Collateral pursuant to
this Pledge Agreement.
(d) The Pledgor agrees to pay, and to hold the Collateral Agent
and the Lenders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or
other similar taxes which may be payable or determined to be payable with
respect to any of the Collateral or in connection with any of the
transactions contemplated by this Pledge Agreement.
6. Cash Dividends; Voting Rights. (a) Unless an Event of Default
shall have occurred and be continuing and the Collateral Agent shall
(unless such Event of Default is an Event of Default specified in
subsection 9(f) of the Term Loan Agreement or subsection 9(f) of the 1996
Credit Agreement, in which case no such notice need be given) have given
notice to the Pledgor of the Collateral Agent's intent to exercise its
rights pursuant to paragraph 8 below, the Pledgor shall be (i) permitted to
receive all cash dividends or distributions to the extent permitted in the
Credit Agreements in respect of the Pledged Stock and (ii) permitted to
exercise all voting, corporate, limited liability company and other rights
of ownership with respect to the Pledged Stock, provided, however, that no
vote shall be cast or corporate right exercised or other action taken
which, in the Collateral Agent's reasonable judgment, would impair the
Collateral or which would be inconsistent with or result in any violation
of any provision of the Credit Agreements or any of the other Credit
Documents.
(b) If an Event of Default shall have occurred and be continuing
and the Collateral Agent shall (unless such Event of Default is an Event of
Default specified in subsection 9(f) of the Term Loan Agreement or
subsection 9(f) of the 1996 Credit Agreement, in which case no such notice
need be given) have given notice to the Pledgor of its intent to exercise
its rights pursuant to paragraph 8 below, (i) all dividends, interest
payments and other distributions (including cash) paid on or in respect of
the Pledged Stock shall be paid to and retained by the Collateral Agent as
Collateral hereunder (or if received by the Pledgor, shall be held in trust
by the Pledgor for the benefit of the Collateral Agent and the Lenders and
shall be forthwith delivered by it), and (ii) all voting, corporate,
limited liability company and other rights pertaining to the Pledged Stock,
if any, shall be exercised by the Collateral Agent.
7. Rights of the Lenders and the Collateral Agent. (a) If an
Event of Default shall occur and be continuing and the Collateral Agent
shall (unless such Event of Default is an Event of Default specified in
subsection 9(f) of the Term Loan Agreement or subsection 9(f) of the 1996
Credit Agreement, in which case no such notice need be given) give notice
of its intent to exercise its rights hereunder to the Pledgor, (i) the
Collateral Agent shall have the right to receive any and all cash
dividends, distributions and payments or other income paid in respect of
the Collateral and make application thereof to the Guarantee Obligations in
such order as the Collateral Agent may determine and (ii) all shares of the
Pledged Stock shall be registered in the name of the Collateral Agent or
its nominee, and the Collateral Agent or its nominee may thereafter
exercise (A) all voting, corporate, member, creditor and other rights,
powers and privileges pertaining to such Collateral at any meeting of
shareholders of any Issuer and (B) any and all rights of conversion,
exchange, subscription and any other rights, privileges or options
pertaining to the Collateral as if it were the absolute owner thereof
(including, without limitation, the right to exchange at its discretion any
and all of the Collateral upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the structure of any
Issuer, or upon the exercise by the Pledgor or the Collateral Agent of any
right, privilege or option pertaining to the Collateral, and in connection
therewith, the right to deposit and deliver any and all of the Collateral
with any committee, depositary, transfer agent, registrar or other
designated agency upon such terms and conditions as it may determine), all
without liability except to account for property actually received by it
and except for its gross negligence or willful misconduct, but the
Collateral Agent shall have no duty to the Pledgor to exercise any such
right, privilege or option and shall not be responsible for any failure to
do so or delay in so doing.
(b) The rights of the Collateral Agent and the Lenders hereunder
shall not be conditioned or contingent upon the pursuit by the Collateral
Agent or any Lender of any right or remedy against any Issuer or the
Pledgor or against any other Person which may be or become liable in
respect of all or any part of the Guarantee Obligations or against any
collateral security therefor, guarantee therefor or right of set-off with
respect thereto. Neither the Collateral Agent nor any Lender shall be
liable for any failure to demand, collect or realize upon all or any part
of the Collateral or for any delay in doing so, nor shall the Collateral
Agent be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Pledgor or any other Person or to take
any other action whatsoever with regard to the Collateral or any part
thereof.
8. Remedies. In the event that any portion of the Obligations has
been declared or becomes due and payable in accordance with the terms of
the Term Loan Agreement or the 1996 Credit Agreement and such Obligations
have not been paid in full, the Collateral Agent, on behalf of the Lenders,
may exercise, in addition to all other rights and remedies granted in this
Pledge Agreement and in any other instrument or agreement securing,
evidencing or relating to the Guarantee Obligations or Obligations, all
rights and remedies of a secured party under the Code. Without limiting the
generality of the foregoing, the Collateral Agent, without demand of
performance or other demand, presentment, protest, advertisement or notice
of any kind (except any notice required by law referred to below) to or
upon the Pledgor, any Issuer, or any other Person (all and each of which
demands, defenses, advertisements and notices are hereby waived), may in
such circumstances forthwith collect, receive, appropriate and realize upon
the Collateral, or any part thereof, and/or may forthwith sell, assign,
give option or options to purchase or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in
one or more parcels at public or private sale or sales, in the
over-the-counter market, at any exchange or broker's board or office of the
Collateral Agent or any Lender or elsewhere upon such terms and conditions
as it may deem advisable and at such prices as it may deem best, for cash
or on credit or for future delivery without assumption of any credit risk.
The Collateral Agent or any Lender shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of the Collateral
so sold, free of any right or equity of redemption in the Pledgor, which
right or equity is hereby waived or released. The Collateral Agent shall
apply any Proceeds from time to time held by it and the net proceeds of any
such collection, recovery, receipt, appropriation, realization or sale,
after deducting all reasonable costs and expenses of every kind incurred in
respect thereof or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the
Collateral Agent and the Lenders hereunder, including, without limitation,
reasonable attorneys' fees and disbursements of counsel to the Collateral
Agent, to the payment in whole or in part of the Guarantee Obligations, in
such order as the Collateral Agent may elect, and only after such
application and after the payment by the Collateral Agent of any other
amount required by any provision of law, including, without limitation,
Section 9-504(1)(c) of the Code, need the Collateral Agent account for the
surplus, if any, to the Pledgor. To the extent permitted by applicable law,
the Pledgor waives all claims, damages and demands it may acquire against
the Collateral Agent or any Lender arising out of the lawful exercise by
them of any rights hereunder. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 10 days before such sale or
other disposition.
9. Registration Rights; Private Sales. (a) If the Collateral
Agent shall determine to exercise its right to sell any or all of the
Collateral pursuant to paragraph 9 hereof, and if in the opinion of the
Collateral Agent it is necessary or advisable to have the Collateral, or
that portion thereof to be sold, registered under the provisions of the
Securities Act of 1933, as amended (the "Securities Act"), the Pledgor will
cause each Issuer whose stock or note or membership interest, as the case
may be, is to be so registered to (i) execute and deliver, and cause the
directors and officers of such Issuer or the Pledgor, as the case may be,
to execute and deliver, all such instruments and documents, and do or cause
to be done all such other acts as may be, in the opinion of the Collateral
Agent, necessary or advisable to register the Collateral, or that portion
thereof to be sold, under the provisions of the Securities Act, (ii) use
its best efforts to cause the registration statement relating thereto to
become effective and to remain effective for a period of one year from the
date of the first public offering of the Collateral or that portion thereof
to be sold, and (iii) make all amendments thereto and/or to the related
prospectus that, in the opinion of the Collateral Agent, are necessary or
advisable, all in conformity with the requirements of the Securities Act
and the rules and regulations of the Securities and Exchange Commission
applicable thereto. The Pledgor agrees to cause each Issuer to comply with
the provisions of the securities or "Blue Sky" laws of any and all
jurisdictions that the Collateral Agent shall designate and to make
available to its security holders, as soon as practicable, an earnings
statement (which need not be audited) that will satisfy the provisions of
Section 11(a) of the Securities Act.
(b) The Pledgor recognizes that the Collateral Agent may be
unable to effect a public sale of any or all the Collateral by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers that will be
obliged to agree, among other things, to acquire such securities for their
own account for investment and not with a view to the distribution or
resale thereof. The Pledgor acknowledges and agrees that any such private
sale may result in prices and other terms less favorable than if such sale
were a public sale and, notwithstanding such circumstances, agrees that any
such private sale shall be deemed to have been made in a commercially
reasonable manner. The Collateral Agent shall be under no obligation to
delay a sale of any of the Collateral for the period of time necessary to
permit any Issuer to register such securities for public sale under the
Securities Act, or under applicable state securities laws, even if such
Issuer would agree to do so.
(c) The Pledgor further agrees to use its best efforts to do or
cause to be done all such other acts as may be necessary to make such sale
or sales of all or any portion of the Collateral pursuant to this paragraph
9 valid and binding and in compliance with any and all other applicable
Requirements of Law. The Pledgor further agrees that a breach of any of the
covenants contained in this paragraph 9 will cause irreparable injury to
the Collateral Agent and the Lenders, that the Collateral Agent and the
Lenders have no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this paragraph 10
shall be specifically enforceable against the Pledgor, and the Pledgor
hereby waives and agrees not to assert any defenses against an action for
specific performance of such covenants.
10. Limitation on Duties Regarding Collateral. The Collateral
Agent's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of
the Code or otherwise, shall be to deal with it in the same manner as the
Collateral Agent deals with similar securities and property for its own
account. Neither the Collateral Agent nor any Lender nor their respective
directors, officers, employees or agents shall be liable for failure to
demand, collect or realize upon any of the Collateral or for any delay in
doing so (except to the extent the same constitutes gross negligence or
willful misconduct) or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of the Pledgor or otherwise.
11. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable
and powers coupled with an interest.
12. Severability. Any provision of this Pledge Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
13. Paragraph Headings. The paragraph headings used in this
Pledge Agreement are for convenience of reference only and are not to
affect the construction hereof or be taken into consideration in the
interpretation hereof.
14. No Waiver; Cumulative Remedies. Neither the Collateral Agent
nor any Lender shall by any act (except by a written instrument pursuant to
paragraph 15 hereof) be deemed to have waived any right or remedy
hereunder. No failure to exercise, nor any delay in exercising, on the part
of the Collateral Agent or any Lender any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial exercise
of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Collateral Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Collateral Agent or such Lender would otherwise
have on any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive
of any other rights or remedies provided by law.
15. Waivers and Amendments; Successors and Assigns; Governing
Law. None of the terms or provisions of this Pledge Agreement may be
waived, amended, supplemented or otherwise modified except by a written
instrument executed by the Pledgor, the Collateral Agent and the Pledge
Agreement Lenders, provided that no such waiver and no such amendment,
supplement or modification shall alter the equal and ratable treatment
afforded the Guarantee Obligations without the written consent of each
Lender adversely affected by any such waiver, amendment, supplement or
modification This Pledge Agreement shall be binding upon the successors and
assigns of the Pledgor and shall inure to the benefit of the Collateral
Agent and the Lenders and their respective successors and assigns. THIS
PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
16. Notices. Notices by the Collateral Agent may be given by
mail, by telex or by facsimile transmission, addressed or transmitted to
the Issuers at their addresses or transmission numbers set forth in
Schedule III hereto and to the Pledgor at the address or transmission
number set forth in subsection 11.2 of the Term Loan Agreement. Such notice
shall be effective (a) in the case of mail, three Business Days after
deposit in the postal system, first class postage pre-paid, and (b) in the
case of telex or facsimile notices, when sent, answerback received,
addressed. The Pledgor and the Issuers may change their respective
addresses and transmission numbers by written notice to the Collateral
Agent.
17. Irrevocable Authorization and Instruction to Issuers. The
Pledgor hereby authorizes and instructs the Issuers to comply with any
instruction received by it from the Collateral Agent in writing that (a)
states that an Event of Default has occurred and is continuing and (b) is
otherwise in accordance with the terms of this Pledge Agreement, without
any other or further instructions from the Pledgor, and the Pledgor agrees
that the Issuers shall be fully protected in so complying.
18. Authority of Collateral Agent. The Pledgor acknowledges that
the rights and responsibilities of the Collateral Agent under this Pledge
Agreement with respect to any action taken by the Collateral Agent or the
exercise or non-exercise by the Collateral Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Pledge Agreement shall, as between the
Collateral Agent and the Lenders, be governed by the Credit Agreements and
by such other agreements with respect thereto as may exist from time to
time among them, but, as between the Collateral Agent and the Pledgor, the
Collateral Agent shall be conclusively presumed to be acting as agent for
the Lenders with full and valid authority so to act or refrain from acting,
and neither the Pledgor nor the Issuers shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.
IN WITNESS WHEREOF, the undersigned has caused this Pledge
Agreement to be duly executed and delivered as of the date first above
written.
GULFSTREAM AEROSPACE CORPORATION
a Delaware Corporation
By:
----------------------------
Name:
Title:
<PAGE>
ACKNOWLEDGEMENT AND CONSENT
The undersigned Issuers referred to in the foregoing Holdings
Pledge Agreement hereby acknowledge receipt of a copy thereof and agree to
be bound thereby and to comply with the terms thereof insofar as such terms
are applicable to it. The undersigned Issuers agree to notify the
Collateral Agent promptly in writing of the occurrence of any of the events
described in paragraph 5(a) of the Holdings Pledge Agreement. The
undersigned Issuers further agree that the terms of paragraph 9(c) of the
Holdings Pledge Agreement shall apply to them, mutatis mutandis, with
respect to all actions that may be required of them under or pursuant to or
arising out of paragraph 9 of the Holdings Pledge Agreement.
GULFSTREAM DELAWARE CORPORATION
By:
--------------------------
Title:
<PAGE>
SCHEDULE I
to Holdings
Pledge Agreement
----------------
<TABLE>
<CAPTION>
DESCRIPTION OF PLEDGED STOCK (DOMESTIC SUBSIDIARIES)
----------------------------------------------------
Percentage of
Outstanding
Stock Total No. of Number of Shares Owned
Class of Certificate Outstanding Shares Owned by
Issuer Stock No. Shares by the Pledgor the Pledgor
- ------ -------- ----------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
SCHEDULE II
to Holdings
Pledge Agreement
----------------
<TABLE>
<CAPTION>
DESCRIPTION OF PLEDGED STOCK (DOMESTIC SUBSIDIARIES)
----------------------------------------------------
Percentage of
Outstanding
Stock Total No. of Number of Shares Owned
Class of Certificate Outstanding Shares Owned by
Issuer Stock No. Shares by the Pledgor the Pledgor
- ------ -------- ----------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
SCHEDULE III
To Holdings
Pledge Agreement
----------------
ADDRESSES OF ISSUERS
--------------------
<PAGE>
EXHIBIT E TO
TERM LOAN AGREEMENT
-------------------
FORM OF SUBSIDIARY GUARANTEE
SUBSIDIARY GUARANTEE, dated as of _____ __, 1999 (this
"Guarantee"), by each of the entities that are signatories hereto (the
"Guarantors") in favor of THE CHASE MANHATTAN BANK, as Administrative Agent
(in such capacity, the "Administrative Agent") for the banks and other
financial institutions (the "Lenders") that are parties to the Term Loan
Agreement described below.
W I T N E S S E T H :
WHEREAS, GULFSTREAM DELAWARE CORPORATION, a Delaware corporation
(the "Company"), is party to the Term Loan Agreement, dated as of April 15,
1999, among the Company, the Lenders, the Administrative Agent (as amended,
supplemented or otherwise modified from time to time, the "Term Loan
Agreement");
WHEREAS, pursuant to the terms of the Term Loan Agreement and the
other Credit Documents, the Lenders have severally agreed to make loans to
the Company;
WHEREAS, the Company owns, directly or indirectly, all of the
issued and outstanding stock of, or other equity interests in, each of the
Guarantors;
WHEREAS, the proceeds of the extensions of credit under the Term
Loan Agreement may be used in part to enable the Company to make valuable
transfers to some of the Guarantors in connection with the operation of
their respective businesses;
WHEREAS, each Guarantor will derive substantial direct and
indirect benefit from the extensions of credit under the Term Loan
Agreement; and
WHEREAS, the obligation of the Lenders to make their respective
loans to the Company is conditioned upon, among other things, the execution
and delivery by each of the Guarantors of this Guarantee to the
Administrative Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce
the Lenders to enter into the Term Loan Agreement and to make their
respective loans to the Company, each Guarantor hereby agrees with and for
the benefit of the Administrative Agent and the Lenders as follows:
1. Defined Terms. As used in this Guarantee, terms defined in the
Term Loan Agreement (unless otherwise defined herein) are used herein as
therein defined, and the following term shall have the following meaning:
"Maximum Guaranteed Amount" for any Guarantor shall mean, the
amount which can be guaranteed by such Guarantor under applicable federal
and state laws relating to the insolvency of debtors.
2. Guarantee. (a) Each of the Guarantors hereby, jointly and
severally, unconditionally and irrevocably, guarantees to the
Administrative Agent and the Lenders and their respective successors,
indorsees, transferees and assigns, the prompt and complete payment by the
Company when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations, and each Guarantor further agrees to pay any
and all expenses (including, without limitation, all reasonable fees and
disbursements of counsel) which may be paid or incurred by the
Administrative Agent or any Lender in enforcing, or obtaining advice of
counsel in respect of, any rights with respect to, or collecting, any or
all of the Obligations and/or enforcing any rights with respect to, or
collecting against, such Guarantor under this Guarantee; provided, however,
that, anything herein or in any other Credit Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and
under the other Credit Documents shall in no event exceed such Guarantor's
Maximum Guaranteed Amount. This Guarantee constitutes a guarantee of
payment when due and not of collection, and each of the Guarantors
specifically agrees that it shall not be necessary or required that the
Administrative Agent or any Lender exercise any right, assert any claim or
demand or enforce any remedy whatsoever against the Company (or any other
Person) before or as a condition to the obligations of such Guarantor
hereunder.
(b) Each Guarantor agrees that the Obligations may at any time
and from time to time exceed the Maximum Guaranteed Amount of such
Guarantor or of all of the Guarantors without impairing this Guarantee or
affecting the rights and remedies of the Administrative Agent and the
Lenders hereunder.
(c) No payment or payments made by the Company, any of the
Guarantors, any other guarantor or any other Person or received or
collected by the Administrative Agent or any Lender from the Company, any
of the Guarantors, any other guarantor or any other Person by virtue of any
action or proceeding or any set-off or appropriation or application at any
time or from time to time in reduction of or in payment of the Obligations
shall be deemed to modify, reduce, release or otherwise affect the
liability of any Guarantor hereunder which shall, notwithstanding any such
payment or payments other than payments made by such Guarantor in respect
of the Obligations or payments received or collected from such Guarantor in
respect of the Obligations, remain liable for the Obligations up to its
Maximum Guaranteed Amount until the Obligations are paid in full and the
Commitments are terminated.
(d) Each Guarantor agrees that whenever, at any time, or from
time to time, it shall make any payment to the Administrative Agent or any
Lender on account of its liability hereunder, it will notify the
Administrative Agent in writing that such payment is made under this
Guarantee for such purpose.
3. Right of Contribution. Each Guarantor hereby agrees that to
the extent that a Guarantor shall have paid more than its proportionate
share of any payment made hereunder, such Guarantor shall be entitled to
seek and receive contribution from and against any other Guarantor
hereunder who has not paid its proportionate share of such payment. Each
Guarantor's right of contribution shall be subject to the terms and
conditions of Paragraph 5 hereof. The provisions of this Paragraph 3 shall
in no respect limit the obligations and liabilities of any Guarantor to the
Administrative Agent and the Lenders, and each Guarantor shall remain
liable to the Administrative Agent and the Lenders for the full amount
guaranteed by such Guarantor hereunder.
4. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default specified in the Term Loan Agreement,
each Guarantor hereby irrevocably authorizes each Lender at any time and
from time to time without notice to such Guarantor or any other Guarantor,
any such notice being expressly waived by each Guarantor, to set-off and
appropriate and apply any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender to or for the credit or the account of such Guarantor,
or any part thereof, in such amounts as such Lender may elect, against and
on account of the obligations and liabilities of such Guarantor to such
Lender hereunder and claims of every nature and description of such Lender
against such Guarantor, in any currency, whether arising hereunder, under
the Term Loan Agreement, the Notes, or otherwise under any other Credit
Document, as such Lender may elect, whether or not the Administrative Agent
or any Lender has made any demand for payment and although such
obligations, liabilities and claims may be contingent or unmatured. Each
Lender agrees to notify such Guarantor promptly of any such set-off and the
application made by such Lender, provided that the failure to give such
notice shall not affect the validity of such set-off and application. The
rights of each Lender under this paragraph are in addition to other rights
and remedies (including, without limitation, other rights of set-off) which
such Lender may have.
5. Subrogation, etc. Notwithstanding any payment or payments made
by any of the Guarantors hereunder or any set-off or application of funds
of any of the Guarantors by any Lender, no Guarantor shall exercise any of
the rights of the Administrative Agent or any Lender which the Guarantor
may acquire by way of subrogation, by any payment made hereunder, by reason
of such set-off or application of funds or otherwise, against the Company
or any other Guarantor or any collateral security or guarantee or right of
set-off held by any Lender for the payment of the Obligations, nor shall
any Guarantor seek or be entitled to seek any contribution or reimbursement
from the Company or any other Guarantor in respect of payments made by such
Guarantor hereunder, until all amounts owing to the Administrative Agent
and the Lenders by the Company on account of the Obligations are paid in
full and the Commitments are terminated. If any amount shall be paid to any
Guarantor on account of such subrogation rights at any time when all of the
Obligations shall not have been paid in full or the Commitments shall not
have been terminated, such amount shall be held by such Guarantor in trust
for the Administrative Agent and the Lenders, segregated from other funds
of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be
turned over to the Administrative Agent in the exact form received by such
Guarantor (duly indorsed by such Guarantor to the Administrative Agent, if
required), to be applied against the Obligations, whether matured or
unmatured, in such order as required by the applicable Credit Documents.
6. Amendments, etc. with respect to the Obligations; Waiver of
Rights. Each Guarantor shall remain obligated hereunder notwithstanding
that, without any reservation of rights against any Guarantor and without
notice to or further assent by any Guarantor, any demand for payment of any
of the Obligations made by the Administrative Agent or any Lender may be
rescinded by such party and any of the Obligations continued, and the
Obligations, or the liability of any other party upon or for any part
thereof, or any collateral security or guarantee therefor or right of
set-off with respect thereto, may, from time to time, in whole or in part,
be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Administrative Agent or any Lender and the
Term Loan Agreement, the Notes, the other Credit Documents and any other
collateral security document or other guarantee or document in connection
therewith may be amended, modified, supplemented or terminated, in whole or
in part, as the Administrative Agent and/or any Lender may deem advisable
from time to time, and any collateral security, guarantee or right of
set-off at any time held by the Administrative Agent or any Lender for the
payment of the Obligations may be sold, exchanged, waived, surrendered or
released. Neither the Administrative Agent nor any Lender shall have any
obligation to protect, secure, perfect or insure any Lien at any time held
by it as security for the Obligations or for this Guarantee or any property
subject thereto. When making any demand hereunder against any of the
Guarantors, the Administrative Agent or any Lender may, but shall be under
no obligation to, make a similar demand on the Company or any other
Guarantor or guarantor, and any failure by the Administrative Agent or any
Lender to make any such demand or to collect any payments from the Company
or any such other Guarantor or guarantor or any release of the Company or
such other Guarantor or guarantor shall not relieve any of the Guarantors
in respect of which a demand or collection is not made or any of the
Guarantors not so released of their several obligations or liabilities
hereunder, and shall not impair or affect the rights and remedies, express
or implied, or as a matter of law, of the Administrative Agent or any
Lender against any of the Guarantors. For the purposes hereof "demand"
shall include the commencement and continuance of any legal proceedings.
7. Guarantee Absolute and Unconditional. Each Guarantor waives
any and all notice of the creation, renewal, extension or accrual of any of
the Obligations and notice of or proof of reliance by the Administrative
Agent or any Lender upon this Guarantee or acceptance of this Guarantee;
the Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived,
in reliance upon this Guarantee; and all dealings between the Company or
any of the Guarantors and the Administrative Agent or any Lender shall
likewise be conclusively presumed to have been had or consummated in
reliance upon this Guarantee. Each Guarantor waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon
the Company or any of the Guarantors with respect to the Obligations. Each
Guarantor understands and agrees that this Guarantee shall be construed as
a continuing, absolute and unconditional guarantee of payment without
regard to (a) the validity, regularity or enforceability of the Term Loan
Agreement, the Notes, any of the other Credit Documents, any of the
Obligations or any other collateral security therefor or guarantee or right
of set-off with respect thereto at any time or from time to time held by
the Administrative Agent or any Lender, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at
any time be available to or be asserted by the Company against the
Administrative Agent or any Lender, or (c) any other circumstance
whatsoever (with or without notice to or knowledge of the Company or such
Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Company for the Obligations, or of such
Guarantor under this Guarantee, in bankruptcy or in any other instance.
When pursuing its rights and remedies hereunder against any Guarantor, the
Administrative Agent and any Lender may, but shall be under no obligation
to, pursue such rights and remedies as it may have against the Company or
any other Person or against any collateral security or guarantee for the
Obligations or any right of set-off with respect thereto, and any failure
by the Administrative Agent or any Lender to pursue such other rights or
remedies or to collect any payments from the Company or any such other
Person or to realize upon any such collateral security or guarantee or to
exercise any such right of set-off, or any release of the Company or any
such other Person or any such collateral security, guarantee or right of
set-off, shall not relieve such Guarantor of any liability hereunder, and
shall not impair or affect the rights and remedies, whether express,
implied or available as a matter of law, of the Administrative Agent or any
Lender against such Guarantor. This Guarantee shall remain in full force
and effect and be binding in accordance with and to the extent of its terms
upon each Guarantor and the successors and assigns thereof, and shall inure
to the benefit of the Administrative Agent and the Lenders, and their
respective successors, indorsees, transferees and assigns, until all the
Obligations and the obligations of each Guarantor under this Guarantee
shall have been satisfied by payment in full and the Commitments shall be
terminated, notwithstanding that from time to time during the term of the
Term Loan Agreement the Company may be free from any Obligations.
8. Reinstatement. This Guarantee shall continue to be effective,
or be reinstated, as the case may be, if at any time payment, or any part
thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by the Administrative Agent or any Lender upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Company or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for,
the Company or any Guarantor or any substantial part of its property, or
otherwise, all as though such payments had not been made.
9. Payments. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Administrative Agent without set-off or
counterclaim in U.S. Dollars at the office of the Administrative Agent
located at 270 Park Avenue, New York, New York 10017, U.S.A.
10. Representations and Warranties. Each Guarantor hereby
represents and warrants that:
(a) such Guarantor is a corporation, limited liability company or
partnership, as the case may be, duly organized, validly existing and
in good standing under the laws of the jurisdiction in which it is
organized and has the corporate, limited liability company or
partnership power and authority and the legal right to own and operate
its property, to lease the property it operates and to conduct the
business in which it is currently engaged, except to the extent that
the failure to possess such corporate, limited liability company or
partnership power and authority and such legal right would not, in the
aggregate, have a material adverse effect on the business, financial
condition, assets or results of operations of such Guarantor and its
Subsidiaries taken as a whole (a "Material Adverse Effect");
(b) such Guarantor has the corporate, limited liability company
or partnership power and authority and the legal right to execute and
deliver, and to perform its obligations under, the Credit Documents to
which it is a party, and has taken all necessary corporate, limited
liability company or partnership action to authorize its execution,
delivery and performance of the Credit Documents to which it is a
party;
(c) the Credit Documents to which it is a party constitute legal,
valid and binding obligations of such Guarantor enforceable against
such Guarantor in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity
or at law);
(d) the execution, delivery and performance by such Guarantor of
the Credit Documents to which it is a party will not violate any
Requirement of Law or any Contractual Obligation applicable to or
binding upon such Guarantor, which violations, individually or in the
aggregate, would have a material adverse effect on the ability of such
Guarantor to perform its obligations hereunder or thereunder or which
would have a Material Adverse Effect (not waived by the other parties
hereto or thereto) and will not result in or require the creation or
imposition of any Lien on any of the properties or assets of such
Guarantor pursuant to any Requirement of Law applicable to it or any
Contractual Obligation of such Guarantor (other than any Liens created
pursuant to the Credit Documents);
(e) no consent or authorization of, filing with, or other act by
or in respect of, any arbitrator or Governmental Authority and no
consent of any other Person (including, without limitation, any
stockholder or creditor of such Guarantor) is required in connection
with the execution, delivery, performance, validity or enforceability
by or against such Guarantor of the Credit Documents to which it is a
party; and
(f) no litigation or investigation known to such Guarantor or
proceeding of or by any Governmental Authority or other Person is
pending against such Guarantor (i) with respect to any of the Credit
Documents to which it is a party or (ii) which would have a Material
Adverse Effect.
Each Guarantor agrees that the foregoing representations and
warranties shall be deemed to have been made by such Guarantor on each
Borrowing Date by the Company under the Term Loan Agreement on and as of
such Borrowing Date as though made hereunder on and as of such Borrowing
Date.
11. Severability. Any provision of this Guarantee which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
12. Paragraph Headings. The paragraph headings used in this
Guarantee are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.
13. No Waiver; Cumulative Remedies. Neither the Administrative
Agent nor any Lender shall by any act (except by a written instrument
pursuant to paragraph 14 hereof), delay, indulgence, omission or otherwise
be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default or in any breach of any of
the terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent or any Lender, any
right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Administrative Agent or any
Lender of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Administrative Agent or
such Lender would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any rights or remedies provided by
law.
14. Integration; Waivers and Amendments; Successors and Assigns;
Governing Law. This Guarantee represents the agreement of each Guarantor
with respect to the subject matter hereof and there are no promises or
representations by the Administrative Agent or any Lender relative to the
subject matter hereof not reflected herein. None of the terms or provisions
of this Guarantee may be waived, amended or supplemented or otherwise
modified except by a written instrument executed by each Guarantor and the
Administrative Agent, provided that any provision of this Guarantee may be
waived by the Administrative Agent and the Lenders in a letter or agreement
executed by the Administrative Agent or by telex or facsimile transmission
from the Administrative Agent. This Guarantee shall be binding upon the
successors and assigns of each Guarantor and shall inure to the benefit of
the Administrative Agent and the Lenders and their respective successors
and assigns. THIS GUARANTEE SHALL BE GOVERNED BY, AND BE CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
15. Notices. All notices, requests and demands to or upon the
Guarantors or the Administrative Agent or any Lender to be effective shall
be in writing or by telecopy or telex and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made when
delivered by hand, or, in the case of mail, three days after deposit in the
postal system, first class postage pre-paid, or, in the case of telecopy
notice, confirmation of receipt received, or, in the case of telex notice,
when sent, answerback received, addressed to a party at the address
provided for such party in subsection 11.2 of the Term Loan Agreement or
Schedule I hereto, as the case may be.
16. Counterparts. This Guarantee may be executed by one or more
of the parties hereto on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the
same instrument.
17. SUBMISSION TO JURISDICTION; WAIVERS. (a) EACH GUARANTOR
HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(i) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO ANY CREDIT DOCUMENT, OR FOR RECOGNITION AND
ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE
GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE
COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF
NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(ii) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT
IN SUCH COURTS, AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT
OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT
AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE AFFECTED BY MAILING A COPY THEREOF, BY REGISTERED OR
CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE
PREPAID, TO SUCH GUARANTOR AT ITS ADDRESS SET FORTH ON SCHEDULE I
HERETO OR AT SUCH OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT
SHALL HAVE BEEN NOTIFIED PURSUANT TO SECTION 15 HEREOF;
(iv) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT TO SUE IN ANY OTHER JURISDICTION.
(b) EACH OF THE ADMINISTRATIVE AGENT, EACH LENDER AND EACH
GUARANTOR HEREBY UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING REFERRED TO IN PARAGRAPH (a) ABOVE.
18. Authority of Administrative Agent. Each Guarantor
acknowledges that the rights and responsibilities of the Administrative
Agent under this Guarantee with respect to any action taken by the
Administrative Agent or the exercise or non-exercise by the Administrative
Agent of any option, right, request, judgment or other right or remedy
provided for herein or resulting or arising out of this Guarantee shall, as
between the Administrative Agent and the Lenders be governed by the Term
Loan Agreement and by such other agreements with respect thereto as may
exist from time to time among them, but, as between the Administrative
Agent and such Guarantor, the Administrative Agent shall be conclusively
presumed to be acting as agent for the Lenders with full and valid
authority so to act or refrain from acting, and neither such Guarantor, the
Company nor any other Guarantor shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee to be duly executed and delivered by its duly authorized officer
as of the day and year first above written.
GULFSTREAM AEROSPACE CORPORATION
a Georgia Corporation
GULFSTREAM AEROSPACE CORPORATION,
D/B/A GULFSTREAM AEROSPACE TECHNOLOGIES
an Oklahoma Corporation
GULFSTREAM AEROSPACE CORPORATION
a California Corporation
By:
-----------------------------------------
Title:
<PAGE>
SCHEDULE I
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Addresses of Guarantors
-----------------------
The address of each Guarantor is:
<PAGE>
EXHIBIT F TO
TERM LOAN AGREEMENT
-------------------
FORM OF SUBSIDIARY PLEDGE AGREEMENT
SUBSIDIARY PLEDGE AGREEMENT dated as of _____ __, 1999 made by
each of the entities that are signatories hereto (each, a "Pledgor",
collectively, the "Pledgors"), in favor of THE CHASE MANHATTAN BANK
("Chase"), as collateral agent (in such capacity, the "Collateral Agent")
for (i) the lenders (the "Term Loan Lenders") parties to the Term Loan
Agreement, dated as of April 15, 1999 (as amended, supplemented or
otherwise modified from time to time, the "Term Loan Agreement"), among
GULFSTREAM DELAWARE CORPORATION (the "Company"), the Administrative Agent
and the Lenders and (ii) the lenders (the "1996 Lenders") parties to the
Credit Agreement, dated as of October 16, 1996 (as amended, supplemented or
otherwise modified from time to time, the "1996 Credit Agreement"), among
the Company, Chase, as administrative agent for the 1996 Lenders (in such
capacity, the "1996 Administrative Agent"), and the 1996 Lenders.
W I T N E S S E T H :
- - - - - - - - - - -
WHEREAS, pursuant to the Term Loan Agreement, the Term Loan
Lenders have severally agreed to make loans to the Company upon the terms
and subject to the conditions set forth therein;
WHEREAS, each Pledgor is the legal and beneficial owner of the
shares of Pledged Stock (as hereinafter defined) issued by the Persons
named under the caption "Issuer" on Schedules I and II hereto set forth
opposite such Pledgor's name;
WHEREAS, the Pledgors have executed and delivered the Subsidiary
Guarantee dated as of the date hereof (as amended, supplemented or
otherwise modified from time to time, the "Subsidiary Guarantee") pursuant
to which, subject to the terms and conditions thereof, the Pledgors have
guaranteed to the Administrative Agent and the Term Loan Lenders the
punctual payment and performance of all amounts and other obligations owing
by the Issuer pursuant to the Term Loan Agreement;
WHEREAS, the Pledgors have executed and delivered a Subsidiary
Guarantee dated as of October 16, 1996 (as amended, supplemented or
otherwise modified from time to time, the "1996 Subsidiary Guarantee")
pursuant to which, subject to the terms and conditions thereof, the
Pledgors have guaranteed to the 1996 Administrative Agent and the 1996
Lenders the punctual payment and performance of all amounts and other
obligations owing by the Issuer pursuant to the 1996 Credit Agreement;
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective loans to the Company under the Term Loan
Agreement that the Pledgors shall have executed and delivered this Pledge
Agreement to the Collateral Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce
the Lenders to make their respective loans to the Company under the Term
Loan Agreement, the Pledgors hereby agree with the Collateral Agent, for
the ratable benefit of the Lenders, as follows:
1. Defined Terms. Unless otherwise defined herein, terms that are
defined in the Term Loan Agreement and used herein are so used as so
defined; and the following terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the date hereof are
used herein as so defined: Accounts, Chattel Paper, General Intangibles and
Instruments; and the following terms shall have the following meanings:
"Code": the Uniform Commercial Code from time to time in effect
in the State of New York.
"Collateral": the collective reference to the Pledged Stock, and
all Proceeds thereof.
"Credit Agreements": the collective reference to the Term Loan
Agreement and the 1996 Credit Agreement.
"Guarantee Obligations": as to each Pledgor, all indebtedness,
obligations and liabilities of such Pledgor under the Subsidiary
Guarantee and the 1996 Subsidiary Guarantee, including, without
limitation, (i) all guarantee obligations in respect of the unpaid
principal of and interest on the Loans and all other Obligations of
the Company to the Administrative Agent and the Lenders, whether
direct or indirect, absolute or contingent, matured or unmatured, due
or to become due, or now existing or hereafter incurred under the Term
Loan Agreement and the other Credit Documents and (ii) all guarantee
obligations in respect of the unpaid principal of and interest on the
1996 Loans and all other 1996 Obligations of the Company to the 1996
Administrative Agent and the 1996 Lenders, whether direct or indirect,
absolute or contingent, matured or unmatured, due or to become due, or
now existing or hereafter incurred under the 1996 Credit Agreement and
the other 1996 Credit Documents.
"Issuer": with respect to any Pledged Stock, the Issuers from
time to time listed on Schedules I and II as the issuer of such
Pledged Stock.
"Lenders": the collective reference to the Term Loan Lenders and
the 1996 Lenders.
"1996 Credit Documents": the "Credit Documents" as defined in the
1996 Credit Agreement.
"1996 Loans": the "Loans" as defined in the 1996 Credit
Agreement.
"1996 Obligations": the "Obligations" as defined in the 1996
Credit Agreement.
"Pledge Agreement": this Pledge Agreement, as amended,
supplemented or otherwise modified from time to time.
"Pledge Agreement Lenders": at a particular time, the holders of
at least 51% of the sum of (i) the aggregate unpaid principal amount
of the Loans, if any, under the Term Loan Agreement and (ii) the
aggregate unpaid principal amount of the Term Loans (as defined in the
1996 Credit Agreement) outstanding at such time, if any, and the
aggregate Revolving Credit Commitments (as defined in the 1996 Credit
Agreement) at such time.
"Pledged Stock": all of the shares of capital stock of the
Issuers listed on Schedules I and II hereto (but not more than 65% of
all shares of each class of Capital Stock of the Issuers listed on
Schedule II hereto) now owned or at any time hereafter acquired by any
Pledgor or in which any Pledgor now has or may from time to time
acquire any right, title or interest, together with all stock
certificates, options or rights of any nature whatsoever that may be
issued or granted by the Issuer thereof to the applicable Pledgor
while this Pledge Agreement is in effect.
"Proceeds": all "proceeds" as such term is defined in Section
9-306(1) of the Code on the date hereof and, in any event, shall
include, without limitation, all dividends or other income from the
Pledged Stock, and any and all collections on the foregoing or
distributions with respect to the foregoing.
2. Pledge; Grant of Security Interest. Each Pledgor hereby
delivers to the Collateral Agent, for the ratable benefit of the Lenders,
all of such Pledgor's right, title and interest in the Pledged Stock and
hereby transfers and grants to the Collateral Agent, for the ratable
benefit of the Lenders, a first security interest in all of such Pledgor's
right, title and interest in all of the Collateral, as collateral security
for the prompt and complete payment and performance when due (whether at
the stated maturity, by acceleration or otherwise) of the Guarantee
Obligations.
3. Stock Powers. Concurrently with the delivery by any Pledgor to
the Collateral Agent of each certificate representing one or more shares of
Pledged Stock, such Pledgor shall deliver an undated stock power covering
such certificate, duly executed in blank by such Pledgor.
4. Representations and Warranties. Each Pledgor represents and
warrants that:
(a) the shares of capital stock of each of the Issuers listed on
Schedules I and II which are identified as Pledged Stock on said
Schedules I and II constitute (i) all of the issued and outstanding
shares of capital stock of the Issuers listed on Schedule I hereto
which are owned by the Pledgors; and (ii) all of the issued and
outstanding shares of capital stock of the Issuers listed on Schedule
II hereto which are owned by the Pledgors (but not in excess of 65% of
the issued and outstanding shares of all classes of the capital stock
of such Issuers);
(b) all the shares of Pledged Stock have been duly and validly
issued and are fully paid and nonassessable;
(c) such Pledgor is the record and beneficial owner of, and has
good title to, the Collateral owned by it, free of any and all Liens
or options in favor of, or claims of, any other Person, except the
Lien created by this Pledge Agreement; and
(d) upon delivery to the Collateral Agent of the stock
certificates evidencing the Pledged Stock, the Lien granted pursuant
to this Pledge Agreement will constitute a valid, perfected first
priority Lien on the Collateral owned by such Pledgor (except, with
respect to Proceeds, only to the extent permitted by Section 9-306 of
the Code), enforceable as such against all creditors of such Pledgor
and any Persons purporting to purchase any Collateral from such
Pledgor except in each case as enforceability may be affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing. No security agreement, financing statement or
other public notice with respect to all or any part of the Collateral
is on file or of record in any public office.
Each Pledgor agrees that the foregoing representations and
warranties shall be deemed to have been made by it on each Borrowing Date
by such Pledgor under the Term Loan Agreement on and as of such Borrowing
Date as though made hereunder on and as of such Borrowing Date.
5. Covenants. Each Pledgor covenants and agrees with the
Collateral Agent and the Lenders, that, from and after the date of this
Pledge Agreement until the Guarantee Obligations are paid in full and the
Commitments are terminated:
(a) If such Pledgor shall, as a result of its ownership of the
Collateral, become entitled to receive or shall receive any stock
certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate
issued in connection with any reorganization), promissory note or
other instrument, option or rights, whether in addition to, in
substitution of, as a conversion of, or in exchange for any of the
Collateral, or otherwise in respect thereof, such Pledgor shall accept
the same as the agent of the Collateral Agent and the Lenders, hold
the same in trust for the Collateral Agent and the Lenders and deliver
the same forthwith to the Collateral Agent in the exact form received,
duly indorsed by such Pledgor to the Collateral Agent, if required,
together with an undated stock power or endorsement, as appropriate,
covering such certificate, note or instrument duly executed in blank
by such Pledgor and with, if the Collateral Agent so requests,
signature guarantees, to be held by the Collateral Agent, subject to
the terms hereof, as additional collateral security for the Guarantee
Obligations. Any sums paid upon or in respect of the Collateral upon
the liquidation or dissolution of any Issuer shall be paid over to the
Collateral Agent to be held by it hereunder as additional collateral
security for the Guarantee Obligations, and, in case any distribution
of capital shall be made on or in respect of the Collateral or any
property shall be distributed upon or with respect to the Collateral
pursuant to the recapitalization or reclassification of the capital of
such Issuer or pursuant to the reorganization thereof, the property so
distributed shall be delivered to the Collateral Agent to be held by
it hereunder as additional collateral security for the Guarantee
Obligations. If any sums of money or property so paid or distributed
in respect of the Collateral shall be received by such Pledgor, such
Pledgor shall, until such money or property is paid or delivered to
the Collateral Agent, hold such money or property in trust for the
Lenders, segregated from other funds of such Pledgor, as additional
collateral security for the Guarantee Obligations.
(b) Without the prior written consent of the Collateral Agent and
except as permitted by, or not prohibited under, the Credit
Agreements, such Pledgor will not (i) vote to enable, or take any
other action to permit, any Issuer to issue any stock, membership
interests or other equity securities of any nature or to issue any
other securities convertible into or granting the right to purchase or
exchange for any stock or other equity securities of any nature of
such Issuer, (ii) sell, assign, transfer, exchange, or otherwise
dispose of, or grant any option with respect to, the Collateral, or
(iii) create, incur or permit to exist any Lien or option in favor of,
or any claim of any Person with respect to, any of the Collateral, or
any interest therein, except for the Lien provided for by this Pledge
Agreement. Such Pledgor will defend the right, title and interest of
the Collateral Agent and the Lenders in and to the Collateral against
the claims and demands of all Persons whomsoever.
(c) At any time and from time to time, upon the written request
of the Collateral Agent, and at the sole expense of such Pledgor, such
Pledgor will promptly and duly execute and deliver such further instruments
and documents and take such further actions as the Collateral Agent may
reasonably request for the purposes of obtaining or preserving the full
benefits of this Pledge Agreement and of the rights and powers herein
granted. If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any promissory note, other
Instrument or Chattel Paper, such note, Instrument or Chattel Paper shall
be immediately delivered to the Collateral Agent, duly endorsed in a manner
satisfactory to the Collateral Agent, to be held as Collateral pursuant to
this Pledge Agreement.
(d) Such Pledgor agrees to pay, and to save the Collateral Agent
and the Lenders harmless from, any and all liabilities with respect
to, or resulting from any delay in paying, any and all stamp, excise,
sales or other similar taxes which may be payable or determined to be
payable with respect to any of the Collateral or in connection with
any of the transactions contemplated by this Pledge Agreement.
6. Cash Dividends; Voting Rights. (a) Unless an Event of Default
shall have occurred and be continuing and the Collateral Agent shall
(unless such Event of Default is an Event of Default specified in
subsection 9(f) of the Term Loan Agreement or subsection 9(f) of the 1996
Credit Agreement, in which case no such notice need be given) have given
notice to any Pledgor of the Collateral Agent's intent to exercise its
rights pursuant to paragraph 8 below, such Pledgor shall be (i) permitted
to receive all cash dividends or distributions to the extent permitted in
the Credit Agreements in respect of the Pledged Stock and (ii) permitted to
exercise all voting, corporate and other rights of ownership with respect
to the Pledged Stock, provided, however, that no vote shall be cast or
corporate or other action taken which, in the Collateral Agent's reasonable
judgment, would impair the Collateral or which would be inconsistent with
or result in any violation of any provision of the Credit Agreements or any
of the other Credit Documents.
(b) If an Event of Default shall have occurred and be continuing
and the Collateral Agent shall (unless such Event of Default is an Event of
Default specified in subsection 9(f) of the Term Loan Agreement or
subsection 9(f) of the 1996 Credit Agreement, in which case no such notice
need be given) give notice of its intent to exercise its rights hereunder
to any Pledgor, (i) all dividends, interest payments and other
distributions (including cash) paid on or in respect of the Pledged Stock
owned by such Pledgor shall be paid to and retained by the Collateral Agent
as Collateral hereunder (or if received by such Pledgor, shall be held in
trust by such Pledgor for the benefit of the Collateral Agent and the
Lenders and shall be forthwith delivered by it), and (ii) all voting,
corporate and other rights pertaining to the Pledged Stock, if any, shall
be exercised by the Collateral Agent.
7. Rights of the Lenders and the Collateral Agent. (a) If an
Event of Default shall occur and be continuing and the Collateral Agent
shall (unless such Event of Default is an Event of Default specified in
subsection 9(f) of the Term Loan Agreement or subsection 9(f) of the 1996
Credit Agreement, in which case no such notice need be given) give notice
of its intent to exercise its rights hereunder to any Pledgor, (i) the
Collateral Agent shall have the right to receive any and all cash
dividends, distributions and payments or other income paid in respect of
the Collateral and make application thereof to the Guarantee Obligations in
such order as the Collateral Agent may determine and (ii) all shares of the
Pledged Stock shall be registered in the name of the Collateral Agent or
its nominee, and the Collateral Agent or its nominee may thereafter
exercise (A) all voting, corporate, member, creditor and other rights,
powers and privileges pertaining to the Collateral at any meeting of
shareholders of any Issuer or otherwise, and (B) any and all rights of
conversion, exchange, subscription and any other rights, privileges or
options pertaining to the Collateral as if it were the absolute owner
thereof (including, without limitation, the right to exchange at its
discretion any and all of the Collateral upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the
structure of any Issuer, or upon the exercise by any Pledgor or the
Collateral Agent of any right, privilege or option pertaining to the
Collateral, and in connection therewith, the right to deposit and deliver
any and all of the Collateral with any committee, depositary, transfer
agent, registrar or other designated agency upon such terms and conditions
as it may determine), all without liability except to account for property
actually received by it and except for its gross negligence or willful
misconduct, but the Collateral Agent shall have no duty to any Pledgor to
exercise any such right, privilege or option and shall not be responsible
for any failure to do so or delay in so doing.
(b) The rights of the Collateral Agent and the Lenders hereunder
shall not be conditioned or contingent upon the pursuit by the Collateral
Agent or any Lender of any right or remedy against any Issuer, or any
Pledgor or against any other Person which may be or become liable in
respect of all or any part of the Guarantee Obligations or against any
collateral security therefor, guarantee therefor or right of set-off with
respect thereto. Neither the Collateral Agent nor any Lender shall be
liable for any failure to demand, collect or realize upon all or any part
of the Collateral or for any delay in doing so (except to the extent that
such failure constitutes gross negligence or willful misconduct), nor shall
the Collateral Agent be under any obligation to sell or otherwise dispose
of any Collateral upon the request of any Pledgor or any other Person or to
take any other action whatsoever with regard to the Collateral or any part
thereof.
8. Remedies. In the event that any portion of the Obligations has
been declared or becomes due and payable in accordance with the terms of
the Term Loan Agreement or the 1996 Credit Agreement and such Obligations
have not been paid in full, the Collateral Agent, on behalf of the Lenders,
may exercise, in addition to all other rights and remedies granted in this
Pledge Agreement and in any other instrument or agreement securing,
evidencing or relating to the Guarantee Obligations or Obligations, all
rights and remedies of a secured party under the Code. Without limiting the
generality of the foregoing, the Collateral Agent, without demand of
performance or other demand, presentment, protest, advertisement or notice
of any kind (except any notice required by law referred to below) to or
upon any Pledgor, any Issuer, or any other Person (all and each of which
demands, defenses, advertisements and notices are hereby waived), may in
such circumstances forthwith collect, receive, appropriate and realize upon
the Collateral, or any part thereof, and/or may forthwith sell, assign,
give option or options to purchase or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in
one or more parcels at public or private sale or sales, in the
over-the-counter market, at any exchange or broker's board or office of the
Collateral Agent or any Lender or elsewhere upon such terms and conditions
as it may deem advisable and at such prices as it may deem best, for cash
or on credit or for future delivery without assumption of any credit risk.
The Collateral Agent or any Lender shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of the Collateral
so sold, free of any right or equity of redemption in any Pledgor, which
right or equity is hereby waived or released. The Collateral Agent shall
apply any Proceeds from time to time held by it and the net proceeds of any
such collection, recovery, receipt, appropriation, realization or sale,
after deducting all reasonable costs and expenses of every kind incurred in
respect thereof or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the
Collateral Agent and the Lenders hereunder, including, without limitation,
reasonable attorneys' fees and disbursements of counsel to the Collateral
Agent, to the payment in whole or in part of the Guarantee Obligations, in
such order as the Collateral Agent may elect, and only after such
application and after the payment by the Collateral Agent of any other
amount required by any provision of law, including, without limitation,
Section 9-504(1)(c) of the Code, need the Collateral Agent account for the
surplus, if any, to the Pledgors. To the extent permitted by applicable
law, each Pledgor waives all claims, damages and demands it may acquire
against the Collateral Agent or any Lender arising out of the lawful
exercise by them of any rights hereunder. If any notice of a proposed sale
or other disposition of Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least 10 days before such
sale or other disposition.
9. Registration Rights; Private Sales. () If the Collateral Agent
shall determine to exercise its right to sell any or all of the Collateral
pursuant to paragraph 9 hereof, and if in the opinion of the Collateral
Agent it is necessary or advisable to have the Collateral, or that portion
thereof to be sold, registered under the provisions of the Securities Act
of 1933, as amended (the "Securities Act"), each Pledgor will cause each
Issuer whose stock, note or membership interest, as the case may be, is to
be so registered to (i) execute and deliver, and cause the directors and
officers of such Issuer, as the case may be, to execute and deliver, all
such instruments and documents, and do or cause to be done all such other
acts as may be, in the opinion of the Collateral Agent, necessary or
advisable to register the Collateral or that portion thereof to be sold,
under the provisions of the Securities Act, (ii) use its best efforts to
cause the registration statement relating thereto to become effective and
to remain effective for a period of one year from the date of the first
public offering of the Collateral, or that portion thereof to be sold, and
(iii) make all amendments thereto and/or to the related prospectus that, in
the opinion of the Collateral Agent, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto.
Each Pledgor agrees to cause each Issuer to comply with the provisions of
the securities or "Blue Sky" laws of any and all jurisdictions that the
Collateral Agent shall designate and to make available to its security
holders, as soon as practicable, an earnings statement (which need not be
audited) that will satisfy the provisions of Section 11(a) of the
Securities Act.
(b) Each Pledgor recognizes that the Collateral Agent may be
unable to effect a public sale of any or all the Collateral by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers that will be
obliged to agree, among other things, to acquire such securities for their
own account for investment and not with a view to the distribution or
resale thereof. Each Pledgor acknowledges and agrees that any such private
sale may result in prices and other terms less favorable than if such sale
were a public sale and, notwithstanding such circumstances, agrees that any
such private sale shall be deemed to have been made in a commercially
reasonable manner. The Collateral Agent shall be under no obligation to
delay a sale of any of the Collateral for the period of time necessary to
permit any Issuer to register such securities for public sale under the
Securities Act, or under applicable state securities laws, even if such
Issuer would agree to do so.
(c) Each Pledgor further agrees to use its best efforts to do or
cause to be done all such other acts as may be necessary to make such sale
or sales of all or any portion of the Collateral pursuant to this paragraph
9 valid and binding and in compliance with any and all other applicable
Requirements of Law. Each Pledgor further agrees that a breach of any of
the covenants contained in this paragraph 9 will cause irreparable injury
to the Collateral Agent and the Lenders, that the Collateral Agent and the
Lenders have no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this paragraph 10
shall be specifically enforceable against such Pledgor, and such Pledgor
hereby waives and agrees not to assert any defenses against an action for
specific performance of such covenants.
10. Limitation on Duties Regarding Collateral. The Collateral
Agent's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of
the Code or otherwise, shall be to deal with it in the same manner as the
Collateral Agent deals with similar securities and property for its own
account. Neither the Collateral Agent nor any Lender nor their respective
directors, officers, employees or agents shall be liable for failure to
demand, collect or realize upon any of the Collateral or for any delay in
doing so (except to the extent that such failure constitutes gross
negligence or willful misconduct) or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of any Pledgor or
otherwise.
11. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable
and powers coupled with an interest.
12. Severability. Any provision of this Pledge Agreement which is
prohibited or unenforceable in any jurisdiction or against any Pledgor
shall, as to such jurisdiction or Pledgor, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or the applicability of any provisions hereof with
respect to any other Pledgor, and any such prohibition or unenforceability
in any jurisdiction or against any Pledgor shall not invalidate or render
unenforceable such provision in any other jurisdiction or against any other
Pledgor.
13. Paragraph Headings. The paragraph headings used in this
Pledge Agreement are for convenience of reference only and are not to
affect the construction hereof or be taken into consideration in the
interpretation hereof.
14. No Waiver; Cumulative Remedies. Neither the Collateral Agent
nor any Lender shall by any act (except by a written instrument pursuant to
paragraph 15 hereof) be deemed to have waived any right or remedy
hereunder. No failure to exercise, nor any delay in exercising, on the part
of the Collateral Agent or any Lender any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial exercise
of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Collateral Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Collateral Agent or such Lender would otherwise
have on any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive
of any other rights or remedies provided by law.
15. Waivers and Amendments; Successors and Assigns; Governing
Law. None of the terms or provisions of this Pledge Agreement may be
waived, amended, supplemented or otherwise modified except by a written
instrument executed by the Pledgor, the Collateral Agent and the Pledge
Agreement Lenders, provided that no such waiver and no such amendment,
supplement or modification shall alter the equal and ratable treatment
afforded the Obligations without the written consent of each Lender
adversely affected by any such waiver, amendment, supplement or
modification This Pledge Agreement shall be binding upon the successors and
assigns of the Pledgors and shall inure to the benefit of the Collateral
Agent and the Lenders and their respective successors and assigns. THIS
PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
16. Notices. Notices by the Collateral Agent may be given by
mail, by telex or by facsimile transmission, addressed or transmitted to
the Issuers at their addresses or transmission numbers set forth in
Schedule III hereto and to the Pledgors at their addresses or transmission
numbers set forth on Schedule IV hereto. Such notice shall be effective (a)
in the case of mail, three Business Days after deposit in the postal
system, first class postage pre-paid, and (b) in the case of telex or
facsimile notices, when sent, answerback received, addressed. The Pledgors
and the Issuers may change their respective addresses and transmission
numbers by written notice to the Collateral Agent.
17. Irrevocable Authorization and Instruction to Issuers. Each
Pledgor hereby authorizes and instructs the Issuers to comply with any
instruction received by it from the Collateral Agent in writing that (a)
states that an Event of Default has occurred and is continuing and (b) is
otherwise in accordance with the terms of this Pledge Agreement, without
any other or further instructions from any Pledgor, and such Pledgor agrees
that the Issuers shall be fully protected in so complying.
18. Authority of Collateral Agent. Each Pledgor acknowledges that
the rights and responsibilities of the Collateral Agent under this Pledge
Agreement with respect to any action taken by the Collateral Agent or the
exercise or non-exercise by the Collateral Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Pledge Agreement shall, as between the
Collateral Agent and the Lenders, be governed by the Credit Agreements and
by such other agreements with respect thereto as may exist from time to
time among them, but, as between the Collateral Agent and the Pledgors, the
Collateral Agent shall be conclusively presumed to be acting as agent for
the Lenders with full and valid authority so to act or refrain from acting,
and neither any Pledgor nor the Issuers shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Pledge
Agreement to be duly executed and delivered as of the date first above
written.
[PLEDGORS]
By:
----------------------------
Title:
Accepted and Agreed:
THE CHASE MANHATTAN BANK, as Collateral Agent
By:
----------------------------
Title:
<PAGE>
ACKNOWLEDGEMENT AND CONSENT
Each of the undersigned Issuers referred to in the foregoing
Subsidiary Pledge Agreement hereby acknowledges receipt of a copy thereof
and agrees to be bound thereby and to comply with the terms thereof insofar
as such terms are applicable to it. Each of the undersigned Issuers agrees
to notify the Collateral Agent promptly in writing of the occurrence of any
of the events described in paragraph 5(a) of the Subsidiary Pledge
Agreement. Each of the undersigned Issuers further agrees that the terms of
paragraph 9(c) of the Subsidiary Pledge Agreement shall apply to it,
mutatis mutandis, with respect to all actions that may be required of it
under or pursuant to or arising out of paragraph 9 of the Subsidiary Pledge
Agreement.
[LIST OF ISSUERS]
By:
----------------------------
Title:
<PAGE>
SCHEDULE I
to Subsidiary
Pledge Agreement
----------------
<TABLE>
<CAPTION>
DESCRIPTION OF PLEDGED STOCK (DOMESTIC SUBSIDIARIES)
----------------------------------------------------
Percentage of
Stock Total No. of Number of Outstanding
Class of Certificate Outstanding Shares Owned Shares Owned
Issuer Stock No. Shares by the Pledgor by the Pledgor
- ------ ----- --- ------ -------------- --------------
<S> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
SCHEDULE II
To Subsidiary
Pledge Agreement
----------------
<TABLE>
<CAPTION>
DESCRIPTION OF PLEDGED STOCK (FOREIGN SUBSIDIARIES)
---------------------------------------------------
Percentage of
Stock Total No. of Number of Outstanding
Class of Certificate Outstanding Shares Owned Shares Owned
Issuer Stock No. Shares by the Pledgor by the Pledgor
- ------ ----- --- ------ -------------- --------------
<S> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
SCHEDULE III
To Subsidiary
Pledge Agreement
----------------
ADDRESSES OF ISSUERS
--------------------
<PAGE>
SCHEDULE IV
To Subsidiary
Pledge Agreement
----------------
ADDRESSES OF PLEDGORS
---------------------
<PAGE>
EXHIBIT G TO
TERM LOAN AGREEMENT
-------------------
FORM OF EXEMPTION CERTIFICATE
Reference is made to the Term Loan Agreement, dated as of April
15, 1999, among Gulfstream Delaware Corporation, the lenders and other
financial institutions which are parties thereto (the "Lenders") and The
Chase Manhattan Bank, as administrative agent for the Lenders (in such
capacity, the "Administrative Agent") (the "Term Loan Agreement").
Capitalized terms used herein that are not defined herein shall have the
meanings ascribed to them in the Term Loan Agreement. [Name of Non-U.S.
Lender] (the "Lender") is providing this certificate pursuant to subsection
4.18 of the Term Loan Agreement. Under penalties of perjury, the Lender
hereby represents and warrants that:
1. The Lender is the sole record and beneficial owner of the Qualified
Non-U.S. Lender Note(s) and Loans in respect of which it is providing
this certificate, and it shall remain the sole beneficial owner of
such Qualified Non-U.S. Lender Note(s) at all times during which it is
the record holder of such Qualified Non-U.S. Lender Note(s) and Loans.
2. The Lender is not a "bank" for purposes of Section 881(c)(3)(A) of the
Internal Revenue Code of 1986, as amended (the "Code"). In this
regard, the Lender further represents and warrants that:
(a) the Lender is not subject to regulatory or other legal
requirements as a bank in any jurisdiction;
(b) the Lender has not been treated as a bank for purposes of any
tax, securities law or other filing or submission made to any
Governmental Authority, any application made to a rating agency
or qualification for any exemption from tax, securities law or
other legal requirements;
(c) the Lender is acquiring an interest in a Qualified Non-U.S.
Lender Note or a Loan for its own account, and the Lender will
not hold such interest, directly or indirectly, for or on behalf
of, or as nominee for, any bank; further, the Lender is not a
"conduit entity" (within the meaning of U.S. Treasury Regulations
Section 1.881-3); and
(d) the Lender is not using funds borrowed from a bank on a
limited recourse or other basis, the effect of which is to shift
the economic benefits or burdens of ownership of an interest in
any Qualified Non-U.S. Lender Note or Loan to such bank, to
acquire an interest in any Qualified Non-U.S. Lender Note or
Loan.
3. The Lender meets all of the requirements under Code Section 871(h) or
881(c) to be eligible for a complete exemption from withholding of
U.S. Taxes on interest payments made to it under the Term Loan
Agreement. In connection with the foregoing, the Lender represents and
warrants that (a) any and all Notes that it now holds, or may
hereafter hold, are Qualified Non-U.S. Lender Notes, and (b) it has
not taken, and will not take, any action that would cause any
Qualified Non-U.S. Lender Note held by it at any time during the term
of the Term Loan Agreement to fail to be in registered form within the
meaning of U.S. Treasury Regulations Section 5f.103-1(c).
4. The Lender shall promptly notify the Company and the Administrative
Agent if (a) any of the representations and warranties made herein are
no longer true and correct, or (b) the Lender is a "conduit entity"
within the meaning of any successor to U.S. Treasury Regulations
Section 1.881-3 or any other Regulations promulgated under the
authority of Code Section 7701(l) with respect to its interest in any
Qualified Non-U.S. Lender Note or Loan and any bank.
IN WITNESS WHEREOF, the undersigned has duly executed this certificate.
[Name of Non-U.S. Lender]
By:
---------------------------
Name:
Title:
Date:
-----------
<PAGE>
EXHIBIT I-1 TO
TERM LOAN AGREEMENT
-------------------
FORM OF HOLDINGS CLOSING CERTIFICATE
Pursuant to subsection 6.1(j) of the Term Loan Agreement, dated
as of April 15, 1999, among Gulfstream Delaware Corporation (the
"Company"), the lenders and other financial institutions which are parties
thereto (the "Lenders") and The Chase Manhattan Bank, as administrative
agent for the Lenders (in such capacity, the "Administrative Agent"), (the
"Term Loan Agreement"; terms defined therein being used herein as therein
defined), the undersigned [Vice Presidents] of Holdings hereby certify as
follows:
1. The representations and warranties of Holdings made on the
Closing Date and set forth in each of the Credit Documents to which it
is a party or which are contained in any certificate, document or
financial or other statement furnished by or on behalf of Holdings
pursuant to or in connection with any Credit Document are true and
correct in all material respects on and as of the date hereof with the
same effect as if made on the date hereof, except for representations
and warranties stated to relate to a specific earlier date, in which
case such representations and warranties were true and correct in all
material respects as of such earlier date;
2. Attached hereto as Exhibit I are true and correct copies of
all consents, authorizations and filings, if any, required in
connection with the execution, delivery and performance by Holdings
and the validity and enforceability against Holdings of the Credit
Documents to which it is a party and such consents, authorizations and
filings are in full force and effect, except such consents,
authorizations and filings the failure to obtain which would not have
a Material Adverse Effect;
3. No Default or Event of Default has occurred and is continuing
as of the date hereof or after giving effect to the Loans to be made
on the date hereof;
4. _______________ is and at all times since _________ __, 199_
has been, the duly elected and qualified Assistant Secretary of
Holdings and the signature set forth on the signature line for such
officer below is such officer's true and genuine signature;
and the undersigned Assistant Secretary of Holdings hereby certifies as
follows:
5. There are no liquidation or dissolution proceedings pending or
to my knowledge threatened against Holdings nor has any other event
occurred affecting or threatening the corporate existence of Holdings;
6. Holdings is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware; attached
hereto as Exhibit II is a true and complete copy of a Certificate,
dated as of a recent date, of the Secretary of State as to the good
standing of Holdings under the laws of the State of Delaware;
7. Attached hereto as Exhibit III is a true and complete copy of
resolutions duly adopted by the written consent of the Board of
Directors of Holdings on _________ __, 1999 such resolutions have not
in any way been amended, modified, revoked or rescinded and have been
in full force and effect since their adoption to and including the
date hereof and are now in full force and effect; such resolutions are
the only corporate proceedings of Holdings now in force relating to or
affecting the matters referred to therein;
8. Attached hereto as Exhibit IV is a true and complete copy of
the By-Laws of Holdings as in effect at all times since _________ __,
199_, to and including the date hereof;
9. Attached hereto as Exhibit V is a true and complete copy of
the Certificate of Incorporation of Holdings, as amended, as in effect
at all times since _____ __, 199_, to and including the date hereof;
10. The following persons are now duly elected and qualified
officers of Holdings holding the offices indicated next to their
respective names below, and such officers have held such offices with
Holdings at all times since _________ __, 199_, to and including the
date hereof, and the signatures appearing opposite their respective
names below are the true and genuine signatures of such officers, and
each of such officers is duly authorized to execute and deliver on
behalf of Holdings the Credit Documents to which it is a party and any
certificate or other document to be delivered by Holdings pursuant to
the Credit Documents:
<PAGE>
Name Office Signature
---- ------ ---------
-----------------
-----------------
IN WITNESS WHEREOF, the undersigned have hereunto set our names.
- --------------------------- --------------------------
Name: Name:
Title: Title:
- --------------------------
Name:
Title:
Date: _________ __, 1999
<PAGE>
EXHIBIT I-2 TO
TERM LOAN AGREEMENT
-------------------
FORM OF COMPANY CLOSING CERTIFICATE
Pursuant to subsection 6.1(j) of the Term Loan Agreement, dated
as of April 15, 1999, among Gulfstream Delaware Corporation (the
"Company"), the lenders and other financial institutions which are parties
thereto (the "Lenders") and The Chase Manhattan Bank, as administrative
agent for the Lenders (in such capacity, the "Administrative Agent"), (the
"Term Loan Agreement"; terms defined therein being used herein as therein
defined), the undersigned [Vice Presidents] of the Company hereby certify
as follows:
1. The representations and warranties of the Company made on the
Closing Date and set forth in each of the Credit Documents to which it
is a party or which are contained in any certificate, document or
financial or other statement furnished by or on behalf of the Company
pursuant to or in connection with any Credit Document are true and
correct in all material respects on and as of the date hereof with the
same effect as if made on the date hereof, except for representations
and warranties stated to relate to a specific earlier date, in which
case such representations and warranties were true and correct in all
material respects as of such earlier date;
2. Attached hereto as Exhibit I are true and correct copies of
all consents, authorizations and filings, if any, required in
connection with the execution, delivery and performance by the Company
and the validity and enforceability against the Company of the Credit
Documents to which it is a party and such consents, authorizations and
filings are in full force and effect, except such consents,
authorizations and filings the failure to obtain which would not have
a Material Adverse Effect;
3. No Default or Event of Default has occurred and is continuing
as of the date hereof or after giving effect to the Loans to be made
on the date hereof;
4. _______________ is and at all times since _________ __, 199_
has been, the duly elected and qualified Assistant Secretary of the
Company and the signature set forth on the signature line for such
officer below is such officer's true and genuine signature;
and the undersigned Assistant Secretary of the Company hereby certifies as
follows:
5. There are no liquidation or dissolution proceedings pending or
to my knowledge threatened against the Company nor has any other event
occurred affecting or threatening the corporate existence of the
Company;
6. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware;
attached hereto as Exhibit II is a true and complete copy of a
Certificate, dated as of a recent date, of the Secretary of State as
to the good standing of the Company under the laws of the State of
Delaware;
7. Attached hereto as Exhibit III is a true and complete copy of
resolutions duly adopted by the written consent of the Board of
Directors of the Company on _________ __, 1999 such resolutions have
not in any way been amended, modified, revoked or rescinded and have
been in full force and effect since their adoption to and including
the date hereof and are now in full force and effect; such resolutions
are the only corporate proceedings of the Company now in force
relating to or affecting the matters referred to therein;
8. Attached hereto as Exhibit IV is a true and complete copy of
the By-Laws of the Company as in effect at all times since _________
__, 199_, to and including the date hereof;
9. Attached hereto as Exhibit V is a true and complete copy of
the Certificate of Incorporation of the Company, as amended, as in
effect at all times since _______ __, 199_, to and including the date
hereof;
10. The following persons are now duly elected and qualified
officers of the Company holding the offices indicated next to their
respective names below, and such officers have held such offices with
the Company at all times since _________ __, 199_, to and including
the date hereof, and the signatures appearing opposite their
respective names below are the true and genuine signatures of such
officers, and each of such officers is duly authorized to execute and
deliver on behalf of the Company the Credit Documents to which it is a
party and any certificate or other document to be delivered by the
Company pursuant to the Credit Documents:
<PAGE>
Name Office Signature
---- ------ ---------
-----------------
-----------------
IN WITNESS WHEREOF, the undersigned have hereunto set our names.
- --------------------------- --------------------------
Name: Name:
Title: Title:
- --------------------------
Name:
Title:
Date: _________ __, 1999
<PAGE>
EXHIBIT I-3 TO
TERM LOAN AGREEMENT
-------------------
FORM OF SUBSIDIARY GUARANTOR CLOSING CERTIFICATE
Pursuant to subsection 6.1(j) of the Term Loan Agreement, dated
as of April 15, 1999, among Gulfstream Delaware Corporation, the lenders
and other financial institutions parties thereto (collectively, the
"Lenders") and The Chase Manhattan Bank, as administrative agent for the
Lenders (the "Administrative Agent"), (the "Term Loan Agreement"; terms
defined therein being used herein as therein defined), the undersigned
[Vice President] of each of the entities listed on Schedule A hereto (each,
a "Guarantor"), hereby certifies as follows:
1. The representations and warranties of each Guarantor made on
the Closing Date and set forth in each of the Credit Documents to
which it is a party or which are contained in any certificate,
document or financial or other statement furnished by or on behalf of
such Guarantor pursuant to or in connection with any Credit Document
are true and correct in all material respects on and as of the date
hereof with the same effect as if made on the date hereof except for
representations and warranties stated to relate to a specific earlier
date, in which case such representations and warranties were true and
correct in all material respects as of such earlier date;
2. Attached hereto as Exhibit I are true and correct copies of
all consents, authorizations and filings, if any, required in
connection with the execution, delivery and performance by each
Guarantor and the validity and enforceability against such Guarantor
of the Credit Documents to which it is a party and such consents,
authorizations and filings are in full force and effect, except such
consents, authorizations and filings the failure to obtain which would
not have a Material Adverse Effect;
3. No Default or Event of Default has occurred and is continuing
as of the date hereof or after giving effect to the Loans to be made
on the date hereof;
4. ____________________ is and at all times since ________, 199_,
has been, the duly elected and qualified Assistant Secretary of such
Guarantor and the signature set forth on the signature line for such
officer below is such officer's true and genuine signature;
and the undersigned Assistant Secretary of each Guarantor hereby certifies
as follows:
5. There are no liquidation or dissolution proceedings pending or
to my knowledge threatened against any Guarantor, nor has any other
event occurred affecting or threatening the corporate existence of any
Guarantor;
6. Each Guarantor is a corporation duly incorporated, validly
existing and in good standing under the laws of its state of
incorporation or organization, as the case may be; attached hereto as
Exhibit II is a true and complete copy of a Certificate, dated as of a
recent date, of the Secretary of State of the state of its
incorporation or organization, as the case may be, as to the good
standing of such Guarantor under the law of such state;
7. Attached hereto as Exhibit III is a true and complete copy of
resolutions duly adopted by the Board of Directors or other governing
body, as the case may be, of such Guarantor on _________, 1999; such
resolutions have not in any way been amended, modified, revoked or
rescinded and have been in full force and effect since their adoption
to and including the date hereof and are now in full force and effect;
such resolutions are the only corporate, partnership or limited
liability company proceedings, as the case may be, of such Guarantor
now in force relating to or affecting the matters referred to therein;
8. Attached hereto as Exhibit IV is a true and complete copy of
the By-Laws, if applicable, of each Guarantor as in effect on the date
hereof;
9. Attached hereto as Exhibit V is a true and complete copy of
the Certificate of Incorporation, if applicable (or other certificate
of existence), of each Guarantor as in effect on the date hereof;
10. The following persons are now duly elected and qualified
officers of each Guarantor holding the offices indicated next to their
respective names below and the signatures appearing opposite their
respective names below are the true and genuine signatures of such
officers, and each of such officers is duly authorized to execute and
deliver on behalf of such Guarantor the Credit Documents to which it
is a party and any certificate or other document to be delivered by
such Guarantor pursuant to the Credit Documents:
<PAGE>
Name Office Signature
---- ------ ---------
-----------------
-----------------
IN WITNESS WHEREOF, the undersigned have hereunto set our names.
- --------------------------- --------------------------
Name: Name:
Title: Title:
- --------------------------
Name:
Title:
Date: _________ __, 1999
<PAGE>
EXHIBIT J TO
TERM LOAN AGREEMENT
-------------------
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Term Loan Agreement, dated as of April
15, 1999, among Gulfstream Delaware Corporation (the "Company"), the
Lenders parties thereto and The Chase Manhattan Bank, as Administrative
Agent (as the same may from time to time be amended, modified or
supplemented, the "Term Loan Agreement"). Unless otherwise defined herein,
terms defined in the Term Loan Agreement and used herein shall have the
meanings given to them in the Term Loan Agreement.
[Name of Assigning Lender] (the "Assignor") and [Name of
Assignee] (the "Assignee") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the
Assignee without recourse to the Assignor, and the Assignee hereby
irrevocably purchases and assumes from the Assignor without recourse to the
Assignor, as of the Effective Date (as defined below), an __% interest (the
"Assigned Interest") in and to the Assignor's rights and obligations with
respect to the Loans under the Term Loan Agreement as set forth on Schedule
1 hereto (the "Assigned Facility"), in a principal amount for such Assigned
Facility as set forth on Schedule 1 hereto.
2. The Assignor (a) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Term Loan Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Term Loan Agreement, any other Credit Document or any other
instrument or document furnished pursuant thereto, other than that it has
not created any adverse claim upon the interest being assigned by it
hereunder and that such interest is free and clear of any such adverse
claim; (b) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Company, any of its
Subsidiaries or any other obligor or the performance or observance by the
Company, any of its Subsidiaries or any other obligor of any of their
respective obligations under the Term Loan Agreement or any other Credit
Document or any other instrument or document furnished pursuant hereto or
thereto; and (c) attaches the Note(s), if any, held by it evidencing the
Assigned Facility and requests that the Company exchange such Note(s), if
any, for a new Note or Notes payable to the Assignee and (if the Assignor
has retained any interest in the Assigned Facility) a new Note or Notes, if
any, payable to the Assignor in the respective amounts which reflect the
assignment being made hereby (and after giving effect to any other
assignments which have become effective on the Effective Date).
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that
it has received a copy of the Term Loan Agreement, together with copies of
the financial statements delivered pursuant thereto and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Acceptance;
(c) agrees that it will, independently and without reliance upon the
Assignor, the Administrative Agent, the Co-Agents or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking
action under the Term Loan Agreement, the other Credit Documents or any
other instrument or document furnished pursuant hereto or thereto; (d)
appoints and authorizes the Administrative Agent to take such action as
agent on its behalf and to exercise such powers and discretion under the
Term Loan Agreement, the other Credit Documents or any other instrument or
document furnished pursuant hereto or thereto as are delegated to the
Administrative Agent by the terms thereof, together with such powers as are
incidental thereto; [and]1 (e) agrees that it will be bound by the
provisions of the Term Loan Agreement and will perform in accordance with
its terms all the obligations which by the terms of the Term Loan Agreement
are required to be performed by it as a Lender; [(f) represents and
warrants (for the benefit of the Assignor, the Administrative Agent and the
Company) that under applicable law and treaties no U.S. Taxes will be
required to be withheld by the Administrative Agent, the Company or the
Assignor with respect to any payments to be made to the Assignee in respect
of the Term Loans; (g) has attached hereto, and shall furnish to the
Assignor and the Company, such Internal Revenue Service forms required to
be furnished pursuant to subsection 4.18(e) of the Term Loan Agreement; and
(h) agrees (for the benefit of the Assignor, the Administrative Agent and
the Company) to be bound by the provisions of subsection 4.18(e).]2
4. The effective date of this Assignment and Acceptance shall be
________ __, 199_ (the "Effective Date"). Following the execution of this
Assignment and Acceptance, it will be delivered to the Administrative Agent
for acceptance by it and recording by the Administrative Agent pursuant to
subsection 11.6 of the Term Loan Agreement, effective as of the Effective
Date.
5. Upon such acceptance and recording, from and after the
Effective Date, the Administrative Agent shall make all payments in respect
of the Assigned Interest (including payments of principal, interest, fees
and other amounts) to the Assignee and the Assignor, as their interests may
appear. The Assignor and the Assignee shall make all appropriate
adjustments in payments by the Administrative Agent for periods prior to
the Effective Date or with respect to the making of this assignment
directly between themselves.
6. From and after the Effective Date, (a) the Assignee shall be a
party to the Term Loan Agreement and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and under the other Credit Documents and shall be bound by the
provisions thereof and (b) the Assignor shall, to the extent provided in
this Assignment and Acceptance, relinquish its rights and be released from
its obligations under the Term Loan Agreement.
7. Notwithstanding any other provision hereof, if the consent of
the Administrative Agent and the Company hereto is required under
subsection 11.6 of the Term Loan Agreement, this Assignment and Acceptance
shall not be effective unless such consents shall have been obtained.
8. This Assignment and Acceptance shall be governed by, and
construed and interpreted in accordance with, the laws of the State of New
York.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed as of ________ __, 199_ by their
respective duly authorized officers on Schedule 1 hereto.
- --------------------
1. Delete if Assignee will be a Non-U.S. Lender on effectiveness of the
assignment.
2. Add items (f) - (h) if the Assignee will be a Non-U.S. Lender on the
effectiveness of the assignment.
<PAGE>
SCHEDULE 1
TO ASSIGNMENT
AND ACCEPTANCE
--------------
Name of Assignor:
Name of Assignee:
Effective Date of Assignment:
Credit Principal
Facility Assigned Amount Assigned
----------------- ---------------
[NAME OF ASSIGNEE] [NAME OF ASSIGNOR]
By By
-------------------------- -------------------------
Name: Name:
Title: Title:
Accepted and Consented to: Consented to:
THE CHASE MANHATTAN BANK GULFSTREAM DELAWARE
Administrative Agent CORPORATION
By By
-------------------------- -------------------------
Name: Name:
Title: Title:
EXHIBIT 10.52
SIXTH AMENDMENT
SIXTH AMENDMENT, dated as of April 7, 1999 (this "Amendment"), to
the Credit Agreement, dated as of October 16, 1996, as heretofore amended
(the "Credit Agreement"), among GULFSTREAM DELAWARE CORPORATION, a Delaware
corporation (the "Company"), the several lenders from time to time parties
thereto (the "Lenders"), THE CHASE MANHATTAN BANK, a New York banking
corporation, as administrative agent for the Lenders (in such capacity, the
"Administrative Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company, the Lenders and the Administrative Agent
are parties to the Credit Agreement;
WHEREAS, the Company has requested that the Administrative Agent
and the Required Lenders amend certain provisions of the Credit Agreement;
and
WHEREAS, the Administrative Agent and the Required Lenders are
agreeable to the requested amendments, but only on the terms and subject to
the conditions set forth herein;
NOW THEREFORE, in consideration of the premises herein contained
and for other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, capitalized
terms used herein which are defined in the Credit Agreement are used herein
as therein defined.
2. Amendment to Subsection 1.1. (a) Subsection 1.1 of the Credit
Agreement is hereby amended by inserting at the end of the definition for
"Applicable Margin" in such subsection the following:
"Notwithstanding the foregoing, from the `Closing Date' of the
Term Loan Agreement and until the date which is six months
thereafter, the Applicable Margin for Eurodollar Loans will not
be less than 1.00%."
(b) Subsection 1.1 of the Credit Agreement is hereby further
amended by inserting after the words "is less than 1.50 to 1.00" where they
appear in the definition for "Leverage Ratio Level VI" in such subsection
the words "but greater than or equal to 0.75 to 1.00".
(c) Subsection 1.1 of the Credit Agreement is hereby further
amended by inserting after the words "other than the Loans and other
Obligations" where they appear in the definition for "Net Proceeds" in such
subsection the words "and obligations under the Term Loan Agreement".
(d) Subsection 1.1 of Credit Agreement is hereby further amended
by adding the following new definitions in the appropriate alphabetical
order:
"' Collateral Agent': Chase, in its capacity as collateral
agent under the Pledge Agreements and any security agreements
executed and delivered pursuant to subsection 7.8."
"' Leverage Ratio Level VII': shall exist on an Adjustment
Date if the Leverage Ratio for the period of four consecutive
fiscal quarters ending on the last day of the period covered by
the financial statements relating to such Adjustment Date is less
than 0.75 to 1.00."
"' Term Loan Agreement': the Term Loan Agreement, dated as
of April 15, 1999, as amended, supplemented or otherwise modified
from time to time, among the Company, the several lenders from
time to time parties thereto and the Administrative Agent."
3. Amendment to Subsection 7.8(a). Subsection 7.8(a) of the
Credit Agreement is hereby amended by deleting the phrase ", at any time
that the Leverage Ratio then in effect is not less than or equal to
1.5:1.0," where it appears in such subsection.
4. Amendments to Subsection 8.1. (a) Subsection 8.1(h) of the
Credit Agreement is hereby amended by deleting the word "and" where it
appears at the end of such subsection.
(b) Subsection 8.1(i) of the Credit Agreement is hereby amended
by deleting the period at the end of such subsection and substituting in
lieu thereof ";and".
(c) Subsection 8.1 of the Credit Agreement is hereby amended by
adding the following new paragraph (j) at the end of such subsection:
"(j) Indebtedness incurred under the Term Loan Agreement."
5. Amendments to Subsection 8.2. (a) Subsection 8.2(n) of the
Credit Agreement is hereby amended by deleting the word "and" where it
appears at the end of such subsection.
(b) Subsection 8.2(o) of the Credit Agreement is hereby amended
by deleting the period at the end of such subsection and substituting in
lieu thereof ";and".
(c) Subsection 8.2 of the Credit Agreement is hereby amended by
adding the following new paragraph (p) at the end of such subsection:
"(p) Liens securing Indebtedness incurred under the Term Loan
Agreement."
6. Amendment to Subsection 9(e). Subsection 9(e) of the Credit
Agreement is hereby amended by inserting after the words "would equal or
exceed $10,000,000; or" where they appear in such subsection the words "an
Event of Default shall occur and be continuing under the Term Loan
Agreement; or".
7. Amendment to Subsection 10.8. Subsection 10.8 of the Credit
Agreement is hereby amended by adding at the end of such subsection the
following sentence:
"Each Lender acknowledges that Chase is the administrative agent
and a lender under the Term Loan Agreement."
8. Amendment to Section 10. Section 10 of the Credit Agreement is
hereby amended by adding at the end of such Section the following new
subsection 10.10:
"10.10. Collateral Agent. Each Lender irrevocably designates
and appoints Chase as the Collateral Agent under the Pledge
Agreements and any security agreements executed and delivered
pursuant to subsection 7.8. Each Lender agrees that the
Collateral Agent shall be entitled to the same rights and
indemnities in its capacity as such as is the Administrative
Agent and the provisions of this Section 10 shall apply to the
Collateral Agent to the same extent they apply to the
Administrative Agent, mutatis mutandis."
9. Amendment to Subsection 11.1(a). Subsection 11.1(a) of the
Credit Agreement is hereby amended by deleting the phrase ", provided that
no vote or consent of the Administrative Agent or any Lender shall be
required to release automatically the Collateral under any Pledge Agreement
in accordance with the terms thereof at any time that the Leverage Ratio is
1.5:1.0 or less" where it appears in such subsection.
10. Amendment to Subsection 11.5. Subsection 11.5(a) of the
Credit Agreement is hereby amended by inserting immediately after the
phrase "to pay or reimburse the Administrative Agent" where it appears in
such subsection the parenthetical "(which term shall include the Collateral
Agent for purposes of this subsection 11.5)".
11. Amendment to Annex A. Annex A to the Credit Agreement is
hereby amended by deleting the Pricing Grid contained therein in its
entirety and substituting in lieu thereof the following:
Pricing Grid
------------
Eurodollar ABR Commitment
Leverage Ratio Level Applicable Margin Applicable Margin Fee Rate
-------------------- ----------------- ----------------- --------
I 2.25% 1.25% 0.500%
II 2.00% 1.00% 0.375%
III 1.75% 0.75% 0.375%
IV 1.50% 0.50% 0.300%
V 1.25% 0.25% 0.300%
VI 1.00% 0% 0.250%
VII 0.75% 0% 0.250%
12. Further Amendments. The Credit Agreement is hereby further
amended by deleting the term "Administrative Agent" where it appears in the
definitions of "Company Pledge Agreement", "Holdings Pledge Agreement" and
"Subsidiary Pledge Agreement" and in subsections 4.6(b)(ii), 6.1(b),
7.8(a), 7.8(c)(i), 7.8(d), 8.6(f) and 9(j)(i) and substituting in lieu
thereof in each case the term "Collateral Agent".
13. Pledge Agreements. (a) Each Pledge Agreement is hereby
amended by deleting subsection 7(c) of such Pledge Agreement in its
entirety.
(b) The Lenders hereby authorize the Administrative Agent and the
Collateral Agent to enter into such modifications to the forms of the
Pledge Agreements as they decide in their reasonable discretion will enable
the Obligations to be secured equally and ratably with the obligations of
Holdings, the Company and their Subsidiaries under the Term Loan Agreement.
14. Guarantees. The Lenders hereby authorize the Administrative
Agent and the Collateral Agent to enter into such modifications to the
forms of the Guarantees as they decide in their reasonable discretion will
enable the Obligations to be secured equally and ratably with the
obligations of Holdings, the Company and their Subsidiaries under the Term
Loan Agreement.
15. Effectiveness. This Amendment shall become effective as of
the date (the "Effective Date") the Administrative Agent shall have
received counterparts hereof duly executed by the Company, the
Administrative Agent and the Required Lenders.
16. Representations and Warranties. The Company hereby represents
and warrants that each of the representations and warranties in or pursuant
to Section 5 of the Credit Agreement or which are contained in any other
Credit Document or in any certificate, document or financial or other
statement furnished by or on behalf of Holdings, the Company or any
Subsidiary thereof shall be, after giving effect to this Amendment, true
and correct in all material respects as if made on and as of the date
hereof (unless such representations and warranties are stated to relate to
a specific earlier date, in which case such representations and warranties
shall be true and correct in all material respects as of such earlier
date).
17. Continuing Effect of Credit Agreement. This Amendment shall
not be construed as a waiver or consent to any further or future action on
the part of the Company that would require a waiver or consent of the
Administrative Agent and/or the Lenders. Except as amended hereby, the
provisions of the Credit Agreement are and shall remain in full force and
effect.
18. Counterparts. This Amendment may be executed in counterparts
and all of the said counterparts taken together shall be deemed to
constitute one and the same instrument.
19. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
20. Expenses. The Company agrees to pay or reimburse the
Administrative Agent for all of its out-of-pocket costs and expenses
incurred in connection with the preparation, negotiation and execution of
this Amendment, including, without limitation, the fees and disbursements
of counsel to the Administrative Agent.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their duly authorized officers as of the date
first written above.
GULFSTREAM DELAWARE CORPORATION
By:/s/ Robert L. Williams
---------------------------------
Title: Treasurer
THE CHASE MANHATTAN BANK,
as Administrative Agent and as
a Lender
By:/s/ William J. Caggiano
---------------------------------
Title: Managing Director
ARAB BANKING CORP.
By:/s/ Louise Bilbro
---------------------------------
Title: Vice President
BANK OF AMERICA, NT&SA
By:/s/ Michelle L. Hilse
---------------------------------
Title: Vice President
BANK OF NEW YORK
By:/s/ David C. Siegel
---------------------------------
Title: Vice President
BANK OF TOKYO-MITSUBISHI TRUST
By:
---------------------------------
Title:
CAPTIVA FINANCE LTD.
By:/s/ John H. Cullinane
---------------------------------
Title: Director
CERES FINANCE LTD.
By:/s/ John H. Cullinane
---------------------------------
Title: Director
MEDICAL LIABILITY MUTUAL INSURANCE
By: Chancellor LGT Senior Secured
Management, Inc., as Investment Manager
By:
---------------------------------
Title:
BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE, INC.
By:
---------------------------------
Title:
By:
---------------------------------
Title:
<PAGE>
CITIBANK, N.A.
By:/s/ Timothy L. Freeman
---------------------------------
Title: Director
CREDIT LYONNAIS
By:/s/ Philippe Soustra
---------------------------------
Title: Senior Vice President
SUN TRUST BANK, ATLANTA
By:/s/ R. Michael [ILLEGIBLE]
---------------------------------
Title: First Vice President
By:/s/ Susan K. Roache
---------------------------------
Title: Banking Officer
BANKBOSTON, N.A.
By:/s/ Cheryl J. Carangelo
---------------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By:/s/ Kristin H. Hertel
---------------------------------
Title: Vice President
INDUSTRIAL BANK OF JAPAN, LTD.
By:
---------------------------------
Title:
<PAGE>
KREDIETBANK
By:
---------------------------------
Title:
LTCB TRUST COMPANY
By:
---------------------------------
Title:
LEHMAN COMMERCIAL PAPER INC.
By:/s/ Michele Swanson
---------------------------------
Title: Authorized Signatory
HSBC BANK USA
[formerly Marine Midland Bank]
By:/s/ Christopher F. French
---------------------------------
Title: Authorized Signatory
MERRILL LYNCH PRIME RATE PORTFOLIO
By: Merrill Lynch Asset Management,
L.P., as Investment Advisor
By:
---------------------------------
Title:
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.
By:
---------------------------------
Title:
MITSUBISHI TRUST & BANKING
CORPORATION
By:
---------------------------------
Title:
NATIONSBANK, N.A.
By:/s/ Michelle L. Hilse
---------------------------------
Title: Vice President
PNC BANK, N.A.
By:
---------------------------------
Title:
SOCIETE GENERALE
By:/s/ [ILLEGIBLE]
---------------------------------
Title: Vice President
U.S. BANK NATIONAL ASSOCIATION
By:/s/ [ILLEGIBLE]
---------------------------------
Title: Senior Vice President
VAN KAMPEN PRIME RATE INCOME TRUST
By:/s/ Jeffrey W. Mallet
---------------------------------
Title: Senior Vice President
and Director
KZH III LLC
By:/s/ Virginia Conway
---------------------------------
Title: Authorized Agent
The undersigned guarantors hereby
consent to the foregoing Amendment:
GULFSTREAM AEROSPACE CORPORATION,
a Delaware Corporation
By:
---------------------------------
Title:
GULFSTREAM AEROSPACE CORPORATION,
a Georgia Corporation
GULFSTREAM AEROSPACE CORPORATION,
D/B/A GULFSTREAM AEROSPACE
TECHNOLOGIES, an Oklahoma
Corporation
GULFSTREAM AEROSPACE CORPORATION,
a California Corporation
By:
---------------------------------
Title:
EXHIBIT 99.2
Gulfstream News Release, May 17, 1999
[GULFSTREAM LOGO]
For Immediate Release:
Monday, May 17, 1999
GENERAL DYNAMICS TO ACQUIRE GULFSTREAM IN $5.3 BILLION STOCK DEAL
TRANSACTION WILL BE ACCRETIVE TO EARNINGS AND CASH FLOW
FALLS CHURCH, VA. and SAVANNAH, GA. - General Dynamics (NYSE: GD) and
Gulfstream Aerospace Corporation (NYSE: GAC) announced today that they have
entered into a definitive agreement for General Dynamics to acquire
Gulfstream Aerospace Corporation in a one-for-one stock swap, valued at
$71.44 per Gulfstream share, or approximately $5.3 billion, based on
General Dynamics' closing price on May 14, 1999. The transaction, which
will be accounted for as a pooling of interests, is expected to be taxfree
to Gulfstream shareholders.
The proposed acquisition, unanimously approved by the boards of directors
of both companies, is subject to shareholder and regulatory approval and
customary closing conditions. It is expected to be completed in the third
quarter of 1999.
Gulfstream had 1998 revenues of $2.4 billion and earnings of $225.3
million. At the end of the first quarter of 1999, Gulfstream reported fully
diluted shares of approximately 74 million. On the same basis, General
Dynamics reported approximately 128 million shares. General Dynamics is
expected to have approximately 202 million shares outstanding after the
acquisition is completed.
"This transaction will be immediately - and handsomely -- accretive to
earnings and cash flow, and a fine addition to General Dynamics," said
Nicholas D. Chabraja, General Dynamics chairman and chief executive
officer. "Gulfstream, our first major commercial acquisition, is squarely
within the criteria we established five years ago in our strategy for
building shareholder value. Beyond our defense core, that strategy calls
for opportunistically pursuing businesses where we can apply our core
competencies in development, design and production - and Gulfstream is a
perfect fit. As Gulfstream moves further into computer-aided design and
manufacturing, our broad expertise in establishing efficient manufacturing
environments - plus our heritage in aircraft development and production --
will add significant value.
"Gulfstream is a superbly run company and it produces the best business
jets in the world," Chabraja added. "It has an innovative and effective
marketing organization and a team of talented, hardworking employees. Its
lean management structure and focus on operating excellence and customer
satisfaction make it a strong cultural fit with General Dynamics," Chabraja
said. "This transaction will create value for the shareholders of both
companies, and creates additional opportunities for Gulfstream employees."
Theodore J. Forstmann, chairman and chief executive officer of Gulfstream,
said, "Running Gulfstream for the past six years has been easily the most
rewarding experience of my business career. During this period, my partner
Sandra Horbach and I, together with the senior management and employees of
Gulfstream, have built a company with a solid financial structure, a large
backlog, a totally dominant brand in the global marketplace and very
significant prospects for further growth. Gulfstream should now be part of
a larger enterprise. We have been offered a fair price, and, in General
Dynamics, have found a good home for this great American company and its
superb employees.
"Gulfstream Aerospace would become a wholly-owned subsidiary of General
Dynamics," said Chabraja, "with no change to its existing management,
operations, facilities, or work force. I have asked Ted Forstmann to stay
on as chairman of Gulfstream, and I am delighted that he has accepted."
W.W. Boisture, Jr., will continue as president and chief operating officer,
and Chris A. Davis will continue as executive vice president and chief
financial and administrative officer. Forstmann Little & Co., which owns
approximately 16.5 million Gulfstream shares, or approximately 23 percent
of Gulfstream's outstanding shares, has agreed to vote its shares in favor
of the transaction. Theodore Forstmann is a senior partner of that company.
Gulfstream Aerospace is the leading designer, developer, manufacturer and
marketer of the world's most technologically advanced business jet
aircraft. It has produced more than 1,000 aircraft for customers around the
world since 1958. Gulfstream offers a broad range of aircraft products and
services to meet the aviation needs of its customers, including the
Gulfstream IV-SP, the ultra-long range Gulfstream V, Gulfstream Shares,
Gulfstream Financial Services, Gulfstream Lease, Gulfstream Pre-Owned
Aircraft Sales, Gulfstream Charter Services, Gulfstream Management Services
and Gulfstream ServiceCare.
Gulfstream ended the first quarter of 1999 with a $4.1 billion backlog of
129 aircraft. The company has 7,800 employees, with operations in six
states. General Dynamics, headquartered in Falls Church, Virginia, provides
sophisticated defense systems to the United States and its allies. Its
products include nuclear submarines, surface combatants, auxiliary ships,
armored vehicles and other combat systems, and information systems. The
company has 29,000 employees and had 1998 sales of $5 billion.
Bear, Stearns & Co. Inc. is financial advisor to General Dynamics. Merrill
Lynch and Goldman, Sachs & Co. are financial advisors to Gulfstream.
CONTACTS:
General Dynamics: Norine Lyons /703-876-3190
Gulfstream Aerospace: Tricia Bergeron/ 912-965-3700
Forstmann Little: George Sard/Anna Cordasco@Sard Verbinnen
& Co./ 212-687-8080
General Dynamics Analyst/Press Meeting & Conference Call
9:30 A.M. MONDAY, MAY 17, 1999
THE EQUITABLE BUILDING
787 Seventh Avenue (51st Street) in the Alexander Room, 49th Floor
DIAL IN NUMBER: (U.S. and Canada) 1-800-852-5279
International callers: 303-267-1006
A replay of the conference call will be available from 11:00 a.m.
on May 17 until 5:00 p.m. on May 24
U.S. and Canada: 1-800-625-5288
International callers: 303-804-1855
Ask for reservation number 547462
