<PAGE>
Form 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from............to.................
Commission file number 1-4482
ARROW ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)
New York 11-1806155
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
25 Hub Drive
Melville, New York 11747
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 391-1300
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
------------------- ----------------
Common Stock, $1 par value New York Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ X ]
The aggregate market value of voting stock held by nonaffiliates of the
registrant as of March 8, 1996 was $2,239,157,700.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Common Stock, $1 par value: 50,772,870 shares outstanding at March 8, 1996.
The following documents are incorporated herein by reference:
1. Proxy Statement filed in connection with Annual Meeting of Shareholders to
be held May 14, 1996 (incorporated in Part III).
<PAGE>
PART I
Item 1. Business.
--------
Arrow Electronics, Inc. (the "company") is the world's largest distributor of
electronic components and computer products to industrial and commercial
customers. As the global electronics distribution industry's leader in state-
of-the-art operating systems, employee productivity, value-added programs, and
total quality assurance, the company is the distributor of choice for over 500
suppliers.
The company's global distribution network spans the world's three dominant
electronics markets - North America, Europe, and the Asia/Pacific region. The
company is the largest electronics distributor in each of these vital
industrialized regions, serving a diversified base of original equipment
manufacturers (OEMs) and commercial customers worldwide. OEMs include
manufacturers of computer and office products, industrial equipment (including
machine tools, factory automation, and robotic equipment), telecommunications
products, aircraft and aerospace equipment, and scientific and medical devices.
Commercial customers are mainly value-added resellers (VARs) of computer
systems. The company maintains 162 sales facilities and 17 distribution centers
in 31 countries.
In January 1995, the company formed a joint venture with the Lite-On Group, one
of Taiwan's largest semiconductor distributors, in which Arrow holds a 45%
interest. During 1995, Spoerle Electronic Handelsgesellschaft mbH ("Spoerle"),
the company's majority-owned German affiliate, acquired HED Heinrich Electronic
Distribution GmbH. In addition, the company acquired Ally, Inc. in Taiwan and
Arrow Components (NZ) Limited in New Zealand. The company also increased its
interests in Silverstar Ltd., S.p.A. ("Silverstar"), the company's Italian
subsidiary, to 86%; Amitron S.A. and ATD Electronica S.A., the company's
subsidiaries serving Spain and Portugal, to 75% and 87%, respectively; and The
Megachip Group, one of the company's French subsidiaries, to 100%.
During 1994, the company acquired Gates/FA Distributing, Inc. ("Gates") and
Anthem Electronics, Inc. ("Anthem") in transactions accounted for as poolings
of interests. Accordingly, the company's consolidated financial statements for
1993 have been restated to include the operations of Gates and Anthem. In
January 1994, the company increased its holdings in Spoerle to 70% and
Silverstar to 61%. During 1994, the company also acquired Field Oy in Finland;
TH:s Elektronik AB in Sweden; Exatec A/S in Denmark; Texny Glorytact (HK) in
Hong Kong; The Megachip Group in France; and, Veltek Australia Pty Ltd. and
Zatek Australia Pty Ltd.
In North America, the company is organized into five product-specific sales and
marketing groups: The Arrow/Schweber Electronics Group is the largest
dedicated semiconductor distributor in the world. Anthem Electronics, Inc. is
a leading distributor of semiconductors and computer products. Zeus
Electronics is the only specialist distributor serving the military and high-
reliability markets. Capstone Electronics focuses exclusively on the
distribution of passive, electromechanical, and interconnect products. And
Gates/Arrow Distributing, Inc. distributes commercial computer products and
systems.
Through its wholly-owned subsidiary, Arrow Electronics Distribution Group-
Europe B.V., Arrow is the largest pan-European electronics distributor. The
company's European strategy stresses two key elements: strong, locally-managed
distributors to satisfy widely varying customer preferences and business
practices; and an electronic backbone uniting Arrow's European partners with
one another and with Arrow worldwide to leverage inventory investment and
better meet the needs of customers in all of Europe's leading industrial
electronics markets. In most of these markets, Arrow companies hold the number
one position: Arrow Electronics (UK) Ltd. in Britain; Spoerle Electronic in
Central Europe; Silverstar in Italy; and Amitron and ATD Electronica S.A. in
Spain and Portugal. Arrow Electronique and The Megachip Group form the largest
electronics distribution group in France, and Arrow's Nordic companies, Field
Oy, TH:s Elektronik AB, and Exatec A/S, are among the largest distributors in
the markets of Finland, Norway, Sweden, and Denmark.
Arrow is the largest American electronics distributor in the Asia/Pacific
region. Arrow's Components Agent Limited (C.A.L.), the Lite-On Group, and the
Melbourne-based Veltek and Zatek companies in Australia are the region's
leading multi-national distributors. C.A.L., headquartered in Hong Kong,
maintains additional facilities in key cities in Singapore, Malaysia, the
People's Republic of China, and South Korea. Lite-On, headquartered in Taipei,
serves customers in Taiwan, South Korea, Singapore, and Malaysia. Ally serves
customers in Taipei. Arrow Components (NZ) services customers in New Zealand.
Within these dynamic markets, Arrow is benefiting from two important growth
factors: the decision by many of Arrow's traditional North American customers
to locate production facilities in the region; and the surging demand for
electronic products resulting from rising living standards and massive
investments in infrastructure.
The company distributes a broad range of electronic components, computer
products, and related equipment manufactured by others. About 66% of the
company's consolidated sales are comprised of semiconductor products;
industrial and commercial computer products, including microcomputer boards and
systems, design systems, desktop computer systems, terminals, printers, disc
drives, controllers, and communication control equipment account for about 25%;
and the remaining sales are of passive, electromechanical, and interconnect
products, principally capacitors, resistors, potentiometers, power supplies,
relays, switches, and connectors.
Most manufacturers of electronic components and computer products rely on
independent authorized distributors, such as the company, to augment their
product marketing operations. As a stocking, marketing, and financial
intermediary, the distributor relieves its manufacturers of a portion of the
costs and personnel associated with stocking and selling their products
(including otherwise sizable investments in finished goods inventories and
accounts receivable), while providing geographically dispersed selling, order
processing, and delivery capabilities. At the same time, the distributor
offers a broad range of customers the convenience of diverse inventories and
rapid or scheduled deliveries. The growth of the electronics distribution
industry has been fostered by the many manufacturers who recognize their
authorized distributors as essential extensions of their marketing
organizations.
The company and its affiliates serve approximately 150,000 industrial and
commercial customers. Industrial customers range from major original equipment
manufacturers to small engineering firms, while commercial customers include
value-added resellers, small systems integrators, and large end-users.
Most of the company's customers require delivery of the products they have
ordered on schedules that are generally not available on direct purchases from
manufacturers, and frequently their orders are of insufficient size to be
placed directly with manufacturers. No single customer accounted for more than
1% of the company's 1995 or 1994 sales.
The electronic components and other products offered by the company are sold by
field sales representatives, who regularly call on customers in assigned market
areas, and by telephone from the company's selling locations, from which inside
sales personnel with access to pricing and stocking data provided by computer
display terminals accept and process orders. Each of the company's North
American selling locations, warehouses, and primary distribution centers is
electronically linked to the business' central computer, which provides fully
integrated, on-line, real-time data with respect to nationwide inventory levels
and facilitates control of purchasing, shipping, and billing. The company's
foreign operations utilize Arrow's Worldwide Stock Check System, which affords
access to the company's on-line, real-time inventory system.
There are approximately 500 manufacturers whose products are sold by the
company. Intel Corporation accounted for approximately 14% of the business'
purchases because of the market demand for microprocessors, while Texas
Instruments accounted for approximately 10% of the business' purchases. No
other supplier accounted for more than 8% of 1995 purchases. The company does
not regard any one supplier of products to be essential to its operations and
believes that many of the products presently sold by the company are available
from other sources at competitive prices. Most of the company's purchases are
pursuant to authorized distributor agreements which are typically cancellable
by either party at any time or on short notice.
Approximately 65% of the company's inventory consists of semiconductors. It is
the policy of most manufacturers to protect authorized distributors, such as
the company, against the potential write-down of such inventories due to
technological change or manufacturers' price reductions. Under the terms of
the related distributor agreements, and assuming the distributor complies with
certain conditions, such suppliers are required to credit the distributor for
inventory losses incurred through reductions in manufacturers' list prices of
the items. In addition, under the terms of many such agreements, the
distributor has the right to return to the manufacturer for credit a defined
portion of those inventory items purchased within a designated period of time.
A manufacturer who elects to terminate a distributor agreement is generally
required to purchase from the distributor the total amount of its products
carried in inventory. While these industry practices do not wholly protect the
company from inventory losses, management believes that they currently provide
substantial protection from such losses.
The company's business is extremely competitive, particularly with respect to
prices, franchises, and, in certain instances, product availability. The
company competes with several other large multi-national, national, and
numerous regional and local distributors. As the world's largest electronics
distributor, the company is greater in terms of financial resources and sales
than most of its competitors.
The company and its affiliates employ approximately 7,200 people worldwide.
<PAGE>
Executive Officers
The following table sets forth the names and ages of, and the positions and
offices with the company held by, each of the executive officers of the
company.
Name Age Position or Office Held
---- --- -----------------------
Stephen P. Kaufman 54 Chairman and Chief Executive Officer
Robert E. Klatell 50 Executive Vice President, Chief
Financial Officer, General Counsel,
Secretary, and Treasurer
Carlo Giersch 58 Chief Executive Officer of Spoerle Electronic
Steven W. Menefee 51 Senior Vice President
Michael J. Long 37 Vice President; President, Gates/Arrow
Distributing
John J. Powers, III 41 Vice President; President, Anthem Electronics
Wesley S. Sagawa 48 Vice President; President, Capstone
Electronics
Jan S. Salsgiver 39 Vice President; President,
Arrow/Schweber Electronics Group
Robert S. Throop 58 Vice President; Chairman, Anthem Electronics
Set forth below is a brief account of the business experience during the past
five years of each executive officer of the company.
Stephen P. Kaufman has been Chairman since May 1994 and President and Chief
Executive Officer of the company for more than five years prior thereto.
Robert E. Klatell has been Executive Vice President since July 1995 and has
served as Senior Vice President, General Counsel, Secretary, and Treasurer of
the company for more than five years. He has been Chief Financial Officer
since January 1992.
Carlo Giersch has been Chief Executive Officer of Spoerle Electronic for more
than five years.
Steven W. Menefee has been a Senior Vice President of the company since July
1995 and Senior Vice President of Corporate Marketing since November 1995.
Prior thereto he was a Vice President of the company, and President of the
company's Arrow/Schweber Electronics Group since November 1990.
Michael J. Long became a Vice President of the company and President of
Gates/Arrow Distributing, Inc. in November 1995. Prior thereto he held a
variety of positions at Capstone Electronics since 1991, the most recent of
which was acting President since March 1994.
John J. Powers, III became a Vice President of the company in November 1994,
following the acquisition of Anthem Electronics, Inc. He has been President of
Anthem Electronics, Inc. since June 1992; prior thereto he was Senior Vice
President.
Wesley S. Sagawa has been a Vice President of the company and President of
Capstone Electronics for more than five years. During 1994, he was managing
director of Arrow U.K.
Jan S. Salsgiver has been a Vice President of the company since September 1993
and President of the Arrow/Schweber Electronics Group since November 1995.
Prior thereto she had been President of Zeus Electronics. Prior to July 1993,
she held a variety of senior marketing positions in the company, the most
recent of which was Vice President of Semiconductor Marketing of the
Arrow/Schweber Electronics Group.
Robert S. Throop has been Chairman and Chief Executive Officer of Anthem
Electronics, Inc. for more than five years. He became a Vice President of the
company in March 1995.
Item 2. Properties.
----------
The company's executive office, located in Melville, New York, is owned by the
company. The company occupies additional locations under leases due to expire
on various dates to 2016. Six additional facilities are owned by the company,
and another facility has been sold and leased back in connection with the
financing thereof.
Item 3. Legal Proceedings.
-----------------
Through a wholly-owned subsidiary, Schuylkill Metals Corporation, the company
was previously engaged in the refining and selling of lead. In September 1988,
the company sold its refining business.
In mid-1986 the refining business ceased operations at its battery breaking
facility in Plant City, Florida, which facility had been placed on the list of
hazardous waste sites targeted for cleanup under the federal Super Fund
program. The Plant City site was not sold to the purchaser of the refining
business, and the company remains subject to various environmental cleanup
obligations at the site under federal and state law. The company and the EPA
became parties to a consent decree which was entered by a federal court in
Florida and became effective on April 22, 1992. The consent decree requires
the company to fund, design, and implement remediation addressing environmental
impacts to site soils and sediment, underlying ground water, and wetland areas.
Substantial progress has been made in each of these areas. Remediation of the
wetlands areas on the site, including the creation of certain new wetlands
areas under agreement with the EPA and the Florida Department of Environmental
Conservation, was substantially completed in 1994. A waste water treatment
plant has been built on site by the company's contractors, and processing of
ground and pond water for discharge to the Plant City Treatment Works commenced
in July 1994. Soil stabilization facilities have been erected and soil
processing began in November 1994. The company believes it reasonably likely
that soil stabilization will be completed before the end of 1996 and that water
treatment will continue, at least through 1996. The extent of such remediation
activities (including the estimated cost thereof and the time necessary to
complete them), however, is subject to change based upon conditions actually
encountered during remediation. Moreover, the EPA reserves the right to seek
additional action if it subsequently finds further contamination or other
conditions rendering the work insufficiently protective of human health or the
environment. The company believes that the amount expected to be expended in
any year to fund such activities will not have a material adverse impact on the
company's liquidity, capital resources or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
None.
PART II
Item 5. Market for the Registrant's Common Equity and
---------------------------------------------
Related Stockholder Matters.
---------------------------
Market Information
The company's common stock is listed on the New York Stock Exchange (trading
symbol: "ARW"). The high and low sales prices during each quarter of 1995 and
1994 were as follows:
Year High Low
- ---- ---- ---
1995:
Fourth Quarter $55-1/4 $39-1/4
Third Quarter 59-3/4 48-1/2
Second Quarter 50-7/8 40
First Quarter 44-5/8 35-1/8
1994:
Fourth Quarter $38-5/8 $33-3/4
Third Quarter 40-1/8 35-1/8
Second Quarter 41-1/8 33-5/8
First Quarter 45-1/8 36-1/8
Holders
On March 1, 1996, there were approximately 4,500 shareholders of record of the
company's common stock.
Dividend History and Restrictions
The company has not paid cash dividends on its common stock during the past
five years. While the board of directors considers the payment of dividends
on the common stock from time to time, the declaration of future dividends
will be dependent upon the company's earnings, financial condition, and other
relevant factors.
The terms of the company's global multi-currency credit facility and its 8.29%
senior notes (see Note 4 of the Notes to Consolidated Financial Statements)
limit, among other things, the payment of cash dividends and the incurrence of
additional borrowings and require that working capital, net worth, and certain
other financial ratios be maintained at designated levels.
<PAGE>
Item 6. Selected Financial Data
The following table sets forth certain selected consolidated financial data and
should be read in conjunction with the company's consolidated financial state-
ments and related notes appearing elsewhere in this Annual Report.
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA (a)
(In thousands except per share data)
For the year: 1995 1994(b) 1993(c)(d) 1992 1991(e)
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Sales $5,919,420 $4,649,234 $3,560,856 $2,423,033 $1,658,177
- -----------------------------------------------------------------------------------------
Operating income 423,209 255,974 226,089 163,699 79,201
Equity in earnings of
affiliated companies 2,493 - 1,673 6,550 5,657
Interest expense 46,361 36,168 26,573 31,607 31,247
Earnings before
extraordinary charges 202,544 111,889 106,559 84,885 33,889
Extraordinary charges,
net of income taxes - - - 5,424 -
- -----------------------------------------------------------------------------------------
Net income $ 202,544 $ 111,889 $ 106,559 $ 79,461 $ 33,889
- -----------------------------------------------------------------------------------------
Per common share
(fully diluted)
Earnings before extra-
ordinary charges (f) $ 4.03 $ 2.31 $ 2.22 $ 1.96 $ 1.05
Extraordinary charges - - - (.12) -
- -----------------------------------------------------------------------------------------
Net income (f) $ 4.03 $ 2.31 $ 2.22 $ 1.84 $ 1.05
- -----------------------------------------------------------------------------------------
At year-end:
- -----------------------------------------------------------------------------------------
Accounts receivable and
inventories $1,979,160 $1,422,457 $1,094,175 $ 781,267 $ 696,440
Total assets 2,701,016 2,038,774 1,569,152 1,080,163 995,064
Long-term debt and
subordinated debentures 451,706 349,398 314,859 241,804 329,343
Shareholders' equity 1,195,881 837,885 701,799 566,100 392,293
- -----------------------------------------------------------------------------------------
Return on average common
shareholders' equity (g) 20.6% 18.2% 17.5% 17.1% 13.4%
Book value per common share $ 23.61 $ 18.15 $ 15.34 $ 12.64 $ 10.06
- -----------------------------------------------------------------------------------------
<FN>
(a) In 1994, Arrow acquired Gates and Anthem in transactions accounted for
as poolings of interests. Accordingly, all financial information for years
prior thereto have been restated to include the operations of Gates and Anthem.
Also, 1994 includes special charges of $45.3 million associated with the
acquisition and integration of Gates and Anthem. Excluding these charges,
operating income, net income, and net income per share were $301.3 million,
$140.7 million, and $2.88, respectively.
(b) Includes results of Silverstar, which were accounted for under the
equity method prior to January 1994 when Arrow increased its holdings to a
majority interest.
(c) Includes results of Spoerle Electronic, which were accounted for under
the equity method prior to January 1993 when Arrow increased its holdings to a
majority interest.
(d) Net income is after a restructuring charge of $7.8 million reflecting
the disposition of a business unit by Anthem. Excluding this charge, operating
income, net income, and net income per share were $233.9 million, $111.1
million, and $2.31, respectively.
(e) Includes a special charge of $9.8 million reflecting expenses associated
with the integration of the North American electronics distribution businesses
of Lex Service PLC acquired in September 1991. Excluding this charge, operating
income, net income, and net income per share were $89 million, $40.4 million,
and $1.29, respectively.
(f) After preferred stock dividends of $.9 million in 1993, $3.9 million in
1992, and $4.6 million in 1991.
(g) The return on average common shareholders' equity excludes special and
extraordinary charges.
</TABLE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations.
-----------------------------------
For an understanding of the significant factors that influenced the
company's performance during the past three years, the following discussion
should be read in conjunction with the consolidated financial statements
and other information appearing elsewhere in this report.
During 1994, the company acquired Gates/FA Distributing, Inc. ("Gates") and
Anthem Electronics, Inc. ("Anthem") in transactions accounted for as
poolings of interests. Accordingly, the company's consolidated financial
statements for 1993 have been restated to include the operations of Gates
and Anthem. The 1994 and 1993 consolidated financial statements do not
reflect the cost savings and synergies achieved during 1995 or the sales
attrition which may have resulted from the merger of Gates and Anthem with
the company. Beginning in 1994, the consolidated financial statements
include the results of Silverstar Ltd., S.p.A. ("Silverstar"), which had
been accounted for under the equity method prior to January 1994 when the
company increased its holdings to 61%. See Note 2 of the Notes to
Consolidated Financial Statements for information with respect to the
acquisitions.
Sales
In 1995, consolidated sales increased to a record $5.9 billion, a 27%
increase over 1994 sales of $4.6 billion. This sales growth reflects
strong activity levels in each of the company's core businesses as well as
the impact of key strategic alliances and acquisitions forged around the
world during 1994.
Consolidated sales of $4.6 billion in 1994 were 31% higher than 1993 sales
of $3.6 billion. This increase principally reflected increased activity
levels in each of the company's distribution groups throughout the world,
the consolidation of Silverstar and, to a lesser extent, acquisitions in
Europe and the Asia/Pacific region.
In 1993, consolidated sales of $3.6 billion were 47% ahead of 1992 sales of
$2.4 billion. Excluding Spoerle Electronic ("Spoerle"), which had been
accounted for under the equity method prior to January 1993, sales were
$3.2 billion, an advance of 32% over the year-earlier period. This sales
growth was principally due to increased activity levels in each of the
company's distribution groups and, to a lesser extent, acquisitions in
North America, Europe, and the Asia/Pacific region, offset in part by
weaker currencies in Europe.
Operating Income
In 1995, the company's consolidated operating income increased to $423.2
million, compared with operating income of $256 million in 1994. Included
in the 1994 results are special charges of $45.3 million associated with
the acquisition and integration of Gates and Anthem into Arrow. The
improvement in operating income outpaced the growth in sales as the company
benefited from cost savings following the integration of Gates and Anthem.
These cost savings principally reflect reductions in personnel performing
duplicative functions and the elimination of duplicative administrative
facilities, computer and telecommunications equipment, and selling and
stocking locations. Operating expenses as a percentage of sales declined
to 10.3% in 1995, the lowest in the company's history.
The company's consolidated operating income increased to $256 million in
1994, compared with operating income of $226.1 million in 1993. Excluding
the special charges relating to Gates and Anthem, operating income was
$301.3 million. The improvement in operating income, excluding the special
charges, reflected the impact of increased sales, continued economies of
scale and expense containment efforts reducing operating expenses as a
percentage of sales, and the consolidation of Silverstar, offset in part by
lower gross profit margins. Gross profit margins decreased from 1993 as a
result of proportionately higher sales of low-margin microprocessors and
commercial computer products, coupled with competitive pricing pressures.
Operating expenses as a percentage of sales, excluding the special charges,
were 11.1%.
In 1993, the company's consolidated operating income increased to $226.1
million, compared with 1992 operating income of $163.7 million. The
significant improvement in operating income reflected the impact of
increased sales and the consolidation of Spoerle, offset in part by lower
gross profit margins primarily reflecting proportionately higher sales of
low-margin microprocessors and commercial computer products. Operating
income in 1993 included a restructuring charge of $7.8 million associated
with the sale by Anthem of its Eagle Technology Business Unit. Excluding
this restructuring charge, operating income was $233.9 million.
Interest
In 1995, interest expense increased to $46.4 million from $36.2 million in
1994, reflecting increases in working capital required to support higher
sales, interest related to borrowings associated with acquisitions, and
capital expenditures.
Interest expense of $36.2 million in 1994 increased by $9.6 million from
the 1993 level. The increase principally reflected the consolidation of
Silverstar and, to a lesser extent, interest related to borrowings
associated with acquisitions.
In 1993, interest expense decreased to $26.6 million from $31.6 million in
1992. The decrease principally reflected the full-year effect of the
retirement during 1992 of $46 million of the company's 13-3/4% subordinated
debentures and the refinancing of the company's remaining high-yield debt
with securities bearing lower interest rates offset in part by the
consolidation of Spoerle and borrowings associated with acquisitions.
Income Taxes
In 1995, the company recorded a provision for taxes at an effective tax
rate of 40.4% compared with 40.6%, excluding the special charges associated
with the Gates and Anthem acquisitions, in 1994.
The company recorded a provision for taxes at an effective tax rate of
40.6% in 1994, compared with 41% in 1993. The lower effective tax rate was
the result of increased earnings in foreign countries with lower tax rates.
In 1993, the company's effective tax rate was 41%, compared with 38.8% in
1992. The higher effective tax rate reflected increased U.S. taxes
resulting from higher statutory rates and the consolidation of Spoerle.
Net Income
In 1995, the company's net income advanced to $202.5 million from $140.7
million in 1994, before the special charges of $45.3 million ($28.8 million
after taxes) associated with Gates and Anthem. The significant improvement
in net income was principally the result of the increase in operating
income offset in part by higher interest expense.
Net income in 1994 was $111.9 million, an advance from $106.6 million in
1993. Excluding the special charges associated with Gates & Anthem, net
income in 1994 was $140.7 million. Excluding the restructuring charge
associated with the sale by Anthem of its Eagle Technology Business Unit,
net income was $111.1 million in 1993. The increase in net income was due
principally to increased operating income offset in part by higher interest
expense.
Net income in 1993 was $106.6 million, an advance from $79.5 million in
1992, which included extraordinary charges of $5.4 million reflecting the
net unamortized discount and issuance expenses associated with the
redemption of high-coupon subordinated debentures and other debt in 1992.
The increase in net income was due principally to the increase in operating
income and lower interest expense offset in part by higher taxes.
Liquidity and Capital Resources
The company maintains a high level of current assets, primarily accounts
receivable and inventories. Consolidated current assets as a percentage of
total assets were approximately 78% in 1995 and 76% in 1994.
Working capital increased by $349 million, or 40%, compared with 1994,
primarily as a result of increased sales and, to a lesser extent,
acquisitions in Europe and the Asia/Pacific region.
The net amount of cash used for the company's operating activities in 1995
was $114.1 million, as the growth in accounts receivable and inventories
outpaced the increase in net income. The net amount of cash used for
investing activities was $132.7 million, including $90.7 million for
various investments and acquisitions. The net amount of cash provided by
financing activities was $228.1 million, principally reflecting the
company's borrowings to finance investments and acquisitions, distributions
to partners, and the repayment of certain debt.
In October 1995, the company called for the redemption of its 5-3/4%
convertible subordinated debentures due 2002, which resulted in the
issuance of 3,772,254 shares of common stock and eliminated approximately
$125 million in long-term debt and $7.2 million of annual interest charges.
In 1994, working capital increased by $103.6 million, or 14%, compared with
1993, as a result of increased sales, the consolidation of Silverstar, and
acquisitions.
The net amount of cash provided by operations in 1994 was $125.2 million,
the principal element of which was the cash flow resulting from higher net
earnings offset in part by increased working capital needs to support sales
growth. The net amount of cash used by the company for investing purposes
was $122.9 million, including $108.5 million for various acquisitions.
Cash flows from financing activities were $13.4 million, principally from
increased borrowings in part to finance acquisitions in Europe and the
Asia/Pacific region.
Working capital increased in 1993 by $204.7 million, or 37%, compared with
1992, as a result of increased sales, the consolidation of Spoerle, and
acquisitions.
The net amount of cash provided by operations in 1993 was $35.7 million,
the principal element of which was the cash flow resulting from higher net
earnings offset by increased working capital needs to support sales growth.
The net amount of cash used by the company for investing activities
amounted to $114.8 million, including $87.9 million for various
acquisitions. Cash flows from financing activities were $122.2 million,
principally resulting from increased borrowings to finance the 1993
acquisitions in the U.S., Europe, and the Asia/Pacific region.
In September 1993, the company completed the conversion of all of its
outstanding series B $19.375 convertible exchangeable preferred stock into
1,009,086 shares of its common stock. This conversion eliminated the
company's obligation to pay $1.3 million of annual dividends.
Accounting Matters
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for
Stock-Based Compensation," which establishes a fair value based method of
accounting for stock-based compensation plans. SFAS 123 encourages, but
does not require, adoption of a fair value based method. The company has
not yet determined if it will adopt the fair value based method or continue
to report under Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees".
<PAGE>
Item 8. Financial Statements.
--------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Arrow Electronics, Inc.
We have audited the accompanying consolidated balance sheet of Arrow
Electronics, Inc. as of December 31, 1995 and 1994, and the related
consolidated statements of income, cash flows, and shareholders' equity for
each of the three years in the period ended December 31, 1995. Our audits also
included the financial statement schedule listed in the Index at Item 14(a).
These financial statements and the schedule are the responsibility of the
company's management. Our responsibility is to express an opinion on these
financial statements and the schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Arrow Electronics, Inc. at December 31, 1995 and 1994, and the consolidated
results of its operations and its cash flows for each of the three years in
the period ended December 31, 1995, in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken
as a whole, presents fairly in all material respects the information set forth
therein.
ERNST & YOUNG LLP
New York, New York
February 22, 1996
<PAGE>
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
The consolidated financial statements of Arrow Electronics, Inc. have been
prepared by management, which is responsible for their integrity and
objectivity. These statements, prepared in accordance with generally accepted
accounting principles, reflect our best use of judgment and estimates where
appropriate. Management also prepared the other information in the annual
report and is responsible for its accuracy and consistency with the
consolidated financial statements.
The company's system of internal controls is designed to provide reasonable
assurance that company assets are safeguarded from loss or unauthorized use or
disposition, and that transactions are executed in accordance with
management's authorization and are properly recorded. In establishing the
basis for reasonable assurance, management balances the costs of the internal
controls with the benefits they provide. The system contains self-monitoring
mechanisms, and compliance is tested through an extensive program of site
visits and audits by the company's operating controls staff.
The Audit Committee of the Board of Directors, consisting entirely of outside
directors, meets regularly with management, operating controls staff, and
independent auditors, and reviews audit plans and results as well as
management's actions taken in discharging its responsibilities for accounting,
financial reporting, and internal controls. Management, operating controls
staff, and independent auditors have direct and confidential access to the
Audit Committee at all times.
The company's independent auditors, Ernst & Young LLP, were engaged to audit
the consolidated financial statements in accordance with generally accepted
auditing standards. These standards include a study and evaluation of
internal controls for the purpose of establishing a basis for reliance thereon
relative to the scope of their audit of the consolidated financial statements.
Stephen P. Kaufman
Chairman and Chief Executive Officer
Robert E. Klatell
Executive Vice President and
Chief Financial Officer
<PAGE>
ARROW ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31,
------------------------
1995 1994
---- ----
ASSETS
<S> <C> <C>
Current assets:
Cash and short-term investments $ 93,947 $ 105,606
Accounts receivable, less allowance for doubtful
accounts ($38,670 in 1995 and $31,132 in 1994) 940,049 697,021
Inventories 1,039,111 725,436
Prepaid expenses and other assets 31,610 30,180
---------- ----------
Total current assets 2,104,717 1,558,243
---------- ----------
Property, plant and equipment at cost
Land 14,527 11,970
Buildings and improvements 63,857 53,962
Machinery and equipment 112,883 84,740
---------- ----------
191,267 150,672
Less accumulated depreciation and amortization 73,932 60,857
---------- ----------
117,335 89,815
---------- ----------
Investment in affiliated company 36,031 -
Cost in excess of net assets of companies acquired,
less accumulated amortization ($48,085 in 1995
and $36,057 in 1994) 379,171 334,297
Other assets 63,762 56,419
---------- ----------
$2,701,016 $2,038,774
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 561,834 $ 411,766
Accrued expenses 207,738 191,574
Short-term borrowings, including current maturities of
long-term debt 117,085 86,123
---------- ----------
Total current liabilities 886,657 689,463
---------- ----------
Long-term debt 451,706 224,398
Other liabilities 68,992 56,335
Subordinated debentures - 125,000
Minority interest 97,780 105,693
Shareholders' equity:
Common stock, par value $1:
Authorized--80,000,000 shares
Issued--50,647,826 shares in 1995 and 46,167,913 shares in 1994 50,648 46,168
Capital in excess of par value 530,324 388,913
Retained earnings 602,633 400,089
Foreign currency translation adjustment 18,398 6,367
---------- ----------
1,202,003 841,537
Less unamortized employee stock awards and other 6,122 3,652
---------- ----------
Total shareholders' equity 1,195,881 837,885
---------- ----------
$2,701,016 $2,038,774
========== ==========
See accompanying notes.
</TABLE>
<PAGE>
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENT OF INCOME
(In thousands except per share data)
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Sales $5,919,420 $4,649,234 $3,560,856
---------- ---------- ----------
Costs and expenses:
Cost of products sold 4,888,746 3,832,169 2,901,648
Selling, general and administrative expenses 574,166 487,982 403,870
Depreciation and amortization 33,299 27,759 21,439
Integration charges - 45,350 -
Restructuring charge - - 7,810
---------- ---------- ----------
5,496,211 4,393,260 3,334,767
---------- ---------- ----------
Operating income 423,209 255,974 226,089
Equity in earnings of affiliated companies 2,493 - 1,673
Interest expense, net 46,361 36,168 26,573
---------- ---------- ----------
Earnings before income taxes and minority interest 379,341 219,806 201,189
Provision for income taxes 153,139 91,206 82,409
---------- ---------- ----------
Earnings before minority interest 226,202 128,600 118,780
Minority interest 23,658 16,711 12,221
---------- ---------- ----------
Net income $ 202,544 $ 111,889 $ 106,559
========== ========== ==========
Per common share:
Primary $4.21 $2.40 $2.33
===== ===== =====
Fully diluted 4.03 2.31 2.22
===== ===== =====
Average number of common shares and common
share equivalents outstanding:
Primary 48,081 46,634 45,360
====== ====== ======
Fully diluted 51,123 50,407 49,908
====== ====== ======
See accompanying notes.
</TABLE>
<PAGE>
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $202,544 $111,889 $106,559
Adjustments to reconcile net income to net
cash provided by (used for) operations:
Minority interest in earnings 23,658 16,711 12,221
Depreciation and amortization 35,192 29,821 23,871
Equity in undistributed earnings of
affiliated companies (2,493) - (1,673)
Integration charges - 45,350 -
Restructuring charge - - 7,810
Deferred income taxes 14,210 8,167 2,678
Change in assets and liabilities, net of
effects of acquired businesses:
Accounts receivable (221,840) (80,315) (86,782)
Inventories (288,301) (73,425) (86,158)
Prepaid expenses and other assets (8,675) 2,754 1,112
Accounts payable 139,257 93,987 49,095
Accrued expenses (3,848) (37,275) 2,668
Other (3,791) 7,511 4,281
-------- -------- --------
Net cash provided by (used for) operating activities (114,087) 125,175 35,682
-------- -------- --------
Cash flows from investing activities:
Acquisition of property, plant and equipment, net (42,254) (22,773) (21,340)
Cash consideration paid for acquired businesses (59,119) (108,478) (87,875)
Repayment by (investment in and loans to) affiliate (31,538) 7,000 (7,000)
Other 190 1,397 1,369
-------- -------- --------
Net cash used for investing activities (132,721) (122,854) (114,846)
-------- -------- --------
Cash flows from financing activities:
Change in short-term borrowings 49,976 (35,811) 16,860
Proceeds from credit facilities 290,436 15,184 56,911
Proceeds from long-term debt 5,701 36,037 24,750
Repayment of long-term debt (102,370) (6,151) (804)
Proceeds from exercise of stock options
and warrants 13,717 4,897 5,702
Proceeds from (distributions to) minority partners (28,590) (524) 2,993
Proceeds from common stock offering - - 17,705
Other (756) (200) (1,921)
-------- -------- --------
Net cash provided by financing activities 228,114 13,432 122,196
-------- -------- --------
Effect of exchange rate changes on cash 7,035 7,779 314
-------- -------- --------
Net increase (decrease) in cash and
short-term investments (11,659) 23,532 43,346
Cash and short-term investments at
beginning of year 105,606 80,962 10,559
Cash and short-term investments from affiliate
at beginning of year - 1,112 27,057
-------- -------- --------
Cash and short-term investments at end of year $ 93,947 $105,606 $ 80,962
======== ======== ========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Income taxes $142,101 $ 92,514 $ 62,904
Interest 44,019 31,753 22,228
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In thousands)
Preferred Common Foreign Unamortized
Stock Stock Capital in Currency Employee
at Par at Par Excess of Retained Translation Stock Awards
Value Value Par Value Earnings Adjustment and Other Total
--------- ------ ---------- -------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1992 $ 66 $43,552 $350,225 $182,521 $(6,518) $(3,746) $566,100
Net income - - - 106,559 - - 106,559
Issuance of common stock - 562 17,143 - - - 17,705
Conversion of preferred stock (66) 1,009 (991) - - - (48)
Exercise of stock options - 537 4,640 - - 13 5,190
Exercise of stock warrants - 45 467 - - - 512
Tax benefits related to
exercise of stock options - - 5,590 - - - 5,590
Restricted stock awards, net - 48 1,235 - - (1,283) -
Amortization of employee
stock awards - - - - - 731 731
Collection of notes receivable
from officers - - - - - 1,369 1,369
Preferred stock cash dividends - - - (880) - - (880)
Other - - - - - (55) (55)
Translation adjustments - - - - (974) - (974)
---- ------- -------- -------- ------- ------- --------
Balance at December 31, 1993 - 45,753 378,309 288,200 (7,492) (2,971) 701,799
Net income - - - 111,889 - - 111,889
Exercise of stock options - 337 4,560 - - - 4,897
Tax benefits related to
exercise of stock options - - 3,147 - - - 3,147
Restricted stock awards, net - 78 2,897 - - (2,975) -
Amortization of employee
stock awards - - - - - 1,182 1,182
Collection of notes receivable
from officers - - - - - 1,397 1,397
Other - - - - - (285) (285)
Translation adjustments - - - - 13,859 - 13,859
---- ------- -------- -------- ------- ------- --------
Balance at December 31, 1994 $ - $46,168 $388,913 $400,089 $ 6,367 $(3,652) $837,885
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In thousands)
Preferred Common Foreign Unamortized
Stock Stock Capital in Currency Employee
at Par at Par Excess of Retained Translation Stock Awards
Value Value Par Value Earnings Adjustment and Other Total
------- ------- --------- -------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $ - $46,168 $388,913 $400,089 $ 6,367 $(3,652) $ 837,885
Net income - - - 202,544 - - 202,544
Conversion of subordinated
debentures - 3,773 118,684 - - - 122,457
Exercise of stock options - 567 13,150 - - - 13,717
Tax benefits related to
exercise of stock options - - 4,758 - - - 4,758
Restricted stock awards, net - 140 4,819 - - (4,959) -
Amortization of employee
stock awards - - - - - 2,313 2,313
Other - - - - - 176 176
Translation adjustments - - - - 12,031 - 12,031
----- ------- -------- -------- -------- -------- ----------
Balance at December 31, 1995 $ - $50,648 $530,324 $602,633 $ 18,398 $ (6,122) $1,195,881
===== ======= ======== ======== ======== ======== ==========
See accompanying notes.
</TABLE>
<PAGE>
ARROW ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Basis of Presentation
- ---------------------
In 1994, the company acquired Gates/FA Distributing, Inc. ("Gates") and Anthem
Electronics, Inc. ("Anthem") in transactions accounted for as poolings of
interests. Accordingly, the consolidated financial statements for 1993 have
been restated to include the operations of Gates and Anthem.
Principles of Consolidation
- ---------------------------
The consolidated financial statements include the accounts of the company and
its majority-owned subsidiaries. The company's investments in affiliated
companies which are not majority-owned are accounted for using the equity
method. All significant intercompany transactions are eliminated.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the consolidated financial statements and
accompanying notes. Actual results could differ from those estimates.
Inventories
- -----------
Inventories are stated at the lower of cost or market. Cost is determined on
the first-in, first-out (FIFO) method.
Property and Depreciation
- -------------------------
Depreciation is computed on the straight-line method for financial reporting
purposes and on accelerated methods for tax reporting purposes. Leasehold
improvements are amortized over the shorter of the term of the related lease
or the life of the improvement.
Cost in Excess of Net Assets of Companies Acquired
- --------------------------------------------------
The cost in excess of net assets of companies acquired is being amortized on a
straight-line basis, principally over 40 years.
Foreign Currency
- ----------------
The assets and liabilities of foreign operations are translated at the
exchange rates in effect at the balance sheet date, with the related
translation gains or losses reported as a separate component of shareholders'
equity. The results of foreign operations are translated at the weighted
average exchange rates for the year.
Income Taxes
- ------------
Income taxes are accounted for under the liability method. Deferred taxes
reflect the tax consequences on future years of differences between the tax
bases of assets and liabilities and their financial reporting amounts.
Net Income Per Share
- --------------------
Net income per share for 1995 and 1994 is based upon the weighted average
number of shares outstanding and dilutive common share equivalents of 749,216
and 634,739, respectively. For 1995, the weighted average includes the conver-
sion to common stock of the 5-3/4% convertible subordinated debentures (the
"debentures") from October 1995. Net income per share on a fully diluted basis
assumes that the debentures were converted into common stock at the beginning
of the year and the related interest expense, net of taxes, was eliminated.
Net income per share for 1993 is based upon the weighted average number of
common shares outstanding and dilutive common share equivalents of 828,212
after deducting preferred stock dividends related to the series B $19.375
convertible exchangeable preferred stock (the "preferred stock"), which was
converted into common stock in September 1993. Net income per share on a fully
diluted basis assumes that the preferred stock and the debentures were converted
into common stock at the beginning of the year and the dividends related to the
preferred stock and the interest expense on the debentures, net of taxes,
were eliminated.
Cash and Short-term Investments
- -------------------------------
Short-term investments which have a maturity of ninety days or less at time of
purchase are considered cash equivalents in the consolidated statement of cash
flows. The carrying amount reported in the consolidated balance sheet for short-
term investments approximates fair value.
2. Acquisitions
During 1995, Spoerle Electronic Handelsgesellschaft mbH ("Spoerle"), the
company's majority-owned German affiliate, acquired HED Heinrich Electronic
Distribution GmbH. In addition, the company acquired Ally, Inc. in Taiwan and
Arrow Components (NZ) Limited in New Zealand. The company also increased its
interests in Silverstar Ltd., S.p.A. ("Silverstar"), the company's Italian
subsidiary, to 86%; Amitron S.A. and ATD Electronica S.A., the company's
subsidiaries serving Spain and Portugal, to 75% and 87%, respectively; and The
Megachip Group, one of the company's French subsidiaries, to 100%.
The company acquired Gates in August 1994 and Anthem in November 1994 through
the exchange of 3,743,000 and 10,803,000 shares of newly issued company stock,
respectively. These acquisitions were accounted for as poolings of interests.
The 1994 and 1993 consolidated financial statements do not reflect the cost
savings achieved from the combination of Gates and Anthem with the company's
business or the sales attrition which may have resulted. These cost savings
were principally from reductions in personnel performing duplicative functions
and the elimination of duplicative administrative facilities, computer and
telecommunications equipment, and selling and stocking locations. The
consolidated financial statements for 1994 include special charges of
$28,850,000 after taxes ($.62 per share on a primary basis) of costs assoc-
iated with the acquisition and integration of the Gates and Anthem businesses
and related transaction fees. Such integration costs included real estate
termination costs and severance and other expenses related to personnel perform-
ing duplicative functions.
In January 1994, the company increased its holdings in Spoerle to 70% and
Silverstar to 61%. During 1994, the company also acquired Field Oy in Finland;
TH:s Elektronik AB in Sweden; Exatec A/S in Denmark; Texny Glorytact (HK) in
Hong Kong; The Megachip Group in France; and Veltek Australia Pty Ltd. and
Zatek Australia Pty Ltd.
The cost of each acquisition has been allocated among the net assets acquired
on the basis of the respective fair values of the assets acquired and
liabilities assumed. For financial reporting purposes, the acquisitions are
accounted for as purchase transactions beginning in the respective month of
acquisition. The aggregate consideration paid for these acquisitions exceeded
the net assets acquired by $30,671,000 and $96,791,000 in 1995 and 1994,
respectively.
In connection with certain acquisitions, the company may be required to make
additional payments that are contingent upon the acquired businesses achieving
certain operating goals. During 1995 and 1994, the company made additional
payments of $14,884,000 and $9,744,000, respectively, which have been
capitalized as cost in excess of net assets of companies acquired.
3. Investments in Affiliated Companies
During 1995, the company acquired a 45% interest in Strong Electronics Co.,
Ltd. ("Strong Electronics"), a joint venture with Lite-On Inc., a Taiwan-based
electronics distributor.
At December 31, 1993, the company had a 50% interest in Silverstar, which was
accounted for using the equity method; thereafter, it has been consolidated.
4. Debt
Long-term debt consisted of the following at December 31 (in thousands):
1995 1994
---- ----
Global multi-currency credit facility $294,903 $ 20,000
8.29% senior notes 75,000 75,000
Lines of credit 70,000 47,100
U.S. loan agreement due 1995 - 20,000
Deutsche mark term loan due 2000 - 45,170
Pound sterling term loan due 2000 - 28,823
Other obligations with various
interest rates and due dates 13,968 14,541
-------- --------
453,871 250,634
Less installments due within one year 2,165 26,236
-------- --------
$451,706 $224,398
======== ========
The company's revolving credit agreement (the "global multi-currency credit
facility") was amended in August 1995 to increase to $500,000,000 the amount of
available credit, to allow the company's foreign subsidiaries to borrow under
this facility, and to extend the maturity date to August 2000. The interest
rate for loans under this facility is at the applicable Eurocurrency Rate
(5.6875% for U.S. dollar denominated loans at December 31, 1995) plus a margin
of .225%. The company may also utilize the facility's competitive advance
option to obtain loans, generally at a lower rate. The company pays the banks a
facility fee of .125% per annum.
The senior notes are payable in three equal annual installments commencing in
1998.
The global multi-currency credit facility and the senior notes limit, among
other things, the payment of cash dividends and the incurrence of additional
borrowings and require that working capital, net worth, and certain other
financial ratios be maintained at designated levels.
The company maintains uncommitted lines of credit with a group of banks under
which up to $118,000,000 could be borrowed at December 31, 1995 on such terms
as the company and the banks may agree. Borrowings under the lines of credit
are classified as long-term debt as the company has the ability to renew them
or refinance them with the global multi-currency credit facility. There are no
fees or compensating balances associated with these borrowings. Outstanding
borrowings under the lines of credit at December 31, 1995 were at an average
interest rate of 6.17%.
The deutsche mark and pound sterling term loans were repaid during 1995 with
proceeds from the global multi-currency credit facility.
The aggregate annual maturities of long-term debt for each of the five years
in the period ending December 31, 2000 are: 1996-$2,165,000; 1997-$2,429,000;
1998-$25,341,000; 1999-$25,360,000; and 2000-$396,560,000.
Short-term borrowings are principally utilized to support the working capital
requirements of certain foreign operations. The weighted average interest
rates of these borrowings at December 31, 1995 and 1994 were 10.4% and 10%,
respectively.
The estimated fair market value of the senior notes at December 31, 1995 was
108% of par. The balance of the company's borrowings approximate their fair
value.
5. Income Taxes
The provision for income taxes consists of the following (in thousands):
1995 1994 1993
---- ---- ----
Current
Federal $ 78,639 $53,465 $56,519
State 19,989 15,317 13,600
Foreign 37,330 28,063 9,376
-------- ------- -------
135,958 96,845 79,495
-------- ------- -------
Deferred
Federal 2,625 (8,437) (67)
State 600 (2,824) (241)
Foreign 13,956 5,622 3,222
-------- ------- -------
17,181 (5,639) 2,914
-------- ------- -------
$153,139 $91,206 $82,409
======== ======= =======
The principal causes of the difference between the U.S. statutory and
effective income tax rates are as follows (in thousands):
1995 1994 1993
---- ---- ----
Provision at statutory rate $132,769 $76,932 $70,381
State taxes, net of federal
benefit 13,383 8,120 8,715
Foreign tax rate differential 4,959 4,841 3,448
Other 2,028 1,313 (135)
-------- ------- -------
$153,139 $91,206 $82,409
======== ======= =======
For financial reporting purposes, income before income taxes attributable to
the United States was $252,894,000 in 1995, $184,241,000 excluding the special
charges of $45,350,000 in 1994, and $163,073,000 in 1993, and income before
income taxes attributable to foreign operations was $126,447,000 in 1995,
$80,915,000 in 1994, and $38,116,000 in 1993.
The significant components of the company's deferred tax assets, which are
included in other assets, are as follows (in thousands):
1995 1994
---- ----
Inventory reserves $10,268 $ 7,183
Allowance for doubtful accounts 6,712 4,552
Accrued expenses 6,217 9,282
Other 3,303 3,783
------- -------
$26,500 $24,800
======= =======
In France, the company has approximately $8,000,000 of net operating loss
carryforwards, of which approximately $5,000,000 were acquired, which expire
through 2000. Included in other liabilities are deferred tax liabilities of
$33,310,000 and $19,626,000 at December 31, 1995 and 1994, respectively. The
deferred tax liabilities are principally the result of the differences in the
bases of the German assets and liabilities for tax and financial reporting
purposes.
6. Shareholders' Equity
The company has 2,000,000 authorized shares of serial preferred stock with a
par value of $1.
In 1988, the company paid a dividend of one preferred share purchase right on
each outstanding share of common stock. Each right, as amended, entitles a
shareholder to purchase one one-hundredth of a share of a new series of
preferred stock at an exercise price of $50 (the "exercise price"). The rights
are exercisable only if a person or group acquires 20% or more of the company's
common stock or announces a tender or exchange offer that will result in such
person or group acquiring 30% or more of the company's common stock. Rights
owned by the person acquiring such stock or transferees thereof will
automatically be void. Each other right will become a right to buy, at the
exercise price, that number of shares of common stock having a market value of
twice the exercise price. The rights, which do not have voting rights, expire
on March 2, 1998 and may be redeemed by the company at a price of $.01 per
right at any time until ten days after a 20% ownership position has been
acquired. In the event that the company merges with, or transfers 50% or more
of its consolidated assets or earning power to, any person or group after the
rights become exercisable, holders of the rights may purchase, at the exercise
price, a number of shares of common stock of the acquiring entity having a
market value equal to twice the exercise price.
7. Employee Stock Plans
Restricted Stock Plan
- ---------------------
Under the terms of the Arrow Electronics, Inc. Restricted Stock Plan (the
"Plan"), a maximum of 1,480,000 shares of common stock may be awarded at the
discretion of the board of directors to key employees of the company. As many
as 100 employees may be considered for awards under the Plan.
Shares awarded under the Plan may not be sold, assigned, transferred, pledged,
hypothecated, or otherwise disposed of, except as provided in the Plan. Shares
awarded become free of vesting restrictions over a four-year period. The
company awarded 51,500 shares of common stock in early 1996 to 62 key employees
in respect of 1995, 106,350 shares of common stock to 79 key employees during
1995, 77,350 shares of common stock to 50 key employees during 1994, and 49,250
shares of common stock to 35 key employees during 1993. Forfeitures of shares
awarded under the Plan were 10,425, 1,000, and 7,625 during 1995, 1994, and
1993, respectively. The aggregate market value of outstanding awards under the
Plan at the respective dates of award is being amortized over a four-year
period and the unamortized balance is included in shareholders' equity as
unamortized employee stock awards.
Stock Option Plan
- -----------------
Under the terms of the Arrow Electronics, Inc. Stock Option Plan (the "Option
Plan"), both nonqualified and incentive stock options for an aggregate of
6,000,000 shares of common stock were authorized for grant to key employees at
prices determined by the board of directors in its discretion or, in the case
of incentive stock options, prices equal to the fair market value of the shares
at the dates of grant. Options currently outstanding have terms of ten years
and become exercisable in equal annual installments over two or three-year
periods from date of grant. The options issued and outstanding under the
option plans of Gates and Anthem at the dates of their acquisition have been
converted into options to purchase shares of the company's common stock at the
same exchange ratio as utilized in acquiring these businesses, and all unissued
options under those plans were cancelled.
The following information relates to the option plans for the years ended
December 31:
1995 1994 1993
---- ---- ----
Options outstanding at
beginning of year 2,164,038 1,806,818 1,827,305
Granted 917,450 789,123 680,228
Exercised (566,504) (336,481) (546,857)
Forfeited (76,409) (95,422) (153,858)
--------- --------- ---------
Options outstanding at
end of year 2,438,575 2,164,038 1,806,818
========= ========= =========
Prices per share of
options outstanding $3.63-55.38 $2.53-52.43 $2.53-52.43
Average price per share
of options exercised $24.21 $14.44 $9.49
Average price per share
of options outstanding $33.38 $27.82 $21.61
Exercisable options 1,339,987 1,262,715 1,071,270
Options available for future grant:
Beginning of year 2,667,389 2,446,345 1,270,619
End of year 1,793,281 2,667,389 2,446,345
Stock Ownership Plan
- --------------------
The company maintains a noncontributory employee stock ownership plan which
enables most North American employees to acquire shares of the company's common
stock. Contributions, which are determined by the board of directors, are in
the form of common stock or cash which is used to purchase the company's common
stock for the benefit of participating employees. Contributions to the plan
for 1995, 1994, and 1993 aggregated $3,878,000, $2,765,000, and $2,525,000,
respectively.
8. Retirement Plan
The company has a defined contribution plan for eligible employees, which
qualifies under Section 401(k) of the Internal Revenue Code. The company's
contribution to the plan, which is based on a specified percentage of employee
contributions, amounted to $3,966,000, $3,235,000, and $3,055,000 in 1995,
1994, and 1993, respectively. Certain domestic and foreign subsidiaries
maintain separate defined contribution plans for their employees and made
contributions thereunder which amounted to $822,000, $956,000, and $651,000 in
1995, 1994, and 1993, respectively.
The company maintains an unfunded supplemental retirement plan for certain
executives. The company's board of directors determines those employees
eligible to participate in the plan and their maximum annual benefit upon
retirement.
9. Lease Commitments
The company leases certain office, warehouse, and other property under
noncancellable operating leases expiring at various dates through 2016. Rental
expenses of noncancellable operating leases amounted to $27,594,000 in 1995,
$21,736,000 in 1994, and $19,495,000 in 1993. Aggregate minimum rental
commitments under all noncancellable operating leases approximate $134,889,000
exclusive of real estate taxes, insurance, and leases related to facilities
closed in connection with the integration of the acquired businesses. Such
commitments on an annual basis are: 1996-$26,133,000; 1997-$22,070,000; 1998-
$19,584,000; 1999-$16,463,000; 2000-$12,082,000; and $38,557,000 thereafter.
The company's obligations under capitalized leases are reflected as a component
of other liabilities.
10. Financial Instruments
The company enters into foreign exchange forward contracts (the "contracts") to
reduce risk due to changes in currency exchange rates, principally French
francs, deutsche marks, Italian lira, and pounds sterling. These contracts
hedge firm commitments of inventory purchases and generally are settled within
three months. Gains or losses on these contracts are deferred and recognized
when the underlying future purchase is recognized. The risk of loss on a
contract is the risk of nonperformance by the counterparties. The fair value
of the contracts is estimated using market quotes. The notional amount of the
contracts at December 31, 1995 was $52,345,000. The carrying amount, which is
nominal, approximates fair value.
11. Segment and Geographic Information
The company is engaged in one business, the distribution of electronic
components, systems, and related products. The geographic distribution of
consolidated sales, operating income, and identifiable assets is as follows (in
thousands):
Sales to Identifiable
Unaffiliated Operating Assets at
Customers Income (Loss) December 31,
------------ ------------- -------------
1995
- ----
North America $3,929,016 $295,941 $1,476,420
Europe 1,719,523 135,519 1,018,755
Asia/Pacific 270,881 8,884 134,947
Corporate - (17,135) 34,863
Investment in affiliated
company - - 36,031
---------- -------- ----------
$5,919,420 $423,209 $2,701,016
========== ======== ==========
1994
- ----
North America $3,339,210 $224,007 $1,176,196
Europe 1,146,726 89,879 739,863
Asia/Pacific 163,298 4,288 96,773
Corporate - (16,850) 25,942
Integration charges - (45,350) -
---------- -------- ----------
$4,649,234 $255,974 $2,038,774
========== ======== ==========
1993
- ----
North America $2,915,887 $208,371 $1,095,414
Europe 600,935 40,153 367,102
Asia/Pacific 44,034 1,706 57,416
Corporate - (16,331) 35,849
Restructuring charge - (7,810) -
Investment in affiliated
company - - 13,371
---------- -------- ----------
$3,560,856 $226,089 $1,569,152
========== ======== ==========
During 1995, Strong Electronics, the company's Taiwanese affiliate, recorded
sales of approximately $97,000,000, which are not reflected in the company's
1995 consolidated financial statements.
12. Quarterly Financial Data (Unaudited)
A summary of the company's quarterly results of operations follows (in
thousands except per share data):
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
1995
- ----
Sales $1,440,353 $1,458,213 $1,459,591 $1,561,263
Gross profit 246,330 262,838 256,794 264,712
Net income 44,851 51,752 50,958 54,983
Per common share:
Primary .96 1.09 1.07 1.09
Fully diluted .91 1.03 1.01 1.08
1994
- ----
Sales $1,117,679 $1,113,991 $1,161,423 $1,256,141
Gross profit 197,584 201,362 200,916 217,203
Net income 33,379 32,903 21,779 23,828
Per common share:
Primary .72 .71 .47 .51
Fully diluted .68 .68 .45 .49
Excluding the special charges associated with the acquisition and integration
of Gates and Anthem, net income and net income per share on a primary basis in
the third and fourth quarters of 1994 would have been $34,904,000 and $.75 and
$39,553,000 and $.85, respectively.
<PAGE>
Item 9. Changes In and Disagreements with Accountants on
------------------------------------------------
Accounting and Financial Disclosure.
-----------------------------------
None.
Part III
Item 10. Directors and Executive Officers of the Registrant.
--------------------------------------------------
See "Executive Officers" in the response to Item 1 above. In addition,
the information set forth under the heading "Election of Directors" in
the company's Proxy Statement filed in connection with the Annual
Meeting of Shareholders scheduled to be held May 14, 1996 hereby is
incorporated herein by reference.
Item 11. Executive Compensation.
----------------------
The information set forth under the heading "Executive Compensation and
Other Matters" in the company's Proxy Statement filed in connection
with the Annual Meeting of Shareholders scheduled to be held May 14,
1996 hereby is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
--------------------------------------------------------------
The information on page 3 and under the heading "Election of Directors"
in the company's Proxy Statement filed in connection with the Annual
Meeting of Shareholders scheduled to be held May 14, 1996 hereby is
incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
----------------------------------------------
The information set forth under the heading "Executive Compensation and
Other Matters" in the company's Proxy Statement filed in connection
with the Annual Meeting of Shareholders scheduled to be held May 14,
1996 hereby is incorporated herein by reference.
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
---------------------------------------------------------------
(a)1. Financial Statements.
--------------------
The financial statements listed in the accompanying index to financial
statements and financial statement schedules are filed as part of this
annual report.
2. Financial Statement Schedules.
-----------------------------
The financial statement schedule listed in the accompanying index to
financial statements is filed as part of this annual report.
All other schedules have been omitted since the required information is
not present or is not present in amounts sufficient to require
submission of the schedule, or because the information required is
included in the consolidated financial statements, including the notes
thereto.
<PAGE>
ARROW ELECTRONICS, INC.
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
(Item 14 (a))
Page
----
Report of Ernst & Young LLP, independent auditors 13
Management's responsibility for financial reporting 14
Consolidated balance sheet at December 31, 1995 and 1994 15
For the years ended December 31, 1995, 1994 and 1993:
Consolidated statement of income 16
Consolidated statement of cash flows 17
Consolidated statement of shareholders' equity 18
Notes to consolidated financial statements for
the years ended December 31, 1995, 1994 and 1993 20
Consolidated schedule for the three years
ended December 31, 1995:
II - Valuation and qualifying accounts 39
<PAGE>
3. Exhibits.
(2)(a)(i) Share Purchase Agreement dated as of October 10,
1991 among EDI Electronics Distribution International B.V., Aquarius
Investments Ltd., Andromeda Investments Ltd., and the other persons named
therein (incorporated by reference to Exhibit 2.2 to the company's
Registration Statement on Form S-3, Registration No. 33-42176).
(ii) Standstill Agreement dated as of October 10,
1991 among Arrow Electronics, Inc., Aquarius Investments Ltd., Andromeda
Investments Ltd., and the other persons named therein (incorporated by
reference to Exhibit 4.1 to the company's Registration Statement on Form
S-3, Registration No. 33-42176).
(iii) Shareholder's Agreement dated as of October 10,
1991 among EDI Electronics Distribution International B.V., Giorgio Ghezzi,
Germano Fanelli, and Renzo Ghezzi (incorporated by reference to Exhibit
2(f)(iii) to the company's Annual Report on Form 10-K for the year ended
December 31, 1993, Commission File No. 1-4482).
(b) Agreement and Plan of Merger, dated as of June
24, 1994, by and among Arrow Electronics, Inc., AFG Acquisition Company and
Gates/FA Distributing, Inc. (incorporated by reference to Exhibit 2 to the
company's Registration Statement on Form S-4, Commission File No. 35-
54413).
(c) Agreement and Plan of Merger, dated as of
September 21, 1994, by and among Arrow Electronics, Inc., MTA Acquisition
Company and Anthem Electronics, Inc. (incorporated by reference to Exhibit
2 to the company's Registration Statement on Form S-4, Commission File No.
33-55645).
(3)(a) Amended and Restated Certificate of
Incorporation of the company, as amended (incorporated by reference to
Exhibit 3(a) to the company's Annual Report on Form 10-K for the year ended
December 31, 1994 Commission File No. 1-4482).
(b) By-Laws of the company, as amended (incorporated
by reference to Exhibit 3(b) to the company's Annual Report on Form 10-K
for the year ended December 31, 1986, Commission File No. 1-4482).
(4)(a)(i) Rights Agreement dated as of March 2, 1988
between Arrow Electronics, Inc. and Manufacturers Hanover Trust Company, as
Rights Agent, which includes as Exhibit A a Certificate of Amendment of the
Restated Certificate of Incorporation for Arrow Electronics, Inc. for the
Participating Preferred Stock, as Exhibit B a letter to shareholders
describing the Rights and a summary of the provisions of the Rights
Agreement and as Exhibit C the forms of Rights Certificate and Election to
Exercise (incorporated by reference to Exhibit 1 to the company's Current
Report on Form 8-K dated March 3, 1988, Commission File No. 1-4482).
(ii) First Amendment, dated June 30, 1989, to the
Rights Agreement in (4)(a)(i) above (incorporated by reference to Exhibit
4(b) to the Company's Current Report on Form 8-K dated June 30, 1989,
Commission File No. 1-4482).
(iii) Second Amendment, dated June 8, 1991, to the
Rights Agreement in (4)(a)(i) above (incorporated by reference to Exhibit
4(i)(iii) to the company's Annual Report on Form 10-K for the year ended
December 31, 1991, Commission File No. 1-4482).
(iv) Third Amendment, dated July 19, 1991, to the
Rights Agreement in (4)(a)(i) above (incorporated by reference to Exhibit
4(i)(iv) to the company's Annual Report on Form 10-K for the year ended
December 31, 1991, Commission File No. 1-4482).
(v) Fourth Amendment, dated August 26, 1991, to the
Rights Agreement in (4)(a)(i) above (incorporated by reference to Exhibit
4(i)(v) to the company's Annual Report on Form 10-K for the year ended
December 31, 1991, Commission File No. 1-4482).
(10) (a)(i) Arrow Electronics Savings Plan, as amended and
restated through January 1, 1989 (incorporated by reference to Exhibit
10(b)(i) to the company's Annual Report on Form 10-K for the year ended
December 31, 1989, Commission File No. 1-4482).
(ii) Amendment No. 1, dated December 7, 1989, to the
Arrow Electronics Savings Plan in (10)(a)(i) above (incorporated by
reference to Exhibit 10(b)(ii) to the company's Annual Report on Form 10-K
for the year ended December 31, 1992, Commission File No. 1-4482).
(iii) Amendment No. 2, dated January 18, 1990, to the
Arrow Electronics Savings Plan in (10)(a)(i) above (incorporated by
reference to Exhibit 10(b)(ii) to the company's Annual Report on Form 10-K
for the year ended December 31, 1991, Commission File No. 1-4482).
(iv) Amendment No. 3, dated February 21, 1992, to the
Arrow Electronics Savings Plan in (10)(a)(i) above (incorporated by
reference to Exhibit 10(b)(iv) to the company's Annual Report on Form 10-K
for the year ended December 31, 1992, Commission File No. 1-4482).
(v) Supplement, dated September 27, 1991, to the
Arrow Electronics Savings Plan in (10)(a)(i) above (incorporated by
reference to Exhibit 10(b)(v) to the company's Annual Report on Form 10-K
for the year ended December 31, 1992, Commission File No. 1-4482).
(vi) Supplement No. 3, dated August 24, 1993, to the
Arrow Electronics Savings Plan in 10(a)(i) above (incorporated by reference
to Exhibit 10(b)(vi) in the company's Annual Report on Form 10-K for the
year ended December 31, 1993, Commission File No. 1-4482).
(vii) Supplement No. 4, dated December 28, 1994, to
the Arrow Electronics Savings Plan in 10(a)(i) above (incorporated by
reference to Exhibit 10(b)(vii) in the company's Annual Report on Form 10-K
for the year ended December 31, 1994, Commission File No. 1-4482).
(viii) Arrow Electronics Stock Ownership Plan, as
amended and restated through January 1, 1989 (incorporated by reference to
Exhibit 10(b)(ii) to the company's Annual Report on Form 10-K for the year
ended December 31, 1989, Commission File No. 1-4482).
(ix) Amendment No. 1, dated November 29, 1989, to the
Arrow Electronics Stock Ownership Plan in (10)(a)(viii) above (incorporated
by reference to Exhibit 10(b)(vii) to the company's Annual Report on Form
10-K for the year ended December 31, 1992, Commission File No. 1-4482).
(x) Amendment No. 2, dated December 7, 1989, to the
Arrow Electronics Stock Ownership Plan in (10)(a)(viii) above (incorporated
by reference to Exhibit 10(b)(viii) to the company's Annual Report on Form
10-K for the year ended December 31, 1992, Commission File No. 1-4482).
(xi) Amendment No. 3, dated January 18, 1990, to the
Arrow Electronics Stock Ownership Plan in (10)(a)(viii) above (incorporated
by reference to Exhibit 10(b)(iv) to the company's Annual Report on Form
10-K for the year ended December 31, 1991, Commission File No. 1-4482).
(xii) Amendment No. 4, dated December 31, 1992 to the
Arrow Electronics Stock Ownership Plan in (10)(a)(viii) above (incorporated
by reference to Exhibit 10(b)(x) to the company's Annual Report on Form 10-
K for the year ended December 31, 1992, Commission File No. 1-4482).
(xiii) Supplement No. 1, dated September 8, 1992, to
the Arrow Electronics Stock Ownership Plan in (10)(a)(viii) above
(incorporated by reference to Exhibit 10(b)(xi) to the company's Annual
Report on Form 10-K for the year ended December 31, 1992, Commission File
No. 1-4482).
(xiv) Supplement No. 3, dated August 24, 1993, to the
Arrow Electronics Stock Ownership Plan in (10)(a)(viii) above (incorporated
by reference to Exhibit 10(b)(xiii) in the company's Annual Report on Form
10-K for the year ended December 31, 1993, Commission File No. 1-4482).
(xv) Supplement to No. 4, dated December 28, 1994,
to the Arrow Electronics Stock Ownership Plan in (10)(a)(viii) above
(incorporated by reference to Exhibit 10(b)(xv) in the company's Annual
Report on Form 10-K for the year ended December 31, 1994, Commission File
No. 1-4482).
(xvi) Capstone Electronics Corp. Profit-Sharing Plan,
effective January 1, 1990 (incorporated by reference to Exhibit 10(b)(iii)
to the company's Annual Report on Form 10-K for the year ended December 31,
1990, Commission File No. 1-4482).
(xvii) Supplement No. 1, dated September 8, 1992, to
the Capstone Electronics Profit-Sharing Plan in (10)(a)(xvi) above
(incorporated by reference to Exhibit 10(b)(xiii) to the company's Annual
Report on Form 10-K for the year ended December 31, 1992, Commission File
No. 1-4482).
(xviii) Supplement No. 2, dated August 24, 1993, to
the Capstone Electronics Profit Sharing Plan in (10)(a)(xvi) above
(incorporated by reference to Exhibit 10(b)(xvi) in the company's Annual
Report on Form 10-K for the year ended December 31, 1993, Commission File
No. 1-4482).
(xix) Supplement No. 3, dated December 28, 1994 to the
Capstone Electronics Profit Sharing Plan in 10(a)(xvi) above (incorporated
by reference to Exhibit 10(b)(xix) to the company's Annual Report on Form
10-K for the year ended December 31, 1994, Commission File No. 1-4482).
(b)(i) Employment Agreement, dated as of October 16,
1990, between the company and John C. Waddell (incorporated by reference to
Exhibit 10(c)(i) to the company's Annual Report on Form 10-K for the year
ended December 31, 1990, Commission File No. 1-4482).
(ii) Employment Agreement, dated as of February 22,
1995, between the company and Stephen P. Kaufman (incorporated by reference
to Exhibit 10(c)(ii) to the company's Annual Report on Form 10-K for the
year ended December 31, 1994, Commission File No. 1-4482).
(iii) Employment Agreement, dated as of March 13,
1991, between the company and Robert E. Klatell (incorporated by reference
to Exhibit 10(c)(iii) to the company's Annual Report on Form 10-K for the
year ended December 31, 1990, Commission File No. 1-4482).
(iv) Form of agreement between the company and the
employees parties to the Employment Agreements listed in 10(b)(i), (ii),
and (iii) above providing extended separation benefits under certain
circumstances (incorporated by reference to Exhibit 10(c)(iv) to the
company's Annual Report on Form 10-K for the year ended December 31, 1988,
Commission File No. 1-4482).
(v) Form of Employment Agreement, dated as of
September 1, 1994 between the company and Steven W. Menefee (incorporated
by reference to Exhibit 10(c)(v) to the company's Annual Report on Form 10-
K for the year ended December 31, 1994, Commission File No. 1-4482).
(vi) Form of Employment Agreement, dated as of
September 21, 1994, between the company and Robert S. Throop (incorporated
by reference to Exhibit 10(c)(x) to the company's Annual Report on Form 10-
K for the year ended December 31, 1994, Commission File No. 1-4482).
(vii) Form of agreement between the company and all
corporate Vice Presidents, including the employees parties to the
Employment Agreements listed in 10(c)(v)-(vi) above, providing extended
separation benefits under certain circumstances (incorporated by reference
to Exhibit 10(c)(ix) to the company's Annual Report on Form 10-K for the
year ended December 31, 1988, Commission File No. 1-4482).
(viii) Form of agreement between the company and
non-corporate officers providing extended separation benefits under certain
circumstances (incorporated by reference to Exhibit 10(c)(x) to the
company's Annual Report on Form 10-K for the year ended December 31, 1988,
Commission File No. 1-4482).
(ix) Unfunded Pension Plan for Selected Executives of
Arrow Electronics, Inc., as amended (incorporated by reference to Exhibit
10(c)(xiii) to the company's Annual Report on Form 10-K for the year ended
December 31, 1994, Commission File No. 1-4482).
(x) English translation of the Service Agreement,
dated January 19, 1993, between Spoerle Electronic and Carlo Giersch
(incorporated by reference to Exhibit 10(f)(v) to the company's Annual
Report on Form 10-K for the year ended December 31, 1992, Commission File
No. 1-4482).
(c)(i) Senior Note Purchase Agreement, dated as of
December 29, 1992, with respect to the company's 8.29% Senior Secured Notes
due 2000 (incorporated by reference to Exhibit 10(d) to the company's
Annual Report on Form 10-K for the year ended December 31, 1992, Commission
File No. 1-4482).
(ii) First Amendment, dated as of December 22, 1993,
to the Senior Note Purchase Agreement in 10(c)(i) above (incorporated by
reference to Exhibit 10(d)(ii) in the company's Annual Report on form 10-K
for the year ended December 31, 1993, Commission File No. 1-4482).
(d) Amended and Restated Credit Agreement, dated as
of August 16, 1995 among Arrow Electronics, Inc., the several Banks from
time to time parties hereto, Bankers Trust Company and Chemical Bank, as
agents.
(e)(i) Arrow Electronics, Inc. Stock Option Plan, as
amended (incorporated by reference to Exhibit 10(i)(i) to the company's
Annual Report on Form 10-K for the year ended December 31, 1994, Commission
File No. 1-4482).
(ii) Form of Stock Option Agreement under (e)(i)
above (incorporated by reference to Exhibit 10(k)(ii) to the company's
Annual Report on Form 10-K for the year ended December 31, 1986, Commission
File No. 1-4482).
(iii) Form of Nonqualified Stock Option Agreement
under (e)(i) above (incorporated by reference to Exhibit 10(k)(iv) to the
company's Registration Statement on Form S-4, Registration No. 33-17942).
(f)(i) Restricted Stock Plan of Arrow Electronics,
Inc., as amended and restated (incorporated by reference to Exhibit
10(j)(i) to the company's Annual Report on Form 10-K for the year ended
December 31, 1994, Commission File No. 1-4482).
(ii) Form of Award Agreement under (f)(i) above
(incorporated by reference to Exhibit 10(l)(iv) to the company's
Registration Statement on Form S-4, Registration No. 33-17942).
(g) Form of Indemnification Agreement between the
company and each director (incorporated by reference to Exhibit 10(m) to
the company's Annual Report on Form 10-K for the year ended December 31,
1986, Commission File No. 1-4482).
(11) Statement Re: Computation of Earnings Per Share.
(21) List of Subsidiaries.
(23) Consent of Ernst & Young
(28) (i) Record of Decision, issued by the EPA on
September 28, 1990, with respect to environmental clean-up in Plant City,
Florida (incorporated by reference to Exhibit 28 to the company's Annual
Report on Form 10-K for the year ended December 31, 1990, Commission File
No. 1-4482).
(ii) Consent Decree lodged with the U.S. District
Court for the Middle District of Florida, Tampa Division, on December 18,
1991, with respect to environmental clean-up in Plant City, Florida
(incorporated by reference to Exhibit 28(ii) to the company's Annual Report
on Form 10-K for the year ended December 31, 1991, Commission File No. 1-
4482).
(b) Reports on Form 8-K
During the quarter ended December 31, 1995, the following
Current Reports on Form 8-K were filed:
Date of Report
(Date of Earliest Event Reported) Items Reported
--------------------------------- --------------
None
<PAGE>
Exhibit 10(d)
CONFORMED COPY
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
among
ARROW ELECTRONICS, INC.,
THE FOREIGN SUBSIDIARY BORROWERS
The Several Banks
from Time to Time Parties Hereto,
NATWEST BANK N.A.,
as Lead Manager
BANKERS TRUST COMPANY
and
CHEMICAL BANK,
as Agents
CHEMICAL SECURITIES INC.,
as Arranger
and
CHEMICAL BANK,
as Administrative Agent
Dated as of August 16, 1995
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS 2
1.1 Defined Terms 2
1.2 Other Definitional Provisions 23
1.3. Accounting Determinations 23
SECTION 2. THE COMMITTED RATE LOANS 24
2.1 Committed Rate Loans 24
2.2 Procedure for Committed Rate Loan Borrowing 24
2.3 Repayment of Committed Rate Loans; Evidence of Debt 24
2.4 Termination or Reduction of Commitments 25
2.5 Optional Prepayments 25
2.6 Conversion and Continuation Options 26
2.7 Minimum Amounts of Tranches 26
2.8 Interest Rates and Payment Dates for Committed Rate Loans 26
2.9 Inability to Determine Interest Rate 27
SECTION 3. THE COMPETITIVE ADVANCE LOANS 27
3.1 Competitive Advance Loans 27
3.2 Procedure for Competitive Advance Loan Borrowing 28
3.3 Repayment of Competitive Advance Loans; Evidence of Debt 29
3.4 Prepayments 30
SECTION 4. THE SWING LINE LOANS 30
4.1 Swing Line Loans 30
4.2 Procedure for Swing Line Borrowing 30
4.3 Repayment of Swing Line Loans; Evidence of Debt 31
4.4 Allocating Swing Line Loans; Swing Line Loan Participations 31
SECTION 5. THE LETTERS OF CREDIT 33
5.1 L/C Commitment. 33
5.2 Procedure for Issuance of Letters of Credit under this
Agreement. 34
5.3 Fees, Commissions and Other Charges. 34
5.4 L/C Participations. 35
5.5 Reimbursement Obligation of the Specified Borrowers. 35
5.6 Obligations Absolute. 36
5.7 Letter of Credit Payments. 37
5.8 Application. 37
SECTION 6. LOCAL CURRENCY FACILITIES 37
6.1 Terms of Local Currency Facilities 37
6.2 Reporting of Local Currency Outstandings 39
6.3 Refunding of Local Currency Loans 39
SECTION 7. CERTAIN PROVISIONS APPLICABLE TO THE LOANS AND
LETTERS OF CREDIT 41
7.1 Facility Fee, Other Fees 41
7.2 Computation of Interest and Fees 41
7.3 Pro Rata Treatment and Payments 41
7.4 Illegality 42
7.5 Requirements of Law 42
7.6 Taxes 44
7.7 Company's Options upon Claims for Increased Costs and Taxes 46
7.8 Indemnity 47
7.9 Determinations 48
7.10 Change of Lending Office 48
7.11 Company Controls on Exposure; Calculation of Exposure;
Prepayment if Exposure exceeds Commitments 48
SECTION 8. REPRESENTATIONS AND WARRANTIES 49
8.1 Financial Condition 50
8.2 No Change 50
8.3 Corporate Existence; Compliance with Law 50
8.4 Corporate Power; Authorization; Enforceable Obligations 51
8.5 No Legal Bar 51
8.6 No Material Litigation 51
8.7 No Default 51
8.8 Ownership of Property; Liens 51
8.9 Intellectual Property 52
8.10 No Burdensome Restrictions 52
8.11 Taxes 52
8.12 Federal Regulations 52
8.13 ERISA 53
8.14 Investment Company Act; Other Regulations 53
8.15 Subsidiaries 53
8.16 Accuracy and Completeness of Information 54
8.17 Purpose of Loans 54
8.18 Senior Indebtedness 54
8.19 Environmental Matters 54
SECTION 9. CONDITIONS PRECEDENT 55
9.1 Conditions to Closing Date 55
9.2 Conditions to Each Extension of Credit 57
SECTION 10. AFFIRMATIVE COVENANTS 58
10.1 Financial Statements 58
10.2 Certificates; Other Information 59
10.3 Payment of Obligations 60
10.4 Conduct of Business and Maintenance of Existence 60
10.5 Maintenance of Property; Insurance 60
10.6 Inspection of Property; Books and Records; Discussions 61
10.7 Notices 61
10.8 Environmental Laws 62
10.9 Additional Subsidiary Guarantees 62
SECTION 11. NEGATIVE COVENANTS 62
11.1 Financial Condition Covenants 62
11.2 Limitation on Indebtedness of Domestic Subsidiaries 62
11.3 Limitation on Liens 63
11.4 Limitation on Fundamental Changes 63
11.5 Limitation on Restricted Payments 64
11.6 Limitation on Negative Pledge Clauses 64
11.7 Limitation on Modifications of Debt Instruments 64
SECTION 12. EVENTS OF DEFAULT 65
SECTION 13. THE ADMINISTRATIVE AGENT; THE AGENTS AND
THE COLLATERAL AGENT; THE ARRANGER 68
13.1 Appointment 68
13.2 Delegation of Duties 68
13.3 Exculpatory Provisions 68
13.4 Reliance by Administrative Agent 69
13.5 Notice of Default 69
13.6 Non-Reliance on Administrative Agent and Other Banks 69
13.7 Indemnification 70
13.8 Administrative Agent in Its Individual Capacity 70
13.9 Successor Administrative Agent 70
13.10 The Agents and the Arranger; The Collateral Agent 71
SECTION 14. MISCELLANEOUS 71
14.1 Amendments and Waivers 71
14.2 Notices 73
14.3 No Waiver; Cumulative Remedies 74
14.4 Survival of Representations and Warranties 74
14.5 Payment of Expenses and Taxes 75
14.6 Successors and Assigns; Participations and Assignments 75
14.7 Adjustments; Set-off 79
14.8 Power of Attorney 79
14.9 Judgment 80
14.10 Counterparts 80
14.11 Severability 80
14.12 Integration 80
14.13 GOVERNING LAW 81
14.14 Submission To Jurisdiction; Waivers 81
14.15 Acknowledgements 82
14.16 WAIVERS OF JURY TRIAL 82
<PAGE>
SCHEDULES
I - Banks and Commitments
II - Foreign Subsidiary Borrowers
III - Certain Information Concerning Swing Line
Loans and Letters of Credit
IV - Administrative Schedule
8.13 - Excluded ERISA Arrangements
8.15 - Subsidiaries
8.19 - Environmental Matters
EXHIBITS
Exhibit A - Form of Joinder Agreement
Exhibit B - Form of Schedule Amendment
Exhibit C - Form of Local Currency Facility Addendum
Exhibit D - Form of Consent and Confirmation
Exhibit E - Form of Borrowing Certificate
Exhibit F - Form of Company Guarantee
Exhibit G-1 - Form of Opinion of Winthrop, Stimson, Putnam
Exhibit G-2 - Form of Opinion of Robert E. Klatell
Exhibit G-3 - Opinions Relating to Foreign Subsidiary Borrowers
Exhibit H - Form of Certificate Pursuant to Subsection 10.2
Exhibit I - Form of Assignment and Acceptance
Exhibit J - Notice of Guarantee Ceiling Amount
1/ Insert short description of terms of Local Currency Facility.
2/ Copies of the Documentation must accompany the Local Currency
Facility Addendum, together with, if applicable, an English
translation thereof.
3/ Provide citation to relevant provision from the Documentation.
4/ Calculate the Commitment Percentage that is assigned to at least
15 decimal places and show as a percentage of the aggregate
commitments of all Lenders.
5/ Consents only required if Assignee is not already a Bank or an
Affiliate thereof.
<PAGE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of
August 16, 1995, among:
(i) ARROW ELECTRONICS, INC., a New York corporation
(the "Company");
(ii) the FOREIGN SUBSIDIARY BORROWERS (as
hereinafter defined);
(iii) the several banks and other financial
institutions from time to time parties to this Agreement (the "Banks");
(iv) NATWEST BANK N.A., as Lead Manager (in such
capacity the "Lead Manager");
(v) CHEMICAL SECURITIES INC., as Arranger (in such
capacity, the "Arranger");
(vi) BANKERS TRUST COMPANY, a New York banking
corporation ("Bankers Trust"), and CHEMICAL BANK, a New York banking
corporation ("Chemical"), as agents for the Banks hereunder (in such
capacity, the "Agents");
(vii) BANKERS TRUST, as Collateral Agent (in such
capacity, the "Collateral Agent"); and
(viii) CHEMICAL, as administrative agent for the Banks
hereunder (in such capacity, the "Administrative Agent").
W I T N E S S E T H :
WHEREAS, the Company, several banks and other financial
institutions (including certain of the Banks) (the "Existing Banks"),
Chemical, as administrative agent for the Existing Banks (in such
capacity, the "Existing Administrative Agent") and the Collateral Agent
are parties to the Amended and Restated Credit Agreement, dated as of
January 28, 1994 (as the same has been amended, supplemented or
otherwise modified through the date hereof, the "Existing Credit
Agreement");
WHEREAS, each of (i) Capstone Electronics Corp., a Delaware
corporation ("Capstone"), and Arrow Electronics International, Inc., a
United States Virgin Island corporation ("AEI"), executed and delivered
in favor of the Collateral Agent for the benefit of the Existing Banks a
Guarantee, dated as of September 27, 1991, (ii) Anthem Electronics,
Inc., a Delaware corporation ("Anthem") executed and delivered in favor
of the Collateral Agent for the benefit of the Existing Banks and the
Purchasers (as defined below) a Guarantee, dated November 28, 1994, and
(iii) Gates/Arrow Distributing, Inc., a Delaware corporation ("Gates"),
executed and delivered in favor of the Collateral Agent for the benefit
of the Existing Banks and the Purchasers a Guarantee, dated as of
September 30, 1994 (as each of the foregoing Guarantees has been
amended, supplemented or otherwise modified through the date hereof,
collectively, the "Existing Subsidiary Guarantees");
WHEREAS, (i) the Company entered into several Note Purchase
Agreements, dated as of December 29, 1992, as amended, pursuant to which
the Purchasers party thereto (the "Purchasers") purchased Senior Notes
of the Company (as hereafter defined, the "1992 Private Placement
Notes") and (ii) in connection therewith and with the Existing Credit
Agreement, (A) amendments were entered into with respect to the Existing
Subsidiary Guarantees made by Capstone and AEI in order to provide that
such Existing Subsidiary Guarantees would thereafter guarantee, equally
and ratably, obligations owing in respect of the 1992 Private Placement
Notes and obligations owing in respect of the Existing Credit Agreement
(including as amended and restated hereby) and (B) the Company, the
Collateral Agent, certain of the Existing Banks and the Purchasers
executed and delivered an Intercreditor Agreement, dated as of December
29, 1992 (as the same may have been amended, supplemented or otherwise
modified through the date hereof, the "Intercreditor Agreement"),
pursuant to which the Collateral Agent now holds the Existing Subsidiary
Guarantees as guarantees of the Company's obligations under the 1992
Private Placement Notes and the Existing Credit Agreement, in each case,
as amended, supplemented or otherwise modified from time to time;
WHEREAS, on the Closing Date (as hereinafter defined), (i) all
amounts owing under or in connection with the Existing Credit Agreement
will be paid in full, (ii) all commitments and obligations of each
Existing Bank under the Existing Credit Agreement will terminate, (iii)
the Existing Credit Agreement will be amended and restated in its
entirety as set forth in this Agreement and (iv) the Borrowers may then
and thereafter make borrowings from the Banks under this Agreement in
accordance with the Commitments hereunder;
WHEREAS, from and after the Closing Date the Collateral Agent
will continue to hold the Existing Subsidiary Guarantees as guarantees
of the Company's obligations under the 1992 Private Placement Notes and
this Agreement, in each case as amended, supplemented or otherwise
modified from time to time; and
WHEREAS, the Company has requested that the Existing Credit
Agreement be amended and restated in its entirety in order to provide a
multi-currency, multi-option credit facility which will be available to
the Company and certain of its foreign Subsidiaries as hereafter set
forth;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereto hereby agree that,
effective on the Closing Date, the Existing Credit Agreement shall be
and hereby is amended and restated in its entirety to read as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/100 of 1%) equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Base CD Rate in effect on such
day plus 1% and (c) the Federal Funds Effective Rate in effect 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
Chemical 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 Chemical in connection with extensions of credit to
debtors); "Base CD Rate" shall mean the sum of (a) the product of (i)
the Three-Month Secondary CD Rate and (ii) a fraction, the numerator of
which is one and the denominator of which is one minus the C/D Reserve
Percentage and (b) the C/D Assessment Rate; "Three-Month Secondary CD
Rate" shall mean, for any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such day (or, if
such day shall not be a Business Day, the next preceding Business Day)
by the Board through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current
practices of the Board, be published in Federal Reserve Statistical
Release H.15(519) during the week following such day), or, if such rate
shall not be so reported on such day or such next preceding Business
Day, the average of the secondary market quotations for three-month
certificates of deposit of major money center banks in New York City
received at approximately 10:00 A.M., New York City time, on such day
(or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Administrative Agent from three New York City
negotiable certificate of deposit dealers of recognized standing
selected by it; 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 Base CD Rate or the
Federal Funds Effective Rate, or both, for any reason, including the
inability or failure of the Administrative Agent to obtain sufficient
quotations in accordance with the terms thereof, the ABR shall be
determined without regard to clause (b) or (c), or both, of the first
sentence of this definition, as appropriate, until the circumstances
giving rise to such inability no longer exist. Any change in the ABR
due to a change in the Prime Rate, the Base CD 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, the Base CD Rate or the
Federal Funds Effective Rate, respectively.
"ABR Loans": Loans denominated in Dollars the rate of
interest applicable to which is based upon the ABR.
"Additional Local Currencies": Australian Dollars, Belgian
Francs, Italian Lira, Singapore Dollars, Spanish Pesetas, New Taiwan
Dollars and any other available and freely convertible non-Dollar
currency selected by the Company and approved by the Administrative
Agent in the manner described in subsection 14.1(b).
"Adjusted Consolidated EBITDA": for any fiscal period, (a)
the Consolidated Net Income of the Company and its Subsidiaries for such
period, plus (b) to the extent deducted from earnings in determining
Consolidated Net Income for such period, the sum, in each case for such
period, of income taxes, interest expense, depreciation expense,
amortization expense, including amortization of any goodwill or other
intangibles, minus (c) to the extent included in determining
Consolidated Net Income for such period, non-cash equity earnings of
unconsolidated Affiliates, plus (d) to the extent excluded in
determining Consolidated Net Income for such period, cash distributions
received by the Company from unconsolidated Affiliates, all as
determined on a consolidated basis in accordance with GAAP.
"Administrative Schedule": Schedule IV to this Agreement,
which contains interest rate definitions and administrative information
in respect of each Currency and each Type of Loan.
"Administrative Agent": as defined in the preamble hereto.
"AEI": as defined in the recitals hereof.
"Affected Bank": any Bank affected by the events described in
subsection 7.4, 7.5 or 7.6, as the case may be, but only for the period
during which such Bank shall be affected by such events.
"Affiliate": as to any Person, (a) any other Person (other
than a Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person or (b) any
Person who is a director or officer of the Company or any of its
Subsidiaries. For purposes of this definition, "control" of a Person
means the power, directly or indirectly, 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.
"Agents": as defined in the preamble hereto (individually,
each an "Agent").
"Agreement": this Second Amended and Restated Credit
Agreement, as amended, supplemented or otherwise modified from time to
time.
"Allocable Share": as to any Assenting Bank at any time, a
fraction, the numerator of which shall be the Commitment of such
Assenting Bank then in effect and the denominator of which shall be the
aggregate of the Commitments of all Assenting Banks then in effect.
"Anthem": as defined in the recitals hereof.
"Applicable Margin": for each Type of Loan, the rate per
annum determined from time to time based upon the Ratings in effect by
Moody's and S&P set forth under the relevant column heading below
opposite such Ratings:
Ratings Applicable Margin
(in basis points)
Eurocurrency
S&P/Moody's Loans ABR Loans
A-/A3 20.00 0
or higher
Greater than
or equal to
BBB/Baa2 22.50 0
Greater than
or equal to
BBB-/Baa3 35.00 0
Less than
or equal to
BB+/Ba1 37.50 0
; provided that, in the event that the Ratings of S&P and Moody's
do not coincide, the Applicable Margin set forth above opposite the
higher of such Ratings will apply, unless one of the Ratings is BB+/Ba1
or lower, in which case the Applicable Margin will be that applicable to
BB+/Ba1. Notwithstanding the foregoing, in the event that no Ratings
are in effect at such time of determination, the Applicable Margin will
be determined in a manner to be mutually agreed upon by the
Administrative Agent and the Company and not disapproved by the Required
Banks and provided, further, that at any time when no Ratings are in
effect and prior to the time a manner for determination of the
Applicable Margin is mutually agreed upon by the Administrative Agent
and the Company, the Applicable Margin shall be the Applicable Margin in
effect immediately prior to the initial time when no Ratings were in
effect.
"Application": an application, in such form as the Issuing
Bank may specify from time to time, requesting the Issuing Bank to issue
a Letter of Credit.
"Assenting Bank": as defined in subsection 7.7(a).
"Assignee": as defined in subsection 14.6(c).
"Assignment and Acceptance": each Assignment and Acceptance,
substantially in the form of Exhibit I, executed and delivered pursuant
to subsection 14.6(c).
"Available Foreign Currencies": Deutsche Marks, Pounds
Sterling, Hong Kong Dollars, French Francs, Danish Kroner, Norwegian
Kroner, Finnish Markka, Swedish Kroner and Dutch Guilder, and any other
available and freely-convertible non-Dollar currency selected by the
Company and approved by the Administrative Agent in the manner described
in subsection 14.1(b).
"Bankers Trust": as defined in the preamble hereto.
"Banks": as defined in the preamble hereto.
"Board": the Board of Governors of the Federal Reserve System
or any successor.
"Borrowers": the collective reference to the Company, the
Foreign Subsidiary Borrowers and the Local Currency Borrowers.
"Borrowing Date": any Business Day on which the Company or
any Foreign Subsidiary Borrower requests the Banks to make Loans
hereunder.
"Borrowing Percentage": with respect to Committed Rate Loans
to be made by any Bank at any time, the ratio (expressed as a
percentage) of the amount of such Bank's Undrawn Commitment at such time
to the aggregate amount of the Undrawn Commitments of all the Banks at
such time; provided, that in determining any Bank's Undrawn Commitment
for purpose of determining such Bank's Borrowing Percentage of any
Committed Rate Loans whose proceeds will be simultaneously applied to
repay Swing Line Loans or Local Currency Loans or to pay Reimbursement
Obligations, such Bank's Commitment Percentage of the amount of such
Swing Line Loans and Reimbursement Obligations, and the amount of such
Local Currency Loans owing to such Bank, will not be considered
Committed Exposure of such Bank. The Borrowing Percentage of each Bank
at any time will be calculated by the Administrative Agent on the basis
of its most recent calculations of the Undrawn Commitments of the Banks.
"Business": as defined in subsection 8.20(b).
"Business Day": (a) when such term is used in respect of a
day on which a Loan in a Foreign Currency is to be made, a payment is to
be made in respect of such Loan, an Exchange Rate is to be set in
respect of such Foreign Currency or any other dealing in such Foreign
Currency is to be carried out pursuant to this Agreement, such term
shall mean a London Banking Day which is also a day on which banks are
open for general banking business in the city which is the principal
financial center of the country of such Foreign Currency, (b) when such
term is used to describe a day on which a request is to be made to an
Issuing Bank for issuance of a Letter of Credit or on which a Letter of
Credit is to be issued, such term shall mean a day other than a
Saturday, Sunday or other day on which commercial banks in the city in
which such Issuing Bank's Issuing Office is located is authorized or
required by law to close and (c) when such term is used in any context
in this Agreement, such term shall mean 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.
"C/D Assessment Rate": for any day as applied to any ABR
Loan, the net annual assessment rate (rounded upward to the nearest
1/100th of 1%) determined by Chemical to be payable on such day to the
Federal Deposit Insurance Corporation or any successor ("FDIC") for
FDIC's insuring time deposits made in Dollars at offices of Chemical in
the United States.
"C/D Reserve Percentage": for any day as applied to any ABR
Loan, that percentage (expressed as a decimal) which is in effect on
such day, as prescribed by the Board, for determining the maximum
reserve requirement for a Depositary Institution (as defined in
Regulation D of the Board) in respect of new non-personal time deposits
in Dollars having a maturity of 30 days or more.
"Capital Stock": any and all shares, interests,
participations or other equivalents (however designated) of capital
stock of a corporation, any and all equivalent ownership interests in a
Person (other than a corporation) and any and all warrants, options or
rights to purchase any of the foregoing.
"Capitalization Documents": the collective reference to the
Governing Documents of the Company and each of its Subsidiaries, the
certificates of designation and other agreements governing the issuance
of, or setting forth the terms of, any Capital Stock (including, without
limitation, the common stock) issued or to be issued by the Company or
any of its Subsidiaries and the Rights Agreement.
"Capstone": as defined in the recitals hereof.
"Change in Control": one or more of the following events:
(a) less than a majority of the members of the Company's
board of directors shall be persons who either (i) were serving as
directors on the Closing Date or (ii) were nominated as directors and
approved by the vote of the majority of the directors who are directors
referred to in clause (i) above or this clause (ii); or
(b) the stockholders of the Company shall approve any
plan or proposal for the liquidation or dissolution of the Company; or
(c) a Person or group of Persons acting in concert
(other than the direct or indirect beneficial owners of the Capital
Stock of the Company as of the Closing Date) shall, as a result of a
tender or exchange offer, open market purchases, privately negotiated
purchases or otherwise, have become the direct or indirect beneficial
owner (within the meaning of Rule 13d-3 under the Securities Exchange
Act of 1934, as amended from time to time) of securities of the Company
representing 40% or more of the combined voting power of the outstanding
voting securities for the election of directors or shall have the right
to elect a majority of the board of directors of the Company.
"Chemical": as defined in the recitals hereof.
"Closing Date": the date on which the conditions precedent
set forth in subsection 9.1 shall be satisfied.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Commitment": as to any Bank, the obligation of such Bank to
make and/or acquire participating interests in Committed Rate Loans or
Swing Line Loans hereunder and/or under Local Currency Facilities and
issue and/or acquire participating interests in Letters of Credit
hereunder in an aggregate Dollar Equivalent Amount at any one time
outstanding not to exceed the amount set forth opposite such Bank's name
on Schedule I, as such amount may be changed from time to time in
accordance with the provisions of this Agreement.
"Commitment Percentage": as to any Bank at any time, the
percentage which such Bank's Commitment then constitutes of the
aggregate Commitments (or, at any time after the Commitments shall have
expired or terminated, the percentage which the amount of such Bank's
Exposure at such time constitutes of the aggregate amount of the
Exposure of all the Banks at such time).
"Commitment Period": the period from and including the
Closing Date to but not including the Termination Date or such earlier
date on which the Commitments shall terminate as provided herein.
"Committed Exposure": as to any Bank, the sum of (a) the
aggregate Dollar Equivalent Amount of the principal amount of all
outstanding Committed Rate Loans and Local Currency Loans made by such
Bank or its Local Currency Bank affiliates, agencies or branches plus
(b) such Bank's Commitment Percentage of the aggregate Dollar Equivalent
Amount of the principal or face amount of all outstanding Swing Line
Loans and L/C Obligations.
"Committed Rate Loan": as defined in subsection 2.1; a
Committed Rate Loan bearing interest based upon the ABR shall be a
"Committed Rate ABR Loan", and a Committed Rate Loan bearing interest
based upon a Eurocurrency Rate shall be a "Committed Rate Eurocurrency
Loan".
"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 Guarantee": the Guarantee of the Company,
substantially in the form of Exhibit F, as amended, supplemented or
otherwise modified from time to time.
"Company Guarantee Ratio": at any time, the ratio (expressed
as a percentage) of (a) the excess of (i) the aggregate Exposure of the
Foreign Subsidiary Borrowers and the Local Currency Borrowers at such
time over (ii) the Guarantee Ceiling Amount at such time (the "Excess
Exposure") to (b) the aggregate Exposure of the Foreign Subsidiary
Borrowers and Local Currency Borrowers at such time; provided that, if
the Excess Exposure at any time is less than or equal to zero, the
Company Guarantee Ratio shall be zero.
"Competitive Advance Loan": as defined in subsection 3.1.
"Competitive Advance Loan Offer": with respect to any
Competitive Advance Loan Request in any Currency, an offer from a Bank
in respect of such Competitive Advance Loan Request, containing the
information in respect of such Competitive Advance Loan Offer and
delivered to the Person, in the manner and by the time specified for a
Competitive Advance Loan Offer in respect of such Currency in the
Administrative Schedule.
"Competitive Advance Loan Request": with respect to any
Competitive Advance Loan in any Currency, a request from the Specified
Borrower in respect of such Loan, containing the information in respect
of such Competitive Advance Loan and delivered to the Person, in the
manner and by the time specified for a Competitive Advance Loan Request
in respect of such Currency in the Administrative Schedule.
"Consent and Confirmation": the Consent and Confirmation to
be executed and delivered by Capstone, AEI, Anthem and Gates,
substantially in the form of Exhibit D.
"Consolidated Cash Interest Expense": for any period, (a) the
amount which would, in conformity with GAAP, be set forth opposite the
caption "interest expense" or any like caption on a consolidated income
statement of the Company and its Subsidiaries minus (b) the amount of
non-cash interest (including interest paid by the issuance of additional
securities) included in such amount.
"Consolidated Net Income": for any fiscal period means the
consolidated net income (or loss) of the Company and its Subsidiaries
after excluding all unusual, extraordinary and non-recurring gains and
after adding all unusual, extraordinary and non-recurring losses, in all
cases of the Company and its Subsidiaries determined on a consolidated
basis during the relevant period in accordance with GAAP.
"Consolidated Net Worth": at a particular date, all amounts
which would be included under shareholders' equity on a consolidated
balance sheet of the Company and its Subsidiaries determined on a
consolidated basis in accordance with GAAP.
"Consolidated Total Capitalization": at a particular date,
the sum of (a) Consolidated Net Worth plus (b) Consolidated Total Debt
as at such date.
"Consolidated Total Debt": all Indebtedness of the Company
and its Subsidiaries (excluding Indebtedness of the Company owing to any
of its Subsidiaries or Indebtedness of any Subsidiary of the Company
owing to the Company or any other Subsidiary of the Company), as
determined on a consolidated basis in accordance with GAAP.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or any
of its property is bound.
"Credit Documents": this Agreement, the Applications, the
Subsidiary Guarantees, the Company Guarantee and the Local Currency
Facilities.
"Currencies": the collective reference to Dollars and Foreign
Currencies.
"Default": any of the events specified in Section 12, whether
or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Dollar Equivalent Amount": with respect to (i) the amount of
any Foreign Currency on any date, the equivalent amount in Dollars of
such amount of Foreign Currency, as determined by the Administrative
Agent using the Exchange Rate and (ii) any amount in Dollars, such
amount.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"Domestic Subsidiary": as to any Person, a Subsidiary of such
Person organized under the laws of a State of the United States or the
District of Columbia.
"Environmental Laws": any and all applicable foreign,
Federal, state, local or municipal laws, rules, orders, regulations,
statutes, ordinances, codes, decrees, requirements of any Governmental
Authority or other Requirements of Law (including, without limitation,
common law) regulating, relating to or imposing liability or standards
of conduct concerning protection of human health or the environment, as
now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Loan": any Loan bearing interest based upon a
Eurocurrency Rate.
"Eurocurrency Rate": in respect of Dollars and each Available
Foreign Currency, the rate determined as the Eurocurrency Rate for
Dollars or such Available Foreign Currency in the manner set forth in
the Administrative Schedule.
"Event of Default": any of the events specified in Section
12, provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Exchange Rate": with respect to any Foreign Currency on any
date, the rate at which such Foreign Currency may be exchanged into
Dollars, as set forth on such date on the relevant Reuters currency page
at or about 11:00 A.M. London time on such date. In the event that such
rate does not appear on any Reuters currency page, the "Exchange Rate"
with respect to such Foreign Currency shall be determined by reference
to such other publicly available service for displaying exchange rates
as may be agreed upon by the Administrative Agent and the Company or, in
the absence of such agreement, such "Exchange Rate" shall instead be the
Administrative Agent's spot rate of exchange in the interbank market
where its foreign currency exchange operations in respect of such
Foreign Currency are then being conducted, at or about 10:00 A.M., local
time, at such date for the purchase of Dollars with such Foreign
Currency, for delivery two Business Days later; provided, that if at the
time of any such determination, no such spot rate can reasonably be
quoted, the Administrative Agent may use any reasonable method as it
deems applicable to determine such rate, and such determination shall be
conclusive absent manifest error (without prejudice to the determination
of the reasonableness of such method).
"Existing Subsidiary Guarantees": as defined in the recitals
hereof.
"Exposure": at any date, (a) as to all the Banks, the
aggregate Dollar Equivalent Amount of (i) the outstanding principal
amount of all Loans then outstanding and (ii) all L/C Obligations then
outstanding, and (b) as to any Bank, the aggregate Dollar Equivalent
Amount of (i) the outstanding principal amount of all Committed Rate
Loans, Local Currency Loans and Competitive Advance Loans made by such
Bank or its Local Bank affiliates, branches or agencies and (ii) such
Bank's Commitment Percentage of the outstanding principal amount of all
Swing Line Loans and L/C Obligations.
"Extensions of Credit": the collective reference to the
making of any Loans and the issuance of any Letters of Credit but
excluding the continuation or conversion of any Loan pursuant to a
Notice of Conversion or a Notice of Continuation.
"Facility Fee Rate": a rate per annum determined from time to
time based upon the Ratings in effect by Moody's and S&P set forth under
the column below opposite such Ratings:
Ratings Facility Fee Rate
S&P/Moody's (in basis points)
A-/A3 10.00
or higher
Greater than
or equal to
BBB/Baa2 12.50
Greater than
or equal to
BBB-/Baa3 15.00
Less than
or equal to
BB+/Ba1 25.00
; provided that, in the event that the Ratings of S&P and Moody's
do not coincide, the Facility Fee Rate set forth above opposite the
higher of such Ratings will apply, unless one of the Ratings is BB+/Ba1
or lower, in which case the Facility Fee Rate will be that applicable to
BB+/Ba1. Notwithstanding the foregoing, in the event that no Ratings
are in effect at such time of determination, the Facility Fee Rate will
be determined in a manner to be mutually agreed upon by the
Administrative Agent and the Company and not disapproved by the Required
Banks and provided, further, that at any time when no Ratings are in
effect and prior to the time a manner for determination of the Facility
Fee Rate is mutually agreed upon by the Administrative Agent and the
Company, the Facility Fee Rate shall be the Facility Fee Rate in effect
immediately prior to the initial time when no Ratings were in effect.
"Financing Lease": any lease of property, real or personal,
the obligations of the lessee in respect of which are required in
accordance with GAAP to be capitalized on a balance sheet of the lessee.
"Foreign Currencies": the collective reference to the
Available Foreign Currencies and the Additional Local Currencies.
"Foreign Currency Exposure": at any date, the aggregate
Dollar Equivalent Amount of (a) the outstanding principal amount of all
Loans then outstanding which are denominated in a currency other than
Dollars and (b) all L/C Obligations then outstanding which are
denominated in a currency other than Dollars.
"Foreign Subsidiary Borrower": each Subsidiary of the Company
listed as a Foreign Subsidiary Borrower in Schedule II as amended from
time to time in accordance with subsection 14.1(b)(i); provided that
with respect to any Subsidiary for which a Foreign Subsidiary Opinion
has not previously been delivered, if the aggregate Exposure of such
Subsidiary owing to all Banks exceeds $20,000,000 for a period of 30
consecutive days, then, unless a Foreign Subsidiary Opinion is delivered
within 30 days after the end of such period, such Subsidiary shall cease
to be a Foreign Subsidiary Borrower 30 days after the end of such period
with respect to all Exposure of such Subsidiary owing to the Banks in
excess of $20,000,000.
"Foreign Subsidiary Opinion": with respect to any Foreign
Subsidiary Borrower, a legal opinion of counsel to such Foreign
Subsidiary Borrower addressed to the Administrative Agent and the Banks
concluding that such Foreign Subsidiary Borrower and the Credit
Documents to which it is a party substantially comply with the matters
listed on Exhibit G-3 hereto, with such deviations therefrom as the
Administrative Agent shall consent (such consent not to be unreasonably
withheld).
"Funding Office": for each Type of Committed Rate Loan and
each Currency, the Funding Office set forth in respect thereof in the
Administrative Schedule.
"Funding Time": for each Type of Committed Rate Loan and each
Currency, the Funding Time set forth in respect thereof in the
Administrative Schedule.
"GAAP": generally accepted accounting principles in the
United States of America in effect from time to time.
"Gates": as defined in the recitals hereof.
"Governing Documents": as to any Person, the certificate or
articles of incorporation and by-laws or other organizational or
governing documents of such Person.
"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.
"Guarantee Ceiling Amount": at any time, the aggregate amount
of obligations that, pursuant to the restrictions contained in the Note
Purchase Agreement, may be guaranteed by the Company under the Company
Guarantee on a basis pari passu with the 1992 Private Placement Notes.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has
issued a reimbursement, counterindemnity or similar obligation, in
either case guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends or other obligations (the "primary obligations") of
any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation of
the guaranteeing person, whether or not contingent, (i) to purchase any
such primary obligation or any property constituting direct or indirect
security therefor, (ii) to advance or supply funds (1) for the purchase
or payment of any such primary obligation or (2) to maintain working
capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (iii) 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 (iv)
otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the
term Guarantee Obligation shall not include endorsements of instruments
for deposit or collection in the ordinary course of business. The
amount of any Guarantee Obligation of any guaranteeing person shall be
deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Guarantee Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may
be liable are not stated or determinable, in which case the amount of
such Guarantee Obligation shall be such guaranteeing person's maximum
reasonably anticipated liability in respect thereof as determined by the
Company in good faith.
"Guarantor": the Company or any Subsidiary in its capacity as
a party to the Company Guarantee or a Subsidiary Guarantee, as the case
may be.
"Hedging Agreements": (a) Interest Rate Agreements and (b)
any swap, futures, forward or option agreements or other agreements or
arrangements designed to limit or eliminate the risk and/or exposure of
a Person to fluctuations in currency exchange rates.
"Hedging Banks": any Bank or any of its subsidiaries or
affiliates which from time to time enter into Hedging Agreements with
the Company or any of its Subsidiaries.
"Indebtedness": of any Person at any date, without
duplication, (a) the principal amount of all indebtedness of such Person
for borrowed money or for the deferred purchase price of property or
services (other than current trade liabilities incurred in the ordinary
course of business and payable in accordance with customary practices),
(b) the principal amount of any other indebtedness of such Person which
is evidenced by a note, bond, debenture or similar instrument, (c) the
portion of all obligations of such Person under Financing Leases which
must be capitalized in accordance with GAAP, (d) the principal or stated
amount of all obligations of such Person in respect of letters of
credit, banker's acceptances or similar obligations issued or created
for the account of such Person, (e) all liabilities arising under
Hedging Agreements of such Person, (f) the principal or stated amount of
all Guarantee Obligations of such Person (other than guarantees by the
Company or any Subsidiary in respect of current trade liabilities of the
Company or any Subsidiary incurred in the ordinary course of business
and payable in accordance with customary terms), and (g) the principal
amount of all liabilities secured by any Lien on any property owned by
such Person even though such Person has not assumed or otherwise become
liable for the payment thereof.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245
of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intercreditor Agreement": as defined in the recitals hereof.
"Interest Payment Date": (a) as to any ABR Loan, the last day
of each March, June, September and December, (b) as to any Committed
Rate Eurocurrency Loan having an Interest Period of three months or
less, the last day of such Interest Period, (c) as to any Committed Rate
Eurocurrency Loan having an Interest Period longer than three months,
each day which is three months after the first day of such Interest
Period and the last day of such Interest Period, (d) as to any Swing
Line Loan, the last Business Day of each calendar month during which
such Swing Line Loan is outstanding, and (e) as to any Competitive
Advance Loan, the date or dates set forth in the applicable Competitive
Advance Loan Request or otherwise agreed upon by the relevant Borrower
and Bank at the time the terms of such Competitive Advance Loan are
determined as provided in Section 3.
"Interest Period": with respect to any Committed Rate
Eurocurrency Loan:
(i) initially, the period commencing on the
borrowing or conversion date, as the case may be, with respect to such
Eurocurrency Loan and ending one, two, three or six months thereafter,
as selected by the relevant Borrower in its Notice of Borrowing or
Notice of Conversion, as the case may be, given with respect thereto;
and
(ii) thereafter, each period commencing on the last
day of the next preceding Interest Period applicable to such
Eurocurrency Loan and ending one, two, three or six months thereafter,
as selected by the relevant Borrower by a Notice of Continuation with
respect thereto;
provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
(1) if any Interest Period would otherwise end on a day
that is not a Business Day, such Interest Period shall be extended to
the next succeeding Business 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
Business Day;
(2) any Interest Period that would otherwise extend
beyond the Termination Date shall end on the Termination Date; and
(3) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month.
"Interest Rate Agreement": any interest rate protection
agreement, interest rate future, interest rate option, interest rate
swap, interest rate cap or other interest rate hedge or arrangement
under which the Company is a party or a beneficiary.
"Issuing Bank": in respect of any Currency, each Bank listed
as an Issuing Bank in Schedule III in respect of such Currency.
"Issuing Office": in respect of each Issuing Bank, the
Issuing Office set forth for such Issuing Bank in Schedule III.
"Joinder Agreement": each Joinder Agreement, substantially in
the form of Exhibit A, from time to time executed and delivered
hereunder pursuant to subsection 14.1 (b).
"L/C Commitment": $35,000,000.
"L/C Obligations": at any time, an amount equal to the sum of
the Dollar Equivalent Amount of (a) the aggregate then undrawn and
unexpired amount of the then outstanding Letters of Credit and (b) the
aggregate amount of drawings under Letters of Credit which have not then
been reimbursed pursuant to subsection 5.5(a).
"L/C Participant": in respect of each Letter of Credit, each
Bank (other than the Issuing Bank in respect of such Letter of Credit)
in its capacity as the holder of a participating interest in such Letter
of Credit.
"Letters of Credit": as defined in subsection 5.1(b).
"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or
other security interest or any 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 and any Financing Lease having substantially the
same economic effect as any of the foregoing).
"Limited Subsidiary Borrower": any Foreign Subsidiary
Borrower which may not have Exposure in excess of $20,000,000 by
operation of the proviso to the definition of "Foreign Subsidiary
Borrower" in this subsection 1.1; provided such Foreign Subsidiary
Borrower will cease to be a Limited Subsidiary Borrower upon the earlier
of (a) six months from the date it became a Limited Subsidiary Borrower
or (b) delivery of a Foreign Subsidiary Opinion with respect to it.
"Loan": any Committed Rate Loan, Competitive Advance Loan,
Swing Line Loan or Local Currency Loan.
"Loan Parties": the Company and each Subsidiary of the
Company which is a party to a Credit Document.
"Local Currency Bank": any Bank (or, if applicable, any
affiliate, branch or agency thereof) party to a Local Currency Facility.
"Local Currency Bank Maximum Borrowing Amount": as defined in
subsection 6.1(b).
"Local Currency Borrower": each Subsidiary of the Company
organized under the laws of a jurisdiction outside the United States
that the Company designates as a "Local Currency Borrower" in a Local
Currency Facility Addendum.
"Local Currency Facility": any Qualified Credit Facility that
the Company designates as a "Local Currency Facility" pursuant to a
Local Currency Facility Addendum.
"Local Currency Facility Addendum": a Local Currency Facility
Addendum received by the Administrative Agent, substantially in the form
of Exhibit C and conforming to the requirements of Section 6.
"Local Currency Facility Agent": with respect to each Local
Currency Facility, the Local Currency Bank acting as agent for the Local
Currency Banks party thereto.
"Local Currency Facility Maximum Borrowing Amount": as
defined in subsection 6.1(b).
"Local Currency Loan": any loan made pursuant to a Local
Currency Facility.
"London Banking Day": any day on which banks in London are
open for general banking business, including dealings in foreign
currency and exchange.
"Material Adverse Effect": a material adverse effect on (a)
the business, operations, property, condition (financial or otherwise)
or prospects of the Company and its Subsidiaries taken as a whole, (b)
the ability of the Company to perform its obligations under this
Agreement or other Credit Documents or (c) the validity or
enforceability of this Agreement, any Application or any of the other
Credit Documents or the rights or remedies of the Administrative Agent,
the Collateral Agent, the Agents or the Banks hereunder or thereunder.
"Materials of Environmental Concern": any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Law,
including, without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.
"Moody's": Moody's Investors Service, Inc.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"1992 Private Placement Notes": the $75,000,000 Senior
Secured Notes issued by the Company, as any of the same may be amended,
supplemented, endorsed or otherwise modified from time to time; provided
the aggregate principal amount thereof is not increased.
"Non-Excluded Taxes": as defined in subsection 7.6.
"Note Purchase Agreement": the collective reference to the
several Senior Note Purchase Agreements, each dated as of December 29,
1992, among the Company and the respective financial institutions party
thereto as purchasers, as the same may be amended, supplemented or
otherwise modified from time to time.
"Notice of Borrowing": with respect to a Committed Rate Loan
of any Type in any Currency, a notice from the Specified Borrower in
respect of such Loan, containing the information in respect of such Loan
and delivered to the Person, in the manner and by the time specified for
a Notice of Borrowing in respect of such Currency and such Type of Loan
in the Administrative Schedule.
"Notice of Continuation": with respect to a Committed Rate
Eurocurrency Loan in any Currency, a notice from the Specified Borrower
in respect of such Loan, containing the information in respect of such
Loan and delivered to the Person, in the manner and by the time
specified for a Notice of Continuation in respect of such Currency in
the Administrative Schedule.
"Notice of Conversion": with respect to a Committed Rate Loan
in Dollars which a Specified Borrower wishes to convert from a
Eurocurrency Loan to an ABR Loan, or from an ABR Loan to a Eurocurrency
Loan, as the case may be, a notice from such Borrower setting forth the
amount of such Loan to be converted, the date of such conversion and, in
the case of conversions of ABR Loans to Eurocurrency Loans, the length
of the initial Interest Period applicable thereto. Each Notice of
Conversion shall be delivered to the Administrative Agent at its address
set forth in subsection 14.2 and shall be delivered before 12:00 Noon,
New York City time, on the Business Day of the requested conversion in
the case of conversions to ABR Loans, and before 12:00 Noon, New York
City time, three Business Days before the requested conversion in the
case of conversions to Eurocurrency Loans.
"Notice of Guarantee Ceiling Amount": a certificate of the
Company substantially in the form of Exhibit J delivered to the
Administrative Agent and calculating the Guarantee Ceiling Amount.
"Notice of Local Currency Outstandings": with respect to each
Local Currency Facility Agent, a notice from such Local Currency
Facility Agent containing the information, delivered to the Person, in
the manner and by the time, specified for a Notice of Local Currency
Outstandings in the Administrative Schedule.
"Notice of Prepayment": with respect to prepayment of any
Committed Rate Loan of any Type in any Currency, a notice from the
Specified Borrower in respect of such Loan, containing the information
in respect of such prepayment and delivered to the Person, in the manner
and by the time specified for a Notice of Prepayment in respect of such
Currency and such Type of Loan in the Administrative Schedule.
"Notice of Swing Line Borrowing": with respect to a Swing
Line Loan of any Type in any Currency, a notice from the Specified
Borrower in respect of such Loan, containing the information in respect
of such Swing Line Loan and delivered to the Person, in the manner and
by the time agreed by the Company and the applicable Swing Line Bank in
respect of such Currency and such Type of Loan.
"Notice of Swing Line Outstandings": with respect to each
Swing Line Bank, a notice from such Swing Line Bank containing the
information, delivered to the Person, in the manner and by the time,
specified for a Notice of Swing Line Outstandings in the Administrative
Schedule.
"Notice of Swing Line Refunding": with respect to each Swing
Line Bank, a notice from such Swing Line Bank containing the
information, delivered to the Person, in the manner and by the time,
specified for a Notice of Swing Line Refunding in the Administrative
Schedule.
"Participant": as defined in subsection 14.6(b).
"Participating Creditor": as defined in the Intercreditor
Agreement.
"Payment Office": for each Type of Committed Rate Loan and
each Currency, the Payment Office set forth in respect thereof in the
Administrative Schedule.
"Payment Time": for each Type of Committed Rate Loan and each
Currency, the Payment Time set forth in respect thereof in the
Administrative Schedule.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which the Company or a Commonly
Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Properties": as defined in subsection 8.20(a).
"Qualified Credit Facility": a credit facility (a) providing
for one or more Local Currency Banks to make loans denominated in an
Additional Local Currency to a Local Currency Borrower, (b) providing
for such loans to bear interest at a rate or rates determined by the
Company and such Local Currency Bank or Local Currency Banks and (c)
otherwise conforming to the requirements of Section 6.
"Quotation Day": in respect of the determination of the
Eurocurrency Rate for any Interest Period for any Currency, the day on
which quotations would ordinarily be given by prime banks in the London
interbank market (or, if such Currency is Sterling, in the Paris
interbank market) for deposits in such Currency for delivery on the
first day of such Interest Period; provided, that if quotations would
ordinarily be given on more than one date, the Quotation Day for such
Interest Period shall be the last of such dates. On the date hereof,
the Quotation Day in respect of any Interest Period for any Currency is
customarily the last day prior to the beginning of such Interest Period
which is (i) at least two London Banking Days prior to the beginning of
such Interest Period and (ii) a day on which banks are open for general
banking business in the city which is the principal financial center of
the country of such Currency (and, in the case of Sterling, in Paris).
"Ratings": the implied senior unsecured debt ratings of the
Company in effect from time to time by Moody's, S&P or a similar rating
agency.
"Register": as defined in subsection 14.6(d).
"Regulation U": Regulation U of the Board as in effect from
time to time.
"Reimbursement Obligation": in respect of each Letter of
Credit, the obligation of the account party thereunder to reimburse the
Issuing Bank for all drawings made thereunder in accordance with Section
5 and the Application related to such Letter of Credit.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Replacement Bank": as defined in subsection 7.7(b).
"Reportable Event": any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the thirty day
notice period is waived under subsections .13, .14, .16, .18, .19 or .20
of PBGC Reg. 2615.
"Required Banks": at any time, Banks the Commitment
Percentages of which aggregate more than 50%.
"Requirement of Law": as to any Person, the Governing
Documents of such Person, and any law, treaty, rule or regulation 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": as to any Person, the chief executive
officer, the chairman of the board, the president, the chief financial
officer, the chief accounting officer, any executive or senior vice
president or the treasurer of such Person.
"Restricted Payments": as defined in subsection 11.5.
"Rights Agreement": the Rights Agreement, dated as of March
2, 1988, between the Company and Chemical Bank, as successor by merger
to Manufacturers Hanover Trust Company, as rights agent, as amended,
supplemented or otherwise modified from time to time.
"S&P": Standard & Poor's Ratings Group.
"Schedule Amendment": each Schedule Amendment, substantially
in the form of Exhibit B, executed and delivered pursuant to subsection
14.1.
"Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Specified Borrower": the collective reference to the Company
and the Foreign Subsidiary Borrowers.
"Subordinated Debentures": the Company's 5-3/4% Convertible
Subordinated Debentures due 2002.
"Subordinated Indebtedness": Indebtedness outstanding under
the Subordinated Debentures.
"Subsidiary": as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership
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, or the management of which is otherwise controlled, directly
or indirectly through one or more intermediaries, or both, by such
Person. Unless otherwise qualified, all references to a "Subsidiary" or
to "Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Company.
"Subsidiary Guarantee": each of (a) the Existing Subsidiary
Guarantees and (b) each other Subsidiary Guarantee, substantially in the
form of the Existing Subsidiary Guarantees with such changes as shall be
approved by the Administrative Agent, to be executed and delivered from
time to time by any other Domestic Subsidiary that accounts for more
than 5% of Total Assets at any date, in each case, as the same may be
amended, supplemented or otherwise modified from time to time.
"Swing Line Bank": in respect of any Specified Borrower and
any Currency, each Bank listed as a Swing Line Bank in respect of such
Specified Borrower and Currency in Schedule III.
"Swing Line Currency": in respect of any Specified Borrower,
the Currency set forth for such Specified Borrower in Schedule III.
"Swing Line Limit": in respect of any Specified Borrower, the
amount listed as the Swing Line Limit in respect of such Specified
Borrower in Schedule III, but not in any case for all Specified
Borrowers to exceed a Dollar Equivalent Amount equal to $75,000,000.
"Swing Line Loan": as defined in subsection 4.1.
"Swing Line Rate": in respect of each Swing Line Currency for
each Swing Line Bank, the interest rate agreed from time to time between
the Company and such Swing Line Bank.
"Termination Date": August 16, 2000.
"Total Assets": at a particular date, the assets of the
Company and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP.
"Tranche": the collective reference to Committed Rate
Eurocurrency Loans in any Currency the then current Interest Periods
with respect to all of which begin on the same date and end on the same
later date (whether or not such Loans shall originally have been made on
the same day).
"Transferee": as defined in subsection 14.6(f).
"Type": in respect of any Loan, its character as a Committed
Rate Loan, Competitive Advance Loan or Swing Line Loan, as the case may
be.
"UCC": the Uniform Commercial Code as from time to time in
effect in the relevant jurisdiction.
"Undrawn Commitment": as to any Bank at any time, the amount
of such Bank's Commitment minus the amount of such Bank's Committed
Exposure at such time.
"Uniform Customs": the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500 as the same may be amended from time to time.
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the
defined meanings when used in any certificate or other document made or
delivered pursuant hereto.
(b) As used herein and in any certificate or other document
made or delivered pursuant hereto, accounting terms relating to 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 both the singular and plural forms of such terms.
(e) The phrases "to the knowledge of the Company" and "of
which any Subsidiary is aware" and phrases of similar import when used
in this Agreement shall mean to the actual knowledge of a Responsible
Officer of the Company or any such Subsidiary, as the case may be.
1.3. Accounting Determinations. Unless otherwise specified
herein, all accounting determinations for purposes of calculating or
determining compliance with the terms found in subsection 1.1 or the
standards and covenants found in subsection 11.1 and otherwise to be
made under this Agreement shall be made in accordance with GAAP applied
on a basis consistent in all material respects with that used in
preparing the financial statements referred to in subsection 8.1. If
GAAP shall change from the basis used in preparing such financial
statements, the certificates required to be delivered pursuant to
subsection 10.1 demonstrating compliance with the covenants contained
herein shall set forth calculations setting forth the adjustments
necessary to demonstrate how the Company is in compliance with the
financial covenants based upon GAAP as in effect on the Closing Date.
SECTION 2. THE COMMITTED RATE LOANS
2.1 Committed Rate Loans. (a) Subject to the terms and
conditions hereof, each Bank severally agrees to make loans on a
revolving credit basis ("Committed Rate Loans") to any Specified
Borrower from time to time during the Commitment Period; provided, that
(i) no Committed Rate Loan shall be made if, after giving effect to the
making of such Loan and the simultaneous application of the proceeds
thereof, (A) the aggregate amount of the Exposure of all the Banks would
exceed the aggregate amount of the Commitments or (B) the aggregate
amount of the Foreign Currency Exposure would exceed $250,000,000, and
(ii) no Committed Rate Loan shall be made to any Foreign Subsidiary
Borrower if, after giving effect to the making of such Loan and the
simultaneous application of the proceeds thereof, the Company Guarantee
Ratio would exceed 25%. During the Commitment Period, the Specified
Borrowers may use the Commitments by borrowing, prepaying the Committed
Rate Loans in whole or in part, and reborrowing, all in accordance with
the terms and conditions hereof.
(b) The Committed Rate Loans may be made in Dollars or any
Available Foreign Currency and may from time to time be (i) Committed
Rate Eurocurrency Loans, (ii) in the case of Committed Rate Loans in
Dollars only, Committed Rate ABR Loans or (iii) a combination thereof,
as determined by the relevant Specified Borrower and set forth in the
Notice of Borrowing or Notice of Conversion with respect thereto;
provided, that no Committed Rate Eurocurrency Loan shall be made after
the day that is one month prior to the Termination Date.
2.2 Procedure for Committed Rate Loan Borrowing. Any
Specified Borrower may request the Banks to make Committed Rate Loans on
any Business Day during the Commitment Period by delivering a Notice of
Borrowing. Each borrowing of Committed Rate Loans (other than pursuant
to a Swing Line Refunding pursuant to subsection 4.4, pursuant to
subsection 5.5(c) or pursuant to subsection 6.3) shall be in an amount
equal to (a) in the case of ABR Loans, $1,000,000 or a whole multiple of
$500,000 in excess thereof (or, if the then aggregate undrawn amount of
the Commitments is less than $1,000,000, such lesser amount) and (b) in
the case of Eurocurrency Loans, (i) if in Dollars, $2,000,000 or
increments of $500,000 thereafter, and (ii) if in any Available Foreign
Currency, an amount in such Available Foreign Currency of which the
Dollar Equivalent Amount is at least $2,000,000. Upon receipt of any
such Notice of Borrowing from a Specified Borrower, the Administrative
Agent shall promptly notify each Bank of receipt of such Notice of
Borrowing and of such Bank's Borrowing Percentage of the Committed Rate
Loans to be made pursuant thereto. Subject to the terms and conditions
hereof, each Bank will make its Borrowing Percentage of each such
borrowing available to the Administrative Agent for the account of such
Specified Borrower at the Funding Office, and at or prior to the Funding
Time, for the Currency of such Loan in funds immediately available to
the Administrative Agent in the applicable Currency. The amounts made
available by each Bank will then be made available to such Specified
Borrower at the Funding Office, in like funds as received by the
Administrative Agent.
2.3 Repayment of Committed Rate Loans; Evidence of Debt. (a)
Each Specified Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of each Bank on the Termination
Date (or such earlier date on which the Loans become due and payable
pursuant to Section 12), the then unpaid principal amount of each
Committed Rate Loan made by such Bank to such Specified Borrower. Each
Specified Borrower hereby further agrees to pay interest on the unpaid
principal amount of the Committed Rate Loans made to such Specified
Borrower 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 2.8.
(b) Each Bank shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of each
Specified Borrower to such Bank resulting from each Committed Rate Loan
of such Bank from time to time, including the amounts of principal and
interest payable and paid to such Bank from time to time under this
Agreement.
(c) The Administrative Agent shall maintain the Register
pursuant to subsection 14.6(d), and a subaccount therein for each Bank,
in which shall be recorded (i) the amount of each Committed Rate Loan
made hereunder and each Interest Period (if any) applicable thereto,
(ii) the amount of any principal or interest due and payable or to
become due and payable from each Specified Borrower to each Bank under
Committed Rate Loans and (iii) the amount of any sum received by the
Administrative Agent from each Specified Borrower in respect of
Committed Rate Loans, and the amount of each Bank's share thereof.
(d) The entries made in the Register and the accounts of each
Bank maintained pursuant to subsection 2.3(b) shall, to the extent
permitted by applicable law, be prima facie evidence of the existence
and amounts of the obligations of each Specified Borrower therein
recorded; provided, however, that the failure of any Bank 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 each
Specified Borrower to repay (with applicable interest) the Committed
Rate Loans made to such Specified Borrower by such Bank in accordance
with the terms of this Agreement.
2.4 Termination or Reduction of Commitments. The Company
shall have the right, upon not less than five Business Days' notice to
the Administrative Agent, to terminate the Commitments or, from time to
time, to reduce the amount of the Commitments. Any such reduction shall
be in an amount equal to $5,000,000 or a whole multiple thereof and
shall reduce permanently the Commitments then in effect; provided that
the Commitments may not be optionally reduced at any time to an amount
which is less than the amount of the Exposure of all the Banks at such
time; and provided further that the Commitments may not be reduced to an
amount which is less than $50,000,000 unless they are terminated in
full.
2.5 Optional Prepayments. By giving a Notice of Prepayment,
any Specified Borrower may, at any time and from time to time, prepay
the Committed Rate Loans made to such Specified Borrower, in whole or in
part, without premium or penalty (except as provided in subsection 7.8).
Upon receipt of any such notice the Administrative Agent shall promptly
notify each Bank thereof. If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified
therein, together with any amounts payable pursuant to subsection 7.8.
Partial prepayments shall be in an aggregate principal amount of
$1,000,000 or a whole multiple of $500,000 in excess thereof or an
aggregate principal Dollar Equivalent Amount of at least $1,000,000 for
Loans denominated in a Foreign Currency.
2.6 Conversion and Continuation Options. (a) By giving a
Notice of Conversion, any Specified Borrower may elect from time to time
(i) to convert such Specified Borrower's Eurocurrency Loans in Dollars
to ABR Loans or (ii) to convert such Specified Borrower's ABR Loans to
Eurocurrency Loans in Dollars. Upon receipt of any Notice of Conversion
the Administrative Agent shall promptly notify each Bank thereof. All
or any part of Eurocurrency Loans outstanding in Dollars or ABR Loans
may be converted as provided herein, provided that (i) no ABR Loan may
be converted into a Eurocurrency Loan when any Event of Default has
occurred and is continuing and the Administrative Agent has or the
Required Banks have determined that such a conversion is not appropriate
and (ii) no ABR Loan may be converted into a Eurocurrency Loan after the
date that is one month prior to the Termination Date.
(b) By giving a Notice of Continuation, any Specified
Borrower may continue any of such Specified Borrower's Eurocurrency
Loans as Eurocurrency Loans in the same Currency for additional Interest
Periods.
(c) Any Specified Borrower may convert Committed Rate Loans
outstanding in Dollars or one Available Foreign Currency to Committed
Rate Loans in Dollars or a different Currency by repaying such Loans in
the first Currency and borrowing Loans of such different Currency in
accordance with the applicable provisions of this Agreement.
(d) If any Specified Borrower shall fail to timely give a
Notice of Continuation or a Notice of Conversion in respect of any of
such Specified Borrower's Eurocurrency Loans with respect to which an
Interest Period is expiring, such Specified Borrower shall be deemed to
have given a Notice of Continuation for an Interest Period of one month.
2.7 Minimum Amounts of Tranches. All borrowings, conversions
and continuations of Committed Rate Loans and all selections of Interest
Periods shall be in such amounts and be made pursuant to such elections
so that, after giving effect thereto, the aggregate principal amount of
the Committed Rate Loans comprising (i) each Tranche in Dollars shall be
not less than $2,000,000 and (ii) each Tranche in any Available Foreign
Currency shall be not less than the Dollar Equivalent Amount in such
Currency of $2,000,000.
2.8 Interest Rates and Payment Dates for Committed Rate
Loans. (a) Each Committed Rate Eurocurrency Loan shall bear interest
for each day during each Interest Period with respect thereto at a rate
per annum equal to the Eurocurrency Rate for such Interest Period plus
the Applicable Margin.
(b) Each Committed Rate ABR Loan shall bear interest at a
rate per annum equal to the ABR.
(c) If all or a portion of (i) the principal amount of any
Committed Rate Loan 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 bear interest at a rate per annum
which is (x) in the case of overdue principal, the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of
this subsection plus 2% or (y) in the case of overdue interest, the rate
described in paragraph (b) of this subsection plus 2%, in each case from
the date of such non-payment until such amount is paid in full (as well
after as before judgment).
(d) Interest on Committed Rate Loans shall be payable in
arrears on each Interest Payment Date; provided, that interest accruing
pursuant to paragraph (c) of this subsection shall be payable from time
to time on demand.
2.9 Inability to Determine Interest Rate. If on or prior to
the Quotation Day for any Interest Period in respect of any Eurocurrency
Loan in any Currency:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error) that, by reason
of circumstances affecting the relevant market generally, adequate and
reasonable means do not exist for ascertaining the Eurocurrency Rate for
such affected Currency or such affected Interest Period, or
(b) the Administrative Agent shall have received notice from
Banks having Commitments comprising at least 25% of the aggregate amount
of the Commitments that the Eurocurrency Rate determined or to be
determined for such affected Interest Period will not adequately and
fairly reflect the cost to such Banks (as conclusively certified by such
Banks) of making or maintaining their affected Committed Rate Loans
during such affected Interest Period,
the Administrative Agent shall give telecopy or telephonic notice
thereof to the Company and the Banks as soon as practicable thereafter.
If such notice is given (x) any Eurocurrency Loans requested to be made
in such affected Currency on the first day of such affected Interest
Period shall be made as ABR Loans in Dollars in the Dollar Equivalent
Amount, (y) any Committed Rate Loans that were to have been converted on
the first day of such affected Interest Period from ABR Loans to
Eurocurrency Loans shall be continued as ABR Loans and (z) any
Eurocurrency Loans in such affected Currency that were to have been
continued as such shall be converted, on the first day of such Interest
Period, to ABR Loans in Dollars in the Dollar Equivalent Amount. Until
such notice has been withdrawn by the Administrative Agent, no further
Eurocurrency Loans in such affected Currency shall be made, converted to
or continued as such.
SECTION 3. THE COMPETITIVE ADVANCE LOANS
3.1 Competitive Advance Loans. (a) Subject to the terms and
conditions hereof, any Specified Borrower may, from time to time during
the Commitment Period, request the Banks to offer bids, and any Bank
may, in its sole discretion, offer such bids, to make competitive
advance loans ("Competitive Advance Loans") to such Specified Borrower
on the terms and conditions set forth in such bids. Each Competitive
Advance Loan shall bear interest at the rates, be payable on the dates,
and shall mature on the date, agreed between such Specified Borrower and
Bank at the time such Competitive Advance Loan is made; provided, that
(i) each Competitive Advance Loan shall mature not earlier than 1 day
and not later than 180 days, after the date such Competitive Advance
Loan is made and (ii) no Competitive Advance Loan shall mature after the
Termination Date. During the Commitment Period, the Specified Borrowers
may accept bids from Banks from time to time for Competitive Advance
Loans, and borrow and repay Competitive Advance Loans, all in accordance
with the terms and conditions hereof; provided, that (i) no Competitive
Advance Loan shall be made if, after giving effect to the making of such
Loan and the simultaneous application of the proceeds thereof, (A) the
aggregate amount of the Exposure of all the Banks would exceed the
aggregate amount of the Commitments or (B) the aggregate amount of the
Foreign Currency Exposure would exceed $250,000,000, and (ii) no
Competitive Advance Loan shall be made to any Foreign Subsidiary
Borrower if, after giving effect to the making of such Loan and the
simultaneous application of the proceeds thereof, the Company Guarantee
Ratio would exceed 25%. Subject to the foregoing, any Bank may, in its
sole discretion, make Competitive Advance Loans in an aggregate
outstanding amount exceeding the amount of such Bank's Commitment.
(b) The Competitive Advance Loans may be made in Dollars or
any Available Foreign Currency, as agreed between the Specified Borrower
and Bank in respect thereof at the time such Competitive Advance Loan is
made.
3.2 Procedure for Competitive Advance Loan Borrowing.
(a) Any Specified Borrower may request Competitive Advance
Loans by delivering a Competitive Advance Loan Request. The
Administrative Agent shall notify each Bank promptly by facsimile
transmission of the contents of each Competitive Advance Loan Request
received by the Administrative Agent. Each Bank may elect, in its sole
discretion, to offer irrevocably to make one or more Competitive Advance
Loans to the Specified Borrower by delivering a Competitive Advance Loan
Offer to the Administrative Agent.
(b) Before the acceptance time set forth in the applicable
Competitive Advance Loan Request, the Specified Borrower, in its
absolute discretion, shall:
(i) cancel such Competitive Advance Loan Request by
giving the Administrative Agent telephone notice to that effect, or
(ii) by giving telephone notice to the Administrative Agent
immediately confirmed in writing or by facsimile transmission (1)
subject to the provisions of subsection 3.2(c) accept one or more of the
offers made by any Bank or Banks pursuant to subsection 3.2(a) of the
amount of Competitive Advance Loans for each relevant maturity date and
(2) reject any remaining offers made by Banks pursuant to subsection
3.2(a).
(c) The Specified Borrower's acceptance of Competitive
Advance Loans in response to any Competitive Advance Loan Request shall
be subject to the following limitations:
(i) The amount of Competitive Advance Loans accepted for each
maturity date specified by any Bank in its Competitive Advance Loan
Offer shall not exceed the maximum amount for such maturity date
specified in such Competitive Advance Loan Offer;
(ii) the aggregate amount of Competitive Advance Loans
accepted for all maturity dates specified by any Bank in its Competitive
Advance Loan Offer shall not exceed the aggregate maximum amount
specified in such Competitive Advance Loan Offer for all such maturity
dates;
(iii) the Specified Borrower may not accept offers for
Competitive Advance Loans for any maturity date in an aggregate
principal amount in excess of the maximum principal amount requested in
the related Competitive Advance Loan Request; and
(iv) if the Specified Borrower accepts any of such
offers, it must accept offers based solely upon pricing for such
relevant maturity date and upon no other criteria whatsoever and if two
or more Banks submit offers for any maturity date at identical pricing
and the Specified Borrower accepts any of such offers but does not wish
to (or by reason of the limitations set forth in this subsection
3.2(c)(iii) cannot) borrow the total amount offered by such Banks with
such identical pricing, the Administrative Agent shall allocate offers
from all of such Banks in amounts among them pro rata according to the
amounts offered by such Banks (or as nearly pro rata as shall be
practicable).
(d) If the Specified Borrower notifies the Administrative
Agent that a Competitive Advance Loan Request is cancelled, the
Administrative Agent shall give prompt telephone notice thereof to the
Banks.
(e) If the Specified Borrower accepts one or more of the
offers made by any Bank or Banks, the Administrative Agent promptly
shall notify each Bank which has made such a Competitive Advance Loan
Offer of (i) the aggregate amount of such Competitive Advance Loans to
be made for each maturity date and (ii) the acceptance or rejection of
any offers to make such Competitive Advance Loans made by such Bank.
Before the Funding Time for Committed Rate Loans of the applicable
Currency, each Bank whose Competitive Advance Loan Offer has been
accepted shall make available to the Administrative Agent for the
account of the Specified Borrower at the Funding Office for Committed
Rate Loans of the applicable Currency the amount of Competitive Advance
Loans in the applicable Currency to be made by such Bank, in immediately
available funds.
3.3 Repayment of Competitive Advance Loans; Evidence of Debt.
(a) Each Specified Borrower that borrows any Competitive Advance Loan
hereby unconditionally promises to pay to the Bank that made such
Competitive Advance Loan on the maturity date, as agreed by such
Specified Borrower and Bank (or such earlier date on which all the Loans
become due and payable pursuant to Section 12), the then unpaid
principal amount of such Competitive Advance Loan. Each Specified
Borrower hereby further agrees to pay interest on the unpaid principal
amount of the Competitive Advance Loans made by any Bank to such
Specified Borrower from time to time outstanding from the date thereof
until payment in full thereof at the rate per annum, and on the dates,
agreed by such Specified Borrower and Bank at the time such Competitive
Advance Loan is made. All payments in respect of Competitive Advance
Loans shall be made by such Specified Borrower to the Administrative
Agent for the account of the Bank that makes such Competitive Advance
Loan to the Payment Office and by the Payment Time specified for
Committed Rate Loans in the applicable Currency.
(b) Each Bank shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of each
Specified Borrower to such Bank resulting from each Competitive Advance
Loan of such Bank from time to time, including the amounts of principal
and interest payable and paid to such Bank from time to time in respect
of Competitive Advance Loans. The entries made in the accounts of each
Bank maintained pursuant to this subsection 3.3(b) shall, to the extent
permitted by applicable law, be prima facie evidence of the existence
and amounts of the obligations of each Specified Borrower therein
recorded, absent manifest error; provided, however, that the failure of
any Bank to maintain any such account, or any error therein, shall not
in any manner affect the obligation of each Specified Borrower to repay
(with applicable interest) the Competitive Advance Loans made to such
Specified Borrower by such Bank in accordance with the terms of this
Agreement.
3.4 Prepayments. Unless otherwise agreed by the Bank making
a Competitive Advance Loan, upon giving a Notice of Prepayment at the
address and time specified for Committed Rate Loans in the applicable
Currency such Competitive Advance Loan may be optionally prepaid prior
to the scheduled maturity date thereof.
SECTION 4. THE SWING LINE LOANS
4.1 Swing Line Loans. Subject to the terms and conditions
hereof, each Specified Borrower may borrow from such Specified
Borrower's Swing Line Bank swing line loans ("Swing Line Loans") from
time to time during the Commitment Period in a Swing Line Currency of
such Specified Borrower; provided, that (i) no Swing Line Loan shall be
made if, after giving effect to the making of such Loan and the
simultaneous application of the proceeds thereof, (A) the aggregate
amount of the Exposure of all the Banks would exceed the aggregate
amount of the Commitments, (B) the aggregate amount of the Foreign
Currency Exposure would exceed $250,000,000, or (C) the aggregate Dollar
Equivalent Amount of all outstanding Swing Line Loans of such Specified
Borrower would exceed the Swing Line Limit for such Specified Borrower
or the Dollar Equivalent Amount of all outstanding Swing Line Loans
would exceed $75,000,000, and (ii) no Swing Line Loan shall be made to
any Foreign Subsidiary Borrower if, after giving effect to the making of
such Loan and the simultaneous application of the proceeds thereof, the
Company Guarantee Ratio would exceed 25%. During the Commitment Period,
the Specified Borrowers may borrow and prepay the Swing Line Loans, in
whole or in part, all in accordance with the terms and conditions
hereof.
4.2 Procedure for Swing Line Borrowing. (a) Any Specified
Borrower may borrow Swing Line Loans during the Commitment Period on any
Business Day by giving a Notice of Swing Line Borrowing in respect of
such Swing Line Loan. Subject to the terms and conditions hereof, on
the Borrowing Date of each Swing Line Loan, the relevant Swing Line Bank
shall make the proceeds thereof available to the relevant Specified
Borrower in immediately available funds in the applicable Currency in
the manner from time to time agreed by such Specified Borrower and such
Swing Line Bank.
(b) Upon request of the Administrative Agent and on the last
Business Day of each month on which a Swing Line Bank has any
outstanding Swing Line Loans, such Bank shall deliver to the
Administrative Agent a Notice of Swing Line Outstandings. The
Administrative Agent will, at the request of any Swing Line Bank, advise
such Swing Line Bank of the Exchange Rate used by the Administrative
Agent in calculating the Dollar Equivalent Amount of Swing Line Loans of
such Swing Line Bank on any date.
4.3 Repayment of Swing Line Loans; Evidence of Debt. (a)
Each Specified Borrower hereby unconditionally promises to pay to its
Swing Line Bank on the Termination Date (or such earlier date on which
such Swing Line Loans become due and payable pursuant to subsection 4.4
or on which all the Loans become due and payable pursuant to Section
12), the then unpaid principal amount of all Swing Line Loans made to
such Specified Borrower. Each Specified Borrower hereby further agrees
to pay interest on the unpaid principal amount of all Swing Line Loans
made to such Specified Borrower from time to time outstanding from the
date thereof until payment in full thereof at the Swing Line Rate for
the Currency of such Swing Line Loan, payable on the last Business Day
of each calendar month on which such Swing Line Loans are outstanding.
All payments in respect of Swing Line Loans shall be made by such
Specified Borrower to its Swing Line Bank at the address set forth in
Schedule III for such Swing Line Bank and Swing Line Loans in such
Currency.
(b) Each Swing Line Bank shall maintain in accordance with
its usual practice an account or accounts evidencing indebtedness of
each Specified Borrower to such Swing Line Bank resulting from each
Swing Line Loan of such Bank from time to time, including the amounts of
principal and interest payable and paid to such Swing Line Bank from
time to time under this Agreement. The entries made in the accounts of
each Swing Line Bank maintained pursuant to this subsection 4.3(b)
shall, to the extent permitted by applicable law, be prima facie
evidence of the existence and amounts of the obligations of each
Specified Borrower therein recorded; provided, however, that the failure
of any Swing Line Bank to maintain any such account, or any error
therein, shall not in any manner affect the obligation of each Specified
Borrower to repay (with applicable interest) the Swing Line Loans made
to such Specified Borrower by such Swing Line Bank in accordance with
the terms of this Agreement.
4.4 Allocating Swing Line Loans; Swing Line Loan
Participations. (a) If any Event of Default shall occur and be
continuing, any Swing Line Bank may, in its sole and absolute
discretion, direct that the Swing Line Loans owing to it be refunded, by
delivering a Notice of Swing Line Refunding. Upon receipt of a Notice
of Swing Line Refunding the Administrative Agent shall promptly give
notice of the contents thereof to the Banks and, unless an Event of
Default described in Section 12(h) in respect of the Company or the
relevant Specified Borrower has occurred, to the Company and the
relevant Specified Borrower. Each such Notice of Swing Line Refunding
shall be deemed to constitute delivery by such Specified Borrower of a
Notice of Borrowing of Committed Rate Eurocurrency Loans in the amount
and Currency of the Swing Line Loans to which it relates, for an
Interest Period of one month's duration. Subject to the terms and
conditions hereof, each Bank (including each Swing Line Bank in its
capacity as a Bank having a Commitment) hereby agrees to make a
Committed Rate Loan to such Specified Borrower pursuant to Section 2 in
an amount equal to such Bank's Borrowing Percentage of the aggregate
amount of the Swing Line Loans to which such Notice of Swing Line
Refunding relates. Unless any of the events described in Section 12(h)
in respect of the Company or such Specified Borrower shall have occurred
(in which case the procedures of subsection 4.4(b) shall apply), each
Bank shall make the amount of such Committed Rate Loan available to the
Administrative Agent at the Funding Office, and at or prior to the
Funding Time, for the Currency of such Loan in funds immediately
available to the Administrative Agent. The proceeds of such Committed
Rate Loans shall be immediately made available to such Swing Line Bank
by the Administrative Agent and applied by such Swing Line Bank to repay
the Swing Line Loans to which such Notice of Swing Line Refunding
related.
(b) If prior to the time a Committed Rate Loan would have
otherwise been made pursuant to subsection 4.4(a), one of the events
described in Section 12(h) shall have occurred in respect of the Company
or the relevant Specified Borrower, each Bank (other than the relevant
Swing Line Bank) shall, on the date such Committed Rate Loan would have
been made pursuant to the Notice of Swing Line Refunding referred to in
subsection 4.4(a) (the "Refunding Date"), purchase an undivided
participating interest in the outstanding Swing Line Loans to which such
Notice of Swing Line Refunding related, in an amount equal to (i) such
Bank's Commitment Percentage times (ii) the aggregate principal amount
of such Swing Line Loans then outstanding which were to have been repaid
with Committed Rate Loans (the "Swing Line Participation Amount"). On
the Refunding Date, (x) each Bank shall transfer to such Swing Line
Bank, in immediately available funds, such Bank's Swing Line
Participation Amount, and upon receipt thereof such Swing Line Bank
shall, if requested by any Bank, deliver to such Bank a participation
certificate dated the date of such Swing Line Bank's receipt of such
funds and evidencing such Bank's ownership of its Swing Line
Participation Amount and (y) the interest rate on the applicable Swing
Line Loan will automatically be converted to the applicable Eurocurrency
Rate with an Interest Period of one month plus the Applicable Margin. If
any amount required to be paid by any Bank to any Swing Line Bank
pursuant to this subsection 4.4 in respect of any Swing Line
Participation Amount is not paid to such Swing Line Bank on the date
such payment is due from such Bank, such Bank shall pay to such Swing
Line Bank on demand an amount equal to the product of (i) such amount,
times (ii) (A) in the case of any such payment obligation denominated in
Dollars, the daily average Federal funds rate, as quoted by such Swing
Line Bank, or (B) in the case of any such payment obligation denominated
in an Available Foreign Currency, the rate customary in such Currency
for settlement of similar inter-bank obligations, as quoted by such
Swing Line Bank, in each case during the period from and including the
date such payment is required to the date on which such payment is
immediately available to the Swing Line Bank, times (iii) a fraction the
numerator of which is the number of days that elapse during such period
and the denominator of which is 360. A certificate of a Swing Line Bank
submitted to any Bank with respect to any amounts owing under this
subsection shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after any Swing Line Bank has
received from any Bank such Bank's Swing Line Participation Amount, such
Swing Line Bank receives any payment on account of the related Swing
Line Loans, such Swing Line Bank will distribute to such Bank its
Commitment Percentage of such payment on account of its Swing Line
Participation Amount (appropriately adjusted, in the case of interest
payments, to reflect the period of time during which such Bank's
participating interest was outstanding and funded); provided, however,
that in the event that such payment received by such Swing Line Bank is
required to be returned, such Bank will return to such Swing Line Bank
any portion thereof previously distributed to it by such Swing Line
Bank.
(d) Each Bank's obligation to make Committed Rate Loans
pursuant to subsection 4.4(a) and to purchase participating interests
pursuant to subsection 4.4(b) shall be absolute and unconditional and
shall not be affected by any circumstance, including, without
limitation, (i) any set-off, counterclaim, recoupment, defense or other
right which such Bank may have against any other Bank or any Specified
Borrower, or any Specified Borrower may have against any Bank or any
other Person, as the case may be, for any reason whatsoever; (ii) the
occurrence or continuance of a Default or an Event of Default; (iii) any
adverse change in the condition (financial or otherwise) of the Company
or any of its Subsidiaries; (iv) any breach of this Agreement by any
party hereto; or (v) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.
SECTION 5. THE LETTERS OF CREDIT
5.1 L/C Commitment. (a) Subject to the terms and conditions
hereof, each Issuing Bank agrees to issue letters of credit for the
account of any Specified Borrower on any Business Day during the
Commitment Period in such form as shall be reasonably acceptable to such
Issuing Bank; provided, that (i) no Letter of Credit shall be issued if,
after giving effect thereto (A) the aggregate amount of the Exposure of
all the Banks would exceed the aggregate amount of the Commitments, (B)
the aggregate amount of the Foreign Currency Exposure would exceed
$250,000,000 or (C) the aggregate amount of the L/C Obligations would
exceed $35,000,000, and (ii) no Letter of Credit shall be issued for the
account of any Foreign Subsidiary Borrower if, after giving effect
thereto, the Company Guarantee Ratio would exceed 25%.
(b) Each Letter of Credit shall:
(i) be denominated in Dollars or an Available Foreign
Currency and shall be either (A) a standby letter of credit issued to
support obligations of a Specified Borrower, contingent or otherwise, to
provide credit support for workers' compensation, other insurance
programs and other lawful corporate purposes (a "Standby Letter of
Credit") or (B) a commercial letter of credit issued in respect of the
purchase of goods and services in the ordinary course of business of the
Company and its Subsidiaries (a "Commercial Letter of Credit"; together
with the Standby Letters of Credit, the "Letters of Credit") and,
(ii) expire no later than the earlier of 365 days after
its date of issuance and 5 Business Days prior to the Termination Date
although any such Letter of Credit may be automatically extended for
periods of one year from the current or any future expiration date of
the Letter of Credit unless the Issuing Bank elects not to extend such
Letter of Credit and the extended maturity date is not beyond the
Termination Date.
(c) Each Letter of Credit shall be subject to the Uniform
Customs and, to the extent not inconsistent therewith, the laws of the
State of New York or, if acceptable to the Required Banks and the
relevant account party, the jurisdiction of the Issuing Office at which
such Letter of Credit is issued.
(d) No Issuing Bank shall at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or
cause such Issuing Bank or any Bank to exceed any limits imposed by, any
change after the date hereof in any applicable Requirement of Law.
5.2 Procedure for Issuance of Letters of Credit under this
Agreement. Any Specified Borrower may from time to time request that an
Issuing Bank issue a Letter of Credit by delivering to such Issuing Bank
at its Issuing Office an Application therefor (with a copy to the
Administrative Agent), completed to the satisfaction of the Issuing
Bank, and such other certificates, documents and other papers and
information as such Issuing Bank may reasonably request. Upon receipt
by an Issuing Bank of any Application, and subject to the terms and
conditions hereof, such Issuing Bank will process such Application and
the certificates, documents and other papers and information delivered
to it in connection therewith in accordance with its customary
procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall any Issuing Bank be required to issue any
Letter of Credit earlier than five Business Days after its receipt of
the Application therefor and all such other certificates, documents and
other papers and information relating thereto) by issuing the original
of such Letter of Credit to the beneficiary thereof or as otherwise may
be agreed by such Issuing Bank and such Specified Borrower. Such
Issuing Bank shall advise the Administrative Agent of the terms of such
Letter of Credit on the date of issuance thereof and shall promptly
thereafter furnish copies thereof and each amendment thereto to the
Company and through the Administrative Agent each Bank.
5.3 Fees, Commissions and Other Charges. (a) Each Specified
Borrower for whose account a Letter of Credit is issued hereunder shall
pay to the Administrative Agent, for the account of the Banks (including
the Issuing Bank) pro rata according to their Commitment Percentages, a
letter of credit commission with respect to each Letter of Credit,
computed at a rate equal to the then Applicable Margin for Eurocurrency
Loans on the daily average undrawn face amount of such Letter of Credit.
Such commissions shall be payable in arrears on the last Business Day of
each March, June, September and December to occur after the date of
issuance of each Letter of Credit and on the expiration date of such
Letter of Credit and shall be nonrefundable. Each Specified Borrower
for whose account a Letter of Credit is issued hereunder shall also pay
to the Issuing Bank in respect of each Letter of Credit such commission
as shall be agreed from time to time by the Company and such Issuing
Bank.
(b) In addition to the foregoing fees and commissions, each
Specified Borrower for whose account a Letter of Credit is issued
hereunder shall (i) pay or reimburse the Issuing Bank for such normal
and customary costs and expenses as are incurred or charged by such
Issuing Bank in issuing, effecting payment under, amending or otherwise
administering such Letter of Credit and (ii) pay the Issuing Bank such
other fees as shall be agreed by the Issuing Bank and such Specified
Borrower.
(c) The Administrative Agent shall, promptly following its
receipt thereof, distribute to the Issuing Bank and the Banks all fees
and commissions received by the Administrative Agent for their
respective accounts pursuant to this subsection.
5.4 L/C Participations. (a) Each Issuing Bank irrevocably
agrees to grant and hereby grants to each L/C Participant, and, to
induce the Issuing Bank to issue Letters of Credit hereunder, each L/C
Participant irrevocably agrees to accept and purchase and hereby accepts
and purchases from such Issuing Bank, on the terms and conditions
hereinafter stated, for such L/C Participant's own account and risk, an
undivided interest equal to such L/C Participant's Commitment Percentage
in such Issuing Bank's obligations and rights under each Letter of
Credit issued by such Issuing Bank hereunder and the amount of each
draft paid by such Issuing Bank thereunder. Each L/C Participant
unconditionally and irrevocably agrees with each Issuing Bank that, if a
draft is paid under any Letter of Credit issued by such Issuing Bank for
which the Specified Borrower which is the account party under such
Letter of Credit has not reimbursed such Issuing Bank to the full extent
required by the terms of this Agreement, such L/C Participant shall pay
to such Issuing Bank upon demand at such Issuing Bank's Issuing Office
an amount equal to such L/C Participant's Commitment Percentage of the
amount of such draft, or any part thereof, which is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant
to any Issuing Bank pursuant to subsection 5.4(a) in respect of any
unreimbursed portion of any payment made by such Issuing Bank under any
Letter of Credit is not paid to such Issuing Bank on the date such
payment is due from such L/C Participant, such L/C Participant shall pay
to such Issuing Bank on demand an amount equal to the product of (i)
such amount, times (ii) (A) in the case of any such payment obligation
denominated in Dollars, the daily average Federal funds rate, as quoted
by such Issuing Bank, or (B) in the case of any such payment obligation
denominated in an Available Foreign Currency, the rate customary in such
Currency for settlement of similar inter-bank obligations, as quoted by
such Issuing Bank, in each case during the period from and including the
date such payment is required to the date on which such payment is
immediately available to the Issuing Bank, times (iii) a fraction the
numerator of which is the number of days that elapse during such period
and the denominator of which is 360. A certificate of an Issuing Bank
submitted to any L/C Participant with respect to any amounts owing under
this subsection shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after an Issuing Bank has made
payment under any Letter of Credit and has received from any L/C
Participant its pro rata share of such payment in accordance with
subsection 5.4(a) the Issuing Bank receives any payment related to such
Letter of Credit (whether directly from the account party or otherwise,
including by way of set-off or proceeds of collateral applied thereto by
such Issuing Bank), or any payment of interest on account thereof, such
Issuing Bank will distribute to such L/C Participant its pro rata share
thereof; provided, however, that in the event that any such payment
received by such Issuing Bank shall be required to be returned by the
Issuing Bank, such L/C Participant shall return to such Issuing Bank the
portion thereof previously distributed by such Issuing Bank to it.
5.5 Reimbursement Obligation of the Specified Borrowers. (a)
Each Specified Borrower for whose account a Letter of Credit is issued
hereunder agrees to reimburse the Issuing Bank in respect of such Letter
of Credit on each date on which such Issuing Bank notifies such
Specified Borrower (with a copy to the Administrative Agent at its
address in the Administrative Schedule for Notices of Borrowing for the
applicable Currency) of the date and amount of a draft presented under
such Letter of Credit and paid by such Issuing Bank for the amount of
(i) such draft so paid and (ii) any taxes, fees, charges or other costs
or expenses incurred by such Issuing Bank in connection with such
payment; provided if any Issuing Bank shall notify the Specified
Borrower of a drawing after 2:00 p.m. local time of such Issuing Bank's
Issuing Office on the date of any drawing under a Letter of Credit, the
Specified Borrower will not be required to reimburse such Issuing Bank
until the next succeeding Business Day. Each such payment shall be made
to such Issuing Bank at its Issuing Office in the Currency in which
payment of such draft was made and in immediately available funds.
(b) Interest shall be payable on any and all amounts
remaining unpaid by any Specified Borrower under this subsection from
the date such amounts become payable (whether at stated maturity, by
acceleration or otherwise) until payment in full at the rate which is
(i) in the case of such amounts payable in Dollars, 2% above the ABR
from time to time and (ii) in the case of such amounts payable in any
other currency, 2% above the rate reasonably determined by the Issuing
Bank as the cost of funding such overdue amount from time to time on an
overnight basis.
(c) Each notice of a drawing under any Letter of Credit
denominated in Dollars shall constitute a request by the Specified
Borrower for a borrowing pursuant to subsection 2.2 of ABR Loans in the
amount of such drawing plus any amounts payable pursuant to subsection
5.5(a)(ii) in respect of such drawing. The Borrowing Date with respect
to such borrowing shall be the date of such drawing.
5.6 Obligations Absolute. (a) The obligations of the
Specified Borrowers under this Section 5 shall be absolute and
unconditional under any and all circumstances and irrespective of any
set-off, counterclaim or defense to payment which any Specified Borrower
may have or have had against the Issuing Bank or any beneficiary of a
Letter of Credit.
(b) Each Specified Borrower for whose account a Letter of
Credit is issued hereunder also agrees with the Issuing Bank in respect
of such Letter of Credit that such Issuing Bank shall not be responsible
for, and such Specified Borrower's Reimbursement Obligations under
subsection 5.5(a) shall not be affected by, among other things, (i) the
validity or genuineness of documents or of any endorsements thereon,
even though such documents shall in fact prove to be invalid, fraudulent
or forged, provided, that reliance upon such documents by such Issuing
Bank shall not have constituted gross negligence or wilful misconduct of
such Issuing Bank or (ii) any dispute between or among such Specified
Borrower and any beneficiary of any Letter of Credit or any other party
to which such Letter of Credit may be transferred or (iii) any claims
whatsoever of any Specified Borrower against any beneficiary of such
Letter of Credit or any such transferee.
(c) No Issuing Bank shall be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any
message or advice, however transmitted, in connection with any Letter of
Credit, except for errors or omissions caused by such Issuing Bank's
gross negligence or willful misconduct.
(d) Each Specified Borrower for whose account a Letter of
Credit is issued hereunder agrees that any action taken or omitted by
any Issuing Bank under or in connection with any Letter of Credit or the
related drafts or documents, if done in the absence of gross negligence
or willful misconduct and in accordance with the standards of care
specified in the Uniform Customs, shall be binding on such Specified
Borrower and shall not result in any liability of such Issuing Bank to
such Specified Borrower.
5.7 Letter of Credit Payments. If any draft shall be
presented for payment to an Issuing Bank under any Letter of Credit,
such Issuing Bank shall promptly notify the account party of the date
and amount thereof. The responsibility of the Issuing Bank to the
account party in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation
expressly provided for in such Letter of Credit, be limited to
determining that the documents (including each draft) delivered under
such Letter of Credit in connection with such presentment are in
conformity with such Letter of Credit.
5.8 Application. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the
provisions of this Section 5, the provisions of this Section 5 shall
apply.
SECTION 6. LOCAL CURRENCY FACILITIES
6.1 Terms of Local Currency Facilities. (a) Subject to the
provisions of this Section 6, the Company may in its discretion from
time to time designate any Subsidiary of the Company organized under the
laws of any jurisdiction outside the United States as a "Local Currency
Borrower" and any Qualified Credit Facility to which such Local Currency
Borrower and any one or more Banks (or its affiliates, agencies or
branches) is a party as a "Local Currency Facility", with the consent of
each such Bank in its sole discretion, by delivering a Local Currency
Facility Addendum to the Administrative Agent and the Banks (through the
Administrative Agent) executed by the Company, each such Local Currency
Borrower and each such Bank, provided, that on the effective date of
such designation no Event of Default shall have occurred and be
continuing. Concurrently with the delivery of a Local Currency Facility
Addendum, the Company or the relevant Local Currency Borrower shall
furnish to the Administrative Agent copies of all documentation executed
and delivered by any Local Currency Borrower in connection therewith,
together with, if applicable, an English translation thereof. Except as
otherwise provided in this Section 6 or in the definition of "Qualified
Credit Facility" in subsection 1.1, the terms and conditions of each
Local Currency Facility shall be determined by mutual agreement of the
relevant Local Currency Borrower(s) and Local Currency Bank(s). The
documentation governing each Local Currency Facility shall (i) contain
an express acknowledgement that such Local Currency Facility shall be
subject to the provisions of this Section 6 and (ii) designate a Local
Currency Facility Agent for such Local Currency Facility. Each of the
Company and, by agreeing to any Local Currency Facility designation as
contemplated hereby, each relevant Local Currency Bank (if any) party
thereto which is an affiliate, branch or agency of a Bank, acknowledges
and agrees that each reference in this Agreement to any Bank shall, to
the extent applicable, be deemed to be a reference to such Local
Currency Bank. In the event of any inconsistency between the terms of
this Agreement and the terms of any Local Currency Facility, the terms
of this Agreement shall prevail.
(b) The documentation governing each Local Currency Facility
shall set forth (i) the maximum amount (expressed in Dollars) available
to be borrowed from all Local Currency Banks under such Local Currency
Facility (as the same may be reduced from time to time, a "Local
Currency Facility Maximum Borrowing Amount") and (ii) with respect to
each Local Currency Bank party to such Local Currency Facility, the
maximum Dollar Equivalent Amount available to be borrowed from such
Local Currency Bank thereunder (as the same may be reduced from time to
time, a "Local Currency Bank Maximum Borrowing Amount").
(c) Except as otherwise required by applicable law, in no
event shall the Local Currency Banks party to a Local Currency Facility
have the right to accelerate the Local Currency Loans outstanding
thereunder, or to terminate their commitments (if any) to make such
Local Currency Loans prior to the earlier of the stated termination date
in respect thereof or the Termination Date, except, in each case, in
connection with an acceleration of the Loans or a termination of the
Commitments pursuant to Section 12 of this Agreement, provided, that
nothing in this paragraph (c) shall be deemed to require any Local
Currency Bank to make a Local Currency Loan if the applicable conditions
precedent to the making of such Local Currency Loan set forth in the
relevant Local Currency Facility have not been satisfied. No Local
Currency Loan may be made under a Local Currency Facility if (i) after
giving effect thereto, the conditions precedent in subsection 9.2 would
not be satisfied or (ii) after giving effect to the making of such Local
Currency Loan and the simultaneous application of the proceeds thereof,
(A) the aggregate amount of the Exposure of all the Banks would exceed
the aggregate amount of the Commitments, (B) the aggregate amount of the
Foreign Currency Exposure would exceed $250,000,000, (C) the Company
Guarantee Ratio would exceed 25%, or (D) the amount of such Local
Currency Bank's Committed Exposure would exceed the amount of such Local
Currency Bank's Commitment.
(d) The relevant Local Currency Borrower shall furnish to the
Administrative Agent copies of any amendment, supplement or other
modification (including any change in commitment amounts or in the Local
Currency Banks participating in any Local Currency Facility) to the
terms of any Local Currency Facility promptly after the effectiveness
thereof (together with, if applicable, an English translation thereof).
If any such amendment, supplement or other modification to a Local
Currency Facility shall (i) add a Local Currency Bank as a Local
Currency Bank thereunder or (ii) change the Local Currency Facility
Maximum Borrowing Amount or any Local Currency Bank Maximum Borrowing
Amount with respect thereto, the Company shall promptly furnish an
appropriately revised Local Currency Facility Addendum, executed by the
Company, the relevant Local Currency Borrower and the affected Local
Currency Banks (or any agent acting on their behalf), to the
Administrative Agent and the Banks (through the Administrative Agent).
(e) The Company may terminate its designation of a facility
as a Local Currency Facility, with the consent of each Local Currency
Bank party thereto in its sole discretion, by written notice to the
Administrative Agent, which notice shall be executed by the Company, the
relevant Local Currency Borrower and each Local Currency Bank party to
such Local Currency Facility (or any agent acting on their behalf).
Once notice of such termination is received by the Administrative Agent,
such Local Currency Facility and the loans and other obligations
outstanding thereunder shall immediately cease to be subject to the
terms of this Agreement and shall cease to benefit from the Company
Guarantee.
6.2 Reporting of Local Currency Outstandings. On the date of
the making of any Local Currency Loan having a maturity of 30 or more
days to a Local Currency Borrower and on the last Business Day of each
month on which a Local Currency Borrower has any outstanding Local
Currency Loans, the Local Currency Facility Agent for such Local
Currency Borrower, shall deliver to the Administrative Agent a Notice of
Local Currency Outstandings. The Administrative Agent will, at the
request of any Local Currency Facility Agent, advise such Local Currency
Facility Agent of the Exchange Rate used by the Administrative Agent in
calculating the Dollar Equivalent Amount of Local Currency Loans under
the related Local Currency Facility on any date.
6.3 Refunding of Local Currency Loans. (a) Notwithstanding
noncompliance with the conditions precedent set forth in subsection 9.2,
if any Local Currency Loans are outstanding on (i) any date on which an
Event of Default pursuant to Section 12(h) shall have occurred with
respect to the Company, (ii) any date (the "Acceleration Date") on which
the Commitments shall have been terminated and/or the Loans shall have
been declared immediately due and payable pursuant to Section 12 or
(iii) any date on which an Event of Default pursuant to Section
12(a)(ii) shall have occurred and be continuing for three or more
Business Days and, in the case of clause (iii) above, any Local Currency
Bank party to the affected Local Currency Facility shall have given
notice thereof to the Administrative Agent requesting that the Local
Currency Loans ("Affected Local Currency Loans") outstanding thereunder
be refunded pursuant to this subsection 6.3, then, at 10:00 A.M., New
York City time, on the second Business Day immediately succeeding (x)
the date on which such Event of Default occurs (in the case of clause
(i) above), (y) such Acceleration Date (in the case of clause (ii)
above) or (z) the date on which such notice is received by the
Administrative Agent (in the case of clause (iii) above), the
Administrative Agent shall be deemed to have received a notice from the
Company pursuant to subsection 2.2 requesting that ABR Loans be made
pursuant to subsection 2.1 on such second Business Day in an aggregate
amount equal to the Dollar Equivalent Amount of the aggregate amount of
all Local Currency Loans (in the case of clause (i) or (ii) above) or
the Affected Local Currency Loans (in the case of clause (iii) above),
and the procedures set forth in subsection 2.2 shall be followed in
making such ABR Loans. The proceeds of such ABR Loans shall be applied
to repay such Local Currency Loans.
(b) If, for any reason, ABR Loans may not be made pursuant to
paragraph (a) of this subsection 6.3 to repay Local Currency Loans as
required by such paragraph, effective on the date such ABR Loans would
otherwise have been made, (i) the principal amount of each relevant
Local Currency Loan shall be converted into Dollars (calculated on the
basis of the Exchange Rate as of the immediately preceding Business Day)
("Converted Local Currency Loans") and (ii) each Bank severally,
unconditionally and irrevocably agrees that it shall purchase in Dollars
a participating interest in such Converted Local Currency Loans in an
amount equal to the amount of ABR Loans which would otherwise have been
made by such Bank pursuant to paragraph (a) of this subsection 6.3.
Each Bank will immediately transfer to the Administrative Agent, in
immediately available funds, the amount of its participation, and the
proceeds of such participation shall be distributed by the
Administrative Agent to each relevant Local Currency Bank in such amount
as will reduce the amount of the participating interest retained by such
Local Currency Bank in the Converted Local Currency Loans to the amount
of the ABR Loans which were to have been made by it pursuant to
paragraph (a) of this subsection 6.3. All Converted Local Currency
Loans shall bear interest at the rate which would otherwise be
applicable to ABR Loans. Each Bank shall share on a pro rata basis
(calculated by reference to its participating interest in such Converted
Local Currency Loans) in any interest which accrues thereon and in all
repayments thereof.
(c) If, for any reason, ABR Loans may not be made pursuant to
paragraph (a) of this subsection 6.3 to repay Local Currency Loans as
required by such paragraph and the principal amount of any Local
Currency Loans may not be converted into Dollars in the manner
contemplated by paragraph (b) of this subsection 6.3, (i) the
Administrative Agent shall determine the Dollar Equivalent Amount of
such Local Currency Loans (calculated on the basis of the Exchange Rate
determined as of the Business Day immediately preceding the date on
which ABR Loans would otherwise have been made pursuant to said
paragraph (a)) and (ii) effective on the date on which ABR Loans would
otherwise have been made pursuant to said paragraph (a), each Bank
severally, unconditionally and irrevocably agrees that it shall purchase
in Dollars a participating interest in such Local Currency Loans in an
amount equal to the amount of ABR Loans which would otherwise have been
made by such Bank pursuant to paragraph (a) of this subsection 6.3.
Each Bank will immediately transfer to the Administrative Agent, in
immediately available funds, the amount of its participation, and the
proceeds of such participation shall be distributed by the
Administrative Agent to each relevant Local Currency Bank in such amount
as will reduce the Dollar Equivalent as of such date of the amount of
the participating interest retained by such Local Currency Bank in such
Local Currency Loans to the amount of the ABR Loans which were to have
been made by it pursuant to paragraph (a) of this subsection 6.3. Each
Bank shall share on a pro rata basis (calculated by reference to its
participating interest in such Local Currency Loans) in any interest
which accrues thereon, in all repayments of principal thereof and in the
benefits of any collateral furnished in respect thereof and the proceeds
of such collateral.
(d) If any amount required to be paid by any Bank to any
Local Currency Bank pursuant to this subsection 6.3 in respect of any
Local Currency Loan is not paid to such Local Currency Bank on the date
such payment is due from such Bank, such Bank shall pay to such Local
Currency Bank on demand an amount equal to the product of (i) such
amount, times (ii) the daily average Federal funds rate, as quoted by
such Local Currency Bank during the period from and including the date
such payment is required to the date on which such payment is
immediately available to the Local Currency Bank, times (iii) a fraction
the numerator of which is the number of days that elapse during such
period and the denominator of which is 360. A certificate of a Local
Currency Bank submitted to any Bank through the Administrative Agent
with respect to any amounts owing under this subsection (d) shall be
conclusive in the absence of manifest error.
SECTION 7. CERTAIN PROVISIONS APPLICABLE TO THE LOANS AND
LETTERS OF CREDIT
7.1 Facility Fee, Other Fees. (a) The Company agrees to pay
to the Administrative Agent for the account of each Bank a facility fee
for the period from and including the Closing Date to, but excluding,
the Termination Date, computed at the Facility Fee Rate in effect from
time to time on the average daily amount of the Commitment (used and
unused) of such Bank 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
on which the Commitments shall terminate as provided herein, commencing
on the first of such dates to occur after the date hereof.
(b) The Company agrees to pay to the Administrative Agent,
for its own account and for the account of the Arranger, the fees in the
amounts and on the dates agreed to by such parties in writing prior to
the date of this Agreement.
7.2 Computation of Interest and Fees. (a) Facility fees
and, whenever it is calculated on the basis of the Prime Rate, interest
shall be calculated on the basis of a 365- (or 366-, as the case may be)
day year for the actual days elapsed; and, otherwise, interest and
Letter of Credit commissions 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 relevant Specified Borrower and the Banks
of each determination of a Eurocurrency Rate. Any change in the ABR due
to a change in the Prime Rate, the Base CD 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, the Base CD Rate or the
Federal Funds Effective Rate, respectively. The Administrative Agent
shall as soon as practicable notify the relevant Borrower and the Banks
of the effective date and the amount of each such change in interest
rate.
(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 Borrowers and the Banks in the absence
of manifest error.
7.3 Pro Rata Treatment and Payments. (a) Each payment by
the Company on account of any facility fee hereunder and any reduction
of the Commitments of the Banks shall be made pro rata according to the
respective Commitment Percentages of the Banks. Each disbursement of
Committed Rate Loans shall be made by the Banks pro rata according to
the respective Borrowing Percentages of the Banks. Each payment
(including each prepayment) by any Borrower on account of principal of
and interest on any Loans shall be made pro rata according to the
respective principal amounts of the Loans of such Borrower then due and
owing to the Banks. All payments (including prepayments) to be made by
any Borrower hereunder, whether on account of principal, interest, fees,
Reimbursement Obligations or otherwise, shall be made without set off or
counterclaim. All payments in respect of Committed Rate Loans or
Letters of Credit in any Currency shall be made in such Currency and in
immediately available funds at the Payment Office, and at or prior to
the Payment Time, for such Type of Loans and such Currency, on the due
date thereof. The Administrative Agent shall distribute to the Banks
any payments received by the Administrative Agent promptly upon receipt
in like funds as received. If any payment hereunder 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.
(b) Unless the Administrative Agent shall have been notified
in writing by any Bank prior to a Borrowing Date in respect of Committed
Rate Loans that such Bank will not make the amount that would constitute
its Borrowing Percentage of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Bank
is making such amount available to the Administrative Agent, and the
Administrative Agent may, in reliance upon such assumption, make
available to the relevant Borrower a corresponding amount. If such
amount is not made available to the Administrative Agent by the required
time on the Borrowing Date therefor, such Bank shall pay to the
Administrative Agent, on demand, such amount with interest thereon at a
rate equal to (A) in the case of any such Committed Rate Loans
denominated in Dollars, the daily average Federal funds rate, as quoted
by the Administrative Agent, or (B) in the case of any Committed Rate
Loans denominated in an Available Foreign Currency, the rate customary
in such Currency for settlement of similar inter-bank obligations, as
quoted by the Administrative Agent, in each case for the period until
such Bank makes such amount immediately available to the Administrative
Agent. A certificate of the Administrative Agent submitted to any Bank
with respect to any amounts owing under this subsection shall be
conclusive in the absence of manifest error. If such Bank's Borrowing
Percentage of such borrowing is not made available to the Administrative
Agent by such Bank within three Business Days of such Borrowing Date,
the Administrative Agent shall also be entitled to recover such amount
with interest thereon at the rate per annum applicable to Swing Line
Loans in such Currency hereunder, on demand, from the relevant Borrower.
7.4 Illegality. Notwithstanding any other provision herein,
if the adoption of or any change in any Requirement of Law or in the
interpretation thereof by any Governmental Authority charged with the
administration or interpretation thereof shall make it unlawful for any
Bank to make or maintain Eurocurrency Loans or to make or maintain
Extensions of Credit to one or more Foreign Subsidiary Borrowers or
Local Currency Borrowers contemplated by this Agreement, the commitment
of such Bank hereunder to make Eurocurrency Loans, continue Eurocurrency
Loans as such, convert Loans to Eurocurrency Loans and maintain
Extensions of Credit to such Foreign Subsidiary Borrowers or Local
Currency Borrowers shall forthwith be cancelled to the extent necessary
to remedy or prevent such illegality. Nothing in this subsection 7.4
shall affect the obligation of the Banks to make and maintain ABR Loans
to the Company and, to the extent not unlawful, to Foreign Subsidiary
Borrowers, notwithstanding that a Requirement of Law may make it
unlawful to make and maintain Eurocurrency Loans to such Borrowers.
7.5 Requirements of Law. (a) If the adoption of or any
change in any Requirement of Law (other than the Certificate of
Incorporation and By-Laws or other organizational or governing documents
of the Banks) or in the interpretation or application thereof or
compliance by any Bank or Issuing Bank with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority made subsequent to the date hereof:
(i) shall subject any Bank or Issuing Bank or any
corporation controlling such Bank or from which such Bank obtains
funding or credit to any tax of any kind whatsoever with respect to this
Agreement, any Letter of Credit or any Eurocurrency Loan or Local
Currency Loan made by it, or change the basis of taxation of payments to
such Bank or such corporation in respect thereof (except for Non-
Excluded Taxes covered by subsection 7.6 (including taxes excluded under
the first sentence of subsection 7.6(a)) and changes in the rate of tax
on the overall net income of such Bank or Issuing Bank or such
corporation);
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement against
assets held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Bank or Issuing Bank or any
corporation controlling such Bank or Issuing Bank or from which such
Bank obtains funding or credit which is not otherwise included in the
determination of the Eurocurrency Rate hereunder or the interest rate on
such Local Currency Loans under the relevant Local Currency Facility; or
(iii) shall impose on such Bank or Issuing Bank or
any corporation controlling such Bank or from which such Bank obtains
funding or credit any other condition;
and the result of any of the foregoing is to increase the cost to such
Bank or Issuing Bank or such corporation, by an amount which such Bank
or Issuing Bank or such corporation deems to be material, of making,
converting into, continuing or maintaining Eurocurrency Loans or Local
Currency Loans or issuing or participating in Letters of Credit or to
reduce any amount receivable hereunder in respect thereof, then, in any
such case, the Company shall promptly pay such Bank or Issuing Bank,
within five Business Days after its demand, any additional amounts
necessary to compensate such Bank or Issuing Bank for such increased
cost or reduced amount receivable, together with interest on each such
amount from the date due until payment in full at a rate per annum equal
to the ABR plus 2%. If any Bank or Issuing Bank becomes entitled to
claim any additional amounts pursuant to this subsection, it shall
promptly notify the Company, through the Administrative Agent, of the
event by reason of which it has become so entitled. A certificate as to
any additional amounts payable pursuant to this subsection submitted by
such Bank or Issuing Bank, through the Administrative Agent, to the
Company shall be conclusive in the absence of manifest error. This
covenant shall survive the termination of this Agreement and the payment
of Loans and all other amounts payable hereunder.
(b) If any Bank shall have determined that the adoption of or
any change in any Requirement of Law regarding capital adequacy or in
the interpretation or application thereof or compliance by such Bank or
any corporation controlling such Bank or Issuing Bank or from which such
Bank or Issuing Bank obtains funding or credit with any request or
directive regarding capital adequacy (whether or not having the force of
law) from any Governmental Authority made subsequent to the date hereof
does or shall have the effect of reducing the rate of return on such
Bank's or Issuing Bank or such corporation's capital as a consequence of
its obligations hereunder or under any Letter of Credit to a level below
that which such Bank or Issuing Bank or such corporation could have
achieved but for such change or compliance (taking into consideration
such Bank's or Issuing Bank or such corporation's policies with respect
to capital adequacy) by an amount deemed by such Bank or Issuing Bank to
be material, then from time to time, after submission by such Bank or
Issuing Bank to the Company (with a copy to the Administrative Agent) of
a written request therefor (which written request shall be conclusive in
the absence of manifest error), the Company shall pay to such Bank or
Issuing Bank such additional amount or amounts as will compensate such
Bank or Issuing Bank for such reduction.
(c) In addition to, and without duplication of, amounts which
may become payable from time to time pursuant to paragraphs (a) and (b)
of this subsection 7.5, each Borrower agrees to pay to each Bank which
requests compensation under this paragraph (c) by notice to such
Borrower, on the last day of each Interest Period with respect to any
Committed Rate Eurocurrency Loan made by such Bank to such Borrower, at
any time when such Bank shall be required to maintain reserves against
"Eurocurrency liabilities" under Regulation D of the Board (or, at any
time when such Bank may be required by the Board or by any other
Governmental Authority, whether within the United States or in another
relevant jurisdiction, to maintain reserves against any other category
of liabilities which includes deposits by reference to which the
Eurocurrency Rate is determined as provided in this Agreement or against
any category of extensions of credit or other assets of such Bank which
includes any such Committed Rate Eurocurrency Loans), an additional
amount (determined by such Bank's calculation or, if an accurate
calculation is impracticable, reasonable estimate using such reasonable
means of allocation as such Bank shall determine) equal to the actual
costs, if any, incurred by such Bank during such Interest Period as a
result of the applicability of the foregoing reserves to such Committed
Rate Eurocurrency Loans.
(d) A certificate of each Bank, Issuing Bank, Swing Line Bank
or Local Currency Bank setting forth such amount or amounts as shall be
necessary to compensate such Bank, Issuing Bank, Swing Line Bank or
Local Currency Bank as specified in paragraph (a), (b) or (c) above, as
the case may be, and setting forth in reasonable detail an explanation
of the basis of requesting such compensation in accordance with
paragraph (a) or (b) above, including calculations in detail comparable
to the detail set forth in certificates delivered to such Bank in
similar circumstances under comparable provisions of other comparable
credit agreements, shall be delivered to the relevant Borrower and shall
be conclusive absent manifest error. The relevant Borrower shall pay
each Bank, Issuing Bank, Swing Line Bank or Local Currency Bank the
amount shown as due on any such certificate delivered to it within 10
days after its receipt of the same.
(e) The agreements in this subsection shall survive the
termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
7.6 Taxes. (a) All payments made by any Borrower under this
Agreement shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority, excluding, in the case of the
Administrative Agent and each Bank, (i) net income taxes, capital taxes,
doing business taxes and franchise taxes imposed on the Administrative
Agent or such Bank (including, without limitation, each Bank in its
capacity as an Issuing Bank or as a Swing Line Bank), as the case may
be, as a result of a present or former connection between the
jurisdiction of the government or taxing authority imposing such tax and
the Administrative Agent or such Bank (excluding a connection arising
solely from the Administrative Agent or such Bank having executed,
delivered or performed its obligations or received a payment under, or
enforced, this Agreement) or any political subdivision or taxing
authority thereof or therein, (ii) taxes required to be withheld because
of a failure to deliver any certificate described in this subsection 7.6
or subsection 14.6 for any reason and (iii) any and all withholding
taxes payable with respect to payments under this Agreement other than
any such withholding taxes imposed as a result of any change in or
amendment to the laws of any jurisdiction affecting taxation (including
any regulation or ruling proposed or promulgated by a taxing authority
thereof and any treaty provisions) or any change in the official
application, enforcement or interpretation of such laws, regulations,
rulings or treaties or any other action taken by a taxing authority or a
court of competent jurisdiction, which change, amendment, application,
enforcement, interpretation or action becomes effective after the date
hereof (all such non-excluded taxes, levies, imposts, duties, charges,
fees, deductions and withholdings being hereinafter called "Non-Excluded
Taxes"). If any Non-Excluded Taxes are required to be withheld from any
amounts payable to the Administrative Agent or any Bank hereunder, the
amounts so payable to the Administrative Agent or such Bank shall be
increased to the extent necessary to yield to the Administrative Agent
or such Bank (after payment of all Non-Excluded Taxes) interest or any
such other amounts payable hereunder at the rates or in the amounts
specified in this Agreement. Whenever any Non-Excluded Taxes are
payable by any Borrower, as promptly as possible thereafter such
Borrower shall send to the Administrative Agent for its own account or
for the account of such Bank, as the case may be, a certified copy of an
original official receipt received by such Borrower showing payment
thereof. If such Borrower fails to pay any Non-Excluded Taxes when due
to the appropriate taxing authority or fails to remit to the
Administrative Agent the required receipts or other required documentary
evidence, such Borrower shall indemnify the Administrative Agent and
such Bank for any incremental taxes, interest or penalties that may
become payable by the Administrative Agent or such Bank as a result of
any such failure. The agreements in this subsection 7.6(a) shall
survive the termination of this Agreement and the payment of the Loans
and all other amounts payable hereunder.
(b) (i) Each Bank that is not incorporated under the laws of
the United States of America or a state thereof agrees that it will
deliver to the Company and the Administrative Agent (x) two duly
completed copies of United States Internal Revenue Service Form 1001 or
4224 or successor applicable form, as the case may be, and (y) an
Internal Revenue Service Form W-8 or W-9 or successor applicable form,
as the case may be. Each such Bank also agrees to deliver to the
Company and the Administrative Agent two further copies of the said Form
1001 or 4224 and Form W-8 or W-9, or successor applicable forms or other
manner of certification, as the case may be, on or before the date that
any such form expires or becomes obsolete or after the occurrence of any
event (including, without limitation, a change in such Bank's lending
office) requiring a change in the most recent form previously delivered
by it to the Company and the Administrative Agent, and such extensions
or renewals thereof as may reasonably be requested by the Company or the
Administrative Agent, unless in any such case an event (including,
without limitation, any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would
prevent such Bank from duly completing and delivering any such form with
respect to it and such Bank so advises the Company and the
Administrative Agent. Such Bank shall certify (x) in the case of a Form
1001 or 4224, that it is entitled to receive payments under this
Agreement without deduction or withholding of any United States federal
income taxes and (y) in the case of a Form W-8 or W-9, that it is
entitled to an exemption from United States backup withholding tax.
(ii) Upon the written request of any Borrower, each
Bank promptly will provide to such Borrower and to the Administrative
Agent, or file with the relevant taxing authority (with a copy to the
Administrative Agent) such form, certification or similar documentation
(each duly completed, accurate and signed) as is required by the
relevant jurisdiction in order to obtain an exemption from, or reduced
rate of Non-Excluded Taxes to which such Bank or the Administrative
Agent is entitled pursuant to an applicable tax treaty or the law of the
relevant jurisdiction; provided, however, such Bank will not be required
to (x) disclose information which in its reasonable judgment it deems
confidential or proprietary or (y) incur a cost if such cost would, in
its reasonable judgment, be substantial in comparison to the cost of the
Borrower under this subsection 7.6 of such Bank's failure to provide
such form, certification or similar documentation. Such Bank shall
certify in the case of any such form, certification or similar
documentation so provided (to the extent it may accurately and properly
do so) that it is entitled to receive payments under this Agreement
without deduction or withholding, or at a reduced rate of deduction or
withholding of Non-Excluded Taxes.
(iii) A Bank shall be required to furnish a form
under this paragraph (b) only if it is entitled to claim an exemption
from or a reduced rate of withholding under applicable law. A Bank that
is not entitled to claim an exemption from or a reduced rate of
withholding under applicable law, promptly upon written request of the
applicable Borrower, shall inform the applicable Borrower in writing.
(c) If any Bank is, in its sole opinion, able to apply for
any tax credit, tax deduction or other reduction in tax (a "Tax
Benefit") by reason of any increased amount paid by the Company under
this subsection 7.6, such Bank will use reasonable efforts to obtain
such Tax Benefit and, upon receipt thereof will pay to the Company such
amount, not exceeding the increased amount paid by the Company, as it
considers, in its sole opinion, to be equal to the net after-tax value
to such Bank of the Tax Benefit or such part thereof allocable to such
withholding or deduction, having regard to all of such Bank's dealings
giving rise to similar credits and to the cost of obtaining the same,
less any and all expenses incurred by such Bank in obtaining such Tax
Benefit (including any and all professional fees incurred therewith);
provided, however, that (i) no Bank shall be obligated by this
subsection 7.6 to disclose to the Company any information regarding its
tax affairs or computations, (ii) nothing in this subsection 7.6 shall
interfere with the right of each Bank to arrange its tax affairs as it
deems appropriate and (iii) nothing in this subsection 7.6 shall impose
an obligation on a Bank to obtain any Tax Benefit if, in such Bank's
sole opinion, to do so would (x) impose undue hardships, burdens or
expenditures on such Bank or (y) increase such Bank's exposure to
taxation by the jurisdiction in question.
7.7 Company's Options upon Claims for Increased Costs and
Taxes. In the event that any Affected Bank shall decline to make
Eurocurrency Loans pursuant to subsection 7.4 or shall have notified the
Company that it is entitled to claim compensation pursuant to subsection
7.5 or 7.6, the Company may exercise any one or both of the following
options:
(a) The Company may request one or more of the Banks which
are not Affected Banks to take over all (but not part) of any Affected
Banks's then outstanding Loans and to assume all (but not part) of any
Affected Bank's Commitments, if any, and obligations hereunder, and if
applicable, under any Local Currency Facility. If one or more Banks
shall so agree in writing (collectively, the "Assenting Banks";
individually, an "Assenting Bank") with respect to an Affected Bank, (i)
the Commitments, if any, of each Assenting Bank and the obligations of
such Assenting Bank under this Agreement shall be increased by its
respective Allocable Share of the Commitments, if any, and of the
obligations of such Affected Bank under this Agreement and if
applicable, under any Local Currency Facility and (ii) each Assenting
Bank shall make Loans to the Company, according to such Assenting Bank's
respective Allocable Share, in an aggregate principal amount equal to
the outstanding principal amount of the Loans and, if applicable, Local
Currency Loans, of such Affected Bank, on a date mutually acceptable to
the Assenting Banks, such Affected Bank and the Company. The proceeds
of such Loans, together with funds of the Company, shall be used to
prepay the Loans, and if applicable, Local Currency Loans, of such
Affected Bank, together with all interest accrued thereon and all other
amounts owing to such Affected Bank hereunder (including any amounts
payable pursuant to subsection 7.8 in connection with such prepayment),
and, upon such assumption by the Assenting Bank and prepayment by the
Company, such Affected Bank shall cease to be a "Bank" for purposes of
this Agreement and shall no longer have any obligations or rights
hereunder (other than any obligations or rights which according to this
Agreement shall survive the termination of this Agreement).
(b) The Company may designate a replacement bank (a
"Replacement Bank") to assume the Commitments, if any, and the
obligations of any such Affected Bank hereunder and if applicable, under
any Local Currency Facility, and to purchase the outstanding Loans of
such Affected Bank and such Affected Bank's rights hereunder and with
respect thereto, without recourse upon, or warranty by, or expense to,
such Affected Bank (unless such Affected Bank agrees otherwise), for a
purchase price equal to the outstanding principal amount of the Loans
and, if applicable, Local Currency Loans, of such Affected Bank plus (i)
all interest accrued and unpaid thereon and all other amounts owing to
such Affected Bank hereunder and (ii) any amount which would be payable
to such Affected Bank pursuant to subsection 7.8, and upon such
assumption and purchase by the Replacement Bank, such Replacement Bank
shall be deemed to be a "Bank" for purposes of this Agreement and such
Affected Bank shall cease to be a "Bank" for purposes of this Agreement
and shall no longer have any obligations or rights hereunder (other than
any obligations or rights which according to this Agreement shall
survive the termination of this Agreement).
7.8 Indemnity. Each Borrower agrees to indemnify each Bank
and to hold each Bank harmless from any loss or expense (but excluding
any lost profits) which such Bank may sustain or incur as a consequence
of (a) default by such Borrower in payment when due of the principal
amount of or interest on any Eurocurrency Loan, (b) default by such
Borrower in making a borrowing of, conversion into or continuation of
Eurocurrency Loans after such Borrower has given a notice requesting the
same in accordance with the provisions of this Agreement, (c) default by
such Borrower in making any prepayment of Eurocurrency Loans after such
Borrower has given a notice thereof in accordance with the provisions of
this Agreement, (d) the making of a prepayment or conversion of
Eurocurrency Loans on a day which is not the last day of an Interest
Period with respect thereto or (e) the prepayment of any Competitive
Advance Loan, including, without limitation, in each case, any such loss
or expense arising from the reemployment or repayment of funds obtained
by such Bank or from fees payable to terminate the deposits from which
such funds were obtained. This covenant shall survive the termination
of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
7.9 Determinations. In making the determinations
contemplated by Subsection 7.5, 7.6 and 7.8, each Bank may make such
estimates, assumptions, allocations and the like that such Bank in good
faith determines to be appropriate. Upon request of the Company, each
Bank shall furnish to the Company, at any time after demand for payment
of an amount under subsection 7.5(a) or 7.8, a certificate outlining in
reasonable detail the computation of any amounts owing. Any certificate
furnished by a Bank shall be binding and conclusive in the absence of
manifest error.
7.10 Change of Lending Office. If an event occurs with
respect to any Bank that makes operable the provisions of subsection 7.4
or entitles such Bank to make a claim under subsection 7.5 or 7.6, such
Bank shall, if requested in writing by the Company, to the extent not
inconsistent with such Bank's internal policies, use reasonable efforts
to (a) designate another office or offices for the making and
maintaining of its Loans or (b) obtain a different source of funds or
credit, as the case may be, the designation or obtaining of which will
eliminate such operability or reduce materially the amount such Bank is
so entitled to claim, provided that such designation or obtaining would
not, in the sole discretion of such Bank, result in such Bank incurring
any costs unless the Company has agreed to reimburse such Bank therefor.
7.11 Company Controls on Exposure; Calculation of Exposure;
Prepayment if Exposure exceeds Commitments. (a) The Company will
implement and maintain internal accounting controls to monitor the
borrowings and repayments of Loans by the Borrowers and the issuance of
and drawings under Letters of Credit, with the object of preventing any
request for an Extension of Credit that would result in (i) the Exposure
of the Banks being in excess of the Commitments, (ii) the Foreign
Currency Exposure exceeding $250,000,000 or (iii) the Company Guarantee
Ratio exceeding 25% and of promptly identifying and remedying any
circumstance where, by reason of changes in exchange rates, (i) the
aggregate amount of the Exposure does exceed the Commitments, (ii) the
amount of the Foreign Currency Exposure exceeds $250,000,000 or (iii)
the Company Guarantee Ratio exceeds 25%. In the event that at any time
the Company determines that (i) the aggregate amount of the Exposure of
the Banks exceeds the aggregate amount of the Commitments by more that
5%, (ii) the amount of the Foreign Currency Exposure exceeds
$250,000,000 or (iii) the Company Guarantee Ratio exceeds 25%, the
Company will, as soon as practicable but in any event within five
Business Days of making such determination, make or cause to be made
such repayments or prepayments of Loans as shall be necessary to cause
(i) the aggregate amount of the Exposure of the Banks to no longer
exceed the Commitments, (ii) the amount of the Foreign Currency Exposure
not to exceed $250,000,000 or (iii) the Company Guarantee Ratio not to
exceed 25%.
(b) The Administrative Agent will calculate the aggregate
amount of the Exposure of the Banks from time to time, and in any event
not less frequently than once during each calendar month. In making
such calculations, the Administrative Agent will rely on the information
most recently received by it from the Swing Line Banks in respect of
outstanding Swing Line Loans, from Banks in respect of outstanding
Competitive Advance Loans, from Local Currency Facility Agents in
respect of outstanding Local Currency Loans and Issuing Banks in respect
of L/C Obligations. Upon making each such calculation, the
Administrative Agent will inform the Company and the Banks of the
results thereof.
(c) In the event that on any date the Administrative Agent
calculates that (i) the aggregate amount of the Exposure of the Banks
exceeds the aggregate amount of the Commitments by more than 5%, (ii)
the Foreign Currency Exposure exceeds $250,000,000 or (iii) the Company
Guarantee Ratio exceeds 25%, the Administrative Agent will give notice
to such effect to the Company. Within five Business Days after receipt
of any such notice, the Company will, as soon as practicable but in any
event within five Business Days of receipt of such notice, make or cause
to be made such repayments or prepayments of Loans as shall be necessary
to cause (i) the aggregate amount of the Exposure of the Banks to no
longer exceed the Commitments, (ii) the Foreign Currency Exposure not to
exceed $250,000,000 or (iii) the Company Guarantee Ratio not to exceed
25%.
(d) If at the time any Foreign Subsidiary Borrower becomes a
Limited Subsidiary Borrower the Exposure of such Limited Subsidiary
Borrower owing to the Banks exceeds $20,000,000, within five Business
Days after such Foreign Subsidiary Borrower becomes a Limited Subsidiary
its Exposure owing to the Banks in excess of $20,000,000 shall be repaid
and thereafter, for so long as such Foreign Subsidiary Borrower remains
a Limited Subsidiary Borrower, it will not, and the Company will ensure
it does not, have Exposure owing to the Banks in excess of $20,000,000.
(e) If at any time the Committed Exposure of any Bank exceeds
such Bank's Commitment, upon demand of such Bank, the Company will
within one Business Day prepay Loans in such amounts that after giving
effect to such prepayment the Committed Exposure of such Bank does not
exceed its Commitment.
(f) Any prepayment required to be made pursuant to this
subsection 7.11 shall be accompanied by payment of amounts payable, if
any, pursuant to subsection 7.8 in respect of the amount so prepaid.
SECTION 8. REPRESENTATIONS AND WARRANTIES
To induce the Agents, the Administrative Agent and the Banks
to enter into this Agreement and to make the Loans and issue or
participate in the Letters of Credit, the Company and each Foreign
Subsidiary Borrower (in so far as the representations and warranties by
such Foreign Subsidiary Borrower relate to it) hereby represents and
warrants to each Agent, the Administrative Agent and each Bank that:
8.1 Financial Condition. The audited consolidated balance
sheets of the Company and its consolidated Subsidiaries as at December
31, 1994 and the related consolidated statements of operations and of
cash flows for the fiscal year ended on such date, reported on by Ernst
& Young LLP, copies of which have heretofore been furnished to each
Bank, present fairly the consolidated financial condition of the Company
and its consolidated Subsidiaries as at such date, and the consolidated
results of their operations and their consolidated cash flows for the
fiscal year then ended. The unaudited consolidated balance sheet of the
Company and its consolidated Subsidiaries as at March 31, 1995 and the
related unaudited consolidated statements of operations and of cash
flows for the three-month period ended on such date, certified by a
Responsible Officer, copies of which have heretofore been furnished to
each Bank, present fairly the consolidated financial condition of the
Company and its consolidated Subsidiaries as at such date, and the
consolidated results of their operations and their consolidated cash
flows for the three-month period then ended (subject to normal year-end
audit adjustments). The unaudited consolidating balance sheet of the
Company and its consolidated Subsidiaries by principal operating group
as at December 31, 1994 and the related unaudited consolidating
statements of operations for the fiscal year ended on such date,
certified by a Responsible Officer, copies of which have heretofore been
furnished to each Bank, present fairly the consolidating financial
condition of the Company and its consolidated Subsidiaries by principal
operating group as at such date, and the consolidating results of their
operations for the fiscal year then ended. All such financial
statements, including the related schedules and notes thereto, have been
prepared in accordance with GAAP applied consistently throughout the
periods involved (except as approved by such accountants or Responsible
Officer, as the case may be, and as disclosed therein). Neither the
Company nor any of its consolidated Subsidiaries had, at the date of the
most recent balance sheet referred to above, any material Guarantee
Obligation, contingent liability or liability for taxes, or any long-
term lease or unusual forward or long-term commitment, including,
without limitation, any interest rate or foreign currency swap or
exchange transaction, which is not reflected in the foregoing statements
or referred to in the notes thereto. During the period from December
31, 1994 to and including the date hereof there has been no sale,
transfer or other disposition by the Company or any of its consolidated
Subsidiaries of any material part of its business or property and no
purchase or other acquisition of any business or property (including any
Capital Stock of any other Person) material in relation to the
consolidated financial condition of the Company and its consolidated
Subsidiaries at December 31, 1994 (except as otherwise disclosed in
writing to the Banks prior to the Closing Date).
8.2 No Change. Since December 31, 1994 there has been no
development or event which has had or could reasonably be expected to
have a Material Adverse Effect.
8.3 Corporate Existence; Compliance with Law. Each of the
Company and its Subsidiaries (a) is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization,
(b) has the corporate or other power and authority, and the legal right,
to own and operate its property, to lease the property it operates as
lessee and to conduct the business in which it is currently engaged, (c)
is duly qualified as a foreign corporation or other entity 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 duly qualified or in good
standing could not reasonably be expected to have a Material Adverse
Effect, and (d) is in compliance with all Requirements of Law except to
the extent that the failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
8.4 Corporate Power; Authorization; Enforceable Obligations.
The Company and each of its Subsidiaries has the corporate or other
power and authority, and the legal right, to make, deliver and perform
the Credit Documents to which it is a party and to borrow hereunder and
has taken all necessary corporate action to authorize the borrowings on
the terms and conditions of this Agreement and the execution, delivery
and performance of the Credit Documents to which it is a party. No
consent or authorization of, filing with, notice to or other act by or
in respect of, any Governmental Authority or any other Person is
required in connection with the borrowings hereunder or with the
execution, delivery, performance, validity or enforceability of the
Credit Documents. This Agreement has been, and each other Credit
Document to which the Company or any of its Subsidiaries is a party will
be, duly executed and delivered on behalf of the Company or such
Subsidiary, as the case may be. This Agreement constitutes, and each
other Credit Document to which it is a party when executed and delivered
will constitute, a legal, valid and binding obligation of the Company or
any of its Subsidiaries party thereto enforceable against the Company or
such Subsidiary, as the case may be, in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles (whether enforcement is sought by proceedings in equity or at
law).
8.5 No Legal Bar. The execution, delivery and performance of
the Credit Documents to which the Company or any of its Subsidiaries is
a party, the borrowings hereunder and the use of the proceeds thereof
will not violate any Requirement of Law or Contractual Obligation of the
Company or of any of its Subsidiaries (except for violations of
Contractual Obligations which, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect) and will
not result in, or require, the creation or imposition of any Lien on any
of its or their respective properties or revenues pursuant to any such
Requirement of Law or Contractual Obligation, except for the Liens
expressly permitted by subsection 11.3.
8.6 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is
pending or, to the knowledge of the Company, threatened by or against
the Company or any of its Subsidiaries or against any of its or their
respective properties or revenues (a) with respect to any of the Credit
Documents or any of the transactions contemplated hereby or thereby, or
(b) which, if adversely determined, would have a Material Adverse
Effect.
8.7 No Default. Neither the Company nor any of its
Subsidiaries is in default under or with respect to any of its
Contractual Obligations in any respect which could reasonably be
expected to have a Material Adverse Effect. No Default or Event of
Default has occurred and is continuing.
8.8 Ownership of Property; Liens. Each of the Company and
its Subsidiaries has good record and marketable title in fee simple to,
or a valid leasehold interest in, all its real property, and good title
to, or a valid leasehold interest in, all its other property, except
where the failure to have such title or such leasehold interest, as the
case may be, could not reasonably be expected to have a Material Adverse
Effect, and none of such property is subject to any Lien except as
permitted by subsection 11.3.
8.9 Intellectual Property. The Company and each of its
Subsidiaries owns, or is licensed to use, all domestic and foreign
trademarks, tradenames, copyrights, technology, know-how and processes
necessary for the conduct of its business as currently conducted (the
"Intellectual Property") except for those the failure to own or license
which could not reasonably be expected to have a Material Adverse
Effect. No claim has been asserted and is pending or, to the knowledge
of the Company, has been threatened by any Person challenging or
questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property which could reasonably
be expected to have a Material Adverse Effect, nor does the Company know
of any valid basis for any such claim. The use of such Intellectual
Property by the Company and its Subsidiaries does not infringe on the
rights of any Person, except for such claims and infringements that, in
the aggregate, could not reasonably be expected to have a Material
Adverse Effect.
8.10 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of the Company or any of its Subsidiaries has or
could reasonably be expected to have a Material Adverse Effect.
8.11 Taxes. Each of the Company and its consolidated
Subsidiaries has filed or caused to be filed all tax returns which, to
the knowledge of the Company, are required to be filed and has paid all
taxes shown to be due and payable on said returns 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 any unfiled tax returns for taxes, and unpaid
taxes, fees and other charges, (a) the amount or validity of which are
currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been
provided on the books of the Company or its consolidated Subsidiaries,
as the case may be, or (b) which in each case, individually or in the
aggregate, would not cause the Company and its consolidated Subsidiaries
to have a liability in excess of $5,000,000 or the Dollar Equivalent
Amount thereof); no notice of tax Lien has been filed, and, to the
knowledge of the Company, no claim is being asserted by any taxing
authority, with respect to any such tax, fee or other charge except for
claims the amount or validity of which are currently being contested in
good faith by appropriate proceedings and with respect to which reserves
in conformity with GAAP have been provided on the books of the Company
or its consolidated Subsidiaries, as the case may be, and claims for
amounts which, in the aggregate, do not exceed $5,000,000.
8.12 Federal Regulations. No part of the proceeds of any
Loans will be used for "purchasing" or "carrying" any "margin stock"
within the respective meanings of each of the quoted terms under
Regulation U of the Board of Governors of the Federal Reserve System as
now and from time to time hereafter in effect or for any purpose which
violates the provisions of the regulations of such Board of Governors.
If requested by any Bank or the Administrative Agent, the Company will
furnish to the Administrative Agent and each Bank a statement to the
foregoing effect in conformity with the requirements of FR Form U-1
referred to in said Regulation U.
8.13 ERISA. Each Plan which is intended to be qualified
under Section 401(a) (or 403(a) as appropriate) of the Code and each
related trust agreement, annuity contract or other funding instrument
which is intended to be tax-exempt under Section 501(a) of the Code is
so qualified and tax-exempt and has been so qualified and tax-exempt
during the period from its adoption to date. No event has occurred in
connection with which the Company or any Commonly Controlled Entity or
any Plan, directly or indirectly, could reasonably be expected to be
subject to any material liability under ERISA, the Code or any other
law, regulation or governmental order or under any agreement,
instrument, statute, rule of law or regulation pursuant to or under
which the Company or a Subsidiary has agreed to indemnify or is required
to indemnify any person against liability incurred under, or for a
violation or failure to satisfy the requirements of, any such statute,
regulation or order. No Reportable Event has occurred during the five-
year period prior to the date on which this representation is made or
deemed made with respect to any Plan, and each Plan has complied in all
material respects with the applicable provisions of ERISA and the Code.
The present value of all accrued benefits under each Single Employer
Plan maintained by the Company or any Commonly Controlled Entity or for
which the Company or any Commonly Controlled Entity has or could have
any liability (based on those assumptions used to fund the Plans) did
not, as of the last annual valuation date prior to the date on which
this representation is made or deemed made, exceed the value of the
assets of such Plan allocable to such accrued benefits. Neither the
Company nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan, and neither the Company nor any
Commonly Controlled Entity could reasonably be expected to become
subject to any liability 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 on which
this representation is made or deemed made. No such Multiemployer Plan
is in Reorganization or Insolvent. The present value (determined using
actuarial and other assumptions which are reasonable in respect of the
benefits provided and the employees participating) of the unfunded
liability of the Company and each Commonly Controlled Entity for
benefits under all unfunded retirement or severance plans, programs,
policies or other arrangements (including, without limitation, post
retirement benefits to be provided to their current and former employees
under Plans which are welfare benefit plans (as defined in Section 3(1)
of ERISA)), whether or not funded does not, in the aggregate, exceed
$5,000,000 (excluding those arrangements set forth on Schedule 8.13).
8.14 Investment Company Act; Other Regulations. Neither the
Company nor any Subsidiary of the Company is an "investment company", or
a company "controlled" by an "investment company", within the meaning of
the Investment Company Act of 1940, as amended. Neither the Company nor
any Subsidiary of the Company is subject to regulation under any Federal
or State statute or regulation which limits its ability to incur
Indebtedness.
8.15 Subsidiaries. On the Closing Date, the only
Subsidiaries of the Company, and the only material partnerships or joint
ventures in which the Company or any Subsidiary has an interest, are
those set forth on Schedule 8.15. On the Closing Date, the Company owns
the percentage of the issued and outstanding Capital Stock or other
evidences of the ownership of each Subsidiary, partnership or joint
venture set forth on Schedule 8.15 as set forth on such Schedule. On
the Closing Date, except as set forth on Schedule 8.15, no such
Subsidiary, partnership or joint venture has issued any securities
convertible into shares of its Capital Stock. The outstanding stock and
securities (or other evidence of ownership) of such Subsidiaries,
partnerships or joint ventures owned by the Company and its Subsidiaries
are owned by the Company and its Subsidiaries free and clear of all
Liens, warrants, options or rights of others of any kind whatsoever
except for Liens permitted by subsection 11.3.
8.16 Accuracy and Completeness of Information. No document
furnished or statement made in writing to the Banks by the Company in
connection with the negotiation, preparation or execution of this
Agreement or any of the other Credit Documents contains any untrue
statement of a material fact, or omits to state any such material fact
necessary in order to make the statements contained therein not
misleading, in either case which has not been corrected, supplemented or
remedied by subsequent documents furnished or statements made in writing
to the Banks. All other written information, reports and other papers
and data with respect to the Company and its Subsidiaries (other than
financial statements), furnished to the Banks by the Company, or on
behalf of the Company, were (a) in the case of those not prepared for
delivery to the Banks, to the Company's knowledge, at the time the same
were so furnished, complete and correct in all material respects for the
purposes for which the same were prepared and (b) in the case of those
prepared for delivery to the Banks, to the Company's knowledge, complete
and correct in all material respects, or have been subsequently
supplemented by other information, reports or other papers or data, to
the extent necessary to give the Banks a true and accurate knowledge of
the subject matter in all material respects, it being understood that
financial projections as to future events are not to be viewed as facts
and that actual results may differ from projected results. No fact is
known to the Company or any of its Subsidiaries which has had or could
reasonably be expected to have a Material Adverse Effect, which has not
been set forth in the financial statements referred to in subsection 8.1
(or otherwise disclosed in writing to the Banks prior to the Closing
Date).
8.17 Purpose of Loans. The proceeds of the Loans shall be
used by the Company for working capital purposes in the ordinary course
of business and for general corporate purposes of the Company and, to
the extent permitted hereunder, its Subsidiaries.
8.18 Senior Indebtedness. The principal of and interest on
the Loans, the Reimbursement Obligations and the Company's obligations
under the Company Guarantee are and will continue to be within the
definition of "Senior Indebtedness" or any similar term under the
Subordinated Debentures.
8.19 Environmental Matters. Except as set forth on Schedule
8.19 or insofar as there is no reasonable likelihood of a Material
Adverse Effect arising from any combination of facts or circumstances
inconsistent with any of the following:
(a) The facilities and properties owned or operated by the
Company or any of its Subsidiaries (the "Properties") do not contain,
and to the knowledge of the Company or its Subsidiaries, have not
previously contained, any Materials of Environmental Concern in amounts
or concentrations which (i) constitute or constituted a violation of, or
(ii) could reasonably be expected to give rise to liability under, any
applicable Environmental Law.
(b) The Properties and all operations at the Properties are
in compliance with all applicable Environmental Laws, and there is no
contamination at, under or to the knowledge of the Company about the
Properties or violation of any Environmental Law with respect to the
Properties or the business operated by the Company or any of its
Subsidiaries (the "Business") which could materially interfere with the
continued operation of the Properties.
(c) Neither the Company nor any of its Subsidiaries has
received any notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or
compliance with Environmental Laws with regard to any of the Properties
or the Business, nor does the Company or any of its Subsidiaries have
knowledge or reason to believe that any such notice will be received or
is being threatened.
(d) To the knowledge of the Company or any of its
Subsidiaries, Materials of Environmental Concern have not been
transported or disposed of from the Properties in violation of, or in a
manner or to a location which could reasonably be expected to give rise
to liability under, any Environmental Law, nor have any Materials of
Environmental Concern been generated, treated, stored or disposed of at,
on or under any of the Properties in violation of, or in a manner that
could reasonably be expected to give rise to liability under, any
applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Company or any of its
Subsidiaries, threatened, under any Environmental Law to which the
Company or any Subsidiary is or will be named as a party with respect to
the Properties or the Business, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other orders, or
other analogous administrative or judicial requirements outstanding
under any Environmental Law with respect to the Properties or the
Business.
(f) There has been no release or threat of release of
Materials of Environmental Concern at or from the Properties, or arising
from or related to the operations of the Company or any Subsidiary in
connection with the Properties or otherwise in connection with the
Business, in violation of or in amounts or in a manner that could
reasonably give rise to liability under any applicable Environmental
Laws.
SECTION 9. CONDITIONS PRECEDENT
9.1 Conditions to Closing Date. The occurrence of the
Closing Date, and the agreement of each Bank to make the initial
Extension of Credit requested to be made by it on or after the Closing
Date, shall be subject to the satisfaction, on or prior to the Closing
Date, of the following conditions precedent:
(a) Credit Documents. The Administrative Agent shall have
received (i) this Agreement, executed and delivered by a duly authorized
officer of the Company, with a counterpart for each Bank, (ii) for the
account of each Bank, the Company Guarantee executed and delivered by a
duly authorized officer of the Company, with a counterpart or conformed
copy for each Bank and (iii) each Existing Subsidiary Guarantee,
together with the related Consent and Confirmation, executed and
delivered by a duly authorized officer of the Guarantor party thereto,
with a counterpart or a conformed copy for each Bank.
(b) Borrowing Certificate. The Administrative Agent shall
have received with a counterpart for each Bank, a certificate of the
Company, dated the Closing Date, substantially in the form of Exhibit E,
with appropriate insertions and attachments, satisfactory in form and
substance to the Administrative Agent, executed by the President,
Executive Vice President or any Vice President and the Secretary or any
Assistant Secretary of the Company.
(c) Corporate Proceedings of Company. The Administrative
Agent shall have received, with a counterpart for each Bank, a copy of
the resolutions, in form and substance satisfactory to the
Administrative Agent, of the Board of Directors of the Company
authorizing (i) the execution, delivery and performance of this
Agreement and the other Credit Documents to which it is a party and (ii)
the borrowings contemplated hereunder, certified by the Secretary or an
Assistant Secretary of such Loan party as of the Closing Date, which
certificate shall be in form and substance satisfactory to the
Administrative Agent and shall state that the resolutions thereby
certified have not been amended, modified, revoked or rescinded.
(d) Fees and Expenses. The Administrative Agent shall have
received the fees and expenses to be received on or prior to the
Closing Date pursuant to subsection 7.1(b).
(e) Legal Opinions. The Administrative Agent shall have
received, with a counterpart for each Bank, the following executed legal
opinions:
(i) the executed legal opinion of Winthrop,
Stimson, Putnam & Roberts, counsel to the Company, substantially in the
form of Exhibit G-1, with such modifications therein as shall be
reasonably requested or approved by the Administrative Agent;
(ii) the executed legal opinion of Robert E.
Klatell, general counsel of the Company, substantially in the form of
Exhibit G-2, with such modifications therein as shall be reasonably
requested or approved by the Administrative Agent; and
(iii) the executed Foreign Subsidiary Opinion
of counsel to each Foreign Subsidiary Borrower located in England or
Germany that is a party to this Agreement on the Closing Date.
Each such legal opinion shall cover such other matters incident to
the transactions contemplated by this Agreement and the other Credit
Documents as the Administrative Agent may reasonably require.
(f) No Material Litigation. No litigation, inquiry,
injunction or restraining order shall be pending, entered or threatened
(including any proposed statute, rule or regulation) which in the
reasonable judgment of any Bank could have a Material Adverse Effect.
(g) Payment of Amounts under Existing Credit Agreement. All
principal of and interest on the Loans (as defined in the Existing
Credit Agreement) and all other amounts (including, without limitation,
compensation in respect of prepayments of such Loans) owing under or in
connection with the Existing Credit Agreement shall have been paid in
full.
(h) Notice of Guarantee Ceiling Amount. The Administrative
Agent shall have received with a counterpart for each Bank, a Notice of
Guarantee Ceiling Amount, dated the Closing Date, with appropriate
insertions, executed by a Responsible Officer of the Company.
(i) Calculation of Guarantee Ceiling Amount. The Banks shall
have received confirmation satisfactory to them that the obligations of
the Domestic Subsidiaries under the Subsidiary Guarantees will not be
included in the indebtedness of the Domestic Subsidiaries for purposes
of calculating the Guarantee Ceiling Amount in accordance with the Note
Purchase Agreement.
(j) Additional Matters. All corporate and other proceedings,
and all documents, instruments and other legal matters in connection
with the transactions contemplated by this Agreement and the other
Credit Documents shall be reasonably satisfactory in form and substance
to the Administrative Agent.
9.2 Conditions to Each Extension of Credit. The agreement of
each Bank to make any Extension of Credit requested to be made by it on
any date (including, without limitation, its initial Extension of
Credit, but excluding any Committed Rate Loan made pursuant to a Notice
of Swing Line Refunding, pursuant to subsections 5.5(c) or 6.3 or
pursuant to subsection 2.6(c) if the Dollar Equivalent Amount thereof is
not increased) is subject to the satisfaction of the following
conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Company and its Subsidiaries
in or pursuant to the Credit Documents shall be true and correct in all
material respects on and as of such date as if made on and as of such
date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date after giving effect to the Loans
requested to be made on such date.
(c) No Material Adverse Change in Foreign Subsidiary
Borrowers. If such Extension of Credit is to or for a Foreign
Subsidiary Borrower, no event which has or could reasonably expected to
have a material adverse effect on the ability of such Foreign Subsidiary
Borrower to perform its obligations under this Agreement shall have
occurred.
Each borrowing by and Letter of Credit issued on behalf of any Borrower
shall constitute a representation and warranty by the Company and each
Foreign Subsidiary Borrower as of the date of such Loan and/or Letter of
Credit that the conditions contained in this subsection 9.2 have been
satisfied.
SECTION 10. AFFIRMATIVE COVENANTS
The Company hereby agrees that, so long as the Commitments
remain in effect, any Letter of Credit remains outstanding and unpaid or
any other amount is owing to any Bank, any Agent or the Administrative
Agent hereunder or under any Local Currency Facility, the Company shall
and (except in the case of delivery of financial information, reports
and notices) shall cause each of its Subsidiaries to:
10.1 Financial Statements. Furnish to each Bank:
(a) as soon as available, but in any event within 120 days
after the end of each fiscal year of the Company, a copy of the audited
consolidated balance sheet of the Company and its consolidated
Subsidiaries as at the end of such year and the related consolidated
statements of operations and shareholders 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 Ernst & Young or other independent certified public
accountants of nationally recognized standing reasonably acceptable to
the Required Banks;
(b) as soon as available, but in any event within 120 days
after the end of each fiscal year of the Company, the unaudited
consolidating balance sheet of the Company and its consolidated
Subsidiaries by principal operating group as at the end of such year and
the related unaudited consolidating statements of operations of the
Company and its consolidated Subsidiaries by principal operating group
for such year, setting forth in each case in comparative form the
figures for the previous year, certified pursuant to subsection 10.2(b)
by a Responsible Officer as fairly presenting the consolidating
financial condition and results of operations of the Company and its
consolidated Subsidiaries by principal operating group;
(c) as soon as available, but in any event within 60 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
and shareholders' equity and of 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 such quarter of the previous year,
certified by a Responsible Officer as fairly presenting in all material
respects when considered in relation to the consolidated financial
statements of the Company and its consolidated Subsidiaries (subject to
normal year-end audit adjustments); provided that the Company may in
lieu of furnishing such unaudited consolidated balance sheet furnish to
each Bank its Form 10-Q filed with the Securities and Exchange
Commission or any successor or analogous Governmental Authority for the
relevant quarterly period; and
(d) as soon as available, but in any event within 60 days
after the end of each of the first three quarterly periods of each
fiscal year of the Company, the unaudited consolidating balance sheet of
the Company and its consolidated Subsidiaries by principal operating
group as at the end of such quarter and the related unaudited
consolidating statements of operations of the Company and its
consolidated Subsidiaries by principal operating group for such quarter
and the portion of the fiscal year through the end of such quarter, in
the case of the unaudited consolidating balance sheet setting forth in
comparative form the figures for the previous year (but not the
corresponding figures for such quarter of the previous year) and in the
case of the statements of operations setting forth in comparative form
the figures for such quarter of the previous year, certified by a
Responsible Officer as fairly presenting the consolidating financial
condition and results of operations of the Company and its consolidated
Subsidiaries by principal operating group (subject to normal year-end
audit adjustments);
the financial statements to be furnished pursuant to this subsection
10.1 shall fairly present the consolidated (or consolidating by
principal operating group, as appropriate) financial position and
results of operations of the Company and its consolidated Subsidiaries
in accordance with GAAP (subject, in the case of subsections 10.1(c) and
(d), to normal year-end audit adjustments and the absence of complete
footnotes) applied consistently throughout the periods reflected therein
and with prior periods (except as approved by such accountants or
Responsible Officer, as the case may be, and disclosed therein).
10.2 Certificates; Other Information. Furnish to each Bank:
(a) concurrently with the delivery of the financial
statements referred to in subsection 10.1(a), a certificate of the
independent certified public accountants reporting on such financial
statements stating that in making the examination necessary therefor no
knowledge was obtained of any Default or Event of Default, except as
specified in such certificate;
(b) concurrently with the delivery of the financial
statements referred to in subsections 10.1(a) and 10.1(b), a certificate
of a Responsible Officer substantially in the form of Exhibit H;
(c) concurrently with the delivery of the financial
statements referred to in subsection 10.1(c), a certificate of a
Responsible Officer (i) stating that, to the best of such Responsible
Officer's knowledge, the Company has observed and performed all of its
covenants and other agreements contained in this Agreement and the other
Credit Documents to which it is a party to be observed or performed by
it, (ii) that such Responsible Officer has obtained no knowledge of any
Default or Event of Default except as specified therein and (iii)
setting forth calculations supporting compliance with subsections
11.1(a), (b) and (c), 11.2 and 11.5;
(d) as soon as delivered, a copy of the letter, addressed to
the Company, of the certified public accountants who prepared the
financial statements referred to in subsection 10.1(a) for such fiscal
year and otherwise referred to as a "management letter";
(e) within five days after the same are sent, copies of all
financial statements and reports which the Company sends to its
stockholders generally, and within five days after the same are filed,
copies of all financial statements and reports which the Company or any
of its Subsidiaries may make to, or file with, the Securities and
Exchange Commission or any successor or analogous Governmental
Authority;
(f) concurrently with the delivery of the financial
statements referred to in subsections 10.1(a) and 10.1(c) and upon any
incurrence or prepayment of any lien, guarantee or indebtedness which
decreases the Guarantee Ceiling Amount by more than 5%, a Notice of
Guarantee Ceiling Amount as of the last day of such fiscal period or as
the date of such occurrence; and
(g) promptly, such additional documents, instruments, legal
opinions or financial and other information as the Administrative Agent
or any Bank may from time to time reasonably request.
10.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the
case may be, all its obligations of whatever nature, including, without
limitation, all obligations in respect of taxes, except where 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 its
Subsidiaries, as the case may be, or where the failure to pay, discharge
or otherwise satisfy could not reasonably be expected to have a Material
Adverse Effect.
10.4 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 as otherwise permitted pursuant to
subsection 11.4; comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply
therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
10.5 Maintenance of Property; Insurance. Keep all property
useful and necessary in its business in good working order and
condition, except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect; maintain with financially
sound and reputable insurance companies insurance on all its property in
at least such amounts and against at least such risks (but including in
any event public liability, product liability and business interruption)
as are usually insured against in the same general area by companies
engaged in the same or a similar business; and furnish to each Bank,
upon written request, full information as to the insurance carried.
10.6 Inspection of Property; Books and Records; Discussions.
Keep proper books of records and account in which the entries are, in
all material respects, full, true and correct in conformity with sound
business practice and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities;
and, upon reasonable notice under the circumstances, permit
representatives of the Administrative Agent 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
and to discuss the business, operations, properties and financial and
other condition of the Company and its Subsidiaries with officers and
employees of the Company and its Subsidiaries and with its independent
certified public accountants.
10.7 Notices. Promptly, after the Company becomes aware
thereof, give notice to the Administrative Agent and each Bank of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Company or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the
Company or any of its Subsidiaries and any Governmental Authority, which
in either case, if not cured or if adversely determined, as the case may
be, could reasonably be expected to have a Material Adverse Effect or
cause a Default or an Event of Default;
(c) any litigation or proceeding affecting the Company or any
of its Subsidiaries (i) in which the amount involved is $5,000,000 or
more and not covered by insurance or (ii) in which injunctive or similar
relief is sought which could reasonably be expected to have a Material
Adverse Effect;
(d) the following events: (i) the occurrence or expected
occurrence of any Reportable Event with respect to any Plan, a failure
to make any required contribution to a Plan, the creation of any Lien in
favor of the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the PBGC
or the Company or any Commonly Controlled Entity or any Multiemployer
Plan with respect to the withdrawal from, or the terminating (other than
a standard termination under Section 4041(b) of ERISA), Reorganization
or Insolvency of, any Plan;
(e) any change, development or event involving a prospective
change, which has had or could reasonably be expected to have a Material
Adverse Effect; and
Each notice pursuant to this subsection shall be accompanied by a
statement of a Responsible Officer setting forth details of the
occurrence referred to therein and stating what action the Company
proposes to take with respect thereto.
10.8 Environmental Laws. (a) Comply with, and take all
reasonable efforts to ensure compliance by all tenants and subtenants,
if any, in all material respects with, all applicable Environmental Laws
and obtain and comply in all material respects with and maintain, and
undertake all reasonable efforts to ensure that all tenants and
subtenants obtain and comply in all material respects with and maintain,
any and all licenses, approvals, notifications, registrations or permits
required by applicable Environmental Laws.
(b) Conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions
required under Environmental Laws and promptly comply in all material
respects with all lawful orders and directives of all Governmental
Authorities regarding Environmental Laws except to the extent that the
same are being contested in good faith by appropriate proceedings and
the pendency of such proceedings could not reasonably be expected to
have a Material Adverse Effect.
10.9 Additional Subsidiary Guarantees. In the event that any
Domestic Subsidiary which is not a Guarantor shall account for more than
5% of Total Assets at any date, take all actions necessary to cause such
Domestic Subsidiary to execute and deliver a Subsidiary Guarantee,
within 60 days of the occurrence of such event.
SECTION 11. NEGATIVE COVENANTS
The Company hereby agrees that, so long as the Commitments
remain in effect, any Letter of Credit remains outstanding and unpaid or
any other amount is owing to any Bank, any Agent or the Administrative
Agent hereunder or under any Local Currency Facility:
11.1 Financial Condition Covenants. The Company shall not:
(a) Maintenance of Indebtedness. Permit Consolidated Total
Debt at any time to exceed an amount equal to 55% of Consolidated Total
Capitalization.
(b) Maintenance of Net Worth. Permit Consolidated Net Worth
at any time to be less than an amount equal to the sum of $750,000,000
plus 40% of cumulative Consolidated Net Income for the fiscal quarter
commencing April 1, 1995 and for each fiscal quarter thereafter (without
subtraction for any fiscal quarter during which Consolidated Net Income
is a negative number).
(c) Interest Coverage. Permit for any period of four
consecutive fiscal quarters at any time the ratio of Adjusted
Consolidated EBITDA to Consolidated Cash Interest Expense to be less
than 3.0 to 1.0.
11.2 Limitation on Indebtedness of Domestic Subsidiaries.
The Company shall not permit any of its Domestic Subsidiaries to, and
the Domestic Subsidiaries shall not, directly or indirectly, create,
incur, assume or suffer to exist any Indebtedness, except (a)
Indebtedness in an aggregate amount not to exceed 10% of Consolidated
Net Worth and (b) any Indebtedness of Domestic Subsidiaries pursuant to
any of the Credit Documents.
11.3 Limitation on Liens. The Company shall not, and shall
not permit any of its Domestic Subsidiaries to, directly or indirectly,
create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired,
except for:
(a) Liens for taxes not yet due or which are being contested
in good faith by appropriate proceedings, provided that adequate
reserves with respect thereto are maintained on the books of the Company
or its Domestic Subsidiaries, as the case may be, in conformity with
GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 60 days or
which are being contested in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation and deposits securing liability to insurance carriers under
insurance or self-insurance arrangements;
(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Company or such Domestic Subsidiary; and
(f) Liens (not otherwise permitted hereunder) which secure
obligations not exceeding (as to the Company and all Domestic
Subsidiaries) a Dollar Equivalent Amount equal to 5% of Consolidated Net
Worth at any time outstanding.
11.4 Limitation on Fundamental Changes. The Company (a)
shall not, and shall not permit any of its Domestic Subsidiaries to,
directly or indirectly, enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease, assign, transfer or
otherwise dispose of, all or substantially all of its property, business
or assets and (b) shall not, and shall not permit any of its
Subsidiaries, to make any material change in its present method of
conducting business, except:
(i) any Subsidiary may be merged or consolidated
with or into the Company (provided that the Company shall be the
continuing or surviving corporation) or with or into any one or more
wholly-owned Domestic Subsidiaries or Capstone; and
(ii) any Subsidiary may sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to the Company or any other wholly owned
Domestic Subsidiary or Capstone.
11.5 Limitation on Restricted Payments. The Company shall
not, and shall not permit any of its Subsidiaries to, directly or
indirectly declare or pay any dividend (other than dividends payable
solely in common stock of the Company) on, or make any payment on
account of, or set apart assets for a sinking or other analogous fund
for, the purchase, redemption, defeasance, retirement or other
acquisition of, any shares of any class of Capital Stock of the Company
or any warrants or options or rights to purchase any such 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 Subsidiary (such declarations,
payments, setting apart, purchases, redemptions, defeasances,
retirements, acquisitions and distributions being herein called
"Restricted Payments"), except that, so long as no Default or Event of
Default has occurred and is continuing or would result therefrom, the
Company may declare and make Restricted Payments in a cumulative
aggregate amount from the date hereof not exceeding $20,000,000 plus 30%
of cumulative Consolidated Net Income from and including October 1,
1993.
11.6 Limitation on Negative Pledge Clauses. The Company
shall not, and shall not permit any of its Domestic Subsidiaries to,
directly or indirectly enter into with any Person other than the Banks
pursuant hereto any agreement, other than (a) this Agreement, (b) the
Capitalization Documents, (c) the 1992 Private Placement Notes, (d) any
industrial revenue bonds, purchase money mortgages, Financing Leases
permitted by this Agreement or agreements with suppliers (in which
cases, any prohibition or limitation shall only be effective against the
assets financed thereby or inventory purchased from such supplier, as
the case may be), and (e) other agreements provided the net book value
of the property, assets or revenues subject thereto at any time does not
exceed 5% of the Consolidated Net Worth of the Company, which prohibits
or limits the ability of the Company or any of its Domestic Subsidiaries
to create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired.
11.7 Limitation on Modifications of Debt Instruments. The
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, amend, modify or change, or consent or agree to
any amendment, modification or change to any of the terms of any
Subordinated Indebtedness or any agreement which sets forth the terms of
any Subordinated Indebtedness, except amendments, modifications or
changes which would not (directly or indirectly) increase the amount of
any payment of principal thereof, increase the interest rate or premium
payable thereon, increase the amount of fees or any other amounts
payable with respect thereto, shorten the scheduled amortization or
average weighted life thereof, shorten the date for payment of interest
thereon, shorten the final maturity thereof or modify the subordination
provisions thereof.
SECTION 12. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) (i) Any Specified Borrower shall fail to pay any
principal of any Loan or any Reimbursement Obligation owing by it when
due (whether at the stated maturity, by acceleration or otherwise) in
accordance with the terms hereof; or (ii) any Local Currency Borrower
shall fail to pay any principal of or interest on any Local Currency
Loan when due in accordance with the applicable terms of the relevant
Local Currency Facility; or (iii) any Specified Borrower shall fail to
pay any interest on any Loan or any fee 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 the
Company or any Subsidiary herein or in any other Credit Document or
which is contained in any certificate, document or financial or other
statement furnished by it at any time under or in connection with this
Agreement or any such other Credit Document shall prove to have been
incorrect in any material respect on or as of the date made or deemed
made; or
(c) The Company or any Subsidiary shall default in the
observance or performance of any agreement contained in Section 11 and,
with respect to subsections 11.2 and 11.3, such default shall continue
unremedied for a period of 30 days; or
(d) The Company or any Subsidiary shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Credit Document (other than as provided in
paragraphs (a) through (c) of this Section), and such default shall
continue unremedied for a period of 30 days after the Company has
knowledge thereof; or
(e) Any of the Credit Documents shall cease, for any reason,
to be in full force and effect, or the Company shall so assert in
writing (except for the termination of any Local Currency Facility if
all Local Currency Loans and other amounts owing thereunder are paid in
full); or
(f) The subordination provisions applicable to any
Subordinated Indebtedness, for any reason, cease to be in full force and
effect, or any Person shall so assert to the Company in writing and the
Company shall not promptly contest such assertion; or
(g) The Company or any of its consolidated Subsidiaries shall
(i) default in any payment of principal of or interest of any
Indebtedness (other than the Loans and Reimbursement Obligations) or in
the payment of any Guarantee Obligation, in either case with an
outstanding principal amount in excess of a Dollar Equivalent Amount
equal to $5,000,000 when due beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness or
Guarantee Obligation was created; or (ii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or Guarantee 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 Guarantee
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
or such Guarantee Obligation to become payable; or
(h) (i) Any Specified Borrower or any Subsidiary that
accounts for more than 5% of Total Assets at any date 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, conservator or other similar official for
it or for all or any substantial part of its assets, or the Company or
any such Subsidiary shall make a general assignment for the benefit of
its creditors; or (ii) there shall be commenced against any Specified
Borrower or any Subsidiary 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 any Specified Borrower or any
Subsidiary 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
(i) (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 or any Lien in favor of the PBGC or a Plan
shall arise on the assets of the Company or any Commonly Controlled
Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Required
Banks, likely to result in the termination of such Plan for purposes of
Title IV of ERISA, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (v) the Company or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Required
Banks is likely to, incur any liability in connection with a withdrawal
from, or the Insolvency or Reorganization of, a Multiemployer Plan or
(vi) any other event or condition shall occur or exist with respect to a
Plan; and in each case in clauses (i) through (vi) above, such event or
condition, together with all other such events or conditions, if any,
could reasonably be expected to subject the Company to any tax, penalty
or other liabilities in the aggregate material in relation to the
business, operations, property or financial or other condition of the
Company; or
(j) 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 a Dollar
Equivalent Amount equal to $5,000,000 or more, and all such judgments or
decrees shall not have been vacated, discharged, stayed or bonded
pending appeal within 60 days from the entry thereof; or
(k) The Company Guarantee or any Subsidiary Guarantee shall
cease, for any reason, to be in full force and effect or any Guarantor
party thereto shall so assert; or
(l) A Change in Control shall occur;
then, and in any such event, (A) if such event is an Event of Default
specified in clause (i) or (ii) of paragraph (h) above with respect to
the Company, automatically the Commitments shall immediately terminate
and the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents
required thereunder) shall become immediately due and payable and (B) if
such event is any other Event of Default, either or both of the
following actions may be taken: (i) with the consent of the Required
Banks, the Administrative Agent may, or upon the request of the Required
Banks, 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
Banks, the Administrative Agent may, or upon the request of the Required
Banks, the Administrative Agent shall, by notice to the Company, declare
the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents
required thereunder) to be due and payable forthwith, whereupon the same
shall immediately become due and payable. With respect to all Letters
of Credit with respect to which presentment for honor shall not have
occurred at the time of an acceleration pursuant to the preceding
sentence, the applicable Borrower shall at such time deposit in a cash
collateral account opened by the Administrative Agent an amount equal to
the aggregate then undrawn and unexpired amount of Letters of Credit
issued for its account. Each Borrower hereby grants to the
Administrative Agent, for the benefit of the Issuing Banks and the L/C
Participants, a security interest in such cash collateral to secure all
obligations of such Borrower under this Agreement and the other Loan
Documents. Amounts held in such cash collateral account shall be
applied by the Administrative Agent to the payment of drafts drawn under
such Letters of Credit, and the unused portion thereof after all such
Letters of Credit shall have expired or been fully drawn upon, if any,
shall be applied to repay other obligations of the applicable Borrower
hereunder. After all such Letters of Credit shall have expired or been
fully drawn upon, all Reimbursement Obligations shall have been
satisfied and all other obligations of the applicable Borrower hereunder
shall have been paid in full, the balance, if any, in such cash
collateral account shall be returned to the applicable Borrower. The
Borrowers shall execute and deliver to the Administrative Agent, for the
account of the Issuing Banks and the L/C Participants, such further
documents and instruments as the Administrative Agent may request to
evidence the creation and perfection of the within security interest in
such cash collateral account.
Except as expressly provided above in this Section,
presentment, demand, protest and all other notices of any kind are
hereby expressly waived.
SECTION 13. THE ADMINISTRATIVE AGENT; THE AGENTS AND
THE COLLATERAL AGENT; THE ARRANGER
13.1 Appointment. Each Bank hereby irrevocably designates
and appoints Chemical as the Administrative Agent of such Bank under
this Agreement and the other Credit Documents, and each such Bank
irrevocably authorizes Chemical, as the Administrative Agent for such
Bank, to take such action on its behalf under the provisions of this
Agreement and the other Credit Documents and to exercise such powers and
perform such duties as are expressly delegated to the Administrative
Agent by the terms of this Agreement and the other 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 Bank, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be
read into this Agreement or any other Credit Document or otherwise exist
against the Administrative Agent.
13.2 Delegation of Duties. The Administrative Agent may
execute any of its duties under this Agreement and 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. 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.
13.3 Exculpatory Provisions. Neither the Administrative
Agent nor any of its officers, directors, employees, agents, attorneys-
in-fact or Affiliates shall be (i) liable for any action lawfully taken
or omitted to be taken by it or such Person under or in connection with
this Agreement or any other Credit Document (except for its or such
Person's own gross negligence or willful misconduct) or (ii) responsible
in any manner to any of the Banks for any recitals, statements,
representations or warranties made by the Company or any officer thereof
contained in this Agreement or any other Credit Document 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, this Agreement or any other Credit Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Credit Document or for any failure of the
Company to perform its obligations hereunder or thereunder. The
Administrative Agent shall not be under any obligation to any Bank to
ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any
other Credit Document, or to inspect the properties, books or records of
the Company.
13.4 Reliance by Administrative Agent. The Administrative
Agent shall be entitled to rely, and shall be fully protected in
relying, upon any 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 shall be fully justified in failing or
refusing to take any action under this Agreement or any other Credit
Document unless it shall first receive such advice or concurrence of the
Required Banks or all of the Banks, as may be required hereunder, as it
deems appropriate or it shall first be indemnified to its satisfaction
by the Banks 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
from liability to the Banks in acting, or in refraining from acting,
under this Agreement and the other Credit Documents in accordance with a
request of the Required Banks or all of the Banks, as may be required
hereunder, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Banks and their
respective successors and assigns.
13.5 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 notice from a Bank 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 give notice
thereof to the Banks. The Administrative Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably
directed by the Required Banks or all of the Banks, as may be required
hereunder; 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 Banks.
13.6 Non-Reliance on Administrative Agent and Other Banks.
Each Bank expressly acknowledges that neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates has made any representations or warranties to it and that
no act by the Administrative Agent hereinafter taken, including any
review of the affairs of the Company, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Bank.
Each Bank represents to the Administrative Agent that it has,
independently and without reliance upon the Administrative Agent or any
other Bank, 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 Company and made its own decision to make its
Loans hereunder and enter into this Agreement and the other Credit
Documents to which it is or will be a party. Each Bank also represents
that it will, independently and without reliance upon the Administrative
Agent or any other Bank, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other 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 Company and its Subsidiaries. Except for notices, reports and
other documents expressly required to be furnished to the Banks by the
Administrative Agent hereunder, the Administrative Agent shall not have
any duty or responsibility to provide any Bank with any credit or other
information concerning the business, operations, property, condition
(financial or otherwise), prospects or creditworthiness of the Company
and its Subsidiaries which may come into the possession of the
Administrative Agent and any Issuing Bank or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
13.7 Indemnification. The Banks agree to indemnify the
Administrative Agent and each Issuing Bank in their respective
capacities as such (to the extent not reimbursed by the Company and
without limiting the obligation of the Company to do so), ratably
according to their respective Commitment Percentages in effect on the
date on which indemnification is sought under this subsection (or, if
indemnification is sought after the date upon which the Commitments
shall have terminated and the Loans shall have been paid in full,
ratably in accordance with their Commitment Percentages immediately
prior to such date), 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 Loans) be imposed on, incurred by or asserted against the
Administrative Agent or any Issuing Bank in any way relating to or
arising out of this Agreement, any of the other Credit Documents or any
documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or
omitted by the Administrative Agent or any Issuing Bank under or in
connection with any of the foregoing; provided that no Bank 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 or
Issuing Bank's, as the case may be, gross negligence or willful
misconduct. The agreements in this subsection shall survive the payment
of the Loans, the Reimbursement Obligations and all other amounts
payable hereunder.
13.8 Administrative Agent in Its Individual Capacity. The
Administrative Agent and its Affiliates may make loans to, accept
deposits from and generally engage in any kind of business with the
Company and any of its Subsidiaries as though the Administrative Agent
were not the Administrative Agent hereunder and under the other Credit
Documents. With respect to its Loans made or renewed by it and with
respect to any Letter of Credit issued or participated in by it, the
Administrative Agent shall have the same rights and powers under this
Agreement and the other Credit Documents as any Bank and may exercise
the same as though it were not the Administrative Agent, and the terms
"Bank" and "Banks" shall include the Administrative Agent in its
individual capacity.
13.9 Successor Administrative Agent. The Administrative
Agent may resign as Administrative Agent upon 10 days' notice to the
Banks; provided that any such resignation shall not be effective until a
successor agent has been appointed and approved in accordance with this
subsection 13.9, and such successor agent has accepted its appointment.
If the Administrative Agent shall resign as Administrative Agent under
this Agreement and the other Credit Documents, then the Required Banks
shall appoint from among the Banks a successor administrative agent for
the Banks, which successor agent shall be approved by the Company (which
approval shall not be unreasonably withheld), whereupon such successor
administrative 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 such appointment and approval, 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. After any retiring Administrative Agent's
resignation as Administrative Agent, the provisions of this subsection
shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent under this Agreement and
the other Credit Documents.
13.10 The Agents and the Arranger; The Collateral Agent. (a)
Each Bank acknowledges that the Agents, the Arranger and the Lead
Manager, in such capacities, shall have no duties or responsibilities,
and shall incur no liabilities, under this Agreement or the other Credit
Documents.
(b) Each Bank (including each Hedging Bank) acknowledges and
confirms that Bankers Trust is Collateral Agent under the Intercreditor
Agreement and in such capacity shall have such duties, responsibilities,
liabilities, rights and indemnities as are provided for in the
Intercreditor Agreement.
SECTION 14. MISCELLANEOUS
14.1 Amendments and Waivers. (a) Neither this Agreement
nor any other Credit Document, nor any terms hereof or thereof may be
amended, supplemented or modified except in accordance with the
provisions of this subsection. The Required Banks may, or, with the
written consent of the Required Banks, the Administrative Agent may,
from time to time, (i) enter into with the Loan Parties party thereto
written amendments, supplements or modifications to this Agreement and
the other Credit Documents for the purpose of adding any provisions to
this Agreement or the other Credit Documents or changing in any manner
the rights of the Banks or of the Loan Parties hereunder or thereunder
or (ii) waive, on such terms and conditions as the Required Banks or the
Administrative Agent, as the case may be, may specify in such
instrument, any of the requirements of this Agreement or the other
Credit Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such
amendment, supplement or modification shall (i) reduce the amount or
extend the scheduled date of maturity of any Loan or reduce the stated
rate of any interest or fee payable hereunder or extend the scheduled
date of any payment thereof or increase the aggregate amount or extend
the expiration date of any Bank's Commitment, in each case without the
consent of each Bank directly affected thereby, or (ii) amend, modify or
waive any provision of this subsection or reduce the percentage
specified in the definition of Required Banks, or consent to the
assignment or transfer by the Company of any of its rights and
obligations under this Agreement and the other Credit Documents or
amend, modify or waive subsection 7.3(a) or 14.6(a), or release any
Subsidiary from its Subsidiary Guarantee or release the Company from the
Company Guarantee, in each case without the written consent of all the
Banks, or (iii) amend, modify or waive any provision of Section 13
without the written consent of the then Administrative Agent. Any such
waiver and any such amendment, supplement or modification shall apply
equally to each of the Banks and shall be binding upon the Company, the
Foreign Subsidiary Borrowers, the Banks, the Agents, the Administrative
Agent and all future holders of the Loans. In the case of any waiver,
the Company, the Banks and the Administrative Agent shall be restored to
their former position and rights hereunder and under any other Credit
Documents, 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.
(b) In addition to amendments effected pursuant to the
foregoing paragraph (a), Schedules II, III and IV may be amended as
follows:
(i) Schedule II will be amended to add Subsidiaries
of the Company as additional Foreign Subsidiary Borrowers upon (A)
execution and delivery by the Company, any such Foreign Subsidiary
Borrower and the Administrative Agent, of a Joinder Agreement providing
for any such Subsidiary to become a Foreign Subsidiary Borrower, and (B)
delivery to the Administrative Agent of (1) if reasonably requested by
the Administrative Agent, a Foreign Subsidiary Opinion in respect of
such additional Foreign Subsidiary Borrower and (2) such other documents
with respect thereto as the Administrative Agent shall reasonably
request.
(ii) Schedule II will be amended to remove any
Subsidiary as a Foreign Subsidiary Borrower upon (A) execution and
delivery by the Company of a Schedule Amendment providing for such
amendment, (b) repayment in full of all outstanding Loans of such
Foreign Subsidiary Borrower and (c) cash collateralization of all
outstanding Letters of Credit issued for the account of such Foreign
Subsidiary Borrower.
(iii) Schedule III will be amended to designate other
Banks as additional or replacement Swing Line Banks or additional
Issuing Banks, upon execution and delivery by the Company, the
Administrative Agent and such additional or replacement Swing Line Bank
or additional Issuing Bank, as the case may be, of a Schedule Amendment
providing for such amendment. In the case of any replacement of a Swing
Line Bank pursuant to a Schedule Amendment, the existing Swing Line Bank
replaced pursuant thereto shall cease to be a Swing Line Bank upon the
effectiveness of such Schedule Amendment and the repayment of all Swing
Line Loans owing to such replaced Swing Line Bank.
(iv) Schedule III will be amended to change
administrative information (including the Swing Line Rate definition)
with respect to Swing Line Banks or Issuing
Banks, upon execution and delivery by the Company, the
Administrative Agent and such Swing Line Bank or Issuing Bank, as the
case may be, of a Schedule Amendment providing for such amendment.
(v) Schedule IV will be amended to change
administrative information contained therein (other than any interest
rate definition, Funding Time, Payment Time or notice time contained
therein) or to add Available Foreign Currencies (and related interest
rate definitions and administrative information), upon execution and
delivery by the Company and the Administrative Agent of a Schedule
Amendment providing for such amendment.
(vi) Schedule IV will be amended to conform any
Funding Time, Payment Time or notice time contained therein to then-
prevailing market practices, upon execution and delivery by the Company,
the Required Banks and the Administrative Agent of a Schedule Amendment
providing for such amendment.
(vii) Schedule IV will be amended to change any
interest rate definition contained therein, upon execution and delivery
by the Company, all the Banks and the Administrative Agent of a Schedule
Amendment providing for such amendment.
(c) The Administrative Agent shall give prompt notice to each
Bank of any amendment effect pursuant to subsection 14.1(b).
(d) Notwithstanding the provisions of this subsection 14.1,
any Local Currency Facility may be amended, supplemented or otherwise
modified in accordance with its terms so long as after giving effect
thereto either (i) such Local Currency Facility ceases to be a "Local
Currency Facility" and (x) the Company so notifies the Administrative
Agent and (y) the Company Guarantee Ratio does not exceed 25% or (ii)
the Local Currency Facility continues to meet the requirements of a
Local Currency Facility set forth herein.
14.2 Notices. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing
(including by telecopy), and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when delivered
by hand, or five days after being deposited in the mail, postage
prepaid, or, in the case of telecopy notice, when received, addressed as
follows in the case of the Company, the Foreign Subsidiary Borrowers and
the Administrative Agent, and as set forth in Schedule I in the case of
the other parties hereto, or to such other address as may be hereafter
notified by the respective parties hereto and any future holders of the
Loans:
The Company: Arrow Electronics, Inc.
25 Hub Drive
Melville, New York 11747
Attention: Robert E. Klatell and
Ira M. Birns
Telecopy: (516) 391-1683
Telecopy: (516) 391-1848
The Administrative
Agent: Chemical Bank
270 Park Avenue
New York, New York 10017
Attention: Robert Gaynor
Telecopy: (212) 972-0009
with a copy to:
Chemical Bank Agent Bank Services
Group
140 East 45th Street
New York, New York 10017
Attention: Maggie Swales
Telephone No: 212-622-8433
Fax No: 212-622-0122
The Collateral
Agent: As provided in the Intercreditor Agreement
The Foreign
Subsidiary Borrowers: c/o Arrow Electronics, Inc.
25 Hub Drive
Melville, New York 11747
Attention: Robert E. Klatell and
Ira M. Birns
Telecopy: (516) 391-1683
Telecopy: (516) 391-1848
; provided that any Notice of Borrowing, Notice of Continuation, Notice
of Conversion, Notice of Swing Line Outstandings, Notice of Swing Line
Refunding, Notice of Local Currency Outstandings, Notice of Guarantee
Ceiling Amount, Notice of Prepayment, Notice of Swing Line or Borrowing,
or any notice pursuant to subsections 2.4, 2.5 or 5.2 shall not be
effective until received.
14.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Administrative Agent or
any Bank, any right, remedy, power or privilege hereunder or under the
other Credit Documents 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.
14.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Credit
Documents 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 other Credit Documents and the
making of the Loans hereunder and the issuance of Letters of Credit.
14.5 Payment of Expenses and Taxes. The Company agrees (a)
to pay or reimburse the Administrative Agent and the Arranger for all
its reasonable out-of-pocket costs and expenses incurred in connection
with the development, preparation and execution of, and any amendment,
supplement or modification to, this Agreement and the other Credit
Documents and any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, including, without limitation, the fees
and disbursements of counsel to the Administrative Agent and the
Arranger, (b) to pay or reimburse each Bank and the Administrative Agent
and any Issuing Bank for all its reasonable costs and expenses incurred
in connection with the enforcement or preservation of any rights under
this Agreement, the other Credit Documents and any such other documents
upon the occurrence of an Event of Default, including, without
limitation, the fees and disbursements of counsel to the Administrative
Agent and to the several Banks and any Issuing Bank, and (c) to pay,
indemnify, and hold each Bank, each Agent, the Arranger and the
Administrative Agent and any Issuing Bank 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 taxes, if
any, which may be payable or determined to be payable in connection with
the execution and delivery of, or consummation or administration of any
of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this
Agreement, the other Credit Documents and any such other documents, and
(d) to pay, indemnify, and hold each Bank, each Agent, the Arranger and
the Administrative Agent and any Issuing Bank (and their respective
directors, officers, employees and agents) (collectively, the
"indemnified person") 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 with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Credit
Documents and any such other documents, including, without limitation,
any of the foregoing relating to the use of proceeds of the Loans or the
violation of, noncompliance with or liability under, any Environmental
Law applicable to the operations of the Company, any of its Subsidiaries
or any of the Properties (it being understood that costs and expenses
incurred in connection with the enforcement or preservation of rights
under this Agreement and the other Credit Documents shall be paid or
reimbursed in accordance with clause (b) above rather than this clause
(d)) (all the foregoing in this clause (d), collectively, the
"indemnified liabilities"), provided, that the Company shall have no
obligation hereunder to any indemnified person with respect to
indemnified liabilities arising from (i) the gross negligence or willful
misconduct of such indemnified person or (ii) legal proceedings
commenced against the Administrative Agent, any Issuing Bank or any Bank
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. Any payments required to be made by the Company under
this subsection 14.5 shall be made within 30 days of the demand
therefor. The agreements in this subsection shall survive repayment of
the Loans and all other amounts payable hereunder.
14.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of
the Company, the Foreign Subsidiary Borrowers, the Banks, the
Administrative Agent, all future holders of the Loans and their
respective successors and assigns, except that no Specified Borrower may
assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of each Bank.
(b) Any Bank may, in the ordinary course of its commercial
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 Bank, any Commitment of such Bank or
any other interest of such Bank hereunder and under the other Credit
Documents. In the event of any such sale by a Bank of a participating
interest to a Participant, such Bank's obligations under this Agreement
to the other parties to this Agreement shall remain unchanged, such Bank
shall remain solely responsible for the performance thereof, such Bank
shall remain the holder of any such Loan for all purposes under this
Agreement Credit and the other Documents, and the Company, the Foreign
Subsidiary Borrowers and the Agent shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and
obligations under this Agreement and the other Credit Documents. Each
of the Company and the Foreign Subsidiary Borrowers agrees that if
amounts outstanding under this Agreement are due or 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 to the same extent as if the amount
of its participating interest were owing directly to it as a Bank under
this Agreement, provided that, in purchasing such participating
interest, such Participant shall be deemed to have agreed to share with
the Banks the proceeds thereof as provided in subsection 14.7(a) as
fully as if it were a Bank hereunder. Each of the Company and the
Foreign Subsidiary Borrowers also agrees that each Participant shall be
entitled to the benefits of subsections 7.5, 7.6 or 7.8 with respect to
its participation in the Commitments and the Loans outstanding from time
to time as if it was a Bank; provided that, in the case of subsection
7.6, such Participant shall have complied with the requirements of said
subsection and provided, further, that no Participant shall be entitled
to receive any greater amount pursuant to any such subsection than the
transferor Bank would have been entitled to receive in respect of the
amount of the participation transferred by such transferor Bank to such
Participant had no such transfer occurred. Each participating interest
under this Agreement sold by a Bank to a Participant after the Closing
Date shall be under terms providing that such Participant's rights to
consent or withhold consent in respect of actions by such selling Bank
under this Agreement shall be limited to such actions that, pursuant to
subsection 14.1, require the consent of all the Banks. Each Bank
selling or granting a participation shall indemnify the Borrowers and
the Administrative Agent for any taxes and liabilities that they may
sustain as a result of such Bank's failure to withhold and pay any taxes
applicable to payments by such Bank to its participant in respect of
such participation.
(c) Any Bank may, in the ordinary course of its commercial
lending business and in accordance with applicable law, at any time and
from time to time assign to any Bank or any affiliate thereof or, with
the consent of the Administrative Agent and the Company (which shall not
be unreasonably withheld), to an additional bank or financial
institutions ("an Assignee") all or any part of its rights and
obligations under this Agreement and the Loans pursuant to an Assignment
and Acceptance, executed by such Assignee, such assigning Bank (and, in
the case of an Assignee that is not then a Bank or an affiliate thereof,
by the Administrative Agent and the Company) and delivered to the
Administrative Agent for its acceptance and recording in the Register;
provided that after giving effect to any such assignment, the transferor
Bank's aggregate Dollar Equivalent Amount of its Local Currency Bank
Maximum Borrowing Amount under all Local Currency Facilities may not
exceed its Commitment hereunder. 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 Bank hereunder with
a Commitment as set forth therein, and (y) the assigning Bank thereunder
shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of
an Assignment and Acceptance covering all or the remaining portion of an
assigning Bank's rights and obligations under this Agreement, such
assigning Bank shall cease to be a party hereto). Notwithstanding
anything herein to the contrary, no Assignee shall be entitled to
receive any greater amount pursuant to subsections 7.5, 7.6 or 7.8 than
the transferor Bank would have been entitled to receive in respect of
the amount of the Commitment transferred by such transferor Bank to such
Assignee had no such transfer occurred, unless following the date of
such assignment, a change in any applicable Requirement of Law or any
interpretation thereof shall have occurred which entitles such Assignee
to claim additional amounts pursuant to such subsections.
(d) The Administrative Agent shall maintain at its address
referred to in subsection 14.2 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 Banks and the Commitment of, and
principal amount of the Loans owing hereunder to, each Bank 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
Banks may treat each Person whose name is recorded in the Register as
the owner of the Loan recorded therein for all purposes of this
Agreement. The Register shall be available for inspection by the
Company or any Bank at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Bank and an Assignee (and, in the case of an Assignee
that is not then a Bank or an affiliate thereof, by 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 Banks and the Company.
(f) The Company authorizes each Bank to disclose to any
Participant or Assignee (each, a "Transferee") and any prospective
Transferee any and all financial information in such Bank's possession
concerning the Company and its Affiliates which has been delivered to
such Bank by or on behalf of the Company pursuant to this Agreement or
which has been delivered to such Bank by or on behalf of the Company in
connection with such Bank's credit evaluation of the Company and its
Affiliates prior to becoming a party to this Agreement so long as each
such prospective Transferee shall execute a confidentiality agreement
containing provisions substantially similar to the provisions contained
in the next succeeding sentences of this paragraph (f). The
Administrative Agent and each Bank shall hold nonpublic information
obtained pursuant to the requirements of this Agreement other than
information (i) that is, or generally becomes, available to the public,
(ii) that was or becomes available to the Administrative Agent or any
Bank on a nonconfidential basis or (iii) that becomes available to the
Administrative Agent or any Bank from a Person or other source that is
not, to the best knowledge of the Administrative Agent or such Bank, as
the case may be, otherwise bound by a confidentiality obligation to the
Company, in accordance with its customary procedures for treatment of
confidential information and in accordance with safe and sound banking
practices and in any event, may make disclosure reasonably required by
any Governmental Authority or representative thereof pursuant to
subpoena or other legal process or as otherwise required by law, order
or regulation. Unless specifically prohibited by applicable law,
regulation, rule or court order, the Administrative Agent and each Bank
shall notify the Company of any request by any Governmental Authority or
representative thereof (other than any such request in connection with
an examination of the financial condition of the Administrative Agent or
such Bank by such Governmental Authority) for disclosure of such
information by the Administrative Agent or such Bank so that any of them
may seek an appropriate protective order. Except as may be required by
an order of a court of competent jurisdiction and to the extent set
forth therein, neither the Administrative Agent nor any Bank shall be
obligated or required to return any materials furnished by the Company.
Nothing in this paragraph (f) shall prohibit the Administrative Agent or
any Bank from disclosing nonpublic information to its examiners,
regulators and professional advisors.
(g) If, pursuant to this subsection, any interest in this
Agreement is transferred to any Transferee which is organized under the
laws of any jurisdiction other than the United States or any state
thereof, the transferor Bank shall cause such Transferee, concurrently
with the effectiveness of such transfer, (i) to represent to the
transferor Bank (for the benefit of the transferor Bank, the
Administrative Agent and the Company) that under applicable law and
treaties no United States federal income taxes or United States backup
withholding taxes will be required to be withheld by the Administrative
Agent or any Specified Borrower or the transferor Bank with respect to
any payments to be made to such Transferee in respect of the Loans
(excluding any such taxes that would be required to be withheld with
respect to any payments made or to be made to such transferor Bank at
the time of such transfer had such transfer not occurred), (ii) to
furnish to the transferor Bank (and, in the case of any Purchasing Bank
registered in the Register, the Administrative Agent and the Company)
two copies of each of (x) either United States Internal Revenue Service
Form 4224 or United States Internal Revenue Service Form 1001 or
successor applicable form, as the case may be (wherein such Transferee
claims entitlement to complete exemption from United States federal
withholding tax on all payments hereunder), and (y) either United States
Internal Revenue Service Form W-8 or W-9 or successor applicable form,
as the case may be (wherein such Transferee claims entitlement to
complete exemption from United States federal backup withholding tax on
all payments hereunder), and (iii) to agree (for the benefit of the
transferor Bank, the Administrative Agent and the Company) to provide
the transferor Bank (and, in the case of any Purchasing Bank registered
in the Register, the Administrative Agent and the Company) a new Form
4224, Form 1001, Form W-8 or Form W-9 or successor applicable form, as
the case may be, duly executed and completed by such Transferee, on or
before the date that any such form expires or becomes obsolete or after
the occurrence of any event (including, without limitation, a change in
such Transferee's lending office) requiring a change in the most recent
form previously delivered by it to the Company and the Administrative
Agent in accordance with applicable United States laws and regulations
and amendments and to comply from time to time with all applicable
United States laws and regulations with regard to such withholding tax
exemption.
(h) Nothing herein shall prohibit any Bank from pledging or
assigning any Loan to any Federal Reserve Bank in accordance with
applicable law.
14.7 Adjustments; Set-off. (a) If any Bank (a "benefitted
Bank") shall at any time receive any payment of all or part of its Loans
or the Reimbursement Obligations then due and owing to it, 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 Section 12(h), or otherwise),
in a greater proportion than any such payment to or collateral received
by any other Bank, if any, in respect of such other Bank's Loans or the
Reimbursement Obligations then due and owing to it, or interest thereon,
such benefitted Bank shall purchase for cash from the other Banks a
participating interest in such portion of each such other Bank's Loan or
the Reimbursement Obligations owing to it, or shall provide such other
Banks with the benefits of any such collateral, or the proceeds thereof,
as shall be necessary to cause such benefitted Bank to share the excess
payment or benefits of such collateral or proceeds ratably with each of
the Banks; provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such benefitted Bank,
such purchase shall be rescinded, and the purchase price and benefits
returned, to the extent of such recovery, but without interest. Each of
the Company and the Foreign Subsidiary Borrowers agrees that each Bank
so purchasing a portion of another Bank's Loan may exercise all rights
of payment (including, without limitation, rights of set-off) with
respect to such portion as fully as if such Bank were the direct holder
of such portion.
(b) In addition to any rights and remedies of the Banks
provided by law, each Bank shall have the right, without prior notice to
the Company or any Foreign Subsidiary Borrower, any such notice being
expressly waived by the Company and the Foreign Subsidiary Borrowers to
the extent permitted by applicable law, upon any amount becoming due and
payable by the Company hereunder or under this Agreement or the other
Credit Documents (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against such amount 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 Bank
or any branch or agency thereof to or for the credit or the account of
the Company or such Foreign Subsidiary Borrower, as the case may be.
Each Bank agrees promptly to notify the Company and the Administrative
Agent after any such set-off and application made by such Bank, provided
that the failure to give such notice shall not affect the validity of
such set-off and application.
14.8 Power of Attorney. Each Foreign Subsidiary Borrower
hereby grants to the Company an irrevocable power of attorney to act as
its attorney-in-fact with regard to matters relating to this Agreement,
the Applications and each other Credit Document, including, without
limitation, execution and delivery of any amendments, supplements,
waivers or other modifications hereto or thereto, receipt of any notices
hereunder or thereunder and receipt of service of process in connection
herewith or therewith. Each Foreign Subsidiary Borrower hereby
explicitly acknowledges that the Administrative Agent and each Bank has
executed and delivered this Agreement and each other Credit Document to
which it is a party, and has performed its obligations under this
Agreement and each other Credit Document to which it is a party, in
reliance upon the irrevocable grant of such power of attorney pursuant
to this subsection 14.8. The power of attorney granted by each Foreign
Subsidiary Borrower hereunder is coupled with an interest.
14.9 Judgment. (a) If for the purpose of obtaining judgment
in any court it is necessary to convert a sum due hereunder in one
currency into another currency, the parties hereto agree, to the fullest
extent that they may effectively do so, that the rate of exchange used
shall be that at which in accordance with normal banking procedures the
Administrative Agent could purchase the first currency with such other
currency on the Business Day preceding the day on which final judgment
is given.
(b) The obligation of the Company or any Foreign Subsidiary
Borrower in respect of any sum due to any Bank or the Administrative
Agent hereunder shall, notwithstanding any judgment in a currency (the
"Judgment Currency") other than that in which such sum is denominated in
accordance with the applicable provisions of this Agreement or the other
Credit Documents (the "Agreement Currency"), be discharged only to the
extent that on the Business Day following receipt by such Bank or the
Administrative Agent (as the case may be) of any sum adjudged to be so
due in the Judgment Currency such Bank or the Administrative Agent (as
the case may be) may in accordance with normal banking procedures
purchase the Agreement Currency with the Judgment Currency; if the
amount of the Agreement Currency so purchased is less than the sum
originally due to such Bank or the Administrative Agent (as the case may
be) in the Agreement Currency, the Company or such Foreign Subsidiary
Borrower (as the case may be) agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify such Bank or the
Administrative Agent (as the case may be) against such loss, and if the
amount of the Agreement Currency so purchased exceeds the sum originally
due to any Bank or the Administrative Agent (as the case may be), such
Bank or the Administrative Agent (as the case may be) agrees to remit to
the Company or such Foreign Subsidiary Borrower (as the case may be)
such excess.
14.10 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate
counterparts (including by telecopy), 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.
14.11 Severability. Any provision of this 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.
14.12 Integration. This Agreement and the other Credit
Documents represent the agreement of the Company, the Foreign Subsidiary
Borrowers, the Agents, the Administrative Agent and the Banks with
respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent
or any Bank relative to subject matter hereof not expressly set forth or
referred to herein or in the other Credit Documents.
14.13 GOVERNING LAW. THIS AGREEMENT AND THE OTHER CREDIT
DOCUMENTS (OTHER THAN ANY LOCAL CURRENCY FACILITY) AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE OTHER CREDIT
DOCUMENTS (OTHER THAN ANY LOCAL CURRENCY FACILITY) SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF NEW YORK.
14.14 Submission To Jurisdiction; Waivers. (a) Each of the
Company and the Foreign Subsidiary Borrowers hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal action
or proceeding relating to this Agreement and the other Credit Documents
to which it is a party, or for recognition and enforcement of any
judgement 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 the Company at its address set forth in subsection 14.2 or
at such other address of which the Administrative Agent shall have been
notified pursuant thereto;
(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; and
(v) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this subsection any special, exemplary, punitive or
consequential damages.
(b) Each Foreign Subsidiary Borrower hereby irrevocably
appoints the Company as its agent for service of process in any
proceeding referred to in subsection 14.14(a) and agrees that service of
process in any such proceeding may be made by mailing or delivering a
copy thereof to it care of the Company at its address for notice set
forth in subsection 14.2.
14.15 Acknowledgements. Each of the Company and the Foreign
Subsidiary Borrowers hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Credit Documents;
(b) none of the Agents, the Administrative Agent, the
Collateral Agent or any Bank has any fiduciary relationship with or duty
to the Company and the Foreign Subsidiary Borrowers arising out of or in
connection with this Agreement or any of the other Credit Documents, and
the relationship between the Agents, the Administrative Agent, the
Collateral Agent and the Banks, on one hand, and the Company and the
Foreign Subsidiary Borrowers, on the other hand, in connection herewith
or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Credit
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Banks or among the Company and the Foreign Subsidiary
Borrowers and the Banks.
14.16 WAIVERS OF JURY TRIAL. THE COMPANY, THE FOREIGN
SUBSIDIARY BORROWERS, THE AGENTS, THE ADMINISTRATIVE AGENT, THE
COLLATERAL AGENT AND THE BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly
authorized officers as of the day and year first above written.
ARROW ELECTRONICS, INC.
By:/s/ Robert E. Klatell
Title: Vice-President
ARROW ELECTRONICS DISTRIBUTION GROUP EUROPE B.V.
By:/s/ Robert E. Klatell
Title: Vice-President
ARROW ELECTRONICS GmbH
By:/s/ Robert E. Klatell
Title: Vice-President
SPOERLE ELECTRONIC
HANDELSGESELLSCHAFT mbH & CO.
By:/s/ Robert E. Klatell
Title: Vice-President
ARROW ELECTRONICS (UK) LTD.
By:/s/ Robert E. Klatell
Title: Vice-President
MICROPROCESSOR AND MEMORY DISTRIBUTION LTD.
By:/s/ Robert E. Klatell
Title: Vice-President
ARROW-EXATEC A/S
By:/s/ Robert E. Klatell
Title: Vice-President
ARROW-FIELD OY
By:/s/ Robert E. Klatell
Title: Vice-President
ARROW-TH:S ELEKTRONIK AB
By:/s/ Robert E. Klatell
Title: Vice-President
ARROW-TAHONIC A/S
By:/s/ Robert E. Klatell
Title: Vice-President
COMPONENTS AGENT LTD.
By:/s/ Robert E. Klatell
Title: Vice-President
TEXNY GLORYTACT (HK) LIMITED
By:/s/ Robert E. Klatell
Title: Vice-President
ARROW ELECTRONIQUE S.A.
By:/s/ Robert E. Klatell
Title: Vice-President
MEGACHIP S.A.
By:/s/ Robert E. Klatell
Title: Vice-President
CHEMICAL SECURITIES INC., as Arranger
By:/s/ Elizabeth F. Allen
Title: Vice-President
CHEMICAL BANK, as Administrative Agent, as an Agent and as a Bank
By:/s/ Robert K. Gaynor
Title: Vice-President
ABN AMRO BANK NV NEW YORK BRANCH
By:/s/ Ann Schwalbenberg
Title: Vice-President
By:/s/ Laura G. Fazio
Title: Vice-President
BANCA COMMERCIALE ITALIANA
By:/s/ Edward C. Bermant Julia M. Welch
Title: FVP AVP
BANCA POPOLARE DI MILANO
By:/s/ Anthony Franco Esperanza Quintero
Title: FVP & General Manager VP
BANK OF MONTREAL
By:/s/ W.T. Calder
Title: Director
THE BANK OF NEW YORK
By:/s/ William A. Kerr
Title: Vice President
BANK OF NOVA SCOTIA
By:/s/ John W. Campbell
Title: Unit Head
BANKERS TRUST COMPANY, as an Agent, as Collateral Agent and as a Bank
By:/s/ Edward G. Benedict
Title: Vice President
BANQUE NATIONALE DE PARIS
By:/s/ Richard L. Sted
Title: Senior Vice President
By:/s/ Richard Pace
Title: Assistant Vice President
BAYERISCHE LANDESBANK, CAYMAN ISLANDS BRANCH
By:/s/ Karl-Heinz Wallner
Title: Senior VP and Manager of Operations and Administration
By:/s/ Peter Obermann
Title: Senior VP, Manager Lending Division
BAYERISCHE VEREINSBANK AG, NEW YORK BRANCH
By:/s/ Ernst Luthi
Title: Senior Vice President
By:/s/ Ramon Espinosa
Title: Credit Analyst
BHF-BANK AG
By:/s/ Linda Pace Perry Foreman
Title: VP Assistant VP
CARIPLO-CASSA DI RISPARMIO DELLE PROVINCIE LOMBARDE S.P.A.
By:/s/ Anthony F. Giobbi
Title: Vice President
By:/s/ Bernato Bassi
Title: First Vice President
CHASE MANHATTAN BANK
By:/s/ Sal Trifilletti
Title: Vice President
CREDIT INDUSTRIEL ET COMMERCIAL (CIC PARIS)
By:/s/ Robert Gaynor
Title: Attorney-in-fact
CREDIT LYONNAIS NEW YORK BRANCH
By:/s/ Mark Campellone
Title: Vice President
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By:/s/ Mark Campellone
Title: Authorized Signature
DEN DANSKE BANK AKTIESELSKAB, CAYMAN ISLANDS BRANCH
By:/s/ Mogens Sondergaard
Title: Vice President
By:/s/ John O'Neill
Title: Vice President
DEUTSCHE BANK AG
By:/s/ Jean M. Hannigan J. Tracy Mehr
Title: Assistant VP Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By:/s/ Steven Kim
Title: Corporate Banking Officer
MIDLAND BANK PLC, NEW YORK BRANCH
By:/s/ Rochelle Forster
Title: Vice President
LTCB TRUST COMPANY
By:/s/ Rene O. LeBlanc
Title: Senior Vice President
NATWEST BANK N.A., as Lead Manager and as a Bank
By:/s/ Stephan Ramerini
Title: Vice President
NATIONAL WESTMINSTER BANK AG
By:/s/ Barbara Bauer Bruno Oestreicher
Title: Asst. Mgr. Sr. Asst. Mgr.
NATIONSBANK OF TEXAS, N.A.
By:/s/ Yousuf Omar
Title: Senior Vice President
PNC BANK, NATIONAL ASSOCIATION
By:/s/ Tom Partridge
Title: Commercial Banking Officer
THE SANWA BANK, LIMITED, NEW YORK BRANCH
By:/s/ Jean-Michel Fatovic
Title: Vice President
SHAWMUT BANK, N.A.
By:/s/ Olaperi Onipede
Title: Director, Electronics/Technology
SOCIETE GENERALE
By:/s/ Gordon Saint-Denis
Title: Vice President
STANDARD CHARTERED BANK
By:/s/ Stephen H. Wahl
Title: Vice President
<PAGE>
SCHEDULE I
BANKS AND COMMITMENTS
Banks Commitment
- --------------------------------------- ---------------------
Chemical Bank $30,000,000.00
c/o Chemical Securities Inc.
270 Park Avenue
New York, New York 10017
Attention: Robert Gaynor
Telephone: (212) 270-3838
Telecopy: (212) 972-0009
ABN AMRO Bank NV New York Branch $16,000,000.00
500 Park Avenue
New York, New York 10022
Attention: Mr. Clarke Moody
Telephone: (212) 446-4142
Telecopy: (212) 832-7129
Banca Commerciale Italiana $16,000,000.00
One William Street
New York, New York 10004
Attention: Mr. Charles Dougherty
Telephone: (212) 607-3656
Telecopy: (212) 809-2124
Banca Popolare di Milano $16,000,000.00
375 Park Avenue
New York, New York 10152
Attention: Mr. Nicholas Cinosi
Telephone: (212) 758-5040
Telecopy: (212) 838-1077
The Bank of Montreal $16,000,000.00
430 Park Avenue
New York, New York 10022
Attention: Mr. Tom Brino
Telephone: (212) 605-1666
Telecopy: (212) 605-1455
The Bank of New York $16,000,000.00
One Wall Street
8th Floor
New York, New York 10286
Attention: Mr. Roger Grossman
Telephone: (212) 635-1309
Telecopy: (212) 635-1480
The Bank of Nova Scotia $16,000,000.00
One Liberty Plaza
New York, New York 10006
Attention: Mr. Dan Foote
Telephone: (212) 225-5012
Telecopy: (212) 225-5090
Bankers Trust $30,000,000.00
One Bankers Trust Plaza, 23rd Floor
New York, New York 10006
Attention: Mr. Ned Benedict
Telephone: (212) 250-3708
Telecopy: (212) 250-6815
Banque Nationale de Paris $16,000,000.00
499 Park Avenue
New York, New York 10022-1278
Attention: Mr. Richard Pace
Telephone: (212) 415-9720
Telecopy: (212) 415-9606
Bayerische Landesbank $16,000,000.00
560 Lexington Avenue
New York, New York 10022
Attention: Ms. Joanne Cicino
Telephone: (212) 310-9834
Telecopy: (212) 310-9868
Bayerische Vereinsbank AG $16,000,000.00
335 Madison Avenue, 19th Floor
New York, New York 10017
Attention: Ms. Marianne Weinzinger
Telephone: (212) 210-0352
Telecopy: (212) 880-9724
BHF-Bank AG $16,000,000.00
590 Madison Avenue
New York, New York 10022
Attention: Ms. Linda Pace
Telephone: (212) 756-5915
Telecopy: (212) 756-5536
CARIPLO-Cassa di Risparmio delle $16,000,000.00
Provincie Lombarde S.p.A.
10 East 53rd Street
New York, New York 10022
Attention: Mr. Anthony F. Giobbi
Telephone: (212) 527-8737
Telecopy: (212) 527-8777
Chase Manhattan Bank $16,000,000.00
1 Greeway Plaza
135 Pinelawn Road
Melville, New York 11747
Attention: Mr. Gary Olson
Telephone: (212) 753-9670
Telecopy: (212) 753-0878
Credit Industriel Et Commercial (CIC Paris) $16,000,000.00
57, rue de la Victoire
75009 Paris
Attention: Mr. Steve Francis
Telephone: (1) 45.96.90.04
Telecopy: (1) 45.96.90.11 or 90.71
Credit Lyonnais New York Branch $16,000,000.00
Credit Lyonnais Cayman Island Branch
1301 Avenue of the Americas
New York, New York 10019
Attention: Mr. Mark Campellone
Telephone: (212) 261-7120
Telecopy: (212) 459-3176
Den Danske Bank Aktieselskab, $16,000,000.00
Cayman Islands Branch
280 Park Avenue
4th Floor - East Building
New York, New York 10017
Attention: Mr. Mogens Sondergard
Telephone: (212) 984-8472
Telecopy: (212) 370-9239
Deutsche Bank AG $16,000,000.00
31 West 52nd Street, 24th Floor
New York, New York 10019
Attention: Mr. Gregory Hill
Telephone: (212) 474-8240
Telecopy: (212) 474-82 12
The First National Bank of Chicago $16,000,000.00
153 West 51st Street, Mail Suite 4000
New York, New York 10019
Attention: Mr. James Peterson
Telephone: (212) 373-1108
Telecopy: (212) 373-1388
Hong Kong Bank $16,000,000.00
140 Broadway, 4th Floor
New York, New York 10005
Attention: Ms. Rochelle Forster
Telephone: (212) 658-5114
Telecopy: (212) 658-5109
The Long-Term Credit Bank of Japan, Ltd. $16,000,000.00
165 Broadway, 49th Floor
New York, New York 10006
Attention: Ms. Laura Buckley
Telephone: (212) 335-4518
Telecopy: (212) 608-2371
NatWest Bank N.A. $24,000,000.00
190 Vanderbilt Motor Parkway
Hauppauge, New York 11788
Attention: Mr. Stephen Ramerini
Telephone: (516) 436-2021
Telecopy: (516) 436-2030
National Westminster Bank AG $16,000,000.00
Postfach, P.O. Box 11 10 51
60045 Frankfurt am Main, Germany
Attention: Ms. Barbara Bauer
Telephone: 011-49-69-17006-223
Telecopy: 011-49-69-17006-335
NationsBank of Texas, N.A. $16,000,000.00
901 Main Street, 67th Floor
Dallas, Texas 75283-1000
Attention: Mr. Yousuf Omar
Telephone: (214) 508-3347
Telecopy: (214) 508-0980
PNC Bank, National Association $16,000,000.00
335 Madison Avenue
New York, New York 11017
Attention: Mr. Tom Partridge
Telephone: (212) 557-5356
Telecopy: (212) 557-5461
The Sanwa Bank, Limited, $16,000,000.00
New York Branch
55 East 52nd Street
New York, New York 10055
Attention: Mr. Jean-Michel Fatovic
Telephone: (212) 339-6397
Telecopy: (212) 754-1304
Shawmut Bank, N.A. $16,000,000.00
One Federal Street
Boston, Massachusetts 02211
Attention: Ms. Peri Onipede
Telephone: (617) 292-4048
Telecopy: (617) 292-3241
Societe Generale $16,000,000.00
1221 Avenue of the Americas
New York, New York 10020
Attention: Mr. Gordon Saint-Denis
Telephone: (212) 278-7141
Telecopy: (212) 278-7430
Standard Chartered Bank $16,000,000.00
160 Water Street
New York, New York 10038-4995
Attention: Mr. Stephen H. Wahl
Telephone: (212) 612-0469
Telecopy: (212) 612-0225
<PAGE>
Schedule II
page 1 of 4
FOREIGN SUBSIDIARY BORROWERS
Name and Address Jurisdiction of
Incorporation
- ---------------------------------------------------- ------
Arrow Electronics Distribution Group Europe B.V. Netherlands
c/o Executive Management Trustmij B.V.
Drentestraat 20
1083 HK Amsterdam
The Netherlands
p 020-549-7777
f 020-661-0654
Arrow Electronics GmbH Germany
Max-Planck StraBe 1-3
D-63303 Dreieich
Germany
p 49-6103-30-40
f 49-6103-35465
Spoerle Electronic Handelsgesellschaft mbH & Co. Germany
Max-Planck StraBe 1-3
D-63303 Dreieich
Germany
p 49-6103-30-40
f 49-6103-35465
Arrow Electronics (UK) Ltd. England
St. Martins Business Centre
Cambridge Road
Bedford, MK42 OLF
England
p 011-44-1-234-270-272
f 011-44-1-234-211-434
Schedule II
page 2 of 4
FOREIGN SUBSIDIARY BORROWERS
Name and Address Jurisdiction of
Incorporation
- ------------------------------------- ---------------
Microprocessor and Memory Distribution Ltd. England
3 Bennet Court
Bennet Road, Reading
Berkshire, RG2 OQX
England
p 011-44-734-313-232
f 011-44-734-313-255
Arrow-Exatec A/S Denmark
Mileparken 20E
DK-2740 Skovlunde
Denmark
p 45-44-92-70-00
f 45-44-92-60-20
Arrow-Field OY Finland
Niittyl@ntie 5
SF-00620, Helsinki
Finland
p 011-358-2-777-571
f 011-358-0-798-853
Arrow-TH:s Elektronik AB Sweden
Arrendev@gen 36
Box 3027
S-16303 Spaga
Sweden
p 46-8-36-2970
f 46-8-761-3065
Schedule II
page 3 of 4
FOREIGN SUBSIDIARY BORROWERS
Jurisdiction of
Name and Address Incorporation
- --------------------------------------------- ------------------
Arrow-Tahonic A/S Norway
Sagveien 17
PO Box 4554 Torshov
0404 Oslo
Norway
p 47-2-237-6020
f 47-2-237-4140
Components Agent Limited Hong Kong
36/F Metroplaza, Tower 1
Hing Fong Road, Kwai Chung
Hong Kong
p 011-852-922-02388
f 011-852-487-1268
Texny Glorytact (HK) Limited Hong Kong
Unit M, 6/F., Kaiser Estate
Phase 3, 11 Hok Yuen Street
Hunghom, Kowloon
Hong Kong
p 011-852-765-0118
f 011-852-765-0557
Arrow Electronique S.A. France
73/39, rue des Solets
Silic 585
94663 Rungis Cedex
France
p 011-33-1-49-78-49-78
f 011-33-1-49-78-05-96
Megachip S.A. France
7, avenue du Canada
Z.A. Courtaboeuf
91966 LES ULIS cPdex
France
p 33-1-69-29-04-04
f 33-1-69-29-00-39
<PAGE>
Schedule III
CERTAIN INFORMATION CONCERNING SWING LINE
LOANS AND LETTERS OF CREDIT
I. Issuing Banks and Issuing Offices
Name of Issuing Bank Issuing Office Currencies
- ---------------------- ---------------- ----------------
Chemical Bank 55 Water Street All Available
17th Floor Foreign Currencies
New York, New York 10041
Attention: Standby Letter
of Credit Dept.
Telecopy: (212) 363-5656
Bayerische Vereinsbank AG 335 Madison Avenue U.S.Dollars
New York Branch 19th Floor Deutsche Marks
New York, NY 10017 Hong Kong Dollars
Attn: Letter of Credit French Francs
Dept. Danish Kroner
Telecopy: (212) 210-0330 Dutch Guilder
Pounds Sterling
Standard Chartered Bank 9/F Parklane Square All Available
Chiwan Tower, Foreign Currencies
1 Kimberly Road
Tsimshatsui, Kowloon,
Hong Kong
Phone: 011-852-2378-6771
Telecopy: 011-852-2376-1144
Banque Nationale de Paris 200 Liberty Street All Available
20th Floor Foreign Currencies
World Financial Center
Tower A
New York, New York 10281
Attention: Standby Letter
of Credit Section
Telecopy: (212) 978-1669
I. Issuing Banks and Issuing Offices (con=t)
Name of Issuing Bank Issuing Office Currencies
- --------------------------------- -------------------- ----------------
Bank of New York One Wall Street All Available
8th Floor Foreign Currencies
NY Corporate Division
New York, New York 10286
Phone: (212) 635-1311
Telecopy: (212) 635-1480
II. Swing Line Loans
Dollar
Equivalent
Amount of
Swing Line
Name of Borrower Swing Line Bank Swing Line Currency Limit
- ---------------- -------------- ------------------- -------
Arrow Electronics, Inc. Chemical Bank U.S. Dollars $10,000,000
Components Agent Limited/ Standard Chartered Hong Kong Dollar/ $ 5,000,000
Texny Glorytact (HK) Limited Bank U.S. Dollars
Arrow -Exatec A/S Den Danske Bank Danish Kroner $ 6,000,000
Arrow Electronique S.A./ Credit Industriel French Franc $13,000,000
Megachip S.A. et Commercial
Spoerle Electronic BHF Bank Deutschemarks $ 5,000,000
Handelsgesellschaft
mbH & Co.
Arrow Electronics (UK) Ltd. NatWest Bank N.A. Pounds Sterling $11,000,000
U.S. Dollars
III. Swing Line Lenders -- Addresses of Lending Offices
Berliner Handels-und Frankfurter Bank AG
Neue Mainzer Strasse 74
D-60311 Frankfurt am Main
Germany
Attn: Hansjorg Burk
phone: 011-49-69-718-2523
telecopy: 011-49-69-718-3131
Chemical Bank
270 Park Avenue
New York, NY 10017
Attention: Robert Gaynor
phone: 212-270-3838
telecopy: 212-972-0009
Credit Industriel et Commercial
57 rue de la Victoire
Paris France 75009
Attn: Stephen Francis
phone: 011-331-4596-9004
telecopy: 011-331-4596-9011
Den Danske Bank
[ to be agreed ]
NatWest Bank N.A.
190 Vanderbilt Motor Parkway
Hauppauge, NY 11788
Attn: James Thompson
phone: 516-436-2043
telecopy: 516-436-2030
Standard Chartered Bank
9/F Parklane Square
Chiwan Tower, 1 Kimberly Road
Tsimshatsui, Kowloon, Hong Kong
phone: 011-852-2378-6771
telecopy: 011-852-2376-1144
<PAGE>
SCHEDULE IV
ADMINISTRATIVE SCHEDULE
I. COMMITTED RATE LOANS
A. Interest Rates for Each Currency
Dollars:
1. Committed Rate ABR Loans: ABR
2. Committed Rate Eurocurrency Loans:
for any Interest Period in respect of any Tranche, the
rate for deposits in Dollars for a period beginning on the first day
of such Interest Period and ending on the last day of such Interest
Period which appears on the Telerate Page 3750 (or, if no such
quotation appears on such Telerate Page, on the appropriate Reuters
Screen) as of 11:00 a.m., London time, on the Quotation Day for such
Interest Period.
Danish Kroner:
Committed Rate Eurocurrency Loans:
for any Interest Period in respect of any Tranche, the
rate for deposits in Danish Kroner for a period beginning on the first
day of such Interest Period and ending on the last day of such
Interest Period which appears on the Reuters Screen DKNH (or, if no
such quotation appears on such Reuters Screen, on the appropriate
Telerate Page) as of 11:00 a.m., London time, on the Quotation Day for
such Interest Period.
Deutsche Marks:
Committed Rate Eurocurrency Loans:
for any Interest Period in respect of any Tranche, the
rate for deposits in Deutsche Marks for a period beginning on the
first day of such Interest Period and ending on the last day of such
Interest Period which appears on the Telerate Page 3750 (or, if no
such quotation appears on such Telerate Page, on the appropriate
Reuters Screen) as of 11:00 a.m., London time, on the Quotation Day
for such Interest Period.
French Francs:
Committed Rate Eurocurrency Loans:
for any Interest Period in respect of any Tranche, the
rate for deposits in French Francs for a period beginning on the first
day of such Interest Period and ending on the last day of such
Interest Period which appears on the Telerate Page 3740 (or, if no
such quotation appears on such Telerate Page, on the appropriate
Reuters Screen) as of 11:00 a.m., London time, on the Quotation Day
for such Interest Period.
Sterling:
Committed Rate Eurocurrency Loans:
for any Interest Period in respect of any Tranche, the
rate per annum equal to the average (rounded upward to the nearest
1/16th of 1%) of the rates at which Chemical Bank is offered deposits
in Sterling in the Paris interbank market at or about 11:00 A.M.,
Paris time, on the Quotation Day for such Interest Period for delivery
on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to Chemical Bank's
Borrowing Percentage of the applicable Committed Rate Loan.
Hong Kong Dollars:
Committed Rate Eurocurrency Loans:
for any Interest Period in respect of any Tranche, the
rate for deposits in Hong Kong Dollars for a period beginning on the
first day of such Interest Period and ending on the last day of such
Interest Period which appears on the Reuters Screen HIBO (or, if no
such quotation appears on such Reuters Screen, on the appropriate
Telerate Page) as of 11:00 a.m., London time, on the Quotation Day for
such Interest Period.
Norwegian Kroner:
Committed Rate Eurocurrency Loans:
for any Interest Period in respect of any Tranche, the
rate for deposits in Norwegian Kroners for a period beginning on the
first day of such Interest Period and ending on the last day of such
Interest Period which appears on the Telerate Page 20818 (or, if no
such quotation appears on such Telerate Page, on the appropriate
Reuters Screen) as of 11:00 a.m., London time, on the Quotation Day
for such Interest Period.
Finnish Markka:
Committed Rate Eurocurrency Loans:
for any Interest Period in respect of any Tranche, the
rate for deposits in Finnish Markka for a period beginning on the
first day of such Interest Period and ending on the last day of such
Interest Period which appears on the Reuters Screen SPFB (or, if no
such quotation appears on such Reuters Screen, on the appropriate
Telerate Page) as of 11:00 a.m., London time, on the Quotation Day for
such Interest Period.
Swedish Kroner:
Committed Rate Eurocurrency Loans:
for any Interest Period in respect of any Tranche, the
rate for deposits in Swedish Kroners for a period beginning on the
first day of such Interest Period and ending on the last day of such
Interest Period which appears on the Reuters Screen SIOR (or, if no
such quotation appears on such Reuters Screen, on the appropriate
Telerate Page) as of 11:00 a.m., London time, on the Quotation Day for
such Interest Period.
Dutch Guilder:
Committed Rate Eurocurrency Loans:
for any Interest Period in respect of any Tranche, the
rate for deposits in Dutch Guilders for a period beginning on the
first day of such Interest Period and ending on the last day of such
Interest Period which appears on the Telerate Page 3740 (or, if no
such quotation appears on such Telerate Page, on the appropriate
Reuters Screen) as of 11:00 a.m., London time, on the Quotation Day
for such Interest Period.
B. Funding Office, Funding Time, Payment Office, Payment Time
for Each Currency.
Dollars (If Specified Borrower is the Company):
1. Funding Office: Chemical Bank
270 Park Avenue
New York, New York
2. Funding Time: 11:00 A.M., New York time for Eurocurrency Loans
1:00 P.M., New York time for ABR Loans
3. Payment Office: Chemical Bank
270 Park Avenue
New York, New York
4. Payment Time: 12:00 Noon, New York time.
Dollars (If Specified Borrower is a Foreign Subsidiary Borrower):
1. Funding Office: Chemical Investment Bank Limited
Account of: Chemical Investment
Bank Limited
Account No: CHAPS 40 52 06
125 London Wall
London EC2Y 5AJ
2. Funding Time: 11:00 A.M., New York time for Eurocurrency Loans
1:00 P.M., New York time for ABR Loans
3. Payment Office: Chemical Investment Bank Limited
Account of: Chemical Investment
Bank Limited
Account No: CHAPS 40 52 06
125 London Wall
London EC2Y 5AJ
4. Payment Time: 12:00 Noon, London time.
Danish Kroner:
1. Funding Office:
Account of: Chemical Investment Bank Limited
Account No: 5000001963
Unibank Populaires
Copenhagen
2. Funding Time: 11:00 A.M., local time.
3. Payment Office:
Account of: Chemical Investment Bank Limited
Account No: 5000001963
Unibank Populaires
Copenhagen
4. Payment Time: 11:00 A.M., local time.
Deutsche Marks:
1. Funding Office:
Account of: Chemical Investment Bank Limited
Account No: 0101-080002101
Chemical Bank
Frankfurt
2. Funding Time: 11:00 A.M., local time.
3. Payment Office:
Account of: Chemical Investment Bank Limited
Account No: 0101-080002101
Chemical Bank
Frankfurt
4. Payment Time: 11:00 A.M., local time.
French Francs:
1. Funding Office:
Account of: Chemical Investment Bank Limited
Account No: 905 01735
Caisse Centrale des Banques
Paris
2. Funding Time: 11:00 A.M., local time.
3. Payment Office:
Account of: Chemical Investment Bank Limited
Account No: 905 01735
Caisse Centrale des Banques
Paris
4. Payment Time: 11:00 A.M., local time.
Sterling:
1. Funding Office:
Account of: Chemical Investment Bank Limited
Account No: CHAPS 40 52 06
Chemical Bank
125 London Wall
London EC2Y 5AJ
2. Funding Time: 11:00 A.M., local time.
3. Payment Office:
Account of: Chemical Investment Bank Limited
Account No: CHAPS 40 52 06
Chemical Bank
125 London Wall
London EC2Y 5AJ
4. Payment Time: 11:00 A.M., local time.
Hong Kong Dollars:
1. Funding Office:
Account of: Chemical Investment Bank Limited London
Account No: 0001-039230103
Chemical Bank
Hong Kong
2. Funding Time: 11:00 A.M., local time.
3. Payment Office:
Account of: Chemical Investment Bank Limited
Account No: 0001-0392301
Chemical Bank
Hong Kong
4. Payment Time: 11:00 A.M., local time.
Norwegian Kroner:
1. Funding Office:
Account of: Chemical Investment Bank Limited
Account No: 110100334350
Chemical Bank
Norge A/S, Oslo
2. Funding Time: 11:00 A.M., local time.
3. Payment Office:
Account of: Chemical Investment Bank Limited
Account No: 110100334350
Chemical Bank
Norge A/S, Oslo
4. Payment Time: 11:00 A.M., local time.
Finnish Markka:
1. Funding Office:
Account of: Chemical Bank, London [Swift CHEMGB2L]
for further favour Chemical Investment Bank
Limited Account No: 20006700145116
Merita Bank, Helsinki [Swift UNITFIHH]
2. Funding Time: 11:00 A.M., local time.
3. Payment Office:
Account of: Chemical Bank, London [Swift CHEMGB2L]
for further favour Chemical Investment Bank
Limited
Account No: 20006700145116
Merita Bank, Helsinki [Swift UNITFIHH]
4. Payment Time: 11:00 A.M., local time.
Swedish Kroner:
1. Funding Office:
Account of: Chemical Investment Bank Limited
Account No: 5201-8519395
Skandinaviska Banken Enskllda Banken,
Stockholm
2. Funding Time: 11:00 A.M., local time.
3. Payment Office:
Account of: Chemical Investment Bank Limited
Account No: 5201-8519395
Skandinaviska Banken Enskllda Banken,
Stockholm
4. Payment Time: 11:00 A.M., local time.
Dutch Guilder:
1. Funding Office:
Account of: Chemical Investment Bank Limited
Account No: 540419400
ABN/Amro Bank NV
Nederlandsche, Amsterdam
2. Funding Time: 11:00 A.M., local time.
3. Payment Office:
Account of: Chemical Investment Bank Limited
Account No: 540419400
ABN/Amro Bank NV
Nederlandsche, Amsterdam
4. Payment Time: 11:00 A.M., local time.
C. Notice of Borrowing:
Dollars (If Specified Borrower is the Company):
1. Deliver to: Chemical Bank Agent Bank Services Group
140 East 45th Street
New York, New York 10017
Attention: Maggie Swales
Telephone No: 212-622-8433
Fax No: 212-622-0122
2. Time:
(i) ABR Loans--Not later than 12:00 Noon, New York
City time, on the Borrowing Date
(ii) Eurocurrency Loans--Not later than 12:00 Noon,
New York City time, three Business Days prior to the Borrowing Date.
3. Information Required: Name of Borrower, amount to be
borrowed, whether ABR Loans or Eurocurrency Loans, amounts of each
such type, and Interest Periods for Eurocurrency Loans.
Dollars (If Specified Borrower is a Foreign Subsidiary Borrower):
1. Deliver to: Chemical Investment Bank Limited
125 London Wall
London EC2Y 5AJ
Attention: Steve Clarke
Telephone No: 011-44-171 777 2353
Fax No: 011-44-171 777 2360
2. Time:
(i) ABR Loans--Not later than 11:00 A.M., London time,
on the Borrowing Date
(ii) Eurocurrency Loans--Not later than 11:00 A.M.,
London time, three Business Days prior to the Borrowing Date.
3. Information Required: Name of Borrower, amount to be
borrowed, whether ABR Loans or Eurocurrency Loans, amounts of each
such type, and Interest Periods for Eurocurrency Loans.
Available Foreign Currencies:
1. Deliver to: Chemical Investment Bank Limited
125 London Wall
London EC2Y 5AJ
Attention: Steve Clarke
Telephone No: 011-44-171 777 2353
Fax No: 011-44-171 777 2360
2. Time: Not later than 11:00 A.M., London time, on the last
Business Day preceding the Quotation Day in respect of such Borrowing
Date.
3. Information Required: Name of Borrower, amount to be
borrowed, and Interest Periods.
D. Notice of Continuation; Notice of Prepayment;
Dollars (If Specified Borrower is the Company):
1. Deliver to: Chemical Bank Agent Bank Services Group
140 East 45th Street
New York, New York 10017
Attention: Maggie Swales
Telephone No: 212-622-8433
Fax No: 212-622-0122
2. Time:
(i) ABR Loans--Not later than 12:00 Noon, New York
City time, on the prepayment date
(ii) Eurocurrency Loans----Not later than 12:00 Noon,
New York City time, three Business Days prior to the last day of the
current Interest Period for continuations or the prepayment date, as
the case may be.
3. Information Required: Name of Borrower, amount to be
continued or prepaid, as the case may be, whether ABR Loans or
Eurocurrency Loans, amounts of each such Type, and Interest Periods
for Eurocurrency Loans to be continued.
Dollars (If Specified Borrower is a Foreign Subsidiary Borrower):
1. Deliver to: Chemical Investment Bank Limited
125 London Wall
London EC2Y 5AJ
Attention: Steve Clarke
Telephone No: 011-44-171 777 2353
Fax No: 011-44-171 777 2360
2. Time:
(i) ABR Loans--Not later than 11:00 A.M., London time,
on the prepayment date
(ii) Eurocurrency Loans--Not later than 11:00 A.M.,
London time, three Business Days prior to the last day of the current
Interest Period for continuations or the prepayment date, as the case
may be
3. Information Required: Name of Borrower, amount to be
continued or prepaid, as the case may be, whether ABR Loans or
Eurocurrency Loans, amounts of each such Type, and Interest Periods
for Eurocurrency Loans to be continued.
Available Foreign Currencies:
1. Deliver to: Chemical Investment Bank Limited
125 London Wall
London EC2Y 5AJ
Attention: Steve Clarke
Telephone No: 011-44-171 777 2353
Fax No: 011-44-171 777 2360
2. Time:
Not later than 11:00 A.M., London time, on the last
Business Day preceding the Quotation Day for the next Interest Period.
3. Information Required: Name of Borrower, amount to be
continued or prepaid, as the case may be, and Interest Periods.
II. COMPETITIVE ADVANCE LOANS
A. Competitive Advance Loan Request by Company
1. Deliver to: Chemical Bank Agent Bank Services Group
140 East 45th Street
New York, New York 10017
Attention: Maggie Swales
Telephone No: 212-622-8433
Fax No: 212-622-0122
2. Delivery time: By 9:30 A.M. New York time on the date
on which Competitive Advance Loan Offers are requested.
3. Information to be set forth:
Name of Borrower.
Amount and Currency of Competitive Advance Loan.
Date of Competitive Advance Loan.
Maturity Date.
Interest Payment Dates.
Date on which Competitive Advance Loan Offers are due.
B. Competitive Advance Loan Offer to Company
1. Deliver to: Chemical Bank Agent Bank Services Group
140 East 45th Street
New York, New York 10017
Attention: Maggie Swales
Telephone No: 212-622-8433
Fax No: 212-622-0122
2. Delivery time: By 11:00 A,M. New York time on date set
forth in Competitive Advance Loan Request.
3. Information to be set forth:
Name of Bank.
Amount and Currency of Competitive Advance Loan offered
for each maturity date.
interest rate.
If Competitive Advance Loans may not be prepaid.
C. Competitive Advance Loan Request by Foreign Subsidiary Borrower
1. Deliver to: Chemical Investment Bank Limited
125 London Wall
London EC2Y 5AJ
Attention: Steve Clarke
Telephone No: 011-44-171 777 2353
Fax No: 011-44-171 777 2360
2. Delivery time: By 11:00 A.M. London time one Business
Days prior to the date on which Competitive Advance Loan Offers are
requested.
3. Information to be set forth:
Name of Borrower.
Amount and Currency of Competitive Advance Loan.
Date of Competitive Advance Loan.
Maturity Date.
Interest Payment Dates.
Date on which Competitive Advance Loan Offers are due.
D. Competitive Advance Loan Offer to Foreign Subsidiary Borrower
1. Deliver to: Chemical Investment Bank Limited
125 London Wall
London EC2Y 5AJ
Attention: Steve Clarke
Telephone No: 011-44-171 777 2353
Fax No: 011-44-171 777 2360
2. Delivery time: By close of business London time on
Business Day preceding the requested Competitive Advance Loan.
3. Information to be set forth:
Name of Bank.
Amount and Currency of Competitive Advance Loan offered
for each Borrower for each maturity date.
interest rate.
If Competitive Advance Loans may not be prepaid.
III. NOTICE OF SWING LINE OUTSTANDINGS
A. Deliver to: Chemical Investment Bank Limited
125 London Wall
London EC2Y 5AJ
Attention: Steve Clarke
Telephone No: 011-44-171 777 2353
Fax No: 011-44-171 777 2360
B. Delivery time: By close of business in London on the date of
request by Administrative Agent and on the first Business Day of each
month on which a Swing Line Lender has any outstanding Swing Line
Loans as of the opening of business on such first day.
C. Information to be set forth:
Name of Borrower
Number of Swing Line Loans
Amount and Currency of each Swing Line Loan
Date of each Swing Line Loan
IV. NOTICE OF SWING LINE REFUNDING
A. Deliver to: Chemical Investment Bank Limited
125 London Wall
London EC2Y 5AJ
Attention: Steve Clarke
Telephone No: 011-44-171 777 2353
Fax No: 011-44-171 777 2360
B. Information to be set forth:
Name of Borrower
Number of Swing Line Loans
Amount and Currency of each Swing Line Loan
Date of each Swing Line Loan
V. NOTICE OF LOCAL CURRENCY OUTSTANDINGS
1. Deliver to: Chemical Investment Bank Limited
125 London Wall
London EC2Y 5AJ
Attention: Steve Clarke
Telephone No: 011-44-171 777 2353
Fax No: 011-44-171 777 2360
2. Delivery time: By close of business in London on the
date of making of each Local Currency Loan and on the last Business
Day of each month on which the applicable Local Currency Borrower has
outstanding any Local Currency Loans.
3. Information to be set forth:
Name of Borrower
Amount and Currency of outstanding Local Currency Loans
<PAGE>
Schedule 8.13
1. Extended Separation Benefits
The Company maintains a broad-based program to shelter employees
at all levels from any adverse consequences which might result from a
change in control of the Company. A change in control is defined in
the program to include such time that any person becomes the
beneficial owner, directly or indirectly, of 30% or more of the
combined voting power of the Company's voting securities or certain
changes occur in the constitution of the Company's Board of Directors.
Pursuant to a policy adopted by the Board of Directors in 1988, the
period of salary continuation normally extended to employees whose
employment is terminated as a result of a workforce reduction or
reorganization (which period ranges from 2 to 12 weeks depending upon
length of service with the Company) is tripled if employment is
terminated by the Company (other than for cause) as a result of a
change in control. In addition to this policy, the Company has
entered into one-year employment agreements with approximately 65
management-level employees, pursuant to which among other matters,
such employees will receive one year's compensation and continuation
for up to one year of medical and life insurance benefits if their
employment is terminated by the Company (other than for cause) within
12 months following a change in control. The Company also has
agreements with approximately 20 divisional and group vice presidents
who are not executive officers, which provide such vice presidents
with two times their annualized includible compensation (as defined in
the Code) and continuation for up to three years of medical, life, and
other welfare benefits if their employment is terminated by the
Company (other than for cause), if their responsibilities or base
salaries are materially diminished, or if certain other adverse
changes occur within 24 months following a change in control. Similar
agreements provide the executive officers with three times their
annualized includible compensation and continuation for up to three
years of their benefits if their employment is terminated by the
Company(other than for cause approved by three-fourths of the
directors then serving), if their responsibilities or base salaries
are materially diminished, or if certain other adverse changes occur
within 24 months following a change in control. The amounts payable
pursuant to such agreements to the executive officers (other than
Messrs. Waddell, Kaufman, and Klatell) and to the other vice
presidents will be reduced, if necessary, to avoid excise tax under
Section 4999 of the Code.
2. Unfunded Pension Plan
The Company maintains the Unfunded Pension Plan for Selected
Executives of the Company (the "SERP"). Under the SERP, the Company's
Board of Directors determines those employees who are eligible to
participate in the SERP and the amount of their maximum annual pension
upon retirement on or after attaining age 60. Of the named executive
officers, Messrs. Kaufman, Klatell and Menefee have been designated by
the Company as participants in the SERP, with maximum annual pensions
of $300,000, $150,000 and $175,000 respectively. If a designated
participant retires between the ages of 55 and 60, the amount of the
annual pension is reduced based upon a formula contained in the SERP.
In addition, if there is a change of control of the Company and the
employment of a designated participant who is at least age 50 with 15
years of service is involuntarily terminated other than for cause or
disability, or such participant terminates employment for good reason,
the participant will receive the maximum annual pension
<PAGE>
Schedule 8.15
Page 1 of 2
ARROW ELECTRONICS, INC.
SUBSIDIARY LISTING
1. Arrow Electronics, Inc. a New York corporation
2. Arrow Electronics International, Inc., a Virgin Islands
corporation
3. Arrow Electronics Canada Ltd., a Canadian Corporation
4. Lex Electronics, Ltd., a Canadian Corporation
5. Arrow Electronics Credit Corporation, a Delaware Corporation
6. Schuylkill Metals of Plant City, Inc., a Delaware Corporation
7. Arrow Electronics International, Inc., a Delaware Corporation
8. Arrow Electronics (UK) Inc., a Delaware Corporation
9. Arrow/TEK Ltd., a Japanese Joint Venture (50% owned)
10. Capstone Electronics Corp., a Delaware Corporation
11. High Tech Ad, Inc., a New York Corporation
12. Gates/Arrow Distributing, Inc., a Delaware Corporation
13. Anthem Electronics, Inc., a Delaware Corporation, including
subsidiaries:
A. Anthem Enterprises
B. Lionex Corp.
C. Anthem Technology Systems
14. Arrow-Field Oy, and subsidiaries, a Finnish Company
15. Arrow-TH:s Elektronik AB, and subsidiaries, a Swedish Company
(85% owned)
16. Arrow-Exatec A/S, and subsidiaries, a Danish company (85% owned)
17. Arrow Electronics Distribution Group - Europe B.V., a Dutch
company, and Subsidiaries which include:
A. Arrow Electronics (UK) Limited, a British Company, and subsidiaries:
1. RR Electronics Limited, a British Company
2. Axiom Electronics Ltd., a British Company
3. Jermyn Holdings Limited, a British Company & Subsidiaries
4. Techdis Limited, a British company, and subsidiary:
a. Microprocessor & Memory Distribution Ltd., a
British Company
B. EDI Electronics Distribution International (France) SA,
a French Company and subsidiaries:
1. Arrow Electronique S.A., a French Company, and subsidiaries:
a. Generim S.A., a French Company
b. Feutrier S.A., a French Company
c. CCI Electronique S.A., a French Company
d. Arrow Computer Products S.N.C. (formerly Megachip
S.A.)and subsidiaries
C. Arrow Electronics GmbH, a German Company (which owns
70% interest of Spoerle Electronic Handelsgesellschaft mbH,
a German company, and subsidiaries)
<PAGE>
Schedule 8.15
Page 2 of 2
SUBSIDIARY LISTING
D. Arrow ATD Netherlands B.V., a Dutch company (which owns 87%
of ATD Electronica S.A., a Spanish company
E. ARROW-Amitron Netherlands B.V., a Dutch company (which owns
75% of the shares of Amitron-Arrow S.A.)
F. Silverstar Ltd. S.p.A. (86% owned) & subsidiaries
G. Arrow Electronics Australia Pty Ltd. (100% owned) and
subsidiaries:
1. Veltek Australia Pty Ltd. (75% owned)
2. Zatek Australia Pty Ltd. (75% owned)
18. Components Agent Limited, a British Virgin Island company (90%
owned) and Subsidiaries which include:
A. Components Agent Limited, a Hong Kong company
B. Components Agent China Limited, a Hong Kong company
C. Components Agent Korea Limited, a Hong Kong company
D. Components Assembly & Sales Pte Ltd, a Singapore company
E. Casl. (M) Sdn. Berhad, a Malaysian company, and subsidiaries
F. Salson Holdings Limited, a British Virgin Islands company,
and subsidiary:
1. Qinhuangdao Arrow Electronics Company Limited, a company of
the People=s Republic of China
G. Components Korea Company Limited, a Korean company
19. Texny (Holdings) Limited, a British Virgin Islands company (95%
owned) and Subsidiaries:
A. Texny (H.K.) Limited, a Hong Kong company, and subsidiary:
1. Glorytact Company Limited, a Hong Kong company
B. Intex-semi Limited, a Hong Kong company (inactive company)
C. Colourmedia Animation Limited, a Hong Kong company (inactive
company)
20. Strong Electronics Co., Ltd. and subsidiaries, a Taiwanese Joint
Venture (45% owned)
21. Arrow/Ally, Inc. a Taiwanese company (75% owned)
22. Arrow Components (NZ) Limited, a New Zealand company (75% owned)
<PAGE>
Schedule 8.19
Environmental Matters
Through a wholly-owned subsidiary, Schuylkill Metals Corporation,
the Company was previously engaged in the refining and selling of
lead. In September 1988, the Company sold its refining business.
1. In mid-1986 the refining business ceased operations at its
battery breaking facility in Plant City, Florida, which facility had
been placed on the list of hazardous waste sites targeted for cleanup
under the federal Superfund Program. The Plant City site was not sold
to the purchaser of the refining business, and the Company remains
subject to various environmental cleanup obligations at the site under
federal and state law. During 1991, the Company engaged in settlement
negotiations with the EPA, resulting in the execution of a consent
decree defining those obligations which was entered by a federal court
in Florida and became effective on April, 1992. The consent decree
requires the Company to fund and implement remedial design and
remedial action activity addressing environmental impacts to site
soils and sediment, underlying ground water, and wetland areas. The
Company, through its technical contractors, has begun implementation
of these requirements and substantial progress has been made in each
of the areas requiring remediation. Remediation of the wetlands areas
on the site, including the creation of certain new wetlands areas
under agreement with the EPA and the Florida Department of
Environmental Conservation, has been substantially completed. A waste
water treatment plant has been built on site by the Company's
contractors, and processing of ground and pond water for discharge to
the Plant City Treatment Works has commenced. A contract for the
stabilization of contaminated soils has been let and stabilization
facilities erected. Soil processing has begun and material meeting
the specifications of the consent decree are being produced.
2. Iron Horse Landfill Superfund Site (Massachusetts): The
Federal government has identified Lex Electronics Inc. ("LEI") as a
contributor of waste to a site identified as a toxic waste site now
controlled by the remedial provisions of federal law. LEI has
responded that it has no knowledge of the generation or disposal of
toxic material at that site. Insurance coverage neither exists nor is
available for this type of claim.
<PAGE>
EXHIBIT A TO
SECOND AMENDED
AND RESTATED
CREDIT AGREEMENT
JOINDER AGREEMENT
JOINDER AGREEMENT, dated as of the date set forth below,
entered into pursuant to the SECOND AMENDED AND RESTATED CREDIT
AGREEMENT, dated as of August __, 1995 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"; terms
defined therein being used herein as therein defined), among ARROW
ELECTRONICS, INC., the Foreign Subsidiary Borrowers parties thereto,
the Banks, Lead Manager and Agents parties thereto, CHEMICAL
SECURITIES INC., as Arranger and CHEMICAL BANK, as Administrative
Agent.
W I T N E S S E T H:
WHEREAS, the parties to this Joinder Agreement wish to
amend Schedule II to the Credit Agreement in the manner hereinafter
set forth; and
WHEREAS, this Joinder Agreement is entered into pursuant to
subsection 14.1(b) of the Credit Agreement;
NOW, THEREFORE, in consideration of the premises, the
parties hereto hereby agree as follows:
1. Each of the undersigned Subsidiaries of the Company
hereby acknowledges that it has received and reviewed a copy (in
execution form) of the Credit Agreement, and agrees to:
(a) join the Credit Agreement as a Foreign Subsidiary Borrower;
(b) be bound by all covenants, agreements and acknowledgements
attributable to a Foreign Subsidiary Borrower in the Credit Agreement;
and
(c) perform all obligations required of it by the Credit
Agreement.
2. Each of the undersigned Subsidiaries of the Company
hereby represents and warrants that the representations and warranties
with respect to it contained in, or made or deemed made by it in,
Section 8 of the Credit Agreement are true and correct on the date
hereof.
3. The address and jurisdiction of incorporation of each
undersigned Subsidiary of the Company is set forth in Annex I to this
Joinder Agreement.
4. THIS JOINDER AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
IN WITNESS WHEREOF, each of the undersigned has caused this
Joinder Agreement to be duly executed and delivered in New York, New
York by its proper and duly authorized officer as of the date set
forth below.
[NAME OF SUBSIDIARY],
Dated:________________ as a Foreign Subsidiary Borrower
By:__________________________
Title:
ARROW ELECTRONICS, INC.
By:_______________________
Title:
ACKNOWLEDGED AND AGREED TO:
CHEMICAL BANK,
as Administrative Agent
By:_______________________
Title:
ANNEX I
[Insert administrative information concerning Subsidiaries]
<PAGE>
EXHIBIT B TO
SECOND AMENDED
AND RESTATED
CREDIT AGREEMENT
SCHEDULE AMENDMENT
SCHEDULE AMENDMENT, dated as of the date set forth below,
entered into pursuant to the SECOND AMENDED AND RESTATED CREDIT
AGREEMENT, dated as of _________ __, ____ (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"; terms
defined therein being used herein as therein defined), among ARROW
ELECTRONICS, INC., the Foreign Subsidiary Borrowers parties thereto,
the Banks, Lead Manager and Agents parties thereto, CHEMICAL
SECURITIES INC., as Arranger and CHEMICAL BANK, as Administrative
Agent.
W I T N E S S E T H:
WHEREAS, the parties to this Schedule Amendment wish to
amend Schedule [III] [IV], as specified in Annex I hereto, to the
Credit Agreement in the manner hereinafter set forth; and
WHEREAS, this Schedule Amendment is entered into pursuant to
subsection 14.1(b) of the Credit Agreement;
NOW, THEREFORE, in consideration of the premises, the
parties hereto hereby agree as follows:
1. Schedule [III] [IV], as specified in Annex I hereto, is
hereby amended as set forth in Annex I hereto.
2. The Company hereby represents and warrants that, after
giving effect to the amendments effected hereby, the representations
and warranties contained in Section 8 of the Credit Agreement are true
and correct on the date hereof.
3. THIS SCHEDULE AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
IN WITNESS WHEREOF, each of the undersigned has caused this
Schedule Amendment to be duly executed and delivered in New York, New
York by its proper and duly authorized officer as of the date set
forth below.
Dated:_________________
ARROW ELECTRONICS, INC.
By:_______________________
Title:
ACKNOWLEDGED AND AGREED TO:
CHEMICAL BANK,
as Administrative Agent
By:_______________________
Title:
[NAMES OF OTHER PARTIES, IF ANY, REQUIRED PURSUANT TO SUBSECTION 14.1
(b)]
ANNEX I
[Describe amendments]
<PAGE>
EXHIBIT C TO
SECOND AMENDED
AND RESTATED
CREDIT AGREEMENT
[FORM OF LOCAL CURRENCY FACILITY ADDENDUM]
LOCAL CURRENCY FACILITY ADDENDUM
To: Chemical Bank, as Administrative Agent
From: Arrow Electronics, Inc.
I. This Local Currency Facility Addendum is being
delivered to you pursuant to subsection 6.1 of the Second Amended and
Restated Credit Agreement, dated as of ________ __, 1995, among Arrow
Electronics, Inc., each Foreign Subsidiary Borrower party thereto, the
Banks, the Lead Manager and the Agents named therein, Chemical
Securities Inc., as Arranger and Chemical Bank, as Administrative
Agent (as the same may be amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"). Terms defined in the
Credit Agreement and used herein shall have the meanings given to them
in the Credit Agreement.
2. The effective date (the "Effective Date") of this Local
Currency Facility Addendum will be ______________________ __, 19__.
3. Please be advised that, as of the Effective Date, the
credit facility described below is hereby designated as a "Local
Currency Facility" for the purposes of the Credit Agreement.
Type of Facility:1/
Additional Local Currenc(y)(ies):
Local Currency Facility
Maximum Borrowing Amount: $
Local Currency Banks: Local Currency Bank
Name of Lender Maximum Borrowing Amount
$
List of Documentation Governing
Local Currency Facility
(the "Documentation"):1/
4. Arrow Electronics, Inc. hereby represents and warrants
that (i) the Documentation complies in all respects with the
requirements of Section 6 of the Credit Agreement and (ii)
______________ of ______________1/ contains an express acknowledgement
that such Local Currency Facility shall be subject to the provisions
of Section 6 of the Credit Agreement.
ARROW ELECTRONICS, INC.
By _______________________________
Title:
Accepted and Acknowledged:
CHEMICAL BANK, as Administrative Agent
By________________________________
Title:
<PAGE>
EXHIBIT D TO
SECOND AMENDED
AND RESTATED
CREDIT AGREEMENT
FORM OF CONSENT AND CONFIRMATION
CONSENT AND CONFIRMATION, dated as of _______ __, 1995 (this
"Consent and Confirmation"), made by the undersigned, [CAPSTONE
ELECTRONICS CORP., a Delaware corporation] [ARROW ELECTRONICS
INTERNATIONAL, INC., a United States Virgin Islands corporation]
[ANTHEM ELECTRONICS, INC., a Delaware corporation] [GATES/ARROW
DISTRIBUTING, INC., a Delaware corporation], as Guarantor (the
"Guarantor") under the Subsidiary Guarantee (as hereinafter defined).
W I T N E S S E T H:
WHEREAS, the Guarantor executed and delivered a Guarantee,
dated as of [September 27, 1991] [November __, 1994] [September __,
1994] (a copy of which is attached hereto as Exhibit A) [(as amended
by the First Amendment thereto, dated as of December 29, 1992 (a copy
of which is attached hereto as Exhibit B)], and as the same may be
further amended, supplemented or otherwise modified from time to time,
the "Subsidiary Guarantee") in favor of Bankers Trust Company, as
collateral agent (the "Collateral Agent"), for (i) the several banks
and financial institutions (the "Existing Banks") parties to the
Amended and Restated Credit Agreement, dated as of January 28, 1994
(as amended, supplemented or otherwise modified prior to the date
hereof, the "Existing Credit Agreement"), among Arrow Electronics,
Inc. (the "Company"), the Existing Banks, Chemical Bank, as
Administrative Agent and the Collateral Agent and (ii) the purchasers
named in the several Senior Note Purchase Agreements, dated as of
December 29, 1992 between such purchasers and the Company (as amended,
supplemented or otherwise modified from time to time); and
WHEREAS, the Existing Credit Agreement is being amended and
restated as hereinafter described.
NOW, THEREFORE, in consideration of the foregoing premises,
the Guarantor hereby acknowledges, consents and confirms as follows:
1. The Guarantor acknowledges that the Existing Credit
Agreement is being amended and restated concurrently herewith by a
Second Amended and Restated Credit Agreement, dated as of ___________
__, 1995 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the Company, the Banks named
therein, the Lead Manager named therein, Bankers Trust Company and
Chemical Bank, as agents (the "Agents"), the Collateral Agent,
Chemical Securities Inc., as Arranger, and Chemical Bank, as
Administrative Agent (the "Administrative Agent").
2. The Guarantor confirms and agrees that, after giving
effect to the amendment and restatement of the Existing Credit
Agreement by the Credit Agreement, the Subsidiary Guarantee is and
shall continue to be, in full force and effect and is hereby confirmed
and ratified in all respects, and the Credit Agreement is the Credit
Agreement referred to in the Subsidiary Guarantee.
3. This Consent and Confirmation is made for the benefit of
the Agents, the Collateral Agent, the Administrative Agent and the
Banks from time to time parties to the Credit Agreement and is
executed and delivered to induce such parties to enter into the Credit
Agreement and to extend credit to the Company thereunder.
4. This Consent and Confirmation shall be governed by and
construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the undersigned has caused this Consent
and Confirmation to be duly executed and delivered by its proper and
duly authorized officer as of the day and year first above written.
[CAPSTONE ELECTRONICS CORP.]
[ARROW ELECTRONICS INTERNATIONAL, INC.]
[ANTHEM ELECTRONICS, INC.]
[GATES/ARROW DISTRIBUTING, INC.]
By ____________________________
Title:
ACCEPTED:
BANKERS TRUST COMPANY, as
Collateral Agent
By _________________________
Title:
Exhibit A to Consent
and Confirmation
[Subsidiary Guarantee]
Exhibit B to Consent
and Confirmation
[First Amendment to Subsidiary Guarantee]
<PAGE>
EXHIBIT E TO
SECOND AMENDED
AND RESTATED
CREDIT AGREEMENT
FORM OF BORROWING CERTIFICATE
Pursuant to subsection 9.1(b) of the Second Amended and
Restated Credit Agreement, dated as of _______ __, 1995 (as the same
may be amended, supplemented or otherwise modified from time to time,
the "Credit Agreement"), among Arrow Electronics, Inc., a New York
corporation (the "Company"), the several banks and other financial
institutions from time to time parties thereto (the "Banks"), the Lead
Manager named therein, Bankers Trust Company and Chemical Bank, as
agents for the Banks, Bankers Trust Company, as collateral agent,
Chemical Securities Inc., as arranger, and Chemical Bank, as
administrative agent for the Banks, the Company hereby certifies as
follows:
1. The representations and warranties of the Company set forth
in the Credit Agreement and each of the other Credit Documents or
which are contained in any certificate, document or financial or other
statement furnished pursuant to or in connection with the Credit
Agreement 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 expressly stated to relate
to a specific earlier date, in which case such representations and
warranties are true and correct as of such earlier date;
2. No Default or Event of Default has occurred and is
continuing as of the date hereof or will occur after giving effect to
the making of the Loans and the issuance of the Letters of Credit on
the date hereof and the consummation of each of the transactions
contemplated by the Credit Documents;
3. There are no liquidation or dissolution proceedings pending
or to the knowledge of the Company threatened against the Company, any
of its Domestic Subsidiaries or any Foreign Subsidiary Borrower, nor
to the knowledge of the Company has any other event occurred affecting
or threatening the existence of the Company or any Foreign Subsidiary
Borrower, except as permitted by the Credit Agreement, or any of its
Subsidiaries;
4. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of New York;
5. No litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge
of the Company, threatened by or against the Company or any of its
Subsidiaries or against any of its or their respective properties or
revenues (a) with respect to any of the Credit Documents or any of the
transactions contemplated hereby or thereby, or (b) which, if
adversely determined, would have a Material Adverse Effect;
Unless otherwise defined herein, capitalized terms which are
defined in the Credit Agreement and used herein are so used as so
defined.
IN WITNESS WHEREOF, the undersigned has hereunto set his or
her name and affixed the corporate seal.
ARROW ELECTRONICS, INC.
By: _____________________
Title:
Date: __________ __, 1995
<PAGE>
EXHIBIT F TO
SECOND AMENDED
AND RESTATED
CREDIT AGREEMENT
GUARANTEE
GUARANTEE, dated as of , 1995, made by ARROW ELECTRONICS,
INC., a New York corporation (the "Guarantor"), in favor of CHEMICAL
BANK, as administrative agent (in such capacity, the "Administrative
Agent") for the several banks and other financial institutions (the
"Banks") parties to the Second Amended and Restated Credit Agreement,
dated as of __, 1995 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among the
Guarantor, the Foreign Subsidiary Borrowers parties thereto, the
Banks, the Lead Manager named therein, the Agents parties thereto,
Chemical Securities Inc., as arranger, and the Administrative Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Banks have
severally agreed to make loans to, and issue or participate in letters
of credit for the account of, the Foreign Subsidiary Borrowers upon
the terms and subject to the conditions set forth therein; and
WHEREAS, pursuant to the Local Currency Facilities, the Local
Currency Banks have severally agreed, and will agree, to make loans to
the Local Currency Borrowers upon the terms and subject to the
conditions set forth therein; and
WHEREAS, it is a condition precedent to the obligation of the
Banks to make their respective loans and other extension of credit to
the Foreign Subsidiary Borrowers and the Local Currency Borrowers
under the Credit Agreement and the Local Currency Facilities,
respectively, that the Guarantor shall have executed and delivered
this Guarantee to the Administrative Agent for the ratable benefit of
the Banks; and
WHEREAS, the Guarantor is the parent of each Foreign Subsidiary
Borrower and Local Currency Borrower, and it is to the advantage of
Guarantor that the Banks make their loans and other extensions of
credit to the Foreign Subsidiary Borrowers and Local Currency
Borrowers;
NOW, THEREFORE, in consideration of the premises and to induce
the Administrative Agent, the Agents, the Arranger and the Banks to
enter into the Credit Agreement and the Local Currency Facilities, and
to induce the Banks to make their respective loans to the Foreign
Subsidiary Borrowers and the Local Currency Borrowers under the Credit
Agreement and the Local Currency Facilities, respectively, the
Guarantor hereby agrees with the Administrative Agent, for the ratable
benefit of the Banks, as follows:
1. Defined Terms. (a) Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the
meanings given to them in the Credit Agreement.
(b) As used herein, (i) "Obligations" means the collective
reference to the unpaid principal of and interest on the Loans to
Foreign Subsidiary Borrowers and on the Local Currency Loans and all
other obligations and liabilities of the Foreign Subsidiary Borrowers
and Local Currency Borrowers to the Administrative Agent and the Banks
(including, without limitation, interest accruing at the then
applicable rate provided in the Credit Agreement or any applicable
Local Currency Facility after the maturity of the Loans or the Local
Currency Loans and interest accruing at the then applicable rate
provided in the Credit Agreement or any applicable Local Currency
Facility after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding,
relating to any Foreign Subsidiary Borrower or Local Currency Borrower
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, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, the
Credit Agreement, any Local Currency Facility or any other Credit
Documents or any other document made, delivered or given in connection
therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements
of counsel to the Administrative Agent or to the Banks that are
required to be paid by the Guarantor, any Foreign Subsidiary Borrower
or any Local Currency Borrower pursuant to the terms of the Credit
Agreement, any Local Currency Facility, this Agreement or any other
Credit Document) and (ii) "Senior Obligations" means the obligations
of the Guarantor now or hereafter existing in favor of the purchasers
named in the Note Purchase Agreement (the "Note Purchasers") and each
promissory note issued under the Note Purchase Agreement, security
agreement, pledge agreement, mortgage, subordination agreement,
guaranty, foreign exchange agreement and other agreement and
instrument executed and delivered to the Collateral Agent by any
person or entity pursuant to the terms of the Note Purchase Agreement
or the Intercreditor Agreement (such agreements and instruments, as
amended or otherwise modified from time to time, collectively, the
"Note Documents"), whether for principal (in an aggregate principal
amount not to exceed $75,000,000 less all prepayments, repayments or
redemptions of the 1992 Private Placement Notes since the date of
their original issuance), interest (including interest as provided in
the promissory notes issued pursuant to the terms of the Note Purchase
Agreement accruing subsequent to the filing of any petition initiating
any proceeding referred to in Section 10(c) hereof), fees, expenses or
otherwise.
(c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Guarantee shall refer to this
Guarantee as a whole and not to any particular provision of this
Guarantee, and section and paragraph references are to this Guarantee
unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. Guarantee. (a) The Guarantor hereby unconditionally and
irrevocably guarantees to the Administrative Agent, for the ratable
benefit of the Banks and their respective successors, indorsees,
transferees and assigns, the prompt and complete payment and
performance by each Foreign Subsidiary Borrower and each Local
Currency Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations. If at any time the
Dollar Equivalent Amount of the Obligations exceeds the Guarantee
Ceiling Amount at such time, the portion of the Obligations which so
exceeds the Guarantee Ceiling Amount will be subordinated to the prior
repayment of the 1992 Private Placement Notes as set forth in Section
10; provided that no more than 25% of the Dollar Equivalent Amount of
the Obligations at any time shall be so subordinated.
(b) 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 Bank 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 shall
remain in full force and effect until the Obligations are paid in full
and the Commitments are terminated, notwithstanding that from time to
time prior thereto the Foreign Subsidiary Borrowers and the Local
Currency Borrowers or any of them may be free from any Obligations.
(c) No payment or payments made by any Foreign Subsidiary
Borrower, any Local Currency Borrower or any other Person or received
or collected by the Administrative Agent or any Bank from any Foreign
Subsidiary Borrower, any Local Currency Borrower 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 until the
Obligations are paid in full and the Commitments are terminated.
(d) The Guarantor agrees that whenever, at any time, or from
time to time, it shall make any payment to the Administrative Agent or
any Bank on account of its liability hereunder, it will notify the
Administrative Agent and such Bank in writing that such payment is
made under this Guarantee for such purpose.
3. Right of Set-off. Upon the occurrence of any Event of
Default, the Administrative Agent and each Bank is hereby irrevocably
authorized 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 the Administrative Agent or
such Bank to or for the credit or the account of the Guarantor, or any
part thereof in such amounts as the Administrative Agent or such Bank
may elect, against or on account of the obligations and liabilities of
the Guarantor to the Administrative Agent or such Bank hereunder and
claims of every nature and description of the Administrative Agent or
such Bank against the Guarantor, in any currency, whether arising
hereunder, under the Credit Agreement, any Credit Document or
otherwise, as the Administrative Agent or such Bank may elect, whether
or not the Administrative Agent or such Bank has made any demand for
payment and although such obligations, liabilities and claims may be
contingent or unmatured. The Administrative Agent and each Bank shall
notify the Guarantor promptly of any such set-off and the application
made by the Administrative Agent or such Bank, as the case may be, of
the proceeds thereof; provided that the failure to give such notice
shall not affect the validity of such set-off and application. The
rights of the Administrative Agent and each Bank under this paragraph
are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Administrative Agent or
such Bank may have.
4. No Subrogation. Notwithstanding any payment or payments made
by the Guarantor hereunder, or any set-off or application of funds of
the Guarantor by the Administrative Agent or any Bank, the Guarantor
shall not be entitled to be subrogated to any of the rights of the
Administrative Agent or any Bank against the Guarantor or against any
collateral security or guarantee or right of offset held by the
Administrative Agent or any Bank for the payment of the Obligations,
nor shall the Guarantor seek or be entitled to seek any contribution
or reimbursement from the Guarantor in respect of payments made by the
Guarantor hereunder, until all amounts owing to the Administrative
Agent and the Banks by the Guarantor on account of the Obligations and
on account of all other obligations of the Guarantor to the
Administrative Agent and the Banks under the Credit Documents 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 and such other amounts shall not have
been paid in full, such amount shall be held by the Guarantor in trust
for the Administrative Agent and the Banks, 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 the Guarantor (duly indorsed by the Guarantor to the
Administrative Agent, if required), to be applied against the
Obligations and the other obligations of the Guarantor under the
Credit Documents, whether matured or unmatured, in such order as the
Administrative Agent may determine.
5. 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 Bank may be rescinded by the
Administrative Agent or such Bank, 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 offset 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 Bank, and the Credit Agreement and the
other Credit Documents and any other documents executed and delivered
in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Administrative Agent (or the
Required Banks or all the Banks, as the case may be) may deem
advisable from time to time, and any collateral security, guarantee or
right of offset at any time held by the Administrative Agent or any
Bank for the payment of the Obligations may be sold, exchanged,
waived, surrendered or released. Neither the Administrative Agent nor
any Bank 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 the Guarantor, the Administrative Agent or
any Bank may, but shall be under no obligation to, make a similar
demand on any Foreign Subsidiary Borrower or any Local Currency
Borrower or any other guarantor, and any failure by the Administrative
Agent or any Bank to make any such demand or to collect any payments
from any Foreign Subsidiary Borrower or any Local Currency Borrower or
any such other guarantor or any release of any Foreign Subsidiary
Borrower or any Local Currency Borrower or such other guarantor shall
not relieve the Guarantor of its 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
Bank against the Guarantor. For the purposes hereof "demand" shall
include the commencement and continuance of any legal proceedings.
6. 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 Bank 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 any Foreign Subsidiary Borrower or any Local Currency
Borrower or the Guarantor, on the one hand, and the Administrative
Agent and the Banks, on the other, 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 any
Foreign Subsidiary Borrower or any Local Currency Borrower or the
Guarantor with respect to the Obligations. 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 Credit Agreement, any Local Currency Facility,
or any other Credit Document, any of the Obligations or any other
collateral security therefor or guarantee or right of offset with
respect thereto at any time or from time to time held by the
Administrative Agent or any Bank, (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 any Foreign
Subsidiary Borrower or any Local Currency Borrower against the
Administrative Agent or any Bank, or (c) any other circumstance
whatsoever (with or without notice to or knowledge of any Foreign
Subsidiary Borrower or any Local Currency Borrower or the Guarantor)
which constitutes, or might be construed to constitute, an equitable
or legal discharge of any Foreign Subsidiary Borrower or any Local
Currency Borrower 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 Bank may, but shall be under no
obligation to, pursue such rights and remedies as it may have against
any Foreign Subsidiary Borrower or any Local Currency Borrower or any
other Person or against any collateral security or guarantee for the
Obligations or any right of offset with respect thereto, and any
failure by the Administrative Agent or any Bank to pursue such other
rights or remedies or to collect any payments from any Foreign
Subsidiary Borrower or any Local Currency Borrower or any such other
Person or to realize upon any such collateral security or guarantee or
to exercise any such right of offset, or any release of any Foreign
Subsidiary Borrower or any Local Currency Borrower or any such other
Person or of any such collateral security, guarantee or right of
offset, shall not relieve the 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 Bank 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 its
successors and assigns thereof, and shall inure to the benefit of the
Administrative Agent and the Banks, 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 Credit
Agreement any Foreign Subsidiary Borrower or any Local Currency
Borrower may be free from any Obligations.
7. Confirmation. (a) Each Joinder Agreement delivered by the
Guarantor to the Administrative Agent shall constitute a confirmation
by the Guarantor that the Obligations guaranteed hereby include all
Obligations of each Foreign Subsidiary Borrower named in such Joinder
Agreement.
(b) Each Local Currency Facility Addendum delivered by the
Guarantor to the Administrative Agent shall constitute a confirmation
by the Guarantor that the Obligations guaranteed hereby include all
Obligations of each Local Currency Borrower under each Local Currency
Facility named in such Local Currency Facility Addendum.
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 Bank upon the insolvency, bankruptcy, dissolution, liquidation
or reorganization of any Foreign Subsidiary Borrower or any Local
Currency Borrower or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer
for, any Foreign Subsidiary Borrower or any Local Currency Borrower or
any substantial part of its respective property, or otherwise, all as
though such payments had not been made.
9. Payments. (a) The Guarantor hereby agrees that the
Obligations will be paid to the Administrative Agent without set-off
or counterclaim in the Currency in which they are denominated at the
office for payment thereof set forth in the Credit Agreement or the
applicable Local Currency Facility, as the case amy be.
(b) The obligation of the Guarantor in respect of any sum due to
any Bank or the Administrative Agent hereunder shall, notwithstanding
any judgment in a currency (the "Judgment Currency") other than that
in which such sum is denominated in accordance with the applicable
provisions of the Credit Agreement, any Local currency Facility or the
other Credit Documents (the "Agreement Currency"), be discharged only
to the extent that on the Business Day following receipt by such Bank
or the Administrative Agent (as the case may be) of any sum adjudged
to be so due in the Judgment Currency such Bank or the Administrative
Agent (as the case may be) may in accordance with normal banking
procedures purchase the Agreement Currency with the Judgment Currency;
if the amount of the Agreement Currency so purchased is less than the
sum originally due to such Bank or the Administrative Agent (as the
case may be) in the Agreement Currency, the Guarantor agrees, as a
separate obligation and notwithstanding any such judgment, to
indemnify such Bank or the Administrative Agent (as the case may be)
against such loss, and if the amount of the Agreement Currency so
purchased exceeds the sum originally due to any Bank or the
Administrative Agent (as the case may be), such Bank or the
Administrative Agent (as the case may be) agrees to remit to the
Guarantor such excess.
10. Subordination.
(a) Agreement to Subordinate. To the extent that at any time
the Dollar Equivalent Amount of the Obligations exceeds the Guarantee
Ceiling Amount at such time, each of the Administrative Agent, the
Banks and the Guarantor agrees that the lesser of (i) 25% of the
Dollar Equivalent Amount of the Obligations at such time and (ii) the
amount of the Obligations equal to the Dollar Equivalent Amount of
such excess over the Guarantee Ceiling Amount shall be subordinate, to
the extent and in the manner hereinafter set forth, in right of
payment to the prior payment in full of the Senior Obligations. For
the purposes of this Agreement the Senior Obligations shall not be
deemed to have been paid in full until 90 days following the date on
which the holders or owners thereof shall have received payment in
full of the Senior Obligations in cash (the "Termination Date").
(b) Restrictions on Payment of the Obligations. Neither the
Administrative Agent nor any Bank (collectively, the "Subordinated
Creditors") will ask, demand, sue for, commence any action seeking, or
take or receive, directly or indirectly, from the Guarantor in cash,
securities, or other property, by setoff, by realizing upon collateral
or in any other manner, payment of, or security for, any or all of the
portion of the Obligations subordinated pursuant to this Section 10
(the "Subordinated Guarantee Obligations"), or seek any other remedy
against the Guarantor with respect to the Subordinated Guarantee
Obligations, whether at law or in equity, unless and until the Senior
Obligations shall have been paid in full. The provisions of this
Section 10 shall not apply to, and shall not prevent the
Administrative Agent or any Bank from asking, demanding, suing for,
commencing any action seeking, or taking or receiving, directly or
indirectly, from the Guarantor in cash, securities, or other property,
by setoff, by realizing upon collateral or in any other manner,
payment of, or security for, any or all of the portion of the
Obligations not subordinated pursuant to this Section 10 or seeking
any other remedy against the Guarantor with respect to the
Obligations, whether at law or in equity, at any time.
(c) Additional Provisions Concerning Subordination. Each of the
Subordinated Creditors and the Guarantor agrees as follows:
i) In the event of any dissolution, winding up,
liquidation, arrangement or reorganization relating to the Guarantor,
whether in any bankruptcy, insolvency, arrangement, reorganization or
receivership proceedings or upon an assignment for the benefit of
creditors or any other marshalling of the assets and liabilities of
the Guarantor or otherwise, any payment or distribution of any kind
(whether in cash, securities or other property) which otherwise would
be payable or deliverable upon or with respect to the portion of the
Obligations constituting Subordinated Guarantee Obligations shall be
paid or delivered directly to the Collateral Agent for application (in
the case of cash) to, or as collateral (in the case of securities or
other non-cash property) for, the payment or prepayment of the Senior
Obligations until the Senior Obligations shall have been paid in full.
ii) In any proceeding referred to in subsection (c)i) of
this Section 10 commenced by or against the Guarantor, no Subordinated
Creditors will take any action, or fail to take any action, with
respect to the portion of the Obligations constituting Subordinated
Guarantee Obligations which is inconsistent with, or in opposition to,
the action or position requested by notice hereunder from the
Collateral Agent to be taken by the Subordinated Creditors so long as
such request is made in good faith by the Collateral Agent to obtain
payment of the Subordinated Guarantee Obligation and the Senior
Obligations as contemplated hereby.
iii) All payments or distributions upon or with respect to
the Subordinated Guarantee Obligations which are received by any
Subordinated Creditor contrary to the provisions of this Section 10
shall be received in trust for the benefit of the Note Purchasers,
shall be segregated from other funds and property held by such
Subordinated Creditor and shall be forthwith paid over to the
Collateral Agent in the same form as so received (with any necessary
indorsement) to be applied (in the case of cash) to or held as
collateral (in the case of securities or other non-cash property) for
the payment or prepayment of the Senior Obligations until the Senior
Obligations shall have been paid in full.
iv) The Collateral Agent is hereby authorized to demand
specific performance of this Agreement at any time when any
Subordinated Creditor shall have failed to comply with any of the
provisions of this Section 10 applicable to such Subordinated Creditor
whether or not the Guarantor shall have complied with any of the
provisions hereof applicable to the Guarantor, and each Subordinated
Creditor hereby irrevocably waives any defense based on the adequacy
of a remedy at law which might be asserted as a bar to such remedy of
specific performance.
(d) Senior Obligations Unconditional. i) All rights and
interests of the Collateral Agent and the Note Purchasers under this
Section 10, and all agreements and obligations of the Subordinated
Creditors and the Guarantor under this Section 10, shall remain in
full force and effect irrespective of: (i) any lack of validity or
enforceability of any Note Document or any other agreement or
instrument relating thereto, (ii) any change in the time, manner or
place of payment of, or in any other term in respect of, all or any of
the Senior Obligations (except any increase in the principal amount
thereof), or any other amendment or waiver of or any consent to
departure from any Note Document, (iii) any exchange or release of, or
non-perfection of any lien on or security interest in, collateral, or
any release or amendment or waiver of or consent to departure from any
guaranty, for all or any of the Senior Obligations, or (iv) any other
circumstance which might otherwise constitute a defense available to,
or a discharge of, the Guarantor in respect of the Senior Obligations
or the Subordinated Creditors or the Guarantor in respect of this
Section 10.
ii) This Agreement shall continue to be effective or shall be
reinstated, as the may be, if at any time any payment of any of the
Senior Obligations is rescinded or must otherwise be returned by the
Collateral Agent or any Note Purchaser upon the insolvency, bankruptcy
or reorganization of the Guarantor or otherwise, all as though such
payment had not been made.
(e) Waivers. Each of the Subordinated Creditors and the
Guarantor hereby waives (i) promptness and diligence, (ii) notice of
acceptance and notice of the incurrence of any Senior Obligation by
the Guarantor, (iii) notice of any actions taken by the Collateral
Agent or any Note Purchaser or the Guarantor or any other party under
any Note Document or any other agreement or instrument relating
thereto, (iv) all other notices, demands and protests, and all other
formalities of every kind in connection with the enforcement of the
Senior Obligations or of the obligations of the Subordinated Creditors
and the Guarantor hereunder, the omission of or delay in which, but
for the provisions of this Section 10(e), might constitute grounds for
relieving any Subordinated Creditor or the Guarantor of its
obligations hereunder, and (v) any requirement that the Collateral
Agent or any Note Purchaser protect, secure, perfect or insure any
security interest or other lien or any property subject thereto or
exhaust any right to take any action against the Guarantor or any
other person or any collateral of the Guarantor.
(f) Subrogation. No payment or distribution to the Collateral
Agent or any Note Purchaser pursuant to the provisions of this Section
10 shall entitle any Subordinated Creditor to exercise any rights of
subrogation in respect thereof until the Senior Obligations shall have
been paid in full.
(g) Relative Rights. This Section 10 defines the relative
rights of Subordinated Creditors and Note Purchasers. Nothing in this
Agreement shall impair, as between the Guarantor and Subordinated
Creditors, the obligation of the Guarantor, which is absolute and
unconditional, to pay and perform the Obligations in accordance with
their terms.
11. 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
Banks, be governed by the Credit 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 Banks with full and valid authority so to act or refrain
from acting, and the Guarantor shall not be under any obligation, or
entitlement, to make any inquiry respecting such authority.
12. Notices. All notices, requests and demands to or upon the
Administrative Agent, any Bank or the Guarantor to be effective shall
be in writing (or by telex, telecopy or similar electronic transfer
confirmed in writing) and shall be deemed to have been duly given or
made (a) when delivered by hand or (b) if given by mail, when
deposited in the mails by certified mail, return receipt requested, or
(c) if by telex, telecopy or similar electronic transfer, when sent
and receipt has been confirmed, addressed as follows:
(i) if to the Administrative Agent or any Bank, at its address
or transmission number for notices provided in subsection 14.2 of the
Credit Agreement; and
(ii) if to the Guarantor, at its address or transmission number
for notices provided in subsection 14.2 of the Credit Agreement.
The Administrative Agent, each Bank and the Guarantor may change
its address and transmission numbers for notices by notice in the
manner provided in this Section.
13. 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.
14. Integration. This Guarantee represents the agreement of
the Guarantor with respect to the subject matter hereof and there are
no promises or representations by the Administrative Agent or any Bank
relative to the subject matter hereof not reflected herein.
15. Amendments in Writing; No Waiver; Cumulative Remedies. (a)
None of the terms or provisions of this Guarantee may be waived,
amended, 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 Banks in a letter or agreement executed
by the Administrative Agent or by telex or facsimile transmission from
the Administrative Agent.
(b) Neither the Administrative Agent nor any Bank shall by any
act (except by a written instrument pursuant to Section 15(a) 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 Bank, 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 Bank 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 Bank would otherwise have on any future
occasion.
(c) 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.
16. Section Headings. The section 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.
17. Successors and Assigns. 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 Banks and their
successors and assigns. The Note Purchasers shall be third party
beneficiaries of Section 10 hereof.
18. Governing Law. This Guarantee shall be governed by, and
construed and interpreted in accordance with, the law of the State of
New York.
IN WITNESS WHEREOF, 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.
ARROW ELECTRONICS, INC.
By
Title
<PAGE>
EXHIBIT G-1 TO
SECOND AMENDED
AND RESTATED
CREDIT AGREEMENT
[Letterhead of Winthrop, Stimson, Putnam & Roberts]
[Closing Date]
To each of the banks and other
financial institutions from time
to time parties to the Credit
Agreement referred to below
Ladies and Gentlemen:
We have acted as counsel to Arrow Electronics, Inc., a New
York corporation (the "Company"), Capstone Electronics Corp., a
Delaware corporation ("Capstone"), Anthem Electronics, Inc. a Delaware
corporation ("Anthem"), Gates/Arrow Distributing, Inc. Inc., a
Delaware corporation ("Gates" and, together with the Company, Capstone
and Anthem, the "Domestic Loan Parties"), the Foreign Subsidiary
Borrowers parties to the Credit Agreement referred to below and Arrow
Electronics International, Inc., a United States Virgin Islands
corporation ("AEI" and, together with the Foreign Subsidiary Borrowers
and the Domestic Loan Parties, the "Loan Parties") in connection with
the preparation, execution, and delivery of the Amended and Restated
Credit Agreement dated as of _______ __, 1995 among the Company, the
Foreign Subsidiary Borrowers parties thereto, the several banks and
other financial institutions from time to time parties thereto (the
"Banks"), the Lead Manager named therein, Bankers Trust Company and
Chemical Bank, as agents for the Banks thereunder, Bankers Trust
Company, as collateral agent, Chemical Securities Inc., as arranger,
and Chemical Bank, as administrative agent for the Banks thereunder
(the "Credit Agreement"), and each of the documents listed on Annex A
hereto (the Credit Agreement and such listed documents, collectively,
the "Transaction Documents").
This opinion is furnished to you at the request of the
Company pursuant to subsection 9.1(e)(i) of the Credit Agreement.
Unless otherwise defined herein, capitalized terms used herein that
are defined in the Credit Agreement are used herein as therein
defined.
In connection with this opinion, we have examined copies of
(a) each of the Transaction Documents[, (b) the indenture under which
the Subordinated Debentures are outstanding,] (c) the Purchase
Agreements, as amended to the date hereof, under which the 1992
Private Placement Notes were issued and (d) such corporate documents
and records of the Company and its Subsidiaries, certificates and
instruments of public officials and officers of the Company and its
Subsidiaries and other documents as we have deemed relevant or proper
as a basis for our opinions set forth herein.
In arriving at the opinions contained herein, we have made
such investigations of law, in each case as we have deemed appropriate
as a basis for such opinions.
For the purposes of the opinions contained herein, we have
assumed:
(i) the genuineness of all signatures and the
conformity to the original of all copies submitted to us as
photocopies or conformed copies;
(ii) the accuracy of (A) the copies of the
corporate documents of the Domestic Loan Parties furnished to the
Administrative Agent pursuant to Section 9.1(c) of the Credit
Agreement and (B) good standing certificates received by us with
respect to the Domestic Loan Parties;
(iii) for the purposes of paragraph 5, that (A)
except as such matters are expressly opined on in paragraph 2, (1)
each party to the Transaction Documents has the corporate power and
authority and the legal right, and has taken all necessary action to
authorize it, to execute, deliver and perform each Transaction
Document to which it is a party and (2) each Transaction Document has
been duly executed and delivered by each party thereto, (B) all
consents and authorizations of, filings with and other acts by or in
respect of any Governmental Authority or any other Person required to
be obtained or made by any party to the Transaction Documents (other
than the Loan Parties) in connection with the execution, delivery and
performance thereof have been obtained or made and are in full force
and effect and (C) the execution, delivery and performance of the
Transaction Documents do not and will not violate any Contractual
Obligation under which any party to the Transaction Documents (other
than the Loan Parties) is bound or any Requirement of Law to which any
such party is subject; and
(iv) for the purposes of paragraphs 4(a)(ii) and
5, insofar as they relate to the proviso to Section 2(a) and clause
10(a)(i) of the Company Guarantee, that the Company Guarantee Ratio
does not exceed 25%.
We are members of the Bar of the State of New York and we
express no opinion as to any matters governed by any laws other than
the laws of the State of New York, the General Corporation Law of the
State of Delaware and the Federal laws of the United States of
America.
Based upon the foregoing and subject to the qualifications,
limitations and exceptions set forth below, we are of the opinion
that:
1. Each Domestic Loan Party is duly organized, validly
existing and in good standing under the laws of the jurisdiction of
its incorporation.
2. Each Domestic Loan Party has the corporate power and
authority and the legal right, and has taken all necessary corporate
action to authorize it, to execute, deliver and perform the
Transaction Documents to which it is a party and, in the case of the
Company, to borrow under the Credit Agreement.
3. Except for (a) consents or authorizations that have
been obtained or filings that have been made, and that in either case
are, to the best of our knowledge, in full force and effect and (b)
consents or authorizations the failure to obtain which or filings the
failure to make which could not reasonably be expected to have a
Material Adverse Effect, no consent or authorization of, filing with
or other act by or in respect of, any Governmental Authority or any
other Person is required under applicable laws, rules or regulations
within the scope of this opinion or under Contractual Obligations or
court orders known to us that are binding upon the Company or any of
its Subsidiaries, in connection with the execution, delivery,
performance, validity or enforceability of the Transaction Documents
or the borrowings under the Credit Agreement.
4. The execution, delivery and performance of the
Transaction Documents, the consummation of the transactions
contemplated thereby, the compliance by each Loan Party with any
provisions thereof and the borrowings under the Credit Agreement do
not and (absent a changes in any applicable law, rule, regulation,
Contractual Obligation or court order) will not (a) violate, or
constitute a default under, (i) any laws, rules or regulation within
the scope of this opinion or (ii) any Contractual Obligation or court
orders known to us that are binding upon the Company or any of its
Subsidiaries (except for violations of Contractual Obligations that,
individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect) or (b) result in or require the
creation or imposition of any Lien on any of its or their respective
properties or revenues pursuant to any such law, rule, regulation,
Contractual Obligation or court order, except for the Liens expressly
permitted by subsection 11.3 of the Credit Agreement.
5. Each Transaction Document constitutes a legal, valid
and binding obligation of each Loan Party that is a party thereto,
enforceable against such Loan Party in accordance with its terms.
6. To the best of our knowledge, and except as set forth
on Schedule 8.19 to the Credit Agreement, no litigation, investigation
or proceeding of or before any arbitrator or Governmental Authority is
pending or threatened by or against the Company or any of its
Subsidiaries or against any of its or their respective properties or
revenues (a) with respect to the Transaction Documents or any of the
transactions contemplated thereby or (b) that, if adversely
determined, would have a Material Adverse Effect.
7. None of the Loan Parties is (a) an "investment
company", or a company "controlled" by an "investment company", within
the meaning of the Investment Company Act of 1940, as amended from
time to time, or (b) a "holding company" as defined in, or otherwise
subject to regulation under, the Public Utility Holding Company Act of
1935.
8. The principal of, and interest on, the Loans, the
Company's Reimbursement Obligations in respect of the Letters of
Credit and the Company's Obligations under the Company Guarantee are
within the definition of "Senior Indebtedness" under the Subordinated
Debentures.
Anything to the contrary expressly stated or implied
notwithstanding, the opinions expressed herein are subject to the
following qualifications, limitations and exceptions, whether or not
such opinions refer to such qualifications, limitations and
exceptions:
(a) The opinions set forth in paragraph 5 are also subject
to the following additional qualifications, limitations, and
exceptions:
(i) We express no opinion as to the effect of
any violation of a Contractual Obligation known to parties to the
Transaction Documents (other than the Loan Parties) but not known to
us.
(ii) Such opinions are subject to the effect of
applicable bankruptcy, insolvency, reorganization, moratorium or
similar law affecting creditors' rights generally.
(iii) To the extent such opinions relate to
enforceability, such opinions are subject to (A) the requirement that
the Transaction Documents be performed and enforced in good faith and
(B) the effect of general principles of equity, including (without
limitation) (1) principles relating to the availability of equitable
remedies, including, without limitation, specific performance and (2)
concepts of materiality and reasonableness.
(iv) Certain indemnities and exculpatory
provisions, including certain waivers (other than the waiver of jury
trial), may be unenforceable if they are violative of public policy.
(v) Without limiting the generality of the
foregoing, we express no opinion with respect to the legality,
validity, binding effect or enforceability of the following
provisions:
(A) any provision specifying that any Transaction
Document may be waived or amended only in writing;
(B) any purported waiver of the right to seek the
transfer of a case to another jurisdiction;
(C) Section 14.7(b) of the Credit Agreement to the
extent that it provides for (1) a right of set-off in respect of
claims, credits or other obligations that are contingent, or (2) a
right of set-off in respect of Exposures of a Specified Borrower
against deposits, indebtedness or other obligations of any entity
other than the entity to which such Exposures are payable;
(D) the third sentence of Section 14.6(b) of the
Credit Agreement;
(E) as to (1) whether a United States Federal court or
a court of the State of New York would render a money judgment in a
currency other than United States Dollars or enforce a judgment
expressed in a foreign currency in a currency other than United States
Dollars and (2) the rate of exchange a United States Federal court or
a court of the State of New York would apply;
(F) as to Section 14.14(a)(ii) of the Credit Agreement
insofar as it relates to an action brought in the United States
District Court for the Southern District of New York; and
(G) as to Section 9(b) of the Company Guarantee.
(b) Whenever an opinion herein is qualified by the phrase
"to the best of our knowledge" or "known to us" or phrases of similar
import, such phrases refer only to the actual knowledge of the
attorneys in our firm who have spent a significant amount of time
representing the Loan Parties in connection with the Transaction
Documents, based on facts that have come to their attention in the
course of such representation or other recent representation of the
Loan Parties or their affiliates.
This opinion has been rendered solely for the benefit of the
addressees hereof and their respective Transferees in connection with
the Transaction Documents and the transactions contemplated thereby
and may not be used, circulated, quoted, relied upon or otherwise
referred to by any other Person or for any purpose without our prior
written consent.
Very truly yours,
ANNEX A
Other Transaction Documents
1. Each Subsidiary Guarantee, as amended, in the case of Capstone
and AEI, by the First Amendment thereto and, in each case, as
consented to by the Guarantor party thereto
2. Subordination Agreement
3. Company Guarantee
<PAGE>
EXHIBIT G-2 TO
SECOND AMENDED
AND RESTATED
CREDIT AGREEMENT
[Letterhead of Arrow Electronics, Inc.]
[Closing Date]
To each of the banks and other
financial institutions from time
to time parties to the Credit
Agreement referred to below
Ladies and Gentlemen:
I am Senior Vice President and General Counsel of Arrow
Electronics, Inc., a New York corporation (the "Company"). As such, I
have acted as counsel for the Company, Capstone Electronics Corp., a
Delaware corporation ("Capstone"), Anthem Electronics, Inc., a
Delaware corporation ("Anthem"), Gates/Arrow Distributing, Inc., a
Delaware corporation ("Gates" and together with the Company, Capstone
and Anthem, the "Domestic Loan Parties"), the Foreign Subsidiary
Borrowers parties to the Credit Agreement referred to below and Arrow
Electronics International, Inc., a United States Virgin Islands
corporation ("AEI" and, together with the Foreign Subsidiary Borrowers
and the Domestic Loan Parties, the "Loan Parties") in connection with
the preparation, execution, and delivery of the Second Amended and
Restated Credit Agreement dated as of _________ __, 1995 among the
Company, the several banks and other financial institutions from time
to time parties thereto (the "Banks"), the Lead Manager named therein,
Bankers Trust Company and Chemical Bank, as agents for the Banks
thereunder, Bankers Trust Company, as collateral agent, Chemical
Securities, Inc., as arranger, and Chemical Bank, as administrative
agent for the Banks thereunder (the "Credit Agreement") and each of
the documents listed on Annex A hereto (the Credit Agreement and such
listed documents, collectively, the "Transaction Documents").
This opinion is furnished to you pursuant to subsection
9.1(e)(ii) of the Credit Agreement. Unless otherwise defined herein,
capitalized terms used herein that are defined in the Credit Agreement
are used herein as therein defined.
In connection with this opinion, I have examined copies of
(a) each of the Transaction Documents and (b) such corporate documents
and records of the Company and its Subsidiaries, certificates and
instruments of public officials and officers of the Company and its
Subsidiaries and other documents as I have deemed relevant or proper
as a basis for my opinions set forth herein.
In arriving at the opinions contained herein, I have made
such investigations of law, in each case as I have deemed appropriate
as a basis for such opinions.
For the purposes of the opinions contained herein, I have
assumed:
(i) the genuineness of all signatures and the
conformity to the original of all copies submitted to me as
photocopies or conformed copies; and
(ii) the accuracy of (A) certified copies of the
certificates of incorporation of the Domestic Loan Parties and (B)
good standing certificates for the Domestic Loan Parties.
I am a member of the Bar of the State of New York and I
express no opinion as to any matters governed by any laws other than
the laws of the State of New York, the General Corporation Law of the
State of Delaware and the Federal laws of the United States of
America.
Based upon the foregoing and subject to the qualifications,
limitations and exceptions set forth below, I am of the opinion that:
1. Each Domestic Loan Party (a) has the corporate power
and authority and the legal right to own and operate its property, to
lease the property it operates as lessee and to conduct the business
in which it is currently engaged and (b) 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 duly qualified or in good standing could not
reasonably be expected to have a Material Adverse Effect.
2. Each Transaction Document has been duly executed and
delivered on behalf of each Loan Party that is a party thereto.
3. To the best of my knowledge, and except as set forth on
Schedule 8.19 to the Credit Agreement, no litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is
pending or threatened by or against the Company or any of its
Subsidiaries or against any of its or their respective properties or
revenues (a) with respect to the Transaction Documents or any of the
transactions contemplated thereby or (b) that if adversely determined
would have a Material Adverse Effect.
4. To the best of my knowledge, neither the Company nor
any of its Subsidiaries is in default under or with respect to any of
its Contractual Obligations in any respect that could reasonably be
expected to have a Material Adverse Effect.
5. The Company is not subject to regulation under any
federal or state statute or regulation within the scope of this
opinion that limits its ability to incur Indebtedness under the Credit
Agreement.
Anything to the contrary expressly stated or implied
notwithstanding, I express no opinion as to the effect of any law,
rule or regulation outside the express scope of the opinions.
This opinion has been rendered solely for the benefit of the
addressees hereof and their respective Transferees in connection with
the Transaction Documents and the transactions contemplated thereby
and may not be used, circulated, quoted, relied upon or otherwise
referred to by any other Persons or for any purpose without my prior
written consent.
Very truly yours,
ANNEX A
Other Transaction Documents
1. Each Subsidiary Guarantee, as amended, in the case of Capstone
and AEI, by the First Amendment thereto and, in each case, as
consented to by the Guarantor party thereto
2. Subordination Agreement
3. Company Guarantee
<PAGE>
EXHIBIT G-3 TO
SECOND AMENDED
AND RESTATED
CREDIT AGREEMENT
OPINIONS RELATING TO THE
FOREIGN SUBSIDIARY BORROWERS
Opinions for the Foreign Subsidiary Borrowers:
1. The Foreign Subsidiary Borrower is duly organized, validly
existing and in good standing under the laws of the jurisdiction of
its organization (the "Jurisdiction").
2. The Foreign Subsidiary Borrower has the power and authority, and
the legal right, to make, deliver and perform its obligations under
the Credit Agreement and to borrow under the Credit Agreement. The
Foreign Subsidiary Borrower has taken all necessary corporate action
to authorize the performance of its obligations as a "Foreign
Subsidiary Borrower" under the Credit Agreement and to authorize the
execution, delivery and performance of the Credit Agreement.
3. Except for consents, authorizations, approvals, notices and
filings described on an attached schedule, all of which have been
obtained, made or waived and are in full force and effect, no consent
or authorization of, approval by, notice to, filing with or other act
by or in respect of, any Governmental Authority is required in
connection with the borrowings by the Foreign Subsidiary Borrower
under the Credit Agreement or with the execution, delivery,
performance, validity or enforceability of the Credit Agreement.
4. The Credit Agreement has been duly executed and
delivered on behalf of the Foreign Subsidiary Borrower.
5. The execution and delivery of the Credit Agreement by
the Foreign Subsidiary Borrower, the performance of its obligations
thereunder, the consummation of the transactions contemplated thereby,
the compliance by the Foreign Subsidiary Borrower with any of the
provisions thereof, the borrowings under the Credit Agreement and the
use of proceeds thereof, all as provided therein, (a) will not
violate, or constitute a default under, any Requirement of Law the
Foreign Subsidiary Borrower and (b) will not result in, or require,
the creation or imposition of any Lien on any of its properties or
revenues pursuant to any such Requirement of Law.
6. There are no taxes imposed by the Jurisdiction (a) on or
by virtue of the execution, delivery, enforcement or performance of
the Credit Agreement or (b) on any payment to be made by the Foreign
Subsidiary Borrower pursuant to the Credit Agreement other than any
Non-Excluded Taxes payable by the Foreign Subsidiary Borrower as
provided in subsection 6.6 of the Credit Agreement.
7. To ensure the legality, validity, enforceability or
admissibility in evidence of the Credit Agreement, it is not necessary
that the Credit Agreement or any other Loan Documents or any other
document be filed, registered or recorded with, or executed or
notarized before, any court of other authority of the Jurisdiction or
that any registration charge or stamp or similar tax be paid on or in
respect of the Credit Agreement.
8. The Credit Agreement is in proper legal form under the
laws of the Jurisdiction for the enforcement thereof against the
Foreign Subsidiary Borrower under the laws of the Jurisdiction.
9. In any action or proceeding arising out of or relating
to the Credit Agreement in any court in the Jurisdiction, such court
would recognize and give effect to the choice of law provisions in the
Credit Agreement wherein the parties thereto agree that the Credit
Agreement shall be governed by, and construed and interpreted in
accordance with, the laws of the State of New York.
10. It is not necessary under the laws of the Jurisdiction
(a) in order to enable the Administrative Agent and the Lenders or any
of them to enforce their respective rights under the Credit Agreement
or (b) by reason of the execution of the Credit Agreement [or the
Joinder Agreement to which the Foreign Subsidiary Borrower is a party]
or the performance of the Credit Agreement that any of them should be
licensed, qualified or entitled to carry on business in the
Jurisdiction.
11. Neither the Administrative Agent nor any of the Lenders
will be deemed to be resident, domiciled, carrying on business or
subject to taxation in the Jurisdiction merely by reason of the
execution of the Credit Agreement [or the Joinder Agreement to which
the Foreign Subsidiary Borrower is a party] or the performance or
enforcement of any thereof. The performance by the Administrative
Agent and the Lenders or any of them of any action required or
permitted under the Credit Agreement will not violate any law or
regulation, or be contrary to the public policy, of the Jurisdiction.
12. If any judgment of a competent court outside the
Jurisdiction were rendered against the Foreign Subsidiary Borrower in
connection with any action arising out of or relating to the Credit
Agreement, such judgment would be recognized and could be sued upon in
the courts of the Jurisdiction, and such courts would grant a judgment
which would be enforceable against the Foreign Subsidiary Borrower in
the Jurisdiction without any retrial unless it is shown that (a) the
foreign court did not have jurisdiction in accordance with its
jurisdictional rules, (b) the party against whom the judgment of such
foreign court was obtained had no notice of the proceedings or (iii)
the judgment of such foreign court was obtained through collusion or
fraud or was based upon clear mistake of fact or law.
<PAGE>
EXHIBIT H TO
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
FORM OF
CERTIFICATE OF RESPONSIBLE OFFICER
PURSUANT TO SUBSECTION 10.2(b)
Pursuant to subsection 10.2(b) of the Second Amended and
Restated Credit Agreement, dated as of ______________ __, 1995 (as the
same may be amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among Arrow Electronics, Inc., a New
York corporation (the "Company"), the Foreign Subsidiary Borrowers
named therein, the several banks and other financial institutions from
time to time parties thereto (the "Banks"), the Lead Manager named
therein, Bankers Trust Company and Chemical Bank, as agents for the
Banks, Bankers Trust Company, as collateral agent, Chemical Securities
Inc., as arranger, and Chemical Bank, as administrative agent for the
Banks, the undersigned, [Responsible Officer of the Company], hereby
certifies, to the best of his/her knowledge, as follows:
1. For the fiscal year of the Company ending ________ __, 199_,
the Company has observed or performed all of its covenants and other
agreements contained in the Credit Agreement and the other Credit
Documents to which it is a party to be observed or performed by it,
and that such Responsible Officer has obtained no knowledge of any
Default or Event of Default except as specified herein [specify
Default or Event of Default, if any];
2. The financial statements delivered concurrently herewith
pursuant to subsections 10.1(a) and (b) of the Credit Agreement fairly
present the consolidated (or consolidating by principal operating
group, as appropriate) financial position and results of operations of
the Company and its consolidated Subsidiaries in accordance with GAAP
applied consistently throughout the periods reflected therein and with
the prior periods (except as approved by the accountants performing
such audit or the Responsible Officer making such certification, as
the case may be, and disclosed therein).
3. The calculations set forth on Schedule A hereto support the
statement in paragraph 1 above in respect of subsections 11.1(a), (b)
and (c), 11.2 and 11.5 of the Credit Agreement.
Unless otherwise defined herein, capitalized terms which are
defined in the Credit Agreement and used herein are so used as so
defined.
IN WITNESS WHEREOF, the undersigned has hereunto set his or
her name and affixed the corporate seal.
ARROW ELECTRONICS, INC.
By: _____________________
Title:
Date: _________ __, 199_
<PAGE>
EXHIBIT I TO
SECOND AMENDED
AND RESTATED
CREDIT AGREEMENT
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Second Amended and Restated Credit
Agreement, dated as of August , 1995 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"), among
Arrow Electronics, Inc. (the "Company"), the Foreign Subsidiary
Borrowers named therein, the several Banks, the Lead Manager and the
Agents parties thereto, Chemical Securities Inc., as arranger, and
Chemical Bank, as administrative agent (in such capacity, the
"Administrative Agent"). Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the
meanings given to them in the Credit Agreement.
_____________________ (the "Assignor") and _________________
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 under the Credit Agreement, in a principal amount as set
forth on SCHEDULE 1.
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 Credit Agreement
or with respect to the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement, any other
Loan Document or any other instrument or document furnished pursuant
thereto, other than that the Assignor 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; and (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 Credit Agreement or any other Loan Document or
any other instrument or document furnished pursuant hereto or thereto.
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 Credit Agreement, together
with copies of the financial statements delivered pursuant to
subsection 8.1 thereof and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to
enter into this Assignment and Acceptance; (c) agrees that it will,
independently and without reliance upon the Assignor, the
Administrative Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under the
Credit Agreement, the other Credit Documents or any other instrument
or document furnished pursuant hereto or thereto; (d) appoints and
authorizes the Administrative Agent, each Swing Line Bank and each
Issuing Bank to take such action as agent on its behalf and to
exercise such powers and discretion under the Credit Agreement, the
other Credit Documents or any other instrument or document furnished
pursuant hereto or thereto as are delegated to the Administrative
Agent, each Swing Line Bank and each Issuing Bank, as the case may be,
by the terms thereof, together with such powers as are incidental
thereto; and (e) agrees that it will be bound by the provisions of the
Credit Agreement and will perform in accordance with its terms all the
obligations which by the terms of the Credit Agreement are required to
be performed by it as a Bank including its obligation pursuant to
subsection 7.6(b) of the Credit Agreement.
4. The effective date of this Assignment and Acceptance
shall be , (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 the Credit Agreement, effective as of
the Effective Date (which shall not, unless otherwise agreed to by the
Administrative Agent, be earlier than five Business Days after the
date of such acceptance and recording by the Administrative Agent).
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) which accrue subsequent to the
Effective Date to the Assignee. 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 Credit Agreement and, to the extent provided
in this Assignment and Acceptance, have the rights and obligations of
a Lender thereunder and under the other Loan 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 Credit
Agreement.
7. This Assignment and Acceptance shall be governed by and
construed 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 the date first above
written by their respective duly authorized officers on Schedule 1
hereto.
SCHEDULE 1
TO ASSIGNMENT AND ACCEPTANCE
RELATING TO THE CREDIT AGREEMENT, DATED AS OF AUGUST , 1995,
AMONG
ARROW ELECTRONICS, INC. (THE "COMPANY"), THE FOREIGN SUBSIDIARY
BORROWERS NAMED THEREIN, THE SEVERAL BANKS, THE LEAD MANAGER AND THE
AGENTS PARTIES THERETO, CHEMICAL SECURITIES INC., AS ARRANGER, AND
CHEMICAL BANK, AS AGENT (IN SUCH CAPACITY, THE "ADMINISTRATIVE AGENT")
Name of Assignor:
Name of Assignee:
Effective Date of Assignment:
Principal
Amount Assigned
Commitment Percentage
Assigned1/
$
. %
[NAME OF ASSIGNEE]
By
Name:
Title:
[NAME OF ASSIGNOR]
By
Name:
Title:
Accepted [and Consented to]:
CHEMICAL BANK, as Administrative Agent
By
Name:
Title:
Consented To:1/
ARROW ELECTRONICS, INC.
By
Name:
Title:
<PAGE>
EXHIBIT J TO
SECOND AMENDED
AND RESTATED
CREDIT AGREEMENT
FORM OF
GUARANTEED CEILING AMOUNT CERTIFICATE
Pursuant to subsection [9.1(h)][10.2(f)] of the Second Amended
and Restated Credit Agreement, dated as of ______________, (as the
same may be amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among Arrow Electronics, Inc., a New
York corporation (the "Company"), the Foreign Subsidiary Borrowers
named therein, the several banks and other financial institutions from
time to time parties thereto (the "Banks"), the Lead Manager named
therein, Bankers Trust Company and Chemical Bank, as agents for the
Banks, Bankers Trust Company, as collateral agent, Chemical Securities
Inc., as arranger, and Chemical Bank, as administrative agent for the
Banks, the undersigned, Ira Birns, hereby certifies, to the best of
his knowledge, as follows:
1. The Guarantee Ceiling Amount as of June 30, 1995, is
$124,873,000 calculated as follows:
a. Consolidated Net Worth of the company as of June 30, 1995
(calculated as defined in and in accordance with the provisions
of the Note Purchase Agreement).
$965,817,000
b. 15% of Line a.
$144,873,000
c. all Indebtedness (including, without limitation,
Capitalized Lease Obligations) of the company and its subsidiaries
(other than its Foreign Subsidiaries) secured by Liens other than
Permitted Liens under subclauses (a) through (I) and (k) through (q)
of Section 8.0(j) of the Note Purchase Agreement (calculated as
defined in and in accordance with the provisions of the Note Purchase
Agreement).
$0
d. the total Indebtedness of the Company's Subsidiaries (other
than its Foreign Subsidiaries) (calculated as defined in and in
accordance with the provisions of the Note Purchase Agreement).
$20,000,000
e. Guarantees by the Company of the Indebtedness of the
Foreign Subsidiaries permitted pursuant to Section 8.08(iv) of the
Note Purchase Agreement (calculated as defined in and in accordance
with the provisions of the Note Purchase Agreement) but excluding the
aggregate Dollar Equivalent Amount of the Exposure of the Foreign
Subsidiary Borrowers and the Local Currency Borrowers.
$0
f. Guarantee Ceiling Amount calculated as Line b. minus the
sum of Lines c., d. and e.
$124,873,000
2. The aggregate Dollar Equivalent Amount of the Exposure
of the Foreign Subsidiary Borrowers and Local Currency Borrowers on
the date hereof is $66,743,000.
3. The Company Guarantee Ratio is (calculated as the
ratio of (a)2. minus 1.f to (b) 2., but not less than zero)
0%
Unless otherwise defined herein, capitalized terms which
are defined in the Credit Agreement and used herein are so used as so
defined.
IN WITNESS WHEREOF, the undersigned has hereunto set his
or her name and affixed the corporate seal.
ARROW ELECTRONICS, INC.
By: ______________________
Title: Assistant Treasurer
Date: ____________________
<PAGE>
<TABLE>
<CAPTION>
Exhibit 11
ARROW ELECTRONICS, INC.
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
Year Ended December 31,
------------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(In thousands except per share data)
<S> <C> <C> <C> <C> <C>
Primary
- -------
Average shares of common
stock outstanding 47,332 45,999 44,532 38,329 26,879
Net effect of dilutive
stock options - based
on the treasury method 749 635 828 1,241 974
---------- ---------- ---------- ---------- ----------
Total 48,081 46,634 45,360 39,570 27,853
========== ========== ========== ========== ==========
Net income $ 202,544 $ 111,889 $ 106,559 $ 79,461 $ 33,889
Less preferred stock
dividends - - (880) (3,903) (4,596)
---------- ---------- ---------- ---------- ----------
Total $ 202,544 $ 111,889 $ 105,679 $ 75,558 $ 29,293
========== ========== ========== ========== ==========
Per share amount $ 4.21 $ 2.40 $ 2.33 $ 1.91 $ 1.05
========== ========== ========== ========== ==========
Fully Diluted
- -------------
Average shares of common
stock outstanding 47,332 45,999 44,532 38,329 26,879
Net effect of dilutive
stock options - based
on the treasury method 762 635 911 1,263 1,070
Assumed conversion of 9%
convertible subordi-
nated debentures - - - - 851
Assumed conversion of
5-3/4% convertible sub-
ordinated debentures 3,029 3,773 3,774 381 -
Assumed conversion of
preferred stock - - 691 3,433 3,615
--------- ---------- ---------- --------- ---------
Total 51,123 50,407 49,908 43,406 32,415
========= ========== ========== ========= =========
Net income $ 202,544 $ 111,889 $ 106,559 $ 79,461 $ 33,889
Add interest on 9%
convertible subordi-
nated debentures,
net of income tax
effect - - - - 1,649
Add interest on 5-3/4%
convertible subordi-
nated debentures,
net of income tax
effect 3,471 4,313 4,313 455 -
--------- ---------- ---------- -------- ---------
Total $ 206,015 $ 116,202 $ 110,872 $ 79,916 $ 35,538
========= ========== ========== ======== =========
Per share amount $ 4.03 $ 2.31 $ 2.22 $ 1.84 $ 1.10(A)
========= ========== ========== ======== =========
(A) This calculation is submitted in accordance with Regulation S-K Item
601(b)(11) although it is contrary to paragraph 40 of APB Opinion No. 15
because it produces an anti-dilutive result.
</TABLE>
<PAGE>
ARROW ELECTRONICS, INC.
SUBSIDIARY LISTING Exhibit 21
1. Arrow Electronics, Inc. a New York corporation
2. Arrow Electronics International, Inc., a Virgin Islands corporation
3. Arrow Electronics Canada Ltd., a Canadian Corporation
4. Lex Electronics, Ltd., a Canadian Corporation
5. Arrow Electronics Credit Corporation, a Delaware Corporation
6. Schuylkill Metals of Plant City, Inc., a Delaware Corporation
7. Arrow Electronics International, Inc., a Delaware Corporation
8. Arrow Electronics (UK) Inc., a Delaware Corporation
9. Arrow/TEK Ltd., a Japanese Joint Venture (50% owned)
10. Capstone Electronics Corp., a Delaware Corporation
11. High Tech Ad, Inc., a New York Corporation
12. Gates/Arrow Distributing, Inc., a Delaware Corporation
13. Anthem Electronics, Inc., a Delaware Corporation,
including subsidiaries:
A Anthem Enterprises
B. Lionex Corp.
C. Anthem Technology Systems
14. Arrow-Field OY and subsidiaries, a Finnish Company
15. Arrow-TH:s Elektronik AB, and subsidiaries, a Swedish
Company (owned 85%)
16. Exatec A/S, and subsidiaries, a Danish company (owned 85%)
17. Arrow Electronics Distribution Group - Europe B.V., a Dutch company,
and Subsidiaries which include:
A. Arrow Electronics (UK) Limited, a British Company, and
subsidiaries:
1. RR Electronics Limited, a British Company
2. Axiom Electronics Ltd., a British Company
3. Jermyn Holdings Limited, a British Company &
Subsidiaries
4. Techdis Limited, a British company, and subsidiary:
a. Microprocessor & Memory Distribution Ltd., a
British Company
B. EDI Electronics Distribution International (France) SA, a
French Company and subsidiaries:
1. Arrow Electronique S.A., a French Company, and
subsidiaries:
a. Generim S.A., a French Company
b. Feutrier S.A., a French Company
c. CCI Electronique S.A., a French Company
d. Arrow Computer Products S.N.C. (formerly
Megachip S.A.) and subsidiaries
C. Arrow Electronics GmbH, a German Company (which owns 70%
interest of Spoerle Electronic Handelgesellschaft mbH, a German
company, and subsidiaries)
D. Arrow ATD Netherlands B.V., a Dutch company (which owns 87% of
ATD Electronica S.A., a Spanish company
E. Arrow-Amitron Netherlands B.V., a Dutch company (which owns 75%
of the shares of Amitron-Arrow S.A.)
F. Silverstar Ltd. S.p.A. (86% owned) & subsidiaries
G. Arrow Australia Pty Ltd. (100% owned) and subsidiaries:
1. Veltek Australia Pty Ltd. (75% owned)
2. Zatek Australia Pty Ltd. (75% owned)
18. Components Agent Limited, a British Virgin Island company (owned 90%)
and Subsidiaries which include:
A. Components Agent Limited, a Hong Kong company
B. Components Agent China Limited, a Hong Kong company
C. Components Agent Korea Limited, a Hong Kong company
D. Components Assembly & Sales Pte Ltd, a Singapore company
E. Casl. (M) Sdn. Berhad, a Malaysian company, and subsidiaries
F. Salson Holdings Limited, a British Virgin Islands company, and
subsidiary:
1. Qinhuangdao Arrow Electronics Company Limited, a
company of the People's Republic of China
G. Components Korea Company Limited, a Korean company
19. Texny (Holdings) Limited, a British Virgin Islands company (owned 95%)
and Subsidiaries:
A. Texny (H.K.) Limited, a Hong Kong company, and subsidiary:
1. Glorytact Company Limited, a Hong Kong company
B. Intex-semi Limited, a Hong Kong company (inactive company)
C. Colourmedia Animation Limited, a Hong Kong company (inactive
company)
20. Strong Electronics Co., Ltd. and subsidiaries, a Taiwanese Joint
Venture (owned 45%)
21. Ally/Arrow, Inc., a Taiwanese company (75% owned)
22. Arrow Components (NZ) Limited, a New Zealand company (75% owned)
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Forms S-8 No. 33-55565, 33-66594, No. 33-48252, No. 33-20428 and No. 2-
78185) and in the related Prospectuses pertaining to the employee stock
plans of Arrow Electronics, Inc., in Amendment No. 1 to the Registration
Statement (Form S-3 No. 33-54473) and in the related Prospectus pertaining
to the registration of 1,376,843 shares of Arrow Electronics, Inc. Common
Stock, in Amendment No. 1 to the Registration Statement (Form S-3 No. 33-
67890) and in the related Prospectus pertaining to the registration of
1,009,086 shares of Arrow Electronics, Inc. Common Stock, and in Amendment
No. 1 to the Registration Statement (Form S-3 No. 33-42176) and in the
related Prospectus pertaining to the registration of up to 944,445 shares
of Arrow Electronics, Inc. Common Stock held by Aquarius Investments Ltd.
and Andromeda Investments Ltd. of our report dated February 22, 1996 with
respect to the consolidated financial statements and schedule of Arrow
Electronics, Inc. included in this Annual Report on Form 10-K for the year
ended December 31, 1995.
ERNST & YOUNG LLP
New York, New York
March 27, 1996
<PAGE>
ARROW ELECTRONICS, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
For the three years ended December 31, 1995
Additions
---------
Balance at Balance
beginning Charged Charged at end
of year to income to other (2) Write-offs of year
---------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Allowance for
doubtful accounts (1)
1995 $31,132,000 $21,344,000 $ 67,000 $13,873,000 $38,670,000
=========== =========== ========== =========== ===========
1994 $24,263,000 $20,289,000 $3,251,000 $16,671,000 $31,132,000
=========== =========== ========== =========== ===========
1993 $16,278,000 $17,330,000 $3,060,000 $12,405,000 $24,263,000
=========== =========== ========== =========== ===========
(1) During 1994, the company acquired Gates/FA Distributing, Inc. and Anthem
Electronics, Inc. in transactions accounted for as poolings of interests,
accordingly the 1994 and 1993 financial information has been restated to
include this activity.
(2) Represents the allowance for doubtful accounts of the businesses acquired
by the company during each year.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this annual report to
be signed on its behalf by the undersigned, thereunto duly authorized.
ARROW ELECTRONICS, INC.
By/s/ Robert E. Klatell
------------------------
Robert E. Klatell
Executive Vice President
March 27, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
By/s/ Stephen P. Kaufman March 27, 1996
--------------------------------------------------------------
Stephen P. Kaufman, Chairman, Principal
Executive Officer, and Director
By/s/ Robert E. Klatell March 27, 1996
--------------------------------------------------------------
Robert E. Klatell, Executive Vice President,
Principal Financial Officer, and Director
By/s/ Paul J. Reilly March 27, 1996
--------------------------------------------------------------
Paul J. Reilly, Controller
and Principal Accounting Officer
By/s/ Daniel W. Duval March 27, 1996
--------------------------------------------------------------
Daniel W. Duval, Director
By/s/ Carlo Giersch March 27, 1996
--------------------------------------------------------------
Carlo Giersch, Director
By/s/ March 27, 1996
--------------------------------------------------------------
Roger King, Director
By/s/ Karen Gordon Mills March 27, 1996
--------------------------------------------------------------
Karen Gordon Mills, Director
By/s/ Richard S. Rosenbloom March 27, 1996
--------------------------------------------------------------
Richard S. Rosenbloom, Director
By/s/ Robert S. Throop March 27, 1996
--------------------------------------------------------------
Robert S. Throop, Director
By/s/ John C. Waddell March 27, 1996
--------------------------------------------------------------
John C. Waddell, Vice Chairman
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE 1995 10-K AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000
<CURRENCY> U.S.DOLLARS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> DEC-31-1995
<PERIOD-TYPE> 12-MOS
<EXCHANGE-RATE> 1
<CASH> 93,947
<SECURITIES> 0
<RECEIVABLES> 940,049
<ALLOWANCES> 38,670
<INVENTORY> 1,039,111
<CURRENT-ASSETS> 2,104,717
<PP&E> 191,267
<DEPRECIATION> 73,932
<TOTAL-ASSETS> 2,701,016
<CURRENT-LIABILITIES> 886,657
<BONDS> 451,706
0
0
<COMMON> 50,648
<OTHER-SE> 1,145,233
<TOTAL-LIABILITY-AND-EQUITY> 2,701,016
<SALES> 5,919,420
<TOTAL-REVENUES> 5,919,420
<CGS> 4,888,746
<TOTAL-COSTS> 5,496,211
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 21,344
<INTEREST-EXPENSE> 46,361
<INCOME-PRETAX> 379,341
<INCOME-TAX> 153,139
<INCOME-CONTINUING> 202,544
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 202,544
<EPS-PRIMARY> 4.21
<EPS-DILUTED> 4.03
