SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
_X_ OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED April 30, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
___ OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO ___
COMMISSION FILE NUMBER 1-9299
HARNISCHFEGER INDUSTRIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 39-1566457
(State of Incorporation) (I.R.S. Employer
Identification No.)
3600 South Lake Drive, St. Francis, Wisconsin 53235-3716
(Address of principal executive offices) (Zip Code)
(414)486-6400
(Registrant's Telephone Number, Including Area Code)
Indicate by checkmark 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, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at June 14, 1999
Common Stock, $1 par value 47,949,089 shares
HARNISCHFEGER INDUSTRIES, INC.
FORM 10-Q
April 30, 1999
INDEX
PART I.
Financial Information:
Consolidated Statement of Income -
Three and Six Months Ended
April 30, 1999 and 1998
Consolidated Balance Sheet -
April 30, 1999 and October 31, 1998
Consolidated Statement of Cash Flows -
Six Months Ended April 30, 1999 and 1998
Consolidated Statement of Shareholders' Equity -
Six Months Ended April 30, 1999 and 1998
Notes to Consolidated Financial Statements
Management's Discussion and Analysis
of Results of Operations and Financial Condition
PART II.
Other Information
Signatures
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
HARNISCHFEGER INDUSTRIES, INC.
(Debtor-in-Possession as of June 7, 1999)
CONSOLIDATED STATEMENT OF INCOME
(Dollar amounts in thousandsexcept per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
April 30, April 30,
------------------------------------------------------------------
1999 1998 1999 1998
------------------------------ --------------------------------
<S> <C> <C> <C> <C>
Revenues
Net Sales $ 488,124 $ 477,839 $ 944,374 $ 1,035,683
Other Income 1,293 750 9,955 10,760
-------------- ------------- ------------- --------------
489,417 478,589 954,329 1,046,443
Cost of Sales, including anticipated
losses on contracts 484,196 434,854 857,419 939,454
Product Development, Selling
and Administrative Expenses 101,171 115,173 203,406 213,010
Restructuring Charge - 65,000 - 65,000
-------------- ------------- ------------- --------------
Operating (Loss) (95,950) (136,438) (106,496) (171,021)
Interest Expense - Net (21,984) (19,802) (44,902) (38,097)
-------------- ------------- ------------- --------------
(Loss) before Benefit for Income
Taxes and Minority Interest (117,934) (156,240) (151,398) (209,118)
Benefit for Income Taxes 40,125 63,717 51,500 81,700
Minority Interest 3,551 19,697 9,241 29,621
-------------- ------------- ------------- --------------
Net (Loss) From Continuing Operations (74,258) (72,826) (90,657) (97,797)
Income from Discontinued Operation,
net of applicable income taxes - 972 - 4,376
Gain on Sale of Discontinued Operation,
net of applicable income taxes - 151,500 - 151,500
-------------- ------------- ------------- --------------
Net Income (Loss) $ (74,258) $ 79,646 $ (90,657) $ 58,079
============== ============= ============= ==============
Basic Earnings Per Share
(Loss) from continuing operations $ (1.60) $ (1.57) $ (1.96) $ (2.10)
Income from and net gain on sale of
discontinued operation - 3.28 - 3.35
-------------- ------------- ------------- --------------
Net Income (Loss) $ (1.60) $ 1.71 $ (1.96) $ 1.25
============== ============= ============= ==============
Diluted Earnings Per Share
(Loss) from continuing operations $ (1.60) $ (1.57) $ (1.96) $ (2.10)
Income from and net gain on sale of
discontinued operation - 3.28 - 3.35
-------------- ------------- ------------- --------------
Net Income (Loss) $ (1.60) $ 1.71 $ (1.96) $ 1.25
============== ============= ============= ==============
See accompanying notes to financial statements
</TABLE>
HARNISCHFEGER INDUSTRIES, INC.
(Debtor-in-Possession as of June 7, 1999)
CONSOLIDATED BALANCE SHEET
(Dollar amounts in thousands)
April 30, October 31,
1999 1998
--------------- ----------------
(Unaudited)
Assets
Current Assets:
Cash and cash equivalents $ 36,716 $ 30,012
Accounts receivable-net 684,932 692,326
Inventories 611,434 610,478
Other current assets 75,178 56,142
Prepaid income taxes 124,285 74,186
--------------- ----------------
1,532,545 1,463,144
Property, Plant and Equipment:
Land and improvements 60,071 61,454
Buildings 261,689 289,789
Machinery and equipment 779,287 809,969
------- -------
1,101,047 1,161,212
Accumulated depreciation (518,905) (529,884)
--------------- ----------------
582,142 631,328
Investments and Other Assets:
Goodwill 464,430 480,625
Intangible assets 71,456 31,343
Other assets 225,056 180,819
--------------- ----------------
760,942 692,787
=============== ================
$ 2,875,629 $2,787,259
=============== ================
See accompanying notes to financial statements.
HARNISCHFEGER INDUSTRIES, INC.
(Debtor-in-Possession as of June 7, 1999)
CONSOLIDATED BALANCE SHEET
(Dollar amounts in thousands)
April 30, October 31,
1999 1998
--------------- --------------
(Unaudited)
Liabilities and Shareholders' Equity
Current Liabilities:
Short-term notes payable, including current
portion of long-term obligations $ 203,928 $ 156,383
Trade accounts payable 318,377 333,624
Employee compensation and benefits 72,917 73,334
Advance payments and progress billings 106,999 115,320
Accrued warranties 48,980 58,053
Other current liabilities 328,148 289,566
--------------- --------------
1,079,349 1,026,280
Long-term Obligations 1,080,679 962,797
Other Liabilities:
Liability for postretirement benefits 29,369 34,187
Accrued pension costs 77,028 40,812
Other liabilities 9,634 12,495
--------------- --------------
116,031 87,494
Minority Interest 35,322 43,838
Shareholders' Equity:
Common stock (51,668,939 and
51,668,939 shares issued, respectively) 51,669 51,669
Capital in excess of par value 577,414 586,509
Retained earnings 120,673 216,065
Accumulated comprehensive (loss) (73,539) (60,289)
Less:
Stock Employee Compensation
Trust (1,433,147 and 1,433,147
shares, respectively) at market (13,973) (13,525)
Treasury stock (3,865,101 and
4,465,101 shares, respectively)
at cost (97,996) (113,579)
--------------- --------------
564,248 666,850
--------------- --------------
$2,875,629 $2,787,259
=============== ==============
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES, INC.
(Debtor-in-Possession as of June 7, 1999)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollar amounts in thousands)
Six Months Ended
April 30,
<S> <C> <C>
Operating Activities 1999 1998
Net income (loss) $ (90,657) $ 58,079
Add (deduct) - Items not affecting cash:
Valuation Reserve on APP 811 and 812 87,000 -
Income from and gain on sale of discontinued operation - (155,876)
Restructuring charge - 65,000
Minority interest, net of dividends paid (9,241) (29,621)
Depreciation and amortization 41,295 41,836
Prepaid/deferred income taxes -net (49,445) (92,858)
Other - net (5,859) (6,772)
Changes in working capital, exclusive of acquisitions and divestitures
Decrease (increase) in accounts receivable - net 1,465 (41,107)
(Increase) in inventories (4,407) (72,445)
(Increase) in other current assets (20,152) (14,427)
(Decrease) in trade accounts payable (11,173) (56,994)
Increase (decrease) in employee compensation and benefits 3,656 (17,292)
(Decrease) increase in advance payments and progress
billings (5,585) 31,943
(Decrease)Increase in other current liabilities (33,277) 16,534
----------- ------------
Net cash (used by) operating activities (96,380) (274,000)
----------- ------------
Investment and Other Transactions
Acquisitions, net of cash acquired - (40,283)
Proceeds from sale of Material Handling - 341,000
Proceeds from sale of J&L Fiber Services - 109,445
Property, plant and equipment acquired (32,597) (59,191)
Property, plant and equipment retired 10,369 12,870
Other - net (36,515) (9,168)
----------- ------------
Net cash (used by) provided by investment
and other transactions (58,743) 354,673
----------- ------------
Financing Activities
Dividends paid (4,592) (9,285)
Exercise of stock options - 454
Purchase of treasury stock - (30,086)
Issuance of long-term obligations 125,812 65,218
Redemption of long-term obligations (3,963) (40,636)
Increase (decrease) in short-term notes payable 43,742 (86,472)
----------- ------------
Net cash provided by (used by) financing activities 160,999 (100,807)
----------- ------------
Effect of Exchange Rate Changes on Cash and
Cash Equivalents 828 288
-------------------------
Increase (Decrease) in Cash and Cash Equivalents 6,704 (19,846)
Cash and Cash Equivalents at Beginning of Period 30,012 29,383
=========================
Cash and Cash Equivalents at End of Period $ 36,716 $ 9,537
=========================
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES, INC.
(Debtor-in-Possession as of June 7, 1999)
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Dollar amounts in thousands)
(Unaudited)
Accumulated
Capital in Compreh- Other
Common Excess of sive Retained Comprehen- Treasury
Stock Par Value (Loss) Earnings sive (Loss) SECT Stock Total
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Six Months Ended April 30, 1999
Balance at October 31, 1998 $51,669 $586,509 $216,065 $(60,289) $(13,525) $(113,579) $666,850
Comprehensive income (loss):
Net (loss) (90,657) (90,657) (90,657)
Other Comprehensive (loss):
Currency translation adjustment (13,250) (13,250) (13,250)
--------
Total Comprehensive (loss) (103,907)
========
Dividends paid ($.10 per share) (4,735) (4,735)
Dividends on shares held by SECT 143 143
866,500 shares purchased by employee
and director benefit plans (10,035) 15,583 5,548
Adjust SECT shares to market value 448 (448) -
Amortization of unearned compensation
on restricted stock 349 349
==================== =====================================================
Balance at April 30, 1999 $51,669 $577,414 $120,673 $(73,539) $(13,973) $(97,996) $564,248
==================== =====================================================
Six Months Ended April 30, 1998
Balance at October 31, 1997 $51,607 $625,358 $253,727 $(41,440) $(56,430) $(83,162) $749,660
Comprehensive income (loss):
Net income 58,079 58,079 58,079
Other Comprehensive (loss):
Currency translation adjustment (5,738) (5,738) (5,738)
--------
Total Comprehensive (loss) (52,341)
========
Exercise of 22,256 stock options 22 432 454
Dividends paid ($.20 per share) (9,572) (9,572)
Dividends on shares held by SECT 287 287
Adjust SECT shares to market value (15,944) 15,944 -
113,043 shares purchased by employee
and director benefit plans 1,944 3,187 5,131
670,000 shares acquired as treasury
stock (30,086) (30,086)
Amortization of unearned compensation
on restricted stock 349 349
==================== =====================================================
Balance at April 30, 1998 $51,629 $612,426 $302,234 $(47,178) $(40,486) $(110,061) $768,564
==================== =====================================================
See accompanying notes to financial statements
</TABLE>
HARNISCHFEGER INDUSTRIES, INC.
(Debtor-in-Possession as of June 7, 1999)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1999
(Dollar amounts in thousands except per share amounts)
(a) Reorganization under Chapter 11
On June 7, 1999, Harnischfeger Industries, Inc. (the "Company") and its
domestic operating subsidiaries (collectively, the "Debtors") filed
voluntary petitions for reorganization under Chapter 11 of the U.S.
Bankruptcy Code (the "Bankruptcy Code") within the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") and
orders for relief were entered. The Debtors' Chapter 11 cases have been
consolidated for the purpose of joint administration under case number
99-2171. The Debtors are currently operating their businesses as
debtors-in-possession pursuant to the Bankruptcy Code. Pursuant to the
Bankruptcy Code, actions to collect prepetition indebtedness of the
Debtors and other contractual obligations against the Debtors may not be
enforced. These claims will be reflected in subsequent filings in the
balance sheet as "liabilities subject to compromise." In addition, under
the Bankruptcy Code, the Debtors may assume or reject executory contracts,
including leases. Additional claims may arise from such rejections, and
from the determination by the court (or agreed by the parties in interest)
to allow claims for contingencies and other disputed amounts. However, the
Debtors have not yet completed their review of all their prepetition
executory contracts and leases for assumption or rejection. See also notes
(h) - Long-Term Obligation and (o) Subsequent Events.
The Debtors received approval from the Bankruptcy Court to pay or
otherwise honor certain of their prepetition obligations, including
employee wages and product warranties. In addition, the Bankruptcy Court
authorized the Debtors to maintain their employee benefit programs.
Pension and savings plan funds are in trusts and protected under federal
regulations. All required contributions are current in the respective
plans.
(b) Basis of Presentation
The accompanying consolidated interim financial statements have been
prepared on a going concern basis, which contemplates continuity of
operations, realization of assets and liquidation of liabilities in the
ordinary course of business and do not reflect any adjustments that might
result if the Debtors are unable to continue as a going concern. As a
result of the Debtors' Chapter 11 filings, however, such matters are
subject to significant uncertainty. The Debtors intend to file a plan of
reorganization with the Bankruptcy Court. Continuing on a going concern
basis is dependent upon, among other things, the Debtors' formulation of
an acceptable plan of reorganization, the success of future business
operations, and the generation of sufficient cash from operations and
financing sources to meet the Debtors' obligations. The accompanying
consolidated interim financial statements do not reflect (a) the
realizable value of assets on a liquidation basis or their availability to
satisfy liabilities, (b) aggregate prepetition liability amounts that may
be allowed for claims or contingencies, or their status or priority, (c)
the affect of any changes to the Debtors' capital structure or in the
Debtors' business operations as the result of an approved plan of
reorganization, or (d) adjustments to the carrying value of assets or
liability amounts that may be necessary as the result of actions by the
Bankruptcy Court.
In the opinion of management, all adjustments necessary for the fair
presentation on a going concern basis of the results of operations for the
three and six months ended April 30, 1999 and 1998, cash flows for the six
months ended April 30, 1999 and 1998, and financial position at April 30,
1999 have been made. All adjustments made are of a normal recurring
nature, except for the adjustment related to anticipated losses on
contracts discussed in note (l) - Beloit APP Contracts. In addition, other
transactions which pertain to fiscal 1998 related to anticipated losses on
contracts discussed in note (l) - Beloit APP Contracts and
acquisitions/divestitures which are discussed in note (c) -
Acquisitions/Discontinued Operations are of a nonrecurring nature.
These financial statements should be read in conjunction with the
financial statements and the notes thereto included in the Company's
Annual Report on Form 10-K for the year ended October 31, 1998.
The results of operations for any interim period are not necessarily
indicative of the results to be expected for the full year.
(c) Acquisitions/Discontinued Operations
On March 30, 1998, the Company completed the sale of approximately 80% of
the common stock of the Company's P&H Material Handling ("Material
Handling") segment to Chartwell Investments, Inc. in a leveraged
recapitalization transaction. As such, the accompanying financial
statements have been reclassified to reflect Material Handling as a
discontinued operation. The Company retained approximately 20% of the
outstanding common stock and 11% of the outstanding voting securities of
Material Handling and holds one board of director seat in the new company.
In addition, the Company has licensed Material Handling to use the "P&H"
trademark on existing Material Handling-produced products on a worldwide
basis for periods specified in the agreement for a royalty fee payable
over a ten year period. The Company reported a $151,500 after-tax gain on
the sale of this discontinued operation in the second quarter of fiscal
1998. Proceeds consisted of $341,000 in cash and $4,800 in preferred stock
with a 12.25% payment-in-kind dividend; $7,200 in common stock was not
reflected in the Company's balance sheet or gain calculations due to the
nature of the leveraged recapitalization transaction. Net assets disposed
of in the sale aggregated $139,300. Sales and operating profit of Material
Handling for the five months ended March 30, 1998 was $130,546 and $7,447,
respectively.
On March 19, 1998, the Company completed the acquisition of Horsburgh &
Scott ("H&S") for the purchase price of $40,283. H&S is a manufacturer of
gears and gear cases, and is also involved in the distribution of parts
and service to the mining industry. The acquisition was accounted for as a
purchase transaction, with the purchase price allocated to the fair value
of specific assets acquired and liabilities assumed. Resultant goodwill is
amortized over 40 years.
(d) Restructuring Charge
In the second quarter of fiscal 1998, Beloit Corporation, a subsidiary of
the Company ("Beloit"), recorded a $65,000 restructuring charge ($31,900
after tax and minority interest). The charge included costs related to
severance for approximately 1,000 employees worldwide, facility closures,
and the disposal of machinery and equipment. Closures have been completed
of pulping-related manufacturing facilities in Sherbrooke, Quebec, Canada
and Dalton, Massachusetts. Conversion of a paper-related manufacturing
facility in the United Kingdom into a roll center of excellence is
complete. The Italian operation is expected to be converted in fiscal 1999
from a full-line manufacturing operation to a Millprosm aftermarket center
for central and southern Europe. The cash and noncash elements of the
restructuring charge approximated $32,500 and $32,500, respectively.
Management anticipates that the reserves will be substantially utilized
before the end of the fiscal year. Details of this restructuring charge
are as follows:
Original Reserve 4/30/99
Reserve Utilized Reserve
------------ ------------- ----------
Employee severance $ 25,800 $(15,092) $ 10,708
Facility closures 33,300 (33,300) -
Machinery and equipment dispositions 5,900 (4,757) 1,143
------------ ------------- ----------
Pre-tax charge $ 65,000 $(53,149) $ 11,851
============ ============= =========
(e) Inventories
Consolidated inventories consisted of the following:
April 30, October 31,
1999 1998
------------- --------------
Finished goods $ 351,284 $ 366,346
Work in process and purchased parts 217,376 198,765
Raw materials 94,520 96,920
------------- --------------
663,180 662,031
Less excess of current cost over stated
LIFO value (51,746) (51,553)
============= ==============
$ 611,434 $ 610,478
============= ==============
Inventories valued using the LIFO method represented approximately 65% and
66% of consolidated inventories at April 30, 1999 and October 31, 1998,
respectively.
(f) Research and Development Expense
Research and development costs are expensed as incurred. Such costs
incurred in the development of new products or significant improvements to
existing products amounted to $5,662 and $14,119 for the three months and
$13,064 and $24,224 for the six months ended April 30, 1999 and 1998,
respectively. Certain capital expenditures used in research activities are
capitalized and depreciated over their expected useful lives.
(g) Interest Expense - Net
Net interest expense consists of the following:
Three Months Ended Six Months Ended
April 30, April 30,
------------------------ -----------------------------
1999 1998 1999 1998
------------------------ ------------ -------------
Interest income $ 1,689 $ 2,429 $ 3,244 $ 3,953
Interest expense (23,673) (22,231) (48,146) (42,050)
======================== ============ =============
Interest expense - net $(21,984) $ (19,802) $(44,902) $ (38,097)
======================== ============ =============
(h) Long-Term Obligations
Long-term obligations at April 30, 1999 and October 31, 1998 consisted of
the following:
April 30, October 31,
1999 1998
------------------------
8.9% Debentures, due 2022 $ 75,000 $ 75,000
8.7% Debentures, due 2022 75,000 75,000
7 1/4% Debentures, due 2025
(net of discount of $1,226 and $1,233, respectively ) 148,774 148,767
6 7/8% Debentures, due 2027 (net of discount of $103
and $106, respectively) 149,897 149,894
Senior Notes, Series A through D, at
interest rates of between 8.9% and
9.1%, due 1999 to 2006 69,546 69,546
Australian Term Loan Facility, due 2000 59,508 56,169
Revolving Credit Facility 500,000 375,000
Industrial Revenue Bonds, at interest
rates of between 5.9% and 8.8%,
due 1999 to 2017 32,620 32,820
Other 9,546 19,377
------------------------
1,119,891 1,001,573
Less: Amounts payable within one year (39,212) (38,776)
========================
$1,080,679 $ 962,797
========================
The 7 1/4% debentures were issued on December 19, 1995 at a price of
99.153%. The debentures mature on December 15, 2025, are not redeemable
prior to maturity and are not subject to sinking fund requirements.
In 1996, the Company filed a shelf registration with the Securities and
Exchange Commission for the sale of up to $200,000 of debt securities. On
February 25, 1997, $150,000 of 6 7/8% debentures were issued at 99.925%.
Proceeds were used to repay of short-term indebtedness. The debentures
mature on February 15, 2027, are not redeemable by the Company prior to
maturity, and are not subject to sinking fund requirements. Each holder of
the debentures has the right to require the Company to repay the holders,
in whole or in part, on February 15, 2007, at a repayment price equal to
100% of the aggregate principal amount thereof plus accrued and unpaid
interest.
On February 17, 1998, the Company filed a shelf registration with the
Securities and Exchange Commission for $200,000 of debt securities. To
date, none of these securities have been issued. The Company also has
$50,000 of debt securities remaining under the shelf registration filed in
1996.
The Senior Notes, Series A through D, were issued in private placements
and are unsecured. The Series D Notes provide for eleven equal annual
repayments of principal plus accrued interest beginning in 1996; Series A,
B and C Notes are due at maturity in September of 1999, 1999, and 2001,
respectively.
One of the Company's Australian subsidiaries is party to a committed
three-year $90,000 Australian dollar ($59,508 U.S. dollar) term loan
facility with a group of four banks at rates expressed in relation to
Australian dollar-denominated Bank Bills of Exchange. A commitment fee is
payable on any unused portions of the loan. As of April 30, 1999, the loan
was fully utilized.
The Company is party to a committed Revolving Credit Facility Agreement
with certain domestic and foreign financial institutions that allows for
borrowings of up to $500,000 at rates expressed in relation to LIBOR and
other rates and which expires in October, 2002. A facility fee is payable
on the Revolving Credit Facility. At April 30, 1999, outstanding
borrowings under the facility were $500,000. Such borrowings bore interest
at LIBOR plus 0.325% prior to March 1, 1999 and LIBOR plus 0.5%
thereafter. At April 30, 1999 the Company was in compliance with its loan
covenants. The provisions of certain of the Company's indebtedness provide
that a bankruptcy filing triggers an event of default. See also notes (a)
- Reorganization under Chapter 11 and (o) - Subsequent Events.
Liquidity and Capital Resources - Subsequent Event
On June 7, 1999, Harnischfeger Industries, Inc. (the "Company") and its
domestic operating subsidiaries (collectively, the "Debtors") filed
voluntary petitions for reorganization under the Bankruptcy Code. The
provisions of certain of the Company's indebtedness provide that a
bankruptcy filing triggers an event of default. See also notes (a)
Reorganization under Chapter 11 and (o) - Subsequent Events. Also, on June
7, 1999, the Bankruptcy Court entered an order authorizing $235,000 in
interim debtor-in-possession financing to the Debtors. This amount
represents the initial portion under a commitment by The Chase Manhattan
Bank to provide $750,000 in financing in connection with the Debtors'
Chapter 11 cases. This new facility has a term of two years from the date
the Debtors filed for reorganization and will replace existing working
capital in the form of revolving credit, term loans, and letters of
credit. The hearing for the remainder under the financing facility has
been set for June 28, 1999.
The Company believes that the filing provides the Debtors with the
opportunity to better position themselves for a viable future. The Company
plans to continue with implementation of its initiatives to streamline its
cost structures to be in line with market requirements. Disruption of
operations relating to the Chapter 11 reorganization could adversely
affect the Debtors' relationships with their creditors, customers,
suppliers or employees. If the Company's and its subsidiaries'
relationships with their creditors, customers, suppliers or employees are
adversely affected, the Debtors' operations could be materially affected.
(i) Contingent Liabilities
At April 30, 1999, the Company was contingently liable to banks, financial
institutions, and others for approximately $444,000 for outstanding
letters of credit securing performance of sales contracts and other
guarantees in the ordinary course of business. The Company may also
guarantee performance of its equipment at levels specified in sales
contracts without the requirement of a letter of credit.
The Company is a party to litigation matters and claims which are normal
in the course of its operations. Also, as a normal part of their
operations, the Company's subsidiaries undertake certain contractual
obligations, warranties and guarantees in connection with the sale of
products or services. Although the outcome of these matters cannot be
predicted with certainty and favorable or unfavorable resolution may
affect income on a quarter-to-quarter basis, management believes that such
matters will not have a materially adverse effect on the Company's
consolidated financial position. Beloit may on occasion enter into
arrangements to participate in the ownership of or operate pulp or
papermaking facilities in order to satisfy contractual undertakings or
resolve disputes.
One of the claims against Beloit involves a lawsuit brought by Potlatch
Corporation that alleges pulp line washers supplied by Beloit failed to
perform satisfactorily. (See note (m) - Potlatch)
The Company and certain of its senior executives have been named as
defendants in a class action, entitled In re Harnischfeger Industries,
Inc. Securities Litigation, in the United States District Court for the
Eastern District of Wisconsin. This action seeks damages in an unspecified
amount on behalf of an alleged class of purchasers of the Company's common
stock, based principally on allegations that the Company's disclosures
with respect to the Indonesian contracts of Beloit discussed in note (l) -
Beloit APP Contracts violated the federal securities laws.
The Company and certain of its current and former directors have been
named defendants in a purported class action, entitled Brickell Partners,
Ltd., Plaintiff vs. Jeffery T. Grade et. al., in the Court of Chancery of
the State of Delaware. This action seeks damages of an unspecified amount
on behalf of shareholders based on allegations that the defendants failed
to explore all reasonable alternatives to maximize shareholder value.
The Company's ability to realize the unbilled receivables is discussed in
note (l) - Beloit APP Contracts.
------- --------------
The Company is also involved in a number of proceedings and potential
proceedings relating to environmental matters. Although it is difficult to
estimate the potential exposure to the Company related to these
environmental matters, the Company believes that the resolution of these
matters will not have a materially adverse effect on its consolidated
financial position or results of operations.
As a result of its bankruptcy filing described in note (a) -
Reorganization under Chapter 11 aforementioned, litigation against the
Company and its subsidiaries who filed bankruptcy is stayed.
(j) Earnings Per Share
In the first quarter of fiscal 1998, the Company adopted Statement of
Financial Accounting Standard ("SFAS") No. 128, "Earnings Per Share".
Following is the reconciliation of the numerators and denominators used to
calculate the basic and diluted earnings per share:
Three Months Ended Six Months Ended
April 30, April 30,
-----------------------------------------
1999 1998 1999 1998
Basic Earnings Per Share
- ---------------------------------------
(Loss) from continuing operations $ (74,258) $ (72,826)$ (90,657) $ (97,797)
Income from discontinued operation - 972 - 4,376
Gain on sale of discontinued operation - 151,500 - 151,500
======== ========== =======================
Net Income (loss) (74,258) $ 79,646 $ (90,657) $ 58,079
======= ========== =======================
Average common shares outstanding 46,369 46,416 46,143 46,579
(Loss) from continuing operations $ (1.60) $ (1.57) $ (1.96) $ (2.10)
Income from and net gain on sale of
discontinued operation - 3.28 - 3.35
======== ========== =======================
Net Income (loss) $ (1.60) $ 1.71 $ (1.96) $ 1.25
========= ========== =======================
Diluted Earnings Per Share
- ---------------------------------------
(Loss) from continuing operations $ (74,258) $ (72,826) $ (90,657) $ (97,797)
Income from discontinued operation - 972 - 4,376
Gain on sale of discontinued operation - 151,500 - 151,500
======= ============ =======================
Net Income (loss) $ (74,258) $ 79,646 $ (90,657) $ 58,079
======= ============ =======================
Average common shares outstanding 46,369 46,416 46,143 46,579
Assumed exercise of stock options - - - -
------ ------------ -----------------------
46,369 46,416 46,143 46,579
(Loss) from continuing operations $ (1.60) $ (1.57) $ (1.96) $ (2.10)
Income from and net gain on sale of
discontinued operation - 3.28 - 3.35
========= ========== =======================
Net Income (loss) $ (1.60) $ 1.71 $ (1.96) $ 1.25
========== ============ =======================
(k) Common Stock
In September, 1997, the Company announced that the board of directors had
authorized the repurchase of up to ten million shares of the Company's
common stock. As of April 30, 1999, the Company had repurchased 1,772,900
shares through open-market transactions at a cost of approximately
$68,263. No shares have been repurchased during fiscal 1999.
(l) Beloit APP Contracts
In fiscal 1996 and 1997, Beloit's Asian subsidiaries received orders for
four fine paper machines from Asia Pulp & Paper Co. Ltd. ("APP") for a
total of approximately $600,000. During the second quarter of fiscal 1998,
the Company identified $155,000 of additional estimated contract costs at
Beloit related to these contracts. The additional costs primarily related
to non-proprietary equipment, installation and erection, freight and other
site construction costs, and overruns resulting from changes in estimates
of costs to complete related to these complex, large-scale projects.
The first two machines have been substantially paid for and installed at
APP facilities in Indonesia. Beloit sold approximately $44,000 of
receivables from APP on these first two machines to a financial
institution. The machines are currently in the start-up/optimization phase
and are required to meet certain contractual performance tests. The
contracts provide for potential liquidated damages, including performance
damages, in certain circumstances. The Company is having discussions with
APP on certain claims and back charges on the first two machines.
The two remaining machines have been substantially manufactured, are in
Beloit's or Beloit's Asian subsidiaries' possession and are carried on the
Consolidated Balance Sheet at April 30, 1999 as unbilled receivables of
approximately $180,000. This amount is net of a $46,000 down payment
received from APP. In addition, the Company repurchased various note
receivables from APP in December 1998 and February 1999 of $2,770 and
$16,230, respectively which had previously been sold to a financial
institution. The Company has issued letters-of-credit ("LOCs") in the
amount of the down payment. To date, APP has been unable to secure
financing for these two machines. In addition, Beloit is working with
vendors which supplied material and parts on these machines to extend
payment terms.
On December 15, 1998, Beloit's Asian subsidiaries declared APP in default
on the contracts for the two remaining machines, concluding that APP has
not acted in good faith and is unwilling to pay its obligations or is
incapable of securing financing for these two paper machines.
Consequently, on December 16, 1998, Beloit's Asian subsidiaries filed for
arbitration in Singapore for the full payment from APP for the second two
machines as well as at least $125,000 in damages and delay costs. The
claim may be adjusted if the machines are sold to another customer.
On December 16, 1998, APP filed a notice of arbitration in Singapore
against Beloit's Asian subsidiaries seeking a full refund of approximately
$46,000 paid to Beloit's Asian subsidiaries for the second two machines
and claiming that Beloit's Asian subsidiaries had an obligation under the
purchase contracts to secure financing. APP also seeks recovery of other
damages it alleges were caused by Beloit's Asian subsidiaries' claimed
breaches. In addition, APP seeks a declaration in the arbitration that it
has no liability under certain promissory notes. Also, APP has filed for
and received an injunction from the Singapore courts that prohibit Beloit
from acting on the notes receivable from APP except for in the Singapore
arbitration. Beloit and it's Asian subsidiaries will vigorously defend
against all of APP's assertions and also will proceed without delay to
mitigate APP's obligations for damages by seeking other customers for
these world-class machines. APP has attempted to draw on approximately
$15,900 of existing LOCs issued by Banca Nazionale del Lavaro ("BNL") in
connection with the contracts for the second two machines. The Company has
filed for and received a preliminary injunction that prohibits BNL from
executing payment under the drawing. The final disposition of the
Company's request for a permanent injunction remains pending with the
United States District Court for the Eastern District of Wisconsin. On
January 4, 1999, the Company placed funds on deposit with BNL to provide
for payment under the LOCs should the permanent injunction not be granted.
To mitigate APP's damages and to improve short-term liquidity, Beloit's
Asian subsidiaries are seeking to sell these two machines to alternative
customers. The Company recorded an $87,000 reserve in the second quarter
against the possible decrease in realizable value of certain paper
machines for Asian customers, primarily the third and fourth paper
machines ordered by APP (designated as #811 and #812 by Beloit). This
reserve reflects the offering in the second quarter of one machine at a
significant discount to improve short-term liquidity. In the event APP
does not pay for these machines and the Company is unable to sell these
paper machines to another customer, it may have a materially adverse
effect on its consolidated financial position or results of operations.
(m) Potlatch
On April 2, 1999 the Supreme Court of Idaho vacated the judgement of the
Idaho District Court in the Potlatch lawsuit and remanded the case for a
new trial. Filed originally in 1995, the Potlatch lawsuit related to a
1989 purchase of pulp line washers supplied by Beloit for less than
$15,000. In June, 1997, a Lewiston, Idaho jury awarded Potlatch $95,000 in
damages in the case which, together with fees, costs and interest to April
2, 1999, approximated $120,000. This litigation has been stayed as a
result of the bankruptcy filings. See note (a) - Reorganization under
Chapter 11.
(n) Other Comprehensive Income
In the first quarter of fiscal 1999, the Company adopted SFAS No.130,
"Reporting Comprehensive Income", which established standards for
reporting and displaying comprehensive income and its components in a
financial statement that is displayed with the same prominence as other
financial statements.
(o) Subsequent Events
On June 7, 1999 the Debtors filed voluntary petitions for reorganization
under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy
Court for the District of Delaware. The filings allow the Debtors an
opportunity to better position themselves for a viable future. The Debtors
will continue to implement initiatives to streamline their cost structures
in line with market requirements. In connection with the filing, the
Debtors have received a commitment for debtor-in-possession financing of
$750,000. See notes (a) - Reorganization under Chapter 11 and (h) -
Long-Term Obligations.
(p) Receivables Facilities
On February 26, 1999, the Company established two facilities under which
receivables were sold to two newly formed subsidiaries which in turn sold
receivables to The Chase Manhattan Bank, as administrative agent, and
certain other purchasers. The receivables companies were not among the
Company's subsidiaries that filed petitions for reorganization under
Chapter 11 of the Bankruptcy Code on June 7, 1999. Approximately $45,000
was outstanding under these facilities on June 7, 1999. The receivables
companies are separate and distinct from the Company. Creditors of the
Company do not have a direct claim on the assets of the receivables
companies.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
SIX MONTHS ENDED APRIL 30, 1999 AND 1998
(Dollar amounts in thousands except per share amounts)
On June 7, 1999, the Company filed voluntary petitions for reorganization under
Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the
District of Delaware in an action that covers the parent company and its U.S.
based operating subsidiaries.
The commentary in Management's Discussion and Analysis contains forward-looking
statements. When used in this document, terms such as "anticipate", "believe",
"estimate", "expect", "indicate", "may be", "objective", "plan", "predict", and
"will be" are intended to identify such statements. Forward-looking statements
are subject to certain risks, uncertainties and assumptions which could cause
actual results to differ materially from those projected, including those,
without limitation, described in Item 5. Other Information - "Cautionary
Factors" in Part II of this report.
Net loss for the six months ended April 30, 1999 amounted to ($90,657), or
($1.96) per basic share, as compared to net income of $58,079, or $1.25 per
basic share for the six months ended April 30, 1998. The net loss in 1999
included pre-tax anticipated losses on contracts of ($87,000). Net income in
1998 included a pre-tax restructuring charge of ($65,000) and anticipated losses
on contracts of $(164,400), offset by income from and a gain on sale from
discontinued operation of $151,500.
Basic and diluted earnings per share calculations for the first six months of
1999 and 1998 were based on 46,143 and 46,579 average shares outstanding,
respectively.
Significant factors contributing to the $7,140 improvement in loss from
continuing operations for the first six months of 1999 as compared to 1998
included: (1) a $64,525 decrease in operating losses as described in the Segment
Information section which follows, offset by (2) a $6,805 increase in interest
expense, (3) a $30,200 decrease in the income tax benefit due to lower pre-tax
losses and (4) a $20,380 decrease in minority interest.
<TABLE>
<CAPTION>
Segment Information
Operating results of the Company's business segments for the three months ended
April 30, 1999 and 1998 are summarized as follows:
Backlog at
Net Sales Operating Profit Orders Booked End of Period
----------------------- ----------------------- -------------------- ------------------------
1999 1998 1999 1998 1999 1998 04/99 01/99
------------ ---------- ----------- ----------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mining Group $294,334 $280,746 $ 20,965 $ 23,543 $240,497 $331,003 $368,719 $ 422,556
Pulp and Paper Machinery 193,790 197,093 (24,965) (7,655) 171,397 173,958 300,103 (A) 569,996
Anticipated Losses on Contracts (87,000) (82,400)
Restructuring Charge (65,000)
---------- ---------- ----------- --------- -------- --------- -------- ---------
Total Pulp and Paper Machinery 193,790 197,093 (111,965) (155,055) 171,397 173,958 300,103 569,996
---------- ---------- ----------- --------- -------- --------- -------- ---------
Total Business Segments 488,124 477,839 (91,000) (131,512) 411,894 504,961 668,822 992,552
========== ========== ======== ========= ========= =========
Corporate Administration (4,950) (4,926)
--------- ---------
Operating (Loss) (95,950) (136,438)
========== =========
(A) Backlog has been reduced by $247,500 due to elimination of remaining backlog
related to the APP orders ($72,000) and to other inactive orders in the
backlog, primarily in Brazil and Russia.
</TABLE>
<TABLE>
<CAPTION>
Segment Information
Operating results of the Company's business segments for the six months ended
April 30, 1999 and 1998 are summarized as follows:
Backlog at
Net Sales Operating Profit Orders Booked End of Period
----------------------- ----------------------- -------------------- ------------------------
1999 1998 1999 1998 1999 1998 04/99 10/98
------------ ---------- ----------- ----------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mining Group $558,771 $601,868 $ 36,062 $ 62,070 $541,484 $634,343 $368,719 $ 386,006
Pulp and Paper Machinery 385,603 433,815 (46,295) 6,852 295,982 477,334 300,103 (A) 637,224
Anticipated Losses on Contracts (87,000) (164,400)
Restructuring Charge (65,000)
---------- ---------- ----------- --------- -------- --------- -------- ---------
Total Pulp and Paper Machinery 385,603 433,815 (133,295) (222,548) 295,982 477,334 300,103 637,224
---------- ---------- ----------- --------- -------- --------- -------- ---------
Total Business Segments 944,374 1,035,683 (97,233) (160,478) 837,466 1,111,677 668,822 1,023,230
========== ========== ======== ========= ========= =========
Corporate Administration (9,263) (10,543)
--------- ---------
Operating (Loss) (106,496) (171,021)
========== =========
(A) Backlog has been reduced by $247,500 due to elimination of remaining backlog
related to the APP orders ($72,000) and to other inactive orders in the
backlog, primarily in Brazil and Russia.
</TABLE>
<PAGE>
Segment Information - Continuing Operations
Net sales of the Mining Equipment segment were $558,771 and $601,868 for the
first six months of 1999 and 1998, respectively. Operating profit decreased to
$36,062 for the first six months of 1999 compared to $62,070 in 1998. The
decrease in sales and operating profit is primarily due to lower original
equipment sales resulting from ongoing weakness in the coal and copper mining
markets, partially offset through improved aftermarket sales. Reduced operating
profits also reflected decreases in absorption of manufacturing costs related to
lower sales and manufacturing direct labor hours. Cost reduction efforts
initiated in the latter part of fiscal 1998 improved operating profit by
$28,300. The surface and underground mining machinery businesses have both
maintained their overall market positions and their product by product price
realization. Bookings for the first six months of 1999 amounted to $541,484 as
compared to $634,343 for the same period in 1998.
The Pulp and Paper Machinery segment ("Beloit") contributed sales of $385,603
and an operating loss of $46,295 before a reserve of $87,000 established during
the first six months of 1999 against the possible decrease in realizable value
of certain paper machines for Asian customers, primarily the third and fourth
paper machines ordered by APP. This reserve reflects the offering of one of
these machines at significant discount in the second quarter to improve
short-term liquidity. This compared to net sales of $433,815 and an operating
gain of $6,852, before restructuring charge of $65,000 and anticipated losses on
contracts of $164,400, for the first six months of 1998. Sales decreased 11% in
1999 over 1998, due primarily to a decrease in sales of original equipment
caused by the weak global pulp and paper markets. Operating results were
adversely impacted by the lower sales levels and a decrease in absorption of
manufacturing costs related to lower sales and reduced manufacturing direct
labor hours. Also, start-up costs and initial operating losses at Princeton
Paper Company LLC of $12,885 negatively impacted results. Beloit became
responsible for the operations of Princeton Paper, a Fitchburg, Massachusetts
pulp and paper mill, as a result of a settlement with holders of bonds for the
initial construction of the facility, for which Beloit provided equipment.
Princeton Paper is obligated to make lease payments over fifteen years with a
present value aggregating $54,000. Cost reduction efforts initiated in the
latter part of fiscal 1998 and first part of fiscal 1999 reduced the operating
loss by $33,700. Bookings for the first six months of 1999 amounted to $295,982
as compared to $477,334 for the same period in 1998. Overall, order backlog has
been reduced by $247,500 to reflect the removal of the remaining portion of the
backlog related to the APP equipment ($72,000), as well as the removal of other
inactive orders, primarily in Brazil and Russia due to those countries' weakened
financial condition.
In addition, Beloit continues to suffer from a prolonged global depression in
demand for pulp and paper machinery. While proposal activity strengthens, the
conversion rate of proposals into confirmed bookings has not accelerated as
projects continue to be pushed out in time. Aftermarket activity in Beloit's
Millprosm initiative continues to grow in key markets, but at low, single-digit
rates. Cost-reduction efforts also continue as worldwide operations headcount
was reduced by about 500 with the announced closing of one of two major
Wisconsin plants and the foundry in Poland and the conversion of the largest
European facility into a Millpro service center. Selected reductions in the
workforce included a combination of layoffs and shortened workweeks in a wide
variety of facilities in North America. These temporary measures allow the
flexibility to quickly respond to changing customer needs and to retain key
resources for the cyclical upturn.
In the second quarter of fiscal 1998, Beloit recorded a $65,000 restructuring
charge ($31,900 after tax and minority interest). The charge included costs
related to severance for approximately 1,000 employees worldwide, facility
closures, and the disposal of machinery and equipment. Closures have been
completed of pulping-related manufacturing facilities in Sherbrooke, Quebec,
Canada and Dalton, Massachusetts. Conversion of a paper-related manufacturing
facility in the United Kingdom into a roll center of excellence is complete. The
Italian operation is expected to be converted in fiscal 1999 from a full-line
manufacturing operation to a Millprosm aftermarket center for central and
southern Europe. The cash and noncash elements of the restructuring charge
approximated $32,500 and $32,500, respectively. Management anticipates that the
reserves will be substantially utilized before the end of the fiscal year.
Details of this restructuring charge are as follows:
Original Reserve 4/30/99
Reserve Utilized Reserve
------------ ------------- ----------
Employee severance $ 25,800 $(15,092) $ 10,708
Facility closures 33,300 (33,300) -
Machinery and equipment dispositions 5,900 (4,757) 1,143
------------ ------------- ----------
Pre-tax charge $ 65,000 $(53,149) $ 11,851
============ ============= =========
Income Taxes
The Company's estimated annual effective tax rate for continuing operations for
the first six months of 1999 was 34% compared to a 35% federal statutory tax
rate. The effective rate differs from the statutory rate because of tax credits,
state taxes and differences in foreign and U.S. tax rates.
Liquidity and Cash Flows
The Company's capital structure at April 30, 1999 and October 31, 1998 were as
follows:
April 30, October 31,
1999 1998
------------ ---------------
Short-term notes payable $ 164,716 $ 117,607
Long-term obligations, including current portion 1,119,891 1,001,573
------------ ---------------
1,284,607 1,119,180
Minority interest 35,322 43,838
Shareholders' equity 564,248 666,850
------------ ---------------
Total capitalization $1,884,177 $1,829,868
============ ===============
Debt to capitalization ratio 68.2% 61.2%
============ ===============
Cash flow used by operating activities was $96,380 for the six months ended
April 30, 1999 compared to cash flow used by operating activities of $274,000
for the comparable period in 1998. The difference in cash flow between periods
is primarily the result of lower increases in accounts receivable and
inventories in the first half of fiscal 1999, and effects of gain on sale of
discontinued operation and restructuring charge of fiscal 1998.
Cash flow used by investment activities was $58,743 for the six months ended
April 30, 1999 compared to cash flow provided by investment activities of
$354,673 for the comparable period in 1998. The change is primarily due to
proceeds from the sale of J&L Fiber Services and Material Handling during the
first half of fiscal 1998.
Cash provided by financing activities in the first six months of fiscal 1999 was
$160,999 compared to cash flow used by financing activities of $100,807 in 1998.
The difference was primarily due to treasury stock purchases in the first half
of 1998 and activities in short-term notes payable.
As of April 30, 1999, the Company maintained the following borrowing facilities:
(1) A Revolving Credit Facility which expires in October 2002, between the
Company and certain domestic and foreign financial institutions allows
for borrowings of up to $500,000 at rates expressed in relation to LIBOR
and other rates. At April 30, 1999, there were direct outstanding
borrowings of $500,000 under the facility. Such borrowings bore interest
at LIBOR plus 0.325% prior to March 1, 1999 and LIBOR plus 0.5%
thereafter.
(2) Various uncommitted domestic credit facilities of approximately $20,000
to further supplement short-term working capital requirements. At April
30, 1999, there were $20,000 in borrowings outstanding under these
facilities. Short-term bank credit lines of foreign subsidiaries were
approximately $155,000, of which approximately $122,000 was outstanding
at April 30, 1999.
(2) In February 1998, the Company filed a shelf registration with the
Securities and Exchange Commission for $200,000 of debt securities. To
date, none of these securities have been issued. The Company also has
$50,000 of debt securities remaining under a shelf registration filed in
1996.
At April 30, 1999 the Company was in compliance with its loan covenants.
Liquidity and Capital Resources - Subsequent Event
On June 7, 1999, Harnischfeger Industries, Inc. (the "Company") and its domestic
operating subsidiaries (collectively, the "Debtors") filed voluntary petitions
for reorganization under the Bankruptcy Code. The provisions of certain of the
Company's indebtedness provide that a bankruptcy filing triggers an event of
default. See also notes (a) - Reorganization under Chapter 11, (h) - Long-Term
Obligation and (o) - Subsequent Events. Also, on June 7, 1999, the Bankruptcy
Court entered an order authorizing $235,000 in interim debtor-in-possession
financing to the Debtors. This amount represents the initial portion under a
commitment by The Chase Manhattan Bank to provide $750,000 in financing in
connection with the Debtors' Chapter 11 cases. This new facility has a term of
two years from the date the Debtors filed for reorganization and will replace
existing working capital in the form of revolving credit, term loans, and
letters of credit. The hearing for the remainder under the financing facility
has been set for June 28, 1999.
The Company believes that the filing provides the Debtors with the opportunity
to better position themselves for a viable future. The Company plans to continue
with implementation of its initiatives to streamline its cost structures to be
in line with market requirements. Disruption of operations relating to the
Chapter 11 reorganization could adversely affect the Debtors' relationships with
their creditors, customers, suppliers or employees. If the Company's and its
subsidiaries' relationships with their creditors, customers, suppliers or
employees are adversely affected, the Debtors' operations could be materially
affected.
Acquisitions/Discontinued Operations
On March 30, 1998, the Company completed the sale of approximately 80% of the
common stock of the Company's P&H Material Handling ("Material Handling")
segment to Chartwell Investments, Inc. in a leveraged recapitalization
transaction. As such, the accompanying financial statements have been
reclassified to reflect Material Handling as a discontinued operation. The
Company retained approximately 20% of the outstanding common stock and 11% of
the outstanding voting securities of Material Handling and holds one Board of
Director seat in the new company. In addition, the Company has licensed Material
Handling to use the "P&H" trademark on existing Material Handling-produced
products on a worldwide basis for periods specified in the agreement for a
royalty fee payable over a ten year period. The Company reported a $151,500
after-tax gain on the sale of this discontinued operation in the second quarter
of fiscal 1998. Proceeds consisted of $341,000 in cash and $4,800 in preferred
stock with a 12.25% Payment-in-Kind dividend; $7,200 in common stock was not
reflected in the Company's balance sheet or gain calculations due to the nature
of the leveraged recapitalization transaction. Net assets disposed of in the
sale aggregated $139,300. Sales and operating profit of Material Handling for
the five months ended March 30, 1998 was $130,546 and $7,447, respectively.
On March 19, 1998, the Company completed the acquisition of Horsburgh & Scott
("H&S") for the purchase price of $40,283. H&S is a manufacturer of gears and
gear cases, and is also involved in the distribution of parts and service to the
mining industry. The acquisition was accounted for as a purchase transaction,
with the purchase price allocated to the fair value of specific assets acquired
and liabilities assumed. Resultant goodwill is amortized over 40 years.
Beloit APP Contracts
In fiscal 1996 and 1997, Beloit's Asian subsidiaries received orders for four
fine paper machines from Asia Pulp & Paper Co. Ltd. ("APP") for a total of
approximately $600,000. During the second quarter of fiscal 1998, the Company
identified $155,000 of additional estimated contract costs at Beloit related to
these contracts. The additional costs primarily related to non-proprietary
equipment, installation and erection, freight and other site construction costs,
and overruns resulting from changes in estimates of costs to complete related to
these complex, large-scale projects.
The first two machines have been substantially paid for and installed at APP
facilities in Indonesia. Beloit sold approximately $44,000 of receivables from
APP on these first two machines to a financial institution. The machines are
currently in the start-up/optimization phase and are required to meet certain
contractual performance tests. The contracts provide for potential liquidated
damages, including performance damages, in certain circumstances. The Company is
having discussions with APP on certain claims and back charges on the first two
machines.
The two remaining machines have been substantially manufactured, are in Beloit's
or Beloit's Asian subsidiaries' possession and are carried on the Consolidated
Balance Sheet at April 30, 1999 as unbilled receivables of approximately
$180,000. This amount is net of a $46,000 down payment received from APP. In
addition, the Company repurchased various note receivables from APP in December
1998 and February 1999 of $2,770 and $16,230, respectively which had previously
been sold to a financial institution. The Company has issued letters-of-credit
("LOCs") in the amount of the down payment. To date, APP has been unable to
secure financing for these two machines. In addition, Beloit is working with
vendors which supplied material and parts on these machines to extend payment
terms.
On December 15, 1998, Beloit's Asian subsidiaries declared APP in default on the
contracts for the two remaining machines, concluding that APP has not acted in
good faith and is unwilling to pay its obligations or is incapable of securing
financing for these two paper machines. Consequently, on December 16, 1998,
Beloit's Asian subsidiaries filed for arbitration in Singapore for the full
payment from APP for the second two machines as well as at least $125,000 in
damages and delay costs. The claim may be adjusted if the machines are sold to
another customer.
On December 16, 1998, APP filed a notice of arbitration in Singapore against
Beloit's Asian subsidiaries seeking a full refund of approximately $46,000 paid
to Beloit's Asian subsidiaries for the second two machines and claiming that
Beloit's Asian subsidiaries had an obligation under the purchase contracts to
secure financing. APP also seeks recovery of other damages it alleges were
caused by Beloit's Asian subsidiaries' claimed breaches. In addition, APP seeks
a declaration in the arbitration that it has no liability under certain
promissory notes. Also, APP has filed for and received an injunction from the
Singapore courts that prohibit Beloit from acting on the notes receivable from
APP except for in the Singapore arbitration. Beloit and it's Asian subsidiaries
will vigorously defend against all of APP's assertions and also will proceed
without delay to mitigate APP's obligations for damages by seeking other
customers for these world-class machines. APP has attempted to draw on
approximately $15,900 of existing LOCs issued by Banca Nazionale del Lavaro
("BNL") in connection with the contracts for the second two machines. The
Company has filed for and received a preliminary injunction that prohibits BNL
from executing payment under the drawing. The final disposition of the Company's
request for a permanent injunction remains pending with the United States
District Court for the Eastern District of Wisconsin. On January 4, 1999, the
Company placed funds on deposit with BNL to provide for payment under the LOCs
should the permanent injunction not be granted.
To mitigate APP's damages and to improve short-term liquidity, Beloit's Asian
subsidiaries are seeking to sell these two machines to alternative customers.
The Company recorded an $87,000 reserve in the second quarter against the
possible decrease in realizable value of certain paper machines for Asian
customers, primarily the third and fourth paper machines ordered by APP
(designated as #811 and #812 by Beloit). This reserve reflects the offering in
the second quarter of one machine at a significant discount to improve
short-term liquidity. In the event APP does not pay for these machines and the
Company is unable to sell these paper machines to another customer, it may have
a materially adverse effect on its consolidated financial position or results of
operations.
Potlatch
On April 2, 1999 the Supreme Court of Idaho vacated the judgement of the Idaho
District Court in the Potlatch lawsuit and remanded the case for a new trial.
Filed originally in 1995, the Potlatch lawsuit related to a 1989 purchase of
pulp line washers supplied by Beloit for less than $15,000. In June, 1997, a
Lewiston, Idaho jury awarded Potlatch $95,000 in damages in the case which,
together with fees, costs and interest to April 2, 1999, approximated $120,000.
This litigation has been stayed as a result of the bankruptcy filings. See note
(a) - Reorganization under Chapter 11.
Year 2000 Readiness Disclosure
The Year 2000 issue focuses on the ability of information systems to properly
recognize and process date-sensitive information beyond December 31, 1999. To
address this problem, the Company is in the process of implementing its Year
2000 readiness plan for information technology systems ("IT") and non-IT
equipment, facilities and systems.
The primary IT strategy for attaining Year 2000 readiness within the operating
units is the successful implementation of Year 2000-ready business processing
software. Joy has implemented SAP R/3. P&H Mining Equipment has completed
various remediation efforts and system upgrades. Beloit is in the process of a
worldwide implementation of MAPICS. All business segments anticipate their Year
2000 IT efforts to be substantially completed during the third quarter of fiscal
1999.
The Company relies on third-party suppliers for key materials and services.
Efforts have been initiated to evaluate the status of suppliers' efforts and to
determine alternatives and contingency plan requirements. These activities are
intended to provide a means of managing risk, but cannot eliminate the potential
for disruption due to third-party failure.
Facilities and office equipment such as machine tools, material distribution
equipment, telephone switches, and other common devices may be affected by the
Year 2000 problem. Mission-critical systems are scheduled to be Year 2000
compliant by July 1999.
The Company has identified product-related Year 2000 problems and is working
with customers to assist in their Year 2000 readiness efforts. It is not
possible to determine with complete certainty that all Year 2000 problems have
been identified or corrected due to testing limitations, complexity and
application of these products.
Total expenses on the project through April 30, 1999 were approximately $4,937
and were related to expenses for repair or replacement of software and hardware,
expenses associated with facilities, products and supplier reviews and project
management expenses. Expected incremental expenses related to Year 2000 are not
expected to be material to the Company's financial position. The costs of
implementing SAP and MAPICS are excluded as these system implementations were
undertaken primarily to improve business processes.
The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Contingency plans are being developed as risks are identified in the
various business processes.
Due to the general uncertainty inherent in the Year 2000 problem, resulting in
part from uncertainty of the Year 2000 readiness of third-party suppliers and
customers, the Company is unable to determine at this time whether the
consequences of Year 2000 failures will have a material impact on the Company.
The Company believes that the implementation of new business systems and the
completion of the readiness plan as scheduled will reduce the possibility of
significant interruptions of normal operations.
Market Risk
Volatility in interest rates and foreign exchange rates can impact the Company's
earnings, equity, and cash flow. From time to time the Company will undertake
transactions to hedge this impact. The instrument will be effective if it
offsets partially or completely the impact on earnings, equity, and cash flow of
this rate volatility on the Company's underlying interest rate and foreign
exchange rate exposures. In accordance with the Company's policy, at no time
will the Company execute derivatives that are speculative or that increase the
Company's risk from interest rate or foreign exchange rate fluctuations. At
April 30, 1999, there were no interest rate derivatives. Foreign exchange
derivatives at that date were exclusively in the form of forward exchange
contracts executed over-the-counter with several commercial banks, all of which
held investment grade credit ratings. The outstanding value of these forward
contracts at April 30, 1999, in absolute dollar terms for all currencies, was
$210,152.
The Company's accounting policy for recording gains and losses from forward
exchange contracts complies with Statement of Financial Accounting Standard
("SFAS") No. 52. In addition, the Company has adopted a Foreign Exchange Risk
Management Policy. It is a risk-averse policy in which most of the foreign
exchange exposures that impact earnings and cash flow are fully hedged, subject
to a net $5,000 self-insurance threshold of permitted exposures per currency.
Exposures that impact only equity or that do not have a cash flow impact are
generally not hedged with derivatives. There are two categories of foreign
exchange exposure that are hedged: assets and liabilities denominated in a
foreign currency and future receipts or payments denominated in a foreign
currency. These exposures normally arise from imports and exports of goods and
from intercompany lending activity.
The fair value of the Company's forward exchange contracts at April 30, 1999 is
presented in the following table by country currency converted to U.S. dollars:
Maturing in Maturing in
1999 2000
Contracts (Dollar Amounts in Thousands)
- ----------------------------------------------------------------
Australian Dollar $ 14,631 $ 664
Austrian Schilling 101 -
Canadian Dollar 323 -
Italian Lira 21,711 -
So. African Rand 20,024 5,578
U.K. Pound 89,053 13,997
U.S. Dollar 40,735 3,335
- ----------------------------------------------------------------
Other
The company has exceeded its goal of reducing 3,100 positions globally by the
end of 1999, having achieved reductions in excess of 3,400 by the end of the
second quarter. These cuts, coupled with additional cost-reduction efforts, are
delivering more than $110,000 in annualized savings at fiscal 1998 sales levels.
Selected cost-reduction plans occurred in the first half of fiscal 1999,
although some additional plans were postponed due to liquidity constraints that
negatively impacted the Company's ability to absorb one-time cash costs
associated with desired cost-reduction efforts.
On May 24, 1999, the Company's board of directors named John Nils Hanson as the
Company's Chief Executive Officer and Robert B. Hoffman as Chairman. Messrs.
Hanson and Hoffman succeed Jeffery T. Grade in these positions. In addition,
Francis M. Corby, Jr. has resigned as Executive Vice President, Finance and
Administration and Chief Financial Officer. Messrs. Grade and Corby also
resigned as directors of the Company as of May 24, 1999. The impact of
agreements related to these management changes will be reflected in the third
quarter operating results.
-----
PART II. OTHER INFORMATION
PART II. OTHER INFORMATION
Item 5 Other Information - "Cautionary Factors"
This report and other documents or oral statements which have been
and will be prepared or made in the future contain or may contain
forward-looking statements by or on behalf of the Company. Such
statements are based upon management's expectations at the time
they are made. In addition to the assumptions and other factors
referred to specifically in connection with such statements, the
following factors, among others, could cause actual results to
differ materially from those contemplated.
The realization of anticipated cost savings is subject to certain
risks including, among other things, the risks that expected cost
reductions have been overestimated, unexpected costs will be
incurred and anticipated operating efficiencies will not be
achieved.
The Company's principal businesses involve designing,
manufacturing, marketing and servicing large, complex machines for
the mining and pulp and papermaking industries. Long periods of
time are necessary to plan, design and build these machines. With
respect to new machines and equipment, there are risks of customer
acceptances and start-up or performance problems. Large amounts of
capital are required to be devoted by the Company's customers to
purchase these machines and to finance the mines and pulp and paper
mills that use these machines. The Company's success in obtaining
and managing a relatively small number of sales opportunities,
including the Company's success in securing payment for such sales
and meeting the requirements of warranties and guarantees
associated with such sales, can affect the Company's financial
performance. In addition, many projects are located in undeveloped
or developing economies where business conditions are less
predictable. In recent years, more than 50% of the Company's total
sales occurred outside the United States.
Other factors that could cause actual results to differ materially
from those contemplated include:
o Factors affecting customers' purchases of new equipment,
rebuilds, parts and services such as: production capacity,
stockpiles and production and consumption rates of coal,
copper, iron, gold, fiber, paper/paperboard, recycled paper,
steel and other commodities; the cash flows of customers; the
cost and availability of financing to customers and quality of
financing to customers and the ability of customers to obtain
regulatory approval for investments in mining and pulp and
papermaking projects; consolidations among customers; work
stoppages at customers or providers of transportation; and the
timing, severity and duration of customer buying cycles,
particularly in the pulp and paper and mining businesses.
o Factors affecting the Company's ability to capture available
sales opportunities, including: customers' perceptions of the
quality and value of the Company's products as compared to
competitors' products; whether the Company has successful
reference installations to show customers; customers'
perceptions of the health and stability of the Company as
compared to its competitors; the Company's ability to assist
with competitive financing programs and the availability of
manufacturing capacity at the Company's factories.
o Factors affecting the Company's ability to successfully manage
sales it obtains, such as: the accuracy of the Company's cost
and time estimates for major projects; the adequacy of the
Company's systems to manage major projects and its success in
completing projects on time and within budget; the Company's
success in recruiting and retaining managers and key
employees; wage stability and cooperative labor relations;
plant capacity and utilization; and whether acquisitions are
assimilated and divestitures completed without notable
surprises or unexpected difficulties.
o Factors affecting the Company's general business, such as:
unforeseen patent, tax, product, environmental, employee
health or benefit or contractual liabilities; nonrecurring
restructuring and other special charges; changes in accounting
or tax rules or regulations; and reassessments of asset
valuations for such assets as receivables inventories, fixed
assets and intangible assets; and leverage and debt service.
o Factors affecting general business levels, such as: political
turmoil and economic turmoil in major markets such as the
United States, Canada, Europe, Asia and the Pacific Rim, South
Africa, Australia and Chile; environmental and trade
regulations; and the stability and ease of exchange of
currencies.
o Factors relating to the Company's Chapter 11 filing, such as:
the possible disruption of relationships with creditors,
customers, suppliers and employees; the ability to
successfully prepare, have approved and implement a plan of
reorganization; and the availability of financing and
refinancing.
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits:
3 Bylaws of Harnischfeger Industries, Inc. dated
April 22, 1999
10 (a) Revolving Credit, Term Loan and Guarranty
Agreement dated as of June 7, 1999 among
Harnischfeger Industries, Inc. as Borrower and
The Chase Manhattan Bank, as Administrative
Agent
(b) Amendment to Supplemental Retirement and Stock
Funding Plan dated June 3, 1999
(c) Termination and Release Agreement dated as of
May 24, 1999 by and between Harnischfeger, Inc.
and Jeffery T. Grade
(d) Termination and Release Agreement dated as of
May 24, 1999 by and between Harnischfeger, Inc.
and Francis M. Corby, Jr.
11 Statement re: Calculation of Earnings Per Share
(b) Reports on Form 8-K June 7, 1999
FORM 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HARNISCHFEGER INDUSTRIES, INC.
(Registrant)
/s/ John Nils Hanson
John Nils Hanson
Vice Chairman, President and Chief
Date June 14, 1999 Executive/Operating Officer
/s/ James C. Benjamin
James C. Benjamin
Vice President and Controller
Date June 14, 1999 and Chief Accounting Officer
5/24/99
B Y L A W S
OF
HARNISCHFEGER INDUSTRIES, INC.
ARTICLE I
OFFICES
The initial registered office of the corporation required by
the Delaware General Corporation Law shall be 100 West Tenth Street, City of
Wilmington, County of New Castle, State of Delaware, and the address of the
registered office may be changed from time to time by the Board of Directors.
The principal business office of the corporation shall be
located in the City of St. Francis, County of Milwaukee, State of Wisconsin. The
corporation may have such other offices, either within or without the State of
Wisconsin, as the Board of Directors may designate or as the business of the
corporation may require from time to time.
The registered office of the corporation required by the
Wisconsin Business Corporation Law may be, but need not be, the same as its
place of business in the State of Wisconsin, and the address of the registered
office may be changed from time to time by the Board of Directors.
ARTICLE II
STOCKHOLDERS
SECTION 1. Annual Meeting. The annual meeting of stockholders
shall be held at a time and on a date in the month of February designated by
resolution adopted by the Board of Directors for the purpose of electing
directors and for the transaction of such other business as may come before the
meeting. If the day fixed for the annual meeting shall be a legal holiday in the
state where the meeting is to be held, such meeting shall be held on the next
succeeding business day. If the election of directors shall not be held on the
day designated herein for the annual meeting of the stockholders, or at any
adjournment thereof, the Board of Directors shall cause the election to be held
at a special meeting of the stockholders as soon thereafter as is convenient.
SECTION 2. Special Meeting. Special meetings of the
stockholders, for any purpose or
purposes, unless otherwise prescribed by statute, may be called by the Chief
Executive Officer or by the Board of Directors.
SECTION 3. Place of Meeting. The Board of Directors may
designate any place, either within or without the State of Delaware, as the
place of meeting for any annual meeting or for any special meeting called by the
Board of Directors. If no designation is made, or if a special meeting be
otherwise called, the place of meeting shall be the principal business office of
the corporation in the State of Wisconsin.
SECTION 4. Notice of Meeting. Written notice stating the
place, day and hour of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not less
than ten days nor more than sixty days before the date of the meeting, either
personally or by mail, by or at the direction of the Chief Executive Officer, or
the Secretary, or the officer or persons calling the meeting, to each
stockholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be given when deposited in the United States mail, addressed
to the stockholder at the stockholder's address as it appears on the records of
the corporation, with postage thereon prepaid. Any previously scheduled meeting
of the stockholders may be postponed, and any special meeting of the
stockholders may be cancelled, by resolution of the Board of Directors upon
public notice given prior to the date previously scheduled for such meeting of
stockholders.
SECTION 5. Fixing of Record Date. For the purpose of
determining stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or entitled to receive payment of any
dividend, or in order to make a determination of stockholders for any other
proper purpose, the Board of Directors of the corporation may fix in advance a
date as the record date for any such determination of stockholders, such date in
any case to be not more than sixty days and, in case of a meeting of
stockholders, not less than ten days prior to the date on which the particular
action, requiring such determination of stockholders, is to be taken. If no
record date is fixed for the determination of stockholders entitled to notice of
or to vote at a meeting of stockholders, or stockholders entitled to receive
payment of a dividend, the close of business on the date next preceding the date
on which notice of the meeting is mailed or the date on which the resolution of
the Board of Directors declaring such dividend is adopted, as the case may be,
shall be the record date for such determination of stockholders. When a
determination of stockholders entitled to vote at any meeting of stockholders
has been made as provided in this section, such determination shall apply to any
adjournment thereof; provided, however, that the Board of Directors may fix a
new record date for the adjourned meeting.
SECTION 6. Voting Lists. The officer or agent having charge of
the stock ledger of the corporation shall make, at least ten days before each
meeting of stockholders, a complete list of the stockholders entitled to vote at
such meeting, or any adjournment thereof, arranged in alphabetical order, with
the address of and the number of shares held by each; which list, for a period
of ten days prior to such meeting, shall be kept at the place where the meeting
is to be held, or at another place within the city where the meeting is to be
held, which other place shall be specified in the notice of meeting and the list
shall be subject to inspection by any stockholder for any purpose germane to the
meeting, at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any stockholder during the whole time of the meeting. The
original stock ledger shall be prima facie evidence as to who are the
stockholders entitled to examine such list or ledger or to vote at any meeting
of stockholders. Failure to comply with the requirements of this section will
not affect the validity of any action taken at such meeting.
SECTION 7. Quorum. A majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
stockholders. If a quorum is present, the affirmative vote of a majority of the
shares represented at the meeting and entitled to vote on the subject matter
shall be the act of the stockholders, unless the vote of a greater number or
voting by classes is required by Delaware law, the Articles of Incorporation, or
these Bylaws. If less than a majority of the outstanding shares are represented
at a meeting, a majority of the shares so represented may adjourn the meeting
from time to time without further notice. Any stockholders' meeting, annual or
special, whether or not a quorum is present, may be adjourned from time to time
by the Chairman of the meeting without further notice. At such adjourned meeting
at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally called.
SECTION 8. Proxies. At all meetings of stockholders, a
stockholder may vote by proxy executed in writing by the stockholder or by the
stockholder's duly authorized attorney in fact. Such proxy shall be filed with
the Secretary of the corporation before or at the time of the meeting. No proxy
shall be valid after three years from the date of its execution, unless
otherwise provided in the proxy.
SECTION 9. Voting of Shares. Each outstanding share,
regardless of class, shall be entitled to one vote on each matter submitted to a
vote at a meeting of stockholders, except to the extent that the voting rights
of any class or classes are enlarged, limited or denied by the Articles of
Incorporation or in the manner therein provided.
SECTION 10. Voting of Shares by Certain Holders. Neither
treasury shares nor shares of the corporation held by another corporation, if a
majority of the shares entitled to vote in the election of directors of such
other corporation is held, directly or indirectly, by the corporation, shall be
entitled to vote or to be counted for quorum purposes. Nothing in this paragraph
shall be construed as limiting the right of the corporation to vote its own
stock held by it in a fiduciary capacity.
Shares standing in the name of another corporation, domestic
or foreign, may be voted in the name of such corporation by its President or
such other officer as the President may appoint or pursuant to any proxy
executed in the name of such corporation by its President or such other officer
as the President may appoint in the absence of express written notice filed with
the Secretary that such President or other officer has no authority to vote such
shares.
Shares held by an administrator, executor, guardian,
conservator, trustee in bankruptcy, receiver or assignee for creditors may be
voted by such administrator, executor, guardian, conservator, trustee in
bankruptcy, receiver or assignee for creditors, either in person or by proxy,
without a transfer of such shares into the name of such administrator, executor,
guardian, conservator, trustee in bankruptcy, receiver or assignee for
creditors. Shares standing in the name of a fiduciary may be voted by such
fiduciary, either in person or by proxy.
A stockholder whose shares are pledged shall be entitled to
vote such shares unless in the transfer by the pledgor on the books of the
corporation the pledgor has expressly empowered the pledgee to vote thereon, in
which case only the pledgee, or the pledgee's proxy, may represent such stock
and vote thereon.
SECTION 11. Stockholder Proposals. No proposal for a
stockholder vote shall be submitted by a stockholder (a "Stockholder Proposal")
to the corporation's stockholders unless the stockholder submitting such
proposal (the "Proponent") shall have filed a written notice setting forth with
particularity (i) the names and business addresses of the Proponent and all
Persons acting in concert with the Proponent (ii) the name and address of the
Proponent and the Persons identified in clause (i), as they appear on the
corporation's books (if they so appear), (iii) the class and number of shares of
the corporation beneficially owned by the Proponent and the Persons identified
in clause (i); (iv) a description of the Stockholder Proposal containing all
material information relating thereto; and (v) whether the Proponent or any
Person identified in clause (i) intends to solicit proxies from holders of a
majority of shares of the corporation entitled to vote on the Stockholder
Proposal. The Proponent shall also submit such other information as the Board of
Directors reasonably determines is necessary or appropriate to enable the Board
of Directors and stockholders to consider the Stockholder Proposal. As used in
this Section, the term "Person" means any individual, partnership, firm,
corporation, association, trust, unincorporated organization or other entity.
The presiding officer at any stockholders' meeting may
determine that any Stockholder Proposal was not made in accordance with the
procedures prescribed in these Bylaws or is otherwise not in accordance with
law, and if it is so determined, such officer shall so declare at the meeting
and the Stockholder Proposal shall be disregarded.
The notice required by these Bylaws to be delivered by the
Proponent shall be delivered to the Secretary at the principal executive office
of the corporation (i) not less than ninety (90) days before nor more than one
hundred twenty (120) days before the first anniversary of the preceding date of
the previous year's annual meeting of stockholders if such Stockholder Proposal
is to be submitted at an annual stockholders' meeting (provided, however, that
in the event that the date of the annual meeting is more than thirty (30) days
before or more than sixty (60) days after such anniversary date, notice by the
stockholder to be timely must be so delivered not earlier than the close of
business on the one hundred twentieth (120th) day prior to such annual meeting
and not later than the close of business on the later of the ninetieth (90th)
day prior to such annual meeting or the tenth (10th) day following the day on
which public announcement of the date of such annual meeting is first made by
the corporation) and (ii) no later than the close of business on the fifteenth
(15th) day following the day on which notice of the date of a special meeting of
stockholders was given if the Stockholder Proposal is to be submitted at a
special stockholders' meeting (provided, however, if notice of the date of the
special meeting of stockholders was given less than twenty (20) days before the
date of the special meeting of stockholders, the notice required by these Bylaws
to be given by the Proponent shall be delivered no later than the close of
business on the fifth (5th) day following the day on which notice of the special
stockholder's meeting was given). In no event shall the public announcement of
an adjournment of an annual or special meeting commence a new time period forthe
giving of a stockholder's notice as described above.
SECTION 12. Inspectors of Election; Opening and Closing the
Polls. The Board of Directors by resolution shall appoint one or more
inspectors, which inspector or inspectors may include individuals who serve the
corporation in other capacities, including without limitation, as officers,
employees, agents or representatives, to act at the meetings of stockholders and
make a written report thereof. One or more persons may be designated as
alternate inspectors to replace any inspector who fails to act. If no inspector
or alternate has been appointed to act or is able to act at a meeting of
stockholders, the Chairman of the meeting shall appoint one or more inspectors
to act at the meeting. Each inspector, before discharging his or her duties,
shall take and sign an oath faithfully to execute the duties of inspector with
strict impartiality and according to the best of his or her ability. The
inspector shall have the duties prescribed by law.
The Chairman of the meeting shall fix and announce at the
meeting the date and time of the opening and closing of the polls for each
matter upon which the stockholders will vote at a meeting.
SECTION 13. Stockholder Consent Procedures. (a) Record Date
for Action by Written Consent. In order that the corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is adopted
by the Board of Directors, and which date shall not be more than 10 days after
the date upon which the resolution fixing the record date is adopted by the
Board of Directors. Any stockholder of record seeking to have the stockholders
authorize or take corporate action by written consent shall, by written notice
to the Secretary, request the Board of Directors to fix a record date. The Board
of Directors shall promptly, but in all events within 10 days after the date on
which such a request is received, adopt a resolution fixing the record date. If
no record date has been fixed by the Board of Directors within 10 days after the
date on which such a request is received, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting, when no prior action by the Board of Directors is required by
applicable law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
corporation by delivery to its registered office in Delaware, its principal
place of business or to any officer or agent of the corporation having custody
of the book in which proceedings of meetings of stockholders are recorded.
Delivery made to the corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested. If no record date has
been fixed by the Board of Directors and prior action by the Board of Directors
is required by applicable law, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting shall be at
the close of business on the date on which the Board of Directors adopts the
resolution taking such prior action.
(b) Inspectors of Written Consent. In the event of the
delivery, in the manner provided by Section 13(a), to the corporation of the
requisite written consent or consents to take corporate action and/or any
related revocation or revocations, the corporation shall engage nationally
recognized independent inspectors of elections for the purpose of promptly
performing a ministerial review of the validity of the consents and revocations.
For the purpose of permitting the inspectors to perform such review, no action
by written consent without a meeting shall be effective until such date as the
independent inspectors certify to the corporation that the consents delivered to
the corporation in accordance with Section 13(a) represent at least the minimum
number of votes that would be necessary to take the corporate action. Nothing
contained in this paragraph shall in any way be construed to suggest or imply
that the Board of Directors or any stockholder shall not be entitled to test the
validity of any consent or revocation thereof, whether before or after such
certification by the independent inspectors, or to take any other action
(including, without limitation, the commencement, prosecution or defense of any
litigation with respect thereto, and the seeking of injunctive relief in such
litigation).
(c) Effectiveness of Written Consent. Every written consent
shall bear the signature of each stockholder who signs the consent and no
written consent shall be effective to take the corporate action referred to
therein unless, within 60 days of the date the earliest dated written consent
was received in accordance with Section 13(a), a written consent or consents
signed by a sufficient number of holders to take such action are delivered to
the Corporation in the manner prescribed in Section 13(a).
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. General Powers. The business and affairs of the
corporation shall be managed by its Board of Directors.
SECTION 2. Number. Tenure and Qualifications. The number of
directors of the corporation shall be eleven. Two of the three classes of
Directors established by the corporation's Certificate of Incorporation shall
consist of four members and the third class shall consist of three members. Each
director shall hold office for the term provided in the Certificate of
Incorporation and until such director's successor shall have been elected and
qualified, or until such director's earlier death or resignation. No director
shall be or be deemed to be removed from office prior to the expiration of such
director's term in office by virtue of a reduction in the number of directors.
Directors need not be residents of the State of Delaware or stockholders of the
corporation.
SECTION 3. Annual Meetings. An annual meeting of the Board of
Directors shall be held without other notice than this Bylaw immediately after,
and at the same place as, the Annual Meeting of Stockholders.
SECTION 4. Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the Chairman or any two
directors. The person or persons authorized to call special meetings of the
Board of Directors may fix any place, either within or without the State of
Delaware, as the place for holding any special meeting of the Board of Directors
called by them.
SECTION 5. Notice. Notice of any special meeting shall be
given at least 48 hours previous thereto by written notice delivered personally
or mailed to each director at such director's business address, or by telegram.
If mailed, such notice shall be deemed to be given when deposited in the United
States mail so addressed, with postage thereon prepaid. If notice be given by
telegram, such notice shall be deemed to be given when the telegram is delivered
to the telegraph company. Any director may waive notice of any meeting. The
attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting and objects thereat to
the transaction of any business because of the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
SECTION 6. Quorum. A majority of the number of directors fixed
by Section 2 of this Article III shall constitute a quorum for the transaction
of business at any meeting of the Board of Directors, but if less than such
majority is present at a meeting, a majority of the directors present may
adjourn the meeting from time to time without further notice.
SECTION 7. Manner of Acting. The act of the majority of the
directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors.
SECTION 8. Nomination of Directors; Vacancies. Candidates for
director shall be nominated either (i) by the Board of Directors or a committee
appointed by the Board of Directors or (ii) by nomination at any stockholders'
meeting by or on behalf of any stockholder entitled to vote at such meeting
provided that written notice of such stockholder's intent to make such
nomination or nominations has been given, either by personal delivery or by
United States mail, postage prepaid, to the secretary of the corporation not
later than (1) with respect to an election to be held at an annual meeting of
stockholders, ninety (90) days in advance of such meeting, and (2) with respect
to an election to be held at a special meeting of stockholders for the election
of directors, the close of business on the tenth (10th) day following the date
on which notice of such meeting is first given to stockholders. Each such notice
shall set forth: (a) the name and address of the stockholder who intends to make
the nomination and of the person or persons to be nominated; (b) a
representation that the stockholder is a holder of record of stock of the
corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice; (c) a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the stockholder; (d) such other information regarding each nominee proposed by
such stockholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission had the
nominee been nominated, or intended to be nominated, by the Board of Directors;
and (e) the consent of each nominee to serve as a director of the corporation if
so elected. The presiding officer of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with the foregoing procedure.
Any vacancy occurring in the Board of Directors, including a vacancy
created by an increase in the number of directors, may be filled for the
remainder of the unexpired term by the affirmative vote of a majority of the
directors then in office although less than a quorum.
SECTION 9. Action by Directors Without a Meeting. Any action
required to be taken at a meeting of directors, or at a meeting of a committee
of directors, or any other action which may be taken at a meeting, may be taken
without a meeting if a consent in writing setting forth the action so taken
shall be signed by all of the directors or members of the committee thereof
entitled to vote with respect to the subject matter thereof and such consent
shall have the same force and effect as a unanimous vote.
SECTION 10. Participation in a Meeting by Telephone. Members
of the Board of Directors or any committee of directors may participate in a
meeting of such Board or committee by means of conference telephone or similar
communication equipment by means of which all persons participating in the
meeting can hear each other, and participating in a meeting pursuant to this
section 10 shall constitute presence in person at such meeting.
SECTION 11. Compensation. The Board of Directors, by majority
vote of the directors then in office and irrespective of any personal interest
of any of its members, shall have authority to establish reasonable compensation
of all directors for services to the corporation as directors, officers or
otherwise, or to delegate such authority to an appropriate committee. The Board
of Directors also shall have authority to provide for reasonable pensions,
disability or death benefits, and other benefits or payments, to directors,
officers and employees and to their estates, families, dependents and
beneficiaries on account of prior services rendered by such directors, officers
and employees to the corporation. The Board of Directors may be paid their
expenses, if any, of attendance at each such meeting of the Board.
SECTION 12. Presumption of Assent. A director of the
corporation who is present at a meeting of the Board of Directors at which
action on any corporate matter is taken shall be presumed to have assented to
the action taken unless such director's dissent is entered in the minutes of the
meeting or unless such director files a written dissent to such action with the
person acting as the Secretary of the meeting before the adjournment thereof or
forwards such dissent by registered mail to the Secretary of the corporation
immediately after the adjournment of the meeting. Such right to dissent shall
not apply to a director who voted in favor of such action.
SECTION 13. Validity of Contracts. No contract or other
transaction entered into by the corporation shall be affected by the fact that a
director or officer of the corporation is in any way interested in or connected
with any party to such contract or transaction, or is a party to such contract
or transaction, even though in the case of a director the vote of the director
having such interest or connection shall have been necessary to obligate the
corporation upon such contract or transaction; provided, however, that in any
such case (i) the material facts of such interest are known or disclosed to the
directors or stockholders and the contract or transaction is authorized or
approved in good faith by the stockholders or by the Board of Directors or a
committee thereof through the affirmative vote of a majority of the
disinterested directors (even though not a quorum), or (ii) the contract or
transaction is fair to the corporation as of the time it is authorized, approved
or ratified by the stockholders, or by the Board of Directors, or by a committee
thereof.
SECTION 14. Indemnification and Insurance. Each person who was
or is made a party or is threatened to be made a party to or is involved in any
action, suit, arbitration, mediation or proceeding, whether civil, criminal,
administrative or investigative, whether domestic or foreign (hereinafter a
"proceeding"), by reason of the fact that he or she, or a person of whom he or
she is the legal representative, is or was a director or officer of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
or inaction in an official capacity as a director, officer, employee or agent or
in any other capacity while serving as a director, officer, employee or agent,
shall be indemnified and held harmless by the corporation to the fullest extent
not prohibited by the General Corporation Law of the State of Delaware, as the
same exists or may hereafter be amended (but, in the case of any such amendment,
with respect to alleged action or inaction occurring prior to such amendment,
only to the extent that such amendment permits the corporation to provide
broader indemnification rights than said law permitted the corporation to
provide prior to such amendment), against all expense, liability and loss
(including without limitation attorneys' fees and expenses, judgments, fines,
ERISA excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith. Such
indemnification as to such alleged action or inaction shall continue as to a
person who has ceased after such alleged action or inaction to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that, except as provided in the
following paragraph, the corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board unless such proceeding (or part thereof) is a counter claim, cross-claim,
third party claim or appeal brought by such person in any proceeding. The right
to indemnification conferred in this Section shall be a contract right and shall
include the right to be paid by the corporation the expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that, if the General Corporation law of the State of Delaware requires,
the payment of such expenses incurred by a director or officer in his or her
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, shall be made only upon delivery to
the corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined by final
judicial decision from which there is no further appeal that such director or
officer is not entitled to be indemnified for such expenses under this Section
or otherwise. The corporation may, by action of the Board, provide
indemnification to an employee or agent of the corporation or to a director,
trustee, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise of which the corporation owns fifty
percent or more with the same scope and effect as the foregoing indemnification
of directors and officers or such lesser scope and effect as shall be determined
by action of the Board.
If a claim under the preceding paragraph is not paid in full by the
corporation within thirty days after a written claim has been received by the
corporation, the claimant may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim and, if successful in
whole or in part in any such claim or suit, or in a claim or suit brought by the
corporation to recover an advancement of expenses under this paragraph, the
claimant shall be entitled to be paid also the expense of prosecuting or
defending any such claim or suit. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the corporation) that the
claimant has not met the applicable standard of conduct which make it
permissible under the General Corporation Law of the State of Delaware for the
corporation to indemnify the claimant for the amount claimed, but the burden of
proving such defense shall be on the corporation. Neither the failure of the
corporation (including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
General Corporation Law of the State of Delaware, nor an actual determination by
the corporation (including its Board of Directors, independent legal counsel, or
its stockholders) that the claimant has not met such applicable standard of
conduct set forth in the General Corporation Law of the State of Delaware, shall
be a defense to the action or create a presumption that the claimant has not met
the applicable standard of conduct. In any suit brought by such person to
enforce a right to indemnification or to an advancement of expenses hereunder,
or by the corporation to recover an advancement of expenses hereunder, the
burden of proving that such person is not entitled to be indemnified, or to have
or retain such advancement of expenses, shall be on the corporation.
The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this
Section shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, By-law, agreement, vote of stockholders or disinterested
directors or otherwise.
The corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the corporation
would have the power to indemnify such person against such expense, liability or
loss under the General Corporation Law of the State of Delaware.
In the event that any of the provisions of this Section 14 (including
any provision within a single section, paragraph or sentence) is held by a court
of competent jurisdiction to be invalid, void or otherwise unenforceable, the
remaining provisions are severable and shall remain enforceable to the full
extent permitted by law.
SECTION 15. Committees of Directors. The Board of Directors
may, by resolution passed by a majority of the whole Board, designate one or
more committees, each committee to consist of one or more of the directors of
the corporation. The Board may designate one or more directors as alternate
committee members, who may replace any absent or disqualified member at any
committee meeting. In the absence or disqualification of a committee member, the
member or members present at any meeting and not disqualified from voting,
whether such member or members constitute a quorum, may unanimously appoint
another director to act at the meeting in place of the absent or disqualified
member. Any such committee shall have and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the Certificate of Incorporation
(except that a committee may, to the extent authorized in the resolution(s)
providing for the issuance of shares of stock adopted by the Board, fix any of
the preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
corporation), adopting an agreement of merger or consolidation, recommending to
the stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
Bylaws of the corporation; and, unless the resolution expressly so provides, no
such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock, or to adopt a certificate of ownership and
merger.
SECTION 16. Special Meetings of Non-Management Directors.
Notwithstanding anything to the contrary contained in these Bylaws, a special
meeting between all stockholders of the corporation and the non-management
members of the Board of Directors may be called at any time by stockholders
holding, of record or benefically, not less than one-quarter of all the shares
unconditionally entitled to vote in elections of directors. Stockholders may
request a meeting by delivering a request to the Corporate Governance Committee
of the Board of Directors setting forth in writing with particularity (i) the
names and addresses of the stockholders requesting the meeting and of their
respective representatives; (ii) a representation and evidence of ownership from
each such stockholder regarding the class and number of shares of stock of the
corporation owned by each such stockholder; and (iii) a description of the
business purpose of the meeting containing all material information relating
thereto. Such stockholders shall also submit such other information as the
Corporate Governance Committee of the Board of Directors may reasonably request,
including, without limitation, additional evidence of ownership. The Corporate
Governance Committee of the Board of Directors shall be entitled to establish
reasonable procedures relating to the conduct of such meeting including, without
limitation, the day, time and place of such meeting and who shall be entitled to
attend such meeting in addition to the stockholders and non-management members
of the Board of Directors. The Chairman of the Corporate Governance Committee of
the Board of Directors shall serve as chairman of the meeting. Such meeting
shall be held at the expense of the corporation within 45 days after the later
of the receipt of the request therefor by the Corporate Governance Committee or
the receipt of any information reasonably requested by such committee as set
forth above. The directors at any such meeting may, by resolution passed by a
majority of such directors, make recommendations to the entire Board of
Directors. No meeting called pursuant to this Section 16 shall be required to be
held at any time within six months of any other meeting called pursuant to this
Section 16 or within three months of any annual or special meeting of
stockholders.
ARTICLE IV
OFFICERS
SECTION 1. Number. The officers of the corporation shall be a
Chairman of the Board (who must be a member of the Board of Directors and who
may be a current or former employee of the corporation), a Chief Executive
Officer, a President, one or more Vice Presidents (the number thereof to be
determined by the Board of Directors), a Secretary, a Treasurer and a
Controller, each of whom shall be elected by the Board of Directors. The Board
of Directors may also elect a Vice Chairman of the Board, a Chief Operating
Officer and one or more Group Presidents and may designate one or more of the
Vice Presidents as Executive Vice Presidents or Senior Vice Presidents. Such
other officers and assistant officers and agents as may be deemed necessary may
be elected or appointed by the Board of Directors. Any two or more offices may
be held by the same person, except the offices of President and Secretary, and
the offices of President and Vice President. The Corporate Governance Committee
of the Board of Directors shall consider at least annually whether or not the
Chairman of the Board should be a past or present employee of the corporation
and shall make a recommendation to the Board of Directors based thereon. The
Chairman of the Corporate Governance Committee will be the lead member of the
non-management directors for purposes of executive sessions of the Board of
Directors when management is not present and for directing communications
between non-management directors and stockholders, including with respect to the
matters set forth in Article XIII hereof and for such other purposes as the
Board of Directors may determine.
SECTION 2. Election and Term of Office. The officers of the
corporation shall be elected annually by the Board of Directors at the first
meeting of the Board of Directors held after each annual meeting of the
stockholders. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as convenient. Each officer shall
hold office until such officer's successor shall have been duly elected or until
such officer's death or until such officer shall resign or shall have been
removed in the manner hereinafter provided.
SECTION 3. Removal. Any officer or agent elected or appointed
by the Board of Directors may be removed by the Board of Directors whenever in
its judgment the best interests of the corporation would be served thereby, but
such removal shall be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment shall not of itself create contract
rights.
SECTION 4. Vacancies. A vacancy in any office because of
death, resignation, removal,
disqualification or otherwise, may be filled by the Board of Directors for the
unexpired portion of the term.
SECTION 5. Chairman of the Board. The Chairman of the Board
shall preside at all meetings of the Board of Directors and stockholders.
SECTION 6. Vice Chairman of the Board. The Vice Chairman of
the Board shall preside at all meetings of the Board of Directors and
stockholders in the absence of the Chairman of the Board.
SECTION 7. Chief Executive Officer. The Chief Executive
Officer shall be the principal executive officer of the corporation and, subject
to the control of the Board of Directors, shall supervise and control all of the
business and affairs of the corporation, and establish current and long-range
objectives, plans and policies. The Chief Executive Officer shall have
authority, subject to such rules as may be prescribed by the Board of Directors,
to appoint such agents and employees of the corporation as the Chief Executive
Officer shall deem necessary, to prescribe their powers, duties and
compensation, and to delegate authority to them. Such agents and employees shall
hold office at the discretion of the Chief Executive Officer. The Chief
Executive Officer shall have authority to sign, execute and acknowledge, on
behalf of the corporation, all deeds, mortgages, bonds, stock certificates,
contracts, leases, reports and all other documents or instruments necessary or
proper to be executed in the course of the corporation's regular business or
which shall be authorized by resolution of the Board of Directors; and, except
as otherwise provided by law or the Board of Directors, the Chief Executive
Officer may authorize the President, an Executive Vice President, Senior Vice
President, or other officer or agent of the corporation to sign, execute and
acknowledge such documents or instruments in the Chief Executive Officer's place
and stead. In general, the Chief Executive Officer shall perform all duties
incident to the office of Chief Executive Officer and such other duties as may
be prescribed by the Board of Directors from time to time. In the absence of the
Chairman of the Board and, if any, the Vice Chairman of the Board, the Chief
Executive Officer shall, when present, preside at all meetings of the
stockholders and the Board of Directors.
SECTION 8. President. The President shall direct, administer
and coordinate the activities of the corporation in accordance with policies,
goals and objectives established by the Chief Executive Officer and the Board of
Directors. The President shall also assist the Chief Executive Officer in the
development of corporate policies and goals. In the absence of both the Chairman
of the Board, the Vice Chairman of the Board, if any, and the Chief Executive
Officer, the President shall, when present, preside at all meetings of the
stockholders and the Board of Directors.
SECTION 9. The Chief Operating Officer, Group Presidents and
the Vice Presidents. In the absence of the President or in the event of the
President's death, inability or refusal to act, the Chief Operating Officer, the
Group Presidents and the Executive Vice Presidents in the order designated at
the time of their election, or, in the absence of any designation, then in the
order of their election (or in the event there be no Chief Operating Officer,
Group Presidents or Executive Vice Presidents or they are incapable of acting,
the Senior Vice Presidents in the order designated at the time of their
election, or, in the absence of any designation, then in the order of their
election) shall perform the duties of the President, and when so acting shall
have all the powers of and be subject to all the restrictions upon the
President. The Board of Directors may designate certain Vice Presidents as being
in charge of designated divisions, plants, or functions of the corporation's
business and add appropriate description to their title. Any Chief Operating
Officer, Group President or Vice President may sign, with the Secretary or an
Assistant Secretary, certificates for shares of the corporation; and shall
perform such other duties as from time to time may be assigned to such Chief
Operating Officer, Group President or Vice President by the Chief Executive
Officer or by the Board of Directors.
SECTION 10. The Secretary. The Secretary shall: (a) keep the
minutes of the stockholders' and of the Board of Directors' meetings in one or
more books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these Bylaws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents, the execution of
which on behalf of the corporation under its seal is duly authorized; (d) keep
or cause to be kept a register of the post office address of each stockholder
which shall be furnished to the Secretary by such stockholder; (e) sign with the
Chief Executive Officer, President, or any Vice President, certificates for
shares of the corporation, the issuance of which shall have been authorized by
resolution of the Board of Directors; (f) have general charge of the stock
transfer books of the corporation; and (g) in general, perform all duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to the Secretary by the Chief Executive Officer or by the Board
of Directors.
SECTION 11. The Treasurer. The Treasurer shall give a bond for
the faithful discharge of the Treasurer's duties in such sum and with such
surety or sureties as the Board of Directors shall determine. The Treasurer
shall: (a) have charge and custody of and be responsible for all funds and
securities of the corporation; receive and give receipts for monies due and
payable to the corporation from any source whatsoever, and deposit all such
monies in the name of the corporation in such banks, trust companies or other
depositories as shall be selected in accordance with the provisions of Article
VI of these Bylaws; and (b) in general, perform all of the duties incident to
the office of Treasurer and such other duties as from time to time may be
assigned to the Treasurer by the Chief Executive Officer or by the Board of
Directors.
SECTION 12. The Controller. The Controller shall: (a) keep, or
cause to be kept, correct and complete books and records of account, including
full and accurate accounts of receipts and disbursements in books belonging to
the corporation; and (b) in general, perform all duties incident to the office
of Controller and such other duties as from time to time may be assigned to the
Controller by the Chief Executive Officer or by the Board of Directors.
SECTION 13. Assistant Secretaries and Assistant Treasurers.
The Assistant Secretaries may sign with the President, or any Vice President,
certificates for shares of the corporation, the issuance of which shall have
been authorized by a resolution of the Board of Directors. Assistant Treasurers
shall respectively give bonds for the faithful discharge of their duties in such
sums and with such sureties as the Board of Directors shall determine. The
Assistant Secretaries and Assistant Treasurers, in general, shall perform such
duties as shall be assigned to them by the Secretary or the Treasurer,
respectively, or by the Chief Executive Officer or the Board of Directors.
SECTION 14. Salaries. The salaries of the officers shall be
fixed from time to time by the Board of Directors and no officer shall be
prevented from receiving such salary by reason of the fact that such officer is
also a director of the corporation.
ARTICLE V
APPOINTED EXECUTIVES
SECTION 1. Vice Presidents. The Chief Executive Officer may
appoint, from time to time, as the Chief Executive Officer may see fit, and fix
the compensation of, one or more Vice Presidents whose title will include words
describing the function of such Vice President's office and the group, division
or other unit of the Company in which such Vice President's office is located.
Each of such appointed Vice Presidents shall hold office during the pleasure of
the Chief Executive Officer, shall perform such duties as the Chief Executive
Officer may assign, and shall exercise the authority set forth in the Chief
Executive Officer's letter appointing such Vice President.
SECTION 2. Assistants. The Chief Executive Officer may
appoint, from time to time, as the Chief Executive Officer may see fit, and fix
the compensation of, one or more Assistants to the Chairman, one or more
Assistants to the President, and one or more Assistants to the Vice Presidents,
each of whom shall hold office during the pleasure of the Chief Executive
Officer, and shall perform such duties as the Chief Executive Officer may
assign.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. Contracts. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
SECTION 2. Loans. No loans shall be contracted on behalf of
the corporation and no evidences of indebtedness shall be issued in its name
unless authorized by a resolution of the Board of Directors. Such
authority may be general or confined to specific instances.
SECTION 3. Checks, Drafts, etc. All checks, drafts or other
orders for the payment of money, notes or other evidences of indebtedness issued
in the name of the corporation, shall be signed by such officer or officers,
agent or agents, of the corporation and in such manner as shall from time to
time be determined by resolution of the Board of Directors.
SECTION 4. Deposits. All funds of the corporation not
otherwise employed shall be deposited from time to time to the credit of the
corporation in such banks, trust companies or other depositories as the Board of
Directors may select.
ARTICLE VII
CERTIFICATE FOR SHARES AND THEIR TRANSFER
SECTION 1. Certificates for Shares. Certificates representing
shares of the corporation shall be in such form as shall be determined by the
Board of Directors. Such certificates shall be signed by the Chief Executive
Officer, President, or any Vice President and by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary. Any or all of the
signatures on the certificate may be a facsimile. In case any officer, transfer
agent, or registrar who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer, transfer agent, or
registrar before such certificate is issued, it may be issued by the corporation
with the same effect as if such person were such officer, transfer agent, or
registrar at the date of issue. All certificates for shares shall be
consecutively numbered or otherwise identified. The name and address of the
person to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered on the stock ledger of the
corporation.
All certificates surrendered to the corporation for transfer
shall be canceled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
canceled, except that in the case of a lost, destroyed or mutilated certificate,
a new one may be issued therefor upon such terms and indemnity to the
corporation as the Board of Directors may prescribe.
SECTION 2. Transfer of Shares. Transfer of shares of the
corporation shall be made only on the stock ledger of the corporation by the
holder of record thereof or by such person's legal representative, who shall, if
so required, furnish proper evidence of authority to transfer, or by such
person's attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the corporation, and on surrender for cancellation
of the certificate for such shares. The person in whose name shares stand on the
books of the corporation shall be deemed by the corporation to be the owner
thereof for all purposes.
ARTICLE VIII
FISCAL YEAR
The fiscal year of the corporation shall begin on the first
day of November and end on the thirty-first day of October in each year.
ARTICLE IX
DIVIDENDS
The Board of Directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and by the Articles of Incorporation.
ARTICLE X
SEAL
The Board of Directors shall provide a corporate seal which
shall be circular in form and shall have inscribed thereon the name of the
corporation and the state of incorporation and the words "Corporate Seal".
ARTICLE XI
WAIVER OF NOTICE
Whenever any notice is required to be given to any stockholder
or director of the corporation under the provisions of these Bylaws or under the
provisions of the Articles of Incorporation or under the provisions of the
Delaware General Corporation Law, a waiver thereof in writing, signed at any
time by the person or persons entitled to such notice of the meeting, shall be
deemed equivalent to the giving of such notice.
ARTICLE XII
AMENDMENTS
These Bylaws may be amended or repealed and new Bylaws may be
adopted by the Board of Directors at any regular or special meeting thereof only
with the affirmative vote of at least 80% of the total number of Directors.
ARTICLE XIII
SIGNIFICANT TRANSACTIONS
The affirmative vote or consent of the holders of a majority
of all shares of stock of the corporation unconditionally entitled to vote in
elections of directors, considered for the purpose of this Article XIII as one
class, shall be required for the adoption, approval or authorization of any
significant transaction (as hereinafter defined). A proxy statement responsive
to the requirements of the Securities Exchange Act of 1934, as amended, shall be
mailed to stockholders of the corporation for purpose of soliciting stockholder
approval of such significant transaction and shall contain at the front thereof,
in a prominent place, any recommendation as to the advisability (or
inadvisability) of the significant transaction which the directors may choose to
make and an opinion of a reputable investment banking firm as to the fairness
(or not) of the terms of such significant transaction from the point of view of
the stockholders of the corporation (such investment banking firm to be selected
by a majority of the directors and to be paid a reasonable fee for their
services by the corporation upon receipt of such opinion). As used in this
Article XIII, the term "significant transaction" shall include any sale, merger,
joint venture or similar transaction of the corporation or any of its
subsidiaries of a size in excess of 25% of the assets of the corporation and its
subsidiaries, taken as a whole, as determined in good faith by the Board. The
provisions of this Article XIII shall not be applicable to any transaction
between the corporation and any of its subsidiaries or between any subsidiaries
of the corporation.
HARNISCHFEGER INDUSTRIES, INC.
AMENDMENT TO SUPPLEMENTAL
RETIREMENT AND STOCK FUNDING PLAN
(as amended and restated December 6, 1998)
The Harnischfeger Industries, Inc. Supplemental Retirement and Stock Funding
Plan (the "Supplemental Plan") is hereby amended, effective as of June 3, 1999,
(the "Effective Date"), as set forth below.
1. The Supplemental Plan shall be renamed the "Harnischfeger Industries,
Inc. Supplemental Retirement Plan".
2. Section 1.2 of the Supplemental Plan shall be amended by deleting the
last sentence thereof in its entirety and adding the following sentence
to the end of such Section.
The purpose of this Supplemental Plan is to provide benefits
which may not be provided under the Retirement Plan because of
limitations imposed by the Code or the Act, including those
relating to nondiscrimination and maximum benefit limitations,
elections to defer compensation made by the participants, and
the granting of past (or deemed) service credits.
3. Section 2.1 of the Supplemental Plan shall be amended by deleting the
first and second sentences thereof in their entirety and adding the
following sentences at the beginning of such Section.
Subject to the conditions and limitations hereof, if a
participant in the Retirement Plan (i) has been granted credit
for prior service or elected to defer compensation which may
not be taken into account under the Retirement Plan because of
applicable nondiscrimination or other rules, (ii) has accrued
a vested pension benefit under the Retirement Plan (or would
have accrued a vested benefit if his prior service were taken
into account), and such benefit has been limited as a result
of the maximum benefit limitations imposed by Sections
401(a)(17) and 415 of the Code, or (iii) has been granted
credit for additional years of service (based upon a multitude
of actual years of service) by the Committee, in its sole
discretion, which may not be taken into account under the
Retirement Plan, he shall be a participant ("Participant") in
this Supplemental Plan and shall be entitled to receive under
this Supplemental Plan the portion of his benefits under the
Retirement Plan, determined without regard to the limitations
on inclusions of prior (or deemed) service or deferred
compensation or the maximum benefit limitations therein, which
exceeds the benefits payable to him under the Retirement Plan
after applying such limitations. If a Participant was employed
by another "Harnischfeger Company", as defined in the
Retirement Plan, and such other company also maintains a
qualified plan covering the Participant, the benefits
hereunder and under such other plan shall be limited so as to
not be duplicative and the Participant's benefits hereunder
and under such other plan shall be paid by the Company and
such other Harnischfeger Company in such proportions as the
Company shall determine.
4. Section 2.2 of the Supplemental Plan shall be amended to read in its
entirety as follows:
Payments of benefits under this Supplemental Plan shall be
paid to a Participant, or in the event of a Participant's
death to his beneficiary, at the same time and in the same
manner as his pension benefits under the Retirement Plan.
5. Section 2.3 of the Supplemental Plan shall be amended by deleting the
second sentence of such Section in its entirety and replacing it with
the following sentence.
Prior to a "Change in Control" of the Company (as defined
below), the Company shall not be required (but may do so in
its discretion) to place assets in the Rabbi Trust that may be
used to provide any benefits under this Supplemental Plan.
6. Section 2 of the Supplemental Plan shall be amended by adding the
following Section 2.4 to such Section.
2.4 Change in Control. The term "Change in Control" shall
mean a Change in Control of the Company as defined in
the Rabbi Trust.
7. Section 3 of the Supplemental Plan shall be deleted in its entirety,
and shall be of no further force or effect, and no Participant in the
Supplemental Plan shall have a right to receive Company common stock
under the Supplemental Plan.
8. Section 4.5 of the Supplemental Plan shall be amended by deleting the
last sentence of such Section and adding the following sentence to the
end thereof.
No Participant shall have any right to any benefit payments
hereunder prior to his termination of employment with the
Company.
9. Schedule A to the Supplemental Plan shall be deleted in its entirety.
10. The amendments set forth herein shall be applicable solely to
Participants who terminate employment with the Company on or after the
Effective Date. "Stock Participants" under the Plan who have terminated
employment prior to the Effective Date shall remain as Stock
Participants subject to the terms of the Plan as in effect prior to the
Effective Date.
REVOLVING CREDIT, TERM LOAN AND GUARANTY AGREEMENT
Dated as of June 7, 1999
REVOLVING CREDIT, TERM LOAN AND GUARANTY AGREEMENT, dated as
of June 7, 1999, among HARNISCHFEGER INDUSTRIES, INC., a Delaware corporation
(the "Borrower"), a debtor and debtor-in-possession in a case pending under
Chapter 11 of the Bankruptcy Code, each of the direct or indirect Subsidiaries
of the Borrower signatory hereto (each a "Guarantor" and collectively, the
"Guarantors"), each of which Guarantors referred to in this paragraph is a
debtor and debtor-in-possession in a case pending under Chapter 11 of the
Bankruptcy Code (the cases of the Borrower and the Guarantors, each a "Case" and
collectively, the "Cases"), THE CHASE MANHATTAN BANK, a New York banking
corporation ("Chase"), each of the other financial institutions from time to
time party hereto (together with Chase, the "Banks") and THE CHASE MANHATTAN
BANK, as administrative agent (in such capacity, the "Agent") for the Banks.
INTRODUCTORY STATEMENT
On June 7, 1999, the Borrower and the Guarantors filed
voluntary petitions with the Bankruptcy Court initiating the Cases and have
continued in the possession of their assets and in the management of their
businesses pursuant to Sections 1107 and 1108 of the Bankruptcy Code.
The Borrower has applied to the Banks for a revolving credit,
term loan and letter of credit facility in an aggregate principal amount not to
exceed $750,000,000, all of the Borrower's obligations under which are to be
guaranteed by the Guarantors.
The proceeds of the Loans and Letters of Credit will be used
for working capital and general corporate purposes of the Borrower and
Guarantors in accordance with the Budget and as provided for herein.
To provide guarantees and security for the repayment of the
Loans, the reimbursement of any draft drawn under a Letter of Credit and the
payment of the other obligations of the Borrower and the Guarantors hereunder
and under the other Loan Documents (including, without limitation, the
obligations of the Borrower under Section 6.03(vi) and the obligations of the
Borrower owed to Banks permitted by Section 6.03(ix)), the Borrower and the
Guarantors will provide to the Agent and the Banks the following (each as more
fully described herein):
(1) a guaranty from each of the Guarantors of the due and punctual
payment and performance of the Obligations of the Borrower
hereunder;
(2) with respect to the obligations of the Borrower and the Guarantors
hereunder, an allowed administrative expense claim in each of the Cases
pursuant to Section 364(c)(1) of the Bankruptcy Code having priority
over all administrative expenses of the kind specified in Sections
503(b) and 507(b) of the Bankruptcy Code; and
(1)
(3) with respect to the Obligations of the Borrower and the Guarantors
hereunder, a perfected first priority Lien, pursuant to Section
364(c)(2) of the Bankruptcy Code, upon (x) the capital stock of all
direct Subsidiaries of the Borrower and each of the Guarantors
(limited, in the case of foreign subsidiaries, to 65% of the interests
of the Borrower and the Guarantors in the ownership interests therein)
and (y) all cash and cash equivalents in the Letter of Credit Account
(following the Termination Date, amounts in the Letter of Credit
Account shall not be subject to the Carve-Out hereinafter referred to).
All of the claims and the Liens granted hereunder in the Cases
to the Agent and the Banks shall be subject to the Carve-Out to the extent
provided in Section 2.22.
Accordingly, the parties hereto hereby agree as follows:
SECTION 2. DEFINITIONS
SECTION 2.1 Defined Terms.
As used in this Agreement, the following terms shall have the
meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Section 2.
"Additional Credit" shall have the meaning given such term in
Section 4.02(d) hereof.
"Adjusted LIBOR Rate" shall mean, with respect to any
Eurodollar Borrowing for any Interest Period, an interest rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the quotient of
(a) the LIBOR Rate in effect for such Interest Period divided by (b) a
percentage (expressed as a decimal) equal to 100% minus Statutory Reserves. For
purposes hereof, the term "LIBOR Rate" shall mean the rate (rounded upwards, if
necessary, to the next 1/16 of 1%) at which dollar deposits approximately equal
in principal amount to such Eurodollar Borrowing and for a maturity comparable
to such Interest Period are offered to the principal London office of the Agent
in immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.
"Affiliate" shall mean, as to any Person, any other Person
which, directly or indirectly, is in control of, is controlled by, or is under
common control with such Person. For purposes of this definition, a Person (a
"Controlled Person") shall be deemed to be "controlled by" another Person (a
"Controlling Person") if the Controlling Person possesses, directly or
indirectly, power to direct or cause the direction of the management and
policies of the Controlled Person whether by contract or otherwise.
"Agent" shall have the meaning set forth in the Introduction.
"Agreement" shall mean this Revolving Credit, Term Loan and
Guaranty Agreement, as the same may from time to time be further amended,
modified or supplemented.
"Alternate Base Rate" shall mean, for any day, a rate per
annum (rounded upwards, if necessary, to the next 1/16 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 the Agent as its
prime rate in effect at its principal office in New York City; each change in
the Prime Rate shall be effective on the date such change is publicly announced.
"Base CD Rate" shall mean the sum of (a) the quotient of (i) the Three-Month
Secondary CD Rate divided by (ii) a percentage expressed as a decimal equal to
100% minus Statutory Reserves and (b) the 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 Agent from three New York City negotiable certificate of deposit dealers of
recognized standing selected by it. "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 Agent from three Federal funds brokers of
recognized standing selected by it. If for any reason the 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 Agent to
obtain sufficient quotations in accordance with the terms hereof, the Alternate
Base Rate 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 Alternate Base
Rate due to a change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate shall be effective on the effective date of such
change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate, respectively.
"Assessment Rate" shall mean for any date the annual rate
(rounded upwards, if necessary, to the next 1/100 of 1%) most recently estimated
by the Agent as the then current net annual assessment rate that will be
employed in determining amounts payable by the Agent to the Federal Deposit
Insurance Corporation (or any successor) for insurance by such Corporation (or
any successor) of time deposits made in dollars at the Agent's domestic offices.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Bank and an Eligible Assignee, and accepted by the
Agent, substantially in the form of Exhibit D.
"Bankruptcy Code" shall mean The Bankruptcy Reform Act of
1978, as heretofore and hereafter amended, and codified as
---------------
11 U.S.C. Section 101 et seq.
-- ---
"Bankruptcy Court" shall mean the United States Bankruptcy
Court for the District of Delaware or any other court having jurisdiction over
the Cases from time to time.
"Banks" shall have the meaning set forth in the Introduction.
"Board" shall mean the Board of Governors of the Federal
Reserve System of the United States.
"Borrower" shall have the meaning set forth in the
Introduction.
"Borrowing" shall mean the incurrence of Revolving Loans or
Term Loans of a single Type made from all the Tranche A Banks or Tranche B Banks
(as applicable) on a single date and having, in the case of Eurodollar Loans, a
single Interest Period (with any ABR Loan made pursuant to Section 2.15 being
considered a part of the related Borrowing of Eurodollar Loans).
"Budget" shall have the meaning set forth in Section 4.01(f).
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which banks in the State of New York are required or
permitted to close (and, for a Letter of Credit, other than a day on which the
Fronting Bank issuing such Letter of Credit is closed); provided, however, that
when used in connection with a Eurodollar Loan, the term "Business Day" shall
also exclude any day on which banks are not open for dealings in dollar deposits
on the London interbank market.
"Capital Expenditures" shall mean, for any period, the
aggregate of all expenditures (whether paid in cash and not theretofore accrued
subsequent to the date of this Agreement or accrued as liabilities during such
period and including that portion of Capitalized Leases which is capitalized on
the consolidated balance sheet of the Borrower and its Subsidiaries) net of cash
amounts received by the Borrower and its Subsidiaries from other Persons during
such period in reimbursement of Capital Expenditures made by the Borrower and
its Subsidiaries, excluding interest capitalized during construction, by the
Borrower and its Subsidiaries during such period that, in conformity with GAAP,
are required to be included in or reflected by the property, plant, equipment or
intangibles or similar fixed asset accounts reflected in the consolidated
balance sheet of the Borrower and its Subsidiaries (including equipment which is
purchased simultaneously with the trade-in of existing equipment owned by the
Borrower or any of its Subsidiaries to the extent of the gross amount of such
purchase price less the book value of the equipment being traded in at such
time), but excluding expenditures made in connection with the replacement or
restoration of assets, to the extent reimbursed or financed from insurance
proceeds paid on account of the loss of or the damage to the assets being
replaced or restored, or from awards of compensation arising from the taking by
condemnation or eminent domain of such assets being replaced.
"Capitalized Lease" shall mean, as applied to any Person, any
lease of property by such Person as lessee which would be capitalized on a
balance sheet of such Person prepared in accordance with GAAP.
"Carve-Out" shall have the meaning set forth in Section 2.22.
"Cases" shall mean the Chapter 11 Cases of the Borrower and
each of the Guarantors pending in the Bankruptcy Court.
"Change of Control" shall mean (i) the acquisition of
ownership, directly or indirectly, beneficially or of record, by any Person or
group (within the meaning of the Securities Exchange Act of 1934 and the rules
of the Securities and Exchange Commission thereunder as in effect on the date
hereof), of shares representing more than 50% of the aggregate ordinary voting
power represented by the issued and outstanding capital stock of the Borrower;
or (ii) the occupation of a majority of the seats (other than vacant seats) on
the Board of Directors of the Borrower by Persons who were neither (A) nominated
by the Board of Directors of the Borrower nor (B) appointed by directors so
nominated.
"Chase" shall have the meaning set forth in the Introduction.
"Closing Date" shall mean the date on which this Agreement has
been executed and the conditions precedent to the making of the initial Loans
set forth in Section 4.01 have been satisfied or waived, which date shall occur
as promptly as practicable after the entry of the Interim Order, but no later
than 10 days after such entry.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Collateral" shall mean the Collateral under the Pledge
Agreement.
"Commitment" shall mean, collectively, the Tranche A
Commitments, the Tranche B Commitments and the Tranche C Commitments.
"Commitment Fee" shall have the meaning set forth in Section
2.19.
"Commitment Letter" shall mean that certain Commitment Letter
dated June 4, 1999 among the Agent, Chase Securities
------------------
Inc. and the Borrower.
"Commitment Percentage" shall mean at any time, with respect
to each Bank, the percentage obtained by dividing its Tranche A Commitment,
Tranche B Commitment or Tranche C Commitment at such time by the Total Tranche A
Commitment, Total Tranche B Commitment or Total C Commitment, as applicable, at
such time.
"Consummation Date" shall mean the date of the substantial
consummation (as defined in Section 1101 of the Bankruptcy Code and which for
purposes of this Agreement shall be no later than the effective date) of a
Reorganization Plan of the Borrower or any of the Guarantors which is confirmed
pursuant to an order of the Bankruptcy Court.
"Dollars" and "$" shall mean lawful money of the United States
of America.
"EBITDA" shall mean, for any period, all as determined in
accordance with GAAP, the consolidated net income (or net loss) of the Borrower
and its Subsidiaries" for such period, plus (a) the sum of (i) depreciation
expense, (ii) amortization expense, (iii) other non-cash charges, (iv) provision
for LIFO adjustment for inventory valuation, (v) net total Federal, state and
local income tax expense, (vi) gross interest expense for such period less gross
interest income for such period, (vii) extraordinary losses, (viii) any
non-recurring charge or restructuring charge which in accordance with GAAP is
excluded from operating income, (ix) the cumulative effect of any change in
accounting principles and (x) "Chapter 11 expenses" (or "administrative costs
reflecting Chapter 11 expenses") as shown on the Borrower's consolidated
statement of income for such period less (b) extraordinary gains plus or minus
(c) the amount of cash received or expended in such period in respect of any
amount which, under clause (viii) above, was taken into account in determining
EBITDA for such or any prior period.
"Eligible Assignee" shall mean (i) a commercial bank having
total assets in excess of $1,000,000,000; (ii) a finance company, insurance
company or other financial institution or fund, in each case acceptable to the
Agent, which in the ordinary course of business extends credit of the type
contemplated herein and has total assets in excess of $200,000,000 and whose
becoming an assignee would not constitute a prohibited transaction under Section
4975 of ERISA; and (iii) any other financial institution satisfactory to the
Borrower and the Agent.
"Environmental Lien" shall mean a Lien in favor of any
Governmental Authority for (i) any liability under federal or state
environmental laws or regulations, or (ii) damages arising from or costs
incurred by such Governmental Authority in response to a release or threatened
release of a hazardous or toxic waste, substance or constituent, or other
substance into the environment.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"ERISA Affiliate" shall mean any trade or business (whether or
not incorporated) which is a member of a group of which the Borrower is a member
and which is under common control within the meaning of Section 414(b) or (c) of
the Code and the regulations promulgated and rulings issued thereunder.
"Eurocurrency Liabilities" shall have the meaning assigned
thereto in Regulation D issued by the Board, as in effect from time to time.
"Eurodollar Borrowing" shall mean a Borrowing comprised of
Eurodollar Loans.
"Eurodollar Loan" shall mean any Loan bearing interest at a
rate determined by reference to the Adjusted LIBOR Rate in accordance with the
provisions of Section 2.
"Event of Default" shall have the meaning given such term in
Section 7.
"Fees" shall collectively mean the Commitment Fees,
Letter of Credit Fees and other fees referred to in Sections
----
2.18, 2.19 and 2.20.
"Filing Date" shall mean June 7, 1999.
"Final Order" shall have the meaning given such term in
Section 4.02(d).
"Financial Officer" shall mean the Chief Financial Officer,
Controller, Treasurer or Assistant Treasurer of the Borrower.
"Fronting Bank" shall mean Chase and such other Banks (which
other Banks shall be reasonably satisfactory to the Borrower) as may agree with
Chase to act in such capacity.
"GAAP" shall mean generally accepted accounting principles
applied on a basis consistent with those used in preparing the financial
statements referred to in Section 3.04.
"Governmental Authority" shall mean any Federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality or any court, in each case whether of the United States or
foreign.
"Guarantor" shall have the meaning set forth in the
Introduction.
"Hedging Agreement" shall mean any interest rate protection
agreement, foreign currency exchange agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price hedging
agreement.
"Indebtedness" shall mean, at any time and with respect to any
Person, (i) all indebtedness of such Person for borrowed money, (ii) all
indebtedness of such Person for the deferred purchase price of property or
services (other than property, including inventory, and services purchased, and
expense accruals and deferred compensation items arising, in the ordinary course
of business), (iii) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments (other than performance, surety and
appeal bonds arising in the ordinary course of business), (iv) all indebtedness
of such Person created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (v)
all obligations of such Person under leases which have been or should be, in
accordance with GAAP, recorded as capital leases, to the extent required to be
so recorded, (vi) all reimbursement, payment or similar obligations of such
Person, contingent or otherwise, under acceptance, letter of credit or similar
facilities and all obligations of such Person in respect of Hedging Agreements;
(vii) all Indebtedness referred to in clauses (i) through (vi) above guaranteed
directly or indirectly by such Person, or in effect guaranteed directly or
indirectly by such Person through an agreement (A) to pay or purchase such
Indebtedness or to advance or supply funds for the payment or purchase of such
Indebtedness, (B) to purchase, sell or lease (as lessee or lessor) property, or
to purchase or sell services, primarily for the purpose of enabling the debtor
to make payment of such Indebtedness or to assure the holder of such
Indebtedness against loss in respect of such Indebtedness, (C) to supply funds
to or in any other manner invest in the debtor (including any agreement to pay
for property or services irrespective of whether such property is received or
such services are rendered) or (D) otherwise to assure a creditor against loss
in respect of such Indebtedness, and (viii) all Indebtedness referred to in
clauses (i) through (vii) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property (including, without limitation, accounts and
contract rights) owned by such Person, even though such Person has not assumed
or become liable for the payment of such Indebtedness.
"Insufficiency" shall mean, with respect to any Plan, the
amount, if any, of its unfunded benefit liabilities within the meaning of
Section 4001(a)(18) of ERISA.
"Interim Order" shall have the meaning given such term in
Section 4.01(b).
"Interest Expense" shall mean interest expense as determined
in accordance with GAAP.
"Interest Payment Date" shall mean (i) as to any Eurodollar
Loan, the last day of the Interest Period in respect thereof, and (ii) as to all
ABR Loans, the last calendar day of each March, June, September and December and
the date on which any ABR Loans are refinanced with Eurodollar Loans pursuant to
Section 2.11.
"Interest Period" shall mean, as to any Borrowing of
Eurodollar Loans, the period commencing on the date of such Borrowing (including
as a result of a refinancing of ABR Loans) or on the last day of the preceding
Interest Period applicable to such Borrowing and ending on the numerically
corresponding day (or if there is no corresponding day, the last day) in the
calendar month that is one or three months thereafter, as the Borrower may elect
in the related notice delivered pursuant to Sections 2.05(b) or 2.11; provided,
however, that (i) if any Interest Period would end on a day which shall not be a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day, and (ii) no Interest Period shall end later than the
Termination Date.
"Investments" shall have the meaning given such term in
Section 6.10.
"Letter of Credit Account" shall mean the account established
by the Borrower under the sole and exclusive control of the Agent maintained at
the office of the Agent at 270 Park Avenue, New York, New York 10017 designated
as the "Harnischfeger Industries, Inc. Letter of Credit Account" that shall be
used solely for the purposes set forth in Sections 2.02(b) and 2.12.
"Letter of Credit" shall mean any irrevocable letter of credit
issued pursuant to Section 2.02, which letter of credit shall be (i) a standby
or import documentary letter of credit, (ii) issued (x) in the case of standby
letters of credit, (A) in favor of lenders to foreign Subsidiaries of the
Borrower (provided that such lenders extend or continue loan terms to such
foreign Subsidiaries as may be satisfactory to the Agent) in amounts that are
satisfactory to the Agent and in form (including, without limitation, in respect
of draw conditions) satisfactory to the Agent or (B) in connection with
performance and bid requirements of the Borrower and its Subsidiaries, customer
advance and progress payments and surety bonds, in each case consistent with
past practices, (y) in the case of import documentary letters of credit, for
purposes that are consistent with past practices or (z) for such other purposes
as are reasonably acceptable to the Agent, (iii) denominated in Dollars (or
another currency acceptable to the Agent and the Fronting Bank) and (iv)
otherwise in such form as may be reasonably approved from time to time by the
Agent and the applicable Fronting Bank.
"Letter of Credit Fees" shall mean the fees payable in respect
of Letters of Credit pursuant to Section 2.20.
"Letter of Credit Outstandings" shall mean the sum of the
Tranche A Letter of Credit Outstandings and the Tranche C Letter of Credit
Outstandings.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind whatsoever (including any conditional
sale or other title retention agreement or any lease in the nature thereof).
"Loans" shall mean the Revolving Loans and the Term Loans.
"Loan Documents" shall mean this Agreement, the Pledge
Agreement, the Letters of Credit, and any other instrument or agreement executed
and delivered in connection herewith.
"Maturity Date" shall mean June 7, 2001.
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
Affiliate is making or accruing an obligation to make contributions, or has
within any of the preceding five plan years made or accrued an obligation to
make contributions.
"Multiple Employer Plan" shall mean a Single Employer Plan,
which (i) is maintained for employees of the Borrower or an ERISA Affiliate and
at least one Person other than the Borrower and its ERISA Affiliates or (ii) was
so maintained and in respect of which the Borrower or an ERISA Affiliate could
have liability under Section 4064 or 4069 of ERISA in the event such Plan has
been or were to be terminated.
"Obligations" shall mean (a) the due and punctual payment of
principal of and interest on the Loans and the reimbursement of all amounts
drawn under Letters of Credit, and (b) the due and punctual payment of the Fees
and all other present and future, fixed or contingent, monetary obligations of
the Borrower and the Guarantors to the Banks and the Agent under the Loan
Documents.
"Orders" shall mean the Interim Order and the Final Order of
the Bankruptcy Court referred to in Sections 4.01(b)
------
and 4.02(d).
"Other Taxes" shall have the meaning given such term in
Section 2.17.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or
any successor agency or entity performing substantially the same functions.
"Pension Plan" shall mean a defined benefit pension or
retirement plan which meets and is subject to the requirements of Section 401(a)
of the Code.
"Permitted Investments" shall mean:
(1) direct obligations of, or obligations the principal of and interest on which
are unconditionally guaranteed by, the United States of America (or by any
agency thereof to the extent such obligations are backed by the full faith and
credit of the United States of America), in each case maturing within twelve
months from the date of acquisition thereof;
(2) without limiting the provisions of paragraph (d) below, investments in
commercial paper maturing within six months from the date of acquisition thereof
and having, at such date of acquisition, a rating of at least "A-2" or the
equivalent thereof from Standard & Poor's Corporation or of at least "P-2" or
the equivalent thereof from Moody's Investors Service, Inc.;
(1)
(3) investments in certificates of deposit, banker's acceptances and time
deposits (including Eurodollar time deposits) maturing within six months from
the date of acquisition thereof issued or guaranteed by or placed with (i) any
domestic office of the Agent or the bank with whom the Borrower and the
Guarantors maintain their cash management system, provided, that if such bank is
not a Bank hereunder, such bank shall have entered into an agreement with the
Agent pursuant to which such bank shall have waived all rights of setoff and
confirmed that such bank does not have, nor shall it claim, a security interest
therein or (ii) any domestic office of any other commercial bank of recognized
standing organized under the laws of the United States of America or any State
thereof that has a combined capital and surplus and undivided profits of not
less than $250,000,000 and is the principal banking Subsidiary of a bank holding
company having a long-term unsecured debt rating of at least "A-2" or the
equivalent thereof from Standard & Poor's Corporation or at least "P-2" or the
equivalent thereof from Moody's Investors Service, Inc.;
(4) investments in commercial paper maturing within six months from the date of
acquisition thereof and issued by (i) the holding company of the Agent or (ii)
the holding company of any other commercial bank of recognized standing
organized under the laws of the United States of America or any State thereof
that has (A) a combined capital and surplus in excess of $250,000,000 and (B)
commercial paper rated at least "A-2" or the equivalent thereof from Standard &
Poor's Corporation or of at least "P-2" or the equivalent thereof from Moody's
Investors Service, Inc.;
(5) investments in repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clause (a) above
entered into with any office of a bank or trust company meeting the
qualifications specified in clause (c) above;
(6) investments in money market funds substantially all the assets of which are
comprised of securities of the types described in clauses (a) through (e) above;
and
(7) to the extent owned on the Filing Date, investments in the capital stock of
any direct or indirect Subsidiary of the Borrower or any Guarantor.
(1)
"Permitted Liens" shall mean (i) Liens imposed by law (other
than Environmental Liens and any Lien imposed under ERISA) for taxes,
assessments or charges of any Governmental Authority for claims not yet due or
which are being contested in good faith by appropriate proceedings and with
respect to which adequate reserves or other appropriate provisions are being
maintained in accordance with GAAP; (ii) statutory Liens of landlords and Liens
of carriers, warehousemen, mechanics, materialmen and other Liens (other than
Environmental Liens and any Lien imposed under ERISA) imposed by law created in
the ordinary course of business for amounts not yet due or which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves or other appropriate provisions are being maintained in
accordance with GAAP; (iii) Liens (other than any Lien imposed under ERISA)
incurred or deposits made in the ordinary course of business (including, without
limitation, surety bonds and appeal bonds) in connection with workers'
compensation, unemployment insurance and other types of social security benefits
or to secure the performance of tenders, bids, leases, contracts (other than for
the repayment of Indebtedness), statutory obligations and other similar
obligations or arising as a result of progress payments under government
contracts; (iv) easements (including, without limitation, reciprocal easement
agreements and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments, variations and zoning and other restrictions,
charges or encumbrances (whether or not recorded) and interest of ground
lessors, which do not interfere materially with the ordinary conduct of the
business of the Borrower or any Guarantor, as the case may be, and which do not
materially detract from the value of the property to which they attach or
materially impair the use thereof to the Borrower or any Guarantor, as the case
may be; (v) purchase money Liens (including Capitalized Leases) upon or in any
property acquired or held in the ordinary course of business to secure the
purchase price of such property or to secure Indebtedness permitted by Section
6.03(iii) solely for the purpose of financing the acquisition of such property;
and (vi) extensions, renewals or replacements of any Lien referred to in
paragraphs (i) through (v) above, provided that the principal amount of the
obligation secured thereby is not increased and that any such extension, renewal
or replacement is limited to the property originally encumbered thereby.
"Person" shall mean any natural person, corporation, division
of a corporation, partnership, trust, joint venture, association, company,
estate, unincorporated organization or government or any agency or political
subdivision thereof.
"Plan" shall mean a Single Employer Plan or a Multiemployer
Plan.
"Pledge Agreement" shall have the meaning set forth in
Section 4.01(c).
"Prepayment Date" shall mean thirty (30) days after the entry
of the Interim Order by the Bankruptcy Court if the Final Order has not been
entered by the Bankruptcy Court prior to the expiration of such thirty (30) day
period.
"Pre-Petition Payment" shall mean a payment (by way of
adequate protection or otherwise) of principal or interest or otherwise on
account of any pre-petition Indebtedness or trade payables or other pre-petition
claims against the Borrower or any Guarantor.
"Register" shall have the meaning set forth in Section 10.03
(d).
"Reorganization Plan" shall mean a plan of reorganization in
any of the Cases.
"Required Banks" shall mean, at any time, Banks holding in
excess of 50% of the Total Commitment, which Banks shall
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include the Required Tranche A Banks.
"Required Tranche A Banks" shall mean, at any time, Tranche A
Banks holding Tranche A Loans representing in excess of 50% of the aggregate
principal amount of such Tranche A Loans outstanding or, if no such Tranche A
Loans are outstanding, Tranche A Banks having Tranche A Commitments representing
in excess of 50% of the Total Tranche A Commitment.
"Required Tranche C Banks" shall mean, at any time, Tranche C
Banks having obligations to issue and/or reimburse Tranche C Letters of Credit
representing in excess of 50% of the Tranche C Letter of Credit Outstandings or,
if there are no such Tranche C Letter of Credit Outstandings, Tranche C Banks
having Tranche C Commitments representing in excess of 50% of the Total Tranche
C Commitment.
"Revolving Loans" shall have the meaning given such term in
Section 2.01(a).
"Single Employer Plan" shall mean a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (i) is maintained for employees of
the Borrower or an ERISA Affiliate or (ii) was so maintained and in respect of
which the Borrower could have liability under Section 4069 of ERISA in the event
such Plan has been or were to be terminated.
"Statutory Reserves" shall mean on any date the percentage
(expressed as a decimal) established by the Board and any other banking
authority which is (i) for purposes of the definition of Base CD Rate, the then
stated maximum rate of all reserves (including, but not limited to, any
emergency, supplemental or other marginal reserve requirement) for a member bank
of the Federal Reserve System in New York City, for new three month negotiable
nonpersonal time deposits in dollars of $100,000 or more or (ii) for purposes of
the definition of Adjusted LIBOR Rate, the then stated maximum rate for all
reserves (including but not limited to any emergency, supplemental or other
marginal reserve requirements) applicable to any member bank of the Federal
Reserve System in respect of Eurocurrency Liabilities (or any successor category
of liabilities under Regulation D issued by the Board, as in effect from time to
time). Such reserve percentages shall include, without limitation, those imposed
pursuant to said Regulation. The Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in such percentage.
"Subsidiary" shall mean, with respect to any Person (herein
referred to as the "parent"), any corporation, association or other business
entity (whether now existing or hereafter organized) of which at least a
majority of the securities or other ownership interests having ordinary voting
power for the election of directors is, at the time as of which any
determination is being made, owned or controlled by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.
"Super-majority Banks" shall have the meaning given such term
in Section 10.10(b).
"Superpriority Claim" shall mean a claim against the Borrower
and any Guarantor in any of the Cases which is an administrative expense claim
having priority over any or all administrative expenses of the kind specified in
Sections 503(b) or 507(b) of the Bankruptcy Code.
"Taxes" shall have the meaning given such term in
Section 2.17.
"Term Loans" shall have the meaning given such term in Section
2.01(b).
"Termination Date" shall mean the earliest to occur of (i) the
Prepayment Date, (ii) the Maturity Date, (iii) the Consummation Date and (iv)
the acceleration of the Loans and the termination of the Total Commitment in
accordance with the terms hereof.
"Termination Event" shall mean (i) a "reportable event", as
such term is described in Section 4043 of ERISA and the regulations issued
thereunder (other than a "reportable event" not subject to the provision for
30-day notice to the PBGC under Section 4043 of ERISA or such regulations) or an
event described in Section 4068 of ERISA excluding events described in Section
4043(c)(9) of ERISA or 29 CFR ss.ss.2615.21 or 2615.23 and excluding events
which would not be reasonably likely (as reasonably determined by the Agent) to
have a material adverse effect on the financial condition, operations, business,
properties or assets of the Borrower and the Guarantors taken as a whole, or
(ii) the withdrawal of the Borrower or any ERISA Affiliate from a Multiple
Employer Plan during a plan year in which it was a "substantial employer", as
such term is defined in Section 4001(c) of ERISA, or the incurrence of liability
by the Borrower or any ERISA Affiliate under Section 4064 of ERISA upon the
termination of a Multiple Employer Plan, or (iii) providing notice of intent to
terminate a Plan pursuant to Section 4041(c) of ERISA or the treatment of a Plan
amendment as a termination under Section 4041 of ERISA, or (iv) the institution
of proceedings to terminate a Plan by the PBGC under Section 4042 of ERISA, or
(v) any other event or condition (other than the commencement of the Cases and
the failure to have made any contribution accrued as of the Filing Date but not
paid) which would reasonably be expected to constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the imposition of any liability under Title IV of ERISA
(other than for the payment of premiums to the PBGC).
"Total Commitment" shall mean, at any time, the sum of the
Total Tranche A Commitments, the Total Tranche B Commitments and the Total
Tranche C Commitments at such time.
"Total Exposure" shall mean, at any time, the sum of (i) the
Total Tranche A Commitments, (ii) the aggregate outstanding principal amount of
the Term Loans and (iii) the Total Tranche C Commitments at such time.
"Total Tranche A Commitment" shall mean, at any time, the sum
of the Tranche A Commitments at such time.
"Total Tranche B Commitment" shall mean, at any time, (x) the
sum of the Tranche B Commitments at such time or (y) after the making of the
Tranche B Loans, the sum of the principal amount of the Tranche B Loans
outstanding at such time.
"Total Tranche C Commitment" shall mean, at any time, the sum
of the Tranche C Commitments at such time.
"Tranche A Bank" shall mean each Bank having a Tranche A
Commitment.
"Tranche A Commitment" shall mean the commitment of each
Tranche A Bank hereunder to make Revolving Loans or to issue and/or participate
in Tranche A Letters of Credit in the amount set forth opposite its name on
Annex A hereto or as may subsequently be set forth in the Register from time to
time, as the same may be reduced from time to time pursuant to this Agreement.
"Tranche A Letter of Credit" shall mean a Letter of Credit
issued pursuant to Section 2.02(a).
"Tranche A Letter of Credit Outstandings" shall mean, at any
time, the sum of (i) the aggregate undrawn stated amount of all Tranche A
Letters of Credit then outstanding plus (ii) all amounts theretofore drawn under
Tranche A Letters of Credit and not then reimbursed.
"Tranche B Bank" shall mean each Bank having a Tranche B
Commitment.
"Tranche B Commitment" shall mean the commitment of each
Tranche B Bank hereunder to make a Term Loan in the amount set forth opposite
its name on Annex B hereto or as may subsequently be set forth in the Register
from time to time, as the same may be reduced from time to time pursuant to this
Agreement.
"Tranche C Bank" shall mean each Bank having a Tranche C
Commitment.
"Tranche C Commitment" shall mean the commitment of each
Tranche C Bank hereunder to make and/or participate in Tranche C Letters of
Credit in the amount set forth opposite its name on Annex C hereto or as may
subsequently be set forth in the Register from time to time, as the same may be
reduced from time to time pursuant to this Agreement.
"Tranche C Letter of Credit" shall mean a Letter of Credit
issued pursuant to Section 2.02(b).
"Tranche C Letter of Credit Outstandings" shall mean, at any
time, the sum of (i) the aggregate undrawn stated amount of all Tranche C
Letters of Credit then outstanding plus (ii) all amounts theretofore drawn under
Tranche C Letters of Credit and not then reimbursed.
"Transferee" shall have the meaning given such term in
Section 2.17.
"Type" when used in respect of any Loan or Borrowing shall
refer to the Rate of interest by reference to which interest on such Loan or on
the Loans comprising such Borrowing is determined. For purposes hereof, "Rate"
shall mean the Adjusted LIBOR Rate and the Alternate Base Rate.
"Unused Total Tranche A Commitment" shall mean, at any time,
(i) the Total Tranche A Commitment less (ii) the sum of (x) the aggregate
outstanding principal amount of all Revolving Loans and (y) the aggregate
Tranche A Letter of Credit Outstandings.
"Unused Total Tranche B Commitment" shall mean, prior to the
making of the Term Loans, the Total Tranche B Commitment.
"Unused Total Tranche C Commitment" shall mean, at any time,
the Total Tranche C Commitment less the aggregate Tranche C Letter of Credit
Outstandings.
"Withdrawal Liability" shall have the meaning given such term
under Part I of Subtitle E of Title IV of ERISA.
SECTION 2.2 Terms Generally. The definitions in Section 1.01 shall apply equally
to both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include," "includes" and "including" shall be deemed to
be followed by the phrase "without limitation." All references herein to
Sections, Exhibits and Schedules shall be deemed references to Sections of, and
Exhibits and Schedules to, this Agreement unless the context shall otherwise
require. Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with GAAP, as in
effect from time to time; provided, however, that for purposes of determining
compliance with any covenant set forth in Section 6, such terms shall be
construed in accordance with GAAP as in effect on the date of this Agreement
applied on a basis consistent with the application used in the Borrower's
audited financial statements referred to in Section 3.04.
SECTION 3. AMOUNT AND TERMS OF CREDIT.
SECTION 3.1 Commitments of the Banks.
(1) Each Tranche A Bank severally and not jointly with the other Tranche A Banks
agrees, upon the terms and subject to the conditions herein set forth, to make
revolving credit loans (each a "Revolving Loan" and collectively, the "Revolving
Loans") to the Borrower at any time and from time to time during the period
commencing on the date hereof and ending on the Termination Date (or the earlier
date of termination of the Total Tranche A Commitment) in an aggregate principal
amount not to exceed, when added to such Tranche A Bank's Tranche A Commitment
Percentage of the then aggregate Tranche A Letter of Credit Outstandings, the
Tranche A Commitment of such Tranche A Bank, which Revolving Loans may be repaid
and reborrowed in accordance with the provisions of this Agreement. At no time
shall the sum of the then outstanding aggregate principal amount of the
Revolving Loans plus the then aggregate Tranche A Letter of Credit Outstandings
exceed the Total Tranche A Commitment of $350,000,000 as the same may be reduced
from time to time pursuant to Section 2.09.
(2) Each Tranche B Bank severally and not jointly with the other Tranche B Banks
agrees, upon the terms and subject to the conditions herein set forth, to make
term loans (each a "Term Loan" and collectively, the "Term Loans") to the
Borrower within two Business Days after the entry by the Bankruptcy Court of the
Final Order, subject to the satisfaction of the conditions set forth in Section
4.02, in an aggregate principal amount not to exceed the Tranche B Commitment of
such Tranche B Bank. At no time shall the sum of the then outstanding aggregate
principal amount of the Term Loans exceed the Total Tranche B Commitment of
$200,000,000.
(3) Each Borrowing shall be made by the applicable Banks pro rata in accordance
with their respective Commitments; provided, however, that the failure of any
Bank to make any Loan shall not in itself relieve the other Banks of their
obligations to lend.
(1)
(4) At no time shall the sum of the then outstanding aggregate principal amount
of the Loans plus the then aggregate Letter of Credit Outstandings exceed the
Total Commitment of $750,000,000, as the same may be reduced from time to time
pursuant to Section 2.09.
(5) Notwithstanding anything to the contrary herein, the Agent shall have the
right to determine, after consultation with the Borrower, a reallocation of the
Commitments in Tranches A, B and C (and the sublimits therein), provided that
such reallocation by the Agent shall not effect the amount of the Total
Commitment.
SECTION 3.2 Letters of Credit; Tranche C Commitment.
(1) Upon the terms and subject to the conditions herein set forth, the Borrower
may request a Fronting Bank, at any time and from time to time after the date
hereof and prior to the Termination Date, to issue, and, subject to the terms
and conditions contained herein, such Fronting Bank shall issue, for the account
of the Borrower or a Guarantor one or more Tranche A Letters of Credit, provided
that no Tranche A Letter of Credit shall be issued if after giving effect to
such issuance (i) the aggregate Tranche A Letter of Credit Outstandings shall
exceed $320,000,000 (consisting of a sublimit of (x) $20,000,000 for import
documentary letters of credit and (y) $300,000,000 for standby letters of
credit) or (ii) the aggregate Tranche A Letter of Credit Outstandings, when
added to the aggregate outstanding principal amount of the Revolving Loans,
would exceed the Total Tranche A Commitment and, provided further that no
Tranche A Letter of Credit shall be issued if the Fronting Bank shall have
received notice from the Agent or the Required Tranche A Banks that the
conditions to such issuance have not been met.
(2) Upon the terms and subject to the conditions herein set forth, the Borrower
may request a Fronting Bank, at any time and from time to time after the date
hereof and prior to the Termination Date, to issue, and, subject to the terms
and conditions contained herein, such Fronting Bank shall issue, for the account
of the Borrower or a Guarantor one or more Tranche C Letters of Credit (all of
which shall be standby Letters of Credit), provided that no Tranche C Letter of
Credit shall be issued if after giving effect to such issuance the aggregate
Tranche C Letter of Credit Outstandings shall exceed the Total Tranche C
Commitment of $200,000,000 (as the same may be reduced from time to time
pursuant to Section 2.09), provided further that no Tranche C Letter of Credit
shall be issued if the Fronting Bank shall have received notice from the Agent
or the Required Tranche C Banks that the conditions to such issuance have not
been met.
(1)
(3) No Letter of Credit shall expire later than (i) 60 days after the Maturity
Date in the case of standby Letters of Credit issued in connection with
performance and bid requirements and (ii) in the case of all other Letters of
Credit, the earlier of (x) one year from the date of the issuance thereof and
(y) 60 days after the Maturity Date, provided that if any Letter of Credit shall
be outstanding on the Termination Date, the Borrower shall, at or prior to the
Termination Date, except as the Agent and the Fronting Bank may otherwise agree
in writing, (A) cause all Letters of Credit which expire after the Termination
Date to be returned to the Fronting Bank undrawn and marked "cancelled" or (B)
if the Borrower is unable to do so in whole or in part, either (I) provide a
"back-to-back" letter of credit to one or more Fronting Banks in a form
satisfactory to such Fronting Bank and the Agent (in their sole discretion),
issued by a bank satisfactory to such Fronting Bank and the Agent (in their sole
discretion), in an amount equal to 105% of the then undrawn stated amount of all
outstanding Letters of Credit issued by such Fronting Banks and/or (II) deposit
cash in the Letter of Credit Account in an amount equal to 105% of the then
undrawn stated amount of all Letter of Credit Outstandings as collateral
security for the Borrower's reimbursement obligations in connection therewith,
such cash to be remitted to the Borrower upon the expiration, cancellation or
other termination or satisfaction of such reimbursement obligations.
(4) The Borrower shall pay to each Fronting Bank, in addition to such other fees
and charges as are specifically provided for in Section 2.20 hereof, such fees
and charges in connection with the issuance and processing of the Letters of
Credit issued by such Fronting Bank as are customarily imposed by such Fronting
Bank from time to time in connection with letter of credit transactions.
(5) Drafts drawn under each Tranche A Letter of Credit shall be reimbursed by
the Borrower in Dollars not later than the first Business Day following the date
of draw and shall bear interest from the date of draw until the first Business
Day following the date of draw at a rate per annum equal to the Alternate Base
Rate plus 1-3/4% and thereafter until reimbursed in full at a rate per annum
equal to the Alternate Base Rate plus 3-3/4% (computed on the basis of the
actual number of days elapsed over any year of 360 days). The Borrower shall
effect such reimbursement (x) if such draw occurs prior to the Termination Date
(or the earlier date of termination of the Total Tranche A Commitment), in cash
or through a Borrowing of Revolving Loans without the satisfaction of the
conditions precedent set forth in Section 4.02 or (y) if such draw occurs on or
after the Termination Date (or the earlier date of termination of the Total
Tranche A Commitment), in cash.
(6) Drafts drawn under each Tranche C Letter of Credit shall be reimbursed by
the Borrower in Dollars (i) not later than the first Business Day following the
date of draw and shall bear interest from the date of draw until the first
Business Day following the date of draw at a rate per annum equal to the
Alternate Base Rate plus 1-3/4% or (ii) at the option of the Borrower, on the
Termination Date and until so reimbursed in full the unreimbursed amount thereof
shall bear interest at a rate per annum as provided for in Section 2.07.
(1)
(7) Immediately upon the issuance of any Tranche A Letter of Credit by any
Fronting Bank, such Fronting Bank shall be deemed to have sold to each Tranche A
Bank other than such Fronting Bank and each such other Tranche A Bank shall be
deemed unconditionally and irrevocably to have purchased from such Fronting
Bank, without recourse or warranty, an undivided interest and participation, to
the extent of such Tranche A Bank's Commitment Percentage, in such Tranche A
Letter of Credit, each drawing thereunder and the obligations of the Borrower
and the Guarantors under this Agreement with respect thereto. Upon any change in
the Tranche A Commitments pursuant to Section 10.03, it is hereby agreed that
with respect to all Tranche A Letter of Credit Outstandings, there shall be an
automatic adjustment to the participations hereby created to reflect the new
Commitment Percentages of the assigning and assignee Tranche A Banks. Any action
taken or omitted by a Fronting Bank under or in connection with a Tranche A
Letter of Credit, if taken or omitted in the absence of gross negligence or
willful misconduct, shall not create for such Fronting Bank any resulting
liability to any other Tranche A Bank.
(8) Immediately upon the issuance of any Tranche C Letter of Credit by any
Fronting Bank, such Fronting Bank shall be deemed to have sold to each Tranche C
Bank other than such Fronting Bank and each such other Tranche C Bank shall be
deemed unconditionally and irrevocably to have purchased from such Fronting
Bank, without recourse or warranty, an undivided interest and participation, to
the extent of such Tranche C Bank's Commitment Percentage, in such Tranche C
Letter of Credit, each drawing thereunder and the obligations of the Borrower
and the Guarantors under this Agreement with respect thereto. Upon any change in
the Tranche C Commitments pursuant to Section 10.03, it is hereby agreed that
with respect to all Tranche C Letter of Credit Outstandings, there shall be an
automatic adjustment to the participations hereby created to reflect the new
Commitment Percentages of the assigning and assignee Tranche C Banks. Any action
taken or omitted by a Fronting Bank under or in connection with a Tranche C
Letter of Credit, if taken or omitted in the absence of gross negligence or
willful misconduct, shall not create for such Fronting Bank any resulting
liability to any other Tranche C Bank.
(9) In the event that a Fronting Bank makes any payment under any Letter of
Credit and the Borrower shall not have reimbursed such amount in full to such
Fronting Bank on the first Business Day following the date of draw, the Fronting
Bank shall promptly notify the Agent, which shall promptly notify each Bank (as
applicable) thereof, and each Bank (as applicable) shall promptly and
unconditionally pay to the Agent for the account of the Fronting Bank the amount
of such Bank's Commitment Percentage of such unreimbursed payment in Dollars and
in same day funds. If the Fronting Bank so notifies the Agent, and the Agent so
notifies the applicable Banks prior to 11:00 a.m. (New York City time) on any
Business Day, such Banks shall make available to the Fronting Bank such Bank's
Commitment Percentage of the amount of such payment on such Business Day in same
day funds. If and to the extent such Bank shall not have so made its Commitment
Percentage of the amount of such payment available to the Fronting Bank, such
Bank agrees to pay to such Fronting Bank, forthwith on demand such amount,
together with interest thereon, for each day from such date until the date such
amount is paid to the Agent for the account of such Fronting Bank at the Federal
Funds Effective Rate. The failure of any Bank (as applicable) to make available
to the Fronting Bank its Commitment Percentage of any payment under any Letter
of Credit (as applicable) shall not relieve any other Bank (as applicable) of
its obligation hereunder to make available to the Fronting Bank its Commitment
Percentage of any payment under any such Letter of Credit on the date required,
as specified above, but no Bank shall be responsible for the failure of any
other Bank to make available to such Fronting Bank such other Bank's Commitment
Percentage of any such payment. Whenever a Fronting Bank receives a payment of a
reimbursement obligation as to which it has received any payments from the Banks
pursuant to this paragraph, such Fronting Bank shall pay to each Bank which has
paid its Commitment Percentage thereof, in Dollars and in same day funds, an
amount equal to such Bank's applicable Commitment Percentage thereof.
(1)
SECTION 3.3 Issuance. Whenever the Borrower desires a Fronting Bank to issue a
Letter of Credit, it shall give to such Fronting Bank and the Agent at least two
Business Days' prior written (including telegraphic, telex, facsimile or cable
communication) notice (or such shorter period as may be agreed upon by the
Agent, the Borrower and the Fronting Bank) specifying the date on which the
proposed Letter of Credit is to be issued (which shall be a Business Day), the
stated amount of the Letter of Credit so requested, the expiration date of such
Letter of Credit, the name and address of the beneficiary thereof and whether
such Letter of Credit shall be a Tranche A Letter of Credit or Tranche C Letter
of Credit.
SECTION 3.4 Nature of Letter of Credit Obligations Absolute. The obligations of
the Borrower to reimburse the Banks for drawings made under any Letter of Credit
shall be unconditional and irrevocable and shall be paid strictly in accordance
with the terms of this Agreement under all circumstances, including, without
limitation (it being understood that any such payment by the Borrower shall be
without prejudice to, and shall not constitute a waiver of, any rights the
Borrower might have or might acquire as a result of the payment by the Fronting
Bank of any draft or the reimbursement by the Borrower thereof): (i) any lack of
validity or enforceability of any Letter of Credit; (ii) the existence of any
claim, setoff, defense or other right which the Borrower or any Guarantor may
have at any time against a beneficiary of any Letter of Credit or against any of
the Tranche A Banks or Tranche C Banks (as applicable), whether in connection
with this Agreement, the transactions contemplated herein or any unrelated
transaction; (iii) any draft, demand, certificate or other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect; (iv) payment by a Fronting Bank of any Letter of Credit against
presentation of a demand, draft or certificate or other document which does not
comply with the terms of such Letter of Credit; (v) any other circumstance or
happening whatsoever, which is similar to any of the foregoing; or (vi) the fact
that any Event of Default shall have occurred and be continuing.
SECTION 3.5 Making of Loans.
(1) Except as contemplated by Section 2.10, Loans shall be either ABR Loans or
Eurodollar Loans as the Borrower may request subject to and in accordance with
this Section, provided that all Loans made pursuant to the same Borrowing shall,
unless otherwise specifically provided herein, be Loans of the same Type. Each
Tranche A Bank or Tranche B Bank may fulfill its Commitment (as applicable) with
respect to any Eurodollar Loan or ABR Loan by causing any lending office of such
Bank to make such Loan; provided that any such use of a lending office shall not
affect the obligation of the Borrower to repay such Loan in accordance with the
terms of this Agreement. Each Tranche A Bank or Tranche B Bank shall, subject to
its overall policy considerations, use reasonable efforts (but shall not be
obligated) to select a lending office which will not result in the payment of
increased costs by the Borrower pursuant to Section 2.14. Subject to the other
provisions of this Section and the provisions of Section 2.11, Borrowings of
Loans of more than one Type may be incurred at the same time, provided that no
more than fifteen (15) Borrowings of Eurodollar Loans may be outstanding at any
time.
(1)
(2) The Borrower shall give the Agent prior notice of the making of each
Borrowing of Revolving Loans of at least three Business Days for Eurodollar
Loans and one Business Day for ABR Loans; such notice shall be irrevocable and
shall specify the amount of the proposed Borrowing (which shall not be less than
$10,000,000 in the case of Eurodollar Loans and $5,000,000 in the case of ABR
Loans)) and shall contain disbursement instructions. Such notice, to be
effective, must be received by the Agent not later than 12:00 noon, New York
City time, on the third Business Day in the case of Eurodollar Loans and the
first Business Day in the case of ABR Loans, preceding the date on which such
Borrowing is to be made except as provided in the last sentence of this Section
2.05(b). Such notice shall specify whether the Borrowing then being requested is
to be a Borrowing of ABR Loans or Eurodollar Loans. If no election is made as to
the Type of Loan, such notice shall be deemed a request for Borrowing of ABR
Loans. The Agent shall promptly notify each Tranche A Bank of its proportionate
share of such Borrowing, the date of such Borrowing, the Type of Borrowing or
Loans being requested and the Interest Period or Interest Periods applicable
thereto, as appropriate. On the borrowing date specified in such notice, each
Tranche A Bank shall make its share of the Borrowing available at the office of
the Agent at 270 Park Avenue, New York, New York 10017, no later than 12:00
noon, New York City time, in immediately available funds. Upon receipt of the
funds made available by the Tranche A Banks to fund any Borrowing hereunder, the
Agent shall disburse such funds in the manner specified in the notice of
borrowing delivered by the Borrower and shall use reasonable efforts to make the
funds so received from the Tranche A Banks available to the Borrower no later
than 2:00 p.m. New York City time (other than as provided in the following
sentence). With respect to ABR Loans of $25,000,000 or less, the Tranche A Banks
shall make such Borrowings available to the Borrower by 4:00 p.m., New York City
time, on the same Business Day that the Borrower gives notice to the Agent of
such Borrowing by 12:00 noon, New York City time.
(1)
(3) The Borrower shall give the Agent prior notice of the making of the Term
Loans of at least three Business Days if the Term Loans or a portion thereof are
to be made as Eurodollar Loans and one Business Day if the Term Loans are to be
made as ABR Loans; such notice shall be irrevocable and shall specify the amount
of the proposed Borrowing that is to be made as a Eurodollar Loan (which shall
not be less than $10,000,000) and the date thereof (which shall be a Business
Day) and shall contain disbursement instructions. Such notice, to be effective,
must be received by the Agent not later than 12:00 noon, New York City time, on
the third Business Day in the case of Eurodollar Loans and the first Business
Day in the case of ABR Loans, preceding the date on which such Borrowing is to
be made except as provided in the last sentence of this Section 2.05(b). Such
notice shall specify whether the Borrowing then being requested is to be a
Borrowing of ABR Loans or Eurodollar Loans. If no election is made as to the
Type of Loan, such notice shall be deemed a request for Borrowing of ABR Loans.
The Agent shall promptly notify each Tranche B Bank of its proportionate share
of such Borrowing, the date of such Borrowing, the Type of Borrowing or Loans
being requested and the Interest Period or Interest Periods applicable thereto,
as appropriate. On the borrowing date specified in such notice, each Tranche B
Bank shall make its share of the Borrowing available at the office of the Agent
at 270 Park Avenue, New York, New York 10017, no later than 12:00 noon, New York
City time, in immediately available funds. Upon receipt of the funds made
available by the Tranche B Banks to fund the Term Loans hereunder, the Agent
shall disburse such funds in the manner specified in the notice of borrowing
delivered by the Borrower and shall use reasonable efforts to make the funds so
received from the Tranche B Banks available to the Borrower no later than 2:00
p.m. New York City time.
SECTION 3.6 Repayment of Loans and Unreimbursed Draws; Evidence of Debt.
(1) The Borrower hereby unconditionally promises to pay to the Agent for the
account of each Bank (as applicable) the then unpaid principal amount of each
Loan and each unreimbursed draw under all Letters of Credit as set forth herein.
(2) Each Bank (as applicable) shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the Borrower to
such Bank resulting from each Loan made by such Bank or participation in each
Letter of Credit in which such Bank is participating, including the amounts of
principal and interest payable and paid to such Bank from time to time
hereunder.
(3) The Agent shall maintain accounts in which it shall record (i) the amount of
each Loan made hereunder, the Type thereof and the Interest Period applicable
thereto, and the amount of each Letter of Credit issued hereunder, (ii) the
amount of any principal or interest due and payable or to become due and payable
from the Borrower to each Bank (as applicable) hereunder and (iii) the amount of
any sum received by the Agent hereunder for the account of the Banks (as
applicable) and each Bank's applicable share thereof.
(4) The entries made in the accounts maintained pursuant to paragraph (b) or (c)
of this Section shall be prima facie evidence of the existence and amounts of
the obligations recorded therein; provided that the failure of any Bank or the
Agent to maintain such accounts or any error therein shall not in any manner
affect the obligation of the Borrower to repay the Loans or reimburse the
Letters of Credit in accordance with the terms of this Agreement.
(5) Any Bank may request that Loans made by it be evidenced by a promissory
note. In such event, the Borrower shall prepare, execute and deliver to such
Bank a promissory note payable to the order of such Bank (or, if requested by
such Bank, to such Bank and its registered assigns) and in a form approved by
the Agent. Thereafter, the Loans evidenced by such promissory note and interest
thereon shall at all times (including after assignment pursuant to Section
10.03) be represented by one or more promissory notes in such form payable to
the order of the payee named therein (or, if such promissory note is a
registered note, to such payee and its registered assigns).
(1)
SECTION 3.7 Interest on Loans and Unreimbursed Draws.
(1) Subject to the provisions of Section 2.08, each ABR Loan (and each draw
under a Tranche C Letter of Credit that the Borrower has elected to pay on the
Termination Date and that is to be maintained with reference to the Alternate
Base Rate) shall bear interest (computed on the basis of the actual number of
days elapsed over a year of 360 days) at a rate per annum equal to the Alternate
Base Rate plus 1-3/4%.
(2) Subject to the provisions of Section 2.08, each Eurodollar Loan (and each
draw under a Tranche C Letter of Credit that the Borrower has elected to pay on
the Termination Date and that is to be maintained with reference to the Adjusted
LIBOR Rate) shall bear interest (computed on the basis of the actual number of
days elapsed over a year of 360 days) at a rate per annum equal, during each
Interest Period applicable thereto, to the Adjusted LIBOR Rate for such Interest
Period in effect for such Borrowing plus 2-3/4%.
(3) Accrued interest on all Loans (and all unreimbursed draws under Tranche C
Letters of Credit that the Borrower has elected to pay on the Termination Date)
shall be payable in arrears on each Interest Payment Date applicable thereto, at
maturity (whether by acceleration or otherwise), after such maturity on demand
and (with respect to Eurodollar Loans) upon any repayment or prepayment thereof
(on the amount prepaid).
SECTION 3.8 Default Interest. If the Borrower or any Guarantor, as the case may
be, shall default in the payment of the principal of or interest on any Loan or
in the payment of any other amount becoming due hereunder (including, without
limitation, the reimbursement pursuant to Section 2.02(e) or (f) of any draft
drawn under a Letter of Credit that the Borrower has not, in the case of Tranche
C Letters of Credit, elected to pay on the Termination Date), whether at stated
maturity, by acceleration or otherwise, the Borrower or such Guarantor, as the
case may be, shall on demand from time to time pay interest, to the extent
permitted by law, on such defaulted amount up to (but not including) the date of
actual payment (after as well as before judgment) at a rate per annum (computed
on the basis of the actual number of days elapsed over a year of 360 days) equal
to (x) in the case of Borrowings consisting of Eurodollar Loans or unreimbursed
draws under the Tranche C Letters of Credit that are being maintained with
reference to the Adjusted LIBOR Rate, the Adjusted LIBOR Rate in effect for such
Borrowing or unreimbursed draw plus 4-3/4% and (y) in the case of all other
amounts, the Alternate Base Rate plus 3-3/4%.
SECTION 1.1
SECTION 3.9 Optional Termination or Reduction of Commitments. Upon at least two
Business Days' prior written notice to the Agent, the Borrower may at any time
in whole permanently terminate, or from time to time in part permanently reduce,
the Unused Total Tranche A Commitment or the Unused Total Tranche C Commitment.
Each such reduction of the Commitments shall be in the principal amount of
$5,000,000 or any integral multiple thereof and shall be applied pro rata to
reduce the applicable Commitment of each Bank so being reduced. Simultaneously
with each reduction or termination of any of the Commitments, the Borrower shall
pay to the Agent for the account of each applicable Bank the Commitment Fee
accrued on the amount of the Commitment of such Bank so terminated or reduced
through the date thereof.
SECTION 3.10 Alternate Rate of Interest. In the event, and on each occasion,
that on the day two Business Days prior to the commencement of any Interest
Period for a Eurodollar Loan, the Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower absent manifest
error) that reasonable means do not exist for ascertaining the applicable
Adjusted LIBOR Rate, the Agent shall, as soon as practicable thereafter, give
written or telegraphic notice of such determination to the Borrower and the
Banks, and any request by the Borrower for a Borrowing of Eurodollar Loans
(including pursuant to a refinancing with Eurodollar Loans) pursuant to Section
2.05 or 2.11 shall be deemed a request for a Borrowing of ABR Loans. After such
notice shall have been given and until the circumstances giving rise to such
notice no longer exist, each request for a Borrowing of Eurodollar Loans shall
be deemed to be a request for a Borrowing of ABR Loans.
SECTION 3.11 Refinancing of Loans. The Borrower shall have the right, at any
time, on three Business Days' prior irrevocable notice to the Agent (which
notice, to be effective, must be received by the Agent not later than 12:00
noon, New York City time, on the third Business Day preceding the date of any
refinancing), (x) to refinance (without the satisfaction of the conditions set
forth in Section 4 as a condition to such refinancing) any outstanding Borrowing
or Borrowings of Loans of one Type (or a portion thereof) with a Borrowing of
Loans of the other Type (including in respect of the Term Loans) or (y) to
continue an outstanding Borrowing of Eurodollar Loans (including in respect of
the Term Loans) for an additional Interest Period, subject to the following:
(1) as a condition to the refinancing of ABR Loans with Eurodollar Loans
and to the continuation of Eurodollar Loans for an additional Interest
Period, no Event of Default shall have occurred and be continuing at
the time of such refinancing;
(2) if less than a full Borrowing of Loans shall be refinanced, such
refinancing shall be made pro rata among the Banks in accordance with
the respective principal amounts of the Loans comprising such Borrowing
held by the Banks immediately prior to such refinancing;
(3) the aggregate principal amount of Loans being refinanced shall be at
least $5,000,000, provided that no partial refinancing of a Borrowing
of Eurodollar Loans shall result in the Eurodollar Loans remaining
outstanding pursuant to such Borrowing being less than $10,000,000 in
aggregate principal amount;
(4) each Bank shall effect each refinancing by applying the proceeds
of its new Eurodollar Loan or ABR Loan, as the case may be,
to its Loan being refinanced;
(1)
(5) the Interest Period with respect to a Borrowing of Eurodollar Loans
effected by a refinancing or in respect to the Borrowing of Eurodollar
Loans being continued as Eurodollar Loans shall commence on the date of
refinancing or the expiration of the current Interest Period applicable
to such continuing Borrowing, as the case may be;
(6) a Borrowing of Eurodollar Loans may be refinanced only on the last
day of an Interest Period applicable thereto; and
(7) each request for a refinancing with a Borrowing of Eurodollar Loans
which fails to state an applicable Interest Period shall be deemed to
be a request for an Interest Period of one month.
In the event that the Borrower shall not give notice to refinance any Borrowing
of Eurodollar Loans, or to continue such Borrowing as Eurodollar Loans, or shall
not be entitled to refinance or continue such Borrowing as Eurodollar Loans, in
each case as provided above, such Borrowing shall automatically be refinanced
with a Borrowing of ABR Loans at the expiration of the then-current Interest
Period. The Agent shall, after it receives notice from the Borrower, promptly
give each Bank notice of any refinancing, in whole or part, of any Loan made by
such Bank.
SECTION 3.12 Commitment Termination; Cash Collateral. Upon the Termination Date,
the Total Commitment shall be terminated in full and the Borrower shall pay the
Loans and unreimbursed draws under Letters of Credit in full and, except as the
Agent may otherwise agree in writing, if any Letter of Credit remains
outstanding, deposit into the Letter of Credit Account an amount equal to 105%
of the amount by which the sum of the aggregate Letter of Credit Outstandings
exceeds the amount of cash held in the Letter of Credit Account, such cash to be
remitted to the Borrower upon the expiration, cancellation, satisfaction or
other termination of such reimbursement obligations, or otherwise comply with
Section 2.02(c).
SECTION 3.13 Optional Prepayment of Loans; Reimbursement of Banks.
SECTION 1.1
(1) The Borrower shall have the right at any time and from time to time to
prepay any Loans or unreimbursed draws under Tranche C Letters of Credit that
the Borrower has theretofore elected to pay on the Termination Date, in whole or
in part, (x) with respect to Eurodollar Loans, upon at least three Business
Days' prior written, telex or facsimile notice to the Agent and (y) with respect
to ABR Loans on the same Business Day if written, telex or facsimile notice is
received by the Agent prior to 12:00 noon, New York City time, and thereafter
upon at least one Business Day's prior written, telex or facsimile notice to the
Agent; provided, however, that (i) each such partial prepayment shall be in
multiples of $5,000,000, (ii) no prepayment of Eurodollar Loans shall be
permitted pursuant to this Section 2.13(a) other than on the last day of an
Interest Period applicable thereto unless such prepayment is accompanied by the
payment of the amounts described in clause (i) of the first sentence of Section
2.13(b), and (iii) no partial prepayment of a Borrowing of Eurodollar Loans
shall result in the aggregate principal amount of the Eurodollar Loans remaining
outstanding pursuant to such Borrowing being less than $10,000,000. Each notice
of prepayment shall specify the prepayment date, the principal amount of the
Loans to be prepaid and in the case of Eurodollar Loans, the Borrowing or
Borrowings pursuant to which made, shall be irrevocable and shall commit the
Borrower to prepay such Loan by the amount and on the date stated therein. The
Agent shall, promptly after receiving notice from the Borrower hereunder, notify
each Bank of the principal amount of the Loans held by such Bank which are to be
prepaid, the prepayment date and the manner of application of the prepayment.
(2) The Borrower shall reimburse each Bank on demand for any loss incurred or to
be incurred by it in the reemployment of the funds released (i) resulting from
any prepayment (for any reason whatsoever, including, without limitation,
refinancing with ABR Loans) of any Eurodollar Loan required or permitted under
this Agreement, if such Loan is prepaid other than on the last day of the
Interest Period for such Loan (including, without limitation, any such
prepayment in connection with the syndication of the credit facility evidenced
by this Agreement) or (ii) in the event that after the Borrower delivers a
notice of borrowing under Section 2.05 in respect of Eurodollar Loans, such
Loans are not made on the first day of the Interest Period specified in such
notice of borrowing for any reason other than a breach by such Bank of its
obligations hereunder. Such loss shall be the amount as reasonably determined by
such Bank as the excess, if any, of (A) the amount of interest which would have
accrued to such Bank on the amount so paid or not borrowed at a rate of interest
equal to the Adjusted LIBOR Rate for such Loan, for the period from the date of
such payment or failure to borrow to the last day (x) in the case of a payment
or refinancing with ABR Loans other than on the last day of the Interest Period
for such Loan, of the then current Interest Period for such Loan, or (y) in the
case of such failure to borrow, of the Interest Period for such Loan which would
have commenced on the date of such failure to borrow, over (B) the amount of
interest which would have accrued to such Bank on such amount by placing such
amount on deposit for a comparable period with leading banks in the London
interbank market. Each Bank shall deliver to the Borrower from time to time one
or more certificates setting forth the amount of such loss as determined by such
Bank.
(3) In the event the Borrower fails to prepay any Loan on the date specified in
any prepayment notice delivered pursuant to Section 2.13(a), the Borrower on
demand by any Bank shall pay to the Agent for the account of such Bank any
amounts required to compensate such Bank for any loss incurred by such Bank as a
result of such failure to prepay, including, without limitation, any loss, cost
or expenses incurred by reason of the acquisition of deposits or other funds by
such Bank to fulfill deposit obligations incurred in anticipation of such
prepayment, but without duplication of any amounts paid under Section 2.13(b).
Each Bank shall deliver to the Borrower from time to time one or more
certificates setting forth the amount of such loss as determined by such Bank.
(1)
(4) Any partial prepayment of the Loans by the Borrower pursuant to Section 2.13
shall be applied first to Revolving Loans and second to the pro rata payment of
the Term Loans and the unreimbursed draws under Tranche C Letters of Credit that
the Borrower has theretofore elected to pay on the Termination Date, and in each
case as to ABR Loans or Eurodollar Loans as specified by the Borrower or, in the
absence of such specification, as determined by the Agent, provided that in each
case no Eurodollar Loans shall be prepaid pursuant to Section 2.13 to the extent
that such Loan has an Interest Period ending after the required date of
prepayment unless and until all outstanding ABR Loans and Eurodollar Loans with
Interest Periods ending on such date have been repaid in full.
(5) Once prepaid, Term Loans may not be reborrowed.
SECTION 3.14 Reserve Requirements; Change in Circumstances.
(1) Notwithstanding any other provision herein, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Bank of the principal
of or interest on any Eurodollar Loan made by such Bank or any fees or other
amounts payable hereunder (other than changes in respect of Taxes, Other Taxes
and taxes imposed on, or measured by, the net income or overall gross receipts
or franchise taxes of such Bank by the jurisdiction in which such Bank has its
principal office or in which the applicable lending office for such Eurodollar
Loan is located or by any political subdivision or taxing authority therein, or
by any other jurisdiction or by any political subdivision or taxing authority
therein other than a jurisdiction in which such Bank would not be subject to tax
but for the execution and performance of this Agreement), or shall impose,
modify or deem applicable any reserve, special deposit or similar requirement
against assets of, deposits with or for the account of or credit extended by
such Bank (except any such reserve requirement which is reflected in the
Adjusted LIBOR Rate) or shall impose on such Bank or the London interbank market
any other condition affecting this Agreement or the Eurodollar Loans made by
such Bank, and the result of any of the foregoing shall be to increase the cost
to such Bank of making or maintaining any Eurodollar Loan or to reduce the
amount of any sum received or receivable by such Bank hereunder (whether of
principal, interest or otherwise) by an amount deemed by such Bank to be
material, then the Borrower will pay to such Bank in accordance with paragraph
(c) below such additional amount or amounts as will compensate such Bank for
such additional costs incurred or reduction suffered.
(1)
(2) If any Bank shall have determined that the adoption or effectiveness after
the date hereof of any law, rule, regulation or guideline regarding capital
adequacy, or any change in any of the foregoing or in the interpretation or
administration of any of the foregoing by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or any lending office of such Bank) or any
Bank's holding company with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Bank's capital or on the capital of such Bank's holding company, if any,
as a consequence of this Agreement, the Loans made by such Bank pursuant hereto,
such Bank's Commitment hereunder or the issuance of, or participation in, any
Letter of Credit by such Bank to a level below that which such Bank or such
Bank's holding company could have achieved but for such adoption, change or
compliance (taking into account Bank's policies and the policies of such Bank's
holding company with respect to capital adequacy) by an amount deemed by such
Bank to be material, then from time to time the Borrower shall pay to such Bank
such additional amount or amounts as will compensate such Bank or such Bank's
holding company for any such reduction suffered.
(3) A certificate of each Bank setting forth such amount or amounts as shall be
necessary to compensate such Bank or its holding company as specified in
paragraph (a) or (b) above, as the case may be, shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
each Bank the amount shown as due on any such certificate delivered to it within
10 days after its receipt of the same. Any Bank receiving any such payment shall
promptly make a refund thereof to the Borrower if the law, regulation, guideline
or change in circumstances giving rise to such payment is subsequently deemed or
held to be invalid or inapplicable.
(4) Failure on the part of any Bank to demand compensation for any increased
costs or reduction in amounts received or receivable or reduction in return on
capital with respect to any period shall not constitute a waiver of such Bank's
right to demand compensation with respect to such period or any other period.
The protection of this Section shall be available to each Bank regardless of any
possible contention of the invalidity or inapplicability of the law, rule,
regulation, guideline or other change or condition which shall have occurred or
been imposed.
SECTION 3.15 Change in Legality.
(1) Notwithstanding anything to the contrary contained elsewhere in this
Agreement, if (x) any change after the date of this Agreement in any law or
regulation or in the interpretation thereof by any Governmental Authority
charged with the administration thereof shall make it unlawful for a Bank to
make or maintain a Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to a Eurodollar Loan or (y) at any time any
Bank determines that the making or continuance of any of its Eurodollar Loans
has become impracticable as a result of a contingency occurring after the date
hereof which adversely affects the London interbank market or the position of
such Bank in such market, then, by written notice to the Borrower, such Bank may
(i) declare that Eurodollar Loans will not thereafter be made by such Bank
hereunder, whereupon any request by the Borrower for a Eurodollar Borrowing
shall, as to such Bank only, be deemed a request for an ABR Loan unless such
declaration shall be subsequently withdrawn; and (ii) require that all
outstanding Eurodollar Loans made by it be converted to ABR Loans, in which
event all such Eurodollar Loans shall be automatically converted to ABR Loans as
of the effective date of such notice as provided in paragraph (b) below. In the
event any Bank shall exercise its rights under clause (i) or (ii) of this
paragraph (a), all payments and prepayments of principal which would otherwise
have been applied to repay the Eurodollar Loans that would have been made by
such Bank or the converted Eurodollar Loans of such Bank shall instead be
applied to repay the ABR Loans made by such Bank in lieu of, or resulting from
the conversion of, such Eurodollar Loans.
(1)
(2) For purposes of this Section 2.15, a notice to the Borrower by any Bank
pursuant to paragraph (a) above shall be effective, if lawful, and if any
Eurodollar Loans shall then be outstanding, on the last day of the then-current
Interest Period, otherwise, such notice shall be effective on the date of
receipt by the Borrower.
SECTION 3.16 Pro Rata Treatment, etc. All payments and repayments of principal
and interest in respect of the Loans and unreimbursed draws under Letters of
Credit (except as provided in Sections 2.14 and 2.15) shall be made pro rata
among the applicable Banks in accordance with the then outstanding principal
amount of the Loans and/or participations in Letter of Credit Outstandings and
all outstanding undrawn Letters of Credit (and the unreimbursed amount of drawn
Letters of Credit) hereunder and all payments of Commitment Fees and Letter of
Credit Fees (other than those payable to a Fronting Bank) shall be made pro rata
among the applicable Banks in accordance with their Commitments. All payments by
the Borrower hereunder shall be (i) net of any tax applicable to the Borrower or
Guarantor and (ii) made in Dollars in immediately available funds at the office
of the Agent by 12:00 noon, New York City time, on the date on which such
payment shall be due. Interest in respect of any Loan hereunder shall accrue
from and including the date of such Loan to but excluding the date on which such
Loan is paid in full or converted to a Loan of a different Type.
SECTION 3.17 Taxes.
SECTION 1.1
(1) Any and all payments by the Borrower or any Guarantor hereunder shall be
made free and clear of and without deduction for any and all current or future
taxes, levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding (i) taxes imposed on or measured by the net
income or overall gross receipts of the Agent or any Bank (or any transferee or
assignee thereof, including a participation holder (any such entity being called
a "Transferee")) and franchise taxes imposed on the Agent or any Bank (or
Transferee) by the United States or any jurisdiction under the laws of which the
Agent or any such Bank (or Transferee) is organized or in which the applicable
lending office of any such Bank (or Transferee) is located or any political
subdivision thereof or by any other jurisdiction or by any political subdivision
or taxing authority therein other than a jurisdiction in which the Agent or such
Bank (or Transferee) would not be subject to tax but for the execution and
performance of this Agreement and (ii) taxes, levies, imposts, deductions,
charges or withholdings ("Amounts") with respect to payments hereunder to a Bank
(or Transferee) in accordance with laws in effect on the later of the date of
this Agreement and the date such Bank (or Transferee) becomes a Bank (or
Transferee, as the case may be), but not excluding, with respect to such Bank
(or Transferee), any increase in such Amounts solely as a result of any change
in such laws occurring after such later date or any Amounts that would not have
been imposed but for actions (other than actions contemplated by this Agreement)
taken by the Borrower after such later date (all such nonexcluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"). If the Borrower or any Guarantor shall be required by
law to deduct any Taxes from or in respect of any sum payable hereunder to the
Banks (or any Transferee) or the Agent, (i) the sum payable shall be increased
by the amount necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) such Bank
(or Transferee) or the Agent (as the case may be) shall receive an amount equal
to the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the full
amount deducted to the relevant taxing authority or other Governmental Authority
in accordance with applicable law.
(2) In addition, the Borrower agrees to pay any current or future stamp or
documentary taxes or any other excise or property taxes, charges, assessments or
similar levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Loan Document (hereinafter referred to as "Other Taxes").
(3) The Borrower will indemnify each Bank (or Transferee) and the Agent for the
full amount of Taxes and Other Taxes paid by such Bank (or Transferee) or the
Agent, as the case may be, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted by the relevant taxing
authority or other Governmental Authority. Such indemnification shall be made
within 30 days after the date any Bank (or Transferee) or the Agent, as the case
may be, makes written demand therefor. If a Bank (or Transferee) or the Agent
shall become aware that it is entitled to receive a refund in respect of Taxes
or Other Taxes as to which it has been indemnified by the Borrower pursuant to
this Section, it shall promptly notify the Borrower of the availability of such
refund and shall, within 30 days after receipt of a request by the Borrower,
apply for such refund at the Borrower's expense. If any Bank (or Transferee) or
the Agent receives a refund in respect of any Taxes or Other Taxes as to which
it has been indemnified by the Borrower pursuant to this Section, it shall
promptly notify the Borrower of such refund and shall, within 30 days after
receipt of a request by the Borrower (or promptly upon receipt, if the Borrower
has requested application for such refund pursuant hereto), repay such refund to
the Borrower (to the extent of amounts that have been paid by the Borrower under
this Section with respect to such refund plus interest that is received by the
Bank (or Transferee) or the Agent as part of the refund), net of all
out-of-pocket expenses of such Bank (or Transferee) or the Agent and without
additional interest thereon; provided that the Borrower, upon the request of
such Bank (or Transferee) or the Agent, agrees to return such refund (plus
penalties, interest or other charges) to such Bank (or Transferee) or the Agent
in the event such Bank (or Transferee) or the Agent is required to repay such
refund. Nothing contained in this subsection (c) shall require any Bank (or
Transferee) or the Agent to make available any of its tax returns (or any other
information relating to its taxes that it deems to be confidential).
(4) Within 30 days after the date of any payment of Taxes or Other Taxes
withheld by the Borrower in respect of any payment to any Bank (or Transferee)
or the Agent, the Borrower will furnish to the Agent, at its address referred to
on the signature pages hereof, the original or a certified copy of a receipt
evidencing payment thereof.
(5) Without prejudice to the survival of any other agreement contained herein,
the agreements and obligations contained in this Section shall survive the
payment in full of the principal of and interest on all Loans made hereunder.
(1)
(6) Each Bank (or Transferee) that is organized under the laws of a jurisdiction
outside the United States shall, if legally able to do so, prior to the
immediately following due date of any payment by the Borrower hereunder, deliver
to the Borrower such certificates, documents or other evidence, as required by
the Code or Treasury Regulations issued pursuant thereto, including (A) Internal
Revenue Service Form W-8 or W-9 and (B) Internal Revenue Service Form 1001 or
Form 4224 and any other certificate or statement of exemption required by
Treasury Regulation Section 1.1441-1, 1.1441-4 or 1.1441-6(c) or any subsequent
version thereof or successors thereto, properly completed and duly executed by
such Bank (or Transferee) establishing that such payment is (i) not subject to
United States Federal withholding tax under the Code because such payment is
effectively connected with the conduct by such Bank (or Transferee) of a trade
or business in the United States or (ii) totally exempt from United States
Federal withholding tax or subject to a reduced rate of such tax under a
provision of an applicable tax treaty. Unless the Borrower and the Agent have
received forms or other documents satisfactory to them indicating that such
payments hereunder are not subject to United States Federal withholding tax or
are subject to such tax at a rate reduced by an applicable tax treaty, the
Borrower or the Agent shall withhold taxes from such payments at the applicable
statutory rate.
(7) The Borrower shall not be required to pay any additional amounts to any Bank
(or Transferee) in respect of United States Federal withholding tax pursuant to
subsection (a) above if the obligation to pay such additional amounts would not
have arisen but for a failure by such Bank (or Transferee) to comply with the
provisions of subsection (f) above.
(8) Any Bank (or Transferee) claiming any additional amounts payable pursuant to
this Section 2.17 shall use reasonable efforts (consistent with legal and
regulatory restrictions) to file any certificate or document requested by the
Borrower or to change the jurisdiction of its applicable lending office if the
making of such a filing or change would avoid the need for or reduce the amount
of any such additional amounts that may thereafter accrue and would not, in the
sole reasonable determination of such Bank (or Transferee), be otherwise
materially disadvantageous to such Bank (or Transferee).
SECTION 3.18 Certain Fees. The Borrower shall pay to the Agent, for the
respective accounts of the Agent and the Banks, the fees set forth in that
certain letter dated June 4, 1999 among the Agent, Chase Securities Inc. and the
Borrower.
SECTION 1.1
SECTION 3.19 Commitment Fee. The Borrower shall pay to the Agent on behalf of
the Banks (as applicable) a commitment fee (the "Commitment Fee") for the period
commencing on the date the Commitment Letter is executed to the Termination Date
or the earlier date of termination of any of the Commitments, computed (on the
basis of the actual number of days elapsed over a year of 360 days) at the rate
of one-half of one percent (1/2%) per annum on the average daily Unused Total
Tranche A Commitment, Unused Total Tranche B Commitment or Unused Total Tranche
C Commitment (as applicable). Such Commitment Fee, to the extent then accrued,
shall be payable (x) monthly, in arrears, on the last calendar day of each
month, (y) on the Termination Date and (z) as provided in Section 2.09 hereof,
upon any reduction or termination in whole or in part of any of the Commitments.
SECTION 3.20 Letter of Credit Fees. The Borrower shall pay with respect to each
Letter of Credit (i) to the Agent on behalf of the Tranche A Banks and Tranche C
Banks (as applicable) a fee calculated (on the basis of the actual number of
days elapsed over a year of 360 days) at the rate of (x) two and three-quarter
percent (2-3/4%) per annum on the daily average Tranche A Letter of Credit
Outstandings and Tranche C Letter of Credit Outstandings and (ii) to the
Fronting Bank such Fronting Bank's customary fees for issuance, amendments and
processing referred to in Section 2.02. In addition, the Borrower agrees to pay
each Fronting Bank for its account a fronting fee in respect of each Letter of
Credit issued by such Fronting Bank, for the period from and including the date
of issuance of such Letter of Credit to and including the date of termination of
such Letter of Credit, computed at a rate, and payable at times, to be
determined by such Fronting Bank, the Borrower and the Agent. Accrued fees
described in clause (i) of the first sentence of this paragraph in respect of
each Letter of Credit shall be due and payable monthly in arrears on the last
calendar day of each month and on the Termination Date, or such earlier date as
the Total Tranche A Commitment or Total Tranche C Commitment is terminated.
Accrued fees described in clause (ii) of the first sentence of this paragraph in
respect of each Letter of Credit shall be payable at times to be determined by
the Fronting Bank, the Borrower and the Agent.
SECTION 3.21 Nature of Fees. All Fees shall be paid on the dates due, in
immediately available funds, to the Agent for the respective accounts of the
Agent and the Banks, as provided herein and in the letter described in Section
2.18. Once paid, none of the Fees shall be refundable under any circumstances.
SECTION 1.1
SECTION 3.22 Priority and Liens. The Borrower and each of the Guarantors hereby
covenants, represents and warrants that, upon entry of the Interim Order (i)
pursuant to Section 364(c)(1) of the Bankruptcy Code, the Obligations of the
Borrower and the Guarantors hereunder and under the Loan Documents and in
respect of Indebtedness permitted by Section 6.03(vi) and Indebtedness permitted
by Section 6.03(ix) that is owed to Banks shall at all times constitute allowed
administrative expense claims in the Cases having priority over all
administrative expenses of the kind specified in Sections 503(b) or 507(b) of
the Bankruptcy Code, (ii) pursuant to Section 364(c)(2) of the Bankruptcy Code,
the Obligations of the Borrower and the Guarantors hereunder and under the Loan
Documents and in respect of Indebtedness permitted by Section 6.03(vi) and
Indebtedness permitted by Section 6.03(ix) that is owed to Banks shall at all
times be secured by (A) a pledge of the capital stock of the direct wholly-owned
Subsidiaries of the Borrower and the Guarantors (limited, in the case of foreign
subsidiaries, to 65% of the outstanding shares thereof or other ownership
interests therein) and (B) a perfected first priority Lien on all cash
maintained in the Letter of Credit Account and any direct investments of the
funds contained therein, subject only to (x) in the event of the occurrence and
during the continuance of an Event of Default or an event that would constitute
an Event of Default with the giving of notice or lapse of time or both, and
after the occurrence of the Termination Date, the payment of allowed and unpaid
professional fees and disbursements incurred by the Borrower, the Guarantors and
any statutory committees appointed in the Cases in an aggregate amount not in
excess of $5,000,000 and (y) the payment of unpaid fees pursuant to 28 U.S.C.
ss. 1930 (collectively, the "Carve-Out"), provided that following the
Termination Date amounts in the Letter of Credit Account shall not be subject to
the Carve-Out. The Banks agree that so long as no Event of Default or event
which with the giving of notice or lapse of time or both would constitute an
Event of Default shall have occurred, the Borrower and the Guarantors shall be
permitted to pay compensation and reimbursement of expenses allowed and payable
under 11 U.S.C. ss. 330 and 11 U.S.C. ss. 331, as the same may be due and
payable, and the same shall not reduce the Carve-Out.
SECTION 3.23 Right of Set-Off. Subject to the provisions of Section 7.01, upon
the occurrence and during the continuance of any Event of Default, the Agent and
each Bank is hereby authorized at any time and from time to time, to the fullest
extent permitted by law and without further order of or application to the
Bankruptcy Court, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by the Agent and each such Bank to or for the credit or the
account of the Borrower or any Guarantor against any and all of the obligations
of such Borrower or Guarantor now or hereafter existing under the Loan
Documents, irrespective of whether or not such Bank shall have made any demand
under any Loan Document and although such obligations may be unmatured. Each
Bank and the Agent agrees promptly to notify the Borrower and Guarantors after
any such set-off and application made by such Bank or by the Agent, as the case
may be, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Bank and the Agent
under this Section are in addition to other rights and remedies which such Bank
and the Agent may have upon the occurrence and during the continuance of any
Event of Default.
SECTION 3.24 Security Interest in Letter of Credit Account. Pursuant to Section
364(c)(2) of the Bankruptcy Code, the Borrower and the Guarantors hereby assign
and pledge to the Agent, for its benefit and for the ratable benefit of the
Banks, and hereby grant to the Agent, for its benefit and for the ratable
benefit of the Banks, a first priority security interest, senior to all other
Liens, if any, in all of the Borrower's and the Guarantors' right, title and
interest in and to the Letter of Credit Account and any direct investment of the
funds contained therein.
SECTION 3.25 Payment of Obligations. Subject to the provisions of Section 7.01,
upon the maturity (whether by acceleration or otherwise) of any of the
Obligations under this Agreement or any of the other Loan Documents of the
Borrower and the Guarantors, the Banks shall be entitled to immediate payment of
such Obligations without further application to or order of the Bankruptcy
Court.
SECTION 1.1
SECTION 3.26 No Discharge; Survival of Claims. Each of the Borrower and the
Guarantors agrees that (i) its obligations hereunder shall not be discharged by
the entry of an order confirming a Plan of Reorganization (and each of the
Borrower and the Guarantors, pursuant to Section 1141(d)(4) of the Bankruptcy
Code, hereby waives any such discharge) and (ii) the Superpriority Claim granted
to the Agent and the Banks pursuant to the Order and described in Section 2.22
and the Liens granted to the Agent pursuant to the Order and described in
Sections 2.22 and 2.24 shall not be affected in any manner by the entry of an
order confirming a Plan of Reorganization.
SECTION 4. REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to make Loans and issue and/or
participate in Letters of Credit hereunder, the Borrower and each of the
Guarantors jointly and severally represent and warrant as follows:
SECTION 4.1 Organization and Authority. Each of the Borrower and the Guarantors
(i) is a corporation duly organized and validly existing under the laws of the
State of its incorporation and is duly qualified as a foreign corporation and is
in good standing in each jurisdiction in which the failure to so qualify would
have a material adverse effect on the financial condition, operations, business,
properties or assets of the Borrower and the Guarantors taken as a whole; (ii)
has the requisite corporate power and authority to effect the transactions
contemplated hereby, and by the other Loan Documents to which it is a party, and
(iii) has all requisite corporate power and authority and the legal right to
own, pledge, mortgage and operate its properties, and to conduct its business as
now or currently proposed to be conducted.
SECTION 4.2 Due Execution. The execution, delivery and performance by each of
the Borrower and the Guarantors of each of the Loan Documents to which it is a
party (i) are within the respective corporate powers of each of the Borrower and
the Guarantors, have been duly authorized by all necessary corporate action
including the consent of shareholders where required, and do not (A) contravene
the charter or by-laws of any of the Borrower or the Guarantors, (B) violate any
law (including, without limitation, the Securities Exchange Act of 1934) or
regulation (including, without limitation, Regulations T, U or X of the Board of
Governors of the Federal Reserve System), or any order or decree of any court or
governmental instrumentality, (C) conflict with or result in a breach of, or
constitute a default under, any material indenture, mortgage or deed of trust
entered into after the Filing Date or any material lease, agreement or other
instrument entered into after the Filing Date binding on the Borrower or the
Guarantors or any of their properties, or (D) result in or require the creation
or imposition of any Lien upon any of the property of any of the Borrower or the
Guarantors other than the Liens granted pursuant to this Agreement; and do not
require the consent, authorization by or approval of or notice to or filing or
registration with any Governmental Authority other than the entry of the Orders.
This Agreement has been duly executed and delivered by each of the Borrower and
the Guarantors. This Agreement is, and each of the other Loan Documents to which
the Borrower and each of the Guarantors is or will be a party, when delivered
hereunder or thereunder, will be, a legal, valid and binding obligation of the
Borrower and each Guarantor, as the case may be, enforceable against the
Borrower and the Guarantors, as the case may be, in accordance with its terms
and the terms of the Orders.
SECTION 1.1
SECTION 4.3 Statements Made. The information that has been delivered in writing
by the Borrower or any of the Guarantors to the Agent or to the Bankruptcy Court
in connection with any Loan Document, and any financial statement delivered
pursuant hereto or thereto (other than to the extent that any such statements
constitute projections), taken as a whole and in light of the circumstances in
which made, contains no untrue statement of a material fact and does not omit to
state a material fact necessary to make such statements not misleading; and, to
the extent that any such information constitutes projections, such projections
were prepared in good faith on the basis of assumptions, methods, data, tests
and information believed by the Borrower or such Guarantor to be reasonable at
the time such projections were furnished.
SECTION 4.4 Financial Statements. The Borrower has furnished the Banks with
copies of (i) the audited consolidated financial statement and schedules of the
Borrower for the fiscal year ended October 31, 1998 and (ii) the unaudited
consolidated financial statement and schedules of the Borrower for the fiscal
quarter ended January 31, 1999. Such financial statements present fairly the
financial condition and results of operations of the Borrower and the Guarantors
on a consolidated basis as of such dates and for such periods; such balance
sheets and the notes thereto disclose all liabilities, direct or contingent, of
the Borrower and the Guarantors as of the dates thereof required to be disclosed
by GAAP and such financial statements were prepared in a manner consistent with
GAAP, subject (in the case of such fiscal quarter statement) to normal year end
adjustments. No material adverse change in the operations, business, properties,
assets, prospects or condition (financial or otherwise) of the Borrower and the
Guarantors, taken as a whole, has occurred from that set forth in the Borrower's
consolidated financial statements for the fiscal quarter ended January 31, 1999
other than as disclosed in the Borrower's June 1, 1999 press release and those
which customarily occur and as a result of events leading up to and following
the commencement of a proceeding under Chapter 11 of the Bankruptcy Code and (y)
the commencement of the Cases.
SECTION 4.5 Ownership. Each of the Persons listed on Schedule 3.05 is a
wholly-owned (except as described on Schedule 3.05), direct or indirect
Subsidiary of the Borrower, and the Borrower owns no other Subsidiaries, whether
directly or indirectly, other than as set forth on Schedule 3.05.
SECTION 4.6 Liens. Except for Liens existing on the Filing Date as reflected on
Schedule 3.06, there are no Liens of any nature whatsoever on any assets of the
Borrower or any of the Guarantors other than: (i) Permitted Liens and (ii) Liens
in favor of the Agent and the Banks. Neither the Borrower nor the Guarantors are
parties to any contract, agreement, lease or instrument the performance of
which, either unconditionally or upon the happening of an event, will result in
or require the creation of a Lien on any assets of the Borrower or any Guarantor
or otherwise result in a violation of this Agreement other than Permitted Liens
and the Liens granted to the Agent and the Banks as provided for in this
Agreement.
SECTION 4.7 Compliance with Law.
SECTION 1.1
(1) (i) The operations of the Borrower and the Guarantors comply in all material
respects with all applicable environmental, health and safety statutes and
regulations, including, without limitation, regulations promulgated under the
Resource Conservation and Recovery Act (42 U.S.C. ss.ss. 6901 et seq.); (ii) to
the Borrower's and each of the Guarantor's knowledge, none of the operations of
the Borrower or the Guarantors is the subject of any Federal or state
investigation evaluating whether any remedial action involving a material
expenditure by the Borrower or any Guarantor is needed to respond to a release
of any Hazardous Waste or Hazardous Substance (as such terms are defined in any
applicable state or Federal environmental law or regulations) into the
environment; and (iii) to the Borrower's and each of the Guarantor's knowledge,
the Borrower and the Guarantors do not have any material contingent liability in
connection with any release of any Hazardous Waste or Hazardous Substance into
the environment.
(2) Neither the Borrower nor any Guarantor is, to the best of its knowledge, in
violation of any law, rule or regulation, or in default with respect to any
judgment, writ, injunction or decree of any Governmental Authority the violation
of which, or a default with respect to which, would have a material adverse
effect on the financial condition, operations, business, properties or assets of
the Borrower and the Guarantors taken as a whole.
SECTION 4.8 Insurance. All policies of insurance of any kind or nature owned by
or issued to the Borrower and the Guarantors, including, without limitation,
policies of life, fire, theft, product liability, public liability, property
damage, other casualty, employee fidelity, workers' compensation, employee
health and welfare, title, property and liability insurance, are in full force
and effect and are of a nature and provide such coverage as is sufficient and as
is customarily carried by companies of the size and character of the Borrower
and the Guarantors.
SECTION 4.9 The Orders. On the date of the making of the initial Loans or the
issuance of the initial Letters of Credit hereunder, whichever first occurs, the
Interim Order will have been entered and will not have been stayed, amended,
vacated, reversed or rescinded. On the date of the making of any Loan or the
issuance of any Letter of Credit, the Interim Order or the Final Order, as the
case may be, shall have been entered and shall not have been amended, stayed,
vacated or rescinded. Upon the maturity (whether by the acceleration or
otherwise) of any of the obligations of the Borrower and the Guarantors
hereunder and under the other Loan Documents, the Banks shall, subject to the
provisions of Section 7.01, be entitled to immediate payment of such
obligations, and to enforce the remedies provided for hereunder, without further
application to or order by the Bankruptcy Court.
SECTION 4.10 Use of Proceeds. The proceeds of the Loans shall be used for
working capital and general corporate purposes of the Borrower and the
Guarantors.
SECTION 1.1
SECTION 4.11 Litigation. Except as set forth on Schedule 3.11, there are no
unstayed actions, suits or proceedings pending or, to the knowledge of the
Borrower or the Guarantors, threatened against or affecting the Borrower or the
Guarantors or any of their respective properties, before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which is reasonably likely to be determined adversely to
the Borrower or the Guarantors and, if so determined adversely to the Borrower
or the Guarantors would have a material adverse effect on the financial
condition, business, properties, prospects, operations or assets of the Borrower
and the Guarantors, taken as a whole.
SECTION 4.12 Year 2000. The cost to the Borrower and its Subsidiaries of any
reprogramming required to permit the proper functioning, in and following the
year 2000, of (i) the computer systems of the Borrower and its Subsidiaries and
(ii) equipment containing embedded microchips (including systems and equipment
supplied by others or with which the Borrower's systems interface) and the
testing of all such systems and equipment, as so reprogrammed and of the
reasonably foreseeable consequences of year 2000 to the Borrower and its
Subsidiaries (including, without limitation, reprogramming errors and the
failure of others' systems or equipment) would not reasonably be expected to
result in an Event of Default or event, which with the giving of notice or the
passage of time or both would constitute an Event of Default or have a material
adverse effect on the operations, business, properties or condition (financial
or otherwise) of the Borrower and its Subsidiaries, taken as a whole. To the
knowledge of the Borrower, except for such of the reprogramming referred to in
the preceding sentence as may be necessary, the computer and management
information systems of the Borrower and its Subsidiaries are and, with ordinary
course upgrading and maintenance and planned systems conversions and/or
upgrades, will continue to be, sufficient to permit the Borrower to conduct its
businesses without material adverse effect on the operations, business,
properties or condition (financial or otherwise) of the Borrower and its
Subsidiaries, taken as a whole.
SECTION 5. CONDITIONS OF LENDING
SECTION 5.1 Conditions Precedent to Initial Revolving Loans and Initial Tranche
A Letters of Credit. The obligation of the Banks to make the initial Revolving
Loans or the Fronting Bank to issue the initial Letter of Credit, whichever may
occur first, is subject to the following conditions precedent:
(1) Supporting Documents. The Agent shall have received for the Borrower
(and to the extent available the Guarantors):
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(1) a copy of such entity's certificate of incorporation, as amended,
certified as of a recent date by the Secretary of State of
the state of its incorporation;
(2) a certificate of such Secretary of State, dated as of a recent
date, as to the good standing of and payment of taxes by that
entity and as to the charter documents on file in the office
of such Secretary of State; and
(1)
(3) a certificate of the Secretary or an Assistant Secretary of that entity
dated the date of the initial Loans or the initial Letter of Credit
hereunder, whichever first occurs, and certifying (A) that attached thereto
is a true and complete copy of the by-laws of that entity as in effect on
the date of such certification, (B) that attached thereto is a true and
complete copy of resolutions adopted by the Board of Directors of that
entity authorizing the Borrowings and Letter of Credit extensions
hereunder, the execution, delivery and performance in accordance with their
respective terms of this Agreement, the Loan Documents and any other
documents required or contemplated hereunder or thereunder and the granting
of the security interest in the Letter of Credit Account and other Liens
contemplated hereby, (C) that the certificate of incorporation of that
entity has not been amended since the date of the last amendment thereto
indicated on the certificate of the Secretary of State furnished pursuant
to clause (i) above and (D) as to the incumbency and specimen signature of
each officer of that entity executing this Agreement and the Loan Documents
or any other document delivered by it in connection herewith or therewith
(such certificate to contain a certification by another officer of that
entity as to the incumbency and signature of the officer signing the
certificate referred to in this clause (iii)).
(2) Interim Order. At the time of the making of the initial Revolving Loans
or at the time of the issuance of the initial Tranche A Letters of
Credit, whichever first occurs, the Agent and the Banks shall have
received a certified copy of an order of the Bankruptcy Court in
substantially the form of Exhibit A-1 (the "Interim Order") approving
the Loan Documents and granting the Superpriority Claim status and
Liens described in Section 2.22 which (i) shall have been entered upon
an application or motion of the Borrower reasonably satisfactory in
form and substance to the Agent, on such prior notice to such parties
as may in each case be reasonably satisfactory to the Agent, (ii)
authorize extensions of credit in an aggregate amount of up to
$235,000,000, (iii) approve the payment by the Borrower of all of the
Fees set forth in Section 2.18, (iv) shall be in full force and effect
and (v) shall not have been stayed, reversed, modified or amended in
any respect without the prior written consent of the Agent and the
Required Banks and, if the Interim Order is the subject of a pending
appeal in any respect, neither the making of such Loans nor the
issuance of such Letter of Credit nor the performance by the Borrower
or any of the Guarantors of any of their respective obligations
hereunder or under the Loan Documents or under any other instrument or
agreement referred to herein shall be the subject of a presently
effective stay pending appeal.
(3) Pledge Agreement. The Borrower and each of the Guarantors shall have
executed and delivered to the Agent a Pledge Agreement in substantially
the form of Exhibit B (the "Pledge Agreement").
(4) First Day Orders. All of the "first day orders" entered by the
Bankruptcy Court at the time of the commencement of the Cases shall be
reasonably satisfactory in form and substance to the Agent.
(1)
(5) Opinion of Counsel. The Agent and the Banks shall have received the
favorable written opinion of counsel to the Borrower and the Guarantors
reasonably acceptable to the Agent, dated the date of the initial Loans
or the issuance of the initial Letter of Credit, whichever first
occurs, substantially in the form of Exhibit C.
(6) Budget. The Agent shall have received from the Borrower a budget
detailing the Borrower's anticipated cash receipts and disbursements
for the period through the Maturity Date and setting forth the
anticipated uses of the Commitment that is satisfactory in form and
substance to the Agent (the "Budget").
(7) Payment of Fees. The Borrower shall have paid to the Agent the then
unpaid balance of all accrued and unpaid Fees due under and pursuant to
this Agreement and the letter referred to in Section 2.18.
(8) Corporate and Judicial Proceedings. All corporate and judicial
proceedings and all instruments and agreements in connection with the
transactions among the Borrower, the Guarantors, the Agent and the
Banks contemplated by this Agreement shall be reasonably satisfactory
in form and substance to the Agent, and the Agent shall have received
all information and copies of all documents and papers, including
records of corporate and judicial proceedings, which the Agent may have
reasonably requested in connection therewith, such documents and papers
where appropriate to be certified by proper corporate, governmental or
judicial authorities.
(9) Information. The Agent shall have received such information (financial
or otherwise) as may be reasonably requested by the Agent and shall
have discussed the Borrower's business plan heretofore delivered to the
Agent with the Borrower's management and shall be satisfied with the
nature and substance of such discussions.
(10) Compliance with Laws. The Borrower and the Guarantors shall have
granted the Agent access to and the right to inspect all reports,
audits and other internal information of the Borrower and the
Guarantors relating to environmental matters, and any third party
verification of certain matters relating to compliance with
environmental laws and regulations requested by the Agent, and the
Agent shall be reasonably satisfied that the Borrower and the
Guarantors are in compliance in all material respects with all
applicable environmental laws and regulations and be satisfied with the
costs of maintaining such compliance.
(11) UCC Searches. The Agent shall have received UCC searches conducted in
the jurisdictions in which the Borrower and the Guarantors conduct
business (dated as of a date reasonably satisfactory to the Agent),
reflecting the absence of Liens and encumbrances on the assets of the
Borrower and the Guarantors other than such Liens as may be
satisfactory to the Agent.
(12) Closing Documents. The Agent shall have received all documents
required by this Agreement reasonably satisfactory in form
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and substance to the Agent.
(1)
SECTION 5.2 Conditions Precedent to Each Loan and Each Letter of Credit. The
obligation of the Banks to make each Loan (including the Term Loans) and of the
Fronting Bank to issue each Letter of Credit, including the initial Revolving
Loan and the initial Letter of Credit, is subject to the following conditions
precedent:
(1) Notice. The Agent shall have received a notice with respect to such
borrowing or issuance, as the case may be, as required
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by Section 2.
(2) Representations and Warranties. All representations and warranties
contained in this Agreement and the other Loan Documents or otherwise
made in writing in any report, certification or statement delivered
pursuant hereto shall be true and correct in all material respects on
and as of the date of each Borrowing or the issuance of each Letter of
Credit hereunder with the same effect as if made on and as of such date
except to the extent such representations and warranties expressly
relate to an earlier date.
(3) No Default. On the date of each Borrowing hereunder or the issuance of
each Letter of Credit, the Borrower and Guarantors shall be in
compliance with all of the terms and provisions set forth herein to be
observed or performed and no Event of Default or event which upon
notice or lapse of time or both would constitute an Event of Default
shall have occurred and be continuing.
(4) Orders. The Interim Order shall be in full force and effect and shall
not have been stayed, reversed, modified or amended in any respect
without the prior written consent of the Agent and the Required Banks,
provided, that at the time of the making of any Loan (including the
Term Loans) or the issuance of any Letter of Credit, the aggregate
amount of either of which, when added to the sum of the principal
amount of all Loans then outstanding and the Letter of Credit
Outstandings, would exceed $235,000,000 or, if less, the amount thereof
which was authorized by the Bankruptcy Court in the Interim Order
(collectively, the "Additional Credit"), the Agent and each of the
Banks shall have received a certified copy of an order of the
Bankruptcy Court in substantially the form of Exhibit A-2 (the "Final
Order"), which, in any event, shall have been entered by the Bankruptcy
Court no later than 30 days after the entry of the Interim Order, and
at the time of the extension of any Additional Credit the Final Order
shall be in full force and effect, and shall not have been stayed,
reversed, modified or amended in any respect without the prior written
consent of the Agent and the Required Banks; and if either the Interim
Order or the Final Order is the subject of a pending appeal in any
respect, neither the making of the Loans nor the issuance of any Letter
of Credit nor the performance by the Borrower or any Guarantor of any
of their respective obligations under any of the Loan Documents shall
be the subject of a presently effective stay pending appeal.
(5) Usage. The use of such extension of credit shall be substantially
consistent with the Budget, as updated from time to time.
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(1)
(6) Payment of Fees. The Borrower shall have paid to the Agent the then
unpaid balance of all accrued and unpaid Fees then payable under and
pursuant to this Agreement and the letter referred to in Section 2.18.
The request by the Borrower for, and the acceptance by the Borrower of, each
extension of credit hereunder shall be deemed to be a representation and
warranty by the Borrower that the conditions specified in this Section have been
satisfied or waived at that time.
SECTION 6. AFFIRMATIVE COVENANTS
From the date hereof and for so long as any Loan shall remain
outstanding, any Commitment shall be in effect or any Letter of Credit shall
remain outstanding (in a face amount in excess of the amount of cash then held
in the Letter of Credit Account, or the face amount of back-to-back letters of
credit delivered, in each case pursuant to Section 2.02(c)), or any amount shall
remain outstanding or unpaid under this Agreement, the Borrower and each of the
Guarantors agree that, unless the Required Banks shall otherwise consent in
writing, the Borrower and each of the Guarantors will:
SECTION 6.1 Financial Statements, Reports, etc. In the case of the Borrower and
the Guarantors, deliver to the Agent and each of the Banks:
(1) within 90 days after the end of each fiscal year, the Borrower's
consolidated and consolidating (for the Borrower's surface mining
equipment, underground mining equipment and pulp and papermaking
machinery businesses) balance sheet and related statement of income and
cash flows, showing the financial condition of the Borrower and its
consolidated Subsidiaries on a consolidated basis as of the close of
such fiscal year and the results of their respective operations during
such year, the consolidated statement of the Borrower to be audited for
the Borrower and its consolidated Subsidiaries by independent public
accountants of recognized national standing acceptable to the Required
Banks and accompanied by an opinion of such accountants (which shall
not be qualified in any material respect other than with respect to the
Cases), and the consolidating statement to be prepared using the same
procedures applied in the preparation of the consolidated statement,
and to be certified by a Financial Officer of the Borrower to the
effect that such consolidated financial statements fairly present the
financial condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with
GAAP consistently applied;
(1)
(2) within 45 days after the end of each of the first three fiscal quarters
and within 90 days after the end of the fourth fiscal quarter of each
fiscal year, the Borrower's consolidated and consolidating (for the
Borrower's surface mining equipment, underground mining equipment and
pulp and papermaking machinery businesses) balance sheets and related
statements of income and cash flows, showing the financial condition of
the Borrower and its consolidated Subsidiaries on a consolidated basis
as of the close of such fiscal quarter and the results of their
operations during such fiscal quarter and the then elapsed portion of
the fiscal year, each certified by a Financial Officer as fairly
presenting the financial condition and results of operations of the
Borrower and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end
audit adjustments;
(3) concurrently with any delivery of financial statements under (a) or (b)
above, (i) a certificate of the Financial Officer who certified such
statements (A) certifying that no Event of Default or event which upon
notice or lapse of time or both would constitute an Event of Default
has occurred, or, if such an Event of Default or event has occurred,
specifying the nature and extent thereof and any corrective action
taken or proposed to be taken with respect thereto and (B) setting
forth computations in reasonable detail satisfactory to the Agent
demonstrating compliance with the provisions of Sections 6.03, 6.04,
6.05 and 6.11 and (ii) a certificate (which certificate may be limited
to accounting matters and disclaim responsibility for legal
interpretations) of such accountants accompanying the audited
consolidated financial statements delivered under (a) above certifying
that, in the course of the regular audit of the business of the
Borrower and its consolidated Subsidiaries, such accountants have
obtained no knowledge that an Event of Default has occurred and is
continuing, or if, in the opinion of such accountants, an Event of
Default has occurred and is continuing, specifying the nature thereof
and all relevant facts with respect thereto;
(4) within 30 days after the end of each month, the unaudited monthly cash
flow reports of the Borrower and its consolidated Subsidiaries on a
consolidated basis and as of the close of such fiscal month and the
results of their operations during such fiscal period and the then
elapsed portion of the fiscal year, all certified by a Financial
Officer as fairly presenting the results of operations of the Borrower
and its consolidated Subsidiaries on a consolidated basis, subject to
normal year-end audit adjustments;
(5) concurrently with any delivery of financial statements under (b)
above, monthly financial projections for the following six
fiscal month period;
(6) as soon as possible, and in any event within 30 days of the Closing
Date, a consolidated pro forma statement of the Borrower's and the
Subsidiaries' financial condition as of the Filing Date;
(7) within 30 days from the end of each of the first three fiscal quarters
of each fiscal year of the Borrower, and within 45 days from the end of
the last fiscal quarter of each fiscal year of the Borrower (or, if
earlier, upon the approval thereof by the Borrower's Board of
Directors), an update of the Budget satisfactory in form and substance
to the financial advisor to the Banks;
(1)
(8) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed
by it with the Securities and Exchange Commission, or any governmental
authority succeeding to any of or all the functions of said commission,
or with any national securities exchange, as the case may be;
(9) as soon as available and in any event (A) within 30 days after the
Borrower or any of its ERISA Affiliates knows or has reason to know
that any Termination Event described in clause (i) of the definition of
Termination Event with respect to any Single Employer Plan of the
Borrower or such ERISA Affiliate has occurred and (B) within 10 days
after the Borrower or any of its ERISA Affiliates knows or has reason
to know that any other Termination Event with respect to any such Plan
has occurred, a statement of a Financial Officer of the Borrower
describing such Termination Event and the action, if any, which the
Borrower or such ERISA Affiliate proposes to take with respect thereto;
(10) promptly and in any event within 10 days after receipt thereof by the
Borrower or any of its ERISA Affiliates from the PBGC copies of each
notice received by the Borrower or any such ERISA Affiliate of the
PBGC's intention to terminate any Single Employer Plan of the Borrower
or such ERISA Affiliate or to have a trustee appointed to administer
any such Plan;
(11) promptly and in any event within 30 days after the filing thereof with
the Internal Revenue Service, copies of each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) with respect to
each Single Employer Plan of the Borrower or any of its ERISA
Affiliates;
(12) within 10 days after notice is given or required to be given to the
PBGC under Section 302(f)(4)(A) of ERISA of the failure of the Borrower
or any of its ERISA Affiliates to make timely payments to a Plan, a
copy of any such notice filed and a statement of a Financial Officer of
the Borrower setting forth (A) sufficient information necessary to
determine the amount of the lien under Section 302(f)(3), (B) the
reason for the failure to make the required payments and (C) the
action, if any, which the Borrower or any of its ERISA Affiliates
proposed to take with respect thereto;
(13) promptly and in any event within 10 days after receipt thereof by the
Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor, a
copy of each notice received by the Borrower or any ERISA Affiliate
concerning (A) the imposition of Withdrawal Liability by a
Multiemployer Plan, (B) the determination that a Multiemployer Plan is,
or is expected to be, in reorganization within the meaning of Title IV
of ERISA, (C) the termination of a Multiemployer Plan within the
meaning of Title IV of ERISA, or (D) the amount of liability incurred,
or which may be incurred, by the Borrower or any ERISA Affiliate in
connection with any event described in clause (A), (B) or (C) above;
(1)
(14) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of the Borrower or
any Guarantor, or compliance with the terms of any material loan or
financing agreements as the Agent or any Bank may reasonably request;
and
(15) furnish to the Agent and its counsel promptly after the same is
available, copies of all pleadings, motions, applications, judicial
information, financial information and other documents filed by or on
behalf of the Borrower or any of the Guarantors with the Bankruptcy
Court in the Cases, or distributed by or on behalf of the Borrower or
any of the Guarantors to any official committee appointed in the Cases.
SECTION 6.2 Corporate Existence. Do or cause to be done and cause each of the
Guarantors to do or cause to be done all things necessary to preserve, renew and
keep in full force and effect its corporate existence, material rights,
licenses, permits and franchises and comply in all material respects with all
laws and regulations applicable to it.
SECTION 6.3 Insurance. (a) Keep its insurable properties insured at all times,
against such risks, including fire and other risks insured against by extended
coverage, as is customary with companies of established repute engaged in the
same or similar businesses operating in the same or similar locations; and
maintain in full force and effect public liability insurance against claims for
personal injury or death or property damage occurring upon, in, about or in
connection with the use of any properties owned, occupied or controlled by the
Borrower or any Guarantor, as the case may be, in such amounts and with such
deductibles as are customary with companies of established repute engaged in the
same or similar businesses operating in the same or similar locations; and (b)
maintain such other insurance or self insurance consistent with past practice as
may be required by law.
SECTION 6.4 Obligations and Taxes. With respect to the Borrower and each
Guarantor, pay all its material obligations arising after the Filing Date
promptly and in accordance with their terms and pay and discharge promptly all
material taxes, assessments and governmental charges or levies imposed upon it
or upon its income or profits or in respect of its property arising after the
Filing Date, before the same shall become in default, as well as all material
lawful claims for labor, materials and supplies or otherwise arising after the
Filing Date which, if unpaid, might become a Lien or charge upon such properties
or any part thereof; provided, however, that the Borrower and each Guarantor
shall not be required to pay and discharge or to cause to be paid and discharged
any such tax, assessment, charge, levy or claim so long as the validity or
amount thereof shall be contested in good faith by appropriate proceedings (if
the Borrower and the Guarantors shall have set aside on their books adequate
reserves therefor).
SECTION 6.5 Notice of Event of Default, etc. Promptly give to the Agent notice
in writing of any Event of Default or the occurrence of any event or
circumstance which with the passage of time or giving of notice or both would
constitute an Event of Default.
SECTION 1.1
SECTION 6.6 Access to Books, Records and Properties. Maintain or cause to be
maintained at all times true and complete books and records of the financial
operations of the Borrower and its Subsidiaries; and provide the Agent and its
representatives access to all such books and records during regular business
hours, in order that the Agent may examine and make abstracts from such books,
accounts, records and other papers for the purpose of verifying the accuracy of
the various reports delivered by the Borrower or the Guarantors to the Agent or
the Banks pursuant to this Agreement or for otherwise ascertaining compliance
with this Agreement; and at any reasonable time and from time to time during
regular business hours, upon reasonable notice, permit the Agent and any agents
or representatives (including, without limitation, appraisers) thereof to visit
the assets and properties of the Borrower and the Guarantors.
SECTION 6.7 Business Plan. As soon as practicable, and in any event within 90
days of the Filing Date, furnish to the Agent the Borrower's business plan for
the period through the Maturity Date which shall be satisfactory in form and
substance to the Agent, and make its senior officers available to discuss the
same with the Agent upon the Agent's reasonable request.
SECTION 6.8 Maintenance of Concentration Account. The Borrower and the
Guarantors shall, by no later than 30 days following the Closing Date, and at
all times thereafter, maintain with the Agent an account or accounts to be used
by the Borrower and the Guarantors as their principal concentration accounts for
day-to-day operations conducted by the Borrower and the Guarantors.
SECTION 6.9 Audits. At any time upon the request of the Agent or the Required
Banks through the Agent, permit the Agent or its professionals (including
consultants, accountants and appraisers) retained by the Agent or its
professionals to conduct evaluations and appraisals of such assets and
properties of the Borrower and its Subsidiaries as the Agent or the Required
Banks may require, and to pay the reasonable fees and expenses in connection
therewith.
SECTION 7. NEGATIVE COVENANTS
From the date hereof and for so long as any Loan shall remain
outstanding, any Commitment shall be in effect or any Letter of Credit shall
remain outstanding (in a face amount in excess of the amount of cash then held
in the Letter of Credit Account, or the face amount of back-to-back letters of
credit delivered, in each case pursuant to Section 2.02(c)) or any amount shall
remain outstanding or unpaid under this Agreement, unless the Required Banks
shall otherwise consent in writing, the Borrower and each of the Guarantors will
not (and will not apply to the Bankruptcy Court for authority to) and shall not
permit the Borrower's other Subsidiaries to:
SECTION 7.1 Liens. Incur, create, assume or suffer to exist any Lien on any
asset of the Borrower or the Guarantors, now owned or hereafter acquired by the
Borrower or any of such Guarantors, other than (i) Liens which were existing on
the Filing Date as reflected on Schedule 3.06 hereto; (ii) Permitted Liens;
(iii) Liens in favor of the Agent and the Banks; (iv) Liens securing purchase
money Indebtedness permitted by Section 6.03(iii); (v) Liens in favor of the
Borrower on the assets of foreign Subsidiaries of the Borrower to secure
inter-company loans by the Borrower that are used by a foreign Subsidiary to
repay such foreign Subsidiary's indebtedness for borrowed money; and (vi) other
Liens that are satisfactory to the Agent.
SECTION 7.2 Merger, etc. Consolidate or merge with or into another Person
except as satisfactory to the Agent.
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SECTION 7.3 Indebtedness. Contract, create, incur, assume or suffer to exist any
Indebtedness, or enter into any Hedge Agreement, except for (i) Indebtedness
under this Agreement; (ii) Indebtedness incurred prior to the Filing Date
(including existing Capitalized Leases); (iii) Indebtedness incurred subsequent
to the Filing Date secured by purchase money Liens (exclusive of Capitalized
Leases) in an aggregate amount not to exceed an amount satisfactory to the
Agent; (iv) Capitalized Leases to the extent of Capital Expenditures permitted
by Section 6.04; (v) Indebtedness arising from Investments among the Borrower
and the Guarantors that are permitted hereunder; (vi) Indebtedness owed to Chase
or any banking Affiliates in respect of any overdrafts and related liabilities
arising from treasury, depository and cash management services or in connection
with any automated clearing house transfers of funds; (vii) inter-company
Indebtedness in existence on the Filing Date and set forth on Schedule 6.03(vii)
hereto; (viii) additional loans and advances by the Borrower to foreign
Subsidiaries in an aggregate amount not in excess of an amount satisfactory to
the Agent at any one time outstanding, provided that (A) any such loans or
advances that are used to repay a foreign Subsidiary's Indebtedness for borrowed
money shall be secured by a Lien on such assets of such foreign Subsidiary as
may be satisfactory to the Agent, (B) the Borrower shall use reasonable efforts
to obtain collateral to secure such loans and advances that are used for other
purposes, (C) all of such loans and advances shall be evidenced by promissory
notes bearing interest rates, and payable on terms, that are satisfactory to the
Agent, and providing that payments thereunder shall be made without setoff,
counterclaim or deduction of any kind and (D) no such loans or advances may be
made to any foreign Subsidiary that becomes the subject of a voluntary or
involuntary bankruptcy or similar proceeding; (ix) Hedge Agreements that are
entered into in the ordinary course of business consistent with past practices;
and (x) other Indebtedness that is satisfactory to the Agent.
SECTION 7.4 Capital Expenditures. Make Capital Expenditures in an
aggregate amount in excess of an amount satisfactory to the
- ---------------------------------------
Agent.
SECTION 7.5 EBITDA. Permit cumulative EBITDA for such periods as are
satisfactory to the Agent to be less than such amounts as
are satisfactory to the Agent.
SECTION 1.1
SECTION 7.6 Guarantees and Other Liabilities. Purchase or repurchase (or agree,
contingently or otherwise, so to do) the Indebtedness of, or assume, guarantee
(directly or indirectly or by an instrument having the effect of assuring
another's payment or performance of any obligation or capability of so doing, or
otherwise), endorse or otherwise become liable, directly or indirectly, in
connection with the obligations, stock or dividends of any Person, except (i)
for any guaranty of Indebtedness or other obligations of any Borrower or
Guarantor if the Guarantor could have incurred such Indebtedness or obligations
under this Agreement, (ii) by endorsement of negotiable instruments for deposit
or collection in the ordinary course of business and (iii) as otherwise agreed
in writing by the Agent.
SECTION 7.7 Chapter 11 Claims. Incur, create, assume, suffer to exist or permit
any other Super-Priority Claim which is pari passu with or senior to the claims
of the Agent and the Banks against the Borrower and the Guarantors hereunder,
except for the Carve-Out.
SECTION 7.8 Dividends; Capital Stock. Declare or pay, directly or indirectly,
any dividends or make any other distribution or payment, whether in cash,
property, securities or a combination thereof, with respect to (whether by
reduction of capital or otherwise) any shares of capital stock (or any options,
warrants, rights or other equity securities or agreements relating to any
capital stock), or set apart any sum for the aforesaid purposes, provided that
any Subsidiary may pay dividends to the Borrower or to any other Subsidiary.
SECTION 7.9 Transactions with Affiliates. Sell or transfer any property or
assets to, or otherwise engage in any other material transactions with, any of
its Affiliates (other than the Borrower and the Guarantors), other than in the
ordinary course of business at prices and on terms and conditions not less
favorable to the Borrower or its Subsidiaries than could be obtained on an
arm's-length basis from unrelated third parties and transactions among the
Borrower and its Subsidiaries in the ordinary course of business and consistent
with past practices, or as may be otherwise satisfactory to the Agent.
SECTION 7.10 Investments, Loans and Advances. Purchase, hold or acquire any
capital stock, evidences of indebtedness or its other securities of, make or
permit to exist any loans or advances to, or make or permit to exist any
investment in, any other Person (all of the foregoing, "Investments"), except
for (i) ownership by the Borrower or the Guarantors of the capital stock of each
of the Subsidiaries listed on Schedule 3.05, (ii) Permitted Investments, (iii)
advances and loans among the Borrower and the Guarantors in the ordinary course,
(iv) advances and loans by the Borrower to foreign Subsidiaries permitted hereby
and (iv) other Investments that are satisfactory to the Agent.
SECTION 7.11 Disposition of Assets. Sell or otherwise dispose of any assets
(including, without limitation, the capital stock of any Subsidiary) except for
(i) sales of inventory, fixtures and equipment in the ordinary course of
business, (ii) sales or other dispositions of other assets having a fair market
value not exceeding in the aggregate an amount that is satisfactory to the Agent
and (iii) other sales and dispositions that are satisfactory to the Agent.
SECTION 7.12 Nature of Business. Modify or alter in any material manner the
nature and type of its business as conducted at or prior to the Filing Date or
the manner in which such business is conducted (except as required by the
Bankruptcy Code).
SECTION 8. EVENTS OF DEFAULT
SECTION 8.1 Events of Default. In the case of the happening of any of the
following events and the continuance thereof beyond the applicable period of
grace if any (each, an "Event of Default"):
(1) any material representation or warranty made by the Borrower or any
Guarantor in this Agreement or in any Loan Document or in connection with this
Agreement or the credit extensions hereunder or any material statement or
representation made in any report, financial statement, certificate or other
document furnished by the Borrower or any Guarantors to the Banks under or in
connection with this Agreement, shall prove to have been false or misleading in
any material respect when made or delivered; or
(2) default shall be made in the payment of any (i) Fees or interest on the
Loans or unreimbursed draws under Tranche C Letters of Credit when due, and such
default shall continue unremedied for more than two (2) Business Days or (ii)
principal of the Loans or other amounts payable by the Borrower hereunder
(including, without limitation, reimbursement obligations or cash
collateralization in respect of Letters of Credit), when and as the same shall
become due and payable, whether at the due date thereof (including the
Prepayment Date) or at a date fixed for prepayment thereof or by acceleration
thereof or otherwise; or
(3) default shall be made by the Borrower or any Guarantor in the due observance
or performance of any covenant, condition or agreement contained in Section 6
hereof; or
(4) default shall be made by the Borrower or any Guarantor in the due observance
or performance of any other covenant, condition or agreement to be observed or
performed pursuant to the terms of this Agreement or any of the other Loan
Documents and such default shall continue unremedied for more than ten (10)
days; or
(5) any of the Cases shall be dismissed or converted to a case under Chapter 7
of the Bankruptcy Code; a trustee under Chapter 7 or Chapter 11 of the
Bankruptcy Code, a responsible officer or an examiner with enlarged powers
relating to the operation of the business (powers beyond those set forth in
Section 1106(a)(3) and (4) of the Bankruptcy Code) under Section 1106(b) of the
Bankruptcy Code shall be appointed in any of the Cases and the order appointing
such trustee, responsible officer or examiner shall not be reversed or vacated
within 30 days after the entry thereof; or an application shall be filed by the
Borrower or any Guarantor for the approval of any other Super-Priority Claim
(other than the Carve-Out) in any of the Cases which is pari passu with or
senior to the claims of the Agent and the Banks against the Borrower or any
Guarantor hereunder, or there shall arise or be granted any such pari passu or
senior Super-Priority Claim; or
(1)
(6) the Bankruptcy Court shall enter an order or orders granting relief from the
automatic stay applicable under Section 362 of the Bankruptcy Code to the holder
or holders of any security interest to permit foreclosure (or the granting of a
deed in lieu of foreclosure or the like) on any assets of the Borrower or any of
the Guarantors which have a value in excess of $500,000 in the aggregate; or
(7) a Change of Control shall occur; or
(8) any material provision of any Loan Document shall, for any reason, cease to
be valid and binding on the Borrower or any of the Guarantors, or the Borrower
or any of the Guarantors shall so assert in any pleading filed in any court; or
(9) an order of the Bankruptcy Court shall be entered (without the prior written
consent of the Agent and the Required Banks) reversing, amending, supplementing,
staying for a period in excess of 10 days, vacating or otherwise modifying
either of the Orders or terminating the use of cash collateral by the Borrower
or the Guarantors pursuant to the Orders; or
(10) any administrative expense claim in excess of $10,000,000 shall be allowed
against the Borrower or any of the Guarantors and the enforcement thereof shall
not have been stayed; or
(11) `any non-monetary judgment or order with respect to a post-petition event
shall be rendered against the Borrower or any of the Guarantors which does or
would reasonably be expected to (i) cause a material adverse change in the
financial condition, business, prospects, operations or assets of the Borrower
and the Guarantors taken as a whole on a consolidated basis, (ii) have a
material adverse effect on the ability of the Borrower or any of the Guarantors
to perform their respective obligations under any Loan Document, or (iii) have a
material adverse effect on the rights and remedies of the Agent or any Bank
under any Loan Document, and there shall be any period of 10 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
(12) the Borrower or the Guarantors shall make any Pre-Petition Payment in
excess of amounts that are satisfactory to the Agent; or
(13) any Termination Event described in clauses (iii) or (iv) of the definition
of such term shall have occurred and shall continue unremedied for more than 10
days and the sum (determined as of the date of occurrence of such Termination
Event) of the Insufficiency of the Plan in respect of which such Termination
Event shall have occurred and be continuing and the Insufficiency of any and all
other Plans with respect to which such a Termination Event (described in such
clauses (iii) or (iv)) shall have occurred and then exist is equal to or greater
than $5,000,000; or
(1)
(14) (i) the Borrower or any ERISA Affiliate thereof shall have been notified by
the sponsor of a Multiemployer Plan that it has incurred Withdrawal Liability to
such Multiemployer Plan, (ii) the Borrower or such ERISA Affiliate does not have
reasonable grounds to contest such Withdrawal Liability and is not in fact
contesting such Withdrawal Liability in a timely and appropriate manner, and
(iii) the amount of such Withdrawal Liability specified in such notice, when
aggregated with all other amounts required to be paid to Multiemployer Plans in
connection with Withdrawal Liabilities (determined as of the date of such
notification), exceeds $5,000,000 allocable to post-petition obligations or
requires payments exceeding $500,000 per annum in excess of the annual payments
made with respect to such Multiemployer Plans by the Borrower or such ERISA
Affiliate for the plan year immediately preceding the plan year in which such
notification is received; or
(15) the Borrower or any ERISA Affiliate thereof shall have been notified by the
sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of ERISA,
if as a result of such reorganization or termination the aggregate annual
contributions of the Borrower and its ERISA Affiliates to all Multiemployer
Plans that are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for the plan
years that include the date hereof by an amount exceeding $5,000,000; or
(16) the Borrower or any ERISA Affiliate shall have committed a failure
described in Section 302(f)(1) of ERISA (other than the failure to make any
contribution accrued and unpaid as of the Filing Date) and the amount determined
under Section 302(f)(3) of ERISA is equal to or greater than $5,000,000; or
(17) it shall be determined (whether by the Bankruptcy Court or by any other
judicial or administrative forum) that the Borrower or any Guarantor is liable
for the payment of claims arising out of any failure to comply (or to have
complied) with applicable environmental laws or regulations the payment of which
will have a material adverse effect on the financial condition, business,
properties, operations or assets of the Borrower or the Guarantors, taken as a
whole, and the enforcement thereof shall not have been stayed;
(1)
then, and in every such event and at any time thereafter during the continuance
of such event, and without further order of or application to the Bankruptcy
Court, the Agent may, and at the request of the Required Banks, shall, by notice
to the Borrower (with a copy to counsel for the Official Creditors' Committee
appointed in the Cases and to the United States Trustee for the District of
Delaware), take one or more of the following actions, at the same or different
times (provided, that with respect to clause (iv) below and the enforcement of
Liens or other remedies with respect to the Collateral under clause (v) below,
the Agent shall provide the Borrower (with a copy to counsel for the Official
Creditors' Committee in the Cases and to the United States Trustee for the
District of Delaware) with five (5) Business Days' written notice prior to
taking the action contemplated thereby and provided, further that upon receipt
of notice referred to in the immediately preceding clause with respect to the
accounts referred to in clause (iv) below, the Borrower may continue to make
ordinary course disbursements from such accounts (other than the Letter of
Credit Account) but may not withdraw or disburse any other amounts from such
accounts): (i) terminate forthwith the Total Commitment; (ii) declare the Loans
then outstanding and unreimbursed draws under Tranche C Letters of Credit to be
forthwith due and payable, whereupon the principal of the Loans and unreimbursed
draws under Tranche C Letters of Credit together with accrued interest thereon
and any unpaid accrued Fees and all other liabilities of the Borrower accrued
hereunder and under any other Loan Document, shall become forthwith due and
payable, without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived by the Borrower and the Guarantors,
anything contained herein or in any other Loan Document to the contrary
notwithstanding; (iii) require the Borrower and the Guarantors upon demand to
forthwith deposit in the Letter of Credit Account cash in an amount which,
together with any amounts then held in the Letter of Credit Account, is equal to
the sum of 105% of the then Letter of Credit Outstandings and to the extent the
Borrower and the Guarantors shall fail to furnish such funds as demanded by the
Agent, the Agent shall be authorized to debit the accounts of the Borrower and
the Guarantors maintained with the Agent in such amount; (iv) set-off amounts in
the Letter of Credit Account or any other accounts maintained with the Agent and
apply such amounts to the obligations of the Borrower and the Guarantors
hereunder and in the other Loan Documents; and (v) exercise any and all remedies
under the Loan Documents and under applicable law available to the Agent and the
Banks.
SECTION 9. THE AGENT
SECTION 9.1 Administration by Agent. The general administration of the Loan
Documents shall be by the Agent. Each Bank hereby irrevocably authorizes the
Agent, at its discretion, to take or refrain from taking such actions as agent
on its behalf and to exercise or refrain from exercising such powers under the
Loan Documents as are delegated by the terms hereof or thereof, as appropriate,
together with all powers reasonably incidental thereto (including the release of
Collateral in connection with any transaction that is expressly permitted by the
Loan Documents). The Agent shall have no duties or responsibilities except as
set forth in this Agreement and the remaining Loan Documents.
SECTION 9.2 Advances and Payments.
(1) On the date of each Loan, the Agent shall be authorized (but not obligated)
to advance, for the account of each of the Tranche A Banks and Tranche B Banks,
the amount of the Loan to be made by it in accordance with its Commitments
hereunder. Should the Agent do so, each of the Tranche A Banks and Tranche B
Banks agrees forthwith to reimburse the Agent in immediately available funds for
the amount so advanced on its behalf by the Agent, together with interest at the
Federal Funds Effective Rate if not so reimbursed on the date due from and
including such date but not including the date of reimbursement.
(1)
(2) Any amounts received by the Agent in connection with this Agreement (other
than amounts to which the Agent is entitled pursuant to Sections 2.18, 8.06,
10.05 and 10.06), the application of which is not otherwise provided for in this
Agreement shall be applied, first, in accordance with each Bank's Commitment
Percentage to pay accrued but unpaid Commitment Fees or Letter of Credit Fees
(as applicable), and second, in accordance with each Bank's Commitment
Percentage to pay accrued but unpaid interest and the principal balance
outstanding and all unreimbursed Letter of Credit drawings (as applicable). All
amounts to be paid to a Bank by the Agent shall be credited to that Bank, after
collection by the Agent, in immediately available funds either by wire transfer
or deposit in that Bank's correspondent account with the Agent, as such Bank and
the Agent shall from time to time agree.
SECTION 9.3 Sharing of Setoffs. Each Bank agrees that if it shall, through the
exercise of a right of banker's lien, setoff or counterclaim against the
Borrower, including, but not limited to, a secured claim under Section 506 of
the Bankruptcy Code or other security or interest arising from, or in lieu of,
such secured claim and received by such Bank under any applicable bankruptcy,
insolvency or other similar law, or otherwise, obtain payment in respect of its
Loans as a result of which the unpaid portion of its Loans or participation in
unreimbursed Letters of Credit is proportionately less than the unpaid portion
of the Loans of any other Bank (a) it shall promptly purchase at par (and shall
be deemed to have thereupon purchased) from such other Bank a participation in
the Loans or participation in unreimbursed Letters of Credit of such other Bank,
so that the aggregate unpaid principal amount of each Bank's Loans and
participations in unreimbursed Letters of Credit and its participation in Loans
and unreimbursed Letters of Credit of the other Banks shall be in the same
proportion to the aggregate unpaid principal amount of all Loans then
outstanding and unreimbursed Letters of Credit as the principal amount of its
Loans and unreimbursed Letters of Credit prior to the obtaining of such payment
was to the principal amount of all Loans outstanding and unreimbursed Letters of
Credit prior to the obtaining of such payment and (b) such other adjustments
shall be made from time to time as shall be equitable to ensure that the Banks
share such payment pro-rata, provided that if any such non-pro-rata payment is
thereafter recovered or otherwise set aside such purchase of participations
shall be rescinded (without interest). The Borrower expressly consents to the
foregoing arrangements and agrees that any Bank holding (or deemed to be
holding) a participation in a Loan or in an unreimbursed Letter of Credit may
exercise any and all rights of banker's lien, setoff (in each case, subject to
the same notice requirements as pertain to clause (iv) of the remedial
provisions of Section 7.01) or counterclaim with respect to any and all moneys
owing by the Borrower to such Bank as fully as if such Bank held a Note and was
the original obligee thereon, in the amount of such participation.
SECTION 9.4 Agreement of Required Banks. Upon any occasion requiring or
permitting an approval, consent, waiver, election or other action on the part of
the Required Banks, action shall be taken by the Agent for and on behalf or for
the benefit of all Banks upon the direction of the Required Banks, and any such
action shall be binding on all Banks. No amendment, modification, consent, or
waiver shall be effective except in accordance with the provisions of Section
10.10.
SECTION 9.5 Liability of Agent.
SECTION 1.1
(1) The Agent when acting on behalf of the Banks, may execute any of its
respective duties under this Agreement by or through any of its respective
officers, agents, and employees, and neither the Agent nor its directors,
officers, agents, employees or Affiliates shall be liable to the Banks or any of
them for any action taken or omitted to be taken in good faith, or be
responsible to the Banks or to any of them for the consequences of any oversight
or error of judgment, or for any loss, unless the same shall happen through its
gross negligence or willful misconduct. The Agent and its respective directors,
officers, agents, employees and Affiliates shall in no event be liable to the
Banks or to any of them for any action taken or omitted to be taken by them
pursuant to instructions received by them from the Required Banks or in reliance
upon the advice of counsel selected by it. Without limiting the foregoing,
neither the Agent, nor any of its respective directors, officers, employees,
agents or Affiliates shall be responsible to any Bank for the due execution,
validity, genuineness, effectiveness, sufficiency, or enforceability of, or for
any statement, warranty, or representation in, this Agreement, any Loan Document
or any related agreement, document or order, or shall be required to ascertain
or to make any inquiry concerning the performance or observance by the Borrower
of any of the terms, conditions, covenants, or agreements of this Agreement or
any of the Loan Documents.
(2) Neither the Agent nor any of its respective directors, officers, employees,
agents or Affiliates shall have any responsibility to the Borrower or the
Guarantors on account of the failure or delay in performance or breach by any
Bank or by the Borrower or the Guarantors of any of their respective obligations
under this Agreement or any of the Loan Documents or in connection herewith or
therewith.
(3) The Agent, in its capacity as Agent hereunder, shall be entitled to rely on
any communication, instrument, or document reasonably believed by such person to
be genuine or correct and to have been signed or sent by a person or persons
believed by such person to be the proper person or persons, and such person
shall be entitled to rely on advice of legal counsel, independent public
accountants, and other professional advisers and experts selected by such
person.
SECTION 9.6 Reimbursement and Indemnification. Each Bank agrees (i) to reimburse
(x) the Agent for such Bank's aggregate Commitment Percentage of any expenses
and fees incurred for the benefit of the Banks under this Agreement and any of
the Loan Documents, including, without limitation, counsel fees and compensation
of agents and employees paid for services rendered on behalf of the Banks, and
any other expense incurred in connection with the operations or enforcement
thereof not reimbursed by the Borrower or the Guarantors and (y) the Agent for
such Bank's aggregate Commitment Percentage of any expenses of the Agent
incurred for the benefit of the Banks that the Borrower has agreed to reimburse
pursuant to Section 10.05 and has failed to so reimburse and (ii) to indemnify
and hold harmless the Agent and any of its directors, officers, employees,
agents or Affiliates, on demand, in the amount of its proportionate share, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against it
or any of them in any way relating to or arising out of this Agreement or any of
the Loan Documents or any action taken or omitted by it or any of them under
this Agreement or any of the Loan Documents to the extent not reimbursed by the
Borrower or the Guarantors (except such as shall result from their respective
gross negligence or willful misconduct).
SECTION 1.1
SECTION 9.7 Rights of Agent. It is understood and agreed that Chase shall have
the same rights and powers hereunder (including the right to give such
instructions) as the other Banks and may exercise such rights and powers, as
well as its rights and powers under other agreements and instruments to which it
is or may be party, and engage in other transactions with the Borrower or any
Guarantor, as though it were not the Agent of the Banks under this Agreement.
SECTION 9.8 Independent Banks. Each Bank acknowledges that it has decided to
enter into this Agreement and to make the Loans or participate in Letters of
Credit hereunder based on its own analysis of the transactions contemplated
hereby and of the creditworthiness of the Borrower and the Guarantors and agrees
that the Agent shall bear no responsibility therefor.
SECTION 9.9 Notice of Transfer. The Agent may deem and treat a Bank party to
this Agreement as the owner of such Bank's portion of the Loans or participation
in Letters of Credit for all purposes, unless and until a written notice of the
assignment or transfer thereof executed by such Bank shall have been received by
the Agent.
SECTION 9.10 Successor Agent. The Agent may resign at any time by giving written
notice thereof to the Banks and the Borrower. Upon any such resignation, the
Required Banks shall have the right to appoint a successor Agent, which shall be
reasonably satisfactory to the Borrower. If no successor Agent shall have been
so appointed by the Required Banks and shall have accepted such appointment,
within 30 days after the retiring Agent's giving of notice of resignation, the
retiring Agent may, on behalf of the Banks, appoint a successor Agent, which
shall be a commercial bank organized under the laws of the United States of
America or of any State thereof and having a combined capital and surplus of a
least $100,000,000, which shall be reasonably satisfactory to the Borrower. Upon
the acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Section 8 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement.
SECTION 10. GUARANTY
SECTION 10.1 Guaranty.
(1) Each of the Guarantors unconditionally and irrevocably guarantees the due
and punctual payment and performance by the Borrower of the Obligations. Each of
the Guarantors further agrees that the Obligations may be extended or renewed,
in whole or in part, without notice to or further assent from it, and it will
remain bound upon this guaranty notwithstanding any extension or renewal of any
of the Obligations. The Obligations of the Guarantors shall be joint and
several.
(1)
(2) Each of the Guarantors waives presentation to, demand for payment from and
protest to the Borrower or any other Guarantor, and also waives notice of
protest for nonpayment. The Obligations of the Guarantors hereunder shall not be
affected by (i) the failure of the Agent or a Bank to assert any claim or demand
or to enforce any right or remedy against the Borrower or any other Guarantor
under the provisions of this Agreement or any other Loan Document or otherwise;
(ii) any extension or renewal of any provision hereof or thereof; (iii) any
rescission, waiver, compromise, acceleration, amendment or modification of any
of the terms or provisions of any of the Loan Documents; (iv) the release,
exchange, waiver or foreclosure of any security held by the Agent for the
Obligations or any of them; (v) the failure of the Agent or a Bank to exercise
any right or remedy against any other Guarantor; or (vi) the release or
substitution of any Guarantor or any other Guarantor.
(3) Each of the Guarantors further agrees that this guaranty constitutes a
guaranty of performance and of payment when due and not just of collection, and
waives any right to require that any resort be had by the Agent or a Bank to any
security held for payment of the Obligations or to any balance of any deposit,
account or credit on the books of the Agent or a Bank in favor of the Borrower
or any other Guarantor, or to any other Person.
(4) Each of the Guarantors hereby waives any defense that it might have based on
a failure to remain informed of the financial condition of the Borrower and of
any other Guarantor and any circumstances affecting the ability of the Borrower
to perform under this Agreement.
(5) Each Guarantor's guaranty shall not be affected by the genuineness,
validity, regularity or enforceability of the Obligations or any other
instrument evidencing any Obligations, or by the existence, validity,
enforceability, perfection, or extent of any collateral therefor or by any other
circumstance relating to the Obligations which might otherwise constitute a
defense to this Guaranty. Neither of the Agent, nor any of the Banks makes any
representation or warranty in respect to any such circumstances or shall have
any duty or responsibility whatsoever to any Guarantor in respect of the
management and maintenance of the Obligations.
(6) Subject to the provisions of Section 7.01, upon the Obligations becoming due
and payable (by acceleration or otherwise), the Banks shall be entitled to
immediate payment of such Obligations by the Guarantors upon written demand by
the Agent, without further application to or order of the Bankruptcy Court.
(1)
SECTION 10.2 No Impairment of Guaranty. The obligations of the Guarantors
hereunder shall not be subject to any reduction, limitation, impairment or
termination for any reason, including, without limitation, any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defense or set-off, counterclaim, recoupment or termination whatsoever by reason
of the invalidity, illegality or unenforceability of the Obligations. Without
limiting the generality of the foregoing, the obligations of the Guarantors
hereunder shall not be discharged or impaired or otherwise affected by the
failure of the Agent or a Bank to assert any claim or demand or to enforce any
remedy under this Agreement or any other agreement, by any waiver or
modification of any provision thereof, by any default, failure or delay, willful
or otherwise, in the performance of the Obligations, or by any other act or
thing or omission or delay to do any other act or thing which may or might in
any manner or to any extent vary the risk of the Guarantors or would otherwise
operate as a discharge of the Guarantors as a matter of law, unless and until
the Obligations are paid in full.
SECTION 10.3 Subrogation. Upon payment by any Guarantor of any sums to the Agent
or a Bank hereunder, all rights of such Guarantor against the Borrower arising
as a result thereof by way of right of subrogation or otherwise, shall in all
respects be subordinate and junior in right of payment to the prior final and
indefeasible payment in full of all the Obligations. If any amount shall be paid
to such Guarantor for the account of the Borrower, such amount shall be held in
trust for the benefit of the Agent and the Banks and shall forthwith be paid to
the Agent and the Banks to be credited and applied to the Obligations, whether
matured or unmatured.
SECTION 11. MISCELLANEOUS
SECTION 11.1 Notices. Notices and other communications provided for herein shall
be in writing (including telegraphic, telex, facsimile or cable communication)
and shall be mailed, telegraphed, telexed, transmitted, cabled or delivered to
the Borrower or any Guarantor at 3600 South Lake Drive, St. Francis, Wisconsin
53235-3716, Attention: Chief Financial Officer and to a Bank or the Agent to it
at its address set forth on Annex A, or such other address as such party may
from time to time designate by giving written notice to the other parties
hereunder. All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the fifth Business Day after the date when sent by registered or
certified mail, postage prepaid, return receipt requested, if by mail; or when
delivered to the telegraph company, charges prepaid, if by telegram; or when
receipt is acknowledged, if by any telegraphic communications or facsimile
equipment of the sender; in each case addressed to such party as provided in
this Section 10.01 or in accordance with the latest unrevoked written direction
from such party; provided, however, that in the case of notices to the Agent
notices pursuant to the preceding sentence and pursuant to Section 2 shall be
effective only when received by the Agent.
SECTION 11.2 Survival of Agreement, Representations and Warranties, etc. All
warranties, representations and covenants made by the Borrower or any Guarantor
herein or in any certificate or other instrument delivered by it or on its
behalf in connection with this Agreement shall be considered to have been relied
upon by the Banks and shall survive the making of the Loans herein contemplated
regardless of any investigation made by any Bank or on its behalf and shall
continue in full force and effect so long as any amount due or to become due
hereunder is outstanding and unpaid and so long as the Commitments have not been
terminated. All statements in any such certificate or other instrument shall
constitute representations and warranties by the Borrower and the Guarantors
hereunder with respect to the Borrower.
SECTION 11.3 Successors and Assigns.
SECTION 1.1
(1) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Agent and the Banks and their respective successors and assigns.
Neither the Borrower nor any of the Guarantors may assign or transfer any of
their rights or obligations hereunder without the prior written consent of all
of the Banks. Each Bank may sell participations to any Person in all or part of
any Loan, or all or part of any of its Commitment, in which event, without
limiting the foregoing, the provisions of Section 2.14 shall inure to the
benefit of each purchaser of a participation (provided that such participant
shall look solely to the seller of such participation for such benefits and the
Borrower's and the Guarantors' liability, if any, under Sections 2.14 and 2.17
shall not be increased as a result of the sale of any such participation) and
the pro rata treatment of payments, as described in Section 2.16, shall be
determined as if such Bank had not sold such participation. In the event any
Bank shall sell any participation, such Bank shall retain the sole right and
responsibility to enforce the obligations of the Borrower and each of the
Guarantors relating to the Loans or Letters of Credit, including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of this Agreement (provided that such Bank may grant its participant
the right to consent to such Bank's execution of amendments, modifications or
waivers which (i) reduce any Fees payable hereunder to the Banks, (ii) reduce
the amount of any scheduled principal payment on any Loan or reimbursement
obligation of any Letter of Credit or reduce the principal amount of any Loan or
reimbursement obligation of any Letter of Credit or the rate of interest payable
hereunder or (iii) extend the maturity of the Borrower's obligations hereunder).
The sale of any such participation shall not alter the rights and obligations of
the Bank selling such participation hereunder with respect to the Borrower.
(1)
(2) Each Bank may assign to one or more Banks or Eligible Assignees all or a
portion of any of its interests, rights and obligations under this Agreement
(including, without limitation, all or a portion of any of its separate
Commitments and the same portion of the related Loans or Letters of Credit at
the time owing to it), provided, however, that (i) other than in the case of an
assignment to a Person at least 50% owned by the assignor Bank, or by a common
parent of both, or to another Bank, the Agent and the Fronting Bank must give
their respective prior written consent to such assignment, which consent will
not be unreasonably withheld, (ii) the aggregate amount of the respective
Commitments and/or related Loans or Letters of Credit of the assigning Bank
subject to each such assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to the Agent) shall,
unless otherwise agreed to in writing by the Borrower and the Agent, in no event
be less than $5,000,000 or the remaining portion of such Bank's Commitment
and/or related Loans or Letters of Credit that is being assigned, if less (or
$1,000,000 in the case of an assignment between Banks), and (iii) the parties to
each such assignment shall execute and deliver to the Agent, for its acceptance
and recording in the Register (as defined below), an Assignment and Acceptance
with blanks appropriately completed, together with a processing and recordation
fee of $3,500 (for which the Borrower shall have no liability). Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, which effective date shall be
within ten Business Days after the execution thereof (unless otherwise agreed to
in writing by the Agent), (A) 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 and (B) the 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 Bank shall cease to be a party
hereto).
(3) By executing and delivering an Assignment and Acceptance, the Bank assignor
thereunder and the assignee thereunder confirm to and agree with each other and
the other parties hereto as follows: (i) other than the representation and
warranty that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim, such Bank assignor makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any of the other Loan Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any of the other Loan Documents; (ii) such Bank assignor makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of the Borrower or any Guarantor or the performance or observance by
the Borrower or any Guarantor of any of its obligations under this Agreement or
any of the other Loan Documents or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement and the other Loan Documents, together with copies of the
financial statements referred to in Section 3.04 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Agent, such Bank assignor 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 this Agreement; (v) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
thereto, together with such powers as are reasonably incidental hereof; and (vi)
such assignee agrees that it will perform in accordance with their terms all
obligations that by the terms of this Agreement are required to be performed by
it as a Bank.
(4) The Agent shall maintain at its office a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Banks and the Commitments of, and principal amount of the Loans
or Letter of Credit Outstandings owing to, each Bank from time to time (the
"Register"). The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Guarantors, the Agent and the Banks shall
treat each Person the name of which is recorded in the Register as a Bank
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrower or any Bank at any reasonable time and from time
to time upon reasonable prior notice.
(1)
(5) Upon its receipt of an Assignment and Acceptance executed by an assigning
Bank and the assignee thereunder together with the fee payable in respect
thereto, the Agent shall, if such Assignment and Acceptance has been completed
with blanks appropriately filled and consented to by the Agent and the Fronting
Bank (to the extent such consent is required hereunder), (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt written notice thereof to the Borrower (together
with a copy thereof). No assignment shall be effective for purposes of this
Agreement unless it has been recorded in the Register as provided in this
paragraph.
(6) Any Bank may, in connection with any assignment or participation or proposed
assignment or participation pursuant to this Section 10.03, disclose to the
assignee or participant or proposed assignee or participant, any information
relating to the Borrower or any of the Guarantors furnished to such Bank by or
on behalf of the Borrower or any of the Guarantors; provided that prior to any
such disclosure, each such assignee or participant or proposed assignee or
participant shall agree in writing to be bound by the provisions of Section
10.04.
(7) The Borrower hereby agrees, to the extent set forth in the Commitment
Letter, to actively assist and cooperate with the Agent in the Agent's efforts
to sell participations herein (as described in Section 10.03(a)) and assign to
one or more Banks or Eligible Assignees a portion of its interests, rights and
obligations under this Agreement (as set forth in Section 10.03(b)).
SECTION 11.4 Confidentiality. Each Bank agrees to keep any information delivered
or made available by the Borrower or any of the Guarantors to it confidential
from anyone other than persons employed or retained by such Bank who are or are
expected to become engaged in evaluating, approving, structuring or
administering the Loans; provided that nothing herein shall prevent any Bank
from disclosing such information (i) to any other Bank, (ii) to any of its
Affiliates, provided such Affiliate agrees to keep such information confidential
to the same extent required by the Banks hereunder, (iii) to any other person if
reasonably incidental to the administration of the Loans, (iv) upon the order of
any court or administrative agency, (v) upon the request or demand of any
regulatory agency or authority, (vi) which has been publicly disclosed other
than as a result of a disclosure by the Agent or any Bank which is not permitted
by this Agreement, (vii) in connection with any litigation to which the Agent,
any Bank, or their respective Affiliates may be a party to the extent reasonably
required, (viii) to the extent reasonably required in connection with the
exercise of any remedy hereunder, (ix) to such Bank's legal counsel and
independent auditors, and (x) to any actual or proposed participant or assignee
of all or part of its rights hereunder subject to the proviso in Section
10.03(f).
SECTION 1.1
SECTION 11.5 Expenses. Whether or not the transactions hereby contemplated shall
be consummated, the Borrower and the Guarantors agree to pay all reasonable
out-of-pocket expenses incurred by the Agent and Chase Securities Inc.
(including but not limited to the reasonable fees and disbursements of Morgan,
Lewis & Bockius LLP, special counsel for the Agent, any other counsel that the
Agent shall retain, any internal or third-party consultants and auditors
advising the Agent and Chase Securities Inc. and any financial advisor appointed
to advise the Banks) in connection with the preparation, execution, delivery and
administration of this Agreement and the other Loan Documents, the making of the
Loans and the issuance of the Letters of Credit, the perfection of the Liens
contemplated hereby, the syndication of the transactions contemplated hereby,
the reasonable and customary costs, fees and expenses of the Agent in connection
with the monitoring of assets (including reasonable and customary internal asset
monitoring fees) and publicity expenses, and, following the occurrence of an
Event of Default, all reasonable out-of-pocket expenses incurred by the Banks
and the Agent in the enforcement or protection of the rights of any one or more
of the Banks or the Agent in connection with this Agreement or the other Loan
Documents, including but not limited to the reasonable fees and disbursements of
any counsel for the Banks or the Agent. Such payments shall be made on the date
of the Interim Order and thereafter on demand upon delivery of a statement
setting forth such costs and expenses. Whether or not the transactions hereby
contemplated shall be consummated, the Borrower and the Guarantors agree to
reimburse the Agent and Chase Securities Inc. for the expenses set forth in the
Commitment Letter and the reimbursement provisions thereof are hereby
incorporated herein by reference. The obligations of the Borrower and the
Guarantors under this Section shall survive the termination of this Agreement
and/or the payment of the Loans.
SECTION 11.6 Indemnity. The Borrower and each of the Guarantors agree to
indemnify and hold harmless the Agent, Chase Securities Inc. and the Banks and
their directors, officers, employees, agents and Affiliates (each an
"Indemnified Party") from and against any and all expenses, losses, claims,
damages and liabilities incurred by such Indemnified Party arising out of claims
made by any Person in any way relating to the transactions contemplated hereby,
but excluding therefrom all expenses, losses, claims, damages, and liabilities
to the extent that they are determined by the final judgment of a court of
competent jurisdiction to have resulted from the gross negligence or willful
misconduct of such Indemnified Party. The obligations of the Borrower and the
Guarantors under this Section shall survive the termination of this Agreement
and/or the payment of the Loans.
SECTION 11.7 CHOICE OF LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL IN
ALL RESPECTS BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN
SUCH STATE AND THE BANKRUPTCY CODE.
SECTION 11.8 No Waiver. No failure on the part of the Agent or any of the Banks
to exercise, and no delay in exercising, any right, power or remedy hereunder or
any of the other Loan Documents shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
All remedies hereunder are cumulative and are not exclusive of any other
remedies provided by law.
SECTION 11.9 Extension of Maturity. Should any payment of principal of or
interest or any other amount due hereunder become due and payable on a day other
than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, in the case of principal, interest shall be payable
thereon at the rate herein specified during such extension.
SECTION 11.10 Amendments, etc.
SECTION 1.1
(1) No modification, amendment or waiver of any provision of this Agreement or
the Security and Pledge Agreement, and no consent to any departure by the
Borrower or any Guarantor therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Required Banks, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given; provided, however, that no such modification or amendment shall
without the written consent of the Bank affected thereby (x) increase the
Commitment of a Bank (it being understood that a waiver of an Event of Default
shall not constitute an increase in the Commitment of a Bank), or (y) reduce the
principal amount of any Loan (or unreimbursed Letter of Credit) or the rate of
interest payable thereon, or extend any date for the payment of interest
hereunder or reduce any Fees payable hereunder or extend the final maturity of
the Borrower's obligations hereunder; and, provided, further, that no such
modification or amendment shall without the written consent of (A) all of the
Banks (i) amend or modify any provision of this Agreement which provides for the
unanimous consent or approval of the Banks, (ii) amend this Section 10.10 or the
definition of Required Banks or (iii) amend or modify the Super-Priority Claim
status of the Banks contemplated by Section 2.22 or (B) Banks holding Loans
and/or obligations to issue and/or participate in Letters of Credit representing
at least 66-2/3% of the Total Exposure release all or any substantial portion of
the Liens granted to the Agent hereunder, under the Orders or under any other
Loan Document, or release any Guarantor. No such amendment or modification may
adversely affect the rights and obligations of the Agent or any Fronting Bank
hereunder without its prior written consent. No notice to or demand on the
Borrower or any Guarantor shall entitle the Borrower or any Guarantor to any
other or further notice or demand in the same, similar or other circumstances.
Each assignee under Section 10.03(b) shall be bound by any amendment,
modification, waiver, or consent authorized as provided herein, and any consent
by a Bank shall bind any Person subsequently acquiring an interest on the Loans
held by such Bank. No amendment to this Agreement shall be effective against the
Borrower or any Guarantor unless signed by the Borrower or such Guarantor, as
the case may be.
(1)
(2) Notwithstanding anything to the contrary contained in Section 10.10(a), in
the event that the Borrower requests that this Agreement be modified or amended
in a manner which would require the unanimous consent of all of the Banks and
such modification or amendment is agreed to by the Super-majority Banks (as
hereinafter defined), then with the consent of the Borrower and the
Super-majority Banks, the Borrower and the Super-majority Banks shall be
permitted to amend the Agreement without the consent of the Bank or Banks which
did not agree to the modification or amendment requested by the Borrower (such
Bank or Banks, collectively the "Minority Banks") to provide for (w) the
termination of the Commitments of each of the Minority Banks, (x) the addition
to this Agreement of one or more other financial institutions (each of which
shall be an Eligible Assignee), or an increase in the applicable Commitments of
one or more of the Super-majority Banks, so that the applicable Commitments
after giving effect to such amendment shall be in the same amount as the
applicable Commitments immediately before giving effect to such amendment, (y)
if any Loans (or unreimbursed Tranche C Letters of Credit) are outstanding at
the time of such amendment, the making of such additional Loans (or the funding
of each unreimbursed Tranche C Letter of Credit) by such new financial
institutions or Super-majority Bank or Banks, as the case may be, as may be
necessary to repay in full the outstanding Loans (or unreimbursed Tranche C
Letters of Credit) of the Minority Banks immediately before giving effect to
such amendment and (z) such other modifications to this Agreement as may be
appropriate. As used herein, the term "Super-majority Banks" shall mean, at any
time, Banks holding Loans and/or obligations to issue and/or participate in
Letters of Credit representing at least 66-2/3% of the Total Exposure.
SECTION 11.11 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.
SECTION 11.12 Headings. Section headings used herein are for convenience only
and are not to affect the construction of or be taken into consideration in
interpreting this Agreement.
SECTION 11.13 Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall constitute an original, but all of
which taken together shall constitute one and the same instrument.
SECTION 11.14 Prior Agreements. This Agreement represents the entire agreement
of the parties with regard to the subject matter hereof and the terms of any
letters and other documentation entered into between the Borrower or a Guarantor
and any Bank or the Agent prior to the execution of this Agreement which relate
to Loans to be made hereunder shall be replaced by the terms of this Agreement
(except as otherwise expressly provided herein with respect to the Commitment
Letter and the fee letter referred to therein, including without limitation the
Borrower's agreement to actively assist the Agent in the syndication of the
transactions contemplated hereby referred to in Section 10.03(g) and including
also the provisions of Section 2.18).
SECTION 11.15 Further Assurances. Whenever and so often as reasonably requested
by the Agent, the Borrower and the Guarantors will promptly execute and deliver
or cause to be executed and delivered all such other and further instruments,
documents or assurances, and promptly do or cause to be done all such other and
further things as may be necessary and reasonably required in order to further
and more fully vest in the Agent all rights, interests, powers, benefits,
privileges and advantages conferred or intended to be conferred by this
Agreement and the other Loan Documents.
SECTION 11.16 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE GUARANTORS, THE
AGENT AND EACH BANK HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
SECTION 1.1
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and the year first written.
BORROWER:
HARNISCHFEGER INDUSTRIES, INC.
By: _________________________
Title:
GUARANTORS:
AMERICAN ALLOY COMPANY
AMERICAN LONGWALL FACE CONVEYORS,
INC.
AMERICAN LONGWALL, INC.
AMERICAN LONGWALL REBUILD, INC.
AMERICAN LONGWALL ROOF SUPPORTS,INC.
BELOIT CORPORATION
BELOIT PULPING GROUP, INC.
BENEFIT, INC.
FIELD REPAIR SERVICES LLC
FITCHBURG CORPORATION
HARNISCHFEGER CORPORATION
HARNISCHFEGER WORLD SERVICES
CORPORATION
THE HORSBURGH & SCOTT COMPANY
JOY TECHNOLOGIES INC.
OPTICAL ALIGNMENT SYSTEMS AND
INSPECTION SERVICES, INC.
PRINCETON PAPER COMPANY, LLC
RCHH, INC.
SOUTH SHORE CORPORATION
SOUTH SHORE DEVELOPMENT LLC
By: _________________________
Title:
BELOIT TECHNOLOGIES, INC.
BWRC DUTCH HOLDINGS, INC.
BWRC, INC.
DOBSON PARK INDUSTRIES, INC.
HARNISCHFEGER TECHNOLOGIES, INC.
HCHC, INC.
HCHC UK HOLDINGS, INC.
HIHC, INC.
JOY MM DELAWARE, INC.
JOY TECHNOLOGIES DELAWARE, INC.
JTI UK HOLDINGS, INC.
By: _________________________
Title:
AGENT:
THE CHASE MANHATTAN BANK,
Individually as a Tranche A Bank, Tranche
B Bank and Tranche C Bank and as Agent
By: _________________________
Title:
270 Park Avenue
New York, New York 10017
DocumentIDW/356717v3
TERMINATION AND RELEASE AGREEMENT
AGREEMENT (the "Agreement"), dated as of May 24, 1999 (the
"Termination Date"), by and between Harnischfeger Industries, Inc. (the
"Company"), and Jeffery T. Grade (the "Executive").
WHEREAS, the Executive has been employed as Chief Executive
Officer of the Company; and
WHEREAS, by mutual agreement between the parties hereto, the
Executive shall hereby resign, effective as of the Termination Date, his
positions as Chief Executive Officer of the Company, as a member of the board of
directors of the Company and as an officer and director of any subsidiary or
affiliate of the Company for which he is serving in such positions.
NOW, THEREFORE, BE IT RESOLVED, that the Company and the
Executive, in consideration of the covenants herein set forth, hereby agree as
follows:
1. Termination of Employment
By mutual agreement with the Company, the Executive hereby
resigns, effective as of the Termination Date, from his positions as Chief
Executive Officer of the Company and a member of the Board of Directors of the
Company, and from all other positions the Executive may currently hold as an
officer or member of the board of directors of any of the Company's subsidiaries
or affiliates. The Executive shall sign and deliver to the Company such other
documents as may be necessary to effect or reflect such resignations.
2. Severance Payments, Benefits and Obligations
(a) The Company will pay to the Executive his base salary
through the Termination Date, and the Executive will not be entitled to any
additional compensation or benefits from the Company, or its subsidiaries or
affiliates, except as provided in this Agreement.
(b) Pursuant to the terms of the Harnischfeger Industries,
Inc. Supplemental Retirement and Stock Funding Plan (the "SERP"), the Company
shall pay the Executive the amounts due to the Executive under the SERP upon a
termination of employment for "Good Reason," and the Company shall have no
further obligations to the Executive under the SERP. Upon execution of this
Agreement, the Company shall deliver to the Executive the shares of Company
common stock due to the Executive pursuant to the SERP. The Executive hereby
agrees that he will not violate any federal or state securities laws in
connection with transactions in shares of the Company's securities.
(c) Pursuant to the terms of the Harnischfeger Industries,
Inc. Long-Term Compensation Plan for Key Executives (the "LTCP"), the Company
shall pay the Executive the amounts due to the Executive under the LTCP upon a
termination of employment for "Good Reason" (as set forth in Exhibit A to this
Agreement), and the Company shall have no further obligations to the Executive
under the LTCP, other than any "Gross-Up Payments" which may become due to the
Executive under Section 7 of the LTCP if, and to the extent, applicable.
(d) Upon execution of this Agreement, the Company shall pay
the Executive a lump sum cash amount equal to $400,000. At the end of each
month, commencing in June, 1999, the Company shall pay the Executive a lump sum
cash amount equal to $50,000. The cash payments made to the Executive under this
Section 2(d) shall offset and be credited against the payments due to the
Executive pursuant to Sections 2(b) and 2(c) of this Agreement. Notwithstanding
anything to the contrary in this Section 2(d), the obligations of the Company
under this Section 2(d) shall cease at such time as the aggregate payments made
by the Company pursuant to this Section 2(d) and Sections 2(b) and 2(c) of this
Agreement satisfy the Company's obligations to the Executive under the SERP and
LTCP upon the Executive's termination of employment for Good Reason. Under no
circumstances shall the aggregate payments made by the Company pursuant to
Sections 2(b), 2(c) and 2(d) exceed the aggregate payments due to the Executive
under the SERP and LTCP upon the Executive's termination of employment for Good
Reason.
(e) The Company and its subsidiaries will continue to honor
for at least six years following the Termination Date, pursuant to their terms,
the director and officer indemnification and liability insurance provisions
maintained by such entities with respect to the Executive, with respect to
actions of the Executive as an officer or director of the Company (or any of its
subsidiaries) prior to the Termination Date.
(f) The Company will reimburse the Executive for any
unreimbursed reasonable business expenses incurred by the Executive prior to the
Termination Date, pursuant to the Company's reimbursement policies, following
the Executive's presentation of an expense report to the Company.
(g) The Company will provide the Executive with the
outplacement services and, subject to the Executive continuing to make the
required employee contributions, continuing medical, dental and vision benefits
due to the Executive under the Company's Out Placement Services and Medical
Benefits Continuation Plan, which benefits shall be equivalent to those provided
to the Executive and his family as of the Termination Date.
(h) As soon as practicable following the Termination Date, the
Company shall transfer to the Executive the lease on the Executive's
Company-provided vehicle. The Company shall reimburse the Executive for the
lease payments on such vehicle for the remaining period of the lease, as the
lease payments become due, as soon as practicable following receipt of an
invoice from the Executive.
(i) The Company shall provide the Executive with reasonable
office space in the Chicago area, and with secretarial services, through the
earlier of May 24, 2000, or such time as the Executive becomes reemployed.
3. Disparaging Comments
From and after the Termination Date, the Executive will
refrain from taking actions or making statements, written or oral, which
denigrate, disparage or defame the goodwill or reputation of the Company and any
of its subsidiaries and affiliates (the "Company Entities") and their trustees,
officers, security holders, partners, agents and former and current employees
and directors or which are intended to, or may be reasonably expected to,
adversely affect the morale of the employees of any of the Company Entities. The
Executive further agrees not to make any negative statements to third parties
relating to his employment or any aspect of the business of the Company Entities
and not to make any negative or adverse statements to third parties about the
circumstances of the termination of his employment, or the Company Entities and
their trustees, officers, security holders, partners, agents and former and
current employees and directors, except as may be required by a court or
governmental body. The Company will take reasonable steps to advise actively
employed executive officers of the Company and its subsidiaries, and members of
their boards of directors not to denigrate, disparage or defame the Executive's
reputation.
4. Confidentiality of this Agreement
Except as required by law or regulation, or to the extent
disclosed by the other party, none of the parties hereto will disclose the terms
of this Agreement, provided that the Executive may disclose such terms to his
financial and legal advisors and his spouse and the Company may disclose such
terms to selected employees, advisors and affiliates on a "need to know" basis,
each of whom shall be instructed by the Executive and the Company, as the case
may be, to maintain the terms of this Agreement in strict confidence in
accordance with the terms hereof.
5. Restrictive Covenants
(a) The Executive has returned or will immediately return to
the Company all Company Information (as defined below), including client lists,
files, software, records, computer access codes and instruction manuals which he
has in his possession, and agrees not to keep any copies of Company Information.
The Executive affirms his obligation to keep all Company Information
confidential and not to disclose it to any third party in the future. The term
"Company Information" means: (i) confidential information, including information
received from third parties under confidential conditions, and (ii) other
technical, marketing, business or financial information, or information relating
to personnel or former personnel of the Company, the use or disclosure of which
might reasonably be construed to be materially contrary to the interest of the
Company; provided, however, that the term "Company Information" shall not
include any information that is or became generally known or available to the
public other than as a direct result of a breach of this paragraph by the
Executive or any action by the Executive prior to the Termination Date which
would have been a breach of the Executive's obligations to the Company in effect
at such time. The Executive shall have the right to remove from the offices of
the Company any of his personal belongings which do not constitute Company
Information. The Executive may disclose Company Information to the extent
required by law or regulation; provided, that the Executive shall provide the
Company's general counsel with reasonable written notice (if possible no less
than 20 days' written notice) of any required disclosure. In the event the
Company does not object to such disclosure within the time period, the Executive
shall be permitted to disclose such Company Information. In the event the
Company objects to such disclosure, the Executive agrees that he will not
provide any Company Information that is the subject of such objection, but
rather will refer the requesting entity to the Company unless he is subject to a
court order to provide the Company Information.
(b) The Executive agrees that he will not engage in
Competition during the two-year period following the Termination Date.
"Competition" for the purposes of this Agreement shall mean: (i) becoming
directly or indirectly involved, as an owner, principal, employee, officer,
director, independent contractor, representative, stockholder, agent, advisor,
lender or in any other capacity, in any business engaged, or seeking to become
engaged, in the businesses conducted by the Company as of the Termination Date,
in any geographical area in which the Company is at the time engaging in or
attempting to engage in such businesses; provided, however, that in no event
shall ownership of less than 3% of the outstanding capital stock of any
corporation, in and of itself, be deemed Competition if such capital stock is
listed on a national securities exchange or regularly traded in an
over-the-counter market; or
(ii) soliciting any person who is a customer of the businesses conducted by the
Company, on behalf of a business described in clause (i) of this Section 5(b),
or inducing or attempting to persuade any employee of the Company or any of its
subsidiaries to terminate his or her employment relationship with the Company or
any of its subsidiaries.
(c) The Executive acknowledges and agrees that the Company's
remedy at law for any breach of the Executive's obligations under this Section 5
would be inadequate and agrees and consents that temporary and permanent
injunctive relief may be granted in any proceeding which may be brought to
enforce any provision of this Section without the necessity of proof of actual
damage. With respect to any provision of this Section 5 finally determined by a
court of competent jurisdiction to be unenforceable, the Executive and the
Company hereby agree that such court shall have jurisdiction to reform this
Agreement or any provision hereof so that it is enforceable to the maximum
extent permitted by law, and the parties agree to abide by such court's
determination.
6. Waiver of Other Payments and Benefits; Stock Options
(a) The compensation and benefits arrangements set forth in
this Agreement are in lieu of any rights or claims that the Executive may have
with respect to severance or other benefits, or any other form of remuneration
from the Company Entities, other than benefits under any tax-qualified employee
pension benefit plans subject to the Employee Retirement Income Security Act of
1974, as amended (including the Company's 401(k) plan and tax-qualified pension
plan), and without limiting the generality of the foregoing, the Executive
hereby expressly waives any right or claim that he may have or could assert to
payment for salary, bonuses, medical, dental or hospitalization benefits,
payments under supplemental retirement plans and incentive plans, life insurance
benefits, perquisites, expenses and attorneys' fees, except as otherwise
provided in this Agreement (or to the extent attorneys' fees are provided in the
LTCP or SERP) or as mandated under applicable law.
(b) The Executive acknowledges that all of his nonvested stock
options for Company common stock shall be cancelled and forfeited upon the
Termination Date, and that the Executive's vested stock options for Company
common stock shall remain exercisable for three months or one year following the
Termination Date, as provided in the applicable stock option agreement, and
shall then be cancelled and forfeited at such time.
7. Information Requests/Cooperation/Consulting Services
(a) The Executive agrees to make himself reasonably available
to the Company to respond to requests by the Company for information concerning
matters involving facts or events relating to the Company or any other Company
Entity that may be within the Executive's knowledge, and to assist the Company
and the Company Entities as reasonably requested with respect to pending and
future litigations, arbitrations or other dispute resolutions. The Company will
reimburse the Executive for his reasonable travel expenses and costs incurred as
a result of his assistance under this Section 7(a).
(b) In addition to the Executive's cooperation with the
Company described in Section 7(a) above, for the one-year period following the
Termination Date (the "Consulting Period"), the Executive shall provide
reasonable consulting services to the Company from time to time upon the request
of the Company's chief executive officer. The Company shall compensate the
Executive for such consulting services by a per diem payment of $1,000 for up to
50 days of consulting during the Consulting Period. At the end of the Consulting
Period, the Company shall pay the Executive an amount equal to $50,000, less the
aggregate per diem payments previously paid under this Section 7(b), so long as
the Executive has made himself available to provide the consulting services
hereunder. In addition to the foregoing, if the Company requests the Executive
to provide consulting services for more than 50 days during the Consulting
Period, the Company and the Executive shall agree upon appropriate compensation
for such additional services.
8. No Admission of Wrongdoing
Nothing contained in this Agreement shall be construed in any
way as an admission by any of the parties of any act, practice or policy of
discrimination or breach of contract either in violation of applicable law or
otherwise.
9. Waiver and Release
(a) In consideration of the payments and benefits set forth in
this Agreement, except for the payment and benefits expressly provided herein,
the Executive, for himself, his heirs, administrators, representatives,
executors, successors and assigns (collectively "Releasors") does hereby
irrevocably and unconditionally release, acquit and forever discharge the
Company Entities and their trustees, officers, security holders, partners,
agents, and former and current employees and directors, including without
limitation all persons acting by, through, under or in concert with any of them
(collectively, "Releasees"), from any and all charges, complaints, claims,
liabilities, obligations, promises, agreements, controversies, damages,
remedies, actions, causes of action, suits, rights, demands, costs, losses,
debts and expenses (including attorneys' fees and costs) of any nature
whatsoever, known or unknown, whether in law or equity and whether arising under
federal, state or local law and in particular including any claim for
discrimination based upon race, color, ethnicity, sex, age (including the Age
Discrimination in Employment Act of 1967) (the "ADEA Release"), national origin,
religion, disability, or any other unlawful criterion or circumstance, which the
Releasors had, now have, or may have in the future, against each or any of the
Releasees from the beginning of the world until the date of the execution of
this Agreement. The Executive acknowledges and agrees that if he or any other
Releasor should hereafter make any claim or demand or commence or threaten to
commence any action, claim or proceeding against the Releasees with respect to
any cause, matter or thing which is the subject of this Section 9(a), this
Agreement may be raised as a complete bar to any such action, claim or
proceeding, and the applicable Releasee may recover from the Executive all costs
incurred in connection with such action, claim or proceeding, including
attorneys' fees.
(b) In consideration of the Executive's agreements and
covenants set forth in this Agreement, the Company and its subsidiaries (the
"Company Releasors") hereby irrevocably and unconditionally release, acquit and
forever discharge the Executive from any and all charges, complaints, claims,
liabilities, obligations, promises, agreements, controversies, damages,
remedies, actions, causes of action, suits, rights, demands, costs, losses,
debts and expenses (including attorneys' fees and costs) of any nature
whatsoever, known or unknown, whether in law or equity and whether arising under
federal, state or local law, which the Company Releasors now have, or may have
in the future, against the Executive with respect to the Executive from the
beginning of the world until the date of the execution of this Agreement, other
than any claim based upon fraudulent or illegal activity that was not discovered
by the Company Releasors until subsequent to the date of execution of this
Agreement, or any claim that may be brought derivatively. The Company Releasors
acknowledge and agree that if they should hereafter make any claim or demand or
commence or threaten to commence any action, claim or proceeding against the
Executive with respect to any cause, matter or thing which is the subject of
this Section 9(b), this Agreement may be raised as a complete bar to any such
action, claim or proceeding, and the Executive may recover from the Company
Releasors all costs incurred in connection with such action, claim or
proceeding, including attorneys' fees.
(c) The Executive affirms that prior to the execution of this
Agreement and the waiver and release in Section 9(a), the Executive was advised
by the Company to consult with an attorney of the Executive's choice concerning
the terms and conditions set forth herein, and that the Executive was given up
to 21 days to consider executing this Agreement, including the ADEA Release in
Section 9(a). The Executive has 7 days following his execution of this Agreement
to revoke the ADEA Release. In the event the Executive revokes the ADEA Release,
the Executive shall return to the Company any amounts paid to the Executive
under the first sentence of Section 2(d) of this Agreement, and the Company may
terminate the consulting arrangement set forth in Section 7(b) of this
Agreement.
10. Public Statement
The parties acknowledge that the Executive's termination of
employment has been announced by a statement mutually agreed upon by the Company
and the Executive, and agree that no subsequent comments shall be made to the
media or through other public statements by any party hereto regarding the
Executive's termination of employment that are inconsistent with such statement,
except as may be required by applicable law or regulation.
11. No Reliance
The Executive represents and acknowledges that, in executing
this Agreement, he has not relied upon any representation or statement made by
the Company or not set forth herein.
12. Governing Law
This Agreement shall be governed by and construed in
accordance with the laws of the State of Wisconsin, without regard to the
principles of conflicts of law thereof, to the extent not superseded by
applicable federal law.
13. Warranty
The parties hereto represent and warrant that there exists no
impediment or restraint, contractual or otherwise on their power, right or
ability to enter into this Agreement and to perform their duties and obligations
hereunder or as contemplated hereby.
14. Taxes
All payments and distributions made to the Executive under
this Agreement will be reduced by, or the Executive will otherwise pay, all
income, employment and Medicare taxes required to be withheld on such payments.
15. No Coercion
The parties hereto represent and acknowledge that they have
decided to enter into this Agreement voluntarily, knowingly and without coercion
of any kind.
16. Enforceability/Severability
The parties hereto affirmatively acknowledge that this
Agreement, and each of its provisions, is enforceable, and expressly agree not
to challenge nor raise any defense against the enforceability of this Agreement
or any of its provisions in the future. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement. In the event that any provision or
portion of this Agreement shall be determined to be invalid or unenforceable for
any reason, the remaining provisions or portions of this Agreement shall be
unaffected thereby and shall remain in full force and effect to the fullest
extent permitted by law.
17. Notices
All notices, requests, demands and other communication which
are required or may be given under this Agreement shall be in writing and shall
be deemed to have been duly given when received if personally delivered; when
transmitted by telecopy, electronic or digital transmission method upon receipt
of telephonic or electronic confirmation; that day after it is sent, if sent for
next day delivery to a domestic address by recognized overnight delivery service
(e.g., Federal Express) and upon receipt, if sent by certified or registered
mail, return receipt requested. In each case notice shall be sent to:
If to the Executive, addressed to:
Jeffery T. Grade
Last Known Address in Company Records
If to the Company, addressed to:
Harnischfeger Industries, Inc.
3600 South Lake Drive
St. Francis, WI 53201-0554
Attention: General Counsel
or to such other place and with such other copies as any party
may designate as to itself or himself by written notice to the others.
18. Amendments; Waivers
This Agreement may not be amended, modified or terminated,
except by a written instrument signed by the parties hereto. Any provision of
this Agreement may be waived by a written instrument signed by the party to be
charged with such waiver.
19. Successors
This Agreement shall be binding on the Executive, the Company,
and their respective heirs, successors and assigns, including without limitation
any corporation or other entity into which the Company may be merged,
reorganized or liquidated, or by which may be acquired. The obligations of the
Company may be assigned without limitation; but, as the obligations to be
performed by the Executive hereunder are unique based upon his skills and
qualifications, the Executive's obligations under this Agreement may not be
assigned.
20. Entire Agreement
Except as specified herein, this Agreement contains the entire
agreement between the parties concerning the subject matter hereof and
supersedes all prior agreements, understandings, discussions, negotiations and
undertakings, whether written or oral, between the parties with respect thereto.
21. Counterparts
This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original, but all of which together will
constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement, as of the date and
year first written above.
HARNISCHFEGER INDUSTRIES, INC.
By:
Jeffery T. Grade
DocumentIDW/356726v4
TERMINATION AND RELEASE AGREEMENT
AGREEMENT (the "Agreement"), dated as of May 24, 1999
(the "Termination Date"), by and between Harnischfeger Industries, Inc.
(the "Company"), and Francis M. Corby, Jr. (the "Executive").
WHEREAS, the Executive has been employed as Executive Vice
President - Finance and Administration and Chief Financial Officer of the
Company; and
WHEREAS, by mutual agreement between the parties hereto, the
Executive shall hereby resign, effective as of the Termination Date, his
positions as Executive Vice President - Finance and Administration and Chief
Financial Officer of the Company, as a member of the board of directors of the
Company and as an officer and director of any subsidiary or affiliate of the
Company for which he is serving in such positions.
NOW, THEREFORE, BE IT RESOLVED, that the Company and the
Executive, in consideration of the covenants herein set forth, hereby agree as
follows:
1. Termination of Employment
By mutual agreement with the Company, the Executive hereby
resigns, effective as of the Termination Date, from his positions as Executive
Vice President - Finance and Administration and Chief Financial Officer of the
Company and a member of the Board of Directors of the Company, and from all
other positions the Executive may currently hold as an officer or member of the
board of directors of any of the Company's subsidiaries or affiliates. The
Executive shall sign and deliver to the Company such other documents as may be
necessary to effect or reflect such resignations.
2. Severance Payments, Benefits and Obligations
(a) The Company will pay to the Executive his base salary
through the Termination Date, and the Executive will not be entitled to any
additional compensation or benefits from the Company, or its subsidiaries or
affiliates, except as provided in this Agreement.
(b) Pursuant to the terms of the Harnischfeger Industries,
Inc. Supplemental Retirement and Stock Funding Plan (the "SERP"), the Company
shall pay the Executive the amounts due to the Executive under the SERP upon a
termination of employment for "Good Reason," and the Company shall have no
further obligations to the Executive under the SERP. Upon execution of this
Agreement, the Company shall deliver to the Executive the shares of Company
common stock due to the Executive pursuant to the SERP. The Executive hereby
agrees that he will not violate any federal or state securities laws in
connection with transactions in shares of the Company's securities.
(c) Pursuant to the terms of the Harnischfeger Industries,
Inc. Long-Term Compensation Plan for Key Executives (the "LTCP"), the Company
shall pay the Executive the amounts due to the Executive under the LTCP upon a
termination of employment for "Good Reason" (as set forth in Exhibit A to this
Agreement), and the Company shall have no further obligations to the Executive
under the LTCP, other than any "Gross-Up Payments" which may become due to the
Executive under Section 7 of the LTCP if, and to the extent, applicable.
(d) Upon execution of this Agreement, the Company shall pay
the Executive a lump sum cash amount equal to $200,000. At the end of each
month, commencing in June, 1999, the Company shall pay the Executive a lump sum
cash amount equal to $25,000. The cash payments made to the Executive under this
Section 2(d) shall offset and be credited against the payments due to the
Executive pursuant to Sections 2(b) and 2(c) of this Agreement. Notwithstanding
anything to the contrary in this Section 2(d), the obligations of the Company
under this Section 2(d) shall cease at such time as the aggregate payments made
by the Company pursuant to this Section 2(d) and Sections 2(b) and 2(c) of this
Agreement satisfy the Company's obligations to the Executive under the SERP and
LTCP upon the Executive's termination of employment for Good Reason. Under no
circumstances shall the aggregate payments made by the Company pursuant to
Sections 2(b), 2(c) and 2(d) exceed the aggregate payments due to the Executive
under the SERP and LTCP upon the Executive's termination of employment for Good
Reason.
(e) The Company and its subsidiaries will continue to honor
for at least six years following the Termination Date, pursuant to their terms,
the director and officer indemnification and liability insurance provisions
maintained by such entities with respect to the Executive, with respect to
actions of the Executive as an officer or director of the Company (or any of its
subsidiaries) prior to the Termination Date.
(f) The Company will reimburse the Executive for any
unreimbursed reasonable business expenses incurred by the Executive prior to the
Termination Date, pursuant to the Company's reimbursement policies, following
the Executive's presentation of an expense report to the Company.
(g) The Company will provide the Executive with the
outplacement services and, subject to the Executive continuing to make the
required employee contributions, continuing medical, dental and vision benefits
due to the Executive under the Company's Out Placement Services and Medical
Benefits Continuation Plan, which benefits shall be equivalent to those provided
to the Executive and his family as of the Termination Date.
(h) As soon as practicable following the Termination Date, the
Company shall transfer to the Executive the lease on the Executive's
Company-provided vehicle. The Company shall reimburse the Executive for the
lease payments on such vehicle for the remaining period of the lease, as the
lease payments become due, as soon as practicable following receipt of an
invoice from the Executive.
(i) The Company shall permit the Executive to retain his
Company-provided fax machine, lap-top computer and cellular telephone.
3. Disparaging Comments
From and after the Termination Date, the Executive will
refrain from taking actions or making statements, written or oral, which
denigrate, disparage or defame the goodwill or reputation of the Company and any
of its subsidiaries and affiliates (the "Company Entities") and their trustees,
officers, security holders, partners, agents and former and current employees
and directors or which are intended to, or may be reasonably expected to,
adversely affect the morale of the employees of any of the Company Entities. The
Executive further agrees not to make any negative statements to third parties
relating to his employment or any aspect of the business of the Company Entities
and not to make any negative or adverse statements to third parties about the
circumstances of the termination of his employment, or the Company Entities and
their trustees, officers, security holders, partners, agents and former and
current employees and directors, except as may be required by a court or
governmental body. The Company will take reasonable steps to advise actively
employed executive officers of the Company and its subsidiaries, and members of
their boards of directors not to denigrate, disparage or defame the Executive's
reputation.
4. Confidentiality of this Agreement
Except as required by law or regulation, or to the extent
disclosed by the other party, none of the parties hereto will disclose the terms
of this Agreement, provided that the Executive may disclose such terms to his
financial and legal advisors and his spouse and the Company may disclose such
terms to selected employees, advisors and affiliates on a "need to know" basis,
each of whom shall be instructed by the Executive and the Company, as the case
may be, to maintain the terms of this Agreement in strict confidence in
accordance with the terms hereof.
5. Restrictive Covenants
(a) The Executive has returned or will immediately return to
the Company all Company Information (as defined below), including client lists,
files, software, records, computer access codes and instruction manuals which he
has in his possession, and agrees not to keep any copies of Company Information.
The Executive affirms his obligation to keep all Company Information
confidential and not to disclose it to any third party in the future. The term
"Company Information" means: (i) confidential information, including information
received from third parties under confidential conditions, and (ii) other
technical, marketing, business or financial information, or information relating
to personnel or former personnel of the Company, the use or disclosure of which
might reasonably be construed to be materially contrary to the interest of the
Company; provided, however, that the term "Company Information" shall not
include any information that is or became generally known or available to the
public other than as a direct result of a breach of this paragraph by the
Executive or any action by the Executive prior to the Termination Date which
would have been a breach of the Executive's obligations to the Company in effect
at such time. The Executive shall have the right to remove from the offices of
the Company any of his personal belongings which do not constitute Company
Information. The Executive may disclose Company Information to the extent
required by law or regulation; provided, that the Executive shall provide the
Company's general counsel with reasonable written notice (if possible no less
than 20 days' written notice) of any required disclosure. In the event the
Company does not object to such disclosure within the time period, the Executive
shall be permitted to disclose such Company Information. In the event the
Company objects to such disclosure, the Executive agrees that he will not
provide any Company Information that is the subject of such objection, but
rather will refer the requesting entity to the Company unless he is subject to a
court order to provide the Company Information.
(b) The Executive agrees that he will not engage in
Competition during the two-year period following the Termination Date.
"Competition" for the purposes of this Agreement shall mean: (i) becoming
directly or indirectly involved, as an owner, principal, employee, officer,
director, independent contractor, representative, stockholder, agent, advisor,
lender or in any other capacity, with any of the entities set forth on Exhibit B
attached to this Agreement (the "Listed Entities"), or by any person, entity,
firm or corporation which is an affiliate or successor of any of the Listed
Entities, or by any after-market provider of parts or services for any equipment
manufactured by the Company or its subsidiaries; provided, however, that in no
event shall passive ownership of less than 3% of the outstanding capital stock
of any Listed Entity or other corporation, in and of itself, be deemed
Competition if such capital stock is listed on a national securities exchange or
regularly traded in an over-the-counter market; or
(ii) soliciting any person who is a customer of the businesses conducted by the
Company, on behalf of a business described in clause (i) of this Section 5(b),
or inducing or attempting to persuade any employee of the Company or any of its
subsidiaries to terminate his or her employment relationship with the Company or
any of its subsidiaries.
(c) The Executive acknowledges and agrees that the Company's
remedy at law for any breach of the Executive's obligations under this Section 5
would be inadequate and agrees and consents that temporary and permanent
injunctive relief may be granted in any proceeding which may be brought to
enforce any provision of this Section without the necessity of proof of actual
damage. With respect to any provision of this Section 5 finally determined by a
court of competent jurisdiction to be unenforceable, the Executive and the
Company hereby agree that such court shall have jurisdiction to reform this
Agreement or any provision hereof so that it is enforceable to the maximum
extent permitted by law, and the parties agree to abide by such court's
determination.
6. Waiver of Other Payments and Benefits; Stock Options
(a) The compensation and benefits arrangements set forth in
this Agreement are in lieu of any rights or claims that the Executive may have
with respect to severance or other benefits, or any other form of remuneration
from the Company Entities, other than benefits under any tax-qualified employee
pension benefit plans subject to the Employee Retirement Income Security Act of
1974, as amended (including the Company's 401(k) plan and tax-qualified pension
plan), and without limiting the generality of the foregoing, the Executive
hereby expressly waives any right or claim that he may have or could assert to
payment for salary, bonuses, medical, dental or hospitalization benefits,
payments under supplemental retirement plans and incentive plans, life insurance
benefits, perquisites, expenses and attorneys' fees, except as otherwise
provided in this Agreement (or to the extent attorneys' fees are provided in the
LTCP or SERP) or as mandated under applicable law.
(b) The Executive acknowledges that all of his nonvested stock
options for Company common stock shall be cancelled and forfeited upon the
Termination Date, and that the Executive's vested stock options for Company
common stock shall remain exercisable as provided in the applicable stock option
agreement, and shall then be cancelled and forfeited at such time.
7. Information Requests/Cooperation/Consulting Services
(a) The Executive agrees to make himself reasonably available
to the Company to respond to requests by the Company for information concerning
matters involving facts or events relating to the Company or any other Company
Entity that may be within the Executive's knowledge, and to assist the Company
and the Company Entities as reasonably requested with respect to pending and
future litigations, arbitrations or other dispute resolutions. The Company will
reimburse the Executive for his reasonable travel expenses and costs incurred as
a result of his assistance under this Section 7(a).
(b) In addition to the Executive's cooperation with the
Company described in Section 7(a) above, for the one-year period following the
Termination Date (the "Consulting Period"), the Executive shall provide
reasonable consulting services to the Company from time to time upon the request
of the Company's chief executive officer. The Company shall compensate the
Executive for such consulting services by a per diem payment of $1,000 for up to
50 days consulting during the Consulting Period. At the end of the Consulting
Period, the Company shall pay the Executive an amount equal to $50,000, less the
aggregate per diem payments previously paid under this Section 7(b), so long as
the Executive has made himself available to provide the consulting services
hereunder. In addition to the foregoing, if the Company requests the Executive
to provide consulting services for more than 50 days during the Consulting
Period, the Company and the Executive shall agree upon appropriate compensation
for such additional services. The consulting requirements under this Section
7(b) shall not unreasonably interfere, however, with the Executive's employment
opportunities or responsibilities.
8. No Admission of Wrongdoing
Nothing contained in this Agreement shall be construed in any
way as an admission by any of the parties of any act, practice or policy of
discrimination or breach of contract either in violation of applicable law or
otherwise.
9. Waiver and Release
(a) In consideration of the payments and benefits set forth in
this Agreement, except for the payment and benefits expressly provided herein
(including the indemnification obligations under Section 2(e) of this
Agreement), the Executive, for himself, his heirs, administrators,
representatives, executors, successors and assigns (collectively "Releasors")
does hereby irrevocably and unconditionally release, acquit and forever
discharge the Company Entities and their trustees, officers, security holders,
partners, agents, and former and current employees and directors, including
without limitation all persons acting by, through, under or in concert with any
of them (collectively, "Releasees"), from any and all charges, complaints,
claims, liabilities, obligations, promises, agreements, controversies, damages,
remedies, actions, causes of action, suits, rights, demands, costs, losses,
debts and expenses (including attorneys' fees and costs) of any nature
whatsoever, known or unknown, whether in law or equity and whether arising under
federal, state or local law and in particular including any claim for
discrimination based upon race, color, ethnicity, sex, age (including the Age
Discrimination in Employment Act of 1967) (the "ADEA Release"), national origin,
religion, disability, or any other unlawful criterion or circumstance, which the
Releasors had, now have, or may have in the future, against each or any of the
Releasees from the beginning of the world until the date of the execution of
this Agreement. The Executive acknowledges and agrees that if he or any other
Releasor should hereafter make any claim or demand or commence or threaten to
commence any action, claim or proceeding against the Releasees with respect to
any cause, matter or thing which is the subject of this Section 9(a), this
Agreement may be raised as a complete bar to any such action, claim or
proceeding, and the applicable Releasee may recover from the Executive all costs
incurred in connection with such action, claim or proceeding, including
attorneys' fees.
(b) In consideration of the Executive's agreements and
covenants set forth in this Agreement, the Company and its subsidiaries (the
"Company Releasors") hereby irrevocably and unconditionally release, acquit and
forever discharge the Executive from any and all charges, complaints, claims,
liabilities, obligations, promises, agreements, controversies, damages,
remedies, actions, causes of action, suits, rights, demands, costs, losses,
debts and expenses (including attorneys' fees and costs) of any nature
whatsoever, known or unknown, whether in law or equity and whether arising under
federal, state or local law, which the Company Releasors now have, or may have
in the future, against the Executive with respect to the Executive from the
beginning of the world until the date of the execution of this Agreement, other
than any claim based upon fraudulent or illegal activity that was not discovered
by the Company Releasors until subsequent to the date of execution of this
Agreement, or any claim that may be brought derivatively. The Company Releasors
acknowledge and agree that if they should hereafter make any claim or demand or
commence or threaten to commence any action, claim or proceeding against the
Executive with respect to any cause, matter or thing which is the subject of
this Section 9(b), this Agreement may be raised as a complete bar to any such
action, claim or proceeding, and the Executive may recover from the Company
Releasors all costs incurred in connection with such action, claim or
proceeding, including attorneys' fees.
(c) The Executive affirms that prior to the execution of this
Agreement and the waiver and release in Section 9(a), the Executive was advised
by the Company to consult with an attorney of the Executive's choice concerning
the terms and conditions set forth herein, and that the Executive was given up
to 21 days to consider executing this Agreement, including the ADEA Release in
Section 9(a). The Executive has 7 days following his execution of this Agreement
to revoke the ADEA Release. In the event the Executive revokes the ADEA Release,
the Executive shall return to the Company any amounts paid to the Executive
under the first sentence of Section 2(d) of this Agreement, and Company may
terminate the consulting arrangement set forth in Section 7(b) of this
Agreement.
10. Public Statement
The parties acknowledge that the Executive's termination of
employment has been announced by a statement mutually agreed upon by the Company
and the Executive, and agree that no subsequent comments shall be made to the
media or through other public statements by any party hereto regarding the
Executive's termination of employment that are inconsistent with such statement,
except as may be required by applicable law or regulation.
11. No Reliance
The Executive represents and acknowledges that, in executing
this Agreement, he has not relied upon any representation or statement made by
the Company or not set forth herein.
12. Governing Law
This Agreement shall be governed by and construed in
accordance with the laws of the State of Wisconsin, without regard to the
principles of conflicts of law thereof, to the extent not superseded by
applicable federal law.
13. Warranty
The parties hereto represent and warrant that there exists no
impediment or restraint, contractual or otherwise on their power, right or
ability to enter into this Agreement and to perform their duties and obligations
hereunder or as contemplated hereby.
14. Taxes
All payments and distributions made to the Executive under
this Agreement will be reduced by, or the Executive will otherwise pay, all
income, employment and Medicare taxes required to be withheld on such payments.
15. No Coercion
The parties hereto represent and acknowledge that they have
decided to enter into this Agreement voluntarily, knowingly and without coercion
of any kind.
16. Enforceability/Severability
The parties hereto affirmatively acknowledge that this
Agreement, and each of its provisions, is enforceable, and expressly agree not
to challenge nor raise any defense against the enforceability of this Agreement
or any of its provisions in the future. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement. In the event that any provision or
portion of this Agreement shall be determined to be invalid or unenforceable for
any reason, the remaining provisions or portions of this Agreement shall be
unaffected thereby and shall remain in full force and effect to the fullest
extent permitted by law.
17. Notices
All notices, requests, demands and other communication which
are required or may be given under this Agreement shall be in writing and shall
be deemed to have been duly given when received if personally delivered; when
transmitted by telecopy, electronic or digital transmission method upon receipt
of telephonic or electronic confirmation; that day after it is sent, if sent for
next day delivery to a domestic address by recognized overnight delivery service
(e.g., Federal Express) and upon receipt, if sent by certified or registered
mail, return receipt requested. In each case notice shall be sent to:
If to the Executive, addressed to:
Francis M. Corby, Jr.
Last Known Address in Company Records
If to the Company, addressed to:
Harnischfeger Industries, Inc.
3600 South Lake Drive
St. Francis, WI 53201-0554
Attention: General Counsel
or to such other place and with such other copies as any party
may designate as to itself or himself by written notice to the others.
18. Amendments; Waivers
This Agreement may not be amended, modified or terminated,
except by a written instrument signed by the parties hereto. Any provision of
this Agreement may be waived by a written instrument signed by the party to be
charged with such waiver.
19. Successors
This Agreement shall be binding on the Executive, the Company,
and their respective heirs, successors and assigns, including without limitation
any corporation or other entity into which the Company may be merged,
reorganized or liquidated, or by which may be acquired. The obligations of the
Company may be assigned without limitation; but, as the obligations to be
performed by the Executive hereunder are unique based upon his skills and
qualifications, the Executive's obligations under this Agreement may not be
assigned.
20. Entire Agreement
Except as specified herein, this Agreement contains the entire
agreement between the parties concerning the subject matter hereof and
supersedes all prior agreements, understandings, discussions, negotiations and
undertakings, whether written or oral, between the parties with respect thereto.
21. Counterparts
This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original, but all of which together will
constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement,
as of the date and year first written above.
HARNISCHFEGER INDUSTRIES, INC.
By:
Francis M. Corby, Jr.
<TABLE>
<CAPTION>
Exhibit 11
HARNISCHFEGER INDUSTRIES, INC.
CALCULATION OF EARNINGS PER SHARE
(Dollar amounts in thousands except per share amounts)
Three Months Ended Six Months Ended
April 30, April 30,
--------------------------- ----------------------------
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Average common shares outstanding
Basic 46,369 46,416 46,143 46,579
============ ============= ============ =============
Diluted 46,369 46,416 46,143 46,579
============ ============= ============ =============
(Loss) from continuing operation $ (74,258) $(72,826) $(90,657) $ (97,797)
Income from discontinued operation,
net of applicable income taxes - 972 - 4,376
Gain on sale of discontinued operations,
net of applicable income taxes - 151,500 - 151,500
============ ============= ============ =============
Net Income (Loss) $ (74,258) $ 79,646 $(90,657) $ 58,079
============ ============= ============ =============
Basic Earnings Per Share
(Loss) from continuing operations $ (1.60) $(1.57) $ (1.96) $ (2.10)
Income and net gain from sale of
discontinued operation - 3.28 - 3.35
------------ ------------- ------------ -------------
Net Income (Loss) $ (1.60) $ 1.71 $ (1.96) $ 1.25
============ ============= ============ =============
Diluted Earnings Per Share
(Loss) from continuing operations $ (1.60) $ (1.57) $ (1.96) $(2.10)
Income and net gain from sale of
discontinued operation - 3.28 - 3.35
------------ ------------- ------------ -------------
Net Income (Loss) $ (1.60) $ 1.71 $ (1.96) $ 1.25
============ ============= ============ =============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000801898
<NAME> Harnischfeger Industries, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Oct-31-1999
<PERIOD-START> Nov-01-1998
<PERIOD-END> Apr-30-1999
<CASH> 36,716
<SECURITIES> 0
<RECEIVABLES> 692,915
<ALLOWANCES> 7,983
<INVENTORY> 611,434
<CURRENT-ASSETS> 1,532,545
<PP&E> 1,101,047
<DEPRECIATION> 518,905
<TOTAL-ASSETS> 2,875,629
<CURRENT-LIABILITIES> 1,079,349
<BONDS> 1,080,679
0
0
<COMMON> 51,669
<OTHER-SE> 512,579
<TOTAL-LIABILITY-AND-EQUITY> 2,875,629
<SALES> 944,374
<TOTAL-REVENUES> 954,329
<CGS> 857,419
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 44,902
<INCOME-PRETAX> (151,398)
<INCOME-TAX> (51,500)
<INCOME-CONTINUING> (90,657)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (90,657)
<EPS-BASIC> (1.96)
<EPS-DILUTED> (1.96)
</TABLE>
