<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended September 30, 1994
------------------------------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-17506
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UST Inc.
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(Exact name of registrant as specified in its charter)
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<S> <C>
Delaware 06-1193986
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 West Putnam Avenue, Greenwich, Conn. 06830
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(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (203) 661-1100
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NONE
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(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
------ ------
Number of Common shares ($.50 par value) outstanding at September 30,
1994. 200,906,136
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<PAGE> 2
UST Inc.
(Registrant)
INDEX
<TABLE>
<CAPTION>
Page No.
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Part I. Financial Information:
Condensed Consolidated Statement of Financial Position -
September 30, 1994 and December 31, 1993 2
Condensed Consolidated Statement of Earnings -
Three and nine months ended September 30, 1994 and 1993 3
Condensed Consolidated Statement of Cash Flows -
Nine months ended September 30, 1994 and 1993 4
Notes to Condensed Consolidated Financial Statements 5
Management's Discussion and Analysis of Operations and
Financial Condition 7
Part II. Other Information:
Item 1. Legal Proceedings 10
Item 6. Exhibits and Reports on Form 8-K 11
10. Material Contracts
27. Financial Data Schedule
Signatures 12
</TABLE>
(1)
<PAGE> 3
UST Inc.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
------------------ ---------------
ASSETS (Unaudited) (Note)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 38,691 $ 25,327
Accounts receivable 69,395 64,376
Inventories:
Leaf tobacco 100,422 90,742
Products in process and finished goods 103,740 108,117
Other materials and supplies 17,848 16,776
-------- --------
222,010 215,635
Prepaid expenses and other current assets 48,024 29,658
-------- --------
Total current assets 378,120 334,996
Property, plant and equipment, net 304,679 309,611
Other asset 57,827 61,588
-------- --------
$740,626 $706,195
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 87,935 $ 62,445
Income taxes 46,853 44,197
-------- --------
Total current liabilities 134,788 106,642
Long-term debt 60,000 40,000
Deferred income taxes 6,057 7,955
Postretirement benefits other than pensions 60,161 56,782
Other liabilities 32,089 31,844
-------- --------
Total liabilities 293,095 243,223
Stockholders' equity
Preferred stock - par value $.10 per share:
Authorized - 10 million shares; issued - none
Common stock - par value $.50 per share:
Authorized - 600 million shares;
issued 215,128,136 shares in 1994,
and 213,223,636 shares in 1993. 107,564 106,612
Additional paid-in capital 366,865 337,842
Retained earnings 374,847 255,222
-------- --------
849,276 699,676
Less cost of shares in treasury - 14,222,000
shares in 1994 and 8,467,000 shares in 1993 401,745 236,704
-------- --------
Total stockholders' equity 447,531 462,972
-------- --------
$740,626 $706,195
======== ========
</TABLE>
Note: The statement of financial position at December 31, 1993 has been
derived from the audited financial statements at that date.
See Notes to Condensed Consolidated Financial Statements.
(2)
<PAGE> 4
UST Inc.
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
---------------------- ----------------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $310,366 $278,978 $900,948 $823,704
Costs and expenses
Cost of products sold 63,983 58,514 181,784 182,144
Selling, advertising and administrative 80,588 71,612 242,205 217,857
-------- -------- -------- --------
Total costs and expenses 144,571 130,126 423,989 400,001
-------- -------- -------- --------
Operating income 165,795 148,852 476,959 423,703
Other income
Interest income, net 142 741 114 1,415
Gain on disposal of product line - - - 35,029
-------- -------- -------- --------
Earnings before income taxes and
cumulative effect of accounting changes 165,937 149,593 477,073 460,147
Income taxes 65,607 60,890 188,499 178,053
-------- -------- -------- --------
Earnings before cumulative
effect of accounting changes 100,330 88,703 288,574 282,094
Cumulative effect of accounting changes:
Postretirement benefits other than pensions
(net of income tax benefit of $18,115) - - - (32,690)
Income taxes - - - 12,844
-------- -------- -------- --------
Net earnings $100,330 $ 88,703 $288,574 $262,248
======== ======== ======== ========
Earnings per share:
Primary earnings before cumulative
effect of accounting changes $.48 $.41 $1.38 $1.30
Cumulative effect of accounting changes - - - (.09)
Net earnings per share:
Primary $.48 $.41 $1.38 $1.21
Fully diluted $.48 $.41 $1.38 $1.21
Cash dividends per common share $.28 $.24 $.84 $.72
Average number of common and common
equivalent shares outstanding:
Primary 207,786 215,474 208,878 216,739
Fully diluted 207,786 215,474 209,078 216,786
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
(3)
<PAGE> 5
UST Inc.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30,
------------------------------
1994 1993
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<S> <C> <C>
OPERATING ACTIVITIES
- - - --------------------
Net cash provided by operating activities $313,861 $312,884
INVESTING ACTIVITIES
- - - --------------------
Purchases of property, plant and equipment, net (16,056) (45,066)
Net proceeds received from sales of businesses 1,043 37,191
-------- --------
Net cash used in investing activities (15,013) (7,875)
-------- --------
FINANCING ACTIVITIES
- - - --------------------
Proceeds from long-term debt 20,000 -
Proceeds from the issuance of common stock 29,975 23,259
Dividends paid (170,418) (150,359)
Common stock repurchased (165,041) (139,515)
-------- --------
Net cash used in financing activities (285,484) (266,615)
-------- --------
Increase in cash and cash equivalents 13,364 38,394
Cash and cash equivalents at beginning of year 25,327 36,370
-------- --------
Cash and cash equivalents at end of period $ 38,691 $ 74,764
======== ========
- - - -----------------------------------------------------------------------------------------------------
Supplemental disclosure of cash flow information
Cash paid during the period for:
Income taxes $177,691 $147,687
Interest 2,774 809
- - - -----------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
(4)
<PAGE> 6
UST Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1994
(Unaudited)
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the three and
nine month periods ended September 30, 1994 are not necessarily indicative of
the results that may be expected for the year ended December 31, 1994. For
further information, refer to the consolidated financial statements and
footnotes thereto included in Registrant's annual report on Form 10-K for the
year ended December 31, 1993.
REPURCHASE OF COMMON STOCK
In June 1994, the Board of Directors approved a new stock repurchase program,
authorizing Registrant to repurchase up to 20 million shares of its common
stock from time to time in open market or in negotiated transactions for use in
connection with benefits and compensation plans and other corporate purposes.
This program began in October 1994, upon completion of the prior program.
The prior program provided for the repurchase of up to 40 million shares of
Registrant's common stock and had been in effect since January 1, 1990. As of
December 31, 1993, 6.4 million shares remained to be repurchased under the
previous program. Through September 30, 1994, an additional 5.8 million shares
costing $165 million were repurchased.
SHORT-TERM CREDIT FACILITY
During the third quarter, Registrant entered into a $200 million revolving
credit and term loan agreement with a group of seven banks which replaced the
previous $50 million revolving credit and term loan agreement.
Under the terms of the new agreement, Registrant may borrow funds and elect to
pay interest under the "Base Rate", "Competitive Bid" or "Eurodollar" interest
rate provisions. The terms of the agreement provide for a three-year revolving
line of credit. At Registrant's option, any balance outstanding thereafter may
be converted into a three-year term loan. Principal repayments are optional
during the revolving credit period, while 36 equal monthly installments are
required during the term loan period. Registrant is required to pay a facility
fee of 1/10 of 1 percent per annum during the revolving credit period. Certain
provisions of this agreement require maintenance of tangible net worth levels
as well as certain financial ratios.
(5)
<PAGE> 7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
CONTINGENCIES
Registrant is named in certain litigation against the major cigarette companies
and others seeking damages relating to the usage of cigarettes. Registrant has
had only limited involvement with cigarettes. Prior to 1985, Registrant
manufactured some cigarette products which had a de minimis market share. From
May 1, 1982, to August 1, 1994, Registrant distributed a small volume of
imported cigarettes and is indemnified against claims relating to those
products. Registrant no longer manufactures, markets, or distributes any
cigarette products. Registrant believes that these actions are without merit,
intends to defend them vigorously and does not believe they will result in any
material liability to Registrant.
In addition, on November 1, 1994, Registrant was named in a complaint entitled
McGraw v. The American Tobacco Company, et al., commenced against the major
cigarette companies and others by the Attorney General of the State of West
Virginia, purportedly on behalf of the State of West Virginia. The complaint
asserts "the State spends millions of dollars each year" as a result of
"tobacco-related injuries, diseases or sickness" and the action is purportedly
brought under West Virginia law to recover compensatory and punitive damages in
unspecified amounts as well as certain equitable, declaratory and injunctive
relief.
Although the allegations in the McGraw complaint relate mainly to cigarettes
and cigarette manufacturers, the complaint does contain several allegations
relating to smokeless tobacco products, and some causes of action make
reference to "cigarettes and other tobacco products."
As explained above, Registrant has had only limited involvement with
cigarettes. Registrant's current percentage share of the West Virginia tobacco
business (cigarettes and smokeless tobacco) is relatively small.
Registrant believes this action is without merit, intends to defend it
vigorously and does not believe it will result in any material liability to
Registrant.
(6)
<PAGE> 8
UST INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF OPERATIONS AND FINANCIAL CONDITION
(UNAUDITED)
Results of Operations
Third quarter and nine months of 1994 compared
with the same periods of 1993
Net sales for the third quarter and nine months increased 11 percent and 9
percent, respectively, as compared with the corresponding periods in the prior
year. The Tobacco and Wine segments posted sales gains for both the third
quarter and nine-month period while sales for the Other segment were higher in
the third quarter but were lower for the nine-month period. Higher selling
prices for moist smokeless tobacco was the primary reason for the increase in
consolidated net sales. Domestic unit volume for moist smokeless tobacco
decreased 0.5 percent for the third quarter and increased 2.1 percent for the
nine-month period. Registrant believes that the unit volume comparisons for
both the third quarter and nine months to the similar periods in the prior year
were unfavorably affected by the national roll-out of two Skoal Long Cut
flavors in the second quarter of 1993 and the running of a major moist
smokeless tobacco product promotion in the second quarter of 1994 versus the
third quarter in 1993. Registrant expects the domestic unit volume comparison
for moist smokeless tobacco products to return to a positive level in the
fourth quarter. Wine segment sales were higher due to an increase in overall
case volume, primarily in the premium category. Other segment sales increased
in the third quarter mainly due to volume gains for the entertainment business,
while the decrease for the nine-month period was due to the absence of Zig-Zag
cigarette papers and related products resulting from the sale of its
distribution rights on March 31, 1993.
Cost of products sold increased for the third quarter and was stable for the
nine-month period. Both periods included increased costs due to volume gains
for the entertainment and wine businesses and higher unit costs for domestic
moist smokeless tobacco partially offset by volume declines for other tobacco
products. The nine-month period also included higher costs due to volume gains
for domestic moist smokeless tobacco which were more than offset by lower unit
costs for wine and the absence of Zig-Zag and related products. The overall
gross margin percentage increased in both periods mainly due to higher selling
prices for domestic moist smokeless tobacco.
Selling, advertising and administrative expenses increased for the Tobacco and
Other segments for both the third quarter and nine-month periods. Expenses for
the Wine segment increased slightly for the third quarter, but were stable for
the nine-month period. Increased selling expenses for the Tobacco segment were
directed at the promotion and support of moist smokeless tobacco products,
along with higher salaries and related costs for the sales force and support
personnel. Increased selling and advertising costs for the Other segment were
expended to support new products and markets. Administrative and other
expenses increased in both periods due to higher salary and related costs,
increased spending in other areas and the absence of a gain recorded on the
sale of a European facility in 1993. The nine-month period was also
unfavorably affected by the absence of gains recorded on the sale of corporate
investments in 1993.
(7)
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
OPERATIONS AND FINANCIAL CONDITION (Continued)
Registrant recorded net interest income in both periods as interest income from
cash equivalent investments exceeded interest expense on short-term borrowings
and long-term debt.
Net earnings for the third quarter and nine-month period increased 13 percent
and 10 percent, respectively, over the corresponding periods in the prior year.
Primary earnings per share increased 17 percent for the third quarter and 14
percent for the nine-month period.
The comparison of earnings per share for the first nine months of 1994 to the
similar period in 1993 was adversely affected by 3 cents per share due to
several events which occurred during 1993. On March 31, 1993 Registrant sold
its distribution rights for Zig-Zag cigarette papers and related products which
resulted in an after-tax gain of $22 million, or 10 cents per share. This gain
was offset by the adoption of Statement of Financial Accounting Standards
(SFAS) No. 106 and SFAS No. 109, which reduced primary earning per share by 9
cents for the first nine months of 1993. In addition, operating results for
the first nine months of 1994 do not include Zig-Zag and related products
amounting to 2 cents per share.
The Clinton Administration's Health Security Act proposed an increase in the
federal excise tax on moist snuff from 36 cents per pound to $12.86 per pound.
Registrant believes that this proposal, along with other proposals containing
increases in the federal excise tax, will not be acted on by the end of the
103rd Congress. Similar proposals will likely be considered in 1995.
Registrant is not able to predict the amount, if any, by which the federal
excise tax rate may increase, or assess the future effect that any such
increase may have on the sale of its tobacco products.
Liquidity and Sources of Capital
Changes in Financial Condition Since December 31, 1993
Net cash provided by operating activities represents net income adjusted for
the non-cash items included in the determination of net income as well as
changes in operating assets and liabilities. A primary use of cash in
operations was for purchases of leaf tobacco of $52.5 million, which was higher
than amounts expended in the corresponding period of the prior year.
Registrant anticipates that additional purchases of leaf tobacco will not be
significant for the remainder of 1994.
Net cash used in investing activities for the nine-month period of 1994 was for
the purchase of property plant and equipment. Registrant expects the 1994
capital program to approximate $29 million.
Net cash used in financing activities were amounts expended for dividends and
the stock repurchase program. Amounts expended for the stock repurchase
program were slightly higher than in the corresponding period of the prior
year. Registrant expects that total funds allocated to the stock repurchase
program in 1994 from operations and increased borrowing will be higher than
amounts expended in 1993.
(8)
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
OPERATIONS AND FINANCIAL CONDITION (Continued)
Registrant had $60 million outstanding on its $200 million revolving credit and
term loan agreement at September 30, 1994 of which $20 million was borrowed
during the first nine months of 1994. (See Notes to Condensed Consolidated
Financial Statements). In October 1994, Registrant borrowed an additional $25
million under this credit facility and used the funds to repurchase additional
shares of its common stock. Registrant expects to continue to use funds
available under its credit facility to repurchase additional shares of its
common stock during the remainder of 1994 and in 1995. The availability and
price of Registrant's common stock, market conditions at the time of purchase
and other factors will determine the number of shares actually repurchased.
Registrant will continue to have significant cash requirements for the
remainder of 1994, primarily for the increased stock repurchase program and
dividends. Registrant expects to meet these requirements with internally
generated funds augmented by the proceeds from the new revolving credit and
term loan agreement and short-term borrowings when necessary.
(9)
<PAGE> 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In Allman v. Philip Morris, Inc., et al. (Case No. 94-0504-IEG
(CM)), by Order dated September 21, 1994, the U.S. District
Court, Southern District of California, dismissed the Amended
Complaint, with prejudice, as to all defendants, including
Registrant, on the grounds that it failed to state a cause of
action under the Racketeer Influenced and Corrupt
Organizations Act ("RICO").
On October 7, 1994, plaintiffs filed a Notice of Appeal and
Civil Appeal Docketing Statement.
On November 1, 1994, Registrant was named in a complaint
entitled McGraw v. The American Tobacco Company, et al. (Civil
Action No. 94-1707 Circuit Court of Kanawha County, West
Virginia), commenced against the major cigarette companies and
others by the Attorney General of the State of West Virginia,
purportedly on behalf of the State of West Virginia. The
complaint asserts that "the State spends millions of dollars
each year" as a result of "tobacco-related injuries, diseases
or sickness" and the action is purportedly brought under West
Virginia law to recover damages to reimburse the State for the
expenditures made and for such other relief as equitably may
be obtained.
The complaint asserts causes of action for restitution and
unjust enrichment, common law public nuisance, negligent
performance of a voluntary undertaking, fraud, intentional
misrepresentation, conspiracy and concert of action, aiding
and abetting, and violations of the West Virginia General
Consumer Protection and Antitrust Acts, and seeks compensatory
and punitive damages in unspecified amounts as well as certain
equitable, declaratory and injunctive relief. Although the
allegations in the McGraw complaint relate mainly to
cigarettes and cigarette manufacturers, the complaint does
contain several allegations relating to smokeless tobacco
products, and some causes of action make reference to
"cigarettes and other tobacco products."
Registrant has had only limited involvement with cigarettes.
Prior to 1985, Registrant manufactured some cigarette products
which had a de minimis market share, and Registrant is
indemnified for the small volume of imported cigarettes which
it distributed up and until August 1, 1994. Registrant's
current percentage share of the West Virginia tobacco business
(cigarettes and smokeless tobacco) is relatively small.
Registrant believes this action is without merit, intends to
defend it vigorously and does not believe it will result in
any material liability to Registrant.
(10)
<PAGE> 12
PART II - OTHER INFORMATION (Continued)
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10. $200,000 Revolving Credit and Term Loan Agreement
dated as of August 15, 1994 among UST Inc. (the
"Borrower"), The Bank of Nova Scotia, Fleet Bank,
N.A., Shawmut Bank Connecticut, N.A., Toronto -
Dominion Bank (New York), Inc., Union Trust Company
and Wachovia Bank of Georgia, N.A. (the "Banks") and
Bank of Boston Connecticut, as Agent.
27. Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K for the three months ended
September 30, 1994.
(11)
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UST Inc.
------------
(Registrant)
Date November 10, 1994 /s/ John J. Bucchignano
----------------- -------------------------------------
John J. Bucchignano
Executive Vice President and Chief
Financial Officer (Principal Financial
Officer)
/s/ Robert T. D'Alessandro
-------------------------------------
Robert T. D'Alessandro
Controller (Principal Accounting
Officer)
(12)
<PAGE> 14
EXHIBIT INDEX
10. $200,000 Revolving Credit and Term Loan Agreement dated as of
August 15, 1994 among UST Inc. (the "Borrower"), The Bank of
Nova Scotia, Fleet Bank, N.A., Shawmut Bank Connecticut, N.A.,
Toronto - Dominion Bank (New York), Inc., Union Trust Company
and Wachovia Bank of Georgia, N.A. (the "Banks") and Bank of
Boston Connecticut, as Agent.
27. Financial Data Schedule
<PAGE> 1
AMENDED AND RESTATED
REVOLVING CREDIT AND TERM
LOAN AGREEMENT
UST INC.
Dated as of August 15, 1994
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BANK OF BOSTON CONNECTICUT
FLEET BANK, N.A.
SHAWMUT BANK CONNECTICUT, N.A.
UNION TRUST COMPANY
WACHOVIA BANK OF GEORGIA, N.A.
THE BANK OF NOVA SCOTIA
TORONTO-DOMINION (NEW YORK), INC.
as Banks
BANK OF BOSTON CONNECTICUT
as Agent
<PAGE> 2
TABLE OF CONTENTS
Title
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Section Page
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SECTION I - DEFINITIONS
1.1 Definitions...................................... 2
1.2 Accounting Terms................................. 12
SECTION II - DESCRIPTION OF CREDIT
2.1 The Revolving Credit and Term Loans............. 12
2.2 Notice and Manner of Borrowing or Conversion
of Base Rate and Eurodollar Loans.............. 13
2.3 Facility Fee.................................... 14
2.4 Reduction of Commitment Amount.................. 15
2.5 The Revolving Credit and Term Notes............. 15
2.6 Duration of Eurodollar Interest Periods......... 16
2.7 Interest Rates and Payments of Interest......... 16
2.8 Competitive Bid Loans........................... 17
2.9 Changed Circumstances........................... 22
2.10 Capital Requirements............................ 24
2.11 Payments and Prepayments of the Loans........... 25
2.12 Method of Payment for Revolving Credit Loans
and Term Loans................................. 25
2.13 Overdue Payments................................ 26
2.14 Payments Not at End of Interest Period.......... 26
2.15 Computation of Interest and Fees................ 27
SECTION III - CONDITIONS OF LOAN
3.1 Conditions Precedent to Initial Loan............ 27
3.2 Conditions Precedent to all Loans............... 28
SECTION IV - REPRESENTATIONS AND WARRANTIES
4.1 Organization and Qualification.................. 28
4.2 Corporate Authority............................. 29
4.3 Valid Obligations............................... 29
4.4 Consents or Approvals........................... 29
4.5 Title to Properties; Absence of
Encumbrances................................... 29
4.6 Financial Statements............................ 30
4.7 Changes......................................... 30
4.8 Defaults........................................ 30
4.9 Taxes........................................... 30
4.10 Litigation...................................... 30
4.11 Subsidiaries.................................... 31
4.12 Compliance with ERISA........................... 31
4.13 Environmental Matters........................... 31
</TABLE>
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<TABLE>
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SECTION V - AFFIRMATIVE COVENANTS
5.1 Financial Statements and other Reporting
Requirements.................................. 33
5.2 Conduct of Business............................. 35
5.3 Maintenance and Insurance....................... 35
5.4 Taxes........................................... 36
5.5 Inspection by the Agent ........................ 37
5.6 Maintenance of Books and Records................ 37
5.7 Consolidated Tangible Net Worth................. 37
5.8 Consolidated Total Funded Debt to
Consolidated Tangible Net Worth Ratio......... 37
5.9. Consolidated Operating Cash Flow to
Consolidated Total Debt Service
and Dividends Ratio........................... 37
5.10 Environmental Laws.............................. 38
5.11 Further Assurances.............................. 38
SECTION VI - NEGATIVE COVENANTS
6.1 Encumbrances.................................... 38
6.2 Contingent Liabilities.......................... 40
6.3 Merger; Consolidation; Sale or Lease
of Assets...................................... 40
6.4 Indebtedness of Subsidiaries.................... 41
6.5 Restricted Investments.......................... 41
6.6 ERISA........................................... 41
6.7 Use of Proceeds................................. 42
6.8 Transactions with Affiliates.................... 42
SECTION VII - DEFAULTS
7.1 Events of Default............................... 42
7.2 Remedies........................................ 45
SECTION VIII - CONCERNING THE AGENT AND THE BANKS
8.1 Appointment and Authorization................... 45
8.2 Agent and Affiliates............................ 46
8.3 Future Advances................................. 46
8.4 Delinquent Bank................................. 47
8.5 Payments........................................ 47
8.6 Action by Agent................................. 48
8.7 Notification of Defaults and Events of Default.. 49
8.8 Consultation with Experts....................... 49
8.9 Liability of Agent.............................. 49
8.10 Indemnification................................. 49
8.11 Independent Credit Decision..................... 50
8.12 [Intentionally Omitted]......................... 50
8.13 Successor Agent................................. 50
</TABLE>
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SECTION IX - MISCELLANEOUS
9.1 Notices......................................... 51
9.2 Expenses........................................ 53
9.3 Set-Off......................................... 53
9.4 Term of Agreement............................... 54
9.5 No Waivers...................................... 54
9.6 Governing Law................................... 54
9.7 Amendments, Waivers, etc........................ 54
9.8 Binding Effect of Agreement..................... 55
9.9 Assignment and Participation.................... 55
9.10 Counterparts.................................... 57
9.11 Partial Invalidity.............................. 57
9.12 Captions........................................ 57
9.13 Waiver of Jury Trial............................ 57
9.14 Entire Agreement................................ 57
</TABLE>
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<PAGE> 5
EXHIBITS
EXHIBIT A-1 - Form of Revolving Credit and Term Note
EXHIBIT A-2 - Form of Competitive Bid Note
EXHIBIT B - Form of Notice of Borrowing or Conversion
EXHIBIT C - Indebtedness; Encumbrances
EXHIBIT D - Litigation
EXHIBIT E - Significant Subsidiaries
EXHIBIT F - Form of Report of Chief Financial Officer
EXHIBIT G - Form of Opinion of Counsel to the Company
EXHIBIT H - Form of Competitive Bid Quote Request
EXHIBIT I - Form of Invitation for Competitive Bid Quotes
EXHIBIT J - Form of Competitive Bid Quote
EXHIBIT K - Form of Notice of Competitive Bid Loans
EXHIBIT L - Form of Notice of Competitive Bid Borrowing
EXHIBIT M - Form of Assignment and Joinder Agreement
SCHEDULES
SCHEDULE 1 - Commitments of the Banks
SCHEDULE 4.13 - List of Sites at which Potentially Responsible Party;
Hazardous Materials Disclosure; Other Disclosure Under
Section 4.13
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REVOLVING CREDIT AND TERM LOAN AGREEMENT
Dated as of August 15, 1994
THIS AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT is
made as of August 15, 1994, by and among UST Inc. (the "Company"), a Delaware
corporation having its chief executive office at 100 West Putnam Avenue,
Greenwich, Connecticut 06830; Bank of Boston Connecticut, a bank having an
office at 31 Pratt Street, Hartford, Connecticut 06103, executing this
Agreement in its capacity as one of the Banks ("Bank of Boston"), Fleet Bank,
N.A., a national banking association having an office at One Constitution
Plaza, Hartford, Connecticut 06115 ("Fleet"), Shawmut Bank Connecticut, N.A., a
bank having an office at 777 Main Street, Hartford, Connecticut 06115
("Shawmut"), Union Trust Company, a trust company having an office at 300 Main
Street, Stamford, Connecticut 06904-0700 ("Union Trust"), Wachovia Bank of
Georgia, N.A., a national banking association having an office at 191 Peachtree
Street, N.E., Atlanta, Georgia 30303 ("Wachovia"), The Bank of Nova Scotia, a
bank having an office at One Liberty Plaza, New York, New York 10006 ("Bank of
Nova Scotia"), and Toronto-Dominion (New York), Inc., a bank having an office
at 909 Fannin, Suite 1700, Houston, Texas 77010 ("Toronto Dominion")]; and Bank
of Boston Connecticut, executing this Agreement in the capacity of Agent for
the Banks (the "Agent").
WHEREAS, the Company and Bank of Boston entered into the Revolving Credit
and Term Loan Agreement dated as of January 25, 1994 (the "Existing Credit
Agreement"), and the parties thereto desire to amend the Existing Credit
Agreement in certain respects; and
WHEREAS, Fleet, Shawmut, Union Trust, Wachovia, Bank of Nova Scotia and
Toronto Dominion desire to become parties to the Existing Credit Agreement upon
the terms and conditions set forth herein;
NOW, THEREFORE, the parties hereto hereby agree that the Existing Credit
Agreement shall be amended and restated effective the date hereof to read as
follows:
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SECTION I
DEFINITIONS
1.1. Definitions.
All capitalized terms used in this Agreement or in the Notes or in any
certificate, report or other document made or delivered pursuant to this
Agreement (unless otherwise defined therein) shall have the meanings assigned
to them below:
Adjusted Eurodollar Rate. Applicable to any Interest Period, shall mean
a rate per annum determined pursuant to the following formula:
AER = [ IOR ]*
-----------
[ 1.00 - RP ]
AER = Adjusted Eurodollar Rate
IOR = Interbank Offered Rate
RP = Reserve Percentage
*The amount in brackets shall be rounded upwards, if necessary, to
the next higher 1/100 of 1%.
Where:
"Interbank Offered Rate" applicable to any Eurodollar Loan for any
Interest Period means the rate of interest determined by the Agent
to be the prevailing rate per annum at which deposits in U.S.
dollars are offered to the Agent by first-class banks in the
interbank Eurodollar market in which it regularly participates on
or about 10:00 a.m. (Boston time) two Business Days before the
first day of such Interest Period in an amount approximately equal
to the principal amount of the Eurodollar Loan to which such
Interest Period is to apply for a period of time approximately
equal to such Interest Period.
"Reserve Percentage" applicable to any Interest Period means the
rate (expressed as a decimal) applicable to the Agent during such
Interest Period under regulations issued from time to time by the
Board of Governors of the Federal Reserve System for determining
the maximum reserve requirement (including, without limitation,
any basic, supplemental, emergency or marginal reserve
requirement) of the Agent with respect to "Eurocurrency
liabilities" as that term is defined under such regulations.
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The Adjusted Eurodollar Rate shall be adjusted automatically as of the
effective date of any change in the Reserve Percentage.
Affected Loans. See Section 2.8(a).
Affiliate. With reference to any person (which term does not include,
for purposes of this definition, any governmental agency or instrumentality),
(i) any director, officer or employee of that person, (ii) any other person
controlling, controlled by or under direct or indirect common control of that
person, (iii) any other person directly or indirectly holding 10% or more of
any class of the capital stock or other equity interests (including options,
warrants, convertible securities and similar rights) of that person and (iv)
any other person 10% or more of any class of whose capital stock or other
equity interests (including options, warrants, convertible securities and
similar rights) is held directly or indirectly by that person.
Agent. Bank of Boston in the capacity as Agent for the Banks under this
Agreement, and includes (where the context so admits) any other person or
persons succeeding to the functions of the Agent under this Agreement.
Agreement. This amended and restated Agreement, as the same may be
supplemented or amended from time to time.
Banks. Collectively, (i) Bank of Boston and (ii) each of the other
persons that may on or after the date hereof become a party to this Agreement
as a Bank hereunder.
Base Rate. The greater of (i) the rate of interest announced from time
to time by The First National Bank of Boston at its head office as its Base
Rate, or (ii) the Federal Funds Effective Rate plus 1/2 of 1% per annum
(rounded upwards, if necessary, to the next 1/16 of 1%).
Base Rate Loan. Any Revolving Loan or portion of any Term Loan bearing
interest determined with reference to the Base Rate.
Business Day. (i) For all purposes other than as covered by clause (ii)
below, any day other than a Saturday, Sunday or legal holiday on which banks in
Boston, Massachusetts are open for the conduct of a substantial part of their
commercial banking business; and (ii) with respect to all notices and
determinations in connection with, and payments of principal and interest on,
Eurodollar Loans, any day that is a Business Day described in clause (i) and
that is also a day for trading by and between banks in U.S. Dollar deposits in
the interbank Eurodollar market.
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Capital Expenditures. Any expenditure for fixed assets, leasehold
improvements, capital leases under GAAP, installment purchases of machinery and
equipment, acquisitions of real estate and other similar expenditures including
(i) in the case of a purchase, the entire purchase price, whether or not paid
during the fiscal period in question, (ii) in the case of a capital lease, the
entire rental amount for the lease term, and (iii) expenditures in any
construction-in-process account of the Company.
Closing Date. The first date on which the conditions set forth in
Section 4 hereof have all been satisfied and any Loans are to be made
hereunder.
Code. The Internal Revenue Code of 1986 and the rules and regulations
thereunder, collectively, as the same may from time to time be supplemented or
amended and remain in effect.
Commercial Paper Rating. The rating given by each of Moody's and
Standard and Poor's to the commercial paper issued by the Company.
Commitment. With respect to each Bank, the amount set forth on Schedule
1 hereto, as such Bank's Commitment may be modified pursuant hereto and in
effect from time to time.
Commitment Amount. Two Hundred Million and 00/100 dollars ($200,000,000)
or any lesser amount, including zero, resulting from a termination or reduction
of such amount in accordance with Section 2.4 or Section 7.2.
Commitment Percentage. With respect to each Bank, the percentage set
forth on Schedule 1 hereto as such Bank's percentage of the aggregate
Commitments of all the Banks. Schedule 1 shall be amended from time to time to
reflect any changes to the Commitment Percentages.
Company. See Preamble.
Company's Accountants. Independent certified public accountants
acceptable to the Agent and each Bank. The Agent and each Bank hereby
acknowledge that the Company's Accountants may include Ernst & Young.
Competitive Bid Auction. A solicitation by the Agent of Competitive Bid
Quotes pursuant to Section 2.8.
Competitive Bid Loans. Any Loans bearing interest at a rate determined
with reference to the Competitive Bid Rate, which Loans shall be made solely at
the discretion of each Bank pursuant to a Competitive Bid Auction, as set forth
in Section 2.8.
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Competitive Bid Notes. The promissory notes of the Company,
substantially in the form of Exhibit A-2 hereto, evidencing the obligation of
the Company to each Bank to repay the Competitive Bid Loans made by such Bank.
Competitive Bid Quote. An offer by a Bank to make a Competitive Bid Loan
in accordance with Section 2.8.
Competitive Bid Rate. The rate of interest quoted by a Bank, at such
Bank's sole discretion, in any Competitive Bid Quote.
Consolidated Net Income. As at any date as of which the amount thereof
shall be determined, the sum of the net income of the Company and its
Subsidiaries determined on a consolidated basis in accordance with GAAP.
Consolidated Net Worth. At any date as of which the amount thereof shall
be determined, the sum of the Net Worth of the Company and its Subsidiaries, as
consolidated in accordance with GAAP, after the elimination of intercompany
items and portions of income properly attributable to minority interests in
Subsidiaries, except to the extent actually received from such Subsidiary in
the form of dividends or other distributions.
Consolidated Operating Cash Flow. For any period for which the amount
thereof shall be determined, as consolidated in accordance with GAAP, (i) an
amount equal to EBIT of the Company and its Subsidiaries for such period, (ii)
plus all depreciation, amortization and other non-cash charges taken in
accordance with GAAP by the Company and its Subsidiaries for such period, (iii)
minus all taxes paid in cash by the Company and its Subsidiaries for such
period, and (iv) minus all Capital Expenditures paid in cash by the Company and
its Subsidiaries during such period.
Consolidated Subsidiary. Any Subsidiary of the Company the assets and
liabilities of which are required to be consolidated with those of the Company
in its consolidated financial statements in accordance with GAAP.
Consolidated Tangible Net Worth. At any date as of which the amount
thereof shall be determined, the Consolidated Net Worth of the Company and its
Subsidiaries minus the amount of all intangible items reflected therein,
including, without limitation, all unamortized debt discount and expense,
unamortized research and development expense, unamortized deferred charges,
goodwill, Patents, and all other similar items which would be treated as
intangibles in accordance with GAAP.
Consolidated Total Debt Service. At any date as of which the amount
thereof shall be determined, as consolidated in
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accordance with GAAP, (i) the aggregate cash interest expense of the Company
and its Subsidiaries for the applicable period, (ii) plus the aggregate amount
of scheduled principal payments made by the Company and its Subsidiaries for
the applicable period.
Consolidated Total Funded Debt. At any date as of which the amount
thereof shall be determined, as consolidated in accordance with GAAP, all of
the Funded Debt of the Company and its Subsidiaries.
Controlled Group. All trades or businesses (whether or not incorporated)
under common control that, together with the Company, are treated as a single
employer under Section 414(b) or 414(c) of the Code or Section 4001(b) of
ERISA.
Default. An event or condition that, but for the requirement that time
elapse or notice be given, or both, would constitute an Event of Default.
Dividends. (i) The declaration or payment of any cash or property
dividend on or in respect of shares of any class of capital stock of the
Company, except dividends payable solely in shares of the Company's capital
stock, and (ii) any other distribution paid on or in respect of shares of any
class of capital stock of the Company, but does not include redemptions or
repurchases by the Company of any shares of its capital stock.
EBIT. At any date as of which the amount thereof shall be determined, an
amount equal to net income (as determined in accordance with GAAP), plus the
following to the extent deducted in computing such net income (i) all interest,
and (ii) taxes on income.
Encumbrances. See Section 6.1.
Environmental Laws. Any and all applicable foreign, federal, state and
local environmental, health or safety statutes, laws, regulations, or
ordinances (whether now existing or hereafter enacted or promulgated), of all
governmental agencies, bureaus or departments which may now or hereafter have
jurisdiction over the Company or any of its Subsidiaries and all applicable
judicial and administrative and regulatory decrees, judgments and orders,
including common law rulings and determinations, relating to injury to, or the
protection of, real or personal property or human health or the environment,
including, without limitation, all requirements pertaining to reporting,
licensing, permitting, investigation, remediation and removal of emissions,
discharges, releases or threatened releases of Hazardous Materials, chemical
substances, pollutants or contaminants whether solid, liquid or gaseous in
nature, into the environment or relating to the
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manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of such Hazardous Materials, chemical substances,
pollutants or contaminants.
ERISA. The Employee Retirement Income Security Act of 1974 and the rules
and regulations thereunder, collectively, as the same may from time to time be
supplemented or amended and remain in effect.
Eurodollar Loan. Any Revolving Loan or portion of any Term Loan bearing
interest at a rate determined with reference to the Adjusted Eurodollar Rate.
Event of Default. Any event described in Section 7.1.
Federal Funds Effective Rate. For any day, a fluctuating interest rate
per annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business Day,
the average of the quotations for such day on such transactions received by the
Agent from three Federal funds brokers of recognized standing selected by the
Agent.
Funded Debt. At any date as of which the amount thereof shall be
determined, as applied to the Company and its Subsidiaries, all Indebtedness of
the Company or such Subsidiary which by its terms is payable more than one year
from such date or which may be extended at the option of the Company or such
Subsidiary under a revolving credit facility or similar agreement to a date
more than one year from such date of determination, provided that all
Indebtedness hereunder shall at all times constitute Funded Debt.
GAAP. Generally accepted accounting principles consistently applied.
Guarantees. As applied to the Company and its Subsidiaries, all
guarantees, endorsements or other contingent or surety obligations with respect
to obligations of others whether or not reflected on the consolidated balance
sheet of the Company and its Subsidiaries, including, without limitation, any
obligation to furnish funds, directly or indirectly (whether by virtue of
partnership arrangements, by agreement to keep-well or otherwise), through the
purchase of goods, supplies or services, or by way of stock purchase, capital
contribution, advance or loan, or to enter into a contract for any of the
foregoing, for the purpose of payment of obligations of any other person.
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Hazardous Material. Any substance (i) the presence of which requires or
may hereafter require notification, investigation or remediation under any
Environmental Law; (ii) which is or becomes defined as a "hazardous waste",
"hazardous material" or "hazardous substance" or "controlled industrial waste"
or "pollutant" or "contaminant" under any present or future Environmental Law
or amendments thereto including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601
et seq.) and any applicable local statutes and the regulations promulgated
thereunder; (iii) which is toxic, explosive, corrosive, flammable, infectious,
radioactive, mutagenic or otherwise hazardous and is or becomes regulated by
any governmental authority, agency, department, commission, board, agency or
instrumentality of any foreign country, the United States, any state of the
United States, or any political subdivision thereof to the extent any of the
foregoing has or had jurisdiction over the Company; or (iv) without limitation,
which contains gasoline, diesel fuel or other petroleum products, asbestos or
polychlorinated biphenyls ("PCB's").
Indebtedness. As applied to the Company and its Subsidiaries and
determined on a consolidated basis, (i) all obligations for borrowed money or
other extensions of credit whether or not secured or unsecured, absolute or
contingent, including, without limitation, unmatured reimbursement obligations
with respect to letters of credit or guarantees issued for the account of or on
behalf of the Company and its Subsidiaries and all obligations representing the
deferred purchase price of property, other than accounts payable arising in the
ordinary course of business, (ii) all obligations evidenced by bonds, notes,
debentures or other similar instruments, (iii) all obligations secured by any
mortgage, pledge, security interest or other lien on property owned or acquired
by the Company or any of its Subsidiaries whether or not the obligations
secured thereby shall have been assumed, (iv) that portion of all obligations
arising under capital leases that is required to be capitalized on the
consolidated balance sheet of the Company and its Subsidiaries, (v) all
Guarantees, and (vi) all obligations that are immediately due and payable out
of the proceeds of property now or hereafter owned or acquired by the Company
or any of its Subsidiaries.
Interest Period.
(a) With respect to each Eurodollar Loan, the period commencing on the
date of the making or continuation of or conversion to such Eurodollar Loan and
ending not later than one, two, three or six months thereafter, as the Company
may elect in the applicable Notice of Borrowing or Conversion;
(b) with respect to each Competitive Bid Loan, the period commencing on
the date of the making or continuation of such
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Competitive Bid Loan and ending not later than ninety days thereafter, as the
Company may elect in accordance with Section 2.8 hereof;
provided that:
(i) any Interest Period (other than an Interest Period determined
pursuant to clause (iii) below) that would otherwise end on a day that is
not a Business Day shall be extended to the next succeeding Business Day
unless, in the case of Eurodollar Loans, such Business Day falls in the
next calendar month, in which case such Interest Period shall end on the
immediately preceding Business Day;
(ii) any Interest Period applicable to a Eurodollar Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall, subject to clause (iii) below,
end on the last Business Day of a calendar month that is one, two, three
or six months after the first day of such Interest Period;
(iii) any Interest Period during the Revolving Credit Period that
would otherwise end after the Revolving Credit Termination Date shall end
on the Revolving Credit Termination Date, and any Interest Period during
the Term Loan Period that would otherwise end after the final maturity
date of the Term Loan, shall end on said final maturity date;
(iv) no Interest Period applicable to any Term Loan shall include
a principal repayment date for such Term Loan unless an aggregate
principal amount of Loans at least equal to the principal amount due on
such principal repayment date shall be Base Rate Loans or other Loans
having Interest Periods ending on or before such date;
(v) notwithstanding clauses (iii) and (iv) above, no Interest
Period applicable to a Eurodollar Loan shall have a duration of less than
one month; and if any Interest Period applicable to such Loan would be
for a shorter period, such Interest Period shall not be available
hereunder; and
(vi) no Interest Period may be selected in respect to all or any
portion of any Revolving Loan or Competitive Bid Loan which would expire
after the Revolving Credit Termination Date.
Investment. (i) Any share of capital stock, evidence of Indebtedness or
other security issued by any other person, (ii)
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any loan, advance or extension of credit to, or contribution to the capital of,
any other person, (iii) any Guarantee of the Indebtedness or Liability of any
other person, (iv) any obligation secured by an Encumbrance on, or payable out
of the proceeds of property of any other person, whether or not such obligation
shall have been assumed by such person, (v) any other investment in any other
person (other than the acquisition of the assets constituting the business or a
division or operating unit thereof of any person), and (vi) any commitment or
option to make an Investment if, in the case of an option, the consideration
therefor exceeds $1,000,000.
Liabilities. As applied to the Company and its Subsidiaries, at any date
as of which the amount thereof shall be determined, all obligations that
should, in accordance with GAAP, be classified as liabilities on the balance
sheet of the Company or such Subsidiary, including, in any event, all
Indebtedness of the Company or such Subsidiary.
Loan. A loan made to the Company by any Bank pursuant to Section II of
this Agreement, and "Loans" means all of such loans, collectively.
Majority Banks. Those Banks, no fewer than two, whose aggregate
Commitments constitute at least fifty-one percent (51%) of the total
Commitments of the Banks.
Material Adverse Effect. A material adverse change in or effect on the
assets, business, properties, operations, liabilities or condition (financial
or otherwise) of the Company and its Significant Subsidiaries taken as a whole.
Net Worth. At any date as of which the amount thereof shall be
determined, as applied to the Company or any Subsidiary, the total
shareholders' equity (including capital stock, additional paid-in-capital and
retained earnings) which at such time would appear as such on a balance sheet
of the Company or any Subsidiary, as applicable, prepared in accordance with
GAAP, minus (without duplication) the amount of all treasury stock.
Notes. Collectively, the Revolving Credit and Term Notes and the
Competitive Bid Notes.
Notice of Borrowing or Conversion. See Section 2.2.
Obligations. Any and all obligations of the Company to the Agent or any
Bank hereunder or under the Notes of every kind and description, direct or
indirect, absolute or contingent, primary or secondary, due or to become due,
now existing or hereafter arising, regardless of how they arise or by what
agreement or instrument, if any, and including obligations to
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perform acts and refrain from taking action as well as obligations to pay
money.
Patents. Any patent, patent rights or licenses, trademarks, trademark
rights, trade names, trade name rights, copyrights, and any other right with
respect to the foregoing.
PBGC. The Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.
Permitted Encumbrances. See Section 6.1.
Person or person. Any individual, corporation, partnership, trust,
governmental agency or instrumentality.
Plan. At any time, an employee pension or other benefit plan that is
subject to Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by the Company or any
member of the Controlled Group for employees of the Company or any member of
the Controlled Group or (ii) if such Plan is established, maintained pursuant
to a collective bargaining agreement or any other arrangement under which more
than one employer makes contributions and to which the Company or any member of
the Controlled Group is then making or accruing an obligation to make
contributions or has within the preceding five Plan years made contributions.
Revolving Credit and Term Notes. The revolving credit and term notes of
the Company, substantially in the form of Exhibit A-1 hereto, evidencing the
obligation of the Company to each Bank to repay the Revolving Credit Loans and
the Term Loan made by such Bank.
Revolving Credit Period. The period beginning on the date of this
Agreement and extending through and including the Revolving Credit Termination
Date or such earlier date on which the obligation of the Banks to make
Revolving Loans is terminated or the Commitment Amount is reduced to zero in
accordance with the terms hereof.
Revolving Credit Termination Date. August 15, 1997.
Revolving Loans. The Loans made to the Company pursuant to Section
2.1(a) of this Agreement.
Significant Subsidiary. Any Subsidiary of the Company that, at the time
of determination, constitutes a "Significant Subsidiary" as such term is
defined in Regulation S-X of the Securities and Exchange Commission, but shall,
in any case, include, without limitation, all of the Subsidiaries listed on the
attached Exhibit E and any Affiliate of the Company which may, in the future,
operate or own the principal business or
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assets currently operated and owned by any of such Subsidiaries listed on
Exhibit E, and shall, in any case, exclude Camera Platforms International, Inc.
Subsidiary. Any corporation, association, joint stock company, business
trust or other similar organization of which 50% or more of the ordinary voting
power for the election of a majority of the members of the board of directors
or other governing body of such entity is held or controlled by the Company or
a Subsidiary of the Company; or any other such organization the management of
which is directly or indirectly controlled by the Company or a Subsidiary of
the Company through the exercise of voting power or otherwise; or any joint
venture, whether incorporated or not, in which the Company has a 50% ownership
interest.
Term Loans. The loans made to the Company pursuant to Section 2.1(b) of
this Agreement.
Term Loan Period. The period beginning on the Revolving Credit
Termination Date and extending through and including the third anniversary of
the Revolving Credit Termination Date or such earlier date on which the Term
Loans are repaid in full.
1.2. Accounting Terms. All terms of an accounting character shall have
the meanings assigned thereto by GAAP applied on a basis consistent with the
financial statements referred to in Section 4.6 of this Agreement, modified to
the extent, but only to the extent, that such meanings are specifically
modified herein. In the event that any change in GAAP after the date hereof
would change the principles underlying the determination of any financial
covenant in any material respect, the Company, the Agent and the Banks shall
endeavor in good faith to agree upon a mutually acceptable amendment to such
covenant; provided, however, that such covenant as in effect at the time of
such change shall continue to be in full force and effect unless and until such
an amendment becomes effective.
SECTION II
DESCRIPTION OF CREDIT
2.1. The Revolving Credit and Term Loans.
(a) Subject to the terms and conditions hereof, each Bank severally
agrees to make Revolving Loans to the Company, from time to time until the
close of business on the Revolving Credit Termination Date, in such sums as the
Company may request up to an amount equal to such Bank's Commitment, provided
that the aggregate principal amount of all Loans at any one time outstanding
hereunder shall not exceed the Commitment Amount, and provided further that the
Revolving
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Loans shall be made pro rata in accordance with each Bank's Commitment
Percentage at the time each such Loan is made. The Company may borrow, prepay
pursuant to Section 2.10 and reborrow, from the date of this Agreement until
the Revolving Credit Termination Date, the full amount of the Commitment Amount
or any lesser sum that is at least $1,000,000 or an integral multiple thereof.
Any Revolving Loan not repaid by the Revolving Credit Termination Date shall be
due and payable on the Revolving Credit Termination Date.
(b) Subject to the terms and conditions hereof, each Bank severally
agrees to make to the Company, on the Revolving Credit Termination Date, a term
loan (collectively, the "Term Loans") equal to such Bank's Commitment
Percentage of the aggregate principal amount of Revolving Loans and Competitive
Bid Loans then outstanding, provided that no Term Loan made by any Bank shall
exceed such Bank's Commitment. The Term Loans shall be made by the Banks pro
rata in accordance with each Bank's Commitment Percentage, and the proceeds
thereof shall be used to repay in full the aggregate principal amount of
Revolving Loans and Competitive Bid Loans then outstanding. The principal of
each Term Loan shall be payable in thirty-six (36) equal consecutive monthly
installments on the last day of each month commencing on September 30, 1997.
All principal remaining unpaid and any accrued but unpaid interest shall in any
event be due and payable on the earlier of the last day of the Term Loan Period
or August 15, 2000.
(c) Provided that no Default shall have occurred and be continuing, the
Company may elect to convert all or any part (in integral multiples of
$1,000,000) of any outstanding Base Rate Loan or Eurodollar Loan into a Loan of
any other type provided for in this Agreement (other than a Competitive Bid
Loan) in the same aggregate principal amount, on any Business Day (which, in
the case of a conversion of a Eurodollar Loan, shall be the last day of the
Interest Period applicable to such Eurodollar Loan). The Company shall give
the Agent prior notice of each such conversion (which notice shall be effective
upon receipt in accordance with Section 2.2). All such conversions shall be
made pro rata in accordance with each Bank's Commitment Percentage.
2.2. Notice and Manner of Borrowing or Conversion of Base Rate and
Eurodollar Loans. (a) Whenever the Company desires to obtain or continue Base
Rate Loans or Eurodollar Loans hereunder, or convert outstanding Base Rate
Loans into Eurodollar Loans or Eurodollar Loans into Base Rate Loans, the
Company shall notify the Agent (which notice shall be irrevocable) by telecopy,
telegraph or telephone received no later than 10:00 a.m. Boston time on the day
on which the requested Loans are to be made or continued as or converted to
Base Rate Loans, and received no later than 10:00 a.m. Boston time on the date
four Business Days before the day on which the
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requested Loans are to be made or continued as or converted to Eurodollar
Loans. Promptly upon receipt of any such notice, the Agent shall notify each
of the Banks thereof. Such notice shall specify (i) the effective date and
amount of each Loan or portion thereof to be continued or converted, subject to
the limitations set forth in Section 2.1, (ii) the interest rate option to be
applicable thereto, and (iii) the duration of the applicable Interest Period,
if any (subject to the provisions of the definition of Interest Period and
Section 2.6). Each such notification (a "Notice of Borrowing or Conversion")
shall be immediately followed by a written confirmation thereof by the Company
in substantially the form of Exhibit B hereto, provided that if such written
confirmation differs in any material respect from the action taken by the
Agent, the records of the Agent shall control absent manifest error.
(b) Subject to the terms and conditions hereof, each Bank shall make
available to the Agent, in immediately available funds, no later than 1:00 p.m.
on the date upon which any Base Rate Loan or Eurodollar Loan is to be made such
Bank's Commitment Percentage of the requested Loan. Upon receipt of such
funds, the Agent shall, in turn, make each such Loan available to the Company
on the effective date specified therefor by crediting the amount of such Loan
to the Company's demand deposit account with the Agent or as otherwise
specified by the Company in writing. In no event shall the Agent (in its
capacity as Agent) have any obligation to make any funding unless it shall have
received funds therefor from the Banks.
(c) Subject to the terms and conditions hereof, each Bank which is
making a Competitive Bid Loan pursuant to Section 2.8 hereof shall make
available to Agent, in immediately available funds, no later than 1:00 p.m. on
the date on which such Competitive Bid Loan is to be made, the principal amount
thereof (or so much thereof as shall have been allocated to such Bank pursuant
to Section 2.8(h) hereof). Upon receipt of such funds, the Agent shall make
such Competitive Bid Loan available to the Company on the effective date
specified therefor by crediting the amount of such Competitive Bid Loan to the
Company's demand deposit account with the Agent or as otherwise specified by
the Company in writing. In no event shall the Agent (in its capacity as Agent)
have any obligation to fund any Competitive Bid Loan unless it shall have
received funds therefor from the Bank or Banks making such Loan.
2.3. Facility Fee. The Company shall pay a facility fee to the Agent
for the respective accounts of the Banks, to be allocated among the Banks in
accordance with their respective Commitment Percentages, for each day during
the Revolving Credit Period at the rate per annum set forth in Table 2.3 below
corresponding to the Commercial Paper Rating applicable to the Company for such
day, multiplied by the Commitment Amount in effect for such day, or if the
Company is not rated
-14-
<PAGE> 20
by either Moody's or Standard & Poor's at any time, the facility fee rate shall
be .25% per annum. Facility fees shall be payable quarterly in arrears, on the
last day of March, June, September and December of each year beginning
September, 1994, and on the last day of the Revolving Credit Period. If, at
any time, the Commercial Paper Rating assigned to the Company by Moody's is at
a different level from the Commercial Paper Rating assigned to the Company by
Standard & Poor's (e.g., a Moody's rating of P1 and a Standard & Poor's rating
of A3), the Commercial Paper Rating which results in a higher facility fee rate
shall apply (e.g., the Standard & Poor's rating of A3, in the example above).
TABLE 2.3
<TABLE>
<CAPTION>
Facility
Commercial Paper Rating Fee Rate
----------------------- ----------
Moody's S&P
------- ---
<S> <C> <C> <C> <C>
at least: P1 or A1 .10%
- - - -------- P2 or A2 .15%
P3 or A3 .20%
below: P3 or A3 .25%
- - - -----
</TABLE>
2.4. Reduction of Commitment Amount. The Company may from time to time
by written notice delivered to the Agent at least two Business Days prior to
the date of the requested reduction, reduce by integral multiples of $1,000,000
any unborrowed portion of the Commitment Amount. No reduction of the
Commitment Amount shall be subject to reinstatement.
2.5. The Revolving Credit and Term Notes. (a) The Revolving Credit
Loans and Term Loans shall be evidenced by separate promissory notes
substantially in the form of Exhibit A-1 attached hereto, payable to the order
of each Bank and having a final maturity of the last day of the Term Loan
Period, but in no event later than August 15, 2000. Each such Note shall be
dated on or before the date of the first Loans and shall have the blanks
therein appropriately completed.
(b) Each Bank shall, and is hereby irrevocably authorized by the
Company to, enter on the schedule forming a part of such Bank's Revolving
Credit and Term Note or otherwise in its records appropriate notations
evidencing the date and the amount of each Loan, the interest rate applicable
thereto and the date and amount of each payment of principal made by the
Company with respect thereto; and such notations shall constitute prima facie
evidence thereof. Each Bank is hereby irrevocably authorized by the Company to
attach to and make a part of such Bank's Revolving Credit and Term Note a
continuation of any such schedule as and when required. No failure on the part
of any Bank to make any notation as
-15-
<PAGE> 21
provided in this subsection (b) shall in any way affect any Loan or the rights
or obligations of such Bank or the Company with respect thereto.
2.6. Duration of Eurodollar Interest Periods. (a) Subject to the
provisions of the definition of the term "Interest Period", the duration of
each Interest Period applicable to a Eurodollar Loan shall be as specified in
the applicable Notice of Borrowing or Conversion. The Company shall have the
option to elect a subsequent Interest Period to be applicable to such
Eurodollar Loan by giving notice of such election to the Agent received no
later than 10:00 a.m. Boston time three Business Days before the end of the
then applicable Interest Period if such Loan is to be continued as or converted
to a Eurodollar Loan.
(b) If the Agent does not receive a notice of election of duration of an
Interest Period for a Eurodollar Loan pursuant to subsection (a) above within
the applicable time limits specified therein, or if, when such notice must be
given, an Event of Default exists, the Company shall be deemed to have elected
to convert all Eurodollar Loans in whole into Base Rate Loans on the last day
of the then current Interest Period with respect thereto.
(c) Notwithstanding the foregoing, the Company may not select an
Interest Period for any Eurodollar Loan that would end, but for the provisions
of the definition of Interest Period, after the Revolving Credit Termination
Date or the maturity date of the Term Loan, as the case may be.
2.7. Interest Rates and Payments of Interest. (a) Each Base Rate Loan
shall bear interest on the outstanding principal amount thereof at a rate per
annum equal to the Base Rate, which rate shall change contemporaneously with
any change in the Base Rate. Such interest shall be payable on the last day of
each month in which a Base Rate Loan is outstanding hereunder, and when such
Base Rate Loan is due (whether at maturity, by reason of acceleration or
otherwise).
(b) Each Eurodollar Loan shall bear interest on the outstanding
principal amount thereof, for each Interest Period applicable thereto, at a
rate per annum equal to the Adjusted Eurodollar Rate plus (i) for each
Revolving Loan that is a Eurodollar Loan, the percentage set forth in Table E-1
below corresponding to the Commercial Paper Rating applicable to the Company on
the first day of the Interest Period for such Loan and (ii) for any portion of
the Term Loan that is a Eurodollar Loan, the percentage set forth in Table E-2
below corresponding to the Commercial Paper Rating applicable to the Company on
the first day of the Interest Period for such Loan, or if the Company is not
rated by either Moody's or Standard & Poor's at any time, the Eurodollar Margin
shall be .675% with respect to
-16-
<PAGE> 22
Revolving Loans that are Eurodollar Loans and .800% with respect to any portion
of the Term Loan that is a Eurodollar Loan. Such interest shall be payable for
such Interest Period on the last day thereof and when such Eurodollar Loan is
due (whether at maturity, by reason of acceleration or otherwise) and, if such
Interest Period is longer than three months, at intervals of three months after
the first day of such Interest Period. If, at any time, the Commercial Paper
Rating assigned to the Company by Moody's is at a different level from the
Commercial Paper Rating assigned to the Company by Standard & Poor's (e.g., a
Moody's rating of P1 and a Standard & Poor's rating of A3), the Commercial
Paper Rating which results in a higher Eurodollar Margin shall apply (e.g., the
Standard & Poor's rating of A3, in the example above).
TABLE E-1
<TABLE>
<CAPTION>
Eurodollar
Commercial Paper Rating Margin
----------------------- ----------
Moody's S&P
------- ---
<S> <C> <C> <C> <C>
at least: P1 or A1 .300%
- - - -------- P2 or A2 .425%
P3 or A3 .550%
below: P3 or A3 .675%
- - - -----
</TABLE>
TABLE E-2
<TABLE>
<CAPTION>
Eurodollar
Commercial Paper Rating Margin
----------------------- ----------
Moody's S&P
------- ---
<S> <C> <C> <C> <C>
at least: P1 or A1 .425%
- - - -------- P2 or A2 .550%
P3 or A3 .675%
below: P3 or A3 .800%
- - - -----
</TABLE>
Section 2.8 Competitive Bid Loans.
(a) Competitive Bid Loan Option. In addition to Revolving Loans,
the Company may, pursuant to the terms of this Section 2.8, cause the Agent to
request that the Banks submit offers to make Competitive Bid Loans to the
Company from time to time prior to the Revolving Credit Termination Date. The
Banks may, but shall have no obligation to, make such offers and the Company
may, but shall have no obligation to, accept such offers in the manner set
forth in this Section 2.8; provided that at no time shall the sum of the
aggregate principal amount of Competitive Bid Loans outstanding plus the
aggregate principal amount of all other Loans outstanding exceed the Commitment
Amount.
-17-
<PAGE> 23
(b) Competitive Bid Request. When the Company wishes to request
offers to make Competitive Bid Loans under this Section 2.8, it shall transmit
to the Agent by telecopy or telex a bid request substantially in the form of
Exhibit H hereto to be received no later than 10:00 a.m. (Boston time) on the
Business Day preceding the day on which the requested Competitive Bid Loan is
to be made specifying (i) the date such Competitive Bid Loan is requested to be
made (which must be a Business Day), (ii) the amount of such Competitive Bid
Loan, which must be a minimum of $1,000,000 or an integral multiple thereof,
and (iii) the duration of the requested Interest Period applicable thereto
(subject to the provisions of the definition of the term "Interest Period").
The Company may request offers to make Competitive Bid Loans for more than one
Interest Period in a single bid request.
(c) Invitation for Competitive Bids. Not later than 2:00 p.m.
(Boston time) on the Business Day on which the Agent receives a bid request
from the Company in compliance with Section 2.8(b), the Agent shall send to the
Banks by telecopy or telex an invitation for Competitive Bid Quotes,
substantially in the form of Exhibit I hereto, which shall constitute an
invitation by the Company to each Bank to submit bids offering to make
Competitive Bid Loans in accordance with this Section 2.8 (each an "Invitation
for Competitive Bids"). If, after receipt by the Agent of a bid request from
the Company in accordance with subsection (b) of this Section 2.8, the Agent or
any Bank shall be unable to complete any procedure of the auction process
described in subsections (c) through (f) (inclusive) of the Section 2.8 due to
the inability of such Person to transmit or receive communications through the
means specified therein, such Person may rely on telephonic notice for the
transmission or receipt of such communications. In any case where such Person
shall rely on telephone transmission or receipt, any communication made by
telephone shall, as soon as possible thereafter, be followed by written
confirmation thereof.
(d) Submission and Contents of Competitive Bids.
(i) In response to any Invitation for Competitive Bids, each Bank
may (but shall not be required to) submit to the Agent a Competitive Bid Quote
containing an offer or offers to make Competitive Bid Loans. Each Competitive
Bid Quote must comply with the requirements of this Section 2.8(d) and must be
submitted to the Agent by telecopy or telex not later than 9:30 a.m. (Boston
time) on the requested effective date of the Competitive Bid Loan, as set forth
in the Invitation for Competitive Bids, provided that Competitive Bid Quotes
submitted by the Agent (or any Affiliate of the Agent) in its capacity as a
Bank may be submitted, and may only be submitted, if the Agent or such
Affiliate notifies the Company of the
-18-
<PAGE> 24
offer or offers contained therein not later than 9:15 a.m. (Boston time) on the
requested effective date of the Competitive Bid Loan. Any Competitive Bid
Quote so made shall be irrevocable except with the written consent of the Agent
given on the instructions of the Company.
(ii) Each Competitive Bid Quote shall be substantially in the
form of Exhibit J hereto and shall in any case specify:
(A) the proposed effective date of the proposed
Competitive Bid Loan;
(B) the principal amount of the proposed Competitive Bid
Loan for which each offer is made, which principal amount (x) may be greater
than the quoting Bank's Commitment at the time but may not exceed the
Commitment Amount, (y) must be $1,000,000 or an integral multiple of $1,000,000
and (z) may not exceed the principal amount of the Competitive Bid Loan for
which offers were requested;
(C) the rate of interest per annum (rounded to the nearest
1/10,000th of 1%) (the "Competitive Bid Rate") offered for each such
Competitive Bid Loan;
(D) the proposed Interest Period for the proposed
Competitive Bid Loan; and
(E) the identity of the quoting Bank.
(iii) Any Competitive Bid Quote shall be disregarded if it:
(A) is not substantially in the form of Exhibit J hereto
or does not specify all of the information required by Section 2.8(d)(ii);
(2) contains qualifying, conditional or similar language
(except that it may, in the case of a quote relating to more than one Interest
Period, contain the condition that the Bank will fund any one, but not more, of
the Competitive Bid Loans offered in such Competitive Bid Quote);
(3) proposes terms (including, without limitation, an
Interest Period) other than or in addition to those set forth in the applicable
Invitation for Competitive Bids; or
(4) arrives after the time set forth in Section 2.8(d)(i).
(e) Notice to Company. Not later than 10:00 a.m. (Boston time)
on the effective date of the requested borrowing,
-19-
<PAGE> 25
the Agent shall notify the Company of the terms of each Competitive Bid Quote
submitted by a Bank that is in accordance with Section 2.8(d). The Agent's
notice to the Borrower shall specify (i) the aggregate principal amount of
Competitive Bid Loans for which offers have been received for each Interest
Period specified in the related Competitive Bid Request and (ii) the respective
principal amounts and Competitive Bid Rates, as the case may be, so offered.
(f) Acceptance and Notice By Company. Not later than 10:30 a.m.
(Boston time) on the date of the requested borrowing, the Company shall notify,
by telephone, confirmed by telecopy substantially in the form of Exhibit K
hereto, the Agent of its acceptance or non-acceptance of the offers so notified
to it pursuant to Section 2.8(e). In the case of an acceptance, such notice (a
"Notice of Competitive Bid Borrowing") shall specify the aggregate principal
amount of offers for each Interest Period that are accepted. The Company may
accept any Competitive Bid Quote in whole or in part; provided that:
(i) the aggregate principal amount of each borrowing may not
exceed the applicable amount set forth in the related Competitive Bid Request;
(ii) subject to the provisions of Section 2.8(h) hereof, the
principal amount of each Loan must be $1,000,000 or an integral multiple of
$1,000,000;
(iii) offers quoting lower Competitive Bid Rates must be accepted
prior to offers quoting higher Competitive Bid Rates; and
(iv) the Company shall not accept any offer that is described in
Section 2.8(d)(iii) or that otherwise fails to comply with the requirements of
this Agreement.
(g) Notice by the Agent to the Banks. Not later than 11:00 a.m.
(Boston time) on the date of the requested borrowing, the Agent shall notify,
by telephone, confirmed by telecopy substantially in the form of Exhibit L
hereto, such Banks that made such Competitive Bid Quotes of the Company's
acceptance or non-acceptance of such Competitive Bid Quotes.
(h) Allocation by Agent. If Competitive Bid Quotes are made by
two or more Banks with the same Competitive Bid Rates for a greater aggregate
principal amount than the amount in respect of which offers are accepted by the
Company for the related Interest Period, the principal amount of Competitive
Bid Loans in respect of which such offers are accepted by the Company shall be
allocated by the Agent among such Banks as nearly as possible (in such
multiples, not smaller than $500,000, as the Agent may deem appropriate) in
proportion to
-20-
<PAGE> 26
the aggregate principal amount of such offers. If any such Bank has indicated
a minimum acceptable Competitive Bid Loan in its Competitive Bid Quote, and
under the procedures of this subsection (h), the Agent would have allocated to
it an amount less than such minimum, such Competitive Bid Quote will instead be
deemed to have been withdrawn. Determinations by the Agent of the amounts of
Competitive Bid Loans to be made by each Bank shall be conclusive in the
absence of manifest error.
(i) Interest on Competitive Bid Loans. Each Competitive Bid Loan shall
bear interest on the outstanding principal amount thereof, for the Interest
Period applicable thereto, at a rate per annum equal to the Competitive Bid
Rate quoted by the Bank making such Loan in its Competitive Bid Quote. Such
interest shall be payable on the last day of each month during the Interest
Period applicable thereto and when such Competitive Bid Loan is due (whether at
maturity, by reason of acceleration or otherwise).
(j) Competitive Bid Notes. The Competitive Bid Loans shall be
evidenced by separate promissory notes substantially in the form of Exhibit A-2
attached hereto, payable to the order of each Bank in a principal amount equal
to the Commitment Amount. Each such Note shall be dated on or before the date
of the first Loans and shall have the blanks therein appropriately completed.
Each Bank shall, and is hereby irrevocably authorized by the Company to, enter
on the schedule forming a part of such Bank's Competitive Bid Notes or
otherwise in its records appropriate notations evidencing the date and the
amount of each Competitive Bid Loan made by such Bank, the interest rate
applicable thereto and the date and amount of each payment of principal made by
the Company with respect thereto; and such notations shall constitute prima
facie evidence thereof. Each Bank is hereby irrevocably authorized by the
Company to attach to and make a part of such Bank's Competitive Bid Notes a
continuation of any such schedule as and when required. No failure on the part
of any Bank to make any notation as provided in this subsection (j) shall in
any way affect any Competitive Bid Loan or the rights or obligations of such
Bank or the Company with respect thereto.
(k) Payment of Competitive Bid Loans. Each Competitive Bid Loan shall
be due and payable, and the Company hereby absolutely and unconditionally
promises to pay such Competitive Bid Loans, on the earlier of (i) the
expiration of the Interest Period thereof and (ii) the Revolving Credit
Termination Date. All payments of principal and interest and other amounts
payable in respect of a Competitive Bid Loan shall be made by the Company to
the Agent for the account of the Bank or Banks making such Competitive Bid Loan
in immediately available funds, on or before 11:00 a.m. (Boston time) on the
due date thereof, free and clear of, and without any deduction or withholding
for, any taxes or other payments.
-21-
<PAGE> 27
(l) Maximum Competitive Bid Loans; Funding Losses. (a) Notwithstanding
any other provision herein to the contrary, at no time shall the aggregate
principal amount of Competitive Bid Loans outstanding at any time, after giving
effect to the use of the proceeds of any such Competitive Bid Loan, exceed the
Commitment Amount minus the aggregate principal amount of Revolving Loans
outstanding at such time.
(b) If after acceptance of any Competitive Bid Quote pursuant to Section
2.8, the Company fails to borrow any Competitive Bid Loan so accepted on the
date specified therefor, the Company shall indemnify the Bank funding such Loan
against any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Bank to fund or
maintain such unborrowed Loans.
2.9. Changed Circumstances.
(a) In the event that:
(i) on any date on which the Adjusted Eurodollar Rate would
otherwise be set the Agent shall have determined in good faith (which
determination shall be final and conclusive) that adequate and fair means
do not exist for ascertaining the Interbank Offered Rate, or
(ii) at any time the Agent shall have determined in good faith
(which determination shall be final and conclusive) that:
(A) the making or continuation of or conversion of any Loan to a
Eurodollar Loan has been made impracticable or unlawful by (1) the
occurrence of a contingency that materially and adversely affects the
interbank Eurodollar market maintained by dealers in New York City of
recognized standing or (2) compliance by the Agent or any Bank in good
faith with any applicable law or governmental regulation, guideline or
order or interpretation or change thereof by any governmental authority
charged with the interpretation or administration thereof or with any
request or directive of any such governmental authority (whether or not
having the force of law); or
(B) as the case may be, the Adjusted Eurodollar Rate shall no
longer represent the effective cost to any Bank for U.S. dollar deposits
in the interbank Eurodollar market for deposits in which it regularly
participates;
then, and in any such event, the Agent shall forthwith so notify the Company
thereof. Until the Agent notifies the Company that the circumstances giving
rise to such notice no longer apply, the obligation of each Bank to allow
selection by the Company of the type of Loan affected by the contingencies
-22-
<PAGE> 28
described in this Section 2.9(a) (herein called "Affected Loans") shall be
suspended. If at the time the Agent so notifies the Company, the Company has
previously given the Agent or the Banks a Notice of Borrowing or Conversion
with respect to Affected Loans but such Loans have not yet gone into effect,
such notification shall be deemed to be void and the Company may borrow Loans
of another type by giving a substitute Notice of Borrowing or Conversion
pursuant to Section 2.2 hereof.
In the case of an event specified in clause (ii)(A)(2) above, upon such
date as shall be specified in such notice (which shall not be earlier than the
date such notice is given) the Company shall, with respect to all of the
outstanding Affected Loans, prepay the same, together with interest thereon and
any amounts required to be paid pursuant to Section 2.14, and may borrow a Loan
of another type in replacement thereof in accordance with Section 2.1 hereof by
giving a Notice of Borrowing or Conversion pursuant to Section 2.2 hereof.
(b) In case any law, regulation, treaty or official directive or the
interpretation or application thereof by any court or by any governmental
authority charged with the administration thereof or the compliance with any
guideline or request of any central bank or other governmental authority
(whether or not having the force of law):
(i) subjects the Agent or any Bank to any tax with respect to
payments of principal or interest or any other amounts payable hereunder
by the Company or otherwise with respect to the transactions contemplated
hereby (except for franchise taxes and taxes on the overall net income of
the Agent or such Bank imposed by the United States of America or any
political subdivision thereof), or
(ii) imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit or similar requirement against assets held by,
or deposits in or for the account of, or loans by, the Agent or any Bank
(other than such requirements as are already included in the
determination of the Adjusted Eurodollar Rate), or
(iii) imposes upon the Agent or any Bank any other condition with
respect to its performance under this Agreement,
and the result of any of the foregoing is to increase the cost to the Agent or
such Bank, reduce the income receivable by the Agent or such Bank or impose any
expense upon the Agent or such Bank with respect to any Loans, the Agent shall
notify the Company thereof. The Company agrees to pay to the Agent or such
Bank the amount of such increase in cost, reduction in income or additional
expense as and when such cost, reduction
-23-
<PAGE> 29
or expense is incurred or determined, upon presentation by the Agent or such
Bank of a statement in the amount and setting forth the Agent or such Bank's
calculation thereof, which statement shall constitute prima facie evidence of
the subject matter thereof.
(c) The Agent and each Bank agrees that as promptly as practicable
after it becomes aware of the occurrence of any event or the existence of a
condition that (i) would cause it to incur any increased cost under this
Section 2.9 or (ii) would require the Company to pay an increased amount under
this Section 2.9, (a) it will notify the Company and the Agent of such event or
condition and, (b) it will use its reasonable efforts to make, fund or maintain
the affected Loans through another lending office or take such other reasonable
steps so as to avoid the consequences of such event or condition, provided that
the Agent or such Bank determines, in its sole discretion, that it may do so
consistent with the Agent's or such Bank's internal policies and without being
detrimental to the Agent or such Bank.
2.10. Capital Requirements. If after the date hereof the Agent or any
Bank determines that (i) the adoption of or change in any law, rule, regulation
or guideline regarding capital requirements for banks or bank holding
companies, or any change in the interpretation or application thereof by any
governmental authority charged with the administration thereof, or (ii)
compliance by the Agent or any Bank or its parent bank holding company with any
guideline, request or directive of any such entity regarding capital adequacy
(whether or not having the force of law) or the interpretation thereof by a
court or governmental authority with appropriate jurisdiction, has the effect
of reducing the return on the Agent's or such Bank's or such holding company's
capital as a consequence of the Agent's or such Bank's Loans or commitment to
make Loans hereunder to a level below that which the Agent or such Bank or such
holding company could have achieved but for such adoption, change or compliance
(taking into consideration Agent's or such the Bank's or such holding company's
then existing policies with respect to capital adequacy and assuming the full
utilization of such entity's capital) by any amount deemed by the Agent or such
Bank to be material, then the Agent or such Bank shall notify the Company
thereof. The Company agrees to pay to the Agent or such Bank the amount of
such reduction of return on capital as and when such reduction is determined,
upon presentation by the Agent or such Bank of a statement stating the amount
and setting forth the Agent's or Bank's calculation thereof, which statement
shall constitute prima facie evidence of the subject matter thereof. In
determining such amount, the Agent or such Bank may use any reasonable
averaging and attribution methods.
-24-
<PAGE> 30
2.11. Payments and Prepayments of the Loans. (a) Revolving Loans that
are Base Rate Loans may be prepaid, in whole or in part, at any time, without
premium or penalty upon one Business Day's notice. Eurodollar Loans may be
prepaid, in whole or in part, at any time, without premium or penalty (but
subject to the provisions of Section 2.14) upon three business days notice to
the Agent. Any interest accrued on the amounts so prepaid to the date of such
payment must be paid at the time of any such payment. No prepayment of Base
Rate Loans or Eurodollar Loans during the Revolving Credit Period shall affect
the Commitment Amount or impair the Company's right to borrow Base Rate Loans
or Eurodollar Loans as set forth in Section 2.1.
(b) The Term Loan may be prepaid at any time, in whole or in part, at
any time without premium or penalty (but, in the case of Eurodollar Loans,
subject to the provisions of Section 2.14), upon one Business Day's notice to
the Agent in the case of a Base Rate Loan and upon three business days notice
in the case of a Eurodollar Loan, provided that interest accrued on the amounts
so prepaid to the date of such payment must be paid at the time of any such
payment. Prepayments of the Term Loan shall be applied to installments of
principal due thereunder in the inverse order of their maturities.
(c) With respect to Revolving Loans or any portions of the Term Loans
that are Eurodollar Loans, in the event that the Agent or any Bank seeks
reimbursement from the Company pursuant to the terms of Section 2.9(b) or
Section 2.10, the Company may (subject to the provisions of Section 2.14)
elect, rather than paying to the Agent or such Bank the amount of such
reimbursement, to prepay the Loans in full, together with any and all other
Obligations owing by the Company to the Agent and each Bank. Any amounts so
prepaid may not be reborrowed and, upon such prepayment, each Bank's obligation
to make Loans hereunder shall terminate.
(d) Competitive Bid Loans may not be prepaid without the prior written
consent of the Bank which made such Competitive Bid Loan.
2.12. Method of Payment for Revolving Credit Loans and Term Loans. All
payments and prepayments of principal and all payments of interest, fees and
other amounts payable hereunder shall be made by the Company to the Agent, for
the respective accounts of the Banks or (as the case may be) the Agent, c/o The
First National Bank of Boston, 100 Federal Street, Boston, Massachusetts 02110,
Attention: Ms. Nancy Bolton, Large Corporate New England; in immediately
available funds in lawful United States currency, on or before 11:00 a.m.
(Boston time) on the due date thereof, free and clear of, and without any
deduction or withholding for, any taxes or other payments. The Agent and any
Bank may, and the Company hereby authorizes
-25-
<PAGE> 31
the Agent or any Bank to, debit the amount of any payment not made by such time
to the demand deposit account of the Company with the Agent or such Bank.
2.13. Overdue Payments. (a) Overdue principal (whether at maturity, by
reason of acceleration or otherwise) and, to the extent permitted by applicable
law, overdue interest and fees or any other amounts payable hereunder or under
each Note shall bear interest from and including the due date thereof until
paid, compounded daily and payable on demand, at a rate per annum equal to (i)
if such due date occurs prior to the end of an Interest Period, 1% above the
interest rate applicable to such Loan for such Interest Period until the
expiration of such Interest Period, and thereafter, 1% above the Base Rate, and
(ii) in all other cases, 1% above the rate then applicable to Base Rate Loans,
all of which interest shall be compounded daily and payable on demand.
(b) If a payment of principal or interest hereunder is not made within
10 days of its due date, the Company will also pay on demand a late payment
charge equal to 1% of the amount of such payment. Nothing in the preceding
sentence shall affect the Agent's or any Bank's right to exercise any of its
rights or remedies, including those provided in Section 7.2, if an Event of
Default has occurred.
2.14. Payments Not at End of Interest Period. If the Company for any
reason makes any payment of principal with respect to any Eurodollar Loan on
any day other than the last day of an Interest Period applicable to such
Eurodollar Loan or fails to borrow or continue or convert to a Eurodollar Loan
after giving a Notice of Borrowing or Conversion pursuant to Section 2.2, the
Company shall pay to the Agent for the respective accounts of the Banks an
amount computed pursuant to the following formula:
L = (R - T) x P x D
---------------
360
L = amount payable to Agent for the accounts of the Banks
R = the applicable Adjusted Eurodollar Rate for such Loan
T = effective interest rate per annum at which any readily marketable
bond or other obligation of the United States, selected at the
Agent's sole discretion, maturing on or near the last day of the
then applicable Interest Period of such Loan and in approximately
the same amount as such Loan can be purchased by the Agent Bank on
the day of such payment of principal or failure to borrow or
continue or convert
P = the amount of principal prepaid or the amount of the requested Loan
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D = the number of days remaining in the Interest Period as of the date
of such payment or the number of days of the requested Interest
Period
The Company shall pay such amount upon presentation by the Agent of a statement
setting forth the amount and the Agent's calculation thereof pursuant hereto,
which statement shall constitute prima facie evidence of the subject matter
thereof.
2.15. Computation of Interest and Fees. Interest and all fees payable
hereunder shall be computed daily on the basis of a year of 360 days and paid
for the actual number of days for which due. If the due date for any payment
of principal is extended by operation of law, interest shall be payable for
such extended time. If any payment required by this Agreement becomes due on a
day that is not a Business Day such payment may be made on the next succeeding
Business Day (subject to clause (i) of the definition of Interest Period), and
such extension shall be included in computing interest in connection with such
payment.
SECTION III
CONDITIONS OF LOANS
3.1. Conditions Precedent to Initial Loan. The obligation of each Bank
to make its initial Loan is subject to the condition precedent that the Agent
shall freceive on or before the Closing Date, in form and substance
satisfactory to the Agent and counsel to the Banks, the following:
(a) this Agreement, each Revolving Credit and Term Note and each
Competitive Bid Note, duly executed by the Company;
(b) a certificate of the Secretary or an Assistant Secretary of the
Company (i) with respect to resolutions of the Board of Directors authorizing
the execution and delivery of this Agreement and the Notes and identifying the
officer(s) authorized to execute, deliver and take all other actions required
under this Agreement, and providing specimen signatures of such officers, (ii)
stating that there have been no amendments to its certificate of incorporation
or by-laws as in effect on January 25, 1994, and (iii) stating that all
insurance that is required by this Agreement to be in effect is in effect on
the Closing Date;
(c) a certificate of the Secretary of State of the State of Delaware, as
to legal existence and good standing (including tax good standing) in such
state and listing all documents on file in the office of said Secretary of
State;
(d) a favorable legal opinion addressed to the Agent and each Bank from
Philip R. Brookmeyer, Esquire, assistant general
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counsel to the Company, substantially in the form of Exhibit G hereto; and
(e) such other documents, and completion of such other matters, as the
Agent or counsel for any Bank may reasonably deem necessary or appropriate.
3.2. Conditions Precedent to all Loans. The obligation of each Bank to
make each Loan, including its initial Loan, or continue or convert Loans to
Loans of another type, is further subject to the following conditions:
(a) timely receipt by the Agent of the Notice of Borrowing or
Conversion as provided in Section 2.2;
(b) the representations and warranties contained in Section IV shall
be true and accurate in all material respects on and as of the date of such
Notice of Borrowing or Conversion and on the effective date of the making,
continuation or conversion of each Loan as though made at and as of each such
date (except to the extent that such representations and warranties expressly
relate to an earlier date), and no Default shall have occurred and be
continuing, or would result from such Loan;
(c) the resolutions referred to in Section 3.1(b) shall remain in full
force and effect; and
(d) no change shall have occurred in any law or regulation or
interpretation thereof that, in the opinion of counsel for any Bank, would make
it illegal or against the policy of any governmental agency or authority for
any Bank to make Loans hereunder.
The making of each Loan shall be deemed to be a representation and
warranty by the Company on the date of the making, continuation or conversion
of such Loan as to the accuracy of the facts referred to in subsection (b) of
this Section 3.2.
SECTION IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Agreement and to make
Loans hereunder, the Company represents and warrants to the Agent and each Bank
that:
4.1. Organization and Qualification. Each of the Company and its
Significant Subsidiaries (a) is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation, (b)
has all requisite corporate power to own its property and conduct its business
as
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now conducted and as presently contemplated and (c) is duly qualified and in
good standing as a foreign corporation and is duly authorized to do business in
each jurisdiction where the nature of its properties or business requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the business, financial condition, assets or
properties of the Company or of the Company and its Significant Subsidiaries
taken as a whole.
4.2. Corporate Authority. The execution, delivery and performance of
this Agreement and each Note and the transactions contemplated hereby are
within the corporate power and authority of the Company and have been
authorized by all necessary corporate proceedings, and do not and will not (a)
require any consent or approval of the stockholders of the Company, (b)
contravene any provision of the charter documents or by-laws of the Company or
any law, rule or regulation applicable to the Company, (c) contravene any
provision of, or constitute an event of default or event that, but for the
requirement that time elapse or notice be given, or both, would constitute an
event of default under, any other agreement, instrument, order or undertaking
binding on the Company, or (d) result in or require the imposition of any
Encumbrance on any of the properties, assets or rights of the Company.
4.3. Valid Obligations. This Agreement and each Note and all of their
respective terms and provisions are the legal, valid and binding obligations of
the Company, enforceable in accordance with their respective terms except as
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally, and except as the
remedy of specific performance or of injunctive relief is subject to the
discretion of the court before which any proceeding therefor may be brought.
4.4. Consents or Approvals. The execution, delivery and performance of
this Agreement and each Note and the transactions contemplated herein do not
require any approval or consent of, or filing or registration with, any
governmental or other agency or authority, or any other party.
4.5. Title to Properties; Absence of Encumbrances. Each of the Company
and its Significant Subsidiaries has good and marketable title to all of its
material properties, assets and rights of every name and nature now purported
to be owned by it, including, without limitation, such properties, assets and
rights as are reflected in the financial statements referred to in Section 4.6
(except such properties, assets or rights as have been disposed of in the
ordinary course of business since the date thereof), free from all Encumbrances
except Permitted Encumbrances or those Encumbrances disclosed in Exhibit C
hereto, and, except as so disclosed, free from all defects of title that could
reasonably be expected to materially adversely affect such properties, assets
or rights, taken as a whole.
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4.6. Financial Statements. The Company has furnished the Agent and each
Bank its consolidated balance sheet as of December 31, 1993 and its
consolidated statements of income, changes in stockholders' equity and cash
flow for the fiscal year then ended, and related footnotes, audited and
certified by the Company's Accountants. The Company has also furnished the
Agent and each Bank its consolidated balance sheet as of March 31, 1994 and its
consolidated statements of income, changes in stockholders' equity and cash
flow for the fiscal quarter then ended, certified by the principal financial
officer of the Company but subject, however, to normal, recurring year-end
adjustments that shall not in the aggregate be material in amount. All such
financial statements were prepared in accordance with GAAP applied on a
consistent basis throughout the periods specified and present fairly the
financial position of the Company and its Consolidated Subsidiaries as of such
dates and the results of the operations of the Company and its Consolidated
Subsidiaries for such periods. There are no liabilities, contingent or
otherwise, required to be disclosed in accordance with GAAP and not disclosed
in such financial statements that involve a material amount.
4.7. Changes. Since the date of the most recent financial statements
referred to in Section 4.6, there has been no Material Adverse Effect.
4.8. Defaults. As of the date of this Agreement, no Default exists.
4.9. Taxes. The Company and each Significant Subsidiary has filed all
material federal, state and other tax returns required to be filed, and all
material taxes, assessments and other governmental charges due from the Company
and each Significant Subsidiary have been fully paid except where (i) such
payment is being contested in good faith by appropriate proceedings and
adequate reserves have been established and are being maintained in accordance
with GAAP, or (ii) where the failure to so file or pay could not reasonably be
expected to have a Material Adverse Effect. The Company and each Significant
Subsidiary has established on its books reserves adequate for the payment of
all federal, state and other tax liabilities.
4.10. Litigation. Except as set forth on Exhibit D hereto, there is no
litigation, arbitration, proceeding or investigation pending, or, to the
knowledge of the Company's or any Subsidiary's officers, threatened, against
the Company or any Subsidiary the outcome of which could reasonably be expected
to result in a forfeiture of all or any substantial part of the property of the
Company or its Significant Subsidiaries, or could reasonably be expected to
otherwise have a Material Adverse Effect.
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4.11. Subsidiaries. As of the date of this Agreement, Exhibit E lists
all of the Company's Significant Subsidiaries. Such Significant Subsidiaries
have, in the aggregate, assets, sales and earnings totalling not less than 90%
of the total assets, sales and earnings of the Company and its Consolidated
Subsidiaries. The Company or a Significant Subsidiary of the Company is the
owner, free and clear of all liens and Encumbrances, of all of the issued and
outstanding stock of such Significant Subsidiaries. All shares of the stock of
the Company and each Significant Subsidiary have been validly issued and are
fully paid and nonassessable, and no rights to subscribe to any additional
shares have been granted, and no options, warrants or similar rights are
outstanding.
4.12. Compliance with ERISA. The Company and each member of the
Controlled Group have fulfilled their obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and are in compliance
in all material respects with the applicable provisions of ERISA and the Code,
and have not incurred any liability to the PBGC or a Plan under Title IV of
ERISA; and, to the best knowledge of the Company, no "prohibited transaction"
or "reportable event" (as such terms are defined in ERISA) has occurred with
respect to any Plan.
4.13. Environmental Matters. (a) Except as set forth on Schedule 4.13,
(i) the Company and each of its Significant Subsidiaries have obtained all
permits, licenses and other authorizations which are required under all
applicable Environmental Laws, except to the extent failure to have any such
permit, license or authorization would not have a Material Adverse Effect, and
(ii) the Company and each of its Subsidiaries are in compliance with the terms
and conditions of all such permits, licenses and authorizations, and are also
in compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
any applicable Environmental Law or in any regulation, code, plan, order,
decree, judgment, injunction, entered, promulgated or approved thereunder,
except to the extent failure to comply would not have a Material Adverse
Effect.
(b) Except as set forth in Schedule 4.13, no written notice,
notification, demand, request for information, citation, summons or order has
been issued, no complaint has been filed, no penalty has been assessed and, to
the best knowledge of the Company, no investigation is pending or threatened
(in writing) by any governmental or other entity with respect to any alleged
failure by the Company or any of its Significant Subsidiaries to have any
permit, license or authorization required in connection with the conduct of its
business or with respect to any applicable Environmental Laws, including,
without limitation, Environmental Laws relating to
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the generation, treatment, storage, recycling, transportation, disposal or
release of any Hazardous Materials, except to the extent that such notice,
complaint, penalty or investigation did not or could not reasonably be expected
to result in a Material Adverse Effect. As of the date hereof, the Company or
any Subsidiary of the Company has been identified in writing as a potentially
responsible party (as that term has been construed pursuant to the federal
Comprehensive Environmental Response, Compensation and Liability Act and
similar state and local laws) at the sites listed and described on the attached
Schedule 4.13 and at no other sites.
(c) Except as disclosed on Schedule 4.13 attached hereto, to the best of
the Company's knowledge no material written notification of a release of a
Hazardous Material has been filed by or on behalf of the Company or any of its
Significant Subsidiaries and no property now or previously owned, leased or
used by the Company or any of its Significant Subsidiaries is listed or
proposed for listing on the National Priorities List under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, or
on any similar state list of sites requiring investigation or clean-up, except
to the extent such notification, listing or proposed listing could not
reasonably be expected to result in a Material Adverse Effect.
(d) There are no liens or encumbrances arising under or pursuant to any
applicable Environmental Laws on any of the real property or properties
currently owned, leased or used by the Company or any of its Significant
Subsidiaries, and no notice of any governmental action has been received by the
Company or any Significant Subsidiary, and to the best knowledge of the
Company, no governmental actions have been taken or are in process, which could
subject any of such properties to such liens or encumbrances, except to the
extent that such liens or encumbrances could not reasonably be expected to
result in a Material Adverse Effect.
(e) Except as set forth on Schedule 4.13, (i) neither the Company nor
any of its Significant Subsidiaries nor, to the best knowledge of the Company,
any previous owner, tenant, occupant or user of any property currently owned,
leased or used by the Company or any of its Significant Subsidiaries, has
stored, deposited, disposed of, or located on any property currently owned,
leased, or used by the Company or any of its Significant Subsidiaries, any
Hazardous Materials, except (a) to the extent commonly used in day-to-day
operations of such property and, in such case, in substantial compliance with
all applicable Environmental Laws, or (b) where such storage, deposition,
disposal or location would not have a Material Adverse Effect, and (ii) no
Hazardous Materials are stored, deposited, disposed of, or located on any
property currently owned, leased, or used by the Company or any of its
Significant
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Subsidiaries, except (a) to the extent commonly used in day-to-day operations
of such property and, in such case, in substantial compliance with all
applicable Environmental Laws, or (b) where such storage, deposition, disposal
or location would not have a Material Adverse Effect.
SECTION V
AFFIRMATIVE COVENANTS
So long as any Bank has any commitment to lend hereunder or any Loan or
other Obligation hereunder remains outstanding, the Company covenants as
follows:
5.1. Financial Statements and other Reporting Requirements. The Company
shall furnish to the Agent:
(a) as soon as available to the Company, but in any event within 90
days after the end of each of its fiscal years, a consolidated balance sheet as
of the end of, and a related consolidated statement of income, changes in
stockholders' equity and cash flow for, such year, audited and certified by the
Company's Accountants (or other independent certified public accountants
acceptable to the Agent and each Bank) in the case of such consolidated
statements, and certified by the principal financial officer in the case of
such consolidated statements; and, concurrently with such financial statements,
a written statement by such accountants that, in the making of the audit
necessary for their report and opinion upon such financial statements they have
obtained no knowledge of any Default or, if in the opinion of such accountants
any such Default exists, they shall disclose in such written statement the
nature and status thereof;
(b) as soon as available to the Company, but in any event within 45
days after the end of each of its fiscal quarters, a consolidated balance sheet
as of the end of, and a related consolidated statement of income for, the
period then ended, certified by the principal financial officer of the Company
but subject, however, to normal, recurring year-end adjustments that shall not
in the aggregate be material in amount;
(c) concurrently with the delivery of each financial statement
pursuant to subsections (a) and (b) of this Section 5.1, a report in
substantially the form of Exhibit F hereto signed on behalf of the Company by
its chief financial officer, its treasurer or its controller;
(d) promptly, as and when any Subsidiary qualifies or ceases to
qualify as a Significant Subsidiary hereunder, a revised Exhibit E reflecting
the current list of Significant Subsidiaries;
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(e) promptly after the same are available, copies of all proxy
statements, financial statements and reports as the Company shall send to its
stockholders or as the Company may file with the Securities and Exchange
Commission or any governmental authority at any time having jurisdiction over
the Company or its Significant Subsidiaries;
(f) (i) if and when the Company gives or is required to give notice to
the PBGC of any "Reportable Event" (as defined in Section 4043 of ERISA) with
respect to any Plan that might constitute grounds for a termination of such
Plan under Title IV of ERISA, or knows that any member of the Controlled Group
or the plan administrator of any Plan has given or is required to give notice
of any such Reportable Event, a copy of the notice of such Reportable Event
given or required to be given to the PBGC, (ii) a copy of any request for a
waiver of the funding standards or an extension of the amortization periods
required under Section 412 of the Code or Section 302 of ERISA, (iii) a copy of
any notice of intent to terminate any Plan, (iv) notice that the Company or any
member of the Controlled Group will or may incur any material liability to or
on account of a Plan under Section 4062, 4063, 4064, 4069, 4201 or 4204 of
ERISA, (v) promptly upon the request of the Agent or any Bank, a copy of the
annual report of each Plan (Form 5500 or comparable form) required to be filed
with the IRS and/or the Department of Labor; and (vi) promptly upon the request
of the Agent or any Bank, notice of the adoption of any Plan subject to ERISA,
along with the vesting and funding schedules and other principal provisions
thereof;
(g) immediately upon becoming aware of the existence of any condition
or event that constitutes a Default, written notice thereof specifying the
nature and duration thereof and the action being or proposed to be taken with
respect thereto;
(h) promptly upon becoming aware of any litigation or of any
investigative proceedings by a governmental agency or authority commenced or
threatened against the Company or any of its Subsidiaries of which it has
notice, the outcome of which could reasonably be expected to have a Material
Adverse Effect, written notice thereof and the action being or proposed to be
taken with respect thereto;
(i) within 30 days of receipt of written notice from any governmental
agency or authority, or promptly upon the Company's reasonable belief (i) that
a violation of any Environmental Law has been committed by the Company, (ii)
that there are any investigative proceedings by a governmental agency or
authority commenced or threatened against the Company or any of its
Subsidiaries regarding any actual or potential violation of Environmental Laws
or any spill, release, discharge or disposal of any Hazardous Material in
violation of any Environmental Law, (iii) that any governmental agency or
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private party is alleging that the Company may be liable or responsible for any
costs associated with a response to or cleanup of a release of a Hazardous
Material into the environment or any damages caused thereby, or (iv) that any
administrative or judicial complaint or order has been filed against the
Company alleging a violation of any Environmental Law or requiring the Company
to take any action in connection with the release of Hazardous Material into
the environment, which, in any such case described in items (i) through (iv)
above, could reasonably be expected to have a Material Adverse Effect, written
notice thereof and the action being or proposed to be taken with respect
thereto;
(j) promptly upon becoming aware of any occurrence, condition or event
affecting the Company or any of its Subsidiaries which could reasonably be
expected to constitute a Material Adverse Effect; and
(k) from time to time, such other financial data and information about
the Company or its Subsidiaries as the Bank may reasonably request.
5.2. Conduct of Business. Each of the Company and its Significant
Subsidiaries shall:
(a) duly observe and comply in all material respects with all
applicable laws and valid requirements of any governmental authorities relative
to its corporate existence, rights and franchises, to the conduct of its
business and to its property and assets (including without limitation all
Environmental Laws and ERISA), and shall maintain and keep in full force and
effect all licenses and permits necessary in any material respect to the proper
conduct of its business;
(b) except as provided in Section 6.3, maintain its corporate
existence; and
(c) remain engaged substantially in the same fields of business as
that in which it is now engaged, except that nothing in this Section shall
prevent the Company or any Significant Subsidiary from engaging in any new
business and the Company or any Significant Subsidiary may withdraw from any
business activity which its Board of Directors reasonably deems unprofitable or
unsound, provided that promptly after such withdrawal, the Company provide the
Agent with written notice thereof.
5.3. Maintenance and Insurance. Each of the Company and its Significant
Subsidiaries shall protect and preserve all of its properties, including,
without limitation, all of its Patents, shall obtain all new Patents as are
necessary or advisable for the conduct of its business, and shall maintain all
of its tangible properties in good repair, working order
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and condition and from time to time make all necessary and proper repairs,
renewals, replacements, additions and improvements thereto as the Company or
such Significant Subsidiary, in the exercise of its reasonable judgment, deems
necessary or advisable, as required for the normal conduct of its business, and
shall comply with the provisions of all material leases to which it is a party
or under which it occupies property so as to prevent any material loss or
forfeiture thereof or thereunder if, in any such case, the failure to do so
would have a Material Adverse Effect. Each of the Company and its Significant
Subsidiaries shall at all times, to the extent available, in the Company's
reasonable discretion, on reasonable economic terms, maintain liability and
casualty insurance with financially sound and reputable insurers or self-insure
in such amounts as the officers of the Company in the exercise of their
reasonable judgment deem to be adequate or as required by any applicable law.
The Company shall furnish to the Agent certificates or other evidence
satisfactory to the Agent of compliance with the foregoing insurance
provisions. In handling such certificates, the Agent shall exercise the same
degree of care that it exercises with respect to its own proprietary
information of the same types to maintain the confidentiality of any non-public
information thereby received except that disclosure of such information may be
made (i) to the subsidiaries or Affiliates of the Agent in connection with
their present or prospective business relations with the Company, (ii) to
prospective transferees, assignees or purchasers of an interest in the Loans
who have agreed in writing to be bound by the confidentiality provisions
hereof, (iii) as required by law, regulation, rule or order, subpoena, judicial
order or similar order, provided that the Agent and each Bank shall, to the
extent it would not be unlawful, use reasonable efforts to afford the Company
the opportunity to contest any such rule, order or subpoena, and (iv) as may be
required in connection with the examination, audit or similar investigation of
the Agent or any Bank. The Agent shall not, by the fact of approving,
disapproving or accepting any such insurance, incur any liability for the form
or legal sufficiency of insurance contracts, solvency of insurance companies or
payment of lawsuits, and the Company hereby expressly assumes full
responsibility therefor and liability, if any, thereunder.
5.4. Taxes. The Company shall pay or cause to be paid all taxes,
assessments or governmental charges on or against it or any of its Significant
Subsidiaries or its or their properties on or prior to the time when they
become due; provided that this covenant shall not apply to any tax, assessment
or charge that (i) is being contested in good faith by appropriate proceedings
and with respect to which adequate reserves have been established and are being
maintained in accordance with GAAP, or (ii) singly or in the aggregate would
not have a Material Adverse Effect.
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5.5. Inspection by the Agent. The Company shall permit the Banks,
through the Agent or its designees, at any reasonable time and upon reasonable
notice, to (i) visit and inspect the properties of the Company and its
Significant Subsidiaries, (ii) examine and make copies of and take abstracts
from the books and records of the Company and its Significant Subsidiaries, and
(iii) discuss the affairs, finances and accounts of the Company and its
Significant Subsidiaries with their appropriate officers, employees and
accountants. In handling such information the Agent and each Bank shall
exercise the same degree of care that it exercises with respect to its own
proprietary information of the same types to maintain the confidentiality of
any non-public information thereby received or received pursuant to subsections
5.1(a), (b), or (c) except that disclosure of such information may be made (i)
to the subsidiaries or affiliates of the Agent or any Bank in connection with
their present or prospective business relations with the Company, (ii) to
prospective transferees or purchasers of an interest in the Loans who have
agreed in writing to be bound by the confidentiality provisions hereof, (iii)
as required by law, regulation, rule or order, subpoena, judicial order or
similar order, provided that the Agent and each Bank, as the case may be,
shall, to the extent it would not be unlawful, use reasonable efforts to afford
the Company the opportunity to contest any such rule, order or subpoena, and
(iv) as may be required in connection with the examination, audit or similar
investigation of the Agent or any Bank.
5.6. Maintenance of Books and Records. Each of the Company and its
Significant Subsidiaries shall keep adequate books and records of account (and
the Company, in addition, shall keep such books and records on a consolidated
basis), in which true and complete entries will be made reflecting all of its
business and financial transactions, and such entries will be made in
accordance with GAAP and applicable law.
5.7. Consolidated Tangible Net Worth. The Company shall, at the end of
each of its fiscal quarters, maintain Consolidated Tangible Net Worth of at
least $250,000,000.
5.8. Consolidated Total Funded Debt to Consolidated Tangible Net Worth
Ratio. The Company shall, at the end of each of its fiscal quarters, maintain
a ratio of Consolidated Total Funded Debt to Consolidated Tangible Net Worth of
not greater than 1.0 to 1.0.
5.9. Consolidated Operating Cash Flow to Consolidated Total Debt Service
and Dividends Ratio. The Company shall at all times maintain a ratio of (i)
Consolidated Operating Cash Flow to (ii) Consolidated Total Debt Service plus
Dividends in excess of 1.25 to 1.0, as determined at the end of each fiscal
quarter for the four consecutive fiscal quarters then ending.
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5.10 Environmental Laws. The Company shall comply, and shall make all
reasonable efforts to cause its Significant Subsidiaries to comply, with all
applicable Environmental Laws in all jurisdictions in which any of them
operates now or in the future; provided, however, that the Company shall not be
obligated by this Section to take any action that would result in its being
designated an operator (as that term has been construed pursuant to the federal
Comprehensive Environmental Response, Compensation and Liability act and
similar state and local laws) of any Significant Subsidiary or an owner or
operator of property owned, used, or leased by such Significant Subsidiary.
5.11. Further Assurances. At any time and from time to time the Company
shall, and shall cause each of its Subsidiaries to, execute and deliver such
further instruments and take such further action as may reasonably be requested
by the Agent or any Bank to effect the purposes of this Agreement and the
Notes.
SECTION VI
NEGATIVE COVENANTS
So long as any Bank has any commitment to lend hereunder or any Loan or
other Obligation hereunder remains outstanding, the Company covenants as
follows:
6.1. Encumbrances. Neither the Company nor any of its Significant
Subsidiaries shall create, incur, assume or suffer to exist any mortgage,
pledge, security interest, lien or other charge or encumbrance, including the
lien or retained security title of a conditional vendor upon or with respect to
any of its property or assets ("Encumbrances"), or assign or otherwise convey
any right to receive income, including the sale or discount of accounts
receivable with or without recourse, except the following ("Permitted
Encumbrances"):
(a) Encumbrances in favor of the Agent for the benefit of the Banks;
(b) Encumbrances existing as of the date of this Agreement and
disclosed in Exhibit C hereto;
(c) liens for taxes, fees, assessments and other governmental charges
to the extent that payment of the same may be postponed or is not required in
accordance with the provisions of Section 5.4;
(d) landlords' and lessors' liens in respect of rent not in default;
liens incurred or deposits made in the ordinary course of business in
connection with workmen's compensation,
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unemployment insurance, social security and other like laws; mechanics',
laborers' and materialmen's and similar liens, if the obligations secured by
such liens are not then delinquent; liens securing the performance of bids,
tenders, contracts (other than for the payment of money); and statutory
obligations incidental to the conduct of its business and that do not in the
aggregate materially detract from the value of its property or materially
impair the use thereof in the operation of its business;
(e) liens existing on property of any Person at the time such Person
becomes a Significant Subsidiary, but only so long as the obligation secured by
any such lien is not in default and such lien is and will remain confined to
the property subject to it at the time such Person becomes a Significant
Subsidiary and to fixed improvements thereafter erected on such property;
(f) liens existing on any property prior to the acquisition thereof by
the Company or any Significant Subsidiary and not created in contemplation of
such acquisition, provided that any such lien does not extend to any other
property of the Company or any Significant Subsidiary;
(g) judgment liens that shall not have been in existence for a period
longer than 30 days after the creation thereof or, if a stay of execution shall
have been obtained, for a period longer than 30 days after the expiration of
such stay;
(h) rights of lessors under capital leases;
(i) Encumbrances in respect of any purchase money obligations for
tangible property used in its business, provided that any such Encumbrances
shall not extend to property and assets of the Company or any such Significant
Subsidiary not financed by such a purchase money obligation;
(j) easements, rights of way, restrictions and other similar charges
or Encumbrances relating to real property and not interfering in a material way
with the ordinary conduct of its business;
(k) Encumbrances on the common stock of the Company purchased with any
of the proceeds of the Loans;
(l) Encumbrances in favor of the United States of America or any State
thereof or any political subdivision, agency or instrumentality of any thereof
(each hereinafter called a "Government") on any property or assets hereafter
acquired, constructed, installed or purchased by the Company or a Significant
Subsidiary primarily for the purpose of manufacturing or producing any product,
or performing any research or development work, directly or indirectly, for
such Government;
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(m) Encumbrances on its property or assets created in connection with
the refinancing of Indebtedness secured by Permitted Encumbrances on such
property, provided that the amount of Indebtedness secured by any such
Encumbrance shall not be increased as a result of such refinancing and no such
Encumbrance shall extend to property and assets of the Company or any such
Significant Subsidiary not encumbered prior to any such refinancing; and
(n) Encumbrances securing Indebtedness of the kind described in
Section 6.4 to the extent (but only to the extent) permitted by Section 6.4.
6.2. Contingent Liabilities. Neither the Company nor any of its
Consolidated Subsidiaries shall create, incur, assume or remain liable with
respect to any Guarantees other than the following:
(a) Guarantees in favor of the Agent for the benefit of the Banks;
(b) Guarantees existing on the date of this Agreement and disclosed on
Exhibit C hereto or in the financial statements referred to in Section 4.6;
(c) Guarantees resulting from the endorsement of negotiable
instruments for collection in the ordinary course of business; and
(d) Guarantees in respect of (i) surety, appeal performance and
return-of-money and other similar obligations incurred in the ordinary course
of business (exclusive of obligations for the payment of borrowed money), (ii)
normal trade debt relating to the acquisition of goods and supplies, and (iii)
the obligations of the Company or any Subsidiary of the Company, provided that
the aggregate amount of all such guaranties permitted under this clause (d)
shall not at any time exceed the sum of $50,000,000.
6.3. Merger; Consolidation; Sale or Lease of Assets. Neither the
Company nor any of its Significant Subsidiaries shall (i) sell, lease or
otherwise dispose of assets or properties (valued at the lower of cost or
market), other than (a) sales of assets in the ordinary course of business
consistent with past practices, (b) sales of assets or properties not in the
ordinary course of business, provided that the assets or properties so sold
during any fiscal year generated, produced, contributed to or accounted for,
directly or indirectly, in the aggregate, no more than ten percent (10%) of
Consolidated Net Income for the immediately preceding fiscal year, as shown in
the financial statements for such prior year delivered to the Agent by the
Company pursuant to Section 5.1(a), and provided, further, that (x) whenever
the Company or
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any Significant Subsidiary sells any assets or properties pursuant to this
clause (b), the Company shall provide the Agent with such statements of income
and other information as the Agent or any Bank reasonably requests in order to
determine compliance with this clause (b), all of which statements have been
prepared in accordance with GAAP in a manner consistent with the financial
statements provided to the Agent by the Company pursuant to Section 5.1.(a),
and (y) at the time of any such proposed sale, no Event of Default has occurred
and is continuing, and (c) the sale or disposition of any of the common stock
of the Company purchased with any of the proceeds of the Loans; or (ii)
liquidate, merge or consolidate into or with any other person, provided that
any Significant Subsidiary of the Company may merge or consolidate into or with
(a) the Company if no Default has occurred and is continuing or would result
from such merger and if the Company is the surviving company, or (b) any other
wholly-owned Significant Subsidiary of the Company.
6.4 Indebtedness of Subsidiaries. The Company shall not cause or permit
any of its Significant Subsidiaries to create, incur, assume, guarantee or be
or remain liable with respect to any Indebtedness other than (i) Indebtedness
existing as of the date of this Agreement and disclosed in Exhibit C hereto,
(ii) Indebtedness owing to the Company or any other Subsidiary, and (iii) other
Indebtedness, not to exceed $50,000,000 in the aggregate at any time
outstanding, provided that such other Indebtedness is not secured by any
security interests, liens, charges or encumbrances on the property of any
Significant Subsidiary other than the Significant Subsidiary for whose benefit
such Indebtedness was incurred, or as otherwise permitted in Section 6.1.
6.5 Restricted Investments.
(a) Neither the Company nor any Significant Subsidiary will make or
acquire any Investment in any Subsidiary that is not a Significant Subsidiary
unless, after giving effect to such action, the aggregate amount of all
Investments made or acquired in Subsidiaries that are not Significant
Subsidiaries would not exceed $50,000,000.
(b) No Consolidated Subsidiary will declare or pay any dividend or make
any other distribution on its minority shares except out of the pro rata part
of the assets of such Consolidated Subsidiary which is properly payable or
distributable, as the case may be, to such minority shares.
6.6. ERISA. Neither the Company nor any member of the Controlled Group
shall permit any Plan maintained by it to (i) engage in any "prohibited
transaction" (as defined in Section 4975 of the Code or Section 406 of ERISA
that would have a Material Adverse Effect, (ii) incur any "accumulated funding
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deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA)
whether or not waived, that would have a Material Adverse Effect, (iii) fail to
satisfy any additional funding requirements set forth in Section 412 of the
Code and Section 302 of ERISA, (iv) adopt a Plan amendment which would require
security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA, or
(v) terminate any Plan in a manner that could result in the imposition of a
lien or encumbrance on the assets of the Company or any of its Significant
Subsidiaries pursuant to Section 4068 of ERISA that would have a Material
Adverse Effect. Each Plan shall comply in all material respects with ERISA.
6.7. Use of Proceeds. The Company shall use the proceeds of the Term
Loans to repay in full all outstanding Revolving Loans and Competitive Bid
Loans and the proceeds of the other Loans for its general corporate purposes,
including, without limitation, to purchase common stock of the Company and for
the payment of costs and expenses incurred or sustained by the Company in
connection with the consummation of the transactions referred to herein or
contemplated hereby. No proceeds of any Loans will be used for a purpose which
violates Regulations U and X of the Board of Governors of the Federal Reserve
System, 12 C.F.R. 221 and 224, as amended, and following the application of the
proceeds of each Loan, the value of all "margin stock" (as such term is used in
such Regulations) of the Company will not exceed 25% of the value of the total
assets of the Company that are subject to the restrictions set forth in Section
6.1 and 6.3.
6.8. Transactions with Affiliates. The Company shall not, and shall not
permit any of its Significant Subsidiaries to, directly or indirectly enter
into any purchase, sale, lease or other transaction with any Affiliate (other
than any other Subsidiary) except in the ordinary course of business on terms
that are no less favorable to the Company or such Significant Subsidiary than
those which might be obtained at the time in a comparable arm's length
transaction with any person who is not an Affiliate.
SECTION VII
DEFAULTS
7.1. Events of Default. There shall be an Event of Default hereunder if
any of the following events occurs:
(a) the Company shall fail to pay: (i) any amount of principal of any
Loans when due; or (ii) within 5 Business Days of the due date, any amount of
interest thereon or any fees, expenses or other amounts payable hereunder or
under any Note on the due date therefor; or
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(b) The Company shall fail to perform, comply with or observe or shall
otherwise breach any one or more of the terms, covenants, obligations or
agreements contained in Sections 5.1(f) through 5.1(j), inclusive, 5.5, 5.7
through 5.9, inclusive, 6.1 through 6.9, inclusive; or
(c) the Company shall fail to perform, comply with or observe or shall
otherwise breach any one or more of the terms, covenants, obligations or
agreements (other than in respect of subsections 7.1(a) and 7.1(b) hereof)
contained in this Agreement and such default shall continue for 15 days after
notice thereof has been sent to the Company by the Agent, provided, however,
that in the event of a failure by the Company to comply with the covenants
contained in Sections 5.2 or 5.10, no Default, default or an Event of Default
shall be deemed to occur on account of any such failure unless such failure(s)
(individually or in the aggregate) has a Material Adverse Effect; or
(d) any representation or warranty of the Company made in this
Agreement or in any Note or any other documents or agreements executed in
connection with the transactions contemplated by this Agreement or in any
certificate delivered hereunder shall prove to have been false in any material
respect upon the date when made or deemed to have been made; or
(e) [Intentionally Omitted]; or
(f) the Company or any of its Significant Subsidiaries shall fail to
pay at maturity, or within any applicable period of grace, any obligations in
excess of $5,000,000 in the aggregate for borrowed monies or advances, or fail
to observe or perform any term, covenant or agreement evidencing or securing
such obligations for borrowed monies or advances, the result of which failure
is to permit the holder or holders of such Indebtedness to cause such
Indebtedness to become due prior to its stated maturity upon delivery of
required notice, if any; or
(g) the Company or any of its Significant Subsidiaries shall (i) apply
for or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee, liquidator or similar official of itself or of
all or a substantial part of its property, (ii) be generally not paying its
debts as such debts become due, (iii) make a general assignment for the benefit
of its creditors, (iv) commence a voluntary case under the Federal Bankruptcy
Code (as now or hereafter in effect), (v) take any action or commence any case
or proceeding under any law relating to bankruptcy, insolvency, reorganization,
winding-up or composition or adjustment of debts, or any other law providing
for the relief of debtors, (vi) fail to contest in a timely or appropriate
manner, or acquiesce in writing to, any petition filed against it in an
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involuntary case under the Federal Bankruptcy Code or other law, (vii) take any
action under the laws of its jurisdiction of incorporation or organization
similar to any of the foregoing, (viii) be insolvent within the meaning of the
United States Bankruptcy Code or other applicable statute, or (ix) take any
corporate action for the purpose of effecting any of the foregoing; or
(h) a proceeding or case shall be commenced, without the application
or consent of the Company or any of its Significant Subsidiaries in any court
of competent jurisdiction, seeking (i) the liquidation, reorganization,
dissolution, winding up, or composition or readjustment of its debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of it or
of all or any substantial part of its assets, or (iii) similar relief in
respect of it, under any law relating to bankruptcy, insolvency,
reorganization, winding-up or composition or adjustment of debts or any other
law providing for the relief of debtors, and such proceeding or case shall
continue undismissed, or unstayed and in effect, for a period of 60 days; or an
order for relief shall be entered in an involuntary case under the Federal
Bankruptcy Code, against the Company or such Subsidiary; or action under the
laws of the jurisdiction of incorporation or organization of the Company or any
of its Subsidiaries similar to any of the foregoing shall be taken with respect
to the Company or such Subsidiary and shall continue unstayed and in effect for
any period of 60 days; or
(i) (i) the Company shall fail to own, both legally and beneficially,
100% of the capital stock of United States Tobacco Company, a Delaware
corporation, or (ii) United States Tobacco Company shall cease to operate the
principal business currently operated by it or to own the principal assets
necessary to operate such business, or (iii) United States Tobacco Company
shall cease to own, both legally and beneficially, 100% of the capital stock of
each of U.S. Tobacco Manufacturing, Inc. and U.S. Tobacco Sales & Marketing,
Inc. or (iv) either of U.S. Tobacco Manufacturing, Inc. or U.S. Tobacco Sales &
Marketing, Inc. shall cease to operate the principal business currently
operated by it or to own the principal assets necessary to operate such
business, provided that if any of the foregoing events result from a merger
permitted by Section 6.3, the occurrence of such event shall not be an Event of
Default hereunder; or
(j) judgments or orders for the payment of money shall be entered
against the Company or any of its Significant Subsidiaries by any court, or
warrants of attachment or execution or injunctions or any similar processes
shall be issued or levied against property of the Company or such Significant
Subsidiary, that in the aggregate exceed $10,000,000 in value and such
judgments, orders, warrants,
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injunctions or processes shall continue undischarged or unstayed for 30 days;
or
(k) the Company or any member of the Controlled Group shall fail to
pay any amount or amounts that it shall have become liable to pay to the PBGC
or to a Plan under Title IV of ERISA; or notice of intent to terminate a Plan
or Plans shall be filed under Title IV of ERISA by the Company, any member of
the Controlled Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to
terminate or to cause a trustee to be appointed to administer any such Plan or
Plans or a proceeding shall be instituted by a fiduciary of any such Plan or
Plans against the Company and such proceedings shall not have been dismissed
within 30 days thereafter; or a condition shall exist by reason of which the
PBGC would be entitled to obtain a decree adjudicating that any such Plan or
Plans must be terminated, if the result of any of the foregoing events
described in this clause (k) would constitute a Material Adverse Effect.
7.2. Remedies. Upon the occurrence of an Event of Default described in
subsections 7.1(g) and (h), with respect to the Company, immediately and
automatically, and upon the occurrence of any other Event of Default, at any
time thereafter while such Event of Default is continuing, at the option of the
Majority Banks and upon the Agent's declaration:
(a) each Bank's commitment to make any further Loans hereunder shall
terminate;
(b) the unpaid principal amount of the Loans together with accrued
interest, all other Obligations, and all other obligations of the Company to
the Agent and each Bank of any kind shall become immediately due and payable
without presentment, demand, protest or further notice of any kind, all of
which are hereby expressly waived; and
(c) the Agent may exercise (on behalf of itself and the Banks) any and
all rights the Agent and the Banks have under this Agreement, the Notes or any
other documents or agreements executed in connection herewith, or at law or in
equity, and proceed to protect and enforce the Agent's and each Bank's rights
by any action at law, in equity or other appropriate proceeding.
SECTION VIII
CONCERNING THE AGENT AND THE BANKS.
8.1 Appointment and Authorization. Each of the Banks hereby appoints
Bank of Boston to serve as Agent under this Agreement and irrevocably
authorizes the Agent to take such
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action on such Bank's behalf under this Agreement and to exercise such powers
and to perform such duties under this Agreement and the other documents and
instruments executed and delivered in connection with the consummation of the
transactions contemplated hereby as are delegated to the Agent by the terms
hereof or thereof, together with all such powers as are reasonably incidental
thereto.
8.2 Agent and Affiliates. Bank of Boston shall also have the same
rights and powers under this Agreement of a Bank and may exercise or refrain
from exercising the same as though it were not the Agent, and Bank of Boston
and its Affiliates may accept deposits from, lend money to, and generally
engage in any kind of business with the Company or any Affiliate of the Company
as if it were not the Agent hereunder. Except as otherwise provided by the
terms of this Agreement, nothing herein shall prohibit any Bank from accepting
deposits from, lending money to or generally engaging in any kind of business
with the Company or any Affiliate of the Company.
8.3 Future Advances.
(a) In order more conveniently to administer the Loans, the Agent may,
unless notified to the contrary by any Bank prior to the date upon which any
Revolving Loan is to be made, assume that such Bank has made available to the
Agent on such date the amount of such Bank's share of such Revolving Loan to be
made on such date as provided in this Agreement, and the Agent may (but it
shall not be required to), in reliance upon such assumption, make available to
the Borrower a corresponding amount. If any Bank makes available to the Agent
such amount on a date after the date upon which the Revolving Loan is made,
such Bank shall pay to the Agent on demand an amount equal to the product of
(i) the average computed for the period referred to in clause (iii) below, of
the weighted average interest rate paid by the Agent for federal funds acquired
by the Agent during each day included in such period, multiplied by (ii) the
amount of such Bank's share of such Revolving Loan, multiplied by (iii) a
fraction, the numerator of which is the number of days that elapsed from and
including such date to the date on which the amount of such Bank's share of
such Revolving Credit Loan shall become immediately available to the Agent, and
the denominator of which is 365. A statement of the Agent submitted to such
Bank with respect to any amounts owing under this paragraph shall be prima
facie evidence of the amount due and owing to the Agent by such Bank.
(b) The Agent may at any time, in its sole discretion, upon notice to
any Bank, refuse to make any Revolving Loan to the Company on behalf of such
Bank unless such Bank shall have provided to the Agent immediately available
federal funds equal to such Bank's share of such Loan in accordance with this
Agreement.
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(c) Anything in this Agreement to the contrary notwithstanding, the
obligations to make Loans under the terms of this Agreement shall be the
several and not joint obligation of each of the Banks and any advances made by
the Agent on behalf of any Bank are strictly for the administrative convenience
of the parties and shall in no way diminish any Bank's liability to the Agent
and Bank of Boston to repay the Agent for such Loans and advances. If the
amount of any Bank's share of any Revolving Loan which the Agent has advanced
to the Company is not made available to the Agent by such Bank within three (3)
Business Days following the date upon which such Revolving Loan is made, the
Agent shall be entitled to recover such amount from the Company on demand, with
interest thereon at the rate per annum applicable to the Revolving Loans made
on such date.
8.4 Delinquent Bank. Notwithstanding anything to the contrary contained
in this Agreement, any Bank that fails to make available to the Agent its share
of any Revolving Loan when and to the full extent required by the provisions of
this Agreement shall be deemed delinquent (a "Delinquent Bank") and shall be
deemed a Delinquent Bank until such time as such delinquency is satisfied. A
Delinquent Bank shall be deemed to have assigned any and all payments due to it
from the Company, whether on account of outstanding Loans, interest, fees or
otherwise, to the remaining non-delinquent Banks for application to, and
reduction of, their respective pro rata shares of all outstanding Revolving
Loans. The Delinquent Bank hereby authorizes the Agent to distribute such
payments to the non-delinquent Banks in proportion to their respective pro rata
shares of all outstanding Revolving Loans. A Delinquent Bank shall be deemed
to have satisfied in full a delinquency when and if, as a result of application
of the assigned payments to all outstanding Revolving Loans of the
non-delinquent Banks, the Banks' respective pro rata shares of all outstanding
Loans have returned to those in effect immediately prior to such delinquency
and without giving effect to the nonpayment causing such delinquency.
8.5 Payments.
(a) All payments of principal of and interest on Revolving Loans
and Term Loans received by the Agent shall be paid to each of the Banks pro
rata in accordance with their respective interests in such Loans; all payments
in respect of each Competitive Bid Loan received by the Agent shall be paid to
the Bank or Banks making such Competitive Bid Loan pro rata in accordance with
their interests in such Loan; and any other payments received by the Agent
hereunder shall be paid to the Banks or the Agent or both pro rata as their
respective interests appear. The Agent shall use its best efforts to provide
each Bank with its ratable share of such payments on
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the same day on which such payments are received by the Agent; provided that if
the Agent does not make any such payment to any Bank on such date, the Agent
shall pay to such Bank interest on the unpaid amount at the overnight cost of
funds to the Agent for each day until payment of such amount is made by the
Agent.
(b) Each of the Banks and the Agent hereby agrees that if it
should receive any amount (whether by voluntary payment, by the exercise of the
right of set-off or banker's lien, by counterclaim or cross action, by the
enforcement of any right hereunder under or otherwise) in respect of principal
of, or interest on, the Loans or any fees which are to be shared among the
Banks, which, as compared to the amounts theretofore received by the other
Banks with respect to such principal, interest or fees, is in excess of such
Bank's pro rata share of such principal, interest or fees as provided in this
Agreement, such Bank shall share such excess, less the costs and expenses
(including, reasonable attorneys' fees and disbursements) incurred by such Bank
in connection with such realization, exercise, claim or action, pro rata with
all other Banks in proportion to their respective interests therein, and such
sharing shall be deemed a purchase (without recourse) by such sharing party of
participation interests in the Loans or such fees, as the case may be, owed to
the recipients of such shared payments to the extent of such shared payments;
provided, however, that if all or any portion of such excess amount is
thereafter recovered from such Bank, such purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.
8.6 Action by Agent.
(a) The obligations of the Agent hereunder are only those
expressly set forth herein. The Agent shall have no duty to exercise any right
or power or remedy hereunder or under any other document or instrument executed
and delivered in connection with or as contemplated by this Agreement or to
take any affirmative action hereunder or thereunder.
(b) The Agent shall keep all records of the Loans and payments
hereunder, and shall give and receive notices and other communications to be
given or received by the Agent hereunder on behalf of the Banks.
(c) Upon the occurrence of an Event of Default, and upon the
direction of the Majority Banks pursuant to Section 7.2, the Agent shall
exercise the option of the Banks pursuant to Section 7.2 to declare all Loans
and other Obligations immediately due and payable and may take such action as
may appear necessary or desirable to collect the Obligations and enforce the
rights and remedies of the Agent or the Banks.
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8.7 Notification of Defaults and Events of Default. Each Bank hereby
agrees that, upon learning of the existence of a Default or an Event of
Default, pursuant to Section 5.1(g) or otherwise, it shall promptly notify the
Agent thereof. The Agent hereby agrees that upon receipt of any notice under
this Section 8.7, it shall promptly notify the other Banks of the existence of
such Default or Event of Default.
8.8 Consultation with Experts. The Agent shall be entitled to retain
and consult with legal counsel, independent public accountants and other
experts selected by it and shall not be liable to the Banks for any action
taken, omitted to be taken or suffered in good faith by it in accordance with
the advice of such counsel, accountants or experts. The Agent may employ
agents and attorneys-in-fact and shall not be liable to the Banks for the
default or misconduct of any such agents or attorneys.
8.9 Liability of Agent. The Agent shall exercise the same care to
protect the interests of each Bank as it does to protect its own interests, so
that so long as the Agent exercises such care it shall not be under any
liability to any of the Banks, except for the Agent's gross negligence or
willful misconduct with respect to anything it may do or refrain from doing.
Subject to the immediately preceding sentence, neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken
or not taken by it in connection herewith in its capacity as Agent. Without
limiting the generality of the foregoing, neither the Agent nor any of its
directors, officers, agents or employees shall be responsible for or have any
duty to ascertain, inquire into or verify: (i) any statement, warranty or
representation made in connection with this Agreement or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of the Company; (iii) the satisfaction of any condition specified in
Section Section 3.1 or 3.2, except receipt of items required to be delivered to
the Agent; or (iv) the validity, effectiveness, enforceability or genuineness
of this Agreement, the Notes or any other document or instrument executed and
delivered in connection with or as contemplated by this Agreement. The Agent
shall not incur any liability by acting in reliance upon any notice, consent,
certificate, statement or other writing (which may be a bank wire, telex or
similar writing) believed by it to be genuine or to be signed by the proper
party or parties.
8.10 Indemnification. Each Bank agrees to indemnify the Agent (to the
extent the Agent is not reimbursed by the Company), ratably in accordance with
its Commitment Percentage from and against any cost, expense (including
attorneys' fees and disbursements), claim, demand, action, loss or liability
which the Agent may suffer or incur in connection with this Agreement, or any
action taken or omitted by the Agent hereunder, or the Agent's relationship
with the Company
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hereunder, including, without limitation, the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers and duties hereunder and of taking or
refraining from taking any action hereunder, but excluding any costs, expenses
or losses directly arising from the Agent's gross negligence or willful
misconduct. No payment by any Bank under this Section shall in any way relieve
the Company of its obligations under this Agreement with respect to the amounts
so paid by any Bank, and the Banks shall be subrogated to the rights of the
Agent, if any, in respect thereto.
8.11 Independent Credit Decision. Each of the Banks represents and
warrants to the Agent that it has, independently and without reliance upon the
Agent or any other Bank and based on the financial statements referred to in
Section 4.6 and such other documents and information as it has deemed
appropriate, made its own independent credit analysis and decision to enter
into this Agreement. Each of the Banks acknowledges that it has not relied
upon any representation by the Agent and that the Agent shall not be
responsible for any statements in or omissions from any documents or
information concerning the Company, this Agreement, the Notes or any other
document or instrument executed and delivered in connection with or as
contemplated by this Agreement. Each of the Banks acknowledges that it will,
independently and without reliance upon the Agent or 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.
8.12 [Intentionally Omitted.]
8.13 Successor Agent. Bank of Boston, or any successor Agent, may
resign as Agent at any time by giving written notice thereof to the Banks and
to the Company. Upon any such resignation, the Banks shall have the right to
appoint a successor Agent, which successor Agent shall be reasonably acceptable
to the Company. If no successor Agent shall have been so appointed by the
Banks, and shall have accepted such appointment, within 30 days after the
retiring Agent's giving of notice of resignation, then the retiring Agent may,
on behalf of the Banks, appoint a successor Agent, which shall be a commercial
bank (or Affiliate thereof) or savings and loan association organized under the
laws of the United States of America or any State thereof or under the laws of
another country which is doing business in the United States of America or any
State thereof and having a combined capital, surplus and undivided profits of
at least $100,000,000 and shall be reasonably acceptable to the Company. 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
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all further duties and obligations under this Agreement. After any retiring
Agent's resignation or removal 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 IX
MISCELLANEOUS
9.1. Notices. Unless otherwise specified herein, all notices hereunder
to any party hereto shall be in writing and shall be deemed to have been given
when delivered by hand, when properly deposited in the mails postage prepaid,
when sent by telex, answerback received, or electronic facsimile transmission,
or when delivered to the telegraph company or overnight courier, addressed to
such party at its address indicated below:
If to the Company, at
UST Inc.
100 West Putnam Avenue
Greenwich, Connecticut 06830
Attention: Jeffrey D. Harris, Treasurer
Jonathan P. Nelson, Secretary
Telecopy: (203) 863-7211
with a copy to
Skadden, Arps, Slate, Meagher and Flom
919 Third Avenue
New York, New York 10022
Attention: James Douglas, Esq.
Telecopy: (212) 735-2001
If to the Agent or Bank of Boston, at
Bank of Boston Connecticut
One Landmark Square, Suite 2002
Stamford, Connecticut 06901
Attention: Jo Ann Keller, Director
Telecopy: (203) 967-8169
and
The First National Bank of Boston
100 Federal Street
Boston, Massachusetts 02110
Attention: Nancy Bolton
Large Corporate New England
Telecopy: (617) 434-0637
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with a copy to
Goulston & Storrs, P.C.
400 Atlantic Avenue
Boston, Massachusetts 02110
Attention: Kitt Sawitsky, Esq.
Telecopy: (617) 574-4112
If to Fleet, at
Fleet Bank, N.A.
One Stamford Plaza
263 Tresser Boulevard
Stamford, Connecticut 06901-3236
Attention: Dorothy E. Bambach
Telecopy: (203) 351-1511
If to Shawmut, at
Shawmut Bank Connecticut, N.A.
One Landmark Square, MSN 752
Stamford, Connecticut 06904
Attention: Robert M. Surdam, Jr.
Telecopy: (203) 358-6111
If to Union Trust, at
Union Trust Company
300 Main Street
Stamford, Connecticut 06904-0700
Attention: Donald Whitham
Telecopy: (203) 964-8239
If to Wachovia, at
Wachovia Bank of Georgia, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attention: Linda M. Harris
Telecopy: (404) 332-6898
with a copy to
Wachovia Bank of Georgia, N.A.
152 West 57th Street
New York, New York 10019
Attention: John Paul Mathis
Telecopy: (212) 603-7729
-52-
<PAGE> 58
If to The Bank of Nova Scotia, at
The Bank of Nova Scotia
One Liberty Plaza, 26th floor
New York, New York 10006
Attention: Todd Meller
Telecopy: (212) 225-5090
If to Toronto Dominion (New York), Inc., at
The Toronto-Dominion Bank
909 Fannin, Suite 1700
Houston, Texas 77010
Attention: Frederic B. Hawley
with a copy to
The Toronto-Dominion Bank
31 West 52nd Street
New York, New York 10019-6101
Attention: Ken Segal/W. Reg Waylen
Telecopy: (212) 262-1926
or at any other address specified by such party in writing.
9.2. Expenses. The Company will pay on demand all reasonable expenses
of the Agent or any Bank in connection with the preparation, waiver or
amendment of this Agreement, the Note or other documents executed in connection
herewith or therewith, or the administration, default or collection of the
Loans or other Obligations or administration, default, collection in connection
with the Agent's or any Bank's exercise, preservation, forbearance or
enforcement of any of its rights, remedies or options hereunder or thereunder,
including, without limitation, reasonable fees of outside legal counsel or the
allocated costs of in-house legal counsel, accounting, consulting, brokerage or
other similar professional fees or expenses, and any fees or expenses
associated with any travel or other costs relating to any appraisals or
examinations conducted in connection with the Obligations or any collateral
therefor, and the amount of all such expenses shall, until paid, bear interest
at the rate applicable to principal hereunder (including any default rate).
9.3. Set-Off. Regardless of the adequacy of any collateral or other
means of obtaining repayment of the
-53-
<PAGE> 59
Obligations, any deposits, balances or other sums credited by or due from any
Bank or any of its branch or affiliate offices to the Company may, at any time
and from time to time after the occurrence and continuance of an Event of
Default hereunder, without notice to the Company or compliance with any other
condition precedent now or hereafter imposed by statute, rule of law, or
otherwise (all of which are, to the extent permitted by law, hereby expressly
waived) be set off, appropriated, and applied by any Bank against any and all
obligations of the Company to such Bank or any of its affiliates in such manner
as the head office of such Bank or any of its branch offices in their sole
discretion may determine.
9.4. Term of Agreement. This Agreement shall continue in full force and
effect so long as any Bank has any commitment to make Loans hereunder or any
Loan or any Obligation hereunder shall be outstanding.
9.5. No Waivers. No failure or delay by the Agent or any Bank in
exercising any right, power or privilege hereunder or under the Note or under
any other documents or agreements executed in connection herewith shall operate
as a waiver thereof; nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein and in each Note provided are
cumulative and not exclusive of any rights or remedies otherwise provided by
agreement or law.
9.6. Governing Law. This Agreement and each Note shall be deemed to be
contracts made under seal and shall be construed in accordance with and
governed by the laws of the State of Connecticut (without giving effect to any
conflicts of laws provisions contained therein).
9.7. Amendments; Waivers; etc. Neither this Agreement nor any Note nor
any provision hereof or thereof may be amended, waived, discharged or
terminated except by a written instrument signed by the Majority Banks, and, in
the case of amendments, by the Company; provided, however, that the following
changes shall require the written consent, agreement or approval of all of the
Banks: (A) any change in the amount or the due date of any Obligation; (B) any
change in the interest rates prescribed in any of the Notes; (C) any change in
the Commitment Amount or any Commitment or Commitment Percentage of any of the
Banks, except as permitted by Section 9.9; (D) any change in the definition of
Majority Banks; (E) any change in the facility fee provisions as set forth in
Section 2.3; and (F) any change in the terms of this Section 9.7. Any change
to Section 8 or any other provision of this Agreement affecting the rights or
obligations of the Agent shall not be amended or modified without the prior
written consent of the Agent.
-54-
<PAGE> 60
9.8. Binding Effect of Agreement. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns; provided that (i) the Company may not assign or transfer its
rights or obligations hereunder, and (ii) no Bank may assign or transfer its
rights or obligations hereunder to any person except in accordance with the
provisions of Section 9.9.
9.9 Assignment and Participation.
(i) Assignments by the Banks. From and after the date hereof, any Bank may at
any time assign all, or a proportionate part of all, of its rights, interests
and duties with respect to its Loans and its Notes to one or more banks or
other financial institutions (each, an "Assignee") on such terms, as between
such Bank and each of its Assignees, as such Bank may think fit (provided,
however, that if any Bank assigns less than all of its rights and interests,
any such assignment must be in a minimum aggregate principal amount of at least
$10,000,000), and such Assignee shall assume such rights, interests and duties
pursuant to an instrument executed by such Assignee and such Bank, and for this
purpose such Bank may make available to each of its potential Assignees such
information relating to the Company, this Agreement and the transactions
contemplated hereby as such Bank may think necessary or desirable, which
information shall be held by each potential Assignee strictly in confidence;
provided, however, that prior to assigning any interest to any Assignee
hereunder, such Bank shall (x) notify the Company and the Agent in writing
identifying the proposed Assignee and stating the aggregate principal amount of
the proposed interest to be assigned, (y) to the extent made available to such
Bank by the proposed Assignee, furnish the Company with such material
information relating to such proposed Assignee as the Company may reasonably
request in order to enable the Company to make its decision (which information
shall be held by the Company strictly in confidence), except that such Bank
shall not be bound to ascertain whether any such information delivered to it by
such proposed Assignee is true, accurate and complete, and (z) receive the
prior written consent of the Company and the Agent, which consent may not be
unreasonably withheld by the Company and the Agent. It is understood and
agreed that the proviso contained in the immediately preceding sentence shall
not be applicable in the case of, and this paragraph (i) shall not restrict,
(a) an assignment or other transfer by any Bank to an Affiliate of such Bank or
(b) a collateral assignment or other similar transfer to any of the twelve
Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12
U.S.C. Section 341. Each Assignee shall execute and deliver to the Agent and
the Borrower a counterpart joinder in the form of Exhibit K hereto and shall
pay to the Agent, solely for the account of the Agent, an assignment fee of
$3,000. Upon the
-55-
<PAGE> 61
execution and delivery of such counterpart joinder, (a) such Assignee shall, on
the date and to the extent provided in such counterpart joinder, become a
"Bank" party to this Agreement for all purposes of this Agreement and shall
have all the rights and obligations of a Bank with a Commitment as set forth in
such counterpart joinder, and the transferor Bank shall, on the date and to the
extent provided in such counterpart joinder, be released from its obligations
hereunder to a corresponding extend (and, in the case of an assignment covering
all of the remaining portion of an assigning Bank's rights and obligations
under this Agreement, such transferor shall cease to be a party hereto but
shall continue to be entitled to any fees accrued for its account hereunder and
not yet paid); (b) the Borrower shall issue to such Assignee a Revolving Credit
and Term Note in the amount of such Assignee's Commitment and a Competitive Bid
Note in the amount equal to the Commitment Amount, each dated the Closing Date
or such other date as may be specified by such Assignee and otherwise completed
in substantially the form of Exhibit A-1 and Exhibit A-2, respectively; (c) the
Agent shall distribute to the Borrower, the Banks and such Assignee an amended
Schedule 1 hereto reflecting such changes; and (d) this Agreement shall be
deemed appropriately amended to reflect (i) the status of such Assignee as a
party hereto and (ii) the status and rights of the Banks and Agent hereunder.
(ii) Participations by the Banks. From and after the date hereof, each Bank
shall be at liberty to offer participations in the Loans and the Notes to one
or more banks or other financial institutions (each, a "Participant") on such
terms as such Bank may think fit, and for this purpose such Bank may make
available to each of its potential Participants such information relating to
the Company, this Agreement and the transactions contemplated hereby as such
Bank may think necessary or desirable, which information shall be held by each
potential Participant strictly in confidence; provided, however, that such Bank
shall retain the sole right to consent to amendments to, or waivers of, the
provisions of this Agreement and the Note and the sole right and responsibility
to enforce the obligations of the Company hereunder and under the Notes;
provided that such Bank may agree with each of its Participants that such Bank
will not agree, without the consent of the Participant, to any amendment or
waiver of any provision of this Agreement which would increase or otherwise
change its Commitment Amount or reduce the principal of or rate of interest on
the Loans subject to such participation, or postpone the date fixed for any
payment of principal or of interest on any Loans.
(iii) No Assignee, Participant or other transferee of any Bank's rights shall
be entitled to receive any greater payment
-56-
<PAGE> 62
under Section Section 2.9 or 2.10 hereof than such Bank would have been
entitled to receive with respect to the rights transferred, unless such
transfer is made with the Company's prior written consent or at a time when the
circumstances giving rise to such greater payment did not exist.
9.10. Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures hereto and thereto were
upon the same instrument.
9.11. Partial Invalidity. The invalidity or unenforceability of any one
or more phrases, clauses or sections of this Agreement shall not affect the
validity or enforceability of the remaining portions of it.
9.12. Captions. The captions and headings of the various sections and
subsections of this Agreement are provided for convenience only and shall not
be construed to modify the meaning of such sections or subsections.
9.13. WAIVER OF JURY TRIAL. THE COMPANY AGREES THAT NEITHER IT NOR ANY
OF ITS ASSIGNEES OR SUCCESSORS SHALL (A) SEEK A JURY TRIAL IN ANY LAWSUIT,
PROCEEDING, COUNTERCLAIM OR ANY OTHER ACTION BASED UPON, OR ARISING OUT OF,
THIS AGREEMENT, ANY RELATED INSTRUMENTS OR THE DEALINGS OR THE RELATIONSHIP
BETWEEN THE COMPANY AND ITS ASSIGNS AND SUCCESSORS AND THE AGENT AND/OR ANY
BANK, OR (B) SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH
A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS
PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE COMPANY, AND THESE PROVISIONS SHALL
BE SUBJECT TO NO EXCEPTIONS. THE COMPANY ACKNOWLEDGES THAT NEITHER THE AGENT
NOR ANY BANK HAS AGREED WITH OR REPRESENTED TO IT THAT THE PROVISIONS OF THIS
PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
9.14. Entire Agreement. This Agreement, the Notes and the documents and
agreements executed in connection herewith constitute the final agreement of
the parties hereto and supersede any prior agreement or understanding, written
or oral, with respect to the matters contained herein and therein.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the day and year first above written.
UST INC.
By /s/ JOHN J. BUCCHIGNANO
-------------------------------
Title: Executive Vice President
and Chief Financial
Officer
(Signatures continued on next page)
-57-
<PAGE> 63
By /s/ JEFFREY D. HARRIS
-------------------------------
Title: Treasurer
The Agent:
---------
BANK OF BOSTON CONNECTICUT
By /s/ JOANN KELLER
-------------------------------
Title: JoAnn Keller, Director
The Banks:
---------
BANK OF BOSTON CONNECTICUT
By /s/ JOANN KELLER
-------------------------------
Title: JoAnn Keller, Director
FLEET BANK, N.A.
By /s/ DOROTHY E. BAMBACH
-------------------------------
Title: Senior Vice President
SHAWMUT BANK CONNECTICUT, N.A.
By /s/ ROBERT M. SURDAM, JR.
-------------------------------
Title: Director
UNION TRUST COMPANY
By /s/ DONALD W. WHITHAM
-------------------------------
Title: Vice President
WACHOVIA BANK OF GEORGIA, N.A.
By /s/ LINDA M. HARRIS
-------------------------------
Title: Sr. Vice President
(Signatures continued on next page)
-58-
<PAGE> 64
THE BANK OF NOVA SCOTIA
By /s/ TERRY K. FRYETT
-------------------------------
Title:
TORONTO-DOMINION (NEW YORK), INC.
By /s/ WARREN FINLAY
-------------------------------
Title: WARREN FINLAY
VICE PRESIDENT
-59-
<PAGE> 65
[FORM OF REVOLVING CREDIT AND TERM NOTE]
EXHIBIT A-1
UST INC.
AMENDED AND RESTATED
REVOLVING CREDIT AND TERM NOTE
August 15, 1994
$___________ Hartford, Connecticut
For value received, the undersigned hereby promises to pay to
__________________________ (the "Bank"), or order, at the head office of the
Agent at 100 Pearl Street, Hartford, Connecticut, the principal amount of _____
MILLION AND 00/100 Dollars ($__,000,000), or such lesser amount as shall equal
the principal amount outstanding hereunder on August 15, 1997, in thirty-six
(36) equal consecutive monthly installments on the last day of each month
beginning on September 30, 1997, in lawful money of the United States of
America and in immediately available funds, and to pay interest on the unpaid
principal balance hereof from time to time outstanding, at said office and in
like money and funds, for the period commencing on the date hereof until paid
in full, at the rates per annum and on the dates provided in the Agreement (as
defined below). All principal remaining unpaid and any accrued but unpaid
interest shall in any event be due and payable on August 15, 2000.
If a payment of principal or interest hereunder is not made within 10
days of its due date, the undersigned will also pay on demand a late payment
charge equal to 1% of the amount of such payment. Nothing in the preceding
sentence shall affect the Bank's rights to exercise any of its rights and
remedies provided in the Agreement if an Event of Default (as defined in the
Agreement) has occurred.
This Note is issued pursuant to, and entitled to the benefits of, and is
subject to, the provisions of a certain Amended and Restated Revolving Credit
and Term Loan Agreement dated as of August 15, 1994 by and among the
undersigned and Bank of Boston Connecticut, N.A., Fleet Bank, N.A., Shawmut
Bank Connecticut, N.A., Union Trust Company, Wachovia Bank of Georgia, N.A.,
The Bank of Nova Scotia and Toronto-Dominion (New York), Inc., and Bank of
Boston Connecticut as Agent (herein, as the same may from time to time be
amended or extended, referred to as the "Agreement"), but neither this
reference to the Agreement nor any provision thereof shall affect or impair the
absolute and unconditional obligation of the undersigned maker of this Note to
pay the principal of and interest on this Note as herein provided.
A-1-1
<PAGE> 66
In case an Event of Default (as defined in the Agreement) shall occur,
the aggregate unpaid principal of and accrued interest on this Note shall
become or may be declared to be due and payable in the manner and with the
effect provided in the Agreement.
The undersigned may at its option prepay all or any part of the principal
of this Note before maturity upon the terms provided in the Agreement.
The undersigned maker hereby waives presentment, demand, notice of
dishonor, protest and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note.
This instrument shall have the effect of an instrument executed under
seal and shall be governed by and construed in accordance with the laws of the
State of Connecticut (without giving effect to any conflicts of laws provisions
contained therein).
UST INC.
By:
--------------------
Title: Executive Vice
President and Chief
Financial Officer
By:
-------------------
Title: Treasurer
A-1-2
<PAGE> 67
SCHEDULE I TO PROMISSORY NOTE
<TABLE>
<CAPTION>
TYPE OF LOAN
AMOUNT (EURODOLLAR
OF OR INTEREST INTEREST AMOUNT NOTATION
DATE LOAN BASE RATE) RATE* PERIOD** PAID MADE BY
---- ---- ---------- ----- -------- ---- -------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
- - - -----------------
* For Base Rate Loans, insert "Base Rate"
** For Eurodollar Loans only
A-1-3
<PAGE> 68
[FORM OF COMPETITIVE BID NOTE]
EXHIBIT A-2
UST INC.
COMPETITIVE BID NOTE
$200,000,000 August 15, 1994
FOR VALUE RECEIVED, the undersigned, hereby promises to pay to the order
of [insert Bank] (the "Bank"), on August 15, 1997 or on such earlier date or
dates as may be determined pursuant to the Credit Agreement (each a "Maturity
Date") at the office of the Agent as set forth in the Amended and Restated
Revolving Credit Agreement dated as of August 15, 1994 among the undersigned,
the Banks named therein and the Agent named therein (the "Credit Agreement"),
the principal sum of Two Hundred Million Dollars ($200,000,000), or such lesser
amount as shall equal the principal amount of Competitive Bid Loans outstanding
hereunder, on the Maturity Date applicable to each such Competitive Bid Loan,
and to pay interest on the unpaid principal amount outstanding from time to
time at the rate of interest per annum as shall from time to time be
established therefor pursuant to the terms of the Credit Agreement, payable on
the last day of each month during each Interest Period applicable hereto and on
the Maturity Date, at said office, in lawful money of the United States of
America in immediately available funds.
The undersigned promises to pay interest and late charges, on demand, on
any overdue principal and, to the extent permitted by law, overdue interest at
a rate or rates determined as set forth in the Credit Agreement.
This Competitive Bid Note evidences borrowings under, is subject to the
terms and conditions of, and has been issued by the undersigned in accordance
with the terms of the Credit Agreement, and is one of the Competitive Bid Notes
referred to therein. The Bank and any holder hereof is entitled to the
benefits of the Credit Agreement and may enforce the agreements of the
undersigned contained therein, and the holder hereof may exercise the
respective remedies provided for thereby or otherwise available in respect
thereof, all in accordance with the respective terms thereof. All capitalized
terms used in this Competitive Bid Note and not otherwise defined herein shall
have the same meanings herein as in the Credit Agreement.
If any one or more of the Events of Default shall occur, the entire
unpaid principal amount of this Competitive Bid Note and all of the unpaid
interest accrued thereon may become or be declared due and payable in the
manner and with the effect provided in the Credit Agreement.
A-2-1
<PAGE> 69
The undersigned and every endorser and guarantor of this Competitive Bid
Note or the obligation represented hereby waive presentment, demand, notice,
protest and all other demands and notices in connection with the delivery,
acceptance, performance, default or enforcement of this Competitive Bid Note,
assent to any extension or postponement of the time of payment or any other
indulgence, to any substitution, exchange or release of collateral and to the
addition or release of any other party or person primarily or secondarily
liable.
This Competitive Bid Note shall be deemed to take effect as a sealed
instrument under the laws of the State of Connecticut and for all purposes
shall be construed in accordance with such laws (without giving effect to any
conflicts of laws provisions contained therein).
IN WITNESS WHEREOF, UST INC. has caused this Competitive Bid Note to be
signed by its duly authorized officer as of the day and year first above
written.
UST INC.
By:
------------------------
Title: Executive Vice
President and Chief
Financial Officer
By:
-----------------------
Title: Treasurer
A-2-2
<PAGE> 70
SCHEDULE I TO PROMISSORY NOTE
<TABLE>
<CAPTION>
AMOUNT
OF INTEREST INTEREST AMOUNT NOTATION
DATE LOAN TYPE OF LOAN RATE PERIOD(S) PAID MADE BY
---- ---- ------------ ---- --------- ---- -------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
A-2-3
<PAGE> 71
EXHIBIT B
UST INC.
Bank of Boston Connecticut, as Agent
1 Landmark Square, Suite 2002
Stamford, Connecticut 06901
Re: Amended and Restated Revolving Credit and Term Loan
Agreement Dated as of August , 1994 (the "Agreement")
Ladies and Gentlemen:
Pursuant to Section 2.2 of the Agreement the undersigned hereby confirms
its request made on ___________, 19__ for a [Base Rate] [Eurodollar] Loan in
the amount of $________________ on ____________, 199_.
[The Interest Period applicable to said Loan will be [one] [two] [three]
[six] months [__] days.]*
[Said Loan represents a conversion of the [Base Rate] [Eurodollar] Loan
in the same amount made on _________.]**
The representations and warranties contained or referred to in Section IV
of the Agreement are true and accurate in all material respects on and as of
the effective date of the Loan as though made at and as of such date (except to
the extent that such representations and warranties expressly relate to an
earlier date); and no Default has occurred and is continuing or will result
from the Loan.
UST INC.
---------------------------
Title:
- - - ---------------------------
Date
- - - ---------------------------
* To be inserted in any request for a Eurodollar Loan
** To be inserted in any request for a conversion.
B-1
<PAGE> 72
PAGE 1
EXHIBIT C
INDEBTEDNESS; ENCUMBRANCES
<TABLE>
<CAPTION>
GUARANTEES
- - - ----------
AMOUNT
(000'S)
-------
<S> <C>
United States Tobacco Company's guarantee to Barclay's
Bank of London Payment of duty and VAT Deferment Schemes
by United States Tobacco International, Inc. (continuing). 46
Fleet Bank, N.A. - Employee Assistance Program Loan
Guaranty Agreement (continuing). 5
First City Bank & Trust Co., Hopkinsville, Kentucky -
Employee Assistance Program Loan Agreement (continuing). -0-
NationsBank - Nashville, Tennessee - Employee Assistance
Program Loan Agreement (continuing). 4
Paysaver Credit Union - Westchester, Illinois - Employee
Assistance Program Loan Agreement (continuing). -0-
UST Inc.'s guarantee of the obligations of several employees
who are holders of the Corporate American Express business
cards under the supervision of the Corporate Travel Department 5
UST Inc.'s guarantee of a line of credit of $200,000 to
First Union National Bank, Sparta on behalf of Sparta Industries
Inc., Sparta, North Carolina, for the purchase of raw material -
(expires 12/94). 200
UST Inc.'s guarantee of a letter of credit for 110,005,500
Italian Liras issued in favor of Banco di Roma, Rome, Italy
furnished by their New York Agency for the account of United
States Tobacco International, Inc. to guarantee reimbursement
of value added tax of Ufficio Imposta Sul Valore Aggiunto -
(expires 5/15/95). 69
</TABLE>
C-1
<PAGE> 73
PAGE 2
EXHIBIT C (CONTINUED)
<TABLE>
<S> <C> <C>
AMOUNT
(000'S)
-------
UST Inc's guarantee of a letter of credit for 4,133,540
Italian Liras issued in favor of Banco di Roma, Rome,
Italy furnished by their New York agency for the account
of United States Tobacco International, Inc. to guarantee
reimbursement of value added tax of Ufficio Imposta
Sul Valore Aggiunto (expires 5/15/95). 3
UST Inc.'s issuance of a Line of Credit Agreement in favor
of Camera Platforms International Inc. (Amended 3/23/93)
for utilization of the borrowing facility in accordance with the
terms and conditions of the agreement. Total of loans
not to exceed $3,000,000 - (expires 12/31/95). 3,000
UST Inc.'s issuance of a Line of Credit Agreement in favor
of Camera Platforms International Inc., related to the
acquisition of Panther Corporation of America and
associated product inventory in the amount of
$2,350,000 - (expires 7/1/98). 2,210 5,210
-----
UST Inc.'s guarantee in favor of Camera Platforms International
Inc. to guarantee the post-closing installment purchase price
obligations of C.P.I. to Panther GMBH in an amount not to
exceed in total the sum of eight hundred thousand ($800,000)
dollars - (expires 7/1/98). 600
UST Inc.'s guarantee in favor of Cabin Fever Entertainment Inc.
to support its obligations and performance in accordance with
the terms and conditions of contracts entered into with RHI
Entertainment, Inc. on December 31, 1992. 3,000
UST Inc.'s guarantee in favor of Cabin Fever Entertainment
Inc. to support its obligations and performance in accordance
with the terms and conditions of contract entered into with
Handleman Company, May 8, 1992. 4,000
------
$ 13,142
</TABLE>
C-2
<PAGE> 74
EXHIBIT D
LITIGATION
None.
D-1
<PAGE> 75
EXHIBIT E
SIGNIFICANT SUBSIDIARIES
1. United States Tobacco Company
2. United States Tobacco Manufacturing Company Inc.
3. United States Tobacco Sales and Marketing Company Inc.
4. International Wine & Spirits Ltd.
5. Stimson Lane Ltd.
6. UST Enterprises Inc.
7. UST International Inc.
E-1
<PAGE> 76
EXHIBIT F
UST INC.
REPORT OF CHIEF FINANCIAL OFFICER, TREASURER OR CONTROLLER
UST INC. (the "Company") HEREBY CERTIFIES that:
This Report is furnished pursuant to Section 5.1(c) of the Amended and
Restated Revolving Credit and Term Loan Agreement dated as of August 15, 1994
by and between the Company and Bank of Boston Connecticut, in its own capacity
and as Agent, Fleet Bank, N.A., Shawmut Bank Connecticut, N.A., Union Trust
Company, Wachovia Bank of Georgia, N.A., The Bank of Nova Scotia and
Toronto-Dominion (New York), Inc. (the "Agreement"). Unless otherwise defined
herein, the terms used in this Report have the meanings given to them in the
Agreement.
As required by Section 5.1(a) and (b) of the Agreement, consolidated
financial statements of the Company and its Subsidiaries for the
[year/month/quarter] ended _____________, 19__ (the "Financial Statements")
prepared in accordance with GAAP applicable to such Financial Statements
consistently applied accompany this Report. The Financial Statements present
fairly the consolidated financial position of the Company and its Subsidiaries
as at the date thereof and the consolidated results of operations of the
Company and its Subsidiaries for the period covered thereby (subject only to
normal recurring year-end adjustments).
The figures set forth in Schedule A for determining compliance by the
Company with the financial covenants contained in the Agreement are true and
complete as of the date hereof.
The activities of the Company and its Subsidiaries during the period
covered by the Financial Statements have been reviewed by the Chief Financial
Officer or by employees or agents under his immediate supervision. Based on
such review, to the best knowledge and belief of the Chief Financial Officer,
Treasurer or Controller, as applicable, and as of the date of this Report, no
Default has occurred.*
WITNESS my hand this ___________ day of _________, 19__.
UST INC.
By:
------------------------
Title:
----------------
- - - -----------------
* If a Default has occurred, this paragraph is to be modified with an
appropriate statement as to the nature thereof, the period of existence
thereof and what action the Company has taken, is taking, or proposes to
take with respect thereto.
F-1
<PAGE> 77
SCHEDULE A
to
EXHIBIT F
FINANCIAL COVENANTS
Consolidated Tangible Net Worth (Section 5.7)
<TABLE>
<S> <C>
REQUIRED:
(i) Required Amount: $250,000,000
===========
ACTUAL:
(i) Consolidated Net Worth of the
Company and its Subsidiaries $
-----------
(ii) Less: excluded items(1) (if any) ($ )
-----------
(iii) Total: $
===========
</TABLE>
Ratio of Consolidated Total Funded Debt to Consolidated
Tangible Net Worth (Section 5.8)
<TABLE>
<S> <C>
REQUIRED: 1.00 : 1.00
======= =====
ACTUAL:
(i) Consolidated Total Funded Debt $
-----------
(ii) Consolidated Tangible Net Worth $
-----------
(iii) Line (i) divided by line (ii) : 1.00
====== =====
</TABLE>
- - - --------------------
(1) Excluded items are: (a) goodwill of $________, (b) book
value, net of any reserves, of intangible assets, including
unamortized debt discount and expense, patents, trade and service marks and
names, copyrights and research and development expenses, of $________, (c)
write-up in the book value of assets of $________ and (d) value of minority
interests in Subsidiaries of $_______.
F-2
<PAGE> 78
Ratio of Consolidated Operating Cash Flow to Consolidated Total
Debt Service and Dividends (Section 5.9)
<TABLE>
<S> <C>
REQUIRED: 1.25 : 1.00
==== ====
ACTUAL:
(i) Consolidated Operating Cash Flow $
-----------
(ii) Consolidated Total Debt Service $
-----------
(iii) Dividends $
-----------
(iv) Sum of line (ii) and line (iii) $
-----------
(v) Line (i) divided by line (iv) :
==== ====
</TABLE>
WITNESS my hand this ___________ day of __________, 19__.
UST INC.
By:
-------------------------
Title:
F-3
<PAGE> 79
UST [LETTERHEAD]
EXHIBIT G
August 15, 1994
Bank of Boston Connecticut, as Agent
for the Banks party to the Agreement
referred to below
1 Landmark Square
Stamford, Connecticut 06901
Each of the Banks listed on Annex 1 hereto
RE: UST Inc.
Ladies and Gentlemen:
This legal opinion is furnished to you pursuant to Section 3.1(d)
of the Amended and Restated Revolving Credit and Term Loan
Agreement, dated as of August 15, 1994 (the "Agreement"), by and
between UST Inc. (the "Company"), the Banks party thereto (the
"Banks") and Bank of Boston Connecticut, as Agent for the Banks
(in such capacity, the "Agent") pursuant to which the Company has
executed and delivered to the Banks its Notes. All terms defined
in the Agreement shall have the same meanings herein.
I am the Assistant General Counsel of the Company and have acted
as such in connection with the transactions and arrangements
contemplated by the Agreement and the Notes.
I have examined executed originals of the Agreement and the
Notes. I have examined originals or certified copies of the
charter documents (including the by-laws) of the Company (each
document except the by-laws certified by the authorized offices
of the Secretary of State of the State of Delaware as of the most
recent practicable date). I have also examined such certificates
of the directors and officers of the Company and such other
certificates, agreements, instruments and documents as I have
deemed necessary or advisable for the purposes of this legal
opinion. I have relied, as to factual matters only, upon such
certificates and the representations and warranties made in such
agreements, instruments and other documents. I have assumed the
genuineness of all documents submitted to me as originals and the
conformity to originals of all documents submitted to me as
copies.
I am admitted to the bar of the State of Connecticut and I
express no opinion as to the laws of any jurisdiction other than
(i) the laws of the State of Connecticut, (ii) the General
Corporation Law of Delaware and (iii) the federal laws of the
United States of America.
<PAGE> 80
Based upon the foregoing, it is my opinion that:
(1) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware. The Company is duly qualified as a foreign corporation
and is licensed, admitted or approved to do business as a foreign
corporation in each jurisdiction wherein the character of the
properties owned or held under lease by it, or the nature of the
business conducted by it, makes such qualification necessary,
except where the failure to be so qualified would not have a
Material Adverse Effect.
(2) The Company has adequate corporate power and authority,
and full legal right to own or to hold under lease its properties
and to carry on the business in which it is presently engaged and
presently proposes to engage.
(3) The Company has adequate power and authority and full
legal right to enter into the Agreement and the Notes and to
perform, observe and comply with all of its agreements and
obligations under each of such documents, including, without
limitation, to make all of the borrowings contemplated by the
Agreement.
(4) The Agreement and the Notes have been duly and properly
executed and delivered by the Company.
(5) The agreements and obligations of the Company contained
in the Agreement and the Notes constitute the legal, valid and
binding obligations of the Company, enforceable against the
Company in accordance with their respective terms.
(6) As of the date of the Agreement, all the Significant
Subsidiaries of the Company are listed on Exhibit E thereto. The
Company or a Significant Subsidiary is the record holder of all
of the issued and outstanding stock of each of such Significant
Subsidiaries. All shares of such stock have been validly issued
and are fully paid and nonassessable, and no rights to subscribe
to any additional shares have been granted, and no options,
warrants or similar rights are outstanding.
(7) Each Significant Subsidiary of the Company is a
corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation, has all
requisite corporate power and authority, and full legal right to
own or hold under lease its properties and conduct its business
as now conducted and is duly qualified and in good standing as a
foreign corporation and is licensed, admitted or approved to do
business as a foreign corporation in each jurisdiction wherein
the character of the properties owned or held under lease by it,
or the nature of the business conducted by it, makes such
qualification necessary, except where the failure to be so
qualified would not have a Material Adverse Effect.
(8) The execution and delivery by the Company of the
Agreement and the Notes, the performance by the Company of all of
its agreements and obligations under each of such
<PAGE> 81
documents, and the making by the Company of all of the borrowings
contemplated by the Agreement, have been duly and properly
authorized by all necessary corporate action on the part of the
Company and do not and will not (a) contravene any provision of
the charter or by-laws of the Company (each as in effect on the
date hereof), (b) to the best of my knowledge (after all due
investigation in the circumstances), conflict with, or result in
a breach of, the terms, conditions or provisions of, or
constitute a default under, any agreement, trust deed, indenture,
mortgage or other instrument to which the Company is a party or
by which it is bound or affected, or result in the creation of
any mortgage, lien, pledge, charge, security interest or other
encumbrance upon any of the property of the Company, (c) violate
or contravene any provision of any law or regulation (including,
without limitation, Regulation X of the Board of Governors of the
Federal Reserve System) or any order, ruling or interpretation
thereunder or, to the best of my knowledge (after all due
investigation in the circumstances), any decree, order or
judgment of any court or governmental or regulatory authority,
bureau, or agency or official applicable to the Company, require
any waivers, consents or approvals by any of the creditors or
trustees for creditors of record of the Company, or (d) require
any waivers, consents or approvals by any shareholders of the
Company or, to the best of my knowledge (after all due
investigation in the circumstances), any other person, except
such as have been duly obtained and are in full force and effect
on the date hereof.
(9) No approval, consent, order, authorization or license
by, or filing or registration with, or giving of notice to, or
taking of any other action with respect to, any governmental or
regulatory authority or agency is required for the execution and
delivery or performance by the Company of the Agreement or the
Notes or for the performance by the Company of any of its
agreements or obligations thereunder or for the making by the
Company of the borrowings contemplated by the Agreement.
(10) To the best of my knowledge (after all due
investigation in the circumstances), there is no pending or
threatened action, suit, proceeding or investigation before any
court, governmental or regulatory authority, agency, commission
or official, board of arbitration or arbitrator against the
Company or any of its Significant Subsidiaries, the outcome of
which could reasonably be expected (a) to adversely affect the
transactions contemplated by the Agreement or the Notes, or (b)
to have a Material Adverse Effect.
(11) All state and local recording, franchise, stamp,
documentary and other taxes and governmental charges and
assessments required to be paid in connection with the execution,
delivery, filing or recordation of, or as a condition to the
enforcement of, the Agreement and the Note and any of the
transactions contemplated thereby, if any, have been duly paid.
My opinion is subject to the following assumption and
qualifications:
(a) enforcement of the Agreement and the Notes may be
limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting
<PAGE> 82
creditors' rights generally and by general principles of
equity regardless of whether enforcement is sought in equity
or at law;
(b) I express no opinion as to the enforceability of any
rights to contribution or indemnification which are
violative of public policy underlying any law, rule or
regulation (including any federal or state securities law,
rule or regulation);
(c) I have assumed that the Agreement constitutes the
legal, valid and binding obligation of the Agent and the
Banks enforceable against the Agent and the Banks in
accordance with its terms; and
(d) I express no opinion as to the effect on the opinions
expressed herein of (i) the compliance or non-compliance of
the Agent or any Bank with any state, federal or other laws
or regulations applicable to it or (ii) the legal or
regulatory status or the nature of the business of the Agent
or any Bank.
This opinion is being furnished only to you and is solely for
your benefit in connection with the transactions contemplated by
the Agreement and the Notes and is not to be used, circulated,
quoted, relied upon or otherwise referred to by any other person
or for any other purpose without my prior written consent.
Very truly yours,
/s/ PHILIP R. BROOKMEYER
------------------------
Philip R. Brookmeyer
Assistant General Counsel
& Assistant Secretary
PRB:kap
<PAGE> 83
ANNEX 1
Bank of Boston Connecticut
Fleet Bank, N.A.
Shawmut Bank Connecticut
Union Trust Company
Wachovia Bank of Georgia
The Bank of Nova Scotia
Toronto Dominion Bank - Texas
as Banks
and
Bank of Boston Connecticut
as Agent
<PAGE> 84
Exhibit H
Form of Competitive Bid Quote Request
[Date]
To: Bank of Boston Connecticut, as agent (the "Agent")
From: UST INC. (the "Borrower")
Re: Amended and Restated Revolving Credit Agreement (the
"Credit Agreement") dated as of August __, 1994 among UST
INC., the Banks party thereto and the Agent.
We hereby give notice pursuant to Section 2.8 of the Credit Agreement
that we request Competitive Bid Quotes for the following proposed Competitive
Bid Borrowing(s):
Date of Borrowing:___________________________
<TABLE>
<CAPTION>
Principal Amount* Interest Period** Maturity Date
- - - ---------------- --------------- -------------
<S> <C> <C>
$
</TABLE>
Such Competitive Bid Quotes should offer a Competitive Bid Rate.
Terms used herein have the meanings assigned to them in the Credit
Agreement.
UST INC.
By:
---------------------
Title:
- - - -----------------------------------
* Amount must be a minimum of $1,000,000 or any larger multiple of
$1,000,000.
** 7 to 90 days, subject to the provisions of the definition of "Interest
Period".
H-1
<PAGE> 85
Exhibit I
Form of Invitation for Competitive Bid Quotes
To: [Name of Bank]
Re: Invitation for Competitive Bid Quotes to UST INC.
(the "Borrower")
Pursuant to Section 2.8 of the Amended and Restated Revolving Credit
Agreement (the "Credit Agreement") dated as of August __, 1994 among UST INC.,
the Banks parties thereto and Bank of Boston Connecticut, as Agent, we are
pleased on behalf of the Borrower to invite you to submit Competitive Bid
Quotes to the Borrower for the following proposed Competitive Bid Borrowing(s):
Date of Borrowing:___________________________
<TABLE>
<CAPTION>
Principal Amount Interest Period Maturity Date
- - - ---------------- --------------- -------------
<S> <C> <C>
$
</TABLE>
Such Competitive Bid Quotes should offer a Competitive Bid Rate.
Please respond to this invitation by no later than ____ * a.m.
(Boston time ) on [date].
BANK OF BOSTON CONNECTICUT, as Agent
By:
---------------------
Authorized Officer
- - - -----------------------------------
* The time specified in Section 2.8 of the Credit Agreement.
I-1
<PAGE> 86
Exhibit J
Form of Competitive Bid Quote
BANK OF BOSTON CONNECTICUT, as Agent
1 Landmark Square, Suite 2002
Stamford, Connecticut 06901
Attention:
Re: Competitive Bid Quote to UST INC. (the
"Borrower")
In response to your invitation on behalf of the Borrower dated
_______________, 19___, we hereby make the following Competitive Bid Quote on
the following terms:
1. Quoting Bank:_______________________________
2. Person to contact at Quoting Bank:__________________________
3. Date of Borrowing:_________________________________*
4. We hereby offer to make Competitive Bid Loan(s) in the following
principal amounts, for the following Interest Periods and at the
following rates:
<TABLE>
<CAPTION>
Principal Interest Competitive Maturity
Amount** Period*** Bid Rate**** Date
- - - --------- ---------- ------------- --------
<S> <C> <C> <C>
$
$
</TABLE>
We understand and agree that the offer(s) set forth above, subject to the
satisfaction of the applicable conditions set forth in the Amended and Restated
Revolving Credit Agreement
- - - -----------------------------------
* As specified in the related Invitation.
** Principal amount bid for each Interest Period may not exceed
principal amount requested. Bids must be made for $1,000,000 or
any larger multiple of $1,000,000.
*** 7 to 90 days, as specified in the related Invitation.
**** Specify rate of interest per annum (each rounded to the nearest
1/10,000th of 1%).
J-1
<PAGE> 87
dated as of August 15, 1994 among UST INC., the Bank parties thereto, and Bank
of Boston Connecticut, as Agent, irrevocably obligates us to make the
Competitive Bid Loan(s) for which any offer(s) are accepted in whole or in part
by the Borrower.
Very truly yours,
[NAME OF BANK]
Dated: By:
------------ ---------------------------
Authorized Officer
J-2
<PAGE> 88
EXHIBIT K
FORM OF NOTICE OF COMPETITIVE BID BORROWING
Re: Amended and Restated Revolving Credit and Term Loan Agreement (as
the same may be amended and in effect from time to time the "Credit
Agreement"), dated as of August 15, 1994, among UST Inc. (the "Company"), the
banks which are or may become parties thereto, and Bank of Boston Connecticut
as Agent.
We hereby give notice pursuant to Section 2.8(f) of the Credit Agreement
of our acceptance of the following Competitive Bid Quote(s):
1. Bank:_________________________
2. Drawdown Date*:________________
3. In the following principal amounts, for the following Interest Periods
and at the following rates:
<TABLE>
<CAPTION>
Principal Interest Competitive Bid
Amount Period(s) Rate(s)**
------ --------- ---------
<S> <C> <C>
$
$
</TABLE>
[Repeat for each Bank as necessary]
4. The aggregate principal amount for each Interest Period is:
<TABLE>
<CAPTION>
Interest Aggregate
Period Principal Amount
------ ----------------
<S> <C>
$
$
</TABLE>
- - - ------------------------------------
* As specified in the related Invitation for Competitive Bid
Quotes.
** Specify rate of interest per annum (each rounded to the
nearest 1/1,000th of 1%) for each applicable Interest Period.
K-1
<PAGE> 89
We hereby certify (a) that we will use the proceeds of the requested
Competitive Bid Loan in accordance with the provisions of the Credit Agreement,
(b) that each of the representations and warranties contained in the Credit
Agreement or in any document or instrument delivered pursuant to or in
connection with the Credit Agreement was true as of the date as of which it was
made and is true at and as of the date hereof (except to the extent of changes
occurring in the ordinary course of business that singly or in the aggregate
are not materially adverse, and to the extent that such representations and
warranties related expressly to an earlier date) and (c) that no Default or
Event of Default has occurred and is continuing.
Capitalized terms which are used herein without definition and which are
defined in the Credit Agreement shall have the same meanings herein as in the
Credit Agreement.
Very truly yours,
Dated: By:
------------- ---------------------------
Name:
Title:
K-2
<PAGE> 90
EXHIBIT L
FORM OF NOTICE OF COMPETITIVE BID LOANS
___________, 199_
To: Each of the Banks referred to below
From: Bank of Boston Connecticut, as Agent
Reference is hereby made to that certain Amended and Restated Revolving
Credit and Term Loan Agreement, dated as of August 15, 1994, among UST Inc.
(the "Company"), the lenders which are or may become parties thereto (the
"Banks") and Bank of Boston Connecticut, as agent for the Banks (the "Agent"),
as the same may be amended and in effect from time to time (such agreement, as
amended and in effect from time to time, the "Credit Agreement"). Capitalized
terms which are used herein without definition and which are defined in the
Credit Agreement shall have the same meanings herein as in the Credit
Agreement.
Under Section 2.8 of the Credit Agreement, the Company borrowed [insert
amount] in Competitive Bid Loans on [insert date] with an Interest Period of
[insert Interest Period]. The Competitive Bid Rate for the period is ______%.
A range of Competitive Bid Quotes were submitted. The bids ranged from
[insert highest bid] to [insert lowest bid].
BANK OF BOSTON CONNECTICUT,
as Agent
By:
---------------------------
Title:
L-1
<PAGE> 91
EXHIBIT M
ASSIGNMENT AND JOINDER AGREEMENT
Dated __________________
Reference is made to the Amended and Restated Revolving Credit and Term
Loan Agreement dated as of August ___, 1994 (the "Credit Agreement") among UST
Inc. (the "Company"), the Banks (as defined in the Credit Agreement), and Bank
of Boston Connecticut as Agent. Terms defined in the Credit Agreement are used
herein with the same meanings.
______________________________________________ (the "Assignor")
agree as follows: ____________________________ (the "Assignee")
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, a ____% interest in
and to all of the Assignor's rights and obligations under the Credit Agreement
as of the Effective Date (as defined below), including, without limitation, a
___% interest (which on the Effective Date is $_________) in the Assignor's
share of Loans outstanding. As a result of such assignment, the Commitment and
the Commitment Percentage of the Assignor shall be $ _____ and ____%,
respectively, and the Commitment and the Commitment Percentage of the Assignee
shall be $ ___ and ___%, respectively. Concurrently herewith, the Assignee is
remitting to the Assignor, in federal funds, the amount of its participation in
each such outstanding loan.
2. The Assignor (i) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant thereto, other
than that the Assignor is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and clear of any
adverse claim, and (ii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Company or the
performance or observation by the Company of any of its obligations under the
Credit Agreement or any other instrument or document furnished pursuant
thereto.
3. The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of such financial statements and other
documents and information as it has deemed necessary to make its own credit
analysis and decision to enter into this Agreement; (ii) agrees that it will,
independently and without reliance upon the Agent, the Assignor or any other
M-1
<PAGE> 92
person and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Credit Agreement; (iii) appoints and authorizes the Agent to
take such action as Agent on its behalf and to exercise such powers under the
Credit Agreement as are delegated to the Agent by the terms thereof, together
with such powers as are reasonably incidental thereto; and (iv) agrees that it
will perform in accordance with their terms all of the obligations which by the
terms of the Credit Agreement are required to be performed by it.
4. The Effective Date of this Agreement shall be
_____________________ (the "Effective Date").
5. From and after the Effective Date, (i) the Assignee shall be a
party to the Credit Agreement and, to the extent rights and obligations have
been transferred to it by this Agreement, shall have the rights and obligations
of a Bank thereunder and (ii) the Assignor shall, to the extent its rights and
obligations have been transferred to the Assignee by this Agreement, relinquish
its rights and be released from its obligations under the Credit Agreement. If
the Assignor is holding any Notes, the Assignor shall, promptly after the
Effective Date, surrender such Notes to the Agent and the Agent shall cause the
Company to issue new Notes in accordance with Section 9.9(a) of the Credit
Agreement.
6. From and after the Effective Date, the Agent shall hold in trust
all payments it receives in respect of the interest assigned hereby and shall
promptly remit such payments to the Assignee.
7. This Assignment and Joinder Agreement shall be governed by, and
construed in accordance with, the laws of the State of Connecticut (without
regard to conflicts of laws or rules).
[NAME OF ASSIGNOR]
By:
-------------------------
Title:
[NAME OF ASSIGNEE]
By:
------------------------
Title:
M-2
<PAGE> 93
SCHEDULE 1
COMMITMENTS OF THE BANKS
<TABLE>
<CAPTION>
Commitment
Percentage Commitment
---------- ----------
<S> <C> <C>
Bank 25% $50,000,000
of Boston
Connecticut
Fleet Bank 17.5% $35,000,000
Shawmut Bank 17.5% $35,000,000
Union Trust 10% $20,000,000
Wachovia 10% $20,000,000
Bank of Nova
Scotia 10% $20,000,000
Toronto 10% $20,000,000
Dominion
---------- ------------
TOTAL 100% $200,000,000
</TABLE>
<PAGE> 94
Schedule 4.13 - Environmental Matters
1. U.S. Tobacco Manufacturing Company ("USTMC") received a "notice of potential
liability" letter from the United States Environmental Protection Agency,
Region IV, dated January 25, 1990, regarding potential liability for the Saad
Site in Nashville, Tennessee. This location was the site of a business that
recycled waste oil. In April 1990, USTMC joined the Saad Site Steering
Committee as a Limited Member solely for the purpose of establishing whether
USTMC was in fact a responsible party for the Saad Site. Through a review of
documents and interviews with relevant plant personnel, USTMC determined that
it had no evidence linking it to the Saad Site. On September 26, 1991, USTMC
entered into a "Limited Member Special De Minimis Settlement Agreement",
pursuant to which USTMC received a covenant not to sue from the Saad Site
Steering Committee in consideration for USTMC's original payment for joining
the steering committee ($250.00). USTMC has not been contacted regarding this
site since that date and has no reason to believe it has any exposure at this
site.
2. On February 16, 1990, Sparta Industries, Inc. ("Sparta") received a letter
from the Trustee in Bankruptcy for Seaboard Chemical Corporation ("Seaboard"),
requesting, in connection with a closure of the Seaboard facility, that Sparta
and other named parties remove existing containers of waste that had been
lawfully shipped to the Seaboard site. Sparta subsequently removed
approximately five drums of waste materials from the Seaboard facility, which
were the only existing drums of materials attributed to Sparta (but not the
only waste materials that Sparta had ever sent to the site). Sparta has not
been contacted by the Trustee, any governmental agency, or any other person,
subsequent to Sparta's removal of its waste.
3. The Company and Dixon Ticonderoga, Inc. have been involved in an
environmental investigation of a facility located at One Cedar King Drive,
Shelbyville, Tennessee, that was sold to Dixon Ticonderoga by a subsidiary of
the Company in 1988. The main substance of concern at the site is benzene in
groundwater, which has been detected in a few of the on-site monitoring wells
on the property. Based on a review of documents and interviews with persons
working at the facility, the Company has no information indicating that benzene
was ever used at this property. Benzene has not been detected in any soils at
the property. As a result of information provided to the State of Tennessee by
Dixon Ticonderoga after the sale of this facility, the Tennessee Department of
Environmental Conservation (the "Department"), in a letter dated July 27, 1989,
requested an environmental assessment of the property. The most recent round
of sampling data was provided to the Department on October 21, 1993. A request
to the Department to close out this matter is currently pending. To the best
of the Company's knowledge, the site is not on any official federal or state
list of sites, such as the National Priorities List.
<PAGE> 95
4. In connection with the Company's application for an air emissions operating
permit from the Metropolitan Department of Health, Metropolitan Government of
Nashville and Davidson County, the Metropolitan Department of Health alleged
that the Company had violated the Code of Laws of Davidson County by
constructing and operating certain sources of air pollutants without
construction and operating permits, and by failing to install best available
control technology ("BACT"), as required by Department regulations. The
Company and the Metropolitan Department of Health have reached an agreement
settling these allegations without admitting or denying the Department's
findings. The proposed Consent Agreement (which has been signed by the
Company) requires the Company to pay a penalty of $7,000 and to install BACT in
accordance with a schedule set forth in the agreement. The Consent Agreement
will become effective when signed by the Director of the Metropolitan
Department of Health (the "Director"). The Company expects that the Consent
Agreement will be signed by the Director in August 1994.
2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from Registrant's condensed consolidated statement of financial
position and condensed consolidated statement of earnings and is
qualified in its entirety by reference to such financial statements.
(In thousands except per share amounts).
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 38,691
<SECURITIES> 0
<RECEIVABLES> 69,395
<ALLOWANCES> 0
<INVENTORY> 222,010
<CURRENT-ASSETS> 378,120
<PP&E> 483,935
<DEPRECIATION> 179,256
<TOTAL-ASSETS> 740,626
<CURRENT-LIABILITIES> 134,788
<BONDS> 60,000
<COMMON> 107,564
0
0
<OTHER-SE> 339,967
<TOTAL-LIABILITY-AND-EQUITY> 740,626
<SALES> 900,948
<TOTAL-REVENUES> 900,948
<CGS> 181,784
<TOTAL-COSTS> 181,784
<OTHER-EXPENSES> 242,205
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (114)
<INCOME-PRETAX> 477,073
<INCOME-TAX> 188,499
<INCOME-CONTINUING> 288,574
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 288,574
<EPS-PRIMARY> 1.38
<EPS-DILUTED> 1.38
</TABLE>
