<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 5, 1997.
REGISTRATION NO. 333-18015
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
Form S-3
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
------------------------
AMERICAN STANDARD COMPANIES INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 13-3465896
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
</TABLE>
ONE CENTENNIAL AVENUE
P.O. BOX 6820
PISCATAWAY, NJ 08855-6820
(908) 980-6000
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
------------------------
RICHARD A. KALAHER, ESQ.
VICE PRESIDENT, GENERAL COUNSEL & SECRETARY
AMERICAN STANDARD COMPANIES INC.
ONE CENTENNIAL AVENUE
P.O. BOX 6820
PISCATAWAY, NJ 08855-6820
(908) 980-6000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
COPIES TO:
<TABLE>
<S> <C>
PAUL H. WILSON, JR., ESQ. MICHAEL A. BECKER, ESQ.
DEBEVOISE & PLIMPTON CAHILL GORDON & REINDEL
875 THIRD AVENUE 80 PINE STREET
NEW YORK, NEW YORK 10022 NEW YORK, NEW YORK 10005
(212) 909-6000 (212) 701-3000
</TABLE>
------------------------
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
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<PAGE> 2
EXPLANATORY NOTE
This Registration Statement contains two forms of prospectus: one to be
used in connection with an offering in the United States (the "U.S. Prospectus")
and one to be used in a concurrent international offering outside the United
States (the "International Prospectus"). The U.S. Prospectus and the
International Prospectus are identical except for the front and back cover
pages, the inside front cover page and the sections entitled "Underwriting" and
"Certain United States Tax Consequences to Non-U.S. Holders" (the section
entitled "Certain United States Tax Consequences to Non-U.S. Holders" appears
only in the International Prospectus). The form of U.S. Prospectus is included
herein and is followed by those pages to be used in the International Prospectus
which differ from, or are in addition to, those in the U.S. Prospectus. Each of
the alternate pages for the International Prospectus included herein is labeled
"Alternate Page for International Prospectus".
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED FEBRUARY 5, 1997
10,750,000 SHARES
AMERICAN STANDARD COMPANIES INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
-------------------
Of the 10,750,000 shares of Common Stock offered, 8,600,000 shares are
being offered hereby in the United States and 2,150,000 shares are being offered
in a concurrent international offering outside the United States (collectively,
the "Offerings"). The initial public offering price and the aggregate
underwriting discount per share will be identical for both Offerings. See
"Underwriting". Each share of Common Stock, including the shares offered hereby,
has associated with it one right to purchase a share of the Company's preferred
stock at a stipulated price in certain circumstances relating to changes in
ownership of the Company under the Company's stockholder rights agreement.
All of the shares of Common Stock offered are being sold by Kelso ASI
Partners, L.P. ("ASI Partners" or the "Selling Stockholder"). Concurrently with
the consummation of the Offerings, the Company will repurchase 6,250,000 shares
of Common Stock from ASI Partners at a price per share equal to the initial
public offering price, up to a maximum total purchase price of $300 million. See
"The Selling Stockholder and Stockholder Transactions".
The last reported sale price of the Common Stock, which is listed under the
symbol "ASD", on the New York Stock Exchange on February 4, 1997 was $43 3/8 per
share. See "Price Range of Common Stock and Dividend Policy".
SEE "RISK FACTORS" ON PAGES 11-15 FOR CERTAIN CONSIDERATIONS RELEVANT TO AN
INVESTMENT IN THE COMMON STOCK.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO SELLING
OFFERING PRICE DISCOUNT(1) STOCKHOLDER(2)
---------------------------------------------------------------
<S> <C> <C> <C>
Per Share............................ $ $ $
Total(3)............................. $ $ $
</TABLE>
- ------------
(1) The Company, American Standard Inc. and the Selling Stockholder have agreed
to indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933.
(2) Estimated offering expenses of $1,000,000 will be paid by the Company.
(3) ASI Partners has granted the U.S. Underwriters an option for 30 days after
the date of this Prospectus to purchase up to an additional 1,290,000 shares
at the initial public offering price per share, less the underwriting
discount, solely to cover over-allotments. Additionally, an over-allotment
option on 322,500 shares has been granted by ASI Partners as part of the
international offering. If such options are exercised in full, the total
initial public offering price, underwriting discount and proceeds to Selling
Stockholder will be $ , $ and $ ,
respectively. See "Underwriting".
-------------------
The shares offered hereby are offered severally by the U.S. Underwriters,
as specified herein, subject to receipt and acceptance by them and subject to
their right to reject any order in whole or in part. It is expected that
certificates for the shares will be ready for delivery in New York, New York, on
or about , 1997 against payment therefor in immediately available
funds.
GOLDMAN, SACHS & CO.
MORGAN STANLEY & CO.
INCORPORATED
SBC WARBURG INC.
SMITH BARNEY INC.
------------------------
The date of this Prospectus is , 1997.
<PAGE> 4
AVAILABLE INFORMATION
American Standard Companies Inc. (the "Company") is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). Reports, proxy statements and other information filed by the
Company may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, and at the Commission's Regional Offices located at Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60611 and
7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such
materials can be obtained upon written request from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, such material may also be inspected and copied at
the offices of the New York Stock Exchange, Inc. (the "NYSE"), 20 Broad Street,
New York, New York 10005. The Commission maintains a Website that contains
reports, proxy and information statements and other information regarding
reporting companies under the Exchange Act, including the Company, at
http://www.sec.gov.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares (the "Shares") of its common
stock, par value $.01 per share (the "Common Stock"), offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all the information set forth in the
Registration Statement, certain items of which are contained in schedules and
exhibits to the Registration Statement as permitted by the rules and regulations
of the Commission. Statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to are not necessarily complete;
with respect to each such contract, agreement or other document filed as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved, and each such statement shall
be deemed qualified in its entirety by such reference. For further information,
reference is hereby made to the Registration Statement.
------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company (File No. 1-11415) with the
Commission pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1995, including portions incorporated therein of the Company's
definitive Proxy Statement dated March 28, 1996.
2. The Company's Quarterly Reports on Form 10-Q/A for the quarters ended
March 31, 1996, June 30, 1996 and September 30, 1996.
3. The descriptions of the Common Stock and the common stock rights
associated with each Share of Common Stock contained in the Registration
Statement on Form 8-A dated January 5, 1995, incorporated by reference
from the Company's Registration Statement on Form S-2 under the
Securities Act, Commission File Number 33-56409, under the captions
"Description of Capital Stock -- Common Stock" and "-- Stockholder
Rights Plan".
4. All other documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Shares.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any or all of the
documents which are incorporated herein by reference, other than exhibits to
such information (unless such exhibits are specifically incorporated by
reference into such documents). Requests should be directed to the Company, One
Centennial Avenue, P.O. Box 6820, Piscataway, NJ 08855-6820, Attention: Office
of the Secretary, telephone: (908) 980-6000.
------------------------
Any statement contained in a document all or a portion of which is
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified shall not be deemed to
constitute a part of this Prospectus except as so modified, and any statement so
superseded shall not be deemed to constitute part of this Prospectus.
AMERICAN STANDARD(R), IDEAL STANDARD(R), STANDARD(R), TRANE(R) and WABCO(R)
are registered trademarks of American Standard Inc. PERROT(R) and PORCHER(R) are
registered trademarks of Deutsche Perrot-Bremsen GmbH and Porcher S.A.,
respectively, subsidiaries of the Company. DEMAND FLOW(R) is a registered
trademark of J-I-T Institute of Technology, Inc.
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
2
<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements
included elsewhere or incorporated by reference in this Prospectus. American
Standard Companies Inc. (the "Company") is a Delaware corporation that has as
its only significant asset all the outstanding common stock of American Standard
Inc., a Delaware corporation ("American Standard Inc."). Hereinafter, "American
Standard" or "the Company" will refer to the Company, or to the Company and
American Standard Inc., including its subsidiaries, as the context requires.
Unless otherwise indicated, all information set forth in this Prospectus assumes
no exercise of the over-allotment options to be granted to the U.S. Underwriters
and the International Underwriters (collectively, the "Underwriters").
THE COMPANY
GENERAL
American Standard is a globally-oriented manufacturer of high quality,
brand-name products in three major product groups: air conditioning systems (57%
of 1995 sales); bathroom and kitchen fixtures and fittings (24% of 1995 sales);
and braking and control systems for medium-sized and heavy trucks, buses,
trailers and utility vehicles (19% of 1995 sales). American Standard is a market
leader in each of these business segments in the principal geographic areas in
which it competes. The Company's brand names include TRANE(R) and AMERICAN
STANDARD(R) for air conditioning systems, AMERICAN STANDARD(R), IDEAL
STANDARD(R), STANDARD(R) and PORCHER(R) for plumbing products and WABCO(R) and
PERROT(R) for braking and related systems. The Company emphasizes
technologically advanced products such as air conditioning systems that utilize
energy-efficient compressors and environmentally-preferred refrigerants,
water-saving plumbing products and commercial vehicle braking and related
systems (including antilock braking systems ("ABS")) that utilize electronic
controls.
American Standard had sales and operating income of $5.2 billion and $534
million, respectively, in 1995. Sales in the first nine months of 1996 were $4.4
billion, compared with $3.9 billion in the first nine months of 1995. Operating
income before asset impairment loss was $454 million in the first nine months of
1996, compared with operating income of $428 million in the first nine months of
1995. Including the asset impairment loss, operating income in the first nine
months of 1996 was $219 million. During the first nine months of 1996, sales
from operations outside the United States represented approximately 48% of the
Company's total sales. At September 30, 1996 American Standard had 103
manufacturing facilities in 35 countries.
American Standard's business strategy is to promote growth in sales and
earnings. Key elements of this strategy are:
- INCREASE MARKET SHARES. The Company plans to increase the market
shares of its products by developing, manufacturing and selling high
quality, technologically advanced products and by providing superior
customer service.
- EXPAND SALES IN DEVELOPING MARKETS. The Company plans to build on its
historical global presence by focusing a significant portion of its
new business activities (principally through joint ventures in which
the Company has operating control) in developing market areas with the
potential for high economic growth and/or demand for the Company's
products, such as the Far East, including the People's Republic of
China ("PRC"), Latin America and Eastern Europe.
- CONTINUE APPLICATION OF DEMAND FLOW. To build on its position as a
leader in each of its industries, the Company continues to apply
principles of DEMAND FLOW(R) technology ("Demand Flow") to all its
businesses. The Company's use of Demand Flow is designed to streamline
processes, improve product quality, enhance customer service and
reduce
3
<PAGE> 6
product cycle times, while improving efficiency, reducing working
capital needs and lowering costs. The Company believes that Demand
Flow, which it began to apply in 1990, has resulted in significant
benefits.
The Company is a Delaware corporation formed by Kelso & Company, L.P.
("Kelso") in 1988 to effect the acquisition (the "Acquisition") of American
Standard Inc. American Standard Inc. was incorporated in 1929 following the
merger of American Radiator Company and Standard Sanitary Manufacturing Company,
each of which traced its roots to the nineteenth century. The Company's
principal executive offices are located at One Centennial Avenue, P.O. Box 6820,
Piscataway, NJ 08855-6820, and its telephone number is (908) 980-6000.
BUSINESS SEGMENTS
American Standard operates three business segments: Air Conditioning
Products, Plumbing Products and Automotive Products.
AIR CONDITIONING PRODUCTS. American Standard is a leading U.S.
manufacturer of air conditioning systems for both domestic and export sales, and
also manufactures air conditioning systems outside the United States. Air
Conditioning Products manufactures "applied" (custom engineered, site-assembled)
and "unitary" (self-contained, factory-assembled) air conditioning systems that
are sold primarily under the TRANE(R) and AMERICAN STANDARD(R) names. Air
Conditioning Products' sales to the commercial and residential markets
represented approximately 75% and 25%, respectively, of Air Conditioning
Products' total sales in 1995 and the first nine months of 1996. Approximately
60% of Air Conditioning Products' sales in these periods was to the replacement,
renovation and repair markets, which have been less cyclical than the new
residential and commercial construction markets. Of Air Conditioning Products'
1995 worldwide sales, approximately 79% was derived from U.S. operations
(including 7% related to export sales) and 21% was derived from operations
outside the United States.
Air Conditioning Products' sales increased to $2,602 million in the first
nine months of 1996, compared with $2,201 million in the first nine months of
1995. This increase was due principally to substantial volume increases and
price gains for applied and unitary commercial systems, higher volumes and
prices for residential products in the U.S. and sales by the new operations in
the PRC. Management believes that Air Conditioning Products is well positioned
for growth because of its high quality, brand-name products, significant
existing market shares, the introduction of new product features such as
electronic controls, the expansion of its broad distribution network and
conversion to products utilizing environmentally-preferred refrigerants.
PLUMBING PRODUCTS. American Standard is a leading manufacturer in Europe,
the U.S. and a number of other countries of bathroom and kitchen fixtures and
fittings for the residential and commercial construction markets and retail
sales channels. Plumbing Products manufactures and distributes its products
under the AMERICAN STANDARD(R), IDEAL STANDARD(R), STANDARD(R) and PORCHER(R)
names. Of Plumbing Products' worldwide 1995 sales, approximately 71% was derived
from operations outside the United States and 29% was derived from operations in
the United States.
Plumbing Products' sales increased to $1,079 million in the first nine
months of 1996, compared to $952 million in the first nine months of 1995, due
principally to sales by Porcher, the French manufacturer acquired in the fourth
quarter of 1995, and higher sales in North American and Latin American
operations. Management believes that Plumbing Products is well positioned for
growth due to the high quality of its brand-name products, significant existing
market shares in a number of countries and the expansion of existing operations
in developing market areas throughout the world (principally the Far East, Latin
America and Eastern Europe).
AUTOMOTIVE PRODUCTS. American Standard is a leading manufacturer,
primarily in Europe and Brazil, of braking and related systems for the
commercial and utility vehicle industry. Its most
4
<PAGE> 7
important products are pneumatic braking systems and related electronic and
other control systems (including ABS) marketed under the WABCO(R) name for
medium-size and heavy trucks, tractors, buses, trailers and utility vehicles.
American Standard supplies vehicle manufacturers such as Mercedes-Benz, Volvo,
Iveco (Fiat), RVI (Renault) and Rover.
Automotive Products' sales decreased to $687 million in the first nine
months of 1996, compared to $757 million in the first nine months of 1995, due
principally to decreased levels of commercial vehicle production in Europe.
Management believes that Automotive Products is well positioned to benefit from
any future improvement in market conditions in Europe and Brazil and from
increasing demand for ABS and other sophisticated electronic control systems in
a number of markets (including the commercial vehicle market in the United
States, where phase-in of ABS is mandated beginning in 1997), as well as from
the technological advances embodied in the Company's products and its close
relationships with a number of vehicle manufacturers.
See "Business -- Air Conditioning Products Segment"; "-- Plumbing Products
Segment" and "-- Automotive Products Segment".
The Company has recently announced formation of its Medical Systems Group
to pursue initiatives in the medical diagnostics field. See "Business -- Medical
Systems Group".
GLOBALIZATION
American Standard has historically had a significant global presence. One
of its major strategic objectives is to continue to expand that presence through
the growth of existing operations and the establishment of new operations in
developing market areas in the Far East, Latin America and Eastern Europe. The
Company often uses joint ventures with local manufacturing and distribution
partners to facilitate risk sharing and to allow the Company to benefit from the
additional expertise of local market participants. See
"Business -- Strategy -- Globalization".
Air Conditioning Products plans to continue to expand its operations in the
Far East, Latin America and Europe. In 1994, it established a joint venture in
Australia. In 1995 and 1996, it established three joint ventures in the PRC to
become an integrated manufacturer, marketer and distributor of a broad range of
air conditioning systems and related products for residential and commercial
applications. Air Conditioning Products also continues to expand its sales
forces in the Far East, Latin America, the Middle East and India.
Plumbing Products has entered new markets through joint ventures in Eastern
Europe, Spain, Portugal and Vietnam and is continuing to expand using this
approach. In 1995, operations were expanded in France through the acquisition of
Porcher S.A. ("Porcher"). Plumbing Products has expanded its operations in the
PRC through its affiliate, A-S China Plumbing Products Limited ("ASPPL"), in
which American Standard has a current ownership position of approximately 28%
and effective control over day-to-day operations. ASPPL has expanded its
operations to Beijing, Tianjin, Shanghai and Guangzhou through seven joint
ventures in order to provide a full product line of fixtures, fittings and
bathtubs throughout the PRC market.
Automotive Products, headquartered in Europe, has since 1993 established a
joint venture in the PRC, acquired a business in Spain, is in the process of
establishing joint ventures in Eastern Europe and is expanding the volume of
business done through its existing joint ventures in the United States and
Japan.
DEMAND FLOW
To build on its position as a leader in each of its industries and to
increase sales and operating income, American Standard began in 1990 to apply
Demand Flow to all its businesses. Under Demand Flow, products are produced as
and when required by the customer, the production process is streamlined, and
quality control is integrated into each step of the manufacturing process. The
benefits of Demand Flow include better customer service, quicker response to
5
<PAGE> 8
changing market needs, improved quality control, higher productivity, increased
inventory turnover rates and reduced requirements for working capital and
manufacturing and warehouse space.
As part of American Standard's strategy to integrate Demand Flow into all
of its operations, most of American Standard's approximately 44,000 employees
worldwide have been trained in Demand Flow, which has been implemented in
substantially all of American Standard's production facilities as of September
30, 1996. In addition, American Standard is implementing Demand Flow methods in
its acquired operations such as Perrot, a German brake manufacturer acquired in
January 1994, and Porcher, acquired in 1995. American Standard is also applying
Demand Flow to administrative functions and is re-engineering its organizational
structure to manage its businesses based on processes instead of functions.
American Standard believes that its implementation of Demand Flow has
achieved significant benefits. Product cycle time (the time from the beginning
of the manufacturing of a product to its completion) has been reduced and, on
average, inventory turnover rates have more than tripled since 1990. Principally
as a result of the implementation of Demand Flow, American Standard has reduced
inventories by 49% from December 31, 1989 through December 31, 1995, while
related sales have grown 57% for the same period. American Standard further
believes that as a result of the introduction of Demand Flow employee
productivity has risen significantly, customer service has improved and, without
reducing production capacity, the Company has been able to free more than three
million square feet of manufacturing and warehouse space, allowing for
expansion, plant consolidation or other uses.
THE SELLING STOCKHOLDER AND STOCKHOLDER TRANSACTIONS
The Company, ASI Partners and Kelso have entered into an agreement (the
"Stock Disposition Agreement") providing for the sale by ASI Partners of Shares
in the Offerings and the repurchase by the Company from ASI Partners of all
shares of Common Stock to be owned by ASI Partners after giving effect to the
Offerings and the distribution (the "Share Distribution") by ASI Partners of
shares of Common Stock to certain of its partners at their election
(collectively, the "Stockholder Transactions"). Concurrently with the
consummation of the Offerings, the Company will repurchase 6,250,000 shares of
Common Stock from ASI Partners at a price per share equal to the initial public
offering price, up to a maximum total purchase price of $300 million (the "Share
Repurchase"). To the extent the Underwriters' over-allotment options are
exercised, the number of shares that the Company will repurchase will be
reduced. The Company plans to finance the Share Repurchase with borrowings under
the Facilities (as defined).
The Stock Disposition Agreement also provides that the Company will issue
to ASI Partners warrants (the "Warrants") to purchase 3,000,000 shares of Common
Stock at a price per share equal to $10 above the initial public offering price.
If there is a change of control of the Company consummated in a manner specified
in the Stock Disposition Agreement (a "Transaction") prior to January 31, 1998
(or October 1, 1998 in certain cases), the agreement provides that the Company
would be required to make a cash payment to ASI Partners in respect of the
aggregate number of shares sold by ASI Partners in the Offerings and to the
Company pursuant to the Share Repurchase based on the excess, if any, of the
consideration per share received by holders of the Common Stock in the
Transaction over the cash price per share received by ASI Partners in the
Offerings and pursuant to the Share Repurchase. The Warrants would expire if a
Transaction occurs entitling ASI Partners to such a payment, and will not be
exercisable until the possibility of such a payment no longer exists.
Following the Offerings, the Share Repurchase and the Share Distribution,
ASI Partners will own no shares. See "Capitalization", "Pro Forma Financial
Data", "The Selling Stockholder and Stockholder Transactions" and
"Underwriting".
6
<PAGE> 9
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
The unaudited summary pro forma financial data presented below give effect
to the Share Repurchase from ASI Partners for a total cash purchase price of
$269 million (6.25 million shares of Common Stock at an assumed price of $43 per
share) and related proposed borrowings of $269 million under the Facilities to
fund such repurchase, in each case as if such transactions had occurred at the
beginning of each of the periods presented and assuming no exercise of the
Underwriters' over-allotment options. The information presented below should be
read in conjunction with "Summary Historical Financial Data" and "Pro Forma
Financial Data". The pro forma financial data do not give effect to the Medical
Systems Acquisitions (as defined) and related borrowings. See "Business --
Medical Systems Group".
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1995 SEPTEMBER 30, 1996
-------------------- --------------------
ACTUAL PRO FORMA ACTUAL PRO FORMA
------ --------- ------ ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales........................................... $5,221 $ 5,221 $4,368 $ 4,368
Cost of sales................................ 3,887 3,887 3,282 3,282
Selling and administrative expenses.......... 854 854 684 684
Asset impairment loss(a)..................... -- -- 235 235
Other expense................................ 40 40 28 28
Interest expense............................. 213 232 151 164
------ ------ ------ ------
Income (loss) before income taxes and
extraordinary item........................... 227 208 (12) (25)
Income taxes.................................... 85 78 80 75
------ ------ ------ ------
Income (loss) before extraordinary item......... $ 142 $ 130 $ (92) $ (100)
====== ====== ====== ======
INCOME (LOSS) PER COMMON SHARE:
Income (loss) before extraordinary item......... $ 1.90 $ 1.90 $(1.18)(a) $ (1.40)(a)
Average number of outstanding common shares..... 74.7 68.5 77.8 71.6
</TABLE>
- ---------------
(a) Income before extraordinary item per share for the nine months ended
September 30, 1996 would have been $1.84 and $1.89 on an actual and pro
forma basis, respectively, if the asset impairment loss were excluded.
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 121 ("FAS 121"), Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, resulting in
a non-cash asset impairment charge in 1996 of $235 million, for which there
was no tax benefit.
7
<PAGE> 10
RECENT FINANCIAL RESULTS AND DEVELOPMENTS
RECENT FINANCIAL RESULTS. The Company's consolidated sales for 1996 were
$5.8 billion, an increase of 11% from $5.2 billion in 1995. Income before
extraordinary item (excluding the non-cash asset impairment charge of $235.2
million) was $188.5 million, or $2.42 per share, up 33% and 27%, respectively,
from income before extraordinary item in 1995 of $142 million, or $1.90 per
share. These results include the effects of the Company's restatement of its
financial statements for the first nine months of 1996 relating to the Company's
French subsidiary, Porcher S.A., which restatement increased the after-tax net
loss for such period by $6 million, or $.08 per share. See "Management's
Discussion and Analysis of Financial Position and Results of Operations".
Including the asset impairment charge, the net loss for 1996 was $46.7 million,
or $.60 per share. The information set forth herein for 1996 is unaudited.
The following table sets forth segment sales and operating income for 1995
and 1996.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
----------------------
1995
------ 1996
-----------
(UNAUDITED)
(IN MILLIONS, EXCEPT
PER SHARE DATA)
<S> <C> <C>
Sales:
Air Conditioning Products................................... $2,953 $ 3,437
Plumbing Products........................................... 1,270 1,452
Automotive Products......................................... 998 916
------ ------
Total sales................................................. $5,221 $ 5,805
====== ======
Operating income before asset impairment loss:
Air Conditioning Products................................... $ 259 $ 353
Plumbing Products........................................... 120 110
Automotive Products......................................... 155 123
------ ------
534 586
Asset impairment loss:
Air Conditioning Products................................... -- (121)
Plumbing Products........................................... -- (114)
------ ------
-- (235)
------ ------
Total operating income................................... 534 351
Interest expense.............................................. (213) (198)
Corporate and other expenses.................................. (94) (95)
------ ------
Income before income taxes
and extraordinary item...................................... 227 58
Income taxes.................................................. (85) (105)
------ ------
Income (loss) before extraordinary item....................... $ 142 $ (47)
====== ======
Income (loss) per common share:
Income (loss) before extraordinary item..................... $ 1.90 $ (.60)
Average number of outstanding common shares................. 74.7 78.0
</TABLE>
Sales of Air Conditioning Products increased 16% to $3.4 billion as a
result of strong increases in both commercial and residential businesses in the
U.S., reflecting growth in the market and gains in market share. Sales by the
Company's new operations in the PRC, as well as sales gains elsewhere in the Far
East and in Europe, also contributed to the increase. Sales of Plumbing Products
increased 14% to $1.5 billion primarily as a result of the acquisition of
Porcher in the fourth quarter of 1995. Excluding Porcher, sales declined in
Europe, reflecting continued economic
8
<PAGE> 11
weakness in most markets. However, solid growth in North America essentially
offset the decline in Europe. Sales of Automotive Products decreased 8% to $916
million, reflecting the decline in European commercial vehicle production in
1996.
Operating income for 1996, excluding the asset impairment charge, increased
10% to $586 million from $534 million in 1995. Operating income of Air
Conditioning Products, excluding the asset impairment charge, increased 36% to
$353 million as a result of higher volume and margin improvement in both
commercial and residential businesses in the U.S. The margin improvement
reflects higher pricing and cost improvements. Operating income of Plumbing
Products, excluding the asset impairment charge, declined 8% to $110 million,
reflecting the effects of continued weakness in European markets, particularly
in Germany and France, which were partially offset by higher volume and lower
manufacturing costs in both North and Latin American operations. Margins in
France were lower than in 1995 due to increased costs primarily at Porcher. The
Company is undertaking actions to better assimilate Porcher into its European
plumbing products operations and to improve operating performance. Operating
income of Automotive Products declined 20% to $123 million due to lower volumes
and start-up costs associated with new product introductions for customers' 1997
models. Improved levels of new orders late in 1996 are expected to lead to
improving results by the second quarter of 1997.
Corporate and other expense increased slightly from 1995. Increased
spending related to the existing businesses in the newly formed Medical Systems
Group was essentially offset by a gain related to the restructuring of the
Company's Alliance Compressors partnership. Interest expense declined to $198
million from $213 million in 1995, reflecting reduced indebtedness and lower
interest rates.
MEDICAL SYSTEMS GROUP. The Company recently announced formation of its
Medical Systems Group to pursue initiatives in the medical diagnostics field.
The Company has for the last several years had under development two small
medical diagnostic product groups focusing on test instruments using laser
technology and reagents. The Company had invested an aggregate of approximately
$40 million in the development of these businesses through September 30, 1996.
The Company decided to explore acquisitions to accelerate the
commercialization of its technology and expand the number of diagnostic tests
covered by its products. Accordingly, the Company on January 23, 1997 entered
into memoranda of understanding to acquire the European medical diagnostic
business (the "Sorin Business") of Sorin Biomedica S.p.A., an affiliate of the
Fiat Group, and all the outstanding shares of Incstar Corporation ("Incstar"), a
biotechnology company based in Stillwater, Minnesota, 52% of which is owned by
Sorin Biomedica S.p.A. Sales in 1995 were approximately $90 million for the
Sorin Business and approximately $45 million for Incstar. The aggregate cost of
the acquisitions (the "Medical Systems Acquisitions") is expected to be
approximately $220 million (including fees and expenses).
NEW CREDIT FACILITIES. In January 1997, the Company entered into the $1.75
billion amended and restated credit facilities (the "Facilities"), consisting of
$1.375 billion of revolving credit facilities and a $375 million periodic access
facility, which replaced the Company's previous $925 million credit facilities
(the "Previous Facilities"). Borrowings under the Facilities are available to
fund the Share Repurchase, to provide financing for the Medical Systems
Acquisitions, to redeem certain outstanding public debt securities of American
Standard Inc. and for other general corporate purposes. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources".
TYCO ACQUISITION PROPOSALS; RECENT LITIGATION. The Company received
letters from Tyco International Ltd. ("Tyco") on September 30, October 17, and
December 5, 1996 setting forth proposals for a possible acquisition by Tyco of
all the shares of the Company's Common Stock, in each case for a combination of
cash and Tyco common stock. The final letter included a proposed purchase price
of $50 per share. The Company's Board of Directors reviewed the Tyco proposals,
consulted with its legal counsel and financial advisors and concluded that the
Company's strategies
9
<PAGE> 12
already in place are working and that the best way to increase the Company's
earnings and shareholder value is to focus on implementing these strategies as
an independent company. As a result, the Board of Directors concluded that the
Company would decline any interest in the proposals and Tyco was so informed.
There have been no discussions between the Company and Tyco concerning any of
the proposals and the Company contemplates none.
Two persons claiming to be shareholders of the Company and represented by
the same lawyers have filed separate class action and derivative lawsuits in the
Chancery Court of the State of Delaware against the Company, ASI Partners and
the directors of the Company alleging breaches of fiduciary duties in respect of
the rejection of the Tyco proposals and approval of the Stockholder
Transactions. The lawsuits seek to cause the Company to evaluate alternatives to
maximize value for the Company's public shareholders, to enjoin the Stockholder
Transactions and to recover damages in an unspecified amount. A person claiming
to be a holder of certain public debt securities of American Standard Inc. has
filed a class action lawsuit in New York Supreme Court seeking to enjoin the
Stockholder Transactions or to require the Company to redeem such debt
securities at the election of the securityholders. The Company believes that
these lawsuits are without merit and intends to contest them vigorously.
RISK FACTORS
Prospective purchasers of the Shares should consider carefully the specific
risk factors set forth under "Risk Factors", as well as the other information
set forth or incorporated by reference in this Prospectus.
10
<PAGE> 13
RISK FACTORS
Prospective purchasers of the Shares should consider carefully the
following risk factors, as well as other information set forth or incorporated
by reference in this Prospectus.
SUBSTANTIAL LEVERAGE
In connection with the Acquisition in 1988 of American Standard Inc., the
Company incurred substantial indebtedness, resulting in its highly leveraged
capital structure. At September 30, 1996, the Company's total indebtedness was
approximately $2.0 billion, including short-term debt and the current portion of
long-term debt. See "Capitalization". At September 30, 1996, American Standard
had scheduled principal payments of $78 million, $82 million and $235 million
for the years 1997, 1998 and 1999, respectively. The Company has entered into
the $1.75 billion Facilities, consisting of $1.375 billion of revolving credit
facilities and a $375 million periodic access facility, which replaced the
Company's $925 million Previous Facilities. At January 31, 1997, American
Standard Inc. had unused borrowing capacity under the Facilities of
approximately $1.2 billion.
The Company expects to borrow under the Facilities approximately $269
million (approximately $200 million if the Underwriters exercise their
over-allotment options in full) in connection with the Stockholder Transactions.
Borrowings under the Facilities are also available to provide financing for the
Medical Systems Acquisitions, to redeem certain outstanding public debt
securities of American Standard Inc. and for other general corporate purposes.
Subject to restrictions in the Facilities and its other debt instruments, the
Company may incur additional indebtedness from time to time to finance capital
expenditures, joint ventures, acquisitions or other expenditures. If the Medical
Systems Acquisitions are consummated, borrowings under the Facilities would
increase by approximately $220 million.
American Standard's substantial leverage could have important consequences,
including: limiting the Company's ability to obtain additional financing; the
need to use substantial portions of operating cash flow to meet interest and
principal repayment obligations; exposure to interest rate fluctuations due to
floating interest rates; increased vulnerability to changes in general economic
conditions, competitive pressures and changes in government regulations; and
potential limitations on its ability to realize some or all of the benefit of
significant business opportunities. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources".
HISTORICAL LOSSES
Since the Acquisition in 1988 by Kelso, American Standard has had net
losses (after income taxes, cumulative effects of changes in accounting methods
and extraordinary losses on retirement of debt) of $227 million in 1989, $54
million in 1990, $143 million in 1991, $57 million in 1992, $209 million in 1993
and $86 million in 1994. In 1995 the Company had net income of $112 million and
in the first nine months of 1996 a net loss of $92 million (which includes a
$235 million non-cash asset impairment charge). The Company's results of
operations reflect the effects of purchase accounting and significant interest
expense resulting from its highly leveraged capital structure. Results of
operations in 1991, 1992 and 1993 were also affected by recessions in the
Company's markets. See "Prospectus Summary -- Recent Financial Results and
Developments" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations".
INTERNATIONAL OPERATIONS
The Company conducts significant non-U.S. operations through subsidiaries
in most of the major countries of Western Europe, Brazil, the PRC, Thailand,
Mexico, the Philippines, Central American countries, Canada, Malaysia, South
Korea, Taiwan, Australia and Egypt. In addition, the
11
<PAGE> 14
Company conducts business in these and other countries through affiliated
companies and partnerships in which the Company owns 50% or less of the stock or
partnership interest. The Company has manufacturing operations in 35 countries.
International operations are subject to a number of special risks, including
currency exchange rate fluctuations, trade barriers, exchange controls,
governmental expropriation, political risks and risks of increases in taxes. In
addition, various jurisdictions outside the United States have laws limiting the
right and ability of non-U.S. subsidiaries and affiliates to pay dividends and
remit earnings to affiliated companies unless specified conditions are met.
The Company's financial performance on a U.S. dollar denominated basis can
be significantly affected by fluctuations in currency exchange rates. Such
fluctuations have much less effect on local operating results, however, because
the Company for the most part sells its products within the countries in which
they are manufactured. The asset exposure of foreign operations to the effects
of exchange volatility has been partly offset by the denomination in foreign
currencies of a portion of the Company's borrowings. The Company from time to
time enters into agreements in order to reduce its foreign currency exposure.
These agreements have not been and are not expected to be material. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations".
TAX MATTERS
The Company has from time to time reorganized and restructured, and may in
the future reorganize and restructure, its international operations based on
certain assumptions it believes to be correct relating to the various tax laws
(including capital gains and withholding tax laws), U.S. and international tax
treaty developments, international currency exchange and capital repatriation
laws and other relevant laws of a variety of non-U.S. jurisdictions. While
management believes that such assumptions are correct, there can be no assurance
that taxing or other authorities will reach the same conclusion. If such
assumptions are incorrect, or if such laws were changed or modified, the Company
may experience adverse tax and other financial consequences.
In connection with examinations of the tax returns of the Company's German
subsidiaries for the years 1984 through 1990, the German tax authorities have
raised questions regarding the treatment of certain significant matters. In
prior years the Company paid approximately $20 million (at September 30, 1996
exchange rates) of a disputed German income tax. A suit is pending to obtain a
refund of this tax. In March 1996 the Company received an assessment, which it
has appealed, for additional taxes of approximately $71 million (at September
30, 1996 exchange rates) (principally relating to the 1988 to 1990 period), plus
interest, for the tax return years under audit. In addition, significant
transactions similar to those which gave rise to such assessment occurred in
years subsequent to 1990. Having assessed additional taxes for the 1988-1990
period, the German tax authorities might, after future tax audits, propose tax
adjustments for years 1991 to 1993 that could be as much as 50% higher. The
Company, on the basis of the opinion of German legal counsel, Meilicke &
Partner, believes the German tax returns are substantially correct as filed and
any such adjustments would be inappropriate and intends to vigorously contest
any adjustments which have been or may be assessed. Accordingly, the Company has
not recorded any loss contingency at September 30, 1996 with respect to such
matters.
The Company has agreed with the German tax authorities to make a partial
security deposit in respect of the additional taxes and interest assessed in
March 1996. Approximately $13 million was paid in January 1997 and, in addition,
the Company will apply approximately $7 million of tax refunds due it to the
security deposit. The tax authorities have granted a staying order for the
balance of the additional taxes and interest assessed in March 1996, under which
no further payment or other security will be required from the Company before
litigation of the matter or a final resolution. During litigation, the Company
would expect renewal of the staying order. Upon final resolution, the Company
will be obligated to pay any tax liability in excess of the security deposit or
the Company will
12
<PAGE> 15
receive a refund of any excess security deposit (with interest accruing on the
additional tax from the date of assessment or the refund amount from the date of
deposit, respectively).
As a result of German tax legislation, first effective in 1994, the
Company's tax provision in Germany was higher in 1994, 1995 and 1996, and will
continue to be in the future. As a result of this German tax legislation and the
related additional tax provisions, the Company believes its tax exposure to the
major issues under the audit referred to above will be reduced starting in 1994
and continuing thereafter into future years.
GOVERNMENTAL REGULATION AND ENVIRONMENTAL MATTERS
The Company's U.S. operations are subject to federal, state and local
environmental laws and regulations that impose limitations on the discharge of
pollutants into the air, water and soil and establish standards for the
treatment, storage and disposal of solid and hazardous wastes. The Company
believes that it is in substantial compliance with such laws and regulations. A
number of the Company's plants are undertaking responsive actions to address
soil and groundwater issues. In addition, the Company is a party to a number of
remedial actions under various federal and state environmental laws and
regulations that impose liability on companies to clean up, or contribute to the
cost of cleaning up, sites at which hazardous wastes or materials were disposed
or released, including approximately 30 proceedings under the Comprehensive
Environmental Response, Compensation and Liability Act and similar state
statutes, in which the Company has been named a potentially responsible party or
a third party by a potentially responsible party. Expenditures in 1993, 1994,
1995 and the first nine months of 1996 to evaluate and remediate such sites were
not material. On the basis of the Company's historical experience and
information currently available, the Company believes that these environmental
actions will not have a material adverse effect on its financial condition,
results of operations or liquidity.
Additional sites may be identified for environmental remediation in the
future, including properties previously transferred by the Company and with
respect to which the Company may have contractual indemnification obligations.
The Company cannot estimate at this time the ultimate aggregate costs of all
remedial actions because of (a) uncertainties surrounding the nature and
application of environmental regulations, (b) the Company's lack of information
about additional sites at which it may be listed as a potentially responsible
party, (c) the level of cleanup that may be required at specific sites and
choices concerning the technologies to be applied in corrective actions, (d) the
number of contributors and the financial capacity of others to contribute to the
cost of remediation at specific sites and (e) the time periods over which
remediation may occur.
The Company's international operations are also subject to various
environmental statutes and regulations. Generally, these requirements tend to be
no more restrictive than those in effect in the United States. The Company
believes it is in substantial compliance with such existing foreign
environmental statutes and regulations.
The Company derived significant revenues in 1996 and prior years from sales
of air conditioning products using chlorofluorocarbons ("CFCs") and
hydrochlorofluorocarbons ("HCFCs"). Use of CFCs, HCFCs and other ozone-depleting
chemicals is to be phased out over various periods of time under regulations
that will require use of substitute permitted refrigerants. Also, adoption of
new refrigerants will require replacement or modification of much of the air
conditioning equipment already installed. The Company believes that these
regulations will have the effect of generating additional product sales and
parts and service revenues, as existing air conditioning equipment operating on
CFCs is converted to operate on environmentally preferred refrigerants or
replaced, although this is likely to happen only over a number of years, and the
Company is unable to estimate the magnitude or timing of such additional
conversion or replacements. The Company has been working closely with the
manufacturers of refrigerants that are developing substitutes for the CFCs and
HCFCs to be phased out, so that the Company's products will be compatible with
the substitutes. Although the Company believes that its commercial products
currently in production will
13
<PAGE> 16
not require substantial modification to use substitutes, residential and light
commercial products produced by the Company and its competitors may require
modification for substitute refrigerants. The costs of the substitution of
alternative refrigerants are expected to be reflected in product pricing and
accordingly are not expected to have a material adverse impact on the Company.
Various federal and state statutes, including the National Appliance Energy
Conservation Act of 1987, as amended, impose energy efficiency standards for
certain of the Company's unitary air conditioning products. Although the Company
has been able to meet or exceed such standards to date, stricter standards in
the future could require substantial research and development expense and
capital expenditures to maintain compliance.
CERTAIN PROVISIONS RELATING TO CHANGES IN CONTROL
The Company's Restated Certificate of Incorporation, Amended By-Laws and
stockholder rights agreement (the "Stockholder Rights Agreement"), as well as
the Stock Disposition Agreement, certain benefit plans and debt instruments,
contain provisions that may have the effect of making an acquisition of control
of the Company by means of tender offer, open market purchases, a proxy contest
or otherwise more difficult, discouraging acquisition bids for the Company or
limiting the price that certain acquirors might be willing to pay in the future
for shares of the Company's Common Stock.
The Restated Certificate of Incorporation and Amended By-Laws, among other
things, (i) provide for a classified board of directors, (ii) prohibit
stockholders from taking action by written consent in lieu of an annual or
special meeting, (iii) establish advance notice procedures with regard to
stockholder proposals and the nomination of candidates for election as directors
and (iv) require the affirmative vote of at least 65% of the shares entitled to
vote to amend or repeal certain provisions of the Restated Certificate of
Incorporation and the Amended By-Laws. The Restated Certificate of Incorporation
also provides that a director, in determining what he or she reasonably believes
to be the best interests of the Company, shall consider the interests of the
stockholders and, in his or her discretion, may consider any of the following:
the interests of the Company's employees, suppliers, creditors and customers;
the state of the U.S. and global economy; community and societal interests; and
the long-term as well as the short-term interests of the Company and its
stockholders, including the possibility that these interests may be best served
by the continued independence of the Company.
The Stock Disposition Agreement provides, that if a change of control
Transaction occurs prior to January 31, 1998 (or October 1, 1998 in certain
circumstances), the Company would be required to make a cash payment to ASI
Partners in respect of the aggregate number of Shares sold by ASI Partners in
the Offerings and to the Company in the Share Repurchase. Any such cash payment
would be based on the excess, if any, of the consideration per share received by
holders of the Common Stock in the Transaction over the cash price per share
received by ASI Partners in the Offerings and pursuant to the Share Repurchase.
Any such amounts payable to ASI Partners could have the effect of lowering the
price that certain prospective acquirors might be willing to pay in the future
for shares of the Company's Common Stock in a Transaction. See "The Selling
Stockholder and Stockholder Transactions".
Under the Stockholder Rights Agreement, each share of Common Stock
(including the Shares to be sold in the Offerings) will have associated with it
one right to purchase a share of the Company's preferred stock at a stipulated
price in certain circumstances relating to changes in ownership of the Common
Stock. The Company's Stock Incentive Plan provides that upon a change of control
of the Company all options and stock appreciation rights will become immediately
exercisable and restrictions applicable to outstanding restricted units and
restricted stock awards will lapse and the shares in question will fully vest.
Certain of the Company's incentive compensation plans also provide that, in the
event of a change of control of the Company, all performance targets of such
plans then in effect will be deemed to have been met and participants' rights to
14
<PAGE> 17
awards payable under such plans as a result thereof are immediately payable. In
addition, the trust agreement associated with such incentive compensation plans
provides that, in the event of a change of control, plan participants are
entitled to an immediate lump sum distribution of the cash value of their share
award accounts in the trust. American Standard Inc.'s Change of Control
Severance Plan provides that certain designated employees are eligible for
severance payments if such employees are terminated or effect a voluntary
termination under certain circumstances within 12 months after a change of
control.
The Company is subject to Section 203 of the Delaware General Corporation
Law, which limits transactions between a publicly held company and "interested
stockholders" (in general, those stockholders who, together with their
affiliates and associates, own 15% or more of a company's outstanding voting
stock). This provision also may have the effect of deterring certain potential
acquisitions of the Company.
In addition, the terms of the Facilities permit the lenders thereunder, and
the indentures governing certain of American Standard Inc.'s public debt
securities permit the holders of such debt securities, respectively, to
accelerate payments or require redemption upon certain events which constitute a
change of control of the Company or American Standard Inc. The Offerings will
not constitute a change of control under such provisions.
15
<PAGE> 18
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Company's Common Stock is traded on the NYSE under the symbol "ASD".
The following table sets forth the high and low reported sale prices for the
Common Stock as quoted by the NYSE for the periods indicated.
<TABLE>
<CAPTION>
MARKET
PRICE
-----------
CALENDAR PERIOD HIGH LOW
- ------------------------------------------------------------------------------- --- ---
<S> <C> <C>
1995
First Quarter (from February 3, 1995).......................................... $25 $19 5/8
Second Quarter................................................................. 28 1/4 24 1/4
Third Quarter.................................................................. 32 26
Fourth Quarter................................................................. 31 7/8 26 1/4
1996
First Quarter.................................................................. 31 3/8 25 1/2
Second Quarter................................................................. 33 3/8 26 1/2
Third Quarter.................................................................. 35 1/4 28 1/8
Fourth Quarter................................................................. 39 3/4 34 1/4
1997
First Quarter (through February 4, 1997)....................................... 44 5/8 37 3/4
</TABLE>
The last reported sale price for the Common Stock by the NYSE on February
4, 1997 was $43 3/8 per Share.
The Company has not historically paid dividends on its Common Stock, and
does not currently intend to pay dividends. Moreover, the terms of certain debt
instruments (including the Credit Agreement as well as the indentures related to
certain of American Standard Inc.'s public debt securities) prohibit or restrict
the payment of dividends or other distributions by American Standard Inc. to the
Company. The declaration and timing of any dividends in the future will be
determined by the Company's Board of Directors, based on its results of
operations, financial condition, cash requirements, certain corporate law
requirements, applicable restrictive covenants and other factors. After the
Stockholder Transactions, the Company's ability to effect additional repurchases
of shares of Common Stock will be significantly limited under the terms of the
indentures related to certain of American Standard Inc.'s public debt
securities.
USE OF PROCEEDS
All of the Shares of Common Stock offered hereby are being offered by the
Selling Stockholder. The Company will receive no proceeds from the Offerings.
16
<PAGE> 19
CAPITALIZATION
The following table sets forth the capitalization of the Company and its
subsidiaries at September 30, 1996 and at that date as adjusted to give effect
to the financing of the Stockholder Transactions with proposed borrowings of
$269 million under the Facilities (assuming no exercise of the Underwriters'
over-allotment options). See "The Selling Stockholder and Stockholder
Transactions". This table should be read in conjunction with the Company's
consolidated financial statements and notes thereto which have been incorporated
herein by reference. All amounts are translated where applicable using September
30, 1996 currency exchange rates. The table does not give effect to the Medical
Systems Acquisitions and related borrowings. See "Business -- Medical Systems
Group".
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
------------------------
ACTUAL ADJUSTED
-------- -----------
(IN MILLIONS)
<S> <C> <C>
Short-Term Debt:
Loans payable to banks............................................ $ 36 $ 36
Revolving Facilities.............................................. 145 414(a)
Current maturities of long-term debt.............................. 65 65
-------- ------
Total short-term debt.......................................... 246 515
Long-Term Debt:
Credit Agreement.................................................. 366 366
Other debt obligations............................................ 1,437 1,437
-------- ------
1,803 1,803
Less current maturities........................................... (65) (65)
-------- ------
Total long-term debt........................................... 1,738 1,738
-------- ------
Total Stockholders' Deficit......................................... (440) (709)(a)
-------- ------
Total capitalization.............................................. $ 1,544 $ 1,544
======== ======
</TABLE>
- ---------------
(a) Reflects proposed borrowings of $269 million under the Facilities to
repurchase from the Selling Stockholder approximately 6.25 million shares of
Common Stock at an assumed price of $43 per share in connection with the
Stockholder Transactions (assuming no exercise of the Underwriters'
over-allotment options). If the Underwriters were to exercise their
over-allotment options in full (which would represent approximately 1.6
million Shares), the proposed borrowings under the Facilities would be
approximately $200 million and total stockholders' deficit would be $640
million. As part of the Stockholder Transactions, the Company will issue to
ASI Partners certain Warrants. See "The Selling Stockholder and Stockholder
Transactions". For a discussion of the Facilities, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations".
If the Medical Systems Acquisitions are consummated, borrowings under the
Facilities would increase by approximately $220 million.
17
<PAGE> 20
SUMMARY HISTORICAL FINANCIAL DATA
The following tables set forth summary historical financial data and
segment financial data of the Company for each of the three years in the period
ended December 31, 1995 and the nine month periods ended September 30, 1995 and
1996. The summary annual historical financial data are derived from the
Company's consolidated financial statements and notes thereto. Information for
the nine months ended September 30, 1995 and 1996 is derived from unaudited
interim financial statements which reflect, in the opinion of the Company, all
adjustments, which include only normal recurring adjustments, necessary for a
fair presentation of the financial data for such periods. Results for interim
periods are not necessarily indicative of results for the full year. This table
should be read in conjunction with the Company's consolidated financial
statements and notes thereto which have been incorporated herein by reference.
The Company has restated its financial statements for the nine months ended
September 30, 1996. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations".
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------- -----------------
1993 1994 1995 1995 1996
------ ------ ------ ------ ------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED FINANCIAL DATA:
STATEMENT OF OPERATIONS DATA:
Sales............................................... $3,830 $4,457 $5,221 $3,910 $4,368
Cost of sales..................................... 2,903 3,377 3,887 2,893 3,282
Selling and administrative expenses............... 692 779 854 631 684
Asset impairment loss(a).......................... -- -- -- -- 235
Other expense..................................... 38 57 40 27 28
Interest expense.................................. 278 259 213 162 151
------ ------ ------ ------ ------
Income (loss) before income taxes and extraordinary
item.............................................. (81) (15) 227 197 (12)
Income taxes........................................ 36 62 85 78 80
------ ------ ------ ------ ------
Income(loss) before extraordinary item.............. (117) (77) 142 119 (92)
Extraordinary loss on retirement of debt (b)........ (92) (9) (30) (30) --
------ ------ ------ ------ ------
Net income (loss)................................... (209) (86) 112 89 (92)
Preferred dividend.................................. (8) -- -- -- --
------ ------ ------ ------ ------
Net income (loss) applicable to common shares....... $ (217) $ (86) $ 112 $ 89 $ (92)
====== ====== ====== ====== ======
NET INCOME (LOSS) PER COMMON SHARE:
Income (loss) before extraordinary item............. $(2.11) $(1.29) $ 1.90 $ 1.61 $(1.18)(a)
Extraordinary loss on retirement of debt............ (1.55) (.15) (.40) (.40) --
------ ------ ------ ------ ------
Net income (loss) per common share.................. $(3.66) $(1.44) $ 1.50 $ 1.21 $(1.18)(a)
====== ====== ====== ====== ======
Average number of outstanding common shares......... 59.3 59.9 74.7 74.0 77.8
OTHER DATA:
Depreciation expense................................ $ 106 $ 123 $ 110 $ 84 $ 91
Amortization of goodwill............................ 31 31 33 25 21
EBIT (c)............................................ 197 244 440 359 139
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital..................................... $ 80 $ (14) $ (12) $ (15) $ 148
Goodwill (net)...................................... 1,026 1,053 1,082 1,071 851
Total assets........................................ 2,987 3,156 3,520 3,434 3,445
Total debt.......................................... 2,336 2,364 2,083 2,070 1,984
Stockholders' deficit............................... (723) (798) (390) (419) (440)
</TABLE>
- ---------------
(a) Effective January 1, 1996 the Company adopted FAS 121, resulting in a
non-cash charge of $235 million, or $3.02 per share, for which there was no
tax benefit. Excluding the asset impairment loss, income before
extraordinary item would have been $1.84 per share.
(b) Reflects redemptions of debt in 1993, 1994 and 1995 which resulted in
extraordinary charges of $92 million, $9 million and $30 million,
respectively, including call premiums, the write-off of deferred debt
issuance costs. In addition, 1993 included a loss of approximately $15
million on cancellation of foreign currency swap contracts. There were no
tax benefits provided on these charges.
(c) EBIT is the sum of (i) income (loss) before income taxes and extraordinary
item and (ii) interest expense.
18
<PAGE> 21
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------- -----------------
1993 1994 1995 1995 1996
------- ------- ------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
SEGMENT FINANCIAL DATA:
SALES:
Air Conditioning Products........................ $ 2,100 $ 2,480 $ 2,953 $ 2,201 $ 2,602
Plumbing Products................................ 1,167 1,218 1,270 952 1,079
Automotive Products.............................. 563 759 998 757 687
------- ------- ------- ------- -------
Total Sales........................................ $ 3,830 $ 4,457 $ 5,221 $ 3,910 $ 4,368
======= ======= ======= ======= =======
OPERATING INCOME BEFORE ASSET IMPAIRMENT LOSS AND
SPECIAL CHARGES:
Air Conditioning Products........................ $ 138 $ 189 $ 259 $ 209 $ 284
Plumbing Products................................ 109 130 120 96 79
Automotive Products.............................. 43 76 155 123 91
------- ------- ------- ------- -------
290 395 534 428 454
Asset impairment loss and special charges(a):
Air Conditioning Products........................ (5) (7) -- -- (121)
Plumbing Products................................ (1) (19) -- -- (114)
Automotive Products.............................. (2) (14) -- -- --
------- ------- ------- ------- -------
Total Operating Income............................. $ 282 $ 355 $ 534 $ 428 $ 219
======= ======= ======= ======= =======
</TABLE>
- ---------------
(a) Includes the non-cash charge of $235 million in the first quarter of 1996 as
a result of the adoption of FAS 121, for which there was no tax benefit, and
the special charges incurred in 1993 and 1994 applicable to consolidation of
production facilities, employee severance, other cost reduction actions and
a provision for the early disposition of certain assets.
19
<PAGE> 22
PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial data give effect to the Share
Repurchase from the Selling Stockholder of 6.25 million shares of Common Stock
for a total cash purchase price of $269 million (at an assumed price of $43 per
share) and related proposed borrowings of $269 million under the Facilities, in
each case as if such transactions had occurred at the beginning of each of the
periods presented and assuming no exercise of the Underwriters' over-allotment
options. The pro forma financial data are based upon available information and
certain assumptions that management believes are reasonable, including those set
forth in the footnotes thereto. The pro forma financial data do not purport to
represent what the Company's results of operations would actually have been had
the Stockholder Transactions in fact occurred on the assumed date or at the
beginning of the periods indicated or to project the Company's results of
operations for any future period. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "The Selling Stockholder and
Stockholder Transactions". The pro forma financial data do not give effect to
the Medical Systems Acquisitions and related borrowings. See "Business --
Medical Systems Group".
<TABLE>
<CAPTION>
YEAR NINE MONTHS NINE MONTHS
ENDED ENDED ENDED
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1995 1995 1996
------------ ------------- --------------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales........................................ $5,221 $ 3,910 $4,368
Cost of sales............................. 3,887 2,893 3,282
Selling and administrative expenses....... 854 631 684
Asset impairment loss(a).................. -- -- 235
Other expense............................. 40 27 28
Interest expense(b)....................... 232 176 164
------ ------ ------
Income (loss) before income taxes and
extraordinary item........................ 208 183 (25)
Income taxes(b).............................. 78 73 75
------ ------ ------
Income (loss) before extraordinary item...... $ 130 $ 110 $ (100)
====== ====== ======
INCOME (LOSS) PER COMMON SHARE:
Income (loss) before extraordinary item...... $ 1.90(a) $ 1.62(a) $(1.40)(a)
Average number of outstanding common
shares(b)................................. 68.5 67.8 71.6
</TABLE>
- ---------------
(a) Income before extraordinary item per share for the nine months ended
September 30, 1996 would have been $1.89 on a pro forma basis if the asset
impairment loss were excluded. Effective January 1, 1996, the Company
adopted FAS 121, resulting in a non-cash charge in 1996 of $235 million, for
which there was no tax benefit. Exercise of the Underwriters' over-allotment
option in full (which would represent approximately 1.6 million Shares)
would have no material effect on income before asset impairment loss and
extraordinary item per share on a pro forma basis for each of the periods
presented.
(b) The adjustment to reflect the repurchase of approximately 6.25 million
shares of Common Stock from the Selling Stockholder for $269 million
increases interest expense by $19 million, $14 million and $13 million and
decreases income taxes by $7 million, $5 million and $5 million for the year
ended December 31, 1995 and the nine months ended September 30, 1995 and
1996, respectively.
20
<PAGE> 23
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW FOR THE THIRD QUARTER AND FIRST NINE MONTHS OF 1996
Operating income increased 15% to $161 million in the third quarter of 1996
from $140 million in the third quarter of 1995 on strong growth for Air
Conditioning Products and an improvement by Plumbing Products, offset partly by
a decrease for Automotive Products related to weak markets. Effective January 1,
1996 the Company adopted FAS 121 related to impairment of long-lived assets.
Applying the criteria established by FAS 121, the Company concluded that certain
assets and related goodwill of its Canadian, French and Mexican operating units
were impaired. As a result, the Company recorded a non-cash charge in the first
quarter of 1996 of $235 million, approximately 90% of which represented the
write-down of goodwill, for which there is no tax benefit. This charge included
$121 million for Air Conditioning Products' operations in Canada and France, and
$114 million for Plumbing Products' operations in Canada and Mexico. Excluding
this charge, operating income for the first nine months of 1996 was $454
million, an increase of 6% over the $428 million of operating income in the
first nine months of 1995.
The Company has restated its financial statements for each of the first
three quarters of 1996, reducing operating income by $3 million, $4 million and
$2 million, respectively, to properly record costs and expenses for Porcher
S.A., the French plumbing products manufacturer acquired in the fourth quarter
of 1995. Information provided in this section reflects such restatement. The
restatement had the effect of increasing the after-tax net loss for the nine
months ended September 30, 1996, by $6 million, or $.08 per share. New
management at Porcher has taken corrective action to prevent the recurrence of
similar errors which mainly resulted from implementation of new accounting
systems at Porcher.
SUMMARY SEGMENT AND INCOME DATA
(IN MILLIONS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1995 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
Sales:
Air Conditioning Products.......................... $ 776 $ 920 $2,201 $2,602
Plumbing Products.................................. 307 359 952 1,079
Automotive Products................................ 233 206 757 687
------ ------ ------ ------
Total sales........................................ $1,316 $1,485 $3,910 $4,368
====== ====== ====== ======
Operating income before asset impairment loss:
Air Conditioning Products.......................... $ 81 $ 111 $ 209 $ 284
Plumbing Products.................................. 23 29 96 79
Automotive Products................................ 36 21 123 91
------ ------ ------ ------
140 161 428 454
Asset impairment loss:
Air Conditioning Products.......................... -- -- -- (121)
Plumbing Products.................................. -- -- -- (114)
------ ------ ------ ------
-- -- -- (235)
------ ------ ------ ------
Total operating income.......................... 140 161 428 219
Interest expense..................................... (51) (49) (162) (151)
Corporate and other expenses (a)..................... (22) (27) (69) (80)
------ ------ ------ ------
Income (loss) before income taxes and
extraordinary item................................. $ 67 $ 85 $ 197 $ (12)
====== ====== ====== ======
</TABLE>
- ---------------
(a) Corporate and other expenses includes administrative, general and corporate
development expenses, accretion charges on postretirement benefit
liabilities, equity in net income (loss) of affiliated companies, minority
interest, foreign exchange transaction gains and losses and miscellaneous
income and expense.
21
<PAGE> 24
RESULTS OF OPERATIONS FOR THE THIRD QUARTER AND FIRST NINE MONTHS OF 1996
COMPARED WITH THE THIRD QUARTER AND FIRST NINE MONTHS OF 1995
Consolidated sales for the third quarter of 1996 were $1,485 million, an
increase of $169 million, or 13% (14% excluding the unfavorable effects of
foreign exchange), from $1,316 million in the third quarter of 1995. Sales
increased 19% for Air Conditioning Products and 17% for Plumbing Products, while
sales for Automotive Products decreased 12% compared with the third quarter of
1995. Operating income for the third quarter of 1996 was $161 million, an
increase of $21 million, or 15% (16% excluding the unfavorable effects of
foreign exchange), from $140 million in the third quarter of 1995. Operating
income increased 37% for Air Conditioning Products and 26% for Plumbing Products
but decreased 42% for Automotive Products.
Consolidated sales for the first nine months of 1996 were $4,368 million,
an increase of $458 million, or 12% (13% excluding the unfavorable effects of
foreign exchange), from $3,910 million in the first nine months of 1995. Sales
increased 18% for Air Conditioning Products and 13% for Plumbing Products, while
sales for Automotive Products declined 9%. Operating income (excluding the asset
impairment charge previously mentioned) was $454 million for the first nine
months of 1996, an increase of 6% (7% excluding the unfavorable effects of
foreign exchange), compared with $428 million in the first nine months of 1995.
Operating income for the first nine months of 1996 increased 36% for Air
Conditioning Products but declined 18% for Plumbing Products and 26% for
Automotive Products.
Sales of Air Conditioning Products increased 19% (with little effect from
foreign exchange) to $920 million for the third quarter of 1996 from $776
million for the comparable quarter of 1995. This improvement resulted from
substantial volume increases and price gains for applied and unitary commercial
systems; higher volumes and prices and a favorable shift to higher-efficiency,
higher-capacity products for residential products in the U.S.; and sales by the
new operations in the PRC. Sales of commercial products in the U.S. increased
because of improved markets, demand for chiller replacement (due to the ban on
CFC refrigerant production), higher prices and gains in market share.
Residential sales in the U.S. increased because of strong demand (particularly
in the replacement and renovation market), hot weather in some parts of the U.S.
and improved economic conditions. International sales for the third quarter of
1996 increased principally because of sales by the new PRC operations, along
with volume increases in most other businesses. Sales for Air Conditioning
Products for the first nine months of 1996 increased by 18% to $2,602 million
from $2,201 million in the first nine months of 1995, primarily for the reasons
cited for the third quarter increase.
Operating income of Air Conditioning Products increased 37% (with little
effect from foreign exchange) to $111 million in the third quarter of 1996 from
$81 million in the 1995 quarter, primarily reflecting expanded commercial and
residential product sales in the U.S. Despite higher sales (primarily in the
PRC), operating income for international operations was essentially unchanged.
The new PRC operations were at break even, while results in other operations
changed little from levels of the third quarter of 1995. Operating income for
the first nine months of 1996, excluding the asset impairment charge explained
above, increased 36% essentially for the reasons mentioned for the third quarter
increase.
Sales of Plumbing Products increased 17% (18% excluding the unfavorable
effects of foreign exchange) to $359 million in the third quarter of 1996 from
$307 million in the third quarter of 1995 primarily as a result of sales by
Porcher and higher sales in North and Latin American operations. Excluding
Porcher and foreign exchange effects, 1996 third quarter sales increased 3%
compared with the 1995 quarter, as a result of an 8% increase for U.S.
operations, while the international group was essentially flat despite the Latin
American gains. Sales in the U.S. increased as a result of higher volumes
(primarily in the retail market channel) and higher prices. For the
international group, volume gains in Latin American operations (primarily in
Mexico) were offset by a sales decline in Europe, particularly in Germany, Italy
and France which continued to experience weak
22
<PAGE> 25
economic conditions. Sales of Plumbing Products for the first nine months of
1996 increased 13% (14% excluding the unfavorable effects of foreign exchange)
to $1,079 million from $952 million in the first nine months of 1995. Excluding
Porcher and foreign exchange effects, sales decreased by 1% for the first nine
months of 1996 compared with the 1995 period as a result of the same factors
affecting the third quarter results and because of a five-week strike in the
Philippines that occurred in the first quarter of 1996.
Operating income of Plumbing Products increased 26% (27% excluding the
unfavorable effects of foreign exchange) to $29 million for the third quarter of
1996 from $23 million for the third quarter of 1995 as a result of a solid gain
in U.S. operating income, partly offset by a decline in international
operations. In the U.S., operating income improved because of the higher sales,
benefits of lower-cost product sourcing from the Company's Mexican facilities
and manufacturing and operating cost improvements. For international operations,
operating income gains in Latin America were more than offset by declines in the
weak European markets, particularly in Germany and France and, to a lesser
extent, in Italy. In addition, margins in France were lower than in the prior
year due to increased costs. The Company is undertaking actions to better
assimilate Porcher into its European plumbing products operations and to improve
operating performance. Despite a gain for U.S. operations, operating income for
the first nine months of 1996, excluding the aforementioned asset impairment
charge, declined by 18% (17% excluding foreign exchange effects) from the first
nine months of 1995 because of a decline in international operations in the
first half of 1996, including the effects of the first quarter Philippines
strike.
Sales of Automotive Products for the third quarter of 1996 decreased 12%
(10% excluding the unfavorable effects of foreign exchange) to $206 million from
$233 million in the third quarter of 1995, primarily because of a decline in
European commercial vehicle production as a result of market weakness and order
delays at several large customers in anticipation of new truck model
introductions. Unit volume of truck and bus production in Western Europe
decreased from the third quarter of 1995, especially in Germany and France.
Trailer, export and Brazilian markets also decreased, contributing to the sales
decline. Sales of Automotive Products for the first nine months of 1996
decreased 9% (7% excluding the unfavorable effects of foreign exchange) to $687
million from $757 million in the first nine months of 1995, primarily for the
reasons which caused declines in the third quarter.
Operating income for Automotive Products for the third quarter of 1996 was
$21 million, a decrease of 42% (39% excluding the unfavorable effects of foreign
exchange) from $36 million in the third quarter of 1995. This reflected the
lower sales and start-up costs associated with new product introductions on 1997
truck models, offset partly by productivity improvements. Operating income for
Automotive Products for the first nine months of 1996 decreased by 26% (24%
excluding the unfavorable effects of foreign exchange) to $91 million from $123
million in the first nine months of 1995, principally for the same reasons
described with respect to the third quarter.
FINANCIAL REVIEW
Interest expense decreased in the third quarter and first nine months of
1996 compared to the year-earlier periods, primarily as a result of reduced debt
together with lower overall interest rates under the Company's previous bank
credit agreement. The increase in corporate and other expenses for the third
quarter and first nine months of 1996 is primarily attributable to spending for
corporate development and lower equity in the net results of unconsolidated
joint ventures.
Income tax provisions for the three months and nine months ended September
30, 1996 were $29 million and $80 million, respectively, compared with
provisions of $24 million and $78 million in the corresponding periods of 1995.
Effective income tax rates for the third quarter and first nine months of 1996
were 34.5% and 35.6% of pretax income (excluding the asset impairment charge in
the nine month period on which there was no tax benefit), compared with rates of
35.2% and 39.5% in the corresponding year-earlier periods. Both third quarter
periods reflect reductions in the
23
<PAGE> 26
estimated full year tax rates. The lower effective tax rates resulted from
increased levels of U.S. income (enabling the Company to recognize previously
unrecognized tax benefits in both 1995 and 1996) and, in 1996, from
proportionately greater pretax income earned in the U.S. (at a lower effective
rate) compared to that earned in higher-rate jurisdictions in Europe and
elsewhere.
As a result of the redemption of debt in the first quarter of 1995 upon
completion of a refinancing, the first nine months of 1995 included an
extraordinary charge of $30 million attributable to the write-off of unamortized
debt issuance costs, for which no tax benefit was available.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities, after cash interest paid of $87
million, was $200 million for the first nine months of 1996, compared with $202
million for the first nine months of 1995. Higher income before extraordinary
item (excluding the non-cash asset impairment loss of $235 million) along with
improved working capital utilization were offset primarily by higher payments of
income taxes. Inventory turnover as of September 30, 1996 improved one full turn
from September 30, 1995, and working capital as a percent of sales improved
nearly one percentage point. The Company made capital expenditures of $135
million for the first nine months of 1996, including $12 million of investments
in affiliated companies, compared with capital expenditures of $115 million in
the first nine months of 1995, which included $19 million of investments in
affiliated companies (see "-- Capital Expenditures"). Scheduled debt repayments
of $50 million were made during the first nine months of 1996.
At September 30, 1996, the Company's total indebtedness was $1,984 million
and the Company had scheduled debt maturities of $78 million, $82 million, and
$235 million for the years 1997, 1998 and 1999, respectively. In January 1997,
the Company entered into the $1.75 billion Facilities which replaced the
Company's $925 million Previous Facilities. Borrowings under the Facilities are
available to fund the Share Repurchase, to provide financing for the Medical
Systems Acquisitions, to redeem certain outstanding public debt securities of
American Standard Inc. and for other general corporate purposes. The Company's
previous credit agreement has been amended and restated to provide for the
Facilities.
The Company believes that the amounts available from operating cash flows,
funds available under the Facilities and future borrowings will be sufficient to
meet its expected operating needs and planned capital expenditures for the
foreseeable future.
The Facilities provide American Standard Inc. and certain subsidiaries (the
"Borrowers") with senior secured credit facilities aggregating $1.75 billion to
all Borrowers as follows: (a) a $750 million U.S. dollar revolving credit
facility and a $625 million multi-currency revolving credit facility and (b) a
$375 million multi-currency periodic access credit facility. Borrowings under
the Facilities will bear interest at rates lower than those previously in effect
under the Previous Facilities. There are no scheduled principal payments under
any of the facilities prior to 2002. Borrowings under the amended revolving
credit facilities will be short-term by their terms.
All obligations of the Borrowers under the Facilities are guaranteed by the
Company, American Standard Inc. and the subsidiaries of American Standard Inc.
that were guarantors under the Previous Facilities. The Facilities are secured
by pledges of the capital stock of American Standard Inc.'s domestic and foreign
subsidiaries to the same extent as under the Previous Facilities. Unlike the
Previous Facilities, the Facilities will not be secured by mortgages or liens on
any of the other properties or assets of the Company or any of its domestic and
foreign subsidiaries.
The Facilities contain various covenants that limit, among other things,
mergers and asset sales, indebtedness, dividends on and redemption of capital
stock of the Company, voluntary prepayment of certain other indebtedness, rental
expense, liens, capital expenditures, investments or acquisitions, the use of
proceeds from asset sales, intercompany transactions and transactions with
affiliates and certain other business activities. The covenants also require the
Company to meet
24
<PAGE> 27
certain financial tests. Certain other American Standard Inc. debt instruments
also contain financial and other covenants. The Company believes it is currently
in compliance with the covenants under the Facilities and its other debt
instruments.
In addition, the terms of the Facilities permit the lenders thereunder and
the indentures related to certain of American Standard Inc.'s public debt
securities permit the holders of such debt securities, respectively, to
accelerate payment or require redemption upon certain events which constitute a
change of control of the Company or American Standard Inc.
At September 30, 1996, the Company held swap agreements to hedge the
redemption value of a portion of its long-term debt and effectively change such
debt from a fixed interest rate of 10 1/2% to an average fixed rate of
approximately 7%. The redemption value hedged by the swaps is the fair value of
the debt at the commencement of the swaps. The swaps mature in June 1998 and
have a notional debt value of $147 million. These swap agreements are with major
financial institutions. The Company does not anticipate non-performance by such
counterparties.
The Company from time to time enters into agreements in order to reduce its
foreign currency exposure. These agreements have not been and are not expected
to be material.
In August 1996, the Company entered into a financial services partnership,
American Standard Financial Services, with Transamerica Commercial Finance
Corporation, a subsidiary of Transamerica Corporation, to provide a wide range
of financial services to support sales of the Company's products while reducing
cash requirements to expand its business. The partnership will offer inventory
and consumer financing, commercial leasing and asset-based lending programs,
which are expected to enhance the Company's cash flow.
In connection with examinations of the tax returns of the Company's German
subsidiaries for the years 1984 through 1990, the German tax authorities have
raised questions regarding the treatment of certain significant matters. In
prior years the Company paid approximately $20 million (at September 30, 1996
exchange rates) of a disputed German income tax. A suit is pending to obtain a
refund of this tax. In March 1996 the Company received an assessment, which it
has appealed, for additional taxes of approximately $71 million (at September
30, 1996 exchange rates) (principally relating to the 1988 to 1990 period), plus
interest, for the tax return years under audit. In addition, significant
transactions similar to those which gave rise to such assessment occurred in
years subsequent to 1990. Having assessed additional taxes for the 1988-1990
period, the German tax authorities might, after future tax audits, propose tax
adjustments for years 1991 to 1993 that could be as much as 50% higher. The
Company, on the basis of the opinion of German legal counsel, Meilicke &
Partner, believes the German tax returns are substantially correct as filed and
any such adjustments would be inappropriate and intends to vigorously contest
any adjustments which have been or may be assessed. Accordingly, the Company has
not recorded any loss contingency at September 30, 1996 with respect to such
matters.
The Company has agreed with the German tax authorities to make a partial
security deposit in respect of the additional taxes and interest assessed in
March 1996. Approximately $13 million was paid in January 1997 and, in addition,
the Company will apply approximately $7 million of tax refunds due it to the
security deposit. The tax authorities have granted a staying order for the
balance of the additional taxes and interest assessed in March 1996, under which
no further payment or other security will be required from the Company before
litigation of the matter or a final resolution. During litigation, the Company
would expect renewal of the staying order. Upon final resolution, the Company
will be obligated to pay any tax liability in excess of the security deposit or
the Company will receive a refund of any excess security deposit (with interest
accruing on the additional tax from the date of assessment or the refund amount
from the date of deposit, respectively).
As a result of German tax legislation, first effective in 1994, the
Company's tax provision in Germany was higher in 1994, 1995 and 1996, and will
continue to be in the future. As a result of this German tax legislation and the
related additional tax provisions, the Company believes its tax
25
<PAGE> 28
exposure to the major issues under the audit referred to above will be reduced
starting in 1994 and continuing thereafter into future years.
American Standard Inc. makes substantial interest payments to its indirect
wholly owned Netherlands subsidiary. These interest payments had been exempt
from U.S. withholding tax under an income tax treaty between the United States
and the Netherlands. Under a provision in a new treaty such payments would have
become subject to 15% U.S. withholding tax, except that the Company received a
ruling in 1996 from the IRS making a determination that no U.S. withholding tax
will be imposed for a fifteen-year period.
CAPITAL EXPENDITURES
American Standard from time to time has invested in the expansion and
modernization of its existing facilities and affiliated companies and considers
entering into and increasing investments in joint ventures and making
complementary acquisitions. Capital expenditures have been financed out of
operating cash flow and through borrowings under the Previous Facilities.
The Company's capital expenditures for the first nine months of 1996 were
$135 million, including $12 million of investments in affiliated companies,
compared with $115 million (including $19 million of investments in affiliated
companies) for the first nine months of 1995. The increase for 1996 relates
primarily to investments in affiliated companies, lower-cost product sourcing,
expansion in newer operations, new products, expansion to meet market demand and
the continuing implementation of Demand Flow.
The Company's capital expenditures for the year 1995 were $207 million
compared with $130 million for 1994, an increase of 59%. The increase for 1995
relates primarily to investments in affiliated companies ($42 million in 1995
compared to $24 million in 1994), modernization of recent acquisitions, new
products and the continuing implementation of Demand Flow. The Company expects
that capital expenditures (including investments in affiliates) will increase
approximately 10% for 1996 compared with 1995 and by approximately 15% in 1997.
Capital expenditures for Air Conditioning Products for 1995 were $70
million, including $11 million of investments in affiliates, an increase of 56%
over the $45 million of capital spending in 1994. Major expenditures included
investments in affiliates in the PRC and projects related to the expansion of
manufacturing capacity for large chillers, implementation of Demand Flow and new
products.
Plumbing Products' capital expenditures for the year 1995 were $93 million,
including $31 million of investments in affiliated companies (primarily
Porcher), compared with capital expenditures of $55 million in 1994 (including
investments of $10 million in affiliated companies), an increase of 69% (75%
excluding the effects of foreign exchange). Expenditures for 1995 included cash
investments in Porcher and affiliates in the PRC, expansion of capacity in
Mexico, expansion in Far East operations and modernization of the Czech Republic
operations.
Capital expenditures for Automotive Products for 1995 were $44 million,
compared with 1994 capital expenditures of $30 million, an increase of 47% (38%
excluding the effects of foreign exchange). Major projects included completion
of a test track in Germany, continued implementation of Demand Flow and
cost-reduction projects.
CYCLICALITY; SEASONALITY
American Standard's businesses are cyclical. Although the exposure of Air
Conditioning Products and Plumbing Products to cyclicality in the new
construction market is somewhat mitigated by their increasing emphasis on the
replacement, renovation and repair markets (approximately 60% of their 1995
sales), which have been less cyclical, Air Conditioning Products' and Plumbing
Products' sales to the new construction market continue to constitute a
substantial portion of their sales (approximately 40% of their 1995 sales).
26
<PAGE> 29
Automotive Products' sales are highly dependent on production levels of
medium-sized and heavy trucks and buses, particularly in Europe, which have also
been cyclical. Western European truck and bus production declined significantly
from its historical high in 1989 of approximately 395,000 trucks and buses in
excess of six tons to a recent low of approximately 227,000 units in 1993. While
production recovered in 1994 and 1995, to approximately 351,000 units in 1995,
it declined again in 1996 to an estimated 319,000 units on an annualized basis.
Total Company sales tend to be seasonally higher in the second and third
quarters of the year because a significant percentage of Air Conditioning
Products' sales is attributable to residential and commercial construction
activity, which is generally higher in the second and third quarters of the
year, and because summer is the peak season for sales of air conditioning
products.
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
Certain of the statements contained in this Prospectus and in documents
incorporated herein by reference (other than the historical financial data and
other statements of historical fact), including, without limitation, statements
as to management's expectations and belief presented in "Prospectus Summary --
Recent Financial Results and Developments" and in this "Management's Discussion
and Analysis of Financial Condition and Results of Operations," are
forward-looking statements. Forward-looking statements are made based upon
management's expectations and belief concerning future developments and their
potential effect upon the Company. There can be no assurance that future
developments will be in accordance with management's expectations or that the
effect of future developments on the Company will be those anticipated by
management. There are certain important factors that could cause actual results
to differ materially from estimates reflected in such forward-looking
statements, including the level of new construction activity in the Company's
Air Conditioning Products' and Plumbing Products' markets; production levels of
trucks and buses in the Company's Automotive Products' markets, particularly in
Western Europe; changes in U.S. or international economic conditions, such as
inflation, interest rate fluctuations or recessions in the Company's markets;
pricing changes to the Company's products or those of its competitors, and other
competitive pressures on pricing and sales; changes in the markets for medical
diagnostic products; integration of acquired businesses; risks generally
relating to the Company's international operations (see "Risk
Factors -- International Operations" and "-- Tax Matters"); and transactions or
other events affecting the need for, timing and extent of the Company's capital
expenditures. See "Risk Factors" and "-- Results of Operations For the Third
Quarter and First Nine Months of 1996 Compared with the Third Quarter and First
Nine Months of 1995".
While the Company periodically reassesses material trends and uncertainties
affecting the Company's financial condition and results of operations in
connection with its preparation of management's discussion and analysis of
financial condition and results of operations contained in its quarterly and
annual reports, the Company does not intend to review or revise any particular
forward-looking statement referenced in this Prospectus or incorporated herein
by reference in light of future events.
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BUSINESS
American Standard is a globally-oriented manufacturer of high quality,
brand-name products in three major product groups: air conditioning systems (57%
of 1995 sales); bathroom and kitchen fixtures and fittings (24% of 1995 sales);
and braking and control systems for medium-sized and heavy trucks, buses,
trailers and utility vehicles (19% of 1995 sales). American Standard is a market
leader in each of these business segments in the principal geographic areas in
which it competes. The Company's brand names include TRANE(R) and AMERICAN
STANDARD(R) for air conditioning systems, AMERICAN STANDARD(R), IDEAL
STANDARD(R), STANDARD(R) and PORCHER(R) for plumbing products and WABCO(R) and
PERROT(R) for braking and related systems. The Company emphasizes
technologically advanced products such as air conditioning systems that utilize
energy-efficient compressors and environmentally-preferred refrigerants,
water-saving plumbing products and commercial vehicle braking and related
systems (including ABS) that utilize electronic controls. At September 30, 1996,
American Standard had 103 manufacturing facilities in 35 countries.
American Standard's business strategy is to promote growth in sales and
earnings. Key elements of this strategy are:
- INCREASE MARKET SHARES. The Company plans to increase the market
shares of its products by developing, manufacturing and selling high
quality, technologically advanced products and by providing superior
customer service.
- EXPAND SALES IN DEVELOPING MARKETS. The Company plans to build on its
historical global presence by focusing a significant portion of its
new business activities (principally through joint ventures in which
the Company has operating control) in developing market areas with the
potential for high economic growth and/or demand for the Company's
products, such as the Far East, including the PRC, Latin America and
Eastern Europe.
- CONTINUE APPLICATION OF DEMAND FLOW. To build on its position as a
leader in each of its industries, the Company continues to apply
Demand Flow to all its businesses. The Company's use of Demand Flow is
designed to streamline processes, improve product quality, enhance
customer service and reduce product cycle times, while improving
efficiency, reducing working capital needs and lowering costs. The
Company believes that Demand Flow, which it began to apply in 1990,
has resulted in significant benefits.
OVERVIEW OF BUSINESS SEGMENTS
American Standard operates three business segments: Air Conditioning
Products, Plumbing Products and Automotive Products.
AIR CONDITIONING PRODUCTS. American Standard is a leading U.S.
manufacturer of air conditioning systems for both domestic and export sales, and
also manufactures air conditioning systems outside the United States. Air
Conditioning Products manufactures "applied" (custom engineered, site-assembled)
and "unitary" (self-contained, factory-assembled) air conditioning systems that
are sold primarily under the TRANE(R) and AMERICAN STANDARD(R) names. Air
Conditioning Products' sales to the commercial and residential markets
represented approximately 75% and 25%, respectively, of Air Conditioning
Products' total sales in 1995 and the first nine months of 1996. Approximately
60% of Air Conditioning Products' sales in these periods was to the replacement,
renovation and repair markets, which have been less cyclical than the new
residential and commercial construction markets. Of Air Conditioning Products'
1995 worldwide sales, approximately 79% was derived from U.S. operations
(including 7% related to export sales) and 21% was derived from operations
outside the United States. Management believes that Air Conditioning Products is
well positioned for growth because of its high quality, brand-name products,
significant existing market shares, the introduction of new product features
such as electronic controls, the
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expansion of its broad distribution network and conversion to products utilizing
environmentally-preferred refrigerants.
PLUMBING PRODUCTS. American Standard is a leading manufacturer in Europe,
the U.S. and a number of other countries of bathroom and kitchen fixtures and
fittings for the residential and commercial construction markets and retail
sales channels. Plumbing Products manufactures and distributes its products
under the AMERICAN STANDARD(R), IDEAL STANDARD(R), STANDARD(R) and PORCHER(R)
names. Of Plumbing Products' worldwide 1995 sales, approximately 71% was derived
from operations outside the United States and 29% was derived from operations in
the United States. Management believes that Plumbing Products is well positioned
for growth due to the high
quality of its brand-name products, significant existing market shares in a
number of countries and the expansion of existing operations in developing
market areas throughout the world (principally the Far East, Latin America and
Eastern Europe).
AUTOMOTIVE PRODUCTS. American Standard is a leading manufacturer,
primarily in Europe and Brazil, of braking and related systems for the
commercial and utility vehicle industry. Its most important products are
pneumatic braking systems and related electronic and other control systems
(including ABS) marketed under the WABCO(R) name for medium-size and heavy
trucks, tractors, buses, trailers and utility vehicles. American Standard
supplies vehicle manufacturers such as Mercedes-Benz, Volvo, Iveco (Fiat), RVI
(Renault) and Rover. Management believes that Automotive Products is well
positioned to benefit from any future improvement in market conditions in Europe
and Brazil and increasing demand for ABS and other sophisticated electronic
control systems in a number of markets (including the commercial vehicle market
in the United States, where phase-in of ABS is mandated beginning in 1997), as
well as from the technological advances embodied in the Company's products and
its close relationships with a number of vehicle manufacturers.
STRATEGY
GLOBALIZATION
American Standard has historically had a significant global presence. One
of its major strategic objectives is to continue to expand that presence through
the growth of existing operations and the establishment of new operations in
developing market areas in the Far East, Latin America and Eastern Europe. The
Company often uses joint ventures with local manufacturing and distribution
partners to facilitate risk sharing and to allow the Company to benefit from the
additional expertise of local market participants.
Air Conditioning Products continues to expand its operations in the Far
East, Latin America and Europe. In 1994, it established a joint venture in
Australia and continues to expand its sales forces in the Far East, Latin
America, the Middle East and India. In December 1995 the Company completed
arrangements for the development and expansion of its air conditioning business
in the PRC, to become an integrated manufacturer, marketer and distributor of a
broad range of air conditioning systems and related products for residential and
commercial applications. The Company and a minority investor established ASI
China Holdings Limited ("ASI China"), in which the Company has an initial
ownership interest of 64.4%, and formed A-S Air Conditioning Products Limited
("ASAP"), owned 50.4% by ASI China, to establish or acquire majority ownership
in up to five manufacturing joint ventures as well as sales and service
businesses in the PRC. The Company contributed to ASAP its 50% interest (valued
at $10 million) in a Hong Kong joint venture (which imports and distributes air
conditioning products) and has committed to contribute $20 million in cash, $8
million of which had been contributed as of December 31, 1995. The minority
investor in ASI China and third-party investors in ASAP have committed to
contribute a total of $62 million, $26 million of which had been contributed as
of December 31, 1995. As of December 31, 1995, ASAP had acquired majority
ownership in three manufacturing joint ventures and in conjunction therewith
assumed debt of $21 million.
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Plumbing Products has entered new markets through joint ventures in Eastern
Europe, Spain, Portugal and Vietnam and is continuing to expand using this
approach. In 1995, operations were expanded in France through the acquisition of
Porcher (see "--Plumbing Products Segment"). Plumbing Products continues to
expand its operations in the PRC through its affiliate, A-S China Plumbing
Products Limited ("ASPPL"), in which American Standard has a current ownership
position of approximately 28% and effective control over day-to-day operations.
ASPPL, which had total assets of approximately $125 million at September 30,
1996, has expanded its operations to Beijing, Tianjin, Shanghai and Guangzhou in
order to provide a full product line of fixtures, fittings, and bathtubs
throughout the PRC market. ASPPL has entered into seven joint ventures with
local business concerns which, together with one wholly-owned operation, have
received business licenses from Chinese government authorities. These include
two recently constructed chinaware manufacturing facilities, an existing
chinaware manufacturing facility being expanded, two operating fittings plants
and two operating steel tub factories. The Company's ownership interest in ASPPL
is expected to increase over time to up to 51% of the equity of ASPPL through
reinvestment of royalties and management fees and through additional stock
purchases.
Automotive Products, headquartered in Europe, has since 1993 established a
joint venture in the PRC, acquired a business in Spain, is in the process of
establishing joint ventures in Eastern Europe and is expanding the volume of
business done through its existing joint ventures in the United States and
Japan.
DEMAND FLOW
To build on its position as a leader in each of its industries and to
increase sales and operating income, American Standard began in 1990 to apply
Demand Flow to all its businesses. Under Demand Flow, products are produced as
and when required by the customer, the production process is streamlined, and
quality control is integrated into each step of the manufacturing process. The
benefits of Demand Flow include better customer service, quicker response to
changing market needs, improved quality control, higher productivity, increased
inventory turnover rates and reduced requirements for working capital and
manufacturing and warehouse space.
As part of American Standard's strategy to integrate Demand Flow into all
of its operations, most of American Standard's approximately 44,000 employees
worldwide have been trained in Demand Flow which has been implemented in
substantially all of American Standard's production facilities as of September
30, 1996. In addition, American Standard is implementing Demand Flow in its
acquired operations such as Perrot, a German brake manufacturer acquired in
January 1994, and Porcher, acquired in 1995. American Standard is also applying
Demand Flow to administrative functions and is reengineering its organizational
structure to manage its businesses based on processes instead of functions.
American Standard believes that its implementation of Demand Flow has
achieved significant benefits. Product cycle time (the time from the beginning
of the manufacturing of a product to its completion) has been reduced and, on
average, inventory turnover rates have more than tripled since 1990. Principally
as a result of the implementation of Demand Flow, American Standard has reduced
inventories by 49% from December 31, 1989 through December 31, 1995, while
related sales have grown 57% for the same period. American Standard further
believes that as a result of the introduction of Demand Flow, employee
productivity has risen significantly, customer service has improved and, without
reducing production capacity, the Company has been able to free more than three
million square feet of manufacturing and warehouse space, allowing for
expansion, plant consolidation or other uses.
AIR CONDITIONING PRODUCTS SEGMENT
Air Conditioning Products began with the 1984 acquisition by the Company of
The Trane Company, a manufacturer and distributor of air conditioning products
since 1913. Air conditioning
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products are sold primarily under the TRANE(R) and AMERICAN STANDARD(R) names.
In 1995 Air Conditioning Products, with revenues of $2,953 million, accounted
for approximately 57% of the Company's sales and 49% of its operating income.
Outside the United States, Air Conditioning Products derived 21% of its sales in
1995 from manufacturing operations and 7% from U.S. exports. Approximately 60%
of Air Conditioning Products sales in 1995 was from the replacement, renovation
and repair markets, which in general are less cyclical than the new residential
and commercial construction markets.
Air Conditioning Products manufactures three general types of air
conditioning systems. The first, called "unitary," which is sold for residential
and commercial applications, is a factory-assembled central air conditioning
system which generally encloses in one or two units all the components to cool
or heat, clean, humidify or dehumidify, and move air. The second, called
"applied," is typically custom-engineered for commercial use and involves field
installation of several different components of the air conditioning system.
Trane is a world leader in both unitary and applied air conditioning products.
The third type, called "mini-split," is a small unitary air conditioning system,
generally for residential use, which operates without air ducts. Air
Conditioning Products manufactures and distributes mini-split units principally
in the Far East and Europe.
Product and marketing programs have been, and are being, developed to
increase penetration in the growing replacement, renovation and repair
businesses, in which margins are higher than on sales of original equipment.
Much of the equipment sold in the fast-growing air conditioning markets of the
1960's and 1970's is reaching the end of its useful life. Also, equipment sold
in the 1980's is likely to be replaced earlier than originally expected with
higher efficiency products recently developed to meet required efficiency
standards and to capitalize on the availability of environmentally-preferred
refrigerants.
In May 1994 a subsidiary of the Company, Standard Compressors Inc.,
concluded arrangements for a partnership, Alliance Compressors ("Alliance"),
formed in December 1993 with Heatcraft Technologies Inc., a subsidiary of Lennox
International Inc., for the manufacture of compressors for use in air
conditioning and refrigeration equipment. On December 31, 1996, Alliance was
restructured to admit a new partner, Copesub, Inc., a subsidiary of Emerson
Electric Co. Following the restructuring, Standard Compressors Inc. and
Heatcraft Technologies Inc. each own a 24.5% interest in Alliance and Copesub,
Inc. owns a 51% interest. Alliance plans to develop, manufacture, market and
sell, primarily to companies related to Standard Compressors Inc. and Heatcraft
Technologies Inc., scroll compressors utilized mainly in residential central air
conditioning applications. Alliance will operate principally from a newly
constructed facility in Natchitoches, Louisiana.
Many of the products manufactured by Air Conditioning Products utilize
HCFCs and in the past utilized CFCs as refrigerants. Various federal and state
laws and regulations, principally the 1990 Clean Air Act Amendments, require the
eventual phase-out of the production and use of these chemicals because of their
possible deleterious effect on the earth's ozone layer if released into the
atmosphere. Phase-in of substitute refrigerants will require replacement or
modification of much of the air conditioning equipment already installed, which
management believes has created a new market opportunity. In order to ensure
that the Company's products will be compatible with the substitute refrigerants,
Air Conditioning Products has been working closely with the manufacturers that
are developing substitutes for those refrigerants being phased out. Air
Conditioning Products has incurred and will continue to incur research and
development costs in this effort. These costs and the substitution of
alternative refrigerants are not expected to have a material adverse impact on
Air Conditioning Products.
Various federal and state statutes, including the National Appliance Energy
Conservation Act of 1987, as amended, impose energy efficiency standards for
certain of the Company's unitary air conditioning products. Although the Company
has been able to meet or exceed such standards to
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date, stricter standards in the future could require substantial research and
development expense and capital expenditures to maintain compliance.
At September 30, 1996 Air Conditioning Products had 31 manufacturing plants
in 9 countries, employing approximately 20,300 people.
Air Conditioning Products comprises three operating groups: Unitary
Products, North American Commercial, and International.
UNITARY PRODUCTS GROUP
Unitary Products, which accounted for approximately 37% of Air Conditioning
Products' 1995 sales, manufactures and distributes products for commercial and
residential unitary applications in the United States. This group benefits the
most from the growth of the replacement market for residential and commercial
air conditioning systems. Other major suppliers in the unitary market are
Carrier, Rheem, Lennox, Goodman Industries and Inter-City Products.
Commercial unitary products range from 2 to 120 tons and include
combinations of air conditioners, heat pumps, and gas furnaces, along with
variable-air-volume equipment and integrated control systems. Typical
applications are in retail stores, small-to-medium-size office buildings,
manufacturing plants, restaurants, and commercial buildings located in office
parks and strip malls. These products are sold through commercial sales offices
in 121 locations. Residential central air conditioning products range from 1 to
5 tons and include air conditioners, heat pumps, air handlers, furnaces, and
coils. These products are sold through independent wholesale distributors and
Company-owned sales offices in over 250 locations to dealers and contractors who
sell and install the equipment.
During 1994 and 1995 the Unitary Products Group successfully introduced
several new products, including a new line of outdoor condensing units for the
AMERICAN STANDARD(R) brand; a very high efficiency residential air conditioner;
a new furnace line; micro-electronic controlled large rooftop units; rooftop
units with special features that appeal to national accounts; and a large
rooftop line (27.5 tons to 50 tons). The commercial unitary business also
concentrated on enhancements and new capabilities for existing products.
The Company also markets an AMERICAN STANDARD(R) brand name product to
serve distributors who typically carry other products in addition to air
conditioning products.
NORTH AMERICAN COMMERCIAL GROUP
North American Commercial Group, which accounted for 42% of Air
Conditioning Products' 1995 sales, manufactures and distributes products in the
United States for sale in the United States and Canada for air conditioning
applications in larger commercial, industrial, and institutional buildings.
Other major suppliers of commercial systems are Carrier, McQuay and York.
North American Commercial Group distributes its products through 95 sales
offices. Thirty-four of these offices are Company-owned and 61 are franchised.
The Company acquired the Toronto, Canada, and St. Louis, Missouri offices in
1994 and the Albany, New York and Nashville, Tennessee offices in 1995. In 1996,
the Company acquired the Grand Rapids, Michigan; Pittsburgh, Pennsylvania; and
New Haven, Connecticut offices and expects to continue to acquire major sales
offices from its franchisees.
Over the last few years the North American Commercial Group has added
additional aftermarket business activities, such as emergency rentals of air
conditioning equipment. Also, the group has expanded its line to include
components for converting installed centrifugal chiller products to use more
environmentally-preferred refrigerants.
During 1994 and 1995 the Company continued its introduction of a number of
new products such as the high-efficiency centrifugal chiller, an expanded air
cooled series R chiller line, and the
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new fan coil line. Integrated Comfort Systems continues to grow as a percentage
of total sales. Indoor air quality is emerging as a significant new application
to be served by the Company's products and services.
INTERNATIONAL GROUP
The International Group, which accounted for approximately 21% of Trane's
1995 sales, manufactures applied and unitary products in foreign facilities
operated by subsidiaries and joint ventures and exports many of the products
manufactured in the United States by the Unitary Products and North American
Commercial Groups. Like the North American Commercial Group, the International
Group has an extensive network of sales and service agencies, both Company-owned
and franchised, to provide maintenance and warranty service for its equipment
installed around the world.
Trane expects to continue the expansion of its presence outside the U.S. In
the Asia-Pacific region Trane recently established a joint venture in Australia
as well as three manufacturing joint ventures in the PRC (see
"-- Strategy -- Globalization") and expanded its operations in Malaysia. In the
early 1990's it purchased an air conditioning manufacturing and distribution
firm in Taiwan, and entered into a sales and manufacturing joint venture in
Thailand. In Europe, in addition to its plants in Epinal and Charmes, France,
the group opened plants in Mirecourt and in Colchester, U.K., in 1992. A joint
venture in Egypt commenced operations in 1992 to serve markets in the Middle
East.
PLUMBING PRODUCTS SEGMENT
Plumbing Products manufactures and distributes bathroom and kitchen
fixtures and fittings primarily under the IDEAL STANDARD(R), AMERICAN
STANDARD(R), STANDARD(R) and PORCHER(R) names. In 1995 Plumbing Products, with
revenues of $1,270 million, accounted for 24% of the Company's sales and 22% of
its operating income. Plumbing Products derived approximately 71% of its total
1995 sales from operations outside the United States.
Of Plumbing Products' sales, 53% consists of vitreous china fixtures, 26%
consists of fittings (typically brass), 7% consists of bathtubs, and the
remainder consists of related plumbing products. Throughout the world these
products are generally sold through wholesalers and distributors and installed
by plumbers and contractors. In total the residential market accounts for
approximately 75% of Plumbing Products' sales, with the commercial and
industrial markets providing the remaining 25%.
Plumbing Products operates through four primary geographic groups: European
Plumbing Products, U.S. Plumbing Products, Americas International and the Far
East Group. Plumbing Products' fittings operations are organized as the
Worldwide Fittings Group, which has primary responsibility for faucet
technology, product development and manufacturing, with manufacturing facilities
in Germany, Bulgaria, the U.S., and Mexico. Worldwide Fittings sales and
operating results are reported in the four primary geographic groups within
which it operates.
European Plumbing Products, which sells products primarily under the brand
names IDEAL STANDARD(R) and PORCHER(R), manufactures and distributes bathroom
and kitchen fixtures and fittings through subsidiaries or joint ventures in
Germany, Italy, France, England, Greece, the Czech Republic, Spain, Portugal,
and Egypt. In November 1995 the Company acquired substantially all of the
remaining outstanding common shares and convertible bonds of Porcher, a French
manufacturer and distributor of plumbing products in which the Company
previously had an ownership interest of 32.88%. The $25 million cost of the
acquisition was funded with a borrowing under the Company's revolving credit
facilities. In addition $31 million of Porcher debt was assumed. In 1995 Porcher
had sales of $216 million.
U.S. Plumbing Products manufactures bathroom and kitchen fixtures and
fittings, selling under the brand names AMERICAN STANDARD(R) and STANDARD(R) in
the United States. Americas
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International manufactures bathroom and kitchen fixtures and fittings, selling
under the names AMERICAN STANDARD(R), IDEAL STANDARD(R), and STANDARD(R) through
its wholly owned operations in Mexico, Canada, and Brazil and its majority-owned
subsidiaries in Central America.
The Far East Group manufactures bathroom and kitchen fixtures and fittings,
selling under the names AMERICAN STANDARD(R), IDEAL STANDARD(R), and STANDARD(R)
through its wholly owned operations in South Korea, its majority-owned
operations in Thailand and the Philippines, and its manufacturing joint venture
in Indonesia and is developing a new joint venture in Vietnam. The Company is
also significantly expanding its operations in the PRC. See "-- Strategy --
Globalization".
The market for the Company's plumbing products is divided into the
replacement and remodeling market and the new construction market. The
replacement and remodeling market accounts for about 60% of the European and
U.S. Groups' sales but only about 40% of the sales of the Far East Group, for
which new construction is more important. In the United States and Europe the
replacement and remodeling market has historically been more stable than the new
construction market and has shown moderate growth over the past several years.
In 1995 the new construction market in Europe declined slightly, especially in
Germany and France, after recovering somewhat in 1994 and 1993. In the U.S. the
new construction market hit its recent low in 1992 but had some recovery through
1995. The new construction market, in which the product selection is made by
builders or contractors, is more price-competitive and volume-oriented than the
replacement and remodeling market. In the replacement and remodeling market
consumers make the model selection and, therefore, this market is more
responsive to quality and design than price, making it the principal market for
higher-margin luxury products. Although management believes it must continue to
offer a full line of fixtures and fittings in order to support its distribution
system, Plumbing Products' current strategy is to focus on increasing its sales
of higher-margin products in the middle and upper segments of both the
remodeling and new construction markets.
Plumbing Products also has continued its programs to expand its presence in
high-quality showrooms and showplaces featuring its higher-end products in
certain major countries. These programs, along with expanded sales training
activities, have enhanced the image of the Company's products with interior
designers, decorators, consumers and plumbers.
U.S. Plumbing Products is focusing on the unique needs of the growing mass
retail home center industry, using products sourced from several of the
Company's manufacturing locations throughout the Americas. This market channel
accounted for about 26% of U.S. Plumbing Products' sales in 1995, and this
proportion is expected to grow.
In an effort to capture a larger share of the replacement and remodeling
market, over the last few years Plumbing Products has introduced a variety of
new products designed to suit customer tastes in particular countries. New
offerings include additional colors and ensembles, bathroom suites from
internationally known designers, and electronically controlled products. Faucet
technology is centered on anti-leak, anti-scald and other features to meet
emerging consumer and legislative requirements.
Water-saving fixtures and fittings have been a major focus of Plumbing
Products for the past several years, particularly in light of recent water
shortages experienced in a number of areas of the U.S. The Company produces one
of the most extensive lines of water-saving fixtures available in the United
States. Manufacture of water-saving toilets was mandated for residential use by
federal law since January 1994 and for commercial use in January 1997.
Many of the Company's bathtubs are made from a proprietary porcelain on
metal composite, AMERICAST(R), which has gained an increasing share of the
worldwide market. Products made from the composite AMERICAST(R) have the
durability of cast iron with only one-half the weight and are characterized by
improved resistance to breaking and chipping. AMERICAST(R) products are easier
to ship, handle and install and are less expensive to produce than cast iron
products. Use of this advanced composite was extended to kitchen sinks, bathroom
lavatories and acrylic surfaced products during the early 1990's.
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At September 30, 1996, Plumbing Products employed approximately 18,000
people and, including affiliated companies, had 58 manufacturing plants in 25
countries.
In the U.S., Plumbing Products has several important competitors, including
Kohler Company and Masco Corporation in selected product lines. There are also
important competitors in foreign markets, for the most part operating
nationally. Friederich Grohe GmbH, the major manufacturer of fittings in Europe,
is a pan-European competitor. In Europe Villeroy Boch and Sanitec are the major
fixtures competitors, and in the Far East Toto is the major competitor.
AUTOMOTIVE PRODUCTS SEGMENT
Operating under the WABCO(R) name, Automotive Products manufactures air
brake and related systems for the commercial vehicle industry in Europe and
Brazil. WABCO's most important products are pneumatic braking systems and
related electronic control and other systems and components (including ABS) for
medium-size and heavy trucks, tractors, buses, trailers and utility vehicles. In
1995 WABCO, with sales of $998 million, accounted for 19% of the Company's sales
and 29% of its operating income. The Company believes that WABCO is a worldwide
technological leader in the heavy truck and bus braking industry. Electronic
controls, first introduced in ABS in the early 1980's, are increasingly applied
in other systems sold to the commercial vehicle industry.
WABCO's products are sold directly to vehicle and component manufacturers.
Spare parts are sold through both original equipment manufacturers and an
independent distribution network. Although the business is not dependent on a
single or related group of customers, sales of truck braking systems are
dependent on the demand for heavy trucks. Some of the Company's important
customers are Mercedes-Benz, Volvo, Iveco (Fiat), RVI (Renault) and Rover.
Principal competitors are Knorr, Robert Bosch, and Bendix.
The European market for new trucks, buses, trailers, and replacement parts
recovered in 1994 and 1995 after significant declines in 1992 and 1993, before
declining again in 1996. European legislation mandating the phase-in of ABS
beginning in 1991 has had a positive impact on sales and is expected to continue
to do so. The Brazilian market has experienced a significant decline in 1996.
Through 1995 the WABCO(R) ABS system, which the Company believes leads the
market, has been installed in approximately one million heavy trucks, buses, and
trailers worldwide since 1981. Annual sales volume in Europe has significantly
increased in recent years to approximately 175,000 units in 1995 and to 56,000
units annually in other markets, primarily the United States and Japan. In
addition, WABCO has developed electronically controlled pneumatic gear shifting
systems, electronically controlled air suspension systems, and automatic
climate-control and door-control systems for the commercial vehicle industry.
These systems have resulted in greater sales per vehicle for WABCO. Significant
progress was made in recent years in market acceptance of electronically
controlled systems. New products under development are an advanced electronic
braking system and additional electronic drive line control systems. In
addition, WABCO has developed and implemented an electronic data interchange
system, which links certain customers directly to WABCO's information systems,
providing timely, accurate information and just-in-time delivery to the
customer.
At September 30, 1996 WABCO and affiliated companies employed approximately
5,700 people and had 14 manufacturing facilities and 7 sales organizations
operating in 17 countries. Principal manufacturing operations are in Germany,
France, the United Kingdom, and Brazil. WABCO has joint ventures in the United
States with Rockwell International (Rockwell WABCO) and with Cummins Engine Co.
Inc., in Japan with Sanwa Seiki (SANWAB), in India with TVS Group (Clayton
Sundaram) and in the PRC. There is also a licensee in the PRC.
In January 1994 the Company acquired Perrot, a German brake manufacturer.
Through this acquisition the Company is able to offer complete brake systems for
trucks, buses and trailers, especially in the important and growing air-disc
brake business.
Since 1991 ABS for commercial vehicles has been gaining acceptance in the
United States and Japan, where WABCO participates through its joint venture
operations. Rockwell WABCO is now a
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supplier of WABCO systems to Freightliner, Mack, Volvo-GM, Kenworth, Peterbilt
and other vehicle manufacturers in North America. SANWAB supplies Hino, Nissan
and trailer manufacturers in Japan. In most European countries, ABS has become
mandatory for commercial vehicles. In March 1995, the U.S. Department of
Transportation, National Highway Traffic Safety Administration, adopted amended
federal regulations which require that new medium and heavy vehicles be equipped
with antilock brake systems (ABS). These amended regulations will be phased in
over a two-year period beginning in March 1997. WABCO believes it is in a good
position to take advantage of this opportunity.
MEDICAL SYSTEMS GROUP
The Company recently announced formation of its Medical Systems Group to
pursue initiatives in the medical diagnostics field. The Company has for the
last several years had under development two small medical diagnostic product
groups focusing on test instruments using laser technology and reagents. The
Company had invested an aggregate of approximately $40 million in the
development of these businesses through September 30, 1996.
The Company decided to explore acquisitions to accelerate the
commercialization of its technology and expand the number of diagnostic tests
covered by its products. Accordingly, the Company on January 23, 1997 entered
into memoranda of understanding to acquire the European medical diagnostic
business of Sorin Biomedica S.p.A., an affiliate of the Fiat Group, and all the
outstanding shares of Incstar Corporation, a biotechnology company based in
Stillwater, Minnesota, 52% of which is owned by Sorin Biomedica S.p.A.
The Sorin Business both develops and produces reagents to identify the
presence in blood of diseases and other substances that are indicative of a
medical patient's condition, and distributes equipment used to perform
diagnostic tests. The Sorin Business is headquartered in Saluggia, Italy, where
its manufacturing facility is located. The principal markets for the products of
the Sorin Business are Western Europe and the United States. Its sales in 1995
were approximately $90 million.
Incstar develops, manufactures and markets individual test reagents, test
kits and related products used by major hospitals, clinical reference
laboratories and researchers involved in diagnosing and treating immunological
conditions. Incstar also produces and markets histochemical antisera and natural
and synthetic peptides used in clinical diagnostic and medical research. Its
products focus on diagnostic tests for autoimmune, infectious disease,
endocrinology and bone and mineral metabolism product segments, utilizing a
variety of technologies. Incstar's sales in 1995 were approximately $45 million.
The Sorin Business and Incstar will be acquired in two transactions: (a)
the acquisition from Sorin of the Sorin Business and (b) the merger of a wholly
owned subsidiary of the Company with Incstar. The aggregate cost of the
acquisitions is expected to be approximately $220 million (including fees and
expenses). The transactions are subject to the negotiation of definitive
agreements as well as customary conditions, including regulatory consents and
approvals. The Incstar board of directors has approved the signing of a
memorandum of understanding of Incstar with the Company. The Sorin and the
Incstar transactions are each conditioned upon the closing of the other, which
closings are expected to occur in the first half of 1997.
The focus of the Company's existing medical businesses is on instruments
for obstetrical/gynecological and gastrointestinal tests. The products of its
subsidiary Sienna Biotech, Inc. are based on a core technology named Copalis(TM)
for Coupled Particle Light Scattering. Several of Sienna's products have
received clearance from the U.S. Food and Drug Administration ("FDA").
The Company's subsidiary Alimenterics, Inc. is developing certain clinical
laboratory systems for non-invasive diagnostics of gastrointestinal disorders
using an automated Laser Assisted Ratio Analyzer ("LARA(TM)") for the
measurement of stable isotopes in breath. Initial applications for
36
<PAGE> 39
regulatory approvals of Alimenterics products have been made in Europe and are
planned to be made to the FDA in 1997.
The Company believes that the Medical System Acquisitions will position it
to develop its medical products more quickly and effectively than would
otherwise have been possible. The Company may build this group further through
acquisitions of businesses that are complementary and would permit further
acceleration of development and distribution of its products as well as through
further research and development investments. There can be no assurance that the
Company will be successful in completing the Medical Systems Acquisitions.
The development, testing and distribution of medical products are subject
to extensive regulation, including in the United States by the FDA. Moreover,
the medical test market is competitive and many companies with such products
have substantially greater resources and experience than the Company. There is
no assurance that the Company's products will be successfully developed or
marketed.
37
<PAGE> 40
THE SELLING STOCKHOLDER AND STOCKHOLDER TRANSACTIONS
THE SELLING STOCKHOLDER
Prior to the Stockholder Transactions, ASI Partners owns 20,838,656 shares
of Common Stock, representing approximately 27% of the Company's Common Stock.
In the Offerings and the Share Repurchase, it is expected that ASI Partners will
sell an aggregate of 17,000,000 shares (10,750,000 Shares in the Offerings,
assuming no exercise of the Underwriters' over-allotment options, and assuming a
Share Repurchase of 6,250,000 shares). As promptly as practicable following the
closing of the Offerings, ASI Partners expects to distribute in the Share
Distribution to certain of its partners, at their election, up to 4,000,000
shares of Common Stock that it currently owns, which number of shares is subject
to change by agreement among the Company, ASI Partners and Kelso. Following
these transactions, ASI Partners will own no Common Stock and will not be
entitled to designate any of the Company's directors. As part of the Stockholder
Transactions, the Company will issue the Warrants. See "--The Stockholder
Transactions".
THE STOCKHOLDER TRANSACTIONS
The Company, ASI Partners and Kelso have entered into the Stock Disposition
Agreement providing for the sale by ASI Partners of shares in the Offerings and
the repurchase by the Company from ASI Partners of all shares of Common Stock to
be owned by ASI Partners after giving effect to the Offerings and the Share
Distribution. Concurrently with the consummation of the Offerings, the Company
will repurchase 6,250,000 shares of Common Stock from ASI Partners at a price
per share equal to the initial public offering price, up to a maximum total
purchase price of $300 million. To the extent the Underwriters' over-allotment
options are exercised, the number of shares that the Company will repurchase
will be reduced. The Company plans to finance the Share Repurchase with
borrowings under the Facilities.
The Stock Disposition Agreement also provides that the Company will issue
to ASI Partners 3,000,000 Warrants to purchase Common Stock at a price equal to
$10 above the initial public offering price (the "Exercise Price"). The Warrants
will entitle holders to purchase 3,000,000 shares of Common Stock at the
Exercise Price or, at the Company's election, to receive an amount in cash or a
designated number of shares based on the difference between the then market
value of the Company's Common Stock and the Exercise Price. The Company has
agreed that, upon exercise of any Warrant by ASI Partners or its direct or
indirect partners, the Company will exercise such election. In that case, the
Company may make payment in cash or shares, at its option. The Warrants will be
exercisable after the time that it is no longer possible for any cash payment to
be made to ASI Partners in respect of a Transaction and prior to the fifth
anniversary of the closing date of the Offerings.
If a Transaction occurs after the closing of the Offerings and prior to
January 31, 1998 (or October 1, 1998 in the case of a Transaction proposed prior
to January 31, 1998 either non-publicly in writing to the Company or orally to
the Company and discussed by the Company's Board of Directors, or publicly, and
not consummated or withdrawn as of January 31, 1998), the Stock Disposition
Agreement provides that the Company would be required to make a cash payment to
ASI Partners in respect of the aggregate number of shares sold by ASI Partners
in the Offerings and to the Company pursuant to the Share Repurchase. A
Transaction is specified in the agreement to include the sale of all or
substantially all of the shares of capital stock or all or substantially all of
the assets of the Company or the acquisition of majority control of the Company
by any person or group. The total cash payment would be equal to the excess, if
any, of the consideration per share received by holders of the Common Stock in
the Transaction over the cash price per share received by ASI Partners in the
Offerings and pursuant to the Share Repurchase, respectively, multiplied by the
number of Shares sold by ASI Partners in the Stockholder Transactions. If a
Transaction occurs entitling ASI Partners to such a payment, the Warrants would
not be exercisable and would expire upon the consummation of such Transaction.
See "Capitalization", "Pro Forma Financial Data" and "Underwriting". The Stock
Disposition Agreement includes such provisions in order to preserve
38
<PAGE> 41
for ASI Partners the stock price premium that it would otherwise have received
in such a Transaction if it were to occur within the time periods specified
above.
The Company entered into the Stock Disposition Agreement to facilitate the
sale by ASI Partners of its entire investment in the Company now, rather than
over an extended period of time, thereby enabling the Company to repurchase a
substantial number of its shares in one transaction while also increasing the
size and depth of the trading market for the Company's Common Stock. ASI
Partners is an investment partnership with an investment goal to realize
long-term capital gains for its investors. ASI Partners, which acquired its
investment in the Company in 1988, began the process of realizing on its
investment in the Company by selling shares in a registered secondary offering
in September 1995. ASI Partners entered into the Stock Disposition Agreement to
complete the realization of its investment in the Company and to provide for
distributions of the proceeds to its partners. Kelso advises ASI Partners with
respect to its investments generally and has advised ASI Partners in connection
with the Stockholder Transactions.
Two persons claiming to be shareholders of the Company and represented by
the same lawyers have filed separate class action and derivative lawsuits in the
Chancery Court of the State of Delaware against the Company, ASI Partners and
the directors of the Company alleging breaches of fiduciary duties in respect of
the rejection of the Tyco proposals and approval of the Stockholder
Transactions. The lawsuits seek to cause the Company to evaluate alternatives to
maximize value for the Company's public shareholders, to enjoin the Stockholder
Transactions and to recover damages in an unspecified amount. A person claiming
to be a holder of certain public debt securities of American Standard Inc. has
filed a class action lawsuit in New York Supreme Court seeking to enjoin the
Stockholder Transactions or to require the Company to redeem such debt
securities at the election of the securityholders. The Company believes that
these lawsuits are without merit and intends to contest them vigorously.
39
<PAGE> 42
UNDERWRITING
Subject to the terms and conditions of the U.S. Underwriting Agreement, the
Selling Stockholder has agreed to sell to each of the U.S. Underwriters named
below, and each of such U.S. Underwriters has severally agreed to purchase from
the Selling Stockholder, the respective number of Shares set forth opposite its
name below:
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
U.S. UNDERWRITERS COMMON STOCK
-------------------------------------------------------------- ------------
<S> <C>
Goldman, Sachs & Co...........................................
Morgan Stanley & Co. Incorporated.............................
SBC Warburg Inc...............................................
Smith Barney Inc..............................................
---------
Total.......................................... 8,600,000
=========
</TABLE>
Under the terms and conditions of the U.S. Underwriting Agreement, the U.S.
Underwriters are committed to take and pay for all of the Shares offered hereby,
if any are taken.
The U.S. Underwriters propose to offer the Shares in part directly to the
public at the initial public offering price set forth on the cover page of this
Prospectus, and in part to certain securities dealers at such price less a
concession of $ per share. The U.S. Underwriters may allow, and such dealers
may reallow, a concession not in excess of $ per share to certain brokers
and dealers. After the Shares are released for sale to the public, the offering
price and other selling terms may from time to time be varied by the U.S.
Underwriters.
The Company and the Selling Stockholder have entered into an underwriting
agreement (the "International Underwriting Agreement") with the underwriters of
the international offering (the "International Underwriters") providing for the
concurrent offer and sale of 2,150,000 Shares in an international offering
outside the United States. The initial public offering price and aggregate
underwriting discount per share for the two Offerings are identical. The closing
of the offering made hereby is a condition to the closing of the international
offering, and vice versa. The International Underwriters are Goldman Sachs
International, Morgan Stanley & Co. International Limited, Smith Barney Inc. and
Swiss Bank Corporation.
An affiliate of Smith Barney Inc. owns indirect equity interests in ASI
Partners and will receive a portion of the proceeds from the Offerings. In
addition, an affiliate of Smith Barney Inc. is an investor in investment funds
sponsored by Kelso, which funds are not investors in the Company.
Pursuant to an agreement between the U.S. and International Underwriting
Syndicates (the "Agreement Between") relating to the two Offerings, each of the
U.S. Underwriters named herein has agreed or will agree pursuant to the
Agreement Between that, as a part of the distribution of the Shares offered
hereby and subject to certain exceptions, it will offer, sell or deliver the
Shares offered hereby and other shares of Common Stock, directly or indirectly,
only in the United States of America (including the 50 States and the District
of Columbia), its territories, its possessions and other areas subject to its
jurisdiction (the "United States") and to U.S. persons, which term shall mean,
for purposes of this paragraph: (a) any individual who is a resident of the
United States or (b) any corporation, partnership or other entity organized in
or under the laws of the United States or any political subdivision thereof and
whose office most directly involved with the purchase is located in the United
States. Each of the International Underwriters has agreed or will agree pursuant
to the Agreement Between that, as a part of the distribution of the Shares
offered as a part of the international offering, and subject to certain
exceptions, it will (i) not, directly or indirectly, offer, sell or deliver
shares of Common Stock (a) in the United States or to any U.S. persons or (b) to
any person whom it believes intends to reoffer, resell or deliver the shares in
the United States or to any U.S. persons, and (ii) cause any dealer to whom it
may sell such shares at any concession to agree to observe a similar
restriction.
40
<PAGE> 43
Pursuant to the Agreement Between, sales may be made between the U.S.
Underwriters and the International Underwriters of such number of shares of
Common Stock as may be mutually agreed. The price of any shares so sold shall be
the initial public offering price, less an amount not greater than the selling
concession.
ASI Partners has granted the U.S. Underwriters an option exercisable for 30
days after the date of this Prospectus to purchase up to an aggregate of
1,290,000 additional shares of Common Stock to cover over-allotments, if any, at
the initial public offering price, less the underwriting discount, as set forth
in this Prospectus. If the U.S. Underwriters exercise their over-allotment
option, the U.S. Underwriters have severally agreed, subject to certain
conditions, to purchase approximately the same percentage thereof that the
number of shares to be purchased by each of them, as shown in the foregoing
table, bears to the total number of shares. The U.S. Underwriters may exercise
such option only to cover over-allotments in connection with the sale of the
shares. ASI Partners has granted the International Underwriters an option
exercisable for 30 days after the date of this Prospectus to purchase up to an
aggregate of 322,500 additional shares of Common Stock, solely to cover
over-allotments, at the initial public offering price less the underwriting
discount, as set forth on the cover page of this Prospectus.
The Company has agreed not to offer, sell or otherwise dispose of any
shares of Common Stock (other than pursuant to employee stock option plans,
other employee benefit plans or the Stockholder Rights Agreement) for a period
of 90 days after the date of this Prospectus without the prior written consent
of Goldman, Sachs & Co. In addition, ASI Partners expects to distribute not more
than 4,000,000 additional shares to certain of its partners as promptly as
practicable following the closing of the Offerings. See "The Selling Stockholder
and Stockholder Transactions". The recipients of such distributions have agreed
with ASI Partners and the Underwriters not to offer, sell or otherwise dispose
of such shares for a period of 180 days after the date of this Prospectus
without the prior written consent of ASI Partners and Goldman, Sachs & Co. Such
consents may be provided without prior notice to holders of the shares or to the
markets where such securities are traded.
The Common Stock is traded on the New York Stock Exchange.
The Underwriters have in the past provided and may continue to provide
investment banking services to the Company and Kelso.
The Company, American Standard Inc. and the Selling Stockholder have agreed
to indemnify the several Underwriters against certain liabilities, including
liabilities under the Securities Act.
LEGAL MATTERS
The validity of the Shares will be passed upon for the Company by Debevoise
& Plimpton, New York, New York. Debevoise & Plimpton also acts and may hereafter
act as counsel to Kelso and its affiliates, including ASI Partners, and has
acted as counsel to Kelso and ASI Partners in connection with the Stockholder
Transactions, in which the Company and its independent directors have been
separately advised by other counsel. Certain legal matters in connection with
the Offerings will be passed upon for the Underwriters by Cahill Gordon &
Reindel (a partnership including a professional corporation), New York, New
York.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1994 and 1995, and for each of the three years in the period ended December 31,
1995, incorporated by reference in this Prospectus from the Company's Annual
Report on Form 10-K for the year ended December 31, 1995, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
incorporated herein by reference, and have been so incorporated by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
Certain information with respect to German tax matters has been included
herein in reliance upon the authority of Meilicke & Partner as experts in German
tax matters.
41
<PAGE> 44
- ------------------------------------------------------
- ------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................. 2
Incorporation of Certain Documents by
Reference............................ 2
Prospectus Summary..................... 3
Risk Factors........................... 11
Price Range of Common Stock and
Dividend Policy...................... 16
Use of Proceeds........................ 16
Capitalization......................... 17
Summary Historical Financial Data...... 18
Pro Forma Financial Data............... 20
Management's Discussion and Analysis
of Financial Condition and Results of
Operations........................... 21
Business............................... 28
The Selling Stockholder and
Stockholder Transactions............. 38
Underwriting........................... 40
Legal Matters.......................... 41
Experts................................ 41
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
10,750,000 SHARES
AMERICAN STANDARD
COMPANIES INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
------------------------------
AMERICAN STANDARD COMPANIES LOGO
------------------------------
GOLDMAN, SACHS & CO.
MORGAN STANLEY & CO.
INCORPORATED
SBC WARBURG INC.
SMITH BARNEY INC.
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 45
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
SUBJECT TO COMPLETION, DATED FEBRUARY 5, 1997
10,750,000 SHARES
AMERICAN STANDARD COMPANIES INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
-------------------
Of the 10,750,000 shares of Common Stock offered, 2,150,000 shares are
being offered hereby in an international offering outside the United States and
8,600,000 shares are being offered in a concurrent U.S. offering (collectively,
the "Offerings"). The initial public offering price and the aggregate
underwriting discount per share will be identical for both Offerings. See
"Underwriting". Each share of Common Stock, including the shares offered hereby,
has associated with it one right to purchase a share of the Company's preferred
stock at a stipulated price in certain circumstances relating to changes in
ownership of the Company under the Company's stockholder rights agreement.
All of the shares of Common Stock offered are being sold by Kelso ASI
Partners, L.P. ("ASI Partners" or the "Selling Stockholder"). Concurrently with
the consummation of the Offerings, the Company will repurchase 6,250,000 shares
of Common Stock from ASI Partners at a price per share equal to the initial
public offering price, up to a maximum total purchase price of $300 million. See
"The Selling Stockholder and Stockholder Transactions".
The last reported sale price of the Common Stock, which is listed under the
symbol "ASD", on the New York Stock Exchange on February 4, 1997 was $43 3/8 per
share. See "Price Range of Common Stock and Dividend Policy".
SEE "RISK FACTORS" ON PAGES 11-15 FOR CERTAIN CONSIDERATIONS RELEVANT TO AN
INVESTMENT IN THE COMMON STOCK.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO SELLING
OFFERING PRICE DISCOUNT(1) STOCKHOLDER(2)
---------------------------------------------------------------
<S> <C> <C> <C>
Per Share............................ $ $ $
Total(3)............................. $ $ $
</TABLE>
- ------------
(1) The Company, American Standard Inc. and the Selling Stockholder have agreed
to indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933.
(2) Estimated offering expenses of $1,000,000 will be paid by the Company.
(3) ASI Partners has granted the International Underwriters an option for 30
days after the date of this Prospectus to purchase up to an additional
322,500 shares at the initial public offering price per share, less the
underwriting discount, solely to cover over-allotments. Additionally, an
over-allotment option on 1,290,000 shares has been granted by ASI Partners
as part of the U.S. offering. If such options are exercised in full, the
total initial public offering price, underwriting discount and proceeds to
Selling Stockholder will be $ , $ and $ ,
respectively. See "Underwriting".
-------------------
The shares offered hereby are offered severally by the International
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that certificates for the shares will be ready for delivery in New York, New
York, on or about , 1997 against payment therefor in immediately
available funds.
GOLDMAN SACHS INTERNATIONAL
MORGAN STANLEY & CO.
INTERNATIONAL
SBC WARBURG
A DIVISION OF SWISS BANK CORPORATION
SMITH BARNEY INC.
------------------------
The date of this Prospectus is , 1997.
<PAGE> 46
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
AVAILABLE INFORMATION
American Standard Companies Inc. (the "Company") is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). Reports, proxy statements and other information filed by the
Company may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, and at the Commission's Regional Offices located at Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60611 and
7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such
materials can be obtained upon written request from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, such material may also be inspected and copied at
the offices of the New York Stock Exchange, Inc. (the "NYSE"), 20 Broad Street,
New York, New York 10005. The Commission maintains a Website that contains
reports, proxy and information statements and other information regarding
reporting companies under the Exchange Act, including the Company, at
http://www.sec.gov.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares (the "Shares") of its common
stock, par value $.01 per share (the "Common Stock"), offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all the information set forth in the
Registration Statement, certain items of which are contained in schedules and
exhibits to the Registration Statement as permitted by the rules and regulations
of the Commission. Statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to are not necessarily complete;
with respect to each such contract, agreement or other document filed as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved, and each such statement shall
be deemed qualified in its entirety by such reference. For further information,
reference is hereby made to the Registration Statement.
------------------------
This Prospectus does not constitute an offer to sell or the solicitation of
an offer to buy the Shares in any jurisdiction in which such offer or
solicitation is unlawful. There are restrictions on the offer and sale of the
Shares in the United Kingdom. All applicable provisions of the Public Offers of
Securities Regulations 1995, the Financial Services Act 1986 and the Companies
Act 1985 with respect to anything done by any person in relation to the Shares
in, from, or otherwise involving the United Kingdom must be complied with. See
"Underwriting".
In this Prospectus, reference to "dollars", "U.S.$" and $ are United States
dollars.
------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company (File No. 1-11415) with the
Commission pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1995, including portions incorporated therein of the Company's
definitive Proxy Statement dated March 28, 1996.
2. The Company's Quarterly Reports on Form 10-Q/A for the quarters ended
March 31, 1996, June 30, 1996 and September 30, 1996.
3. The descriptions of the Common Stock and the common stock rights
associated with each Share of Common Stock contained in the Registration
Statement on Form 8-A dated January 5, 1995, incorporated by reference
from the Company's Registration Statement on Form S-2 under the
Securities Act, Commission File Number 33-56409, under the captions
"Description of Capital Stock -- Common Stock" and "-- Stockholder
Rights Plan".
4. All other documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Shares.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any or all of the
documents which are incorporated herein by reference, other than exhibits to
such information (unless such exhibits are specifically incorporated by
reference into such documents). Requests should be directed to the Company, One
Centennial Avenue, P.O. Box 6820, Piscataway, NJ 08855-6820, Attention: Office
of the Secretary, telephone: (908) 980-6000.
------------------------
Any statement contained in a document all or a portion of which is
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified shall not be deemed to
constitute a part of this Prospectus except as so modified, and any statement so
superseded shall not be deemed to constitute part of this Prospectus.
------------------------
AMERICAN STANDARD(R), IDEAL STANDARD(R), STANDARD(R), TRANE(R) and WABCO(R)
are registered trademarks of American Standard Inc. PERROT(R) and PORCHER(R) are
registered trademarks of Deutsche Perrot-Bremsen GmbH and Porcher S.A.,
respectively, subsidiaries of the Company. DEMAND FLOW(R) is a registered
trademark of J-I-T Institute of Technology, Inc.
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
2
<PAGE> 47
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
CERTAIN UNITED STATES TAX
CONSEQUENCES TO NON-U.S. HOLDERS
The following is a general discussion of certain United States Federal
income and estate tax consequences of the ownership and disposition of Common
Stock by a person other than (i) a citizen or resident of the United States,
(ii) a corporation, partnership or other entity created or organized in the
United States or under the laws of the United States or of any State or (iii) an
estate or trust treated as a domestic estate or trust for United States Federal
income tax purposes (referred to hereafter as a "non-U.S. holder").
The discussion is based on provisions of the Internal Revenue Code of 1986,
as amended (the "Code") and administrative and judicial interpretations as of
the date hereof, all of which are subject to change, possibly with retroactive
effect. Furthermore, this discussion does not consider specific facts and
circumstances that may be relevant to a particular holder's tax position.
Prospective purchasers are urged to consult a tax adviser with respect to the
United States Federal income and estate tax consequences of owning and disposing
of Common Stock, as well as any tax consequences under the laws of any other
taxing jurisdiction.
INCOME TAX
DIVIDENDS. Generally, dividends paid to a non-U.S. holder of Common Stock
will be subject to U.S. Federal income tax. Except in the case of dividends that
are effectively connected with the holder's conduct of a trade or business
within the United States, this tax is imposed and withheld at the rate of 30% of
the amount of the dividend, unless reduced by an applicable income tax treaty.
Currently, dividends paid to an address in a foreign country are presumed to be
paid to a resident of such country in determining the applicability of a treaty
for such purposes. However, the Internal Revenue Service has issued proposed
regulations which, if adopted, would require a non-U.S. holder to provide
certain certifications under penalties of perjury in order to obtain treaty
benefits.
Except as may be otherwise provided in an applicable income tax treaty,
dividends which are effectively connected with the non-U.S. holder's conduct of
a trade or business within the United States are subject to tax at ordinary
Federal income tax rates, which tax is not collected by withholding (except as
described below under "Backup Withholding and Information Reporting"). All or
part of any effectively connected dividends received by a foreign corporation
may also, under certain circumstances, be subject to an additional "branch
profits" tax at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty. Non-U.S. holders of Common Stock must comply with
certain certification and disclosure requirements to claim an exception from
withholding under the rules described in this paragraph.
A non-U.S. holder that is eligible for a reduced rate of U.S. withholding
tax pursuant to a tax treaty may obtain a refund of any excess amounts withheld
by filing an appropriate claim for refund with the United States Internal
Revenue Service.
DISPOSITION OF COMMON STOCK. Generally, non-U.S. holders will not be
subject to United States Federal income tax (or withholding thereof) in respect
of gain recognized on a disposition of Common Stock unless (i) the gain is
effectively connected with the non-U.S. holder's conduct of a trade or business
within the United States (in which case the "branch profits" tax described above
may also apply if the holder is a foreign corporation), (ii) in the case of a
non-U.S. holder who is a non-resident alien individual and holds the Common
Stock as a capital asset, such holder is present in the United States for 183 or
more days in the taxable year of the sale and certain other conditions are met;
or (iii) the Company is or has been a "United States real property holding
corporation" for Federal income tax purposes (which the Company does not believe
it has been or is currently) and the non-U.S. holder has held directly or
constructively more than 5% of the outstanding Common Stock within the five-year
period ending on the date of the disposition.
40
<PAGE> 48
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
ESTATE TAX
If an individual non-U.S. holder owns, or is treated as owning, Common
Stock at the time of his or her death, such stock would be subject to U.S.
Federal estate tax imposed on the estates of nonresident aliens, in the absence
of a contrary provision contained in any applicable tax treaty.
BACKUP WITHHOLDING AND INFORMATION REPORTING
DIVIDENDS. The Company must report annually to the Internal Revenue
Service and to each non-U.S. holder the amount of dividends paid to, and the
U.S. federal income tax withheld, if any, with respect to, such holder. These
information reporting requirements apply regardless of whether withholding was
reduced by an applicable tax treaty. Backup withholding generally will not apply
to dividends paid on shares of Common Stock to a non-U.S. holder at an address
outside the United States. Certain recently proposed regulations will, if
adopted, provide certain presumptions, however, under which non-U.S. holders may
be subject to backup withholding in the absence of required certifications.
BROKER SALES. Payments of proceeds from the sale of Common Stock by a
non-U.S. holder made to or through a foreign office of a broker generally will
not be subject to information reporting or backup withholding. However, certain
foreign offices, including the foreign offices of a U.S. broker, are subject to
information reporting unless the holder certifies its non-U.S. status under
penalties of perjury or otherwise establishes its entitlement to an exemption.
Payments of proceeds from the sale of Common Stock by a non-U.S. holder to or
through a U.S. office of a broker are currently subject to both information
reporting and backup withholding at a rate of 31% unless the holder certifies
its status as a non-U.S. holder under penalties of perjury or otherwise
establishes an exemption.
A non-U.S. holder may obtain a refund of any excess amounts withheld under
the backup withholding rules by filing the appropriate claim for refund with the
IRS.
41
<PAGE> 49
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
UNDERWRITING
Subject to the terms and conditions of the International Underwriting
Agreement, the Selling Stockholder has agreed to sell to each of the
International Underwriters named below, and each of such International
Underwriters has severally agreed to purchase from the Selling Stockholder, the
respective number of Shares set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
INTERNATIONAL UNDERWRITERS COMMON STOCK
----------------------------------------------------------- ------------
<S> <C>
Goldman Sachs International................................
Morgan Stanley & Co. International Limited.................
SBC Warburg................................................
Smith Barney Inc...........................................
------------
Total............................................ 2,150,000
===============
</TABLE>
Under the terms and conditions of the International Underwriting Agreement,
the International Underwriters are committed to take and pay for all of the
Shares offered hereby, if any are taken.
The International Underwriters propose to offer the Shares in part directly
to the public at the initial public offering price set forth on the cover page
of this Prospectus, and in part to certain securities dealers at such price less
a concession of $ per share. The International Underwriters may allow, and
such dealers may reallow, a concession not in excess of $ per share to
certain brokers and dealers. After the Shares are released for sale to the
public, the offering price and other selling terms may from time to time be
varied by the International Underwriters.
The Company and the Selling Stockholder have entered into an underwriting
agreement (the "U.S. Underwriting Agreement") with the underwriters of the U.S.
offering (the "U.S. Underwriters") providing for the concurrent offer and sale
of 8,600,000 shares in an offering in the United States. The initial public
offering price and aggregate underwriting discount per share for the two
Offerings are identical. The closing of the offering made hereby is a condition
to the closing of the U.S. offering, and vice versa. The U.S. Underwriters are
Goldman, Sachs & Co., Morgan Stanley & Co. Incorporated, SBC Warburg Inc. and
Smith Barney Inc.
An affiliate of Smith Barney Inc. owns indirect equity interests in ASI
Partners and will receive a portion of the proceeds from the Offerings. In
addition, an affiliate of Smith Barney Inc. is an investor in investment funds
sponsored by Kelso, which funds are not investors in the Company.
Pursuant to an agreement between the U.S. and International Underwriting
Syndicates (the "Agreement Between") relating to the two Offerings, each of the
U.S. Underwriters has agreed or will agree pursuant to the Agreement Between
that, as a part of the distribution of the Shares offered as part of the U.S.
offering and subject to certain exceptions, it will offer, sell or deliver the
Shares offered as part of the U.S. offering and other shares of Common Stock,
directly or indirectly, only in the United States of America (including the 50
States and the District of Columbia), its territories, its possessions and other
areas subject to its jurisdiction (the "United States") and to U.S. persons,
which term shall mean, for purposes of this paragraph: (a) any individual who is
a resident of the United States or (b) any corporation, partnership or other
entity organized in or under the laws of the United States or any political
subdivision thereof and whose office most directly involved with the purchase is
located in the United States. Each of the International Underwriters named
herein has agreed or will agree pursuant to the Agreement Between that, as a
part of the distribution of the Shares offered hereby, and subject to certain
exceptions, it will (i) not, directly or indirectly, offer, sell or deliver
shares of Common Stock (a) in the United States or to any U.S. persons or (b) to
any person whom it believes intends to reoffer, resell or deliver the shares in
the United States or to any U.S. persons, and (ii) cause any dealer to whom it
may sell such shares at any concession to agree to observe a similar
restriction.
Pursuant to the Agreement Between, sales may be made between the U.S.
Underwriters and the International Underwriters of such number of shares of
Common Stock as may be mutually
42
<PAGE> 50
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
agreed. The price of any shares so sold shall be the initial public offering
price, less an amount not greater than the selling concession.
ASI Partners has granted the International Underwriters an option
exercisable for 30 days after the date of this Prospectus to purchase up to an
aggregate of 322,500 additional shares of Common Stock to cover over-allotments,
if any, at the initial public offering price, less the underwriting discount, as
set forth in this Prospectus. If the International Underwriters exercise their
over-allotment option, the International Underwriters have severally agreed,
subject to certain conditions, to purchase approximately the same percentage
thereof that the number of shares to be purchased by each of them, as shown in
the foregoing table, bears to the total number of shares. The International
Underwriters may exercise such option only to cover over-allotments in
connection with the sale of the shares. ASI Partners has granted the U.S.
Underwriters an option exercisable for 30 days after the date of this Prospectus
to purchase up to an aggregate of 1,290,000 additional shares of Common Stock,
solely to cover over-allotments, at the initial public offering price less the
underwriting discount, as set forth on the cover page of this Prospectus.
The Company has agreed not to offer, sell or otherwise dispose of any
shares of Common Stock (other than pursuant to employee stock option plans,
other employee benefit plans or the Stockholder Rights Agreement) for a period
of 90 days after the date of this Prospectus without the prior written consent
of Goldman, Sachs & Co. In addition, ASI Partners expects to distribute not more
than 4,000,000 additional Shares to certain of its partners as promptly as
practicable following the closing of the Offerings. See "The Selling Stockholder
and Stockholder Transactions". The recipients of such distributions have agreed
with ASI Partners and the Underwriters not to offer, sell or otherwise dispose
of such Shares for a period of 180 days after the date of this Prospectus
without the prior written consent of ASI Partners and Goldman, Sachs & Co. Such
consents may be provided without prior notice to holders of the Shares or to the
markets where such securities are traded.
The Common Stock is traded on the New York Stock Exchange.
The Underwriters have in the past provided and may continue to provide
investment banking services to the Company and Kelso.
The Company, American Standard Inc. and the Selling Stockholder have agreed
to indemnify the several Underwriters against certain liabilities, including
liabilities under the Securities Act.
LEGAL MATTERS
The validity of the Shares will be passed upon for the Company by Debevoise
& Plimpton, New York, New York. Debevoise & Plimpton also acts and may hereafter
act as counsel to Kelso and its affiliates, including ASI Partners, and has
acted as counsel to Kelso and ASI Partners in connection with the Stockholder
Transactions, in which the Company and its independent directors have been
separately advised by other counsel. Certain legal matters in connection with
the Offerings will be passed upon for the Underwriters by Cahill Gordon &
Reindel (a partnership including a professional corporation), New York, New
York.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1994 and 1995, and for each of the three years in the period ended December 31,
1995, incorporated by reference in this Prospectus from the Company's Annual
Report on Form 10-K for the year ended December 31, 1995, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
incorporated herein by reference, and have been so incorporated by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
Certain information with respect to German tax matters has been included
herein in reliance upon the authority of Meilicke & Partner as experts in German
tax matters.
43
<PAGE> 51
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
- ------------------------------------------------------
- ------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................. 2
Incorporation of Certain Documents by
Reference............................ 2
Prospectus Summary..................... 3
Risk Factors........................... 11
Price Range of Common Stock and
Dividend Policy...................... 16
Use of Proceeds........................ 16
Capitalization......................... 17
Summary Historical Financial Data...... 18
Pro Forma Financial Data............... 20
Management's Discussion and Analysis
of Financial Condition and Results of
Operations........................... 21
Business............................... 28
The Selling Stockholder and
Stockholder Transactions............. 38
Certain United States Tax Consequences
to Non-U.S. Holders.................. 40
Underwriting........................... 42
Legal Matters.......................... 43
Experts................................ 43
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
10,750,000 SHARES
AMERICAN STANDARD
COMPANIES INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
------------------------------
AMERICAN STANDARD COMPANIES LOGO
------------------------------
GOLDMAN SACHS INTERNATIONAL
MORGAN STANLEY & CO.
INTERNATIONAL
SBC WARBURG
A DIVISION OF SWISS BANK CORPORATION
SMITH BARNEY INC.
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 52
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration fee........................................................ $ 163,429
NASD fee................................................................ 30,500
Blue Sky fees and expenses.............................................. 5,000
Transfer agent's fees................................................... 5,000
Printing and engraving expenses......................................... 270,000
Legal fees and expenses................................................. 250,000
Accounting fees and expenses............................................ 150,000
Miscellaneous........................................................... 126,071
----------
Total......................................................... $1,000,000
=========
None of the expenses will be borne by the Selling Stockholder.
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware (the
"Delaware Law") empowers a Delaware corporation to indemnify any persons who
are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was an officer or director
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that such officer or
director acted in good faith and in a manner he reasonably believed to be in, or
not opposed to, the corporation's best interests, and, for criminal proceedings,
had no reasonable cause to believe his conduct was illegal. A Delaware
corporation may indemnify officers and directors in an action by or in the right
of the corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation in the performance of his duty. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses which
such officer or director actually and reasonably incurred.
In accordance with the Delaware Law, the Restated Certificate of
Incorporation of the Company contains a provision to limit the personal
liability of the directors for violations of their fiduciary duty. This
provision eliminates each director's liability to the Company or its respective
stockholders for monetary damages except (i) for any breach of the director's
duty of loyalty to the Company or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the Delaware Law providing for liability of
directors for unlawful payment of dividends or unlawful stock purchases or
redemptions, or (iv) for any transaction from which a director derived an
improper personal benefit. The effect of this provision is to eliminate the
personal liability of directors for monetary damages for actions involving a
breach of their fiduciary duty of care, including any such actions involving
gross negligence.
Subsection (b) of Article EIGHTH of the Company's Restated Certificate of
Incorporation provides for indemnification of directors and officers as follows:
(b) The Corporation shall indemnify, to the fullest extent now or
hereafter permitted by the General Corporation Law of the State of
Delaware, any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the
fact that he or she is or was or has agreed to become a Director or officer
of the Corporation, or is or was serving or has agreed to serve at the
request of the Corporation as a Director or officer of another corporation,
partnership, joint venture, trust or other
II-1
<PAGE> 53
enterprise, or by reason of any action alleged to be taken or omitted in
such capacity, and may to the same extent indemnify any person who was or
is a party or is threatened to be made a party to such an action, suit or
proceeding by reason of the fact that he or she is or was or has agreed to
become an employee or agent of the Corporation, or is or was serving or has
agreed to serve at the request of the Corporation as an employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement in connection with such action, suit or
proceeding or any appeal therefrom.
Article VI of the Amended By-Laws of the Company provides for
indemnification of directors and officers as follows:
Section 6.1. Nature of Indemnity. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is or
was or has agreed to become a Director or officer of the Corporation, or is or
was serving or has agreed to serve at the request of the Corporation as a
director or officer of another corporation, partnership, joint venture, trust or
other enterprise, or by reason of any action alleged to have been taken or
omitted in such capacity, and may indemnify any person who was or is a party or
is threatened to be made a party to such an action, suit or proceeding by reason
of the fact that he is or was or has agreed to become an employee or agent of
the Corporation, or is or was serving or has agreed to serve at the request of
the Corporation as an employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or on his behalf in connection with such action, suit or
proceeding and any appeal therefrom, if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding had no
reasonable cause to believe his conduct was unlawful; except that in the case of
an action or suit by or in the right of the Corporation to procure a judgment in
its favor (1) such indemnification shall be limited to expenses (including
attorneys' fees) actually and reasonably incurred by such person in the defense
or settlement of such action or suit, and (2) no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent that the
Delaware Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Delaware Court of
Chancery or such other court shall deem proper.
The termination of any action, suit or proceeding by judgment, order
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 6.2. Successful Defense. To the extent that a Director, officer,
employee or agent of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Section
6.1 hereof or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
Section 6.3. Determination That Indemnification Is Proper. Any
indemnification of a Director or officer of the Corporation under Section 6.1
hereof (unless ordered by a court) shall be made by the Corporation unless a
determination is made that indemnification of the Director or officer is not
proper in the circumstances because he has not met the applicable standard of
conduct set forth in Section 6.1 hereof. Any indemnification of an employee or
agent of the Corporation under Section 6.1 hereof (unless ordered by a court)
may be made by the Corporation upon a determination that indemnification of the
employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in Section 6.1 hereof. Any such
determination shall be made (1) by a majority vote of the Directors who are not
parties to such action, suit or proceeding, even though less than a quorum, or
(2) if there are no such Directors, or if such Directors so direct, by
independent legal counsel in a written opinion, or (3) by the stockholders.
Section 6.4. Advance Payment of Expenses. Expenses (including attorneys'
fees) incurred by a Director or officer in defending any civil, criminal,
administrative or investigative action, suit or proceeding
II-2
<PAGE> 54
shall be paid by the Corporation in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf of the
Director or officer to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Corporation as authorized in
this Article. Such expenses (including attorneys' fees) incurred by other
employees and agents may be so paid upon such terms and conditions, if any, as
the Board of Directors deems appropriate. The Board of Directors may authorize
the Corporation's counsel to represent such Director, officer, employee or agent
in any action, suit or proceeding, whether or not the Corporation is a party to
such action, suit or proceeding.
Section 6.5. Procedure for Indemnification of Directors and Officers. Any
indemnification of a Director or officer of the Corporation under Sections 6.1
and 6.2, or advance of costs, charges and expenses to a Director or officer
under Section 6.4 of this Article, shall be made promptly, and in any event
within 30 days, upon the written request of the Director or officer. If a
determination by the Corporation that the Director or officer is entitled to
indemnification pursuant to this Article is required, and the Corporation fails
to respond within sixty days to a written request for indemnity, the Corporation
shall be deemed to have approved such request. If the Corporation denies a
written request for indemnity or advancement of expenses, in whole or in part,
or if payment in full pursuant to such request is not made within 30 days, the
right to indemnification or advances as granted by this Article shall be
enforceable by the Director or officer in any court of competent jurisdiction.
Such person's costs and expenses incurred in connection with successfully
establishing his right to indemnification, in whole or in part, in any such
action shall also be indemnified by the Corporation. It shall be a defense to
any such action (other than an action brought to enforce a claim for the advance
of costs, charges and expenses under Section 6.4 of this Article where the
required undertaking, if any, has been received by the Corporation) that the
claimant has not met the standard of conduct set forth in Section 6.1 of this
Article, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board of Directors, its
independent legal counsel, and its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because he has met the applicable standard of
conduct set forth in Section 6.1 of this Article, nor the fact that there has
been an actual determination by the Corporation (including its Board of
Directors, its independent legal counsel, and its stockholders) that the
claimant has not met such applicable standard of conduct, shall be a defense to
the action or create a presumption that the claimant has not met the applicable
standard of conduct.
Section 6.6. Survival; Preservation of Other Rights. The foregoing
indemnification provisions shall be deemed to be a contract between the
Corporation and each Director, officer, employee and agent who serves in any
such capacity at any time while these provisions as well as the relevant
provisions of the General Corporation Law of the State of Delaware are in
effect. Any repeal or modification of these indemnification provisions shall not
affect any right or obligation then existing with respect to any state of facts
then or previously existing or any action, suit or proceeding previously or
thereafter brought or threatened based in whole or in part upon any such state
of facts. Such a "contract right" may not be modified retroactively without the
consent of such Director, officer, employee or agent.
The indemnification provided by this Article VI shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any by-law, agreement, vote of stockholders or disinterested Directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a Director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
Section 6.7. Insurance. The Corporation shall purchase and maintain
insurance on behalf of any person who is or was or has agreed to become a
Director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him or on his behalf in any such capacity, or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article,
provided that such insurance is available on acceptable terms, which
determination shall be made by a vote of a majority of the entire Board of
Directors.
II-3
<PAGE> 55
Section 6.8. Severability. If this Article VI or any portion hereof shall
be invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each Director or officer and may
indemnify each employee or agent of the Corporation as to costs, charges and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the Corporation, to the fullest extent permitted by any applicable
portion of this Article that shall not have been invalidated and to the fullest
extent permitted by applicable law.
ITEM 16. EXHIBITS.
The File Number of American Standard Companies Inc., the Registrant (the
"Company"), and for all Exhibits incorporated by reference is 1-11415, except
those Exhibits incorporated by reference in filings made by American Standard
Inc. ("American Standard Inc.") whose File Number is 33-64450 (formerly 1-470).
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- --------------- -----------------------------------------------------------------------------
<C> <C> <S>
(1) Form of U.S. Underwriting Agreement.++
(4) (i) Form of Common Stock Certificate; previously filed as Exhibit 4(i) in
Amendment No. 3 to Registration Statement No. 33-56409 of the Company under
the Securities Act of 1933, as amended, filed January 5, 1995, and herein
incorporated by reference.
(ii) Indenture, dated as of November 1, 1986, between American Standard Inc. and
Manufacturers Hanover Trust Company, Trustee, including the form of 9 1/4%
Sinking Fund Debenture Due 2016 issued pursuant thereto on December 9, 1986,
in the aggregate principal amount of $150,000,000; previously filed as
Exhibit (4)(iii) by American Standard Inc. in its Form 10-K for the fiscal
year ended December 31, 1986, and herein incorporated by reference.
(iii) Instrument of Resignation, Appointment and Acceptance, dated as of April 25,
1988 among American Standard Inc., Manufacturers Hanover Trust Company (the
"Resigning Trustee") and Wilmington Trust Company (the "Successor Trustee"),
relating to resignation of the Resigning Trustee and appointment of the
Successor Trustee, under the Indenture described in (4)(ii) above; previously
filed as Exhibit (4)(ii) in Registration Statement No. 33-64450 of American
Standard Inc. under the Securities Act of 1933, as amended, and herein
incorporated by reference.
(iv) Indenture dated as of May 15, 1992, between American Standard Inc. and First
Trust National Association, Trustee, relating to American Standard Inc.'s
10 7/8% Senior Notes due 1999, in the aggregate principal amount of
$150,000,000; previously filed as Exhibit (4)(i) by American Standard Inc. in
its Form 10-Q for the quarter ended June 30, 1992, and herein incorporated by
reference.
(v) Form of 10 7/8% Senior Notes due 1999 included as Exhibit A to the Indenture
described in (4)(iv) above.
(vi) Indenture dated as of May 15, 1992, between American Standard Inc. and First
Trust National Association, Trustee, relating to American Standard Inc.'s
11 3/8% Senior Debentures due 2004, in the aggregate principal amount of
$250,000,000; previously filed as Exhibit (4)(iii) by American Standard Inc.
in its Form 10-Q for the quarter ended June 30, 1992, and herein incorporated
by reference.
(vii) Form of 11 3/8% Senior Debentures due 2004 included as Exhibit A to the
Indenture described in (4)(vi) above.
(viii) Form of Indenture, dated as of June 1, 1993, between American Standard Inc.
and United States Trust Company of New York, as Trustee, relating to American
Standard Inc.'s 9 7/8% Senior Subordinated Notes Due 2001; previously filed
as Exhibit (4) (xxxi) in Amendment No. 1 to Registration Statement No.
33-61130 of American Standard Inc. under the Securities Act of 1933, as
amended, and herein incorporated by reference.
</TABLE>
- ---------------
++ Previously filed.
II-4
<PAGE> 56
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(ix) Form of Note evidencing the 9 7/8% Senior Subordinated Notes Due 2001
included as Exhibit A to the Form of Indenture referred to in 4(viii) above.
(x) Form of Indenture, dated as of June 1, 1993, between American Standard Inc.
and United States Trust Company of New York, as Trustee, relating to American
Standard Inc.'s 10 1/2% Senior Subordinated Discount Debentures Due 2005;
previously filed as Exhibit (4) (xxxiii) in Amendment No. 1 to Registration
Statement No. 33-61130 of American Standard Inc. under the Securities Act of
1933, as amended, and herein incorporated by reference.
(xi) Form of Debenture evidencing the 10 1/2% Senior Subordinated Discount
Debentures Due 2005 included as Exhibit A to the Form of Indenture referred
to in 4 (x) above.
(xii) Assignment and Amendment Agreement dated as of February 9, 1995, among the
Company, American Standard Inc., certain subsidiaries of American Standard
Inc., and the financial institutions listed in Schedule I thereto (the
Original Lenders); the financial institutions listed in Schedule II thereto
(the Continuing Lenders), including Chemical Bank as Administrative Agent for
the Original Lenders and Continuing Lenders and as Collateral Agent for the
Original Lenders and Continuing Lenders; previously filed as Exhibit 4(xvi)
by the Company in its Form 10-K for the fiscal year ended December 31, 1994,
and herein incorporated by reference.
(xiii) Amended and Restated Credit Agreement, dated as of February 9, 1995, among
the Company, American Standard Inc., certain subsidiaries of American
Standard Inc. and the lending institutions listed therein, Chemical Bank, as
Administrative Agent; Citibank, N.A. and NationsBank, N.A. (Carolinas), as
Senior Managing Agents; Bank of America Illinois, The Bank of Nova Scotia,
Bankers Trust Company, The Chase Manhattan Bank, N.A., Compagnie Financiere
de CIC et de L'Union Europeenne, Credit Suisse, Deutsche Bank AG, The
Industrial Bank of Japan Trust Company, The Long-Term Credit Bank of Japan,
Limited and The Sumitomo Bank, Ltd., as Managing Agents; and The Bank of New
York, Canadian Imperial Bank of Commerce, The Fuji Bank, Limited and The
Sanwa Bank Limited, as Co-Agents, with exhibits but without schedules;
previously filed as Exhibit 4 (xvii) by the Company in its Form 10-K for the
fiscal year ended December 31, 1994 (Schedules I, II, and III previously
filed by the Company in its Form 10-Q for the quarter ended March 31, 1995),
and herein incorporated by reference.
(xiv) Credit Documents Amendment Agreement dated as of February 9, 1995, among the
Company, American Standard Inc., certain domestic and foreign subsidiaries of
American Standard Inc., and Chemical Bank, as Administrative Agent and as
Collateral Agent for the Lenders under the Amended and Restated Credit
Agreement dated as of February 9, 1995, described in Exhibit 4 (xvii) above;
previously filed as Exhibit 4 (xviii) by the Company in its Form 10-K for the
fiscal year ended December 31, 1994, and herein incorporated by reference.
(xv) First Amendment, dated as of March 15, 1995, to the Amended and Restated
Credit Agreement referred to in 4(xiii) above; previously filed as Exhibit
4(vi) by the Company in its Form 10-Q for the quarter ended March 31, 1995,
and herein incorporated by reference.
(xvi) Amended and Restated Stockholders Agreement, dated as of December 2, 1994,
among the Company, Kelso ASI Partners, L.P., and the Management Stockholders
named therein; previously filed as Exhibit 4(xxi) in Amendment No. 1 to
Registration Statement No. 33-56409 of the Company under the Securities Act
of 1933, as amended, filed December 20, 1994, and herein incorporated by
reference.
(xvii) Rights Agreement, dated as of January 5, 1995 between the Company and
Citibank, N.A. as Rights Agent; previously filed as Exhibit 4(xxv) by the
Company in its Form 10-K for the year ended December 31, 1994, and herein
incorporated by reference.
</TABLE>
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(xviii) Amended and Restated Credit Agreement, dated as of January 31, 1997, among
the Company, American Standard Inc., certain subsidiaries of American
Standard Inc. and the financial institutions listed therein, The Chase
Manhattan Bank, as Administrative Agent; Citibank, N.A., as Documentation
Agent; The Bank of Nova Scotia and NationsBank, N.A., as Co-Syndication
Agents; Bankers Trust Company, Deutsche Bank AG, The Industrial Bank of
Japan Trust Company, The Sanwa Bank Limited, New York Branch and The
Sumitomo Bank, Ltd., as Senior Managing Agents; and The Bank of New York,
Banque Paribas, CIBC Inc., CIBC Wood Gundy plc, Compagnic Financiere de CIC
et de L'Union Europeenne, Credit Lyonnais, New York Branch, Fleet National
Bank, The Long Tem Credit Bank of Japan, Limited and The Toronto-Dominion
Bank, as Managing Agents.
(5) Opinion of Debevoise & Plimpton regarding the legality of the securities
being registered.++
(10) (i) Stock Disposition Agreement, dated as of December 16, 1996, among the
Company, Kelso & Company, L.P. and Kelso ASI Partners, L.P.++
(ii) Form of Warrant Agreement between the Company and Citibank, N.A. as Warrant
Agent, included as Annex A to the Stock Disposition Agreement filed as
Exhibit 10(i).++
(23) (i) Consent of Ernst & Young LLP.
(ii) Consent of Debevoise & Plimpton, included in the opinion of Debevoise &
Plimpton filed as Exhibit (5).++
(iii) Consent of Meilicke & Partner.
(24) Powers of Attorney.++
(27) Financial Data Schedule; previously filed as Exhibit 27 by the Company in
its Form 10-Q/A for the quarter ended September 30, 1996, and herein
incorporated by reference.
</TABLE>
- ---------------
++ Previously filed.
ITEM 17. UNDERTAKINGS.
(A) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(B) The undersigned registrant hereby undertakes that:
1. For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
the form of prospectus filed by the registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared effective.
2. For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(C) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-6
<PAGE> 58
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 2 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Township of Piscataway, State of New Jersey on
February 5, 1997.
AMERICAN STANDARD COMPANIES INC.
By: /s/ EMMANUEL A. KAMPOURIS
------------------------------------
(Emmanuel A. Kampouris)
Chairman, President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed below by the following
persons in the capacities indicated on February 5, 1997.
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/s/ EMMANUEL A. KAMPOURIS Chairman, President and Chief Executive Officer;
- ------------------------------------- Director
(Emmanuel A. Kampouris) (Principal Executive Officer)
/s/ FRED A. ALLARDYCE Vice President and Chief Financial Officer
- ------------------------------------- (Principal Financial Officer)
(Fred A. Allardyce)
/s/ G. RONALD SIMON Vice President and Controller
- ------------------------------------- (Principal Accounting Officer)
(G. Ronald Simon)
/s/ STEVEN E. ANDERSON* Director
- -------------------------------------
(Steven E. Anderson)
/s/ HORST HINRICHS* Director
- -------------------------------------
(Horst Hinrichs)
/s/ GEORGE H. KERCKHOVE* Director
- -------------------------------------
(George H. Kerckhove)
/s/ SHIGERU MIZUSHIMA* Director
- -------------------------------------
(Shigeru Mizushima)
/s/ FRANK T. NICKELL* Director
- -------------------------------------
(Frank T. Nickell)
/s/ ROGER W. PARSONS* Director
- -------------------------------------
(Roger W. Parsons)
/s/ J. DANFORTH QUAYLE* Director
- -------------------------------------
(J. Danforth Quayle)
/s/ DAVID M. RODERICK* Director
- -------------------------------------
(David M. Roderick)
/s/ JOHN RUTLEDGE* Director
- -------------------------------------
(John Rutledge)
/s/ JOSEPH S. SCHUCHERT* Director
- -------------------------------------
(Joseph S. Schuchert)
*By: /s/ RICHARD A. KALAHER
- -------------------------------------
(Richard A. Kalaher,
as attorney-in-fact)
</TABLE>
II-7
<PAGE> 59
INDEX TO EXHIBITS
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EXHIBIT NO. DESCRIPTION PAGE
- -------------- ---------------------------------------------------------------------------------
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(1) Form of U.S. Underwriting Agreement.++
(4) (i) Form of Common Stock Certificate; previously filed as Exhibit
4(i) in Amendment No. 3 to Registration Statement No. 33-56409 of
the Company under the Securities Act of 1933, as amended, filed
January 5, 1995, and herein incorporated by reference.
(ii) Indenture, dated as of November 1, 1986, between American
Standard Inc. and Manufacturers Hanover Trust Company, Trustee,
including the form of 9 1/4% Sinking Fund Debenture Due 2016
issued pursuant thereto on December 9, 1986, in the aggregate
principal amount of $150,000,000; previously filed as Exhibit
(4)(iii) by American Standard Inc. in its Form 10-K for the
fiscal year ended December 31, 1986, and herein incorporated by
reference.
(iii) Instrument of Resignation, Appointment and Acceptance, dated as
of April 25, 1988 among American Standard Inc., Manufacturers
Hanover Trust Company (the "Resigning Trustee") and Wilmington
Trust Company (the "Successor Trustee"), relating to resignation
of the Resigning Trustee and appointment of the Successor
Trustee, under the Indenture described in (4)(ii) above;
previously filed as Exhibit (4)(ii) in Registration Statement No.
33-64450 of American Standard Inc. under the Securities Act of
1933, as amended, and herein incorporated by reference.
(iv) Indenture dated as of May 15, 1992, between American Standard
Inc. and First Trust National Association, Trustee, relating to
American Standard Inc.'s 10 7/8% Senior Notes due 1999, in the
aggregate principal amount of $150,000,000; previously filed as
Exhibit (4)(i) by American Standard Inc. in its Form 10-Q for the
quarter ended June 30, 1992, and herein incorporated by
reference.
(v) Form of 10 7/8% Senior Notes due 1999 included as Exhibit A to
the Indenture described in (4)(iv) above.
(vi) Indenture dated as of May 15, 1992, between American Standard
Inc. and First Trust National Association, Trustee, relating to
American Standard Inc.'s 11 3/8% Senior Debentures due 2004, in
the aggregate principal amount of $250,000,000; previously filed
as Exhibit (4)(iii) by American Standard Inc. in its Form 10-Q
for the quarter ended June 30, 1992, and herein incorporated by
reference.
(vii) Form of 11 3/8% Senior Debentures due 2004 included as Exhibit A
to the Indenture described in (4)(vi) above.
(viii) Form of Indenture, dated as of June 1, 1993, between American
Standard Inc. and United States Trust Company of New York, as
Trustee, relating to American Standard Inc.'s 9 7/8% Senior
Subordinated Notes Due 2001; previously filed as Exhibit (4)
(xxxi) in Amendment No. 1 to Registration Statement No. 33-61130
of American Standard Inc. under the Securities Act of 1933, as
amended, and herein incorporated by reference.
(ix) Form of Note evidencing the 9 7/8% Senior Subordinated Notes Due
2001 included as Exhibit A to the Form of Indenture referred to
in 4(viii) above.
</TABLE>
- ---------------
++ Previously filed.
<PAGE> 60
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(x) Form of Indenture, dated as of June 1, 1993, between American
Standard Inc. and United States Trust Company of New York, as
Trustee, relating to American Standard Inc.'s 10 1/2% Senior
Subordinated Discount Debentures Due 2005; previously filed as
Exhibit (4) (xxxiii) in Amendment No. 1 to Registration Statement
No. 33-61130 of American Standard Inc. under the Securities Act
of 1933, as amended, and herein incorporated by reference.
(xi) Form of Debenture evidencing the 10 1/2% Senior Subordinated
Discount Debentures Due 2005 included as Exhibit A to the Form of
Indenture referred to in 4 (x) above.
(xii) Assignment and Amendment Agreement dated as of February 9, 1995,
among the Company, American Standard Inc., certain subsidiaries
of American Standard Inc., and the financial institutions listed
in Schedule I thereto (the Original Lenders); the financial
institutions listed in Schedule II thereto (the Continuing
Lenders), including Chemical Bank as Administrative Agent for the
Original Lenders and Continuing Lenders and as Collateral Agent
for the Original Lenders and Continuing Lenders; previously filed
as Exhibit 4(xvi) by the Company in its Form 10-K for the fiscal
year ended December 31, 1994, and herein incorporated by
reference.
(xiii) Amended and Restated Credit Agreement, dated as of February 9,
1995, among the Company, American Standard Inc., certain
subsidiaries of American Standard Inc. and the lending
institutions listed therein, Chemical Bank, as Administrative
Agent; Citibank, N.A. and NationsBank, N.A. (Carolinas), as
Senior Managing Agents; Bank of America Illinois, The Bank of
Nova Scotia, Bankers Trust Company, The Chase Manhattan Bank,
N.A., Compagnie Financiere de CIC et de L'Union Europeenne,
Credit Suisse, Deutsche Bank AG, The Industrial Bank of Japan
Trust Company, The Long-Term Credit Bank of Japan, Limited and
The Sumitomo Bank, Ltd., as Managing Agents; and The Bank of New
York, Canadian Imperial Bank of Commerce, The Fuji Bank, Limited
and The Sanwa Bank Limited, as Co-Agents, with exhibits but
without schedules; previously filed as Exhibit 4 (xvii) by the
Company in its Form 10-K for the fiscal year ended December 31,
1994 (Schedules I, II, and III previously filed by the Company in
its Form 10-Q for the quarter ended March 31, 1995), and herein
incorporated by reference.
(xiv) Credit Documents Amendment Agreement dated as of February 9,
1995, among the Company, American Standard Inc., certain domestic
and foreign subsidiaries of American Standard Inc., and Chemical
Bank, as Administrative Agent and as Collateral Agent for the
Lenders under the Amended and Restated Credit Agreement dated as
of February 9, 1995, described in Exhibit 4 (xvii) above;
previously filed as Exhibit 4 (xviii) by the Company in its Form
10-K for the fiscal year ended December 31, 1994, and herein
incorporated by reference.
(xv) First Amendment, dated as of March 15, 1995, to the Amended and
Restated Credit Agreement referred to in 4(xiii) above;
previously filed as Exhibit 4(vi) by the Company in its Form 10-Q
for the quarter ended March 31, 1995, and herein incorporated by
reference.
</TABLE>
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(xvi) Amended and Restated Stockholders Agreement, dated as of
December 2, 1994, among the Company, Kelso ASI Partners, L.P.,
and the Management Stockholders named therein; previously filed
as Exhibit 4(xxi) in Amendment No. 1 to Registration Statement
No. 33-56409 of the Company under the Securities Act of 1933, as
amended, filed December 20, 1994, and herein incorporated by
reference.
(xvii) Rights Agreement, dated as of January 5, 1995 between the
Company and Citibank, N.A. as Rights Agent; previously filed as
Exhibit 4(xxv) by the Company in its Form 10-K for the year
ended December 31, 1994, and herein incorporated by reference.
(xviii) Amended and Restated Credit Agreement, dated as of January 31,
1997, among the Company, American Standard Inc., certain
subsidiaries of American Standard Inc. and the financial
institutions listed therein, The Chase Manhattan Bank, as
Administrative Agent; Citibank, N.A., as Documentation Agent;
The Bank of Nova Scotia and NationsBank, N.A., as Co-Syndication
Agents; Bankers Trust Company, Deutsche Bank AG, The Industrial
Bank of Japan Trust Company, The Sanwa Bank Limited, New York
Branch and The Sumitomo Bank, Ltd., as Senior Managing Agents;
and The Bank of New York, Banque Paribas, CIBC Inc., CIBC Wood
Gundy plc, Compagnic Financiere de CIC et de L'Union Europeenne,
Credit Lyonnais, New York Branch, Fleet National Bank, The Long
Tem Credit Bank of Japan, Limited and The Toronto-Dominion Bank,
as Managing Agents.
(5) Opinion of Debevoise & Plimpton regarding the legality of the
securities being registered.++
(10) (i) Stock Disposition Agreement, dated as of December 16, 1996,
among the Company, Kelso & Company, L.P. and Kelso ASI Partners,
L.P.++
(ii) Form of Warrant Agreement between the Company and Citibank, N.A.
as Warrant Agent, included as Annex A to the Stock Disposition
Agreement filed as Exhibit 10(i).++
(23) (i) Consent of Ernst & Young LLP.
(ii) Consent of Debevoise & Plimpton, included in the opinion of
Debevoise & Plimpton filed as Exhibit (5).++
(iii) Consent of Meilicke & Partner.
(24) Powers of Attorney.++
(27) Financial Data Schedule; previously filed as Exhibit 27 by the
Company in its Form 10-Q/A for the quarter ended September 30,
1996, and herein incorporated by reference.
</TABLE>
- ---------------
++ Previously filed.
<PAGE> 1
Exhibit 4(xviii)
AMERICAN STANDARD COMPANIES INC.
AMERICAN STANDARD INC.
CERTAIN SUBSIDIARIES OF AMERICAN STANDARD INC.
U.S. $1,750,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of January 31, 1997
THE LENDERS NAMED HEREIN
CHASE SECURITIES INC.
AS ARRANGER
THE CHASE MANHATTAN BANK
AS ADMINISTRATIVE AGENT
NATIONSBANK, N.A.
THE BANK OF NOVA SCOTIA
AS CO-SYNDICATION AGENTS
CITIBANK, N.A.
AS DOCUMENTATION AGENT
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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Article Section Page
- ------- ------- ----
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I. DEFINITIONS
1.01 Defined Terms................................ 1
1.02 Terms Generally.............................. 34
II. THE CREDITS
2.01 Commitments.................................. 34
2.02 Loans........................................ 35
2.03 Borrowing Procedure.......................... 37
2.04 Interest Rate Elections; Conversion and
Continuation of Loans........................ 38
2.05 Fees......................................... 40
2.06 Notes; Repayment of Loans.................... 41
2.07 Interest on Loans............................ 42
2.08 Default Interest............................. 42
2.09 Alternate Rate of Interest................... 42
2.10 Termination and Reduction of Commitments..... 43
2.11 Prepayment................................... 43
2.12 Reserve Requirements; Change in Circumstances 46
2.13 Change in Legality........................... 47
2.14 Indemnity.................................... 48
2.15 Pro Rata Treatment........................... 49
2.16 Sharing of Setoffs........................... 49
2.17 Payments..................................... 49
2.18 Taxes........................................ 50
2.19 Letters of Credit............................ 54
2.20 Swingline Loans.............................. 57
2.21 Conversion of Periodic Access Commitment..... 59
2.22 Certain Lender Obligations................... 59
III. REPRESENTATIONS AND WARRANTIES
3.01 Corporate Status............................. 60
3.02 Corporate Power and Authority ............... 61
3.03 No Violation................................. 61
3.04 Use of Proceeds; Margin Regulations ......... 61
3.05 Approvals ................................... 62
3.06 Investment Company Act, etc. ................ 62
3.07 True and Complete Disclosure ................ 62
3.08 Financial Condition; Financial Statements;
Projections.................................. 62
3.09 Security Interests........................... 64
3.10 Tax Returns and Payments..................... 65
3.11 Compliance with ERISA ....................... 65
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2
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3.12 Title to Properties; Liens................... 65
3.13 Patents, Trademarks, etc. ................... 66
3.14 Environmental Matters ....................... 66
3.15 Litigation; Adverse Facts ................... 67
3.16 Compliance with Laws and Charter Documents... 67
3.17 Absence of Default........................... 67
3.18 Labor Matters................................ 68
3.19 Benefit Plans................................ 68
3.20 Insurance.................................... 68
IV. CONDITIONS
4.01 All Events................................... 68
4.02 Effectiveness................................ 69
V. AFFIRMATIVE COVENANTS
5.01 Financial Statements and Other Reports ...... 69
5.02 Books, Records and Inspections............... 74
5.03 Maintenance of Property; Insurance; Good
Repair....................................... 74
5.04 Payment of Taxes and Claims ................. 74
5.05 Consolidated Corporate Franchises............ 74
5.06 Compliance with Statutes, etc. .............. 74
5.07 ERISA ....................................... 74
5.08 Performance of Obligations .................. 75
5.09 Waiver of Stay, Extension or Usury Laws ..... 75
5.10 Security Interests .......................... 76
5.11 Future Guarantors............................ 76
VI. NEGATIVE COVENANTS
6.01 End of Fiscal Year .......................... 78
6.02 Consolidation, Merger or Sale or Purchase of
Assets....................................... 78
6.03 Liens ....................................... 80
6.04 Indebtedness................................. 82
6.05 Advances, Investments and Loans ............. 84
6.06 Leases....................................... 86
6.07 Prepayments of Indebtedness, etc. ........... 86
6.08 Dividends, etc. ............................. 87
6.09 Transactions with Affiliates................. 88
6.10 Consolidated Total Debt to Consolidated EBITDA
Ratio........................................ 88
6.11 Interest Coverage Ratio...................... 89
6.12 ERISA ....................................... 89
6.13 Sale Leasebacks ............................. 89
6.14 Issuance and Sale of Stock .................. 90
6.15 Limitation on Restrictions on Subsidiary
Dividends and Other Distributions, etc. ..... 90
6.16 No Further Negative Pledges ................. 90
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6.17 Changes in Business or Assets ............... 90
VII. EVENTS OF DEFAULT
7.01 Payments.................................... 92
7.02 Representations, etc. ....................... 92
7.03 Covenants ................................... 92
7.04 Default Under Other Agreements .............. 92
7.05 Bankruptcy, etc. ............................ 93
7.06 ERISA ....................................... 93
7.07 Security Documents .......................... 94
7.08 Guarantees .................................. 95
7.09 Judgments ................................... 95
7.10 Change in Control ........................... 95
VIII. THE ADMINISTRATIVE AGENT
8.01 Appointment ................................. 96
8.02 Delegation of Duties ........................ 96
8.03 Powers; General Immunity .................... 97
8.04 Non-Reliance on Administrative Agent and Other
Lenders...................................... 99
8.05 Indemnification ............................. 99
8.06 Resignation by the Administrative Agent ..... 100
8.07 Security Documents, etc. .................... 100
8.08 Determinations Pursuant to Security Documents 101
IX. COLLECTION ALLOCATION MECHANISM
9.01 Implementation of CAM. ...................... 101
9.02 Letters of Credit ........................... 102
X. MISCELLANEOUS
10.01 Payment of Expenses, etc.................... 103
10.02 Right of Setoff............................. 104
10.03 Notices..................................... 104
10.04 Benefit of Agreement........................ 105
10.05 No Waiver; Remedies Cumulative.............. 108
10.06 Calculations; Computations.................. 108
10.07 Governing Law; Submission to Jurisdiction;
Venue....................................... 108
10.08 Counterparts................................ 109
10.09 Headings Descriptive; Entire Agreement...... 109
10.10 Waivers; Amendment.......................... 111
10.11 Survival.................................... 111
10.12 Severability................................. 111
10.13 Independence of Covenants................... 111
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10.14 Judgment Currency........................... 111
10.15 Confidentiality............................. 112
10.16 Negotiation in the Event of Certain Tax Law
Changes...................................... 113
10.17 Waiver of Jury Trial......................... 113
10.18 Miscellaneous................................ 113
10.19 Release of Collateral........................ 114
10.20 Netherlands Power of Attorney................ 115
</TABLE>
<TABLE>
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Exhibit A Form of Borrowing Request
Exhibit B Form of Note
Exhibit C Administrative Questionnaire
Exhibit D Form of Assignment and Acceptance
Exhibit E Form of Issuing Bank Agreement
Exhibit F Form of Perfection Certificate
Exhibit G Form of Section 2.18(e)(ii) Certificate
Exhibit H-1 Form of Supplemental Guarantee
Exhibit H-2 Form of Foreign Supplemental Guarantee
Schedule I Subsidiary Borrowers
Schedule II Lenders and Commitments
Schedule III Subsidiary Guarantors
Schedule IV Scheduled Letters of Credit
Schedule 3.01 Subsidiaries
Schedule 3.08(b) Contingent Obligations
Schedule 3.08(d) Indebtedness
Schedule 3.09(a) Conditions to Perfection
Schedule 3.09(b) Agreements of Equity Holders
Schedule 3.12(a) Liens
Schedule 3.13 Intellectual Property Consents
Schedule 3.14(b) Environmental Obligations
Schedule 3.15 Litigation; Proceedings
Schedule 3.17 Defaults
Schedule 3.19 Pension Plans
Schedule 3.20 Insurance Programs
Schedule 6.02 Permitted Consolidations, Mergers or
Sales or Purchases of Assets
Schedule 6.04 Certain Existing Indebtedness
Schedule 6.05 Investments
</TABLE>
<PAGE> 6
AMENDED AND RESTATED CREDIT AGREEMENT dated as of
January 31, 1997, among AMERICAN STANDARD COMPANIES INC., a
Delaware corporation ("Holding"); AMERICAN STANDARD INC., a
Delaware corporation ("ASI"); the Subsidiaries of ASI listed
in Schedule I hereto (the "Subsidiary Borrowers" and, together
with ASI, the "Borrowers"); the financial institutions listed
in Schedule II hereto (together with their successors and
assigns hereunder, the "Lenders"); THE CHASE MANHATTAN BANK, a
New York banking corporation, as administrative agent for the
Lenders (in such capacity, the "Administrative Agent");
CITIBANK, N.A., as documentation agent (in such capacity, the
"Documentation Agent"); THE BANK OF NOVA SCOTIA and
NATIONSBANK, N.A., as Co-Syndication Agents (in such capacity
the "Co-Syndication Agents" and, together with the
Documentation Agent and the Administrative Agent, the
"Agents").
The parties hereto are willing to enter into this Agreement on the
terms and subject to the conditions herein set forth. Accordingly, Holding, the
Borrowers, the Lenders, the Administrative Agent, the Senior Managing Agents (as
defined herein), the Managing Agents (as defined herein) and the Co-Agents agree
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any Loan bearing interest at a rate determined
by reference to the Alternate Base Rate in accordance with the provisions of
Article II.
"Account Party" shall have the meaning specified in Section 2.19(b).
"Acquisition" shall have the meaning specified in Section 6.05(l).
"Adjusted LIBO Rate" shall mean, with respect to any LIBOR Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary to the next 1/16 of 1%) equal to the product of (a) the LIBO Rate in
effect for such Interest Period and (b) Statutory Reserves.
"Administrative Agent" shall have the meaning specified in the
heading of this Agreement.
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit C hereto.
<PAGE> 7
2
"Affiliate" shall mean, when used with respect to a specified
person, another person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control with the
person specified.
"Agent and Administrative Fees" shall have the meaning specified in
Section 2.05(d).
"Agents" shall have the meaning specified in the heading of this
Agreement.
"Aggregate L/C Exposure" shall mean the sum of the Aggregate U.S. $
L/C Exposure and the Aggregate Multi-Currency L/C Exposure.
"Aggregate Multi-Currency L/C Exposure" shall mean the aggregate
amount of the Lenders' Multi-Currency L/C Exposures.
"Aggregate Multi-Currency Revolving Credit Exposure" shall mean the
aggregate amount of the Lenders' Multi-Currency Revolving Credit Exposures.
"Aggregate Periodic Access Loan Exposure" shall mean the aggregate
amount of the Lenders' Periodic Access Loan Exposures.
"Aggregate Revolving Credit Exposure" shall mean the aggregate
amount of the Lenders' Revolving Credit Exposures.
"Aggregate U.S. $ L/C Exposure" shall mean the aggregate amount of
the Lenders' U.S. $ L/C Exposures.
"Aggregate U.S. $ Revolving Credit Exposure" shall mean the
aggregate amount of the Lenders' U.S. $ Revolving Credit Exposures.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/100 of 1%) equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on
such day plus 1% and (c) the Federal Funds Effective Rate in effect on such day
plus 1/2 of 1%. "Prime Rate" shall mean the rate of interest per annum publicly
announced from time to time by the Administrative Agent as its prime rate in
effect at its principal office in New York City; each change in the Prime Rate
shall be effective on the date such change is publicly announced as effective.
"Base CD Rate" shall mean the sum of (a) the product of (i) the Three-Month
Secondary CD Rate and (ii) Statutory Reserves and (b) the Assessment Rate.
"Three-Month Secondary CD Rate" shall mean, for any day, the secondary market
rate for three-month certificates of deposit reported as being in effect on such
day (or, if such day shall not be a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day), or, if such rate shall not be so reported on such day
or such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center banks
in New York City received at approximately 10:00 a.m., New York City time, on
such day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Administrative Agent from the New York City negotiable
certificate of deposit dealers of recognized national standing selected by it.
"Federal Funds Effective Rate" shall mean, for any day, the weighted average of
the rates on overnight Federal
<PAGE> 8
3
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for the day of such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized national standing selected by it. If for any reason the
Administrative Agent shall have determined that it is unable to ascertain the
Base CD Rate or the Federal Funds Effective Rate or both for any reason,
including the inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms thereof, the Alternate Base
Rate shall be determined without regard to clauses (b) or (c) of the first
sentence of this definition, as appropriate, until the circumstances giving rise
to such inability no longer exist. Any change in the Alternate Base Rate due to
a change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal
Funds Effective Rate shall be effective on the effective date of such change in
the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective
Rate, respectively.
"Alternative Currency" shall mean (a) Canadian Dollars, Deutsche
Marks, French Francs, Dutch Guilders, Italian Lire and Sterling and (b) any
other freely available currency which is freely transferable and freely
convertible into Dollars and in which dealings in deposits are carried on in the
London interbank market, which shall be requested by a Borrower in respect of an
Alternative Currency Borrowing and approved by each Lender making an Alternative
Currency Loan comprising a part of such Borrowing.
"Alternative Currency Borrowing" shall mean a Borrowing comprised of
Alternative Currency Loans.
"Alternative Currency Loan" shall mean any Loan denominated in an
Alternative Currency.
"Amended and Restated Stockholders Agreement" shall mean the Amended
and Restated Stockholders Agreement of American Standard Companies Inc. dated as
of December 2, 1994, as such Amended and Restated Stockholders Agreement may
from time to time be amended, supplemented or modified.
"Applicable Rate" shall mean, for any day, with respect to each
LIBOR Borrowing (or Loan), or with respect to the Commitment Fees payable
hereunder, as the case may be, the applicable rate per annum set forth below
under the caption "LIBOR Spread" or "Commitment Fee", as the case may be, based
upon the ratio of Consolidated Total Debt to Consolidated EBITDA at the end of
and for the most recent period of four consecutive fiscal quarters for which
financial statements shall have been delivered pursuant to clause (a) or (b) of
Section 5.01:
<TABLE>
<CAPTION>
==========================================================================
RATIO OF CONSOLIDATED TOTAL LIBOR COMMITMENT
DEBT TO CONSOLIDATED EBITDA SPREAD FEE
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Category 1 less than 2.00 to 1.00 0.500% 0.125%
- --------------------------------------------------------------------------
Category 2 greater than or equal to 2.00 to 0.625% 0.150%
1.00 but less than 2.50 to 1.00
- --------------------------------------------------------------------------
</TABLE>
<PAGE> 9
4
<TABLE>
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Category 3 greater than or equal to 2.50 to 0.750% 0.1875%
1.00 but less than 3.25 to 1.00
- --------------------------------------------------------------------------
Category 4 greater than or equal to 3.25 to 0.875% 0.200%
1.00 but less than 3.75 to 1.00
- --------------------------------------------------------------------------
Category 5 greater than or equal to 3.75 to 1.000% 0.225%
1.00 but less than 4.00 to 1.00
- --------------------------------------------------------------------------
Category 6 greater than or equal to 1.250% 0.250%
4.00 to 1.00
==========================================================================
</TABLE>
; provided, that at all times prior to the Administrative Agent's receipt of the
financial statements referred to in clause (a) of Section 5.01 for the fiscal
quarter ended June 30, 1997, the LIBOR Spread and Commitment Fee shall be
determined by reference to Category 4. Any change in the Applicable Rate shall
become effective on the date on which the financial statements required to be
delivered pursuant to clause (a) or (b) of Section 5.01 are actually delivered.
In the event ASI shall complete, directly or through a Subsidiary, (i) any
offering of Securities for gross proceeds in excess of $20,000,000, (ii) a
refinancing, repurchase or prepayment of Indebtedness in a principal amount in
excess of $20,000,000 (but only, in the case of Indebtedness outstanding under
any revolving credit or similar arrangement, if the commitments of the lenders
are reduced by a corresponding amount) as permitted under Section 6.04(d) or
under Section 6.07 or (iii) the Contemplated Acquisition or an Acquisition for
total consideration (including Funded Debt incurred or assumed and common stock
of Holding) in excess of $20,000,000, then ASI shall deliver to the
Administrative Agent pro forma computations of the ratios referred to above as
if such offering, refinancing, Contemplated Acquisition or Acquisition had been
completed on the first day of the period of four consecutive fiscal quarters
referred to above, and until four complete fiscal quarters shall have elapsed
since the date of such offering, refinancing, Contemplated Acquisition or
Acquisition and financial statements shall have been delivered with respect
thereto under Section 5.01, the Applicable Rate shall be determined by reference
to the pro forma information for such of the four fiscal quarters preceding and
including the fiscal quarter during which the date of such offering,
refinancing, Contemplated Acquisition or Acquisition shall have occurred as is
necessary to compile information (both pro forma and, to the extent available,
actual) for each period of four fiscal quarters. With respect to an Acquisition,
whether or not such Acquisition shall be completed in reliance on paragraph (l)
of Section 6.05, ASI shall also deliver to the Administrative Agent the
information specified in clause (y)(1), (2) or (3) of the proviso to such
paragraph (l) at the time provided therein.
"Applicable Percentage" (a) of any U.S. $ Revolving Credit Lender at
any time shall mean the percentage of the Total U.S. $ Revolving Credit
Commitment represented by such Lender's U.S. $ Revolving Credit Commitment, and
(b) of any Multi-Currency Revolving Credit Lender at any time shall mean the
percentage of the Total Multi-Currency Revolving Credit Commitment represented
by such Lender's Multi-Currency Revolving Credit Commitment.
"ASI" shall have the meaning specified in the heading of this
Agreement.
"Assessment Rate" shall mean for any date the annual rate (rounded
upwards, if necessary, to the next 1/100 of 1%) identified by the Administrative
Agent (or, if need be, reasonably estimated by the Administrative Agent) as the
then current net annual assessment rate that will be
<PAGE> 10
5
employed in determining amounts payable by the Administrative Agent to the
Federal Deposit Insurance Corporation (or any successor) for insurance by such
Corporation (or such successor) of time deposits made in Dollars at the
Administrative Agent's domestic offices.
"Assigned Dollar Value" shall mean (a) in respect of any
Multi-Currency Revolving Credit Borrowing denominated in an Alternative
Currency, the Dollar Equivalent thereof determined based upon the applicable
Spot Exchange Rate as of the Denomination Date for such Borrowing, (b) in
respect of the undrawn amount of any Multi-Currency Letter of Credit denominated
in an Alternative Currency, the Dollar Equivalent thereof determined based upon
the applicable Spot Exchange Rate as of (i) the date that is three Business Days
prior to the date of issuance of such Multi-Currency Letter of Credit, until the
first day after such date of issuance which is the last day of January, April,
July or October and (ii) thereafter, the most recent date which is the last day
of January, April, July or October, (c) in respect of a Multi-Currency L/C
Disbursement denominated in an Alternative Currency, the Dollar Equivalent
thereof determined based upon the applicable Spot Exchange Rate as of the date
such Multi-Currency L/C Disbursement was made, (d) in respect of a Swingline
Loan denominated in an Alternative Currency, the Dollar Equivalent thereof based
upon the applicable Spot Exchange Rate as of the date that the Administrative
Agent determined the amount thereof following receipt of notice of borrowing of
such Swingline Loan and (e) in respect of any Periodic Access Borrowing
denominated in an Alternative Currency (i) the Dollar Equivalent thereof
determined based upon the applicable Spot Exchange Rate as of the Denomination
Date for such Borrowing, unless and until adjusted pursuant to the following
clause (ii), and (ii) if, as of the end of any Interest Period in respect of
such Periodic Access Borrowing, the Dollar Equivalent thereof determined based
upon the applicable Spot Exchange Rate as of the date that is three Business
Days before the end of such Interest Period would be at least 5% more, or 5%
less, than the "Assigned Dollar Value" thereof at the time, then on and after
the end of such Interest Period the "Assigned Dollar Value" of such Borrowing
shall be adjusted to be the Dollar Equivalent thereof determined based upon the
Spot Exchange Rate that gave rise to such adjustment (subject to further
adjustment in accordance with this clause (ii) thereafter). The Assigned Dollar
Value of a Loan included in any Borrowing shall equal the portion of the
Assigned Dollar Value of such Borrowing represented by such Loan.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Administrative
Agent, in the form of Exhibit D.
"Assignment and Amendment Agreement" shall mean the Assignment and
Amendment Agreement dated as of January 31, 1997, among the parties to this
Agreement and the Withdrawing Lenders (as defined in the Assignment and
Amendment Agreement).
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States or any successor thereto performing similar
functions.
"Borrower Group" shall mean any group consisting of (a) a Borrower
and its Subsidiaries (other than the French and Italian Subsidiaries owning
interests in the EEIG Borrower), (b) the French Subsidiaries owning interests in
the EEIG Borrower and their respective Subsidiaries taken as a whole or (c) the
Italian Subsidiaries owning interests in the EEIG Borrower and their respective
Subsidiaries taken as a whole, excluding in each case (i) any Subsidiary which
is itself a Borrower and (ii) any subsidiary of a Subsidiary referred to in the
preceding clause (i).
"Borrowers" shall have the meaning specified in the heading of this
Agreement.
<PAGE> 11
6
"Borrowing" shall mean (i) a group of Loans of a single Type made
under a single Credit Facility as to which a single Interest Period is in effect
or (ii) a Swingline Loan, as the context may require.
"Borrowing Request" shall mean a request by a Borrower in accordance
with the terms of Section 2.03 in the form of Exhibit A.
"Business Day" shall mean any day on which commercial banks and
foreign exchange markets are open for business and are not required or
authorized by law to close in any of London, New York City or, if such reference
relates to the date on which any amount is to be paid or made available in an
Alternative Currency, the principal financial center in the country of such
Alternative Currency.
"CAM" shall mean the mechanism for the allocation and exchange of
interests in the Credit Facilities and collections thereunder established under
Article IX.
"CAM Exchange" shall mean the exchange of the Lender's interests
provided for in Section 9.01.
"CAM Exchange Date" shall mean the first date on which any event
referred to in Section 7.05 (other than in clause (y) of paragraph (b) thereof)
shall occur in respect of ASI.
"CAM Percentage" shall mean, as to each Lender, a fraction,
expressed as a decimal, of which (a) the numerator shall be the sum of (i) the
aggregate Designated Obligations owed to such Lender and (ii) the sum of the
U.S. $ L/C Exposure and the Multi-Currency L/C Exposure of such Lender, in each
case immediately prior to the CAM Exchange Date and (b) the denominator shall be
the sum of (i) the aggregate Designated Obligations owed to all the Lenders and
(ii) the Aggregate L/C Exposure of all the Lenders, in each case immediately
prior to such CAM Exchange Date. For purposes of computing each Lender's CAM
Percentage, all Designated Obligations and Multi-Currency L/C Exposures which
shall be denominated in Alternative Currencies shall be translated into Dollars
at the Spot Exchange Rate in effect on the CAM Exchange Date.
"Canadian Borrower" shall mean Wabco Standard Trane Inc., an Ontario
corporation.
"Canadian Dollars" or "C$" shall mean lawful money of Canada.
"Capital Expenditures" shall mean, with respect to any person for
any period, the sum of (i) the aggregate of all expenditures (whether paid in
cash or Securities or accrued as a liability) by such person during that period
which, in accordance with GAAP, are or should be included in "additions to
property, plant or equipment" or similar items reflected in the statement of
cash flows of such person and (ii) to the extent not covered by clause (i)
hereof, the aggregate of all expenditures by such person to acquire by purchase
or otherwise the business, property or fixed assets of, or stock or other
evidence of beneficial ownership of, any other person (other than the portion of
such expenditures allocable in accordance with GAAP to net current assets) and
(iii) all Investments by such person in respect of any existing or new Joint
Venture or any Subsidiary of ASI which is not a Designated Subsidiary, provided,
that this clause (iii) shall not include as Capital Expenditures Investments by
such person of licenses and similar contract rights, with respect to
intellectual property, technology, or know-how of ASI, in any existing or new
Joint Venture or any Subsidiary of ASI which is not a Designated Subsidiary;
provided further that notwithstanding anything herein to the contrary (I)
Capital Expenditures shall not include
<PAGE> 12
7
(A) the reinvestment by ASI in any LDC Holding Company of any fees, royalties or
dividends received in connection with the establishment and activities of such
LDC Holding Company or Joint Ventures in which such LDC Holding Company
participates, (B) any expenditure that would otherwise be considered a "Capital
Expenditure" consisting of fixed assets, stock or other capital assets already
owned by ASI or a Subsidiary and contributed by way of Investment in any other
person or (C) any Investment described in clause (m) of Section 6.05 that is
redeemed, repaid, sold or otherwise liquidated in the same fiscal year as
originally made, it being understood that to the extent any such Investment is
not so redeemed, repaid, sold or otherwise liquidated in such fiscal year, the
balance thereof shall not be included as a Capital Expenditure until the
following fiscal year for purposes of calculating Consolidated Free Cash Flow of
ASI and (II) any portion of Capital Expenditures described in clauses (ii) and
(iii) above accrued as a liability shall not be included as Capital Expenditures
for purposes of calculating Consolidated Free Cash Flow of ASI until such
liability is paid in cash.
"Capital Lease", as applied to any person, shall mean any lease of
any property (whether real, personal or mixed) by that person as lessee which,
in accordance with GAAP, is or should be accounted for as a capital lease on the
balance sheet of that person.
"Capital Lease Obligations" of any person shall mean the obligations
of such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP
applied on a consistent basis and, for the purposes of this Agreement, the
amount of such obligations at any time shall be the capitalized amount thereof
at such time determined in accordance with GAAP applied on a consistent basis.
"Cash Available for Principal Payments" shall mean, for any period,
the Consolidated Net Income of ASI for such period, plus, without duplication,
(a) the amount of depreciation, depletion, amortization of intangibles, deferred
taxes, amortization of debt discount and debt issuance costs, accreted
zero-coupon and other non-cash interest expense, amortization of non-cash
discount and non-cash cost of Currency Protection Agreements, Interest Rate
Protection Agreements, credit derivatives and other non-cash items deducted in
determining such Consolidated Net Income, (b) the amount, if any, by which
Working Capital decreased during such period (except to the extent attributable
to a Prepayment Event), (c) the amount, if any, by which Net Joint Venture
Investments decreased during such period (except to the extent attributable to a
Prepayment Event), and (d) the amount, if any, of cash received by ASI and its
Consolidated Subsidiaries during such period pursuant to transactions not in the
ordinary course of business, to the extent receipt of such cash is (x) not
included in income in determining such Consolidated Net Income but to be
included in income in a later period or periods or (y) not attributable to a
Prepayment Event, minus, without duplication, (i) the amount of any non-cash
items included in income in determining such Consolidated Net Income, (ii) the
amount, if any, by which Working Capital increased during such period, (iii) the
amount of Capital Expenditures of ASI and its Consolidated Subsidiaries
(determined without giving effect to clause (I) of the further proviso in the
definition of "Capital Expenditures") during such period (excluding (A) Capital
Expenditures to the extent attributable to Capital Leases or otherwise financed
by the incurrence of Indebtedness, other than Loans and (B) Capital Expenditures
in connection with the repair, restoration or replacement of any property or
asset that suffered any casualty, to the extent of insurance proceeds), (iv) the
amount, if any, by which Net Joint Venture Investments increased during such
period, (v) the amount, if any, of items included in income in determining such
Consolidated Net Income representing cash received and included in calculating
"Cash Available for Principal Payments" in a previous period pursuant to
<PAGE> 13
8
clause (d) above and (vi) to the extent not deducted in determining such
Consolidated Net Income, the amount of premiums paid in cash by ASI and its
Consolidated Subsidiaries during such period in connection with the prepayment
or redemption of Indebtedness and the amount of debt issuance costs paid in cash
by ASI and its Consolidated Subsidiaries during such period in connection with
the incurrence of Indebtedness; provided, however, that (1) for purposes of
calculating Cash Available for Principal Payments, Consolidated Net Income shall
be determined without regard to any gains, losses, taxes or expenses resulting
from or incurred in connection with a Prepayment Event, and (2) if the income
(loss) of any Excluded Subsidiary was excluded for purposes of determining such
Consolidated Net Income for such period, then all the accounts of such Excluded
Subsidiary also shall be excluded for all purposes of calculating Cash Available
for Principal Payments for such period, as though such Excluded Subsidiary were
an unconsolidated Joint Venture during the entire period.
"Cash Equivalents" shall mean (i) marketable securities issued or
directly and fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States of America is pledged in support thereof) having maturities of
not more than six months from the date of acquisition, (ii) time deposits and
certificates of deposit of any domestic commercial bank of recognized standing
having capital and surplus in excess of $500,000,000 with maturities of not more
than six months from the date of acquisition, (iii) repurchase obligations with
a term of not more than seven days for underlying securities of the types
described in clause (i) entered into with any bank or other financial
institution meeting the qualifications specified in clause (ii) above; provided
that the terms of such repurchase agreements comply with the guidelines set
forth in the Federal Financial Institutions Examination Council Supervisory
Policy-Repurchase Agreements of Depository Institutions with Securities Dealers
and Others, as adopted by the Comptroller of the Currency on October 31, 1985 or
any successor guidelines, and (iv) commercial paper issued by the parent
corporation of any domestic commercial bank of recognized standing having
capital and surplus in excess of $500,000,000, and commercial paper rated at
least A-2 or the equivalent thereof by S&P or at least P-2 or the equivalent
thereof by Moody's and in each case maturing within six months after the date of
acquisition.
"Cash Pooling Arrangement" shall mean an arrangement among a single
depository institution and two or more Foreign Subsidiaries in the same
jurisdiction involving the pooling of cash deposits by such Foreign Subsidiaries
for cash management purposes.
A "Change in Control" shall be deemed to have occurred if (a) any
person or group (within the meaning of Rule 13d-5 of the Securities and Exchange
Commission as in effect on the date hereof) other than Kelso and its officers,
directors and Affiliates, the ESOP and officers, directors and employees of
Holding, ASI and their respective Subsidiaries shall own directly or indirectly,
beneficially or of record, shares representing more than 30% of the aggregate
ordinary voting power of the outstanding capital stock of Holding and Kelso and
its officers, directors and Affiliates, the ESOP and officers, directors and
employees of Holding, ASI and their respective Subsidiaries shall at such time
beneficially own, directly or indirectly, in the aggregate a lesser percentage
of the total voting power of the outstanding capital stock of Holding than such
other person or group and shall not have the right or ability by voting power,
contract or otherwise to elect or cause the election of a majority of the Board
of Directors of Holding; (b) a majority of the seats on the Board of Directors
of Holding shall at any time have been occupied by persons who were neither
nominated nor appointed by the Board of Directors of Holding or by Kelso; (c)
any person or group, other than Kelso and its officers, directors and
Affiliates, the ESOP and officers, directors and employees of Holding, ASI and
their respective Subsidiaries, shall otherwise Control Holding; (d) at any time,
Holding shall cease to directly own 100%
<PAGE> 14
9
of the capital stock of ASI other than preferred stock with an aggregate
liquidation preference not to exceed $100,000; or (e) a change in control (or
similar event, however denominated) shall occur under and as defined in any
indenture to which ASI is party.
"Charges" shall have the meaning specified in Section 10.06.
CIBL" shall mean Chase Investment Bank Limited, a United Kingdom
corporation.
"Code" shall mean the Internal Revenue Code of 1986, as the same may
be amended from time to time.
"Collateral" shall mean all the collateral pledged or purported to
be pledged pursuant to any of the Security Documents.
"Collateral Agent" shall mean, in respect of any Security Document,
the Administrative Agent or other person acting as collateral agent, mortgagee,
grantee, collateral trustee or other representative thereunder on behalf of the
holders of the Obligations secured thereby.
"Commitment Fee" shall have the meaning specified in Section
2.05(b).
"Commitments" shall mean, with respect to any Lender, such Lender's
Periodic Access Loan Commitment, U.S. $ Revolving Credit Commitment and
Multi-Currency Revolving Credit Commitment and, in the case of the Swingline
Lender, the Swingline Commitment.
"Consolidated Capital Expenditures" shall mean, with respect to a
person, the Capital Expenditures of such person and its Consolidated
Subsidiaries, determined on a consolidated basis in accordance with the
definition of the term "Capital Expenditures" and otherwise in accordance with
GAAP; provided, that in computing the Consolidated Capital Expenditures of ASI
for any period, (i) any Capital Expenditure shall be excluded to the extent the
consideration for such Capital Expenditure consisted of common stock of Holding
and (ii) any acquisition of a company, a division of a company or a similar
business unit (or of substantially all the assets and business of any of the
foregoing) for total consideration (including Funded Debt incurred or assumed)
in excess of $20,000,000 shall be excluded if ASI shall so elect and if such
acquisition shall be permitted under paragraph (l) of Section 6.05.
"Consolidated EBITDA" shall mean for any person, without
duplication, for any period for which such amount is being determined, the sum
for such period of (i) Consolidated Net Income, (ii) provision for taxes based
on income, (iii) Consolidated Interest Expense, (iv) Special Charges, (v) the
accelerated write off in accordance with GAAP of purchased research and
development associated with the Contemplated Acquisition and any other
Acquisition as shall be reflected in ASI's financial statements delivered
pursuant to Section 5.01(a) and (b) and (vi) other noncash items (including
depreciation expense and amortization expense) reducing Consolidated Net Income,
all as determined on a consolidated basis for such person and its Consolidated
Subsidiaries in accordance with GAAP.
"Consolidated Free Cash Flow" shall mean, for any period,
Consolidated EBITDA for such period minus Consolidated Capital Expenditures for
such period.
<PAGE> 15
10
"Consolidated Interest Expense" shall mean, with respect to any
person, for any period for which such amount is being determined, total interest
expense (including that properly attributable to Capital Leases in accordance
with GAAP and amortization of debt discount and debt issuance costs) of such
person and its Consolidated Subsidiaries on a consolidated basis, including all
capitalized interest, all commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financings and net
costs under Interest Rate Protection Agreements (including amortization of
discount) and Currency Protection Agreements.
"Consolidated Net Income" shall mean, for any person for any period
for which such amount is being determined, the net income (loss) of such person
and its Consolidated Subsidiaries during such period determined on a
consolidated basis for such period taken as a single accounting period in
accordance with GAAP; provided that there shall be excluded (i) income (or loss)
of any person (other than a Consolidated Subsidiary of the person in respect of
which Consolidated Net Income is being determined) in which any other person
(other than such person or any of its Consolidated Subsidiaries) has an equity
interest, except to the extent of the amount of dividends or other distributions
actually paid to such person or any of its Consolidated Subsidiaries by such
other person during such period, (ii) the income (or loss) of any person accrued
prior to the date it becomes a Consolidated Subsidiary of such person or is
merged into or consolidated with such person or any of its Consolidated
Subsidiaries or the person's assets are acquired by such person or any of its
Consolidated Subsidiaries, (iii) the income (or loss) of any Consolidated
Subsidiary of such person that is an Excluded Subsidiary, except to the extent
of the amount of dividends or other distributions actually paid to such person
or any of its Consolidated Subsidiaries (other than to another Excluded
Subsidiary) by such Excluded Subsidiary during such period, (iv) any after-tax
gains (but not pretax losses) attributable to sales of assets out of the
ordinary course of business, (v) premium expense and write-offs of financing
costs deducted in connection with the prepayment or redemption of Indebtedness
and (vi) fees, royalties or dividends received in connection with the
establishment and activities of, and reinvested in, any LDC Holding Company or
Joint Ventures in which such LDC Holding Company participates. If a Consolidated
Subsidiary is an Excluded Subsidiary at the time of any determination or
calculation pursuant to this Agreement involving a determination of Consolidated
Net Income for any period, then, for purposes of such determination or
calculation, such Consolidated Subsidiary shall be deemed to have been an
Excluded Subsidiary for the entire period (regardless of whether such Subsidiary
was not an Excluded Subsidiary during such period), and if at such time a
Consolidated Subsidiary is not an Excluded Subsidiary, then, for purposes of
such determination or calculation, such Consolidated Subsidiary shall be deemed
not to have been an Excluded Subsidiary at any time during such period
(regardless of whether such Subsidiary was an Excluded Subsidiary at any time
during such period).
"Consolidated Rental Payments" shall mean, for any period, the
aggregate amount of all rents paid or payable under all Operating Leases of such
person and its Consolidated Subsidiaries (including Excluded Subsidiaries) as
lessee (net of sublease income), all as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Subsidiaries" shall mean, for any person, all
Subsidiaries of such person that should be consolidated with such person for
financial reporting purposes in accordance with GAAP; provided, however, that a
Subsidiary that is an Excluded Subsidiary shall be considered to be a Joint
Venture, and not a "Consolidated Subsidiary", at the times and for the periods
determined as provided in the definition of the term "Consolidated Net Income".
<PAGE> 16
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"Consolidated Total Debt" shall mean, for any person, all
Indebtedness of such person and its Consolidated Subsidiaries (other than
Indebtedness referred to in clauses (h), (i) and (j) of the definition of such
term), determined on a consolidated basis in accordance with GAAP, provided that
there shall be excluded $25,000,000 of any Indebtedness permitted pursuant to
Section 6.04(u).
"Contemplated Acquisition" shall mean the acquisition referred to in
Amendment No.1 to Registration Statement on Form S-3, Registration No.
333-18015, of American Standard Companies Inc. as filed with the SEC on January
24, 1997; provided that the consideration paid for such acquisition shall be
approximately $250,000,000.
"Contractual Obligation", as applied to any person, shall mean any
provision of any security issued by that person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and "Controlling" and "Controlled" shall have meanings correlative
thereto.
"Credit Documents" shall mean this Agreement, the Assignment and
Amendment Agreement, the Notes, the Letters of Credit, the Security Documents,
the Credit Documents Amendment, the Swingline Loan Agreement, the Guarantee
Documents and the Issuing Bank Agreements.
"Credit Documents Amendment" shall mean the Credit Documents
Amendment Agreement, dated as of February 9, 1995, among Holding, ASI, certain
Subsidiaries of ASI and Chemical Bank, as collateral agent.
"Credit Facility" shall mean a category of Commitments and
extensions of credit thereunder. For purposes hereof, each of the following
comprise a separate Credit Facility: (i) the Periodic Access Loan Commitments
and Periodic Access Loans; (ii) the U.S. $ Revolving Credit Commitments, U.S. $
Revolving Credit Loans and U.S. $ L/C Exposure; and (iii) the Multi-Currency
Revolving Credit Commitments, Swingline Exposure, Multi-Currency Revolving
Credit Loans and Multi-Currency L/C Exposure.
"Credit Parties" shall mean Holding, the Borrowers and the
Subsidiary Guarantors and each other Subsidiary that is or becomes a member of
the EEIG Borrower.
"CSI" shall mean Chase Securities Inc., a Delaware corporation.
"Currency Protection Agreement" shall mean any foreign exchange
contract, currency swap agreement or other financial agreement or arrangement
designed to protect against fluctuations in currency values.
"Default" shall mean any event or condition which upon notice, lapse
of time or both would constitute an Event of Default.
<PAGE> 17
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"Denomination Date" shall mean, in relation to any Alternative
Currency Borrowing, the date that is three Business Days before the date such
Borrowing is made.
"Designated Obligations" shall mean all Obligations of the Credit
Parties in respect of (a) principal of and interest on the Loans and (b) Fees,
whether or not the same shall at the time of any determination be due and
payable under the terms of the Credit Documents.
"Designated Subsidiary" shall mean a Subsidiary of which ASI owns,
directly or through one or more other Subsidiaries, capital stock representing
more than 95% of the ordinary voting power.
"Deutsche Marks" or "DM" shall mean lawful money of Germany.
"Dollar Equivalent" shall mean, with respect to an amount of any
Alternative Currency on any date, the amount of Dollars that may be purchased
with such amount of such Alternative Currency at the Spot Exchange Rate with
respect to such Alternative Currency on such date.
"Dollars" or "$" shall mean lawful money of the United States of
America.
"Domestic Guarantee" shall mean the Amended, Consolidated and
Restated Guarantee dated as of June 1, 1993, by Holding, ASI, and the Subsidiary
Guarantors which are Domestic Subsidiaries, as amended and supplemented from
time to time in accordance with the terms thereof and hereof.
"Domestic Obligations" shall mean all Obligations of Holding, ASI
and the Domestic Subsidiaries.
"Domestic Securities Pledge Agreements" shall mean the securities
pledge agreements dated as of June 1, 1993, between the Collateral Agent and
Holding, ASI and certain Subsidiary Guarantors that are Domestic Subsidiaries,
as amended, supplemented or otherwise modified from time to time in accordance
with the terms thereof and hereof.
"Domestic Subsidiary" shall mean a direct or indirect subsidiary of
ASI which is not a Foreign Subsidiary.
"Dutch Borrower" shall mean WABCO Standard Trane B.V., a corporation
organized under the laws of the Kingdom of the Netherlands.
"Dutch Guilders" or "g" or "fl" shall mean lawful money of the
Kingdom of the Netherlands.
"EEIG Borrower" shall mean Standard Europe, a European Economic
Interest Grouping organized by French and Italian Subsidiaries of ASI to act as
a Borrower hereunder.
"Effective Date" shall mean January 31, 1997.
"Election Date" shall have the meaning specified in Section 2.04(b).
<PAGE> 18
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"11-3/8% Senior Debentures" shall mean ASI's 11-3/8% Senior
Debentures Due 2004.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as the same may be amended from time to time.
"ERISA Affiliate", as applied to any Borrower, shall mean any trade
or business (whether or not incorporated) that is a member of a group of which
such Borrower is a member and which is treated as a single employer under
Section 414 of the Code.
"ESOP" shall mean the American-Standard Employee Stock Ownership
Plan created pursuant to an instrument entitled "American-Standard Employee
Stock Ownership Plan" and dated as of April 23, 1988, as amended from time to
time.
"Event of Default" shall have the meaning specified in Article VII.
"Excess Cash Flow" shall mean, for any period, the excess, if any,
of Cash Available for Principal Payments for such period over the sum of (a) all
principal payments (including cash payments in respect of accreted and
zero-coupon interest obligations) made by ASI and its Consolidated Subsidiaries
during such period as required repayments pursuant to the terms of any
Indebtedness of ASI or any of its Subsidiaries permitted under this Agreement
(including the Loans), but excluding (i) any such principal payments made in
respect of the Loans pursuant to Section 2.11, (ii) any such principal payments
to the extent refinanced with the incurrence of other Indebtedness, (iii) any
such principal payments in respect of Indebtedness of the type described in
clause (h) or (i) of the definition of the term "Indebtedness", (iv) any such
principal payments in respect of Intercompany Indebtedness, (v) any such
principal payments in respect of Indebtedness described in any of clauses (e)
(other than prepayments which permanently reduce the amount of a Permitted
Receivables Financing), (f), (g), (h), (i), (l), (n), (p), (q), (s) or (t) of
Section 6.04 and (vi) any such principal payments in respect of Indebtedness
incurred after the date hereof in reliance upon clause (o) of Section 6.04 and
(b) the aggregate amount by which the Total Periodic Access Commitment was
reduced during such period pursuant to Section 2.10(b); provided, however, that
if the accounts of any Excluded Subsidiary were excluded for purposes of
determining Cash Available for Principal Payments for such period, then any
principal payments made by such Excluded Subsidiary during such period shall be
disregarded for purposes of calculating Excess Cash Flow for such period.
"Excluded Subsidiary" shall mean (i) any Foreign Subsidiary of ASI
that is prevented from paying dividends or similar distributions by any
applicable law, rule, regulation or order of any Governmental Authority outside
the United States, or the payment of dividends or similar distributions by such
Foreign Subsidiary would, by reason of any such law, rule, regulation or order,
be subject to materially burdensome conditions or costs that render payment of
such dividends or distributions commercially unreasonable, in each case as
reasonably determined by the Board of Directors of ASI, and (ii) any Subsidiary
of a Foreign Subsidiary referred to in the preceding clause (i); provided,
however, that a Borrower shall not be an Excluded Subsidiary. A Foreign
Subsidiary shall constitute an Excluded Subsidiary upon delivery to the
Administrative Agent of a certificate executed by the Secretary or an Assistant
Secretary of ASI certifying that ASI's Board of Directors has determined that
such Foreign Subsidiary is an Excluded Subsidiary in accordance with the terms
of this Agreement, and thereafter such Foreign Subsidiary and its Subsidiaries
shall be considered Excluded Subsidiaries unless and until the Administrative
Agent receives a certificate executed by the Secretary or an Assistant Secretary
of ASI certifying that ASI's Board of Directors has determined that such Foreign
Subsidiary
<PAGE> 19
14
shall no longer constitute an Excluded Subsidiary due to a material change in
the applicable law, rule, regulation or order that resulted in the designation
of such Subsidiary as an Excluded Subsidiary.
"Excluded Taxes" shall mean any present or future taxes, duties,
levies, imposts or other governmental charges on or measured by the overall net
income of any Lender or its applicable lending office or branch (including any
advance payment of such taxes, duties, levies, imposts or other governmental
charges collected by means of withholding), and all franchise taxes, taxes on
doing business or taxes measured by capital or net worth imposed on any Lender
or its applicable lending office or branch, (i) imposed by the jurisdiction
under the laws of which such Lender is organized, or in which its principal
executive office is located, or by any country within which any such
jurisdiction is located or any political subdivision thereof; (ii) imposed by
the jurisdiction in which the applicable lending office or branch of such Lender
is located, or in which its principal executive office is located, or by any
country within which any such jurisdiction is located or any political
subdivision thereof; or (iii) imposed by any other jurisdiction, but only to the
extent such taxes, duties, levies, imposts, assessments or other governmental
charges would not have been imposed but for any other connection between the
jurisdiction imposing such tax, duty, levy, impost, assessment or other
governmental charge and such Lender or such applicable lending office or branch
(other than a connection arising from this Agreement or any transaction
contemplated hereby). For purposes of this definition, "Lender" shall have the
meaning ascribed to it in Section 2.18(i)(ii).
"Fees" shall mean the Commitment Fees, the L/C Participation Fees,
the Upfront Fees, the Issuing Bank Fees and the Agent and Administrative Fees.
"Finance Subsidiary" shall mean a special purpose subsidiary engaged
solely in purchasing, owning and financing receivables as part of a Permitted
Receivables Financing.
"Financial Officer" of any corporation shall mean the chief
financial officer, principal accounting officer, Treasurer or Controller of such
corporation.
"Foreign Cash Equivalents" shall mean (i) direct obligations issued
or unconditionally guaranteed by the government of the country in which any
Borrower is incorporated or has its principal place of business, or the
government of the country in which the Foreign Subsidiary investing therein is
incorporated or has its principal place of business, in each case having
maturities of not more than six months from the date of acquisition and (ii)
direct demand obligations of principal banking institutions located in any such
country.
"Foreign Guarantees" shall mean the guarantees executed and
delivered by the Subsidiary Guarantors who are Foreign Subsidiaries, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof.
"Foreign Pension Plan" shall mean any pension plan or other deferred
compensation plan, program or arrangement maintained by any Foreign Subsidiary
which, under applicable local law, is required to be funded through a trust or
other funding vehicle.
"Foreign Securities Pledge Agreements" shall mean the pledge
agreements and similar agreements between (a) the Collateral Agent and certain
Foreign Subsidiaries, (b) the EEIG Borrower and certain Foreign Subsidiaries and
(c) the EEIG Borrower and the Collateral Agent, in each case as
<PAGE> 20
15
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof and hereof.
"Foreign Subsidiary" shall mean each direct or indirect Subsidiary
of ASI which was created or organized under the laws of a jurisdiction other
than the United States of America, any state thereof or the District of
Columbia.
"Foreign Supplemental Documents" shall have the meaning specified in
Section 5.11(b).
"French Francs" or "FFr." shall mean lawful money of France.
"Funded Debt" of any person shall mean all Indebtedness of such
person described in clauses (a), (b), (c), (d), (f), (g) and (i) of the
definition of "Indebtedness" which, by its terms or by the terms of any
instrument or agreement relating thereto, matures, or which is otherwise
payable, more than one year from, or is directly or indirectly renewable or
extendable at the option of the debtor to a date more than one year (including
an option of the debtor under a revolving credit or similar agreement obligating
the lender or lenders to extend credit over a period of more than one year) from
the date on which Funded Debt is to be determined.
"GAAP" shall mean United States generally accepted accounting
principles.
"German Borrower" shall mean WABCO Standard GmbH, a corporation
organized under the laws of Germany.
"Governmental Authority" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"Guarantee" of or by any person shall mean any obligation,
contingent or otherwise, of such person guaranteeing or having the economic
effect of guaranteeing any Indebtedness of any other person (the "primary
obligor") in any manner, whether directly or indirectly, and including any
obligation of such person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness, (b) to purchase property, securities or
services for the purpose of assuring the owner of such Indebtedness of the
payment of such Indebtedness or (c) to maintain working capital, equity capital
or other financial statement condition or liquidity of the primary obligor so as
to enable the primary obligor to pay such Indebtedness; provided, however, that
the term Guarantee shall not include (i) endorsements for collection or deposit,
in either case in the ordinary course of business or (ii) any agreement by ASI
or a Subsidiary thereof to provide working capital to one of its Subsidiaries,
if such agreement is entered into as consideration for obligations incurred by
such Subsidiary for the benefit of ASI or any of its other Subsidiaries and such
agreement is not enforceable by third parties. The amount of any Guarantee shall
be deemed to be an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Guarantee is made or, if not stated
or determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such person is required to perform thereunder); provided, however,
that the amount of any Guarantee that, by its terms, limits the amount payable
thereunder to a stated or determinable amount shall not exceed such stated or
determinable amount.
<PAGE> 21
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"Guarantee Documents" shall mean the Domestic Guarantee, the Foreign
Guarantees and any Supplemental Guarantees.
"Guarantor" shall mean each of Holding, ASI and each Subsidiary
Guarantor.
"Holding" shall have the meaning specified in the heading of this
Agreement.
"Indebtedness" of any person shall mean (a) all obligations of such
person for borrowed money, (b) all obligations of such person evidenced by
bonds, debentures, notes or similar instruments, (c) all obligations of such
person under conditional sale or other title retention agreements relating to
property or assets purchased by such person (other than customary reservations
or retentions of title under agreements with suppliers entered into in the
ordinary course of business), (d) all obligations of such person issued or
assumed as the deferred purchase price of property or services purchased by such
person (other than trade debt incurred in the ordinary course of business and
due within six months of the incurrence thereof) which would appear as
liabilities on a balance sheet of such person, (e) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such person, whether or not the obligations secured thereby have
been assumed, (f) all Guarantees by such person of Indebtedness of others, (g)
all Capital Lease Obligations of such person, (h) all obligations of such person
in respect of interest rate protection agreements, foreign currency exchange
agreements, commodity purchase or option agreements or other interest or
exchange rate or commodity price hedging arrangements or credit derivatives
(including any other credit risk protection arrangements) and (i) all
obligations (contingent or otherwise) of such person as an account party in
respect of letters of credit (other than (x) documentary letters of credit
(including commercial and trade letters of credit) issued to secure payment
obligations in respect of goods and services in the ordinary course of business
and (y) letters of credit and surety bonds with respect to obligations of such
person to the extent such obligations are accounted for as liabilities in the
financial records of such person) and bankers' acceptances; provided that in
determining the amount of any Indebtedness, Guarantees of such Indebtedness
shall not be taken into account to the extent the guaranteed Indebtedness is
itself taken into account. The Indebtedness of any person shall include the
Indebtedness of any partnership in which such person is a general partner,
except to the extent such Indebtedness is not reflected in the consolidated
financial statements of such person and neither ASI nor any of its Subsidiaries
(other than a Subsidiary owning no assets other than the general partnership
interest in such partnership) shall have any direct or contingent liability for
such Indebtedness.
"Indemnitees" shall have the meaning specified in Section 10.01(b).
"Index Debt" shall mean the senior unsecured non-credit enhanced
long-term public indebtedness for borrowed money of ASI.
"Information Memorandum" shall mean the Confidential Information
Memorandum dated January 1997 prepared by CSI and The Chase Manhattan Bank from
information provided by ASI and third parties and relating to the transactions
contemplated hereby.
"Intercompany Indebtedness" shall mean any Indebtedness of ASI or
any Subsidiary of ASI which, in the case of ASI, is owing to any Subsidiary of
ASI and which, in the case of any Subsidiary of ASI, is owing to ASI or any
other Subsidiary of ASI.
<PAGE> 22
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"Intercompany Merger and Transfer Conditions" shall mean, in the
case of any liquidation, dissolution, winding up, merger, consolidation or
transfer or acquisition of assets, (a) that no Event of Default or Default shall
have occurred and be continuing; (b) that after giving effect to such
transaction, (i) except in the case of any transfer or acquisition of less than
substantially all the assets of any person, the surviving or resulting person or
the person acquiring or succeeding to the assets of one or more other persons
shall have assumed or become responsible by operation of law for all the
Obligations of the other person or persons involved in such transfer or
acquisition; (ii) the assets and anticipated cash flows of each Borrower and the
Borrower Group which is involved in such transaction will, in the good faith
judgment of ASI, be adequate to support the Obligations of such Borrower and
Borrower Group, as the case may be, without giving effect to guarantees and
Liens provided or granted by persons which are not members of the same Borrower
Group; and (iii) the capital stock and other ownership interests involved in
such transaction will have been subjected, upon completion of such transaction,
to Liens under the Security Documents to secure the Obligations of the members
of the Borrower Group owning such capital stock and ownership interests and the
other Obligations to the maximum extent practicable without giving rise to (A)
any violation of applicable law, (B) liability of the officers, directors or
shareholders of ASI or any of its Subsidiaries, (C) violation of the provisions
of any joint venture or other material agreement governing or binding ASI or
such Subsidiary, (D) any deemed dividend to ASI or any of its domestic
subsidiaries under Section 956 (or any successor provision) of the Code, (E)
material risk of any of the foregoing or (F) costs which ASI and the Collateral
Agent shall determine to be excessive in relation to the benefits that would be
conferred by such additional instruments or documents (and each Lender and
Issuing Bank authorizes the Collateral Agent, acting in good faith, to make such
determination); (c) that such transaction shall have been carried out in good
faith for valid business purposes and not with a view to limiting or avoiding
any claims or security interests of the Lenders or the Collateral Agent; and (d)
that, in the case of any such transaction involving (i) assets (other than
capital stock or other ownership interests) with a book value in excess of
$50,000,000 or the equivalent thereof in another currency or (ii) capital stock
or other ownership interests with a book value in excess of $25,000,000 or the
equivalent thereof in another currency, ASI shall have delivered to the
Administrative Agent an Officers' Certificate stating that the conditions set
forth in clauses (a), (b) and (c) above (to the extent applicable) have been
satisfied.
"Interest Payment Date" shall mean, with respect to any Borrowing,
the last day of each Interest Period applicable thereto and, in the case of any
LIBOR Borrowing with an Interest Period of more than three months' duration,
each day that would have been an Interest Payment Date for such Borrowing had
successive Interest Periods of three months' duration been applicable to such
Borrowing and, in addition, the date of any refinancing or conversion of such
Borrowing with or to a Borrowing of a different Type.
"Interest Period" shall mean (a) as to any LIBOR Borrowing, the
period commencing on the date of such Borrowing or on the last day of the
immediately preceding Interest Period applicable to such Borrowing, as the case
may be, and ending on the numerically corresponding day (or, if there is no
numerically corresponding day, on the last day) in the calendar month that is 1,
2, 3 or 6 months thereafter, as the applicable Borrower may elect, (b) as to any
ABR Borrowing (other than a Swingline Loan), the period commencing on the date
of such Borrowing and ending on the earlier of (i) the next succeeding day which
shall be the last day of any of January, April, July or October and (ii) the
Maturity Date and (c) as to any Swingline Loan, the period commencing on the
date of such Swingline Loan and ending on the earlier of (i) the day that is
five Business Days thereafter and (ii) the Maturity Date; provided, however,
that if any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless, in
the case of a LIBOR
<PAGE> 23
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Borrowing only, such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day. Interest shall accrue from and including the first day
of an Interest Period to but excluding the last day of such Interest Period.
"Interest Rate Determination Date" shall mean, with respect to a
LIBOR Borrowing, the date which is two Business Days prior to the commencement
of the Interest Period for such Borrowing.
"Interest Rate Protection Agreement" shall mean any interest rate
swap agreement, interest rate cap agreement or other financial agreements or
arrangements designed to protect against fluctuations in interest rates.
"Investment", as applied to any person, shall mean any direct or
indirect purchase or other acquisition by that person of, or beneficial interest
of that person in, stock or other securities of any other person or any direct
or indirect loan, advance (other than advances to employees for purchases of
stock pursuant to any employee benefit plan or arrangement of ASI or any
Subsidiary, moving and travel expenses, drawing accounts and other customary
expenditures, and security deposits, in each case in the ordinary course of
business) or capital contribution by that person to any other person, including
all indebtedness and accounts receivable from that other person which (i) are
not current assets or (ii) did not arise from sales to that other person in the
ordinary course of business and consistent with past practice. The amount of any
Investment shall be the original cost of such Investment plus the cost of all
additions thereto, without any adjustments for increases or decreases in value,
or write-ups, write-downs or write-offs with respect to such Investment, less
the amount of such Investment returned in cash.
"Issuing Bank" shall mean any Lender which shall from time to time
be party to an Issuing Bank Agreement with ASI and the Administrative Agent.
"Issuing Bank Agreement" shall mean an agreement in substantially
the form of Exhibit E.
"Issuing Bank Fees" shall have the meaning specified in Section
2.05(c).
"Italian Lire" or "LIT" shall mean lawful money of Italy.
"Joint Venture" shall mean (i) as to a person, a corporation,
partnership or other legal entity or arrangement in which such person has an
equity Investment, but that is not a subsidiary of such person, and (ii) an
Excluded Subsidiary.
"Judgment Currency" shall have the meaning specified in Section
10.14.
"Judgment Currency Conversion Date" shall have the meaning specified
in Section 10.14.
"Kelso" shall mean Kelso & Company, Inc., a Delaware corporation.
"LASG" shall mean The Chase Manhattan Bank's Loan and Agency
Services Group.
<PAGE> 24
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"L/C Disbursement" shall mean a Multi-Currency L/C Disbursement or
U.S. $ L/C Disbursement, as the case may be.
"L/C Participation Fee" shall have the meaning specified in Section
2.05(c).
"LDC Holding Company" shall mean a holding company organized or
which may be organized by ASI as a vehicle for holding stock or other ownership
interests in various joint ventures in lesser developed countries, including the
Peoples Republic of China and India, and any special purpose Subsidiary
organized exclusively to hold the equity of any such holding company and owning
no other assets.
"Lenders" shall have the meaning specified in the heading of this
Agreement and shall include any person that becomes a "Lender" as contemplated
by Section 10.04.
"Letter of Credit" shall mean any U.S. $ Letter of Credit or
Multi-Currency Letter of Credit.
"LIBO Rate" shall mean, with respect to any LIBOR Borrowing for any
Interest Period, (i) the interest rate per annum for deposits for a maturity
most nearly comparable to such Interest Period in the currency in which such
Borrowing is denominated which appears on page 3740 or 3750, as applicable, of
the Dow Jones Telerate Screen as of 11:00 a.m., London time, on the day that is
two Business Days prior to the first day of such Interest Period or, (ii) if
such a rate does not appear on page 3740 or 3750, as applicable, of the Dow
Jones Telerate Screen, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the rate at which deposits in the
currency in which such Borrowing is denominated approximately equal in principal
amount to the Loan of the Administrative Agent, in its capacity as a Lender (or,
if the Administrative Agent is not a Lender in respect of such Borrowing, then
the Loan of the Lender in respect of such Borrowing with the greatest Loan
amount), included in such LIBOR Borrowing and for a maturity comparable to such
Interest Period are offered to the principal London office of the Administrative
Agent or such Lender in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time (or, if such LIBOR Borrowing is
denominated in Sterling, in immediately available funds in the Paris interbank
market at approximately 11:00 a.m., Paris time), on the relevant Interest Rate
Determination Date.
"LIBOR Borrowing" shall mean a Borrowing comprised of LIBOR Loans.
"LIBOR Loan" shall mean any Loan bearing interest at a rate
determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article II.
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed
of trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement relating to such asset and
(c) in the case of securities, any purchase option, call or similar right of a
third party (other than the issuer) with respect to such securities (other than
rights arising under the American Standard Companies Inc. Stock Incentive Plan).
"Loan" shall mean a Periodic Access Loan, a U.S. $ Revolving Credit
Loan, a Multi-Currency Revolving Credit Loan or a Swingline Loan.
<PAGE> 25
20
"Louisiana Facility" shall mean the assets comprising the
manufacturing facility of the SCI/Heatcraft/Copesub Joint Venture located in
Natchitoches, Louisiana.
"Managing Agents" shall mean the Lenders listed under such caption
on the signature pages of this Agreement.
"Margin Stock" shall have the meaning given such term under
Regulation U.
"Materially Adverse Effect" shall mean (a) a materially adverse
effect on the business, operations, condition (financial or otherwise) or assets
of (i) ASI and its Subsidiaries taken as a whole or (ii) the German Borrower and
its Subsidiaries taken as a whole, or (b) impairment of rights or benefits
material to the interests of the Lenders and available to the Lenders, the
Issuing Banks, the Administrative Agent or the Collateral Agent under the terms
of the Credit Documents.
"Maturity Date" shall mean January 31, 2002.
"Maximum Available Amount" shall have the meaning specified in
Article VII.
"Maximum Rate" shall have the meaning specified in Section 10.06.
"Moody's" shall mean Moody's Investors Service, Inc.
"Multi-Currency L/C Disbursement" shall mean a payment or
disbursement made by an Issuing Bank pursuant to a Multi-Currency Letter of
Credit.
"Multi-Currency L/C Exposure" shall mean at any time the sum of (a)
the aggregate undrawn amount of all outstanding Multi-Currency Letters of Credit
at such time that are denominated in Dollars, plus (b) the Assigned Dollar Value
at such time of the aggregate undrawn amount of all outstanding Multi-Currency
Letters of Credit at such time that are denominated in Alternative Currencies,
plus (c) the aggregate principal amount of all Multi-Currency L/C Disbursements
denominated in Dollars that have not yet been reimbursed at such time, plus (d)
the Assigned Dollar Value at such time of the aggregate principal amount of all
Multi-Currency L/C Disbursements denominated in Alternative Currencies that have
not yet been reimbursed at such time. The Multi-Currency L/C Exposure of any
Multi-Currency Revolving Credit Lender at any time shall mean its Applicable
Percentage of the aggregate Multi-Currency L/C Exposure at such time.
"Multi-Currency Letter of Credit" shall mean a Letter of Credit
issued by an Issuing Bank pursuant to Section 2.19 on behalf of Lenders holding
Multi-Currency Revolving Credit Commitments (including the Scheduled Letters of
Credit deemed to have been so issued pursuant to Section 2.19).
"Multi-Currency Revolving Credit Borrowing" shall mean a Borrowing
comprised of Multi-Currency Revolving Credit Loans.
"Multi-Currency Revolving Credit Commitment" shall mean, with
respect to any Lender at any time, the commitment (if any) of such Lender to
make loans pursuant to Section 2.01(b), to acquire participations in
Multi-Currency Letters of Credit pursuant to Section 2.19 and to acquire
participations in Swingline Loans pursuant to Section 2.20. Subject to Section
10.04, the amount of
<PAGE> 26
21
each Lender's Multi-Currency Revolving Credit Commitment is the amount set forth
opposite such Lender's name in Schedule II under the caption "Multi-Currency
Revolving Credit Commitment", as such amount may be permanently terminated or
from time to time permanently reduced pursuant to Section 2.10.
"Multi-Currency Revolving Credit Exposure" shall mean, with respect
to any Lender at any time, the sum of (a) the aggregate principal amount at such
time of all outstanding Multi-Currency Revolving Credit Loans of such Lender
denominated in Dollars, plus (b) the Assigned Dollar Value at such time of the
aggregate principal amount at such time of all outstanding Multi-Currency
Revolving Credit Loans of such Lender that are Alternative Currency Loans, plus
(c) the aggregate amount at such time of such Lender's Swingline Exposure, plus
(d) the aggregate amount at such time of such Lender's Multi-Currency L/C
Exposure.
"Multi-Currency Revolving Credit Lender" shall mean a Lender with a
Multi-Currency Revolving Credit Commitment.
"Multi-Currency Revolving Credit Loan" shall mean any loan made by a
Lender pursuant to its Multi-Currency Revolving Credit Commitment.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA to which a Borrower or any ERISA Affiliate (other
than one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
Section 414 of the Code) is making or accruing an obligation to make
contributions, or has within any of the preceding five plan years made or
accrued an obligation to make contributions.
"Net Cash Proceeds" shall mean the gross amount of cash
consideration (including any cash received in respect of any non-cash
consideration) received by Holding, ASI or any of their Subsidiaries in respect
of any sale, transfer or other disposition of any property or other asset
(including capital stock or Indebtedness issued by, or accounts receivable from,
or other claims against, another person) or any interests therein, or the
issuance of any Securities by such person, or the issuance or incurrence by such
person of any Indebtedness, or other event requiring a calculation of "Net Cash
Proceeds" hereunder, net of (a) incremental taxes, if any, directly incurred and
payable by Holding, ASI or any such Subsidiary as a result thereof or as a
result of transfers of such consideration to a Borrower or Borrowers in order to
make a prepayment hereunder in respect of any such transaction constituting a
Prepayment Event or other event requiring a calculation of "Net Cash Proceeds",
(b) the amount of reasonable reserves for any liabilities retained in connection
with such transaction, (c) any other reasonable expenses and other costs
directly incurred and payable to unaffiliated third parties as a result thereof,
including amounts, if any, payable pursuant to Section 2.14 as a result of such
transaction or other event requiring a calculation of "Net Cash Proceeds" and
(d) in the case of any such cash consideration received by a Subsidiary other
than a Designated Subsidiary, the portion of such consideration (net of amounts
referred to in clauses (a), (b) and (c) above attributable to taxes,
liabilities, expenses and other costs incurred by such Subsidiary) that would be
distributable in respect of minority interests if such consideration were
distributed as a dividend or similar distribution.
"Net Joint Venture Investments" shall mean, for any period, an
amount equal to (a) the aggregate amount of Investments made by ASI and its
Consolidated Subsidiaries (other than Excluded Subsidiaries) in Joint Ventures
during such period in cash, Cash Equivalents and Foreign Cash Equivalents, minus
(b) the aggregate amount of cash, Cash Equivalents and Foreign Cash Equivalents
<PAGE> 27
22
received by ASI and its Consolidated Subsidiaries (other than Excluded
Subsidiaries) during such period in respect of Investments in Joint Ventures,
but excluding any such receipts to the extent included in determining
Consolidated Net Income for such period, all determined on a consolidated basis.
Net Joint Venture Investments for any period may be a positive or negative
number. Net Joint Venture Investments increase for a period when they are
positive and decrease for a period when they are negative.
"9-1/4% Sinking Fund Debentures" shall mean ASI's 9-1/4% Sinking
Fund Debentures Due 2016.
"1993 Credit Agreement" shall mean the Credit Agreement, dated as of
June 1, 1993, among ASI Holding Corporation, American Standard Inc., certain
subsidiaries of American Standard Inc., the lenders, managing agents and
co-agents named therein and Chemical Bank, as administrative agent and arranger,
as such 1993 Credit Agreement may before the date hereof have been amended,
supplemented or modified.
"1995 Credit Agreement" shall mean the Amended and Restated Credit
Agreement dated as of February 9, 1995, among ASI, Holding, certain subsidiaries
of ASI, the lenders, managing agents and co-agents named therein and Chemical
Bank, as administrative agent and arranger, as heretofore amended and in effect
prior to the Effective Date.
"Non-Borrower Subsidiary" shall mean any Subsidiary which is not a
Borrower.
"Non-Material Subsidiary" shall mean any Subsidiary of ASI, whether
or not such Subsidiary is a Credit Party, (i) the revenues of which (directly
and together with its Subsidiaries) for the most recent fiscal year of ASI for
which audited financial statements are available were less than 1% of ASI's
consolidated revenues for such fiscal year and (ii) the consolidated total
assets of which as of the date of such financial statements were less than 1% of
ASI's consolidated total assets as of such date; provided that, in the event the
aggregate of the revenues or consolidated total assets of all such Non-Material
Subsidiaries exceeds 5% of ASI's consolidated revenues for such fiscal year or
5% of ASI's consolidated total assets as of such date, respectively, ASI (or, in
the event ASI has failed to do so within 10 days, the Administrative Agent)
shall designate sufficient Subsidiaries to be excluded from the definition of
"Non-Material Subsidiary" to eliminate such excess, and such designated
Subsidiaries shall not constitute Non-Material Subsidiaries. Revenues and assets
of Foreign Subsidiaries shall be converted into Dollars at the rates used for
purposes of preparing the consolidated balance sheet of ASI included in such
financial statements.
"Non-Redeemable Preferred Stock" shall mean any preferred stock that
is not, by its terms or by the terms of any agreement or instrument pursuant to
which such preferred stock was issued, required to be redeemed at any fixed
date, or redeemable at the option of the holder thereof at any time.
"Notes" shall mean the promissory notes executed and delivered as
provided in Section 2.06 or Section 2.20.
"Notice of Interest Rate Election" shall have the meaning specified
in Section 2.04(b).
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23
"Obligations" shall mean (a) the Borrowers' obligations in respect
of the due and punctual payment of principal of and interest on the Loans and
L/C Disbursements when and as due whether at maturity, by acceleration, upon one
or more dates set for prepayment or otherwise, (b) all Fees, expenses,
indemnities, expense reimbursement obligations and other obligations, monetary
or otherwise, of the Borrowers under this Agreement or any other Credit Document
and (c) all obligations, monetary or otherwise, of each other Credit Party under
each Credit Document to which it is a party.
"Obligation Currency" shall have the meaning specified in Section
10.14.
"Officers' Certificate" shall mean, as applied to any corporation, a
certificate executed on behalf of such corporation by its Chairman of the Board
(if an officer) or its President or one of its Vice Presidents and by its Chief
Financial Officer or its Treasurer or, in the case of Foreign Subsidiaries,
officers or persons performing comparable functions.
"Operating Lease" shall mean, as applied to any person, any lease
(including, without limitation, leases which may be terminated by the lessee at
any time) of any property (whether real, personal or mixed) which is not a
Capital Lease other than any such lease under which that person is the lessor.
"Organizational Documents" shall mean, with respect to any person,
if such person is a corporation, its charter and by-laws, if any, or if such
person is a partnership, its certificate of partnership, if any, and partnership
agreement and, in each case, any stockholder or similar agreements between and
among the holders of ownership interests in such person.
"Other Taxes" shall have the meaning specified in Section 2.18(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred
to and defined in ERISA, or any successor thereto.
"Pension Plan" shall mean any employee pension benefit plan which is
subject to the provisions of Title IV of ERISA and which is maintained for
employees of ASI or any of its Subsidiaries or any ERISA Affiliate of ASI or any
of its Subsidiaries, other than a Multiemployer Plan.
"Perfection Certificate" shall mean an updated certificate
substantially in the form of Exhibit F, duly executed by a Financial Officer and
a legal officer of ASI or a Subsidiary, duly completed and accompanied by the
attachments contemplated thereby.
"Periodic Access Availability Period" shall mean any period of 30
consecutive days commencing on a date specified by ASI by notice to the
Administrative Agent, which notice shall be given not less than 10 days prior to
the commencement of such period; provided, however, that (a) the first Periodic
Access Availability Period shall not commence prior to June 1, 1997, (b) no
Periodic Access Availability Period shall commence within 3 months following the
commencement of any previous Periodic Access Availability Period and (c) not
more than two Periodic Access Availability Periods shall occur in any single
calendar year.
"Periodic Access Borrowing" shall mean a Borrowing comprised of
Periodic Access Loans.
<PAGE> 29
24
"Periodic Access Lender" shall mean a Lender with a Periodic Access
Loan Commitment.
"Periodic Access Loan" shall mean any loan made by a Lender pursuant
to its Periodic Access Loan Commitment.
"Periodic Access Loan Commitment" shall mean, with respect to any
Lender, the commitment (if any) of such Lender to make loans pursuant to Section
2.01(c). Subject to Section 10.04, the amount of each Lender's Periodic Access
Loan Commitment is the amount set forth opposite such Lender's name in Schedule
II under the caption "Periodic Access Loan Commitment", as such amount may be
permanently terminated or from time to time reduced pursuant to Section 2.10.
"Periodic Access Loan Exposure" shall mean, with respect to any
Lender at any time, the sum of (a) the aggregate principal amount at such time
of all outstanding Periodic Access Loans of such Lender denominated in Dollars,
plus (b) the Assigned Dollar Value at such time of the aggregate principal
amount at such time of all outstanding Periodic Access Loans of such Lender that
are Alternative Currency Loans.
"Permitted Encumbrances" shall mean:
(i) Liens for taxes, assessments or governmental charges or claims
the payment of which is not at the time required by Section 5.04;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and suppliers and other liens imposed
by law or pursuant to customary reservations or retentions of title, in
each case incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith, if such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have
been made therefor;
(iii) with respect to assets other than Collateral, Liens (other
than any Lien imposed by ERISA) incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the performance
of tenders, statutory obligations, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
(iv) Liens in connection with attachments or judgments (including
judgment or appeal bonds) not in excess of $25,000,000 in the aggregate
(exclusive of any amount adequately covered by insurance as to which the
insurance company has acknowledged coverage and exclusive of amounts in
respect of attachments the enforcement of which has been stayed pending
appeal and judgments execution of which has been stayed pending appeal)
unless the judgments secured shall, within 60 days after the entry
thereof, not have been discharged or execution thereof not stayed pending
appeal, or shall not have been discharged within 30 days after the
expiration of any such stay;
(v) leases or subleases granted to others not interfering in any
material respect with the business of ASI or any of its Subsidiaries;
<PAGE> 30
25
(vi) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the
business of ASI or any of its Subsidiaries;
(vii) any interest or title of a lessor under any lease permitted by
Section 6.06;
(viii) Liens arising from UCC financing statements (or equivalent
filings, registrations or agreements in foreign jurisdictions) relating to
leases permitted by this Agreement;
(ix) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(x) deed restrictions to ensure non-disturbance of legally
permitted, permanent on-site waste storage/ treatment facilities;
(xi) normal and customary rights of setoff upon deposits of cash in
favor of banks or other depository institutions;
(xii) Liens on the capital stock of SCI owned by ASI and Liens on
the partnership interest in Alliance Compressors, a Delaware general
partnership ("Alliance Compressors"), held by SCI, in each case resulting
from the rights of purchase in favor of Copesub, Inc. and Heatcraft
Technologies Inc. relating to such capital stock and partnership interest
as set forth in Sections 12.3 and 12.5 of the Amended and Restated
Partnership Agreement dated as of December 31, 1996 among SCI, Heatcraft
Technologies Inc. and Copesub, Inc.; provided that such Sections are in
form and substance substantially similar to those contained in the
12/17/96 draft of such Amended and Restated Partnership Agreement; and
(xiii) Liens arising under Mortgages and other Security Documents
(as defined in the 1995 Credit Agreement) and other related filings
securing obligations under the 1995 Credit Agreement (except to the extent
such Security Documents and filings relate to the Collateral retained
hereunder) that are not released, satisfied or discharged on the Effective
Date.
"Permitted Receivables Financing" shall mean any sale by ASI and its
Subsidiaries of accounts receivable to a Receivables Purchaser in a true sale
transaction without any recourse based upon the collectibility of the accounts
receivable sold and the sale or pledge of such accounts receivable (or an
interest therein) by such Receivables Purchaser, in each case without any
Guarantee by or other recourse to ASI or any Subsidiary (other than to such
Receivables Purchaser, if it is a Finance Subsidiary); provided that (i) such
accounts receivable arise out of U.S. sales of products by ASI's Air
Conditioning Products Segment and/or Plumbing Products Segment, (ii) the
aggregate amount of uncollected accounts receivable held by such Receivables
Purchaser or otherwise subject to any such transaction at any time shall not
exceed $150,000,000 in the aggregate, (iii) the Administrative Agent shall be
satisfied with the structure and documentation for such transaction and that the
terms of such transaction, including the discount at which accounts receivable
are sold to such Receivables Purchaser and any termination events, shall be
consistent with those prevailing in the market at the time for similar
transactions rated AA or better by S&P or having comparable ratings from other
rating agencies and (iv) such transaction shall not by its terms terminate or be
subject to reduction in amount for at least five years, other than by reason of
the occurrence of an event of default or termination event.
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"person" shall mean any natural person, corporation, business trust,
joint venture, association, company, partnership or government, or any agency or
political subdivision thereof.
"Prepayment Event" shall mean (a) any sale, transfer or other
disposition of any property or other asset (including capital stock or
Indebtedness issued by, or accounts receivable from, or other claims against,
another person) or any interest therein (other than the grant, conveyance or
other transfer of a Lien, to the extent permitted by Section 6.03) by Holding,
ASI or any of their Subsidiaries, including any transaction effected in reliance
upon Section 6.02(a)(ii), but excluding (i) any such transaction effected in
reliance upon Sections 6.02(a)(iii), 6.02(a)(iv)(A) or (B) or 6.02(a)(vi), (ii)
any such transaction effected in the ordinary course of business in reliance
upon Section 6.02(a)(v), (iii) any such sale, transfer or other disposition made
by ASI or any Subsidiary thereof to ASI or any Subsidiary thereof (other than an
Excluded Subsidiary) and (iv) sales, transfers or other dispositions of assets
or portions of businesses acquired in the Contemplated Acquisition or an
Acquisition; provided that each such sale, transfer or disposition is identified
in writing to the Administrative Agent within 6 months of the related
Acquisition or the Contemplated Acquisition, as applicable, and is made for fair
market value (as determined in the good faith judgment of the seller) in an
arm's-length transaction that is completed within 12 months of the
identification of such transaction or (b) the issuance or incurrence by Holding,
ASI or any of their Subsidiaries of any Indebtedness (other than any
Indebtedness permitted by Section 6.04), or the issuance or sale by Holding, ASI
or any of their Subsidiaries of any debt securities or any obligations
convertible into or exchangeable for, or giving any person or entity any right,
option or warrant to acquire from Holding, ASI or any of their Subsidiaries any
Indebtedness or any such debt securities or any such convertible or exchangeable
obligations (other than any such debt securities or convertible or exchangeable
obligations permitted by Section 6.04), in an aggregate amount greater than
$20,000,000. Notwithstanding the foregoing, the term "Prepayment Event" shall
not include sales, transfers or other dispositions of any properties or other
assets for Net Cash Proceeds not exceeding in the aggregate $50,000,000 in any
calendar year; provided that at any time when the Net Cash Proceeds received in
connection with any such sale, transfer and other disposition, together with the
aggregate Net Cash Proceeds received in connection with all other such sales,
transfers and other dispositions during the same calendar year, shall exceed
$50,000,000, a "Prepayment Event" shall be deemed to have occurred and the
resultant prepayment in connection with such Prepayment Event shall equal the
amount by which the aggregate Net Cash Proceeds received in connection with such
sales, transfers and other dispositions exceeds $50,000,000.
"Real Property" shall mean each of the interests in real estate or
leasehold estates owned by ASI or any of its Subsidiaries, together with, in
each case, all improvements and appurtenant fixtures and easements.
"Receivables Purchaser" shall mean either a Finance Subsidiary or a
financial institution or trust that purchases receivables in connection with a
Permitted Receivables Financing.
"Redemption Amount" shall mean at any time (a) the sum of (i) the
Net Cash Proceeds of any public offering after January 1, 1995 of common stock
or Non-Redeemable Preferred Stock of Holding, plus (ii) the amount, if any, of
Excess Cash Flow of ASI for each fiscal year (commencing with the fiscal year
ending December 31, 1995) for which financial statements shall have been
delivered under Section 5.01(b), plus (iii) the Net Cash Proceeds resulting from
the exercise of stock options pursuant to the American Standard Companies Inc.
Stock Option Plan and other sales of shares of common stock of Holding to
employees of ASI or any of its Subsidiaries for cash plus (iv) the Net Cash
Proceeds resulting from the issuance of capital stock pursuant to the exercise
of warrants originally
<PAGE> 32
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issued pursuant to the Stock Disposition Agreement minus (b) the aggregate
amount of the cash or other consideration (at the book value thereof), other
than Non-Redeemable Preferred Stock and common stock of Holding, paid after
January 1, 1995 in connection with (i) Acquisitions (other than the Contemplated
Acquisition), (ii) any prepayment, redemption or repurchase solely in reliance
on clause (ii) of Section 6.07(b) of the Indebtedness specified therein (other
than Indebtedness prepaid, redeemed or repurchased on or prior to January 1,
1995) and (iii) repurchases of common stock of Holding (other than as
contemplated by Section 3.04(a)(C)).
"Register" shall have the meaning specified in Section 10.04(d).
"Regulation D" shall mean Regulation D of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation G" shall mean Regulation G of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Related Claims" shall mean (a) in respect of any Borrower, all
obligations of such Borrower in respect of any Loans and L/C Disbursements that
comprise a single Credit Facility and are denominated in the same currency and
(b) in respect of any other Credit Party, all obligations of such Credit Party
in respect of any Loans and L/C Disbursements that are denominated in the same
currency.
"Related Lenders" shall mean all Lenders holding Related Claims.
"Reportable Event" shall mean any reportable event as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Pension Plan (other than a Pension Plan maintained by an ERISA Affiliate which
is considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
Section 414 of the Code).
"Reporting Divisions" shall mean each of the business units of ASI
and its Subsidiaries and subdivisions thereof, as utilized from time to time by
ASI for internal reporting purposes.
"Required Documentation" shall have the meaning specified in Section
2.18(e).
"Required Lenders" shall mean, at any time, Lenders having Loans
(excluding Swingline Loans), Multi-Currency L/C Exposure, U.S. $ L/C Exposure,
Swingline Exposure and unused Commitments (excluding the Swingline Commitment)
representing a majority of the sum of all Loans (excluding Swingline Loans),
Multi-Currency L/C Exposure, U.S. $ L/C Exposure, Swingline Exposure and unused
Commitments (excluding the Swingline Commitment) at such time. For purposes of
determining the Required Lenders, any amounts denominated in an Alternative
Currency shall be translated into Dollars at the Spot Exchange Rates in effect
on the Effective Date.
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"Responsible Officer" of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer or
similar official thereof responsible for the administration of the obligations
of such corporation in respect of this Agreement.
"Restricted Junior Payment" shall mean (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of ASI or Holding, now or hereafter outstanding, except (a) a dividend or other
distribution payable solely in shares of stock of ASI or Holding, as the case
may be, or options, rights or warrants to acquire the same and (b) a dividend or
distribution in respect of the rights associated with the common stock of
Holding, whether by way of redemption of such rights or otherwise, (ii) any
redemption, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class of stock
of ASI or Holding now or hereafter outstanding, (iii) any payment or prepayment
of principal of, premium, if any, or interest on, redemption, purchase,
retirement, defeasance, sinking fund or similar payment with respect to, any
Subordinated Indebtedness, (iv) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock of ASI or Holding now or hereafter outstanding,
except payments in respect of rights associated with the common stock of
Holding, whether by way of redemption of such rights or otherwise, in an
aggregate amount not to exceed $5,000,000 and (v) any loan or advance to
Holding.
"Restricted Subsidiary" shall have the meaning specified in the
Senior Indentures.
"Revolving Credit Borrowing" shall mean a Borrowing comprised of
U.S. $ Revolving Credit Loans or Multi-Currency Revolving Credit Loans.
"Revolving Credit Commitments" shall mean the U.S. $ Revolving
Credit Commitments and the Multi-Currency Revolving Credit Commitments.
"Revolving Credit Exposures" shall mean the U.S. $ Revolving Credit
Exposures and the Multi-Currency Revolving Credit Exposures.
"Revolving Credit Lenders" shall mean the U.S. $ Revolving Credit
Lenders and the Multi-Currency Revolving Credit Lenders.
"Revolving Credit Loan" shall mean any U.S. $ Revolving Credit Loan
or Multi-Currency Revolving Credit Loan.
"Scheduled Letters of Credit" shall mean the letters of credit
listed on Schedule IV that are outstanding on the Effective Date.
"SCI" shall mean Standard Compressors Inc., a Delaware corporation
and a wholly owned subsidiary of ASI.
"SCI/Heatcraft/Copesub Joint Venture" shall mean a Delaware
partnership formed by SCI, Heatcraft Technologies Inc. and Copesub, Inc. and
owned 24.5%, 24.5% and 51%, respectively, at the time of its formation by such
corporations.
"SEC" shall mean the Securities and Exchange Commission.
<PAGE> 34
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"Securities" shall mean any stock, shares, voting trust
certificates, bonds, debentures, options, warrants, notes, or other evidences of
indebtedness, secured or unsecured, convertible, subordinated or otherwise, or
in general any instruments commonly known as "securities" or any certificates of
interest, shares or participations in temporary or interim certificates for the
purchase or acquisition of, or any right to subscribe to, purchase or acquire,
any of the foregoing.
"Security Documents" shall mean the Domestic Securities Pledge
Agreements, the Foreign Securities Pledge Agreements, the Supplemental
Securities Pledge Agreements and any financing statements filed to perfect Liens
created by any of such agreements.
"Senior Indentures" shall mean (i) the Indenture dated as of
November 1, 1986, between ASI and Wilmington Trust Company, as successor
Trustee, relating to the 9-1/4% Sinking Fund Debentures, and (ii) the Indentures
dated as of May 15, 1992, between ASI and First Trust National Association, as
trustee, relating to the 10-7/8% Senior Notes and 11-3/8% Senior Debentures.
"Senior Managing Agents" shall mean the Lenders listed under such
caption on the signature pages of this Agreement.
"S&P" shall mean Standard & Poor's.
"Special Charges" shall mean any charges incurred in 1997 and 1998
in an aggregate amount not to exceed $50,000,000, as reflected in ASI's
financial statements delivered pursuant to paragraphs (a) and (b) of Section
5.01, in connection with programs to establish low cost sourcing by shifting
production to facilities located in Bulgaria, Czech Republic and Mexico.
"Spot Exchange Rate" shall mean, on any day, (a) with respect to any
Alternative Currency, the spot rate at which Dollars are offered on such day by
The Chase Manhattan Bank in London for such Alternative Currency at
approximately 11:00 a.m. (London time), and (b) with respect to Dollars in
relation to any specified Alternative Currency, the spot rate at which such
specified Alternative Currency is offered on such day by The Chase Manhattan
Bank in London for Dollars at approximately 11:00 a.m. (London time). For
purposes of determining the Spot Exchange Rate in connection with an Alternative
Currency Borrowing, such Spot Exchange Rate shall be determined as of the
Denomination Date for such Borrowing with respect to transactions in the
applicable Alternative Currency that will settle on the date of such Borrowing.
"Statutory Reserves" shall mean with respect to any currency, a
fraction (expressed as a decimal), the numerator of which is the number one and
the denominator of which is the number one minus the aggregate of the maximum
reserve, liquid asset or similar percentages (including any marginal, special,
emergency or supplemental reserves) expressed as a decimal established by any
Governmental Authority of the United States or of the jurisdiction of such
currency or in which any subject Loans in such currency are made to which banks
in such jurisdiction are subject for any category of deposits or liabilities
customarily used to fund loans in such currency or by reference to which
interest rates applicable to Loans in such currency are determined. Such
reserve, liquid asset or similar percentages shall, in the case of Dollars,
include those imposed pursuant to Regulation D (and for purposes of Regulation
D, LIBOR Loans shall be deemed to constitute Eurocurrency Liabilities). Loans
shall be deemed to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under Regulation D or any
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other applicable law, rule or regulation. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"Sterling" or "(pound)" shall mean lawful money of the United
Kingdom.
"Stock Disposition Agreement" shall mean the Stock Disposition
agreement dated as of December 16, 1996 among American Standard Companies Inc.,
Kelso & Company, L.P. and Kelso ASI Partners, L.P. and the warrants referred to
therein and issued thereunder.
"Stock Incentive Plan" shall mean the American Standard Companies
Inc. Stock Incentive Plan, as such Stock Incentive Plan may from time to time be
amended, supplemented or modified.
"Stockholder Rights Agreement" shall mean the Stockholders Rights
Agreement of American Standard Companies Inc. dated as of December 2, 1994, as
such Stockholders Rights Agreement may from time to time be amended,
supplemented or modified.
"Subordinated Indebtedness" shall mean Indebtedness of ASI
subordinated in right of payment to the Loans and certain other Indebtedness,
pursuant to documentation, containing interest rates, payment terms, maturities,
amortization schedules, covenants, defaults, remedies, subordination provisions
and other material terms in form and substance satisfactory to and approved in
writing by the Required Lenders. The terms of the Subordinated Indebtedness
identified in clauses (c) and (d) of Section 6.04 are hereby deemed to be
satisfactory to and to have been approved in writing by the Required Lenders.
"Subordinated Securities" shall mean ASI's 10-1/2% Senior
Subordinated Discount Debentures Due 2005 and its 9-7/8% Senior Subordinated
Notes Due 2001, collectively.
"subsidiary" shall mean, with respect to any person (herein referred
to as the "parent"), any corporation, partnership, association or other business
entity of which securities or other ownership interests representing more than
50% of the ordinary voting power or more than 50% of the general partnership
interests are, at the time any determination is being made, owned, controlled or
held by the parent or one or more subsidiaries of the parent or by the parent
and one or more subsidiaries of the parent; provided that the LDC Holding
Companies shall not be deemed subsidiaries of Holding or any Borrower.
"Subsidiary" shall mean, with respect to any Borrower, any
subsidiary of such Borrower. Unless otherwise specified, references to
Subsidiaries generally shall be deemed to refer to subsidiaries of ASI.
"Subsidiary Borrowers" shall have the meaning specified in the
heading of this Agreement.
"Subsidiary Guarantor" shall mean each of the Subsidiaries indicated
on Schedule III as a Subsidiary Guarantor, and each other Subsidiary that
becomes party to a Guarantee Document as contemplated by Section 5.11 or
otherwise.
"Supplemental Documents" shall have the meaning specified in Section
5.11(a).
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"Supplemental Guarantee" shall mean any supplemental guarantee
executed and delivered by a Domestic Subsidiary pursuant to Section 5.11(a) or a
Foreign Subsidiary pursuant to Section 5.11(b) as such supplemental guarantee
shall be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof.
"Supplemental Securities Pledge Agreement" shall mean any
supplemental securities pledge agreement executed and delivered by a Domestic
Subsidiary pursuant to Section 5.11(a) or by a Foreign Subsidiary pursuant to
Section 5.11(b), as such supplemental securities pledge agreement shall be
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof and hereof.
"Swingline Base Rate" shall mean, for any day, with respect to any
Swingline Loan that is an Alternative Currency Loan, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the average rate at
which overnight deposits in the currency in which such Swingline Loan is
denominated and approximately equal in principal amount to such Swingline Loan
are obtainable by the Swingline Lender on such day at its lending office for
such Swingline Loan in the interbank market (or any other market for overnight
funds in such currency utilized by the Swingline Lender), adjusted to reflect
any direct or indirect costs of obtaining such deposits (including costs
analogous to Statutory Reserves and the Assessment Rate, to the extent
applicable). The Swingline Base Rate applicable to any Swingline Loan that is an
Alternative Currency Loan shall be determined for each day by the Swingline
Lender and such determination shall be conclusive absent manifest error.
"Swingline Commitment" shall mean $40,000,000, as such amount shall
be reduced from time to time pursuant to Section 2.20.
"Swingline Exposure" shall mean at any time the sum of (a) the
aggregate principal amount at such time of all outstanding Swingline Loans
denominated in Dollars, plus (b) the Assigned Dollar Value at such time of the
aggregate principal amount at such time of all outstanding Swingline Loans that
are Alternative Currency Loans. The Swingline Exposure of any Multi-Currency
Revolving Credit Lender at any time shall mean its Applicable Percentage of the
aggregate Swingline Exposure at such time.
"Swingline Lender" shall mean The Chase Manhattan Bank.
"Swingline Loan" shall mean any loan made by the Swingline Lender
pursuant to the Swingline Commitment.
"Swingline Loan Agreement" shall mean the Swingline Loan Agreement
dated as of June 1, 1993, among the Borrowers and Chemical Bank, predecessor of
the Swingline Lender.
"Taxes" shall have the meaning assigned to such term in Section
2.18(a).
"10-1/2% Senior Subordinated Discount Debentures" shall mean ASI's
10-1/2% Senior Subordinated Discount Debentures Due 2005.
"10-7/8% Senior Notes" shall mean ASI's 10-7/8% Senior Notes Due
1999.
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"Total Commitment" shall mean, with respect to any Lender at any
time, the aggregate amount of such Lender's Commitments, as in effect at such
time.
"Total Multi-Currency Revolving Credit Commitment" shall mean, at
any time, the aggregate amount of the Multi-Currency Revolving Credit
Commitments, as in effect at such time. The Total Multi-Currency Revolving
Credit Commitment on the Effective Date is U.S. $625,000,000.
"Total Periodic Access Commitment" shall mean, at any time, the
aggregate amount of the Periodic Access Loan Commitments, as in effect at such
time. The Total Periodic Access Commitment on the Effective Date is U.S.
$375,000,000.
"Total Revolving Credit Commitment" shall mean, at any time, the
aggregate amount of the Revolving Credit Commitments, as in effect at such time.
"Total U.S. $ Revolving Credit Commitment" shall mean, at any time,
the aggregate amount of the U.S. $ Revolving Credit Commitments, as in effect at
such time. The Total U.S. $ Revolving Credit Commitment on the Effective Date is
$750,000,000.
"Transactions" shall have the meaning specified in Section 3.05.
"Type", when used in respect of any Loan or Borrowing, shall refer
to the Rate by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined and the currency in which such Loan or
the Loans comprising such Borrowing are denominated. For purposes hereof, "Rate"
shall include the Adjusted LIBO Rate, the Swingline Base Rate and the Alternate
Base Rate and "currency" shall include Dollars and any Alternative Currency
permitted hereunder.
"UCC" shall mean the Uniform Commercial Code.
"Unified Receivables Company" shall mean a finance company referred
to in the definition of Unified Receivables Program.
"Unified Receivables Program" shall mean a program under which ASI
or any of its Subsidiaries receives payment in respect of its customers'
receivables from a finance company and ASI or any of its Subsidiaries agrees to
repurchase certain inventory in order to protect the finance company from loss
in the event any such customers default in the payment of their obligations.
"U.K. Borrower" shall mean American Standard (UK) Co. (formerly
known as American Standard (UK) Limited), a corporation organized under the laws
of the United Kingdom.
"Upfront Fees" shall have the meaning specified in Section 2.05(a).
"U.S. $ L/C Disbursement" shall mean a payment or disbursement made
by an Issuing Bank pursuant to a U.S. $ Letter of Credit.
"U.S. $ L/C Exposure" shall mean at any time the sum of (a) the
aggregate undrawn amount of all outstanding U.S. $ Letters of Credit at such
time, plus (b) the aggregate principal amount of all U.S. $ L/C Disbursements
that have not yet been reimbursed at such time. The U.S. $ L/C
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Exposure of any U.S. $ Revolving Credit Lender at any time shall mean its
Applicable Percentage of the aggregate U.S. $ L/C Exposure at such time.
"U.S. $ Letter of Credit" shall mean a Letter of Credit issued by an
Issuing Bank pursuant to Section 2.19 on behalf of Lenders holding U.S. $
Revolving Credit Commitments (including the Scheduled Letters of Credit deemed
to have been so issued pursuant to Section 2.19).
"U.S. $ Revolving Credit Borrowing" shall mean a Borrowing comprised
of U.S. $ Revolving Credit Loans.
"U.S. $ Revolving Credit Commitment" shall mean, with respect to any
Lender, the commitment (if any) of such Lender to make loans pursuant to Section
2.01(a) and to acquire participations in U.S. $ Letters of Credit pursuant to
Section 2.19. Subject to Section 10.04, the amount of each Lender's U.S. $
Revolving Credit Commitment is the amount set forth opposite such Lender's name
in Schedule II under the caption "U.S. $ Revolving Credit Commitment", as such
amount may be permanently terminated or from time to time permanently reduced
pursuant to Section 2.10.
"U.S. $ Revolving Credit Exposure" shall mean, with respect to any
Lender at any time, the sum of (a) the aggregate principal amount at such time
of all outstanding U.S. $ Revolving Credit Loans of such Lender, plus (b) the
aggregate amount at such time of such Lender's U.S. $ L/C Exposure.
"U.S. $ Revolving Credit Lender" shall mean a Lender with a U.S. $
Revolving Credit Commitment.
"U.S. $ Revolving Credit Loan" shall mean any loan made by a Lender
pursuant to its U.S. $ Revolving Credit Commitment.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
"Working Capital" shall mean, as of any date of determination, an
amount equal to (a) the total assets of ASI and its Consolidated Subsidiaries as
of such date which may properly be classified as current assets in accordance
with GAAP, determined on a consolidated basis in accordance with GAAP, but
excluding (i) cash, Cash Equivalents and Foreign Cash Equivalents and (ii) the
unamortized portion of prepaid expenses, minus (b) the total liabilities of ASI
and its Consolidated Subsidiaries as of such date which may properly be
classified as current liabilities in accordance with GAAP, determined on a
consolidated basis in accordance with GAAP, but excluding (i) current
liabilities in respect of Indebtedness and (ii) any income tax liability in
respect of sales of assets out of the ordinary course of business. Working
Capital as of any date may be a positive or negative number. Working Capital
increases when it becomes more positive or less negative and decreases when it
becomes less positive or more negative, and all such increases and decreases
shall be determined in a manner consistent with that used in preparing ASI's
consolidated statements of cash flows for the same period in accordance with
GAAP.
SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any
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pronoun shall include the corresponding masculine, feminine and neuter forms.
The words "include", "includes" and "including" shall be deemed to be followed
by the phrase "without limitation". All references herein to Articles, Sections,
Exhibits and Schedules shall be deemed references to Articles and Sections of,
and Exhibits and Schedules to, this Agreement unless the context shall otherwise
require. All references herein to any agreement or instrument shall be deemed
references to such agreement or instrument as amended or modified from time to
time, subject to any restrictions herein on the amendment or modification of
such agreement or instrument. Except as otherwise expressly provided herein, all
terms of an accounting or financial nature shall be construed in accordance with
GAAP consistently applied, as in effect from time to time; provided, however,
that, for purposes of determining compliance with any covenant set forth in
Article VI, such terms shall be construed in accordance with GAAP as in effect
on the date of this Agreement applied on a basis consistent with the application
used in preparing ASI's audited financial statements referred to in Section
3.08. All references in Articles III, V, VI and VII of this Agreement to the
Borrowers will be deemed to include the Subsidiaries that own interests in the
EEIG Borrower.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments. (a) Subject to the terms and conditions
and relying upon the representations and warranties herein set forth, each U.S.
$ Revolving Credit Lender agrees, severally and not jointly, to make loans to
one or more of the Borrowers (as specified in the Borrowing Requests with
respect thereto), at any time and from time to time on and after the Effective
Date and until the earlier of the Maturity Date and the termination of the U.S.
$ Revolving Credit Commitment of such Lender in accordance with the terms
hereof, in Dollars, in an aggregate principal amount at any time outstanding
that will not result in (i) such Lender's U.S. $ Revolving Credit Exposure
exceeding (ii) such Lender's U.S. $ Revolving Credit Commitment. The U.S. $
Revolving Credit Commitments may be terminated or reduced from time to time
pursuant to Section 2.10. Within the foregoing limits, the Borrowers may borrow,
pay or prepay and reborrow U.S. $ Revolving Credit Loans hereunder, on and after
the Effective Date and prior to the earlier of the Maturity Date and the
termination of the U.S. $ Revolving Credit Commitments, subject to the terms,
conditions and limitations set forth herein.
(b) Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, each Multi-Currency Revolving
Credit Lender agrees, severally and not jointly, to make loans to one or more of
the Borrowers (as specified in the Borrowing Requests with respect thereto), at
any time and from time to time on and after the Effective Date and until the
earlier of the Maturity Date and the termination of the Multi-Currency Revolving
Credit Commitment of such Lender in accordance with the terms hereof, in Dollars
or one or more Alternative Currencies (as specified in the Borrowing Requests
with respect thereto), in an aggregate principal amount at any time outstanding
that will not result in (i) such Lender's Multi-Currency Revolving Credit
Exposure exceeding (ii) such Lender's Multi-Currency Revolving Credit
Commitment. The Multi-Currency Revolving Credit Commitments may be terminated or
reduced from time to time pursuant to Section 2.10. Within the foregoing limits,
the Borrowers may borrow, pay or prepay and reborrow Multi-Currency Revolving
Credit Loans hereunder, on and after the Effective Date and prior to the earlier
of the Maturity Date and the termination of the Multi-Currency Revolving Credit
Commitments, subject to the terms, conditions and limitations set forth herein.
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(c) Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, each Periodic Access Lender
agrees, severally and not jointly, to make loans to one or more of the Borrowers
(as specified in the Borrowing Requests with respect thereto), on the Effective
Date and, subject to the limitations provided below, from time to time
thereafter and until the earlier of the Maturity Date and the termination of the
Periodic Access Loan Commitment of such Lender in accordance with the terms
hereof, in Dollars or one or more Alternative Currencies (as specified in the
Borrowing Requests with respect thereto), in an aggregate principal amount at
any time outstanding that will not result in (i) such Lender's Periodic Access
Loan Exposure exceeding (ii) such Lender's Periodic Access Loan Commitment;
provided, however, that Periodic Access Loans shall be made only on the
Effective Date and on not more than two dates within each Periodic Access
Availability Period. The Periodic Access Loan Commitments may be terminated or
reduced from time to time pursuant to, Section 2.10. Within the foregoing
limits, the Borrowers may borrow, pay or prepay and reborrow Periodic Access
Loans hereunder, on the Effective Date and on not more than two dates within
each Periodic Access Availability Period thereafter and prior to the earlier of
the Maturity Date and the termination of the Periodic Access Loan Commitments,
subject to the terms, conditions and limitations set forth herein.
SECTION 2.02. Loans. (a) Each Loan (other than a Swingline Loan, as
to which this Section 2.02 shall not apply) shall be made as part of a Borrowing
consisting of Loans made by the Lenders ratably in accordance with their
applicable Commitments; provided, however, that the failure of any Lender to
make any Loan shall not in itself relieve any other Lender of its obligation to
lend hereunder (it being understood, however, that no Lender shall be
responsible for the failure of any other Lender to make any Loan required to be
made by such other Lender). The Loans comprising any Borrowing shall be in an
aggregate principal amount which is (i) an integral multiple of $5,000,000 and
not less than $10,000,000 or (ii) equal to the remaining available balance of
the applicable Commitments. The Loans comprising each Alternative Currency
Borrowing shall be made in the Alternative Currency specified in the applicable
Borrowing Request in an amount the Dollar Equivalent of which is the Dollar
amount specified in such Borrowing Request, as determined by the Administrative
Agent as of the Denomination Date for such Borrowing (which determination shall
be conclusive absent manifest error); provided, however, that (A) for purposes
of clause (i) above, each Alternative Currency Borrowing shall be deemed to be
in an aggregate principal amount equal to the Dollar amount specified in the
applicable Borrowing Request for such Borrowing and (B) if the Dollar Equivalent
of an outstanding Multi-Currency Revolving Credit Borrowing denominated in an
Alternative Currency, determined based upon the applicable Spot Exchange Rate as
of the date that is three Business Days before the end of the Interest Period
with respect to such Borrowing, does not exceed by more than 5% the Assigned
Dollar Value of such Borrowing, and if the entire amount of such Borrowing is to
be refinanced with a new Multi-Currency Revolving Credit Borrowing of equivalent
amount in the same currency and by the same Borrower, then such Multi-Currency
Revolving Credit Borrowing may be refinanced without regard to compliance with
clause (i) above and, if so refinanced, shall continue to have the same Assigned
Dollar Value as in effect prior to such refinancing. The Administrative Agent
shall determine the applicable Spot Exchange Rate as of the date three Business
Days before the end of an Interest Period with respect to a Multi-Currency
Revolving Credit Borrowing denominated in an Alternative Currency and shall
promptly notify ASI and the Multi-Currency Revolving Credit Lenders whether the
Dollar Equivalent of such Borrowing exceeds by more than 5% the Assigned Dollar
Value thereof.
(b) Subject to Sections 2.09 and 2.13, each Borrowing shall be
comprised entirely of LIBOR Loans or ABR Loans as the applicable Borrower may
request pursuant to Section 2.03. Each
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Lender may, subject to Section 10.04(j), at its option make any LIBOR Loan or
Alternative Currency Loan by causing any domestic or foreign branch or Affiliate
of such Lender to make such Loan; provided that any exercise of such option
shall not affect the obligation of the applicable Borrower to repay such Loan in
accordance with the terms of this Agreement. Borrowings of more than one Type
may be outstanding at the same time; provided, however, that none of the
Borrowers shall be entitled to request any Borrowing which, if made, would
result in more than 25 LIBOR Borrowings outstanding hereunder at any time. For
purposes of the foregoing, Borrowings having different Interest Periods or
denominated in different currencies, regardless of whether they commence or end
on the same date, shall be considered separate Borrowings.
(c) Subject to paragraph (f) below, each Lender shall make each Loan
to be made by it hereunder on the proposed date thereof by wire transfer to such
account as the Administrative Agent may designate in federal funds (in the case
of any Loan denominated in Dollars) or such other immediately available funds as
may then be customary for the settlement of international transactions in the
relevant currency not later than 11:00 a.m., New York City time, in the case of
fundings to an account in New York City, or 11:00 a.m., local time, in the case
of fundings to an account in another jurisdiction, and the Administrative Agent
shall by 12:00 (noon), New York City time, in the case of fundings to an account
in New York City, or 12:00 (noon), local time, in the case of fundings to an
account in another jurisdiction, credit the amounts so received to an account
designated by the applicable Borrower in the applicable Borrowing Request, which
account must be in the name of such Borrower and in the financial center of the
country of the currency of such Loan (except that, in the case of Loans
denominated in Dollars and in the case of all Loans made on the Effective Date,
such account shall be in either New York or London) or, if a Borrowing shall not
occur on such date because any condition precedent herein specified shall not
have been met, return the amounts so received to the respective Lenders.
(d) Unless the Administrative Agent shall have received notice from
a Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's portion of such Borrowing,
the Administrative Agent may assume that such Lender has made such portion
available to the Administrative Agent on the date of such Borrowing in
accordance with paragraph (c) above and the Administrative Agent may, in
reliance upon such assumption, make available to the applicable Borrower on such
date a corresponding amount in the required currency. If the Administrative
Agent shall have so made funds available then, to the extent that such Lender
shall not have made such portion available to the Administrative Agent, such
Lender and the applicable Borrower severally agree to repay to the
Administrative Agent forthwith on demand such corresponding amount together with
interest thereon in such currency, for each day from the date such amount is
made available to the applicable Borrower until the date such amount is repaid
to the Administrative Agent at (i) in the case of the Borrower, the interest
rate applicable at the time to the Loans comprising such Borrowing and (ii) in
the case of such Lender, a rate determined by the Administrative Agent to
represent its cost of overnight or short-term funds in the relevant currency
(which determination shall be conclusive absent manifest error). If such Lender
shall repay to the Administrative Agent such corresponding amount, such amount
shall constitute such Lender's Loan as part of such Borrowing for purposes of
this Agreement.
(e) Notwithstanding any other provision of this Agreement, none of
the Borrowers shall be entitled to request any LIBOR Borrowing if the Interest
Period requested with respect thereto would end after the Maturity Date. All
Alternative Currency Borrowings shall be LIBOR Borrowings.
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(f) A Borrower may refinance all or any part of a U.S. $ Revolving
Credit Borrowing or Multi-Currency Revolving Credit Borrowing with another U.S.
$ Revolving Credit Borrowing or Multi-Currency Revolving Credit Borrowing, as
the case may be, in the same currency, subject to the conditions and limitations
set forth in this Agreement (including the condition that the Aggregate U.S. $
Revolving Credit Exposure or, subject to clause (B) of the second proviso of
Section 2.02(a) above, the Aggregate Multi-Currency Revolving Credit Exposure,
as applicable, after giving effect thereto will not exceed the Total U.S. $
Revolving Credit Commitment or the Total Multi-Currency Revolving Credit
Commitment, as applicable). Any Revolving Credit Borrowing or part thereof so
refinanced shall be deemed to be repaid or prepaid in accordance with the
applicable provisions of this Agreement with the proceeds of the new Borrowing,
and the proceeds of such new Borrowing, to the extent they do not exceed the
principal amount of the Borrowing being refinanced, shall not be paid by the
applicable Revolving Credit Lenders to the Administrative Agent or by the
Administrative Agent to the applicable Borrower pursuant to paragraph (c) above.
(g) The Administrative Agent shall notify ASI and the U.S. $
Revolving Credit Lenders of the amount of the Aggregate U.S. $ Revolving Credit
Exposure, and shall notify ASI and the Multi-Currency Revolving Credit Lenders
of the amount of the Aggregate Multi-Currency Revolving Credit Exposure,
promptly following the last day of each January, April, July and October.
SECTION 2.03. Borrowing Procedure. In order to request a Borrowing
(other than a Swingline Loan, as to which this Section 2.03 shall not apply), a
Borrower shall hand deliver or telecopy to the Administrative Agent a duly
completed Borrowing Request in the form of Exhibit A (a) in the case of an
Alternative Currency Borrowing and in the case of a LIBOR Borrowing, not later
than 11:00 a.m., New York City time (or, if the Borrowing Request is delivered
or telecopied to the Administrative Agent in London, 1:00 p.m., London time),
three Business Days before a proposed Borrowing and (b) in the case of an ABR
Borrowing denominated in Dollars, not later than 12:00 noon, New York City time,
one Business Day before a proposed Borrowing; provided, however, that Borrowing
Requests with respect to Borrowings to be made on the Effective Date may, at the
discretion of the Administrative Agent, be delivered later than the times
specified above. Each Borrowing Request shall be irrevocable and shall specify
(i) the Borrower requesting such Borrowing (and be signed by or on behalf of
such Borrower); (ii) whether such Borrowing is to be a Periodic Access
Borrowing, a U.S. $ Revolving Credit Borrowing or a Multi-Currency Revolving
Credit Borrowing; (iii) whether the Borrowing then being requested is to be a
LIBOR Borrowing or an ABR Borrowing; (iv) the number and location of the account
to which funds are to be disbursed (which shall be an account that complies with
the requirements of Section 2.02(c) and, in the case of a Borrowing denominated
in Dollars, shall be at an office of the Administrative Agent in New York City
or London); (v) the date of such Borrowing (which shall be a Business Day and,
in the case of a Periodic Access Borrowing to be made after the Effective Date,
shall be within a Periodic Access Availability Period); (vi) the amount of such
Borrowing (which shall be expressed in Dollars, regardless of whether such
Borrowing is an Alternative Currency Borrowing); (vii) the currency of such
Borrowing (which shall be Dollars, in the case of any U.S. $ Revolving Credit
Borrowing or ABR Borrowing, and otherwise shall be Dollars or an Alternative
Currency); and (viii) if such Borrowing is to be a LIBOR Borrowing, the Interest
Period with respect thereto; provided, however, that, notwithstanding any
contrary specification in any Borrowing Request, each requested Borrowing shall
comply with the requirements set forth in Section 2.02. If no election as to the
currency of Borrowing is specified in any such notice, then the requested
Borrowing shall be denominated in Dollars. If no election as to the Type of
Borrowing is specified in any such notice, then the requested Borrowing shall be
an ABR Borrowing if denominated in Dollars or a LIBOR Borrowing if denominated
in an Alternative Currency. If no Interest Period with respect to any LIBOR
Borrowing
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38
is specified in any such notice, then the applicable Borrower shall be deemed to
have selected an Interest Period of one month's duration. The Administrative
Agent shall promptly (and in any event on the same day that the Administrative
Agent receives such notice, if received by 11:00 a.m., New York City time, on
such day) advise the applicable Lenders of any notice given pursuant to this
Section 2.03 (and the contents thereof), of each Lender's portion of the
requested Borrowing and, in the case of an Alternative Currency Borrowing, of
the Alternative Currency amount of such Borrowing and the Spot Exchange Rate
utilized to determine such amount.
If a Borrower in respect of an outstanding Revolving Credit
Borrowing shall not have delivered a Borrowing Request in accordance with this
Section 2.03 prior to the end of the Interest Period then in effect for such
Borrowing and requesting that such Borrowing be refinanced, then such Borrower
shall (unless such Borrower has notified the Administrative Agent, not fewer
than three Business Days prior to the end of such Interest Period, that such
Borrowing is to be repaid at the end of such Interest Period) be deemed to have
delivered a Borrowing Request requesting that such Borrowing be refinanced with
a new Revolving Credit Borrowing of equivalent amount in the same currency, and
such new Borrowing shall be an ABR Borrowing if denominated in Dollars or a
LIBOR Borrowing with an Interest Period of one month's duration if denominated
in an Alternative Currency.
The sum of (a) the aggregate principal amount of Borrowings by the
EEIG Borrower, plus (b) the Aggregate L/C Exposure under Letters of Credit
issued at the request of the EEIG Borrower, at any one time outstanding, shall
not exceed $575,000,000.
SECTION 2.04. Interest Rate Elections; Conversion and Continuation
of Loans. (a) The initial Type of the Loans comprising each Borrowing, and the
duration of the initial Interest Period applicable to such Loans if they are
initially LIBOR Loans, shall be as specified in the applicable Borrowing Request
pursuant to Section 2.03. Thereafter, the applicable Borrower may from time to
time elect to convert or continue the Type of, or the duration of the Interest
Period applicable to, the Loans included in any Borrowing (excluding overdue
Loans and subject in each case to the provisions of the definition of Interest
Period and Sections 2.09 and 2.13), as follows:
(i) if such Loans are ABR Loans, the applicable Borrower may elect
to convert such Loans to LIBOR Loans, may elect to continue such Loans as
ABR Loans for an additional Interest Period, or may elect to convert such
Loans to any combination of ABR Loans and LIBOR Loans; and
(ii) if such Loans are LIBOR Loans, the applicable Borrower may
elect to convert such Loans to ABR Loans, may elect to continue such Loans
as LIBOR Loans for an additional Interest Period, or may elect to convert
such Loans to any combination of ABR Loans and LIBOR Loans.
Notwithstanding the foregoing, a Borrower may not (A) elect to convert the
currency in which any Loans are denominated, (B) elect to convert Alternative
Currency Loans from LIBOR Loans to ABR Loans, (C) elect an Interest Period for
LIBOR Loans that does not comply with Section 2.02(e), (D) elect to convert any
ABR Loans to LIBOR Loans that would result in the number of LIBOR Borrowings
exceeding the maximum number of LIBOR Borrowings permitted under Section
2.02(b), (E) elect an Interest Period for LIBOR Loans unless the aggregate
outstanding principal amount of LIBOR Loans (including any LIBOR Loans made to
such Borrower in the same currency on the date that such Interest Period is to
begin) to which such Interest Period will apply complies with the
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requirements as to minimum principal amount set forth in Section 2.02(a) or (F)
elect to convert or continue any Swingline Loan.
(b) Any election permitted by Section 2.04(a) may become effective
on any Business Day specified by the applicable Borrower (the "Election Date").
Each such election shall be made by the applicable Borrower by delivering or
telecopying a notice (a "Notice of Interest Rate Election") to the
Administrative Agent (x) not later than 11:00 a.m., New York City time, one
Business Day before the Election Date, if all the resulting Loans will be ABR
Loans and (y) not later than 10:00 a.m., New York City time (or, if the Notice
of Interest Rate Election is delivered or telecopied to the Administrative Agent
in London, 1:00 p.m., London time), three Business Days before the Election
Date, if the resulting Loans will include LIBOR Loans. Each Notice of Interest
Rate Election shall specify the outstanding Loans to which such notice applies
and the following information:
(i) the Election Date;
(ii) whether such Loans are to be converted to or continued as ABR
Loans or LIBOR Loans and, if such Loans are to be converted to or
continued as LIBOR Loans, the duration of the Interest Period applicable
thereto; and
(iii) if such Loans are to be converted to a combination of ABR
Loans and LIBOR Loans, the information specified in clause (ii) above as
to each resulting Borrowing and the aggregate amount of each such
Borrowing.
Each Notice of Interest Rate Election shall comply with the provisions of the
definition of Interest Period and the last sentence of Section 2.04(a).
(c) Upon receipt of a Notice of Interest Rate Election, the
Administrative Agent shall promptly notify each Lender of the contents thereof
and of such Lender's share of the resulting Borrowing and such notice shall not
thereafter be revocable by the applicable Borrower.
(d) If a Borrower fails to deliver a timely Notice of Interest Rate
Election to the Administrative Agent electing to convert or continue the Loans
included in any Borrowing as provided in this Section and has not theretofore
delivered a notice of prepayment relating to such Loans, then such Borrower
shall be deemed to have given the Administrative Agent a Notice of Interest Rate
Election electing (i) in the case of Loans denominated in Dollars, to convert
such Loans to (or continue such Loans as) ABR Loans or (ii) in the case of
Alternative Currency Loans, electing to continue such Loans as LIBOR Loans with
an Interest Period of one month, in each case with an Interest Period commencing
on the last day of the then current Interest Period.
(e) Notwithstanding the foregoing, a Borrower shall not be entitled
to specify or elect in any Borrowing Request or Notice of Interest Rate Election
that any Loans denominated in Dollars shall be or become LIBOR Loans if an Event
of Default shall have occurred and be continuing unless the Required Lenders
shall have notified the Administrative Agent that additional LIBOR Loans
denominated in Dollars shall be made available while such Event of Default is
continuing. If an Event of Default shall occur then, unless the Administrative
Agent shall receive such notice from the Required Lenders, thereafter, until all
Events of Default have been cured or waived (or such notice has been received),
each outstanding Loan denominated in Dollars shall be converted to or continued
as an ABR Loan on the last day of its Interest Period and any additional Loans
denominated in Dollars shall be
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made as ABR Loans. The foregoing is without prejudice to the other rights and
remedies available hereunder upon an Event of Default.
SECTION 2.05. Fees. (a) ASI agrees to pay, or cause one or more of
the Borrowers to pay, to each Lender, through the Administrative Agent, and to
the Administrative Agent, on the date hereof and on the Effective Date (to the
extent not previously paid), the fees (the "Upfront Fees") separately agreed to
be payable by ASI to each such Lender and to the Administrative Agent on the
Effective Date.
(b) ASI agrees to pay, or cause one or more of the Borrowers to pay,
to the U.S. $ Revolving Credit Lenders and the Multi-Currency Revolving Credit
Lenders, as appropriate, through the Administrative Agent, on the last day of
January, April, July and October of each year and on the date on which the U.S.
$ Revolving Credit Commitments of the U.S. $ Revolving Credit Lenders and the
Multi-Currency Revolving Credit Commitments of the Multi-Currency Revolving
Credit Lenders shall be terminated as provided herein, a commitment fee (a
"Commitment Fee") equal to the Applicable Rate per annum in effect from time to
time on the average daily unused amount of the Total U.S. $ Revolving Credit
Commitment and the Total Multi-Currency Revolving Credit Commitment, as
applicable, during the preceding quarter (or shorter period commencing with the
Effective Date or ending with the date on which the Total U.S. $ Revolving
Credit Commitment or the Total Multi-Currency Revolving Credit Commitment, as
applicable, shall be terminated).
All Commitment Fees shall be computed on the basis of the actual
number of days elapsed in a year of 360 days. For purposes of calculating
Commitment Fees, any portion of the Total Multi-Currency Revolving Credit
Commitment unavailable due to outstanding Swingline Loans shall be deemed to be
unused amounts of the Total Multi-Currency Revolving Credit Commitment.
Commitment Fees shall commence to accrue on the Effective Date and shall cease
to accrue on the earlier of (i) Maturity Date or (ii) the termination of the
Total U.S. $ Revolving Credit Commitment or the Total Multi-Currency Revolving
Credit Commitment, as applicable. For purposes of this paragraph, the unused
amount of the Total U.S. $ Revolving Credit Commitment on any day shall be
deemed to be the excess, if any, of (i) the Total U.S. $ Revolving Credit
Commitment over (ii) the Aggregate U.S. $ Revolving Credit Exposure on such day.
For purposes of this paragraph, the unused amount of the Total Multi-Currency
Revolving Credit Commitment on any day shall be deemed to be the excess, if any,
of (i) the Total Multi-Currency Revolving Credit Commitment over (ii) the
Aggregate Multi-Currency Revolving Credit Exposure (excluding Swingline
Exposure) on such day.
(c) ASI agrees to pay, or to cause the applicable Account Parties to
pay, (i) to each U.S. $ Revolving Credit Lender and Multi-Currency Revolving
Credit Lender, through the Administrative Agent, on the last day of January,
April, July and October of each year and on the date on which the U.S. $
Revolving Credit Commitment or the Multi-Currency Revolving Credit Commitment of
such Lender shall be terminated as provided herein, a fee (an "L/C Participation
Fee") calculated on each U.S. $ Revolving Credit Lender's Applicable Percentage
of the average daily aggregate U.S. $ L/C Exposure and on each Multi-Currency
Revolving Credit Lender's Applicable Percentage of the average daily aggregate
Multi-Currency L/C Exposure (excluding, in each case, the portion thereof
attributable to unreimbursed L/C Disbursements) during the preceding quarter (or
shorter period commencing with the Effective Date or ending with the Maturity
Date or any date on which the U.S. $ Revolving Credit Commitment or
Multi-Currency Revolving Credit Commitment, as applicable, of such Lender shall
be terminated) at a rate equal to the Applicable Rate from time to time
applicable for purposes of determining the interest rate on Revolving Credit
Borrowings comprised of LIBOR
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Loans pursuant to Section 2.07 and (ii) to the applicable Issuing Bank with
respect to each Letter of Credit the fees specified in its Issuing Bank
Agreement plus, in connection with the issuance, amendment or transfer of any
Letter of Credit or any L/C Disbursement, the applicable Issuing Bank's
customary documentary and processing charges (collectively, the "Issuing Bank
Fees"). All L/C Participation Fees and Issuing Bank Fees shall be computed on
the basis of the actual number of days elapsed in a year of 360 days.
(d) ASI agrees to pay, or to cause one or more of the Borrowers to
pay, to the Administrative Agent, for its own account, agent and administrative
fees (the "Agent and Administrative Fees") at the times and in the amounts
separately agreed upon between ASI and the Administrative Agent.
(e) All Fees shall be paid on the dates due, in immediately
available funds, to the Administrative Agent for distribution, if and as
appropriate, among the Lenders, except that the Issuing Bank Fees shall be paid
directly to the Issuing Bank entitled thereto. Once paid, none of the Fees shall
be refundable under any circumstances.
SECTION 2.06. Repayment of Loans; Notes. (a) Each Borrower agrees
that the outstanding principal balance of its Periodic Access Loans shall be due
and payable on the Maturity Date. All principal payments of Periodic Access
Loans shall be accompanied by accrued interest on the principal amount being
repaid to the date of payment.
(b) Each Borrower agrees that the outstanding principal balance of
each of its Revolving Credit Loans shall be due and payable on the last day of
the Interest Period applicable to such Loan or, if earlier, on the Maturity
Date. All principal payments of Revolving Credit Loans shall be accompanied by
accrued interest on the principal amount being repaid to the date of payment.
(c) Each Borrower shall, at the request of any Lender (including the
Swingline Lender), duly execute and deliver to such Lender a Note, dated the
Effective Date, in substantially the form attached hereto as Exhibit B, with the
blanks appropriately filled, payable to the order of such Lender (or, if such
Lender shall so request, to such Lender or registered assigns). Notwithstanding
any other provision of this Agreement, in the event any Lender shall request and
receive a Note payable to such Lender and its registered assigns, the interests
represented by that Note shall at all times (including after any assignment of
all or part of such interest pursuant to Section 10.04) be represented by one or
more Notes payable to the payee named therein or its registered assigns. The
failure of any Lender to request a Note hereunder shall in no way diminish the
obligation of the applicable Borrower to pay the principal of and interest on
the Loans that would have been evidenced by such Note in accordance with the
terms of this Agreement.
(d) Each Lender shall, and is hereby authorized by each of the
Borrowers to, maintain in accordance with its usual practice records evidencing
the indebtedness of each of the Borrowers to such Lender hereunder from time to
time, including the amounts and types of and the Interest Periods applicable to
the Loans made by such Lender from time to time and the amounts of principal and
interest paid to such Lender from time to time in respect of such Loans.
(e) The entries made in the records maintained pursuant to paragraph
(d) of this Section and in the Register maintained by the Administrative Agent
pursuant to Section 10.04 shall be prima facie evidence of the existence and
amounts of the Loans of the Borrower to which such entries
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42
relate; provided, however, that the failure of any Lender or the Administrative
Agent to maintain or to make any entry in such records or the Register, as
applicable, or any error therein shall not in any manner affect the obligation
of the Borrowers to repay the Loans in accordance with the terms of this
Agreement.
SECTION 2.07. Interest on Loans. (a) Subject to the provisions of
Section 2.08, the Loans comprising each LIBOR Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 360
days) at a rate per annum equal to the Adjusted LIBO Rate for the Interest
Period in effect for such Borrowing plus the Applicable Rate. Interest on each
LIBOR Borrowing shall be payable on each applicable Interest Payment Date. The
Adjusted LIBO Rate for each Interest Period shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error.
(b) Subject to the provisions of Section 2.08, the Loans comprising
each ABR Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of (i) 365 or 366 days, as the case may be,
during any period in which the Alternate Base Rate is based on the Prime Rate,
and (ii) 360 days, during any period in which the Alternate Base Rate is based
on the Base CD Rate or the Federal Funds Effective Rate) at a rate per annum
equal to the Alternate Base Rate. Interest on each ABR Borrowing shall be
payable on each applicable Interest Payment Date. The Alternate Base Rate shall
be determined by the Administrative Agent for each day such determination is
required, and such determination shall be conclusive absent manifest error.
SECTION 2.08. Default Interest. If any Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, whether at scheduled maturity, by notice of prepayment, by
acceleration or otherwise, such Borrower shall on demand from time to time pay
interest, to the extent permitted by law, on such defaulted amount up to (but
not including) the date of actual payment (after as well as before judgment) at,
(a) in the case of principal or interest, the rate that would have been
applicable to such Loan but for such default plus 2% per annum or (b) in the
case of any other amount, a rate (computed on the basis of the actual number of
days elapsed over a year of 360 days) equal to the Alternate Base Rate plus 2%
per annum.
SECTION 2.09. Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a LIBOR Borrowing of any Type the Administrative Agent shall
have determined or shall have been notified by the Required Lenders (a) that
deposits in the principal amounts of the Loans comprising such Borrowing and in
the currency in which such Loans are to be denominated are not generally
available in the relevant market, or that reasonable means do not exist for
ascertaining the Adjusted LIBO Rate, or (b) that the rates at which such
deposits are being offered will not adequately and fairly reflect the cost to
Lenders holding a material amount of the Loans included in such LIBOR Borrowing
of making or maintaining their LIBOR Loans during such Interest Period, the
Administrative Agent shall, in a timely manner, give written or telecopy notice
of such determination to the Borrowers and the Lenders. In the event of any such
determination, until the Administrative Agent shall have advised the Borrowers
and the Lenders that the circumstances giving rise to such notice no longer
exist, any request by a Borrower for a LIBOR Borrowing of the affected Type or
in the affected currency, or a conversion to or continuation of a LIBOR
Borrowing of the affected Type or in the affected currency, pursuant to Section
2.03 or 2.04 shall be deemed rescinded. Each determination by the Administrative
Agent hereunder shall be conclusive absent manifest error.
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SECTION 2.10. Termination and Reduction of Commitments. (a) The
Commitments shall be automatically terminated on the Maturity Date.
(b) Upon at least three Business Days' prior irrevocable written or
telecopy notice to the Administrative Agent, ASI (on behalf of all the
Borrowers) may at any time in whole permanently terminate, or from time to time
in part permanently reduce, the U.S. $ Revolving Credit Commitments, the
Multi-Currency Revolving Credit Commitments or the Periodic Access Loan
Commitments; provided, however, that (i) each partial reduction of the U.S. $
Revolving Credit Commitments or the Multi-Currency Revolving Credit Commitments
shall be in an integral multiple of $5,000,000 and in a minimum principal amount
of $10,000,000, (ii) the Total U.S. $ Revolving Credit Commitment shall not be
reduced to an amount that is less than the U.S. $ L/C Exposure at the time,
(iii) the Total Multi-Currency Revolving Credit Commitment shall not be reduced
to an amount that is less than the sum of the Multi-Currency L/C Exposure and
Swingline Exposure at the time and (iv) a termination or reduction of the
Periodic Access Loan Commitments under this paragraph shall be permitted subject
to Section 2.11(b).
(c) The Periodic Access Loan Commitments shall be reduced at the
times and in the amounts specified in Section 2.11.
(d) Each reduction in the Periodic Access Loan Commitments hereunder
shall be made ratably among the Periodic Access Lenders in accordance with their
respective Periodic Access Loan Commitments. Each reduction in the U.S. $
Revolving Credit Commitments shall be made ratably among the U.S. $ Revolving
Credit Lenders in accordance with their respective U.S. $ Revolving Credit
Commitments, and each reduction in the Multi-Currency Revolving Credit
Commitments shall be made ratably among the Multi-Currency Revolving Credit
Lenders in accordance with their respective Multi-Currency Revolving Credit
Commitments. ASI shall pay to the Administrative Agent for the accounts of the
Revolving Credit Lenders, on the date of each termination or reduction of the
Revolving Credit Commitments, the Commitment Fees on the amount of such
Commitments so terminated or reduced accrued through the date of such
termination or reduction.
SECTION 2.11. Prepayment. (a) Voluntary Prepayments. Each Borrower
shall have the right at any time and from time to time to prepay any Borrowing,
in whole or in part, upon giving written or telecopy notice (or telephone notice
promptly confirmed by written or telecopy notice) to the Administrative Agent
before 11:00 a.m., New York City time (or, in the case of prepayment of an
Alternative Currency Borrowing in respect of which previous notices have been
delivered to the Administrative Agent in London, then to the Administrative
Agent in London before 1:00 p.m., London time), three Business Days prior to
prepayment; provided, however, that (i) each partial prepayment under this
paragraph shall be in an amount which is an integral multiple of $5,000,000 (or
the equivalent based upon Assigned Dollar Values) and not less than $10,000,000
(or the equivalent based upon Assigned Dollar Values), (ii) a partial prepayment
of a LIBOR Borrowing under this paragraph shall not be made that would result in
the remaining aggregate outstanding principal amount thereof being less than the
minimum principal amount that would be required pursuant to Section 2.02(a) in
respect of a LIBOR Borrowing made on the date of such prepayment (determined
based upon Assigned Dollar Values in the case of Multi-Currency Revolving Credit
Borrowings and Periodic Access Borrowings), and (iii) a prepayment of a Periodic
Access Borrowing under this paragraph shall not be permitted except during a
Periodic Access Availability Period and only if one or more Periodic Access
Borrowings are made on the same date as such prepayment resulting in the
Aggregate Periodic Access Loan Exposure being equal to the Total Periodic Access
Commitment after giving effect to all
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Borrowings and prepayments, and all reductions of the Total Periodic Access
Commitment, made on such date.
(b) Required Periodic Access Prepayments. (i) In the event of any
termination of the Periodic Access Loan Commitments, each Borrower shall repay
or prepay all its outstanding Periodic Access Borrowings on the date of such
termination.
(ii) In the event of any partial reduction of the Periodic Access
Loan Commitments, then (A) at or prior to the effective date of such reduction,
the Administrative Agent shall notify ASI and the Lenders having Periodic Access
Loan Commitments of the Aggregate Periodic Access Loan Exposure and (B) if the
Aggregate Periodic Access Loan Exposure would exceed the Total Periodic Access
Commitment after giving effect to such reduction, then ASI shall, on the date of
such reduction, cause the Borrowers to repay or prepay Periodic Access
Borrowings having an Assigned Dollar Value in an amount sufficient to eliminate
such excess.
(iii) In the event that at the end of any Interest Period in respect
of a Periodic Access Borrowing the Assigned Dollar Value thereof shall either
increase or decrease, then (A) at or prior to the end of such Interest Period,
the Administrative Agent shall notify ASI and the Lenders having Periodic Access
Loan Commitments of the amount of such increase or decrease and of the resulting
Aggregate Periodic Access Loan Exposure and (B) in the case of an increase, if
the resulting Aggregate Periodic Access Loan Exposure would exceed the Total
Periodic Access Commitment after giving effect to such increase, then ASI shall,
on the date such increase becomes effective, cause the Borrower in respect of
such Periodic Access Borrowing to repay or prepay a portion thereof in an amount
sufficient to reduce the Assigned Dollar Value of such Borrowing to an amount
equal to the Assigned Dollar Value thereof before giving effect to such
increase.
(c) Required Revolving Credit Prepayments. (i) In the event of any
termination of the U.S. $ Revolving Credit Commitments or the Multi-Currency
Revolving Credit Commitments, each Borrower shall repay or prepay all its
outstanding U.S. $ Revolving Credit Borrowings or Multi-Currency Revolving
Credit Borrowings, as the case may be, on the date of such termination.
(ii) In the event of any partial reduction of the U.S. $ Revolving
Credit Commitments or the Multi-Currency Revolving Credit Commitments, then (A)
at or prior to the effective date of such reduction, the Administrative Agent
shall notify ASI and the Revolving Credit Lenders of the Aggregate U.S. $
Revolving Credit Exposure or the Aggregate Multi-Currency Revolving Credit
Exposure, as the case may be, and (B) if the Aggregate U.S. $ Revolving Credit
Exposure would exceed the Total U.S. $ Revolving Credit Commitment or the
Aggregate Multi-Currency Revolving Credit Exposure would exceed the Total
Multi-Currency Revolving Credit Commitment after giving effect to such
reduction, then ASI shall, on the date of such reduction, cause the Borrowers to
repay or prepay U.S. $ Revolving Credit Borrowings, Multi-Currency Revolving
Credit Borrowings or Swingline Loans (or a combination thereof) having an
Assigned Dollar Value in an amount sufficient to eliminate such excess.
(d) Prepayment Events. In the event and on each occasion after the
Effective Date that a Prepayment Event occurs, ASI shall, on each date of
receipt by Holding, ASI or any Subsidiary of Net Cash Proceeds in respect of
such Prepayment Event, cause the Borrowers to prepay Loans and reduce the
Commitments pursuant to which the prepaid Loans shall have been made in an
aggregate amount equal to 100% of such Net Cash Proceeds; provided, however,
that (A) no such prepayment and
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reduction of Commitments shall be required in an aggregate amount less than
$10,000,000 (or an amount the Dollar Equivalent of which is $10,000,000) and any
receipt of Net Cash Proceeds that would result in prepayments and reductions in
a lesser amount shall cumulate until the aggregate amount of Net Cash Proceeds
received and not yet applied equals or exceeds $10,000,000 (or the Alternative
Currency Equivalent), at which time such prepayments and reductions shall be
made, (B) to the extent that Net Cash Proceeds received in respect of a
Prepayment Event are received by an Excluded Subsidiary, no prepayment or
reduction of Commitments shall be required hereunder in respect of such Net Cash
Proceeds unless and until such Excluded Subsidiary ceases to be an Excluded
Subsidiary (provided that ASI shall exercise commercially reasonable efforts to
arrange for such Net Cash Proceeds to be paid to ASI or another Subsidiary that
is not an Excluded Subsidiary if such payment can be made without commercially
unreasonable consequences) and (C) to the extent that any prepayment required by
this paragraph would require prepayment of any LIBOR Borrowing on a day other
than the last day of the Interest Period with respect thereto and would result
in the incurrence of costs pursuant to Section 2.14, then, unless an Event of
Default has occurred and is continuing, the amount that would be required to be
applied to prepay such Borrowing may, at ASI's option, be paid on such day to
the Collateral Agent and held as cash Collateral securing such Borrowing until
the last day of the Interest Period with respect to such Borrowing, at which
time such amount shall be applied to prepay such Borrowing (provided that, in
determining which Borrowings of a Borrower are to be prepaid within a Credit
Facility, prepayments required by this paragraph shall be allocated by ASI in
such manner as will minimize the necessity and duration of any deferral of
prepayment pursuant to this clause (C)). ASI shall deliver to the Administrative
Agent at or prior to the time of each prepayment pursuant to this paragraph a
certificate executed by a Financial Officer of ASI setting forth in reasonable
detail the calculation of the amount of such prepayment.
(e) Prepayments Generally. ASI (or the applicable Borrower) shall
deliver to the Administrative Agent a notice of each prepayment to be made under
this Section, which shall be delivered as provided in paragraph (a) above in
the case of any prepayment thereunder and otherwise by 11:00 a.m., New York City
time three Business Days prior to prepayment (unless the circumstances giving
rise to such prepayment render it impractical to provide notice at such time, in
which case such notice shall be given as promptly as practical and in any event
by the time prepayment is made). Each notice of prepayment shall specify the
prepayment date and, by Credit Facility, the principal amount of each Borrowing
(or portion thereof) to be prepaid, shall be irrevocable and shall commit the
applicable Borrower or Borrowers to prepay such Borrowing (or portion thereof)
by the amount stated therein on the date stated therein. All prepayments under
this Section 2.11 shall be subject to Section 2.14 but otherwise without premium
or penalty. All prepayments under this Section 2.11 shall be accompanied by
accrued interest on the principal amount being prepaid to the date of payment.
Any prepayment required under any paragraph of this Section shall be in addition
to, and shall not be applied to reduce the amount of, any prepayment required
under any other paragraph of this Section.
SECTION 2.12. Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision herein (but subject to paragraph (e)
below), if after the date of this Agreement any change in applicable law or
regulation or in the interpretation or administration thereof by any
governmental authority charged with the interpretation or administration thereof
(whether or not having the force of law) shall change the basis of taxation of
payments to any Lender (or any lending office) or any Issuing Bank of the
principal of or interest on any LIBOR Loan or Alternative Currency Loan made by
such Lender or any Fees or other amounts payable hereunder in respect of LIBOR
Loans or Alternative Currency Loans (other than changes in respect of Excluded
Taxes or Taxes), or shall impose, modify or deem applicable any reserve, special
deposit or similar requirement
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46
against assets of, deposits with or for the account of or credit extended by
such Lender (or any lending office) or any Issuing Bank (except, in respect of
LIBOR Loans or Swingline Loans that are Alternative Currency Loans, any such
reserve requirement which is reflected in the Adjusted LIBO Rate or the
Swingline Base Rate, respectively), or shall impose on such Lender, such Issuing
Bank, the London interbank market or any other relevant market any other
condition affecting this Agreement or any LIBOR Loan or Alternative Currency
Loan made by such Lender or any Letter of Credit or participation therein, and
the result of any of the foregoing shall be to increase the net cost to such
Lender or Issuing Bank of making or maintaining any LIBOR Loan or Alternative
Currency Loan or of issuing or maintaining any Letter of Credit or purchasing or
maintaining a participation therein, or to reduce the amount of any sum received
or receivable by such Lender or Issuing Bank hereunder or under the Notes
(whether of principal, interest or otherwise) by an amount deemed by such Lender
or Issuing Bank to be material, then ASI will pay (or cause the Borrowers to
pay) to such Lender or Issuing Bank, as the case may be, within 15 days after
receipt by ASI of a certificate referred to in paragraph (c) below, such
additional amount or amounts as will compensate such Lender or Issuing Bank, as
the case may be, for such additional net costs incurred or reduction suffered.
(b) Subject to paragraph (e) below, if any Lender or Issuing Bank
shall have determined that the adoption after the date hereof of, or any change
after the date hereof in, any law, rule, regulation or guideline regarding
capital adequacy, or any change after the date hereof in the interpretation or
administration of any of the foregoing by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or any lending office of such Lender or,
if applicable, its Affiliate) or any Issuing Bank or any Lender's or Issuing
Bank's holding company with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Lender's or Issuing Bank's capital or on the capital of such Lender's or
Issuing Bank's holding company, if any, as a consequence of this Agreement or
the Loans made or participations in Letters of Credit purchased by such Lender
pursuant hereto or the Letters of Credit issued by such Issuing Bank pursuant
hereto to a level below that which such Lender or Issuing Bank or such Lender's
or Issuing Bank's holding company could have achieved but for such adoption,
change or compliance (taking into consideration such Lender's or Issuing Bank's
policies and the policies of such Lender's or Issuing Bank's holding company
with respect to capital adequacy) by an amount deemed by such Lender or Issuing
Bank to be material, then from time to time ASI shall pay (or cause the
Borrowers to pay), within 15 days after receipt by ASI of a certificate referred
to in paragraph (c) below, to such Lender or Issuing Bank, as the case may be,
such additional amount or amounts as will compensate such Lender or Issuing
Bank, as the case may be, or such Lender's or Issuing Bank's holding company for
any such reduction suffered.
(c) A certificate of a Lender or an Issuing Bank setting forth such
amount or amounts as shall be necessary to compensate such Lender or Issuing
Bank or its holding company, as applicable, as specified in paragraph (a) or (b)
above, as the case may be, shall be delivered to ASI and shall be conclusive
absent manifest error. Any such certificate shall be accompanied by a notice
indicating the circumstances or event that resulted in such claim for
compensation. ASI shall (or shall cause the responsible Borrower to) pay to each
Lender or Issuing Bank that delivers any such certificate the amount shown as
due on such certificate within 15 days after the receipt of the same by ASI.
(d) Failure on the part of any Lender or any Issuing Bank to demand
compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital with respect to any period shall
not constitute a waiver of its right to demand compensation with respect
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47
to such period or any other period; provided, however, that failure on the part
of any Lender or Issuing Bank to demand compensation within 180 days after the
end of its fiscal year shall constitute a waiver of its right to demand any such
compensation with respect to such fiscal year; provided further, however, that
if any change in applicable law or in the interpretation or application thereof
or any request or directive giving rise to any claim for compensation under this
Section is retroactive in effect, then such Lender or Issuing Bank shall be
entitled to claim compensation hereunder for the period of such retroactive
effect prior to and including the date of adoption or promulgation thereof, for
purposes of the foregoing proviso, as though the claims for compensation with
respect to such period of retroactive effect arose on such date. The protection
of this Section shall be available to each Lender and Issuing Bank regardless of
any possible contention of the invalidity or inapplicability of the law, rule,
regulation, guideline or other change or condition which shall have occurred or
been imposed so long as such Lender or Issuing Bank shall certify to the
Administrative Agent and ASI its good faith belief that compliance therewith is
necessary or advisable in the conduct of its business.
(e) Notwithstanding any other provision of this Section 2.12, no
Lender or Issuing Bank shall be entitled to compensation for any increased costs
or reduction in amounts received or receivable or reduction in return on capital
under this Section unless such Lender or Issuing Bank, as the case may be,
represents to ASI that at the time it is the policy or general practice of such
Lender or Issuing Bank to demand such compensation for comparable costs or
reductions, if any, in similar circumstances, if any, under comparable
provisions of other credit agreements for comparable customers.
SECTION 2.13. Change in Legality. (a) Notwithstanding any other
provision herein, if, after the date hereof, (i) any change in any law or
regulation or in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof shall make it unlawful
for any Lender to make or maintain any LIBOR Loan or Alternative Currency Loan
or (ii) there shall have occurred any change in national or international
financial, political or economic conditions (including the imposition of or any
change in exchange controls) or currency exchange rates which would make it
impracticable for any Lender to make Loans denominated in any Alternative
Currency or to any Borrower, then, by written notice to ASI and to the
Administrative Agent:
(i) such Lender may declare that LIBOR Loans or Alternative Currency
Loans (in the affected currency or currencies or to the affected
Borrower), as the case may be, will not thereafter (for the duration of
such unlawfulness or impracticability) be made by such Lender hereunder,
whereupon any request for a LIBOR Borrowing or Alternative Currency
Borrowing (in the affected currency or currencies or to the affected
Borrower), as the case may be, shall, as to such Lender only, be deemed a
request for an ABR Loan or a Loan denominated in Dollars, as the case may
be, unless such declaration shall be subsequently withdrawn (or, if a
Loan to the requesting Borrower cannot be made for the reasons specified
above, such request shall be deemed to have been withdrawn); and
(ii) such Lender may require that all outstanding LIBOR Loans or
Alternative Currency Loans (in the affected currency or currencies), as
the case may be, made by it be converted to ABR Loans or Loans denominated
in Dollars, as the case may be, in which event all such LIBOR Loans or
Alternative Currency Loans (in the affected currency or currencies), as
the case may be, shall be automatically converted to ABR Loans or Loans
denominated in Dollars, as the case may be, as of the effective date of
such notice as provided in paragraph (b) below.
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In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal which would otherwise have been applied to
repay the LIBOR Loans or Alternative Currency Loans, as the case may be, that
would have been made by such Lender or the converted LIBOR Loans or Alternative
Currency Loans, as the case may be, of such Lender shall instead be applied to
repay the ABR Loans or Loans denominated in Dollars, as the case may be, made by
such Lender in lieu of, or resulting from the conversion of, such LIBOR Loans or
Alternative Currency Loans, as the case may be.
(b) For purposes of this Section 2.13, a notice to ASI by any Lender
shall be effective as to each such Loan, if lawful, on the last day of the
Interest Period currently applicable to such Loan; in all other cases such
notice shall be effective on the date of receipt by ASI.
SECTION 2.14. Indemnity. Each Borrower shall indemnify each Lender
against any loss or reasonable expense which such Lender may sustain or incur as
a consequence of (a) any failure by such Borrower to fulfill on the date of any
borrowing hereunder the applicable conditions set forth in Article IV, (b) any
failure by such Borrower to borrow or to convert or continue any Loan hereunder
after irrevocable notice of such borrowing, conversion or continuation has been
given or deemed to have been given pursuant to Section 2.03 or 2.04, (c) any
payment, prepayment, assignment pursuant to Section 2.22(a) or (b), exchange
pursuant to Article IX or conversion of a LIBOR Loan or Alternative Currency
Loan or any portion thereof required by any other provision of this Agreement or
otherwise made or deemed made by or for the account of such Borrower on a date
other than the last day of the Interest Period applicable thereto, (d) any
default by or for the account of such Borrower in payment or prepayment of the
principal amount of any Loan or any part thereof or interest accrued thereon, as
and when due and payable (at the due date thereof, whether by scheduled
maturity, acceleration, irrevocable notice of prepayment or otherwise) or (e)
the occurrence of any Event of Default in respect of such Borrower, including,
in each such case, any loss or reasonable expense sustained or incurred or to be
sustained or incurred in liquidating or employing deposits from third parties
acquired to effect or maintain such Loan or any part thereof as a LIBOR Loan or
Alternative Currency Loan. Such loss or reasonable expense shall include an
amount equal to the excess, if any, as reasonably determined by such Lender, of
(i) its cost of obtaining the funds for the Loan being paid, prepaid, assigned,
converted, exchanged or not borrowed, converted or continued (based on the
Adjusted LIBO Rate) for the period from the date of such payment, prepayment,
assignment, conversion, exchange or failure to borrow, convert or continue to
the last day of the Interest Period for such Loan (or, in the case of a failure
to borrow, convert or continue, the Interest Period for such Loan which would
have commenced on the date of such failure) over (ii) the amount of interest (as
reasonably determined by such Lender) that would be realized by such Lender in
reemploying the funds so paid, prepaid, assigned, converted, exchanged or not
borrowed, converted or continued for such period or Interest Period, as the case
may be. A certificate of any Lender setting forth any amount or amounts which
such Lender is entitled to receive pursuant to this Section and evidencing a
loss suffered by such Lender of such amount or amounts shall be delivered to ASI
and shall be conclusive absent manifest error. ASI shall (or shall cause the
responsible Borrower to) pay to each Lender that delivers any such certificate
the amount shown as due on such certificate within 15 days after the receipt of
the same by ASI.
SECTION 2.15. Pro Rata Treatment. Except as required under Sections
2.13, 2.19(e) and 2.20, (a) each Borrowing, each reduction of Commitments and
each payment of the Commitment Fees in respect of any Credit Facility shall be
allocated pro rata among the Lenders in accordance with their respective
applicable Commitments, (b) each payment or prepayment of principal of any
Borrowing and each payment of interest on the Loans comprising any Borrowing
shall be allocated pro rata among the Lenders in accordance with the respective
amounts due and payable to the Lenders by
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49
the Borrower that shall have made such payment and (c) each conversion or
continuation of Loans included in any Borrowing shall be allocated pro rata
among the Lenders in accordance with the respective principal amounts of their
outstanding Loans comprising such Borrowing. Each Lender agrees that in
computing such Lender's portion of any Borrowing to be made hereunder, the
Administrative Agent may, in its discretion, round each Lender's percentage of
such Borrowing to the next higher or lower whole Dollar (or comparable unit of
any applicable Alternative Currency) amount.
SECTION 2.16. Sharing of Setoffs. Each Lender agrees that if it
shall, through the exercise of a right of banker's lien, setoff or counterclaim
against any Credit Party, or pursuant to a secured claim under Section 506 of
Title 11 of the United States Code or other security or interest arising from,
or in lieu of, such secured claim, received by such Lender under any applicable
bankruptcy, insolvency or other similar law or otherwise, or by any other means,
obtain payment (voluntary or involuntary) in respect of any Loan or Loans or L/C
Disbursement or undrawn L/C's as a result of which the unpaid principal portion
of its Related Claims shall be proportionately less than the unpaid principal
portion of the Related Claims of any other Related Lender, it shall be deemed
simultaneously to have purchased from such other Related Lender at face value,
and shall promptly pay to such other Related Lender the purchase price for, a
participation in the Related Claims of such other Related Lender, so that the
aggregate unpaid principal amount of the Related Claims and participations in
Related Claims held by each Related Lender shall be in the same proportion to
the aggregate unpaid principal amount of all Related Claims then outstanding as
the principal amount of its Related Claims prior to such exercise of banker's
lien, setoff or counterclaim or other event was to the principal amount of all
Related Claims outstanding prior to such exercise of banker's lien, setoff or
counterclaim or other event; provided, however, that, if any such purchase or
purchases or adjustments shall be made pursuant to this Section 2.16 and the
payment giving rise thereto shall thereafter be recovered, such purchase or
purchases or adjustments shall be rescinded to the extent of such recovery and
the purchase price or prices or adjustment restored without interest. The
Borrowers expressly consent to the foregoing arrangements and agree that any
Lender holding a participation in a Loan or L/C Disbursement deemed to have been
so purchased may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing by the applicable Borrower
to such Lender by reason thereof as fully as if such Lender had made a Loan
directly to such Borrower in the amount of such participation.
SECTION 2.17. Payments. (a) Each Borrower shall make each payment
(including principal of, and interest on, the Loans and L/C Disbursements, and
any Fees and other amounts) due and payable by it hereunder and under any other
Credit Document, not later than 12:00 (noon), local time at the place of
payment, on the date when due, in immediately available funds. Each such payment
(other than (i) Issuing Bank Fees, which shall be paid directly to the
applicable Issuing Bank and (ii) principal of and interest on Swingline Loans,
which shall be paid directly to the Swingline Lender except as otherwise
provided in Section 2.20(e)) shall be made to such account of the Administrative
Agent as the Administrative Agent shall specify by notice to the applicable
Borrower and, unless and until otherwise specified, all such payments payable in
Dollars shall be made to the Administrative Agent at its office at 270 Park
Avenue, New York, New York. Each such payment (other than principal of and
interest on Alternative Currency Loans and L/C Disbursements denominated in an
Alternative Currency, which shall be made in the applicable Alternative
Currency) shall be made in Dollars. Any payments received by the Administrative
Agent after the specified time shall be deemed to have been received on the next
Business Day. The Administrative Agent shall distribute to the applicable
Lenders or Issuing Bank, as the case may be, all payments received by the
Administrative Agent for their respective accounts, promptly following receipt
thereof.
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(b) Whenever any payment shall become due, or otherwise would occur,
on a day that is not a Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of interest or Fees, if applicable.
SECTION 2.18. Taxes. (a) All payments hereunder and under any other
Credit Document (including payments on account of principal, interest and Fees)
shall be made by the applicable Borrower without deduction or withholding for or
on account of any present or future tax, duty, levy, impost, assessment or other
governmental charge imposed by any jurisdiction other than (i) Excluded Taxes
and (ii) taxes, duties, levies, imposts, assessments or other governmental
charges imposed by the United States or any political subdivision thereof or
therein (except for withholding taxes on payments (other than Fees) with respect
to Obligations of Borrowers that are Foreign Subsidiaries and withholding taxes
on payments with respect to Obligations of Borrowers that are not Foreign
Subsidiaries acquired by a Lender as a result of the CAM Exchange), but only to
the extent such taxes, duties, levies, imposts, assessments or other
governmental charges described in this clause (ii) do not result from a change
subsequent to the date hereof in applicable law, treaty or regulations or in the
interpretation or administration thereof by any authority charged with the
interpretation or administration thereof or any court of competent jurisdiction
("Taxes"). For purposes of this Section 2.18 and Section 2.12, ratification of
the Convention between the Republic of Austria and the Government of the United
States of America signed on May 31, 1996, the Convention between the Government
of the United States of America and the Government of the Kingdom of Denmark
signed on June 17, 1980 (and the Protocol signed on August 23, 1983, amending
such Convention), the Convention between the Government of the Grand Duchy of
Luxembourg and the Government of the United States of America signed on April 3,
1996, and the Convention between the United States of America and the Swiss
Confederation signed on October 2, 1996, in each case substantially in the same
form as it was signed shall not be considered a change after the date hereof. If
any Borrower is required by law to make any deduction or withholding of any
Taxes from any payment due hereunder or under any other Credit Document, then
the amount payable will be increased to such amount which, after deduction from
such increased amount of all such Taxes required to be withheld or deducted
therefrom, will be equal to the amount that would otherwise have been received
hereunder had no such deduction or withholding been required.
(b) The applicable Borrower shall pay any and all present or future
stamp or documentary taxes, or other excise or property taxes, charges or
similar levies, which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Credit Document excluding, with respect to any Lender,
excise or property taxes, charges or similar levies: (i) imposed by the
jurisdiction under the laws of which such Lender is organized, or in which its
principal executive office is located, or by any country within which any such
jurisdiction is located or any political subdivision thereof; (ii) imposed by
the jurisdiction in which the applicable lending office or branch of such Lender
or any Affiliate thereof that makes or holds a Loan is located, or in which its
principal executive office is located, or under the laws of which it is
organized or by any country within which any such jurisdiction is located or any
political subdivision thereof; or (iii) imposed by any other jurisdiction, but
only to the extent such taxes, charges or levies would not have been imposed but
for any other connection between the jurisdiction imposing such tax, charge or
levy and such Lender or such applicable lending office or branch or Affiliate
(other than a connection arising from this Agreement or any transaction
contemplated thereby) ("Other Taxes").
(c) If any Borrower makes any payment hereunder in respect of which
it is required by law to make any deduction or withholding of any Taxes or Other
Taxes, it shall pay the full amount
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51
to be deducted or withheld to the relevant taxation or other authority within
the time allowed for such payment under applicable law and shall deliver to the
applicable Lenders as soon as practicable (but, in no event, later than 30 days)
after it has made such payment to the applicable authority a receipt issued by
such authority or a statement of the Borrower confirming the payment to such
authority of all amounts so required to be deducted or withheld from such
payment.
(d) Without prejudice to the provisions of paragraph (a) above, if
any Lender, or the Administrative Agent on its behalf, is required to make any
payment on account of Taxes or Other Taxes on or in relation to any sum received
or receivable hereunder or under any other Credit Document by such Lender, or
the Administrative Agent on its behalf, or any liability for Taxes or Other
Taxes in respect of any such payment is imposed, levied or assessed against any
Lender or the Administrative Agent on its behalf (regardless of whether such
Taxes or Other Taxes were correctly or legally asserted by the relevant taxation
or other authority), the applicable Borrower will, within 30 days after demand
therefor, indemnify such person against such tax payment or liability, together
with any interest, penalties and expenses (including reasonable counsel fees and
expenses) payable or incurred in connection therewith, including any Tax or
Other Tax of any Lender arising by virtue of payments under this paragraph (d),
computed in a manner consistent with paragraph (a) above. A certificate as to
the amount of such payment by such Lender, or the Administrative Agent on its
behalf, absent manifest error, shall be final, conclusive and binding for all
purposes.
(e) (i) Each Lender that is organized under the laws of any
jurisdiction other than the United States or any State thereof (including the
District of Columbia) and that will be receiving payments from ASI or American
Standard Credit Inc. under the Credit Documents agrees to furnish to ASI and the
Administrative Agent, prior to the Effective Date (or, if such Lender becomes a
Lender after the Effective Date, then at or prior to the time such Lender
becomes a Lender), two copies of either U.S. Internal Revenue Service Form 4224,
U.S. Internal Revenue Service Form 1001 or any successor forms thereto (wherein
such Lender claims entitlement to complete exemption from or reduced rate of
U.S. federal withholding tax on payments by ASI or American Standard Credit
Inc., as the case may be, under the Credit Documents) as well as any
certification, documentation or other evidence as may be required by the U.S.
Internal Revenue Service to establish the legal entitlement of a Lender to
complete exemption from or reduced rate of U.S. federal withholding tax on
payments by ASI or American Standard Credit Inc., as the case may be under the
Credit Documents ("Required Documentation") and to provide to ASI and the
Administrative Agent a new Form 4224, Form 1001 or any successor forms thereto
and any Required Documentation if any previously delivered form or Required
Documentation is found to be incomplete or incorrect in any material respect or
upon the obsolescence of any previously delivered form or Required
Documentation. In the case of any such Lender exempt from withholding tax on
interest payments under the Credit Documents pursuant to Section 871(h) or
881(c) of the Code, such Lender may provide U.S. Internal Revenue Service Form
W-8 or any successor form thereto (instead of Form 1001) with respect to such
interest payments as well as any Required Documentation and agrees to provide a
new Form W-8 or any successor form thereto and any Required Documentation if any
previously delivered form or Required Documentation is found to be incomplete or
incorrect in any material respect or upon the obsolescence of any previously
delivered form or Required Documentation. A Lender providing Form 1001 or Form
W-8 or any successor form thereto with respect to interest payments agrees to
furnish a separate Form 1001 or a successor form thereto with respect to fees
and other payments under the Credit Documents.
(ii) Each Lender that is managed and controlled from or incorporated
under the laws of any jurisdiction other than the United Kingdom and which is
making a Loan to the U.K. Borrower
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through a lending branch or lending office located outside the United Kingdom
agrees to furnish to the taxing authority of the country in which such Lender is
resident for tax purposes on or prior to the Effective Date (or, if such Lender
becomes a Lender after the Effective Date, then at or prior to the time such
Lender becomes a Lender) (with a copy to the Administrative Agent and the U.K.
Borrower), for certification and forwarding by such taxing authority to the
appropriate United Kingdom taxing authority, two copies of Form "Claim on Behalf
of a United States Domestic Corporation to Relief from United Kingdom Income Tax
on Interest and Royalties Arising in the United Kingdom" (or its counterpart for
jurisdictions other than the United States), or any successor forms (wherein
such Lender claims entitlement to complete exemption from or reduced rate of
United Kingdom withholding tax on interest paid by such Borrower hereunder) and
to provide successor forms thereto if any previously delivered form is found to
be incomplete or incorrect in any material respect or upon the obsolescence of
any previously delivered form. Each Lender that is managed and controlled from
and incorporated under the laws of the United Kingdom or that is making all of
its Loans to the U.K. Borrower through a lending branch or lending office within
the United Kingdom agrees to furnish to each of the U.K. Borrower and the
Administrative Agent on or prior to the Effective Date (or if such Lender
becomes a Lender after the Effective Date, then at or prior to the time such
Lender becomes a Lender) a certificate substantially in the form of Exhibit G
(and if any previously delivered certificate subsequently should become untrue,
promptly (A) to notify the U.K. Borrower and the Administrative Agent of the
change and (B) to furnish the forms described in the first sentence of this
Section 2.18(e)(ii). As soon as practicable after the Effective Date, and from
time to time as circumstances change, ASI shall furnish the Administrative Agent
with a list of Borrowers resident for United Kingdom tax purposes within the
United Kingdom. In the case of any Lender that makes a Loan denominated in a
currency other than Sterling to the U.K. Borrower and with respect to such Loan
qualifies for the exemption under Section 349(3)(a) Income and Corporation Taxes
Act 1988 from withholding tax on interest payable in the United Kingdom on an
advance from a bank carrying on a bona fide banking business in the United
Kingdom, that Lender agrees to take into account as a United Kingdom trading
receipt the interest due to it on such Loan.
(iii) Upon the written request of any Borrower, each Lender
promptly will provide to such Borrower and to the Administrative Agent, or file
with the relevant taxing authority (with a copy to the Administrative Agent)
such form, certification or similar documentation (each duly completed, accurate
and signed) as is required by the relevant jurisdiction in order to obtain an
exemption from, or reduced rate of Taxes or Other Taxes to which such Lender or
the Administrative Agent is entitled pursuant to an applicable tax treaty or the
law of the relevant jurisdiction; provided, however, such Lender will not be
required to (i) disclose information which in its reasonable judgment it deems
confidential or proprietary or (ii) incur a disadvantage if such disadvantage
would, in its reasonable judgment, be substantial in comparison to the cost of
the Borrower under this Section 2.18 of such Lender's failure to provide such
form, certification or similar documentation.
(iv) A Lender shall be required to furnish a form under this
paragraph (e) only if it is entitled to claim an exemption from or a reduced
rate of withholding under applicable law. A Lender that is not entitled to claim
an exemption from or a reduced rate of withholding under applicable law,
promptly upon written request of the applicable Borrower, shall so inform the
applicable Borrower in writing.
(f) The Borrowers shall not be required to pay any increased amount
on account of Taxes or Other Taxes pursuant to this Section 2.18 or Section
2.12(a) to any Lender or to the Administrative Agent to the extent such Taxes or
Other Taxes would not have been payable but for the
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failure of the Lender to furnish the forms in accordance with paragraph (e)
(accurately completed in all material respects).
(g) If a Lender shall become aware that it is eligible for a refund
in respect of Taxes or Other Taxes actually paid by a Borrower pursuant to this
Section 2.18, it shall promptly notify the applicable Borrower of the
availability of such refund and shall, within 30 days after receipt of a request
by such Borrower, apply for such refund or shall furnish to such Borrower such
forms, duly completed, as will enable such Borrower to claim such refund on its
own behalf. Such Borrower shall reimburse such Lender for all reasonable costs
incurred by the applicable Lender in applying for or seeking such refund. If any
Lender receives a refund in respect of any Taxes or Other Taxes paid by a
Borrower pursuant to this Section 2.18, it shall repay such refund within 30
days after receipt, to the applicable Borrower (to the extent of amounts not in
excess of the amounts actually paid by such Borrower and not previously
reimbursed in respect of the Taxes or Other Taxes giving rise to such refund),
net of all reasonable out-of-pocket expenses of such Lender not previously
reimbursed and without interest (other than interest received from the relevant
taxing authority with respect to such refund); provided, however, that such
Borrower, upon the request of the relevant Lender, agrees to return to such
Lender the amount paid to it by the applicable Lender with respect to such
refund (plus applicable penalties, interest or other charges) in the event such
Lender is required to repay such refund. In addition, the Agent and each Lender
shall reasonably cooperate with any Borrower, at such Borrower's expense, in
contesting any Taxes or Other Taxes that such Borrower is required to bear under
this Section 2.18 or under Section 2.12 and shall pay to such Borrower, on a net
after-tax basis, any refunds obtained as a result of such contest, together with
any interest thereon, within 30 days after receipt.
(h) Nothing contained in this Section 2.18 shall require any Lender
to make available any of its tax returns (or any other information relating to
its taxes which it deems to be confidential).
(i) (i) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section 2.18
shall survive the payment in full of the principal of and interest on all Loans
made hereunder, and the payment in full of all other amounts due to the Lenders
or the Administrative Agent under this Agreement or any other Credit Document.
(ii) For purposes of this Section 2.18, a "Lender" shall also
include an Issuing Bank, the Administrative Agent, the Collateral Agent, subject
to Section 10.04(j) and the last sentence of Section 10.04(c), any Affiliate of
a Lender that makes or holds a Loan and, subject to Section 10.04(f)(iii), the
holder of a participation in a Loan.
(j) Notwithstanding any other provisions of this Section 2.18, no
Lender shall be entitled to compensation for any Other Taxes (except for stamp
or documentary taxes or similar levies) unless such Lender represents to ASI
that at that time it is the policy or general practice of such Lender to demand
such compensation for comparable Other Taxes, if any, in similar circumstances,
if any, under comparable provisions of other credit agreements for comparable
customers.
SECTION 2.19. Letters of Credit. (a) General. Any Borrower may
request the issuance of a Letter of Credit, in a form reasonably acceptable to
the Administrative Agent and the applicable Issuing Bank, appropriately
completed, for the account of such Borrower, at any time and from time to time
while the U.S. $ Revolving Credit Commitments or Multi-Currency Revolving Credit
Commitments, as the case may be, remain in effect. This Section shall not be
construed to impose an obligation upon any Issuing Bank to issue any Letter of
Credit that is inconsistent with the terms and
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conditions of its Issuing Bank Agreement. On the Effective Date, the Scheduled
Letters of Credit shall be deemed to have been issued on such date under the
respective Credit Facilities set forth in Schedule 2.19 for all purposes hereof,
notwithstanding the requirements of the following paragraphs of this Section.
(b) Notice of Issuance; Certain Conditions. In order to request the
issuance of a Letter of Credit, a Borrower shall hand deliver or telecopy to an
Issuing Bank and the Administrative Agent (reasonably in advance of the
requested date of issuance) a notice specifying the name of the Borrower for
whose account such Letter of Credit is to be issued (the "Account Party"), the
date of issuance, the date on which such Letter of Credit is to expire (which
shall comply with paragraph (c) below), whether such Letter of Credit is to be a
U.S. $ Letter of Credit or a Multi-Currency Letter of Credit, the amount of such
Letter of Credit and, in the case of a Multi-Currency Letter of Credit, the
currency in which it is to be denominated, the name and address of the
beneficiary thereof and such other information as shall be necessary to prepare
such Letter of Credit. Following receipt of such notice and prior to the
issuance of the requested Letter of Credit, the Administrative Agent shall
notify ASI, the Account Party and the applicable Issuing Bank of the amount of
the Aggregate U.S. $ Revolving Credit Exposure and the Aggregate Multi-Currency
Revolving Credit Exposure after giving effect to (i) the issuance of such Letter
of Credit, (ii) the issuance or expiration of any other Letter of Credit that is
to be issued or will expire prior to the requested date of issuance of such
Letter of Credit and (iii) the borrowing or repayment of any U.S. $ Revolving
Credit Loans, Multi-Currency Revolving Credit Loans or Swingline Loans that
(based upon notices delivered to the Administrative Agent by the Borrowers) are
to be borrowed or repaid prior to the requested date of issuance of such Letter
of Credit. Promptly after the issuance of or amendment to any Letter of Credit,
the Administrative Agent shall notify Lenders with the relevant Commitments of
such issuance or amendment, shall provide a copy of the issued Letter of Credit
or amendment, as the case may be, and in the case of Multi-Currency Letters of
Credit, shall indicate the Spot Exchange Rate to be used in determining the
Assigned Dollar Value thereof. A Letter of Credit shall be issued only if, and
upon issuance of each Letter of Credit the Account Party in respect thereof
shall be deemed to represent and warrant that, after giving effect to such
issuance (A) the Aggregate L/C Exposure shall not exceed $500,000,000, (B) the
Aggregate U.S. $ L/C Exposure shall not exceed $500,000,000, (C) the Aggregate
Multi-Currency L/C Exposure shall not exceed $500,000,000, (D) the Aggregate
U.S. $ Revolving Credit Exposure shall not exceed the Total U.S. $ Revolving
Credit Commitment and (E) the Aggregate Multi-Currency Revolving Credit Exposure
shall not exceed the Total Multi-Currency Revolving Credit Commitment.
(c) Expiration Date. Each Letter of Credit shall expire at the close
of business on the earlier of the date one year after the date of the issuance
of such Letter of Credit and the date that is five Business Days prior to the
Maturity Date unless such Letter of Credit expires by its terms on an earlier
date; provided that a Letter of Credit shall not be issued that would result in
the Aggregate U.S. $ Revolving Credit Exposure exceeding the Total U.S. $
Revolving Credit Commitment or the Aggregate Multi-Currency Revolving Credit
Exposure exceeding the Total Multi-Currency Revolving Credit Commitment.
Compliance with the foregoing proviso shall be determined based upon the
assumption that each Letter of Credit remains outstanding and undrawn in
accordance with its terms until its expiration date (taking into account any
rights of renewal or extension that do not require written notice by or consent
of the applicable Issuing Bank, in its sole discretion, in order to effect such
renewal or extension).
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(d) Participations. By the issuance of a Letter of Credit
(including the issuance of the Scheduled Letters of Credit deemed to occur on
the Effective Date) and without any further action on the part of the applicable
Issuing Bank or the U.S. $ Revolving Credit Lenders or the Multi-Currency
Revolving Credit Lenders, as applicable, the applicable Issuing Bank hereby
grants to each U.S. $ Revolving Credit Lender or Multi-Currency Revolving Credit
Lender, as applicable, and each U.S. $ Revolving Credit Lender or Multi-Currency
Revolving Credit Lender, as applicable, hereby acquires from the applicable
Issuing Bank, a participation in such Letter of Credit equal to such U.S. $
Revolving Credit Lender's or Multi-Currency Revolving Credit Lender's Applicable
Percentage of the aggregate amount available to be drawn under such Letter of
Credit, effective upon the issuance of such Letter of Credit. In consideration
and in furtherance of the foregoing, each U.S. $ Revolving Credit Lender or
Multi-Currency Revolving Credit Lender hereby absolutely and unconditionally
agrees to pay to the Administrative Agent, for the account of the applicable
Issuing Bank, such U.S. $ Revolving Credit Lender's or Multi-Currency Revolving
Credit Lender's Applicable Percentage of each L/C Disbursement made by such
Issuing Bank and not reimbursed by the applicable Account Party (or another
Credit Party pursuant to its obligations under any other Credit Document)
forthwith on the date due as provided in paragraph (e) below. Each U.S. $
Revolving Credit Lender and Multi-Currency Revolving Credit Lender acknowledges
and agrees that its obligation to acquire participations pursuant to this
paragraph in respect of Letters of Credit is absolute and unconditional and
shall not be affected by any circumstance whatsoever, including the occurrence
and continuance of a Default or an Event of Default, and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever.
(e) Reimbursement. If an Issuing Bank shall make any L/C
Disbursement in respect of a Letter of Credit, the applicable Account Party
shall pay to the Administrative Agent, on or prior to the date that is five
Business Days after the date of such L/C Disbursement, an amount equal to such
L/C Disbursement. If such Account Party shall fail to pay any amount required to
be paid under this paragraph on or prior to the date that is five Business Days
after the date on which an L/C Disbursement is made, then (i) such unpaid amount
shall bear interest, for each day from and including the date that is five
Business Days after the date of such L/C Disbursement, to but excluding the date
of payment, at a rate per annum equal to the interest rate applicable to overdue
Loans pursuant to Section 2.08, (ii) the Administrative Agent shall notify the
applicable Issuing Bank and the U.S. $ Revolving Credit Lenders or the
Multi-Currency Revolving Credit Lenders, as the case may be, thereof, (iii) each
such Revolving Credit Lender shall comply with its obligation under paragraph
(d) above by wire transfer of immediately available funds, in the same manner as
provided in Section 2.02(c) with respect to Loans made by such Lender (and
Section 2.02(d) shall apply, mutatis mutandis, to the payment obligations of the
Revolving Credit Lenders), and (iv) the Administrative Agent shall promptly pay
to the applicable Issuing Bank amounts so received by it from the applicable
Revolving Credit Lenders. The Administrative Agent shall promptly pay to the
applicable Issuing Bank any amounts received by it from any Account Party
pursuant to this paragraph prior to the time that any Revolving Credit Lender
makes any payment pursuant to paragraph (d) above; any such amounts received by
the Administrative Agent thereafter shall be promptly remitted by the
Administrative Agent to the Revolving Credit Lenders that shall have made such
payments and to the applicable Issuing Bank, as their interests may appear.
(f) Obligations Absolute. Each Account Party's obligations to
reimburse L/C Disbursements as provided in paragraph (e) above shall be
absolute, unconditional and irrevocable, and
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shall be performed strictly in accordance with the terms of this Agreement,
under any and all circumstances whatsoever, and irrespective of:
(i) any lack of validity or enforceability of any Letter of Credit
or any Credit Document, or any term or provision therein;
(ii) any amendment or waiver of or any consent to departure from all
or any of the provisions of any Letter of Credit or any Credit Document;
(iii) the existence of any claim, setoff, defense or other right
that the applicable Account Party, any other Credit Party, any Subsidiary
or other Affiliate thereof or any other person may at any time have
against the beneficiary under any Letter of Credit, any Issuing Bank, the
Administrative Agent or any Lender or any other person, whether in
connection with this Agreement, any other Credit Document or any other
related or unrelated agreement or transaction;
(iv) any draft or other document presented under a Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect;
(v) payment by the applicable Issuing Bank under a Letter of Credit
against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit; and
(vi) any other act or omission to act or delay of any kind of any
Issuing Bank, the Lenders, the Administrative Agent or any other person
or any other event or circumstance whatsoever, whether or not similar to
any of the foregoing, that might, but for the provisions of this Section,
constitute a legal or equitable discharge of such Account Party's
obligations hereunder.
(g) Disbursement Procedures. The applicable Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit. Such Issuing Bank shall
as promptly as possible give telephonic notification, confirmed by telecopy, to
the Administrative Agent and the applicable Account Party of such demand for
payment and whether such Issuing Bank has made or will make an L/C Disbursement
thereunder; provided that any failure to give or delay in giving such notice
shall not relieve such Account Party of its obligation to reimburse such Issuing
Bank and the Revolving Credit Lenders with respect to any such L/C Disbursement.
The Administrative Agent shall promptly give each U.S. $ Revolving Credit Lender
or Multi-Currency Revolving Credit Lender, as applicable, notice thereof.
(h) Interim Interest. If an Issuing Bank shall make any L/C
Disbursement in respect of a Letter of Credit, then, unless the applicable
Account Party shall reimburse such L/C Disbursement in full on such date, the
unpaid amount thereof shall bear interest for the account of such Issuing Bank,
for each day from and including the date of such L/C Disbursement, to but
excluding the earlier of the date of payment or the date on which interest shall
commence to accrue thereon as provided in paragraph (e) above, at the rate per
annum that would apply to such amount if such amount were a Swingline Loan and
such Issuing Bank were the Swingline Lender.
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(i) Liability of Issuing Banks. Without limiting the generality of
paragraph (f) above, it is expressly understood and agreed that the absolute and
unconditional obligation of each Account Party hereunder to reimburse L/C
Disbursements will not be excused by the gross negligence or wilful misconduct
of any Issuing Bank. However, the foregoing shall not be construed to excuse any
Issuing Bank from liability to an Account Party to the extent of any direct
damages (as opposed to consequential damages, claims in respect of which are
hereby waived by the Account Parties to the extent permitted by applicable law)
suffered by such Account Party that are caused by such Issuing Bank's gross
negligence or wilful misconduct in determining whether drafts and other
documents presented under a Letter of Credit comply with the terms thereof; it
is understood that each Issuing Bank may accept documents that appear on their
face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary and, in making any
payment under any Letter of Credit (i) an Issuing Bank's exclusive reliance on
the documents presented to it under such Letter of Credit as to any and all
matters set forth therein, including reliance on the amount of any draft
presented under such Letter of Credit, whether or not the amount due to the
beneficiary thereunder equals the amount of such draft and whether or not any
document presented pursuant to such Letter of Credit proves to be insufficient
in any respect, if such document on its face appears to be in order, and whether
or not any other statement or any other document presented pursuant to such
Letter of Credit proves to be forged or invalid or any statement therein proves
to be inaccurate or untrue in any respect whatsoever and (ii) any noncompliance
in any immaterial respect of the documents presented under such Letter of Credit
with the terms thereof shall, in each case, be deemed not to constitute wilful
misconduct or gross negligence of an Issuing Bank.
SECTION 2.20. Swingline Loans. (a) Swingline Commitment. The
Swingline Lender agrees to make loans to the Borrowers at any time and from time
to time on and after the Effective Date and until the earlier of the Maturity
Date and the termination of the Swingline Commitment in accordance with the
terms hereof, in an aggregate principal amount at any time outstanding that will
not result in (i) the Swingline Exposure exceeding the Swingline Commitment,
(ii) the portion of the Swingline Exposure attributable to Swingline Loans made
to Borrowers other than ASI exceeding $25,000,000, or (iii) the Aggregate
Multi-Currency Revolving Credit Exposure, after giving effect to any Swingline
Loan, exceeding the Total Multi-Currency Revolving Credit Commitment. The
Swingline Commitment may be terminated or reduced from time to time as provided
herein. Within the foregoing limits, the Borrowers may borrow, pay or prepay and
reborrow Swingline Loans hereunder, on and after the Effective Date and prior to
the Maturity Date, subject to the terms, conditions and limitations set forth
herein.
(b) Swingline Loans. The procedures for requesting and making
Swingline Loans and the currency or currencies in which any Swingline Loan may
be denominated and any limitations as to minimum principal amount of borrowings
are specified in the Swingline Loan Agreement; provided, however, that (i) any
Borrower that requests a Swingline Loan shall, at or prior to the time of such
request, notify the Administrative Agent by telecopy, or by telephone (confirmed
by telecopy), and such Swingline Loan shall not be made if the Administrative
Agent advises the applicable Borrower that the conditions specified in clauses
(i), (ii) or (iii) of paragraph (a) above would not be satisfied, and (ii) all
Swingline Loans shall be made on the terms specified in this Section 2.20, which
shall supersede any contrary provisions in the Swingline Loan Agreement.
(c) Denomination, Maturity and Prepayment. Each Swingline Loan shall
be denominated in Dollars or, subject to Section 2.13, in an Alternative
Currency. Each of the Borrowers agrees to pay the outstanding principal amount
of each Swingline Loan on the last day of the Interest
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Period with respect to such Swingline Loan. The Borrowers shall have the right
at any time and from time to time to prepay any Swingline Loan, in whole or in
part, upon giving written or telecopy notice (or notice by telephone promptly
confirmed by written or telecopy notice) to the Swingline Lender and to the
Administrative Agent before 12:00 (noon), local time on the date of prepayment
at the addresses for notices specified in the Swingline Loan Agreement. All
principal payments of Swingline Loans shall be accompanied by accrued interest
on the principal amount being repaid to the date of payment. Each Borrower
shall, at the request of the Swingline Lender, duly execute and deliver to such
Lender a Note, dated the Effective Date, in substantially the form attached
hereto as Exhibit B, with the blanks appropriately filled, payable to the order
of the Swingline Lender (or, if the Swingline Lender shall so request, to the
Swingline Lender and registered assigns).
(d) Interest. Each Swingline Loan denominated in Dollars shall be an
ABR Loan and, subject to the provisions of Section 2.08, shall bear interest as
provided in Section 2.07(b). Subject to the provisions of Section 2.08, each
Swingline Loan that is an Alternative Currency Loan shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 360
days) at a rate per annum equal to the Swingline Base Rate with respect to such
Swingline Loan. Interest on each Swingline Loan shall be payable on the Interest
Payment Date with respect thereto. The Swingline Lender shall notify the
applicable Borrower and the Administrative Agent of the Swingline Base Rate
applicable to Swingline Lender's Swingline Loans that are Alternative Currency
Loans promptly following each determination thereof.
(e) Participations. If a Borrower does not fully repay a Swingline
Loan on the last day of the Interest Period with respect thereto, the Swingline
Lender shall promptly notify the Administrative Agent thereof (by telecopy or by
telephone, confirmed in writing), and the Administrative Agent shall promptly
notify each Multi-Currency Revolving Credit Lender thereof (by telecopy or by
telephone, confirmed in writing) and of its Applicable Percentage of such
Swingline Loan. Upon such notice but without any further action, the Swingline
Lender hereby agrees to grant to each Multi-Currency Revolving Credit Lender,
and each Multi-Currency Revolving Credit Lender hereby agrees to acquire from
the Swingline Lender, a participation in such defaulted Swingline Loan equal to
such Multi-Currency Revolving Credit Lender's Applicable Percentage of the
aggregate principal amount of such defaulted Swingline Loan. In consideration
and in furtherance of the foregoing, each Multi-Currency Revolving Credit Lender
hereby absolutely and unconditionally agrees, upon receipt of notice as provided
above, to pay to the Administrative Agent, for the account of the Swingline
Lender, such Multi-Currency Revolving Credit Lender's Applicable Percentage of
each Swingline Loan that is not repaid on the last day of the Interest Period
with respect thereto, in the same currency in which such Loan is denominated.
Each Multi-Currency Revolving Credit Lender acknowledges and agrees that its
obligation to acquire participations in Swingline Loans pursuant to this
paragraph is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or an Event of Default, and that each such payment shall be made without any
offset, abatement, withholding or reduction whatsoever. Each Multi-Currency
Revolving Credit Lender shall comply with its obligation under this paragraph by
wire transfer of immediately available funds, in the same manner as provided in
Section 2.02(c) with respect to Loans made by such Lender (and Section 2.02(d)
shall apply, mutatis mutandis, to the payment obligations of the Multi-Currency
Revolving Credit Lenders) and the Administrative Agent shall promptly pay to the
Swingline Lender amounts so received by it from the Multi-Currency Revolving
Credit Lenders. The Administrative Agent shall notify the applicable Borrower
and ASI of any participations in any Swingline Loan acquired pursuant to this
paragraph and thereafter payments in respect of such Swingline Loan shall be
made to the Administrative Agent and not to the Swingline
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Lender for ratable distribution to the Lenders participating in such Swingline
Loan. Any amounts received by the Swingline Lender from a Borrower (or other
Credit Party) in respect of a Swingline Loan after receipt by the Swingline
Lender of the proceeds of a sale of participations therein shall be promptly
remitted to the Administrative Agent; any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative Agent to
the Multi-Currency Revolving Credit Lenders that shall have made their payments
pursuant to this paragraph and to the Swingline Lender, as their interests may
appear. The purchase of participations in a Swingline Loan pursuant to this
paragraph shall not relieve the applicable Borrower of its default in respect of
the payment thereof.
(f) Termination and Reduction of Swingline Commitments. Upon written
or telecopy notice to the Swingline Lender and to the Administrative Agent, ASI
(on behalf of any Borrower or Borrowers) may at any time permanently terminate,
or from time to time in part permanently reduce, the unused portions of the
Swingline Commitment.
SECTION 2.21. Conversion of Periodic Access Loan Commitment. Upon at
least five Business Days' prior irrevocable written or telecopy notice to the
Administrative Agent (which will promptly notify each Lender), ASI (on behalf of
all the Borrowers) may elect to convert the Lenders' Periodic Access Loan
Commitments into additional Multi-Currency Revolving Credit Commitments. On the
effective date of any such conversion, (a) the Multi-Currency Revolving Credit
Commitment of each Lender will be increased by an amount equal to its Periodic
Access Loan Commitment immediately prior to such date, (b) the Periodic Access
Loan Commitments will terminate and (c) each outstanding Periodic Access Loan
will become a Multi-Currency Revolving Credit Loan in the same currency and with
the same principal amount and Interest Period (and all interest accrued but not
paid on the converted Periodic Access Loans will be deemed to have accrued on
the Multi-Currency Revolving Credit Loans resulting from such conversion.
SECTION 2.22. Certain Lender Obligations. (a) In the event (i) any
Lender delivers a certificate requesting compensation pursuant to Section 2.12,
(ii) any Lender delivers a notice described in Section 2.13 or (iii) a Borrower
is required to pay any additional amount to any Lender, or any Governmental
Authority on account of any Lender, pursuant to Section 2.18, ASI may, at its
sole expense and effort, require such Lender to transfer and assign, without
recourse (in accordance with Section 10.04), all of its interests, rights and
obligations under this Agreement to an assignee which shall assume such assigned
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (A) such assignment shall not conflict with any law,
rule or regulation or order of any court or other Governmental Authority having
jurisdiction, (B) ASI shall have received the written consent of the
Administrative Agent and of the Issuing Banks and the Swingline Lender, which
consent shall not unreasonably be withheld, and (C) ASI or the applicable
Borrower or such assignee shall have paid to the assigning Lender in immediately
available funds an amount equal to the sum of the principal of and interest
accrued to the date of such payment on the outstanding Loans and participations
in L/C Disbursements and Swingline Loans of such Lender, plus all Fees and other
amounts accrued for the account of such Lender hereunder (including any amounts
under Section 2.12, Section 2.14 and Section 2.18); provided further that if
prior to any such transfer and assignment the circumstances or event that
resulted in such Lender's claim for compensation under Section 2.12 or notice
under Section 2.13 or the amounts paid pursuant to Section 2.18, as the case may
be, cease to cause such Lender to suffer increased costs or reductions in
amounts received or receivable or reduction in return on capital, or cease to
have the consequences specified in Section 2.13, or cease to result in amounts
being payable under Section 2.18, as the case may be (including as a result of
any action taken by such Lender pursuant to paragraph (b) below), or if such
Lender shall waive its right to claim further
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compensation under Section 2.12 in respect of such circumstances or event or
shall withdraw its notice under Section 2.13 or shall waive its right to further
payments under Section 2.18 in respect of such circumstances or event, as the
case may be, then such Lender shall not thereafter be required to make any such
transfer and assignment hereunder.
(b) If (i) any Lender shall request compensation under Section 2.12,
(ii) any Lender delivers a notice described in Section 2.13 or (iii) a Borrower
is required to pay any additional amount to any Lender, or any Governmental
Authority on account of any Lender, pursuant to Section 2.18, then, such Lender
shall exercise reasonable efforts (which shall not require such Lender to incur
an unreimbursed loss or unreimbursed cost or expense or otherwise take any
action inconsistent with its internal policies or suffer any disadvantage or
burden deemed by it to be significant) to assign its rights and delegate and
transfer its obligations hereunder to another of its offices, branches or
affiliates, if such assignment would reduce its claims for compensation under
Section 2.12 or enable it to withdraw its notice pursuant to Section 2.13 or
would reduce amounts payable pursuant to Section 2.18, as the case may be, in
the future. The Borrowers hereby agree to pay all reasonable costs and expenses
incurred by any Lender in connection with any such assignment, delegation and
transfer.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each of Holding and the Borrowers represents and warrants (but, in
the case of representations and warranties relating to Credit Parties and their
Subsidiaries, only as to itself and its Subsidiaries, it being understood that
Holding and ASI make all representations and warranties as to all parties) to
each of the Lenders that:
SECTION 3.01. Corporate Status. Each Credit Party and each of its
Subsidiaries (i) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and has the corporate or
partnership, as the case may be, power and authority to own its property and
assets and to transact the business in which it is engaged and proposes to
engage, and (ii) has duly qualified and is authorized to do business and is in
good standing in all jurisdictions where the failure to do so could reasonably
be anticipated to result in a Materially Adverse Effect. Schedule 3.01 sets
forth as of the date hereof, and will set forth as of the Effective Date, a
true, complete and correct list of each Subsidiary of ASI indicating (i) its
jurisdiction of incorporation, (ii) its ownership (by holder and percentage
interest), (iii) its business and primary geographic scope of operation and (iv)
whether such Subsidiary is (x) a Foreign Subsidiary or (y) a Restricted
Subsidiary.
SECTION 3.02. Corporate Power and Authority. Each Credit Party has
the power and authority to execute, deliver and carry out the terms and
provisions of each of the Credit Documents to which it is, or is to be, a party.
Each Credit Party has taken all necessary action to authorize the execution,
delivery and performance of each of the Credit Documents to which it is, or is
to be, a party. Each Credit Document, when executed and delivered by a Credit
Party, does and will continue to constitute the legal, valid and binding
obligation of such Credit Party enforceable in accordance with its terms, except
as enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the enforceability
of creditors' rights generally and by general principles of equity or, in the
case of Credit Parties that are Foreign
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Subsidiaries, applicable laws disclosed in legal opinions delivered pursuant to
Section 4.02 of the 1993 Credit Agreement or of this Agreement, as applicable.
SECTION 3.03. No Violation. None of the Transactions (a) will
contravene in any respect material to the rights or interests of the Lenders any
provision of any law, statute, rule, regulation, order, writ, injunction or
decree of any Governmental Authority, (b) will conflict in any respect material
to the rights or interests of the Lenders or be inconsistent with or result in
any breach of any of the terms, covenants, conditions or provisions of, or
constitute (with notice or lapse of time or both) a default under, or result in
a required prepayment of, or (other than as contemplated by the Security
Documents or the Senior Indentures) result in the creation or imposition of (or
the obligation to create or impose), any Lien upon any of the property or assets
of any Credit Party or any of its Subsidiaries pursuant to the terms of, any
indenture, mortgage, deed of trust, agreement or other instrument to which any
Credit Party is a party or by which it or any of its property or assets is bound
or to which it may be subject, (c) will violate any provision of the
Organizational Documents of any Credit Party or any of its Subsidiaries or (d)
will constitute the giving of financial assistance by any UK Company under
Section 151 of the Companies Act 1995. No exchange control law or regulation
materially restricts any Borrower from complying with its obligations in respect
of any Alternative Currency Loan or Letter of Credit.
SECTION 3.04. Use of Proceeds; Margin Regulations. (a) The proceeds
of the Periodic Access Loans and the Revolving Credit Loans made on the
Effective Date, will be applied (i) to the payments described in Section 1.06 of
the Assignment and Amendment Agreement and (ii) to pay fees and expenses in
connection with certain of the Transactions as heretofore disclosed to the
Lenders. The proceeds of the Revolving Credit Loans and Periodic Access Loans
made after the Effective Date may be used (A) to finance the redemption by ASI
on or after May 15, 1997 of all of the outstanding 11-3/8% Senior Debentures,
(B) to finance the redemption by ASI on or after June 1, 1998 of up to
$250,000,000 aggregate principal amount of the outstanding 10-1/2% Senior
Subordinated Discount Debentures, (C) to finance the repurchase by Holding in an
aggregate amount not to exceed $300,000,000 of shares of its common stock
currently owned by Kelso ASI Partners, L.P. pursuant to the Stock Disposition
Agreement, (D) to finance the Contemplated Acquisition and other acquisitions
permitted pursuant to Section 6.05 and (E) for general corporate purposes of the
Borrowers and their Subsidiaries (including the making of loans by the Borrowers
to foreign subsidiaries of ASI that are not Borrowers). The Letters of Credit
issued hereunder will be used to support payment and other obligations incurred
in the ordinary course of business by the Borrowers and their Subsidiaries.
(b) Neither any Borrower nor any of their respective Subsidiaries is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying Margin Stock. No
Letter of Credit and no part of the proceeds of any Loan will be used directly
or indirectly for any purpose which entails a violation of, or which is
inconsistent with, Regulation G, U or X. Margin Stock (as defined in Regulation
U) will at all times constitute less than 25% of the assets of ASI and its
Subsidiaries that are subject to any limitation on sale, pledge or other
restriction hereunder.
SECTION 3.05. Approvals. None of the execution, delivery and
performance by each Credit Party of the Credit Documents to which it is, or is
to be, a party, the borrowings hereunder and the application of the proceeds of
the Loans, the issuance of the Letters of Credit, the continuation of the
security interests in the Collateral pursuant to the Security Documents and the
other transactions contemplated hereby (all the foregoing being collectively
called the "Transactions") do or will require
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any registration with, consent or waiver or approval of, or notice to, or other
action to, with or by, any Governmental Authority or other person except filings
required for the perfection and continuation of security interests granted
pursuant to the Security Documents and filings the failure to make which could
not reasonably be anticipated to result in a Materially Adverse Effect.
SECTION 3.06. Investment Company Act, etc. No Credit Party is or
will be, after giving effect to the Transactions, (a) an "investment company" or
a company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended or (b) subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act or any
foreign, federal, state or local statute or regulation limiting its ability to
incur indebtedness for money borrowed or guarantee such indebtedness as
contemplated hereby or by any other Credit Document.
SECTION 3.07. True and Complete Disclosure. All written information
(excluding the Projected Financial Statements and any other projections)
heretofore or contemporaneously furnished by or on behalf of the Credit Parties
(including all information contained in any of the Credit Documents) does not,
when taken as a whole, contain any material misstatement of fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they are made, not materially misleading.
SECTION 3.08. Financial Condition; Financial Statements;
Projections. (a) No Credit Party is entering into the arrangements contemplated
hereby and by the other Credit Documents, or intends to make any transfer or
incur any obligations hereunder or thereunder with actual intent to hinder,
delay or defraud either present or future creditors. On and as of the Effective
Date, on a pro forma basis after giving effect to the Transactions contemplated
to occur on or in connection with the Effective Date, (w) no final judgments
against any Credit Party arising out of any pending or threatened litigation
will be rendered at a time when, or in an amount such that, such Credit Party
will be unable to satisfy such judgments promptly in accordance with their terms
(taking into account the maximum reasonable amount of such judgments in any such
actions and the earliest reasonable time at which such judgments might be
rendered); the cash available to each Credit Party, after taking into account
all other anticipated uses of the cash of such Credit Party, is anticipated to
be sufficient to pay all such judgments promptly in accordance with their terms;
(x) the sum of the present fair salable value of the assets of each Credit Party
will exceed the probable liability of such Credit Party and its Subsidiaries on
their debts; (y) no Credit Party intends to, or believes that it will, incur
debts beyond its ability to pay such debts as such debts mature (taking into
account the timing and amounts of cash to be received by such Credit Party from
any source, and of amounts to be payable on or in respect of debts of such
Credit Party and the amounts referred to in clause (w)); the cash available to
each Credit Party, after taking into account all other anticipated uses of the
cash of such Credit Party, is anticipated to be sufficient to pay all such
amounts on or in respect of debts of such Credit Party, when such amounts are
required to be paid; and (z) each Credit Party will have sufficient capital with
which to conduct its present and proposed business and the property of such
Credit Party does not constitute unreasonably small capital with which to
conduct its present or proposed business. For purposes of this Section 3.08(a)
"debt" means any liability on a claim, and "claim" means (i) right of payment
whether or not such a right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured, or unsecured; or (ii) right to an equitable remedy for breach of
performance if such breach gives rise to a payment, whether or not such right to
an equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured, or unsecured. On the date of each
Borrowing, issuance of a Letter of Credit or conversion of the Periodic Access
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Commitment pursuant to Section 2.21 (and after giving effect to all Borrowings,
Letters of Credit or conversions as of such date), the representations set forth
in this Section 3.08(a) shall be true and correct with respect to each Borrower
which is incurring Loans or on behalf of which a Letter of Credit is being
issued on such date and any Credit Party which is a guarantor with respect to
any or all of such Borrowings or Letters of Credit. With respect to clauses (x)
and (z), with respect to Credit Parties other than Borrowers, such
representations and warranties are made to the best of the knowledge of the
Borrowers except that such representations and warranties are made without
qualification to the extent that the untruth or inaccuracies of any such
representation or warranty could reasonably be anticipated to result in a
Materially Adverse Effect.
(b) There has heretofore been delivered to the Lenders the
Information Memorandum containing the audited balance sheet of ASI on a
consolidated basis as of December 31, 1995 and the related consolidated
statements of income and cash flows for the year then ended accompanied by an
unqualified opinion of Ernst & Young LLP. Such financial statements fairly
present, in all material respects and in conformity with GAAP, the consolidated
financial position of ASI and its Subsidiaries as of such date and their
consolidated results of operations and cash flows for such fiscal year. Except
as set forth in Schedule 3.08(b), neither ASI nor any of its Subsidiaries had as
of the date of the foregoing financial statements any material Guarantee,
contingent liability or liability for taxes, long-term lease or unusual forward
or long-term commitment which is not reflected in the foregoing financial
statements or the notes thereto to the extent required by GAAP. Since December
31, 1995, there has not occurred any material adverse change in the business,
operations, condition (financial or otherwise), assets or prospects of (i) ASI
and its Subsidiaries taken as a whole or (ii) the German Borrower and its
Subsidiaries taken as a whole.
(c) There has heretofore been delivered to the Lenders the
Information Memorandum containing pro forma consolidated income projections for
ASI and its Subsidiaries, pro forma consolidated balance sheet projections for
ASI and its Subsidiaries and pro forma consolidated cash flow projections for
ASI and its Subsidiaries, all for the fiscal years ending December 31, 1996
through December 31, 2005, inclusive ("Projected Financial Statements"), which
give effect to the Transactions. The assumptions made in preparing the Projected
Financial Statements are believed in good faith by the management of ASI to be
reasonable, as of the date of such projections and as of the Effective Date, and
all material assumptions with respect to the Projected Financial Statements are
set forth therein. Any projected financial information regarding ASI and any of
its Subsidiaries furnished to any of the Lenders after the Effective Date will
be prepared based upon assumptions believed in good faith by the management of
ASI to be reasonable. The Projected Financial Statements and any
projected financial information furnished to any of the Lenders after the
Effective Date, and the assumptions on which they are or will be based, may or
may not prove to be correct.
(d) Schedule 3.08(d) sets forth (i) the outstanding Indebtedness
and preferred stock of ASI and its Subsidiaries as of December 31, 1996, (ii)
each Lien securing any such Indebtedness (excluding Liens to be released by or
maintained on behalf of the Collateral Agent on the Effective Date), (iii) a
list identifying each instrument or agreement governing such Indebtedness and
the maximum amount of debt governed by each such agreement and (iv) each line of
credit available to ASI or any Subsidiary thereof as of the Effective Date
(excluding the Commitments). A true, complete and correct copy of each material
instrument or agreement referred to in clause (iii) above (including all
amendments, supplements, modifications or waivers thereto) has been delivered to
the Administrative Agent and a true, complete and correct copy of all other
instruments or agreements referred to in such clause (including all amendments,
supplements, modifications and waivers thereto) as may be reasonably
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requested by the Administrative Agent will be delivered to it; and, in each
case, the Administrative Agent shall be authorized to deliver copies thereof, at
ASI's expense, to any Lender who requests copies thereof.
(e) Neither ASI nor any Subsidiary thereof has sold any material
assets or properties out of the ordinary course of business during the period
from December 31, 1995, to the date hereof except as permitted by Section 6.02.
SECTION 3.09. Security Interests. Each of the Security Documents
creates (or will create, as the case may be), as security for the obligations
purported to be secured thereby, subject to the provisions hereof and thereof,
either (a) subject to Schedule 3.09(a), a valid and enforceable perfected
security interest in and Lien on all of the Collateral subject to such Security
Document (or comparable interest under foreign law in the case of foreign
Collateral), or (b) in the case of any equity interests in Subsidiaries which
are not evidenced by Securities, floating charge, fixed charge or security
interest, as specified in the applicable Security Document, in each case in
favor of the Collateral Agent for the benefit of the Lenders, subject to no
other Liens except as may be expressly permitted in each applicable Security
Document or this Agreement, and prior to all other Liens except Liens described
in Schedule 3.12(a) as being prior to the Liens granted under the Security
Documents. The pledgor or assignor, as the case may be, under each Security
Document has good title to all Collateral subject thereto free and clear of all
Liens other than Permitted Encumbrances and such additional Liens as may be
specifically permitted by the Security Document to which such Collateral is
subject or by this Agreement. No filings, recordings or other actions are
required in order to perfect the security interests created under the Security
Documents except for filings, recordings or actions listed on Schedule 3.09(a),
all of which shall have been made or done on or prior to the Effective Date
except as otherwise expressly provided in Schedule 3.09(a). Except as set forth
in Schedule 3.09(b), there are no agreements or understandings between or among
stockholders or equity holders of any of the Credit Parties that might adversely
affect the benefits intended to be conferred on the Collateral Agent by the
Security Documents or the prompt realization of such benefits. Subject to
Section 5.11(a), Holding, ASI and each Subsidiary of ASI or any of its
Subsidiaries that is organized under the laws of any state, territory or
possession of the United States that owns capital stock of, or other ownership
interest in, a Subsidiary that is not a Non-Material Subsidiary is a party to
the Domestic Securities Pledge Agreement or a Supplemental Securities Pledge
Agreement and, subject to Section 5.11(b), Holding, ASI and each Foreign
Subsidiary that owns capital stock of, or other ownership interest in, a
Subsidiary that is not a Non-Material Subsidiary is a party to the Foreign
Securities Pledge Agreement or a Supplemental Securities Pledge Agreement;
provided, however, that intercompany receivables and Investments in Subsidiaries
shall be excluded from consolidated total assets for purposes of the definition
of Non-Material Subsidiary as used in this sentence.
SECTION 3.10. Tax Returns and Payments. Each of the Credit Parties
and each of its Subsidiaries has filed all federal income tax returns and all
other material tax returns and reports, domestic and foreign, required to be
filed by it and has paid all taxes shown as due on such returns or due pursuant
to any assessment received by it, other than those not yet delinquent and those
that are being contested by proper proceedings conducted in good faith and with
due diligence for which it maintains adequate reserves in accordance with GAAP.
Each of the Credit Parties has paid, or has provided adequate reserves in
accordance with GAAP for the payment of, all taxes, domestic and foreign,
applicable for all prior fiscal years and for the current fiscal year to the
date hereof. Except as heretofore disclosed to the Lenders in writing, there is
no proposed tax assessment against any Credit
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Party or any of its Subsidiaries which would, if the assessment were made, have
a Materially Adverse Effect.
SECTION 3.11. Compliance with ERISA. (a) As of the date hereof and
as of the Effective Date (i) each Borrower and each of its ERISA Affiliates are
in compliance in all material respects with the applicable provisions of ERISA
with respect to the Pension Plans; (ii) no Reportable Event has occurred as to
which any Borrower or any ERISA Affiliate was required to file a report with the
PBGC, and the present value of all benefit liabilities under all Pension Plans
(based on those assumptions used to fund such Pension Plans) did not, as of the
last annual valuation date applicable thereto, exceed by more than $100,000,000
the value of the assets of all Pension Plans; (iii) neither any Borrower nor any
ERISA Affiliate has incurred any Withdrawal Liability that materially adversely
affects the financial condition of any Borrower and its ERISA Affiliates taken
as a whole; (iv) neither any Borrower nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization or has been
terminated, within the meaning of Title IV of ERISA, and no Multiemployer Plan
is reasonably expected to be in reorganization or to be terminated, where such
reorganization or termination has resulted or can reasonably be expected to
result in an increase in the contributions required to be made to such Plan that
would materially and adversely affect the financial condition of any Borrower
and its ERISA Affiliates taken as a whole; (v) no proceedings have been
instituted to terminate any Pension Plan; (vi) each Foreign Pension Plan is in
compliance in all material respects with the applicable laws of any foreign
jurisdictions; and (vii) no Foreign Pension Plan has any unfunded liabilities
which, individually or in the aggregate, would be likely to result in a
Materially Adverse Effect.
(b) With respect to any pension, retirement or other deferred
compensation plan maintained by a Foreign Subsidiary which is not a Foreign
Pension Plan, reasonable reserves have been established in accordance with
prudent business practice or where required by ordinary accounting practices in
the jurisdiction in which such Foreign Subsidiary maintains its principal place
of business or in which such plan is maintained. The aggregate unfunded
liabilities, after giving effect to any reserves for such liabilities, with
respect to such plans is not likely to result in a Materially Adverse Effect.
SECTION 3.12. Title to Properties; Liens. (a) Each Credit Party and
each of its Subsidiaries have good title (or a comparable interest with respect
to foreign Real Property) with respect to its Real Properties (free and clear of
all Liens other than the Liens described in Schedule 3.12(a), Permitted
Encumbrances and Liens expressly permitted under Section 6.03) and good and
sufficient title (subject as aforesaid) to all of its other respective
properties and assets reflected in the most recent consolidated balance sheet
referred to in Section 3.08(b) or in the most recent financial statements
delivered pursuant to Section 5.01, as the case may be, in each case except for
(i) assets disposed of since the date of such consolidated balance sheet and
prior to the date of this Agreement in the ordinary course of business, (ii)
assets acquired or disposed of since the date of such consolidated balance sheet
in accordance with this Agreement, (iii) assets held under Capital Leases and
(iv) defects that in the aggregate do not result in a Materially Adverse Effect.
Except as set forth above and except as permitted hereby and by Section 3.09 and
by the other Credit Documents, all such properties and assets are free and clear
of Liens.
(b) Each "Principal Property" (as defined in the Senior Indentures)
is owned directly by ASI.
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(c) Each of the Real Properties located in an area in the United
States identified by the Secretary of Housing and Urban Development as an area
having special flood hazards has adequate insurance covering such hazard.
SECTION 3.13. Patents, Trademarks, etc. ASI and its Subsidiaries own
directly, or are entitled to use by license or otherwise, all patents,
trademarks, trade names, copyrights, licenses, technology, know-how, processes
and service marks and rights with respect to any of the foregoing material to
ASI's or such Subsidiary's business as currently conducted. The use of such
patents, trademarks, service marks, trade names, copyrights, licenses,
technology, know-how, processes and rights with respect to the foregoing by ASI
and its Subsidiaries does not, to the best of the Borrowers' knowledge, infringe
on the rights of any person, except for such uses as would not give rise to any
material liability on the part of ASI or its Subsidiaries. The consummation of
the Transactions does not require any consents to be obtained with respect to
such patents, trademarks, trade names, copyrights, technology, know-how,
processes, service marks or its license to use, as the case may be, any of such
patents, trademarks, service marks, trade names, copyrights, licenses,
technology, know-how, processes or service marks or rights with respect to the
foregoing by ASI and its Subsidiaries, except for the consents listed on
Schedule 3.13, which shall have been obtained on or prior to the Effective Date.
SECTION 3.14. Environmental Matters. (a) There are no chemical
substances, pollutants, contaminants or hazardous or toxic substances, materials
or wastes, whether solid, gaseous or liquid in nature, at any premises owned,
operated or controlled by any Credit Party or its Subsidiaries where such could
reasonably be expected to result in a Materially Adverse Effect and none of the
Credit Parties or their Subsidiaries nor, to the best knowledge of the Credit
Parties and their Subsidiaries, any of their respective predecessors in interest
have manufactured, processed, distributed, used, treated, stored, disposed of,
transported or handled any such substances, where such could reasonably be
anticipated to result in a Materially Adverse Effect. There is no ambient air,
surface water, groundwater or land contamination within, under or relating to
any Real Property or, to the best knowledge of the Credit Parties and their
Subsidiaries, other location geologically or hydrologically connected to such
properties and none of such properties has been used by any of the Credit
Parties or their Subsidiaries, or, to the best knowledge of any Credit Party, by
any of their predecessors in interest, for the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of any
substance described in the preceding sentence where such could reasonably be
anticipated to result in a Materially Adverse Effect.
(b) Except as set forth on Schedule 3.14(b), none of the Credit
Parties or any of its Subsidiaries has any obligations or liabilities, matured
or not matured, absolute or contingent, assessed or unassessed, no claims have
been made against it during the past five years, and no presently outstanding
citations or notices have been issued against it, in each case imposed or based
upon any provision of any domestic, foreign, federal, state or local law, rule
or regulation or common law pertaining to exploration and mining operations,
reclamation, health or safety or environmental protection where such
obligations, liabilities, claims, citations or notices, individually or in the
aggregate, could reasonably be expected to result in a Materially Adverse
Effect, including any such obligations, liabilities, claims, citations or
notices relating to or arising out of or attributable, in whole or in part, to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of any substance described in paragraph (a) above by any
of the Credit Parties or their Subsidiaries, or any of their respective
employees, agents, representatives or, to the best knowledge of the Credit
Parties and their Subsidiaries, predecessors in interest in connection with or
in any way arising from or relating to any Credit Party or its Subsidiaries or
any of their respective properties; or,
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to the best knowledge of the Credit Parties, relating to or arising out of or
attributable, in whole or in part, to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of any such substance,
by any other person at, on or under any of the Real Properties or any other
location which could reasonably be expected to result in a Materially Adverse
Effect. Except as set forth on Schedule 3.14(b), none of the Credit Parties or
any of its Subsidiaries has been subject to any action, suit, claim or
proceeding for failure to comply with, or received notice of any potential
liability under, any domestic, foreign, federal, state or local environmental
law, rule or regulation where such, individually or in the aggregate, could
reasonably be anticipated to result in a Materially Adverse Effect.
SECTION 3.15. Litigation; Adverse Facts. Except as set forth on
Schedule 3.15 hereto, there is no action, suit, proceeding or investigation by
any Governmental Authority or other person pending or known by any Credit Party
to be threatened with respect to any Credit Party or any of its Affiliates or
any of their assets or any of the Credit Documents or any of the Transactions
which is reasonably likely to result in a Materially Adverse Effect and there
has occurred no development in any action, suit, proceeding, governmental
investigation or arbitration previously disclosed to the Lenders, which could
reasonably be expected to result in such an effect.
SECTION 3.16. Compliance with Laws and Charter Documents. Neither
any Credit Party nor any Subsidiary of any Credit Party is (i) in violation of
its charter or by-laws or (ii) in violation of any law, statute, rule,
regulation, order, writ, injunction or decree (including, without limitation,
any exchange control law or regulation) of any Governmental Authority applicable
to any Credit Party or any Subsidiary of any Credit Party or any of their
respective properties or assets, which violation under this clause (ii),
individually or in the aggregate, could reasonably be anticipated to result in a
Materially Adverse Effect.
SECTION 3.17. Absence of Default. (a) No Default or Event of
Default has occurred and is continuing.
(b) Except as disclosed on Schedule 3.17, as of the date hereof and
the Effective Date, neither any Credit Party nor any Subsidiary of any Credit
Party is or will be in default in any material respect in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any material mortgage, note, debenture, agreement, license or other
instrument to which it is or will be a party or by which it may be bound, and no
condition exists which, with the giving of notice or the lapse of time or both,
would constitute such a default.
SECTION 3.18. Labor Matters. (i) Neither any Credit Party nor any
Subsidiary of any Credit Party is experiencing any strike, labor dispute,
slowdown or work stoppage, due to labor disagreements which could reasonably be
anticipated to result in a Materially Adverse Effect and (ii) to the best
knowledge of each of the Borrowers, there is no such strike, dispute, slowdown
or work stoppage threatened against any Credit Party or any Subsidiary of any
Credit Party.
SECTION 3.19. Benefit Plans. (a) As of December 31, 1993 (which date
is the most recent date of actuarial valuation of any Pension Plan) the
actuarial value of the assets and the value of the benefit liabilities of all
Pension Plans were as set forth on Schedule 3.19 hereto. Since December 31,
1993, there has not occurred any material adverse change in the funded status of
any Pension Plans resulting from any plan amendment or other action taken by any
Credit Party.
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(b) As of December 31, 1993, the value of the benefit liabilities of
all Foreign Pension Plans, the book reserves for such plans and the actuarial
value of plan assets with respect to all Foreign Pension Plans were as set forth
on Schedule 3.19 hereto. Since December 31, 1993, there has not occurred any
material adverse change in the funded status of any Foreign Pension Plan.
(c) As of the date hereof, the aggregate unfunded expected
post-retirement benefit obligation of ASI and its Subsidiaries for retiree
medical coverage, after giving effect to any reserves for such liabilities,
cannot reasonably be anticipated to result in a Materially Adverse Effect.
SECTION 3.20. Insurance. Schedule 3.20 sets forth a true, complete
and correct description of all insurance maintained by ASI or by ASI for its
Subsidiaries as of the date hereof and the Effective Date. As of each such date,
such insurance is in full force and effect and all premiums have been duly paid.
ASI and its Subsidiaries have insurance in such amounts and covering such risks
and liabilities as are in accordance with normal industry practice.
ARTICLE IV
CONDITIONS
SECTION 4.01. All Events. The obligations of the Lenders to make
Loans and of the Issuing Banks to issue Letters of Credit hereunder are subject
to the satisfaction on the date of each Borrowing (including each Borrowing of a
Swingline Loan) and on the date of each issuance of a Letter of Credit of the
following conditions:
(a) In the case of a Borrowing (other than a Swingline Loan), the
Administrative Agent shall have received a Borrowing Request as required
by Section 2.03 or, in the case of the issuance of a Letter of Credit, the
applicable Issuing Bank and the Administrative Agent shall have received a
notice requesting the issuance of such Letter of Credit as required by
Section 2.19(b) or, in the case of a Borrowing of a Swingline Loan, the
Swingline Lender and the Administrative Agent shall have received a notice
requesting such Swingline Loan as required by the Swingline Loan
Agreement.
(b) Except in the case of a reborrowing of a Revolving Credit
Borrowing that does not increase the aggregate principal amount of
Revolving Credit Loans of any Lender outstanding, the representations and
warranties set forth in Article III and in each other Credit Document
shall be true and correct in all material respects on and as of such date
with the same effect as though made on and as of such date, except to the
extent such representations and warranties expressly relate to an earlier
date.
(c) Each of the Credit Parties shall be in compliance in all
material respects with all the terms and provisions set forth herein and
in each other Credit Document on its part to be observed or performed, and
at the time of and immediately after such Borrowing or issuance of such
Letter of Credit, as the case may be, no Event of Default or Default shall
have occurred and be continuing.
Each Borrowing and each issuance of a Letter of Credit shall be deemed to
constitute a representation and warranty by Holding and ASI and by the
applicable Borrower (but, in the case of a Borrower other
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than ASI, only as to itself and its Subsidiaries) on the date of such Borrowing
or issuance, as the case may be, as to the matters specified in paragraphs (b)
and (c) of this Section 4.01. Without limiting the foregoing, each Borrowing and
each issuance of a Letter of Credit shall further be deemed to constitute a
representation and warranty by Holding and ASI and by the applicable Borrower
that on the basis of (i) such inquiries as one or more Financial Officers of ASI
shall have deemed necessary and (ii) advice of counsel (which may be general
advice or advice as to a particular Borrowing), the requested Borrowing is
permitted under the provisions limiting Indebtedness in each Senior Indenture to
which ASI is a party and each indenture relating to the Subordinated Securities
to which ASI is party.
SECTION 4.02. Effectiveness. The effectiveness of this Agreement and
the obligations of the Lenders to make Loans hereunder and of the Issuing Banks
to issue Letters of Credit hereunder are subject to the satisfaction of the
conditions set forth in Section III of the Assignment and Amendment Agreement.
ARTICLE V
AFFIRMATIVE COVENANTS
A. ASI covenants and agrees that on and after the Effective Date and
so long as this Agreement is in effect and until the Commitments have been
terminated and the Loans, together with interest, Fees and all other
Obligations, have been paid in full, and all Letters of Credit have been
cancelled or have expired and all amounts drawn thereunder have been reimbursed
in full, unless the Required Lenders shall otherwise give written consent, ASI
will and will cause each of its Subsidiaries to:
SECTION 5.01. Financial Statements and Other Reports. Maintain a
system of accounting established and administered in accordance with sound
business practices to permit preparation of the financial statements required to
be delivered hereunder and consolidated financial statements in conformity with
GAAP. ASI will deliver or cause to be delivered to each of the Lenders:
(a) as soon as practicable and in any event within 50 days after the
end of each fiscal quarter of ASI, other than the last quarter in each
fiscal year, (i) the consolidated balance sheet of ASI and its
Subsidiaries and (ii) the related consolidated statements of income and
retained earnings and cash flows of ASI and its Subsidiaries for such
fiscal quarter and for the period from the beginning of the then current
fiscal year to the end of such fiscal quarter setting forth, in
comparative form, the corresponding amounts as of the end of and for the
corresponding periods of the previous fiscal year and the corresponding
amounts from the plan for the current fiscal year delivered pursuant to
Section 5.01(j), all in reasonable detail and accompanied by a certificate
of the chief financial officer (or, if there is no chief financial
officer, the officer functioning as the chief financial officer) and chief
accounting officer of ASI to the effect that they fairly present the
financial condition of ASI and its Subsidiaries as at the dates indicated
and the results of their operations and cash flows for the periods
indicated, subject to changes resulting from normal year-end adjustments;
(b) as soon as practicable and in any event within 105 days after
the end of each fiscal year of ASI (i) the consolidated balance sheet of
ASI and its Subsidiaries and (ii) the related consolidated statements of
income and retained earnings and cash flows of ASI and its
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Subsidiaries for such fiscal year setting forth, in comparative form, the
corresponding amounts as of the end of and for the previous year and the
corresponding amounts from the plan for such fiscal year delivered
pursuant to Section 5.01(j), all in reasonable detail and accompanied by a
certificate of the chief financial officer (or, if there is no chief
financial officer, the officer functioning as the chief financial officer)
and chief accounting officer of ASI to the effect that they fairly present
the financial condition of ASI and its Subsidiaries as at the dates
indicated and the results of their operations and cash flows for the
periods indicated based on ASI's normal accounting procedures and
accompanied by a report thereon of Ernst & Young LLP or other independent
certified public accountants of recognized national standing selected by
ASI and reasonably satisfactory to the Administrative Agent which report
shall be unqualified as to going concern and scope of audit and shall
state that such consolidated financial statements present fairly the
financial condition of ASI and its Subsidiaries as at the dates indicated
and the results of their operations and their cash flows for the periods
indicated in conformity with GAAP applied on a basis consistent with prior
years (except for inconsistencies required by changes in GAAP and changes
approved by such accountants) and that the examination by such accountants
in connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards;
(c) together with each delivery of financial statements of ASI and
its Subsidiaries pursuant to paragraphs (a) and (b) above, commencing with
the financial statements for the period ending March 31, 1997, an
Officers' Certificate of ASI (i) stating that the signers have reviewed
the terms of this Agreement and the other Credit Documents and have made,
or caused to be made under their supervision, a review in reasonable
detail of the transactions and condition of ASI and its Subsidiaries
during the accounting period covered by such financial statements and that
such review has not disclosed the existence during or at the end of such
accounting period, and that the signers do not have knowledge of the
existence as at the date of the Officers' Certificate, of any condition or
event which constitutes a Default or an Event of Default, or, if any such
condition or event existed or exists, specifying the nature and period of
existence thereof and what action ASI has taken, is taking and proposes to
take with respect thereto and (ii) demonstrating in reasonable detail
compliance (as determined in accordance with this Agreement) during and at
the end of such accounting period with the restrictions contained in
Sections 6.06, 6.10 and 6.11.
(d) together with each delivery of financial statements of ASI and
its Subsidiaries pursuant to paragraph (b) above, commencing with the
financial statements for the period ended December 31, 1997, a written
statement by the independent public accountants giving the report thereon
(i) stating that their audit examination has included a review of the
terms of this Agreement and the other Credit Documents as they relate to
accounting matters, (ii) stating whether, in connection with their audit
examination, any condition or event, at any time during or at the end of
such period which constitutes a Default or an Event of Default has come to
their attention, and if such a condition or event has come to their
attention, specifying the nature and period of existence thereof, and
(iii) stating that based on their audit examination nothing has come to
their attention which causes them to believe that the information
contained in any of the certificates delivered therewith pursuant to
paragraph (c) above is not correct or that the matters set forth in the
compliance certificate delivered therewith pursuant to clause (ii) of such
paragraph (c) above for the applicable fiscal year are not stated in
accordance with the terms of this Agreement;
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(e) promptly upon receipt thereof, a notice listing any financial
statements of, or reports submitted by independent public accountants to,
ASI or any of its Subsidiaries in connection with any annual, interim or
special audit of the financial statements of ASI or any of its
Subsidiaries, including, without limitation, any comment letter submitted
by such accountants to the Audit Committee of ASI's Board of Directors in
connection with their annual audit, and upon the request of any Lender, a
copy of any such report or comment letter;
(f) promptly upon their becoming available, a notice listing any
financial statements, reports, notices and proxy statements sent or made
available generally by any Borrower or any of its Subsidiaries to its
public security holders, any regular and periodic reports and all
registration statements and prospectuses filed by any of them with any
securities exchange or with the SEC, or any comparable foreign bodies, and
any press releases and other statements made available generally by any of
them to the public concerning material developments in the business of ASI
or any Subsidiary, and, upon the request of any Lender, a copy of any such
document;
(g) promptly upon any executive officer of ASI obtaining knowledge
(i) of any condition or event which constitutes a Default or an Event of
Default, or becoming aware that any Lender has given any notice or taken
any other action with respect to a claimed Default or Event of Default,
(ii) that any person has given any notice to any Borrower or any
Subsidiary of any Borrower or taken any other action with respect to a
claimed default or event or condition of the type referred to in Section
7.04, (iii) of any condition or event which would be required to be
disclosed in a current report filed by any Borrower with the SEC, on Form
8-K if such Borrower were required to file such reports under the
Securities Exchange Act of 1934, as amended, or the rules and regulations
thereunder (or any successor thereof), or (iv) of a Materially Adverse
Effect, an Officers' Certificate specifying the nature and period of
existence of any such condition or event, or specifying the notice given
or action taken by such Lender or person and the nature of such Default,
Event of Default, claimed Default, claimed Event of Default, or claimed
default, event or condition referred to in Section 7.04, or Materially
Adverse Effect, and what action any Borrower or Subsidiary thereof has
taken, is taking and proposes to take with respect thereto or, in the case
of clause (iii) above, a copy of a current report on Form 8-K filed by
Holding with respect to such condition or event;
(h) promptly upon any executive officer of ASI obtaining knowledge
of (i) the institution of, or threat of, any action, suit, proceeding,
investigation or arbitration by any Governmental Authority or other person
against or affecting in any material respect any Borrower or any of its
Subsidiaries or any of their assets not previously disclosed by any
Borrower to the Lenders pursuant to the terms hereof, or (ii) any material
development in any such action, suit, proceeding, investigation or
arbitration (whether or not previously disclosed to the Lenders by the
Borrowers pursuant to the terms hereof), which, in any case, would be
reasonably likely to result in a Materially Adverse Effect, notice thereof
and copies of such other information as may be reasonably available to ASI
(without waiver of any applicable evidentiary privilege) to enable the
Lenders to evaluate such matters; and, in addition to the requirement set
forth in clauses (i) and (ii) of this subsection 5.01(h), Borrowers upon
request shall promptly give notice of the status of any action, suit,
proceeding, investigation or arbitration covered by a report delivered to
the Lenders pursuant to clause (i) or (ii) above to the Lenders and
provide such other information as may be reasonably available to it to
enable the Lenders to evaluate such matters;
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(i) as soon as practicable and in any event within ten days after
any Borrower or any of its ERISA Affiliates knows of the occurrence of any
"prohibited transaction," within the meaning of Section 406 of ERISA or
Section 4975 of the Code or similar event under other applicable foreign,
federal, state or local law, in connection with any Pension Plan or
Foreign Pension Plan or any trust created thereunder, which in any such
case would have a Materially Adverse Effect, an Officers' Certificate
specifying the nature thereof, what action has been taken, is being taken
or is proposed to be taken by any Borrower or any ERISA Affiliate of any
Borrower with respect thereto, and any action taken or threatened by the
Internal Revenue Service, Department of Labor or other Governmental
Authority with respect thereto (together with copies of all relevant
notices or other communications received from such entity);
(j) as soon as practicable and in any event by the time of each
delivery of the financial statements referred to in paragraph (b) above, a
consolidated plan, prepared in accordance with ASI's normal accounting
procedures (and which will represent management's reasonable estimate of
ASI's projected performance during such periods) applied on a consistent
basis, for the next succeeding three fiscal years of ASI and its
Subsidiaries, including (i) forecasted consolidated balance sheets and
consolidated statements of income, retained earnings and cash flows of ASI
and its Subsidiaries on a consolidated basis for such periods, (ii) such
information with respect to each fiscal quarter in the first year covered
by such plan, (iii) a forecast of the degree to which ASI and its
Subsidiaries will comply with Sections 6.10 and 6.11 and (iv) an
explanation and analysis of any material inconsistencies between such plan
as it related to the fiscal year most recently ended and the actual
performance of ASI and its Subsidiaries for such fiscal year;
(k) together with each delivery of financial statements of ASI and
its Subsidiaries pursuant to paragraph (b) above, an Officers' Certificate
of ASI stating, as of the date of such statements, the amount and terms of
all outstanding Intercompany Indebtedness and the obligors and obligees
thereunder, and that such Intercompany Indebtedness complies with the
terms hereof and of the other Credit Documents;
(l) with reasonable promptness, such other information and data with
respect to each Borrower or any of its respective Subsidiaries as from
time to time may be reasonably requested by any of the Lenders;
(m) to the extent requested by any Lender, as soon as practicable
and in any event within ten days of the later of such request and the
making of any such amendment or waiver, copies of amendments or waivers
with respect to Indebtedness of any Borrower or any of its respective
Subsidiaries (other than with respect to Obligations owing to the Lenders
hereunder);
(n) as soon as practicable and in any event within 135 days after
the end of each fiscal year of ASI, with respect to each Borrower (other
than ASI), (i) the combined balance sheet of such Borrower and its
Subsidiaries and (ii) the related combined statements of income and
retained earnings and cash flows of such Borrower and its Subsidiaries,
for such fiscal year, setting forth in comparative form the corresponding
figures as of the end of the previous year, all in reasonable detail, and
accompanied by a certificate of the chief financial officer (or, if there
is no chief financial officer, the officer functioning as the chief
financial officer) and chief accounting officer of ASI to the effect that
they fairly present the combined financial condition of such Borrower and
its Subsidiaries as at the dates indicated and the combined
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results of their operations and cash flows for the periods indicated, on a
basis consistent with the financial statements of ASI for such periods;
(o) as soon as practicable and in any event within 50 days after the
end of each of the first three fiscal quarters and 105 days after the end
of each fiscal year, an Officers' Certificate (i) containing a summary of
any transactions of the sort referred to in Section 6.02(a)(i), and any
mergers or transfers of the capital stock or substantially all the assets
of any Subsidiary pursuant to Section 6.02(a)(ii), which shall have been
completed during such quarter and (ii) confirming compliance with Section
6.02 during such quarter; and
(p) as soon as practicable and in any event within 105 days after
the end of the fiscal year of ASI ended December 31, 1996, (i) the
consolidated balance sheet of ASI and its Subsidiaries and (ii) the
related consolidated statements of income and retained earnings and cash
flows of ASI and its Subsidiaries for such fiscal years setting forth, in
comparative form, the corresponding amounts as of the end of and for the
previous year, all in reasonable detail and accompanied by a certificate
of the chief financial officer (or, if there is no chief financial
officer, the officer functioning as the chief financial officer) and chief
accounting officer of ASI to the effect that they fairly present the
financial condition of ASI and its Subsidiaries as at the dates indicated
and the results of their operations and cash flows for the periods
indicated based on ASI's normal accounting procedures and accompanied by a
report thereon of Ernst & Young LLP or other independent certified public
accountants of recognized national standing selected by ASI and reasonably
satisfactory to the Administrative Agent which report shall be unqualified
as to going concern and scope of audit and shall state that such
consolidated financial statements present fairly the financial condition
of ASI and its Subsidiaries as at the dates indicated and the results of
their operations and their cash flows for the periods indicated in
conformity with GAAP applied on a basis consistent with prior years
(except for inconsistencies required by changes in GAAP and changes
approved by such accountants) and that the examination by such accountants
in connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards;
SECTION 5.02. Books, Records and Inspections. Permit officers and
designated representatives of any Lender to visit and inspect any of the
properties or assets of such Borrower and any of its Subsidiaries in
whomsoever's possession, to examine the books of account of such Borrower and
any of its Subsidiaries, to make copies and take extracts therefrom and to
discuss the affairs, finances and accounts of such Borrower and of any of its
Subsidiaries with, and be advised as to the same by, its and their officers and
independent accountants, all upon reasonable notice and at such reasonable times
and intervals and to such reasonable extent as such Lender may desire.
SECTION 5.03. Maintenance of Property; Insurance; Good Repair. At
all times maintain in full force and effect insurance in such amounts and
covering such risks and liabilities as are in accordance with normal industry
practice in the applicable area. Each Borrower and each of its Subsidiaries will
ensure that all property and equipment used in or useful or necessary to its
business are kept in good repair, working order and condition (normal wear and
tear excepted), and that from time to time there are made to such property and
equipment all needful and proper repairs, renewals, replacements, extensions,
additions, betterments and improvements thereto, to the extent and in the manner
customary for companies in similar businesses. Each Borrower and each of its
Subsidiaries will maintain with financially sound and reputable insurance
companies insurance on all its properties, as
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described above, and will furnish to each Lender, upon written request,
information as to the insurance carried, and will not cancel any such insurance
without the consent of the Administrative Agent.
SECTION 5.04. Payment of Taxes and Claims. Pay and discharge all
foreign, federal, state or local taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits, or upon any properties
belonging to it, prior to the date on which penalties attach thereto, and all
claims (including claims for labor, services, materials and supplies) which, if
unpaid, might become a lien or charge upon any assets of such Borrower or any of
its Subsidiaries; provided, that neither such Borrower nor any Subsidiary shall
be required to pay any such tax, assessment, charge, levy or claim which is
being contested in good faith and by proper proceedings promptly instituted and
diligently conducted if it maintains adequate reserves with respect thereto in
accordance with GAAP.
SECTION 5.05. Consolidated Corporate Franchises. Do or cause to be
done all things necessary to preserve and keep in full force and effect its
existence, rights and authority, and franchises material to its respective
business; provided that any transaction permitted by Section 6.02 will not
constitute a breach of this Section 5.05.
SECTION 5.06. Compliance with Statutes, etc. Comply with all
applicable statutes, regulations and orders of, and all applicable restrictions
imposed by, any Governmental Authority (including those referred to in Section
6.14) other than those the non-compliance with which would not have a Materially
Adverse Effect.
SECTION 5.07. ERISA. (a) Comply in all material respects with the
applicable provisions of ERISA (except where noncompliance could not reasonably
be expected to result in a Materially Adverse Effect) and (b) furnish to each of
the Lenders (i) as soon as possible, and in any event within 10 days after any
Borrower or any ERISA Affiliate of any Borrower knows or has reason to know that
any Reportable Event has occurred that alone or together with any other
Reportable Event could reasonably be expected to result in liability of any
Borrower to the PBGC in an aggregate amount exceeding $10,000,000, a statement
of the chief financial officer of ASI setting forth details as to such
Reportable Event and the action that any Borrower, any Subsidiary of any
Borrower or any ERISA Affiliate of any Borrower is required or proposes to take
with respect thereto, together with a copy of the notice, if any, of such
Reportable Event given to the PBGC, (ii) promptly after receipt thereof, a copy
of any notice any Borrower or any ERISA Affiliate of any Borrower may receive
from the PBGC relating to the intention of the PBGC to terminate any Pension
Plan or Plans (other than a Pension Plan maintained by an ERISA Affiliate which
is considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
Section 414 of the Code) or to appoint a trustee to administer any such Pension
Plan, (iii) within 10 days after the due date for filing with the PBGC pursuant
to Section 412(n) of the Code a notice of failure to make a required installment
or other payment with respect to a Pension Plan, a statement of the chief
financial officer of ASI setting forth details as to such failure and the action
that any Borrower, any Subsidiary of any Borrower or any ERISA Affiliate of any
Borrower is required or proposes to take with respect thereto, together with a
copy of any such notice given to the PBGC, (iv) promptly and in any event within
10 days after receipt thereof by any Borrower or any ERISA Affiliate of any
Borrower from the sponsor of a Multiemployer Plan, a copy of each notice
received by any Borrower or any ERISA Affiliate of any Borrower concerning (A)
the imposition of Withdrawal Liability or (B) a determination that a
Multiemployer Plan is, or is expected to be, terminated or in reorganization,
both within the meaning of Title IV of ERISA and (v) promptly and in any event
within 10 days after any Borrower knows that any unfunded liability that is
likely to have a Materially Adverse Effect has arisen with respect to any
Foreign Pension Plan, a certificate of the chief financial officer of
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ASI setting forth details as to such occurrence and such action, if any, which
any Borrower, any Subsidiary of any Borrower or any ERISA Affiliate of any
Borrower is required or proposes to take, together with any notices required or
proposed to be filed with or by any Borrower, any Subsidiary of any Borrower or
any ERISA Affiliate of any Borrower, a Governmental Authority or the plan
administrator with respect thereto. Upon the request of the Administrative
Agent, the Borrowers will deliver to the Administrative Agent a copy of the
annual report (Form 5500) of each Pension Plan required to be filed with the
Internal Revenue Service. In addition to any certificates or notices delivered
to the Lenders pursuant to subsection (b) of this Section 5.07, copies of any
notices received by any Borrower or any Subsidiary of any Borrower or any ERISA
Affiliate of any Borrower required to be delivered to the Lenders hereunder
shall be delivered to the Lenders no later than 10 days after the date each such
notice has been received by any Borrower or any Subsidiary of any Borrower or
any ERISA Affiliate of any Borrower.
SECTION 5.08. Performance of Obligations. Perform in all material
respects all of its material obligations under the terms of each material
mortgage, indenture, security agreement, other debt instrument and contract and
agreement by which it is bound or to which it is a party or subject (except as
disclosed in Schedule 3.17).
SECTION 5.09. Waiver of Stay, Extension or Usury Laws. To the full
extent permitted by applicable law, not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, and actively
resist any attempts to claim the benefit of any stay or extension law or any
usury law or other law, which would prohibit or forgive any of them from paying
all or any portion of the principal of and/or interest on the Loans, Fees,
Letters of Credit and the Obligations, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the performance of this
Agreement or the other Credit Documents; furthermore, each Borrower and
Guarantor hereby expressly waives, to the full extent permitted by applicable
law, all benefit or advantage of any such law, and covenants that they will not
hinder, delay or impede the execution of any power herein granted to the Lenders
but will suffer and permit the execution of every such power as though no such
law had been enacted.
SECTION 5.10. Security Interests. (a) Perform and cause its
Subsidiaries which are Credit Parties to perform any and all acts and execute
any and all documents (including the execution, amendment or supplementation of
any financing statement and continuation statement or other statement, if
applicable) for filing under the provisions of the UCC and the rules and
regulations thereunder, or any other statute, rule or regulation of any
applicable foreign, federal, state or local jurisdictions, which are necessary
(or reasonably requested by the Collateral Agent), from time to time, in order
to grant and maintain in favor of the Collateral Agent for the ratable benefit
of the parties named in the applicable Security Documents as beneficiaries
thereof a security interest in each item of the Collateral of the type and
priority described in the relevant Security Document, perfected to the extent
contemplated by Section 3.09.
(b) Deliver or cause to be delivered to the Lenders from time to
time such other documentation, consents, authorizations, approvals and orders in
form and substance satisfactory to the Collateral Agent, as the Collateral Agent
shall deem reasonably necessary or advisable to perfect or maintain the Liens
created by the Security Documents for the benefit of the Lenders, including
assets which are required to become Collateral after the Effective Date.
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SECTION 5.11. Future Guarantors. (a) Promptly upon any person
becoming a direct or indirect Domestic Subsidiary (other than a Domestic
Subsidiary that would not be a Designated Subsidiary, or that would be a
Non-Material Subsidiary) or upon a Domestic Subsidiary that is a Designated
Subsidiary no longer meeting the criteria for being a Non-Material Subsidiary,
or upon a Domestic Subsidiary that is not a Non-Material Subsidiary becoming a
Designated Subsidiary, (i) such new or existing Domestic Subsidiary shall
execute a guarantee of all of the obligations owing to the Lenders hereunder,
substantially in the form of the Supplemental Guarantee attached hereto as
Exhibit H-1, and enter into a Supplemental Securities Pledge Agreement (under
which shares of any Foreign Subsidiary pledged by ASI or any Domestic Subsidiary
to secure Domestic Obligations will not exceed 65% of such Foreign Subsidiary's
voting capital) in respect of its obligations under such Supplemental Guarantee
in such forms as the Administrative Agent may reasonably require, to the fullest
extent permitted by applicable law, and (ii) Holding and ASI shall ensure that
Holding, ASI or any Subsidiary holding shares of capital stock of, or ownership
interests in, such new or existing Domestic Subsidiary shall (unless Holding,
ASI or such Subsidiary is already a Subsidiary Guarantor and such shares are
pledged to the Collateral Agent under an existing Security Document) enter into
a Supplemental Guarantee substantially in the form of Exhibit H-1 and a
Supplemental Securities Pledge Agreement, in such form as the Administrative
Agent may reasonably require, with such changes in each thereof as shall be
permitted by Section 10.10 or required by this Section 5.11 (all such
Supplemental Guarantees and Supplemental Securities Pledge Agreements
collectively the "Supplemental Documents"); provided that no new Supplemental
Document shall be required, or the form of such Supplemental Document shall be
modified, to the extent required to avoid (x) any violation of applicable law or
material risk thereof or (y) any violation of the provisions of any joint
venture or other material agreement governing or binding such Domestic
Subsidiary or other Subsidiary or any material risk thereof. Any Domestic
Subsidiary or other Subsidiary that cannot execute a Supplemental Document or
whose Supplemental Document must be amended for the foregoing reasons shall
promptly upon any change of law or waiver or lapse of the applicable contractual
restriction enter into a Supplemental Document or amend the existing
Supplemental Document to comply with this Section 5.11(a) in a manner
satisfactory to the Administrative Agent. Notwithstanding any other provision of
this paragraph (a), no Finance Subsidiary or Unified Receivables Company shall
be required to execute or deliver any Supplemental Document.
(b) Promptly upon any person becoming a direct or indirect Foreign
Subsidiary (other than a Foreign Subsidiary that would not be a Designated
Subsidiary, or that would be a Non-Material Subsidiary) or upon a Foreign
Subsidiary that is a Designated Subsidiary no longer meeting the criteria for
being a Non-Material Subsidiary, or upon a Foreign Subsidiary that is not a
Non-Material Subsidiary becoming a Designated Subsidiary, (i) such new or
existing Foreign Subsidiary shall execute a guarantee of all of the obligations
(other than the Domestic Obligations) owing to the Lenders hereunder,
substantially in the form of the Supplemental Guarantee attached hereto as
Exhibit H-2 and enter into a Supplemental Securities Pledge Agreement in such
form as the Administrative Agent may reasonably require in respect of its
obligations under such Supplemental Guarantee, (ii) Holding and ASI shall
procure that Holding, ASI or any Subsidiary holding shares of capital stock of,
or other ownership interests in, such new or existing Foreign Subsidiary shall
(unless Holding, ASI or such Subsidiary is already a Subsidiary Guarantor and
such shares are pledged to the Collateral Agent under an existing Security
Document) enter into a Supplemental Guarantee and a Supplemental Securities
Pledge Agreement in such form as the Administrative Agent may reasonably
require, which agreement shall, subject to the proviso below, grant a perfected
security interest in the capital stock of, or other ownership interests in, any
Subsidiary held by Holding, ASI or such Subsidiary (to the fullest extent
permitted by applicable law but under which shares of any such Foreign
Subsidiary pledged by a
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Foreign Subsidiary will not secure Domestic Obligations and shares of any such
Foreign Subsidiary pledged by ASI or a Domestic Subsidiary will not secure
Domestic Obligations to the extent such shares exceed 65% of the issuer's voting
capital) with such changes in each thereof as are permitted by Section 10.10 or
required by this Section 5.11 (all such Supplemental Guarantees and Supplemental
Securities Pledge Agreements being collectively called the "Foreign Supplemental
Documents"); provided that no new Foreign Supplemental Document shall be
required or the form of such Foreign Supplemental Document shall be modified, to
the extent required to avoid (v) any violation of applicable law, (w) liability
of the officers, directors or shareholders of such Foreign Subsidiary, (x)
violation of the provisions of any joint venture or other material agreement
governing or binding such Foreign Subsidiary or its subsidiaries, (y) material
risk of any of the foregoing or (z) costs which the Administrative Agent shall
determine to be excessive in relation to the benefits that would be conferred by
such Foreign Supplemental Document. Any Foreign Subsidiary that cannot execute a
Foreign Supplemental Document or whose Foreign Supplemental Document must be
modified for the foregoing reasons shall promptly upon any change of law or
waiver or lapse of the applicable contractual restriction enter into a Foreign
Supplemental Document or amend the existing Foreign Supplemental Document to
comply with this Section 5.11(b) in a manner satisfactory to the Administrative
Agent.
B. Each Borrower that is a party to this Agreement other than ASI
covenants and agrees that on and after the Effective Date, and for so long as
this Agreement is in effect and until the Commitments have been terminated and
the Loans, together with interest, Fees and all other Obligations have been paid
in full, and all Letters of Credit have been canceled or have expired and all
amounts drawn thereunder have been reimbursed in full, unless the Required
Lenders shall otherwise give written consent, it will not take or refrain from
taking any action as a result of which a Default would occur under any of the
covenants set forth in this Article V.
ARTICLE VI
NEGATIVE COVENANTS
A. ASI covenants and agrees that on and after the Effective Date,
and for so long as this Agreement is in effect and until the Commitments have
been terminated and the Loans, together with interest, Fees and all other
Obligations have been paid in full, and all Letters of Credit have been canceled
or have expired and all amounts drawn thereunder have been reimbursed in full,
unless the Required Lenders shall otherwise give written consent, neither ASI
nor any of its Subsidiaries will:
SECTION 6.01. End of Fiscal Year. In the case of ASI, change its
fiscal year end from that in effect at December 31, 1996.
SECTION 6.02. Consolidation, Merger or Sale or Purchase of Assets.
(a) Liquidate, dissolve or wind up its affairs, or merge with or into or
consolidate with any other person, or sell, lease or otherwise transfer any of
its assets (including the capital stock of, or other ownership interests in, any
Subsidiary), or purchase, lease or otherwise acquire any of the assets of any
other person, or agree to do or suffer any of the foregoing, except that:
(i) so long as all the Intercompany Merger and Transfer Conditions
have been satisfied,
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(A) any Subsidiary (except members of the EEIG Borrower) may merge
with or into, consolidate with or liquidate into another Subsidiary;
(B) any Subsidiary (except members of the EEIG Borrower) may merge
with or into, consolidate with or liquidate into ASI;
(C) ASI or any Subsidiary may transfer assets to any Designated
Subsidiary; and
(D) members of the EEIG Borrower organized under the laws of a
single jurisdiction may merge or consolidate with one another;
(ii) ASI or any Subsidiary may transfer assets to persons other than
Designated Subsidiaries (including through mergers of Non-Borrower Subsidiaries,
but not of Borrowers, with such persons or their subsidiaries and through sale
and leaseback transactions permitted under Section 6.13) so long as (1) any such
transfer or transfers for consideration in excess of $15,000,000 individually or
$50,000,000 in the aggregate during any fiscal year of ASI shall have been
approved in writing by the Required Lenders, (2) ASI or such Subsidiary, as the
case may be, shall receive as consideration for each such transfer cash and/or
Securities with a fair market value at least equal to that of the assets
transferred, (3) the aggregate amount of Securities received in connection with
all such transfers during any fiscal year after the date hereof and held by ASI
and its Subsidiaries shall not exceed $15,000,000, (4) any such cash shall be
applied to prepay Loans to the extent required by Section 2.11 and (5) to the
extent any such assets were pledged under the Security Documents to secure any
Obligations, any Securities received as consideration therefor shall be likewise
pledged to secure the same Obligations;
(iii) ASI or any Subsidiary may transfer or acquire inventory,
supplies and equipment and acquire other personal property, in each case in the
ordinary course of business, and may grant or acquire rights in or licenses to
intellectual property and related general intangibles in the ordinary course of
business;
(iv) so long as no Default or Event of Default shall have occurred
and be continuing at the time of or after giving effect to any such
transactions:
(A) ASI and its Domestic Subsidiaries may sell receivables as part
of a Permitted Receivables Financing;
(B) Subsidiaries of ASI in any jurisdiction may sell or discount
receivables in financing transactions customary in such jurisdiction,
entered into in the ordinary course of business and consistent with the
past practices of such Subsidiaries, to persons other than Affiliates;
provided that the aggregate book value of the receivables so sold or
discounted (x) without recourse during any fiscal year of ASI shall not
exceed $25,000,000 or the equivalent in one or more foreign currencies and
(y) with recourse at any time outstanding shall not exceed $50,000,000 or
the equivalent in one or more foreign currencies, in each case other than
receivables discounted or sold, with or without recourse, by Subsidiaries
organized and doing business in France, Italy or Spain, which shall not be
subject to this proviso; and
(C) ASI or any Subsidiary may sell or discount without recourse to
persons other than Affiliates any note received as consideration for a
sale of assets if the Net Cash Proceeds of each such sale or discount are
applied to the extent required by Section 2.11(d);
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(v) ASI or any Subsidiary may sell or dispose of assets which are
obsolete or no longer useful in any of its businesses;
(vi) ASI or any Subsidiary may liquidate Cash Equivalents and
Foreign Cash Equivalents;
(vii) ASI or any Subsidiary may donate or otherwise convey (1) its
inactive manufacturing facility in Louisville, Kentucky and (2) other property
with a book value or fair market value (whichever is less) not greater than
$1,000,000 in the aggregate during any fiscal year to any governmental body or
charitable institution;
(viii) ASI or any Subsidiary may (1) make Capital Expenditures
(determined without giving effect to clause (I) of the further proviso in the
definition of "Capital Expenditures"), (2) enter into and perform its
obligations under Capital Leases and Operating Leases to the extent permitted by
Sections 6.04 and 6.06, (3) make Investments permitted by Section 6.05, (4) make
Restricted Junior Payments or other dividends, distributions or share
repurchases to the extent not prohibited by Section 6.08, (5) contribute capital
stock of Holding to the ESOP, or make payments in the nature of contributions to
the ESOP (or payments to Holding which are promptly contributed by Holding to
the ESOP), if such payments (x) are paid by the ESOP to Holding as the purchase
price for common stock of Holding and promptly applied by Holding to make
contributions to the capital of ASI, (y) are applied by the ESOP to repay
advances made to the ESOP by ASI or (z) are in amounts not in excess of those
required to satisfy the obligations of participating employers to make
contributions to the ESOP based on the terms of the ESOP as in effect on the
Effective Date (or as amended to comply with applicable law or in order to
provide for the implementation in good faith by management of ASI of changes for
the purpose of providing employees with appropriate compensation and benefits)
and are applied by the ESOP to acquire common stock of Holding from any holder
thereof in an open market or other purchase for a price per share not greater
than the current market price per share at the time of such acquisition, and (6)
incur Indebtedness and Liens to the extent permitted by Sections 6.03 and 6.04,
and pay and discharge other obligations to the extent not prohibited under other
provisions of this Agreement; and
(ix) ASI or any Subsidiary may engage in the transactions described
in Schedule 6.02.
(b) Upon the sale or transfer to a person other than an Affiliate of
all capital stock of, or ownership interests in, a Non-Borrower Subsidiary in
accordance with the terms of this Section, such Subsidiary shall be released
from its obligations under the Credit Documents and all Liens on the capital
stock of, or ownership interests in, such Subsidiary arising under the Security
Documents shall without further act be released. Except as expressly provided
herein, no sale or transfer of capital stock or other ownership interests to any
Borrower or Subsidiary which shall be permitted by this Section shall result in
or require the release of any Lien on such stock or other ownership interests
existing under the Security Documents (except that (i) where any such capital
stock or other ownership interests are to be subjected at the time of transfer
to the Lien of the Security Documents to which the transferee is party, the
Collateral Agent shall, at the request of ASI, release such capital stock or
other ownership interests from the Lien of any other Security Documents to which
the transferor is party and (ii) in the case of the merger of constituent
corporations whose stock is subject to the Lien of the Security Documents, such
Lien on the stock of the non-surviving corporation shall be released upon the
consummation of such merger, provided that the stock of the surviving
corporation shall be subject to the Lien of the Security Documents.
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SECTION 6.03. Liens. Directly or indirectly create, incur, assume or
suffer or permit to exist any Lien upon or with respect to any of its property
or assets, whether now owned or hereafter acquired, or assign any right to
receive income, or file or permit the filing of any financing statement under
the UCC or any other similar notice of Lien under any similar foreign, domestic
or local recording or notice statute, except:
(a) Permitted Encumbrances;
(b) Liens created by this Agreement or the other Credit Documents;
(c) Liens existing on the date hereof and described in Schedule
3.12(a); provided that such Liens shall secure only those obligations
which they secure on the date hereof;
(d) Liens securing the purchase price, or Indebtedness incurred to
finance the purchase, of property, plant or equipment acquired after the
date hereof to the extent such Liens attach only to such property, plant
or equipment and improvements and accretions thereto;
(e) Liens deemed to exist in connection with sales or discounting of
receivables permitted under Section 6.02 and Capital Leases permitted
under Section 6.04 (including any related filings of financing
statements);
(f) customary Liens arising from or created in connection with the
issuance of letters of credit for the account of ASI or any Subsidiary
permitted under Section 6.04(h); provided that in each case such Liens
apply only to the raw materials, inventory, machinery or equipment in
connection with the purchase of which such letter of credit was issued or
to the balance of any account of the account party in respect of such
letter of credit with the bank issuing such letter of credit;
(g) Liens on assets of Subsidiaries which are not Designated
Subsidiaries, granted to secure Indebtedness of such Subsidiaries incurred
after the date hereof that is permitted by Section 6.04(i);
(h) Liens deemed to exist in connection with Investments in
repurchase agreements permitted under Section 6.05(a);
(i) Liens on assets at the time such assets are acquired by ASI or a
Subsidiary; provided that such Liens are not created in contemplation of
such acquisition;
(j) Liens on assets associated with sales offices purchased from
third parties by ASI or its Subsidiaries and securing Indebtedness of ASI
or such Subsidiaries issued as consideration for such purchases;
(k) in the case of equity Securities issued by a Joint Venture or a
Subsidiary other than a Designated Subsidiary, any call or similar right
in the nature of a right of first offer or a first refusal right of a
third party that is also an investor in such Joint Venture or Subsidiary
either existing as of the date hereof or created after the date hereof,
but only to the extent that such rights created after the date hereof do
not extend for a period of more than 90 days; and, in the case of equity
Securities issued by a Joint Venture or Subsidiary, nominee, trust or
directors'
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qualifying shares or similar arrangements designed to satisfy requirements
of applicable local laws;
(l) Liens on assets of any person at the time such person becomes a
Subsidiary; provided that such Liens are not created in contemplation of
such person becoming a Subsidiary;
(m) Liens on cash deposits subject to Cash Pooling Arrangements and
securing liabilities of Foreign Subsidiaries participating therein and
permitted by clause (t) of Section 6.04;
(n) Liens consisting of purchase options, calls or similar rights of
ASI or a Subsidiary of ASI to acquire capital stock of, or other ownership
interests in, another Subsidiary of ASI, provided that no such purchase
option, call or similar right shall be exercised by the holder thereof
unless such exercise, at the time of such exercise, is permitted by
Section 6.02 and, immediately following such exercise, the holder thereof
shall be in compliance with Section 5.10 and Section 5.11; provided
further that such purchase option, call or similar right shall be
subordinate to any security interest in favor of the Collateral Agent for
the benefit of the Lenders in the subject capital stock or other ownership
interest and shall not impair the rights or benefits of the Lenders under
any Security Document; and
(o) other Liens securing obligations in an aggregate amount not to
exceed $1,000,000 at any time outstanding.
SECTION 6.04. Indebtedness. Incur, create, assume or permit to exist
any Indebtedness except:
(a) the Obligations;
(b) the Indebtedness of ASI outstanding on the date hereof under the
Senior Indentures;
(c) the obligations of ASI in respect of the Subordinated
Securities;
(d) Indebtedness of ASI the Net Cash Proceeds of which are used to
finance the acquisition, redemption or prepayment of Indebtedness so long
as such new Indebtedness is subordinated to the Obligations to at least
the same extent, if any, and is otherwise on terms (including maturity,
interest rate, amortization and prepayment and redemption requirements,
and, in the good faith judgment of ASI, covenants and events of default)
at least as favorable to ASI and the Lenders, as the Indebtedness being
acquired, redeemed or prepaid;
(e) the obligations of ASI and its Subsidiaries (including any
Finance Subsidiary) in connection with sales of receivables permitted by
paragraph (A) or (B) of Section 6.02(a)(iv), to the extent such
obligations constitute Indebtedness;
(f) Intercompany Indebtedness arising out of loans and advances
permitted under Section 6.05;
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(g) obligations of ASI and its Subsidiaries in respect of (i)
Interest Rate Protection Agreements, Currency Protection Agreements and
commodity purchase or option agreements entered into in order to manage
existing or anticipated interest rate, exchange rate or commodity price
risks and (ii) credit derivatives (including any other credit risk
protection arrangements) entered into to hedge against changes in market
prices of ASI's debt obligations and, in either case, not for speculative
purposes;
(h) obligations of ASI and its Subsidiaries as account parties in
respect of letters of credit obtained in the ordinary course of business
in an aggregate undrawn amount not greater than $50,000,000 at any time
and in the case of Subsidiaries which are not Credit Parties, or of ASI's
Mexican and Brazilian Subsidiaries, permitted at the time of such
incurrence under clause (o) below;
(i) Indebtedness of Subsidiaries contemplated by Section 6.03(g) in
an aggregate principal amount at any time outstanding not greater than
$50,000,000;
(j) Indebtedness in a principal amount not greater than $75,000,000
and with a weighted average life to maturity at inception greater than
five years incurred to finance the construction and acquisition of the
Louisiana Facility;
(k) Indebtedness incurred to finance Capital Expenditures and
Capital Lease Obligations;
(l) purchase money Indebtedness in an aggregate amount outstanding
at any time not greater than $50,000,000 incurred in connection with the
acquisition by ASI and its Subsidiaries of sales offices not constituting
Capital Expenditures;
(m) Indebtedness of Subsidiaries existing at the time they become
Subsidiaries and not incurred in contemplation of their becoming
Subsidiaries;
(n) Indebtedness of ASI to Holding in a principal amount not greater
than $25,000,000;
(o) other unsecured Indebtedness of Subsidiaries which are not
Credit Parties, or of ASI's Mexican and Brazilian Subsidiaries, in an
aggregate principal amount at any time outstanding which, together with
the Indebtedness referred to in clause (h) above (to the extent such
Indebtedness referred to in clause (h) above constitutes Indebtedness of
Subsidiaries which are not Credit Parties or Indebtedness of ASI's Mexican
or Brazilian Subsidiaries) and clause (p) below, is not in excess of
$125,000,000; provided that, except as permitted by clause (s) below, such
Indebtedness shall not be Guaranteed by, and the holders of such
Indebtedness shall not otherwise have recourse to, ASI or any other Credit
Party (other than such Mexican and Brazilian Subsidiaries);
(p) Indebtedness of Credit Parties incurred before they became
Credit Parties (and not incurred in contemplation of their becoming Credit
Parties) and permitted at the time of such incurrence under clause (o)
above;
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(q) Guarantees in the nature of obligations on the part of ASI
to repurchase unused and not obsolete inventory of independent dealers
and wholesalers in connection with the Unified Receivables Program in
an aggregate amount at any time in effect not to exceed $181,500,000
during fiscal year 1997 and, during each fiscal year thereafter, 110%
of the aggregate amount permitted during the preceding fiscal year;
(r) Indebtedness of Credit Parties (other than ASI's Mexican
and Brazilian Subsidiaries) existing on the date hereof and set forth
on Schedule 6.04;
(s) Guarantees existing on the date hereof by Credit Parties
of Indebtedness referred to in clause (o) above, as set forth on
Schedule 6.04, and additional unsecured Indebtedness incurred by Credit
Parties (other than ASI's Mexican and Brazilian Subsidiaries) after the
date hereof (including additional unsecured Guarantees of Indebtedness
referred to in clause (o) above), provided that such Indebtedness
incurred after the date hereof shall not be incurred in an aggregate
principal amount exceeding $25,000,000 during any fiscal year of ASI;
(t) Indebtedness in connection with overdrafts under Cash
Pooling Arrangements not exceeding $20,000,000 in any jurisdiction;
(u) obligations of ASI in respect of letters of credit
supporting and/or Guarantees of the Indebtedness of LDC Holding
Companies in an aggregate amount not greater than $100,000,000; and
(v) subject to Section 6.07, Indebtedness of ASI issued to
replace all of the outstanding 10-1/2% Senior Subordinated Discount
Debentures and all of the outstanding 9- 7/8% Senior Subordinated
Notes.
SECTION 6.05. Advances, Investments and Loans. Directly or
indirectly make or own any Investment in any person or enter into any Joint
Venture, except for:
(a) Investments in Cash Equivalents and Foreign Cash
Equivalents;
(b) Investments in receivables owing to ASI and its
Subsidiaries and payable or dischargeable in accordance with customary
trade terms, and Investments in the Unified Receivables Company in an
aggregate amount not to exceed $20,000,000 and for each fiscal year
beginning January 1, 1998, an amount equal to 110% of the amount
available in the immediately preceding year;
(c) Intercompany Indebtedness incurred in the ordinary course
of business and either consistent with the past practices of ASI and
its Subsidiaries or for cash management purposes; provided that the
amount of Intercompany Indebtedness consisting of loans and advances by
Credit Parties to Subsidiaries which are not Credit Parties shall not
exceed $5,000,000 in the case of any one loan or advance or $25,000,000
in the aggregate at any time; provided however, that ASI shall be
permitted to invest in or provide loans in an aggregate amount not to
exceed $35,000,000 in order to construct a pottery-making facility in
Bulgaria ;
(d) Investments received as consideration in connection with
or arising by virtue of any merger, consolidation, sale or other
transfer of assets permitted under Section 6.02;
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(e) Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business;
(f) other Investments by ASI or any Subsidiary in Designated
Subsidiaries (or in Subsidiaries of ASI that as a result of any such
Investment become Designated Subsidiaries) that are Subsidiaries of or
part of the same Borrower Group as the investor; provided that the sum
(without duplication) of (i) Investments by Credit Parties in
Subsidiaries that are not Credit Parties and (ii) Investments by
Subsidiaries the capital stock of, or ownership interests in, which is
pledged under the Security Documents in Subsidiaries the capital stock
of, or ownership interests in, which is not so pledged shall not exceed
$5,000,000 individually or $25,000,000 during any fiscal year of ASI;
(g) Investments in or contributions to employee benefit plans
of ASI;
(h) advances to Holding or Investments in common stock of
Holding to the extent permitted under Section 6.08(f), and advances to
Holding to the extent permitted under Section 6.08(g);
(i) Investments existing on the date hereof in Subsidiaries,
Joint Ventures or LDC Holding Companies and other Investments existing
as of the Effective Date listed in Schedule 6.05;
(j) Investments consisting of deposits made in Cash Pooling
Arrangements permitted under clause (t) of Section 6.04;
(k) Capital Expenditures (determined without giving effect to
clause (I) of the further proviso in the definition of "Capital
Expenditures");
(l) Except as provided in clause (n) below, acquisitions of
companies, divisions of companies or similar business units (or of
substantially all the assets and business of any of the foregoing) (the
"Acquiree") engaged in a related line of business, a line of business
involving the sale of ASI's or its Subsidiaries' products or a line of
business involving manufacturing similar to that currently employed by
ASI or its Subsidiaries (each an "Acquisition") so long as, in the case
of each such Acquisition, such Acquisition satisfies the conditions set
forth in one of subparagraphs (i) and (ii) below:
(i) the consideration paid in connection with such
Acquisition consists solely of common stock of Holding; or
(ii) (A) the consideration paid in connection with
such Acquisition includes such common stock of Holding, the
payment of cash, the assumption of debt or the incurrence of
Funded Debt to the applicable selling entity (or any
combination of the foregoing) and (B) the aggregate amount of
all cash paid and Funded Debt so assumed or incurred in
connection with such Acquisition does not exceed the
Redemption Amount;
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provided that (x) at the time of any such proposed Acquisition under
the foregoing subparagraphs of this paragraph (l) and immediately after
giving effect thereto, no Event of Default or Default shall exist after
giving pro forma effect to the Acquisition as if such Acquisition had
been completed on the last day of the quarter of the most recent
available quarterly financial statements and (y) in the case of any
Acquisition of any Acquiree pursuant to subparagraph (ii) above for
consideration totaling $20,000,000 or more, ASI shall deliver to the
Administrative Agent, as promptly after such Acquisition as reasonably
practicable, either (1) a report prepared with respect to such Acquiree
in accordance with Statement on Auditing Standards No. 35 "Special
Reports--Applying Agreed Upon Procedures to Specified Elements,
Accounts, or Items of a Financial Statement" by a nationally recognized
independent public accounting firm or (2) in the case of an Acquiree
that files periodic reports with the Securities and Exchange Commission
and whose annual financial statements are audited by a nationally
recognized independent public accounting firm, the Form 10-K and Forms
10-Q filed by such Acquiree for the most recent fiscal year and the
four most recent fiscal quarters or (3) in the case of an Acquiree that
is not organized or doing business in the United States, the most
recent audited financial information available for such Acquiree for an
annual period;
(m) Investments in LDC Holding Companies not otherwise
permitted by this Section 6.05, in an aggregate amount outstanding of
not more than $50,000,000 at any time, provided that the reinvestment
by ASI in any LDC Holding Company of any fees, royalties or dividends
received in connection with the establishment and activities of such
LDC Holding Company shall not be included within said $50,000,000; and
(n) the Contemplated Acquisition.
SECTION 6.06. Leases. Directly or indirectly become liable in
any way, whether by assignment or as a guarantor or other surety, for
obligations to rent or lease any real or personal property if, after giving
effect thereto, the Consolidated Rental Payments of ASI in any fiscal year would
exceed (a) for the fiscal year ending December 31, 1997, $72,600,000, and (b)
for each subsequent fiscal year, an amount equal to 110% of the amount permitted
during the immediately preceding fiscal year.
SECTION 6.07. Prepayments of Indebtedness, etc. Directly or
indirectly (a) amend or modify (or permit the amendment or modification of) any
of the terms or provisions of the Indebtedness described in any of clauses (b)
through (e) of Section 6.04 (other than Indebtedness described in such clause
(e) by reference to paragraph (B) of Section 6.02(a)(iv)), or any indenture or
other agreement or instrument related thereto, if such amendment or modification
would add any covenant or default, or change the terms of any covenant or
default thereunder, in the good faith judgment of ASI, in a manner adverse to
the issuer of such Indebtedness, or would shorten the final maturity or average
life to maturity or require any payment to be made sooner than originally
scheduled or increase the interest rate applicable thereto or change any
subordination provision thereof; (b) except with the Net Cash Proceeds of any
Indebtedness permitted by Section 6.04(d), make (or give any notice in respect
of) any voluntary or optional payment or prepayment or redemption or acquisition
for value or defeasance of or exchange any Indebtedness described in any of
clauses (b) through (e) or clause (j) or (k) of Section 6.04 (other than
Indebtedness described in such clause (e) by reference to paragraph (B) of
Section 6.02(a)(iv)), except that (i) Indebtedness described in clause (j) or
(k) of Section 6.04 may be prepaid, redeemed or repurchased, provided that the
aggregate amount of cash expended in connection therewith shall not exceed
$1,000,000 during any fiscal year of ASI (except that payments
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under any Capital Lease resulting from events of casualty or obsolescence shall
not be deemed prepayments for purposes of this clause (b)); (ii) Indebtedness
described in any of clauses (b) through (e) or clause (j) or (k) of Section 6.04
may be prepaid, redeemed or repurchased in an aggregate principal amount not
exceeding the Redemption Amount; (iii) the 11-3/8% Senior Debentures may be
redeemed on or after May 15, 1997 with the proceeds of Loans hereunder, (iv) up
to $250,000,000 aggregate principal amount of outstanding 10-1/2% Senior
Subordinated Discount Debentures may be redeemed on or after June 1, 1998 with
the proceeds of Loans hereunder; and (v) all of the outstanding 10-1/2% Senior
Subordinated Discount Debentures and all of the outstanding 9-7/8% Senior
Subordinated Notes may be redeemed on or after June 1, 1998 with the issuance of
senior unsecured Indebtedness, if at the time of and after giving pro forma
effect to each such redemption (assuming such redemption and any related
incurrence of Indebtedness had occurred on the first day of the most recent
period of four fiscal quarters for which financial statements have been
delivered pursuant to Section 5.01(a) or (b), and assuming that any floating
rate Indebtedness incurred in connection with such redemption shall at all times
have borne interest at the rate applicable thereto at the date of the initial
incurrence of such Indebtedness), the ratio of Consolidated Total Debt to
Consolidated EBITDA as of the end of and for the most recent period of four
fiscal quarters for which financial statements shall have been delivered
pursuant to Section 5.01(a) or (b) does not exceed 2.5 to 1; provided that any
prepayment, redemption or repurchase otherwise permitted by this clause (b)
shall not be permitted at any time that an Event of Default has occurred and is
continuing; and (c) amend, modify or change the Organizational Documents of ASI
or any Subsidiary where such change would be reasonably likely to result in a
Materially Adverse Effect or enter into or permit or consent to any stockholder
or similar agreement or arrangement among holders of any ownership interest in
ASI or any Subsidiary the terms of which grant such holders the right to veto
any proposed asset sale that the Board of Directors of ASI or such Subsidiary
has determined is advisable in order to avoid or lessen the likelihood of a
Default or Event of Default or a default or breach under any of the Credit
Documents or the Senior Indentures or the indentures under which the
Subordinated Securities are issued.
SECTION 6.08. Dividends, etc. Directly or indirectly declare,
order, make or set apart any sum for or pay any Restricted Junior Payment,
except (a) as permitted in Section 6.07 (or to the extent required to enable ASI
or a Subsidiary to make a payment permitted by Section 6.07); (b) to make
interest payments on the Subordinated Indebtedness, including payment of accrued
interest and premium, if any, payable in connection with a redemption of any
such securities permitted by Section 6.07; (c) to make regularly scheduled
quarterly dividend payments on preferred stock in additional shares of such
preferred stock in accordance with the terms thereof or in cash in accordance
with the terms thereof; (d) ASI and its Domestic Subsidiaries may make payments
to Holding equal to their separate federal and state income tax liability,
provided that Holding uses such payments immediately to pay such taxes, and any
tax refund received by Holding is applied to the repayment of any monies
advanced by ASI or its Domestic Subsidiaries to meet such tax payments; (e)
advances made or cash dividends paid to Holding which advances or dividends are
used by Holding (i) to repurchase Capital Stock of Holding from officers and
employees of Holding, ASI or their Subsidiaries (or their estates) upon death,
disability or termination of employment of such officers and employees or to
settle for cash at any time any rights of an officer or employee with respect to
any stock option or similar rights; provided that the aggregate amount of all
such repurchases and cash settlements in each twelve-month period commencing on
the Effective Date and each anniversary thereof shall not exceed $10,000,000 or
(ii) for the purposes referred to in Section 6.02(a)(viii)(5); (f) advances made
or cash dividends paid to Holding which advances or dividends are used by
Holding to repurchase shares of its common stock, or payments by ASI to
repurchase shares of common stock of Holding, in each case from participants who
have received a distribution of shares from the ESOP to the extent such
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participants have a put right, or ASI or Holding has a call right, with respect
to such shares; (g) advances made or cash dividends paid to Holding which
advances or dividends are used to exercise rights or to satisfy liabilities or
pay expenses of Holding incurred in compliance with Article VI.B, including any
payments due under agreements and arrangements permitted by Article VI.B, taxes,
liabilities incurred in connection with the registration or issuance of its
capital stock or compliance with reporting obligations arising therefrom, or
customary indemnification obligations to officers and directors; and (h) as
contemplated by Section 3.04(a)(C); provided that no Default or Event of Default
shall have occurred and be continuing or would result therefrom. In addition to
any Restricted Junior Payments permitted by the foregoing clauses (a) through
(h), inclusive, ASI shall be permitted to make Restricted Junior Payments in a
maximum aggregate amount not to exceed the greater of (I) $15,000,000 in any
fiscal year or (II) in the event the ratio of Consolidated Total Debt of ASI to
Consolidated EBITDA of ASI is equal to or less than 2.00 to 1 measured as of
December 31 for any calendar year, during the twelve month period commencing on
the date of delivery of the financial statements for such calendar year pursuant
to clause (b) of Section 5.01, in an amount not to exceed 33% of Consolidated
Net Income of ASI for such calendar year, it being understood that following the
initial Restricted Junior Payments permitted by this clause (II), ASI may
continue to make Restricted Junior Payments in each calendar year following the
year in which such initial payments are made in an amount not exceeding 33% of
Consolidated Net Income of ASI for the calendar year preceding such payment in
the event that the ratio of Consolidated Total Debt of ASI to Consolidated
EBITDA of ASI is equal to or less than 2.25 to 1 measured as of December 31 for
such calendar year. No advances made to Holding as permitted by this Section
shall be treated as assets of ASI or its Subsidiaries for purposes of
determining compliance with ASI's other obligations under this Agreement.
Notwithstanding the foregoing, Restricted Junior Payments otherwise permitted by
this Section 6.08 shall not be permitted at any time that an Event of Default
has occurred and is continuing; provided that for all purposes of this Section
6.08 any Restricted Junior Payment permitted by this Section 6.08 at the date of
its declaration may be paid notwithstanding any subsequent change in
circumstances.
SECTION 6.09. Transactions with Affiliates. Directly or
indirectly enter into any transaction or series of transactions, whether or not
in the ordinary course of business, with any Affiliate other than on terms and
conditions substantially as favorable to ASI or such Subsidiary as would be
obtainable by ASI or such Subsidiary at the time in a comparable arm's-length
transaction with a person other than an Affiliate, except (a) ASI may perform
its obligations under the Amended and Restated Stockholders Agreement, (b) ASI
and any of its Subsidiaries may, in the ordinary course of business, engage in
transactions with ASI or its other Subsidiaries, as the case may be, provided
that ASI and its Subsidiaries shall not, pursuant to this clause (b), engage in
any such transaction or series of transactions that would not be permitted by
Section 6.02 or that could be reasonably expected to materially impair the
rights or benefits material to the interests of the Lenders under the terms of
the Credit Documents, (c) the payment of customary and reasonable fees to any
underwriters for underwriting in connection with public offerings of Securities
permitted by this Agreement, (d) the payment of fees from time to time for
financial and consulting services, such fees not to exceed the usual and
customary fees for similar services, and (e) the transactions otherwise
specifically permitted by Sections 6.02, 6.03, 6.04, 6.05, 6.06, 6.07 and 6.08.
SECTION 6.10. Consolidated Total Debt to Consolidated EBITDA
Ratio. Permit the ratio of (i) Consolidated Total Debt of ASI on the last day of
each fiscal quarter ending on or after any of the dates set forth below (but
prior to the next date set forth below) to (ii) Consolidated EBITDA
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of ASI as of the end of and for any period of four consecutive fiscal quarters
ending on or after any of the dates set forth below (but prior to the next date
set forth below) to exceed the ratio indicated with respect to such date.
Measuring Date Ratio
-------------- -----
Last day of March in the year 1997 4.25:1
Last day of December in the year 1997 3.50:1
Last day of June in the year 1998 3.25:1
Last day of December in the year 1998 3.00:1
Last day of June in the year 1999 2:75:1
Last day of December in the year 1999 2.50:1
and last day of each fiscal quarter thereafter
In the event ASI shall complete, directly or through a
Subsidiary, during any period of four fiscal quarters referred to above, a
permitted Acquisition (whether or not in reliance on paragraph (l) of Section
6.05), the ratio of Consolidated Total Debt of ASI to Consolidated EBITDA of ASI
shall be determined as of the end of and for such period by computing such ratio
on a pro forma basis as if such Acquisition (and any related incurrence of
Indebtedness) had been completed on the first day of such period.
SECTION 6.11. Interest Coverage Ratio. Permit the ratio of (i)
Consolidated Free Cash Flow of ASI to (ii) Consolidated Interest Expense of ASI
for any period of four consecutive fiscal quarters ending on or after any of the
dates set forth below (but prior to the next such date) to be less than the
ratio indicated below with respect to such date:
Measuring Date Ratio
-------------- -----
Last day of March in the year 1997 1.75:1
Last day of December in the year 1997 2.00:1
Last day of June in the year 1998 2.25:1
Last day of December in the year 1998 2.50:1
Last day of June in the year 1999 3.25:1
and last day of each fiscal quarter thereafter
SECTION 6.12. ERISA. (a) Engage or permit any ERISA Affiliate
to engage in any transaction in connection with which any Borrower or any of its
Subsidiaries or any of their ERISA Affiliates could be subject to either a civil
penalty assessed pursuant to Section 502(i) or (l) of ERISA or a tax imposed by
Section 4975 of the Code in either case in an amount which, together with all
other such penalties or taxes incurred subsequent to the date hereof, would
exceed $l,000,000;
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(b) fail or permit any ERISA Affiliate to fail to make full
payment when due of all amounts which, under the provisions of any Pension Plan,
any Borrower or any of its Subsidiaries or any of their ERISA Affiliates is
required to pay as contributions thereto; or permit to exist any accumulated
funding deficiencies, whether or not waived, with respect to all Pension Plans
in an aggregate amount greater than $5,000,000;
(c) permit the sum of the amount of unfunded liabilities with
respect to all Foreign Pension Plans (excluding each Foreign Pension Plan with
an amount of unfunded liabilities of zero or less) to exceed $50,000,000 or
permit the sum of the amount of unfunded current liabilities under all Pension
Plans (excluding each Pension Plan with an amount of unfunded current
liabilities of zero or less) to exceed $100,000,000; or
(d) fail or permit any ERISA Affiliate to fail to make any
payments in an amount individually or in the aggregate greater than $1,000,000
to any Multiemployer Plan that any Borrower or any of its Subsidiaries, or any
of their ERISA Affiliates, may be required to make under any agreement relating
to such Multiemployer Plan, or any law pertaining thereto.
As used in this Section 6.12, the term "accumulated funding
deficiency" has the meaning specified in Section 302 of ERISA and Section 412 of
the Code, and the term "amount of unfunded current liabilities" has the meaning
specified in Section 412(1)(8)(A) of the Code.
SECTION 6.13. Sale Leasebacks. Directly or indirectly become
or remain liable as lessee or as guarantor or other surety with respect to any
lease, whether an Operating Lease or a Capital Lease, of any assets (whether
real or personal or mixed) whether now owned or hereafter acquired, (i) which
ASI or any of its Subsidiaries has sold or transferred or is to sell or transfer
to any other person other than to a Subsidiary of ASI, or (ii) which ASI or any
of its Subsidiaries intends to use for substantially the same purpose as any
other property which has been sold or is to be sold or transferred by ASI or any
such Subsidiary to any person in connection with such lease, provided that ASI
or a Subsidiary of ASI may enter into a sale leaseback with a person who is not
an Affiliate with respect to its property located in Piscataway, New Jersey, and
with respect to additional sale leasebacks yielding not more than $10,000,000 of
gross proceeds in any fiscal year, provided that each such sale leaseback
otherwise complies with Section 6.02.
SECTION 6.14. Issuance and Sale of Stock. Issue or sell any
shares of its capital stock except (a) to qualify directors of Subsidiaries
where required by applicable law or to satisfy other requirements of applicable
law with respect to the ownership of capital stock of Foreign Subsidiaries, (b)
sales of preferred stock of ASI with an aggregate liquidation preference not to
exceed $100,000, (c) issuances and sales of capital stock by Subsidiaries other
than Designated Subsidiaries the Net Cash Proceeds of which are invested in the
businesses of such Subsidiaries, (d) issuances and sales of capital stock by
Designated Subsidiaries to ASI or other Designated Subsidiaries permitted by
Section 6.05(d) and (f), (e) issuances and sales of capital stock by any
Designated Subsidiary which is a Non-Material Subsidiary, provided that the Net
Cash Proceeds of such issuance and sale are invested in the business of such
Designated Subsidiary and (f) issuances and sales of capital stock and options,
warrants or rights to acquire stock by Subsidiaries to employees, officers and
directors of such Subsidiaries.
SECTION 6.15. Limitation on Restrictions on Subsidiary
Dividends and Other Distributions, etc. Directly or indirectly create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction on the ability of any of its subsidiaries to (a) pay
dividends
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or make any other distributions on its capital stock or any other interest or
participation in its profits, or pay any indebtedness, (b) make loans or
advances to any Borrower or Subsidiary or (c) transfer any of its properties or
assets to any Borrower or Subsidiary, except for such encumbrances or
restrictions existing under or by reason of (i) customary non-assignment
provisions in any lease governing a leasehold interest, (ii) any agreement or
other instrument of a person acquired by it at the time of such acquisition,
which encumbrance or restriction is not applicable to any person, or the
properties or assets of any person, other than the property or assets of the
person so acquired and was not entered into in contemplation of such
acquisition, (iii) restrictions existing on the date hereof under the Indentures
relating to the 9-1/4% Sinking Fund Debentures, the 10-7/8% Senior Notes, the
11-3/8% Senior Debentures and other agreements with investors in Subsidiaries
which are not Designated Subsidiaries and (iv) this Agreement and the other
Credit Documents; provided that this Section 6.15 shall not prohibit
encumbrances or restrictions on the ability of ASI to make such dividends,
distributions, loans, advances or transfers.
SECTION 6.16. No Further Negative Pledges. Except with respect
to prohibitions against other encumbrances on specific property encumbered to
secure payment of particular Indebtedness (which Indebtedness relates solely to
such specific property, and improvements and accretions thereto, and is
otherwise permitted hereby), enter into any agreement prohibiting the creation
or assumption of any Lien upon the properties or assets of any Borrower or
Subsidiary of a Borrower, whether now owned or hereafter acquired, or requiring
an obligation to be secured if some other obligation is secured.
SECTION 6.17. Changes in Business or Assets. (a) Cause or
permit ASI and its Subsidiaries taken as a whole substantially to alter the
character of their business.
(b) Take or permit any Subsidiary to take any action (i)
affecting the assets or cash flows of any Borrower or the Borrower Group of
which it is a part or (ii) concentrating Indebtedness within a particular
Borrower Group, if as a result of such action the ability of such Borrower to
pay or perform its obligations under this Agreement and the other Credit
Documents would be materially impaired.
B. Holding covenants and agrees that it will not engage in any
activity or incur any material liability other than the ownership of the capital
stock of ASI and related activities and liabilities incidental thereto.
Notwithstanding anything herein or in the other Credit Documents to the
contrary, Holding may engage in any activity incidental to the (a) maintenance
of its corporate existence and compliance with applicable law; (b) issuance of
equity Securities to any person (pursuant to the Stock Incentive Plan, the
Stockholder Rights Agreement, the Amended and Restated Stockholders Agreement,
the Stock Disposition Agreement, the ESOP, any other plan or agreement for the
benefit of employees, officers and/or directors or otherwise), including rights,
options and warrants to acquire such equity Securities; (c) registration of any
of such equity Securities (whether or not previously issued) under any federal,
state or local securities laws or similar laws of any jurisdiction outside the
United States; (d) listing of any equity Securities with any securities
exchanges, any interdealer quotation system or the National Association of
Securities Dealers, Inc.; (e) ownership and disposition of the common stock of
ASI (to the extent otherwise permitted hereunder); (f) guaranteeing Indebtedness
permitted by Sections 6.04(b), (c) and (d); (g) issuing periodic reports, proxy
statements and other communications to the holders of its Securities and
applicable securities exchange, interdealer quotation systems or the National
Association of Security Dealers, Inc., or to rating agencies, the SEC or
comparable regulatory bodies; (h) paying dividends and other amounts in respect
of its outstanding Securities (to the extent
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otherwise permitted hereunder); (i) accounting, legal, public relations,
investor relations, financial or management activities (including the employment
of employees, counsel, accountants, consultants, bankers, proxy solicitors,
advisors or other professionals) in connection with any of the foregoing
activities; or (j) entering into, and performing its obligations and exercising
its rights under, this Agreement and its guaranty of its Subsidiaries'
obligations hereunder and other agreements to which Holding is or is to become a
party, including the Amended and Restated Stockholders Agreement, the Stock
Disposition Agreement, the Stockholder Rights Agreement, the Stock Incentive
Plan, the ESOP and other plans and/or agreements for the benefit of employees,
officers and directors of Holding or any subsidiary of Holding.
C. Each Borrower that is a party to this Agreement other than
ASI covenants and agrees that on and after the Effective Date, and for so long
as this Agreement is in effect and until the Commitments have been terminated
and the Loans, together with interest, Fees and all other Obligations have been
paid in full and all Letters of Credit have been canceled or have expired and
all amounts drawn thereunder have been reimbursed in full, unless the Required
Lenders shall otherwise give written consent, it will not take or refrain from
taking any action as a result of which a Default would occur under any of the
covenants set forth above in this Article VI.
ARTICLE VII
EVENTS OF DEFAULT
Upon the occurrence of any of the following specified events
(each an "Event of Default"):
SECTION 7.01. Payments. Failure in the payment in the
applicable currency (i) when due (whether at stated maturity, by acceleration,
by notice of prepayment, under Section 2.06 or 2.11 or otherwise) of any
principal of the Loans, (ii) when due of any reimbursement with respect to any
L/C Disbursement, except to the extent due to the failure of any Lender to make
any Revolving Credit Loan when required to do so, or (iii) of any interest on
the Loans or any Fees or any other amounts owing hereunder or under any of the
other Credit Documents within five days after the date due; or
SECTION 7.02. Representations, etc. Any representation,
warranty or statement made, or deemed to have been made, by any Credit Party
herein or in any other Credit Document or in any written statement or
certificate at any time delivered pursuant hereto or thereto or in connection
herewith or therewith shall be untrue in any respect material to the interests
of the Lenders on the date as of which made or deemed made; or
SECTION 7.03. Covenants. Any Credit Party shall (i) fail to
perform, comply with or observe any term, covenant or agreement applicable to it
contained in Section 5.01(g), (h) or (i) (and such failure shall remain uncured
for five Business Days after notice to ASI by the Administrative Agent or any
Lender or after a Responsible Officer of such Credit Party shall otherwise
become aware of such failure), or Article VI (and, in the case of any failure
under Section 6.03 arising without any action on the part of ASI or any
Subsidiary, such failure shall remain uncured for 10 Business Days) or (ii)
default in the due performance or observance by it of any term, covenant or
agreement applicable to it (other than those referred to in Section 7.01 or 7.02
and clause (i) of this Section 7.03) contained in
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this Agreement or in any of the other Credit Documents and such default under
this clause (ii) shall not have been waived or remedied within 30 days after
notice thereof to ASI from the Administrative Agent or any Lender, with a copy
to the Administrative Agent; or
SECTION 7.04. Default Under Other Agreements. (a) ASI or any
of its Subsidiaries (other than Non-Material Subsidiaries) shall (i) fail to pay
principal of or interest on any Indebtedness (other than Indebtedness referred
to in Section 7.01 but including any guaranty of Indebtedness referred to in
Section 7.01 of any other Subsidiary) in excess of $10,000,000 individually or
$25,000,000 in the aggregate for ASI and its Subsidiaries and such failure shall
continue beyond the period of grace, if any, provided in the instrument or
agreement under which such Indebtedness or guaranty was created, or (ii) breach
or default in the observance or performance of any agreement, obligation or
condition relating to any such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which breach, default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
(or a trustee or agent on behalf of such holder or holders) to cause, any such
Indebtedness to become due prior to its stated maturity (or the stated maturity
of the underlying obligation, as the case may be); (b) any such Indebtedness of
ASI or any Subsidiary (other than Non-Material Subsidiaries) shall be declared
to be due and payable, or required to be prepaid (other than from the proceeds
of asset sales or the issuance of other securities to the extent required by the
Senior Indentures or by a regularly scheduled required prepayment) prior to the
stated maturity thereof or (c) there shall occur any default, event of default,
event of termination or other event entitling any person other than ASI or a
Subsidiary to accelerate any Indebtedness, or terminate the purchase of
receivables, under a Permitted Receivables Financing or under another sale of
receivables transaction under which the aggregate amount of uncollected accounts
receivable held by the applicable purchaser exceeds $10,000,000; or
SECTION 7.05. Bankruptcy, etc. (a)(x) A court shall enter a
decree or order for relief in respect of any Credit Party or any of its
Subsidiaries (other than Non-Material Subsidiaries) in an involuntary case under
the Bankruptcy Code or any applicable foreign, federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, which decree or
order is not stayed; or (y) an involuntary case is commenced against any Credit
Party or any of its Subsidiaries (other than Non-Material Subsidiaries) under
the Bankruptcy Code or any applicable foreign, federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect; or a decree or order
of a court having jurisdiction in the premises for the appointment of a
receiver, liquidator, sequestrator, trustee, custodian or other person having
similar powers over any Credit Party or any of its Subsidiaries (other than
Non-Material Subsidiaries), or over all or a substantial part of its property,
shall have been entered; or an interim receiver, trustee or other custodian of
any Credit Party or any of its Subsidiaries (other than Non-Material
Subsidiaries) for all or a substantial part of the property of any Credit Party
or any of its Subsidiaries (other than Non-Material Subsidiaries) is
involuntarily appointed, and the continuance of any such events referred to in
clause (y) for 60 days unless dismissed or bonded and stayed or discharged; or
(b) (x) Any Credit Party or any of its Subsidiaries (other
than Non-Material Subsidiaries) shall have an order for relief entered with
respect to it or shall commence a voluntary case under the Bankruptcy Code or
any applicable foreign, federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or shall consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or shall consent to the appointment of or
taking possession by a receiver, trustee or other custodian for all or a
substantial part of its property or the making by any Credit Party or any of its
Subsidiaries (other
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than Non-Material Subsidiaries) of any assignment for the benefit of creditors;
or (y) the inability or failure of any Credit Party or any of its Subsidiaries
(other than Non-Material Subsidiaries) to pay its debts as such debts mature, or
the admission by any Credit Party or any of its Subsidiaries (other than
Non-Material Subsidiaries) in writing of its inability to pay its debts as such
debts become due, or the Board of Directors (or any committee thereof) of any
Credit Party or any of its Subsidiaries (other than Non-Material Subsidiaries)
adopts any resolution or otherwise authorizes action to approve any of the
foregoing; or
SECTION 7.06. ERISA. (a) A Reportable Event or Reportable
Events, or a failure to make a required installment or other payment (within the
meaning of Section 412(n)(1) of the Code) shall have occurred with respect to
any Pension Plan or Pension Plans that reasonably could be expected to result in
liability of any Credit Party to the PBGC or to a Pension Plan in an aggregate
amount exceeding $10,000,000 and, within 30 days after the reporting of any such
Reportable Event to the Lenders or after the receipt by the Lenders of the
statement required pursuant to Section 5.07(b)(iii), the Administrative Agent
shall have notified ASI in writing that (i) the Required Lenders have made a
determination that, on the basis of such Reportable Event or Reportable Events
or the failure to make a required payment, there are reasonable grounds (A) for
the termination of such Pension Plan or Pension Plans by the PBGC, (B) for the
appointment by the appropriate United States district court of a trustee to
administer such Pension Plan or Pension Plans (C) for the imposition of a lien
in favor of a Pension Plan and (ii) as a result thereof an Event of Default
exists hereunder; or
(b) (i) a trustee shall be appointed by a Governmental
Authority to administer any Pension Plan or Pension Plans or Foreign Pension
Plan; or (ii) a Governmental Authority shall institute proceedings to terminate
any such Pension Plan or Pension Plans or Foreign Pension Plan; or (iii) any
Borrower or any of its Subsidiaries or any of its respective ERISA Affiliates
shall have withdrawn from a Pension Plan or any Foreign Pension Plan if, as of
the date thereof or any subsequent date, the sum of each of the Borrowers' and
their respective ERISA Affiliates' various liabilities (such liabilities to
include, without limitation, any liability to a Governmental Authority or to any
party under Sections 4062, 4063 or 4064 of ERISA or any other provision of law
and to be calculated after giving effect to the tax consequences thereof) that
are likely to result from or otherwise be associated with such events listed in
clauses (i) through (iii) above would exceed, in the aggregate for all such
events, $20,000,000; or
(c) Any Credit Party or any of its Subsidiaries or any of
their respective ERISA Affiliates as employer under a Multiemployer Plan shall
have made a complete or partial withdrawal from such Multiemployer Plan and the
plan sponsor of such Multiemployer Plan shall have notified such withdrawing
employer that such employer has incurred a withdrawal liability requiring annual
payments in an amount individually or in the aggregate exceeding $1,000,000;
unless (x) prior to the time any payment of such withdrawal liability is due in
accordance with Section 4912(c)(2) of ERISA, the plan sponsor agrees in writing
that the correct amount of the annual payment is less than $1,000,000, or (y)
prior to the time any payment of such withdrawal liability is due in accordance
with Section 4219(c)(2) of ERISA, a court of competent jurisdiction has enjoined
and continues to enjoin the collection of such payment, or (z) Section 4219 of
ERISA has been amended to provide that notification that such withdrawing
employer has incurred a withdrawal liability would not, in the ordinary course
or with the lapse of time, require the payment; provided that, in the event of
such amendment, an Event of Default shall be deemed to occur when any payment of
such withdrawal liability becomes due or would, in the ordinary course or with
the lapse of time, become due; or
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SECTION 7.07. Security Documents. Any of the Security
Documents shall, for any reason, not be or shall cease to be in full force and
effect or be declared to be null and void or any of the Security Documents shall
not give or shall cease to give the Collateral Agent for the benefit of the
Lenders the Liens, rights, powers and privileges purported to be created thereby
(including a perfected security interest in, and Lien on, all of the Collateral
subject thereto (or comparable interest under foreign law in the case of foreign
Collateral)), in favor of the Collateral Agent for the benefit of the Lenders,
superior to and prior to the rights of all third persons to the extent
contemplated hereby and subject to no other Liens (except to the extent
expressly permitted herein or therein), other than because such Security
Document is not then yet required to be executed and delivered hereunder or the
security interests created thereby perfected as contemplated in Section 3.09(a),
or any Credit Party shall fail to perform or observe any term, covenant or
agreement on its part to be performed or observed pursuant to any Security
Document or the validity or enforceability of the Liens granted, to be granted,
or purported to be granted, by any of the Security Documents shall be contested
by any Credit Party or any of its Affiliates, provided that no such defect in
the Security Documents, and no such failure to perform or observe any such term,
covenant or agreement shall give rise to an Event of Default under this Section
7.07 unless such defect or such failure shall affect Collateral that is or
should be subject to a Lien in favor of the Collateral Agent for the benefit of
the Lenders having an aggregate value in excess of $10,000,000 (without giving
effect to any exceptions to such terms, covenants or agreements or defects
otherwise permitted by the Security Documents) or is not corrected upon request
by the Administrative Agent upon reasonable notice; or
SECTION 7.08. Guarantees. Any Guarantee Document or any
provision thereof shall be declared to be unenforceable or null and void (other
than because such Guarantee Document is not then yet required to be executed and
delivered hereunder) or any Guarantor thereunder or any person acting by or on
behalf of such Guarantor shall deny or disaffirm any of such Guarantor's
obligations under any Guarantee Document or any Guarantor shall fail to perform
or observe any term, covenant or agreement on its part to be performed or
observed pursuant to any Guarantee Document; or
SECTION 7.09. Judgments. One or more judgments, decrees,
writs, warrants of attachment or similar process shall be entered or filed
against any Credit Party or any of its Subsidiaries (other than persons that are
Non-Material Subsidiaries) or any of their assets involving $25,000,000 or more
in the aggregate (in either case, not fully and adequately covered by insurance
by a carrier that has acknowledged coverage) and any such judgments, decrees,
writs, warrants of attachment or similar process shall not have been vacated,
discharged, stayed or bonded pending appeal within 60 days from the entry
thereof or within five days prior to the date of any proposed sale thereunder;
or
SECTION 7.10. Change in Control. There shall occur a Change in
Control;
THEN (i) upon the occurrence of any Event of Default described
in the foregoing Section 7.05 with respect to any Borrower, other than clause
(y) of Section 7.05(b), each of (x) the unpaid principal amount of and accrued
interest on all of the Loans of the affected Borrower, (y) an amount equal to
the maximum amount which may at any time be drawn under all Letters of Credit
then outstanding for the account of the affected Borrower (whether or not any
beneficiary under any Letter of Credit shall have presented, or shall be
entitled at such time to present, the drafts or other documents required to draw
under such Letter of Credit) and (z) any other amounts payable hereunder or
under any of the other Credit Documents by the affected Borrower shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by each Credit Party, and the obligation of each Lender to make any Loan
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to the affected Borrower (or to any Borrower in the case of such an Event of
Default relating to ASI) and the right of the affected Borrower (or of all
Borrowers in the case of such an Event of Default relating to ASI) to request
Letters of Credit shall thereupon automatically terminate, and (ii) upon the
occurrence and during the continuance of any other Event of Default (including
any Event of Default under Section 7.05), the Required Lenders may, by written
notice to ASI, (A) declare with respect to any Borrower or all Borrowers the
amounts described in clauses (x), (y) and (z) with respect to such Borrower or
Borrowers to be, and the same shall forthwith become, due and payable, together
with accrued interest thereon and/or (B) terminate the obligation of each Lender
to make any Loan to any Borrower or to all Borrowers and the right of any
Borrower or of all Borrowers to request Letters of Credit hereunder; provided,
that the foregoing shall not affect in any way the obligations of the Revolving
Credit Lenders to any Issuing Bank or Swingline Lender under Section 2.19(d) or
2.20(e) with respect to outstanding Letters of Credit or Swingline Loans. So
long as any Letter of Credit shall remain outstanding, any amounts described in
clause (y) above with respect to such Letter of Credit, when received by the
Administrative Agent, shall be held by the Administrative Agent as cash
Collateral for the obligation of the applicable Borrower to reimburse the
applicable Issuing Bank in the event of any drawing under such Letter of Credit,
and upon any drawing under any outstanding Letter of Credit in respect of which
the Administrative Agent holds any amounts described in clause (y) above, the
Administrative Agent shall apply such amounts held by the Administrative Agent
to reimburse the applicable Issuing Bank for the amount of such drawing. In the
event any Letter of Credit in respect of which the Administrative Agent holds
any amounts described in clause (y) above is cancelled or expires or in the
event of any reduction in the maximum amount available at any time for drawing
under such Letter of Credit ("Maximum Available Amount"), the Administrative
Agent shall apply the amount then held in excess of the Maximum Available Amount
immediately after such cancellation, expiration or reduction, if any, first to
the cash collateralization of any outstanding Letters of Credit in respect of
which ASI or any Borrower has failed to pay all or a portion of the amounts
described in clause (y) above, as the case may be, and second, to the payment in
full of the outstanding Obligations. Nevertheless, if, at any time within 60
days after acceleration of the maturity of any Loans, the Borrowers shall pay
all arrears of interest and all payments on account of the principal which shall
have become due otherwise than by acceleration (with interest on principal and,
to the extent permitted by law, on overdue interest, at the rates specified in
this Agreement) and all Defaults and Events of Default (other than non-payment
of principal of and accrued interest on the Loans, and payments of amounts
referred to in clause (y) above, in each case due and payable solely by virtue
of acceleration) shall be remedied or waived pursuant to Section 10.10, then the
Required Lenders by written notice to the Borrowers may rescind and annul the
acceleration and its consequences; and the Administrative Agent shall return to
ASI (for the accounts of the respective Borrowers that paid such amounts) any
amounts held by the Administrative Agent as cash collateral in respect of
amounts described in clause (y) above; but such action shall not affect any
subsequent Default or Event of Default or impair any right consequent thereon.
Upon any amounts described in clauses (x), (y) and (z) above becoming due
following any Event of Default, the Collateral Agent may enforce any or all of
the Liens and security interests created pursuant to any or all of the Security
Documents.
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ARTICLE VIII
THE ADMINISTRATIVE AGENT
SECTION 8.01. Appointment. The Chase Manhattan Bank is hereby
appointed the Administrative Agent hereunder by each Lender, and each Lender
hereby authorizes the Administrative Agent to act hereunder and under the other
instruments and agreements referred to herein (including each of the Credit
Documents) as its agent hereunder and thereunder. The Chase Manhattan Bank
agrees to act as such upon the express conditions contained in this Article VIII
and in the Credit Documents. The Administrative Agent agrees to give to each
Lender promptly a copy of any notice or certificate given to the Administrative
Agent by any of the Borrowers pursuant to the terms of this Agreement.
SECTION 8.02. Delegation of Duties. Any Agent may execute any
of its duties under this Agreement or any other Credit Document by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel or other
advisors concerning all matters pertaining to its duties and rights hereunder.
No Agent shall be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care except to the extent
otherwise expressly required by Section 8.03. Without limiting the foregoing,
the Administrative Agent may appoint LASG or CIBL as its agent to perform the
functions of the Administrative Agent (or any portion of such functions)
hereunder relating to the advancing of funds pursuant to this Agreement and
distribution of funds to the Lenders and to perform such other related functions
of the Administrative Agent hereunder as are reasonably incidental to such
functions.
SECTION 8.03. Powers; General Immunity. (a) Each Lender
irrevocably authorizes the Administrative Agent to take such action on such
Lender's behalf and to exercise such powers hereunder and under the other Credit
Documents and under the other instruments and agreements referred to herein and
therein (including the Security Documents) as are specifically delegated to it
by the terms hereof and thereof, together with such powers as are reasonably
incidental thereto. The Administrative Agent shall have only those duties and
responsibilities which are expressly specified in this Agreement and the other
Credit Documents and it may perform such duties by or through its agents or
employees (including LASG, CSI and CIBL). The duties of the Administrative Agent
shall be mechanical and administrative in nature; and the Administrative Agent
shall not have by reason of this Agreement a fiduciary relationship in respect
of any Lender; and nothing in this Agreement or in any of the other Credit
Documents, expressed or implied, is intended to or shall be so construed as to
impose upon the Administrative Agent any obligations in respect of this
Agreement or in respect of any of the other Credit Documents or the other
instruments and agreements referred to herein or therein except as expressly set
forth herein or therein. It is understood that the Documentation Agent, the
Co-Syndication Agents, the Senior Managing Agents, the Managing Agents and the
Co-Agents do not have any duties or obligations under this Agreement or any
other Credit Document (other than in their capacities as Lenders).
(b) None of the Administrative Agent, LASG, CSI and CIBL, nor
any other Agent, shall be responsible to any Lender for the execution,
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of this Agreement, any of the other Credit Documents, or any of the
Notes issued hereunder or for the issuance of any of the Letters of Credit and
such Lender's purchase of participations therein, or for any Liens or Guarantees
granted by, or purported to be granted by, any of
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the Credit Documents, or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statement or in
any financial or other statements, instruments, reports, certificates or other
documents in connection herewith or therewith furnished or made by the
Administrative Agent, LASG, CSI or CIBL, or any other Agent, to any Lender or by
or on behalf of any Credit Party to the Administrative Agent, LASG, CSI or CIBL,
or any other Agent, or any Lender, or be required to ascertain or inquire as to
the performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained herein or therein or as to the use of the
proceeds of the Loans or the Letters of Credit or of the existence or possible
existence of any Default or Event of Default.
(c) Neither the Administrative Agent, nor any other Agent, nor
any of its officers, directors, employees, agents, investigators, consultants,
attorneys-in-fact or affiliates (including LASG, CSI and CIBL) shall be liable
to any Lender for any action taken or omitted hereunder or under any of the
other Credit Documents or in connection herewith or therewith unless, but only
to the extent, resulting from its or their gross negligence or willful
misconduct. If the Administrative Agent shall request instructions from Lenders
with respect to any act or action (including the failure to take an action) in
connection with this Agreement or any of the other Credit Documents, the
Administrative Agent shall be entitled to refrain from such act or taking such
action unless and until it shall have received instructions from the Required
Lenders. Without prejudice to the generality of the foregoing, (i) each of the
Administrative Agent, LASG, CSI and CIBL shall be entitled to rely, and shall be
fully protected in relying, upon any communication, instrument or document
believed by it to be genuine and correct and to have been signed or sent by the
proper person or persons, and shall be entitled to rely and shall be protected
in relying on opinions and judgments of attorneys (who may be attorneys for any
of the Credit Parties or their Affiliates), accountants, experts and other
professional advisors selected by it; and (ii) no Lender shall have any right of
action whatsoever against the Administrative Agent as a result of the
Administrative Agent acting or (where so instructed) refraining from acting
under this Agreement or the other instruments and agreements referred to herein
in accordance with the instructions of the Required Lenders. The Administrative
Agent shall be entitled to refrain from exercising any power, discretion or
authority vested in it under this Agreement or the other Credit Documents or the
other instruments and agreements referred to herein or therein unless and until
it has obtained the instructions of Required Lenders.
(d) The agency hereby created shall in no way impair or affect
any of the rights and powers of, or impose any duties or obligations upon, the
Administrative Agent or any other Agent, in its individual capacity as a Lender
hereunder. With respect to its participation in the Loans or any Letter of
Credit, each Agent shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not performing the duties and
functions delegated to it hereunder, and the term "Lender" or "Lenders" or any
similar term shall, unless the context clearly otherwise indicates, include each
Agent in its individual capacity. Any Agent and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of banking, trust,
financial advisory or other business with any Credit Party or any Affiliate of
any Credit Party as if it were not performing the duties specified herein, and
may accept fees and other consideration from any Credit Party or any Affiliate
of any Credit Party for services in connection with this Agreement and the other
Credit Documents, including transactions contemplated hereby or thereby, and
otherwise without having to account for the same to the Lenders.
(e) Without limiting the foregoing, none of the Administrative
Agent, LASG, CSI or CIBL, or any other Agent, shall be under any obligation to
any Lender to ascertain or to inquire as to
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the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any of the other Credit Documents, or to
inspect the properties, books or records of any Credit Party or any of its
Subsidiaries or Affiliates. None of the Administrative Agent, LASG, CSI or CIBL,
nor any other Agent, shall be responsible to any Lender for the effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of this
Agreement or any other Credit Document or of any Lien or Guarantee granted or
purported to be granted hereby or thereby or for any representations,
warranties, recitals or statements made herein or therein or made in any written
or oral statements or in any financial or other statements, instruments,
reports, certificates or any other documents in connection herewith or therewith
furnished or made by the Administrative Agent, LASG, CSI or CIBL, or any other
Agent, to any Lender or by or on behalf of any Credit Party to the
Administrative Agent, LASG, CSI or CIBL, or any other Agent, or any Lender or be
required to ascertain or inquire as to the performance or observance of any of
the terms, conditions, provisions, covenants or agreements contained herein or
therein or as to the use of the Letters of Credit or the proceeds of the Loans
or of the existence or possible existence of any Default or Event of Default.
(f) Without limiting the foregoing, each of the Administrative
Agent, LASG, CSI and CIBL may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. Except for
actions expressly required to be taken by the Administrative Agent hereunder or
under any other Credit Document, the Administrative Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Credit Document unless it shall first receive such advice or concurrence
of the Required Lenders as it deems appropriate or it shall first be indemnified
to its satisfaction by the Lenders against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take such
action. The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement and the other Credit
Documents in accordance with a request of the Required Lenders, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Lenders as set forth in Section 10.04(a).
SECTION 8.04. Non-Reliance on Administrative Agent and Other
Lenders. (a) Each Lender expressly acknowledges that neither any Agent, nor any
of its officers, directors, employees, agents, attorneys-in-fact or affiliates
(including LASG, CSI and CIBL) has made any representations or warranties to it
and that no act by any Agent hereafter taken, including any review of the
affairs of any Credit Party, shall be deemed to constitute any representation or
warranty by any such person to any Lender. Each Lender represents to each Agent,
LASG, CSI, CIBL and each of the Credit Parties that it has, independently and
without reliance upon any Agent, LASG, CSI, CIBL or any other Lender and based
upon such documents and information as it has thought appropriate, made its own
appraisal of and investigation into the business, assets, liabilities,
operations, property, financial and other condition, prospects, solvency and
creditworthiness of each Credit Party and made its own decision to make its
Loans hereunder and to issue or participate in Letters of Credit hereunder and
enter into this Agreement and the other agreements contemplated hereby and will
make its own decisions in taking or not taking action under this Agreement and
the other agreements contemplated hereby. No Agent shall have any duty or
responsibility either initially or on a continuing basis to make any such
investigation or any such appraisal on behalf of Lenders or, except as provided
in Section 8.01, to provide any Lender with any credit or other information with
respect thereto whether coming into its possession before the making of the
Loans or the issuance of any Letter of Credit or at any time or times
thereafter, and no Agent shall further have any responsibility with respect to
the accuracy of or the completeness of any information provided to Lenders.
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(b) Each Lender represents to each other party hereto that it
is a bank, savings and loan association or other similar savings institution,
insurance company, investment fund or company or other financial institution
which makes or acquires commercial loans in the ordinary course of its business,
that it is participating hereunder as a Lender for its own account and for such
commercial purposes, and that it is capable of evaluating the merits and risks
of being a Lender hereunder. Each Lender acknowledges and agrees to comply with
the provisions of Section 10.04 applicable to the Lenders, and nothing in this
Section 8.04 shall be deemed to limit or impair such Lender's right to sell
participating interests in all or a portion of its rights and obligations under
this Agreement pursuant to Section 10.04(f).
SECTION 8.05. Indemnification. The Lenders agree to indemnify
each Agent (including the Administrative Agent in its capacity as Collateral
Agent), LASG, CSI and CIBL ratably according to their aggregate outstanding
Loans (excluding Swingline Loans), L/C Exposure, Swingline Exposure and unused
Commitments (excluding Swingline Commitments), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever, including
counsel fees and disbursements, imposed on, incurred by, charged by or asserted
against such Agent in its capacity as such (or as Collateral Agent) in any way
relating to or arising out of this Agreement or any other Credit Document, or
any documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or omitted to be
taken by such Agent, LASG, CSI or CIBL under or in connection with any of the
foregoing, but only to the extent that any of the foregoing is not paid by the
Credit Parties; provided that no Lender shall be liable to any Agent for the
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from such Agent's, LASG's, CSI's or CIBL's gross negligence or wilful
misconduct. If any indemnity furnished to any Agent, LASG, CSI or CIBL for any
purpose shall, in the opinion of the applicable Agent, be insufficient or become
impaired, the applicable Agent may call for additional indemnity and cease, or
not commence, to do the acts indemnified against until such additional indemnity
is furnished. The agreements in this subsection shall survive the payment of all
amounts payable hereunder and under the other Credit Documents and the
cancellation or expiration of the Letters of Credit. To the extent
indemnification payments made by the Lenders pursuant to the Section 8.05 are
subsequently recovered by the Administrative Agent from the Borrowers, the
Administrative Agent will promptly refund such previously paid indemnity
payments to the Lenders.
SECTION 8.06. Resignation by the Administrative Agent. (a) The
Administrative Agent may resign from the performance of all its functions and
duties hereunder and under the other Credit Documents at any time by giving 15
Business Days' prior written notice to ASI and the Lenders. The resignation of
the Administrative Agent shall also be a resignation from its functions and
duties as Collateral Agent. Such resignation shall take effect upon the
acceptance by a successor Administrative Agent of appointment pursuant to
clauses (b) and (c) below or as otherwise provided below and upon satisfaction
of any additional requirements under any of the Security Documents. The
appointment of a successor to the Administrative Agent shall be deemed also the
appointment of a successor Collateral Agent under the applicable Credit
Documents.
(b) Upon any such notice of resignation, the Required Lenders
shall appoint a successor Administrative Agent who shall be reasonably
satisfactory to ASI and shall be an incorporated bank or trust company.
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(c) If a successor Administrative Agent shall not have been so
appointed within said 15 Business Day period, the resigning Administrative Agent
with the consent of ASI (not to be unreasonably withheld or delayed) shall then
appoint a successor Administrative Agent who shall serve as Administrative Agent
until such time, if any, as the Required Lenders, with the consent of ASI,
appoint a successor Administrative Agent as provided above.
(d) If no successor Administrative Agent has been appointed
pursuant to clause (b) or (c) by the 20th Business Day after the date such
notice of resignation was given by the resigning Administrative Agent, the
Administrative Agent's resignation shall become effective and the Required
Lenders shall thereafter perform all the duties of such Administrative Agent
hereunder until such time, if any, as the Required Lenders, with the consent of
ASI, appoint a successor Administrative Agent as provided above.
SECTION 8.07. Security Documents, etc. Each Lender hereby
authorizes the Collateral Agent to enter into each of the Security Documents and
to take all action contemplated thereby. Each Lender agrees that each such
person shall not have any right individually to realize upon the security
granted by any Security Document, it being understood and agreed that such
rights and remedies may be exercised by the Collateral Agent for the benefit of
Lenders and the other beneficiaries thereof upon the terms thereof. The
Collateral Agent may assign its rights and obligations as Collateral Agent under
any of the Security Documents to any direct or indirect Subsidiary of the
Collateral Agent or to any trustee, which assignee, in each such case, shall be
entitled to all the rights of the Collateral Agent under the applicable Security
Document and all rights hereunder of the Collateral Agent with respect to the
applicable Security Document. In addition, the Lenders authorize the
Administrative Agent and the Collateral Agent to appoint one or more trustees
who shall hold, independently and separately, the benefit of the Obligations
hereunder and the Collateral therefor under any of the Security Documents
relating to the pledge of Securities of the Dutch Borrower and its Subsidiaries
and/or Security Documents executed by the U.K. Borrower or any of its
Subsidiaries, which appointment shall in no way affect the Obligations of the
Borrowers to the Lenders and the Administrative Agent hereunder and under the
other Credit Documents but the trustee thereof shall be entitled to all the
rights hereunder of the Collateral Agent with respect to the applicable Security
Document as if it had been a party hereto as Collateral Agent in respect
thereof.
SECTION 8.08. Determinations Pursuant to Security Documents.
In each circumstance where, under any provision of a Security Document or this
Agreement, the Collateral Agent or the Administrative Agent shall have the right
to grant or withhold any consent, exercise any remedy, make any determination or
direct any action by the Collateral Agent or the Administrative Agent, as
applicable, under such Security Document, the Collateral Agent or the
Administrative Agent, as applicable, shall act in respect of such consent,
exercise of remedies, determination or action, as the case may be, only with the
consent of and at the direction of the Required Lenders; provided, however, that
no such consent of the Required Lenders shall be required with respect to any
consent, determination or other matter that is, in the Collateral Agent's or the
Administrative Agent's, as applicable, reasonable judgment, ministerial or
administrative in nature or provided for in this Agreement, and provided that
the Collateral Agent is hereby authorized on behalf of all of the Lenders,
without the necessity of any further consent from any Lender, from time to time
prior to an Event of Default, to release portions of the Collateral from the
security interests and Liens imposed by the Security Documents in connection
with any dispositions of such portions of the Collateral permitted by the terms
of this Agreement or as may be required by law. In each circumstance where any
consent of or direction from the Required Lenders is required, the Collateral
Agent shall send to the Lenders a
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notice setting forth a description in reasonable detail of the matter as to
which consent or direction is requested and the Collateral Agent's proposed
course of action with respect thereto. In the event the Collateral Agent shall
not have received a response from any Lender within five Business Days after the
giving of such notice (unless such notice is given by mail, in which case 10
Business Days after the giving of such notice), such Lender shall be deemed to
have agreed to the course of action proposed by the Collateral Agent, provided
that such notice states that a failure to respond shall have the consequences
specified in this sentence.
ARTICLE IX
COLLECTION ALLOCATION MECHANISM
SECTION 9.01. Implementation of CAM. On the CAM Exchange Date,
(i) the Commitments shall automatically and without further act be terminated as
provided in Article VII and (ii) the Lenders shall automatically and without
further act be deemed to have exchanged interests in the Credit Facilities such
that in lieu of the interest of each Lender in each Credit Facility in which it
shall participate as of such date (including such Lender's interest in the
principal, reimbursement, interest and Fee obligations of each Credit Party in
respect of each such Credit Facility), such Lender shall hold an interest in
every one of the Credit Facilities (including the principal, reimbursement,
interest and Fee obligations of each Credit Party in respect of each such Credit
Facility and each L/C Reserve Account established pursuant to Section 9.02
below), whether or not such Lender shall previously have participated therein,
equal to such Lender's CAM Percentage thereof. Each Lender, each person
acquiring a participation from any Lender as contemplated by Section 10.04(f)
and each Credit Party hereby consents and agrees to the CAM Exchange. Each
Credit Party agrees from time to time to execute and deliver to the
Administrative Agent all such Notes and other instruments and documents as the
Administrative Agent shall reasonably request to evidence and confirm the
respective interests of the Lenders after giving effect to the CAM Exchange, and
each Lender agrees to surrender any Notes originally received by it in
connection with its Loans hereunder to the Administrative Agent against delivery
of any Notes so executed and delivered; provided, however, that the failure of
any Credit Party to execute or deliver or of any Lender to accept any such Note,
instrument or document shall not affect the validity or effectiveness of the CAM
Exchange.
SECTION 9.02. Letters of Credit. (a) In the event that on the
CAM Exchange Date any Letter of Credit shall be outstanding and undrawn in whole
or in part, or any amount drawn under a Letter of Credit shall not have been
reimbursed either by the applicable Account Party or with the proceeds of a
Revolving Credit Borrowing, each Lender which shall on such date, and before
giving effect to the CAM Exchange, have held a participation in such Letter of
Credit pursuant to Section 2.19(d) shall promptly pay over to the Administrative
Agent, in immediately available funds in the currency in which such Letter of
Credit is denominated, an amount equal to such Lender's Applicable Percentage of
such undrawn face amount or such unreimbursed drawing, as the case may be,
together with interest thereon from the CAM Exchange Date to the date on which
such amount shall be paid to the Administrative Agent at the rate that would be
applicable at the time to a Swingline Loan in a principal amount equal to such
amount and denominated in the relevant currency. The Administrative Agent shall
establish a separate account or accounts for each Lender for the amounts
received with respect to each such Letter of Credit from each Lender paying such
amounts pursuant to the preceding sentence. The Administrative Agent shall have
sole dominion and control over each such account (each, an "L/C Reserve
Account"), and the amounts deposited in each L/C Reserve Account shall be held
in
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such L/C Reserve Account until withdrawn as provided in paragraph (b), (c), (d)
or (e) below. The Administrative Agent shall maintain records enabling it to
determine the amounts paid over to it and deposited in the L/C Reserve Accounts
in respect to each Letter of Credit and the amounts on deposit in respect of
each Letter of Credit attributable to each Lender's CAM Percentage (the
aggregate of such amounts attributable to a Lender's CAM Percentage being
referred to as such Lender's "CAM Account"). The amounts paid by a Lender to the
Administrative Agent pursuant to this paragraph shall be held as a reserve
against the L/C Exposures, shall be the property of such Lender, shall not
constitute Loans to any Borrower and shall not give rise to any obligation on
the part of any Borrower to pay interest to such Lender, it being agreed that
the Borrowers' reimbursement obligations in respect of Letters of Credit shall
arise only at such times as drawings are made thereunder, as provided in Section
2.19.
(b) In the event that after the CAM Exchange Date any drawing
shall be made in respect of a Letter of Credit, the Administrative Agent shall,
at the request of the applicable Issuing Bank, withdraw from the L/C Reserve
Account of each of the Lenders (and from the respective CAM Accounts of each of
the Lenders, in accordance with each Lender's CAM Percentage) any amounts, up to
the amount of such drawing, deposited in respect of such Letter of Credit and
remaining on deposit and deliver such amounts to such Issuing Bank in
satisfaction of the reimbursement obligations of the Lenders under Section
2.19(d) (but not of the applicable Borrower under Section 2.19(e)). In the event
any Lender shall default on its obligation to pay over any amount to the
Administrative Agent in respect of any Letter of Credit as provided in this
Section 9.02, the Issuing Bank in respect of such Letter of Credit shall, in the
event of a drawing thereunder, have a claim against such Lender to the same
extent as if such Lender had defaulted on its obligations under Section 2.19(d),
but shall have no claim against any other Lender, notwithstanding the exchange
of interests in the applicable Account Party's reimbursement obligations
pursuant to Section 9.01. Each other Lender shall have a claim against such
defaulting Lender for any damages sustained by it as a result of such default,
including, in the event such Letter of Credit shall expire undrawn, its CAM
Percentage of the defaulted amount.
(c) In the event that after the CAM Exchange Date any Letter
of Credit shall expire undrawn, the Administrative Agent shall withdraw from the
L/C Reserve Account of each Lender the amount remaining on deposit therein in
respect of such Letter of Credit and distribute such amount to such Lender.
(d) With the prior written approval of the Administrative
Agent and the applicable Issuing Bank (not to be unreasonably withheld), any
Lender may withdraw the amount held in its L/C Reserve Account in respect of the
undrawn amount of any Letter of Credit. Any Lender making such a withdrawal
shall be unconditionally obligated, in the event there shall subsequently be a
drawing under such Letter of Credit, to pay over to the Administrative Agent,
for the account of the applicable Issuing Bank, on demand, its CAM Percentage of
such drawing.
(e) Pending the withdrawal by any Lender of any amounts from
its CAM Account as contemplated by the above paragraphs, the Administrative
Agent will, at the direction of such Lender and subject to such rules as the
Administrative Agent may prescribe for the avoidance of inconvenience, invest
such amounts in Cash Equivalents or Foreign Cash Equivalents. Each Lender which
has not withdrawn its CAM Percentage of amounts in its L/C Reserve Account as
provided in paragraph (d) above shall have the right, at intervals reasonably
specified by the Administrative Agent, to withdraw the earnings on investments
so made by the Administrative Agent with amounts in its CAM Account and to
retain such earnings for its own account.
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ARTICLE X
MISCELLANEOUS
SECTION 10.01. Payment of Expenses, etc. (a) Whether or not
any of the transactions contemplated hereby shall be consummated, ASI agrees to
pay promptly (i) all the actual costs and expenses of preparation of this
Agreement and each of the other Credit Documents, including any amendments or
supplements thereto, and all the costs of furnishing all opinions by counsel
for, or on behalf of, the Credit Parties or the Lenders (including any opinions
requested by the Lenders as to any legal matters arising hereunder or under any
of the other Credit Documents), and of the Credit Parties' performance of and
compliance with all agreements and conditions contained herein or in any of the
other Credit Documents on their part to be performed or complied with; (ii) the
reasonable fees and expenses of Cravath, Swaine & Moore and one local or foreign
counsel to the Lenders in each local or foreign jurisdiction in connection with
the negotiation, preparation, execution and administration of this Agreement and
the other Credit Documents, including any amendments or supplements thereto, and
the Loans hereunder and the issuance of Letters of Credit hereunder; (iii) the
fees, costs and expenses of creating, perfecting and maintaining Liens pursuant
to any of the Credit Documents, including filing fees and expenses, reasonable
fees and expenses of counsel (including one local or foreign counsel in each
local or foreign jurisdiction) to the Lenders and the reasonable fees and
expenses of any agent or trustee appointed pursuant to Section 8.07; and (iv)
the fees, costs and expenses (including reasonable fees and expenses of counsel,
including any local and foreign counsel and allocated costs of internal counsel,
and costs of settlements and of any other experts or advisors) incurred by or on
behalf of any Lender in enforcing any Obligations of or in collecting any
payments due from any Credit Party hereunder or under any of the other Credit
Documents by reason of any Default or Event of Default or in connection with any
refinancing or restructuring of the credit arrangements provided under this
Agreement or the other Credit Documents in the nature of a "work-out" or of any
insolvency or bankruptcy proceedings or otherwise.
(b) In addition to the payments pursuant to Section 10.01(a),
whether or not any of the transactions contemplated hereby shall be consummated,
ASI agrees (and, insofar as it is responsible for the indemnified liability in
question, each Borrower also agrees) to pay and indemnify and hold harmless each
of the Agents, CSI and each Lender and Issuing Bank, and the officers,
directors, employees, agents, advisors and affiliates of each of them
(collectively, the "Indemnitees") from and against, any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever other than in
respect of taxes (including the reasonable fees and expenses of counsel for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not such Indemnitee shall be
designated a party thereto), which may be imposed on, incurred by, or asserted
or threatened against that Indemnitee, in any manner relating to or arising out
of this Agreement or the other Credit Documents, the Lenders' or the Issuing
Banks' agreements to make the Loans or issue or participate in the Letters of
Credit hereunder or the use or intended use of the proceeds of any of the Loans
hereunder or of any of the Letters of Credit (the "indemnified liabilities");
provided that neither ASI nor any other Borrower shall have any obligation to an
Indemnitee hereunder to the extent that such indemnified liabilities arise from
the gross negligence or willful misconduct of such Indemnitee. To the extent
that the undertaking to pay, indemnify and hold harmless set forth in the
preceding sentence may be unenforceable, ASI shall contribute the maximum
portion which it is permitted to pay and satisfy
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under applicable law to the payment and satisfaction of all indemnified
liabilities incurred by the Indemnitees or any of them.
SECTION 10.02. Right of Setoff. In addition to any rights now
or hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence of an Event of Default, each
Lender is hereby authorized at any time and from time to time, without
presentment, demand, protest or other notice of any kind to any Credit Party or
to any other person, any such notice being hereby expressly waived, to set off
and to appropriate and apply any and all deposits (general or special) and any
other Indebtedness at any time held or owing by such Lender (including by
branches and agencies of such Lender wherever located) to or for the credit or
the account of any Credit Party against and on account of the Obligations and
liabilities of such Credit Party to such Lender under this Agreement or under
any of the other Credit Documents, including all interests in Obligations of
such Credit Party purchased by such Lender pursuant to Section 2.16, and all
other claims of any nature or description arising out of or connected with this
Agreement or any other Credit Document, irrespective of whether or not such
Lender shall have made any demand hereunder or thereunder or whether said
Obligations, liabilities or claims, or any of them, are contingent or unmatured.
SECTION 10.03. Notices. Except as otherwise expressly provided
herein, all notices and other communications provided for hereunder shall be in
writing (including telecopy or cable communications) and telecopied or
delivered, if to a Borrower, at the address specified opposite such Borrower's
signature below; if to the Administrative Agent or any Lender, at its address
specified in Schedule II; or at such other address as shall be designated by any
party in a written notice to the other parties hereto; provided that all notices
to any Borrower by any Lender or the Administrative Agent or Collateral Agent
may be delivered to such Borrower in care of ASI at ASI's address. All such
notices and communications shall be effective when delivered to a reputable
overnight courier or sent by telecopier, except that notices and communications
to the Administrative Agent or any Lender shall not be effective until received.
SECTION 10.04. Benefit of Agreement. (a) Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Borrowers, the Administrative
Agent or the Lenders that are contained in this Agreement shall bind and inure
to the benefit of their respective successors and assigns.
(b) Each Lender may assign to one or more banks or other
financial institutions all or a portion of its interests, rights and obligations
under this Agreement (including all or a portion of any of its Commitments and
the Loans at the time owing to it); provided, however, that (i) except in the
case of an assignment to an Affiliate of such Lender or a transfer of interests
as part of the CAM Exchange, ASI (and (x) in the case of an assignment of a U.S.
$ Revolving Credit Commitment, the Issuing Banks and (y) in the case of a
Multi-Currency Revolving Credit Commitment, the Issuing Banks and the Swingline
Lender) must give their prior written consent to such assignment (which consent
will not be unreasonably withheld), (ii) unless ASI shall otherwise agree, the
amount of the Loans and Commitments (excluding Swingline Loans and Swingline
Commitments) of the assigning Lender subject to each such assignment (determined
as of the date the Assignment and Acceptance with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $10,000,000 (or
the remaining amount of such Lender's Loans and Commitments), (iii) the parties
to each such assignment shall execute and deliver to the Administrative Agent an
Assignment and Acceptance, together with the Note or Notes subject to such
assignment and a processing and recordation fee of $3,500 (provided that
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payment of such fee shall not be required in the case of a CAM Exchange or an
assignment by a Lender to an Affiliate of such Lender or an assignment described
in paragraph (h) below), (iv) the assignee, if it shall not be a Lender, shall
deliver to the Administrative Agent an Administrative Questionnaire and (v)
after the CAM Exchange Date, each such assignment shall be of a single, and not
a varying, percentage of all the assigning Lender's rights and obligations under
this Agreement. Upon acceptance and recording pursuant to paragraph (e) of this
Section 10.04, from and after the effective date specified in each Assignment
and Acceptance, which effective date shall be at least five Business Days after
the execution thereof unless ASI and the Administrative Agent shall otherwise
agree to an earlier date, which earlier date shall not precede the date of such
acceptance and recording, (A) the assignee thereunder shall be a party hereto
and, to the extent of the interest assigned by such Assignment and Acceptance,
have the rights and obligations of a Lender under this Agreement and (B) the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Acceptance, be released from its obligations under this
Agreement, other than any obligation it may have under Section 2.18(g) (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto (but shall continue to be entitled to
the benefits of Sections 2.12, 2.14, 2.18, 10.01 and 10.05, as well as to any
Fees accrued for its account hereunder and not yet paid)).
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its Commitments, and the outstanding balances of its Loans, in each case without
giving effect to assignments thereof which have not become effective, are as set
forth in such Assignment and Acceptance, (ii) except as set forth in (i) above,
such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, any other Credit Document or any
other instrument or document furnished pursuant hereto or thereto, or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement, any other Credit Document or any other instrument or document
furnished pursuant hereto or thereto, or the financial condition of any Borrower
or any Subsidiary thereof or the performance or observance by any Borrower or
any Subsidiary thereof of any of its obligations under this Agreement, any other
Credit Document or any other instrument or document furnished pursuant hereto or
thereto; (iii) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; (iv) such assignee
confirms that it has received a copy of this Agreement, together with copies of
the most recent financial statements delivered pursuant to Section 5.01 and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (v)
such assignee makes the agreements and representation of a Lender in Section
8.04; (vi) such assignee appoints and authorizes the Administrative Agent and
the Collateral Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Credit Documents as are delegated
to the Administrative Agent and the Collateral Agent by the terms hereof and
thereof, together with such powers as are reasonably incidental thereto; and
(vii) such assignee agrees that it will perform in accordance with their terms
all the obligations which by the terms of this Agreement are required to be
performed by it as a Lender. In the case of any assignment to an Affiliate of
the assigning Lender, such Lender will also represent in the Assignment and
Acceptance that such assignment is being made for a valid business purpose,
specifying the same in reasonable detail if requested by ASI, and is not
inconsistent with the obligations of such Lender under Section 2.22(b).
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(d) The Administrative Agent, acting for this purpose as an
agent of each Borrower, shall maintain at one of its offices in The City of New
York a copy of each Assignment and Acceptance delivered to it and a register for
the recordation of the names and addresses of the Lenders, and the Commitments
of, and principal amount of the Loans owing to, each Lender pursuant to the
terms hereof from time to time (the "Register"). The entries in the Register
absent manifest error shall be conclusive and the Borrowers, the Administrative
Agent and the Lenders shall treat each person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement. All payments under the Credit Documents in respect of principal
or interest shall be made to the appropriate person named in the Register and
recorded in the Register. The Register shall be available for inspection by the
Borrowers and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee together with the
Note or Notes subject to such assignment, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) above and, if required, the written consent of ASI, the Administrative
Agent, the Issuing Banks and the Swingline Lender to such assignment, the
Administrative Agent shall (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give prompt
notice thereof to the Lenders. No assignment shall be effective unless it has
been recorded in the Register as provided in this paragraph (e). Within five
Business Days after receipt of notice, (i) the Borrowers, at their own expense,
shall execute and deliver to the Administrative Agent a new Note, if requested
by such assignee, payable to the order of such assignee (or, if such assignee
shall so request, to such assignee and registered assigns) representing Loans
made pursuant to the Commitments assumed by it pursuant to such Assignment and
Acceptance and (ii) the assigning Lender, if it shall cease to be a party hereto
as provided in paragraph (a) above, shall deliver the Note, if previously
issued, held by it to ASI for cancellation by the appropriate Borrower. The new
Note delivered to such assignee and its registered assigns shall be dated the
Effective Date and shall otherwise be in substantially the form of Exhibit B
hereto.
(f) Each Lender may without the consent of the Borrowers or
the Administrative Agent or any Issuing Bank or the Swingline Lender sell
participations to one or more banks or other financial institutions in all or a
portion of its rights and obligations under this Agreement (including all or a
portion of any of its Commitments and the Loans owing to it); provided, however,
that (i) such Lender's obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) any participating bank or other
financial institution shall be entitled to the benefit of the cost protection
and other provisions contained in Sections 2.12, 2.14, 2.18 and 10.01 to the
same extent as if it were a Lender provided that it shall not be entitled to
receive any more than the selling Lender would have received had it not sold the
participation, (iv) the Borrowers, the Administrative Agent, the Swingline
Lender, the Issuing Banks and the other Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Borrowers and the other Credit Parties relating
to the Loans and to approve any amendment, modification or waiver of any
provision of this Agreement (other than amendments, modifications or waivers
referred to in clause (i) of the first proviso appearing in Section 10.10(b),
but in each case only to the extent that the participating bank or other entity
would be affected thereby) or any other Credit Document and (v) the Borrowers
shall not be responsible for the withholding of any taxes and the filing of any
tax returns in respect of such participations.
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(g) Any Lender or participant may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Section 10.04, disclose to the assignee or participant or proposed assignee
or participant any information relating to the Borrowers and the other Credit
Parties furnished to such Lender by or on behalf of the Borrowers; provided
that, prior to any such disclosure of information designated by the Borrowers as
confidential, each such assignee or participant or proposed assignee or
participant shall execute an agreement whereby such assignee or participant
shall agree to preserve the confidentiality of such confidential information in
accordance with the provisions of Section 10.15.
(h) Any Lender may at any time assign all or any portion of
its rights under this Agreement and the Note issued to it to a Federal Reserve
Bank to secure extensions of credit by such Federal Reserve Bank to such Lender;
provided that no such assignment shall release a Lender from any of its
obligations hereunder.
(i) In exercising its right to assign its interests hereunder
to one or more Affiliates or to cause one or more branches or Affiliates to make
Loans on its behalf as contemplated by Section 2.02(b), each Lender agrees to
endeavor in good faith to avoid increased costs or withholding taxes for which
ASI has agreed to reimburse the Lenders hereunder to the extent such avoidance
does not result in costs for which such Lender shall not be entitled to
reimbursement hereunder and is not, in the judgment of such Lender, otherwise
disadvantageous to it.
(j) Other than as expressly permitted hereunder, the Borrowers
shall not assign or delegate any of their rights or duties hereunder.
SECTION 10.05. No Waiver; Remedies Cumulative. No failure or
delay on the part of the Administrative Agent or any Lender or any holder of a
Note or any Issuing Bank or the Collateral Agent in exercising any right, power
or privilege hereunder or under any other Credit Document and no course of
dealing between any Credit Party and the Administrative Agent, any Lender or the
holder of any Note or any Issuing Bank or the Collateral Agent shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies herein and in the other
documents expressly provided are cumulative and not exclusive of any rights or
remedies which the Administrative Agent, or any Lender or any Issuing Bank or
the Collateral Agent, would otherwise have. No notice to or demand on any Credit
Party in any case shall entitle any Credit Party to any other or further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of the Administrative Agent, any Lender or the holder of any Note or any Issuing
Bank or the Collateral Agent to any other or further action in any circumstances
without notice or demand.
SECTION 10.06. Calculations; Computations. (a) To the extent
that the determination of compliance with any covenant contained herein or other
provision hereof requires the conversion to Dollars of foreign currency amounts,
such Dollar amount shall be the Dollar Equivalent of the amount of such foreign
currency at the time such item is to be calculated or is to be or was incurred,
created or suffered or permitted to exist or assumed or transferred or sold for
purposes of this Agreement (except if such item was incurred, created or
assumed, or suffered or permitted to exist or transferred or sold prior to the
date hereof, such conversion shall be made based on the Dollar Equivalent of the
amounts of such foreign currency at the date hereof); provided that in
determining Consolidated Rental Payments for purposes of Section 6.06,
Indebtedness or purchase price for purposes
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of Section 6.04, rental payments, Indebtedness and purchase price incurred in
currencies other than Dollars for local operations and in the ordinary course of
business shall be converted into Dollars at the Dollar Equivalent determined as
of the Effective Date, except that, with respect to "Highly Inflationary
Countries" (as defined in Financial Accounting Standards Board No. 52), such
determinations shall be made using the Dollar Equivalent at the time such item
was incurred, created or suffered or permitted to exist or assumed or
transferred or sold for purposes of this Agreement.
(b) Notwithstanding anything herein to the contrary, but
without prejudice to the first sentence of Section 10.07(a), if at any time the
applicable interest rate, together with all fees and charges which are treated
as interest under applicable law (collectively the "Charges"), as provided for
herein or in any other document executed in connection herewith, or otherwise
contracted for, charged, received, taken or reserved by any Lender, shall exceed
the maximum lawful rate (the "Maximum Rate") which may be contracted for,
charged, taken, received or reserved by such Lender in accordance with
applicable law, the rate of interest payable, together with all Charges payable
to such Lender, shall be limited to the Maximum Rate.
SECTION 10.07. Governing Law; Submission to Jurisdiction;
Venue. (a) This Agreement and the other Credit Documents (other than Letters of
Credit and other than as expressly set forth in the other Credit Documents) and
the rights and obligations of the parties hereunder and thereunder shall be
construed in accordance with and governed by the laws of the State of New York.
Each Letter of Credit shall be governed by, and shall be construed in accordance
with, the laws or rules designated in such Letter of Credit, or if no such laws
or rules are designated, the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce, Publication No. 500
(the "Uniform Customs") and, as to matters not governed by the Uniform Customs,
the laws of the State of New York. Any legal action or proceeding with respect
to this Agreement or any other Credit Document may be brought in the courts of
the State of New York or of the United States for the Southern District of New
York, and by execution and delivery of this Agreement (including by execution
and delivery of a Guarantee), each Credit Party hereby irrevocably accepts for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Each Credit Party further irrevocably
consents to the service of process out of any of the aforementioned courts in
any such action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to the respective Credit Party at its address
for notices pursuant to Section 10.03, such service to become effective 15 days
after such mailing, and each Credit Party residing outside of the State of New
York hereby irrevocably appoints ASI at the following address as its agent for
service of process out of any of the aforementioned courts: American Standard
Inc., 15 West 54th Street, New York, NY 10019, Attention: Legal Department.
Nothing herein shall affect the right of the Administrative Agent, any Lender or
the holder of any Note or any Issuing Bank or the Collateral Agent to serve
process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against any Credit Party in any other jurisdiction.
(b) Each Credit Party hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Agreement or any other Credit Document brought in the courts referred to in
clause (a) above and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
SECTION 10.08. Counterparts. This Agreement may be executed
in any number of counterparts and by the different parties hereto on separate
counterparts, each of which when so
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executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts executed by all
the parties hereto shall be lodged with ASI and the Administrative Agent.
SECTION 10.09. Headings Descriptive; Entire Agreement. (a) The
headings of the several sections and subsections of this Agreement are inserted
for convenience only and shall not in any way affect the meaning or construction
of any provision of this Agreement.
(b) This Agreement and the other Credit Documents and the
other agreements or documents specifically referred to herein constitute the
entire agreement among the parties hereto and thereto regarding the subject
matter hereof and thereof and supersede all prior agreements, representations
and understandings relating to such subject matter.
SECTION 10.10. Waivers; Amendment. (a) No failure or delay of
the Administrative Agent or any Lender, any Issuing Bank or the Collateral Agent
in exercising any power or right hereunder or under any other Credit Document
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the
Administrative Agent and the Lenders, the Issuing Banks and the Collateral Agent
hereunder and under the other Credit Documents are cumulative and are not
exclusive of any rights or remedies which they would otherwise have. No waiver
of any provision of this Agreement or any other Credit Document or consent to
any departure by any Credit Party therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) below, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. No notice or demand on any Credit Party in any case shall
entitle such Credit Party to any other or further notice or demand in similar or
other circumstances.
(b) Neither this Agreement nor any other Credit Document, nor
any provision hereof or thereof, may be waived, amended or modified (including
by the release of any Obligations of any Credit Party under a Credit Document)
except pursuant to an agreement or agreements in writing entered into by, or
approved in writing by, ASI, any other affected Borrower and the Required
Lenders; provided, however, that no such agreement shall (i) decrease the
principal amount of, or extend the maturity of or any scheduled principal
payment date (it being understood that, for purposes of this clause, principal
payments required by Section 2.06 shall constitute scheduled principal payments;
but principal payments required by paragraphs (b), (c) and (d) of Section 2.11
shall not constitute scheduled principal payments) or date for the payment of
any interest in respect of, any Loan, or any date for reimbursement of an L/C
Disbursement, or waive or excuse any such payment or any part thereof, or
decrease the rate of interest on any Loan or L/C Disbursement, without the prior
written consent of each Lender affected thereby, (ii) increase the amount of any
Commitment of or impose any additional obligations on any Lender without the
prior written consent of such Lender (other than pursuant to Section 2.21), or
extend any Commitment or decrease the Fees of any Lender without the prior
written consent of such Lender, (iii) amend or modify the provisions of Section
2.15, the provisions of this Section or the definition of "Required Lenders",
without the prior written consent of each affected Lender, (iv) change the
allocation among the Lenders of any prepayment made under Section 2.11 without
the prior written consent of each Lender affected thereby (provided that this
clause (iv) shall not be construed to require any consent, other than the
consent of the Required Lenders or any consent expressly required by clause (i)
above, to an agreement that would change the amount of, or extend the date for,
or waive or excuse, any such prepayment or that would permit any new tranche of
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Indebtedness incurred hereunder to share not more than ratably in any such
prepayment), (v) effect the release of any Lien granted under any Security
Document with respect to any Collateral with a book value in excess of
$50,000,000 during any fiscal year or $100,000,000 during the term of this
Agreement (in each case net of any released Collateral which shall subsequently
have been re-pledged under the Security Documents), other than as permitted
under this Agreement and the other Credit Documents, or effect the release of
any of ASI, the other Borrowers, or any other Credit Party, collectively or
individually, from any monetary obligations under the Credit Documents (except
as permitted under the Credit Documents, or under circumstances where any Credit
Party to be released would not have been required to issue a Supplemental
Guarantee under Section 5.11 if the facts on the date of release had existed
immediately prior to the incurrence by such Credit Party of the obligations to
be released), in each case without the prior written consent of each Lender or
as permitted under the Credit Documents, (vi) amend Article IX in a manner
adverse to any Lender without the consent of such Lender or (vii) effect any
waiver, amendment or modification that by its terms adversely affects the rights
of Lenders participating in certain of the Credit Facilities differently from
those of Lenders participating in other Credit Facilities, without the consent
of a majority in interest of the Lenders participating in the adversely affected
Credit Facilities or change the relative rights of the Lenders participating in
different Credit Facilities (other than as contemplated by clause (iv) above)
without the consent of a majority in interest of Lenders participating in each
adversely affected Credit Facility; provided further that no such agreement
shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent or any Issuing Bank or the Swingline Lender hereunder or of
the Collateral Agent under any Security Document without the prior written
consent of the Administrative Agent or such Issuing Bank, the Swingline Lender
or the Collateral Agent, as the case may be. Each Lender shall be bound by any
waiver, amendment or modification authorized by this Section regardless of
whether any Note held by it shall have been marked to make reference thereto,
and any consent by any Lender pursuant to this Section shall bind any person
subsequently acquiring a Note from it, whether or not such Note shall have been
so marked.
(c) Notwithstanding the foregoing, any Security Document may,
and upon the request of ASI shall, be amended, modified or terminated, without
the necessity of any further approval, in order to effect the release of the
Liens granted under the Security Documents with respect to any Collateral (i)
that is being sold or otherwise disposed of to a person other than Holding, ASI
or a Subsidiary thereof (or to ASI or any Subsidiary to the extent expressly
contemplated by Section 6.02) in a transaction permitted by this Agreement or
(ii) that is being released as contemplated by Section 10.19. Upon the request
of ASI, the Collateral Agent will, at ASI's expense, confirm any such release in
writing, but without representation or warranty.
(d) Notwithstanding the foregoing, any Swingline Loan
Agreement or Issuing Bank Agreement may be waived, amended or modified by the
parties thereto with the written approval of the Administrative Agent if and to
the extent that such waiver, amendment or modification would be permitted in
connection with the execution and delivery of a replacement of such agreement.
SECTION 10.11. Survival. (a) All representations and
warranties made herein and in the other Credit Documents shall survive the
execution and delivery of this Agreement and the other Credit Documents, the
making of the Loans hereunder and the execution and delivery of any Notes issued
and the issuance of the Letters of Credit.
(b) Notwithstanding anything in this Agreement or implied by
law to the contrary, the agreements of the Borrowers set forth in Sections 2.12,
2.14, 2.18 and 10.01 shall survive the repayment
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of the Loans, the cancellation or expiration of the Letters of Credit and the
reimbursement of any amount drawn thereunder and the termination of this
Agreement.
SECTION 10.12. Severability. In case any provision in or
obligation under this Agreement or the other Credit Documents shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.
SECTION 10.13. Independence of Covenants. All covenants
hereunder shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitation of, another
covenant shall not avoid the occurrence of a Default or an Event of Default if
such action is taken or condition exists.
SECTION 10.14. Judgment Currency. (a) The Borrowers'
obligations hereunder and under the other Credit Documents to make payments in
Dollars or in any Alternative Currency (the "Obligation Currency") shall not be
discharged or satisfied by any tender or recovery pursuant to any judgment
expressed in or converted into any currency other than the Obligation Currency,
except to the extent that such tender or recovery results in the effective
receipt by the Administrative Agent or a Lender of the full amount of the
Obligation Currency expressed to be payable to the Administrative Agent or such
Lender under this Agreement or the other Credit Documents. If, for the purpose
of obtaining or enforcing judgment against any Borrower or any other Credit
Party in any court or in any jurisdiction, it becomes necessary to convert into
or from any currency other than the Obligation Currency (such other currency
being hereinafter referred to as the "Judgment Currency") an amount due in the
Obligation Currency, the conversion shall be made, at the Dollar Equivalent of
such amount, in the case of any Alternative Currency or Dollars, and, in the
case of other currencies, the rate of exchange (as quoted by the Administrative
Agent or if the Administrative Agent does not quote a rate of exchange on such
currency, by a known dealer in such currency designated by the Administrative
Agent) determined, in each case, as of the date immediately preceding the day on
which the judgment is given (such Business Day being hereinafter referred to as
the "Judgment Currency Conversion Date").
(b) If there is a change in the rate of exchange prevailing
between the Judgment Currency Conversion Date and the date of actual payment of
the amount due, the Borrowers covenant and agree to pay, or cause to be paid,
such additional amounts, if any (but in any event not a lesser amount), as may
be necessary to ensure that the amount paid in the Judgment Currency, when
converted at the rate of exchange prevailing on the date of payment, will
produce the amount of the Obligation Currency which could have been purchased
with the amount of Judgment Currency stipulated in the judgment or judicial
award at the rate of exchange prevailing on the Judgment Currency Conversion
Date.
(c) For purposes of determining the Dollar Equivalent or rate
of exchange for this Section, such amounts shall include any premium and costs
payable in connection with the purchase of the Obligation Currency.
SECTION 10.15. Confidentiality. Each Lender agrees (which
agreement shall survive the termination of this Agreement) that financial
information, information from any Borrower's books and records, information
concerning any Borrower's trade secrets and patents and any other information
received from the Borrowers hereunder which at the time of receipt is clearly
labeled as confidential and
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subject to this Section 10.15 shall be treated as confidential by such Lender,
and each Lender agrees to use its best efforts to ensure that such information
is not published, disclosed or otherwise divulged to anyone other than employees
or officers of such Lender and its counsel and agents; provided it is understood
that the foregoing shall not apply to:
(i) disclosure made with the prior written authorization of a
Borrower;
(ii) disclosure of information (other than that received from
the Borrowers prior to or under this Agreement) already known by, or in
the possession of such Lender without restrictions on the disclosure
thereof at the time such information is supplied to such Lender by the
Borrowers hereunder;
(iii) disclosure of information which is required by
applicable law or legal process or to a governmental agency having
supervisory authority over any party hereto;
(iv) disclosure of information to the extent necessary or
advisable in connection with any suit, action or proceeding in
connection with the enforcement of rights hereunder or under any other
Credit Document or in connection with the transactions contemplated
hereby or thereby;
(v) disclosure to any bank (or other financial institution)
which may acquire a participation or other interest in the Loans or
rights of any Lender hereunder or under the other Credit Documents;
provided that such bank (or other financial institution) agrees to
maintain the confidentiality of any such information to be received in
accordance with the provisions of this Section 10.15;
(vi) disclosure by any party hereto to any other party hereto
or their counsel or agents;
(vii) disclosure by any party hereto to its Affiliates subject
to the confidentiality obligations of this Section; or
(viii) disclosure of information that prior to such disclosure
has become public knowledge through no violation of this Agreement.
SECTION 10.16. Negotiation in the Event of Certain Tax Law
Changes. Each of ASI, each other Borrower and each Lender agrees that in the
event any change in the tax laws of any jurisdiction outside the United States
shall limit the deductibility of interest on any of the Loans in determining the
taxable income of ASI or any Subsidiary, it will, at the request of ASI,
negotiate in good faith with the other parties hereto with a view to agreeing in
a timely manner upon changes acceptable in good faith to ASI and the Required
Lenders to the Credit Documents and the guarantee and collateral arrangements
provided for herein that would restore such deductibility without imposing any
material additional risk upon any party hereto or any fee or other similar cost
on ASI. Notwithstanding any provision of Section 10.10(b) to the contrary, any
changes contemplated by the preceding sentence shall be effected by a waiver,
amendment or modification entered into by, or approved in writing by, ASI, any
other affected Borrower and the Required Lenders.
SECTION 10.17. Waiver of Jury Trial. Each party hereto hereby
waives, to the fullest extent permitted by applicable law, any right it may have
to a trial by jury in respect of any
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litigation directly or indirectly arising out of, under or in connection with
this Agreement or any of the other Credit Documents. Each party hereto (a)
certifies that no representative, agent or attorney or any other party has
represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver and (b) acknowledges
that it and the other parties hereto have been induced to enter into this
Agreement and the other Credit Documents, as applicable, by, among other things,
the mutual waivers and certifications in this Section 10.17.
SECTION 10.18. Miscellaneous. For the purposes of disclosure
pursuant to the Interest Act (Canada) the yearly rate of interest to which any
rate of interest calculated on the basis of a year of 360 days is equivalent may
be determined by multiplying the applicable rate by a fraction, the numerator of
which is the number of days in the calendar year in which the period for which
interest at such rate is payable ends and the denominator of which is 360.
SECTION 10.19. Release of Collateral. (a) The parties hereto
agree that the Collateral will be released from the Lien of the Security
Documents in the event that (i) the Index Debt shall achieve a rating of Baa3 by
Moody's or a rating of BBB- by S&P and the rating of the Index Debt by the other
is not more than two rating categories below the rating of Baa3 or BBB-, as
applicable, and (ii) none of the Indebtedness issued under the Senior Indentures
or the Subordinated Securities would be secured by the Collateral after such
release. The Borrowers agree that in the event that the Index Debt is rated Ba1
or lower by Moody's and BB+ or lower by S&P, the Collateral released pursuant to
the preceding sentence will be repledged, with the same priority as before the
release provided for above, to secure the Obligations. Each Borrower agrees to
promptly execute any instruments, releases, financing statements or other
agreements necessary or advisable by the Collateral Agent or its counsel to
implement such repledge.
(b) The parties hereto acknowledge that the property and
assets subject to the Lien of the Mortgages, the Domestic Security Agreements,
the Foreign Security Agreements (except to the extent the Collateral subject to
the Lien thereunder is capital stock of, or other ownership interests in,
Subsidiaries required to be pledged under this Agreement or the proceeds
thereof) and the Supplemental Security Agreements (all of the foregoing
capitalized terms being used herein as defined in the 1995 Credit Agreement) is
released as of the Effective Date and such Mortgages, Domestic Security
Agreements, Foreign Security Agreements and Supplemental Security Agreements
(except to the extent the Collateral subject to the Lien thereunder is capital
stock of, or other ownership interests in, Subsidiaries required to be pledged
under this Agreement or in proceeds thereof) are terminated as of the Effective
Date. The parties hereto acknowledge that the Domestic Securities Pledge
Agreements and the Foreign Securities Pledge Agreements and any other Security
Document (as such term is used in the 1995 Credit Agreement) will be amended
promptly following the Effective Date so that no collateral other than capital
stock of, or other ownership interests in, Subsidiaries (and proceeds to the
extent provided therein) will be subject to the Lien of such agreements.
(c) The Lenders hereby expressly authorize the Collateral
Agent to, and the Collateral Agent hereby agrees to, promptly execute any
instruments, releases, financing statements or other agreements, to take all
further action necessary to effectuate the releases of property and assets
authorized by Sections 10.19(a) and (b) to be released and to deliver to ASI all
property and assets in the possession of the Collateral Agent and no longer
required to be pledged under this Agreement. The Collateral Agent will deliver
or cause to be delivered to the applicable Credit Party from time to time such
documentation, consents, authorizations, approvals and orders in form and
substance reasonably
<PAGE> 119
114
satisfactory to such Credit Party, as such Credit Party shall deem reasonably
necessary or advisable to obtain release and satisfaction of the Liens on assets
which are not required to be Collateral after the Effective Date.
SECTION 10.20. Netherlands Power of Attorney. In the event
that Wabco Standard Trane B.V. executes and delivers this Agreement through an
attorney-in-fact (the "Attorney-in-Fact"), it is agreed by the parties hereto
that the law of The Netherlands is applicable to the existence and extent of the
Attorney-in-Fact's authority and the effects of the Attorney-in-Fact's exercise
or purported exercise of his authority to execute and deliver this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
Notice Address: AMERICAN STANDARD COMPANIES INC.,
One Centennial Avenue
Piscataway, NJ 08855 by
Attention: Treasurer __________________________________________
Name: Thomas S. Battaglia
Title: Vice President and Treasurer
BORROWERS:
Notice Address: AMERICAN STANDARD INC.,
One Centennial Avenue
Piscataway, NJ 08855 by
Attention: Treasurer __________________________________________
Name: Thomas S. Battaglia
Title: Vice President and Treasurer
Notice Address: AMERICAN STANDARD CREDIT INC.,
13-15 West 54th Street
New York, NY 10019 by
Attention: Secretary __________________________________________
Name: Thomas S. Battaglia
Title: Vice President and Treasurer
*Notice Address: WABCO STANDARD GMBH,
Euskirchener Strasse 80
5300 Bonn 1, Germany by
Attention: Director Finance ___________________________________________
Name: Thomas S. Battaglia
Title: Attorney-in-Fact
<PAGE> 120
115
*Notice Address: AMERICAN STANDARD (UK) CO.,
90 Newbold Road
Rugby, Warwickshire by
CV21 2ND __________________________________________
UNITED KINGDOM Name: Thomas S. Battaglia
Attention: Vice President and Title: Attorney-in-Fact
General Manager
*Notice Address: STANDARD EUROPE, a European Economic Interest
c/o WABCO Westinghouse Grouping,
Equipments Automobiles by
Avenue Aristide Briand 44 __________________________________________
77411 Claye-Souilly Name: Thomas S. Battaglia
FRANCE Title: Attorney-in-Fact
Attention: Director Finance and
Administration
*Notice Address: WABCO STANDARD TRANE INC.,
1401 Dupont Street
Toronto, Ontario by
CANADA M6H 2B1
Attention: Vice President Control __________________________________________
and Finance Name: Thomas S. Battaglia
Title: Authorized Signing Officer
*Notice Address: WABCO STANDARD TRANE B.V.,
Jupiterstraat 254
2132 HK Hoofddorp by
The Netherlands ________________________________________
Attention: Managing Director Name: Thomas S. Battaglia
Title: Attorney-in-Fact
<PAGE> 121
116
ADMINISTRATIVE AGENT:
THE CHASE MANHATTAN BANK, individually
and as Administrative Agent,
by
__________________________________________
Name: Peter Eckstein
Title: Vice President
DOCUMENTATION AGENT:
CITIBANK, N.A., individually and as
Documentation Agent,
by
__________________________________________
Name:
Title:
CO-SYNDICATION AGENTS:
THE BANK OF NOVA SCOTIA, individually and
as Co-Syndication Agent,
by
__________________________________________
Name:
Title:
NATIONSBANK, N.A., individually and as Co-
Syndication Agent,
by
__________________________________________
Name:
Title:
SENIOR MANAGING AGENTS:
BANKERS TRUST COMPANY, individually and
as Senior Managing Agent,
by
__________________________________________
Name:
Title:
<PAGE> 122
117
DEUTSCHE BANK AG, New York and/or
Cayman Islands Branch, individually and as Senior
Managing Agent,
by
__________________________________________
Name:
Title:
by
__________________________________________
Name:
Title:
MANAGING AGENTS:
THE INDUSTRIAL BANK OF JAPAN TRUST
COMPANY, individually and as Managing Agent,
by
__________________________________________
Name:
Title:
THE SANWA BANK LIMITED, NEW YORK
BRANCH, individually and as Managing Agent,
by
__________________________________________
Name:
Title:
THE SUMITOMO BANK, LTD., individually and
as Managing Agent,
by
__________________________________________
Name:
Title:
<PAGE> 123
118
MANAGING AGENTS:
THE BANK OF NEW YORK, individually and as
Managing Agent,
by
__________________________________________
Name:
Title:
BANQUE PARIBAS, individually and as Managing
Agent,
by
__________________________________________
Name:
Title:
by
__________________________________________
Name:
Title:
CIBC INC., individually and as Managing Agent,
by
__________________________________________
Name:
Title:
CIBC WOOD GUNDY plc,
by
__________________________________________
Name:
Title:
<PAGE> 124
119
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE, individually and as
Managing Agent,
by
_______________________________________________
Name:
Title:
by
_______________________________________________
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH,
individually and as Managing Agent,
by
_______________________________________________
Name:
Title:
THE LONG TERM CREDIT BANK OF JAPAN,
LIMITED, individually and as Managing Agent,
by
_______________________________________________
Name:
Title:
THE TORONTO-DOMINION BANK, individually
and as Managing Agent,
by
_______________________________________________
Name:
Title:
LENDERS:
FLEET NATIONAL BANK, successor by merger
to Fleet Bank of Massachusetts, N.A.,
by
_______________________________________________
Name:
Title:
<PAGE> 125
120
LENDERS:
ABN AMRO BANK N.V., NEW YORK
BRANCH,
by
________________________________________
Name:
Title:
by
________________________________________
Name:
Title:
ALLIED IRISH BANK plc, CAYMAN ISLANDS
BRANCH,
by
________________________________________
Name:
Title:
by
________________________________________
Name:
Title:
ARAB BANKING CORPORATION,
by
________________________________________
Name:
Title:
by
________________________________________
Name:
Title:
<PAGE> 126
121
BANCA COMMERCIALE ITALIANA, NEW
YORK BRANCH,
by
___________________________________
Name:
Title:
by
___________________________________
Name:
Title:
BANK OF AMERICA ILLINOIS,
by
___________________________________
Name:
Title:
BANK OF IRELAND,
by
___________________________________
Name:
Title:
BANK OF MONTREAL,
by
___________________________________
Name:
Title:
BANK OF SCOTLAND,
by
___________________________________
Name:
Title:
<PAGE> 127
122
BANK OF TOKYO-MITSUBISHI, LTD., NEW
YORK BRANCH,
by
_________________________________________
Name:
Title:
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR,
by
_________________________________________
Name: Pieter van Tulder
Title: Vice President and Manager
by
_________________________________________
Name: John Eberly
Title: Assistant Treasurer
CORESTATES BANK, N.A.,
by
_________________________________________
Name:
Title:
CREDIT AGRICOLE,
by
_________________________________________
Name:
Title:
CREDITO ITALIANO, SpA
by
_________________________________________
Name:
Title:
by
_________________________________________
Name:
Title:
<PAGE> 128
123
LLOYDS BANK, PLC,
by
________________________________________
Name:
Title:
by
________________________________________
Name:
Title:
MERITA BANK LTD.,
by
________________________________________
Name:
Title:
by
________________________________________
Name:
Title:
THE MITSUBISHI TRUST AND BANKING
CORPORATION,
by
________________________________________
Name:
Title:
THE MITSUI TRUST AND BANKING
COMPANY, LTD.,
by
________________________________________
Name:
Title:
NATIONAL CITY BANK,
by
________________________________________
Name:
Title:
<PAGE> 129
124
THE NIPPON CREDIT BANK, LTD.,
by
___________________________________
Name:
Title:
THE ROYAL BANK OF SCOTLAND plc,
by
___________________________________
Name:
Title:
THE SAKURA BANK, LIMITED,
by
___________________________________
Name:
Title:
SOCIETE GENERALE, NEW YORK BRANCH,
by
___________________________________
Name:
Title:
STANDARD CHARTERED BANK,
by
___________________________________
Name:
Title:
by
___________________________________
Name:
Title:
THE SUMITOMO TRUST AND BANKING CO.,
LTD., NEW YORK BRANCH,
by
___________________________________
Name:
Title:
<PAGE> 130
125
THE TOKAI BANK, LIMITED - NEW YORK
BRANCH,
by
___________________________________
Name:
Title:
UNITED STATES NATIONAL BANK OF
OREGON,
by
___________________________________
Name:
Title:
<PAGE> 131
EXHIBIT A to the
Credit Agreement
FORM OF BORROWING REQUEST
The Chase Manhattan Bank,
Administrative Agent
for the Lenders referred to below,
c/o Loan and Agency Services Group
One Chase Manhattan Plaza
New York, NY 10081
Attention: [Date]
Dear Sirs:
The undersigned (the "Borrower") refers to the Amended and
Restated Credit Agreement dated as of January 31, 1997 (as amended, modified,
extended or restated from time to time, the "Credit Agreement"), among American
Standard Companies Inc., American Standard Inc., certain subsidiaries of
American Standard Inc., the Lenders, Senior Managing Agents, Managing Agents,
Documentation Agent and Co-Syndication Agents named therein, and The Chase
Manhattan Bank, as Administrative Agent. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreement. The Borrower hereby gives you notice pursuant to Section 2.03
of the Credit Agreement that it requests a Borrowing under the Credit Agreement,
and in that connection sets forth below the terms on which such Borrowing is
requested to be made:
1. Name of Borrower: _____________________
2. Credit Facility under which Borrowing is to be made: ___________1/
3. Interest Rate Option: ____________________2/
4. Funds are requested to be disbursed to the following:
Bank Name: ______________________________
Bank Address: ___________________________
For Credit to:
Account Name: ___________________________
Account Number: _________________________3/
- --------
1/$ U.S. Revolving Credit Borrowing; Multi-Currency Revolving Credit
Borrowing or Periodic Access Borrowing (only on Effective Date or during a
Periodic Access Availability Period).
2/LIBOR Borrowing or (if denominated in Dollars or Lenders consent) ABR
Borrowing.
3/See Section 2.02(c) of Credit Agreement.
<PAGE> 132
2
5. Date of Borrowing (which is a Business Day): __________________
6. Principal Amount of Borrowing: ________________(4/)
7. Currency of Borrowing: ________________________(5/)
8. Interest Period (if a LIBOR Borrowing): __________________(6/)
Upon acceptance of any or all of the Loans made by the Lenders
in response to this request, the Borrower shall be deemed to have represented
and warranted that the conditions to lending specified in Sections 4.01(b) and
(c) of the Credit Agreement have been satisfied.
Without limiting the foregoing, the Borrower shall further be
deemed to have represented, upon such acceptance, that on the basis of (i) such
inquiries as one or more Financial Officers of ASI shall have deemed necessary
and (ii) advice of counsel (which may be general advice or advice as to a
particular Borrowing), the requested Borrowing is permitted under the provisions
limiting Indebtedness in each Indenture to which ASI is party.
Very truly yours,
[NAME OF BORROWER],
by
-----------------------------
Title: [Responsible Officer]
- --------
(4/) Expressed in Dollars. See Section 2.02(a) of Credit Agreement for
restrictions.
(5/) Dollars or an Alternative Currency.
(6/) Which shall be subject to the definition of "Interest Period" and
end not later than the applicable Maturity Date.
<PAGE> 133
EXHIBIT B
FORM OF NOTE
New York, New York
[Effective Date]
FOR VALUE RECEIVED, the undersigned, [ ], a [ ] corporation
(the "Borrower"), hereby promises to pay to the order of [NAME OF LENDER] or its
registered assigns (the "Lender"), at the office of The Chase Manhattan Bank
(the "Administrative Agent"), at 270 Park Avenue, New York, New York 10017 or
such other place as the Administrative Agent shall have specified, on the
Maturity Date (as defined in the Credit Agreement referred to below), the
aggregate unpaid principal amount of all Loans made by the Lender to the
Borrower pursuant to the Credit Agreement, in the respective currency or
currencies provided for in the Credit Agreement and on the date or dates
provided for in the Credit Agreement, in same day funds, and to pay interest
from the date hereof on such principal amount from time to time outstanding, in
like funds, at said office, at a rate or rates per annum and payable on such
dates as determined pursuant to the Credit Agreement. This Note is one of the
Notes referred to in the Amended and Restated Credit Agreement dated as of
January 31, 1997 (as amended, modified, extended or restated from time to time,
the "Credit Agreement"), among American Standard Companies Inc., American
Standard Inc., certain subsidiaries of American Standard Inc., the Lenders,
Senior Managing Agents, Managing Agents, Documentation Agent and Co-Syndication
Agents named therein, and The Chase Manhattan Bank, as Administrative Agent.
This Note is entitled to the benefits under the Credit Agreement and is secured
as provided therein. Capitalized terms used in this Note and not defined herein
are used as defined in the Credit Agreement.
The Borrower promises to pay interest, on demand, on any
overdue principal and, to the extent permitted by law, overdue interest from
their due dates at a rate or rates determined as set forth in the Credit
Agreement.
The Borrower hereby waives diligence, presentment, demand,
protest and notice of any kind whatsoever. The nonexercise by the holder of any
of its rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
All payments in respect of the principal of and interest on
this Note shall be made to the person named in the Register and recorded in the
Register as the holder of this Note, as described more fully in Section 10.04(d)
of the Credit Agreement, and such person shall be treated as the Lender
hereunder for all purposes of the Credit Agreement.
All Loans evidenced by this Note and the currency or
currencies in which such Loans were made and all payments and prepayments of the
principal hereof and interest hereon and the respective dates thereof shall be
recorded by the Lender on the schedule attached hereto and made a part hereof,
or on a continuation thereof which shall be attached hereto and made a part
hereof, or otherwise recorded by such Lender in its internal records and, prior
to any transfer hereof, appropriate notations to evidence the foregoing
information with respect to each such Loan then outstanding shall be endorsed by
the holder hereof on the schedule attached hereto and made a part hereof, or on
a continuation thereof which shall be attached hereto and made a part hereof, or
otherwise recorded by such holder in its internal records; provided, however,
that any failure of the holder hereof to make
<PAGE> 134
2
such a notation or any error in such notation shall not in any manner affect the
obligation of the Borrower to make payments of principal and interest in
accordance with the terms of this Note and the Credit Agreement.
The Credit Agreement, among other things, contains provisions
for the acceleration of the maturity hereof upon the happening of certain
events, for optional and mandatory prepayment of the principal hereof prior to
the maturity hereof, for the assignment hereof and for the amendment or waiver
of certain provisions of the Credit Agreement, all upon the terms and conditions
therein specified. THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK OF THE UNITED STATES OF AMERICA.
[NAME OF BORROWER],
by________________________________
Title:
<PAGE> 135
3
Loans and Payments
<TABLE>
<CAPTION>
Unpaid Name of
Amount Principal Person
and Type Interest Payments Balance Making
Date of Loan Period Principal Interest of Note Notation
<S> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 136
EXHIBIT C to the
Credit Agreement
CHASE
THE CHASE MANHATTAN BANK
140 East 45th Street
New York, NY 10017-3162
212/622-0001
Fax 212/622-0002
Telex 353006 ABSC NYK
[FORM OF]
ADMINISTRATIVE QUESTIONNAIRE - AMERICAN STANDARD INC.
Please accurately complete the following information and return via FAX to the
attention of Sandra Miklave at The Chase Manhattan Bank (and to the attention of
John Gauch at Cravath, Swaine & Moore) as soon as possible.
FAX Number: Chase - 212-622-0002
Cravath, Swaine & Moore - 212-474-3700
LEGAL NAME OF YOUR INSTITUTION TO APPEAR IN DOCUMENTATION:
- -------------------------------------------------------------------------------
NUMBER OF SIGNATURES ON BEHALF OF YOUR INSTITUTION TO APPEAR IN YOUR
SIGNATURE BLOCK IN DOCUMENTATION:
----------------------------------------------
GENERAL INFORMATION - DOMESTIC LENDING OFFICE:
Institution Name:
--------------------------------------------------------------
Street Address:
----------------------------------------------------------------
City, State, Zip Code:
---------------------------------------------------------
GENERAL INFORMATION - EURODOLLAR LENDING OFFICE:
Institution Name:
--------------------------------------------------------------
Street Address:
----------------------------------------------------------------
City, State, Zip Code:
---------------------------------------------------------
CONTACT/NOTIFICATION METHODS:
CREDIT CONTACTS--
Primary Contact:
---------------------------------------------------------------
Street Address:
----------------------------------------------------------------
City, State, Zip Code:
---------------------------------------------------------
Phone Number:
------------------------------------------------------------------
FAX Number:
--------------------------------------------------------------------
<PAGE> 137
2
Backup Contact:
----------------------------------------------------------------
Street Address:
----------------------------------------------------------------
City, State, Zip Code:
---------------------------------------------------------
Phone Number:
------------------------------------------------------------------
FAX Number:
--------------------------------------------------------------------
ADMINISTRATIVE CONTACTS - BORROWINGS, PAYDOWNS, INTEREST, FEES, ETC.--
Contact:
-----------------------------------------------------------------------
Street Address:
----------------------------------------------------------------
City, State, Zip Code:
---------------------------------------------------------
Phone Number:
------------------------------------------------------------------
FAX Number:
--------------------------------------------------------------------
BID LOAN NOTIFICATIONS
Backup Contact:
----------------------------------------------------------------
Street Address:
----------------------------------------------------------------
City, State, Zip Code:
---------------------------------------------------------
Phone Number:
------------------------------------------------------------------
FAX Number:
--------------------------------------------------------------------
TAX WITHHOLDING:
Non Resident Alien _____ Y* _____N
* Form 4224 Enclosed
Tax ID Number
------------------------
PAYMENT INSTRUCTIONS:
Name of Bank where funds are to be transferred:
- -------------------------------------------------------------------------------
Routing Transit/ABA number of Bank where funds are to be transferred:
- -------------------------------------------------------------------------------
Name of Account, if applicable:
- -------------------------------------------------------------------------------
Account Number:
----------------------------------------------------------------
Additional Information:
--------------------------------------------------------
--------------------------------------------------------
MAILINGS:
Please specify who should receive financial information:
Name:
--------------------------------------------------------------------------
Street Address:
----------------------------------------------------------------
City, State, Zip Code:
---------------------------------------------------------
<PAGE> 138
3
It is very important that all of the above information is accurately filled in
and returned promptly. If you have any questions, please call a representative
at Agent Bank Services at 212-622-0004.
<PAGE> 139
EXHIBIT D to the
Credit Agreement
[FORM OF]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Amended and Restated Credit Agreement
dated as of January 31, 1997 (as amended and in effect at the date hereof, the
"Credit Agreement"), among American Standard Companies Inc., American Standard
Inc., certain subsidiaries of American Standard Inc., the Lenders, Senior
Managing Agents, Managing Agents, Documentation Agent and Co-Syndication Agents
named therein, and The Chase Manhattan Bank, as Administrative Agent. Terms
defined in the Credit Agreement are used herein with the same meanings.
1. The Assignor hereby sells and assigns, without recourse, to
the Assignee, and the Assignee hereby purchases and assumes, without recourse,
from the Assignor, effective as of the Assignment Date set forth on the reverse
hereof, the interests set forth on the reverse hereof (the "Assigned Interest")
in the Assignor's rights and obligations under the Credit Documents, including,
without limitation, the interests set forth on the reverse hereof in the
Commitments of the Assignor on the Assignment Date and the Loans owing to the
Assignor which are outstanding on the Assignment Date, together with unpaid
interest accrued on the assigned Loans to the Assignment Date and the amount, if
any, set forth on the reverse hereof of the Fees accrued to the Assignment Date
for the account of the Assignor. Each of the Assignor and the Assignee hereby
makes and agrees to be bound by all the representations, warranties and
agreements set forth in Section 10.04(c) of the Credit Agreement, a copy of
which has been received by each such party.(7/) Upon acceptance of this
Assignment and Acceptance by the Administrative Agent and recording of the
information contained herein in accordance with Section 10.04(e) of the Credit
Agreement, from and after the Assignment Date (i) the Assignee shall be a party
to and be bound by the provisions of the Credit Agreement and, to the extent of
the interests assigned by this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and under the other Credit Documents and (ii)
the Assignor shall, to the extent of the interests assigned by this Assignment
and Acceptance, relinquish its rights and be released from its obligations under
the Credit Agreement.
2. This Assignment and Acceptance is being delivered to the
Administrative Agent together with (i) the Notes previously issued to Assignor,
(ii) if the Assignee is organized under the laws of a jurisdiction outside the
United States, the forms specified in Section 2.18(e)(i) of the Credit
Agreement, duly completed and executed by the Assignee, (iii) the form or
certificate, as applicable, specified in Section 2.18(e)(ii) of the Credit
Agreement, duly completed and executed by the Assignee, (iv) if the Assignee is
not already a Lender under the Credit Agreement, an Administrative
- ---------------------------
(7/) If the Assignee is an Affiliate of the Assignor, the Assignor also
must represent to ASI that the assignment is being made for a valid business
purpose (and at the request of ASI will advise ASI of such purpose in reasonable
detail) and is not inconsistent with the obligations of the Assignor under
Section 2.22(b) of the Credit Agreement.
<PAGE> 140
2
Questionnaire in the form of Exhibit C to the Credit Agreement and (v) a
processing and recordation fee of $3,500.
3. This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Assignment Date (may not be fewer than 5 Business Days after the Date of
Assignment):
<TABLE>
<CAPTION>
Percentage Assigned of Credit Facility
(set forth, to at least 8 decimals, as a
percentage of the Credit Facility and
Principal Amount the aggregate Commitments of all Lenders
Credit Facility Assigned thereunder)
- --------------- -------- -----------
<S> <C> <C>
Multi-Currency Revolving Credit
Commitment: $ %
U.S. $ Revolving Credit
Commitment
Periodic Access Loan
Commitment:
Fees Assigned (if any):
</TABLE>
<PAGE> 141
3
The terms set forth above and on the
reverse side hereof are hereby agreed
to:
Accepted: (*/)
, as Assignor AMERICAN STANDARD INC.,
- --------------------------
By: By:
------------------------------- --------------------------------
Name: Name:
Title: Title:
, as Assignee
- --------------------------
By:
-------------------------------
Name:
Title:
- --------------------
(*/) To be completed only if consents are required under Section
10.04(b) of the Credit Agreement. If such consents are required and the
assignment includes a Revolving Credit Commitment, consents also must be
obtained from the Issuing Banks and Swingline Lenders.
<PAGE> 142
EXHIBIT E to the
Credit Agreement
ISSUING BANK AGREEMENT dated as of [ ],
between AMERICAN STANDARD INC., a Delaware
corporation ("ASI") and the financial institution
identified on Schedule I hereto as the Issuing Bank
(the "Issuing Bank").
Reference is made to the Amended and Restated Credit Agreement
dated as of January 31, 1997 (as amended, modified, extended or restated from
time to time, the "Credit Agreement"), among American Standard Companies Inc.,
ASI, certain subsidiaries of ASI, the Lenders, Senior Managing Agents, Managing
Agents, Documentation Agent and Co-Syndication Agents named therein and The
Chase Manhattan Bank, as Administrative Agent. ASI and the Issuing Bank desire
to enter into this Agreement in order to provide for Letters of Credit to be
issued by the Issuing Bank as contemplated by the Credit Agreement. Accordingly,
the parties hereto agree as follows:
SECTION 1. Defined Terms. Capitalized terms used herein and
not otherwise defined herein shall have the respective meanings specified in the
Credit Agreement. The provisions of Section 1.02 of the Credit Agreement shall
apply to this Agreement as though set forth herein.
SECTION 2. Letter of Credit Commitment. The Issuing Bank
hereby agrees to be an "Issuing Bank" under, and, subject to the terms and
conditions hereof and of the Credit Agreement, to issue Letters of Credit under,
the Credit Agreement; provided, however, that Letters of Credit issued by the
Issuing Bank hereunder shall be subject to the limitations, if any, set forth on
Schedule I hereto, in addition to the limitations set forth in the Credit
Agreement.
SECTION 3. Issuance Procedure. In order to request the
issuance of a Letter of Credit hereunder, the applicable Account Party (or ASI
on behalf of the applicable Account Party) shall hand deliver or telecopy a
notice (specifying the information required by Section 2.19(b) of the Credit
Agreement) to the Issuing Bank, at its address or telecopy number specified on
Schedule I hereto (or such other address or telecopy number as the Issuing Bank
may specify by notice to ASI), not later than the time of day (local time at
such address) specified on Schedule I hereto prior to the proposed date of
issuance of such Letter of Credit. A copy of such notice shall be sent,
concurrently, by the applicable Account Party (or ASI on behalf of the
applicable Account Party) to the Administrative Agent in the manner specified
for Borrowing Requests under the Credit Agreement. Upon receipt of such notice,
the Issuing Bank shall consult the Administrative Agent by telephone in order to
determine (i) whether the conditions specified in the last sentence of Section
2.19(b) of the Credit Agreement will be satisfied in connection with the
issuance of such Letter of Credit and (ii) whether the requested expiration date
for such Letter of Credit complies with the proviso to Section 2.19(c) of the
Credit Agreement.
SECTION 4. Issuing Bank Fees, Interest and Payments. (a) The
Issuing Bank Fees payable to the Issuing Bank in respect of Letters of Credit
issued hereunder are specified on Schedule I hereto (and such fees shall be in
addition to the Issuing Bank's customary documentary and processing charges in
connection with the issuance, amendment or transfer of any Letter of Credit
issued hereunder). Each payment of Issuing Bank Fees payable hereunder shall be
made not later than 12:00
<PAGE> 143
2
(noon), local time at the place of payment, on the date when due, in immediately
available funds, to the account of the Issuing Bank specified on Schedule I
hereto (or to such other account of the Issuing Bank as it may specify by notice
to ASI).
(b) If this Agreement permits Letters of Credit to be
denominated in Alternative Currencies, then it will be necessary to establish
the Swingline Base Rate that will apply to unreimbursed L/C Disbursements
denominated in such Alternative Currencies for purposes of determining interest
thereon. The Issuing Bank agrees to determine the Swingline Base Rate for each
day that any such L/C Disbursement denominated in an Alternative Currency is
outstanding hereunder and to notify ASI, the applicable Account Party and the
Administrative Agent thereof.
SECTION 5. Credit Agreement Terms. Notwithstanding any
provision hereof which may be construed to the contrary, it is expressly
understood and agreed that (a) this Agreement is supplemental to the Credit
Agreement and is intended to constitute an Issuing Bank Agreement, as defined
therein (and, as such, constitutes an integral part of the Credit Agreement as
though the terms of this Agreement were set forth in the Credit Agreement), (b)
each Letter of Credit issued hereunder and each and every L/C Disbursement made
under any such Letter of Credit shall constitute a "Letter of Credit" and an
"L/C Disbursement", respectively, for all purposes of the Credit Agreement and
the other Credit Documents, (c) the Issuing Bank's commitment to issue Letters
of Credit hereunder and each and every Letter of Credit requested or issued
hereunder shall be subject to the terms and conditions of the Credit Agreement
and entitled to the benefits of the Credit Documents and (d) the terms and
conditions of the Credit Agreement are hereby incorporated herein as though set
forth herein in full and shall supersede any contrary provisions hereof.
SECTION 6. Assignment. The Issuing Bank may not assign its
commitment to issue Letters of Credit hereunder without the consent of ASI and
prior notice to the Administrative Agent. In the event of an assignment by the
Issuing Bank of all its other interests, rights and obligations under the Credit
Agreement, then the Issuing Bank's commitment to issue Letters of Credit
hereunder shall terminate unless the Issuing Bank, ASI and the Administrative
Agent otherwise agree.
<PAGE> 144
3
SECTION 7. Effectiveness. This Agreement shall not be
effective until counterparts hereof executed on behalf of each of ASI and the
Issuing Bank have been delivered to and accepted by the Administrative Agent.
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
AMERICAN STANDARD INC.,
by
------------------------------
Name:
Title:
[ISSUING BANK],
by
------------------------------
Name:
Title:
Accepted:
THE CHASE MANHATTAN BANK, as
Administrative Agent,
by
----------------------------
<PAGE> 145
SCHEDULE I to
Issuing Bank Agreement
<TABLE>
<CAPTION>
<S> <C>
A. Issuing Bank:
B. Issuing Bank's Address and
Telecopy Number for Notices:
C. Scheduled Letters of Credit: This Agreement shall apply to the
Scheduled Letters of Credit issued by
the Issuing Bank and set forth on
Schedule IV. The Issuing Bank shall be
under no obligation to extend or renew
any Scheduled Letter of Credit, except
in accordance with the terms of such
Scheduled Letter of Credit.
D. Time of Day by Which Notices Other than Scheduled Letters of Credit,
Must be Received a notice requesting the issuance of a
Letter of Credit must be received by the
Issuing Bank by 10:00 a.m. (New York
time) not less than five Business Days
prior to the proposed date of issuance.
E. Special Terms: The Letters of Credit issued pursuant to
the Agreement shall be denominated in
Dollars or any Alternative Currency. The
aggregate L/C Exposure in respect of
Letters of Credit (including Scheduled
Letters of Credit) issued pursuant to
this Agreement shall not exceed
$500,000,000.
F. Issuing Bank Fees: [ ]% per annum on the average daily
undrawn amount of the Scheduled Letters
of Credit, payable on the same dates
that L/C Participation Fees are payable
under the Credit Agreement.
G. Issuing Bank's Account for
Payment of Issuing Bank Fees:
H. Initial Conversion Factor(s) for To be determined in the event of an
Determining Swingline issuance of a Letter of Credit the
Margin(s) stated amount of which is not
denominated in Dollars.
</TABLE>
<PAGE> 146
Exhibit F
Perfection Certificate
Dated as of January 31, 1997
With reference to (i) the Amended and Restated Credit
Agreement (the "1997 Credit Agreement") dated as of the date hereof among
American Standard Companies Inc., American Standard Inc. ("ASI"), certain
subsidiaries of ASI (the "Subsidiary Borrowers"), The Chase Manhattan Bank, as
administrative agent, and the other parties thereto, (ii) the Domestic
Securities Pledge Agreements and (iii) the Foreign Securities Pledge Agreements,
the officers named below of Wabco Air Compressors Inc. ("Compressors"), after
due investigation, hereby certify as of the date hereof to The Chase Manhattan
Bank and each Lender as follows (except as otherwise defined in this
Certificate, capitalized terms used herein and defined in the 1997 Credit
Agreement shall have the meanings assigned to them in the 1997 Credit
Agreement):
1. Stock (or partnership interests, joint venture interests
etc.) Ownership. (a) Attached hereto as Schedule 1(a) is a true and correct list
of each direct and indirect subsidiary of Compressors and ownership interest
therein expressed as a percentage. For the purposes hereof, a subsidiary is an
entity in which another entity has either majority ownership or power to direct
the voting of a majority of its shares.
(b) Attached hereto as Schedule 1(b) is a true and correct
list of all entities which have become Restricted Subsidiaries (as defined in
the Senior Indentures) since June 1, 1993.
IN WITNESS WHEREOF, we have hereunto set our hands this _____
day of January 1997.
WABCO AIR COMPRESSORS INC.,
by
----------------------------
Name:
Title:
<PAGE> 147
Exhibit G
Section 2.18(e)(ii) Certificate
To: U.K. Borrower and Administrative Agent
From: [Lender]
Dated:
Re: Amended and Restated Credit Agreement dated as of January
31, 1997 among American Standard Companies Inc. and certain of its Subsidiaries,
The Chase Manhattan Bank, as Administrative Agent for the Lenders, etc.
Gentlemen:
In connection with the above-referred Agreement, we hereby
certify, under penalties of perjury, that the undersigned [is managed and
controlled from and incorporated under the laws of the United Kingdom] [is
making all of its loans to the U.K. Borrower through a lending branch or lending
office located within the United Kingdom].
[Name of Lender]
By:_____________________
Title:___________________
<PAGE> 148
Exhibit H-1 to the
Credit Agreement
[Form of Supplemental Guarantee]
SUPPLEMENT NO. dated as of ,
to the Amended, Consolidated and Restated Guarantee
dated as of June 1, 1993 (as amended and supplemented
through the date hereof, the "Guarantee"), by
AMERICAN STANDARD COMPANIES INC. (formerly known as
ASI Holding Corporation), AMERICAN STANDARD INC.
("ASI") and certain Subsidiaries of ASI (collectively
the "Guarantors") in favor of THE CHASE MANHATTAN
BANK, as collateral agent (Chemical Bank or its
successor, The Chase Manhattan Bank, the "Collateral
Agent") and the other Guaranteed Creditors, as
defined therein. Except as otherwise defined herein,
terms used herein and defined in the Guarantee and
the 1997 Credit Agreement (as defined below) shall be
used herein as so defined.
The Guarantors entered into the Guarantee in order to induce
the Lenders to extend credit under the Amended and Restated Credit Agreement
dated as of January 31, 1997 (as amended, supplemented or otherwise modified
from time to time, the "1997 Credit Agreement") with certain lending
institutions, Senior Managing Agents, Managing Agents, Documentation Agent and
Co-Syndication Agents named therein, and The Chase Manhattan Bank, as
Administrative Agent, and the Swap Providers to enter into Swap Agreements. The
Guarantee envisages that additional Subsidiaries may become Guarantors under the
Guarantee by execution and delivery of an instrument in the form of this
Supplement. Pursuant to Section 5.11 of the 1997 Credit Agreement, the
undersigned Subsidiary (the "New Guarantor") is required to become a Guarantor
under the Guarantee. The New Guarantor desires to become a Guarantor under the
Guarantee in order to induce the Guaranteed Creditors to continue to extend
credit under the 1997 Credit Agreement or to enter into Swap Agreements, as the
case may be, and as consideration therefor.
Accordingly, the Collateral Agent and the New Guarantor agree
as follows:
SECTION 1. In accordance with Section 26 of the Guarantee, the
New Guarantor by its signature hereto shall become a Guarantor under the
Guarantee with the same force and effect as if originally named therein as a
Guarantor and the New Guarantor hereby (i) agrees to all the terms and
provisions of the Guarantee applicable to it as a Guarantor thereunder, (ii)
represents and warrants that the representations and warranties made by it as a
Guarantor thereunder are true and correct on and as of the date hereof and (iii)
acknowledges receipt of a copy of and agrees to be bound by the terms of the
Guarantee and the 1997 Credit Agreement. Each reference to a "Guarantor" in the
Guarantee shall be deemed to include the New Guarantor. The Guarantee is hereby
incorporated herein by reference.
SECTION 2. This Supplement shall become effective upon
delivery to the Collateral Agent of this Supplement executed on behalf of the
New Guarantor.
SECTION 3. The New Guarantor hereby represents and warrants
that (i) this Supplement has been duly authorized, executed and delivered by the
New Guarantor and constitutes a
<PAGE> 149
2
legal, valid and binding obligation of the New Guarantor, enforceable against it
in accordance with its terms, (ii) attached hereto is a duly completed
Perfection Certificate relating to the New Guarantor and (iii) set forth under
its signature hereto is its address for purposes of notices under the Guarantee.
SECTION 4. Except as expressly supplemented hereby, the
Guarantee shall remain in full force and effect in accordance with its terms.
SECTION 5. THIS SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO NEW
YORK'S CONFLICT OF LAW PROVISIONS (OTHER THAN NEW YORK STATE GENERAL OBLIGATIONS
LAW SECTION 5-1401).
SECTION 6. In case any one or more of the provisions contained
in this Supplement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and in the Guarantee shall not in any way be affected or
impaired. The parties hereto shall endeavor in good-faith negotiations to
replace any invalid, illegal or unenforceable provisions herein with valid
provisions, the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.
SECTION 7. This Supplement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument.
SECTION 8. The New Guarantor agrees to reimburse the
Collateral Agent for its reasonable out-of-pocket expenses in connection with
this Supplement, including the reasonable fees and expenses of counsel for the
Collateral Agent.
IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent
have duly executed this Supplement to the Guarantee as of the day and year first
above written.
[NAME OF NEW SUBSIDIARY GUARANTOR],
by
-------------------------------
Name:
Title:
Notice Address:
<PAGE> 150
Exhibit H-2 to the
Credit Agreement
[Form of Foreign Supplemental Guarantee]
GUARANTEE, (the "Guarantee") dated as of
[ ], made by [ ] (the "Guarantor") in favor of and
for the benefit of The Chase Manhattan Bank as
collateral agent for and representative of (in such
capacity herein called the "Collateral Agent") the
Lenders, the Lenders, the Senior Managing Agents, the
Managing Agents, the Documentation Agent, the
Co-Syndication Agents and the Administrative Agent
under the 1997 Credit Agreement (as defined below)
and each of their respective successors and assigns.
Except as otherwise defined in this Guarantee,
capitalized terms used herein and defined in the 1997
Credit Agreement shall have the meaning assigned to
them in the 1997 Credit Agreement.
Preliminary Statements
A. American Standard Companies Inc. ("Holding"), American
Standard Inc. ("ASI") and certain subsidiaries of ASI (the "Subsidiary
Borrowers"), have executed an Amended and Restated Credit Agreement dated as of
January 31, 1997 (as amended, supplemented or otherwise modified from time to
time, the "1997 Credit Agreement") with certain lending institutions, Senior
Managing Agents, Managing Agents, Documentation Agent and Co-Syndication Agents
named therein, and The Chase Manhattan Bank, as Administrative Agent.
B. The Guarantor, the Borrowers and their Subsidiaries are
engaged in their various businesses as part of a group which operates a
consolidated cash management system pursuant to which funds are allocated among
members of the group on an as-and-when-needed basis. The Guarantor expects to
derive benefit, directly or indirectly, from the continued use of the foregoing
procedure, from the proceeds of the Loans and the issuance of the Letters of
Credit pursuant to the terms of the 1997 Credit Agreement, in each case both
individually and as a member of the group, and because the financial condition
of the Guarantor depends upon the financial performance of the Borrowers and the
group as a whole, the Collateral Agent, the Lenders, the Senior Managing Agents,
the Managing Agents, the Documentation Agent, the Co-Syndication Agents and the
Administrative Agent (collectively, the "Guaranteed Creditors") have required
the Guarantor as a condition precedent to making the Loans and issuing or
participation in the Letters of Credit pursuant to the terms of the 1997 Credit
Agreement, and the Guarantor has agreed, to guarantee the Guaranteed Obligations
(as hereinafter defined) upon the terms set forth in this Guarantee. In order to
induce the Lenders to make the Loans and to issue or participate in the Letters
of Credit, the Guarantor is willing to execute and deliver this Guarantee.
C. In consideration of the above-described extensions of
credit to the Borrowers, and other benefits accruing to the Guarantor, the
receipt and sufficiency of which are hereby acknowledged, the Guarantor hereby
makes the following representations and warranties to the Collateral Agent and
each other Guaranteed Creditor and hereby covenants and agrees with the
Collateral Agent and each other Guaranteed Creditor as follows:
<PAGE> 151
2
1. The Guarantor irrevocably and unconditionally guarantees
the payment and performance in full in the applicable currency of the
Obligations (but excluding Obligations arising under any Guarantee Document
other than this Guarantee and excluding the Domestic Obligations) (the
"Guaranteed Obligations"), and whether for principal, premium, interest
(including, without limitation, interest which, but for the filing of a petition
in bankruptcy with respect to any Subsidiary Borrower other than American
Standard Credit Inc. (the "Guaranteed Borrowers"), would accrue on such
obligations) or other amounts so that, in each case, the beneficiaries will
receive, after giving effect to any Taxes, the full amount that they would
otherwise be entitled to receive with respect to the Guaranteed Obligations. The
right of a Guaranteed Creditor to receive payments with respect to Taxes shall
be subject to the limitations of Section 2.18 of the 1997 Credit Agreement, and
each Guaranteed Creditor and Guarantor shall have the rights and obligations
specified in such Section 2.18, in each case treating such Guaranteed Creditor
as a Lender and the Guarantor as a Borrower.
2. The Guarantor understands, agrees and confirms that this is
a guarantee of payment when due and not of collection and that, subject to the
limitations set forth in this Guarantee, each Guaranteed Creditor may enforce
this Guarantee up to the full amount of the Guaranteed Obligations owed to such
Guaranteed Creditor without proceeding against any Borrower, against any
security for the Guaranteed Obligations, against any other guarantor or under
any other guarantee covering the Guaranteed Obligations.
3. The Guarantor hereby waives, to the fullest extent
permitted by applicable law, notice of acceptance of this Guarantee, notice of
any liability to which it may apply, presentment, demand of payment, protest,
notice of dishonor or nonpayment of any such liabilities, suit or taking of
other action by the Collateral Agent or the Guaranteed Creditors against, and
any other notice to, any party liable thereon (including the Guarantor or any
other guarantor).
4. The Collateral Agent and any other Guaranteed Creditor may
at any time and from time to time without the consent of, or notice to, the
Guarantor, without incurring responsibility to the Guarantor, without impairing
or releasing the obligations of the Guarantor hereunder or under any security
provided by the Guarantor for performance of its obligations hereunder, upon or
without any terms or conditions and in whole or in part:
(a) change the manner, place or terms of payment (including
the currency thereof) of, and/or change or extend the time of payment of, renew
or alter, any of the Guaranteed Obligations, any security therefor, or any
liability incurred directly or indirectly in respect thereof, and the guarantee
herein made shall apply to the Guaranteed Obligations as so changed, extended,
renewed or altered;
(b) sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by whomsoever at
any time pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset there
against;
(c) fail to assert any claims or demand or exercise or refrain
from exercising any rights or remedies against any Borrower or others or
otherwise act or refrain from acting;
<PAGE> 152
3
(d) settle or compromise any of the Guaranteed Obligations,
any security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and subordinate
the payment of all or any part thereof to the payment of any liability (whether
due or not) of any Borrower;
(e) apply any sum by whomsoever paid or howsoever realized to
any liability or liabilities of any Borrower, or any other guarantor of any
Guaranteed Obligations to the Guaranteed Creditors regardless of what liability
or liabilities of the Borrowers remain unpaid; and/or
(f) consent to or waive any breach of, or any act, omission or
default under, the 1997 Credit Agreement or any other Credit Documents or
otherwise amend, modify or supplement the 1997 Credit Agreement, any other
Credit Documents or any of such other instruments or agreements.
5. To the extent permitted by applicable law, no invalidity,
irregularity or unenforceability of all or part of the Guaranteed Obligations or
of any security therefor shall affect, impair or be a defense to this Guarantee,
and this Guarantee is a primary obligation of the Guarantor.
6. If and to the extent that the Guarantor makes any payment
to the Collateral Agent or any other Guaranteed Creditor or to any other person
pursuant to or in respect of this Guarantee, any claim which the Guarantor may
have against any Guaranteed Borrower or other person by reason thereof shall be
subject and subordinate to, and no payment with respect to any such claim of the
Guarantor shall be made before, the prior payment in full in cash in the
applicable currency of the Guaranteed Obligations owed to each Guaranteed
Creditor.
7. This Guarantee is a continuing guarantee and all
liabilities to which it applies or may apply under the terms hereof shall be
conclusively presumed to have been created in reliance hereon. No failure or
delay on the part of the Collateral Agent or any other Guaranteed Creditor in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
expressly specified are cumulative and not exclusive of any rights or remedies
which any Guaranteed Creditor would otherwise have. No notice to or demand on
the Guarantor in any case shall entitle the Guarantor to any other or further
notice or demand in similar or other circumstances or constitute a waiver of the
rights of the Collateral Agent or any other Guaranteed Creditor to any other or
further action in any circumstances without notice or demand.
8. The Guarantor represents and warrants that all
representations and warranties contained in the 1997 Credit Agreement which
relate to the Guarantor are true and correct in all material respects and the
Guarantor does not intend to, and does not intend to permit any of its
Subsidiaries, if any, to, incur debts beyond their respective abilities to pay
such debts as they mature, taking into account the timing and amounts of cash to
be received by the Guarantor and each of such Subsidiaries, and of amounts to be
payable on or in respect of debt of the Guarantor and each of such Subsidiaries.
<PAGE> 153
4
9. (a) The Guarantor hereby agrees upon demand to pay all
reasonable costs and expenses of the Collateral Agent and each other Guaranteed
Creditor in connection with the enforcement of this Guarantee and any amendment,
waiver or consent relating hereto (including, without limitation, the reasonable
fees and disbursements of counsel employed by the Collateral Agent or any other
of the Guaranteed Creditors), except to the extent such costs and expenses
result from the gross negligence or willful misconduct of the Collateral Agent
or such other Guaranteed Creditor (as appropriate).
(b) The Guarantor agrees to indemnify the Collateral Agent and
each other Guaranteed Creditor for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever, other than with respect to taxes, which may
be imposed on, incurred by, or asserted against the Collateral Agent or any
other Guaranteed Creditor in any way relating to or arising out of this
Guarantee or the enforcement of any of the terms hereof or otherwise arising or
relating in any manner to the Guarantee contemplated hereunder; provided,
however, that the Guarantor shall not be liable for any of the foregoing to the
extent they arise from the gross negligence or willful misconduct of the
Collateral Agent or any other Guaranteed Creditor.
(c) Any such amounts payable as provided hereunder shall be
additional Guaranteed Obligations. The provisions of this Section 9 shall remain
operative and in full force and effect regardless of the termination of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Guarantee or any Credit Document, or any investigation made by
or on behalf of the Collateral Agent or any Guaranteed Creditor. All amounts due
under this Section 9 shall be payable on written demand therefor.
10. This Guarantee shall be binding upon the Guarantor and its
successors and assigns and shall inure to the benefit of the Collateral Agent,
the Guaranteed Creditors and their successors and assigns and, in the event of
any transfer permitted or assignment permitted of rights by a Guaranteed
Creditor or the replacement of the Collateral Agent, the rights and privileges
herein conferred upon that Guaranteed Creditor or the Collateral Agent shall
automatically extend to and be vested in such permitted transferee, assignee or
replacement, all subject to the terms and conditions hereof.
11. Neither this Guarantee nor any provision hereof may be
changed, waived, discharged or terminated, except with the written consent of
the Required Lenders or as otherwise provided in the 1997 Credit Agreement.
12. The Guarantor acknowledges that an executed (or conformed)
copy of the 1997 Credit Agreement and each of the other Credit Documents will be
made available to its principal executive officers.
13. In addition to any rights now or hereafter granted under
applicable law (including, without limitation, Section 151 of the New York
Debtor and Creditor Law) and not by way
<PAGE> 154
5
of limitation of any such rights, upon the occurrence and during the continuance
of an Event of Default each Guaranteed Creditor is hereby authorized at any time
or from time to time, without notice to the Guarantor or to any other person,
any such notice being expressly waived, to the extent permitted by applicable
law, to set off and to appropriate and apply any and all deposits (general or
special) and any other indebtedness at any time held or owing by such Guaranteed
Creditor to or for the credit or the account of the Guarantor, against and on
account of the obligations and liabilities of the Guarantor to such Guaranteed
Creditor under this Guarantee, irrespective of whether or not such Guaranteed
Creditor shall have made any demand hereunder.
14. All notices, demands, instructions and other
communications required or permitted to be given to or made upon any party
hereto shall be given in accordance with Section 10.03 of the 1997 Credit
Agreement. For the purposes hereof, and thereof, the address of the Guarantor is
set opposite its signature below and the addresses of the Lenders and the
Collateral Agent shall be the addresses in effect from time to time under the
1997 Credit Agreement.
15. Any payment of a Guaranteed Obligation required to be made
pursuant to this Guarantee shall be made in the currency in which such
Guaranteed Obligation is required to be made pursuant to the 1997 Credit
Agreement or such other Credit Document giving rise to such Guaranteed
Obligation.
16. If claim is ever made upon the Collateral Agent or any
Guaranteed Creditor for repayment or recovery of any amount or amounts received
in payment or on account of any of the Guaranteed Obligations and any of the
aforesaid payees repays all or part of said amount by reason of (a) any
judgment, decree or order of any court or administrative body having
jurisdiction over such payee or any of its property, or (b) any settlement or
compromise of any such claim effected by such payee with any such claimant
(including any Borrower), then and in such event the Guarantor agrees that any
such judgment, decree, order, settlement or compromise shall be binding upon it,
notwithstanding any revocation hereof or the cancellation of the 1997 Credit
Agreement, any other Credit Document or other instrument evidencing any
liability of a Borrower or any other Guaranteed Obligation, and the Guarantor
shall be and remain liable to the aforesaid payees hereunder for the amount so
repaid or recovered to the same extent as if such amount had never originally
been received by any payee.
17. Any acknowledgement or new promise, whether by payment of
any Guaranteed Obligation or otherwise and whether by a Borrower or others
(including the Guarantor), with respect to any of the Guaranteed Obligations
shall to the extent permitted by applicable law, if the statute of limitations
in favor of the Guarantor against the Collateral Agent or any Guaranteed
Creditor shall have commenced to run, toll the running of such statute of
limitations, and if the period of such statute of limitations shall have
expired, prevent the operation of such statute of limitations.
18. The Guarantor hereby waives any claim, right or remedy
which the Guarantor may now have or hereafter acquire against the Borrowers that
arises hereunder, including, without limitation, any claim, remedy or right of
subrogation, reimbursement, exoneration, contribution, indemnification, or
participation in any claim, right or remedy of the Guarantor against the
Borrowers
<PAGE> 155
6
whether or not such claim, right or remedy arises in equity, under contract, by
statute, under common law or otherwise. If any amount shall erroneously be paid
to the Guarantor on account of such subrogation, contribution, reimbursement,
indemnity and similar rights, such amount shall be held in trust for the benefit
of the Guaranteed Creditors and shall forthwith be paid to the Collateral Agent
to be credited and applied to the payment of the Guaranteed Obligations, whether
matured or unmatured, in accordance with the terms of the 1997 Credit Agreement
and other Credit Documents.
19. Any term or provision of this Guarantee to the contrary
notwithstanding, the maximum, aggregate amount of the Guaranteed Obligations
guaranteed hereunder by the Guarantor shall not exceed the maximum amount that
can be hereby guaranteed by the Guarantor without rendering this Guarantee, as
it relates to the Guarantor, voidable under applicable law relating to
fraudulent conveyance or fraudulent transfer or similar laws affecting the
rights of creditors generally.
20. THIS GUARANTEE AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO NEW YORK'S CONFLICTS
OF LAWS PROVISIONS (OTHER THAN NEW YORK STATE GENERAL OBLIGATIONS LAW SECTION
5-1401) EXCEPT AS REQUIRED BY THE MANDATORY PROVISIONS OF LAW.
21. Any judicial proceedings brought against the Guarantor
with respect to this Guarantee may be brought in any state or federal court of
competent jurisdiction in the State of New York and, by execution and delivery
of this Guarantee, the Guarantor hereby accepts for itself and in respect of its
properties, generally and unconditionally, the non-exclusive jurisdiction of the
aforesaid courts and hereby waives, to the extent permitted by applicable law,
any right it may have to object to the bringing of any such action or proceeding
in the aforesaid courts based on the grounds of forum non conveniens, and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Guarantee. The Guarantor designates and appoints American Standard,
Inc., 13-15 West 54th Street, New York, New York 10019, Attention: Legal
Department, and such other persons as may hereafter be selected by it
irrevocably agreeing in writing to so serve, as its agent to receive on its
behalf service of all process in any such proceedings in any such court, such
service being hereby acknowledged by the Guarantor to be effective and binding
service in every respect. A copy of any such process so served shall be mailed
by registered mail to the Guarantor at the address set forth on the signature
page of this Guarantee, except that unless otherwise provided by applicable law,
any failure to mail such copy shall not affect the validity of service of
process. If any agent appointed by the Guarantor refuses to accept service, the
Guarantor hereby agrees that service upon it by mail shall constitute sufficient
notice. Nothing herein shall affect the right to serve process in any other
manner permitted by law or shall limit the right of any Guaranteed Creditor to
bring proceedings against the Guarantor in the courts of any other jurisdiction.
22. Each party hereto hereby waives, to the fullest extent
permitted by applicable law, any right it may have to a trial by jury in respect
of any litigation directly or indirectly arising out of, under or in connection
with this Guarantee, the 1997 Credit Agreement or any of the other Credit
Documents. Each party hereto (a) certifies that no representative, agent or
attorney of any other party
<PAGE> 156
7
has represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver and (b) acknowledges
that it and the other parties hereto have been induced to enter into this
Guarantee, the 1997 Credit Agreement and the other Credit Documents, as
applicable, by, among other things, the mutual waivers and certifications in
this Section.
23. This Guarantee shall remain in full force and effect and
may not be terminated or otherwise revoked by the Guarantor, but shall be
terminated without further act subject to paragraph 16 above (i) when the
Guarantor is released from its obligations hereunder in accordance with Section
6.02 of the 1997 Credit Agreement or (ii) if earlier, but only for so long as
there are no Guaranteed Obligations outstanding, when all the Guaranteed
Obligations have been paid in full in cash in the applicable currency and the
Lenders have no further commitment to make Loans or to issue Letters of Credit
and there are no Letters of Credit issued, unexpired and not fully drawn and/or
not fully reimbursed, under the 1997 Credit Agreement; and upon termination the
Collateral Agent shall execute and deliver to the Guarantor such releases in
respect of the Guarantor's obligations hereunder as the Guarantor may reasonably
request.
24. (a) The Guarantor's obligations under this Guarantee to
make payments in Dollars or in any other currency (the "Obligation Currency")
shall not be discharged or satisfied by any tender or recovery pursuant to any
judgment expressed in or converted into any currency other than the Obligation
Currency, except to the extent that such tender or recovery results in the
effective receipt by the Collateral Agent or the relevant Guaranteed Creditor of
the full amount of the Obligation Currency expressed to be payable to them under
this Guarantee. If for the purpose of obtaining or enforcing judgment against
the Guarantor in any court or in any jurisdiction, it becomes necessary to
convert into or from any currency other than the Obligation Currency (such other
currency being hereinafter referred to as the "Judgment Currency") an amount due
in the Obligation Currency, the conversion shall be made, at the Dollar
Equivalent of such amount, in the case of Foreign Currency or Dollars, and, in
the case of other currencies, the rate of exchange (as quoted by the
Administrative Agent or if the Administrative Agent does not quote a rate of
exchange on such currency, by a known dealer in such currency designated by the
Administrative Agent) determined, in each case, as on the day immediately
preceding the day on which the judgment is given (such Business Day being
hereinafter referred to as the "Judgment Currency Conversion Date").
(b) If there is a change in the rate of exchange prevailing
between the Judgment Currency Conversion Date and the date of actual payment of
the amount due, the Guarantor covenants and agrees to pay such additional
amounts, if any (but in any event not a lesser amount), as may be necessary to
ensure that the amount paid in the Judgment Currency, when converted at the rate
of exchange prevailing on the date of payment, will produce the amount of the
Obligation Currency which could have been purchased with the amount of Judgment
Currency stipulated in the judgment or judicial award at the rate of exchange
prevailing on the Judgment Currency Conversion Date.
(c) For purposes of determining the Dollar Equivalent or rate
of exchange for this Section, such amounts shall include any premium and costs
payable in connection with the purchase of the Obligation Currency.
<PAGE> 157
8
25. If (i) there is an event with respect to the Guarantor
that would require or permit the acceleration under Section 7.05 of the 1997
Credit Agreement of any outstanding Loan if the Guarantor were a Borrower under
the 1997 Credit Agreement, or (ii) the Guarantor's obligations, if any, under
the 1997 Credit Agreement are accelerated, all of the Guaranteed Obligations
shall be immediately due and payable by the Guarantor.
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to
be executed and delivered as of the date first above written.
[Name]
by
---------------------------------
Name:
Title:
Notice Address:
[ ]
<PAGE> 158
EXHIBIT XII
ASSIGNMENT AND AMENDMENT AGREEMENT dated as
of January 31, 1997, among AMERICAN STANDARD
COMPANIES INC., formerly known as ASI Holding
Corporation, a Delaware corporation ("Holding");
AMERICAN STANDARD INC., a Delaware corporation
("ASI"); the Subsidiaries of ASI listed on the
signature pages hereto (the "ASI Subsidiaries" and,
together with Holding and ASI, the "ASI Parties");
the financial institutions listed in Schedule I
hereto, in their respective capacities as parties to
the Original Credit Documents referred to below (the
"Original Lenders"); and the financial institutions
listed in Schedule II hereto (the "Continuing
Lenders"); including THE CHASE MANHATTAN BANK, as
Administrative Agent for the Original Lenders and
Continuing Lenders (in such capacity, the "Agent")
and as Collateral Agent for the Original Lenders and
the Continuing Lenders (in such capacity, the
"Collateral Agent").
Preliminary Statement
A. Holding, ASI and the ASI Subsidiaries are parties to an
Amended and Restated Credit Agreement dated as of February 9, 1995 (as amended
and in effect immediately prior to the effectiveness of the transactions
contemplated by this Agreement, the "1995 ASI Credit Agreement"), with the
Original Lenders. The ASI Parties desire to amend and restate the 1995 ASI
Credit Agreement and to restructure all outstanding loans and commitments
thereunder (including by providing for the repayment of certain of such loans)
and have requested that the Original Lenders and the Continuing Lenders enter
into this Agreement for that purpose.
B. The Continuing Lenders are willing to amend and restate the
1995 ASI Credit Agreement in the form of the Amended and Restated Credit
Agreement executed and delivered herewith (the "Amended and Restated Credit
Agreement"), among the ASI Parties and the Continuing Lenders, and to
restructure the outstanding loans and commitments under the 1995 ASI Credit
Agreement on the terms and conditions set forth herein and in the Amended and
Restated Credit Agreement.
C. ASI has notified all the Original Lenders and the
Continuing Lenders of the scheduled date for the effectiveness of the
assignments and amendments contemplated hereby (which shall be the Effective
Date referred to in Section III).
D. Each of ASI and the ASI Subsidiaries that are to borrow on
the Effective Date under the Amended and Restated Credit Agreement has delivered
to the Agent, in accordance with the Amended and Restated Credit Agreement, a
Borrowing Request (as defined therein), which specifies (i) the amounts,
currencies and categories of, and the Interest Periods (as defined in the
Amended and Restated Credit Agreement) to be applicable to, the loans that it
desires to be advanced to it on the Effective Date that are not already
outstanding under the 1995 ASI Credit Agreement, and (ii) the amounts,
currencies and categories of, and the Interest Periods to be applicable to, the
loans made to it that are outstanding under the 1995 ASI Credit Agreement and
that are to remain outstanding thereunder on the Effective Date (the loans
described in this clause (ii) being collectively called the "Continuing Loans").
The foregoing Borrowing Requests are referred to herein collectively as the
"Effective Date Loan Notices".
E. The parties (other than the Withdrawing Lenders, as defined
below) desire that the Continuing Loans remain outstanding as indebtedness under
the Amended and Restated Credit Agreement, that letters of credit issued and
outstanding under the 1995 ASI Credit Agreement remain outstanding under the
Amended and Restated Credit Agreement and that the guarantees of, and certain
security interests in the
<PAGE> 159
2
capital stock (or other ownership interests) of subsidiaries of ASI and the
proceeds thereof securing, obligations under the 1995 ASI Credit Agreement and
certain of the other "Credit Documents" as defined therein continue to guarantee
and to secure obligations under the Amended and Restated Credit Agreement and
the Credit Documents (as defined in the Amended and Restated Credit Agreement
and as they may be amended from time to time (the "Credit Documents")).
F. The Original Lenders that will not be Continuing Lenders
(the "Withdrawing Lenders") desire to be released from their obligations under,
and all the Original Lenders desire to assign and transfer to the Continuing
Lenders (to the extent not retained by them as Continuing Lenders) their
interests and rights under, the 1995 ASI Credit Agreement.
Accordingly, the parties hereto hereby agree as follows:
I. ASSIGNMENT AND AMENDMENT
SECTION 1.01. Funding Memorandum. On or prior to the Effective
Date, the Agent and ASI shall prepare a funding memorandum (the "Funding
Memorandum") setting forth (i) with respect to each borrower under the 1995 ASI
Credit Agreement, the amounts and currencies of its outstanding loans of each
category thereunder as of the Effective Date and, for each category of loans,
any differences between such amounts and currencies and the amounts and
currencies of the loans of such category that will continue to be outstanding
under, or be made under, the Amended and Restated Credit Agreement on the
Effective Date based on the Effective Date Loan Notices, (ii) the respective
amounts and currencies of the Continuing Loans of each category that will
continue to be held on the Effective Date by Original Lenders currently holding
such Continuing Loans as a result of such Original Lenders also being Continuing
Lenders (such Continuing Loans being the "Retained Continuing Loans"), (iii) the
respective amounts and currencies of the Continuing Loans of each category that
will be assigned on the Effective Date pursuant to Section 1.02 by Original
Lenders currently holding such Continuing Loans (the "Assigning Lenders") as a
result of such Original Lenders being Withdrawing Lenders or having commitments
under the Amended and Restated Credit Agreement that are inconsistent with the
retention of all the Continuing Loans currently held by them (such Continuing
Loans being the "Assigned Continuing Loans") and, as to each category of
Assigned Continuing Loans, the amount of such Loans, if any, to be purchased by
each Continuing Lender (the Continuing Lenders purchasing Assigned Continuing
Loans of any category being called the "Applicable Continuing Lenders" in
respect thereof), (iv) the letters of credit to be outstanding under the 1995
ASI Credit Agreement as of the Effective Date, and (v) the respective amounts to
be paid and received by the parties hereto on the Effective Date pursuant to
Section 1.06.
SECTION 1.02. Assignments. Subject to the conditions set forth
in Article III, effective on the Effective Date, (a) each Assigning Lender
hereby assigns and transfers to the Applicable Continuing Lenders, without
recourse, representation or warranty (other than as expressly set forth in
Article II), all its Assigned Continuing Loans of each category and all its
related rights and interests under the Credit Documents, and (b) the Applicable
Continuing Lenders hereby purchase and accept all such Assigned Continuing
Loans, rights and interests. Each Applicable Continuing Lender shall be deemed
to have purchased the Loans of each category purchased by it from the applicable
Assigning Lenders pro rata based on the amounts of the Loans of such category
sold by such Assigning Lenders. Notwithstanding the foregoing, (i) the Assigning
Lenders shall retain the exclusive right under the Credit Documents to receive
and retain the payments referred to in clauses (a) and (c) of Section 1.06, and
(ii) the Assigning Lenders shall retain all their rights under the Credit
Documents in respect of indemnification and expense
<PAGE> 160
3
reimbursement obligations, including under Sections 2.12, 2.14, 2.18 and 10.01
of the 1995 ASI Credit Agreement, which shall survive the amendment and
restatement of the 1995 ASI Credit Agreement without prejudice to the rights of
the Continuing Lenders under the Amended and Restated Credit Agreement (and for
purposes of such Section 2.14, the assignments of the Assigned Continuing Loans
on the Effective Date shall be treated as prepayments of such Loans, as provided
in Section 1.06(a)(iii)). In implementation of the foregoing, the Original
Lenders agree to use their best efforts to deliver to the Agent, on or prior to
the Effective Date (or as promptly as possible thereafter), all promissory notes
issued under the 1995 ASI Credit Agreement (the "Original Notes"), or written
certification that such Original Notes are lost or cannot be located; provided
that (A) failure to deliver the Original Notes shall not affect the validity of
the assignments provided for herein and (B) each Original Lender that fails so
to deliver its Original Notes hereby agrees to indemnify the ASI Parties against
any loss, cost or expense resulting from such failure. The Agent shall surrender
to ASI on the Effective Date, for cancellation, all Original Notes received by
the Agent, it being understood that loans outstanding under the Amended and
Restated Credit Agreement are to be evidenced as provided therein.
SECTION 1.03. Amendment and Restatement. Subject to the
conditions set forth in Article III, on the Effective Date, upon the
consummation of the assignments referred to in Section 1.02, (a) the 1995 ASI
Credit Agreement shall be amended and restated in the form of the Amended and
Restated Credit Agreement, (b) the Continuing Loans shall constitute Loans
outstanding under, and as defined in, the Amended and Restated Credit Agreement
in accordance with the Effective Date Loan Notices (and, for purposes of the
Amended and Restated Credit Agreement, the Continuing Lenders shall be deemed to
have advanced their respective Continuing Loans under the Amended and Restated
Credit Agreement on the Effective Date as though made pursuant to Borrowing
Requests delivered thereunder and the Interest Periods to be applicable to such
Continuing Loans, as set forth in the Effective Date Loan Notices, will commence
on the Effective Date), (c) the interests, rights and obligations of each
Continuing Lender shall be limited to those set forth in the Amended and
Restated Credit Agreement and the Credit Documents and (d) the Credit Documents
(and all interests of any party thereunder, including all security interests
whatsoever) shall, except as expressly provided herein, continue in full force
and effect for the benefit of the Continuing Lenders, and all references in any
thereof to the 1993 Credit Agreement (as defined in the Amended and Restated
Credit Agreement), the 1995 ASI Credit Agreement or to any such other Credit
Documents shall be deemed references to the Amended and Restated Credit
Agreement or to such Credit Documents, as amended, restated, supplemented or
otherwise modified from time to time.
SECTION 1.04 Consents and Releases. (a) The ASI Parties hereby
consent and agree to the transactions to be effected by Sections 1.02 and 1.03
and hereby release, effective on the Effective Date, the Withdrawing Lenders
from all their obligations under the Credit Documents other than their
obligations under Section 10.15 of the 1995 ASI Credit Agreement and any
obligations they may have under Section 2.18(g) of the 1995 ASI Credit
Agreement. The Continuing Lenders and the ASI Parties acknowledge and agree that
upon the effectiveness of the amendment and restatement provided for in Section
1.03, the obligations of the ASI Parties (other than as set forth herein) and
the Continuing Lenders shall be limited to those set forth in the Amended and
Restated Credit Agreement and the Credit Documents.
(b) The Continuing Lenders and the ASI Parties agree that (i)
upon the effectiveness of the amendment and restatement provided for in Section
1.03, the Security Documents (as such term is defined in the 1995 ASI Credit
Agreement) listed in Part A of Schedule III hereto shall be terminated and (ii)
following the effectiveness of the amendment and restatement provided for in
Section 1.03, the Security Documents listed in Part B of Schedule III hereto
shall be amended or terminated.
<PAGE> 161
4
SECTION 1.05. Letters of Credit. On the Effective Date, each
letter of credit issued and outstanding under the 1995 ASI Credit Agreement (a
"Continuing Letter of Credit") shall continue to constitute a Letter of Credit
issued under, and as defined in, the Amended and Restated Credit Agreement, with
the same effect as though issued thereunder on the Effective Date. Each such
Letter of Credit will be deemed to have been issued pursuant to the U.S. $
revolving credit facility established by the Amended and Restated Credit
Agreement. Each Continuing Lender that shall have issued a Continuing Letter of
Credit (a "Continuing Issuing Bank") shall be deemed to be an "Issuing Bank", as
defined in the Amended and Restated Credit Agreement, in respect of such
Continuing Letter of Credit for all purposes of the Credit Documents, entitled
to the benefits thereof; and each Issuing Bank Agreement (as defined in the 1995
ASI Credit Agreement) in effect on the Effective Date shall continue to
constitute an Issuing Bank Agreement under the Amended and Restated Credit
Agreement. The ASI Parties and the Continuing Lenders consent to the foregoing
and each Continuing Issuing Bank agrees that, on and after the Effective Date,
the Original Lenders shall be released from their participations acquired under
the 1995 ASI Credit Agreement in such Continuing Letters of Credit issued by it,
without prejudice to the rights of such Continuing Issuing Bank in respect of
the participations acquired by Continuing Lenders under the Amended and Restated
Credit Agreement in respect of such Continuing Letters of Credit. Each
Continuing Issuing Bank and the ASI Parties also hereby acknowledge and agree
that, on and after the Effective Date, the compensation payable by the ASI
Parties to such Continuing Issuing Bank with respect to its Continuing Letters
of Credit shall be as set forth in the Issuing Bank Agreement executed and
delivered by ASI and such Continuing Issuing Bank, as contemplated by the
Amended and Restated Credit Agreement.
SECTION 1.06. Payments. Subject to the conditions set forth in
Article III hereof, on the Effective Date:
(a) each ASI Party that is a borrower under the 1995 ASI
Credit Agreement shall pay, and ASI shall cause each such borrower to
pay, to the Agent, in the manner and currencies required under the 1995
ASI Credit Agreement for distribution to the Original Lenders in
accordance with the 1995 ASI Credit Agreement, an amount equal to the
sum of (i) all accrued and unpaid interest on all the loans of such ASI
Party outstanding under the 1995 ASI Credit Agreement, regardless of
whether such loans are being prepaid on such date, (ii) the aggregate
principal amount of all the loans (excluding only Continuing Loans) of
such ASI Party outstanding under the 1995 ASI Credit Agreement (and the
amounts referred to in this clause (ii) shall be applied to prepay such
loans on the Effective Date), and (iii) without limiting clause (b)(ii)
of Section 1.02, all fees and other amounts, including without
limitation any break funding costs arising as a result of the payments
provided for herein (to the extent ASI has received prior notice
thereof), accrued and unpaid (whether or not then due) by such ASI
Party under the 1995 ASI Credit Agreement or any Credit Document (and
for purposes of this clause (iii), each assignment of an Assigned
Continuing Loan shall be treated as a prepayment thereof on the
Effective Date in determining break funding costs due under the 1995
ASI Credit Agreement);
(b) each Continuing Lender shall pay to the Agent, in
accordance with Section 2.02(c) of the Amended and Restated Credit
Agreement, (i) the amounts of the loans (other than Continuing Loans)
to be made by such Continuing Lender under the Amended and Restated
Credit Agreement on the Effective Date based upon the Effective Date
Loan Notices and the Funding Memorandum, and (ii) amounts equal to the
principal amounts of the Assigned Continuing Loans that will constitute
outstanding loans of such Continuing Lender under the Amended and
Restated Credit Agreement based upon such Effective Date Loan Notices
and the Funding Memorandum;
<PAGE> 162
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(c) the Agent shall pay (i) to the Original Lenders from the
funds received by it pursuant to clause (a)(i) above, all accrued and
unpaid interest in respect of the Loans of such Lenders outstanding
under the 1995 ASI Credit Agreement on the Effective Date; (ii) to the
Original Lenders from the funds received by it pursuant to clause
(a)(ii) above, the aggregate principal amounts of the respective loans
(other than Continuing Loans) of such Lenders outstanding under the
1995 ASI Credit Agreement on the Effective Date; (iii) to the Assigning
Lenders from the funds received by it pursuant to clause (b)(ii) above,
the aggregate principal amounts of the respective Assigned Continuing
Loans of such Lenders outstanding on the Effective Date; and (iv) to
the Original Lenders and the Agent from the funds received by it
pursuant to clause (a)(iii) above, all fees and other amounts,
including break funding costs determined in accordance with the 1995
ASI Credit Agreement and such clause (a)(iii), accrued and unpaid
(whether or not then due) to such Lenders under the 1995 ASI Credit
Agreement, including those payable by reason of the assignments and
prepayments provided for herein (but only, in the case of break funding
costs and other amounts payable by reason of the assignments and
prepayments provided for herein, to the extent that ASI has received
prior notice thereof);
(d) the ASI Parties that are parties to the Amended and
Restated Credit Agreement shall pay to the Agent, in the manner and
currencies required under the Amended and Restated Credit Agreement for
distribution to the Continuing Lenders in accordance with the Amended
and Restated Credit Agreement, all fees and other amounts payable to
the Continuing Lenders pursuant to Section III(h) hereof on the
Effective Date; and
(e) the Agent shall pay to each ASI Party that is a borrower
under the Amended and Restated Credit Agreement, from the funds
received by it pursuant to clause (b)(i) above, the balance of such
funds remaining for the account of such ASI Party.
The obligations of the Continuing Lenders under clause (b)
above are several and not joint. The parties acknowledge that not all the break
funding costs under the 1995 ASI Credit Agreement have been notified to ASI, and
ASI shall pay such costs in accordance with the 1995 ASI Credit Agreement.
II. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS
SECTION 2.01. Representations and Warranties of Original
Lenders. (a) Each of the Assigning Lenders represents and warrants, as of the
Effective Date, to the Continuing Lenders that it is the beneficial and record
owner of the Assigned Continuing Loans to be assigned by it as contemplated by
Section 1.02; and that it has not sold, transferred or created any participating
interest in or lien upon such Assigned Continuing Loans (except participating
interests which will terminate upon the assignment provided for in Section
1.02).
(b) Each of the Original Lenders represents and warrants to
the Continuing Lenders that it has the power and authority to execute, deliver
and perform its obligations under this Agreement and that this Agreement
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the enforceability of creditors' rights generally and by general
principles of equity.
<PAGE> 163
6
SECTION 2.02. Representations and Warranties of Continuing
Lenders. Each Continuing Lender represents and warrants to the Original Lenders
that it has the corporate power and authority to execute, deliver and perform
its obligations under this Agreement and that this Agreement constitutes its
legal, valid and binding obligation, enforceable against it in accordance with
its terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting the
enforceability of creditors' rights generally and by general principles of
equity.
SECTION 2.03. Representations and Warranties of the ASI
Parties. Each of the ASI Parties represents and warrants to the Withdrawing
Lenders that it has the corporate power and authority to execute, deliver and
perform its obligations under this Agreement and that this Agreement constitutes
its legal, valid and binding obligation, enforceable against it in accordance
with its terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the enforceability of creditors' rights generally and by general
principles of equity or, in the case of the ASI Parties that are Foreign
Subsidiaries, applicable laws disclosed in legal opinions delivered pursuant to
the 1995 ASI Credit Agreement or the Amended and Restated Credit Agreement, as
applicable. Except for certain corporate reorganizations which have been
disclosed in writing to the Administrative Agent, each of the ASI Parties
represents and warrants (as to itself and its Subsidiaries and the shares of
capital stock, or parts, as applicable, pledged by it and them) to the
Continuing Lenders that, as of the date hereof, (a) as to the pledge of shares
of capital stock of any Domestic Subsidiary, such shares of capital stock
constitute 100% of the issued and outstanding capital stock of such Domestic
Subsidiary owned by ASI Parties and their Subsidiaries and required to be
pledged under the 1995 ASI Credit Agreement or the Amended and Restated Credit
Agreement, (b) as to the pledge of shares of capital stock or parts, as
applicable, of any Foreign Subsidiary pledged by ASI or any Subsidiary to secure
Domestic Obligations, such shares of capital stock or parts, as applicable,
constitute at least 65% in the aggregate of the issued and outstanding capital
stock of such Foreign Subsidiary owned by ASI, Holding and any Domestic
Subsidiary and required to be pledged under the 1995 ASI Credit Agreement or the
Amended and Restated Credit Agreement and (c) as to the pledge of shares of
capital stock or parts, as applicable, of any Foreign Subsidiary pledged by ASI
or any Subsidiary to secure Obligations other than Domestic Obligations, such
shares of capital stock or parts, as applicable, constitute 100% of the issued
and outstanding stock of such Foreign Subsidiary owned by ASI Parties and their
Subsidiaries and required to be pledged under the 1995 ASI Credit Agreement or
the Amended and Restated Credit Agreement.
SECTION 2.04. Certain Agreements Among ASI Parties and
Continuing Lenders. The ASI Parties that are parties to the Amended and Restated
Credit Agreement and the Continuing Lenders agree that, for all purposes of the
Credit Documents, the transactions contemplated hereby, including the payments
contemplated by Section 1.06 and the transactions contemplated by Sections 1.02,
1.03 and 1.04, shall be deemed to constitute part of the "Transactions" as
defined in the Amended and Restated Credit Agreement.
III. CONDITIONS
The transactions contemplated by Sections 1.02, 1.03, 1.04 and
1.05 shall become effective only upon the satisfaction, on a single date (which
shall be the Effective Date), of the following conditions (capitalized terms
used in this Section III and not otherwise defined herein shall have the
meanings assigned to them in the Amended and Restated Credit Agreement):
<PAGE> 164
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(a) all the payments referred to in Section 1.06 shall have
been made;
(b) each Continuing Lender that shall have so requested in
accordance with Section 2.06 of the Amended and Restated Credit
Agreement shall have received a duly executed Note evidencing the Loans
payable to it from time to time under the Amended and Restated Credit
Agreement;
(c) the Agent shall have received, on behalf of the Lenders,
legal opinions from each of Debevoise & Plimpton, counsel to the Credit
Parties, Richard A. Kalaher, Esq., General Counsel of ASI, and such
foreign counsel to ASI and the Subsidiary Borrowers and other counsel
as shall have been requested by the Agent, each such opinion to be
dated the Effective Date and addressed to the Issuing Banks, the Agent
and the Lenders, as to such matters as the Agent may reasonably
request, and the Borrowers hereby instruct each such counsel to deliver
such opinions.
(d) the representations and warranties set forth in Article
III of the Amended and Restated Credit Agreement and in each Credit
Document shall be true and correct in all material respects on and as
of such date with the same effect as though made on and as of such
date, except to the extent such representations and warranties
expressly relate to an earlier date;
(e) all legal matters incidental to this Agreement, the
Amended and Restated Credit Agreement, the Borrowings thereunder, the
Credit Documents and the Transactions shall be satisfactory to the
Lenders and to Cravath, Swaine & Moore, counsel for the Agent;
(f) the Agent shall have received, on behalf of the Lenders,
(i) in the case of any Credit Party of which the certificate or
articles of incorporation (or other analogous document) has been
changed since February 9, 1995, a copy of the certificate or articles
of incorporation (or other analogous document), including all
amendments thereto, of such Credit Party, certified (where reasonably
available, in the case of any Credit Party organized outside the United
States) as of a recent date by the Secretary of State (or other
appropriate Governmental Authority) of the state (or country) of its
organization, or other evidence reasonably satisfactory to the Agent as
to the organization of such Credit Party; (ii) a certificate as to the
good standing or subsistence (or other analogous certification), to the
extent available, of each of the Credit Parties as of a recent date,
from the appropriate Secretary of State (or other appropriate
Governmental Authority) or other evidence reasonably satisfactory to
the Agent as to the good standing of such Credit Party and a
certificate as to the good standing of ASI as a foreign corporation
from each applicable Secretary of State including the District of
Columbia; (iii) a certificate of the Secretary or Assistant Secretary
(or other Responsible Officer, in the case of Credit Parties that do
not have a Secretary or an Assistant Secretary) of each Credit Party
executing any Credit Document as of the Effective Date dated the
Effective Date and certifying (A) that attached thereto is a true and
complete copy of the by-laws (or other analogous documents to the
extent available) of such Credit Party as in effect on the Effective
Date and at all times since a date prior to the date of the resolutions
described in clause (B) below, (B) that attached thereto is a true and
complete copy of resolutions duly adopted by the Board of Directors of
such Credit Party (and, if necessary, resolutions duly adopted by the
shareholders or other equity owners of such Credit Party) authorizing
the execution, delivery and performance of this Agreement, the Amended
and Restated Credit Agreement and the Credit Documents to which such
Credit Party is or is to be a party and, in the case of the Borrowers,
the Borrowings, and that such resolutions have not been modified,
rescinded or amended and are in full force and effect, (C) that the
certificate or articles of incorporation (or analogous documents)
<PAGE> 165
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of such Credit Party have not been amended since the date of the last
amendment thereto shown on the certificate (or other analogous
certification or such other evidence reasonably satisfactory to the
Agent) furnished pursuant to clause (i) above or, if no such
certificate is required to be furnished under (i) above, since February
9, 1995, and (D) as to the incumbency and specimen signature of each
officer executing this Agreement, the Amended and Restated Credit
Agreement, any Credit Document or any other document delivered in
connection herewith on behalf of such Credit Party; (iv) a certificate
of another officer as to the incumbency and specimen signature of the
Secretary or Assistant Secretary executing the certificate pursuant to
clause (iii) above; and (v) such other documents as the Lenders, the
Issuing Banks or Cravath, Swaine & Moore, counsel for the Agent, may
reasonably request;
(g) the Agent shall have received, on behalf of the Lenders,
an Officer's Certificate of ASI, dated the Effective Date (i)
confirming compliance with the conditions precedent set forth in
paragraphs (b) and (c) of Section 4.01 of the Amended and Restated
Credit Agreement insofar as such conditions precedent relate to ASI and
its Subsidiaries and (ii) certifying that no Actionable Default (as
defined in the Senior Indentures) has occurred and is continuing;
(h) the Agent shall have received all Fees and other amounts
due and payable on or prior to the Effective Date, including
reimbursement or payment of all out-of-pocket expenses required to be
reimbursed or paid by any of the Borrowers hereunder or under any
Credit Document (to the extent invoices and statements therefor have
been received);
(i) the Security Documents and the Guarantee Documents shall
be in full force and effect on the Effective Date. The Collateral Agent
on behalf of the holders of the Obligations shall have a security
interest in the Collateral of the type and priority described in each
Security Document, perfected to the extent contemplated by Section 3.09
of the Amended and Restated Credit Agreement;
(j) the Agent shall have received, on behalf of the Lenders, a
satisfactory Perfection Certificate dated the Effective Date from ASI,
demonstrating the perfection, to the extent contemplated by Section
3.09 of the Amended and Restated Credit Agreement, of the Liens granted
under the Security Documents;
(k) the Lenders shall have received a satisfactory pro forma
consolidated balance sheet for ASI, reflecting the Transactions,
certified by a Financial Officer of ASI, and such balance sheet shall
be consistent in all material respects with the information and
projections delivered by ASI to the Lenders prior to the date hereof;
(l) ASI shall have taken all actions, if any, necessary to
designate its liabilities in respect of the Obligations as senior
indebtedness for purposes of the subordination provisions of its
subordinated indebtedness (including, in the case of ASI, the
Subordinated Securities), and the Obligations shall constitute senior
indebtedness for such purposes;
(m) except as contemplated by the Transactions and as
otherwise disclosed to the Lenders prior to the execution and delivery
of this Agreement and the Amended and Restated Credit Agreement, there
shall not have occurred any Prepayment Event or any other material
change in the capitalization or corporate structure of Holding or the
Borrowers since the date of the most recent balance sheet referred to
in Section 3.08 of the Amended and Restated Credit Agreement;
<PAGE> 166
9
(n) the Transactions, including the extensions of credit (and
in particular the incurrence of the Loans and the issuance of the
Letters of Credit) under the Amended and Restated Credit Agreement and
the continuance of the Liens created by the Security Documents, shall
have been approved or exempted by all requisite Governmental
Authorities, and all such approvals or exemptions, including any
conditions imposed thereby, shall be in form and substance acceptable
to the Lenders. No action shall have been taken by any Governmental
Authority which restrains or prevents or seeks to restrain or prevent,
or imposes or seeks to impose materially adverse conditions upon, any
of the Transactions;
(o) no action, suit, litigation or similar proceeding at law
or in equity or by or before any court or other Governmental Authority
shall exist or, in the case of litigation by a Governmental Authority,
be threatened, with respect to any of the Transactions that would in
the reasonable opinion of the Lenders be likely to result in a
Materially Adverse Effect;
(p) the ASI-BV Intercompany Note (as defined in the 1995 ASI
Credit Agreement) shall have been amended to be an unsecured note in a
manner satisfactory to the Administrative Agent; and
(q) all aspects of the structure and documentation of the
Transactions and all corporate and other proceedings taken or to be
taken in connection therewith and all documents incidental thereto, in
each case to the extent not otherwise provided for herein, shall be
reasonably satisfactory in form and substance to the Agent and to
Cravath, Swaine & Moore, counsel for the Agent, and the Lenders shall
have received copies of all such documents as the Lenders may
reasonably request.
Satisfaction of the foregoing conditions shall be conclusively evidenced by (i)
receipts executed and delivered by the Agent and ASI, in the case of the
condition set forth in clause (a) above and (ii) the making of the payments
described in Section 1.06 on the Effective Date, in the case of the conditions
set forth in clauses (b) through (q) above; provided that execution and delivery
of the receipts referred to in clause (i) above shall not affect the rights of
any party hereto to receive amounts due and payable to it and not actually
received by such party. Unless and until the transactions contemplated by
Sections 1.02, 1.03, 1.04 and 1.05 become effective as provided above, the
Credit Documents shall remain in full force and effect in accordance with their
respective terms and the rights and obligations of the parties thereto shall not
be affected hereby.
IV. MISCELLANEOUS
SECTION 4.01. Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns (including, in the case of the Original
Lenders, all banks or other persons which shall become Lenders under and as
defined in the 1995 ASI Credit Agreement hereafter and prior to the Effective
Date and, in the case of the Continuing Lenders, all banks or other persons
which shall hereafter become Lenders under and as defined in the Amended and
Restated Credit Agreement).
SECTION 4.02. Applicable Law. This Agreement shall be
construed in accordance with and governed by the laws of the State of New York.
<PAGE> 167
10
SECTION 4.03. Amendment. This Agreement may be waived,
modified or amended only by a written agreement executed by each of the parties
hereto.
SECTION 4.04. Counterparts. This Agreement may be executed in
any number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same agreement. Delivery
of an executed counterpart of a signature page of this Agreement by facsimile
transmission shall be effective as delivery of a manually executed counterpart
of this Agreement.
SECTION 4.05. No Novation. (a) Neither this Agreement nor the
execution, delivery or effectiveness of the Amended and Restated Credit
Agreement shall extinguish the obligations for the payment of money outstanding
under the 1995 ASI Credit Agreement or, except as expressly provided in this
Agreement, discharge or release the Lien or priority of any pledge agreement or
any other security therefor. Nothing herein contained shall be construed as a
substitution or novation of the obligations outstanding under the 1995 ASI
Credit Agreement or instruments securing the same, which shall remain in full
force and effect, except to any extent modified hereby or by instruments
contemplated hereby or executed concurrently herewith. Except as expressly
provided herein or in the Amended and Restated Credit Agreement, nothing in this
Agreement, the Amended and Restated Credit Agreement or any other document
contemplated hereby or thereby shall be construed as a release or other
discharge of any Borrower or any Guarantor or any Pledgor under any Credit
Document from any of its obligations and liabilities as a "Borrower",
"Guarantor" or "Pledgor" under the 1995 ASI Credit Agreement or the Credit
Documents. Each of the 1995 ASI Credit Agreement and the Credit Documents shall
remain in full force and effect, until (as applicable) and except to the extent
modified hereby or in connection herewith. Notwithstanding any provision of this
Agreement or the Amended and Restated Credit Agreement, the provisions of
Sections 8.05 and 10.01 of the 1995 ASI Credit Agreement, including all defined
terms used therein, will continue to be effective as to all matters arising out
of or in any way related to facts or events existing or occurring prior to the
Effective Date.
(b) Each of the ASI Parties hereby represents and warrants
(but, in the case of representations and warranties relating to ASI Parties
other than Holding and ASI, only as to itself and its Subsidiaries, it being
understood that Holding and ASI make these representations and warranties as to
all parties) to the Collateral Agent and the Continuing Lenders that (i) each
Credit Document (as defined in the Amended and Restated Credit Agreement)
continues to be the legal, valid, binding and enforceable obligation of each
party thereto, and (ii) the Lenders from time to time party to the Amended and
Restated Credit Agreement are entitled to the benefits of the Guarantee
Documents and the Security Documents (each as defined in the Amended and
Restated Credit Agreement).
SECTION 4.06. Netherlands Power of Attorney. In the event that
Wabco Standard Trane B.V. executes and delivers this Agreement through an
attorney-in-fact (the "Attorney-in-Fact"), it is agreed by the parties hereto
that the law of The Netherlands is applicable to the existence and extent of the
Attorney-in-Fact's authority and the effects of the Attorney-in-Fact's exercise
or purported exercise of his authority to execute and deliver this Agreement.
<PAGE> 168
11
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed and delivered as of the date first above written.
AMERICAN STANDARD COMPANIES INC.,
by
______________________________________
Name: Thomas S. Battaglia
Title: Vice President and Treasurer
AMERICAN STANDARD INC.,
by
______________________________________
Name: Thomas S. Battaglia
Title: Vice President and Treasurer
AMERICAN STANDARD (UK) CO.,
by
______________________________________
Name: Thomas S. Battaglia
Title: Attorney-in-Fact
AMERICAN STANDARD CREDIT INC.,
by
______________________________________
Name: Thomas S. Battaglia
Title: Vice President and Treasurer
WABCO STANDARD TRANE INC.,
by
______________________________________
Name: Thomas S. Battaglia
Title: Vice President and Treasurer
<PAGE> 169
12
WABCO STANDARD GMBH,
by
___________________________
Name: Thomas S. Battaglia
Title: Attorney-in-Fact
WABCO STANDARD TRANE B.V.,
by
___________________________
Name: Thomas S. Battaglia
Title: Attorney-in-Fact
STANDARD EUROPE, a European Economic
Interest Grouping,
by
___________________________
Name: Thomas S. Battaglia
Title: Attorney-in-Fact
THE CHASE MANHATTAN BANK, individually
and as Administrative Agent,
by
___________________________
Name: Peter Eckstein
Title: Vice President
ABN AMRO BANK N.V. NEW YORK BRANCH,
by
___________________________
Name:
Title:
by
___________________________
Name:
Title:
<PAGE> 170
13
ALLIED IRISH BANK plc, CAYMAN
ISLANDS BRANCH,
by
___________________________
Name:
Title:
by
___________________________
Name:
Title:
ARAB BANKING CORPORATION,
by
___________________________
Name:
Title:
by
___________________________
Name:
Title:
BANCA COMMERCIALE ITALIANA,
NEW YORK BRANCH,
by
___________________________
Name:
Title:
by
___________________________
Name:
Title:
<PAGE> 171
14
BANK AUSTRIA AG,
by
___________________________
Name:
Title:
by
___________________________
Name:
Title:
BANK OF AMERICA ILLINOIS,
by
___________________________
Name:
Title:
BANK OF IRELAND,
by
___________________________
Name:
Title:
BANK OF MONTREAL,
by
___________________________
Name:
Title:
THE BANK OF NEW YORK,
by
___________________________
Name:
Title:
<PAGE> 172
15
THE BANK OF NOVA SCOTIA,
by
___________________________
Name:
Title:
BANK OF SCOTLAND,
by
___________________________
Name:
Title:
THE BANK OF TOKYO-MITSUBISHI,
LTD., NEW YORK BRANCH,
by
___________________________
Name:
Title:
BANKERS TRUST COMPANY,
by
___________________________
Name:
Title:
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR,
by
___________________________
Name:
Title:
by
___________________________
Name: John Eberly
Title: Assistant Treasurer
<PAGE> 173
16
BANQUE PARIBAS,
by
___________________________
Name:
Title:
by
___________________________
Name:
Title:
CIBC INC.,
by
___________________________
Name:
Title:
CIBC WOOD GUNDY plc,
by
___________________________
Name:
Title:
CITIBANK, N.A.,
by
___________________________
Name:
Title:
CITY NATIONAL BANK,
by
___________________________
Name:
Title:
<PAGE> 174
17
COMPAGNIE FINANCIERE de CIC et de
l'UNION EUROPEENNE,
by
___________________________
Name:
Title:
by
___________________________
Name:
Title:
CORESTATES BANK, N.A.,
by
___________________________
Name:
Title:
CREDIT AGRICOLE,
by
___________________________
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH,
by
___________________________
Name:
Title:
<PAGE> 175
18
CREDIT SUISSE FIRST BOSTON
(formerly known as Credit Suisse),
by
___________________________
Name:
Title:
by
___________________________
Name:
Title:
CREDITO ITALIANO SpA,
by
___________________________
Name:
Title:
by
___________________________
Name:
Title:
DEUTSCHE BANK AG, NEW YORK BRANCH
and/or CAYMAN ISLANDS BRANCH,
by
___________________________
Name:
Title:
by
___________________________
Name:
Title:
<PAGE> 176
19
DRESDNER BANK AG,
by
___________________________
Name:
Title:
by
___________________________
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
(successor to NBD Bank),
by
___________________________
Name:
Title:
FLEET NATIONAL BANK, successor by
merger to Fleet Bank of
Massachusetts, N.A.,
by
___________________________
Name:
Title:
THE FUJI BANK, LIMITED,
by
___________________________
Name:
Title:
THE HOKKAIDO TAKUSHOKU BANK LTD.,
by
___________________________
Name:
Title:
<PAGE> 177
20
THE INDUSTRIAL BANK OF JAPAN,
TRUST COMPANY,
by
___________________________
Name:
Title:
THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED,
by
___________________________
Name:
Title:
LLOYDS BANK PLC,
by
___________________________
Name:
Title:
by
___________________________
Name:
Title:
MERITA BANK LTD.,
by
___________________________
Name:
Title:
THE MITSUBISHI TRUST AND BANKING
CORPORATION,
by
___________________________
Name:
Title:
<PAGE> 178
21
THE MITSUI TRUST AND BANKING
COMPANY, LIMITED,
by
___________________________
Name:
Title:
NATIONAL CITY BANK,
by
___________________________
Name:
Title:
NATIONSBANK, N.A.,
by
___________________________
Name:
Title:
THE NIPPON CREDIT BANK, LTD.,
by
___________________________
Name:
Title:
PARIBAS CAPITAL FUNDING LLC,
by
___________________________
Name:
Title:
THE ROYAL BANK OF SCOTLAND plc,
by
___________________________
Name:
Title:
<PAGE> 179
22
THE SAKURA BANK, LTD.,
by
___________________________
Name:
Title:
THE SANWA BANK, LIMITED, NEW YORK
BRANCH,
by
___________________________
Name:
Title:
SOCIETE GENERALE, NEW YORK BRANCH,
by
___________________________
Name:
Title:
STANDARD CHARTERED BANK,
by
___________________________
Name:
Title:
by
___________________________
Name:
Title:
THE SUMITOMO BANK, LIMITED, NEW
YORK BRANCH,
by
___________________________
Name:
Title:
<PAGE> 180
23
THE SUMITOMO TRUST AND BANKING
CO., LTD., NEW YORK BRANCH,
by
___________________________
Name:
Title:
THE TOKAI BANK, LIMITED-NEW YORK
BRANCH,
by
___________________________
Name:
Title:
THE TORONTO-DOMINION BANK,
by
___________________________
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.,
by
___________________________
Name:
Title:
UNITED STATES NATIONAL BANK OF
OREGON,
by
___________________________
Name:
Title:
<PAGE> 181
SCHEDULE I TO
ASSIGNMENT AND
AMENDMENT AGREEMENT
Original Lenders
ALLIED IRISH BANK plc, CAYMAN ISLAND BRANCH
BANCA COMMERCIALE ITALIANA, NEW YORK BRANCH
*BANK AUSTRIA AG
BANK OF AMERICA ILLINOIS
BANK OF IRELAND
THE BANK OF NEW YORK
THE BANK OF NOVA SCOTIA
BANK OF SCOTLAND
THE BANK OF TOKYO-MITSUBISHI, LTD., NEW YORK BRANCH
BANKERS TRUST COMPANY
BANQUE PARIBAS
CIBC INC.
THE CHASE MANHATTAN BANK
CITIBANK, N.A.
*CITY NATIONAL BANK
COMPAGNIE FINANCIERE de CIC et de
l'UNION EUROPEENNE - NEW YORK BRANCH
CREDIT LYONNAIS NEW YORK BRANCH
*CREDIT SUISSE FIRST BOSTON
CREDITO ITALIANO SpA
DEUTSCHE BANK AG, NEW YORK BRANCH AND/OR CAYMAN ISLAND BRANCH
*DRESDNER BANK
*THE FIRST NATIONAL BANK OF CHICAGO (successor to NBD Bank)
FLEET NATIONAL BANK, successor by merger to Fleet Bank of Massachusetts, N.A.
*THE FUJI BANK, LTD.
*THE HOKKAIDO TAKUSHOKU BANK, LTD. - NEW YORK BRANCH
THE INDUSTRIAL BANK OF JAPAN, TRUST COMPANY
THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED
MERITA BANK LTD. (formerly known as Union Bank of Finland)
THE MITSUBISHI TRUST & BANKING CORPORATION
THE MITSUI TRUST AND BANKING COMPANY, LIMITED
NATIONSBANK, N.A
NATIONAL CITY BANK
*PARIBAS CAPITAL FUNDING LLC
THE SAKURA BANK, LTD.
THE SANWA BANK, LIMITED, NEW YORK BRANCH
SOCIETE GENERALE
THE SUMITOMO BANK LTD., NEW YORK BRANCH
THE SUMITOMO TRUST AND BANKING CO., LTD., NEW YORK BRANCH
THE TORONTO DOMINION BANK
*UNION BANK OF CALIFORNIA, N.A. (merged into The Bank of Tokyo-Mitsubishi, Ltd.)
UNITED STATES NATIONAL BANK OF OREGON
- -------------------
* Withdrawing Lenders
<PAGE> 182
SCHEDULE II TO
ASSIGNMENT AND
AMENDMENT AGREEMENT
Continuing Lenders
*ABN AMRO BANK N.V. NEW YORK BRANCH
ALLIED IRISH BANK, plc, CAYMAN ISLAND BRANCH
*ARAB BANKING CORPORATION
BANCA COMMERCIALE ITALIANA, NEW YORK BRANCH
BANK OF AMERICA ILLINOIS
BANK OF IRELAND
THE BANK OF NEW YORK
THE BANK OF NOVA SCOTIA
BANK OF SCOTLAND
*BANK OF MONTREAL
THE BANK OF TOKYO-MITSUBISHI, LTD., NEW YORK BRANCH
BANKERS TRUST COMPANY
BANQUE PARIBAS
*BANQUE FRANCAISE DU COMMERCE EXTERIEUR
CIBC INC.
THE CHASE MANHATTAN BANK
CITIBANK, N.A.
*CORESTATES BANK, N.A.
COMPAGNIE FINANCIERE de CIC et de
l'UNION EUROPEENNE - NEW YORK BRANCH
*CREDIT AGRICOLE
CREDIT LYONNAIS NEW YORK BRANCH
CREDITO ITALIANO SpA
DEUTSCHE BANK AG, NEW YORK BRANCH AND/OR CAYMAN ISLAND BRANCH
FLEET NATIONAL BANK (successor by merger to Fleet Bank of Massachusetts, N.A.)
THE INDUSTRIAL BANK OF JAPAN, TRUST COMPANY
THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED
*LLOYDS BANK PLC
MERITA BANK LTD. (formerly known as Union Bank of Finland)
THE MITSUBISHI TRUST & BANKING CORPORATION
THE MITSUI TRUST AND BANKING COMPANY, LIMITED
NATIONSBANK, N.A
NATIONAL CITY BANK
*THE NIPPON CREDIT BANK LTD.
*THE ROYAL BANK OF SCOTLAND plc
THE SAKURA BANK, LTD.
THE SANWA BANK, LIMITED, NEW YORK BRANCH
SOCIETE GENERALE
*STANDARD CHARTERED BANK
THE SUMITOMO BANK LTD., NEW YORK BRANCH
THE SUMITOMO TRUST AND BANKING CO., LTD., NEW YORK BRANCH
*THE TOKAI BANK LIMITED - NEW YORK BRANCH
THE TORONTO DOMINION BANK
UNITED STATES NATIONAL BANK OF OREGON
- -----------------
* New Lenders
<PAGE> 1
EXHIBIT 23(i)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated February 26, 1996 in Amendment No. 2 to the
Registration Statement (Form S-3, No. 333-18015) and related Prospectus of
American Standard Companies Inc. for the Registration of 12,362,500 shares of
its common stock and 12,362,500 shares of its common stock rights.
We also consent to the incorporation by reference therein of our report
with respect to the financial statement schedules of American Standard Companies
Inc. for the years ended December 31, 1995, 1994 and 1993 included in the Annual
Report on Form 10-K for 1995 filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
New York, New York
February 5, 1997
<PAGE> 1
Exhibit 23(iii)
CONSENT
MEILICKE & PARTNER
Poppelsdorfer Allee 106
Bonn 53115 Germany
February 5, 1997
The undersigned is the German tax counsel identified in this
Registration Statement on Form S-3 filed with respect to an offering of shares
of American Standard Companies Inc. (the "Company") common stock, par value
$.01 per share, by certain of the Company's stockholders, and hereby consents
to the references to our firm as experts in German tax matters under the
headings "Risk Factors -- Tax Matters", "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources" and "Experts", contained in the prospectus constituting a part of
such Registration Statement, and to the incorporation by reference of this
consent into any registration statement filed pursuant to Rule 462(b) under the
Securities Act of 1933 for the purpose of registering additional shares of
Common Stock for sale in connection with the offering.
Yours truly,
Meilicke & Partner
/s/ W. Meilicke
- --------------------
Dr. W. Meilicke
